Document:

EXHIBIT 4.4

                           EMPLOYEE SAVINGS PLAN
                         FOR ELIGIBLE EMPLOYEES OF
                            POCO PETROLEUMS LTD.

                          ARTICLE 1 - DEFINITIONS

1.1  Whenever used in this Plan:

     (a)  "Active  Participant" shall mean an Employee described in Article
          2 in any month contributions are made under Section 3.1 or 3.2.

     (b)  "Administrator"  shall mean the  administrator of the Plan, being
          Fidelity Investments Canada Limited or any successor appointed by
          the Corporation.

     (c)  "Basic  Earnings"  shall mean the projected  annual salary of the
          Employee as determined conclusively by the Corporation, excluding
          all  bonuses,  car  allowances  and all non  cash  benefits  from
          employment.

     (d)  "Corporation" shall mean Poco Petroleums Ltd., its successors and
          assigns and any subsidiary or affiliated company so designated by
          the Directors of Poco Petroleums Ltd.

     (e)  "Credit Balance" shall refer to each Participant's interest under
          the Plan from time to time,  as described in Article 5, and shall
          include:

          (i)  the investments held by the Trustee for the Participant
               under this Plan as of a specified date; and

          (ii) amounts held by the Trustee for the Participant in
               uninvested cash or in any other form.

     (f)  "Employee"  shall  mean  a  permanent  salaried  full-time  or  a
          permanent   salaried   part-time/job   share   employee   of  the
          Corporation.

     (g)  "Fund" shall mean the asset balance  attributable  to each of the
          investments described in Section 6. 1.

     (h)  "Normal   Retirement   Date"  shall  mean,   in  respect  of  any
          Participant who has attained the age of 60, the Transaction  Date
          coinciding  with or next  following the date of  retirement  from
          employment with the Corporation of that Participant.

     (i)  "Participant" shall mean an Employee of the Corporation who is an
          Active Participant in the Plan as prescribed in Article 2, or who
          has been an Active  Participant and still has a Credit Balance in
          the Plan.

     (j)  "Plan"  shall  mean  the  Employee   Savings  Plan  for  Eligible
          Employees of the Corporation as described herein, or as hereafter
          amended.

     (k)  "RRSP" means the Poco  Petroleums Ltd. Group  Retirement  Savings
          Plan administered by the Administrator.

     (l)  "Transaction  Date"  shall  mean the first  business  day of each
          month.

     (m)  "Trustee"  shall  mean the  trustee  of the Plan,  being TD Trust
          Company or any successor  trustee  appointed by the Administrator
          or the Corporation.

Whenever used in this  instrument,  the singular  shall include the plural,
the plural shall  include the singular,  the feminine  gender shall include
the masculine, and the masculine gender shall include the feminine.

                         ARTICLE 2 - PARTICIPATION

2.1  Entry Into Plan
     ---------------

     Each Employee of the Corporation shall become eligible to be an Active
     Participant in this Plan on the date of employment by the Corporation,
     provided the Employee has:

     (a)  made  written   application   in  a  manner   acceptable  to  the
          Corporation;

     (b)  executed an election designating the percentage of Basic Earnings
          to be contributed to the Plan and,  authorized the Corporation to
          make payroll  deductions for the  Participant's  contributions as
          provided in Article 3 hereof; and

     (c)  been  certified to the  Administrator  by the  Corporation  as an
          eligible Participant under the Plan.

2.2  Cessation of Participation
     --------------------------

     An Employee  will remain an Active  Participant  in the Plan until the
     earliest of the following dates:

     (a)  The date the Employee ceases to be employed by the Corporation;

     (b)  The date the Employee suspends contributions under Section 3.4;

     (c)  The date the Employee  becomes  entitled to long term  disability
          benefits  from  either the  Corporation  or the  insurers  of the
          Corporation; or

     (d)  The date the Employee gives written notice to the Corporation and
          the Trustee of withdrawal of the Plan.

                         ARTICLE 3 - CONTRIBUTIONS

3.1  Participant's Contributions
     ---------------------------

     Each Active  Participant  may contribute to the Plan any percentage up
     to a maximum of 5% of the Active  Participant's  Basic  Earnings (such
     percentage being referred to herein as the "Basic Contribution Rate"),
     which Basic  Contribution Rate shall be established by the Participant
     from time to time by notice in  writing to the  Corporation  and which
     shall  be paid to the  Administrator  in  monthly  instalments  by the
     Corporation  deducting  the amount of each such  instalment  from each
     payment of Basic Earnings to the Employee.  A Basic  Contribution Rate
     established by an Active Participant shall continue until varied by an
     Active Participant by notice in writing to the Corporation.

3.2  Corporation Contributions
     -------------------------

     The Corporation shall contribute to the Plan, on behalf of each Active
     Participant,  out of current or prior profits of the  Corporation,  an
     amount  equal  to  100%  of the  contributions  made  by  such  Active
     Participant up to a maximum of 5% of such Active  Participant's Basing
     Earnings.

     The contributions by the Corporation and each Active Participant shall
     be made solely in the form of cash or securities  of the  Corporation,
     as determined by the Corporation  and an Active  Participant may elect
     to invest or withdraw such contributions as otherwise provided in this
     Plan.

3.3  Excess Contributions
     --------------------

     (a)  Each  Active  Participant  may  elect to  contribute  to the Plan
          amounts of the Active  Participant's  Basic Earnings in excess of
          the Basic Contribution Rate ("Excess  Contribution  Rate"), which
          Excess  Contribution Rate shall be established at the time of the
          establishment  of the Basic  Contribution  Rate and which will be
          paid  to  the   Administrator  in  monthly   instalments  by  the
          Corporation  deducting  the amount of each such  instalment  from
          each  payment  of  Basic  Earnings  to the  Employee.  An  Excess
          Contribution  Rate  shall  continue  until  varied  by an  Active
          Participant by notice in writing to the Corporation.

     (b)  Contributions  at the Excess  Contribution  Rate shall be made in
          the form of cash or securities of the Corporation,  as determined
          by the Corporation and an Active  Participant may elect to invest
          or withdraw  the amount  received as  otherwise  provided in this
          Plan.  Contributions made at the Excess Contribution Rate are not
          eligible for matching  contributions by the Corporation  pursuant
          to Section 3.2, but are eligible for  investment in the RRSP. All
          contributions  made at the  Excess  Contribution  Rate  shall  be
          otherwise  subject  to all of the  terms and  conditions  of this
          Plan, including, in particular, Article 4 hereof.

3.4  RRSP Contribution Limits
     ------------------------

     If an Active  Participant has in any year directed any portion of such
     Active  Participant's  contributions  to be invested in the RRSP, such
     Active  Participant  shall be solely  responsible  for determining the
     maximum amount prescribed by law and such individual may contribute to
     one or more  registered  retirement  savings  plan in any year and for
     ensuring  that such  maximum  amounts  are not  exceeded.  Neither the
     Administrator,  the Trustee,  nor the Corporation  shall in any way be
     liable in the event an Active  Participant  contributes any amounts to
     the RRSP which are either on their own or in combination  with amounts
     contributed to other registered retirement savings plans, in excess of
     the  maximum  amounts  prescribed  by  law  eligible  for  income  tax
     deduction for any one year.

3.5  Conditions and Limitations
     --------------------------

     (a)  Each payment received by the Administrator  shall be allocated to
          the Credit  Balance of an  individual  Participant  in respect of
          whom the  amount  was  paid.  The  Administrator  shall  allocate
          contributions   indicated  in   accordance   with  prior  written
          instructions on the forms authorized by the Corporation.

