EXHIBIT 10.34
                           WARRANT PURCHASE AGREEMENT

         THIS WARRANT PURCHASE AGREEMENT  ("Agreement") is made and entered into
this 30th day of June, 1997 by and between Keith J. McKenzie  ("Purchaser")  and
LS Capital Corporation, a Delaware corporation (the "Company").

                                                    RECITALS:

      WHEREAS,  the Company  desires to sell to Purchaser from time to time, and
Purchaser is willing to purchase  from the Company  from time to time,  warrants
("Warrants") to acquire shares of the Company's common stock, $.01 par value per
share  (the  "Common  Stock"),  in each  case  upon the  terms,  provisions  and
conditions hereof; and

      WHEREAS,  each of the  Company and  Purchaser  desires to  memorialize  in
writing  the  terms,  provisions  and  conditions  of  the  Company's  sale  and
Purchaser's purchase of the Warrants and certain other matters relating thereto;

                                                    AGREEMENT:

      NOW,  THEREFORE,  in  consideration  of the  mutual  promises,  covenants,
agreements,  representations  and warranties set forth  hereinafter,  $10.00 and
other good and valuable consideration (the receipt,  adequacy and sufficiency of
which each of the Company and Purchaser hereby  acknowledges) and subject to the
terms,  provisions  and  conditions  hereof,  each of the Company and  Purchaser
hereby agrees as follows:

         1.       Term.  The term of this Agreement (the "Term") shall commence 
on the date hereof and shall continue for two years thereafter.

         2.       General Representations and Warranties.

         (a)  Purchaser  hereby  represents  and  warrants to the  Company  that
Purchaser  has full right,  power and  authority  to execute  and  deliver  this
Agreement and all other agreements,  documents and instruments to be executed in
connection herewith and perform Purchaser's obligation hereunder and thereunder;
when this Agreement and all other  agreements,  documents and  instruments to be
executed by Purchaser  in  connection  herewith  are  executed by Purchaser  and
delivered to the Company,  this Agreement and such other  agreements,  documents
and instruments  will  constitute the valid and binding  agreements of Purchaser
enforceable against Purchaser in accordance with their respective terms; neither
the execution and delivery of this Agreement or any other agreements,  documents
and  instruments to be executed in connection  herewith nor the  consummation of
the transactions  contemplated hereby or thereby will (i) violate, conflict with
or  result  in the  breach  or  termination  of,  or  otherwise  give any  other
contracting  party the right to  terminate,  or  constitute a default (by way of
substitution,  novation or otherwise)  under the terms of, any contract to which
Purchaser  is a party or by  which  Purchaser  is  bound or by which  any of the
assets of Purchaser is bound or affected,  (ii) violate any judgment against, or
binding  upon,  Purchaser  or the assets of  Purchaser,  or (iii)  result in the
creation  of any  lien,  charge or  encumbrance  upon any  assets  of  Purchaser
pursuant to the terms of any contract  referred to in (i) of this Section  2(a);
there are no actions,  suits,  claims or legal,  administrative  or  arbitration
proceedings  or  investigations  pending or  threatened  against,  involving  or
affecting any of the assets of Purchaser, this


