kodiaksb2ex4-1.htm


    
      

      

    

    
      Exhibit
        4.1

       

      AS
        THE CORPORATION IS NOT A REPORTING ISSUER IN ANY JURISDICTION OF CANADA,
        UNLESS
        PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY
        MUST NOT TRADE THE SECURITY IN CANADA AND MAY HAVE TO HOLD THE SECURITY FOR
        AN
        INDEFINITE PERIOD.

      


      NEITHER
        THESE WARRANTS NOR THE COMMON SHARES ISSUABLE UPON EXERCISE THEREOF HAVE
        BEEN
        REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
        "U.S.
        SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
        STATES.  THESE WARRANTS MAY NOT BE EXERCISED WITHIN THE UNITED STATES
        OR BY OR ON BEHALF OF A U.S. PERSON (AS DEFINED IN REGULATION S UNDER THE
        U.S.
        SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
        REQUIREMENTS OF THE U.S. SECURITIES ACT, AND EXEMPTIONS FROM APPLICABLE STATE
        SECURITIES LAWS, IN EACH CASE AFTER PROVIDING AN OPINION OF COUNSEL OR OTHER
        EVIDENCE SATISFACTORY TO THE CORPORATION TO SUCH EFFECT.

      


      NEITHER
        THESE WARRANTS NOR THE COMMON SHARES ISSUABLE UPON EXERCISE THEREOF MAY BE
        OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR DISPOSED
        OF
        EXCEPT: (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S.
        SECURITIES ACT; (B) IN A TRANSACTION OUTSIDE THE UNITED STATES MEETING THE
        REQUIREMENTS OF RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT OR
        (C) IN
        A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND,
        IN
        EACH CASE, IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
        LAWS.  PRIOR TO THE COMPLETION OF ANY SUCH TRANSACTION PURSUANT TO THE
        FOREGOING CLAUSES (B) OR (C), THE TRANSFEROR SHALL DELIVER TO THE CORPORATION
        A
        WRITTEN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE CORPORATION
        TO
        THE EFFECT THAT SUCH TRANSACTION IS IN COMPLIANCE WITH THE REGISTRATION
        REQUIREMENTS OF ALL APPLICABLE UNITED STATES FEDERAL AND STATE SECURITIES
        LAWS.  HEDGING TRANSACTIONS WITH RESPECT TO THESE WARRANTS AND THE
        COMMON SHARES ISSUABLE UPON EXERCISE THEREOF ARE PROHIBITED UNLESS THEY ARE
        CONDUCTED IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

      


      This
        warrant certificate is void if not exercised on or before 5:00 p.m. (Calgary
        time) on June 30, 2009.

      


      WARRANT
        CERTIFICATE

      KODIAK
        ENERGY, INC.

      


      (Incorporated
        under the laws of the State of  Delaware and extra-provincially
        registered in the Province of Alberta, Canada)

      


      
        	
                WARRANT
                  CERTIFICATE

                NO.
                  «Certificate»

                 

              	 	
                «Warrant»
                  WARRANTS, each entitling the holder to acquire one Common Share
                  for each
                  Warrant represented hereby

                 

              


      

      


      THIS
        IS TO CERTIFY THAT, FOR VALUE RECEIVED

      


      «Name»

      «Address»

      


      (hereinafter
        referred to as the "holder" or the "Warrantholder") is entitled to acquire
        for
        each Warrant represented hereby, in the manner and subject to the restrictions
        and adjustments set forth herein, at any time and from time to time until
        5:00 p.m. (Calgary time) (the "Time of Expiry") on the Expiry Date (as
        hereinafter defined), one fully paid and non-assessable common share ("Common
        Share") of KODIAK ENERGY, INC. (the "Corporation"), at the Exercise Price
        (as
        hereinafter defined), subject to adjustment as herein provided.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2

      
 

      These
        Warrants may only be exercised at the principal office of the Corporation
        at 734
        7th Avenue
        S.W.
        Suite 460 Calgary, Alberta, T2P 3P8, or such other office as the Corporation
        may
        advise the holder in writing.  These Warrants are issued subject to
        the terms and conditions appended hereto as
Schedule "A".

       

      IN
        WITNESS WHEREOF, the Corporation has caused this Warrant Certificate to be
        executed by a duly authorized officer.

       

      DATED
        this 1st day of July, 2006.

      
        	 	
                KODIAK
                  ENERGY, INC.

              
	 	 
	 	 
	 	
                Per:  _____________________________

              


      

      


      


      (See
        terms and conditions attached hereto)

      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        "A"

      


      TERMS
        AND CONDITIONS FOR WARRANT

      


      ARTICLE
        1

       

      INTERPRETATION

      


      
        	
                1.1

              	
                Definitions

              


      

       

      In
        these Terms and Conditions, unless
        there is something in the subject matter or context inconsistent
        therewith:

      


      
        	
                (a)

              	
                "Common
                  Shares" means the common shares in the capital of the
                  Corporation;

              


      

       

      
        	
                (b)

              	
                "Corporation"
                  means Kodiak Energy, Inc.;

              


      

       

      
        	
                (c)

              	
                "Current
                  Market Price" of the Common Shares at any date means the simple
                  average of
                  the closing price per share for the Common Shares for any 10 consecutive
                  trading days selected by the Corporation commencing not more than
                  45
                  trading days before such date on the stock exchange on which the
                  Common
                  Shares are listed or, if such Common Shares are not listed on a
                  stock
                  exchange, such over-the-counter market on which the Common Shares
                  are
                  quoted or trade (provided that if on any day in such period no
                  closing
                  price per share for the Common Shares is reported on by such exchange
                  or
                  over-the-counter market for such day, the average of the reported
                  closing
                  bid and asked prices on such exchange or over-the-counter market
                  on such
                  day shall be deemed to be the closing price per share for the Common
                  Shares for such day) of if the Common Shares are not listed or
                  quoted on
                  any stock exchange or over-the-counter market, a price determined
                  by the
                  board of directors of the Corporation acting
                  reasonably;

              


