WARRANT AGREEMENT
_________________
AGREEMENT, dated as of the 12th day of November, 1993, by
and between OF COUNSEL ENTERPRISES, INC., a Texas corporation (the
"Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY as Warrant
Agent (the "Warrant Agent").
WITNESSETH
__________
WHEREAS, the Company has determined to issue and deliver
up to 1,437,500 Common Stock Purchase Warrants ("Warrants")
evidencing the right of the holders thereof to purchase up to an
aggregate of 1,437,500 shares of the Company's Common Stock, par
value $.01 per share ("Common Stock"), which Warrants are to be
issued and delivered as part of units ("units"); and
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to act in
connection with the issuance, registration, transfer and exchange
of the Warrants, the issuance of certificates representing the
Warrants, the exercise of the Warrants, and the rights of the
holders thereof;
NOW, THEREFORE, in consideration of the premises and the
mutual agreement hereinafter set forth and for the purpose of
defining the terms and provisions of the Warrants and the
certificates representing the Warrants and the respective rights
and obligations thereunder of the Company, the holders of
certificates representing the Warrant and the Warrant Agent, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following
terms shall have the following meanings, unless the context shall
otherwise require:
(a) "Corporate Office" shall mean the office of the
Warrant Agent (or its successor) at which at any particular time
its principal business shall be administered, which office is
located at the date hereof at 40 Wall Street, New York, New York
10005.
(b) "Exercise Date" shall mean, as to any Warrant,
the date on which the Warrant Agent shall have received at the
Corporate Office both (a) the certificate (the "Warrant
Certificates") representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder thereof or his
attorney duly authorized in writing, and (b) payment in cash, or by
official bank or certified check made payable to the Company, of an
amount in lawful money of the United States of America equal to the
applicable Stock Purchase Price; provided, however, that the
Exercise Date shall not occur earlier than November 15, 1994.
(c) "Market Value" shall mean, on any date specified
herein, the price obtained by taking the average, on each such
trading day, of, of (A) the high and low sale price of a share of
Common Stock or if no such sale takes place on any such trading
day, the average of the closing bid and asked prices thereof on any
such trading day, in each case as officially reported on all
national securities exchanges on which the Common Stock is then
listed or admitted to trading, or (B) if the Common Stock is not
then listed or admitted to trading on any national securities
exchange, the closing price of the Common Stock on such date or if
no closing price is available on any such trading date, the average
of the closing bid and asked prices thereof on any such trading
date in the over-the-counter market as reported to NASDAQ, or, if
the Common Stock is not then quoted in such system, the average of
the highest and lowest bid and asked prices reported by the market
makers and dealers for the Common Stock listed as such by the
National Quotation Bureau, Incorporated or any similar successor
organization.
(d) "Stock Purchase Price" shall mean the purchase
price to be paid upon exercise of the Warrants in accordance with
the terms hereof, which price shall be $3.75 per share of Common
Stock subject to modification and adjustment from time to time
pursuant to the provisions of Section 8.
(e) "Redemption Date" shall mean the date, not prior
to November 15, 1994, when the Company redeems the Warrants.
(f) "Redemption Price" shall mean $.05 per Warrant.
(g) "Transfer Agent" shall mean American Stock
Transfer & Trust Company as the Company's transfer agent, or its
authorized successor such.
(h) "Warrant Expiration Date" shall mean 5:00 P.M.
(New York time) on the earlier of (i) the Redemption Date or (ii)
November 15, 1998.
SECTION 2. WARRANTS AND ISSUANCE OF WARRANT
CERTIFICATES: REGISTRATION
(a) A Warrant shall initially entitle the
Registered Holder of the Warrant Certificate representing such
Warrant to purchase one share of Common Stock upon the exercise
thereof and payment of the Stock Purchase Price (subject to
modification as herein provided), in accordance with the terms
hereof.
(b) From time to time from November 15, 1994, to
the earlier of the Redemption Date of the Warrant Expiration Date,
the Transfer Agent shall deliver stock certificates in required
whole number denominations representing up to an aggregate of
1,437,500 shares of Common Stock, subject to adjustment as
described herein, upon the exercise of the Warrants in accordance
with this Agreement.
