##### 



Exhibit 4.3
 EXHIBIT 3
 
 FORM OF DEBENTURE




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##### 



UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE
SECURITY BEFORE NOVEMBER 4, 2007
  WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE
SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE COMMON SHARES FOR
WHICH THIS SECURITY IS EXERCISABLE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED
ON OR THROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE
BENEFIT OF A CANADIAN RESIDENT UNTIL NOVEMBER 4, 2007
  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE U.S. SECURITIES ACT). THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES,
AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED ONLY (A) TO THE CORPORATION, (B) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION
UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A THEREUNDER, IF AVAILABLE, IN EACH
CASE IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OF THE UNITED STATES OR (C) IN ANY
OTHER TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY
APPLICABLE STATE SECURITIES LEGISLATION, AND THE SELLER FURNISHES TO THE CORPORATION AN OPINION OF
COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE CORPORATION TO SUCH
EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY IN SETTLEMENT OF
TRANSACTIONS ON STOCK EXCHANGES IN CANADA.
 Ausam Energy Corporation
   Noram Resources, Inc.
  US$25,000,000 9% SENIOR SECURED CONVERTIBLE DEBENTURE
 DUE JULY 3 2012




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##### 



IN WITNESS WHEREOF
 AUSAM ENERGY CORPORATIONPer:Per:NORAM RESOURCES, INC.Per:Per:ACCEPTED AND AGREED:THE HUFF ENERGY FUND, L.P.by
its General Partner, WRH Energy
Partners L.L.C.Per:




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##### 



-4- TABLE OF CONTENTS TO SCHEDULE A
 ARTICLE 1 INTERPRETATION
    
    
    61.1
    
    Definitions
    
    
    61.2
    
    Interpretation
    
    
    101.3
    
    Headings, Etc.
    
