THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
            SECURITIES ACT OF 1933, AS AMENDED, ANY MAY NOT BE SOLD,
           HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED OF IN THE
           ABSENCE OF SUCH REGISTRATION, UNLESS AN EXEMPTION FROM THE
             REQUIREMENT OF SUCH REGISTRATION IS AVAILABLE UNDER THE
                      CIRCUMSTANCES AT THE TIME OBTAINING.

          Void After 5:00 P.M. Houston, Texas Time on December 31, 1997


                            CHAPARRAL RESOURCES, INC.
                          -----------------------------
                          Common Stock Purchase Warrant


     CHAPARRAL  RESOURCES,  INC.,  a Colorado  corporation  ("Chaparral"  or the
"Company"),  hereby  certifies  that, in  connection  with the  subscription  by
Victory Ventures LLC, a Delaware limited liability company with an office at 645
Madison  Avenue,  New  York,  New  York  10021  ("Victory"),   as  evidenced  by
Subscription Agreement of even date hereof, and for other valuable consideration
received,  Victory, or its permitted assigns, is entitled,  subject to the terms
and  conditions  herein set forth,  to purchase from the Company up to 4,615,385
fully paid and  non-assessable  shares of Common Stock,  $.10 par value,  of the
Company,  at the per share  purchase  price  (the  "Purchase  Price")  of $0.65,
subject to adjustment as hereinafter  provided, at any time or from time to time
on or after the date  hereof and up to 5:00 P.M.  New York City time on December
31, 1997 (the  "Expiration  Date").  The number and  character of such shares of
Common Stock are subject to adjustment as p voided herein.

     1. Definitions.  As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:

          (a) "Act" shall mean the Securities Act of 1933, as amended.

          (b)  "Additional  Shares  of  Common  Stock"  shall  mean  all  shares
     (including treasury shares) of Common Stock issued or sold (or, pursuant to
     Section  3.7  hereof,  deemed to be issued) by the  Company  after the date
     hereof,  whether or not subsequently  reacquired or retired by the Company,
     other than shares of Common Stock issuable pursuant to this Warrant.

          (c)  "Adjusted  Exercise  Price"  shall have the meaning  specified in
     Section 3.2 hereof.

          (d) "Company" means Chaparral Resources, Inc. or any corporation which
     shall succeed to or assume the  obligations  of Chaparral  Resources,  Inc.
     hereunder.



<PAGE>



          (e) "Common  Stock"  shall mean the Common  Stock,  par value $.10 per
     share, of the Company and any stock into which such common stock shall have
     been  changed  or any stock  resulting  from any  reclassification  of such
     common  stock,  and shall  include  all other  stock of any class  (however
     designated)  of the Company  the  holders of which have the right,  without
     limitation  as to  amount,  either to all or to a share of the  balance  of
     current dividends and liquidating  dividends after the payment of dividends
     and distributions of any shares entitled to preference.

          (f) "Convertible Securities" shall mean any evidences of indebtedness,
     shares of stock (other than Common Stock) or other  securities  directly or
     indirectly  convertible into or exchangeable  for Common Stock,  other than
     any securities issuable pursuant to this Warrant.

          (g) "Market  Price",  as used with  reference to any share of stock on
     any specified date, shall mean:

                    (i) if such stock is listed and  registered  on any national
               securities   exchange  or  traded  on  The  Nasdaq  Stock  Market
               ("Nasdaq"),  (A) the last reported sale price on such exchange or
               Nasdaq of such stock on the  business day  immediately  preceding
               the  specified  date,  or (B) if there  shall  have  been no such
               reported sale price of such stock on the business day immediately
               preceding  the specified  date,  the average of the last reported
               sale  price on such  exchange  or on  Nasdaq  on (x) the day next
               preceding the specified  date for which there was a reported sale
               price  and (y) the day next  succeeding  the  specified  date for
               which there was a reported sale price; or

                    (ii) if such  stock  is not at the time  listed  on any such
               exchange   or   traded   on   Nasdaq   but  is   traded   on  the
               over-the-counter  market as  reported by the  National  Quotation
               Bureau  or  other  comparable  service,  (A) the  average  of the
               closing bid and asked  prices for such stock on the  business day
               immediately  preceding the specified  date, or (B) if there shall
               have been no such reported bid and asked prices for such stock on
               the business day  immediately  preceding the specified  date, the
               average  of the last  bid and  asked  prices  on (X) the day next
               preceding  the  specified  date for  which  such  information  is
               available and (Y) the day next  succeeding the specified date for
               which such information is available; or

                    (iii) if clauses (i) and (ii) above are not applicable,  the
               fair  value per share of such stock as  determined  in good faith
               and on a  reasonable  basis  by the  Board  of  Directors  of the
               Company and, if requested, set

                                        2

<PAGE>



               forth in a  certificate  delivered  to the holder of this Warrant
               upon the exercise hereof.

          (h) "Options" shall mean rights, options or warrants to subscribe for,
     purchase  or  otherwise   acquire   either  Common  Stock  or   Convertible
     Securities.

          (i) "Other  Securities"  shall mean any stock and other  securities of
     the Company or any other person  (corporate or otherwise) which the holders
     of this  Warrant at any time shall be entitled  to  receive,  or shall have
     received,  upon the exercise of this Warrant,  in lieu of or in addition to
     the Common Stock, or which at any time shall be issuable or shall have been
     issued to holders of the Common Stock in exchange for, in addition to or in
     replacement of the Common Stock or Other Securities pursuant to Section 3.5
     or otherwise.

          (j) "Purchase Price" shall mean $0.65 per share, subject to adjustment
     as provided herein.

     2. Exercise of Warrant.
        -------------------

     2.1 Manner of Exercise.
         ------------------

               (a) This Warrant may be exercised by the holder hereof,  in whole
          or in part (but not as to fewer than 1,000  shares of the Common Stock
          unless,  at the time of exercise,  this Warrant entitles the holder to
          purchase fewer than 1,000 shares of the Common Stock), on any business
          day on or after the date hereof and before 5:00 P.M.,  Houston,  Texas
          time on December 31, 1997, by surrender of this Warrant, with the form
          of subscription at the end hereof (or a reasonable  facsimile thereof)
          duly executed by such holder, to the Company at its office in Houston,
          Texas,   and,   except  as  otherwise   provided  in  Section  2.1(b),
          accompanied by payment, by certified or official bank check payable to
          the order of the Company,  in the amount  obtained by multiplying  (x)
          the number of shares of the Common Stock (without giving effect to any
          adjustment  therein)  designated in such form of subscription (or such
          reasonable facsimile) by (y) the Purchase Price, and such holder shall
          thereupon  be  entitled  to receive the number of shares of the Common
          Stock determined as provided hereunder.