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Agreement, or the transactions contemplated hereby, and there are no outstanding
orders,  writs,  injunctions  or decrees of any  court,  governmental  agency or
arbitration  tribunal  against,  involving or affecting any assets of Purchaser,
this Agreement, or the transactions  contemplated hereby; no consent or approval
from any person is required in  connection  with the  execution  and delivery of
this Agreement or any of the other  agreements,  documents and instruments to be
executed by  Purchaser  in  connection  herewith;  and the  representations  and
warranties  made  immediately  above and  elsewhere  herein are  material to the
Company and are being relied upon by the Company in connection with its decision
to enter into the transactions provided for by this Agreement.
      (b) The Company  hereby  represents  and warrants to Purchaser that it has
full right,  power and  authority to execute and deliver this  Agreement and all
other  agreements,  documents and instruments to be executed by it in connection
herewith and perform its obligation  hereunder and thereunder;  it has been duly
organized,  is validly  existing and is in good standing in the  jurisdiction in
which it was  incorporated;  the execution and delivery by it of this  Agreement
and all other  agreements,  documents  and  instruments  to be executed by it in
connection herewith have been authorized by all necessary corporate action; when
this  Agreement  and all  other  agreements,  documents  and  instruments  to be
executed by it in  connection  herewith are executed by it and  delivered to the
Purchaser,  this Agreement and such other agreements,  documents and instruments
will constitute the valid and binding agreements of it enforceable against it in
accordance with their  respective  terms;  neither the execution and delivery of
this Agreement or any other agreements, documents and instruments to be executed
in connection  herewith nor the  consummation of the  transactions  contemplated
hereby or thereby  will (i)  violate,  conflict  with or result in the breach or
termination  of,  or  otherwise  give any other  contracting  party the right to
terminate,  or  constitute  a  default  (by  way of  substitution,  novation  or
otherwise)  under the terms of, any  contract to which it is a party or by which
it is bound or by  which  any of the  assets  of it is bound or  affected,  (ii)
violate any judgment  against,  or binding  upon,  it or upon its assets,  (iii)
result in the creation of any lien, charge or encumbrance upon any of its assets
pursuant to the terms of any contract  referred to in (i) of this Section  2(b),
or (iv)  violate any  provision  in the charter  documents,  bylaws or any other
agreement  affecting  the  governance  and control of it;  there are no actions,
suits,   claims  or  legal,   administrative   or  arbitration   proceedings  or
investigations pending or threatened against,  involving or affecting any of its
assets, this Agreement,  or the transactions  contemplated hereby (other than as
reflected in the Company's filings with the Securities and Exchange Commission),
and there are no outstanding orders, writs, injunctions or decrees of any court,
governmental agency or arbitration tribunal against,  involving or affecting any
of its assets,  this Agreement,  or the  transactions  contemplated  hereby;  no
consent or approval from any person is required in connection with the execution
and delivery of this  Agreement or any of the other  agreements,  documents  and
instruments  to be executed by it in connection  herewith;  the shares of Common
Stock to be issued to Purchaser  pursuant to the exercise of the Warrants  shall
be duly authorized,  validly issued,  fully paid and  non-assessable at the time
that they are issued;  and the  representations  and warranties made immediately
above are  material  to  Purchaser  and are being  relied upon by  Purchaser  in
connection with Purchaser's decision to enter into the transactions provided for
by this Agreement.

         3.       Securities Representations and Warranties.

         Purchaser hereby  represents and warrants to the Company that Purchaser
is not a "U.S.


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Person" as that term in defined in  Regulation  S under the Act; at the time the
buy order originated for the Warrants and the date of this Agreement,  Purchaser
was and will be outside of the United States of America (the "U.S.");  Purchaser
is acquiring the Warrants for  Purchaser's  own account and not on behalf of any
U.S.  Person,  and a sale  has not  been  prearranged  with a U.S.  Person  or a
purchaser  in the  U.S.;  Purchaser  agrees  that all  offers  and  sales of the
Warrants  prior  to the  expiration  of a period  commencing  on the date of the
issuance  thereof and ending 40 days thereafter shall only be made in compliance
with the safe harbor  contained in Regulation S, or pursuant to the registration
thereof or an exemption from registration,  and that all offers and sales in the
U.S.  after  expiration  of the 40-day period shall be made only pursuant to the
registration  thereof or an exemption from registration;  all offering documents
received by  Purchaser  have  included  statements,  and all  certificates  that
Purchaser shall receive  representing  the Warrants shall feature legends to the
effect that the Warrants have not been  registered  under the Act and may not be
offered or sold in the U.S.  or to U.S.  Persons  prior to the  expiration  of a
period  commencing  on the  date of the  issuance  thereof  and  ending  40 days
thereafter  and all offers and sales shall only be made in  compliance  with the
safe harbor contained in Regulation S, or pursuant to the  registration  thereof
or an  exemption  from  registration;  Purchaser  has  been  furnished  with the
Company's  most recent Annual Report on Form 10-K and any  subsequent  Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K; Purchaser is familiar with
the business and financial  condition,  properties,  operations and prospects of
the  Company,  and has  been  given  full  access  to all  material  information
concerning the condition,  properties,  operations and prospects of the Company;
Purchaser has had an  opportunity  to ask such questions of, and to receive such
information  from,  the  Company  as  Purchaser  has  desired  and to obtain any
additional  information  necessary to verify the accuracy of the information and
data received;  and Purchaser is satisfied that there is no material information
concerning the condition,  properties,  operations and prospects of the Company,
of which Purchaser is unaware.

