SETTLEMENT AGREEMENT

         THIS SETTLEMENT AGREEMENT (the "Agreement") is made and entered into as
of this 9th day of July,  1999, by and between  INDUSTRIAL  STATE BANK, a Kansas
state bank (the "Bank"),  and DELMAR A. JANOVEC and MARILYN C. JANOVEC,  two (2)
individuals (the "Janovecs"),  and AMERIRESOURCE TECHNOLOGIES,  INC., a Delaware
corporation ("ARET" and ARET and the Janovecs hereinafter  collectively referred
to as the "Settling Defendants");

         WITNESSETH:

         WHEREAS,  on or about  November  24,  1998,  Bank  commenced  an action
against  ARET  in  Case  No.98-C-14923,   captioned  Industrial  State  Bank  v.
AmeriResource  Technologies,  Inc.,  in the  District  Court of Johnson  County,
Kansas, Civil Court Department (the "ARET Action"); and

         WHEREAS,  on or about  November  24,  1998,  Bank  commenced  an action
against the Janovecs in Case No.98-C-14924,  captioned  Industrial State Bank v.
Delmar A.  Janovec  and Marilyn C.  Janovec,  in the  District  Court of Johnson
County, Kansas, Civil Court Department (the "Janovec Action" and the ARET Action
and the Janovec Action hereinafter  collectively  referred to as the "Actions");
and

         WHEREAS,  at this time, Bank and the Settling Defendants wish to settle
such claims and to resolve any issues between the parties  pursuant to the terms
hereof.

         NOW,  THEREFORE,  in  consideration  of  the  premises,  covenants  and
agreements hereinafter set forth, and intending to be legally bound, the parties
hereto agree as follows:

         1.  Payment of  Settlement  Amount;  Transfer of Preferred  Stock.  The
Janovecs  and  ARET  shall  tender  the  sum of  One  Hundred  Thousand  Dollars
($100,000.00)  (the "First Payment") on or before July 16, 1999 by wire transfer
in immediately  available  funds to Bank and shall tender the sum of One Hundred
Thousand Dollars  ($100,000.00)  (the "Second Payment" and the First Payment and
the Second  Payment  hereinafter  collectively  referred  to as the  "Settlement
Amount") on or before August 30, 1999 by wire transfer in immediately  available
funds to Bank. On or before the date of the payment of the First Payment, Delmar
A. Janovec shall  cooperate with Bank to cause,  and shall cause,  the 2,760,000
shares of preferred stock of ARET, pledged as collateral by the Janovecs,  to be
converted into the common stock of ARET and transferred into the name of Bank or
its nominee (the "Stock Transfer").

         2. Representations and Warranties of Bank. Bank represents and warrants
as follows:

                  (a) Authority;  No Conflict. Bank has the power to execute and
deliver  this  Agreement.  The  execution,  delivery  and  performance  of  this
Agreement  will not  violate or breach any  provision  of any  mortgage,  trust,
indenture,  lien, lease, agreement,  instrument,  order, judgment, law, statute,
regulation,  ordinance,  decree or other restriction of any kind or character to
which Bank is subject.  This  Agreement has been duly  authorized,  executed and
delivered by Bank and is valid, binding and enforceable against it in accordance
with its terms.

                  (b)      No Transfer. Bank has not sold, conveyed, transferred
                           or assigned to any other person




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or entity any Claim (as that term is defined in Section 4(a) below)  against any
of the Settling Defendants, nor any rights in or to any matter, released herein.

         3. Representations and Warranties of Settling  Defendants.  Each of the
Settling Defendants represents and warrants as follows:

                  (a) Authority; No Conflict; Enforceability. ARET has the power
to execute and deliver this Agreement.  The execution,  delivery and performance
of this  Agreement  will not violate or breach any  provision  of any  mortgage,
trust,  indenture,  lien, lease,  agreement,  instrument,  order, judgment, law,
statute,  regulation,  ordinance,  decree  or other  restriction  of any kind or
character to which ARET is subject.  This  Agreement  has been duly  authorized,
executed and delivered by ARET and is valid,  binding and enforceable against it
in  accordance  with its  terms.  This  Agreement  has been  duly  executed  and
delivered  by the Janovecs and will be valid,  binding and  enforceable  against
them in accordance with its terms.