(c) From time to time, up to the earlier of the
Redemption Date or the Warrant Expiration Date, the Warrant Agent
shall deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement; provided
that no Warrant Certificates shall be issued except (i) those
issued upon the exercise of fewer than all the Warrants represented
by a Warrant Certificate, to evidence any unexercised Warrants held
by the exercising Registered Holder; (ii) those issued upon any
transfer or exchange pursuant to Section 6; (iii) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7; and (iv) at the option of the
Company, in such form as may be approved by its Board of Directors,
to reflect any adjustment or change in the Stock Purchase Price or
the number of shares of Common Stock purchasable upon exercise of
the Warrants made pursuant to Section 8.
(d) The Warrant Agent shall maintain books (the
"Warrant Register"), for the registration of original issuance and
the registration of transfer of the Warrants. Upon the initial
issuance of the Warrants, the Warrant Agent shall issue and
register the Warrants in the names of the respective holders
thereof in such denominations and otherwise in accordance with
instructions delivered to the Warrant Agent by the Company.
(e) Prior to due presentment for registration of
transfer of any Warrant, the Company and the Warrant Agent may deem
and treat the person in whose name such Warrant shall be registered
upon the Warrant Register (the "Registered Holder"), as the
absolute owner of such Warrant and of each Warrant represented
thereby (notwithstanding any notation of ownership or other writing
on the Warrant Certificate made by anyone other than the Company or
the Warrant Agent), for the purpose of any exercise thereof, and
for all other purposes, and neither the Company nor the Warrant
Agent shall be affected by any notice to the contrary.
(f) The Warrant Agent understands that the Warrants
are being issued as part of Units together with shares of the
Company's Common Stock and that the shares of Common Stock and the
Warrants are immediately detachable and may be traded separately.
SECTION 3. FORM AND EXEUCTION OF WARRANT
CERTIFICATE.
(a) Warrant Certificates shall be substantially in
the form annexed hereto as Exhibit A (provisions of which Exhibit
are hereby incorporated herein) and may have such letters, numbers
or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon
as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on
which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer or exchange or in lieu of
mutilated, lost, stolen, or destroyed Warrant Certificates) and
issued in registered form. Warrants shall be numbered serially
with the letter W on the Warrants of all denominations.
(b) Warrant Certificates shall be executed on
behalf of the Company by its Chief Executive Officer and by its
Secretary by manual signatures or by facsimile signatures printed
thereon, and shall have imprinted thereon a facsimile of the
Company's seal. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such
officer of the Company before, the date of issuance of the Warrant
Certificates and before issue and delivery thereof, such Warrant
Certificates may nevertheless be issued and delivered by the
Warrant Agent to the Registered Holder without further action by
the Company, except as otherwise provided by Section 4 hereof. No
Warrant may be exercised until countersigned by the Warrant Agent
as provided for in Section 3(c) hereof.
(c) The Warrant Agent shall countersign a Warrant
only upon the occurrence of either of the following events:
(i) if the Warrant is to be issued in exchange or
substitution for one or more previously countersigned Warrants, as
hereinafter provided, or
(ii) if the Company instructs the Warrant Agent to
do so.
SECTION 4. EXERCISE.