     (b)  Contributions  by, and on behalf of,  each  Participant  shall be
          paid to the  Administrator  by the  Corporation  not  later  than
          thirty (30) days following the deduction from the Employee's pay,
          and   credited  to  the   respective   Credit   Balance  of  each
          Participant.

3.6  Suspension of Contributions
     ---------------------------

     An Active Participant may suspend his contributions by written request
     to the  Corporation,  which  request  shall be  effective  on the next
     following Transaction Date. Contributions by an Active Participant and
     the Corporation  shall be suspended during any period during which the
     Active  Participant is temporarily not employed by the Corporation (on
     the  inactive  list) on account  of layoff,  leave of absence or other
     reason, and is not receiving salary from the Corporation.

                 ARTICLE 4 - WITHDRAWALS DURING EMPLOYMENT

4.1  Withdrawals of Participant's Contributions
     ------------------------------------------

     Not more frequently  than once in each calendar  quarter a Participant
     may  withdraw  from the Plan all or any  portion of the  Participant's
     Credit Balance in the Plan without penalty.

4.2  Procedure for Making Withdrawals
     --------------------------------

     Requests  for  withdrawals  under  Section  4.1  above  shall  be made
     directly  to the  Trustee  and shall be made in  accordance  with such
     rules and procedures as may be established by the Trustee and approved
     by the Corporation from time to time. Withdrawals may, at the election
     of the Participant,  be made in the form of cash or in such other form
     as may be made available by the Administrator.

               ARTICLE 5 - VESTING AND SETTLEMENT OF ACCOUNTS

5.1  Ownership of Own Contributions and Earnings
     -------------------------------------------

     All  contributions  to  the  Plan  made  by a  Participant  or by  the
     Corporation  on behalf of a  Participant,  together  with any  income,
     capital gain and other  appreciation,  less any capital loss, expense,
     charge  and  other  such  loss,   allocated   or   reallocated   to  a
     Participant's   Credit  Balance  shall  be  nonforfeitable  and  shall
     continually vest in the Participant.

5.2  Payment of Benefits
     -------------------

     The total of a  Participant's  Credit  Balance  shall be issued to the
     Participant  or,  in  the  event  of  death,   to  the   Participant's
     beneficiary,  as  soon  as  is  administratively  feasible  after  the
     earliest of:

     (i)   The day on  which  the  Employee  ceases  to be  employed  by the
           Corporation;

     (ii)  The day on which the Participant  gives notice of withdrawal from
           the Plan.

     (iii) The death of the Employee;

     (iv)  The Employee's Normal Retirement Date; or

     (v)   The termination or winding up of the Plan by the Corporation.

                           ARTICLE 6 - INVESTMENT

6.1  Investment
     ----------

     (a)  All   contributions  in  the  Plan  shall  be  invested  in  such
          investment  opportunities  as may be  designated  by the Benefits
          Committee from time to time.

     (b)  Limitations on Designation of Investments
          -----------------------------------------

          (i)  The Administrator  shall execute all allocation  requests as
               soon as  administratively  feasible.  However,  neither  the
               Administrator  nor the  Corporation  shall be liable for any
               delay in the  execution of any requests.  All  securities of
               the Corporation required for the purposes of this Plan shall
               be  purchased  by the  Administrator  in the open  market no
               later  than  the end of the  first  full  week of the  month
               following the month of contribution.

          (ii) Income,  if any, from investments shall be reinvested by the
               Administrator in the same Fund.

            ARTICLE 7 - ACCOUNTS TO BE RENDERED BY ADMINISTRATOR

7.1  Retention and Issuance of Information by Administrator
     ------------------------------------------------------

     The  Administrator  shall keep  accurate and detailed  accounts of all
     investments,  receipts,  disbursements and other transactions. As soon
     as practical after March 31st, June 30th,  September 30th and December
     31st of each calendar year,  but in any event,  no longer than 45 days
     after each such date, the Administrator,  as prescribed herein,  shall
     furnish the following reports and statements:

     (a)  A report to the  Corporation  showing the  operations of the Plan
          for the preceding three month period,  including a summary of the
          transactions  and a  statement  of  assets  held and  such  other
          statements as shall be requested by the Corporation and agreed to
          by the Administrator;

     (b)  A statement to each  Participant or beneficiary of the account of
          each Participant showing as of the end of such three month period
          the (i) total amount of contributions  of the  Participant;  (ii)
          total amount of  contributions  made by the Corporation on behalf
          of the Participant;  (iii) any expenses,  withdrawals,  losses or
          other charges made against the Participant's  account during such
          period;  (iv) all  income  or  realized  capital  gains or losses
          credited to the Participant's account during such period; and (v)
          the amount of the Participant's Credit Balance; and

     (c)  Such additional  reports as the Corporation may from time to time
          request of the Administrator.

7.2  Issuance of Statement
     ---------------------

     A statement as provided for in Section  7.1(b) of this Article 7 shall
     be rendered to each  Participant or beneficiary and to the Corporation
     within  45 days  after an  event  described  in  Section  5.3,  and an
     accounting and statements as provided for in Section 7.1(a) and (b) of
     this Article  shall be rendered by the  Administrator,  within 45 days
     after the resignation or removal of the Administrator,  for the period
     following  the  close of the last  three  month  period to the date of
     resignation or removal.

                           ARTICLE 8 - TRUST FUND

8.1  Establishing Trust Fund
     -----------------------

     A trust fund shall be  established by the  Administrator  to which all
     contributions by the Participants and the Corporation shall be made.

8.2  Allocation to Employee Accounts
     -------------------------------

     Each  payment  made  to  the  Administrator   shall  be  allocated  to
     Participants by the  Administrator in the year in which it is received
     by the Administrator.  All investments,  earnings, including interest,
     dividends,  realized  gains  or  losses  shall  be  allocated  to  the
     Participants in the year in which they are received.

8.3  Limitation on Ownership of Assets
     ---------------------------------

     The trust fund shall not form any part of the revenue or assets of the
     Corporation,  nor at any time shall any part of the trust fund be used
     for or diverted to any purposes  other than for the exclusive  benefit
     of the Participants and their beneficiaries.  No person shall have any
     interest in or right to the trust fund or any part thereof,  except as
     expressly  provided  in the Plan.  No  liability  for the  payment  of
     benefits  under the Plan shall be imposed upon the  Corporation or the
     officers, directors or shareholders of the Corporation.

                         ARTICLE 9 - ADMINISTRATION

9.1  Administration of Plan
     ----------------------

     The  administration  of the Plan  shall be the  responsibility  of the
     Administrator,  provided  that  the  Administrator  may  refer  to and
     consult  with the  Corporation  and the  Administrator's  professional
     advisers  should the  Administrator  feel such action is  warranted by
     circumstances.

9.2  Administrator Authority for Payment
     -----------------------------------

     The  Administrator  is duly  authorized  and  directed  to execute all
     agreements  and elections and to do all things  necessary or advisable
     for the administration and maintenance of the Plan and the payments of
     benefits to the Participants and their beneficiaries.

9.3  Administrator Authority for Interpretation
     ------------------------------------------

     At the request of the  Administrator,  the Corporation shall establish
     the facts and make final rulings  concerning  all questions  regarding
     eligibility for withdrawals  under Article 4, or  distributions  under
     Article 5. The Administrator  shall conclusively decide on all matters
     relating to the  administration  and  application  of the terms of the
     Plan and the  Corporation  shall  conclusively  decide on all  matters
     relating to the interpretation of the terms of the Plan.