               (b) In  addition  to the method of  payment  set forth in Section
          2.1(a),  and in lieu of any  cash  payment  required  thereunder,  the
          holder of this Warrant  shall have the right at any time and from time
          to time to exercise  this  Warrant in full or in part by  surrendering
          this Warrant,  with the form of  subscription  at the end hereof (or a
          reasonable  facsimile  thereof) duly  executed by such holder,  to the
          Company at its office in Denver,  Colorado,  in exchange for which the
          holder shall receive the number of shares of Common Stock equal to the
          product of (x) the  number of shares as to which the  Warrant is being
          exercised, multiplied

                                                     3

<PAGE>



          by (y) a fraction,  the  numerator of which is the Market Price of one
          share of the Common  Stock less the per share  Purchase  Price then in
          effect and the  denominator  of which is the Market Price of one share
          of the Common Stock.

     2.2. When Exercise Effective. Each exercise of this Warrant shall be deemed
to have been effected immediately prior to the close of business on the business
day on which this Warrant shall have been surrendered to the Company as provided
in Section 2.1, and the person(s) in whose name(s) the certificate(s) for shares
of the  Common  Stock (or Other  Securities)  that are to be issued  up.on  such
exercise in accordance  with Section 2.3 shall be deemed the holder(s) of record
thereof at such time.

     2.3. Delivery of Stock Certificates,  etc. As soon as practicable after the
exercise of this Warrant in full or in part in accordance  herewith the Company,
at its expense (including the payment by it of any applicable issue taxes), will
cause to be issued in the name of and delivered to the holder hereof, or as such
holder  (upon  payment  by such  holder of any  applicable  transfer  taxes) may
direct,

               (a) a certificate  or  certificates,  marked with an  appropriate
          legend  referring  to the  terms of this  Warrant  and any  applicable
          restrictions  on such  shares  imposed  by the  Federal  or any  state
          securities laws, for the number of full shares of the Common Stock (or
          Other  Securities)  to which such holder  shall be entitled  upon such
          exercise  plus, in lieu of any  fractional  share to which such holder
          would  otherwise  be  entitled,  cash in an  amount  equal to the same
          fraction of the Market Price of one full share of the Common Preferred
          Stock on the business day next  preceding  the date of such  exercise,
          and

               (b) in case such  exercise  is in part  only,  a new  Warrant  or
          Warrants of like tenor,  calling in the aggregate on the face or faces
          thereof for the number of shares of the Common  Stock  equal  (without
          giving effect to any adjustment  therein) to the number of such shares
          called  for on the face of this  Warrant  minus  the  number of shares
          designated  by the holder  upon such  exercise  as provided in Section
          2.1.

     3. Common Stock Issuable Upon Exercise.

     3.1. General.  The number of shares of the Common Stock which the holder of
this  Warrant  shall be  entitled  to receive  upon the  exercise  hereof or, if
securities or other property in addition to or in lieu of the Common Stock shall
by reason of the  operation of the  provisions  of this Section be issuable upon
such exercise,  the amount and kind of such securities or other property,  shall
be adjusted or determined as provided in this Section 3.

     3.2.  Adjusted  Exercise  Price.  The number of shares of the Common  Stock
which the holder of this Warrant  shall be entitled to receive upon the exercise
hereof shall be  determined  by  multiplying  the number of shares of the Common
Stock which, but for the

                                        4

<PAGE>



provisions of this Section 3, would otherwise be issuable upon such exercise, as
designated  by the holder  hereof  pursuant to Section  2.1, by the  fraction of
which the numerator is the per share Purchase  Price and the  denominator is the
per share Adjusted  Exercise Price (as herein  defined) in effect on the date of
such exercise.  The per share Adjusted  Exercise Price of the Common Stock shall
initially be the Purchase  Price (as defined in Section 1) and shall be adjusted
and  readjusted  from time to time as  provided  in this  Section 3 (and,  as so
adjusted or  readjusted,  shall remain in effect until a further  adjustment  or
readjustment thereof is required by this Section 3).

     3.3. Stock Dividends, Stock Splits, etc. In case the Company at any time or
from time to time after the date hereof shall declare or pay any dividend on the
Common Stock payable in Common Stock, or effect a subdivision of the outstanding
shares of the Common  Stock into a greater  number of shares of the Common Stock
(by  reclassification  or  otherwise  than by payment of a dividend in shares of
Common Stock),  then, in any such event,  the per share Adjusted  Exercise Price
per share  shall be  adjusted  effective  as of the close of business on (i) the
record date for the  determination  of  shareholders  entitled  to receive  such
dividend if such dividend is in fact paid, or (ii) the day immediately preceding
the day upon which such subdivision shall become effective (any such day, as the
case may be, shall be referred to herein as the "Subdivision  Effective  Date"),
by multiplying the per share Adjusted Exercise Price in effect immediately prior
to the  Subdivision  Effective  Date by the fraction of which (x) the  numerator
shall be the number of shares of the Common Stock outstanding  immediately prior
to the Subdivision Effective Date and (y) the denominator shall be the number of
shares of the Common  Stock  outstanding  immediately  prior to the  Subdivision
Effective  Date plus the number of shares of the Common Stock  issuable upon the
payment of such dividend or the  consummation of such  subdivision,  as the case
may be.

     3.4.  Adjustments for Combinations,  etc. In case the outstanding shares of
the Common  Stock shall be  combined or  consolidated,  by  reclassification  or
otherwise, into a lesser number of shares of Common Stock, the Adjusted Exercise
Price  shall be  adjusted,  effective  as of the  close of  business  on the day
immediately  preceding the day upon which such  combination or  consolidation is
effective (the  "Combination  Effective  Date"),  by  multiplying  the per share
Adjusted Exercise Price in effect immediately prior to the Combination Effective
Date by the fraction of which (x) the numerator shall be the number of shares of
the Common Stock outstanding immediately prior to the Combination Effective Date
and (y) the  denominator  shall be the  number  of shares  of the  Common  Stock
outstanding immediately after the Combination Effective Date.

     3.5. Adjustments for Consolidation,  Merger, Sale of Assets, Reorganization
etc. In case the Company,  after the date hereof,  (a) shall consolidate with or
merge  into any  other  person  and  shall not be the  continuing  or  surviving
corporation  of such  consolidation  or  merger,  or (b) shall  permit any other
person to  consolidate  with or merge into the Company and the Company  shall be
the continuing or surviving person but, in connection with such consolidation or
merger,  the Common Stock shall be changed into or exchanged  for stock or other
securities  or  property  of any other  person,  or (c)  shall  effect a capital
reorganization or

                                        5

<PAGE>



reclassification  of the Common Stock (other than a reclassification  subject to
Sections 3.3 or 3.4),  then, and in each such case,  proper  provision  shall be
made so that the holder of this  Warrant,  upon the exercise  hereof at any time
after  the  consummation  of  such  consolidation,   merger,  reorganization  or
reclassification,  shall be entitled to receive, in lieu of the Common Stock (or
Other Securities)  issuable upon such exercise prior to such  consummation,  the
stock and other  securities  and  property to which such holder  would have been
entitled  upon such  consummation  if such holder had so exercised  this Warrant
immediately prior thereto,  subject to adjustments (subsequent to such corporate
action) as nearly equivalent as possible to the adjustments provided for in this
Section 3.