Each Warrant, when countersigned by the Warrant Agent,
may be exercised by the Registered Holder thereof at the Corporate
Office at any time from November 15, 1994 to the earlier of the
Redemption Date or the Warrant Expiration Date, upon the payment of
the Stock Purchase Price (subject to adjustment as herein provided)
and upon the other terms and subject to the conditions set forth
herein and in the applicable Warrant Certificate. A Warrant shall
be deemed to have been exercised immediately prior to the close of
business on the Exercise Date and the person entitled to receive
the securities deliverable upon such exercise shall be treated for
all purposes as the holder of such securities upon exercise thereof
as of the close of business on the Exercise Date. As soon as
practicable on or after the Exercise Date, the Warrant Agent shall
deposit the proceeds received from the exercise of a Warrant and
shall notify the Company in writing of such exercise. Promptly
following, and in any event within five Business days after the
date of such notice from the Warrant Agent, the Warrant Agent, on
behalf of the Company, shall cause to be issued and delivered by
the Transfer Agent to the personal or persons entitled to receive
the same a certificate or certificates for the securities
deliverable upon such exercise (plus a Warrant Certificate for any
remaining unexercised Warrants of the Registered Holder), unless
prior to the date of issuance of such certificates the Company
shall instruct the Warrant Agent to refrain from causing such
issuance of certificates pending clearance of checks received in
payment of the Stock Purchase Price pursuant to such Warrants.
Upon the exercise of any Warrant and clearance of the funds
received, the Warrant Agent shall promptly remit the payment
received for the issuance of Common Stock issued upon exercise of
the Warrant to the Company or as the Company may direct in writing.
SECTION 5. RESERVATION OF SHARES; LISTING: PAYMENT
OF TAXES; ETC.
(a) The Company covenants that it will at all times
reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of the Warrants, such
number of shares of Common Stock as shall then be issuable upon the
exercise of all outstanding Warrants. The Company covenants that
all shares of Common Stock which shall be issuable upon the
Warrants shall, at the time of delivery, be duly and validly
issued, fully paid, nonassessable and free from all taxes, liens
and charges with respect to the issue thereof (other than those
which the Company shall promptly pay or discharge), and that upon
issuance such shares shall be listed on each national securities
exchange, if any, on which the other outstanding shares of Common
Stock of the Company are then listed.
(b) The Company has filed with the Securities and
Exchange Commission a Registration Statement No. 33-68480-FW (the
"Registration Statement") on Form SB-2 for the registration, under
the Securities Act of 1933, as amended, of, among others, the
Warrants and the Common Stock issuable upon exercise of the
Warrants. The Company agrees that, if necessary, it shall file
with the Securities and Exchange Commission a post-effective
amendment to the Registration Statement, or a new registration
statement, for the registration, under the Securities Act of 1933,
as amended, of the Common Stock issuable upon exercise of the
Warrants. In either case, the Company will use its best efforts to
cause the same to become effective and to maintain the
effectiveness of such registration statement until the expiration
of the Warrants in accordance with the provisions of this
Agreement.
(c) The Company shall pay all documentary, stamp or
similar taxes and other governmental charges that may be imposed
with respect to the issuance of the Warrants, or the issuance, or
delivery of any shares of Common Stock upon exercise of the
Warrants; provided, however, that if the shares of Common Stock are
to be delivered in a name other than the name of the Registered
Holder of the Warrant Certificate representing any Warrant being
exercised, then no delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of
transfer taxes or charges incident thereto, if any. The Company
shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of
any Warrant Certificate in a name other than that of the then
Registered Holder of the Warrant being exercised.
(d) The Warrant Agent is hereby irrevocably
authorized to requisition the Company's Transfer Agent from time to
time for certificates representing shares of Common Stock required
upon exercise of the Warrants, and the Company will authorize the
Transfer Agent to comply with all proper requisitions. The Company
will file with the Warrant Agent a statement setting forth the name
and address of the Transfer Agent of the Company for shares of
Common Stock issuable upon the exercise of the Warrants.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of
Warrants of the same class or may be transferred in whole or in
part. Warrant Certificates to be exchanged shall be surrendered to
the Warrant Agent at its Corporate Office, and upon satisfaction of
the terms and provision hereof, the Company shall execute and the
Warrant Agent shall countersign, issue and deliver in exchange
therefor the Warrant Certificates which Registered Holder making
the exchange shall be entitled to receive.
(b) Upon due presentment for registration of transfer of any
Warrant Certificate at such office, the Company shall execute and
the Warrant Agent shall issue and deliver to the transferee
transferees a new Warrant Certificate or Certificates representing
an equal aggregate number of Warrants of the same class.