9.4  Records and Accounts
     --------------------

     The  Administrator  shall  keep or cause to be kept such  records  and
     accounts as may be necessary or  appropriate  for the discharge of its
     duties.

9.5  Expenses
     --------

     Any expenses,  including  fees of the  Administrator,  incurred in the
     administration of the Plan shall be paid by the Corporation and, until
     paid, shall constitute a charge upon the Fund.

9.6  Explanation of Plan
     -------------------

     The  Corporation  shall  ensure  that each new  Employee is advised in
     writing of a Participant's rights under the Plan.

9.7  Voting of Shares
     ----------------

     The  Administrator  shall have all voting  rights on securities of the
     Corporation held under Section 6.1.

                   ARTICLE 10 - MISCELLANEOUS PROVISIONS

10.1 Non-Assignable Assets
     ---------------------

     Neither a  Participant's  Credit  Balance  in the Plan,  nor any cash,
     securities,  or other property therein, shall be assignable or subject
     to garnishment,  attachment,  execution or levy of any kind or used as
     collateral by the  Participant or  beneficiary  and no amount shall be
     payable to a Participant or a beneficiary by way of loan.

10.2 Limitation on Liability of Corporation and Officers
     ---------------------------------------------------

     Except for gross  negligence or malfeasance,  no officer,  director or
     Employee of the Corporation  shall be liable for any action or failure
     to act with respect to this Plan.  The  Corporation  hereby  agrees to
     indemnify and hold harmless its officers,  directors and employees and
     to defend the same against any and all claims or liabilities which may
     be asserted against any of them by reason of any action or omission in
     the  administration of the Plan, except in any case of fraud or wilful
     wrongdoing.

10.3 Limitation on Rights of Participant
     -----------------------------------

     The establishment and implementation of this Plan shall not constitute
     an  enlargement  of any rights to which an Employee is entitled  apart
     from this Plan.

10.4 Submissions of Plan to Authorities
     ----------------------------------

     The  establishment  of this Plan is subject to obtaining such approval
     from the relevant tax  authorities,  as is necessary to establish that
     the Corporation is entitled to deduct the amounts of its contributions
     and payments as expenses,  before taxes,  under the  provisions of the
     Income  Tax Act,  or any other  applicable  legislation,  as is now in
     effect or as may be amended or adopted.

10.5 Designation of Beneficiaries
     ----------------------------

     Each Participant shall designate a beneficiary to receive all proceeds
     under the Plan in the event of the death of the  Participant  prior to
     distribution.  If  there  is no  beneficiary  living  at the date of a
     Participant's death, the Administrator shall make payments to the duly
     authorized representative of the Participant's Estate.

10.6 Written Notices Required
     ------------------------

     Any  notice  or  election  required  or  permitted  to be  made by any
     provision of this Plan,  shall be made in  accordance  with such rules
     and procedures as may be established by the Administrator and approved
     by the Corporation from time to time.

10.7 Advice to Administration of Amendments
     --------------------------------------

     The Corporation will advise the Administrator of all amendments to the
     Plan.

                      ARTICLE 11 - FUTURE OF THE PLAN

11.1 Continuation of Plan
     --------------------

     The  Corporation  intends to maintain this Plan in force  indefinitely
     but  necessarily  reserves the right to amend or discontinue the Plan,
     in whole or in part, by  resolution of its Board of Directors,  should
     future   conditions   warrant  such  action  in  the  opinion  of  the
     Corporation.  The  Administrator  shall have the right to approve  any
     amendments to the Plan which would affect the  Administrator's  duties
     and responsibilities hereunder.

11.2 Assured Benefits
     ----------------

     No  amendment to the Plan shall  operate to reduce the benefits  which
     have  accrued to and vested in the  Participants  of the Plan prior to
     the date of the amendment. In the event of discontinuance,  whether in
     whole or in part, the Corporation  cannot recover any sums paid to the
     date  thereof and all the assets of the Plan must and shall be applied
     for the benefit of the  Participants  and/or their  beneficiaries  pro
     rata to their Credit Balances.

11.3 Corporation Discontinuance
     --------------------------

     If the Corporation shall have been wound up or become bankrupt,  or if
     the Plan should be terminated, the assets of the Plan shall, within 90
     days  thereof,  be applied for the benefit of  Participants  and their
     beneficiaries in accordance with subsection 11.2 of this Article.

11.4 Limit of Liability
     ------------------

     No liability  shall  attach to the  Corporation  or a liquidator  or a
     trustee in  bankruptcy  of the  Corporation  in  connection  with such
     distribution if made in good faith.WARRANT AGREEMENT
            ---------------------------------------

                      KESTREL ENERGY, INC.

                              AND

           AMERICAN SECURITIES TRANSFER & TRUST, INC.
                         Warrant Agent

                        January 18, 2000

             --------------------------------------

     THIS AGREEMENT (the "Agreement") is dated as of January 18, 2000,
between KESTREL ENERGY, INC., a Colorado corporation (the "Company"), and
AMERICAN SECURITIES TRANSFER & TRUST, INC., a Colorado corporation (the
"Warrant Agent").

     WHEREAS, on January 18, 2000 (the "Warrant Dividend Declaration
Date"), the Board of Directors authorized and declared a dividend
distribution of 10 warrants ("Warrant") for every 100 shares of common
stock, no par value per share ("Common Stock") held by holders of the
Company's Common Stock, outstanding at the close of business on February
4, 2000 (the "Record Date"), and each Warrant entitles the holder to
purchase one share of the Company's Common Stock at $3.125 per share;

     WHEREAS, the Company desires to provide for issuance of certificates
(the "Warrant Certificates") representing the Warrants; and

     WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection
with the issuance, registration, transfer and exchange of Warrant
Certificates and exercise of the Warrants.

     NOW, THEREFORE, in consideration of the promises and the mutual
agreements hereinafter set forth, it is agreed that:

     1.   WARRANTS/WARRANT CERTIFICATES.  Shareholders will receive 10
Warrants for every 100 shares of Common Stock held of record by a
shareholder on the Record Date.  Each Warrant will entitle the registered
holder of such Warrant to purchase from the Company one share of Common
Stock at $3.125 per share (the "Exercise Price"), subject to adjustment as
provided for in Section 8 hereof.  The Company will not issue Warrants in
increments of less than 10 Warrants per 100 shares of Common Stock, but
the Company, in lieu of issuing Warrants in increments of less than 10
Warrants, shall round up or down to the nearest 100 shares held by each
shareholder on the Record Date.  No Warrants will be issued to
shareholders holding less than 100 shares on the Record Date.

          Hereinafter, unless the context indicates otherwise, as used
herein the words "Registered Warrant Holders" will mean the holders of the
Warrants, the word "Warrants" will mean the Warrants, and the words
"Warrant Shares" will mean the Company's securities issuable upon exercise
of the Warrants.  Unless changed pursuant to Section 8 hereof, the Warrant
Shares will consist of the Company's Common Stock.  A copy of the form of
Warrant Certificate for the Warrants is attached hereto as Exhibit A.

          Warrant Certificates representing the right to purchase Warrant
Shares shall be executed by the Company's President and attested to by the
Company's Secretary or Assistant Secretary and delivered to the Warrant
Agent upon execution of this Agreement.  The Warrant Certificates shall be
distributed among the shareholders of the Company as soon as practicable
following the Record Date of February 4, 2000.

