Document:

<PAGE>   1
                                                                     Exhibit 4.1
Certificate No. ____________

                               DEBENTURE AGREEMENT
                                $
                                 ----------------
                          9% INTEREST RATE SUBORDINATED
                      DEBENTURE WITH CONVERSION PRIVILEGES
                          AND PROVISION FOR REDEMPTION

                              Due December 31, 2005

New York, New York                                                 March 1, 2000

         After date and for value received, Greka Energy Corporation ("Greka")
promises to pay to the Order of _________________________________ ("Holder") at
__________________________________ the sum of $_______________ pursuant to the
terms hereinafter set forth:

         1. Securities Exchanged. The Holder hereof has exchanged his Saba
Petroleum Company Debenture in the principal amount of $_____________ for this
Greka Debenture ("Debenture") in the same principal amount. Each Debenture may
be converted into shares of the No Par Value Common Stock of Greka, as set forth
in section 4 below.

         2. Interest. This Debenture shall be subject to an annual, simple
interest rate of 9% per annum. Greka shall be obligated to make quarterly
interest only payments (March 31, June 30, September 30 and December 31 of each
year) to holders of record on March 15, June 15, September 15 and December 15,
respectively, commencing June 30, 2000. The June 30, 2000 interest-only payment
shall include any unpaid interest on the Saba Petroleum Company Debentures
accruing after December 15, 1999. The Debenture is due in full including all
principal and accrued but unpaid interest on December 31, 2005. Interest shall
be computed on the basis of a 360-day year of twelve 30-day months.

         3. Security. The Convertible Debenture is not secured by any assets of
Greka.

         4. Conversion. At the sole option of the Holder, he may convert the
principal balance of his Debenture to the No Par Value Common Stock of Greka
(the "Conversion Stock") upon presenting this Debenture along with the
conversion notice which is Exhibit "A" to this Debenture duly executed to Greka
on or before the due date or redemption of the debenture by Greka in accordance
with paragraph 5 below. Upon presentation to Greka of the notice of election to
convert, properly executed, Greka shall cancel the Debenture and issue to the
Debenture Holder in accordance with Paragraph 6(c) shares of the Conversion
Stock based on the Conversion Price as of the date of the receipt of the
conversion notice. The Conversion Price shall be equal to 95% of the average
closing bid price of the No Par Value Common Stock of Greka for the 30
consecutive trading days ending one day prior to the date of the receipt by

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<PAGE>   2

Greka of the notice of conversion, duly executed. The Conversion Price shall in
no instance be less than $8.50 per share nor greater than $12.50 per share,
unless adjusted pursuant to Paragraph 8. At the time of issuance, the Conversion
Stock will either be registered or its resale will be registered pursuant to a
registration statement under the Securities Act of 1993, as amended, which Greka
agrees it shall use its best efforts to file within ninety (90) days of the
issuance of this Debenture and cause to become effective and remain effective
for a period of not less than two years from the date of conversion unless the
Conversion Stock is earlier sold.

         5. Redemption.

            a) At Greka's sole option at any time during the term of this
Debenture, it may call for redemption the entire Debenture or any portion
thereof. Should a partial redemption be made, Greka will make such call on a pro
rata basis based on the percentage of the total Debentures being redeemed. Once
the Redemption Price as heretofore defined is paid, Greka will reissue new
debenture certificates for the principal amount not redeemed, upon surrender of
the original Debenture by the Holder and payment of the Redemption Price by
Greka. The Redemption Price shall be 102% of the principal amount redeemed plus
any accrued but unpaid interest thereon through the date of redemption. Greka
shall provide notice of the date of the redemption (the "Redemption Date") in
writing not less than 30 days prior to the Redemption Date. Each holder, at its
sole discretion, may, prior to the Redemption Date, convert all or part of the
Debenture being redeemed to No Par Value Common Stock of Greka in accordance
with the provisions of paragraph 4 above by submitting the required notice of
conversion.

            b) Commencing on August 1, 2000 each Debenture holder shall have the
right upon 30 days prior written notice to Greka to require Greka to redeem all
or a portion of his Debenture at an amount equal to the principal amount of such
Debenture redeemed plus any accrued but unpaid interest thereon through the date
of redemption.