    
    101.4
    
    Day Not a Business Day
    
    
    111.5
    
    Currency
    
    
    111.6
    
    Consents and Approvals
    
    
    111.7
    
    Interpretation of Outstanding
    
    
    111.8
    
    Application of Generally Accepted Accounting Principles
    
    
    111.9
    
    Interpretation of PPSA Expressions
    
    
    111.10
    
    Application of PPSA
    
    
    111.11
    
    Collateral Inclusive
    
    
    121.12
    
    Meaning of Collateral and Secured Obligations on Amalgamation
    
    
    12ARTICLE 2 INTEREST
    
    
    122.1
    
    Calculation of Interest
    
    
    122.2
    
    Payment of Interest
    
    
    12ARTICLE 3 SECURITY
    
    
    123.1
    
    Security for Debenture
    
    
    123.2
    
    Reservation of Last Day of Terms of Leases
    
    
    133.3
    
    Registration
    
    
    133.4
    
    Further Assurances
    
    
    133.5
    
    No Merger
    
    
    143.6
    
    Separate Security
    
    
    143.7
    
    Defeasance
    
    
    143.8
    
    Attachment
    
    
    143.9
    
    Holders Rights as a Secured Party
    
    
    143.10
    
    Full Recourse to the Corporation
    
    
    143.11
    
    Registration and Perfection
    
    
    153.12
    
    Possession and Use of Mortgaged Premises Prior to Default
    
    
    153.13
    
    Release of Mortgaged Premises
    
    
    15ARTICLE 4 REPAYMENT OF DEBENTURE
    
    
    154.1
    
    Repayment at Maturity Date
    
    
    154.2
    
    Failure to Repay at Maturity Date
    
    
    164.3
    
    Debenture Non-Callable
    
    
    16ARTICLE 5 CONVERSION OF DEBENTURE
    
    
    165.1
    
    Conversion and Conversion Price
    
    
    165.2
    
    Manner of Exercise of Right to Convert
    
    
    175.3
    
    Conversion
    
    
    185.4
    
    Adjustment of Conversion Price
    
    
    185.5
    
    No Adjustments for Certain Transactions or Events
    
    
    195.6
    
    No Requirement to Issue Fractional Shares
    
    
    205.7
    
    Corporation to Reserve Shares
    
    
    205.8
    
    Cancellation of Converted Debenture
    
    
    205.9
    
    Certificate as to Adjustment
    
    
    215.10
    
    Notice of Special Matters
    
    
    21ARTICLE 6 COVENANTS
    
    
    216.1
    
    To Pay Principal and Interest
    
    
    216.2
    
    To Carry on Business
    
    
    216.3
    
    Mortgaged Premises
    
    
    216.4
    
    To Maintain Accurate Books and Records
    
    
    216.5
    
    Maintain Existence
    
    
    226.6
    
    Continued Listing
    
    
    226.7
    
    Securities Qualification Requirements
    
    
    226.8
    
    Notice of Event of Default
    
    
    226.9
    
    Officers Certificates
    
    
    226.10
    
    Comply with Laws
    
    
    226.11
    
    Lien
    
    
    22




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##### 



-5- 6.12
    
    Pay Taxes
    
    
    236.13
    
    Appraisal of Debentures and Warrants
    
    
    236.14
    
    Right of First Refusal
    
    
    236.15
    
    Insurance
    
    
    236.16
    
    Holder Proposals
    
    
    236.17
    
    Delivery of Documents on Event of Default
    
    
    236.18
    
    Reporting
    
    
    246.19
    
    Directors Actions
    
    
    246.20
    
    Significant Changes Affecting Collateral
    
    
    256.21
    
    Board Representation
    
    
    256.22
    
    Further Assurances
    
    
    256.23
    
    Negative Covenants
    
    
    256.24
    
    Subordination of Debenture
    
    
    26ARTICLE 7 PERFORMANCE BY HOLDER
    
    
    277.1
    
    Holder May Perform Covenants
    
    
    27ARTICLE 8 DEFAULT
    
    
    278.1
    
    Acceleration of Maturity
    
    
    278.2
    
    Remedies
    
    
    298.3
    
    Application of Monies
    
    
    308.4
    
    Holders Actions
    
    
    318.5
    
    Extensions and Indulgences
    
    
    318.6
    
    No Obligation To Act Promptly
    
    
    318.7
    
    Remedies Cumulative
    
    
    318.8
    
    Costs of Realization
    
    
    31ARTICLE 9 SUPPLEMENTAL DEBENTURES
    
    
    319.1
    
    Supplemental Indentures
    
    
    319.2
    
    No Amendment or Waiver
    
    
    32ARTICLE 10 REGISTRATION AND TRANSFER OF DEBENTURE
    
    
    3210.1
    
    Register of the Debenture
    
    
    3210.2
    
    Transfer of the Debenture
    
    
    32ARTICLE 11 SUCCESSOR CORPORATION
    
    
    3211.1
    
    Assumption of Obligations
    
    
    32ARTICLE 12 MISCELLANEOUS
    
    
    3312.1
    
    Discharge
    
    
    3312.2
    
    Affiliated Transactions
    
    
    3312.3
    
    Severability
    
    
    3312.4
    
    Laws of the State of New York
    
    
    3312.5
    
    Continuing Separate Security
    
    
    3312.6
    
    Advances in Part or in Whole
    
    
    3312.7
    
    Waiver of Protest
    
    
    3412.8
    
    Corporation not to Assert Claims or Defences
    
    
    3412.9
    
    Copy of Agreement
    
    
    3412.10
    
    Enurement
    
    
    3412.11
    
    Time of the Essence
    
    
    3412.12
    
    PPSA Waiver
    
    
    3412.13
    
    Maximum Rate Permitted by Law
    
    
    34




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##### 



-6- SCHEDULE A
 ,
 ARTICLE 1
INTERPRETATION
 1.1
    
    Definitions
  this Debenture, the Debenture, Debenture, hereto, herein, hereby, hereunder, hereof
 Accessions
 Account
 Account Debtor
 Act Business Corporations Act
 Adjusted Principal Amount
 AFE
 Alberta PPSA Personal Property Security Act
 Audited Financial Statements
 business day
 Capital Reorganization
 Change of Control




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##### 



-7-  Chattel Paper
 Collateral
 (a)
    
    all the undertaking of the Parent and Noram,(b)
    
    all Goods (including all parts, accessories, attachments, special tools, additions and
Accessions thereto),(c)
    
    all Chattel Paper, Documents of Title (whether negotiable or not), Instruments, Intangibles,
Money and Investment Property (including Securities) now owned or hereafter owned or acquired
by or on behalf of the Parent and Noram (including such as may be returned to or repossessed
by the Parent and Noram),(d)
    
    all Proceeds and renewals thereof, accretions thereto and substitutions therefor,(e)
    
    all Inventory of whatever kind and wherever situate,(f)
    
    all Equipment of whatever kind and wherever situate, including, without limitation, all
machinery, tools, apparatus, plant, furniture, fixtures and vehicles of whatsoever nature or
kind,(g)
    
    all Debts and Accounts,(h)
    
    all deeds, documents, writings, papers, books of account and other books relating to or being
records of all or any of the foregoing, or by which such are or may hereafter be secured,
evidenced, acknowledged or made payable,(i)
    
    all contractual rights and insurance claims and all goodwill, patents, trademarks,
copyrights, and other industrial property, and(j)
    
    all present and after acquired personal property acquired by the Parent and Noram as a result
of any dealing either directly or indirectly, with any or all or the foregoing;
 Consumer Goods
 Control Person
 Conversion Price
 Corporation




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##### 



-8- Corporations Auditor
 Counsel
 Current Market Price per Share th
 Date of Conversion
 Debt
 Director Directors Board of
Directors
 Document of Title
 Event of Default
 Equipment
 Financing Change Statement
 Financing Statement
 GAAP
 Goods
 Holder
 Instrument
 Interest




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##### 



-9- Interest Rate
 Inventory
 Investment Property
 Lien
 Maturity Date
 Maturity Shares
 Maximum Cash Amount
 Mortgaged Premises
 Officers Certificate
 Person
 PPSA
 Principal Amount
 Proceeds
 Restricted Collateral
 Secured Party
 Secured Obligations
 Securities
 Security Interest




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##### 



-10- Senior Debt
 Services Agreement
 Shares
 Share Reorganization
 SKH
 Subscription Agreement
 Subsidiary Subsidiary Corporation
 TSX-V
 UCC
 VWAP
 Warrants
 written direction of the Corporation
 1.2
    
    Interpretation
  1.3
    
    Headings, Etc.




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##### 



-11- 1.4
    
    Day Not a Business Day
  1.5
    
    Currency
  1.6
    
    Consents and Approvals
  1.7
    
    Interpretation of Outstanding
  (i)
    
    monies for the payment of all amounts owing to the Holder hereunder shall have
been paid or delivered to the Holder or this Debenture is converted to Shares in
accordance with Article 5 hereof; and(ii)
    
    the obligations of the Corporation hereunder shall have been duly performed as
herein contemplated, or otherwise discharged to the reasonable satisfaction of the
Holder;
  1.8
    
    Application of Generally Accepted Accounting Principles
  1.9
    
    Interpretation of PPSA Expressions
  1.10
    
    Application of PPSA and UCC




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##### 



-12- 1.11
    
    Collateral Inclusive
  1.12
    
    Meaning of Collateral and Secured Obligations on Amalgamation
  (i)
    
    shall extend to Collateral (as that term is herein defined) owned by each of
the amalgamating corporations and the amalgamated corporation at the time of
amalgamation or other merger and to any Collateral thereafter owned or acquired by
the amalgamated corporation, and(ii)
    
    shall secure the Secured Obligations (as that term is herein defined) of each
of the amalgamating corporations and the amalgamated corporation to the Holder at the
time of amalgamation and any Secured Obligations of the amalgamated corporation to
the Holder thereafter arising.
  ARTICLE 2
INTEREST
 2.1
    
    Calculation of Interest
 Interest
 2.2
    
    Payment of Interest
  ARTICLE 3
SECURITY
 3.1
    
    Security for Debenture




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##### 



-13- (i)
    
    a security interest  as and by way of a security interest in all of the
Collateral; and(ii)
    
    a floating charge security interest,
 Security Interest
  3.2
    
    Reservation of Last Day of Terms of Leases
  Restricted Collateral
 3.3
    
    Registration
  3.4
    
    Further Assurances




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##### 



-14-  3.5
    
    No Merger
  3.6
    
    Separate Security
  3.7
    
    Defeasance
  3.8
    
    Attachment
  3.9
    
    Holders Rights as a Secured Party
  3.10
    
    Full Recourse to the Corporation




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##### 



-15- 3.11
    
    Registration and Perfection
  3.12
    
    Possession and Use of Mortgaged Premises Prior to Default
  3.13
    
    Release of Mortgaged Premises
  ARTICLE 4
REPAYMENT OF DEBENTURE
 4.1
    
    Repayment at Maturity Date
 Maturity Shares Adjusted Principal Amount
 4.2
    
    Repayment upon Asset Sale or Change of ControlIf, prior to the Maturity Date:
 (a)
    
    the Corporation completes a transaction as contemplated in subsection 6.23(a) of this
Debenture other than with the approval of the Holders as contemplated therein, or a Change of
Control occurs and is continuing for a period of thirty (30) days; and(b)
    
    the Holder provides written notice to the Corporation demanding payment pursuant to this
Section 4.2; then,