(c) With respect to all Warrant Certificates
presented for registration or transfer, or for exchange or
exercise, the subscription form on the reverse thereof shall be
duly endorsed, or be accompanied by a written instrument or
instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered
Holder or his attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant
Agent for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by the
Registration Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for
exercise or for exchange in case of mutilated Warrant Certificates
shall be promptly canceled by the Warrant Agent and thereafter
retained by the Warrant Agent until termination of this Agreement
or resignation as Warrant Agent, disposed of or destroyed, at the
direction of the Company. The Warrant Agent will record all such
exercises or exchanges on the Warrant Register.
(f) Prior to due presentment for registration of
transfer thereof, the Company and the Warrant Agent may deem and
treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made
by anyone other than a duly authorized officer of the Company or
the Warrant Agent) for all purposes and shall not be affected by
any notice to the contrary.
SECTION 7.LOSS OR MUTILATION.
Upon receipt by the Company and the Warrant Agent of
evidence satisfactory to them of the ownership of and loss, theft,
destruction or mutilation of any Warrant Certificate and (in case
of loss, theft, destruction or mutilation of any Warrant
Certificate and (in case of loss, theft or destruction) or
indemnity satisfactory to them, and in case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and
the Warrant Agent shall (in the absence of notice to the Company
and/or the Warrant Agent that the Warrant Certificate has been
acquired by a bona fide purchaser) countersign and deliver to the
Registered Holder in lieu thereof a new Warrant Certificate of like
tenor representing an equal aggregate number o of the Warrants.
Applicants for substitute Warrant Certificates shall comply with
such other reasonable regulations and pay such other reasonable
charges as the Warrant Agent may prescribe.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER
OF COMMON STOCK OR WARRANTS.
The Stock Purchase Price and the number of shares
purchasable upon the exercise of the Warrants shall be subject to
adjustment from time to time upon the occurrence of certain events
described in this Section 8.
8.1 SUBDIVISION OR COMBINATION OF COMMON STOCK. In
case the Company shall at any time (a) subdivide its outstanding
shares of Common Stock into a greater number of shares, (b) combine
its outstanding Common Stock into a smaller number of shares, or
(c) issue any securities in reclassification of its outstanding
Common Stock, then and in each such event, the Stock Purchase Price
in effect immediately prior to such action by the Company shall be
adjusted by multiplying it by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision, combination or
reclassification and the denominator of which shall the number of
shares of Common Stock outstanding immediately after such
subdivision, combination or reclassification.
8.2 STOCK DIVIDED. In case the Company shall at
any time declare a dividend upon its Common Stock payable solely in
shares of Common Stock, the Stock Purchase in effect immediately
prior to such dividend shall be proportionately reduced.
8.3 NOTICE OF ADJUSTMENT. Upon any adjustment of
the Stock Purchase Price or any increase or decrease in the number
of shares purchasable upon the exercise of the Warrants, the
Company shall give written notice thereof, by first class mail,
postage prepaid, addressed to the Warrant Agent and to each
Registered Holder of the Warrants at the address of such holder as
shown on the Warrant Register. The notice shall be signed by the
Company's chief financial officer and shall state the Stock
Purchase price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price
upon the exercise of the Warrants, setting forth in reasonable
detail the method of calculation and the facts upon which such
calculation is based.
8.4 OTHER NOTICES. If at any time:
(a) the Company shall declare any cash dividend
upon its Common Stock;
(b) the Company shall declare any dividend upon its
Common Stock payable in stock (other than a dividend payable solely
in shares of Common Stock) or make any special dividend or other
distribution to the holders of its Common Stock;
(c) there shall be any consolidation or merger of
the Company with another corporation, or a sale of all or
substantially all of the Company's assets to another corporation;
or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by
certified or registered mail, postage prepaid, addressed to the
Registered Holder of each Warrant at the address of such Registered
Holder as shown on the Warrant Register, (i) at least 30 days'
prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to
vote in respect of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-
up, at least 30 days' written notice of the date when the same
shall take place. Any notice given in accordance with clause (i)
above shall also specify, in the case of any such dividend,
distribution or option rights, the date on which the holders of
Common Stock shall be entitled thereto. Any notice given in
accordance with clause (ii) above shall also specify the date on
with the holders of Common Stock shall be entitled to exchange
their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, as the case may be.