         6. Conversion Rights. In addition to the Conversion Rights discussed in
paragraph 4 above, the Holder shall have the following rights:

            a) Greka represents and warrants that at the time of making this
Debenture Agreement it has sufficient authorized but unissued No Par Value
Common Stock available to satisfy its obligations pursuant to all rights of
conversion granted hereby and Greka agrees to reserve sufficient Conversion
Stock during the conversion term of this Debenture to provide for the conversion
of this Debenture. Should Greka at any time during the conversion period have a
capital reorganization, merger, consolidation, stock swap or sell substantially
all of its assets to any person or corporation, then as part of such merger,
consolidation or sale, provision shall be made for the Conversion Rights to be
adjusted in such a manner as to provide for the protection of said rights so as
to permit the conversion in as nearly equivalent a manner as set forth herein as
is possible. Greka shall reserve for issuance upon conversion sufficient,

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equivalent recapitalized equity to meet its obligations hereunder during the
entire conversion period.

            b) Upon presentation to Greka at the notice address of (1) a letter
requesting conversion, (2) the Conversion Form, which is Exhibit "A" attached
hereto and which provides for the cancellation of the Debenture upon issuance of
the Conversion Stock, and (3) the original Debenture Agreement all duly
executed; Greka shall within 10 business days issue a certificate for the
appropriate number of shares and send said certificate to the Holder postage
prepaid, registered mail, return receipt or any other manner agreed to by the
Holder and Greka.

            c) All shares of Conversion Stock or other securities delivered upon
the exercise of the rights of conversion shall be validly issued, fully paid and
non-assessable.

            d) Irrespective of the date of issuance and delivery of a
certificate or certificates for any shares of Conversion Stock issuable upon the
exercise of conversion rights, each person (including a corporation) in whose
name any such certificate or certificates is to be issued will for all purposes
be deemed to have become the holder of record of the Conversion Stock, the
securities, and/or property represented thereby on the date on which a duly
executed notice of exercise of conversion rights and the canceled underlying
Debenture is delivered to Greka.

            e) The Holder is not, by virtue of ownership of the Debenture,
entitled to any rights whatsoever of a stockholder of Greka.

         7. Restricted Securities/Restrictions on Assignments. The undersigned
Holder acknowledges that he understands that the securities represented by this
Convertible Debenture have not been and will not be registered pursuant to the
Securities Act of 1933 or pursuant to the laws of any state, that Greka is
relying on exemptions from registration of these securities, and that Greka will
not make any effort to create a public trading market for the Debentures. Each
Debenture (and the Common Stock which may be issued as a result of the
conversion of the Debenture in the event the registration statement has not yet
been declared effective) shall be imprinted with a restrictive legend as
follows:

         "This Debenture (Common Stock) and the rights hereunder have not been
         registered or qualified under federal or state securities laws. This
         Debenture (Common Stock) may not be assigned unless so registered or
         qualified or unless an exemption exists, the availability of which is
         to be established by issuer's counsel at the holder's expense;
         provided, however, if the proposed assignment is made to a person or
         entity outside of the United States or Canada, and not for the benefit
         of or to any U.S. or Canadian person, the establishment by issuer's
         counsel of the availability of an exemption from registration shall not
         be necessary for the holder to make such assignment in the absence of a
         change of Law or Regulation which would then require proof of exemption
         or registration of

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         such transaction. The assignee under any such assignment shall be
         likewise subject to the terms of this restriction upon any proposed
         assignment or transfer."

         The undersigned Holder hereof further acknowledges that he is
purchasing this Debenture as an investment for his own account and not with a
view to distribute the Debenture.

         8. Anti-Dilution Provision/Adjustments for Change in Capitalization.
The conversion ratio, and the minimum and maximum Conversion Price but only in
the event of a stock split of the Common Stock, is to be adjusted upon the
occurrence of any Extraordinary Common Stock Event as defined below for which
Greka does not receive fair value or compensation therefor in money services, or
property or upon the occurrence of certain other events described herein. The
conversion ratio shall be adjusted by multiplying the then effective Conversion
Ratio by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately prior to such Extraordinary Common Stock
Event and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such Extraordinary Common Stock Event, and the
product so obtained shall thereafter be the new conversion ratio. The conversion
ratio, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive Extraordinary Common Stock Event or Events. "Extraordinary
Common Stock Events" shall mean (i) the issuance of Common Stock as a dividend
or other non cash distribution on outstanding Common Stock, (ii) the subdivision
of outstanding shares of Common Stock into a greater number of shares of Common
Stock, or (iii) the combination of outstanding shares of Common Stock into a
smaller number of shares of Common Stock.