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##### 



-16- 
 ten (10) business days after receipt by the Corporation of such notice this Debenture shall
become due and payable, if not converted into Shares prior thereto, at that amount which is
four times the Principal Amount, plus any accrued but unpaid Interest.
 4.3
    
    Maximum Cash Payable at Maturity
 Maximum Cash Amount )
 4.4
    
    Interest After Maturity Date
  4.5
    
    Debenture Non-Callable
  ARTICLE 5
CONVERSION OF DEBENTURE
 5.1
    
    Conversion and Conversion Price
 (a)
    
    Upon and subject to the terms, provisions and conditions of this Article:
 (i)
    
    the Holder shall have the right, at its option at any time and from time to
time, prior to the close of business on the Maturity Date, to convert the Principal
Amount (or any part of such Principal Amount) into fully paid and non-assessable Shares
at the Conversion Price in effect on the Date of Conversion; and(ii)
    
    effective from and after 30 months from the date hereof, the Holder shall be
required to convert the Principal Amount (or any part of such Principal Amount as
specified by the Corporation) into fully paid and non-assessable Shares at the
Conversion Price in effect on the Date of Conversion where: (A) the Holder has received
thirty (30) days prior written notice from the Corporation (the Notice Date); (B)
the 30-day VWAP, calculated with respect to the thirty (30) trading days prior to the
Notice Date, of the then outstanding Shares is at or above a price of CDN$0.90 or,
where the Conversion Price is payable in United States dollars pursuant to subsection
5.4(f), at or above a price of US$0.8406 (in each case adjusted for divisions and
consolidations of Shares in the same manner contemplated by Section 5.4 hereof); (C)
the average trading volume during such 30-day period equals or exceeds 1,000,000 Shares
per day (adjusted for divisions and consolidations of Shares in the same manner
contemplated by Section 5.4 hereof); and (D) the Shares received are tradeable without
restriction.




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##### 



-17- 
 (b)
    
    The Conversion Price shall be subject to adjustment as provided in Section 5.4.(c)
    
    The right of conversion set forth in Section 5.1(a) shall extend only to the maximum number
of whole Shares into which the aggregate Principal Amount of this Debenture surrendered for
conversion at any one time by the Holder may be converted in accordance with the foregoing
provisions of this Section.(d)
    
    Fractional interests in Shares shall be satisfied in the manner provided in Section 5.5.(e)
    
    The Holder covenants that it shall not convert all or any portion of the Principal Amount
where such conversion would constitute the creation of a new Control Person unless approval of
such creation of a new Control Person has been provided by the shareholders of the Parent in
accordance with the policies of the TSX-V or has otherwise been consented to by the TSX-V (the
Restricted Conversion Amount). In the event that (i) the Holder has provided the
Corporation with written notice of its intention to convert all or a part of the Principal
Amount in accordance with Section 5.2 hereof, but is prevented from converting the Restricted
Conversion Amount; and (ii) the shareholders of the Parent have not approved the creation of a
new Control Person at a meeting of the shareholders called for that purpose in accordance with
the policies of the TSX-V and such conversion has not otherwise been consented to by the
TSX-V, then the Interest Rate applicable to the Restricted Conversion Amount shall increase by
1% and shall continue to increase by an additional 1% for each quarter thereafter, to a
maximum aggregate increase of 5%, for the period that the Restricted Conversion Amount of this
Debenture remains outstanding.(f)
    
    Notwithstanding Section 5.1(a)(ii), the Holder shall not be required to convert any portion
of the Principal Amount where such conversion would constitute the creation of a new Control
Person, unless approval of such creation of a new Control Person has been provided by the
shareholders of the Parent in accordance with the policies of the TSX-V or has otherwise been
consented to by the TSX-V, provided however that, once the conditions set out in Section
5.1(a)(ii) have been satisfied, the Holder shall continue to be required to convert such
portion of the Principal Amount specified pursuant to Section 5.1(a)(ii) where such conversion
will not, at the time of conversion, create a new Control Person.(g)
    
    Where the Holder is the registered holder of Debentures having an aggregate Principal Amount
such that conversion of the entire aggregate amount would constitute the creation of a new
Control Person, the Parent shall, upon written request from the Holder, hold a meeting of its
shareholders to seek approval of such creation of a new Control Person within ninety (90) days
of such request.5.2
    
    Manner of Exercise of Right to Convert(a)
    
    If the Holder wishes to convert the Principal Amount in whole or in part into Shares in
accordance with Section 5.1(a)(i), the Holder shall prior to the Maturity Date surrender this
Debenture to the Parent at its principal office in the City of Calgary, Alberta, together with
written notice, substantially in the form of Appendix 1 hereto, duly executed by the Holder
or its legal representatives or attorney duly appointed by an instrument in writing in form
and executed in a manner satisfactory to the Parent, acting reasonably, exercising its right
to convert all or a portion of the Principal Amount into fully paid and non-assessable Shares
in accordance with the provisions of this Article. Upon exercise as contemplated in this
Section or the conversion as contemplated in Section 5.1(a)(ii) hereof, the Holder, shall be
entitled to be entered in the books of the Parent as at the Date of Conversion as the holder
of the number of Shares into which all or a portion of the Principal Amount is converted in
accordance with the provisions of this Article and, as soon as practicable thereafter (but in
any event no later than three (3) business days), the Parent shall deliver to the Holder a
certificate or certificates for such Shares and, if applicable, a cheque for any amount
payable under Section 5.5.(b)
    
    For the purposes of this Article, this Debenture shall be deemed to be surrendered for
conversion pursuant to subsection 5.1(a) on the date (herein called the Date of Conversion)
on which it (and the notice contemplated by Section 5.2(a) above) is received by the
Corporation in accordance with the provisions of this Article, or upon conversion as
contemplated in Section 5.1(a)(ii).