In the event that the Registered Holder of a Warrant does not
exercise the Warrant prior to the occurrence of an event described
above, the Registered Holder shall not be entitled to receive the
benefits accruing to existing holders of the Common Stock in such
event, and upon the occurrence of an event described in this
subsection (d) the Warrant shall terminate.
8.5. CHANGES IN COMMON STOCK. In case at any time the
Company shall be party to any transaction (including, without
limitation, a merger, consolidation, sale of all or substantially
all of the Company's assets or recapitalization of the Common
Stock) in which the previously outstanding Common Stock shall be
changed into or exchanged for different securities of the Company
or common stock or other securities of another corporation or
interests in a non-corporate entity or other property (including
cash) or any combination of any of the foregoing (each such
transaction being herein called the "Consummation Date," the
Company shall make, as a condition of the consummation of the
Transaction, lawful and adequate provisions so that each Registered
Holder, upon the exercise of its Warrants at any time on after the
Consummation Date, shall be entitled to receive, and the Warrant
shall thereafter represent the right to receive, in lieu of the
Common Stock issuable upon such exercise prior to the Consummation
Date, the highest amount of securities or other property to which
such holder would actually have been entitled as a stockholder upon
the consummation of the Transaction if such Register Holder had
exercised its Warrants immediately prior thereto (subject to
adjustments from and after the Consummation Date as nearly
equivalent as possible to the adjustments provided for in this
paragraph 8). The provisions of this Section 8.5 shall similarly
apply to successive Transactions.
SECTION 9. FRACTIONAL WARRANTS AND FRACTIONAL
SHARES.
No fractional shares shall be issued upon the exercise of
the Warrants. The Company shall, in lieu of issuing any fractional
shares, pay the holder entitled to such fraction a sum equal to
such fraction multiplied by the Market Value.
SECTION 10. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS.
No holder of a Warrant shall, as such, be entitled to
vote or to consent or to receive notice as a stockholder in respect
of meetings of stockholders for the election of directors of the
Company or any other matters or any rights whatsoever as a
stockholder of the Company. Except for the adjustment to the Stock
Purchase Price pursuant to Section 8.2 in the event of a dividend
on the Common Stock payable in shares of Common Stock, no dividends
or interest shall be payable or accrued in respect of this Warrant
or the interest represented hereby or the shares purchasable
hereunder until, and only to the extent that, the Warrant shall
have been exercised. No provisions hereof, in the absence of
affirmative action by the holder to purchase shares of Common
Stock, and no mere enumeration herein of the rights or privileges
of the Registered Holder of the Warrant, shall give rise to any
liability of such Registered Holder for the Stock Purchase Price or
as a stockholder of the Company whether such liability is asserted
by the Company or by its creditors.
SECTION 11. RIGHTS OF ACTION. All rights of action with
respect to the Agreement are vested in the respective Registered
Holders of the Warrants, and any Registered Holder of a Warrant,
without consent of the Warrant Agent or of the holder of any other
Warrant, may, in this own behalf and for his own benefit, enforce
against the Company his right to exercise his Warrants for the
purchase of Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
SECTION 12. AGREEMENT OF WARRANT HOLDERS. Every holder
of a Warrant, by his acceptance thereof, consents and agrees with
the Company, the Warrant Agent and every other holder of a Warrant
that:
(a) The Warrants are transferable only on the Warrant
Register by the Registered Holder thereof in person or by his
attorney duly authorized in writing and only if the Warrant
Certificates representing such warrants are surrendered at the
office of the Warrant Agent, duly endorsed or accompanied by a
proper instrument of transfer satisfactory to the Warrant Agent and
the Company in their sole discretion, together with payment of any
applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat
the person in whose name the Warrant Certificate is registered as
the holder and as the absolute, true and lawful owner of the
Warrants represented thereby for all purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice of
knowledge to the contrary, except as otherwise expressly provided
in Section 7.