         Upon the occurrence of each adjustment or readjustment of the
conversion ratio, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
the Holder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
Each such certificate shall be certified by the Chief Financial Officer or
C.E.O. and Greka shall, upon written request at any time of the holder, furnish
or cause to be furnished to such holder a like certificate setting forth (i)
such adjustments and readjustments, (ii) the conversion ratio, as applicable, at
the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time would be received upon the
exercise of conversion rights.

         9. Amendment. Neither this Debenture nor any term thereof may be
changed, waived, discharged, or terminated orally or in writing except that any
term of this Debenture may be amended and the observance of any such term may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with (and only with) the written consent of Greka and of the
holders of at least 51% in principal amount of the Debentures at the time then
outstanding, provided that no such amendment or waiver shall, without the
written consent of all the holders of the debentures at the time then
outstanding (a) change the amount or time of any payment or prepayment of any
debenture or any part thereof, or of any premium or

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interest thereon or the Conversion Price, or (b) reduce the percentage of the
principal amount of the Debentures the holders of which are required to consent
to any amendment or waiver pursuant to this paragraph.

         10. Notices. All notices and communications to any party to this
Debenture shall be in writing and sent to Greka and to the Holder at the address
set forth below the Holder's signature or at such other place as may be
designated in writing by either party hereto postage prepaid, registered mail,
return receipt or any other manner agreed to by the Holder and Greka. All
notices to overseas addresses shall be by telex or overnight courier with
confirmation of receipt required.

         11. General

             a) This Debenture is being delivered and is intended to be
performed in the State of New York and shall be construed and enforced in
accordance with and governed by the laws of such State. All of the terms of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto whether so
expressed or not, and in particular shall inure to the benefit of and be
enforceable by any holder or holders at the time of the debentures. This
Agreement embodies the entire Convertible Debenture Agreement and understanding
between the undersigned Holder and Greka and supersedes all prior agreements and
understandings relating to the subject matter hereof.

             b) The undersigned Holder acknowledges that no promises or
guarantees have been made to him concerning the total amount of Conversion Stock
which may be issued.

             c) Should the Holder lose the Debenture or should it be stolen or
destroyed, Greka will issue a replacement upon receipt of such assurances as may
be reasonably requested by Greka.

         If you agree to the foregoing terms of the Convertible Debenture,
please sign the acceptance below in the place provided for the "Holder" and
print or type your full name, address, telephone number and social security
number. No debenture will be accepted without an executed Debenture Agreement,
an executed and sworn Affidavit, and the return and cancellation of the Saba
Petroleum Company Debenture.

         DATED this ___________ day of _________________________, 2000.

                                     ATTEST:

                                     -------------------------------------
                                     Secretary

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                                   EXHIBIT "A"

                     (Attached to the Convertible Debenture
                              dated March 1, 2000)

                               EXERCISE AGREEMENT
                               ------------------

                              NOTICE OF CONVERSION

         To:  Greka Energy Corporation                   Dated:________________
              Attn:  Mr. Randeep S. Grewal
              630 Fifth Avenue, Suite 1501
              New York, NY  10111

         The undersigned, pursuant to the Conversion Rights set forth in the
attached Debenture (Certificate No. __________), hereby agrees to subscribe for
and purchase __________ shares of the Common Stock covered by such Debenture and
makes payment herewith in full therefor by assigning the attached Debenture to
Greka thereby canceling said debt.

Signature:
              -----------------------
Printed Name:
              -----------------------
Address:
              -----------------------

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

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

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                             ASSIGNMENT OF DEBENTURE

         FOR VALUE RECEIVED, _________________________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
attached Debenture (Certificate No. ___________) with respect to the number of
Units of the Debenture thereby set forth below, unto:

<TABLE>
<CAPTION>
Name of Assignee                    Address          No. of Units
----------------                    -------          ------------
<S>                                 <C>              <C>
                                                     $
</TABLE>

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

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

                                            Witness:
                                                      --------------------------

                                                      --------------------------<PAGE>   1
                                                                     EXHIBIT 4.2

                               DEBENTURE AGREEMENT
                                   $1,000,000
                        FIXED INTEREST RATE SUBORDINATED
                      DEBENTURE WITH CONVERSION PRIVILEGES
                         AND CALL PROVISION WITH PREMIUM
                                UNIT CERTIFICATE

CERTIFICATE NO.
               -----

                              DUE FEBRUARY 1, 2001

Denver, Colorado                                               February 26, 1999

            After date and for value received, Horizontal Ventures, Inc., a
Colorado corporation (hereinafter the "Company") promises to pay to the order of
_______________at _____________________ the sum of __________ pursuant to the
terms hereinafter set forth:

         1. SECURITIES PURCHASED. The Holder hereof has purchased as an
investment for his own account units of the debenture (the "Units"), each Unit
consisting of $25,000 and $5,000 minimum increments thereafter of the Company's
$1,000,000 convertible debenture. Each Unit may be converted to shares of the
Company's no par value common stock as set forth below.