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##### 



-18- 
 (c)
    
    Any portion of the Principal Amount may be converted into Shares as provided in this Article
and all references in this Debenture to conversion of the Principal Amount or this Debenture
shall be deemed to include conversion of such portion of the Principal Amount.(d)
    
    If this Debenture is converted as to a portion of the Principal Amount only, the Holder
shall, upon the exercise of its right of conversion, surrender this Debenture to the
Corporation. The Corporation shall cancel the same and shall without charge forthwith deliver
to the Holder a new Debenture in an aggregate Principal Amount equal to the unconverted part
of the Principal Amount so surrendered.(e)
    
    Upon the surrender of this Debenture for conversion in accordance with Section 5.2, the
Holder shall be entitled to receive accrued and unpaid Interest in respect thereof up to the
Date of Conversion, and the Shares issued upon such conversion shall only be entitled to
receive dividends declared in favour of shareholders of record on and after the Date of
Conversion, from which date such Shares will for all purposes be and be deemed to be issued
and outstanding as fully paid and non-assessable Shares.5.3
    
    ConversionOn and following the Date of Conversion this Debenture shall represent only the right of the
Holder to receive: (i) a certificate representing the Shares acquired on conversion and
cheque representing any accrued but unpaid Interest upon surrender of this Debenture; and
(ii) if only a portion of the Principal Amount of this Debenture is converted, a replacement
debenture (substantially in the form of this Debenture) for the Principal Amount hereof that
was not so converted into Shares.5.4
    
    Adjustment of Conversion PriceThe Conversion Price in effect at any date shall be subject to adjustment from time to time as follows:(a)
    
    If, and whenever at any time and from time to time the Parent shall: (A) subdivide, redivide
or change its then outstanding Shares into a greater number of Shares, (B) reduce, combine,
consolidate or change its then outstanding Shares into a lesser number of Shares, or (C) issue
Shares (or securities exchangeable or convertible into Shares) to the holders of all or
substantially all of its then outstanding Shares by way of stock dividend or other
distribution (other than a dividend in the ordinary course) paid in Shares or securities
exchangeable or convertible into Shares, (any of such events being herein called a Share
Reorganization), the Conversion Price shall, subject to applicable stock exchange rules, be
proportionately adjusted effective immediately after the effective date or record date for the
Share Reorganization, by multiplying the Conversion Price in effect immediately prior to such
effective date or record date by the quotient obtained when:
 (i)
    
    the number of Shares outstanding on such effective date or record date before
giving effect to the Share Reorganization, is divided by(ii)
    
    the number of Shares outstanding immediately after the completion of such Share
Reorganization (but before giving effect to the issue of any Shares issued after such
record date otherwise than as part of such Share Reorganization) including, in the case
where securities exchangeable or convertible into Shares are distributed, the number of
Shares that would have been outstanding had such securities been exchanged for or
converted into Shares on such record date,
 provided however, that no such adjustment to the Conversion Price shall be made with respect
to the circumstances set out in Section 5.5.
 (b)
    
    If and whenever at any time and from time to time the Corporation shall issue Shares, or
debt, shares, warrants, options or other securities convertible into Shares, in each case at a
price, conversion price or exercise price, for Shares, respectively, below the Conversion
Price, the Conversion Price shall, subject to




---



##### 



-19- 
 applicable stock exchange rules, be proportionally adjusted effective immediately after such
issuance such that the Conversion Price shall be equal to the price per Share obtained by
multiplying the Conversion Price by a fraction, of which the numerator shall be the number
of Shares outstanding on the date of such issuance (not including the Shares issued on such
date) plus the number of Shares which the aggregate consideration received for all the
securities so issued would purchase at the Current Market Price per Share, and of which the
denominator shall be the number of Shares outstanding on the date of such issuance
(including the Shares issued on such date), provided, however, that no such adjustment to
the Conversion Price shall be made with respect to the circumstances set out in Section 5.5.(c)
    
    If and whenever there is a capital reorganization of the Corporation not otherwise provided
for in this Section 5.4 or a consolidation, merger, arrangement, amalgamation (statutory or
otherwise) or similar transaction of the Corporation with or into another Person, or in the
case of any sale of the properties and assets of the Corporation as or substantially as an
entirety to any other Person (any such event being called a Capital Reorganization), the
Debenture shall, after such Capital Reorganization, be convertible into the number of Shares
or other securities or property of the Corporation, or such continuing, successor or
purchasing corporation, as the case may be, to which a holder of the number of Debentures
would have been issued if such Debentures had been converted immediately prior to such Capital
Reorganization. Notwithstanding the generality of the foregoing, no Capital Reorganization
shall be carried into effect unless, in the opinion of the Directors, all necessary steps
shall have been taken to ensure that the Holder shall thereafter be entitled to receive such
number of Shares or other securities or property of the Corporation, or such continuing,
successor or purchasing Corporation, as the case may be, subject to adjustments thereafter in
accordance with the provisions similar, as nearly as they may be, to those contained in this
clause.(d)
    
    In the case of any reclassification of, or other change in, the outstanding Shares other than
a Share Reorganization or a Capital Reorganization, the right of conversion shall be adjusted
immediately after the effective date or record date for such reclassification or other change
so that the Holder shall be entitled to receive, upon the exercise of such right at any time
after the effective date or record date of such reclassification or other change, such shares,
securities or rights as it would have received had this Debenture been converted into Shares
immediately prior to such effective date or record date, subject to adjustment thereafter in
accordance with provisions the same as nearly may be possible as those contained in subsection
5.4(a) and (c).(e)
    
    Where the application of the foregoing provisions of this Section 5.4 results in a decrease
in the Conversion Price taking effect immediately after the record date for a specific event,
if any Shares are converted after that record date and prior to completion of the event, the
Parent may postpone the issuance to the Holder of the additional Shares to which the Holder is
entitled by reason of the decrease of the Conversion Price, but such additional Shares shall
be issued and delivered to the Holder upon completion of the event and the Parent shall
deliver to the Holder an appropriate instrument evidencing its right to receive such
additional Shares upon completion of the relevant event.(f)
    
