SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release  ("Agreement") is entered into between and
among  Plaintiffs,  Heartland,  Inc.  of  Wichita  ("Heartland")  and  Collins &
McIlhenny, Inc. ("C&M"), and Defendants, Chaparral Resources, Inc. ("Chaparral")
and Howard Karren, and former Defendants Whittier Trust Company ("Whittier") and
James A. Jeffs  ("Jeffs"),  in  consideration  of the mutual promises  contained
herein and other good and valuable consideration.
     WHEREAS,  on November  14,  1997,  Heartland  and C&M filed their  original
petition against  Chaparral,  Karren,  Whittier and Jeffs in Cause No. 97-56585;
Heartland.  Inc.  of  Wichita  and  Collins  &  Mc.Ilhenny,  Inc.  v.  Chaparral
Resources,  Inc.,  Howard Karren,  Whittier Trust Company and James A. Jeffs; In
the 55th  Judicial  District  Court of Harris  County,  Texas  (the  "Lawsuit").
Reference  is hereby  made to the  pleadings  on file in the  Lawsuit for a more
thorough  description  of the  disputes,  claims and  causes of action  made the
subject of this Agreement;
     WHEREAS, Chaparral,  Karren, Whittier and Jeffs denied and continue to deny
the claims asserted  against them in the Lawsuit and asserted  defenses to those
claims;
     WHEREAS,  on August 27, 1998, the Court, on Plaintiffs'  motion,  dismissed
Whittier  and Jeffs  from the  Lawsuit.  Nevertheless,  it is the  desire of all
parties that Plaintiffs,  on the one hand, and Whittier and Jeffs, on the other,
mutually  release any and all claims  asserted  against each other or that could
have been  asserted in the  Lawsuit,  it being  "understood,  however,  that the
execution of this Agreement by Whittier and Jeffs shall not operate to waive nor
shall  Plaintiffs  argue  that it  somehow  waives the  objections  to  personal
jurisdiction  that were  asserted by Whittier  and Jeffs in the Lawsuit and that
were  pending in the Lawsuit when  Plaintiffs  dismissed  their  claims  against
Whittier and Jeffs;
     WHEREAS,  Heartland,  C&M,  Chaparral,  Karren,  Whittier  and  Jeffs  each
acknowledge  that the Lawsuit  involves  disputed  claims  (including the claims
previously asserted against Whittier and Jeffs that Plaintiffs  dismissed),  and
that this Agreement does not constitute an admission by any party hereto,  as to
the merits of any claim or defense in the Lawsuit.  The parties have  concluded,
however, that further litigation of the Lawsuit through trial and any appeal and
any litigation that might be initiated involving Whittier and Jeffs with respect
to the claims  asserted  against  them and  dismissed  in the  Lawsuit  would be
extremely  expensive and  protracted,  and that it is desirable  that all of the
disputes  involved  currently or at any time  previously in the Lawsuit be fully
and finally  settled in the manner and upon the terms and  conditions  set forth
herein, solely in order to avoid the expense of litigation.
     NOW,  THEREFORE,  in consideration of the execution of this Agreement,  the
foregoing  premises,  the mutual promises and covenants  contained  herein,  and
other good and valuable consideration, the adequacy and sufficiency of which are
hereby acknowledged by the respective parties hereto, Heartland, C&M, Chaparral,
Karren, Whittier and Jeffs agree as follows:
1. Payment Obligations.
     a. Cash. Chaparral agrees to pay the sum of TWO HUNDRED THOUSAND AND NO/100
DOLLARS  ($200,000.00)  by check made payable to  Heartland  and its attorney of
record in the Lawsuit, Don M. Kennedy.
      
     b.  Warrants.  Chaparral  will deliver  warrants to purchase a total of TWO
HUNDRED  THOUSAND  (200,000)  shares of Chaparral common stock at a price of ONE
DOLLAR  ($l.OO) per Share (the  "Warrants").  EIGHTY  THOUSSAND  (80,000) of the
Warrants  will be delivered to Don M.  Kennedy,  counsel of record for Heartland
and C&M, and the remaining ONE HUNDRED TWENTY THOUSAND  (120,000)  Warrants will
be delivered to Heartland and CAM,  jointly.  Chaparral  agrees,  subject to all
applicable  securities laws, to include the common stock underlying the Warrants