          Subject to the provisions of Sections 3, 5, 6,7 and 8, the
Warrant Agent shall deliver Warrant Certificates in required whole number
denominations to Registered Holders in connection with any transfer or
exchange permitted under this Agreement.  No Warrant Certificates shall be
issued except (i) Warrant Certificates initially issued hereunder, (ii)
Warrant Certificates issued on or after the initial issuance date, upon
the exercise of any Warrants, to evidence the unexercised Warrants held by
the exercising Registered Holder, and (iii) Warrant Certificates issued
after the initial issuance date, upon any transfer or exchange of Warrant
Certificates or replacements of lost or mutilated Warrant Certificates.

     2.   FORM AND EXECUTION OF WARRANT CERTIFICATES.  The Warrant
Certificates shall be substantially in the form attached as Exhibit A.
The Warrant Certificates shall be dated as of the date of their issuance,
whether on initial issuance, transfer or exchange or in lieu of mutilated,
lost, stolen or destroyed Warrant Certificates.

          Each such Warrant Certificate shall be numbered serially with
the letter "W" appearing on each Warrant Certificate.

          The Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned.  In the event any officer of the Company who executed the
Warrant Certificates shall cease to be an officer of the Company before
the date of issuance of the Warrant Certificates or before
countersignature and delivery by the Warrant Agent, such Warrant
Certificates may be countersigned, issued and delivered by the Warrant
Agent with the same force and effect as though the person who signed such
Warrant Certificates had not ceased to be an officer of the Company.

     3.   EXERCISE.  Subject to the provisions of Sections 4, 7 and 8, the
Warrants, when evidenced by a Warrant Certificate, may be exercised at a
price (the "Exercise Price") set forth in Section 1 hereof, on the basis
of one Warrant for one share of Common Stock in whole or in part at any
time during the period (the "Exercise Period") commencing on the effective
date of the Company's Form S-3 registration statement covering the Warrant
Shares and terminating on February 4, 2001 (the "Expiration Date").  A
Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date (the "Exercise Date") of the surrender for
exercise of the Warrant Certificate.  The exercise form shall be executed
by the Registered Holder thereof or his attorney duly authorized in
writing and will be delivered together with payment to the Warrant Agent
at 12039 West Alameda Parkway, Suite Z-2, Lakewood, CO 80228, in cash or
by official bank or certified check, of an amount equal to the aggregate
Exercise Price, in lawful money of the United States of America, made
payable to Kestrel Energy, Inc.  If payment is submitted in the form of a
an uncertified non-bank check, the Warrant Agent shall have no obligation
to issue shares of Common Stock until it has received collected funds.

          The person entitled to receive the number of Warrant Shares
deliverable on such exercise shall be treated for all purposes as the
holder of such Warrant Shares as of the close of business on the Exercise
Date, provided, however, the Warrant Shares may be issued otherwise as
provided herein.  The Warrant Agent shall, at such time, verify that all
of the conditions precedent to the issuance of Warrant Shares set forth in
Section 4 are satisfied as of the Exercise Date.  If any one of the
conditions precedent set forth in Section 4 is not satisfied as of the
Exercise Date, the Warrant Agent shall request written instructions from
the Company as to whether to return the Warrant and Exercise Price to the
exercising Registered Holder or to hold the same until all such conditions
have been satisfied. The Company shall not be obligated to issue any
fractional share interests in Warrant Shares issuable or deliverable on
the exercise of any Warrant or scrip or cash therefor and such fractional
shares shall be of no value whatsoever.  If more than one Warrant shall be
exercised at one time by the same Registered Holder, the number of full
Warrant Shares which shall be issuable on exercise thereof shall be
computed on the basis of the aggregate number of full Warrant Shares
issuable on such exercise.

          Within five business days after the Exercise Date and in any
event prior to the pertinent Expiration Date, pursuant to a Stock Transfer
Agreement between the Company and the Warrant Agent, the Warrant Agent
shall cause to be issued and delivered to the person or persons entitled
to receive the same, a certificate or certificates for the number of
Warrant Shares deliverable on such exercise.  No adjustment shall be made
in respect of cash dividends on Warrant Shares delivered on exercise of
any Warrant.  The Warrant Agent shall promptly notify the Company in
writing of any exercise and of the number of Warrant Shares delivered and
shall cause payment of the Exercise Price to be promptly forwarded to the
Company and in no event less than three (3) business days after receipt
thereof.

          Expenses incurred by the Warrant Agent while acting in the
capacity as Warrant Agent will be paid by the Company.  A detailed
accounting statement relating to the number of Warrants exercised, the
identity of the persons exercising, the amount of exercised funds
remitted, and amount due to Warrant Agent for expenses incurred, will be
given to the Company with the payment of each exercise amount, for payment
by the Company within 15 days.  This will serve as an interim accounting
for the Company's use during the Exercise Period.  A complete accounting
will be made by the Warrant Agent to the Company concerning all persons
exercising Warrants, the number of Warrant Shares issued and the amounts
paid at the completion of the Exercise Period.

          The Company may deem and treat the Registered Holder of the
Warrants at any time as the absolute owner thereof for all purposes, and
the Company shall not be affected by any notice to the contrary.  The
Warrants shall not entitle the holder thereof to any of the rights of
shareholders or to any dividend declared on the Common Stock unless the
holder shall have exercised the Warrants and purchased the Warrant Shares
prior to the record date fixed by the Board of Directors of the Company
for the determination of holders of Common Stock entitled to such dividend
or other right.

     4.   RESERVATION OF SHARES AND PAYMENT OF TAXES.  The Company
covenants that it will at all times reserve and have available from its
authorized Common Stock such number of Warrant Shares as shall then be
issuable on the exercise of all outstanding Warrants.  The Company
covenants that all Warrant Shares which shall be so issuable shall be duly
and validly issued, fully paid and nonassessable, and free from all taxes,
liens and charges with respect to the issue thereof.

          The Company and the Warrant Agent acknowledge that the Company
will file a Registration Statement on Form S-3, pursuant to the Securities
Act of 1933, as amended (the "Act"), covering the Warrants and the Warrant
Shares, as soon as practicable following the initial distribution of the
Warrants.  No Warrant shall be exercisable until such time as the Company
has provided written notice to all Registered Holders of the effective
date of the Registration Statement.  The Company shall have the authority
to suspend the exercise of all Warrant Shares, until such registration or
approval shall have been obtained; but all Warrants, the exercise of which
are requested during any such suspension, shall be exercisable at the
Exercise Price.

          The Company shall pay all documentary, stamp or similar taxes
and other government charges that may be imposed with respect of the
issuance of the Warrants, or the issuance or delivery of any Warrant
Shares on exercise of the Warrants.  In the event the Warrant Shares are
to be delivered in a name other than the name of the Registered Holder of
the Warrant Certificate, or if any Warrant Shares are requested to be
transferred, no such delivery shall be made unless the person requesting
the same has paid to the Warrant Agent the amount of any such taxes or
charges incident thereto.

          In the event the Warrant Agent ceases to also serve as the stock
transfer agent for the Company, the Warrant Agent is irrevocably
authorized to requisition the Company's new transfer agent from time to
time for Certificates of Warrant Shares required upon exercise of the
Warrants, and the Company will authorize such transfer agent to comply
with all such requisitions.  The Company will file with the Warrant Agent
a statement setting forth the name and address of its new transfer agent,
for shares of Common Stock or other capital stock issuable upon exercise
of the Warrants and of each successor transfer agent.