     3.6.  Issuances of  Securities.  If, at any time while this Warrant (or any
portion thereof) is outstanding, the Company:

                    (i)  issues  or sells  Additional  Shares  of  Common  Stock
               without  consideration or for a consideration per share less than
               the Adjusted  Exercise Price in effect  immediately prior to such
               issue or sale, or

                    (ii)  declares,  orders,  pays or makes a dividend  or other
               distribution (including,  without limitation, any distribution of
               other or additional  stock or other securities or property by way
               of  dividend or spinoff,  reclassification,  recapitalization  or
               similar corporate rearrangement) on the Common Stock other than a
               dividend payable in Additional Shares of Common Stock,

then,  and in each such case, the Adjusted  Exercise  Price shall,  concurrently
with such issue or sale or immediately after the close of business on the record
date fixed for the determination of holders of any class of securities  entitled
to receive such dividend or distribution,  be reduced to a price  (calculated to
the  nearest  cent,  a half cent being  considered  a full cent)  determined  by
dividing:

          (x) an amount equal to:

                    (i) the product obtained by multiplying the number of shares
               of Common Stock  outstanding  immediately  prior to such issue or
               sale or at the  close  of  business  on such  record  date by the
               Adjusted Exercise Price in effect at such time,

               plus

                    (ii)  in  the   case  of  any  such   issue  or  sale,   the
               consideration, if any, received by the Company upon such issue or
               sale, or

               minus


                                        6

<PAGE>



                    (iii) in the case of any such dividend or distribution,  the
               aggregate amount of such dividend or  distribution,  which amount
               shall be valued in accordance with Section 3.8 hereof,

               by

          (y) the number of shares of Common Stock outstanding immediately after
     such issue or sale or at the close of business on such record date,

provided  that,  this  Section  3.6 shall not apply to the  issuance  or sale of
Additional  Shares  of  Common  Stock  pursuant  to  any  Option  or  commitment
outstanding  prior to the date hereof set forth on  Schedule A attached  hereto,
and provided,  further  however,  that for the purposes of this Section 3.6, (A)
immediately  after  any  Additional  Shares of Common  Stock are  deemed  issued
pursuant to Section 3.7 hereof,  such  Additional  Shares  shall be deemed to be
outstanding and (B) treasury shares shall not be deemed to be outstanding.

     3.7. Options and Convertible Securities. In case the Company at any time or
from time to time after the date hereof shall issue,  sell,  grant or assume any
Options  or  Convertible  Securities,  or  shall  fix  a  record  date  for  the
determination of holders of any class of securities entitled to receive any such
Options or  Convertible  Securities,  then the maximum  number of shares (as set
forth in the  instrument  relating  thereto  without  regard  to any  provisions
contained  therein for a subsequent  adjustment  of such number) of Common Stock
issuable  upon the  exercise  of such  Options  or,  in the case of  Convertible
Securities and Options therefor,  the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that  Additional  Shares of Common Stock shall not be deemed to have been issued
unless the consideration  per share (determined  pursuant to Section 3.8 hereof)
of such  shares  would  be less  than the  Adjusted  Exercise  Price  in  effect
immediately prior to such issue,  sale, grant or assumption or immediately prior
to the close of business on such record date,  as the case may be, and provided,
further,  that in any such case in which  Additional  Shares of Common Stock are
deemed to be issued:

               (a) no further adjustment of the Adjusted Exercise Price shall be
          made upon the subsequent  issue or sale of  Convertible  Securities or
          shares  of Common  Stock  upon the  exercise  of such  Options  or the
          conversion or exchange of such Convertible Securities;

               (b) if such  Options or  Convertible  Securities  by their  terms
          provide,  with the passage of time or  otherwise,  for any increase in
          the consideration payable to the Company, or decrease in the number of
          shares of Common Stock  issuable,  upon the  exercise,  conversion  or
          exchange  thereof (by change of rate or otherwise),  then the Adjusted
          Exercise  Price  computed  upon the  original  issue,  sale,  grant or
          assumption thereof (or upon the occurrence of a record date

                                        7

<PAGE>



          with respect thereto),  and any subsequent  adjustments based thereon,
          shall,  upon any such  increase or  decrease  becoming  effective,  be
          recomputed to reflect such increase or decrease  insofar as it affects
          such  Options,  or the rights of  conversion  or  exchange  under such
          Convertible Securities, which are outstanding at such time;

               (c) upon the  expiration  of any such  Options  or any  rights of
          conversion or exchange under such  Convertible  Securities which shall
          not have been exercised, the Adjusted Exercise Price computed upon the
          original  issue,  sale,  grant  or  assumption  thereof  (or  upon the
          occurrence of a record date with respect thereto),  and any subsequent
          adjustments based thereon, shall, upon such expiration,  be recomputed
          as if:

                    (i) in the case of  Convertible  Securities  or Options  for
               Common Stock,  the only Additional  Shares of Common Stock issued
               or sold were the shares of Common Stock, if any,  actually issued
               or sold upon the  exercise of such Options or the  conversion  or
               exchange of such  Convertible  Securities  and the  consideration
               received therefor was the consideration  actually received by the
               Company  for the issue,  sale,  grant or  assumption  of all such
               Options,  whether  or  not  exercised,   plus  the  consideration
               actually  received by the Company upon such exercise,  or for the
               issue  or sale of all  such  Convertible  Securities  which  were
               actually   converted   or   exchanged,    plus   the   additional
               consideration, if any, actually received by the Company upon such
               conversion or exchange, and

                    (ii) in the case of Options for Convertible Securities, only
               the Convertible Securities,  if any, actually issued or sold upon
               the exercise thereof were issued at the time of the issue,  sale,
               grant  or  assumption  of such  Options,  and  the  consideration
               received by the Company for the Additional Shares of Common Stock
               deemed to have then been  issued was the  consideration  actually
               received by the Company for the issue,  sale, grant or assumption
               of  all  such  options,  whether  or  not  exercised,   plus  the
               consideration  deemed  to  have  been  received  by  the  Company
               (pursuant  to Section 3.8  hereof)  upon the issue or sale of the
               Convertible  Securities  with  respect to which such Options were
               actually exercised;

               (d) no  readjustment  pursuant  to clause (b) or (c) above  shall
          have the effect of increasing the Adjusted Exercise Price by an amount
          in excess of the amount of the adjustment  thereof  originally made in
          respect of the issue,  sale,  grant or  assumption  of such Options or
          Convertible Securities; and


                                        8

<PAGE>



               (e) in the case of any Options to acquire Convertible  Securities
          which  expire by their  terms not more than 30 days  after the date of
          issue,  sale,  grant  or  assumption  thereof,  no  adjustment  of the
          Adjusted Exercise Price shall be made until the expiration or exercise
          of all such Options,  whereupon such  adjustment  shall be made in the
          manner provided in clause (c) above.

