Exhibit 4.6

THE HOLDER, BY ITS ACCEPTANCE OF THIS SECURITY, REPRESENTS, ACKNOWLEDGES, AND
AGREES THAT IT WILL NOT AND WILL NOT BE ENTITLED TO, DIRECTLY OR INDIRECTLY,
SELL OR TRANSFER THE SECURITIES INTO CANADA OR TO RESIDENTS OF CANADA, EXCEPT IN
COMPLIANCE WITH APPLICABLE CANADIAN SECURITIES LAWS. NO SALE OR TRANSFER INTO
CANADA OR TO A CANADIAN RESIDENT WILL BE REGISTERED BY WORLD HEART CORPORATION'S
TRANSFER AGENT AND ANY ATTEMPT TO EFFECT SUCH A TRANSFER IS INVALID UNLESS MADE
IN COMPLIANCE WITH THE ABOVE-NOTED RESTRICTIONS.

THE SECURITIES REPRESENTED HEREBY (AND THE SECURITIES ISSUED UPON CONVERSION
HEREOF) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR
THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, OR (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATIONS UNDER THE U.S.
SECURITIES ACT, IF APPLICABLE, OR (C) INSIDE THE UNITED STATES (1) PURSUANT TO
THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL
OF RECOGNIZED STANDING TO THAT EFFECT IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE CORPORATION OR (3) PURSUANT TO A REGISTRATION STATEMENT
PURSUANT TO THE U.S. SECURITIES ACT.

UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE DEBENTURE OR COMMON SHARES ISSUABLE ON EXERCISE
THEREOF IN THE PROVINCE OF ONTARIO BEFORE JANUARY 17, 2005.

                             WORLD HEART CORPORATION

                   US$13,318,750 AGGREGATE PRINCIPAL AMOUNT OF
                       3% UNSECURED CONVERTIBLE DEBENTURES
                             DUE SEPTEMBER 15, 2009
                          (Conversion Price - US$1.25)

Original Issue Date:      as of September 15, 2004

Issuer:                   World Heart Corporation (the "Corporation")
                          1 Laser Street
                          Ottawa, Ontario
                          K2E 7V1

Holder:                   o

Principal Amount of
Debenture Purchased:      US$o (the "Principal Amount")
<PAGE>
                                       -2-


                           ARTICLE 1 - INTERPRETATION

1.1  Definitions

In this Debenture the expressions following shall have the following meanings,
namely:

     (a)  "Affiliate" means, with respect to any Person, any other
          Person which directly or indirectly Controls, is controlled
          by, or is under common control with, such Person.

     (b)  "Aggregate Principal Amount" means the principal amount of all
          Debentures from time to time outstanding;

     (c)  "Applicable Legislation" means such provisions of (i) any
          statute of (A) Canada, a province or territory thereof, or (B)
          the United States, a State or political subdivision thereof
          and (ii) regulations under any such statutes as are from time
          to time in force and applicable to this Debenture;

     (d)  "Business Day" means a day, other than Saturday or Sunday on
          which banking institutions in New York City and Ottawa,
          Ontario are generally open for business.

     (e)  "Change of Control" means, at any time (i) any Person or any
          Persons acting together that would constitute a "group" for
          purposes of Section 13(d) under the U.S. Exchange Act, or any
          successor provision thereto, shall acquire beneficial ownership
          (within the meaning of Rule 13d-3 under the U.S. Exchange Act,
          or any successor provision thereto) in a single transaction or
          a series of related transactions, of more than 50% of the
          aggregate voting power of the Corporation; (ii) the Corporation
          consolidates or amalgamates with, or merges with or into,
          another Person or sells, assigns, conveys, transfers, leases or
          otherwise disposes of all or substantially all of its assets to
          any Person, or any Person consolidates or amalgamates with, or
          merges with or into, the Corporation, and in any such event any
          of the outstanding Common Shares are converted into or exchanged
          for cash, securities or other property, other than (A) any such
          transaction in which the outstanding Common Shares are converted
          into or exchanged for, or the assets of the Corporation are
          exchanged for, voting securities or securities exchangeable at
          the option of the Holder into voting securities of the surviving
          or transferee Person constituting a majority of such voting
          securities (giving effect to such issuance and the exercise of
          any rights to exchange such securities into voting securities),
          or (B) pursuant to a migratory merger effected solely for the
          purpose of changing the jurisdiction of incorporation of the
          Corporation; or (iii) during any period of two consecutive
          years, individuals who at the beginning of such period
          constituted the Board of Directors (or similar governing body)
          of the Corporation (together with any new directors whose
          election by the shareholders of the Corporation was proposed by
          a vote of the majority of directors of the Corporation then
          still in office who were either
<PAGE>
                                       -3-


          directors at the beginning of such period or whose election or
          nomination for election was previously so approved) cease for
          any reason to constitute a majority of the Board of Directors
          of the Corporation then in office.

     (f)  "Change of Control Date" means the date on which a Change of
          Control occurs.

     (g)  "Common Shares" means the common shares in the capital of the
          Corporation, provided that in the event of any adjustment
          pursuant to Section 6.3, "Common Shares" will thereafter mean
          the shares or other securities resulting from such adjustment
          including any securities into which Common Shares are
          reclassified.

     (h)  "Control" means the possession, direct or indirect, of the
          power to direct or cause the direction of the management and
          policies of a Person, whether through the ownership of voting
          securities, by contract or otherwise.

     (i)  "Conversion Price" means $1.25 per Common Share, subject to
          adjustment in accordance with Section 6.3.

     (j)  "Current Market Price" as of a particular date (the "Valuation
          Date") shall mean the following:  (a) if the Common Shares are then
          quoted on NASDAQ, the closing price of one Common Share on NASDAQ on
          the last Trading Day prior to the Valuation Date or, if no such
          closing price is available, the average of the high bid and the low
          asked price quoted on NASDAQ on the last trading day prior to the
          Valuation Date; (b) if the Common Shares are not quoted on NASDAQ and
          the Common Shares are then listed on the TSX, the closing price of one
          Common Share on the TSX on the last trading day prior to the Valuation
          Date; or (c) if the Common Shares are not then listed on the TSX or
          quoted on NASDAQ, the fair market value of one Common Share as of the
          Valuation Date, shall be determined in good faith by the Board of
          Directors of the Corporation.  The Board of Directors of the
          Corporation shall respond promptly, in writing, to an inquiry by the
          Holder as to the Current  Market  Value of a Common Share as
          determined by the Board of Directors of the Corporation.

     (k)  "Date of Conversion" has the meaning attributed to such term in
          Section 6.2(b).

     (l)  "Debentures" means the 3% Unsecured Convertible Debentures of the
          Corporation, issued or to be issued by the Corporation in favour of
          the Holders and includes this Debenture.

     (m)  "Debentureholders" or "Holders" means the Persons from time to time
          entered in the registers hereinafter mentioned as holders of
          Debentures; "Debentureholder" or "Holder" shall mean the holder of
          this Debenture.

     (n)  "dollars" or "$" shall mean references to United States dollars.
<PAGE>
                                   -4-


     (o)  "Event of Default" has the meaning attributed to such term in
          Section 9.1.

     (p)  "Interest" has the meaning attributed to such term in Section
          3.2(2).

     (q)  "Interest Conversion Price" at any date ("Interest Valuation Date")
          means the conversion price determined based on the weighted average
          trading price per share of the Common Shares during the five
          consecutive trading days ending on the Date of Conversion on (a)
          NASDAQ or, (b) the TSX, if the Common Shares are not quoted on
          NASDAQ and the Common Shares are then listed on the TSX, or (c)
          if the Common Shares are not then listed on the TSX or quoted on
          NASDAQ, the fair market value of one Common Share as of the
          Interest Valuation Date, shall be determined in good faith by the
          Board of Directors of the Corporation. The Board of Directors of
          the Corporation shall respond promptly, in writing, to an inquiry
          by the Holder as to the Interest Conversion Price of a Common
          Share as determined by the Board of Directors of the Corporation.

     (r)  "Investor Agreements" means the purchase agreement dated September 15,
          2004 between the Corporation and each of the US investors party
          thereto and the subscription agreements dated September 15, 2004
          between the Corporation and each of the Canadian and non-US
          investors party thereto.

     (s)  "Material Adverse Effect" means the result or consequence of any
          event, act or omission by or affecting the Corporation or any of
          its property, assets or undertaking, which result or consequence:
          (i) has a material adverse effect or could reasonably be expected
          to have a material adverse effect on the assets, business or
          financial condition of the Corporation, of (ii) has materially
          impaired or could reasonably be expected to materially impair the
          ability of the Corporation to carry on its business or to perform
          its obligations herein.

     (t)  "Maturity Date" means September 15, 2009.

     (u)  "NASDAQ" means the Nasdaq National Market or the Nasdaq Small Cap
          Market.

     (v)  "Notice Period" has the meaning attributed to such term in Section
          5.1.

     (w)  "Original Issue Date" means as of September 15, 2004.

     (x)  "Permitted Encumbrances" means, as at any time, any liens, charges,
          encumbrances and/or rights of others incurred in the ordinary
          course of business for normal operating purposes.

     (y)  "Person" means an individual, corporation, partnership, limited
          liability company, trust, business trust, association, joint stock
          company, joint venture, sole proprietorship, unincorporated
          organization, governmental authority or any other form of entity
          not specifically listed herein.
<PAGE>

                                      -5-


     (z)  "Redemption Date" has the meaning attributed to such term in
          Section 5.2.

     (aa) "Redemption Price" has the meaning attributed to such term in
          section 5.1(1).

     (bb) "Required Holders" means Holders who hold at least 66 2/3% of the
          Aggregate Principal Amount including any Holder or group of
          affiliated Holders collectively owning 20% or more of the Aggregate
          Principal Amount.