      

       

      
        	
                (d)

              	
                "Dividend
                  Paid in the Ordinary Course" means a dividend declared payable
                  on the
                  Common Shares in any four consecutive quarters of the Corporation,
                  whether
                  in (1) cash, (2) securities of the Corporation, including rights,
                  options
                  or warrants (other than rights, options or warrants referred to
                  in
                  subsection 4.2(b)) to purchase any securities of the Corporation
                  or
                  property or other assets of the Corporation, or (3) property or
                  other
                  assets of the Corporation, to the extent that the amount or value
                  of such
                  dividend together with the amount or value of all other dividends
                  theretofore paid during such financial year (any such securities,
                  property
                  or other assets so distributed to be valued at the fair market
                  value of
                  such securities, property or other assets, as the case may be,
                  as
                  determined by the Corporation, which determination shall be conclusive,
                  provided that, for the purposes of this definition, the fair market
                  value
                  of any Common Share distributed by way of dividend shall be conclusively
                  determined by reference to the Current Market Price per Common
                  Share on
                  the date prior to the declaration of such dividend) does not exceed
                  the
                  greater of:

              


      

       

      
        	
                 

              	
                (i)

              	
                150%
                  of the aggregate amount and/or value of dividends declared payable
                  by the
                  Corporation on the Common Shares in the period of four consecutive
                  financial quarters ended immediately prior to the first day of
                  such
                  financial year; and

              


      

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2

      


       

      
        	
                 

              	
                (ii)

              	
                100%
                  of the consolidated net income of the Corporation before extraordinary
                  items (but after dividends payable on all shares ranking prior
                  to or on a
                  parity with respect to the payment of dividends with the Common
                  Shares) in
                  respect of the period of four consecutive financial quarters ended
                  immediately prior to the first day of the current financial quarter
                  (such
                  consolidated net income, extraordinary items and dividends to be
                  shown in
                  the audited consolidated financial statements of the Corporation
                  for such
                  period of four consecutive financial quarters or if there are no
                  audited
                  consolidated financial statements for such period, computed in
                  accordance
                  with generally accepted accounting principles, consistent with
                  those
                  applied in the preparation of the most recent audited consolidated
                  financial statements of the
                  Corporation);

              


      

       

      
        	
                (e)

              	
                "Exercise
                  Price" means the price of US$2.70 per Common Share (subject to
                  adjustment
                  in certain events) from the date of issue until 30th
                  day of June,
                  2008. From 1st day of July, 2008, the price shall be US$3.50 until
                  the
                  expiry date;

              


      

       

      
        	
                (f)

              	
                "Expiry
                  Date" means the 30th day of June,
                  2009;

              


      

       

      
        	
                (g)

              	
                "herein",
                  "hereby" and similar expressions refer to these Terms and Conditions
                  as
                  the same may be amended or modified from time to time; and the
                  expression
                  "Article" and "Section" followed by a number refer to the specified
                  Article or Section of these Terms and
                  Conditions;

              


      

       

      
        	
                (h)

              	
                "person"
                  means an individual, corporation, partnership, trustee or any
                  unincorporated organization and words importing persons have a
                  similar
                  meaning;

              


      

       

      
        	
                (i)

              	
                "Time
                  of Expiry" means 5:00 p.m. (Calgary time) on the Expiry
                  Date;

              


      

       

      
        	
                (j)

              	
                "Warrant"
                  means the warrant to acquire Common Shares evidenced by the Warrant
                  Certificate issued to the holder;
                  and

              


      

       

      
        	
                (k)

              	
                "Warrant
                  Certificate" means the certificate to which these Terms and Conditions
                  are
                  attached.

              


      

       

      
        	
                1.2

              	
                Gender

              


      

       

      Words
        importing the singular number
        include the plural and vice versa and words importing the masculine gender
        include the feminine and neuter genders.

      


      
        	
                1.3

              	
                Interpretation
                  Not Affected by Headings

              


      

       

      The
        division of these Terms and
        Conditions into Articles, Sections and Subsections and the insertion of headings
        are for convenience of reference only and shall not affect the construction
        or
        interpretation thereof.

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3

      


       

      
        	
                1.4

              	
                Applicable
                  Law

              


      

       

      The
        terms hereof and of the Warrant
        shall be construed in accordance with the laws of the Province of Alberta
        and
        the laws of Canada applicable thereto.

      


      ARTICLE
        2

       

      ISSUE
        OF WARRANT

      


      
        	
                2.1

              	
                Issue
                  of Warrants

              


      

       

      That
        number of Warrants set out on the
        Warrant Certificate are hereby created and authorized to be issued.

      


      
        	
                2.2

              	
                Additional
                  Warrants

              


      

       

      Subject
        to any other written agreement
        between the Corporation and the Warrantholder, the Corporation may at any
        time
        and from time to time undertake further equity or debt financing and may
        issue
        additional securities of any kind including Common Shares, warrants or grant
        options or similar rights to purchase Common Shares to any person.

      


      
        	
                2.3

              	
                Issue
                  in Substitution for Lost Warrants

              


      

       

      If
        the
        Warrant Certificate becomes mutilated, lost, destroyed or stolen:

      


      
        	
                (a)

              	
                the
                  Corporation shall, subject to subsection 2.3(b) hereof, issue and
                  deliver
                  a new Warrant Certificate of like date and tenor as the one mutilated,
                  lost, destroyed or stolen, in exchange for and in place of and
                  upon
                  cancellation of such mutilated, lost, destroyed or stolen Warrant
                  Certificate; and

              


      

       

      
        	
                (b)

              	
                the
                  holder shall bear the cost of the issue of a new Warrant Certificate
                  hereunder and in the case of the mutilation, loss, destruction
                  or theft of
                  the Warrant Certificate, shall, as a condition precedent to the
                  issuance
                  of a new Warrant Certificate, furnish to the Corporation such evidence
                  of
                  mutilation, loss, destruction, or theft as shall be satisfactory
                  to the
                  Corporation in its sole discretion and, if required by the Corporation,
                  an
                  indemnity in an amount and form satisfactory to the Corporation,
                  in its
                  discretion, and shall pay the reasonable charges of the Corporation
                  in
                  connection therewith.