     3.8. Computation of Consideration.  For the purposes of this Section 3, the
consideration  received by the  Company for the issue or sale of any  Additional
Shares of Common Stock shall be computed as follows:

               (a) Nature of Consideration. Such consideration shall

                         (i) insofar as it consists of cash,  be computed at the
                    actual  amount  paid by the  purchaser  of  such  Additional
                    Shares of Common Stock,  without  deduction for commissions,
                    concessions or discounts allowed to underwriters, dealers or
                    others in connection with such issue,

                         (ii)  insofar as it  consists  of  property  other than
                    cash,  be computed at the fair value  thereof at the time of
                    such issue or sale, as determined in good faith by the Board
                    of  Directors of the Company;  provided,  however,  that any
                    such  property  that  consists  of  securities  (A) that are
                    listed  on  any  national  securities  exchange  or if  such
                    securities  are  traded  on  Nasdaq,  then the per share (or
                    other unit) value shall be the last  reported  sale price of
                    such securities on the most recent trading day preceding the
                    day in question for which such information is available,  or
                    (B) that are traded in the  over-the-counter  market but are
                    not  traded on  Nasdaq,  then the per share (or other  unit)
                    value shall be the average between the closing bid and asked
                    prices of such  securities  on the most  recent  trading day
                    preceding the day in question for which such  information is
                    available, as reported by the NASD, and

                         (iii) in case  Additional  Shares of  Common  Stock are
                    issued or sold  together  with other stock or  securities or
                    other assets of the Company for  consideration  which covers
                    both,  be that  portion of such  consideration  (computed as
                    provided in clauses (i) and (ii) above), which is determined
                    in good faith by the Board of Directors of the Company to be
                    allocable to such Additional Shares of Common Stock.

               (b) Options and Convertible  Securities.  The  consideration  per
          share  received by the Company for  Additional  Shares of Common Stock
          deemed to have been issued pursuant to Section 3.7 hereof, relating to
          Options and Convertible Securities, shall be determined by dividing:


                                        9

<PAGE>



                         (i) the total amount, if any, received or receivable by
                    the Company as consideration  for the issue,  sale, grant or
                    assumption of such Options or Convertible  Securities,  plus
                    the minimum aggregate amount of additional consideration (as
                    set  forth  in the  instruments  relating  thereto,  without
                    regard to any provision  contained  therein for a subsequent
                    adjustment  of such  consideration)  payable to the  Company
                    upon the  exercise  of such  Options  or the  conversion  or
                    exchange of such  Convertible  Securities or, in the case of
                    Options for  Convertible  Securities,  the  exercise of such
                    Options for  Convertible  Securities  and the  conversion or
                    exchange of such Convertible Securities,

                  by

                         (ii) the maximum  number of shares of Common  Stock (as
                    set  forth  in the  instruments  relating  thereto,  without
                    regard to any provision  contained  therein for a subsequent
                    adjustment  of such  number)  issuable  upon the exercise of
                    such  Options  or  the   conversion   or  exchange  of  such
                    Convertible Securities.

     4. No Dilution or  Impairment.  The Company  will not, by  amendment of its
articles  of  organization  or through any  reorganization,  transfer of assets,
consolidation,  merger~  dissolution,  issue or sale of  securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this  Warrant,  but will at all times in good  faith  assist in the
carrying  out of all such terms and in the  taking of all such  action as may be
necessary  or  appropriate  in order to protect the rights of the holder of this
Warrant against dilution or other impairment.

     5. Notices of Record Date, etc. In the event of

               (a) any taking by the  Company of a record of the  holders of any
          class of securities for the purpose of determining the holders thereof
          who are entitled to receive any dividend or other distribution, or any
          right to subscribe  for,  purchase or otherwise  acquire any shares of
          stock of any class or any other securities or property,  or to receive
          any other right, or

               (b)   any   capital    reorganization   of   the   Company,   any
          reclassification  or  recapitalization  of the  capital  stock  of the
          Company or any transfer of all or substantially  all the assets of the
          Company to any other person or any  consolidation  or merger involving
          the Company and any other person, or

               (c) any  voluntary or  involuntary  dissolution,  liquidation  or
          winding-up of the Company,


                                       10

<PAGE>



          the  Company  will  give  to the  holder  of  this  Warrant  a  notice
          specifying  (i) the date or expected  date on which any such record is
          to be taken for the purpose of such dividend,  distribution  or right,
          and stating the amount and character of such dividend, distribution or
          right,  and  (ii)  the  date  or  expected  date  on  which  any  such
          reorganization,    reclassification,    recapitalization,    transfer,
          consolidation,  merger,  dissolution,  liquidation or winding-up is to
          take place and the time, if any such time is to be fixed,  as of which
          the holders of record of the Common Stock (or Other  Securities) shall
          be  entitled to exchange  their  shares of the Common  Stock (or Other
          Securities)  for  securities or other property  deliverable  upon such
          reorganization,    reclassification,    recapitalization,    transfer,
          consolidation,  merger, dissolution, liquidation or winding-up. Unless
          otherwise  required by law to be given  sooner,  such notice  shall be
          mailed within a reasonable time prior to the date therein specified.

     6.  Reservation  of Stock,  etc. The Company will at all times  reserve and
keep  available out of its  authorized  but unissued  Common  Stock,  solely for
issuance and  delivery  upon the  exercise of this  Warrant,  the full number of
shares of Common Stock (or Other  Securities) then issuable upon the exercise of
this Warrant.  All shares of the Common Stock issuable upon the exercise of this
Warrant shall be duly authorized,  and when issued and paid for in full, validly
issued,  fully  paid and  non-assessable  with no  liability  on the part of the
holders thereof.

     7. Registration Rights.

               (a)  Definitions.  For purposes of this Section 7, the  following
          terms shall have the following respective meanings:

                         (i)   "Commission"   shall  mean  the   United   States
                    Securities  and  Exchange  Commission  or any other  Federal
                    agency at the time administering the Act.

                         (ii) The term "holder or holders of Registrable  Stock"
                    shall mean the holders of Common  Stock or Other  Securities
                    issued pursuant to this Warrant.

                         (iii)   The   terms   "register,"    "registered"   and
                    "registration" refer to a registration effected by preparing
                    and filing a registration  statement or similar  document in
                    compliance  with the Act, and the declaration or ordering of
                    effectiveness of such registration  statement or document by
                    the Commission.