<PAGE>

in an  amendment  to a  registration  statement  that  was  filed on Form S-3 by
Chaparral  with the  Securities  Exchange  Commission  September  22,  1998 (the
"September S-3 Registration  Statement").  Specifically,  Chaparral will file an
amendment to the September S-3  Registration  Statement  after execution of this
Agreement by all parties so that the common stock Underlying the Warrant will be
included  in the  September  S-3  Registration  Statement  prior to the time the
September S-3  Registration  Statement is declared  effective by the SEC. If the
September S-3 Registration  Statement is not declared  effective for any reason,
if Chaparral withdraws the September S-3 Registration,  Statement for any reason
or if, for any reason the common stock underlying the Warrants is not,  included
in the September S-3  Registration  Statement prior to the date the SEC declares
the September S-3 Registration  Statement effective,  Chaparral will include the
common stock underlying the Warrants in the next application for registration of
stock it files in which said stock may  properly  be included  under  applicable
law. The Warrants shall expire 90 days after the date they are issued.
     Once such registration is declarad effective by the SEC, Chaparral will use
its best  efforts to keep such  registration  statement  effective to permit the
resale of the common stock underlying the Warrants until the earlier of the date
the shares  acquired on the exercise of such Warrants have been sold pursuant to
such  registration  statement  or Rule  144  adopted  by the  SEC is  available.
Chaparral  shall  pay all  costs,  fees  and  expenses  in  connection  with all
registration  statements  filed under this  paragraph  1.b.  including,  without
limitation,  Chaparral's  legal and accounting fees,  printing expenses and blue
sky fees and  expenses,  but not  including the fees and expenses of counsel and
accountants and advisors for the holders of the Warrants or underlying shares of
common stock. Chaparral shall not pay for underwriting discounts and commissions
and  underwriter's  expenses  allocable to the common stock being  registered or
state transfer taxes. 
c. Division of Payments. Chaparral's delivery of the cash and Warrants set forth
above shall be without any obligation on the part of Chaparral, Karren, Whittier
or Jeffs to see to the proper division thereof as between C&M and Heartland. The
division of the cash and Warrants  specified  above  between  Heartland  and C&M
shall be governed by  agreement  between  them and  neither  Chaparral,  Karren,
Whittier nor Jeffs shall have any  obligation to administer or see to the proper
division thereof or compliance with any agreement between Heartland and C&M.
     2.  Dismissal.  Upon execution of this  Agreement,  Heartland and C&M shall
immediately  dismiss the Lawsuit with  prejudice to their rights to refile same,
any part thereof or to assert any claim arising out of the  underlying  document
dated  September 25, 1997 upon which the Lawsuit was based.  To  accomplish  the
foregoing,  Heartland,  C&M, Chaparral and Karren shall execute the Agreed Final
Judgment in the form  attached  hereto and  promptly  file same for entry by the
Court in which the  Lawsuit  is  pending. 

     3.  Heartland's and C&M's Releases.  Heartland and C&M for themselves,  and
their  respective  past,  present  and future  parent  companies,  subsidiaries,
affiliates,  predecessors and successors,  their  respective  past,  present and
future employees,  representatives,  agents, servant,  attorneys,  shareholders,
directors,  officers,  partners,  and principals,  and their  respective  heirs,
executors,  personal  representatives,  administrators and assigns,  any and all
persons,  natural or  corporate,  in privity with them or acting in concert with
them or any of them,  and all persons or  entities to whom or for whose  conduct
they may be  liable  (collectively  "Releasors"),  hereby  release  and  forever
discharge Chaparral,  Karren, Whittier and Jeffs, their respective past, present
and  future  parent  companies,  subsidiaries,   affiliates,   predecessors  and
successors,    their   respective   past,    present   and   future   employees,
representatives, agents, servants, attorneys, shareholders, directors, officers,
partners,  and  principals,  and their  respective  heirs,  executors,  personal