              


      

       

      
        	
                2.4

              	
                Warrantholder
                  Not a Shareholder

              


      

       

      The
        Warrant Certificate shall not
        constitute the holder a shareholder of the Corporation, nor entitle it to
        any
        right or interest in respect thereof except as may be expressly provided
        in the
        Warrant Certificate.  The Corporation may deem and treat the holder of
        the Warrant Certificate as the absolute owner thereof for all purposes and
        the
        Corporation shall not be affected by any notice to the contrary.

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4


       

       

      
        	
                2.5

              	
                Register
                  of Warrants

              


      

       

      At
        all times while Warrants are
        outstanding, the Corporation shall maintain a register of all holders of
        Warrants on which shall be entered the names, latest known addresses of all
        holders and if available, the telecopier numbers of such holders and particulars
        of the Warrants held by them and a register of transfers in which shall be
        entered the particulars of all transfers of Warrants, such registers to be
        kept
        by and at the office of the Corporation.

       

      
        	
                2.6

              	
                Transfer

              


      

       

      Warrants
        may only be transferred on the
        register of the Corporation by the holder thereof or its legal representatives
        or its attorney duly appointed by an instrument in writing in form and execution
        satisfactory to the Corporation in accordance with applicable
        laws.  The Warrants and the Common Shares issuable thereunder are and
        may continue to be subject to resale restrictions and hold periods, and holders
        should consult their legal advisors in respect of the same.  Such
        transfer will be effected upon surrender to the Corporation of this Warrant
        Certificate for cancellation and the duly completed and executed Transfer
        Form
        attached hereto as Appendix 1 and upon compliance, to the
        reasonable satisfaction of the Corporation, with:

      


      
        	
                (a)

              	
                the
                  conditions herein;

              


      

       

      
        	
                (b)

              	
                such
                  reasonable requirements as the Corporation may require;
                  and

              


      

       

      
        	
                (c)

              	
                all
                  applicable securities legislation and requirements of regulatory
                  authorities and all stock exchanges upon which the Common Shares
                  are
                  listed from time to time, as
                  applicable.

              


      

       

      ARTICLE
        3

       

      EXERCISE
        OF THE WARRANT

      


      3.1       No
        Registration under U.S. Securities Act

       

      The
        Warrants may not be exercised
        within the United States, or by or on behalf of a “U.S. Person” (as defined in
        Regulation S under the United States Securities Act of 1933, as amended (the
        “U.S. Securities Act”)), nor will certificates representing Common Shares
        issuable upon exercise of the Warrants be delivered in the United States,
        except
        pursuant to an exemption from the registration requirements of the U.S.
        Securities Act and exemptions from applicable state securities
        laws.  Any person who proposes to exercise a Warrant shall provide to
        the Corporation, as contemplated in Appendix 2, either (i)
        written certification that the Warrant is not being exercised within the
        United
        States or by or on behalf of a U.S. Person, (ii) a written opinion of counsel
        or
        other evidence satisfactory to the Corporation to the effect that the issuance
        of Common Shares upon exercise of such Warrant is not required to be registered
        under the U.S. Securities Act and applicable state securities laws or (iii)
        written confirmation by the person exercising the Warrant that it is the
        original purchaser thereof and reaffirming, as of the date of such exercise,
        the
        representations, warranties made by it in the subscription agreement pursuant
        to
        which it purchased the Warrant.  Common Shares issuable upon exercise
        of Warrants by a person in the United States or by or on behalf of a U.S.
        Person
        may, if so determined by the Corporation in its sole discretion, bear a legend
        restricting transfer.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5

      


       

      
        	
                3.2

              	
                Method
                  of Exercise of The Warrant

              


      

       

      The
        holder may exercise the right
        hereby conferred on the holder to acquire Common Shares (subject to the
        provisions of this Article 3) by:

       

      
        	
                (a)

              	
                duly
                  completing and executing the Warrant Exercise Form attached hereto
                  as
                  Appendix 2;
                  and

              


      

       

      
        	
                (b)

              	
                certifying
                  that the holder or (if different) the recipient of the Common Shares
                  to be
                  issued upon exercise of the Warrant either: (i) is not (a) a "U.S.
                  Person", (b) exercising the Warrant(s) on behalf of a "U.S. Person",
                  and
                  (c) in the United States at the time that the Warrant(s) are exercised
                  and
                  did not execute or deliver the Warrant Exercise Form in the United
                  States;
                  or (ii) at or prior to the time of such exercise, has delivered
                  to the
                  Corporation a written opinion of counsel or other evidence satisfactory
                  to
                  the Corporation to the effect that the issuance of Common Shares
                  upon such
                  exercise is not required to be registered under the U.S. Securities
                  Act
                  and applicable state securities laws; or (iii) is the original
                  purchaser
                  of the Warrants and confirms as of the date of such exercise, the
                  representations, warranties and agreements made by it in the subscription
                  agreement pursuant to which the Warrant was purchased by it;
                  and

              


      

       

      
        	
                (c)

              	
                surrendering
                  this certificate, together with the holder’s certified cheque or a bank
                  draft, money order or wire transfer  in the full amount of the
                  total aggregate Exercise Price of the Common Shares being purchased,
                  together with the duly completed and executed Warrant Exercise
                  Form, to
                  the Corporation at its offices,

              


      

       

      at
        any
        time up until the Time of Expiry.  This Warrant Certificate shall be
        deemed to be surrendered only upon personal delivery thereof to, or if sent
        by
        mail or other means of transmission, upon actual receipt thereof by, the
        Corporation at its offices.