         4.       Purchase of Warrants.

      (a) At any time and from time to time during the Term and upon notice from
the Company (a "Warrant Purchase  Notice"),  Purchaser hereby agrees to purchase
Warrants from the Company at Closings (as defined herein) in transactions exempt
from the  securities  offering  registration  requirements  of federal and state
securities laws, upon the terms,  provisions and conditions contained herein and
in accordance with the related Warrant  Purchase  Notice.  Each Warrant Purchase
Notice shall contain the amount of funds (the "Warrant Purchase Price") that the
Company  desires  Purchaser  to expend in  connection  with the  purchase of the
related  Warrant;  provided,  however,  that to limit the amount of  Purchaser's
investment  in the  Company  and its  subsidiaries,  Purchaser  shall  never  be
required to have expended a cumulative  Warrant  Purchase Price pursuant to this
Agreement  exceeding the amount of net proceeds that Purchaser has received from
any sales of the 300,000  shares of Common  Stock (the  "300,000  Shares")  that
Purchaser received from the Company in connection with Purchaser's  contribution
of mining claims to Desert Minerals,  Inc., a Delaware subsidiary corporation of
the  Company.  In  connection  with  the  foregoing  limitation  on  Purchaser's
obligation to purchase Warrants pursuant to this Agreement,  Purchaser shall (i)
maintain  complete records with respect to the sale of the 300,000 Shares,  (ii)
give  notice to the Company  upon the sale of any of the 300,000  Shares and the
amount of net proceeds received in connection therewith, and (iii) extend to the
Company the right to receive copies of and


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examine the records of  Purchaser  to the extent they pertain to the sale of the
300,000  Shares.  With  respect to the  purchase of any  Warrant,  the number of
shares that may purchased pursuant to an exercise of the Warrant shall equal the
product  obtained by multiplying (i) the quotient obtain by dividing the Warrant
Purchase  Price for the Warrant,  by the closing sales price of the Common Stock
on the date  preceding  the date of the  Warrant  Purchase  Notice (or the sales
price of the most  recent sale if there is no closing  price on such  date),  by
(ii) 1.33,  and then rounding to the closest  whole number of shares.  Moreover,
with respect to the  purchase of any Warrant,  the term during which the Warrant
may be exercised shall be two years from the date of issuance, and the per-share
purchase price for shares acquired  pursuant to an exercise of the Warrant shall
be $.01.  Each  Warrant  shall be  represented  by the form of warrant  attached
hereto as an exhibit,  with the number of shares  determined in accordance  with
the preceding  sentence as well as the dates for the issuance and  expiration of
the Warrant being reflected in the form of warrant.

         (b) Subject to Section 4(c) below,  the closing (the "Closing") of each
sale and purchase of a Warrant  pursuant to this  Agreement  shall occur on such
date as the Company has specified in the related Warrant Purchase Notice,  which
date shall be  between  five and ten days  after the  giving of such  notice.  A
Closing  need not be one in which  the  Company  and  Purchaser  are  physically
present  but may be one in which all  documents,  instruments  and  other  items
necessary  to close the sale and purchase of a Warrant are  transmitted  between
the parties by means of ordinary or express  mails and  wire-transfers.  At each
Closing,  Purchaser  shall  deliver the Warrant  Purchase  Price for the related
Warrant  in  immediately  available  funds  and  the  certificates  required  of
Purchaser as provided in Section 4(c) below,  and the Company  shall deliver the
Warrant in the form of  warrant  attached  hereto as Exhibit A and as  otherwise
provided  herein and the  certificates  required  of the  Company as provided in
Section 4(c) below.