                         (iv)  The term  "Registration  Period"  shall  mean the
                    period  commencing on the date hereof and ending (a) if this
                    Warrant shall expire  without having been exercised in whole
                    or in part, the Expiration Date or (b) if this Warrant shall
                    have been  exercised in whole or in part, at such time as no
                    shares of Registrable Stock remain outstanding.

                                       11

<PAGE>




                         (v) The term  "Registrable  Stock" means (a) the shares
                    of Common Stock issued or issuable upon the exercise of this
                    Warrant,  and (b) any Other  Securities  issued or  issuable
                    pursuant to this Warrant; provided,  however, that shares of
                    Registrable  Stock  shall cease to be  Registrable  Stock if
                    they are sold or transferred pursuant to a registered public
                    offering  or other  transaction  which  does not  result  in
                    restrictions  on resale  being  imposed on the  transfer  by
                    virtue of Federal or state  securities  laws;  and  provided
                    further that Registrable Stock shall cease to be Registrable
                    Stock  if  the  holder  could  sell  or  transfer  all  such
                    securities held by him in one  transaction  pursuant to Rule
                    144 promulgated under the Act.

               (b) Demand Registration.

                         (i) Upon the  written  request of any holder or holders
                    ("Initiating  Holders")  of at least  306 of the  shares  of
                    Registrable  Stock,  which request shall be given during the
                    Registration  Period,  shall  state the  intended  method of
                    disposition  by such  Initiating  Holders and shall  request
                    that the Company effect the  registration  of all or part of
                    the  Registrable  Stock  under the Act,  the  Company  shall
                    promptly give written notice of such requested  registration
                    to all other  holders,  if any, of  Registrable  Stock.  If,
                    after the  expiration of thirty days from the giving of such
                    notice to the  holders of  Registrable  Stock,  the  Company
                    shall have  received  written  requests to register at least
                    50k of the shares of Registrable Stock, which requests shall
                    state the intended  method of disposition of such securities
                    by such  holders,  the  Company  shall  use  all  reasonable
                    efforts  to  prepare   and  file  with  the   Commission   a
                    registration statement and such other documents, including a
                    prospectus,  as may be necessary to permit a public offering
                    and sale of such  Registrable  Stock in the United States in
                    compliance with the provisions of the Act, all to the extent
                    requisite to permit the  disposition (in accordance with the
                    intended methods thereof as aforesaid) by the holders of the
                    Registrable  Stock so to be registered  (the  "Participating
                    Holders").  If  such  sale  of  Registrable  Stock  is to be
                    pursuant to an underwritten  offering, the underwriter shall
                    be  selected  by  the   Initiating   Holders  and  shall  be
                    reasonably  acceptable  to the Company.  If the  underwriter
                    selected determines that the number of shares be included is
                    required  to  be  limited  due  to  market   conditions   or
                    otherwise,  the holders of  Registrable  Stock  proposing to
                    sell their shares in such  underwritten  registration  shall
                    share pro rata (according to the number of shares  requested
                    to be registered) in the number of shares being underwritten
                    (as determined by such underwriter) and registered for their
                    account.  The  Company  shall only be required to effect two
                    registrations pursuant to this Section 7(b).

                                       12

<PAGE>




                         (ii) The  Company  shall not be  required to effect any
                    registration  under this  Section  7(b)  within  nine months
                    after  the   completion  of  any  public   offering  of  its
                    securities  pursuant  to which the  holders  of  Registrable
                    Stock were  afforded the right to register as many shares of
                    their  Registrable  Stock as requested nor within six months
                    after any other public offering by the Company.

                         (iii) The  Company  shall  have the right to include in
                    any registration statement or post-effective amendment filed
                    pursuant  to  this  Section  7(b)  other  securities  of the
                    Company then proposed to be distributed, except that, to the
                    extent  consistent  with the rights of other  holders of the
                    Company's  securities,   if  and  to  the  extent  that  the
                    underwriter  or  underwriters  acting  with  respect of such
                    public offering  reasonably  determine that the inclusion of
                    such other securities may substantially  prejudice or hinder
                    the offering of Registrable  Stock, the number of such other
                    securities  shall be  reduced  or  eliminated  prior.to  any
                    reduction in the number of shares of Registrable Stock so to
                    be registered.

                         (iv) If the  registration  under this  paragraph (b) is
                    effected on a Form S-3 (or any successor form thereto),  and
                    the  effectiveness  of such  registration  statement  can be
                    maintained  without  significant  additional  expense to the
                    Company,   then  the   Company   agrees  to   maintain   the
                    effectiveness of such registration statement for a period of
                    one year after its initial effective date.

               (c) Incidental Registration.

                         (i) If, during the Registration  Period, the Company at
                    any  time or from  time to time  proposes  to file  with the
                    Commission  a  registration  statement  under  the Act  with
                    respect  to  any  proposed   distribution   of  any  of  its
                    securities (other than a registration to be effected on Form
                    S-4, S-8 or other similar limited purpose form), whether for
                    sale for its own  account  or for the  account  of any other
                    person  holding  registration  rights  with  respect  to the
                    securities  of the  Company,  then the  Company  shall  give
                    written  notice of such  proposed  filing to the  holders of
                    Registrable  Stock at least  thirty  (30)  days  before  the
                    anticipated  filing date,  and such notice shall describe in
                    detail the proposed registration and distribution (including
                    those  jurisdictions  where  registration  or  qualification
                    under the securities or blue sky laws is intended) and shall
                    offer the holders of  Registrable  Stock the  opportunity to
                    register such number of shares of  Registrable  Stock as the
                    holders of  Registrable  Stock may request.  Upon receipt by
                    the  Company  by the  anticipated  filing  date  of  written
                    requests from the Participating Holders of