      


      
        	
                3.3

              	
                Effect
                  of Exercise of the Warrant

              


      

       

      
        	
                (a)

              	
                Upon
                  surrender and payment as aforesaid the Common Shares so subscribed
                  for
                  shall be issued as fully paid and non-assessable shares, free from
                  all
                  liens, charges and encumbrances and the holder shall become the
                  holder of
                  record of such Common Shares on the date of such surrender and
                  payment;

              


      

       

      
        	
                (b)

              	
                Within
                  ten (10) business days after surrender and payment as aforesaid,
                  the
                  Corporation shall forthwith cause the issuance of and mail to the
                  holder a
                  certificate for the Common Shares purchased as
                  aforesaid;

              


      

       

      
        	
                (c)

              	
                Notwithstanding
                  anything herein contained including any adjustment provided for
                  in Article
                  4, the Corporation shall not be required, upon the exercise of
                  any
                  Warrants, to issue fractions of Common Shares or to distribute
                  certificates which evidence fractional Common Shares.  Any
                  fractional Common Shares that would otherwise be issuable upon
                  the
                  exercise of Warrants shall be cancelled by the Corporation without
                  compensation to the holder thereof;
                  and

              


      

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      6

      


       

      
        	
                (d)

              	
                Notwithstanding
                  anything herein contained, no Common Shares will be issued pursuant
                  to the
                  exercise of any Warrant if the issuance of such Common Shares would
                  constitute a violation of the securities laws of any applicable
                  jurisdiction or the requirements of any applicable stock exchange,
                  and without limiting the generality of the foregoing,
                  in the event
                  that any of the Warrants are exercised prior to expiry of any hold
                  period
                  or other resale restriction placed thereon by such laws or requirements,
                  the certificates evidencing the Common Shares thereby issued will
                  bear
                  such legend as is required under applicable securities laws and
                  that, in
                  the opinion of legal counsel to the Corporation, is necessary in
                  order to
                  avoid a violation of any such laws or
                  requirements.

              


      

       

      
        	
                3.4

              	
                Subscription
                  for Less than Entitlement

              


      

       

      The
        holder may subscribe for and
        purchase a number of Common Shares less than the number which it is entitled
        to
        purchase pursuant to the surrendered Warrant Certificate.  In the
        event of any purchase of a number of Common Shares less than the number which
        can be purchased pursuant to the Warrant Certificate, the Corporation shall
        forthwith issue and deliver to the holder a new Warrant Certificate containing
        the same terms and conditions as disclosed herein to purchase that number
        of
        Common Shares with respect to which such partial exercise did not
        apply.

      


      
        	
                3.5

              	
                Resale
                  Restrictions

              


      

       

      As
        the Corporation is not a reporting
        issuer in any jurisdiction of Canada, unless permitted under Canadian securities
        legislation, the holder of this security must not trade the security in Canada
        and may have to hold the security for an indefinite period.

       

      
        	
                3.6

              	
                Expiration
                  of the Warrant

              


      

       

      After
        the Time of Expiry, all rights
        hereunder shall wholly cease and terminate and the Warrant Certificate and
        the
        Warrants shall be void and of no further force and effect.

      


      ARTICLE
        4

       

      ADJUSTMENTS

      


      
        	
                4.1

              	
                Adjustment
                  of Number of Common Shares

              


      

       

      The
        acquisition rights in effect at any
        date attaching to the Warrants shall be subject to adjustment from time to
        time
        as follows:

      


      
        	
                (a)

              	
                If
                  and whenever at any time after the date hereof and prior to the
                  Time of
                  Expiry, any adjustment in the Exercise Price or in the calculation
                  thereof
                  pursuant to Section 4.2 shall occur as a result
                  of:

              


      

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      7

      


       

      
        	
                 

              	
                (i)

              	
                an
                  event referred to in subsection
                  4.2(a);

              


      

       

      
        	
                 

              	
                (ii)

              	
                the
                  fixing by the Corporation of a record date for an event referred
                  to in
                  subsection 4.2(b); or

              


      

       

      
        	
                 

              	
                (iii)

              	
                the
                  fixing by the Corporation of a record date for an event referred
                  to in
                  subsection 4.2(c) if such event constitutes the issue or distribution
                  to
                  the holders of all or substantially all of its outstanding Common
                  Shares
                  of:

              


      

       

      
        	
                 

              	
                (A)

              	
                Common
                  Shares, or

              


      

       

      
        	
                 

              	
                (B)

              	
                securities
                  exchangeable for or convertible into Common Shares at less than
                  the
                  Current Market Price of the Common Shares on such record date,
                  or

              


      

       

      
        	
                 

              	
                (C)

              	
                rights,
                  options or warrants to acquire Common Shares at an exercise, exchange
                  or
                  conversion price per Common Share less than the Current Market
                  Price of
                  the Common Shares on such record
                  date,

              


      

       

      the
        number of Common Shares obtainable upon the subsequent exercise of the Warrant
        shall be adjusted simultaneously with the adjustment in the Exercise Price
        pursuant to Section 4.2 by multiplying the number of Common Shares theretofore
        obtainable on the exercise thereof immediately prior to such adjustment by
        a
        fraction of which the numerator shall be the total number of Common Shares
        outstanding immediately after such date and the denominator shall be the
        total
        number of Common Shares outstanding immediately prior to such
        date.  To the extent that any adjustment in subscription rights occurs
        pursuant to this subsection 4.1(a) as a result of the distribution of securities
        convertible into or exchangeable for Common Shares referred to in subsection
        4.2(a) or as a result of the fixing by the Corporation of a record date for
        the
        distribution of rights, options or warrants referred to in subsection 4.2(b),
        the number of Common Shares purchasable upon exercise of a Warrant shall
        be
        readjusted immediately after the expiration of any relevant exchange, conversion
        or exercise right to the number of Common Shares which would be purchasable
        based upon the number of Common Shares actually issued and
        remaining issuable immediately after such expiration, and shall be further
        readjusted in such manner upon expiration of any further such
        right.  To the extent that any such adjustment in subscription rights
        occurs pursuant to this subsection 4.1(a) as a result of the fixing by the
        Corporation of a record date for the distribution referred to in subsection
        4.2(c) of rights, options or warrants or exchangeable or convertible securities,
        the number of Common Shares purchasable upon exercise of a Warrant shall
        be
        readjusted immediately after the expiration of any relevant exchange, conversion
        or exercise right to the number which would be purchasable pursuant to this
        subsection 4.1(a) if the fair market value of such rights, options or warrants
        or other exchangeable or convertible securities had been determined for the
        purposes of the adjustment pursuant to this subsection 4.1(a) on the basis
        of
        the number of Common Shares issued and remaining issuable immediately after
        such
        expiration, and shall be further readjusted in such manner upon expiration
        of
        any further right.