         (c)  The  obligations  of  Purchaser  at  a  Closing  are  subject,  at
Purchaser's  election, to the satisfaction on or prior to Closing of each of the
following  conditions:  (i) each of the representations and warranties of Seller
contained in this Agreement  shall be true and correct in all respects at and as
of the Closing as if each such representation and warranty was made at and as of
the Closing,  Seller shall have  performed  in all respects all  agreements  and
covenants  required by this  Agreement  to be performed by it prior to or at the
Closing,  and at the Closing  there shall be delivered  to  Purchaser  customary
bring-down  certificates (each dated as of the Closing, signed by Seller) to the
foregoing effects; and (ii) no suit or other proceeding by any third party shall
be pending before any court or governmental agency seeking to restrain, prohibit
or declare illegal,  or seeking substantial damages from Purchaser in connection
with, the transactions contemplated by this Agreement. The obligations of Seller
at a Closing are subject, at Seller's election,  to the satisfaction on or prior
to Closing of each of the following conditions:  (x) each of the representations
and  warranties  of  Purchaser  contained  in this  Agreement  shall be true and
correct in all respects at and as of the Closing as if each such  representation
and warranty was made at and as of the Closing,  Purchaser  shall have performed
in all respects all  agreements  and covenants  required by this Agreement to be
performed  by it prior to or at the Closing,  and at the Closing  there shall be
delivered  to Seller  customary  bring-down  certificates  (each dated as of the
Closing,  signed by Purchaser) to the foregoing effect; (y) Purchaser shall have
delivered  to Seller a  certificate  signed by Purchaser  containing  such other
representations and warranties of Purchaser as the Company shall believe


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necessary or advisable to determine that the issuance of the related  Warrant is
exempt from federal and state securities offering registration requirements; and
(z) no suit or other  proceeding by any third party shall be pending  before any
court or governmental  agency seeking to restrain,  prohibit or declare illegal,
or seeking  substantial damages from Seller in connection with, the transactions
contemplated by this Agreement.  In addition to the preceding,  Purchaser agrees
to furnish to the Company any other information required by the Company in order
for the Company to  determine  that the  issuance of a Warrant  will not violate
federal or state securities laws. If the Company believes that the issuance of a
Warrant will violate such laws,  then the date of the related  Closing  shall be
extended  until all action  believed by the Company to be  necessary in order to
avoid violating such laws can be taken.

         5.       Indemnification.

         (a) All  representations  and warranties  made herein by a party hereto
shall survive all transactions  provided for or contemplated herein,  including,
without limitation, the issuances and sales of the Warrants and the issuances of
shares of Common Stock pursuant to exercises of the Warrants.

         (b) Purchaser  shall protect,  indemnify and hold the Company  harmless
from  any and  all  demands,  claims,  actions,  causes  of  actions,  lawsuits,
proceedings,  judgments,  losses, damages, injuries,  liabilities,  obligations,
expenses and costs (including costs of litigation and attorneys' fees),  arising
from any breach of any agreement,  representation  or warranty made by Purchaser
in this Agreement.

         (c) The Company shall protect,  indemnify and hold  Purchaser  harmless
from  any and  all  demands,  claims,  actions,  causes  of  actions,  lawsuits,
proceedings,  judgments,  losses, damages, injuries,  liabilities,  obligations,
expenses and costs (including costs of litigation and attorneys' fees),  arising
from any breach of any agreement,  representation or warranty made by it in this
Agreement.

         6.       General.

         (a)      THIS AGREEMENT AND ALL QUESTIONS RELATING TO ITS
VALIDITY, INTERPRETATION, PERFORMANCE, AND ENFORCEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.

         (b) Mandatory venue for any  controversy  arising out of or relating to
this Agreement or any  modification or extension  thereof,  including any claims
for breach, for damages, and/or for recision or reformation, shall be in a court
of competent jurisdiction located in Harris County, Texas.

         (c) This Agreement contains the entire  understanding among the parties
hereto with respect to the subject  matter hereof and  supersedes  all prior and
contemporaneous  agreements  and  understandings,  inducements,  or  conditions,
express or implied, oral or written, except as herein contained.  This Agreement
may not be modified or amended  other than by an agreement in writing  signed by
all parties affected.


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         (d) The  express  terms  hereof  control  and  supersede  any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
The section  headings in this Agreement are for  convenience  only; they form no
part of this Agreement and shall not affect its interpretation.