                                       13

<PAGE>



                    Registrable   Stock  for  the  Company  to  register   their
                    Registrable Stock, the Company shall permit, or in the event
                    of an underwritten  offering,  shall use its best efforts to
                    cause  the  managing  underwriter  or  underwriters  of such
                    proposed  underwritten offering to permit, the Participating
                    Holders to include such  securities  in such offering on the
                    same terms and  conditions as any similar  securities of the
                    Company included therein; provided,  however, that if in the
                    opinion of the managing  underwriter or underwriters of such
                    offering,  the  inclusion  of the  total  amount  or kind of
                    securities which it or the Company, and any other persons or
                    entities,   intend  to  include  in  such   offering   would
                    interfere,    hinder,   delay,   reduce   or   prevent   the
                    effectiveness  or sale of the  Company's  shares  of  Common
                    Stock  proposed  to  be so  registered  or  would  otherwise
                    adversely  affect  the  success of such  offering,  then the
                    amount or kind of  securities to be offered for the accounts
                    of the Company and each  holder of Common  Stock  (including
                    without   limitation   Registrable   Stock)  or   securities
                    convertible into or exercisable for Common Stock proposed to
                    be  registered  (other  than any persons  exercising  demand
                    registration  rights)  shall be reduced (or  eliminated)  in
                    proportion  to  their   respective   values  to  the  extent
                    necessary  to reduce the total  amount of  securities  to be
                    included  in such  offering  on  behalf of such  holders  of
                    securities  to  the  amount  recommended  by  such  managing
                    underwriter.  For purposes of this  Section,  "value"  shall
                    mean  principal  amount with respect to debt  securities and
                    the proposed offering price per share with respect to equity
                    securities.  Notwithstanding the foregoing,  if, at any time
                    after  giving  written  notice of its  intention to register
                    Common  Stock  or  other  securities   convertible  into  or
                    exercisable for Common Stock and prior to the  effectiveness
                    of the registration  statement filed in connection with such
                    registration,  the Company  determines for any reason either
                    not  to  effect   such   registration   or  to  delay   such
                    registration,  the Company may, at its election, by delivery
                    of written notice to the Participating  Holders,  (i) in the
                    case of a determination not to effect registration,  relieve
                    itself of its obligations to register any Registrable  Stock
                    in connection with such registration, or (ii) in the case of
                    determination   to  delay   the   registration,   delay  the
                    registration of such  Registrable  Stock for the same period
                    as the delay in the  registration  of such  other  shares of
                    Common  Stock  or  other  securities   convertible  into  or
                    exercisable for Common Stock.

                         (ii)  Exception.  The Company  shall not be required to
                    include  any of the  Registrable  Stock  of a  Participating
                    Holder  in  any  registration  statement  or  post-effective
                    amendment   prepared  at  its  own   instance   unless  such
                    Participating Holder shall furnish such information and sign
                    such  documents  as may be  required  by the  Commission  or
                    reasonably

                                       14

<PAGE>



                    requested  by  the  Company  in  accordance  with  generally
                    accepted   practices,   in  connection  with  such  proposed
                    distribution.

               (d)  Covenants of the Company with  Respect to  Registration.  In
          connection  with any  registration  under this  Section 7, the Company
          shall, as expeditiously as is reasonably possible:

                         (i) Prepare and file with the Commission a registration
                    statement   with  respect  to  the   Participating   Holders
                    Registrable  Stock  and,  subject  to the last  sentence  of
                    Section 7(c)(i)  hereof,  use its best efforts to cause such
                    registration statement to become effective.

                         (ii)  Prepare  and  file  with  the   Commission   such
                    amendments and  supplements to such  registration  statement
                    and  prospectus  used in connection  with such  registration
                    statement as may be necessary to comply with the  provisions
                    of the Act with respect to the disposition of all securities
                    covered by such registration statement.

                         (iii) Furnish to the Participating Holders such numbers
                    of copies  of a  prospectus,  including,  if  applicable,  a
                    preliminary prospectus,  in conformity with the requirements
                    of  the  Act,  and  such  other  documents  as  the  selling
                    shareholders  reasonably  request in order to facilitate the
                    disposition of Registrable  Stock owned by the Participating
                    Holders may  reasonably  request in order to facilitate  the
                    disposition of Registrable  Stock owned by the Participating
                    Holders.

                         (iv) Use its best  efforts to register  and qualify the
                    securities covered by such registration statement under such
                    other  securities  or blue  sky  laws of such  jurisdictions
                    within the United States as shall be reasonably requested by
                    the  Participating  Holders;  provided,  however,  that  the
                    Company shall not be required in connection  therewith or as
                    a  condition  thereto to qualify to do business or to file a
                    general  consent to service of process in any such states or
                    jurisdictions.

                         (v) In the event of any  underwritten  public offering,
                    enter into and perform its obligations under an underwriting
                    agreement,  in usual and customary  form,  with the managing
                    underwriter  of such  offering.  The  Participating  Holders
                    shall  also-enter into and perform their  obligations  under
                    such an agreement.

                         (vi) Notify the Participating Holders, at any time when
                    a prospectus  relating to Registrable  Stock covered by such
                    registration statement is required to be delivered under the
                    Act, of the  happening of any event as a result of which the
                    prospectus included in such registration

                                       15

<PAGE>



                    statement,  as then in effect,  includes an untrue statement
                    of a  material  fact  or  omits  to  state a  material  fact
                    required  to be  stated  therein  or  necessary  to make the
                    statements  therein  not  misleading  in  the  light  of the
                    circumstances then existing.

                         (vii) Furnish to the Participating Holders, on the date
                    that  shares  of  Registrable  Stock  are  delivered  to the
                    underwriters  for  sale in  connection  with a  registration
                    pursuant  to this  Section 7, if such  securities  are being
                    sold by underwriters,  or, on the date that the registration
                    statement with respect to such securities becomes effective,
                    (i) an opinion  as to matters of law only,  dated such date,
                    of counsel representing the Company for the purposes of such
                    registration,  in form and substance as is customarily given
                    to  underwriters  in  an   underwritten   public   offering,
                    addressed   to  the   underwriters,   if  any,  and  to  the
                    Participating  Holders  and (ii) a letter  dated  such date,
                    from the  independent  certified  public  accountants of the
                    Company,  in form and substance as is  customarily  given by
                    independent  certified public accountants to underwriters in
                    an   underwritten   public   offering,   addressed   to  the
                    underwriters, and to the Participating Holders.

               (e) The  Company  shall  pay all  costs,  fees  and  expenses  in
          connection with all registration statements filed under this Section 7
          including,  without  limitation,  the Company's  legal and  accounting
          fees,  printing  expenses  and blue sky  fees  and  expenses,  but not
          including  the fees and  expenses  of  counsel  for the  Participating
          Holders in connection  with such  registration.  However,  the Company
          shall  not  pay  for   underwriting   discounts  and  commissions  and
          underwriters'  expenses  allocable  to  the  Registrable  Stock  being
          registered or state transfer taxes.

               (f) Indemnification.

                         (i) The  Company  shall  indemnify  each  Participating
                    Holder under this Agreement,  its officers and directors and
                    any person  controlling  it within the meaning of Section 15
                    of the Act or Section 20(a) of the Exchange Act, against any
                    loss, claim, damage, expense or liability (including without
                    limitation    all    expenses    reasonably    incurred   in
                    investigating,  preparing,  or  defending  against any claim
                    whatsoever, such expenses to be reimbursed by the Company as
                    they are  incurred) to which any of them may become  subject
                    under the Act, the Exchange Act or otherwise, arising out of
                    or based upon (i) any  untrue  statement  or alleged  untrue
                    statement of a material fact  contained in any  registration
                    statement or  prospectus or any  amendments  or  supplements
                    thereto in which  Registrable  Stock is  included  or in any
                    application,  statement  or  other  document  filed  by  the
                    Company with the

                                       16

<PAGE>



                    Commission or any securities exchange or in any jurisdiction
                    in  connection   with   qualifying  such  shares  under  the
                    securities  laws  thereof,  or (ii) the  omission or alleged
                    omission  therefrom of a material fact required to be stated
                    therein or  necessary  to make the  statements  therein  not
                    misleading,  unless  such  statement  or omission is made in
                    reliance  upon and in  conformity  with written  information
                    furnished   to  the   Company   by  or  on  behalf  of  such
                    Participating Holder or an underwriter  expressly for use in
                    any such registration statement or other document.