     (cc) "Subsidiary" means, with respect to any Person, (i) any corporation
          of which the outstanding capital stock having at least a majority of
          the votes entitled to be cast in the election of directors under
          ordinary circumstances shall at the time be owned, directly or
          indirectly, by such Person, by one or more Subsidiaries of such
          Person or by any combination thereof, (ii) any other Person (other
          than a partnership) of which at least a majority of the voting
          interest under ordinary circumstances is at the time, directly or
          indirectly, owned by such Person, by one or more Subsidiaries of
          such Person or by any combination thereof, or (iii) any
          partnership (a) the sole general partner or the managing general
          partner of which is such Person or a Subsidiary of such Person or
          (b) the only general partners of which are such Person or one or
          more Subsidiaries of such Person (or any combination thereof).

     (dd) "this Debenture", "herein", "hereby", "hereof", "hereunder", and
          similar expressions mean or refer to this Debenture and any
          indenture, deed or instrument supplemental or ancillary hereto as
          a whole and are not limited to any particular Article, Section or
          other subdivision hereof.

     (ee) "Trading Condition" has the meaning attributed to such term in
          Section 5.1(1).

     (ff) "Trading Day" means a day during which the NASDAQ is open for
          trading and at least one board of the Common Shares has traded on
          the NASDAQ.

     (gg) "TSX" means the Toronto Stock Exchange.

     (hh) "U.S. Exchange Act" means the United States Securities Exchange
          Act of 1934, as amended.

     (ii) "U.S. Person" means a U.S. Person as that term is defined in
          Regulation S of the U.S. Securities Act.

     (jj) "U.S. Securities Act" means the United States Securities Act of 1933,
          as amended.
<PAGE>
                                       -6-


1.2  Meaning of "Outstanding"

Each Debenture delivered by the Corporation shall be deemed to be outstanding
until it is cancelled, converted or redeemed in full or delivered to the
Corporation for cancellation, conversion or redemption for cash consideration or
Common Shares, as the case may be, provided that:

     (a)  Debentures which have been partially redeemed or converted shall
          be deemed to be outstanding only to the extent of the unredeemed
          or unconverted part of the principal amount thereof; and

     (b)  when a new Debenture has been issued in substitution for a
          Debenture which has been lost, stolen or destroyed, only the new
          Debenture shall be counted for the purpose of determining the
          Principal Amount outstanding.

1.3     Interpretations Not Affected by Headings, etc.

The division of this Debenture into Articles and Sections and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof. Words and terms denoting inclusiveness
(such as "include" or "includes" or "including"), whether or not so stated, are
not limited by and do not imply limitation of their context or the words or
phrases which precede or succeed them.

1.4  Monetary References

Any reference in this Debenture to "Dollars", "dollars" or "US$" shall be deemed
to be a reference to lawful money of the United States of America and any
reference to "Cdn$" shall be deemed to be a reference to lawful money of Canada.
Any reference in this Debenture to payments shall be deemed to be a reference to
payments in Dollars.

1.5  Day Not a Business Day

In the event that any day on or before which any action is required to be taken
or any computation is required to be made hereunder is not a Business Day, then
such action or computation shall be required to by taken or made on or before
the requisite time on the first Business Day thereafter. If any payment due
hereunder is required to be made on any day which is not a Business Day, such
payment shall be due and payable on the next succeeding Business Day and
interest shall continue to accrue thereon to the date on which such payment is
made.

1.6  Invalidity of Provisions

Each of the provisions contained in this Debenture is distinct and severable and
a declaration of invalidity or unenforceability of any such provision by a court
of competent jurisdictions shall not affect the validity or enforceability of
any other provision hereof.
<PAGE>

                                      -7-


1.7  Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL

     (1)  This Debenture shall be governed by, and construed in accordance
with, the internal laws of the State of New York without regard to the choice of
law principles thereof. Except as provided in Section 1.7(2), the Corporation
and, by its acceptance of this Debenture, the Holder each irrevocably submits to
the exclusive jurisdiction of the courts of the State of New York located in New
York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgement relating
to or arising out of this Debenture and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on the Corporation and the Holder anywhere in the world by the same
methods as are specified for the giving of notices under this Debenture. The
Corporation and, by its acceptance of this Debenture, the Holder each
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Corporation
and, by its acceptance of this Debenture, the Holder each irrevocably waives any
objection to the laying of venue of any such suit, action or proceeding brought
in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
THE CORPORATION AND, BY ITS ACCEPTANCE OF THIS DEBENTURE, THE HOLDER EACH WAIVES
ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.

     (2)  Notwithstanding Section 1.7(1), the Holder shall have the right to
bring any suit, action or proceeding against the Corporation in the courts of
the Province of Ontario having jurisdiction.

1.8  Successors and Assigns

All covenants and agreements in this Debenture by the Corporation shall bind its
successors and assigns (whether by merger, consolidation, amalgamation,
operation of law or otherwise), whether expressed or not.

                           ARTICLE 2 - PROMISE TO PAY

2.1  Promise to Pay

     (1) The Corporation, for value received, hereby acknowledges itself
indebted and promises to pay to the Holder on the Maturity Date, or on such
other date as the Principal Amount becomes payable in accordance with the
provisions hereof, the Principal Amount and Interest on the terms set forth in
this Debenture.

     (2) Unless otherwise herein specified, all payments of the Principal
Amount, Interest and any other amounts payable hereunder shall be paid by wire
transfer of Dollars in immediately available funds to an account specified by
the Holder.
<PAGE>
                                      -8-


                           ARTICLE 3 - THE DEBENTURE

3.1  Limitation on Issue and Designation

The Aggregate Principal Amount shall consist of and be limited to US$13,318,750
and the Debentures are hereby designated 3% Unsecured Convertible Debentures due
September 15, 2009.

3.2  Terms of the Debenture

     (1)  This Debenture shall mature on the Maturity Date, or such other
date as specified in this Debenture, at which time the entire outstanding
Principal Amount together with all accrued and unpaid Interest shall be paid in
full.

     (2)  Interest at the rate of 3% per annum shall accrue daily but not be
compounded and shall be calculated on the outstanding Principal Amount
("Interest").  The Interest shall accumulate and shall (i) be payable on the
Maturity Date, or on such other date as the Principal Amount becomes payable in
accordance with the provisions hereof or (ii) be convertible into Common Shares
at the Interest Conversion Price in accordance with the terms of Article 6.
Interest shall be computed on the actual number of days elapsed over a year
consisting of 365 days.

     (3)  Overdue amounts (including interest on overdue Interest) shall be
payable at a default rate of 10% per annum.

     (4)  This Debenture will be redeemable by the Corporation in accordance
with the terms of Article 5.

     (5)  The Debentureholder shall have the option to convert the Principal
Amount into Common Shares at the Conversion Price in accordance with the terms
of Article 6. In the event that the Debentureholder exercises this conversion
option, the Interest will automatically be converted into Common Shares at the
Interest Conversion Price in accordance with the terms of Article 6.

3.3  Change of Control

     (1)  Upon the occurrence of a Change of Control, the Debentureholder has
a right to require the Corporation to purchase this Debenture. The terms and
conditions of such right are set forth below:

     (a)  Upon the occurrence of a Change of Control, the Debentureholder shall
          have the right (the "Put Right") to require the Corporation to
          purchase all or any part of this Debenture in accordance with the
          requirements of Applicable Legislation at a cash price equal to 101%
          of the Principal Amount plus all accrued and unpaid Interest thereon,
          to but excluding, the Put Date (the "Put Price") as specified below.
<PAGE>
                                       -9-


     (b)  The Corporation will, as soon as practicable after the occurrence of a
          Change of Control, and in any event no later than two Business Days
          thereafter, give written notice to the Debentureholder of the Change
          of Control (the "Change of Control Notice"). The Change of Control
          Notice shall be prepared by the Corporation and shall (i) include
          a description of the Change of Control, (ii) specify the date (the
          "Put Date"), which shall be the 30th day following the Change of
          Control, on which the Corporation will purchase all or part of this
          Debenture from the Holder, (iii) include a statement that the Holder
          will be entitled to withdraw his election to require the Corporation
          to repurchase all or any part of this Debenture if the Corporation
          receives, no later than the close of business on the third Business
          Day immediately preceding the Put Date, a facsimile transmission
          or letter setting forth (A) the name of the Holder, (B) the
          Principal Amount delivered for purchase and (C) a statement that
          the Holder is withdrawing the election to have such Debenture
          purchased and (iv) contain a description of the rights of the
          Corporation to redeem untendered Debentures in accordance with
          Section 3.3(d) hereof.

     (c)  To exercise the Put Right, the Debentureholder must deliver to
          the Corporation, at least ten Business Days prior to the Put Date
          (the "Exercise Expiration Date"), written notice of the Holder's
          exercise of such right in the form attached as Schedule A
          together with the Debenture with respect to which the right is
          being exercised.

     (d)  If 90% or more of the Aggregate Principal Amount outstanding on
          the date the Corporation provides notice of a Change of Control
          has been tendered for purchase pursuant to the put provisions
          contained herein and in the other Debentures on or prior to the
          Exercise Expiration Date and the Debentureholder has not exercised
          its Put Right hereunder with respect to all of the outstanding
          Principal Amount, the Corporation shall have the right, exercisable
          upon written notice to the Debentureholder, to redeem all the
          remaining outstanding Principal Amount on the Put Date at the Put
          Price (the "90% Redemption Right") provided that the Corporation
          simultaneously redeems all of the remaining outstanding Aggregate
          Principal Amount.