<PAGE>

representatives,  administrators,  and assigns, and any and all persons, natural
or corporate, in privity with them or acting in concert with them ("Releasees"),
from any and all claims, demands,  causes of action, debts, suits,  liabilities,
rights of  action,  dues,  sums of money,  accounts,  bonds,  bills,  covenants,
contracts,  controversies,  agreements, promises, damages, judgments, variances,
executions or obligations of whatever nature,  past, present or future,  matured
or unmatured,  liquidated or  unliquidated,  absolute or contingent,  whether in
contract or in tort, whether choate or unchoate, known or unknown, arising under
or by virtue of any  statute or  regulation,  common law,  equity or  otherwise,
including,  without limitation,  claims for contribution or indemnity,  that the
Releasors have, own or hold, or might have had or owned or held, formerly had or
might have, own or hold, individually, representatively,  derivatively or in any
other  capacity  which they have asserted or alleged,  or could have asserted or
alleged, against Chaparral, Karren, Whittier or Jeffs from the beginning of time
to the  present  (hereinafter  "Claims"),  including  any such  Claims (i) which
relate to or which are in any way based  upon or arise from the  document  dated
September  25, 1997 which was the subject of the Lawsuit or any  restriction  or
obligation  purportedly  created by that  document,  or (ii) which relate to, or
which are in any way based upon or arise from or are in any way  connected  with
the claims asserted in the Lawsuit, or (iii) which relate to or which are in any
way based upon or arise from, or are in any way connected  with any of the acts,
facts,  events,  circumstances,  matters,  claims,  transactions,   occurrences,
omissions, representations, misrepresentations, or matters of any kind or nature
whatsoever,  related  directly or indirectly to the subject matters referred to,
set forth in or the facts or claims  for  relief  which  were or could have been
alleged or litigated in the Lawsuit,  or in any discovery or offer proceeding in
connection therewith.  Excepted from this release and discharge by Heartland and
C&M are the  obligations  of  Chaparral  under this  Agreement  
4. Chaparral's,  Karren's.  Whittier's and Jeffs' Releases.  Chaparral,  Karren,
Whittier and Jeffs,  for  themselves,  and their  respective  past,  present and
future parent companies, subsidiaries,  affiliates, predecessors and successors,
their respective past,  present and future employees,  representatives,  agents,
servants,   attorneys,   shareholders,   directors,   officers,   partners,  and
principals,  and their respective heirs,  executors,  personal  representatives,
administrators  and  assigns,  any and all  persons,  natural or  corporate,  in
privity with them or acting in concert with them or any of them, and all persons
or  entities  to whom or for  whose  conduct  they may be  liable  (collectively
"Releasors"),  hereby  release and forever  discharge  Heartland and C&M,  their
respective past, present and future parent companies, subsidiaries,  affiliates,
predecessors  and  successors,   their  respective  past,   present  and  future
employees,   representatives,   agents,   servants,   attorneys,   shareholders,
directors,  officers,  partners,  and principals,  and their  respective  heirs,
executors,  personal representatives,  administrators,  and assigns, and any and
all  persons,  natural or  corporate,  in privity with them or acting in concert
with them  ("Releasees"),  from any and all claims,  demands,  causes of action,
debts,  suits,  liabilities,  rights of action,  dues, sums of money,  accounts,
bonds,  bills,  covenants,  contracts,   controversies,   agreements,  promises,
damages,  judgments,  variances,  executions or obligations of whatever  nature,
past,  present or future,  matured or  unmatured,  liquidated  or  unliquidated,
absolute  or  contingent,  whether in  contract  or in tort,  whether  choate or
unchoate,  known or  unknown,  arising  under or by  virtue  of any  statute  or
regulation,  common law,  equity or otherwise,  including,  without  limitation,
claims for  contribution or indemnity,  that the Releasors have, own or hold, or
might  have  had or  owned or held,  formerly  had or might  have,  own or hold,
individually, representatively, derivatively or in any other capacity which they
have asserted or alleged,  or could have asserted or alleged,  against Heartland
and C&M  from  the  beginning  of time to the  present  (hereinafter  "Claims"),