                         (ii) Each Participating Holder shall, as a condition to
                    such registration of Registrable  Stock,  agree to indemnify
                    the  Company,  its  officers  and  directors  and any person
                    controlling  the Company within the meaning of Section 15 of
                    the Act or Section  20(a) of the Exchange  Act,  against any
                    loss,  claim,  damage or  expense  or  liability  (including
                    without  limitation  all  expenses  reasonably  incurred  in
                    investigating,  preparing  or  defending  against  any claim
                    whatsoever,   such   expenses  to  be   reimbursed   by  the
                    undersigned  as they are  incurred) to which they may become
                    subject  under  the  Act,  the  Exchange  Act or  otherwise,
                    arising  out of or based  upon (i) any untrue  statement  or
                    alleged untrue statement of a material fact contained in any
                    registration  statement or prospectus  or any  amendments or
                    supplements  thereto in which  Registrable Stock is included
                    or in any application,  statement or other document filed by
                    the Company with the Commission or any  securities  exchange
                    or in any  jurisdiction  in connection  with qualifying such
                    shares  under  the  securities  laws  thereof,  or (ii)  the
                    omission or alleged  omission  therefrom of a material  fact
                    required  to be  stated  therein  or  necessary  to make the
                    statements  therein  not  misleading,  provided in each case
                    that such statement or omission is made in reliance upon and
                    in  conformity  with  written  information  furnished to the
                    Company  by  or  on  behalf  of  such  Participating  Holder
                    expressly  for use in any  such  registration  statement  or
                    other document.

                         (iii)   Promptly  upon  receipt  by  a  party  claiming
                    indemnification  hereunder of notice of the  commencement of
                    any  action  involving  a  claim  referred  to  above,  such
                    indemnified  party will, if a claim in respect thereof is to
                    be made  against . party which may be required to  indemnify
                    such party  hereunder,  give written notice to the latter of
                    the commencement of such action.  In case any such action is
                    brought against an indemnified party, the indemnifying party
                    shall  be  entitled  to  participate  in and to  assume  the
                    defense of such action, to the extent that it may wish, with
                    counsel  reasonably  satisfactory to such indemnified party.
                    Except as set forth herein,  the  indemnified  party and any
                    party  cooperating  in the defense of such  claim-shall  not
                    settle  or  compromise  any such  claim  or admit  liability
                    without the express

                                       17

<PAGE>



                    written consent of the  indemnifying  party. The indemnified
                    party shall have the right to be  represented by an advisory
                    counsel  and  accountants,  at  its  own  expense,  and  the
                    indemnified  party  shall  be kept  fully  informed  of such
                    action,  suit or proceeding at all stages thereof whether or
                    not the indemnified party is so represented.  After a period
                    of thirty days following the date the written notice of such
                    claim was given to the  indemnifying  party the  indemnified
                    party may  settle any such claim (and the amount of any such
                    settlement  shall be subject to  indemnification  hereunder)
                    unless within such thirty-day period the indemnifying  party
                    shall have  provided the  indemnified  party with notice and
                    evidence to the indemnified  party's  satisfaction  that the
                    indemnifying  party  reasonably  disputes such claim and has
                    the   financial   ability   to  meet   its   indemnification
                    obligations  hereunder.  Notwithstanding the foregoing,  the
                    indemnified  party  may  immediately  cause  to be  paid  or
                    discharged any asserted claim the non-payment of which would
                    have  an  immediate   substantial   adverse  impact  on  the
                    indemnified party and any claim which the indemnifying party
                    has not  disputed  within  thirty days of notice as provided
                    above.

                         (iv)  If  the  indemnification  provided  for  in  this
                    Section 7(f) is unavailable or insufficient to hold harmless
                    an indemnified party under such subsection in respect of any
                    losses,  claims, damages or liabilities or action in respect
                    thereof or referred to therein, then each indemnifying party
                    shall  in  lieu  of  indemnifying   such  indemnified  party
                    contribute to the amount paid or payable by such indemnified
                    party  as  a  result  of  such  losses,   claims,   damages,
                    liabilities or actions in such  proportion as is appropriate
                    to reflect the  relative  fault of the  Company,  on the one
                    hand,  and  the  Participating  Holders,  on the  other,  in
                    connection  with the statements or omissions  which resulted
                    in such losses, claims,  damages,  liabilities or actions as
                    well  as  any  other  relevant   equitable   considerations,
                    including the failure to give the notice required under such
                    subsections.  The  relative  fault  shall be  determined  by
                    reference  to,  among  other  things,  whether the untrue or
                    alleged  untrue  statement  of a  material  fact  relates to
                    information  supplied by the Company on the one hand, or the
                    Participating  Holders,  on the other hand, and the parties'
                    relative  intent,  knowledge,   access  to  information  and
                    opportunity   to  correct  or  prevent  such   statement  or
                    omission.  The Company and the  Participating  Holders agree
                    that it would  not be just  and  equitable  if  contribution
                    pursuant to this Section  7(f)(iv)  were  determined  by pro
                    rata  allocation or by any other method of allocation  which
                    did  not  take  account  of  the  equitable   considerations
                    referred to above in this  subsection.  No person  guilty of
                    fraudulent misrepresentations (within the meaning of Section
                    11(f) of the Securities Act), shall be entitled to

                                       18

<PAGE>



                    contribution  from  any  person  who is not  guilty  of such
                    fraudulent misrepresentations.

                         (v)   The   obligations   of  the   Company   and   the
                    Participating  Holders under this Section 7(f) shall survive
                    the  completion  of any offering of  Registrable  Stock in a
                    registration statement under this Section 7.

                         (vi) The rights of  indemnification  contained  in this
                    Section 7 shall not be deemed to be the exclusive  remedy of
                    the parties  hereto and such rights  shall be in addition to
                    any other rights or remedies which any party hereto may have
                    at law or equity.