         2. SENIOR DEBT. The Debenture shall have a preference in liquidation to
all obligations except bank debt, purchase money debt which is secured by the
property purchased and secured leases which it shall be subordinated to, plus
any other indebtedness the subordination to which is agreed to by persons
holding at least two thirds (2/3) of the outstanding debentures. Upon a
liquidation, dissolution, bankruptcy or reorganization, or similar transaction
by the company, the holders of the "senior debt" would be paid in full before
payment would be made on the debenture.

         3. SECURITY. The convertible debenture is secured by the Company's
limestone deposits located in southern Indiana, U.S.A. pursuant to that certain
Deed of Trust executed by Horizontal Ventures, Inc dated February 26, 1999, and
recorded in the records of the Clerk and Recorder of the County of Monroe as
reception No. ______________ (the "Mortgage").

         4. CONVERSION. The convertible debenture holder may convert the
debenture, including accrued interest, into the Company's no par value common
stock at any time from August 1, 1999 until 5:00 p.m. E.S.T. on February 1, 2000
at the rate of $15 per share and thereafter until 5:00 p.m. E.S.T. on January
31, 2001 at the rate of $20 per share unless the Company shall earlier call the
debenture pursuant to paragraph 7 of this Debenture Agreement. Should the holder
elect to exercise his right to conversion, the Company shall pay any

<PAGE>   2

unconverted accrued interest on said debenture less any value of a dividend
which has been declared but not paid on the dated of the exercise of the
conversion rights.

         5. INTEREST. This debenture shall be subject to an annual interest rate
of 15% per annum. The debenture is due in full including all principal and
accrued interests on or before February 1, 2001. Any payments of principal and
interest not paid when due shall bear interest at a default rate of 20% per
annum until paid. Except for a failure to pay a "call" as set forth below, the
remedy for which is a reversion to the rights and terms pursuant to this
agreement.

         6. CALL PROVISION. At any time during the term of this Debenture the
Company, at its sole option, may call the entire Debenture due or any portion
thereof by paying the principal balance of the Debenture owing plus any accrued
interest plus, under certain circumstances, a penalty as set forth hereinafter
(the "Call Price"). Should a partial Call be made, the Company will make such
Call on a pro rata basis per unit outstanding. The penalty shall be the
difference, if any, between the total interest accrued and paid on the principal
and 5% of the principal balance. By way of example only, if at the time of a
call only 3 months have past and therefore only 3.75% interest on the principal
had accrued, there would be a penalty of 1.25% so that the total return was 5%
on principal. Once the Call Price is paid and upon the surrender of the original
debenture by the holder, the Company will reissue debentures for the principal
amount not called. Notice of the Call shall be given to each Unit holder at
least 30 days prior to the date of payment. Notwithstanding anything to the
contrary in Section 4 hereof, each Unit Holder shall have the right to convert
the Units of debenture being called including interest on or before the date for
payment of the Call Price as set forth in the written notice. Upon conversion, a
Unit Holders right to payment of the Call Price shall cease.

         7. CONVERSION RIGHTS. In addition to the conversion rights discussed in
paragraphs 4 and 7 above, the holder shall have the following rights:

            a. Should the Holder elect to exercise his right to conversion, the
corporation shall pay in cash upon delivery of the stock certificate any accrued
interest on said debenture less any value of a dividend which has been declared
but not paid on the date of the election to convert.

            b. The Company represents and warrants that at the time of making
this Debenture Agreement it has sufficient authorized but unissued no par value
common stock available to satisfy its obligations pursuant to all rights of
conversion granted hereby and the Company agrees to reserve sufficient common
stock during the conversion term of this debenture to provide for the conversion
of this debenture. Should the Company at any time during the conversion period
have a capital reorganization, merger, consolidation, stock swap or sell
substantially all of its assets to any person or corporation, then as part of
such merger, consolidation or sale, provision shall be made for the conversion
rights to be adjusted in such a manner as to provide for the protection of said
rights so as to permit the conversion in as nearly equivalent a manner as set
forth herein as is possible. The Company shall reserve for issuance