                  (b) No  Transfer.  Neither  the  Janovecs  nor ARET has  sold,
conveyed,  transferred  or assigned to any other  person or entity any Claim (as
that term is defined in Section 4(a) below)  against Bank,  nor any rights in or
to any matter, released herein.

         4.       Release of Settling Defendants.

                  (a) Release and Discharge.  Upon the payment of the Settlement
Amount and the Stock  Transfer,  Bank, on behalf of itself,  and its affiliates,
directors, officers, constituents, agents, servants, employees,  representatives
and attorneys, and the predecessors, successors and assigns of each of them, and
all  persons  claiming  through  and under  them,  and each of them  jointly and
severally  (collectively,  the "Releasing  Bank  Parties"),  do hereby  release,
acquit, remise, forgive and forever discharge the Settling Defendants, and their
respective  directors,  officers,  constituents,  agents,  servants,  employees,
successors, assigns,  representatives and attorneys from and against any and all
matters,  events,  conditions,  indebtedness,  suits, demands,  representations,
agreements,  debts,  obligations,  liabilities,  damages,  claims,  actions, and
causes of action of any nature  whatsoever  (any such matter  being  referred to
herein a "Claim"),  whether known or unknown, arising out of or related to or in
connection  with any actions,  failures to act,  events,  occurrences,  facts or
allegations,  or any combination  thereof,  including,  without limitation,  all
claims which were or could have been alleged in the Actions.

                  (b) Nature of Release and Discharge. Bank, on behalf of itself
and each of the Releasing Bank Parties,  expressly  understands and acknowledges
that the releases set forth herein include all matters liquidated, unliquidated,
known, apparent, concealed, mature or immature.

                  (c) Operation of Release.  The releases set forth herein shall
operate  against  each of Bank  and the  other  Releasing  Bank  Parties  in all
capacities  of each  such  party,  whether  the  claims  are  direct,  indirect,
derivative or otherwise.

                  (d) No  Support  of  Released  Claim.  Bank,  in any  capacity
whatsoever,  shall not bring or support  any claim  settled or  released  herein
against any of the Settling Defendants.

         5.       Release of Bank.




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                  (a) Release and Discharge.  Upon the payment of the Settlement
Amount and the Stock Transfer, the Settling Defendants,  on behalf of themselves
and their respective  affiliates,  directors,  officers,  constituents,  agents,
servants,  employees,  representatives  and  attorneys,  and  the  predecessors,
successors  and assigns of each of them,  and all persons  claiming  through and
under them, and each of them jointly and severally (collectively, the "Releasing
Defendant  Parties"),  do hereby release,  acquit,  remise,  forgive and forever
discharge  Bank,  its  directors,  officers,  constituents,   agents,  servants,
employees,  successors, assigns,  representatives and attorneys from and against
any and all Claims, whether known or unknown, arising out of or related to or in
connection  with any actions,  failures to act,  events,  occurrences,  facts or
allegations,  or any combination  thereof,  including,  without limitation,  all
claims which were or could have been alleged in the Actions.

                  (b) Nature of Release and Discharge.  The Settling Defendants,
on behalf of themselves and each of the Releasing  Defendant Parties,  expressly
understand  and  acknowledge  that the  releases  set forth  herein  include all
matters  liquidated,   unliquidated,   known,  apparent,  concealed,  mature  or
immature.

                  (c) Operation of Release.  The releases set forth herein shall
operate  against  each  of the  Settling  Defendants  and  the  other  Releasing
Defendant  Parties in all capacities of each such party,  whether the claims are
direct, indirect, derivative or otherwise.

                  (d) No  Support  of  Released  Claim.  Each  of  the  Settling
Defendants,  in any  capacity  whatsoever,  shall not bring or support any claim
settled or released herein against Bank.