     (e)  If the Corporation elects to exercise the 90% Redemption Right
          and acquire the remaining outstanding Principal Amount, the
          Corporation shall within two Business Days after the Exercise
          Expiration Date provide written notice to the Holder (the
          "Exercise Notice"), which shall specify that:

          (i)   the Corporation is exercising the 90% Redemption Right and
                will purchase all remaining outstanding Debentures on the
                Put Date at the Put Price (and the Corporation shall include
                in such notice a calculation of the Holder's Put Price);

          (ii)  the Holder must transfer this Debenture to the Corporation
                on the same terms as the holders that exercised their
                respective put
<PAGE>
                                      -10-


                rights in the other Debentures and must send this Debenture,
                duly endorsed for transfer, or its duly endorsed form of
                transfer, as applicable, to the Corporation within five
                Business Days after the date of the Exercise Notice; and

          (iii) the rights of the Holder under this Debenture shall cease as
                of the Put Date provided the Corporation has paid the Put
                Price to, or to the order of, the Holder and thereafter this
                Debenture shall not be considered to be outstanding and the
                Holder shall not have any right except to receive the Put
                Price upon surrender and delivery of this Debenture in
                accordance with the provisions hereof.

     (f)  If the Holder has exercised the Put Right and has delivered this
          Debenture to the Corporation pursuant to Section 3.3(1)(c) or
          if  the Corporation has exercised the 90% Redemption Right, the
          Corporation shall pay or cause to be paid to the Holder the
          Put Price on the Put Date.

     (g)  In the event that the Holder elects to have only part of this
          Debenture purchased by the Corporation in accordance with this
          Section 3.3 upon surrender of this Debenture for payment of the
          Put Price, the Corporation shall execute and deliver without
          charge to the Holder or upon the Holder's order, one or more new
          Debentures for the portion of the Principal Amount not purchased.

     (h)  Subject to Section 3.1(g), in the event that either (i) the Holder has
          exercised its Put Right hereunder with respect to the entire
          outstanding Principal Amount or (ii) the Corporation has elected to
          redeem the Debenture in accordance with Section 3.3(1)(e), the
          outstanding Principal Amount shall become due and payable at the
          Put Price on the Put Date, in the same manner and with the same
          effect as if it were the Maturity Date, anything herein to the
          contrary notwithstanding, and from and after payment of the Put
          Price to the Holder on the Put Date, Interest shall cease to
          accrue on this Debenture.

     (i)  In case the Holder shall fail to surrender this Debenture as
          specified herein or shall not within such time accept payment of
          the moneys payable hereunder, or give such receipt therefor, if
          any, as the Corporation (acting reasonably) may require, such
          moneys may be set aside in trust, and such setting aside shall
          for all purposes be deemed a payment to the Debentureholder of
          the sum so set aside and, to that extent, the Debenture shall
          cease to be outstanding and the Debentureholder shall have no
          other right except to receive payment of the moneys so paid and
          deposited upon surrender and delivery up of this Debenture. In
          the event that any money required to be deposited hereunder with
          any depositary or paying agent shall remain so deposited for a
          period of ten years from the Put Date, then such moneys, together
          with any accumulated interest thereon, shall at the end of such
          period, and subject to the requirements of applicable law, be
          paid over to the Corporation and thereafter the Holder shall look
          only to the Corporation for the payment of such amounts.
<PAGE>
                                      -11-


     (j)  Subject to the provisions above related to a partial redemption
          of this Debenture, upon redemption of this Debenture as provided
          in this Section 3.3, this Debenture shall be cancelled and no
          Debentures shall be issued in substitution therefor.

     (k)  The Corporation will comply with all Applicable Legislation in the
          event that the Corporation is required to repurchase any Principal
          Amount pursuant to this Section 3.3.

3.4  Evidence of Indebtedness

This Debenture shall evidence the obligations of the Corporation to the
Debentureholder hereunder. In addition, the Corporation shall maintain accounts
and records evidencing the obligations of the Corporation to the Debentureholder
hereunder at its registered office at the address shown above. The Corporation's
accounts and records shall constitute prima facie evidence of the obligations
owed to the Debentureholder hereunder in the absence of manifest error.

3.5  Mutilation, Loss, Theft or Destruction

In the event this Debenture shall become mutilated or be lost, stolen or
destroyed, the Corporation, in its discretion, may issue, and deliver, a new
Debenture upon surrender and cancellation of the mutilated Debenture, or in the
case of a lost, stolen or destroyed Debenture, in lieu of and in substitution
for the same, and the substituted Debenture shall be in the same form as the
mutilated Debenture and the Holder of the new Debenture shall be entitled to the
same benefits as included in the mutilated Debenture. In case of loss, theft or
destruction, the applicant for a substituted Debenture shall furnish to the
Corporation evidence of the loss, theft or destruction of the Debenture as shall
be satisfactory to the Corporation acting reasonably and shall also furnish an
indemnity satisfactory to the Corporation acting reasonably. The applicant shall
pay all reasonable expenses incidental to the issuance of any substituted
Debenture.

3.6  No Voluntary Prepayment

The Corporation shall not be entitled to voluntarily prepay any amounts
outstanding hereunder prior to the Maturity Date.

3.7  Canadian Transfer Restrictions

     (1)  In order to ensure compliance with Applicable Legislation, no direct
or indirect sale or transfer of Debentures or the underlying Common Shares
shall be permitted from or by a registered Holder whose address is in Canada to
a purchaser or transferee whose address is in Canada (or who is a resident of
Canada) or to a purchaser or transferee whose address is in the United States
(or who is a resident of the United States) unless it is made in compliance with
Applicable Legislation. Each Debentureholder in Canada, by its acceptance of the
Debenture, shall be deemed to have acknowledged and agreed that if the
Debentureholder is a resident of Canada it shall not transfer this Debenture or
underlying Common Shares except as provided in the immediately preceding
sentence. Each Debenture
<PAGE>
                                      -12-


originally issued to a person within Canada and all Debentures issued in
exchange therefor or in substitution thereof or upon transfer thereof, shall
bear the legends or similar legends to those set forth below (the "Canadian
Legend"):

(a) "UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE JANUARY 17, 2005."

(b) "THE SECURITIES REPRESENTED HEREBY (AND THE SECURITIES ISSUED UPON EXERCISE
HEREOF) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR
THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, OR (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT, IF APPLICABLE, OR (C) INSIDE THE UNITED STATES (1) PURSUANT TO
THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL
OF RECOGNIZED STANDING TO THAT EFFECT IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE CORPORATION OR (3) PURSUANT TO A REGISTRATION STATEMENT
PURSUANT TO THE U.S. SECURITIES ACT."

     (2)  In the event that the Common Shares issuable upon the conversion of
this Debenture or Interest are issued prior to the date which is four months and
one day after the date issue the Common Shares shall in addition to the legends
in Section 3.7(1)(a) and (b), bear the following legend:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO
STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE."

     (3)  In the event that the Common Shares issuable upon the conversion of
this Debenture and Interest are issued after the date which is four months and
one day after the date of issue, the Common Shares shall bear the legends set
forth below (the "Modified Canadian Legend"):

(a)  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO
STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE."


(b) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
<PAGE>
                                      -13-


THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(A) TO THE CORPORATION, OR (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
903 OR 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, IF APPLICABLE, OR (C)
INSIDE THE UNITED STATES (1) PURSUANT TO THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAW OR (2) IN A
TRANSACTION THAT DOES NOT OTHERWISE REQUIRE REGISTRATION UNDER THE U.S.
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW, PROVIDED THE HOLDER HAS
FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO
THAT EFFECT IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE CORPORATION OR
(3) PURSUANT TO A REGISTRATION STATEMENT PURSUANT TO THE U.S. SECURITIES ACT."

     (4)  With respect to the Canadian Legend and the Modified Canadian Legend,
provided that either (i) a registration statement is declared effective by the
United States Securities and Exchange Commission with respect to the Common
Shares issuable upon the conversion of this Debenture, and receipt by the
Corporation of the Holder's written confirmation that such Common Shares will
not be disposed of except in compliance with the prospectus delivery
requirements of the U.S. Securities Act or (ii) Rule 144(k) becoming available,
then the legend in Section 3.7(1)(b) or Section 3.7(2)(b) above may be removed.

     (5)  If the Common Shares issuable upon the conversion of the Debenture or
the Interest are being sold outside the United States in accordance with Rule
903 or 904 of Regulation S, the legends in Section 3.7(1)(b) or Section
3.7(2)(b) above may be removed by providing a declaration to the Corporation's
registrar and transfer agent in the form attached as Schedule B hereto.

3.8  United States and European Transfer Restrictions

     (1)  In order to ensure compliance with Applicable Legislation and
applicable United States securities laws, no direct or indirect sale, transfer
or repurchase of this Debenture or the underlying Common Shares shall be
permitted from or by a registered holder whose address is in the United States
to a purchaser or transferee whose address is in the United States (or who is a
resident of the United States) or to a purchaser or transferee whose address is
in Canada (or who is a resident of Canada)or to a purchaser or transferee who
address is in Switzerland unless it is made in compliance with Applicable
Legislation, applicable United States securities laws or other applicable
securities laws. Each Debentureholder in the United States and Europe, by its
acceptance of this Debenture, shall be deemed to have acknowledged and agreed
that if the Debentureholder is a resident of United States or Europe it shall
not transfer the Debenture or underlying Common Shares except as provided in the
immediately preceding sentence. Each Debenture originally issued to a person
within the United States or Europe and all Debentures issued in exchange
therefor or in substitution thereof or upon transfer thereof shall bear the
following or similar legends set forth below (the "U.S. Legend"):

(a) "THE HOLDER, BY ITS ACCEPTANCE OF THIS SECURITY, REPRESENTS, ACKNOWLEDGES,
AND AGREES THAT IT WILL NOT AND WILL NOT BE ENTITLED TO, DIRECTLY OR INDIRECTLY,
SELL OR TRANSFER THE SECURITIES INTO CANADA OR TO RESIDENTS OF CANADA, EXCEPT IN
COMPLIANCE WITH APPLICABLE CANADIAN SECURITIES LAWS. NO SALE OR TRANSFER INTO
CANADA OR TO A CANADIAN RESIDENT
<PAGE>
                                      -14-


WILL BE REGISTERED BY WORLD HEART CORPORATION'S TRANSFER AGENT AND ANY ATTEMPT
TO EFFECT SUCH A TRANSFER IS INVALID UNLESS MADE IN COMPLIANCE WITH THE
ABOVE-NOTED RESTRICTIONS. "

(b) "UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THE
SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE JANUARY 17, 2005."