SECTION 13. REDEMPTION; CANCELLATION OF WARRANT
CERTIFICATE.
13.1. REDEMPTION. All, but not less than all of the
outstanding Warrants may be redeemed at the Redemption Price, at
the option of the Company, at any time, commencing on the
Redemption Date and prior to the Warrant Expiration Date, at the
Corporate Office, upon not less than 30 days prior written notice,
given in accordance with Section 13.2, if the closing bid price of
the Common Stock equals or exceeds $7.00 per share on at least 20
days during a 30 consecutive trading day period ending not more
than 10 days prior to the date of such notice.
13.2. DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the
event the Company shall elect to redeem all outstanding Warrants,
the Company shall fix a date for the redemption. Notice of
redemption, including the date fixed for redemption shall be mailed
by first class mail, postage prepaid, by the Company to the
registered holders of the Warrants to be redeemed at their last
address as they shall appear on the Warrant Register. Any notice
mailed in the manner herein provided shall be conclusively presumed
to have been duly given whether or not the Registered Holder
received such notice.
13.3. EXERCISE AFTER NOTICE OF REDEMPTION. The Warrants
may be exercised in accordance with Section 4 of this Agreement at
any time after notice of redemption shall have been given by the
Company pursuant to Section 13.2 hereof and prior to the time and
date fixed for redemption.
SECTION 13.4. CANCELLATION. If the Company shall
purchase or acquire any Warrants, the Warrant Certificate(s)
evidencing the same shall thereupon be delivered to the Warrant
Agent and canceled by it and retired. The Warrant Agent shall also
cancel shares of Common Stock following exercise of any or all of
the Warrants represented thereby or delivered to it for transfer,
split-up, combination or exchange.
SECTION 14. CONCERNING THE WARRANT AGENT. The Warrant
Agent acts hereunder as agent and in a ministerial capacity for the
Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder be
deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property
delivered upon exercise of any Warrant or whether any stock issued
upon exercise of any Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty
or responsibility to any holder of Warrant Certificates to make or
cause to be made any adjustment of the Stock Purchase Price
provided in this Agreement, or to determine whether any fact exists
which may require any such adjustment, or with respect to the
nature or extent of any such adjustment, when make, or with respect
to the method employed in making the same. It shall not (i) be
liable for any recital or statement of facts contained herein or
for any action taken, suffered or omitted by it in reliance on any
Warrant Certificate or other document or instrument believed by it
in good faith to be genuine and to have been signed or presented by
the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant
Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
wilful misconduct.
The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall
incur no liability or responsibility for any action taken, suffered
or omitted by it in good faith in accordance with the opinion or
advice of such counsel.
Any notice, statement, instruction, request, direction,
order or demand of the Company shall be sufficiently evidenced by
an instrument signed by the Chief Executive Officer or its
Secretary (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in accordance with
such notice, statement, instruction, request, direction, order or
demand reasonably believed by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its
reasonable expenses hereunder; it further agrees to indemnify the
Warrant Agent and save it harmless against any and all losses,
expenses and Liabilities, including judgements, costs and counsel
fees for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's
negligence or wilful misconduct.
The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except
liabilities arising as a result of the Warrant Agent's own
negligence or wilful misconduct), after 30 days' prior written
notice tot he Company. At least 15 days prior to the date such
resignation is to become effective, the Warrant Agent shall cause
a copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company';s expense. Upon
such resignation, or any inability of the Warrant Agent to act as
such hereunder, the Company shall appoint a new warrant agent in
writing. If the Company shall fail to make such appointment within
a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, the Registered Holders
of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Any new
warrant agent, whether appointed by the Company or by such a court,
shall be a bank or trust company having a capital and surplus, as
shown by its last published report to its stockholders, of not less
than $10,000,000 or stock transfer company. After acceptance in
writing of such appointment by the new warrant agent is received by
the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if had been
originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall
be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed
and delivered by the resigning Warrant Agent. Not later than the
effective date of any such appointment the Company shall file
notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder
of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation
resulting form any consolidation to which the Warrant Agent or any
new warrant agent shall be a party or any corporation succeeding to
the trust business of the Warrant Agent shall be a successor
warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the
preceding paragraph. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be
mailed to the Company and to the Registered Holder of each Warrant
Certificate at the Company's expense.