<PAGE>

including any such Claims (i) which relate to or which are in any way based upon
or arise from the document dated September 25, 1997 which was the subject of the
Lawsuit, or any restriction or obligation  purportedly created by that document,
or (ii) which relate to, or which are in any way based upon or arise from or are
in any way  connected  with the claims  asserted in the Lawsuit,  or (iii) which
relate to or which are in any way based  upon or arise  from,  or are in any way
connected with any of the acts, facts, events,  circumstances,  matters, claims,
transactions,  occurrences, omissions, representations,  misrepresentations,  or
matters of any kind or nature whatsoever,  related directly or indirectly to the
subject  matters  referred  to,  set forth in or the facts or claims  for relief
which were or could have been alleged or  litigated  in the  Lawsuit,  or in any
discovery  or other  proceeding  in  connection  therewith.  Excepted  from this
release  and  discharge  by  Chaparral,  Karren,  Whittier  and  Jeffs  are  the
obligations of Heartland and C&M under this  Agreement,  and any claims that any
current or former  employee of  Chaparral  may have against  Richard  Stowell or
Heartland for the failure to pay commissions or other  compensation  arising out
of the  services  alleged  by  Plaintiffs  as the  basis of the  lawsuit  or for
Stowell's or Heartland's failure to comply with any agreements or understandings
reached by them. 
5.  No  Other  Inducements  Voluntary  Execution.   In  making  this  Agreement,
Chaparral,  Karren,  Heartland, C&M, Whittier and Jeffs understand and represent
to each other that they have  relied  solely on their own  judgment,  belief and
knowledge  of the  nature  and  extent of any  damages  alleged,  as well as the
liability questions involved in the Lawsuit. Chaparral,  Karren, Heartland, C&M,
Whittier and Jeffs  represent and covenant that they have not been influenced to
any  extent  whatsoever  in making  this  Agreement  by any  representations  or
statements  made by any person or entity  hereby  released  except as  reflected
herein.  Chaparral,   Karren,  Heartland,  C&M,  Whittier  and  Jeffs  by  their
respective  signatures below,  acknowledge and represent to each other that they
have read this Agreement,  that they fully understand it, that they have had the
benefit of the advice of counsel of their own  choosing,  that they have  relied
solely  and  completely  upon  their own  judgment  and the  advice of their own
counsel  in  entering  into  this  Agreement,  that no  promise,  inducement  or
agreement not herein  expressed has been made to them,  that they are authorized
to sign the  Agreement and that they have executed it of their own free will and
accord. It is expressly understood and agreed by Chaparral,  Karren,  Heartland,
C&M, Whittier and Jeffs that the terms of this Agreement are contractual and not
mere recitals.
6. Authority.  Chaparral,  Karren,  Heartland, C&M, Whittier and Jeffs expressly
represent  and warrant to each other that the person  signing on their behalf is
authorized  and is the  proper  person  to  sign  this  Agreement,  and  further
represent and warrant that they have not assigned,  pledged or otherwise sold or
transferred,  either by written  instrument  or  otherwise,  any  right,  title,
interest or claim they have or may have in connection with or arising out of the
Lawsuit.  The parties also  represent  and warrant to each other that the person
signing this Agreement on their  respective  behalves is authorized to sign same
and that the  Agreement  shall be binding  upon any entity on whose  behalf this
Agreement is signed.
7. Costs and Expenses.  Heartland and C & M shall bear no responsibility for the
costs and attorneys'  fees incurred by Chaparral,  Karren,  Whittier and Jeff in
their defense of the Lawsuit. Chaparral, Karren, Whittier, and Jeff s shall bear
no responsibility  for the costs and attorneys' fees incurred by Heartland and C
& M in their prosecution of the Lawsuit.
8. Entire  Agreement.  This Agreement  constitutes  the entire  agreement by and
among  the  parties  hereto,  supersedes  any and all prior  understandings  and
agreements,  and may not be  modified  or  amended  except  on or after the date
hereof by  writing  signed  by the  party  against  whom  said  modification  or