     5.   REGISTRATION OF TRANSFER.  The Warrants may not be sold,
transferred, assigned, pledged or hypothecated,  in whole or in part,
prior to the effective date of the registration statement covering the
resale of the Warrants, unless an exemption from the registration
requirements of the Act and any applicable state securities laws is
available, the availability of which must be established to the reasonable
satisfaction of the Company and its counsel, and except by will or
operation of law.  Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its principal office.  The Company
shall execute and the Warrant Agent shall countersign, issue and deliver
in exchange therefor the Warrant Certificate or Certificates which the
holder making the transfer shall be entitled to receive.

          The Warrant Agent shall keep transfer books at its principal
office which shall register Warrant Certificates and the transfer thereof.
On due presentment for registration of transfer of any Warrant Certificate
at such office, the Warrant Agent shall notify the Company of such request
for transfer, and shall not effect such transfer unless and until
authorized by the Company. If authorized by the Company, the Company shall
execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an
equal aggregate number of Warrants.  All Warrant Certificates presented
for registration of transfer or exercise shall be duly endorsed or be
accompanied by a written instrument or instruments of transfer in form
reasonably satisfactory to the Company and the Warrant Agent.  At the time
of transfer, the Holder shall pay the transfer fee.  The Company may
require payment of a sum sufficient to cover any tax or other government
charge that may be imposed in connection therewith.

          All Warrant Certificates so surrendered, or surrendered for
exercise, or for exchange in case of mutilated Warrant Certificates, shall
be promptly canceled by the Warrant Agent and thereafter retained by the
Warrant Agent until termination of the agency created by this Agreement.
Prior to due presentment for registration of transfer thereof, the Company
and the Warrant Agent may treat the Registered Holder of any Warrant
Certificate as the absolute owner thereof (notwithstanding any notations
of ownership or writing thereon made by anyone other than the Company or
the Warrant Agent), and the parties hereto shall not be affected by any
notice to the contrary.

     6.   LOSS OR MUTILATION.  On receipt by the Company and the Warrant
Agent of evidence satisfactory as to the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate, the Company shall
execute, and the Warrant Agent shall countersign and deliver in lieu
thereof, a new Warrant Certificate representing an equal aggregate number
of Warrants.  In the case of loss, theft or destruction of any Warrant
Certificate, the individual requesting issuance of a new Warrant
Certificate shall be required to indemnify the Company and Warrant Agent
in such amount as is customary for lost securities.  In the event a
Warrant Certificate is mutilated, such Certificate shall be surrendered
and canceled by the Warrant Agent prior to delivery of a new Warrant
Certificate.  Applicants for a new Warrant Certificate shall also comply
with such other regulations and pay such other reasonable charges as the
Company may prescribe.

     7.   REDEMPTION OF WARRANTS.   The Warrants are subject to redemption
by the Company at $0.01 per Warrant, at any time prior to their
expiration, on not less than 30 days' prior written notice to the holders
of Warrants, provided that the closing bid price per share of Common Stock
has been in excess of $3.75 (subject to adjustment), for the period of at
least five consecutive trading days ending on the trading day prior to the
date upon which the notice of redemption is given.  The Warrants will be
exercisable until the close of the business day preceding the date fixed
in the notice for redemption.  Notwithstanding the foregoing, the Company
will not be entitled to call any of the Warrants for redemption or redeem
any of the Warrants at a time when the Company has not maintained a
current registration statement as described in Section 4 hereof.  On the
date the redemption is effective (the "Redemption Date"), the Warrant
Holders of record of redeemed Warrants shall be entitled to payment of the
Redemption Price upon surrender of such redeemed Warrants to the Company
at the principal office of the Warrant Agent.

     (b)  Notice of redemption of any Warrants shall be given by mailing,
by registered or certified mail, return receipt requested, a copy of such
notice to all of the affected Warrant Holders of record as of two days
prior to the mailing date at their respective addresses appearing on the
books or transfer records of the Company or such other address designated
in writing by the Warrant Holder of record to the Warrant Agent not less
than 30 days prior to the Redemption Date and shall be effective upon
receipt.

     (c)  Notwithstanding any other provision of this Agreement, from and
after the Redemption Date, all rights of the affected Warrant Holders
(except the right to receive the Redemption Price) shall terminate, but
only if (i) on or prior to the Redemption Date the Company shall have
irrevocably deposited with the Warrant Agent, as paying agent, a
sufficient amount to pay on the Redemption Date the Redemption Price for
all Warrants called for redemption and (ii) the notice of redemption shall
have stated the name and address of the Warrant Agent and the intention of
the Company to deposit such amount with the Warrant Agent on or before the
Redemption Date.

     (d)  The Warrant Agent shall pay to the Warrant Holders of record of
redeemed Warrants all monies received by the Warrant Agent for the
redemption of Warrants to which the Warrant Holders of record of such
redeemed Warrants are entitled under the provisions of this Agreement.

     (e)  Any amounts deposited with the Warrant Agent which are not
required for redemption of the Warrants may be withdrawn by the Company.
Any amounts deposited with the Warrant Agent which shall be unclaimed
after six (6) months after the Redemption Date may be withdrawn by the
Company, and thereafter the Warrant Holders of the Warrants called for
redemption for which such funds were deposited shall look solely to the
Company for payment.  The Company shall be entitled to the interest, if
any, on funds deposited with the Warrant Agent, and the Warrant Holders of
redeemed Warrants shall have no right to any such interest.

     (f)  If the Company fails to make a sufficient deposit with the
Warrant Agent as provided above, the Warrant Holders of any Warrants
called for redemption may at the option of the Warrant Holder (i) by
notice to the Company declare the notice of redemption a nullity, or (ii)
maintain an action against the Company for the Redemption Price.  If the
Warrant Holder brings such an action the Company will pay reasonable
attorneys' fees of the Warrant Holder.  If the Warrant Holder fails to
bring an action against the Company for the Redemption Price within ninety
(90) days after the Redemption Date, the Warrant Holder shall be deemed to
have elected to declare the notice of redemption to be a nullity and such
notice shall be without any force or effect.

     8.   ADJUSTMENT OF EXERCISE PRICE AND WARRANT SHARES.  After each
adjustment of the Exercise Price pursuant to this Section 8, the number of
Warrant Shares purchasable upon the exercise of each Warrant shall be the
number receivable upon exercise thereof prior to such adjustment
multiplied by a fraction, the numerator of which shall be the original
Exercise Price as defined in Section 3 above and the denominator of which
shall be such adjusted Exercise Price.  The Exercise Price shall be
subject to adjustment as set forth below:

          (a)(i)  In case the Company shall hereafter (A) pay a dividend
or make a distribution on its Common Stock in shares of its capital stock
(whether shares of Common Stock or of capital stock of any other class),
(B) subdivide its outstanding shares of Common Stock, (C) combine its
outstanding shares of Common Stock into a smaller number of shares, or (D)
issue by reclassification of its shares of Common Stock any shares of
capital stock of the Company, the Exercise Price in effect immediately
prior to such action shall be adjusted so that the Registered Holder of
any Warrant thereafter exercised shall be entitled to receive the number
of shares of capital stock of the Company which he would have owned
immediately following such action had such Warrant been exercised
immediately prior thereto.  An adjustment made pursuant to this subsection
shall become effective immediately after the record date in the case of a
dividend and shall become effective immediately after the effective date
in the case of a subdivision, combination or reclassification.  If, as a
result of an adjustment made pursuant to this subsection, the Registered
Holder of any Warrant thereafter exercised shall become entitled to
receive shares of two or more classes of capital stock of the Company, the
Board of Directors (whose determination shall be conclusive and shall be
described in a statement filed with the Warrant Agent) shall determine the
allocation of the adjusted Exercise Price between or among shares of such
classes of capital stock.