         6. Dismissal of Actions.  Upon the payment of the Settlement Amount and
the Stock  Transfer,  Bank  shall  file the Joint  Motions  for  Dismissal  With
Prejudice,  attached  hereto as  Exhibit  A, and the  Orders of  Dismissal  With
Prejudice,  attached hereto as Exhibit B, pursuant to which the Actions shall be
dismissed  with  prejudice.  Bank and the  Settling  Defendants  agree  that the
dismissal with prejudice  pursuant to this Section shall provide that each party
is to bear its, his or her own respective costs.

         7. No  Admission.  Each of the parties to this  Agreement  acknowledges
its, his or her understanding that this Agreement and release is a compromise of
disputed  claims,  and that each party does not admit liability of any nature or
kind with respect to any claims asserted by any of the other parties.

         8. Third Party  Beneficiaries.  This  Agreement is not intended to, and
shall not,  confer upon any person  other than the parties  hereto any rights or
remedies hereunder.

         9. Further Assurances. The parties agree (a) to furnish upon request to
each other such  further  information,  (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably  request for the purpose of carrying out the intent of this
Agreement.

         10  Negotiated  Transaction.  The  provisions  of this  Agreement  were
negotiated by the parties hereto and said Agreement shall be deemed to have been
jointly drafted by the parties hereto.

         11.      Legal Counsel.  Each party represents and warrants that it, he
or she has consulted with and  has been  advised by legal counsel regarding this
Agreement.



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         12.  Nature of  Claims  and  Debts.  Bank and the  Settling  Defendants
acknowledge  that the claims that are the subject of the settlement set forth in
this Agreement  consist of contested and disputed claims between the parties and
that Bank and the  Settling  Defendants  respectively  dispute the claims of the
other party or parties.  Bank represents and acknowledges that the debts alleged
to be due  and  owing  to it by the  Settling  Defendants  constitute  contested
liabilities  and  disputed  debts  of  the  Settling  Defendants.  Bank  further
represents that the principal amount of the alleged indebtedness of the Janovecs
is $2,941,058.20 and the principal amount of the alleged indebtedness of ARET is
$1,071,214.15.  Bank  represents  that it is its  position  that  it  must  file
Internal  Revenue  Service Form 1099-C with respect to the principal  amounts of
the indebtedness that it alleges are owed to it by the Settling  Defendants even
though the foregoing debts constitute contested  liabilities and disputed debts.
Bank shall take such actions, execute such documents and take such further steps
as  reasonably  requested  by the  Settling  Defendants  to assist the  Settling
Defendants  in any  actions,  inquiries  or  proceedings  which  may be  made or
instituted by the Internal  Revenue Service with regard to the treatment of this
Agreement.

         13. Payment of Expenses.  Each of the parties hereto shall pay its, his
or her own  out-of-pocket  costs and  expenses  with regard to the  preparation,
delivery and execution of this Agreement.  Any party hereto shall have the right
to maintain an action in any court of competent  jurisdiction  to enforce and/or
to recover damages for a breach of the rights and/or obligations  created by, or
provided  pursuant to, this Agreement.  If such court action is successful,  the
prevailing  party shall be reimbursed by the other party or parties for all fees
and expenses  (including  attorneys'  fees) actually and reasonably  incurred in
connection with such action (including,  without limitation,  the investigation,
defense, settlement or appeal of such action).

         14. Assignment. This Agreement and the rights and obligations hereunder
shall not be assigned by any party,  without  the prior  written  consent of the
other parties hereto, and any attempted  assignment without such written consent
shall be null and void and without legal effect.

         15.  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts,  all of which taken together shall  constitute one agreement,  and
any party hereto may execute this Agreement by signing any such counterpart.

         16.  Governing  Law and Choice of Law.  This  Agreement  and all rights
hereunder  shall be governed by, and construed in accordance  with,  the laws of
the State of Kansas.

         17.  Headings.  The headings in this Agreement are for convenience only
and in no way define,  limit or describe the scope or intent of any  provisions,
sections or subsections of this Agreement.