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      8

      


       

      
        	
                (b)

              	
                If
                  and whenever at any time after the date hereof and prior to the
                  Time of
                  Expiry there is a reclassification of the Common Shares or a capital
                  reorganization of the Corporation other than as described in subsection
                  4.2(a) or a consolidation, amalgamation or merger of the Corporation
                  (including, without limitation, by way of plan of arrangement)
                  with or
                  into any other body corporate, trust, partnership or other entity,
                  or a
                  sale or conveyance of the property and assets of the Corporation
                  as an
                  entirety or substantially as an entirety to any other body corporate,
                  trust, partnership or other entity, any Warrantholder who has not
                  exercised his right of acquisition prior to the effective date
                  of such
                  reclassification, reorganization, consolidation, amalgamation,
                  merger,
                  sale or conveyance, upon the exercise of such right thereafter,
                  shall be
                  entitled to receive and shall accept, in lieu of the number of
                  Common
                  Shares then sought to be acquired by it, the kind and number of
                  shares or
                  other securities or property of the Corporation or of the body
                  corporate,
                  trust, partnership or other entity resulting from such reclassification,
                  reorganization, consolidation, amalgamation or merger, or to which
                  such
                  sale or conveyance may be made, as the case may be, that such holder
                  would
                  have been entitled to receive as a result of such reclassification,
                  reorganization, consolidation, amalgamation, merger, sale or conveyance,
                  if, on the record date or the effective date thereof, as the case
                  may be,
                  the Warrantholder had been the registered holder of the number
                  of Common
                  Shares to which the holder was theretofore entitled upon
                  exercise.  If determined appropriate by the board of directors
                  of the Corporation to give effect to or to evidence the provisions
                  of this
                  subsection 4.1(b), the Corporation, its successor, or such purchasing
                  body
                  corporate, partnership, trust or other entity, as the case may
                  be, shall
                  prior to or contemporaneously with any such reclassification,
                  reorganization, consolidation, amalgamation, merger, sale or conveyance,
                  enter into an agreement or new Warrant Certificate which shall
                  provide, to
                  the extent possible, for the application of the provisions set
                  forth in
                  this Warrant Certificate with respect to the rights and interests
                  thereafter of the Warrantholder to the end that the provisions
                  set forth
                  in this Warrant shall thereafter correspondingly be made applicable,
                  as
                  nearly as may reasonably be, with respect to any shares, other
                  securities
                  or property to which a Warrantholder is entitled on the exercise
                  of its
                  acquisition rights thereafter and upon entering into such new Warrant
                  Certificate or agreement, the Corporation shall cease to have any
                  obligations (including the obligation to issue any Common Shares)
                  hereunder and the holder shall cease to have any rights
                  hereunder.  Any Warrant Certificate or agreement entered into
                  pursuant to the provisions of this subsection 4.1(b) shall be an
                  agreement
                  entered into pursuant to the provisions of Article 6.  Any
                  Warrant Certificate or agreement entered into between the Corporation,
                  any
                  successor to the Corporation or such purchasing body corporate,
                  partnership, trust or other entity shall provide for adjustments
                  which
                  shall be as nearly equivalent as may be practicable to the adjustments
                  provided in this Article 4 and which shall apply to successive
                  reclassifications, reorganizations, consolidations, amalgamations,
                  mergers, sales or conveyances.

              


      

       

      


       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      9

      


       

      
        	
                4.2

              	
                Adjustment
                  of Exercise Price

              


      

       

      The
        Exercise Price in effect at any
        date attaching to the Warrants shall be subject to adjustment from time to
        time
        as follows:

      


      
        	
                (a)

              	
                If
                  and whenever after the date hereof and at any time prior to the
                  Time of
                  Expiry, the Corporation shall:

              


      

       

      
        	
                 

              	
                (i)

              	
                subdivide,
                  divide or change its outstanding Common Shares into a greater number
                  of
                  Common Shares;

              


      

       

      
        	
                 

              	
                (ii)

              	
                consolidate,
                  reduce or combine its outstanding Common Shares into a lesser number
                  of
                  Common Shares;

              


      

       

      
        	
                 

              	
                (iii)

              	
                make
                  any distribution, other than by way of Dividend Paid in the Ordinary
                  Course, to the holders of all or substantially all of the outstanding
                  Common Shares payable in Common
                  Shares;

              


      

      

        the
          Exercise Price in effect on the effective date of such events referred
          to in
          subsections 4.2(a)(i), 4.2(a)(ii), or 4.2(a)(iii) shall be adjusted to
          equal the
          price determined by multiplying the Exercise Price in effect immediately
          prior
          to such effective date by a fraction of which the numerator shall be the
          total
          number of Common Shares outstanding immediately prior to such date and
          the
          denominator shall be the total number of Common Shares immediately after
          such
          date.  Such adjustment shall be made successively whenever any event
          referred to in this subsection 4.2(a) shall occur.