          (ii)  In any case in which this Section 8(a) shall require that
an adjustment to the Exercise Price be made immediately following a record
date, the Company may elect to defer (but only until five business days
following the filing by the Company with the Warrant Agent of the
certificate of independent public accountants described in subsection (i)
of Section 8(d)) issuing to the holder of any Warrants exercised after
such record date the shares of Common Stock and other capital stock of the
Company issuable upon such exercise over and above the shares of Common
Stock and other capital stock of the Company issuable upon such exercise
on the basis of the Exercise Price prior to adjustment.

          (iii)  No adjustment in the Exercise Price shall be required to
be made unless such adjustment would require an increase or decrease of at
least $.01; PROVIDED, HOWEVER, that any adjustments which by reason of
this subsection are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.  All calculations under
this Section 8 shall be made to the nearest one-tenth of one cent or to
the nearest one-tenth of a share, as the case may be, but in no event
shall the Company be obligated to issue fractional shares upon the
exercise of any Warrant.  Fractional shares shall be rounded to the
nearest whole share.

          (b)  In case of any reclassification or change of Warrant Shares
(other than a change in par value or from par value to no par value or
from no par value to par value or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company
with or into another corporation (other than a merger with a subsidiary in
which merger the Company is the continuing corporation and which does not
result in any reclassification or change of the then Warrant Shares (other
than a change in par value or from par value to no par value or from no
par value to par value) or in the case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case may be,
shall make lawful and adequate provision whereby the Registered Holder of
each Warrant then outstanding shall have the right thereafter to receive
on exercise of such Warrant the kind and amount of shares of stock and
other securities and property receivable upon such reclassification,
change, consolidation, merger, sale or conveyance by a holder of the
number of Warrant Shares  issuable upon exercise of such Warrant
immediately prior to such reclassification, change, consolidation, merger,
sale or conveyance and the Company or its successors shall forthwith file
at the principal office of the Warrant Agent a statement setting forth
such provisions signed by (1) its Chairman of the Board or Vice Chairman
of the Board or President or a Vice President and (2) by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary
evidencing such provisions.  Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to
the adjustments provided for in Section 8(a).  The above provisions of
this Section 8(b) shall similarly apply to successive reclassification and
changes of Warrant Shares and to successive consolidations, mergers, sales
or conveyances.

          (c)  Before taking any action which could cause an adjustment
reducing the Exercise Price below the then par value of the Warrant
Shares,  the Company will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at such
adjusted Exercise Price.

          (d)(i)  Upon any adjustment of the Exercise Price required to be
made pursuant to this Section 8, the Company within 30 days thereafter
shall (A) cause to be filed with the Warrant Agent a certificate of a firm
of independent accountants setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which
certificate shall be conclusive evidence of the correctness of such
adjustment, and (B) cause to be mailed to each of the Registered Holders
of the Warrant Certificates written notice of such adjustment.  Where
practical, such notice shall be given in advance and included as a part of
the notice required to be mailed under the provisions of subsection
8(d)(ii).

          (ii)  In case at any time:

                    (A)  The Company shall declare any dividend upon its
Common Stock payable otherwise than in cash; or

                    (B)  The Company shall offer for subscription to the
holders of its Common Stock any additional shares of stock of any class or
any other securities convertible into shares of stock or any rights to
subscribe thereto; or

                    (C)  There shall be any capital reorganization or
reclassification, or split or combination, of the capital stock of the
Company, or a sale of all or substantially all of the shares of the assets
of the Company, or a consolidation or merger of the Company with another
corporation (other than a merger with a subsidiary in which merger the
Company is the continuing corporation and which does not result in any
reclassification or change of the then Warrant Shares issuable upon
exercise of the Warrants other than a change in par value or from par
value to no par value or from no par value to par value); or

                    (D)  There shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;

then, in any one or more of said cases, the Company shall cause to be
mailed to each of the Registered Holders of the Warrant Certificates, at
the earliest practicable time (and, in any event, not less than 20 days
before any record date or other date set for definitive action), written
notice of the date on which the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription
rights or such reorganization, reclassification, sale, consolidation,
merger, dissolution, liquidation or winding up shall take place, as the
case may be.  Such notice shall also set forth such facts as shall
indicate the effect of such action (to the extent such effect may be known
at the date of such notice) on the Exercise Price and the kind and amount
of the shares of stock and other securities and property deliverable upon
exercise of the Warrants.  Such notice shall also specify the date as of
which the holders of the Common Stock of record shall participate in said
dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, sale, consolidation, merger,
dissolution, liquidation or winding up, as the case may be (on which date,
in the event of voluntary or involuntary dissolution, liquidation or
winding up of the Company, the right to exercise the Warrants shall
terminate).

          (iii)  Without limiting the obligation of the Company to provide
notice to the Registered Holders of the Warrant Certificates of corporate
actions hereunder, it is agreed that the failure of the Company to give
notice shall not invalidate such corporate action of the Company.

          (e)  Other than in the situations provided for in Section
8(a)(i) or (b), in case the Company shall, while any part of the Warrants
remain unexercised and in force, issue or sell shares of its Common Stock
for a consideration per share (before deduction of expenses or commissions
or underwriting discounts or allowance in connection therewith) less than
the fair market value of such Common Stock, as determined by the Board of
Directors, then after the date of such issuance, the Exercise Price shall
be reduced to an amount equal to the purchase price of such newly issued
shares.  No adjustment to the exercise price of the Warrants will be made
for dividends (other than dividends in the form of the Company's stock),
if any, paid on the Common Stock, or for the issuance of restricted
securities in connection with acquisitions by the Company, the grant of
stock options to persons covered by the Company's Stock Option Plan, or
any subsequent incentive stock option plan duly adopted by the Company's
Board of Directors.

     9.   REDUCTION IN EXERCISE PRICE OR EXTENSION OF TERM AT COMPANY'S
OPTION.  In addition to any adjustments made to the Exercise Price
pursuant to Section 8, the Company's Board of Directors may, at its sole
discretion, reduce the Exercise Price of the Warrants in effect at any
time either for the life of the Warrants or any shorter period of time
determined by the Company's Board of Directors or extend the exercise
period of the Warrants for one or more periods of time aggregating up to
two (2) years after the expiration of the original exercise period on
February 4, 2001.  The Company shall promptly notify the Warrant Agent and
the Registered Holders of any such reductions in the Exercise Price.

     10.  DUTIES, COMPENSATION AND TERMINATION OF WARRANT AGENT.  The
Warrant Agent shall act hereunder as agent and in a ministerial capacity
for the Company, and its duties shall be determined solely by the
provisions hereof.  The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity, value or authorization of the Warrant
Certificates or the Warrants represented thereby or of the Warrant Shares
or other property delivered on exercise of any Warrant.  The Warrant Agent
shall not at any time be under any duty or responsibility to any holder of
the Warrant Certificates to make or cause to be made any adjustment of the
Exercise Price or to determine whether any fact exists which may require
any such adjustments.

          The Warrant Agent shall not (i) be liable for any recital or
statement of fact contained herein or for any action taken or omitted by
it in reliance on any Warrant Certificate or other document or instrument
believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any
failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement except for its own negligence or
willful misconduct, or (iii) be liable for any act or omission in connec
tion with this Agreement except for its own negligence or willful
misconduct.

          The Company agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities which the Warrant Agent may incur
in connection with the delivery of copies of the Company's prospectus to
exercising Registered Holders upon the exercise of any Warrants as set
forth in Section 4.