    Where the 30-day average of the number of Shares traded on an exchange in the United States
is greater than the 30-day average of the number of Shares traded on an exchange in Canada,
the Conversion Price shall thereafter be paid in lawful money of the United States and the
definition of Conversion Price shall be converted to lawful money of the United States at a
rate of 0.9340 United States dollars for each Canadian dollar.5.5
    
    No Adjustments for Certain Transactions or Events
  (a)
    
    the granting by the Parent of options or other rights under any stock option plan, stock
purchase plan, phantom stock plan, stock appreciation rights plan, or other deferred, share or
incentive compensation plan to officers, Directors, employees or consultants of the
Corporation or its affiliates;




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##### 



-20- (b)
    
    the issuance by the Parent of any Shares or other securities of the Parent for valuable
consideration to any Persons other than as specifically provided for in Section 5.4 (including
without limitation the issuance of Shares upon the exercise or conversion of any securities of
the Parent outstanding as at the date hereof that are exercisable or convertible into Shares);(c)
    
    the declaration or payment of any dividends on the Shares other than as specifically provided
for in Section 5.4;(d)
    
    the issuance by the Corporation of Shares, convertible shares or convertible debt, or
warrants (the Exempted Issuances) provided that the Exempted Issuances shall not exceed an
aggregate of US$3,000,000 and provided further that, all such Exempted Issuances shall in each
case include a minimum price, conversion price or exercise price, respectively, of US$0.54;(e)
    
    the issuance by the Corporation of any securities (the Repayment Issuances) provided that
the Repayment Issuances shall be used to repay the Principal Amount or Adjusted Principal
Amount of all issued and outstanding debentures and any accrued but unpaid interest in
accordance with Article 4 hereof, or, with the prior written consent of the Holder, such
lesser portion thereof as the Holder may consent to; or(f)
    
    an adjustment that would require an increase or decrease of the Conversion Price of less than
$0.015; provided, however, that any adjustments which by reason of this subsection 5.5(d) are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations made in this regard shall be made to the nearest one-hundredth
of a cent.5.6
    
    No Requirement to Issue Fractional Shares
  5.7
    
    Parent to Reserve Shares
  5.8
    
    Cancellation of Converted Debenture




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##### 



-21- 5.9 Certificate as to Adjustment
  5.10 Notice of Special Matters
  ARTICLE 6
COVENANTS
  6.1 To Pay Principal and Interest
  6.2 To Carry on Business
  6.3 Mortgaged Premises
  6.4 To Maintain Accurate Books and Records




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##### 



-22- 6.5 Maintain Existence
  6.6 Continued Listing
  6.7 Securities Qualification Requirements
 (a)
    
    If, in the opinion of Counsel, any prospectus or other instrument is required to be filed
with or any permission is required to be obtained from any securities regulatory authority or
any other step is required under any federal, provincial or territorial law of Canada before
the Shares or any other securities or property which the Holder is entitled to receive upon
the conversion of this Debenture may properly and legally be delivered or issued upon the due
exercise of such right of conversion, the Corporation will take all such action, at its
expense, as is required or appropriate in the circumstances. This Section 6.7 shall not be
interpreted to require the Corporation to take any action, including the filing of a
prospectus or application for a discretionary prospectus examination, with respect to a hold
period that may be applicable to the Shares issued pursuant to Article 5.
 (b)
    
    The Parent will give written notice of the issue of Shares upon the conversion of this
Debenture, in such detail and timeframe as may be required, to each securities commission or
similar regulatory authority in each jurisdiction in Canada in which there is legislation
requiring the giving of any such notice in order that the subsequent disposition of the Shares
so issued will not, as a result solely of the failure to give such notice, be subject to the
prospectus requirements of such legislation.
 6.8 Notice of Event of Default
  6.9 Officers Certificates
  6.10 Comply with Laws
  6.11 Lien




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##### 



-23-  6.12 Pay Taxes
  6.13 Appraisal of Debentures and Warrants
  6.14 Right of First Refusal
 Proposed
Financing Financing Notice Participation Notice Revised Financing Notice
 6.15 Insurance
  6.16 Holder Proposals
  6.17 Delivery of Documents on Event of Default




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##### 



-24-  6.18 Reporting
  (a)
    
    as soon as the same are delivered to shareholders after the end of each fiscal year of the
Parent, the Audited Financial Statements for the Parent, together with a copy of all
recommendations to management by the Parents auditor;
 (b)
    
    as soon as available and in any event within sixty (60) days after the end of each of the
first three fiscal quarters in each year, unaudited consolidated financial statements and
consolidated balance sheet of the Parent for such period;
 (c)
    
    as soon as available and in any event not less than fifteen (15) days prior to the beginning
of each fiscal year of the Parent, managements proposed annual operating budget and capital
budget for the Parent, by month, in the form to be presented to the Directors for their
consideration;
 (d)
    
    as soon as available and in any event within fifteen (15) days after the approval thereof by
the Directors, a copy of the annual operating budget for the Parent, by month, as approved by
the Directors;
 (e)
    
    as soon as available and in any event within fifteen (15) days after the approval thereof by
the Directors, a copy of the annual capital budget for the Parent, by fiscal quarter, as
approved by the Directors;
 (f)
    
    as soon as available and in any event within fifteen (15) days after the approval thereof by
the Directors, a copy of each updated operating budget and capital budget, for the Parent, as
approved by the Directors;
 (g)
    
    any information generally delivered to the shareholders of the Parent no later than
concurrently with such information being made available to such shareholders;
 (h)
    
    if the Holder then has no nominee elected or appointed to the board of directors of the
Parent or Noram and is otherwise entitled to have such a nominee, the Corporation shall
deliver to the Holder copies of all materials and information delivered to its Directors, no
later than concurrently with such material and information being made available to its
Directors;
 (i)
    
    any reserve or technical reports filed by the Corporation under Canadian or any other
applicable securities legislation;
 (j)
    
    each of the items referred to in paragraphs (a) through (f), as applicable, with respect to
Noram in the event that the Parent does not consolidate any of such items in its corresponding
disclosure to the Holder; and
 (k)
    
    such other financial or technical information with respect to the Corporation as the Holder
may reasonably request.
 6.19 Directors Actions




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##### 



-25- 6.20 Significant Changes Affecting Collateral
  6.21 Board Representation
 Holder Representative
 6.22 Further Assurances
  6.23 Negative Covenants
  (a)
    
    The Corporation will not enter into any transaction whereby all or substantially all of its
undertaking, property and assets would become the property of any other Person whether by way
of reconstruction, reorganization, recapitalization, consolidation, amalgamation, merger,
transfer, sale or otherwise.
 (b)
    
    The Corporation will not create or issue any securities having rights, preferences or
privileges senior to or on parity with the Debentures except as provided in Section 6.24.