      

       

      
        	
                (b)

              	
                If and whenever at any time after the date
                  hereof, the
                  Corporation shall fix a record date which is prior to the Time
                  of Expiry
                  for the issue of rights, options or warrants to all or substantially
                  all
                  the holders of outstanding Common Shares under which such holders
                  are
                  entitled during a period expiring not more than sixty (60) days
                  after the
                  record date for such issue to subscribe for or purchase Common
                  Shares, or
                  securities convertible into or exchangeable for Common Shares,
                  at a price
                  per Common Share or having a conversion or exchange price per Common
                  Share
                  less than the Current Market Price per Common Share on such record
                  date,
                  the Exercise Price shall be adjusted immediately after such record
                  date so
                  that it shall equal the price determined by multiplying the Exercise
                  Price
                  in effect on such record date by a fraction of which the numerator
                  shall
                  be the total number of Common Shares outstanding on such record
                  date plus
                  a number of Common Shares equal to the number arrived at by dividing
                  the
                  aggregate price of the total number of additional Common Shares
                  offered
                  for subscription or purchase, or the aggregate conversion or exchange
                  price of the convertible securities so offered, by such Current
                  Market
                  Price per Common Share, and of which the denominator shall be the
                  total
                  number of Common Shares outstanding on such record date plus the
                  total
                  number of additional Common Shares offered for subscription or
                  purchase
                  (or into which the convertible securities so offered are convertible
                  or
                  exchangeable).  If by the terms of the rights, options or
                  warrants referred to in this subsection 4.2(b), there is more than
                  one
                  purchase, conversion or exchange price per Common Share, the aggregate
                  price of the total number of additional Common Shares offered for
                  subscription or purchase, or the aggregate conversion or exchange
                  price of
                  the convertible securities so offered, shall be calculated for purposes
                  of
                  the adjustment on the basis of the lowest purchase, conversion
                  or exchange
                  price per Common Share, as the case may be.  Any Common Shares
                  owned by or held for the account of the Corporation or any subsidiary
                  of
                  the Corporation shall be deemed not to be outstanding for the purpose
                  of
                  any such computation.  To the extent that any adjustment in
                  Exercise Price occurs pursuant to this subsection 4.2(b) as a result
                  of
                  the fixing by the Corporation of a record date for the distribution
                  of
                  rights, options or warrants referred to in this subsection 4.2(b),
                  the
                  Exercise Price shall be readjusted immediately after the expiration
                  of any
                  relevant exchange, conversion or exercise right to the Exercise
                  Price
                  which would then be in effect based upon the number of Common Shares
                  actually issued and remaining issuable after such expiration, and
                  shall be
                  further readjusted in such manner upon expiration of any further
                  such
                  right.

              


      

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      10

       

       

      
        	
                (c)

              	
                If
                  and whenever at any time prior to the Time of Expiry, the Corporation
                  shall fix a record date which is prior to the Time of Expiry for
                  the issue
                  or distribution to all or substantially all the holders of its
                  outstanding
                  Common Shares of:

              


      

       

      
        	
                 

              	
                (i)

              	
                shares
                  of any class other than Common Shares (excluding Dividends Paid
                  in the
                  Ordinary Course);

              


      

       

      
        	
                 

              	
                (ii)

              	
                rights,
                  options or warrants (excluding those referred to in subsection
                  4.2(b));

              


      

       

      
        	
                 

              	
                (iii)

              	
                evidences
                  of its indebtedness; or

              


      

       

      
        	
                 

              	
                (iv)

              	
                any
                  other property or assets (excluding Dividends Paid in the Ordinary
                  Course);

              


      

       

      then,
        and
        in each such case, the Exercise Price shall be adjusted immediately after
        such
        record date so that it shall equal the price determined by multiplying the
        Exercise Price in effect on such record date by a fraction, of which the
        numerator shall be the total number of Common Shares outstanding on such
        record
        date multiplied by the Current Market Price on such record date, less the
        aggregate fair market value (as determined by the Corporation, which
        determination shall be conclusive) of such shares, rights, options, warrants,
        evidences of indebtedness or assets so issued or distributed, and of which
        the
        denominator shall be the total number of Common Shares outstanding on such
        record date multiplied by such Current Market Price, and any Common Shares
        owned
        by or held for the account of the Corporation or any subsidiary of the
        Corporation shall be deemed not to be outstanding for the purpose of any
        such
        computation.  Such adjustment shall be made successively whenever such
        a record date is fixed, and to the extent that such distribution is not so
        made,
        the Exercise Price shall then be readjusted to the Exercise Price which would
        then be in effect if such record date had not been fixed or to the Exercise
        Price which would then be in effect based upon such shares, rights, options,
        warrants, evidences of indebtedness or assets actually distributed, as the
        case
        may be.

      


      


       

      


       

      


       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      11

      


       

      
        	
                4.3

              	
                General
                  Adjustments

              


      

       

      
        	
                (a)

              	
                If
                  necessary, appropriate adjustments shall be made in the application
                  of the
                  provisions set forth in this Article 4 with respect to the rights
                  and
                  interests thereafter of the holders of Warrants to the end that
                  the
                  provisions set forth in this Article 4 shall thereafter correspondingly
                  be
                  made applicable as nearly as may reasonably be possible in relation
                  to any
                  shares or other securities or property thereafter deliverable upon
                  the
                  exercise of any Warrant.  Any such adjustments shall be made by
                  and set forth in an amendment to this Warrant Certificate hereto
                  approved
                  by the directors of the Corporation and shall for all purposes
                  conclusively be deemed to be an appropriate
                  adjustment.

              


      

       

      
        	
                (b)

              	
                If
                  any case in which this Article 4 shall require that an adjustment
                  shall become effective immediately after a record date for an event
                  referred to herein, the Corporation may defer, until the occurrence
                  of
                  such event, issuing to the holder of any Warrant exercised after
                  such
                  event the additional Common Shares issuable upon such conversion
                  by reason
                  of the adjustment required by such event before giving effect to
                  such
                  adjustment; provided, however, that the Corporation shall deliver
                  to such
                  holder an appropriate instrument evidencing such holder's right
                  to receive
                  such additional Common Shares upon the occurrence of the event
                  requiring
                  such adjustment and the right to receive any distributions made
                  on such
                  additional Common Shares declared in favour of holders of record
                  of Common
                  Shares on and after the relevant date of exercise or such later
                  date as
                  such holder would, but for the provisions of this subsection 4.3(b),
                  have become the holder of record of such additional Common Shares
                  as a
                  result of the exercise of the
                  Warrants.