          The Warrant Agent may at any time consult with counsel
satisfactory to it (which may be counsel for the Company) and shall incur
no liability or responsibility for any action taken or omitted by it in
good faith in accordance with the opinion or advice of such counsel.  Any
notice, statement, instruction, request, direction, order or demand of the
Company shall be sufficiently evidenced by an instrument signed by its
President and attested by its Secretary or Assistant Secretary.  The
Warrant Agent shall not be liable for any action taken or omitted by it in
accordance with such notice, statement, instruction, request, order or
demand.

          The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse the Warrant Agent
for its reasonable expenses.  The Company further agrees to indemnify the
Warrant Agent against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for any action taken or
omitted by the Warrant Agent in the execution of its duties and powers
hereunder, excepting losses, expenses and liabilities arising as a result
of the Warrant Agent's negligence or willful misconduct.

          The Warrant Agent may resign its duties or the Company may
terminate the Warrant Agent and the Warrant Agent shall be discharged from
all further duties and liabilities hereunder (except liabilities arising
as a result of the Warrant Agent's own negligence or willful misconduct),
on 30 days' prior written notice to the other party.  At least 15 days
prior to the date such resignation is to become effective, the Warrant
Agent shall cause a copy of such notice of resignation to be mailed to the
Registered Holder of each Warrant Certificate.  On such resignation or
termination the Company shall appoint a new warrant agent.  If the Company
shall fail to make such appointment within a period of 30 days after it
has been notified in writing of the resignation by the Warrant Agent, then
the registered holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new warrant agent.

          After acceptance in writing of an appointment of a new warrant
agent is received by the Company, such new warrant agent shall be vested
with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; provided, however, if it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the
Company and shall be legally and validly executed.  The Company shall file
a notice of appointment of a new warrant agent with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate.

          Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged, or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be
a party, or any corporation succeeding to the corporate trust business of
the Warrant Agent shall be a successor Warrant Agent under this Agreement,
provided that such corporation is eligible for appointment as a successor
to the Warrant Agent under the provisions of the preceding paragraph.  Any
such successor Warrant Agent shall promptly cause notice of its succession
as Warrant Agent to be mailed to the Company and to the Registered Holder
of each Warrant Certificate.  No further action shall be required for
establishment and authorization of such successor warrant agent.

          The Warrant Agent, its officers or directors and its sub
sidiaries or affiliates may buy, hold or sell Warrants or other securities
of the Company and otherwise deal with the Company in the same manner and
to the same extent and with like effect as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.

     11.  MODIFICATION OF AGREEMENT.  The Warrant Agent and the Company
may from time to time supplement or amend this Agreement without the
approval of any Registered Holders in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any
other provisions in regard to matters or questions arising hereunder which
the Company and the Warrant Agent may deem necessary or desirable.

     12.  NOTICES.  All notices, demands, elections, opinions or requests
(however characterized or described) required or authorized hereunder
shall be deemed given sufficiently if in writing and sent by registered or
certified mail, return receipt requested and postage prepaid, or by tested
telex, facsimile, telegram or cable to, in the case of the Company:

          Kestrel Energy, Inc.
          999 18th Street, Suite 2490
          Denver, Colorado  80202

with a copy to:

          S. Lee Terry, Jr.
          Gorsuch Kirgis LLP
          1515 Arapahoe Street, Tower 1 Suite 1000
          Denver, Colorado 80202

and in the case of the Warrant Agent:

          American Securities Transfer & Trust, Inc.
          12039 West Alameda Parkway, Suite Z-2
          Lakewood, Colorado 80228

with a copy to:

          Patrick J. Russell, Esq.
          Patrick J. Russell PC
          1600 Broadway Suite 2350
          Denver, Colorado 80202

and if to the Registered Holder of a Warrant Certificate, at the address
of such holder as set forth on the books maintained by the Warrant Agent.

     13.  BINDING AGREEMENT.  This Agreement shall be binding upon and
inure to the benefit of the Company, the Warrant Agent and their
respective successors and assigns, and the holders from time to time of
Warrant Certificates.  Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim or to
impose on any other person any duty, liability or obligation.

     14.  FURTHER INSTRUMENTS.  The parties shall execute and deliver any
and all such other instruments and shall take any and all other actions as
may be reasonably necessary to carry out the intention of this Agreement.

     15.  SEVERABILITY.  If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable, or
inoperative for any reason by any court of competent jurisdiction,
government authority or otherwise, such holding, declaration or
pronouncement shall not affect adversely any other provision of this
Agreement, which shall otherwise remain in full force and effect and be
enforced in accordance with its terms, and the effect of such holding,
declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.

     16.  WAIVER.  All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and
remedies as provided by law.  No delay or failure on the part of either
party in the exercise of any right or remedy arising from a breach of this
Agreement shall operate as a waiver of any subsequent right or remedy
arising from a subsequent breach of this Agreement.  The consent of any
party where required hereunder to act or occurrence shall not be deemed to
be a consent to any other action or occurrence.

     17.  GENERAL PROVISIONS.  This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of
Colorado.  Except as otherwise expressly stated herein, time is of the
essence in performing hereunder.  This Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, and
this Agreement may not be modified or amended or any term or provisions
hereof waived or discharged except in writing signed by the party against
whom such amendment, modification, waiver or discharge is sought to be
enforced.  The headings of this Agreement are for convenience in reference
only and shall not limit or otherwise affect the meaning hereof.  This
Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.

     18.  TERMINATION.  This Agreement shall terminate at the close of
business on the Expiration Date or such earlier date upon which all
Warrants have been exercised; provided, however, that if exercise of the
Warrants is suspended pursuant to Section 4 and such suspension continues
past the Expiration Date, this Agreement shall terminate at the close of
business on the business day immediately following the expiration of such
suspension.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.

                                   KESTREL ENERGY, INC.
ATTEST:

By:/s/Mark A. Boatright            By:/s/Timothy L. Hoops
   Mark A. Boatright, Secretary      Timothy L. Hoops, President

                                   AMERICAN SECURITIES TRANSFER &
                                   TRUST, INC.
                                  Warrant Agent

                                   By:/s/Kathy Heagerty
                                   Authorized Officer

                                   /s/Steve King

                                 EXHIBIT A

THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE EXERCISED UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
COVERING THE ISSUANCE OF SHARES OF COMMON STOCK UPON THE EXERCISE OF THIS
WARRANT IS IN EFFECT AND CURRENT AT THE TIME OF EXERCISE OR UNLESS THE
ISSUANCE OF SHARES OF COMMON STOCK UPON ANY EXERCISE IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933 AND UNDER
APPLICABLE STATE SECURITIES LAWS.

                           KESTREL ENERGY, INC.