(c) "THE SECURITIES REPRESENTED HEREBY (AND THE SECURITIES ISSUED UPON EXERCISE
HEREOF) HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH SECURITIES, AGREES FOR
THE BENEFIT OF THE CORPORATION THAT SUCH SECURITIES MAY BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE CORPORATION, OR (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE U.S.
SECURITIES ACT, IF APPLICABLE, OR (C) INSIDE THE UNITED STATES (1) PURSUANT TO
THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL
OF RECOGNIZED STANDING TO THAT EFFECT IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE CORPORATION OR (3) PURSUANT TO A REGISTRATION STATEMENT
PURSUANT TO THE U.S. SECURITIES ACT."

     (2)  In the event that the Common Shares issuable upon the conversion of
this Debenture or Interest are issued prior to the date which is four months and
one day after the date issue the Common Shares shall in addition to the legends
in Section 3.8(1)(a), (b) and (c), bear the following legend:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO
STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE."

     (3)  In the event that the Common Shares issuable upon the conversion of
any Debenture and the Interest are issued after the date which is four months
and one day after the date of issue the Common Shares shall bear the legends
set forth below (the "Modified U.S. Legend"):

(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO
STOCK EXCHANGE; HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF SUCH EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE, AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT "GOOD DELIVERY"
IN SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE."

(b) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY
PURCHASING SUCH SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE
<PAGE>
                                      -15-


TRANSFERRED ONLY (A) TO THE CORPORATION, OR (B) OUTSIDE THE UNITED STATES IN
ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT,
IF APPLICABLE, OR (C) INSIDE THE UNITED STATES (1) PURSUANT TO THE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAW OR (2) IN A TRANSACTION THAT DOES NOT OTHERWISE REQUIRE
REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAW, PROVIDED THE HOLDER HAS FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL
OF RECOGNIZED STANDING TO THAT EFFECT IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE CORPORATION OR (3) PURSUANT TO A REGISTRATION STATEMENT
PURSUANT TO THE U.S. SECURITIES ACT."

(4) With respect to the U.S. Legend and the Modified U.S. Legend, provided that
either (i) a registration statement is declared effective by the United States
Securities and Exchange Commission with respect to the Common Shares issuable
upon the conversion of this Debenture, and receipt by the Corporation of the
Holder's written confirmation that such Common Shares will not be disposed of
except in compliance with the prospectus delivery requirements of the U.S.
Securities Act or (ii) Rule 144(k) becoming available, then the legend in
Section 3.8(1)(c) and Section 3.8(3)(b) above may be removed.

                       ARTICLE 4 - TRANSFER AND OWNERSHIP

4.1  Registration of Debentures

     (1)  The Corporation shall cause to be kept by and at the Corporation's
registered office, a register in which shall be entered the names and address of
the Holders and particulars of the Debentures held and of all transfers of the
Debentures

     (2)  No transfer of a Debenture shall be valid unless made by the
registered Holder or such Holder's executors, administrators or other legal
representatives or an attorney duly appointed by an instrument in writing in
form and execution satisfactory to the Corporation, acting reasonably, together
with a duly executed form of transfer acceptable to the Corporation, acting
reasonably, and recorded on such register referred to in Section 4.1(1).

4.2  Transferee Entitled to Registration

The transferee of a Debenture shall be entitled, after the appropriate form of
transfer is lodged with the Corporation and upon compliance with all other
conditions, to be entered on the register as the owner of such Debenture free
from all equities or rights of set-off or counterclaim between the Corporation
and the transferor or any previous Holder of such Debenture, save in respect of
equities of which the Corporation is required to take notice by statute or by
order of a court of competent jurisdiction.

4.3  No Notice of Trusts

The Corporation shall not be bound to take notice of or see to the execution of
any trust whether express, implied or constructive, in respect of any Debenture,
and may transfer the
<PAGE>

                                      -16-


same on the direction of the person registered as the Holder thereof, whether
named as trustee or otherwise, as though that person were the beneficial owner
thereof.

4.4  Registers Open for Inspection

The registers referred to in Sections 4.1 and 4.2 shall at all reasonable times
be open for inspection by the Corporation to any Debentureholder.

4.5  Charges for Registration, Transfer and Exchange

For each Debenture exchanged, registered, transferred or discharged from
registration, the Corporation shall not make any charge for its services
provided however that the Holder shall be responsible for any stamp taxes or
governmental or other charges required to be paid as a result of such exchange,
registration, transfer or discharge from registration.

4.6  Ownership of Debentures

     (1)  Unless otherwise required by law, the Person in whose name any
registered Debenture is registered shall for all the purposes of this Debenture
be and be deemed to be the owner thereof and payment of or on account of the
principal of and premium, if any, on such Debenture and interest thereon shall
be made to such registered Holder.

     (2)  The registered Holder for the time being of any registered Debenture
shall be entitled to the Principal Amount and the Interest evidenced by the
Debenture free from all equities or rights of set-off or counterclaim between
the Corporation and the original or any intermediate Holder thereof and all
persons may act accordingly and the receipt of any such registered Holder for
any such Principal Amount or the Interest shall be a good discharge to the
Corporation for the same and the Corporation shall be bound to inquire into the
title of any such registered Holder.

     (3)  Where a Debenture is registered in more than one name, the Principal
Amount and Interest from time to time payable in respect thereof may be paid to
the order of all such Holders, failing written instructions from them to the
contrary, and the receipt by any one of such Holders thereof shall be a valid
discharge, to the Corporation.

     (4)  In the case of the death of one or more joint Holders of any Debenture
the Principal Amount and the Interest from time to time payable thereon may be
paid to the order of the survivor or survivors of such registered Holders and
the receipt by any such survivor or survivors thereof shall be a valid discharge
to the Corporation.

                       ARTICLE 5 REDEMPTION OF DEBENTURES

5.1  Redemption Provisions

     (1)  Subject to the provisions of Sections 5.1(2) through 5.1(6), in the
event that the closing price of the Common Shares as traded on NASDAQ (or such
other exchange or stock market on which the Common Shares may then be listed or
quoted) equals or exceeds $3.00 (appropriately adjusted for any stock split,
reverse stock split, stock dividend or other
<PAGE>
                                      -17-


reclassification or combination of the Common Shares occurring after the date
hereof) for 20 consecutive Trading Days (the "Trading Condition"), the
Corporation, upon not less than 30 days and not more than 60 days prior written
notice (the "Notice Period") given to the Debentureholder within two Business
Days following the 20 Trading Day period, shall have the right at its option to
redeem this Debenture at a redemption price equal to 100% of the Principal
Amount to be redeemed plus accrued Interest thereon to but excluding the
Redemption Date (the "Redemption Price") as provided below.

     (2)  No more than the lesser of (i) 20% of the Aggregate Principal Amount
initially issued to Debentureholders plus any accrued Interest, or (ii) the
remaining Aggregate Principal Amount then held by the Debentureholders plus any
accrued Interest, may be redeemed by the Corporation in any three-month period
and the Corporation may not redeem additional Debentures in any subsequent three
month period unless all the conditions are again met (including without
limitation, the Trading Condition) at the time any subsequent redemption notice
is given.

     (3)  It is a condition of the Corporation's exercising its rights under
this Section 5.1 that either (i) the Common Shares issuable upon conversion of
this Debenture are registered pursuant to an effective registration statement
which is available for sales of Common Shares during the Notice Period, (ii) the
Holder has voluntarily declined registration of the Common Shares issuable upon
conversion of this Debenture, or (iii) the Common Shares issuable upon
conversion of this Debenture may be freely traded in the United States by the
Holder thereof.

     (4)  Notwithstanding Section 6.1(1), the Holder shall have the right to
convert all or any part of that portion of the Principal Amount being redeemed
plus any Interest attributable thereto, at any time prior to 5:00 p.m. (Ottawa
time) on any Redemption Date, in accordance with Section 6 of this Debenture.

     (5)  With respect to all Debentureholders, the Corporation must
simultaneously redeem all Debentures on a pro rata basis on the same terms
except as set forth in Section 5.1(4).

5.2  Notice of Redemption

If the Corporation elects to redeem all or part of this Debenture in accordance
with its rights as set forth in Section 5.1, notice of redemption in the form of
Schedule C attached hereto (the "Redemption Notice") of this Debenture shall be
given to the Holder at least 30 days and not more than 60 days prior to the date
fixed for redemption (the "Redemption Date") in the manner provided in Section
12.2. Every such notice from the Corporation shall specify the Principal Amount
and the Aggregate Principal Amount called for redemption, the Redemption Date,
the Redemption Price, Interest up to the Redemption Date, the right of the
Holder to convert such Debenture and Interest as provided for in Article 6, the
place of payment and shall state that the Interest upon the Principal Amount
called for redemption shall cease to be payable from and after the Redemption
Date.
<PAGE>

                                      -18-


5.3  Debenture Due on Redemption Dates

Notice having been given as aforesaid, all or any portion of this Debenture so
called for redemption shall thereupon be and become due and payable at the
Redemption Price on the Redemption Date specified in such notice, in the same
manner and with the same effect as if it were the Maturity Date, anything herein
to the contrary notwithstanding, and from and after payment to the Holder of the
Principal Amount called for redemption and the Interest thereon on the
Redemption Date, Interest upon all or any portion of this Debenture so redeemed
shall cease.