              


      

       

      
        	
                (c)

              	
                No
                  adjustment in the Exercise Price or in the number of shares to
                  be issued
                  pursuant to the exercise of the Warrants shall be required unless
                  such
                  adjustment would result in a change of at least 1% in the Exercise
                  Price
                  then in effect or unless the number of shares to be issued would
                  change by
                  at least 1/100th of a share, provided, however, that any adjustments
                  which, except for the provisions of this subsection 4.3(c) would
                  otherwise have been required to be made, shall be carried forward
                  and
                  taken into account in any subsequent
                  adjustment.

              


      

       

      
        	
                (d)

              	
                The
                  adjustments provided for in this Article 4 in the Exercise Price
                  and in
                  the number and classes of shares which are to be received on the
                  exercise
                  of Warrants are cumulative.  After any adjustment pursuant to
                  this Section, the term "Common Shares" where used in this Warrant
                  shall be
                  interpreted to mean the shares or other securities or property
                  of the
                  Corporation which, as a result of all prior adjustments pursuant
                  to this
                  Section, the Warrantholder is entitled to receive upon the exercise
                  of his
                  Warrant, and the number of Common Shares indicated in any subscription
                  made pursuant to a Warrant shall be interpreted to mean the number
                  and
                  kind of securities or property which, as a result of all prior
                  adjustments
                  pursuant to this Article 4, a Warrantholder is entitled to receive
                  upon
                  the full exercise of a Warrant entitling the holder thereof to
                  purchase
                  the number of Common Shares so
                  indicated.

              


      

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      12


       

       

      
        	
                (e)

              	
                All
                  securities and property which a Warrantholder is at the time in
                  question
                  entitled to receive on the full exercise of his Warrant, whether
                  or not as
                  a result of adjustments made pursuant to this Section, shall, for
                  the
                  purposes of the interpretation of this Warrant be deemed to be
                  securities
                  and property which such Warrantholder is entitled to purchase pursuant
                  to
                  such Warrant.

              


      

       

      
        	
                4.4

              	
                Notice
                  of Adjustment

              


      

       

      Whenever
        the number of Common Shares
        purchasable upon the exercise of each Warrant or the Exercise Price of such
        Common Shares is adjusted, as herein provided, the Corporation shall promptly
        send to the Warrantholder by first class mail, postage prepaid, notice of
        such
        adjustment or adjustments.

       

      ARTICLE
        5

       

      COVENANTS
        BY THE CORPORATION

      


      
        	
                5.1

              	
                Covenants
                  by the Corporation

              


      

       

      The
        Corporation hereby covenants and agrees as follows:

      


      
        	
                (a)

              	
                it
                  will at all times maintain its corporate existence and will carry
                  on its
                  business as currently carried on;

              


      

       

      
        	
                (b)

              	
                it
                  will reserve and there will remain unissued out of its authorized
                  capital
                  a sufficient number of Common Shares to satisfy the rights of acquisition
                  provided for in the Warrant Certificate;
                  and

              


      

       

      
        	
                (c)

              	
                all
                  Common Shares issued upon exercise of the right to purchase provided
                  for
                  herein shall, upon payment of the Exercise Price therefor, be issued
                  as
                  fully paid and non-assessable
                  shares.

              


      

       

      ARTICLE
        6

       

      MERGER
        AND SUCCESSORS

      


      
        	
                6.1

              	
                Corporation
                  May Consolidate, etc. on Certain
                  Terms

              


      

       

      Nothing
        herein contained shall prevent
        any consolidation, reorganization, amalgamation, arrangement or merger of
        the
        Corporation with or into any other body corporate, trust, partnership or
        other
        entity, or a conveyance or transfer of all or substantially all the properties
        and assets of the Corporation as an entirety or substantially as an entirety
        to
        any other body corporate, trust, partnership or other entity lawfully entitled
        to acquire and operate same, provided, however, that the other body corporate,
        trust, partnership or other entity formed by such reorganization, consolidation,
        amalgamation, arrangement or merger or which acquires by conveyance or transfer
        all or substantially all the properties and assets of the Corporation shall,
        simultaneously with such reorganization, consolidation, amalgamation,
        arrangement, merger, conveyance or transfer, assume the due and punctual
        performance and observance of all the covenants and conditions hereof to
        be
        performed or observed by the Corporation.

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      13

      


       

      
        	
                6.2

              	
                Successor
                  Corporation Substituted

              


      

       

      In
        case the Corporation, pursuant to
        Section 6.1, shall be reorganized, consolidated, amalgamated, arranged, or
        merged with or into any other body corporate, trust, partnership or other
        entity, or shall convey or transfer all or substantially all of its properties
        and assets as an entirety or substantially as an entirety to any other body
        corporate, trust, partnership or other entity, the successor formed by such
        reorganization, consolidation, amalgamation, arrangement or merger or into
        which
        the Corporation shall have been reorganized, consolidated, amalgamated, arranged
        or merged or which shall have received a conveyance or transfer as aforesaid,
        shall succeed to and be substituted for the Corporation hereunder and such
        changes in phraseology and form (but not in substance) may be made in the
        Warrant Certificate and herein as may be appropriate in view of such
        reorganization, consolidation, amalgamation, arrangement, merger, conveyance
        or
        transfer.

      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      APPENDIX
        1


      


      


      
        
          

        



      TRANSFER
        FORM

      


      FOR
        VALUE
        RECEIVED, the undersigned hereby sells, assigns and transfers to
        _____________________________________, __________________ Warrants of
Kodiak Energy, Inc. registered in the name of the undersigned
        on the records of Kodiak Energy, Inc. represented by the
        Warrant Certificate attached hereto and irrevocably appoints Kodiak
        Energy, Inc. the attorney of the undersigned to transfer the said
        securities on the books or register with full power of
        substitution.

      


      DATED
        the
        ______ day of ________________, 200__.

      


      


      
        	
                
                  

                

                Signature
                  Guaranteed

              	 	
                
                  
                    

                    Signature of Holder

                

              


      

      


      


      Instructions:

      


      
        	
                1.

              	
                The
                  signature of the Holder must be the signature of the person appearing
                  on
                  the face of this Certificate.