The Warrant Agent, its subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell
Warrants or other securities of the Company and otherwise deal with
the Company in the same manner and to the same extent and with like
effects as though it were not the Warrant Agent. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity
for the Company or for any other legal entity.
SECTION 15. MODIFICATION OF AGREEMENT. The Warrant
Agent and the Company may be supplemental agreement make any
changes or corrections in the Agreement 1. That they shall deem
appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or manifest mistake or error herein
contained; or 2. that they may deem necessary or desirable and
which shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that this Agreement shall
not otherwise be modified, supplemented or altered in any respect
except with the consent in writing of the Registered Holders of
Warrant Certificate representing not less than 50% of the Warrants
then outstanding; and provided, further, that no change in the
number or nature of the securities purchasable upon the exercise of
any Warrant, of the Purchase Price therefor, or the acceleration of
the Warrant Expiration Date, shall be made without the consent in
writing of the Register Holder of the Warrant Certificate
representing such Warrant, other than such changes as are
specifically prescribed by this Agreement as originally executed or
are made in compliance with applicable law.
SECTION 16. NOTICES. All notices, requests, consents
and other communications hereunder shall be in writing and shall be
deemed to have been made when delivered or mailed first class
registered or certified mail, postage prepaid as follows: if to
the Registered Holder of a Warrant Certificate, at the address of
such Registered Holder as shown in the Warrant Register maintained
by the Warrant Agent; if to the Company, at 5251 Westheimer, Suite
320, Houston, Texas 77056, attention: Chief Executive Officer, or
at such other address as may have been furnished to the Warrant
Agent in writing by the Company; if to the Warrant Agent, at its
Corporate Office.
SECTION 17. REPRESENTATIVES' WARRANTS. Upon exercise of
the "Representatives' Warrants" (as defined in the prospectus
forming part of the Registration Statement), the Representatives,
or the subsequent holders of the Representatives' Warrants
("Holders") shall receive units of the Company's securities
described in the Representatives' Warrants shall be identical in
all respects to the Warrants, except that such stock purchase
warrants shall not be redeemable by the Company. Notwithstanding
the foregoing at any time prior to a. the Warrant Expiration Date
or b. the redemption of the Warrants in accordance with Section 13
hereof, each of the Holders shall have the right, but not the
obligation, to convert the stock purchase warrants received on
exercise of such Holder's Representatives' Warrants into Warrants
on identical terms as are contained in the Agreement, in which case
the stock purchase warrants received upon exercise of such Holder's
Representatives' Warrants shall become covered by this agreement.
Any such conversion must be requested in a writing to the Company
and the Warrant Agent.
SECTION 18. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York, without reference to principles of conflict of laws.
SECTION 19. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the Company and the
Warrant Agent and their respective successors and assigns, and the
holders form time to time of Warrant Certificates. Nothing in this
Agreement is intended or shall be construed to cover upon any other
person any right, remedy or claim, in equity or at law, or to
impose upon any other person any duty, liability or obligation.
SECTION 20. TERMINATION. This Agreement shall terminate
at the close of business on the earlier of the earlier of the
Redemption Date, if all of the Warrants are redeemed, or the
Warrant Expiration Date, except that the Warrant Agent shall
account to the Company for cash held by it and the provisions of
Section 15 hereof shall survive such termination.
SECTION 21. COUNTERPARTS. This Agreement may beexecuted
in several counterparts, which taken together shall constitute a
single document.
IN WITNESS WHEREOF, the parties hereto have caused the
Agreement to be duly executed as of the date first above writing.
OF COUNSEL ENTERPRISES, INC.
By:__________________________
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:__________________________