         18. Entire  Agreement.  This  Agreement  and all other  pleadings to be
executed and delivered in connection  herewith  embody the entire  agreement and
understanding  between the parties hereto and supersede all prior agreements and
understandings relating to the subject matter hereof and thereof.










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         19. No  Inducement.  Each party hereto  represents  and warrants to the
other party that it, he or she is relying upon no facts or information  obtained
from any other party hereto in entering  into this  Agreement,  that there is no
inducement  for this  Agreement  other than as set forth  herein,  and that such
warranting party has conducted,  or has had the opportunity to conduct, its, his
or her own investigation  into facts and  circumstances  surrounding all matters
set forth herein and is satisfied with the results and the extent of its, his or
her investigation.

         20.  Amendments.  No amendment or modification of any of the provisions
hereof shall be of any force or effect unless contained in writing and signed by
Bank and each of the Settling Defendants.

         21. Notices.  All notices required hereunder or pertaining hereto shall
be in writing and may be delivered by any means, including,  but not limited to,
delivery by personal delivery, first class registered or certified mail, postage
prepaid,   return  receipt  requested,  by  a  nationally  recognized  overnight
commercial courier service with charges prepaid,  or by facsimile  transmission.
Notices shall be deemed received upon actual receipt. In addition, notices shall
be deemed to have been received upon any of the following: (a) delivery, (b) one
attempted but failed  delivery to the address of record during  business  hours,
(c) refusal to accept  delivery  as shown on the United  States  Postal  Service
return  receipt or similar advice from the applicable  courier  service,  or (d)
electronic confirmation of the facsimile transmission. Notices shall be directed
to the addresses set forth below:

         If to Bank                         Industrial State Bank.
                                            32nd and Strong
                                            P.O. Box 6007
                                            Kansas City, Kansas 66016
                                            Attention:  President
                                            Fax:  (913) 831-2013

         with a copy to:            Chris W. Henry, Esq.
                                            Payne & Jones, Chartered
                                            11000 King, Suite 200
                                            P. O. Box 25625
                                            Overland Park, Kansas 66225-5625
                                            Fax:  (913) 469-0132

         If to Settling Defendants:         Delmar A. Janovec
                                            AmeriResource Technologies, Inc.
                                            9319 Santa Fe Drive
                                            Overland Park, Kansas 66212
                                            Fax:  (913) 341-2809





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         with a copy to:            Richard D. Rhyne, Esq.
                                            Craft Fridkin & Rhyne, L.L.C.
                                            1100 One Main Plaza
                                            4435 Main Street
                                            Kansas City, Missouri  64111
                                            Fax:  (816) 753-3222

Any party may change its or their  address  for  purposes of this  Agreement  by
giving notice of such change in accordance with this Section, provided that such
an address  change  shall not be  effective  until two (2)  business  days after
notice of the change is deemed to have been received.

         22.  Execution  by  Facsimile.  If a party  signs  this  Agreement  and
transmits a facsimile transmission of the signature page to the other party, the
party who receives the transmission may rely upon the facsimile  transmission as
a signed original of this Agreement.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.

                                             INDUSTRIAL STATE BANK



                                             By:
                                                Name:
                                                Title:




                                             DELMAR A. JANOVEC



                                             MARILYN J. JANOVEC


                                             AMERIRESOURCE TECHNOLOGIES, INC.



                                             By:
                                             Name:  Delmar A. Janovec
                                             Title:  President





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APPROVED AND AGREED TO:

PAYNE & JONES, CHARTERED




Chris W. Henry
11000 King, Suite 200
P. O. Box 25625
Overland Park, Kansas 66225-5625
Fax:  (913) 469-0132

Attorneys for Bank

CRAFT FRIDKIN & RHYNE, L.L.C.




Richard D. Rhyne
1100 One Main Plaza
4435 Main Street
Kansas City, Missouri 64111
Fax:  (816) 753-3222

Attorneys for Settling Defendants







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