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upon conversion sufficient, equivalent recapitalized equity to meet its
obligations hereunder during the entire conversion period.

            c. Upon presentation to the Company at the notice address of (1) a
letter requesting conversion, (2) the Conversion Agreement, which is Exhibit A
attached hereto and which provides for the cancellation of the Units upon
issuance of the common stock, and (3) the original Debenture Agreement all duly
executed; the Company shall within 5 business days issue a certificate for the
appropriate number of shares and send said certificate to the holder postage
prepaid, registered mail, return receipt or any other manner agreed to by the
holder and the Company.

            d. All shares of common stock or other securities delivered upon the
exercise of the rights of conversion shall be validly issued, fully paid and
non-assessable.

            e. Irrespective of the date of issuance and delivery of a
certificate or certificates for any shares of common stock issuable upon the
exercise of conversion rights, each person (including a corporation) in whose
name any such certificate or certificates is to be issued will for all purposes
be deemed to have become the holder of record of the common stock, the
securities, and/or property represented thereby on the date on which a duly
executed notice of exercise of conversion rights and the canceled underlying
Debenture is delivered to the Company.

            f. The holder is not, by virtue of ownership of the Units of this
convertible debenture, entitled to any rights whatsoever as a stockholder of the
Company.

         8. ANTI-DILUTION PROVISION/ADJUSTMENTS FOR CHANGE IN CAPITALIZATION. At
the execution of this Debenture Agreement each debenture Unit may be converted
by the Unit of the debenture into the Company's no par value common stock at any
time from August 1, 1999 until 5:00 p.m. February 1, 2000 at the rate of $15 per
share and thereafter until 5:00 p.m. on February 1, 2001 at the rate of $20 per
share. This conversion ratio is to be adjusted upon the occurrence of any
Extraordinary Common Stock Event as defined below for which the Company does not
receive fair value or compensation therefor in money, services, or property or
upon the occurrence of certain other events. The conversion price shall be
adjusted by multiplying the then effective conversion price by a fraction, the
numerator of which shall be the number of shares of common stock outstanding
immediately prior to such Extraordinary Common Stock Event and the denominator
of which shall be the number of shares of common stock outstanding immediately
after such Extraordinary Common Stock Event, and the product so obtained shall
thereafter be the new conversion ratio. The conversion price, as so adjusted,
shall be readjusted in the same manner upon the happening of any successive
Extraordinary Common Stock Event or Events. "Extraordinary Common Stock Events"
shall mean (i) the uncompleted issuance of additional shares of common stock as
a dividend or other distribution on outstanding common stock, (ii) the
subdivision of outstanding shares of common stock into a greater number of
shares of common stock, or (iii) the combination of outstanding shares of common
stock into a smaller number of shares of common stock.

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<PAGE>   4

            Upon the occurrence of each adjustment or readjustment of the
conversion price, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
the holder a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
Each such certificate shall be certified by the Chief Financial Officer or
Chairman of the Company. The Company shall, upon written request at any time of
the holder, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) the conversion ratio,
as applicable, at the time in effect, and (iii) the number of shares of common
stock and the amount, if any, of other property which at the time would be
received upon the exercise of conversion rights.

         9. DEFAULT. Upon a default by the Company the Unit Holders owning not
less than 66 2/3% of the debenture Units may commence foreclosure of the
Mortgage given as collateral and seek such other remedy as may be appropriate.
Waiver of a default shall not act as an estoppel for future action by Unit
Holders nor otherwise justify further waiver for subsequent acts of default.

         10. RESTRICTED SECURITIES/RESTRICTIONS ON ASSIGNMENTS. The undersigned
holder acknowledges that he understands that the securities represented by this
Convertible Debenture have not been registered pursuant to the Securities Act of
1933 or pursuant to the laws of the State of Colorado or any other state and
that the Company is relying on exemptions from registration of theses
securities. Each debenture, and common share which may be issued as a result of
the conversion of the debenture shall be imprinted with a restrictive legend as
follows:

             "This Debenture (Common Stock) and the rights hereunder have not
             been registered or qualified under federal or state securities
             laws. This Debenture (Common Stock) may not be assigned unless so
             registered or qualified or unless an exemption exists, the
             availability of which is to be established by issuer's counsel at
             the holder's expense; provided, however, if the proposed assignment
             is made to a person or entity outside of the United States or
             Canada, and not for the benefit of or to any U.S. or Canadian
             person, the establishment by issuer's counsel of the availability
             of an exemption from registration shall not be necessary for the
             holder to make such assignment in the absence of a change of law or
             regulation which would then require proof of exemption or
             registration of such transaction. The assignee under any such
             assignment shall be likewise subject to the terms of this
             restriction upon any proposed assignment or transfer."