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##### 



-26- 
 (c)
    
    The Corporation will not amend its Articles of Incorporation or Bylaws in a manner that is
adverse to the Holder.
 (d)
    
    The Corporation will not, except in respect of outstanding First Preferred Shares, Series 2
in the capital of the Parent, declare or pay interest or dividends on, or make any
distributions with respect to (in cash or in kind), its equity securities provided however
that this subsection shall not apply to interest, dividends or any distributions from Noram to
the Parent.
 (e)
    
    The Corporation will not, except in respect of outstanding First Preferred Shares, Series 2
in the capital of the Parent, repurchase or redeem any of its outstanding securities, prior to
the Debentures in accordance with the terms hereof except as provided in Section 6.24.
 (f)
    
    Except as provided in the Subscription Agreement, the Parent will not effect any change to
the board representation or observer rights of the Holder as provided herein.
 (g)
    
    The Corporation will not enter into any transaction or series of transactions with SKH
Management, L.P. or its affiliates (together, SKH), other than a services agreement (the
Services Agreement), or any other party related to the Corporation having a monetary value
greater than US$1,000,000 per annum, such limit subject to annual review.
 (h)
    
    Where the Corporation has less than an aggregate of $15,000,000 in cash, cash equivalents or
short term receivables, the Corporation will not enter into an AFE having a cumulative net
cost to the Corporation over $1,500,000 once the cumulative dry hole costs incurred by the
Corporation with respect to prospect well drilling has exceeded $8,500,000; provided however,
that costs incurred by the Corporation with respect to development wells shall not apply to
the calculation of such dry hole costs;
 (i)
    
    The Parent will not issue Shares at a price below the then Current Market Price, or fair
market value (as determined by an investment bank agreed upon as between the Holder and the
Parent) if the Shares are not listed for trading on a recognized stock exchange.
 (j)
    
    Other than with respect to Section 6.24 below, the Corporation will not incur debt in excess
of US$0.50 per undeveloped proven BOE and/or McfGE as defined by U.S. Securities and Exchange
Commission guidelines.
 (k)
    
    The Parent will not cause the delisting of the Shares from the TSX-V, except where the Shares
are to be listed on the Toronto Stock Exchange or American Stock and Options Exchange.
 6.24 Subordination of Debenture
 Subordination Terms
 (a)
    
    the Corporation may, from time to time and at any time, enter into one or more agreements
whereby the Corporation may incur Senior Debt, which Senior Debt may be secured in such manner
and upon such terms as the lender with respect to the Senior Debt may reasonably require (the
Senior Lender);
 (b)
    
    the Holder shall take such acts and execute and deliver such documents as may be reasonably
required to allow the Corporation to incur such Senior Debt including, without limitation, the
execution and delivery of a subordination agreement in a form satisfactory to the Senior
Lender (the Subordination Agreement);
 (c)
    
    notwithstanding anything contained in this Section 6.24, the Corporation shall be entitled to
make and the Holder shall be entitled to receive payments of the Principal Amount (or any
portion thereof) and Interest to the extent permitted by the terms of the Subordination
Agreement;




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##### 



-27- 
 (d)
    
    nothing contained in this Section 6.24 is intended to or shall impair, as between the
Corporation, its creditors other than the holders of Senior Debt of the Corporation, and the
Holder, the obligation of the Corporation, which is absolute and unconditional, to pay to the
Holder the Principal Amount and Interest on this Debenture as and when the same shall become
due and payable in accordance with the terms herein, or is intended to or shall affect the
relative rights of the Holder and creditors of the Corporation, as the case may be, other than
the holders of Senior Debt of the Corporation, as the case may be; and
 (e)
    
    each present and future holder of Senior Debt shall be entitled to the benefit of the
provisions of these Subordination Terms notwithstanding that such holder is not a party to
this Debenture.
 ARTICLE 7
PERFORMANCE BY HOLDER
 7.1 Holder May Perform Covenants
  ARTICLE 8
DEFAULT
 8.1 Acceleration of Maturity
  (a)
    
    if the Corporation makes default in payment of the principal of this Debenture when the same
becomes due and payable under this Debenture, and any such default continues for a period of
five (5) days;
 (b)
    
    if the Corporation makes default in payment of any interest due on this Debenture when the
same becomes due and any payable under this Debenture, and any such default continues for a
period of ten (10) days;
 (c)
    
    if a decree or order by a court having jurisdiction is entered resulting from the
commencement of proceedings against the Corporation by a third party and adjudging the
Corporation a bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement or winding up of the Corporation under any bankruptcy, insolvency
or analogous laws, including, without limitation, the Companies Creditors Arrangement Act
(Canada), or appointing a receiver of the Corporation or ordering the dissolution or
liquidation of its affairs and the Corporation fails to obtain a discharge with respect to
such decree, order, petition or appointment within thirty (30) days;
 (d)
    
    if the Corporation institutes proceedings to be adjudicated a bankrupt or insolvent, or
consents to the institution of bankruptcy or insolvency proceedings against it, or files a
petition, answer or consent seeking re-organizational relief under any bankruptcy, insolvency
or analogous laws, including, without limitation, the Companies Creditors Arrangement Act
(Canada), or consents to the filing of any such petition or to the appointment of a receiver
of the Corporation or makes a general assignment for the benefit of creditors, or the
Corporation admits in writing its inability to pay its debts generally as they become due, or
a resolution is passed by the Corporations Directors or shareholders authorizing the
Corporation to do any of the foregoing, or to commence wind-up or liquidation procedures
unless such resolution is rescinded prior to the taking of any irrevocable actions thereunder;