               (g) Assignment of Registration  Rights. The undersigned's  rights
          set forth in this Section 7 shall  automatically be deemed assigned to
          any  transferee  or assignee of this Warrant or shares of Common Stock
          or Other  Securities  issuable  hereunder,  provided that  immediately
          following such transfer the further  disposition of such securities by
          the  transferee  or assignee  is  restricted  under the Act;  provided
          however,  that, the termination of  registration  rights in respect of
          any shares of Registrable  Stock by reason of the operation of Section
          7(a) shall be binding upon any  transferee  of such  shares.  Upon the
          request of any such holder, the Company will confirm in writing to any
          transferee of such holder's Registrable Stock the Company's continuing
          obligation  to afford such  transferee  the benefits of the  Company's
          agreements  contained in this Section 7, but no failure of the Company
          to confirm such obligations  shall in any way impair such transferee's
          rights under this Section 7.

               (h) Effect of Private Placement.  Notwithstanding anything to the
          contrary  contained in this Section 7, if, prior to December 31, 1997,
          the Company completes a private offering of equity securities in which
          the  Company  realizes  gross  proceeds  of at least $1 million and in
          which one or more  purchasers  of such  securities  are  granted  more
          favorable   registration   rights  than  those  granted  herein,   the
          registration  rights granted to holders of Registrable Stock hereunder
          shall  be  modified  to be  equivalent  in all  respects  to the  most
          favorable  registration  rights  granted  in  such  private  offering;
          provided,  however,  that the  provisions of Section 7(f) hereof shall
          not be modified as a result of such private offering.

     8. Substitution of Warrants.

     8.1. Exchange of Warrants.  Subject to the provisions  appearing at the top
of the first page of this Warrant  concerning,  inter alia, the sale,  transfer,
encumbrance or other disposition of this Warrant,  upon surrender or exchange of
this Warrant, properly endorsed, to the Company, the Company at its expense will
issue and  deliver to or upon the order of the holder  thereof a new  Warrant or
Warrants of like tenor, in the name of such holder or as such

                                       19

<PAGE>



holder  (upon  payment  by such  holder of any  applicable  transfer  taxes) may
direct,  calling in the aggregate on the face or faces thereof for the number of
shares  of  Common  Stock  called  for on the face or faces  of the  Warrant  or
Warrants so surrendered.

     8.2.   Replacement  of  Warrant.   Upon  receipt  of  evidence   reasonably
satisfactory  to the Company of the loss,  theft,  destruction  or mutilation of
this  Warrant  and,  in the case of any such loss,  theft or  destruction,  upon
delivery of an indemnity agreement  reasonably  satisfactory to the Company, or,
in the case of any such  mutilation,  upon  surrender and  cancellation  of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.

     9. Ownership of Warrant.  Until this Warrant is transferred on the books of
the  Company,  the  Company  may treat the person in whose name this  Warrant is
issued as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary,  except that, if and when this Warrant is properly  assigned in
blank,  the Company may (but shall not be obligated  to) treat the bearer hereof
as the absolute  owner of this  Warrant for all  purposes,  notwithstanding  any
notice to the contrary. A Warrant, if properly assigned, may be exercised to the
extent  provided  herein by a new  holder  without  first  having a new  Warrant
issued.

     10. Notices,  etc. All notices and other communications from the Company to
the holder of this Warrant or from the holder of this Warrant shall be delivered
personally,  by facsimile  (if confirmed and followed by delivery by first class
mail),  reputable overnight courier service, or mailed by first class registered
or certified mail,  postage  prepaid,  to the Company at 3400  Bissonnet,  Suite
#135, Houston Texas 77005. Attn: President,  or to the holder at such address as
may have been  furnished to the Company in writing by such holder,  or, until an
address  is so  furnished,  to and at the  address  of the last  holder  of this
Warrant who has so furnished an address to the Company. Any such notice shall be
deemed to have been given on the date of personal delivery,  facsimile, delivery
to a reputable overnight courier service or deposit in the mail.

     11. Warrant Holder Not a Shareholder.  The holder of this Warrant, as such,
shall not be entitled by reason of this  Warrant to any rights  whatsoever  as a
shareholder of the Company but shall be entitled to all such rights with respect
to shares of Common Stock actually issued upon exercise of this Warrant.

     12.  Miscellaneous.  This  Warrant  and any  term  hereof  may be  amended,
changed,  waived,  discharged  or  terminated  only by an  instrument in writing
signed by the Company and consented to in writing by the holder of this Warrant.
This Warrant shall be construed and enforced in accordance  with and governed by
the  laws of  the-State  of New  York  applicable  to  contracts  made and to be
performed  entirely  therein.  The  headings in this  Warrant are for  reference
purposes only and shall not limit or otherwise affect the meaning hereof.

     13.  Expiration.  The right to exercise  this Warrant  shall expire at 5:00
P.M., Houston, Texas time on December 31, 1997.

                                       20

<PAGE>




Dated as of April 22, 1997.

                                         CHAPARRAL RESOURCES, INC.



                                          By:
                                             -----------------------------------
                                             Howard Karren, Chairman and
                                             Chief Executive Officer


                                       21

<PAGE>



                              FORM OF SUBSCRIPTION

                [To be signed only upon exercise of the Warrant]

To: CHAPARRAL RESOURCES, INC.

     The  undersigned,  the holder of the  within  Warrant,  hereby  irrevocably
elects to exercise the purchase  right  represented  by such Warrant for, and to
purchase  thereunder,.............  * shares of the  Common  Stock of  CHAPARRAL
RESOURCES,  INC.  and  herewith  makes  payment of  $...........  therefor,  and
requests  that  the  certificates  for  such  shares  be  issued  in the name of
 ...............  , and  delivered  to,.....................  , whose  address is
 ..............................

Dated:            



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

                                      (Signature  must  conform in all respects
                                       to the name of the holder as specified on
                                       on the face of the Warrant)
                                   




                                        ----------------------------------------
                                       
                                        ----------------------------------------
                                       (Address)




*        Insert the number of shares  called for on the face of the Warrant (or,
         in the case of a partial exercise,  the portion thereof as to which the
         Warrant  is  being  exercised),  in  either  case  without  making  any
         adjustment  for  additional  Common  Stock or any other  stock or other
         securities  or  property  or cash  which,  pursuant  to the  adjustment
         provisions of the Warrant, may be deliverable upon exercise.



                                       22

<PAGE>


                               FORM OF ASSIGNMENT

                [To be signed only upon transfer of the Warrant]

     For value  received,  the undersigned  hereby sells,  assigns and transfers
unto ..................  the right represented by the within Warrant to purchase
 ............... shares of the Common Stock of CHAPARRAL RESOURCES, INC. to which
the within Warrant relates,  and appoints  ........................  Attorney to
transfer such right on the books of CHAPARRAL  RESOURCES,  INC., with full power
of substitution in the premises.

Dated:



                                         ---------------------------------------
                                        (Signature must conform in all respects 
                                         to the name of the holder as specified
                                         on the face of the Warrant)






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

                                         ---------------------------------------
                                        (Address)


Signed in the presence of:

-----------------------------------
(Witness)



                                       23