         (e) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original,  but all of which together constitute one and
the same instrument.


         (f) The parties hereto hereby agree that time is of the essence for all
purposes of this Agreement.

         (g) Any notices to be given  hereunder  by any party to the other party
may be effected either by personal delivery in writing,  or by mail,  registered
or certified,  postage prepaid with return receipt  requested,  addressed to the
party to be notified at the address set forth  beneath  such  party's  signature
below.

         IN WITNESS  WHEREOF,  the parties hereto have signed their names hereto
as of the first date written above.

"COMPANY"

LS CAPITAL CORPORATION


By:_________________________________
Paul J. Montle, President

Address: 15915 Katy Freeway, Suite 250
Houston, Texas 77094


"PURCHASER"


------------------------------------
Keith J. McKenzie

Address: 1400 355 Burrand St.
Vancouver, British Columbia
CANADA V6C 2G8


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THIS  WARRANT  AND THE  SHARES  OF COMMON  STOCK  THAT MAY BE  PURCHASED  ON THE
EXERCISE  HEREOF HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THIS WARRANT IS BEING OFFERED
AND  SOLD  IN  RELIANCE  ON THE  EXEMPTION  FROM  REGISTRATION  PROVIDED  FOR BY
REGULATION S UNDER THE ACT.  CONSEQUENTLY,  IT MAY NOT BE OFFERED OR SOLD IN THE
UNITED  STATES OR TO U.S.  PERSONS  (OTHER THAN  DISTRIBUTORS)  EXCEPT AFTER THE
EXPIRATION OF A 40-DAY PERIOD COMMENCING ON THE ISSUANCE OF THIS WARRANT, UNLESS
THIS  WARRANT IS  REGISTERED  UNDER THE ACT OR AN  EXEMPTION  FROM  REGISTRATION
REQUIREMENTS  OF THE ACT IS  AVAILABLE.  FURTHERMORE,  THIS  WARRANT  MAY NOT BE
TRANSFERRED  EXCEPT AS PROVIDED  IN SECTION  7(b)  HEREOF.  THE SHARES OF COMMON
STOCK  ISSUED OR  ISSUABLE  UPON  EXERCISE  OF THIS  WARRANT  ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 4 OF THIS WARRANT.

                                              LS CAPITAL CORPORATION

                                           WARRANT FOR THE PURCHASE OF
                                            SHARES OF COMMON STOCK OF
                                              LS CAPITAL CORPORATION
                                             (A Delaware Corporation)
                                         _________________ _____, 199___

                                   VOID AFTER 5:00 P.M., CENTRAL STANDARD TIME,
                                        ON _________________ _____, 199___
                                      (being two years after the date hereof)

         LS Capital Corporation, a Delaware corporation (the "Company"),  hereby
certifies  that Keith J.  McKenzie  (together  with his permitted  assigns,  the
"Registered  Holder"),  is entitled,  subject to the terms set forth  below,  to
purchase  from  the  Company,  at any  time  or from  time  to time on or  after
___________________  _____,  199___  (being the date hereof) and on or before of
___________________ _____, 199___ (being two years after the date hereof) at not
later than 5:00 p.m. (Central Standard Time),  _______________  shares of Common
Stock, $.01 par value, of the Company ("Common Stock"),  at a per-share purchase
price equal to $.01. The shares  purchasable upon exercise of this Warrant,  and
the per-share purchase price, each as adjusted from time to time pursuant to the
provisions of this Warrant,  are hereinafter  referred to as the "Warrant Stock"
and the "Purchase Price", respectively.

1.       Exercise.

         (a) This Warrant may be exercised by the Registered Holder, in whole or
in part, by surrendering this Warrant, with the Purchase Form appended hereto as
Exhibit A duly executed by such Registered  Holder,  at the principal  office of
the  Company,  or at such other  office or agency as the Company may  designate,
accompanied  by payment in full,  by bank or certified  check in lawful money of
the United States, of the Purchase Price payable in respect


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of the number of shares of Warrant Stock purchased upon such exercise.