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##### 



-28- 
 (e)
    
    if the Corporation shall fail to pay any of its indebtedness in an amount in excess of
$500,000, or its equivalent in another currency, when due, or in the ordinary course of
business in the case of trade accounts (whether at scheduled maturity or by required
prepayment, acceleration, demand or otherwise); or if any other default under any agreement or
instrument relating to the indebtedness in an amount in excess of $500,000 shall occur, and if
the effect of such default or event is either to accelerate the maturity of such indebtedness
after having given notice of such default or event and the failure of the Corporation to
remedy such event of default within the time permitted, if so provided for; or such
indebtedness in an amount in excess of $500,000 shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required repayment) prior to the
stated maturity thereof;
 (f)
    
    if the Corporation shall fail to comply in all respects with applicable laws, rules,
regulations and orders and the consequences of such failure would or could reasonably be
expected to materially adversely affect the business, operations or financial condition of the
Corporation and any such default continues for a period of thirty (30) days;
 (g)
    
    if any amendment shall have been made to any of the terms, rights, privileges or conditions
attaching to the Shares which are materially adverse to the interests of the Holder or the
holder of the Warrants;
 (h)
    
    if any amendment shall have been made to any of the terms, rights, privileges or conditions
attaching to any securities or shares convertible directly or indirectly into Shares, which
are materially adverse to the interests of the Holder or the holder of the Warrants which, for
greater certainty, shall be deemed to not include a re-pricing of any outstanding warrants to
purchase Shares where such re-pricing is in accordance with the rules and policies of the
TSX-V or such other principal exchange on which the Shares are listed for trading;
 (i)
    
    if any of the facilities or equipment owned, used or occupied by the Corporation in
connection with its business or operations are not operated or occupied, as the case may be,
in compliance with all applicable laws relating thereto, including regulations, rules,
by-laws, approvals, authorizations, directions, consents and orders made pursuant thereto, and
the consequences of such failure would or could reasonably be expected to materially adversely
affect the business, operations or financial condition of the Corporation and continues for a
period of thirty (30) days;
 (j)
    
    if any approvals, permits, certificates, licenses, orders-in-council or other actions
required under applicable laws relating thereto, including regulations, rules, by-laws,
approvals, authorizations, directions, consents and orders made pursuant thereto, to own and
operate the Corporations business and the Mortgaged Premises are not obtained and maintained
in good standing and the consequences of such failure would or could reasonably be expected to
materially adversely affect the business, operations or financial condition of the Corporation
and such circumstance continues for a period of thirty (30) days;
 (k)
    
    if there shall be a breach by the Corporation of any other covenant or condition contained in
this Debenture and any such breach continues for a period of thirty (30) days;
 (l)
    
    if any representation or warranty in favour of the Holder contained in the Subscription
Agreement shall be untrue and such representation or warranty, if capable of being cured,
remains uncured for a period of thirty (30) days and would or could reasonably be expected to
materially adversely affect the business, operations or financial condition of the
Corporation; or
 (m)
    
    if a writ, attachment, execution or similar process is levied against any property of the
Corporation and such writ, attachment, execution or similar process is not released,
satisfied, discharged, vacated or stayed within thirty (30) days after its entry, commencement
or levy;
 Event of Default




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##### 



-29-  8.2 Remedies
  (a)
    
    proceed to protect and enforce the rights vested in it by this Debenture by such appropriate
judicial proceedings as the Holder shall deem most effectual to protect and enforce any of
such rights, either at law or in equity and either in bankruptcy or otherwise;
 (b)
    
    by instrument in writing appoint, or make application to a court of competent jurisdiction to
appoint, any Person, whether an officer or employee of the Holder or not, to be a receiver of
the Mortgaged Premises or any part or parts thereof and may remove any receiver so appointed
and appoint another or others in his stead. Any such receiver shall, so far as concerns
responsibility for his acts, be deemed the agent of the Corporation and the Holder shall not
in any way be responsible for any acts or omissions, including negligence, misconduct or
misfeasance, on the part of any such receiver. Subject to the provisions of any instrument
appointing such receiver, any such receiver so appointed shall have power:
 (i)
    
    to take and enter into possession of, foreclose upon, collect and gather the
Mortgaged Premises, wherever situated, and for that purpose to take any proceedings in
the name of the Corporation or otherwise;(ii)
    
    to carry on or concur in carrying on the business of the Corporation and for
that purpose to raise money on the Mortgaged Premises in priority to this Debenture or
otherwise for such purposes as may be approved by the Holder;(iii)
    
    to sell or dispose of, or concur in sale or disposition of, any of the
Mortgaged Premises or any part of it either for cash or credit or both at the time and
upon the terms and conditions, that the Holder may establish, and to conduct such sale
or disposition in such manner as may seem advisable to the receiver and carry any such
sale into effect by conveying in the name or on behalf of the Corporation or otherwise;(iv)
    
    to make any arrangement or compromise which may be thought expedient in the
interest of the Holder; and(v)
    
    to exercise such other discretion and powers as are granted in the instrument
of appointment and any supplement thereto.
 (c)
    
    Except as otherwise directed by the Holder, all monies from time to time received by such
receiver shall be held in trust for and paid over to the Holder to the extent required to
discharge the liability hereunder. The rights and powers conferred by this paragraph are in
supplement of and not in substitution for any rights or powers the Holder may from time to
time have as the Holder of this Debenture whether or not herein contained and nothing done by
the Holder or by any said receiver or receivers shall render the Holder a mortgagee in
possession or responsible as such. The term receiver as used in this Debenture includes a
receiver and manager and receiver manager;




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##### 



-30- 
 (i)
    
    by itself, its officers, agents or attorneys, in its discretion and/or by a
receiver appointed by it (if permitted or required by law) and/or by a court of
competent jurisdiction on its application, and either with or without notice as it in
its absolute discretion determines, enter into and upon and take possession of and to
remove the whole or any part or parts of the Mortgaged Premises, with full power to
exclude the Corporation, its agents and servants therefrom, to carry on, manage and
conduct the business and operations of the Corporation in respect of the Mortgaged
Premises, including the power to borrow money or advance its own monies at such rate of
interest as it may deem reasonable for the purposes of such business and operations and
the maintenance and preservation of the Mortgaged Premises, or any part thereof, and,
in the name of, and as attorney for, the Corporation, to grant such Liens upon the
whole or any part of the Mortgaged Premises in priority over the Lien hereof, as
security for the repayment of the monies so borrowed and interest thereon, which
security may be granted either at the time of or subsequent to the borrowing of said
monies, (and monies so borrowed or advanced shall be repaid by the Corporation on
demand and until repaid shall, with the interest thereon, be secured by the Lien
created hereunder and shall be a charge upon the Mortgaged Premises in priority to the
Lien of this Debenture) and to receive the rents, incomes, issues and profits thereof
and to pay therefrom all expenses, charges and advances of the Holder and such receiver
in carrying on the said business and operations or otherwise and all taxes,
assessments, insurance premiums and other charges against the Mortgaged Premises
ranking in priority to the Lien of this Debenture or payment of which may be necessary
to preserve the same, and the balance (if any) shall be held and applied as if the same
arose from a sale or realization of the Mortgaged Premises;(ii)
    