5.4  Failure to Surrender Debenture Called for Redemption

In the event the Holder fails on or before the Redemption Date to so surrender
this Debenture, or shall not within such time accept payment of the Redemption
Price payable, or take delivery of the cash, or give such receipt therefor, if
any, as the Corporation (acting reasonably) may require, such redemption moneys
may be set aside in trust, without interest, and such setting aside shall for
all purposes be deemed a payment to the Holder of the sum so set aside and, to
that extent, this Debenture shall cease to be outstanding and the Holder shall
have no other right except upon surrender and delivery of this Debenture to
receive payment out of the moneys so paid and deposited, of the Redemption
Price. Such moneys shall remain so deposited for a period of ten years from the
Redemption Date, then such moneys, together with any accumulated Interest
thereon, shall at the end of such period, and subject to the requirements of
applicable law, be paid over to the Corporation and thereafter the Holder shall
look only to the Corporation for the payment of such amounts.

5.5  Cancellation of Debenture Redeemed

Subject to the provisions of Sections 5.1(2) and 5.1(4) as to Debentures
redeemed or purchased in part, upon redemption of this Debenture as provided in
this Article 5, this Debenture shall be cancelled and no Debentures shall be
issued in substitution therefor.

                       ARTICLE 6 CONVERSION OF DEBENTURES

6.1  Applicability of Article

     (1)  Subject to the provisions of Article 5, at the option of the Holder at
any time and from time to time before 5:00 p.m. (Ottawa time) on the Maturity
Date, the outstanding Principal Amount shall be converted at any time, in whole
or in part in minimum increments of $100,000 or the remaining Principal Amount
if less than $100,000, into Common Shares, at a conversion rate obtained by
dividing the Principal Amount of this Debenture being converted by the
Conversion Price, subject to adjustment in accordance with Section 6.3.

     (2)  In the event that the Holder converts all or part of the Principal
Amount into Common Shares as contemplated in Section 6.1(1) above, the Interest
on the converted part of the Debenture will be automatically converted into
Common Shares at the Interest Conversion Price.
<PAGE>

                                      -19-


6.2  Manner of Exercise of Right to Convert

     (a)  If the Holder desires to convert all or any part of this Debenture
          into Common Shares, it shall surrender this Debenture to the
          Corporation at the Corporation's registered office together with the
          conversion form in Schedule D or any other written notice in a form
          satisfactory to the Corporation (the "Conversion Notice"), in either
          case duly executed by the Holder or his executors or administrators or
          other legal representatives or his or their attorney duly appointed by
          an instrument in writing in form and executed in a manner satisfactory
          to the Corporation, acting reasonably, exercising the Holder's right
          to convert this Debenture in accordance with the provisions of this
          Article 6.  Thereupon such Holder, subject to payment of all
          applicable stamp or security transfer taxes or other governmental
          charges and compliance with all reasonable requirements of the
          Corporation, or such Holder's transferee (if applicable) shall be
          entitled to be entered in the books of the Corporation as at the Date
          of Conversion (or such later date as is specified in Section 6.2(b))
          as the Holder of the number of Common Shares into which the converted
          Principal Amount and the applicable Interest are convertible in
          accordance with the provisions of this Article 6 and, as soon as
          practicable thereafter, the Corporation shall deliver to such Holder
          or, subject as aforesaid, his nominee(s) or assignee(s), a certificate
          or certificates for such Common Shares.

     (b)  For the purposes of this Article 6, this Debenture shall be deemed to
          be surrendered for conversion on the date (herein called the "Date of
          Conversion") on which it is so surrendered in accordance with the
          provisions of this Article 6 and, in the case that this Debenture is
          so surrendered by post or other means of transmission, on the date on
          which it is received by the Corporation at its registered office;
          provided that if a Debenture is surrendered for conversion on a day on
          which the register of Common Shares is closed, the Person entitled to
          receive Common Shares shall become the Holder or Holders of record of
          such Common Shares as at the date on which such registers are next
          reopened.

     (c)  Notwithstanding any other provision contained herein, in the event of
          redemption, the Holder of any Debenture of which only a part is
          converted shall, upon the exercise of the Holder's right of
          conversion, surrender the said Debenture to the Corporation, and the
          Corporation shall cancel the same and shall without charge forthwith
          certify and deliver to the Holder a new Debenture or Debentures in the
          principal amount equal to the unconverted part of the principal amount
          of the Debenture so surrendered.

6.3  Adjustment of Conversion Price

     The rights of the holder of any Debenture, including the number of Common
Shares issuable upon the conversion of such Debenture and the Conversion Price
payable on
<PAGE>
                                      -20-


conversion of such Debenture, shall be adjusted from time to time in the events
and in the manner provided in, and in accordance with, this Section 6.3.

     (a)  If the Corporation shall, at any time or from time to time prior to
          the Redemption Date or Maturity Date, pay a dividend or make a
          distribution on its Common Shares, subdivide its outstanding Common
          Shares into a greater number of shares, or combine its outstanding
          Common Shares into a smaller number of shares or issue, by
          reclassification of its outstanding Common Shares, any shares of its
          capital stock (including any such reclassification in connection with
          a consolidation, merger or amalgamation in which the Corporation is
          the continuing corporation), then the number of Common Shares issuable
          upon conversion of the Debenture and the Conversion Price in effect
          immediately prior to the date upon which such change shall become
          effective, shall be adjusted by the Corporation so that the
          Debentureholder thereafter exercising the Debenture shall be entitled
          to receive the number of Common Shares or other capital stock which
          the Debentureholder would have received if the Debenture had been
          converted immediately prior to such event upon payment of an
          Conversion Price that has been adjusted to reflect a fair allocation
          of the economics of such event to the Debentureholder as determined in
          good faith by the directors of the Corporation. Such adjustments shall
          be made successively whenever any event listed above shall occur.

     (b)  If any capital reorganization, reclassification of the capital stock
          of the Corporation, consolidation or merger of the Corporation with
          another corporation in which the Corporation is not the survivor, or
          amalgamation with, or sale, transfer or other disposition of all or
          substantially all of the Corporation's assets to another corporation
          shall be effected prior to the Redemption Date or Maturity Date, then,
          as a condition of such reorganization, reclassification,
          consolidation, merger, amalgamation, sale, transfer or other
          disposition, lawful and adequate provision shall be made whereby each
          Debentureholder shall thereafter have the right to purchase and
          receive upon the basis and upon the terms and conditions herein
          specified and in lieu of the Common Shares immediately theretofore
          issuable upon conversion of the Debenture, such shares of stock,
          securities or assets as would have been issuable or payable with
          respect to or in exchange for a number of Common Shares equal to the
          number of Common Shares immediately theretofore issuable upon
          conversion of the Debenture, had such reorganization,
          reclassification, consolidation, merger, amalgamation, sale, transfer
          or other disposition not taken place, and in any such case appropriate
          provision shall be made with respect to the rights and interests of
          each Debentureholder to the end that the provisions hereof (including,
          without limitation, provision for adjustment of the Conversion Price)
          shall thereafter be applicable, as nearly equivalent as may be
          practicable in relation to any shares of stock, securities or assets
          thereafter deliverable upon the conversion thereof. The Corporation
          shall not effect any such consolidation, merger, amalgamation, sale,
          transfer or other disposition unless prior to or
<PAGE>
                                      -21-


          simultaneously with the consummation thereof the successor
          corporation (if other than the Corporation) resulting from such
          consolidation, merger or amalgamation, or the corporation purchasing
          or otherwise acquiring such assets or other appropriate corporation or
          entity shall assume the obligation to deliver to the Holder, at the
          last address of such Holder appearing on the books of the Corporation,
          such shares, securities or assets as, in accordance with the foregoing
          provisions, such Holder may be entitled to purchase, and the other
          obligations under the Debenture. The provisions of this paragraph (b)
          shall similarly apply to successive reorganizations,
          reclassifications, consolidations, mergers, amalgamations, sales,
          transfers or other dispositions.

     (c)  In case the Corporation shall fix a payment date prior to the
          Redemption Date or Maturity Date for the making of a distribution to
          all holders of Common Shares (including any such distribution made in
          connection with a consolidation, merger or amalgamation in which the
          Corporation is the continuing corporation) of evidences of
          indebtedness or assets (other than cash dividends or cash
          distributions payable out of consolidated earnings or earned surplus
          or dividends or distributions referred to in Section 6.3(a)), or
          subscription rights or warrants, the Conversion Price to be in effect
          after such payment date shall be determined by multiplying the
          Conversion Price in effect immediately prior to such payment date by a
          fraction, the numerator of which shall be the total number of Common
          Shares outstanding multiplied by the Current Market Price per Common
          Share immediately prior to such payment date, less the fair market
          value (as determined by the directors of the Corporation in good
          faith) of said assets or evidences of indebtedness so distributed, or
          of such subscription rights or warrants, and the denominator of which
          shall be the total number of shares of Common Shares outstanding
          multiplied by such Current Market Price per share of Common Shares
          immediately prior to such payment date. Such adjustment shall be made
          successively whenever such a payment date is fixed.

     (d)  For the term of this Debenture, in addition to the provisions
          contained above, the Conversion Price shall be subject to adjustment
          as provided below. An adjustment to the Conversion Price shall become
          effective immediately after the payment date in the case of each
          dividend or distribution and immediately after the effective date of
          each other event which requires an adjustment.

     (e)  In the event that, as a result of an adjustment made pursuant to this
          Section 6.3, the Holder shall become entitled to receive any shares of
          capital stock of the Corporation other than Common Shares, the number
          of such other shares so receivable upon conversion of the Debenture
          shall be subject thereafter to adjustment from time to time in a
          manner and on terms as nearly equivalent as practicable to the
          provisions with respect to the Common Shares contained in the
          Debenture.