                     WARRANT TO PURCHASE COMMON STOCK
No. W-----
                                                          CUSIP ------

     This Warrant Certificate certifies that             , the registered
holder hereof, or registered assigns ("the Registered Holder") is entitled
to purchase from Kestrel Energy, Inc., a Colorado corporation (the
"Company"), subject to the terms and conditions hereof and of the Warrant
Agreement referred to below, at any time on or after the effective date of
the Company's registration statement as filed with the Securities and
Exchange Commission which includes the shares underlying the Warrants, and
until the close of business on February 4, 2001, at the purchase price of
$3.125 (the "Exercise Price"), the number of shares of common stock, no
par value, of the Company (the "Common Stock") which is initially equal to
the number of Warrants set forth above.   The number of shares purchasable
upon exercise of these Warrants and the Exercise Price per Warrant shall
be subject to adjustment from time to time as set forth in the Warrant
Agreement referred to below, and these Warrants are subject to redemption
by the Company at $0.01 per Warrant, at any time prior to their
expiration, on not less than 30 days' prior written notice to the holders
of Warrants, provided that the daily trading price per share of Common
Stock has been at least $3.75 (120% of the Warrant exercise price) for a
period of at least five consecutive trading days ending the trading day
prior to the date upon which the notice of redemption is given, as more
specifically described in the Warrant Agreement.  During the 30-day period
immediately following the giving of such notice, the Registered Holders
shall have the right to exercise the Warrants so held by them.  Upon
expiration of such 30-day period, all rights of the Registered Holders
shall terminate, other than the rights to receive the redemption price,
without interest.

     These Warrants may be exercised in whole or in part by presentation
of this Warrant Certificate with the Purchase Form on the reverse side
[attached] hereof duly executed and simultaneous payment of the Exercise
Price (subject to adjustment) made payable to Kestrel Energy, Inc. at the
principal office of American Securities Transfer & Trust, Inc. (the
"Warrant Agent").  Payment of such price shall be made at the option of
the Registered Holder hereof in cash, by certified or official bank check
or any combination thereof.

     These Warrants are part of a duly authorized dividend distribution of
one Warrant for every ten shares of outstanding Common Stock held of
record by the Company's shareholders at the close of business on February
4, 2000, and issued under and in accordance with a Warrant Agreement dated
as of January 18, 2000, between the Company and the Warrant Agent and are
subject to the terms and provisions contained in the Warrant Agreement, to
all of which the Registered Holder of these Warrants by acceptance hereof
consents.  The Registered Holder hereof upon written request to the
Warrant Agent may obtain a copy of the Warrant Agreement for inspection.

     Upon any partial exercise of these Warrants, there shall be
countersigned and issued to the Registered Holder hereof a new Warrant
Certificate in respect of the shares of Common Stock as to which these
Warrants shall not have been exercised.  These Warrants may be exchanged
at the office of the Warrant Agent by surrender of these Warrants properly
endorsed either separately or in combination with one or more other
Warrants for one or more new Warrant Certificates entitling the Registered
Holder thereof to purchase the same aggregate number of shares as were
purchasable on exercise of these Warrants. The Company shall not be
required to issue fractions of Warrants upon any such adjustment or to
issue fractions of shares upon the exercise of any Warrants upon any such
adjustment, in accordance with the Warrant Agreement.  These Warrants are
transferable at the office of the Warrant Agent in Lakewood, Colorado in
the manner and subject to the limitations set forth in the Warrant
Agreement.  The Warrants may not be sold, transferred, assigned, pledged
or hypothecated, in whole or in part, prior to the effective date of the
Company's registrations statement covering the resale of the Warrants,
unless an exemption from the registration requirements of the Securities
Act of 1933 and any applicable state securities laws is available, the
availability of which must be established to the reasonable satisfaction
of the Company and its counsel, and except by will or operation of law.
The Registered Holder hereof, until the transfer has been recorded on the
books of the Company, may be treated by the Company, the Warrant Agent,
and all other persons dealing with these Warrants as the absolute owner
hereof for any purpose and as the person entitled to exercise the right
represented hereby, or to the transfer hereof on the books of the Company,
any notice to the contrary notwithstanding.

     These Warrants do not entitle any Registered Holder hereof to any of
the rights of a shareholder of the Company.

     This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.

Dated: --------------------        KESTREL ENERGY, INC.

----------------------------       By:-----------------------------
Mark A. Boatright, Secretary         Timothy L. Hoops, President

                                     AMERICAN SECURITIES TRANSFER &
                                     TRUST, INC.
                                     Warrant Agent

                                     By:--------------------------
                                        ----------------, President

                           KESTREL ENERGY, INC.

                    TRANSFER FEE $20.00 PER CERTIFICATE

     This Warrant Certificate, when surrendered to the Warrant Agent at
its principal office by the Warrant Holder, in person or by attorney duly
authorized in writing in the manner and subject to the limitations
provided in the Warrant Agreement, may be exchanged upon payment of $20.00
per certificate or certificates of like tenor and evidencing in the
aggregate number of Warrants, subject to any adjustments made in
accordance with the provisions of the Warrant Agreement.

     The Company and the Warrant Agreement may deem and treat the
registered holder hereof as the absolute owner of this Warrant certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone) for all purposes and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.  No Warrant Holder, as
such, shall have any rights of a shareholder of the Company, either at law
or at equity, and the rights of the Warrant Holders, as such, are limited
to those rights expressly provided in the Warrant Agreement and in the
Warrant Certificate.

     The Exercise Price is subject to adjustment if the Company shall
prior to the exercise of any Warrants, effect one or more stock splits,
stock dividends, or other increases or reductions of the number of shares
of its no par value common stock outstanding without receiving
compensation therefor in money, services or property.

     The Company shall not be required to issue fractions of Warrants upon
any such adjustment or to issue fractions of shares upon issuance of any
Warrants after any such adjustment, but the Company, in lieu of issuing
any such fractional interest, shall round up or down to the nearest whole
Warrant.

                                ASSIGNMENT

        (For of Assignment to be Executed if the Registered Holder
              Desires to Transfer Warrants Evidenced Hereby)

     FOR VALUE RECEIVED ------------------- hereby sells, assigns and
transfers to ---------------------------- (please print name and address
including zip codes) Warrants represented by this Warrant Certificate, and
does hereby irrevocably constitute and appoint ----------------- Attorney
to transfer the said Warrants on the books of the Warrant Agent with full
power of substitution.

Dated:---------------                   ------------------------------
                                                  Signature

NOTICE:   The above signature must correspond with the name as written
          upon the face of the within Warrant Certificate in every
          particular, without alteration or enlargement or any change
          whatsoever.

Medallion Signature Guaranteed:------------------------------

                                 EXERCISE

         (Form of Exercise to be Executed if the Registered Holder
              Desires to Exercise Warrants Evidenced Hereby)

To Kestrel Energy, Inc.:

     The undersigned hereby irrevocably elects to exercise ----------
Warrants, evidenced by the within Warrant Certificate for, and to purchase
thereunder, ---------- full shares of Common Stock issuable upon exercise
of said Warrants and delivery of $--------- and any applicable taxes.

     The undersigned requests that certificates for such shares be issued
in the name of:
                                        PLEASE INSERT SOCIAL SECURITY OR
                                        TAX IDENTIFICATION NUMBER

-------------------------------         --------------------------------
(Please print name and address)

-------------------------------         --------------------------------

-------------------------------         --------------------------------

     If said number of Warrants shall not be all the Warrants evidenced by
the within Warrant Certificate, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so exercised be issued in
the name of and delivered to:

------------------------------------------------------------------------
                      (Please print name and address)
------------------------------------------------------------------------

------------------------------------------------------------------------

Dated:-------------------------         Signature: ---------------------

NOTICE:   The above signature must correspond with the name as written
          upon the face of the within Warrant Certificate in every
          particular, without alteration or enlargement or any change
          whatsoever, or if signed by any other person the Form of
          Assignment hereon must be duly executed and if the certificate
          representing the shares or any Warrant Certificate representing
          Warrants not exercised is to be registered in a name other than
          that in which the within Warrant Certificate is registered, the
          signature of the holder hereof must be guaranteed.

Medallion Signature Guaranteed:  ---------------------------

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT
TO S.E.C. RULE 17Ad-15.

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