    in case the Lien hereby constituted shall have become enforceable as herein
provided, the Holder may, either after such entry as aforesaid or without any entry,
sell, lease or dispose of the Mortgaged Premises, either as a whole or in separate
parcels at a public auction, by public tender or by private sale, with or without
tender and with or without advertising, and with or without any other formality, all of
which are hereby waived by the Corporation to the full extent permitted by law, at such
times and on such terms and conditions as the Holder shall appoint, having first given
not less than ten (10) days notice or such greater period as may be required pursuant
to the provisions of any applicable law in any jurisdiction in which the Mortgaged
Premises are situate and in or as near as may be to each of the other places in which
the Mortgaged Premises to be sold and disposed of are located, and it shall be lawful
for the Holder to make such sale, either for cash or upon credit, upon such reasonable
conditions as to upset or reserve bid or price and as to terms of payments, as it may
deem proper and also to rescind or vary any contract of sale that may have been entered
into and resell with or under any of the powers conferred herein, to adjourn any such
sale from time to time, and to execute and deliver to the purchaser or purchasers of
the Mortgaged Premises or any part thereof, good and sufficient deeds, bills of sale,
transfers or assignments for the same, the Holder being hereby irrevocably constituted
the true attorney of the Corporation coupled with an interest which shall survive and
may be exercised before, during and after and notwithstanding any bankruptcy,
insolvency or other legal incapacity of the Corporation, for the purpose of making such
sale and executing such deeds, bills of sale, transfers or assignments and any such
sale made as aforesaid shall be perpetual bar both in law and in equity against the
Corporation and its assigns and all other Persons claiming the Mortgaged Premises or
any part or parcel thereof by, from, through or under the Corporation or its assigns,
and the proceeds of any such sale shall be distributed in the manner hereinafter
provided; or(iii)
    
    the Holder, any receiver, or any receiver and manager, or any agent or
representative thereof, may become purchasers at any sale of all or any part of the
Mortgaged Premises, whether made under the power of sale herein contained or pursuant
to judicial proceedings.
 8.3 Application of Monies




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-31-  8.4 Holders Actions
  8.5 Extensions and Indulgences
  8.6 No Obligation To Act Promptly
  8.7 Remedies Cumulative
  8.8 Costs of Realization
  ARTICLE 9
SUPPLEMENTAL DEBENTURES
 9.1 Supplemental Indentures




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##### 



-32- (a)
    
    assigning, mortgaging, charging, and otherwise encumbering by way of a floating charge to or
in favour of the Holder any property now owned or hereafter acquired by the Corporation and
intended to be assigned, mortgaged, charged or otherwise encumbered pursuant to the terms
hereof;(b)
    
    evidencing the succession, or successive successions, of other corporations to the
Corporation, and the terms, provisions, conditions, covenants and obligations assumed by any
such successor in accordance with the provisions of this Debenture; and(c)
    
    for any other purpose not inconsistent with the terms of this Debenture.
 9.2 No Amendment or Waiver
  ARTICLE 10
REGISTRATION AND TRANSFER OF DEBENTURE
 10.1 Register of the Debenture
  10.2 Transfer of the Debenture
  ARTICLE 11
SUCCESSOR CORPORATION
 11.1 Assumption of Obligations




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##### 



-33-  ARTICLE 12
MISCELLANEOUS
 12.1 Discharge
  12.2 Affiliated Transactions
  12.3 Severability
  12.4 Laws of the State of New York
  12.5 Continuing Separate Security
  12.6 Advances in Part or in Whole




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##### 



-34- 12.7 Waiver of Protest
  12.8 Corporation not to Assert Claims or Defences
 bona fide
 12.9 Copy of Agreement
  12.10 Enurement
  12.11 Time of the Essence
  12.12 PPSA and UCC Waiver
  12.13 Maximum Rate Permitted by Law
 Criminal Code
 12.14 Notices




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##### 



-35- (a)
    
    in the case of the Holder, to:
 
 
 
   
 
 (b)
    
    in the case of the Corporation, to:
 
 
  
 
  12.15 Joint and Several Obligations




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##### 



-36-  (a)
    
    the genuineness, validity, regularity, enforceability or any future amendment hereof, or
change herein, or with respect to any other agreement, document or instrument to which Parent
or Noram is or may become a party;(b)
    
    the absence of any action to enforce this Debenture (including this Section 12.15) or any
other agreement, document or instrument to which the Parent or Noram is or may become a party
or the waiver or consent by the Holder with respect to any of the provisions thereof;(c)
    
    the existence, value or condition of, or failure to perfect its Lien against, any security
for the obligations of the Corporation hereunder or any action, or the absence of any action,
by the Holder in respect thereof (including the release of any such security);(d)
    
    the insolvency of the Parent or Noram; or(e)
    
    any other action or circumstances that might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor.
  [THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]




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APPENDIX 1 TO THE CONVERTIBLE DEBENTURE
OF AUSAM ENERGY CORPORATION AND NORAM RESOURCES, INC.
 CONVERSION NOTICE
 To:
    
    Ausam Energy Corporation
Noram Resources, Inc.
1430, 1122  4th Street S.W.
Calgary, Alberta
T2R 1M1
 Debenture  Shares
  
 (Signature of Registered Holder) 
 
 (Address)
  
 *
    
    Print name above in which the Shares issued on conversion are to be issued, delivered and
registered, if not Holder. If Shares are to be registered in the name of a person other than the
registered Holder of the Debenture, the signature of the registered Holder must be guaranteed by a
bank, member of a recognized stock exchange or Investment Dealers Association of Canada in a manner
satisfactory to the Corporation and the Transfer Agent and Registrar.