(2)  At least ten days before the earlier of the effective date of or record
date for any event referred to in this Section 6.3 that requires or might
require an adjustment in any of the
<PAGE>

                                      -22-


rights under this Debenture or such longer notice period as may be applicable in
respect of notices required to be delivered by the Corporation to holders of its
Common Shares, the Corporation will give notice to the Debentureholders of the
particulars of such event and, to the extent determinable, any adjustment
required and a description of how such adjustment will be calculated.

Such notice need only set forth such particulars as have been determined at the
date such notice is given. If any adjustment for which such notice is given is
not then determinable, promptly after such adjustment is determinable the
Corporation will give notice to the Holder of such adjustment.

6.4  No Requirement to Issue Fractional Common Shares

The Corporation shall not be required to issue fractional Common Shares upon the
conversion of this Debenture and Interest pursuant to this Article 6. The number
of whole Common Shares issuable upon conversion thereof shall be computed on the
basis of the Principal Amount to be converted and applicable Interest. If any
fractional interest in a Common Share would, except for the provisions of this
Section 6.4, be deliverable upon the conversion of any Principal Amount and the
Interest, the Corporation shall, in lieu of delivering any certificate
representing such fractional interest, make a cash payment to the Holder of an
amount equal to the fractional interest which would have been issuable in
respect of the conversion of such Principal Amount multiplied by the Conversion
Price plus the fractional interest which would have been issuable in respect of
the conversion of the Interest multiplied by the Interest Conversion Price.

6.5  Corporation to Reserve Common Shares

The Corporation covenants that it will at all times reserve and keep available
out of its authorized Common Shares, solely for the purpose of issue upon
conversion of this Debenture and the Interest as provided in this Article 6, and
conditionally allot to Holders who may exercise their conversion rights
hereunder, such number of Common Shares as could be issuable upon the conversion
of all outstanding Debentures and the interest thereon. The Corporation
covenants that all Common Shares which shall be so issuable shall be duly and
validly issued as fully-paid and non-assessable.

6.6  Cancellation of Converted Debentures

Subject to Section 6.2(c), all Debentures converted in whole or in part under
the provisions of this Article shall be forthwith delivered to and cancelled by
the Corporation and no Debenture shall be issued in substitution therefor.

6.7  Certificate as to Adjustment

The Corporation shall from time to time after the occurrence of any event which
requires an adjustment or readjustment as provided in Section 6.3, except in
respect of any subdivision, redivision, reduction, combination or consolidation
of the Common Shares, forthwith give notice to the Holders in the manner
provided in Section 6.3 specifying the event requiring
<PAGE>
                                      -23-


such adjustment or readjustment and the results thereof, including the resulting
Conversion Price.

6.8  Notice of Special Matters

The Corporation covenants that so long as any Debenture remains outstanding, it
will give notice to the Holders in the manner provided in Section 12.2, of its
intention to fix a record date for any event referred to in Section 6.3(a), (b)
or (c) which may give rise to an adjustment in the Conversion Price, and, in
each case, such notice shall specify the particulars of such event and the
record date and the effective date for such event; provided that the Corporation
shall only be required to specify in such notice such particulars of such event
as shall have been fixed and determined on the date on which such notice is
given. Such notice shall be given not less than 14 days in each case prior to
such applicable record date.



          ARTICLE 7 - REPRESENTATIONS AND WARRANTIES OF THE
                                   CORPORATION

7.1  Representations and Warranties of the Corporation

The Corporation represents and warrants to the Holder that:

     (1)  there is no Event of Default under this Debenture nor has the
Corporation done or omitted to do anything which, with the giving of notice or
the passage of time, or both, would constitute such an Event of Default or
breach; and

     (2)  there are no encumbrances on any of the property, assets or
undertaking of the Corporation other than Permitted Encumbrances.

                     ARTICLE 8 COVENANTS OF THE CORPORATION

The Corporation hereby covenants and agrees for the benefit of the Holder, that
so long as this Debenture remains outstanding:

8.1  To Pay Principal Amount and Interest

The Corporation will duly and punctually pay or cause to be paid to the
Debentureholder when due the Principal Amount and the Interest thereon, at the
places and in the manner mentioned herein.

8.2  To Give Notice of Default

The Corporation shall notify the Holder in writing immediately upon obtaining
knowledge of any Event of Default hereunder or any event, which with the passing
of time, the giving of notice, or both would become an Event of Default.
<PAGE>
                                      -24-


8.3  Preservation of Existence, etc.

Subject to the express provisions hereof, the Corporation will at all times
maintain its corporate existence, carry on and conduct its activities, and cause
its Subsidiaries to carry on and conduct their businesses, in a proper,
efficient and business-like manner and in accordance with good business
practices; and, subject to the express provisions hereof, it will do or cause to
be done all things necessary to preserve and keep in full force and effect its
and its Subsidiaries respective existences and rights.

8.4  Additional Covenants

     (a)  Neither the Corporation nor any of its Subsidiaries will, without the
          prior written consent of the Holder, incur or create any further or
          additional indebtedness or become liable under any indebtedness except
          pursuant to the Debentures and except in the normal course of business
          for general working capital and normal operating purposes.

     (b)  Neither the Corporation nor any of its Subsidiaries will, without the
          prior written consent of the Holder, create, incur, assume, suffer or
          permit to exist any liens or encumbrances upon or assign or transfer
          as security or pledge or hypothecate any of its property, assets or
          undertaking except for Permitted Encumbrances.

     (c)  The Corporation will keep or cause to be kept proper books of record
          and account, in which full and correct entries shall be made of all
          financial transactions and the assets and business of the Corporation
          in accordance with generally accepted accounting principles.

     (d)  The Corporation shall deliver to the Holders within 60 days after the
          end of each fiscal year of the Corporation a certificate of an officer
          of the Corporation stating that the Corporation has complied with, in
          all material respects, all requirements of the Corporation contained
          in the Debentures that, if not complied with, in all material
          respects, would, with the giving of notice, lapse of time, or
          otherwise, constitute an Event of Default. If an Event of Default or
          any event, which with the passing of time, the giving of notice, or
          both, would become an Event of Default, shall have occurred, the
          certificate shall describe the nature and particulars thereof and its
          current status and steps taken or proposed to be taken to eliminate
          such circumstances and remedy such circumstances, as the case may be.

     (e)  The Corporation is duly authorized to create and issue the Debentures
          and the Debentures constitute valid and binding obligations
          enforceable against the Corporation in accordance with their terms.

     (f)  The Corporation will make all requisite filings, including filings
          with appropriate securities regulatory authorities, in connection with
          the conversion of the Principal Amount and/or the Interest into Common
          Shares.
<PAGE>
                                      -25-


     (g)  The Corporation will use its best commercial efforts to ensure that
          all Common Shares outstanding or issuable from time to time include
          the Common Shares issuable upon conversion of the Principal Amount and
          the Interest continue to be or are listed for trading on NASDAQ and
          the TSX.

     (h)  The Corporation will perform and carry out all actions and things to
          be done by it as provided in the Debentures and will not take any
          action which might reasonably be expected to deprive the
          Debentureholders of their rights under the Debentures including the
          right to convert the Principal Amount and Interest into Common Shares
          in accordance with the provisions of this Debenture.

     (i)  The Corporation shall duly and punctually pay all sums of money due by
          it under the terms of this Debenture at the times and places and in
          the manner provided for by this Debenture and shall duly and
          punctually perform and observe all other obligations on its part to be
          performed or observed hereunder at the times and in the manner
          provided for herein.

     (j)  Subject to applicable securities laws, the Corporation shall provide
          notice to the Holder of a Change of Control within five Business Days
          after it has taken any action in furtherance of, or indicated its
          consent to, approval of, or acquiescence to, such Change of Control,
          unless the disclosure of such Change of Control has been made public
          by the dissemination of a press release in both Canada and the United
          States.

                              ARTICLE 9 - DEFAULT

9.1  Events of Default

Each of the following events constitutes, and is herein sometimes referred to
as, an "Event of Default":

     (a)  a breach of any covenant set forth in Article 8 and failure to cure
          such breach within 30 days of notice from a Debentureholder;

     (b)  failure to pay the Principal Amount and/or failure for five days to
          pay the Interest, when due whether at maturity, upon redemption, by
          acceleration or otherwise;

     (c)  if a decree or order of a court having jurisdiction is entered
          adjudging the Corporation a bankrupt or insolvent under the Bankruptcy
          and Insolvency Act (Canada) or any other bankruptcy, insolvency or
          analogous laws of Canada or any province thereof, or issuing
          sequestration or process of execution against, or against any
          substantial part of, the property of the Corporation, or appointing a
          receiver of, or of any substantial part of, the property of the
          Corporation or ordering the winding-up or liquidation of its affairs,
          and any such decree or order continues unstayed and in effect for a
          period of 45 days or any substantial part of the property of the
          Corporation shall be sequestered or attached and shall not be returned
          to the possession of the Corporation or
<PAGE>
                                      -26-


          released from such attachment, as the case may be, whether by filing
          of a bond or stay or otherwise within 45 consecutive days thereafter;

     (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 under the Bankruptcy and Insolvency
          Act (Canada) or any other bankruptcy, insolvency or analogous laws of
          Canada or any province thereof, or consents to the filing of any such
          petition or to the appointment of a receiver, or liquidator or trustee
          or assignee in bankruptcy or insolvency for it, or of any substantial
          part of the property of the Corporation or makes a general assignment
          for the benefit of creditors, or is unable to or admits in writing its
          inability to pay its debts generally as they become due, or any
          corporate action shall be taken by the Corporation in furtherance of
          any of the aforesaid actions;

     (e)  if, after the date hereof, any proceedings with respect to the
          Corporation are taken with respect to a compromise or arrangement,
          with respect to creditors of the Corporation generally, under the
          applicable legislation of any jurisdiction;

     (f)  the Corporation and/or any of its Subsidiaries fail to make a required
          payment or payments on indebtedness for borrowed money of $100,000 or
          more in aggregate principal amount and such failure continues for more
          than 15 days;