         (b) Each exercise of this Warrant shall be deemed to have been effected
immediately  prior to the close of  business  on the day on which  this  Warrant
shall have been surrendered to the Company as provided in subsection 1(a) above.
At such time, the person or persons in whose name or names any  certificates for
Warrant  Stock shall be issuable  upon such  exercise as provided in  subsection
1(c) below shall be deemed to have become the holder or holders of record of the
Warrant Stock represented by such certificates.

         (c) As soon as  practicable  after the exercise of this Warrant in full
or in part, and in any event within ten (10) days thereafter, the Company at its
expense will cause to be issued in the name of, and delivered to, the Registered
Holder, or, subject to the terms and conditions hereof, as the Registered Holder
(upon payment by the  Registered  Holder of any applicable  transfer  taxes) may
direct:

                  (i) a  certificate  or  certificates  for the  number  of full
shares of Warrant Stock to which such  Registered  Holder shall be entitled upon
such exercise  plus, in lieu of any  fractional  share to which such  Registered
Holder would  otherwise be entitled,  cash in an amount  determined  pursuant to
Section 3 hereof, and

                  (ii) in case such  exercise is in part only,  a new warrant or
warrants (dated the date hereof) of like tenor,  calling in the aggregate on the
face or faces thereof for the number of shares of Warrant  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 such shares  purchased  by the
Registered Holder upon such exercise as provided in subsection 1(a) above.

2.       Adjustments.

         (a) If the  outstanding  shares of the Company's  Common Stock shall be
subdivided  into a greater  number of shares or a dividend in Common Stock shall
be paid in respect of Common  Stock,  the Purchase  Price in effect  immediately
prior  to  such  subdivision  or at the  record  date  of  such  dividend  shall
simultaneously  with the  effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately  reduced. If the outstanding
shares of Common Stock shall be combined  into a smaller  number of shares,  the
Purchase  Price  in  effect   immediately  prior  to  such  combination   shall,
simultaneously  with the effectiveness of such combination,  be  proportionately
increased. When any adjustment is required to be made in the Purchase Price, the
number of shares of Warrant Stock  purchasable upon the exercise of this Warrant
shall be changed to the number determined by dividing (i) an amount equal to the
number of shares issuable upon the exercise of this Warrant immediately prior to
such adjustment, multiplied by the Purchase Price in effect immediately prior to
such  adjustment,  by (ii) the Purchase Price in effect  immediately  after such
adjustment.

         (b) If there shall occur any capital reorganization or reclassification
of the Company's Common Stock (other than a change in par value or a subdivision
or combination as provided for in subsection 2(a) above),  or any  consolidation
or merger of the Company with or into another corporation,  or a transfer of all
or substantially all of the assets of the


<PAGE>



Company, or the payment of a liquidating  distribution then, as part of any such
reorganization,  reclassification,  consolidation,  merger,  sale or liquidating
distribution,  lawful  provision shall be made so that the Registered  Holder of
this Warrant shall have the right thereafter to receive upon the exercise hereof
(to the  extent,  if any,  still  exercisable)  the kind and amount of shares of
stock or other  securities or property which such  Registered  Holder would have
been  entitled  to receive  if,  immediately  prior to any such  reorganization,
reclassification,  consolidation,  merger, sale or liquidating distribution,  as
the case may be, such Registered  Holder had held the number of shares of Common
Stock which were then purchasable upon the exercise of this Warrant. In any such
case, appropriate adjustment (as reasonably determined by the Board of Directors
of the Company)  shall be made in the  application  of the  provisions set forth
herein with respect to the rights and  interests  thereafter  of the  Registered
Holder of this  Warrant  such that the  provisions  set forth in this  Section 2
(including  provisions  with respect to adjustment of the Purchase  Price) shall
thereafter be applicable, as nearly as is reasonably practicable, in relation to
any shares of stock or other securities or property thereafter  deliverable upon
the exercise of this Warrant.
         (c) In any  case in  which  this  Section  2  shall  require  that  any
adjustment in the number of shares of Warrant Stock or other  property for which
this  Warrant  may be  exercised  be made  effective  as of a record  date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event  issuing to the  Registered  Holder the amount of Warrant  Stock and other
property,  if any, issuable upon exercise of this Warrant after such record date
that is over and above the Warrant Stock and other  property,  if any,  issuable
upon  exercise of this Warrant as in effect prior to such  adjustment;  provided
that upon request the Company shall deliver to the Registered  Holder a due bill
or other  appropriate  instrument  evidencing the  Registered  Holder's right to
receive such  additional  shares or property  upon the  occurrence  of the event
requiring such adjustment.
         (d) When any  adjustment is required to be made in the Purchase  Price,
the Company shall promptly mail to the Registered  Holder a certificate  setting
forth the  Purchase  Price  after  such  adjustment  and  setting  forth a brief
statement of the facts requiring such adjustment.  Such  certificate  shall also
set forth the kind and amount of stock or other securities or property for which
this Warrant shall be exercisable  following the occurrence of any of the events
specified in subsection 2(a) or 2(b) above.