<PAGE>

amendment is to be enforced.  The failure of any of the  undersigned  parties to
insist  upon  strict  adherence  to any  term of this  Agreement  on one or more
occasions  shall not be deemed a waiver or deprive  such person or entity of the
right  thereafter to insist upon strict adherence to that term or any other term
of this Agreement. No waiver of this Agreement, obligations or conditions herein
shall be valid unless in a writing  signed by the party against whom said waiver
is to be enforced.
9.  Enforceability.  In the event any  provision of the Agreement is deemed void
and  unenforceable,  such  provision  will be  regarded  as  stricken  from  the
Agreement, and will not affect the validity of the remainder of the Agreement.
lO. No Third Party Beneficiaries.  This Agreement does not create, and shall not
be construed as creating,  any rights  enforceable  by any person other than the
undersigned  parties and their respective  successors and assigns,  and does not
release, and shall not be construed as releasing, any rights enforceable against
any person or entity  other than  entities  or  persons  named  herein and their
respective predecessors, successors and assigns.
     11. Counterparts.  This Agreement may be executed in multiple  counterparts
and each such signed  counterpart  shall be binding and effective as an original
Agreement.
     12.  Successors  and  Assigns.  This  Agreement  shall be binding  upon the
parties  hereto and inure to the benefit of the patties  hereto and the entities
or persons named herein and their respective heirs,  successors and assigns, and
any corporation, partnership or other entity into or with which any party hereto
may merge, consolidate or reorganize.
     13. No  Admission.  This  Agreement  does not  constitute  an  admission of
liability  by any  palsy,  but is simply a  settlement  of  claims.  Each of the
undersigned  acknowledges and understands that each other party expressly denies
liability  of any kind  whatsoever  and has made this  Agreement in order to buy
peace and avoid the  expense of  continuing  the  lawsuit.  The  parties  hereto
stipulate that the Agreement is executed  solely for the purpose of avoiding the
costs and  uncertainties  of the  Lawsuit  and it shall not be  construed  as an
admission of liability by any party, any such liability being expressly  denied.
The parties also specifically  agree the execution of this Agreement by Whittier
and  Jeffs  is not a  waiver  of any  objection  by  Whittier  and  Jeffs to the
assertion of personal jurisdiction over them by a Texas court nor is it any type
of admission  by Whittier or Jeffs,  implicit or  otherwise,  of liability or of
personal jurisdiction in a Texas court for the claims asserted.
     14.  Confidentiality.  Except as  required by law,  regulation,  order of a
government  authority or upon written consent of the other parties hereto,  each
party  and  its or  his  respective  agents,  employees,  affiliates,  officers,
directors,  and attorneys shall keep and maintain this Agreement,  the terms and
provisions hereof, the Lawsuit,  and the facts, issues and disputes,  underlying
the Lawsuit, in strict confidence and shall not transmit,  reveal,  disclose, or
otherwise  communicate  any such  information  to anyone  without  prior written
notice to the other parties.  However,  the parties,  their  present,  former of
future shareholders,  directors, officers, agents, representatives,  successors,
heirs,  attorneys,  or assigns  specifically  reserve  the right to  disseminate
certain  information,  including  dissemination  required by or to  governmental
agencies,  or make an  announcement of the fact of settlement of the litigation,
but only as is reasonably  necessary in their business affairs and limiting such
dissemination  to the  least  amount  of  information  reasonably  necessary  to
accomplish the intended  business  purpose (for example notice of settlement and
amount of payment for income tax purposes).
     15.  Return of  Documents.  Within ten (10) days of the  execution  of this
Agreement,  (i) all documents and copies of documents  produced by defendants in
the  Lawsuit,  and (ii)  all  documents  in  Plaintiffs'  possession  concerning
Chaparral,  including financial information,  documents describing Chaparral and

<PAGE>

its  business  prospects  and any  other  documents  used in any of  Plaintiffs'
investment banking efforts regarding Chaparral,  shall be returned to Chaparral.
     16.  Effectiveness.  This Agreement shall pot be effective unless and until
all  of  the  parties  reflected  below  have  executed  and  acknowledged  this
Agreement.




Signed this ___ day of _________,1998.


HEARTLAND, INC. OF WICHITA


STATE OF TEXAS

COUNTY OF HARRIS

     BEFORE ME,  the  undersigned  authority,  on this day  personally  appeared
__________________________,  ___________________ of HEARTLAND,  INC. OF WICHITA,
who,  upon his sworn  oath,  stated  that he  executed  the above and  foregoing
Settlement  Agreement  and Release for the purposes and in the capacity  therein
stated.

SWORN AND SUBSCRIBED to before me on this ____ day of __________, 1998.


Notary Public In and For
The State of Texas



SIGNED this _____ day of ____________, 1998.

COLLINS @ MCILHENNY, INC.
By:____________________
Title:_________________

STATE OF OKLAHOMA
COUNTY OF TULSA

     BEFORE ME,  the  undersigned  authority,  on this day  personally  appeared
______________________,  ________________ of COLLINS @ MCILHENNY, INC. who, upon
his sworn  oath,  stated  that he executed  the above and  foregoing  Settlement
Agreement and Release for the purposes and in the capacity therein stated.

     SWORN AND SUBSCRIBED to before me on this ____ day of _________, 1998.


Notary Public In and For
The State of Oklahoma


My Commission Expires:


SIGNED this ____ day of __________________,1998.


CHAPARRAL RESOURCES, INC.



BY:________________________
Title:_____________________

STATE OF NEW YORK

COUNTY OF ___________

BEFORE  ME,  the  undersigned  authority,  on this day  personally  appeared  of
CHAPARRAL RESOURCES,INC., who, upon this sworn oath, stated that he executed the



<PAGE>

above and foregoing Settlement Agreement and Release for the purposes and in the
capacity therein stated.

SWORN AND SUBSCRIBED to before me on this ____ day of ________________, 1998.



Notary Public In and For
The State of New York

My Commission Expires:
----------------------

SIGNED this ____ day of _________, 1998.