     (g)  there shall have occurred an acceleration of the stated maturity of
          any indebtedness for borrowed money of the Corporation or its
          Subsidiaries of $100,000 or more in aggregate principal amount (which
          acceleration is not rescinded, annulled or otherwise cured within 15
          days of receipt by the Corporation or a Subsidiary of notice of such
          acceleration);

     (h)  a final, non-appealable judgement which, in the aggregate with other
          outstanding final judgements against the Corporation and its
          Subsidiaries, exceeds $100,000 shall be rendered against the
          Corporation or a Subsidiary and within 60 days after the entry
          thereof, such judgement is not discharged or execution thereof stayed
          pending appeal, or within 60 days after the expiration of such stay,
          such judgement is not discharged;

     (i)  if a resolution is passed for the winding-up or liquidation of the
          Corporation or the Corporation is dissolved, liquidated, terminated or
          wound up;

     (j)  if any representation or statement of fact made in the Investor
          Agreements or furnished to the Holder in writing at any time by or on
          behalf of the Corporation proves to be false in any material respect
          when made or furnished;

     (k)  if the Corporation fails to observe or perform in any material respect
          any of the its covenants contained in the Investor Agreements, the
          Warrants or this
<PAGE>
                                      -27-


          Debenture (other than a failure which is covered by Sections 9.1(a)
          and 9.1(b)), and such failure continues for 30 days after receipt
          by the Corporation of notice thereof;

     (l)  the occurrence of any event which has a Material Adverse Effect;
          provided that if in the reasonable opinion of the Debentureholder such
          Material Adverse Effect is capable of cure, such Material Adverse
          Effect has not been cured within 10 Business Days following notice
          thereof by the Holder to the Corporation;

     (m)  the occurrence of an "Event of Default", under and as defined in any
          other Debenture;

     (n)  if the Common Shares cease for any reason to be quoted on NASDAQ or a
          US stock exchange.

     Upon the occurrence of an Event of Default, the Holder may (i) declare
     the Principal Amount and Interest to be immediately due and payable,
     provided that if any Event of Default specified in this Sections 9.1(c) or
     (d) shall occur then the Principal Amount and Interest shall, to the extent
     permitted by applicable law, be and become immediately due and payable
     without any declaration or other act on the part of the Holder and (ii)
     commence such litigation or proceedings as it may consider appropriate
     against the Corporation without any additional notice, presentation,
     demand, protect, or notice of dishonour, all of which are hereby expressly
     waived by the Corporation.  In addition to the foregoing, in the event of
     the institution of any proceeding against the Corporation making an
     assignment for the general benefit of creditor or otherwise voluntarily
     initiating any proceeding in respect of its property or creditors under any
     law relating to bankruptcy or insolvency, the effect of which is to cause
     an automatic stay to come into effect with respect to the Corporation, or
     an actual or deemed entry of an order for relief with respect to any
     proceeding instituted by or against the Corporation under the Bankruptcy
     and Insolvency Act (Canada) or the Companies' Creditors Arrangement Act
     (Canada) (as amended, supplemented or replaced from time to time), as may
     be applicable, or any other applicable bankruptcy or insolvency laws which
     provide for an automatic state, the Principal Amount and Interest shall
     automatically become due and payable, without presentment, demand,
     protect or any notice of any kind, all of which are hereby expressly
     waived by the Corporation. The rights and remedies of the Holder hereunder
     are cumulative and are in addition to and not in substitution of any other
     rights or remedies provided by law.

9.2  Notice of Events of Default

If an Event of Default shall occur and be continuing the Corporation shall
forthwith, give notice of such Event of Default to the Debentureholders in the
manner provided in Section 12.2.
<PAGE>
                                      -28-


9.3  Waiver of Default

     (1) No waiver of any Event of Default shall be effective unless such waiver
is provided to the Corporation in writing and signed by the Holder. Then such
waiver of an Event of Default shall only be effective in respect of such
Holder's Debenture if a waiver of such Event of Default is received from all
Holders then outstanding.

     (2) Any such waiver shall extend only to the specific Event of Default and
shall not be deemed to or be taken in any manner whatsoever to affect any
subsequent Event of Default or the rights resulting therefrom.

9.4  Remedies Cumulative

No remedy herein conferred upon or reserved to the Corporation, or upon or to
the Holder is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now existing or hereafter to exist by law or by statute.

9.5  Rights of Holder to Receive Payment

Notwithstanding any other provision of this Debenture, the right of the Holder
to receive payment of the Principal Amount and Interest on or after the
respective due date expressed in this Debenture (or, in the case of redemption,
on the Redemption Date), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.

9.6  Delay or Omission Not Waiver

No delay or omission of the Holder to exercise any right or remedy accruing upon
any Event of Default shall impair any such right or remedy or constitute a
waiver of any such Event of Default or an acquiescence therein. Every right and
remedy given by this Article or by law to the Holder may be exercised from time
to time, and as often as may be deemed expedient, by the Holder.

9.7  Certain Waivers

The Corporation hereby forever waives presentment, demand, presentment for
payment, protest, notice of protest, notice of dishonour of this Debenture and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Debenture.
<PAGE>
                                      -29-



                             ARTICLE 10 - DISCHARGE

10.1 Cancellation and Destruction

This Debenture shall forthwith after payment of all the obligations owing
hereunder including payment of the Principal Amount and Interest is delivered to
the Holder shall be cancelled by Corporation. All Debentures cancelled or
required to be cancelled shall be destroyed by the Corporation.

                            ARTICLE 11 - SUCCESSORS

11.1 Restrictions on Amalgamation, Merger and Sale of Certain Assets, etc.

Subject to the provisions of Article 6, the Corporation shall not enter into any
transaction or series of transactions whereby all or substantially all of its
undertaking, property or assets would become the property of any other Person
(herein called a "Successor") whether by way of reorganization, consolidation,
amalgamation, arrangement, merger, transfer, sale or otherwise, unless:

     (1)  prior to or contemporaneously with the consummation of such
transaction the Corporation and the Successor shall have executed such
instruments and done such things as, in the opinion of counsel to the Holder,
are necessary or advisable to establish that upon the consummation of such
transaction:

     (a)  the Successor will have assumed all the covenants and obligations of
          the Corporation under this Debenture;

     (b)  the Debentures will be valid and binding obligations of the Successor
          entitling the Holders thereof, as against the Successor, to all the
          rights of Debentures;

     (c)  in the case of the entity organized otherwise than under the laws of
          the Province of Ontario, the successor shall attorn to the
          jurisdiction of the courts of the Province of Ontario;

     (d)  no Event of Default or event which, with the giving of notice, the
          lapse of time, or both, would become an Event of Default shall have
          occurred and be continuing or shall result from any such transaction
          (after giving effect thereto);

     (e)  the Common Shares or other securities issuable upon conversion of this
          Debenture as a result of such transaction shall be quoted on NASDAQ or
          a US stock exchange; and
<PAGE>
                                      -30-


     (2)  such transaction, in the opinion of counsel of the Holder, shall be on
such terms as to substantially preserve and not materially and adversely impair
any of the rights and powers of the Holder hereunder.

11.2 Vesting of Powers in Successor

Whenever the conditions of Section 11.1 hereof shall have been duly observed and
performed, any Successor formed by or resulting from such transaction shall
succeed to, and be substituted for, and may exercise every right and power of
the Corporation under this Debenture with the same effect as though the
Successor had been named as the Corporation herein and thereafter the
Corporation shall be relieved of all obligations and covenants under this
Debenture.

                              ARTICLE 12 - NOTICES

12.1     Notice to Corporation

Unless herein otherwise expressly provided, any notice to be given hereunder to
the Corporation shall be deemed to be validly given if delivered by hand courier
or if transmitted by facsimile to:

if to the Corporation:

                         World Heart Corporation
                         1 Laser Street
                         Ottawa, Ontario, Canada K2E 7V1
                         Attention:       Chief Financial Officer

                         Facsimile:       613-723-8522

                         with a copy to:

                         McCarthy Tetrault LLP
                         40 Elgin Street, Suite 1400
                         Ottawa, Ontario K1P 5K6
                         Attention:       Virginia K. Schweitzer

                         Facsimile:       613-563-9386

and any such notice delivered in accordance with the foregoing shall be deemed
to have been received on the date of delivery or, if telecopied the day of
transmission or, if such day is not a Business Day, on the first Business Day
following the day of transmission; provided that if such notice is delivered or
facsimile after 4 p.m. (Toronto Time), such notice will be deemed to be received
on the next Business Day. The Corporation may from time to time notify the other
in the manner provided in this Section 12.1 of a change of address which from
the effective date of such notice and until changed by like notice, shall be the
address of the Corporation for all purposes of this Debenture.
<PAGE>
                                      -31-


12.2 Notice to Holder

     (1)  All notices to be given hereunder with respect to this Debenture shall
be deemed to be validly given to the Holder if sent by first class mail, postage
prepaid, by letter or circular addressed to such Holder at its post office
address appearing in any of the registers hereinbefore mentioned and shall be
deemed to have been effectively given three Business Days following the day of
mailing.

     (2)  All notices with respect to any Debenture may be given to whichever
one of the Holders thereof (if more than one) is named first in the registers
hereinbefore mentioned, and any notice so given shall be sufficient notice to
all Holders interested in such Debenture.

                              ARTICLE 13 - GENERAL

13.1 Formal Date

For the purpose of convenience this Debenture may be referred to as bearing the
formal date of September 15, 2004, irrespective of the actual date of execution
hereof.

13.2 Fees and Disbursements

The Corporation shall pay all reasonable legal and other professional fees and
disbursements incurred by the Debentureholder in respect of the preparation of
this Debenture, and any other documentation contemplated hereunder, and the
enforcement of the Debentureholder's rights hereunder.