3.       Fractional Shares.

         The Company  shall not be required upon the exercise of this Warrant to
issue any fractional  shares,  but shall make an adjustment  therefor in cash on
the basis of the closing sales price of the Warrant Stock on the date  preceding
the date that the related  Purchase Form is given by the  Registered  Holder (or
the sales  price of the most  recent  sale if there is no closing  price on such
date)

4.       Limitation on Sales.

         (a) The Registered  Holder, and each subsequent holder of this Warrant,
if any,  acknowledges  that this  Warrant  and the  Warrant  Stock have not been
registered  under  the  Securities  Act of 1933,  as now in  force or  hereafter
amended,  or any  successor  legislation  (the  "Act"),  and agrees not to sell,
pledge,  distribute,  offer for sale,  transfer  or  otherwise  dispose  of this
Warrant or any Warrant  Stock  issued upon its exercise in the absence of (i) an
effective


<PAGE>



registration  statement  under the Act as to this Warrant or such Warrant  Stock
and  registration or  qualification  of this Warrant or such Warrant Stock under
any  applicable  blue sky or state  securities  law then in  effect,  or (ii) an
opinion of counsel,  satisfactory  to the Company,  that such  registration  and
qualification  are  not  required.   Without  limiting  the  generality  of  the
foregoing,  unless the offering and sale of the Warrant  Stock to be issued upon
the particular  exercise of this Warrant shall have been effectively  registered
under the Act,  the  Company  shall be under no  obligation  to issue the shares
covered by such  exercise  unless  and until the  Registered  Holder  shall have
executed an investment letter in form and substance satisfactory to the Company,
including  a warranty at the time of such  exercise  that it is  acquiring  such
shares for its own account,  for  investment and not with a view to, or for sale
in connection  with,  the  distribution  of any such shares,  in which event the
Registered Holder shall be bound by the provisions of a legend to such effect on
the certificate(s) representing the Warrant Stock. In addition, without limiting
the generality of the  foregoing,  the Company may delay issuance of the Warrant
Stock until  completion  of any action or obtaining  of any  consent,  which the
Company  believes  necessary or advisable  under any  applicable  law (including
without limitation state securities or "blue sky" laws).

         (b) The  Registered  Holder  agrees,  and each other  holder of Warrant
Stock  agrees,  if requested  by the Company  and/or the  representative  of the
underwriters  underwriting  an offering of Common Stock (or other  securities of
the Company) from time to time, not to sell or otherwise  transfer or dispose of
any Warrant  Stock then held by the  Registered  Holder and/or such other holder
during such period of time  following  the  effective  date of any  registration
statement of the Company filed under the Act for the period of time with respect
to which a majority of the  executive  officers of the Company agree not to sell
shares of Common Stock (or other  securities  of the  Company).  Such  agreement
shall  be  in  writing  in  a  form   satisfactory   to  the  Company  and  such
representative.  The Company may impose stop-transfer  instructions with respect
to the Warrant Stock subject to the foregoing  restriction until the end of such
period.

5.       Reservation of Stock.

         The Company will at all times  reserve and keep  available,  solely for
issuance and delivery upon the exercise of this Warrant,  such shares of Warrant
Stock and other stock,  securities  and property,  as from time to time shall be
issuable upon the exercise of this Warrant.