              


      

      


      
        	
                2.

              	
                If
                  the Transfer Form is signed by a trustee, executor, administrator,
                  curator, guardian, attorney, officer of a corporation or any person
                  acting
                  in a judiciary or representative capacity, the certificate must
                  be
                  accompanied by evidence of authority to sign satisfactory to the
                  Corporation.

              


      

      


      
        	
                3.

              	
                The
                  signature on the Transfer Form must be guaranteed by an authorized
                  officer
                  of a chartered bank, trust Corporation or an investment dealer
                  who is a
                  member of a recognized stock
                  exchange.

              


      

      


      
        	
                4.

              	
                Warrants
                  shall only be transferable in accordance with applicable
                  laws.  The Warrants and the Common Shares issuable thereunder
                  are subject to resale restrictions and hold periods which will
                  prevent the
                  Holder, except in very limited circumstances from trading such
                  securities.  Holders should consult their legal advisors in this
                  regard.

              


      

      


      


      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      APPENDIX
        2

      WARRANT
        EXERCISE FORM

      


      
        	
                TO:

              	
                Kodiak
                  Energy, Inc.

              


      

      


      The
        undersigned holder of the within Warrant(s) hereby subscribes for
        _______________ Common Shares of Kodiak Energy, Inc. (the "Corporation")
        (or
        such number of Common Shares or other securities or property to which such
        exercise entitles the undersigned in lieu thereof or in addition thereto
        under
        the provisions of the Warrant Certificate) pursuant to the within Warrant(s)
        at
        US$2.70 per share (or the adjusted dollar amount per share at which the
        undersigned is entitled to purchase such shares under the provisions of the
        Warrant(s) subscribed for above) prior to 5:00 p.m. (Calgary time) on the
        Expiry
        Date on the terms specified in the said Warrant Certificate, which certificate
        is surrendered to the Corporation and which will, upon the issuance of the
        Common Shares referred to above and the issuance of a new Warrant for any
        outstanding rights of the surrendered Warrant, be null and void.  The
        undersigned also encloses herewith a certified cheque, bank draft or money
        order
        or has transmitted good same day funds by wire or other similar transfer,
        in
        lawful money of the United States, payable to or to the order of Kodiak Energy,
        Inc. in payment of the exercise price.

      


      In
        order
        to exercise any Warrants represented by this certificate, the person exercising
        Warrant(s) must check one of the following:

       

      [PLEASE
        CHECK ONE]

      


      
        	
                r

              	
                The
                  undersigned holder (i) at the time of exercise of these Warrants
                  is not in
                  the United States; (ii) is not a "U.S. person" as defined in Regulation
                  S
                  under the United States Securities Act of 1933, as amended (the
                  "U.S.
                  Securities Act"), and is not exercising these Warrants on behalf
                  of a
                  "U.S. person"; and (iii) did not execute or deliver this Warrant
                  Exercise
                  Form in the United States; or

              


      

      


      
        	
                r

              	
                The
                  undersigned certifies that an exemption from registration under
                  the U.S.
                  Securities Act and any applicable state securities laws is available,
                  and
                  attached hereto is an opinion of counsel to such effect, it being
                  understood that any opinion of counsel tendered in connection with
                  the
                  exercise of these Warrants must be in form and substance satisfactory
                  to
                  the Corporation; or

              


      

      


      
        	
                r

              	
                The
                  undersigned certifies that the undersigned is the original purchaser
                  of
                  the Warrant(s) being exercised and confirms as of the date hereof,
                  the
                  representations, warranties and agreements made by the undersigned
                  in the
                  subscription agreement pursuant to which such Warrant(s) was acquired
                  by
                  it.

              


      

      


      The
        undersigned directs that the said Common Shares hereby exercised, be issued
        and
        delivered as follows:

      


      
        	
                Name
                  in full

              	 	
                Address(es)
                  (Include Postal Code)

              	 	
                #
                  of Common Shares

              
	
                 

              	 	
                 

              	 	
                 

              


      

      (Please
        print full name in which certificates are to be issued.  If any of the
        securities are to be issued to a person or persons other than the undersigned,
        the undersigned holder must pay to the Corporation all requisite taxes or
        other
        governmental charges.)

      


      DATED
        this _________ day of ______________, 200__.

      


      
        	
              	 	
              
	
                Witness

              	 	
                Signature
                  of Warrantholder (or its representative if not an
                  individual).

              


      

      Print
        name and address of Warrantholder in full

      


      
        	Name: 	
              	 	Address:	
              
	 	 	 	 	 
	Title
                of person signing on behalf of holder (if subscriber is not an
                individual):	 	 	 
	 	 	 	 	 
	 	 	 
	 	 	 	Signature
                Guaranteed


      

      



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      
        	
                1.

              	
                If
                  the Warrant Exercise Form indicates that Common Shares are to be
                  issued to
                  a person or persons other than the registered holder of the certificate,
                  the signature of such holder of the Warrant Exercise Form must
                  be
                  guaranteed by an authorized officer of a chartered bank, trust
                  corporation
                  or an investment dealer who is a member of a recognized stock
                  exchange.

              


      

       

      
        	
                2.

              	
                If
                  the Warrant Exercise Form is signed by a trustee, executor, administrator,
                  curator, guardian, attorney, officer of a corporation or any person
                  acting
                  in a judiciary or representative capacity, the certificate must
                  be
                  accompanied by evidence of authority to sign satisfactory to the
                  Corporation.

              


      

       

      
        	
                3.

              	
                If
                  the registered Holder exercises its right to receive Common Shares
                  prior
                  to expiry of any hold period or other resale restriction placed
                  on the
                  Warrants by the securities laws of any applicable jurisdiction
                  or the
                  requirements of any applicable stock exchange, the certificates
                  evidencing
                  the Common Shares thereby issued will bear such legend as is required
                  under applicable securities laws and that, in the opinion of legal
                  counsel
                  to the Corporation, be necessary in order to avoid a violation
                  of any such
                  laws or requirements.