---------------------
    HOWARD KARREN

STATE OF TEXAS
COUNTY OF HARRIS

     BEFORE ME,  the  undersigned  authority,  on this day  personally  appeared
HOWARD KARREN,  Individually,  who, upon his sworn oath, stated that he executed
the above and foregoing Settlement Agreement and Release for the purposes and in
the capacity therein stated.

     SWORN AND SUBSCRIBED to before me on this ____ day of ____________ 1998.

     ------------------------
     Notary Public In and For
     The State of Texas

My Commission Expires:


SIGNED this ___ day of ______,1998.




---------------------------------
HOWARD KARREN

STATE OF TEXAS
COUNTY OF HARRIS

     BEFORE ME, the  undersigned  authority,  on fills day  personally  appeared
HOWARD KARREN,  Individually,  who, upon his sworn oath, stated that he executed

<PAGE>

the above and foregoing Settlement Agreement and Release for the purposes and in
the capacity therein stated.

SWORN AND SUBSCRIBED to before me on this _ day of ________   , 1998.



Notary Public In and For
The State of Texas


My Commission Expires:




SIGNED this __ day of _______,1998.



----------------------------------
JAMES A. JEFFS


STATE OF CALIFORNIA
COUNTY OF LOS ANGELES

         BEFORE ME, the undersigned  authority,  on this day personally appeared
JAMES A. JEFFS,  who, upon his sworn oath, stated that he executed the above and
foregoing  Settlement Agreement and Release for the purposes and in the capacity
therein stated.

SWORN AND SUBSCRIBED to before me on this ____ day of ________, 1998.


------------------------
Notary Public In and For
The State of California

My Commission Expires:







SIGNED this ___ day of ___________, 1998.


WHITTIER TRUST COMPANY



By:_____________________
Title:_____________________

<PAGE>


STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
BEFORE  ME,  the  undersigned  authority,  on this day  personally  appeared  of
WHITTEER  TRUST COMPANY,  who, upon his sworn oath,  stated that he executed the
above and foregoing Settlement Agreement and Release for the purposes and in the
capacity  therein  stated.  SWORN AND SUBSCRIBED to before me on this ___ day of
____________ , 1998.


------------------------
Notary Public In and For
The State of California

My Commission Expires:


NO. 97-56585

HEARTLAND, INC. OF WICHITA AND                         IN THE DISTRICT COURT OF
COLLINS & MCILHENNY,INC.
Plaintiffs
   HARRIS COUNTY,TEXAS

v.

CHAPARRAL RESOURCES, INC.,
HOWARD KARREN, WHITTIER TRUST
COMPANY AND JAMES A. JEFFS,
Defendants                                               55th JUDICIAL DISTRICT

AGREED FINAL JUDGMENT

On this  day  came on to be  heard  the  above-styled  and  numbered  cause  and
Plaintiffs,  Heartland,  Inc.  of Wichita  and Collins &  McIlhenny,  Inc.,  and
Defendants,  Chaparral  Resources,Inc.  and Howard Karren,  by and through their
attorneys  of record,  announced to the Court that the parties had agreed to the
terms of this Agreed Final Judgment,  and Defendants  Whittier Trust Company and
James A. Jeffs having been previously  non-suited from this matter, the Court is
of the opinion that final  judgment  should be rendered in  accordance  with the
terms hereof, It is therefore,

ORDERED, that Plaintiffs take nothing by this suit and that Defendants be in all
things  discharged  and go hence  without  day and  Plaintiffs'  claims  against
Defendants in this cause be dismissed  with prejudice to the refiling of same in
any form. It is further ORDERED that each party be taxed its or his own costs.
         All other relief not expressly granted is denied.



SIGNED this the ___ day of ________, 1998.
<PAGE>



JUDGE, 55TH JUDICIAL DISTRICT COURT



AGREED AS TO FORM AND SUBSTANCE:
Don M. Kennedy
State Bar No. 11284500
900 W. Davis Street, Suite 100
Conroe, Texas 77301
(409) 760-2565
(409) 756-3334

ATTORNEYS FOR PLAINTIFFS, HEARTLAND,
INC. OF WICHITA AND COLLINS & MCILHENNY,
INC.

AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.


Gregg C. Laswell
State Bar No. 11971500
1900 Pennzoil Place - South Tower
711 Louisiana
Houston, Texas 77002
Tel: (713) 220-5813
Fax: (713) 236-0822

ATTORNEYS FOR DEFENDANTS, CHAPARRAL
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