6.   Replacement of Warrants.

         Upon receipt of evidence reasonably  satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant and (in the case of loss,
theft or  destruction)  upon delivery of an indemnity  agreement (with surety if
reasonably required) in an amount reasonably satisfactory to the Company, or (in
the case of mutilation)  upon surrender and  cancellation  of this Warrant,  the
Company will issue, in lieu thereof, a new Warrant of like tenor.

7.       Transfers. etc.



<PAGE>



         Subject to Section 4 above:

         (a) The  Company  will  maintain  a register  containing  the names and
addresses of the Registered  Holders of this Warrant.  The Registered Holder may
change its  address as shown on the warrant  register  by written  notice to the
Company requesting such change.

         (b) This Warrant shall not be transferable by the Registered Holder and
shall be exercisable only by the Registered  Holder;  provided that this Warrant
may be transferred to, and may be exercisable by, any company that directly,  or
indirectly  through one or more  intermediaries,  is controlled  by, or is under
common  control with,  the Registered  Holder.  Subject to the  foregoing,  this
Warrant shall not be assigned,  pledged or  hypothecated  in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or  similar  process  without  the prior  written  consent of the  Company.  Any
attempted transfer,  assignment,  pledge,  hypothecation or other disposition of
this Warrant or of any rights  granted  hereunder  contrary to the provisions of
this  Section  7, or the levy of any  attachment  or similar  process  upon this
Warrant or such rights, shall be null and void.
          (c)  Until  any  transfer  of this  Warrant  is  made  in the  warrant
register,  the Company may treat the  Registered  Holder of this  Warrant as the
absolute owner hereof for all purposes; provided, however, 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  hereof for all
purposes, notwithstanding any notice to the contrary.

8. Mailing of Notices, etc.

         All notices and other communications from the Company to the Registered
Holder of this Warrant  shall be mailed by  first-class  certified or registered
mail, postage prepaid, to the address furnished to the Company in writing by the
last  Registered  Holder of this Warrant who shall have  furnished an address to
the Company in writing. All notices and other communications from the Registered
Holder of this Warrant or in connection  herewith to the Company shall be mailed
by first-class  certified or registered mail, postage prepaid, to the Company at
its offices at 15915 Katy  Freeway,  Suite 250,  Houston,  Texas 77094,  or such
other address as the Company shall so notify the Registered Holder.

9.       No Rights as Stockholder.

         Until the  exercise  of this  Warrant,  the  Registered  Holder of this
Warrant  shall not have or exercise any rights by virtue hereof as a stockholder
of the Company.

10.      Change or Waiver.

         Any term of this Warrant may be changed or waived only by an instrument
in writing signed by the party against which enforcement of the change or waiver
is sought.


11.      Headings.

         The headings in this Warrant are for purposes of reference only and 
shall not limit or


<PAGE>



otherwise affect the meaning of any provision of this Warrant.

12.      Governing Law.

         THIS WARRANT WILL BE GOVERNED BY AND CONSTRUED IN  ACCORDANCE  WITH THE
LAWS OF THE STATE OF DELAWARE.

                             LS CAPITAL CORPORATION


                        By:______________________________

                                 Paul J. Montle,
                                    President


<PAGE>



                                    EXHIBIT A

                                  PURCHASE FORM

To:      LS Capital Corporation
         15915 Katy Freeway, Suite 250
         Houston, Texas 77094

         The  undersigned  pursuant to the  provisions set forth in the attached
Warrant hereby  irrevocably  elects to purchase  _________  shares of the Common
Stock (the "Common Stock") covered by such Warrant and herewith makes payment of
$_____________,  representing  the full  purchase  price for such  shares at the
per-share price provided for in such Warrant.

         The undersigned understands and acknowledges the terms and restrictions
on the right to transfer  or dispose of the Common  Stock set forth in Section 4
of the attached  Warrant,  which the  undersigned  has carefully  reviewed.  The
undersigned  consents  to the  placing  of a legend on its  certificate  for the
Common Stock  referring to such  restrictions  and the placing of stop  transfer
orders until the Common Stock may be transferred in accordance with the terms of
such restrictions.



                      By:_________________________________

                       Name:______________________________

                      Title:_______________________________

                      Dated:______________________________