13.3 Further Assurances

The Corporation hereby covenants and agrees that it will at all times do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged or
delivered all and singular such further acts, deeds, transfers, assignments and
assurances as the Holder may reasonably require for the better assuring,
mortgaging, charging, transferring, assigning, confirming and granting a
security interest unto the Holder.

13.4 Amendments

     (1)  Except as set forth in Section 13.4(2), this Debenture may only be
amended by written agreement signed by the Corporation and the Required Holders
provided that such amendment is binding on all Debentures then outstanding.

     (2)  Except as provided in Section 6.3, amendments to the Debentures with
respect to (i) Principal Amount, (ii) Interest, (iii) Maturity Date, (iv)
Conversion Price, (v) Redemption Price, and (vi) this Section 13.4(2), may only
be made by written agreement signed by the Corporation and all Debentureholders
holding Debentures then outstanding.
<PAGE>
                                      -32-


13.5 Assignments

The Holder may assign, transfer and deliver all of its rights hereunder, any of
the Principal Amount and/or Interest or any documents held by it in respect
thereof without the consent of the Corporation; provided, however that such
assignment, transfer or delivery complies in all material respects with the
requirements of applicable law and the terms of this Debenture. The Corporation
shall not assign any of its rights or obligations hereunder without the prior
written consent of the Holder.

IN WITNESS WHEREOF the Corporation has caused this Debenture to be signed by its
proper officer or officers duly authorized in that behalf as of the date first
shown above.

                                                 WORLD HEART CORPORATION


                                                 By:
                                                    --------------------------
                                                    Authorized Signing Officer
<PAGE>

                                      -33-

                                   SCHEDULE A

                         FORM OF NOTICE OF PUT EXERCISE



                               PUT EXERCISE NOTICE

To:       WORLD HEART CORPORATION
Note:     All capitalized terms used herein have the meaning ascribed thereto
          in the Debenture (as defined below), unless otherwise indicated.

The undersigned registered holder of a 3% unsecured convertible debenture dated
as of September 15, 2004 (the "Debenture") bearing Certificate No. o irrevocably
elects to put such Debenture (or $o principal amount thereof*) to World Heart
Corporation (the "Corporation") to be purchased by the Corporation on the Put
Date in accordance with the terms of the Debenture at a price equal to the
principal amount of the Debenture being put to the Corporation plus all accrued
and unpaid interest thereon to, but excluding, the Put Date (collectively, the
"Total Put Price") and tenders herewith the Debenture.




----------------------------------             --------------------------------
(Date)                                         (Signature of Registered Holder)


          *If  less than the full principal amount of the Debenture, indicate
          in the space provided the principal amount.

The Total Put Price will be payable upon presentation and surrender of the
Debenture with this form on or after the Put Date at the following corporate
office:

                  World Heart Corporation
                  1 Laser Street
                  Ottawa, Ontario K2E 7V1

                  Attention: Chief Financial Officer


 The interest upon the principal amount of the Debenture put to the Corporation
 shall cease to be payable from and after the Put Date unless payment of the
 Total Put Price shall not be made on presentation for surrender of the
 Debenture at the above mentioned corporate office on or after the Put Date or
 prior to the setting aside of the Total Put Price pursuant to the Debenture.

<PAGE>
                                      -34-


                                   SCHEDULE B
                    FORM OF DECLARATION FOR REMOVAL OF LEGEND




                    FORM OF DECLARATION FOR REMOVAL OF LEGEND

To:       CIBC Mellon Trust Company
          as transfer agent for the Common Shares and the unsecured
          convertible debentures of World Heart Corporation


The undersigned (a) acknowledges that the sale of the securities of World Heart
Corporation (the "Corporation") to which this declaration relates is being made
in reliance on Rule 904 of Regulation S under the United States Securities Act
of 1933, as amended (the "1933 Act") and (b) certifies that (1) the seller is
not an affiliate (as defined in Rule 405 under the 1933 Act) of the Corporation,
(2) the offer of such securities was not made to a person in the United States
or identifiable group of U.S. citizens abroad and either (A) at the time the buy
order was originated, the buyer was outside the United States, or the seller and
any person acting on its behalf reasonably believe that the buyer was outside
the United States, or (B) the transaction was executed on or through the
facilities of the Toronto Stock Exchange or any other designated offshore
securities market as defined in Regulation S under the 1933 Act and neither the
seller nor any person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States, (3) neither the seller nor any
affiliate of the seller nor any person acting on any of their behalf has engaged
or will engage in any directed selling efforts in connection with the offer and
sale of such securities, (4) the sale is bona fide and not for the purpose of
"washing off' the resale restrictions imposed because the securities are
"restricted securities" (as such term is defined in Rule 144(a)(3) under the
1933 Act), (5) the seller does not intend to replace the securities sold in
reliance on Rule 904 of the 1933 Act with fungible unrestricted securities, and
(6) the contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S, is part
of a plan or scheme to evade the registration provisions of the 1933 Act. Terms
used herein have the meanings given to them by Regulation S under the 1933 Act.




                                                --------------------------------
                                                Name:
                                                Title:

<PAGE>
                                      -35-


                                   SCHEDULE C
                             WORLD HEART CORPORATION
              3% UNSECURED CONVERTIBLE DEBENTURES REDEMPTION NOTICE

To:       Holders of 3% Unsecured Convertible Debentures (the "Debentures")
of World Heart Corporation (the "Corporation")

Note:     All capitalized terms used herein have the meaning ascribed thereto
in the Debentures unless otherwise indicated.

Notice is hereby given pursuant to Section 5.2 of the Debenture, that $o of the
Aggregate Principal Amount of all Debentures outstanding will be redeemed as of
o (the "Redemption Date"), upon payment of a redemption amount equal to the
principal amount of Debentures being redeemed plus all accrued and unpaid
interest thereon to but excluding the Redemption Date (collectively, the
"Redemption Price").

The portion of the Redemption Price payable to each Debentureholder subject to
this Redemption Notice will be payable upon presentation and surrender of the
Debentures called for redemption from such Holder at the registered office of
the Corporation:

           World Heart Corporation
           1 Laser Street
           Ottawa, Ontario K2E 7V1
           Attention: Chief Financial Officer

The Interest upon the principal amount of Debentures called for redemption shall
cease to be payable from and after the Redemption Date, unless payment of the
Redemption Price shall not be made on presentation for surrender of the
Debenture at the above mentioned corporate office on or after the Redemption
Date or prior to the setting aside of the Redemption Price pursuant to the
Debenture. As of the Redemption Date, Interest in an amount equal to
$             will be due and payable on the [portion of the] Debenture
 ------------ being redeemed.

Pursuant to Section 5.1(4) of the Debenture, the Holder has the right to convert
the portion of the Debenture being called for redemption and Interest thereon at
any time prior to 5:00 p.m., Ottawa time, on the Redemption Date by delivering
to the Corporation a notice of conversion substantially in the form set out in
Schedule D to the Debenture, together with its Debenture.

Pursuant to Section 5.1(4) of the Debenture, if the Holder elects to convert
prior to the Redemption Date, the Holder must deliver to the Corporation a
notice of conversion substantially in the form set out in Schedule D to the
Debenture.

In this connection, upon presentation and surrender of the Debentures for
payment on the Redemption Date, the Corporation shall, on the Redemption Date,
make delivery to the Holder, of the redemption price in United States dollars by
wire transfer of immediately available funds to an account previously specified
by the Holder.

DATED:
      --------------                         WORLD HEART CORPORATION

                                          By:
                                             ----------------------------------
                                       Name:
                                        Title:
<PAGE>
                                      -36-


                                   SCHEDULE D
                          FORM OF NOTICE OF CONVERSION

                                CONVERSION NOTICE

To:       WORLD HEART CORPORATION

Note:     All  capitalized terms used herein have the meaning ascribed thereto
in the Debenture (as defined below), unless otherwise indicated.

The undersigned registered holder of a 3% unsecured convertible debenture dated
as of September 15, 2004 (the "Debenture") bearing Certificate No.
                                                                   ----------
irrevocably elects to convert the entire outstanding Principal Amount of such
Debenture (or $                     principal amount thereof*) and all
               --------------------
Interest accrued on such Principal Amount being converted in accordance with the
terms of the Debenture and tenders herewith the Debenture, and, if applicable,
directs that the Common Shares issuable upon this conversion be issued and
delivered to the person indicated below.

The Corporation shall not be required to issue fractional Common Shares upon the
conversion of the Principal Amount and the Interest accrued on such Principal
Amount. The number of whole Common Shares issuable upon conversion thereof shall
be computed on the basis of the Principal Amount to be converted and applicable
interest. If any fractional interest in a Common Share would be deliverable upon
the conversion of any principal amount and the applicable interest, the
Corporation shall, in lieu of delivering any certificate representing such
fractional interest, make a cash payment to the Holder of an amount equal to the
fractional interest which would have been issuable in respect of the conversion
of such Principal Amount multiplied by the Conversion Price plus the fractional
interest which would have been issuable in respect of the conversion of the
Interest multiplied by the Interest Conversion Price.








----------------------------------             --------------------------------
(Date)                                         (Signature of Registered Holder)



*         If less than the full principal amount of the Debenture, indicate in
          the space provided the principal amount.

<PAGE>
                                      -37-



NOTE:     If Common Shares are to be issued in the name of a person other than
          the holder, (A) the signature must be guaranteed by a chartered
          bank, a trust company or a member firm of a recognized stock
          exchange in Canada or the United States and (B) all requisite
          transfer taxes must be tendered by the undersigned.


--------------------------------------------------------------------------------
(Print name in which Common Shares are to be issued, delivered and registered)



-----------------------------    ----------------------------------------------
(Address)                        (City, Province/State and Postal Code/Zip Code)

Authorized signature:  ---------------------------------------------
By:                    ---------------------------------------------
Dated:                 ---------------------------------------------