         The undersigned holder hereof further acknowledges that he is
purchasing this debenture as an investment for his own account and not with an
eye to reselling.

         11. REGISTRATION RIGHTS. The Company agrees to file a registration
statement on whatever form is available to it to register the common shares
underlying the conversion privileges granted herein on one occasion upon receipt
of demand for registration executed by

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holders of not less than 50% of the Debenture being issued hereby. Upon receipt
of appropriate demand, the Company will use its best efforts to have said
registration statement filed within 60 days of the demand and will use its best
efforts to have said registration statement declared effective at the earliest
practicable date.

         12. AMENDMENT. Neither this debenture or any term thereof may be
changed, waived, discharged or terminated orally or in writing except that any
term of this debenture may be amended and the observance of any such term may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with (and only with) the written consent of the holders of at
lease 66 2/3% in principal amount of the debentures at the time then
outstanding, provided that no such amendment or waiver shall, without the
written consent of all the holders of the debentures at the time then
outstanding (a) change the amount or time of any payment or prepayment of any
debenture or any part thereof, or of any premium or interest thereon, or (b)
reduce the percentage of the principal amount of the debentures the holders of
which are required to consent to any amendment or waiver pursuant to this
paragraph.

         12. NOTICES. All notices and communications to any party to this
debenture shall be in writing and sent to the Company and to the holder at the
address set forth below the holder's signature or at such other place as may be
designated in writing by either party hereto. All notices to overseas addresses
shall be by telex or DHL overnight with confirmation of receipt required.

         13. GENERAL.

            a. This debenture is being delivered and is intended to be performed
in the State of Colorado and shall be construed and enforced in accordance with
and governed by the laws of such State. All of the terms of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto whether so expressed or not, and in
particular shall insure to the benefit of and be enforceable by any holder or
holders at the time of the debentures. This Agreement embodies the entire
convertible debenture agreement and understanding between the undersigned holder
and the Company and supersedes all prior agreements and understandings relating
to the subject matter hereof.

            b. The undersigned holder acknowledges that no promises or
guarantees have been made to him concerning the total amount of debentures which
may be issued.

            c. The Company may not consolidate or merge, or transfer or lease
all or substantially all of its assets to another corporation unless the other
entity assumes in writing all of the obligations of the Company under the
debentures, and that in the case of a transfer or lease or assets, although the
successor assumes the obligations in writing, the Company shall not be released
from its obligations to pay principal or interest on the debentures.

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<PAGE>   6

            d. Interest is payable on the debenture from the date of acceptance
by the Company which date shall not exceed 2 business days from receipt of the
Subscription Agreement with funds.

         If you agree to the foregoing terms of the Convertible Debenture,
please sign the form in the place provided for the "Holder" and print or type
your full name, address, telephone number and social security number and execute
the attached subscription agreement. No debenture will be accepted without an
executed subscription agreement and payment in full which shall not be
refundable.

            DATED this ______ day of February, 1999.

HORIZONTAL VENTURES, INC.                 ATTEST:

By
     -------------------------------      --------------------------------
     Randeep S. Grewal, Chairman and      Secretary
       Chief Executive Officer
     630 Fifth Avenue, Suite 1501
     New York, NY 10111
     Fax (212) 218-4670

         The foregoing debenture with attached warrant is hereby agreed to as of
the date hereof.

                                    HOLDER:

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                                   EXHIBIT "A"

     (ATTACHED TO THE CONVERTIBLE DEBENTURE DATED _________________________)

                              CONVERSION AGREEMENT

To:                                                           Dated:
                                                                     ----------

         The undersigned, pursuant to the Conversion Rights set forth in the
attached Unit of Debenture (Certificate No. _____), hereby agrees to subscribe
for and purchase ______ shares of the common stock covered by such Unit of
Debenture and makes payment herewith in full therefor by assigning the attached
Unit of Debenture to the Company thereby canceling said debt.

                                       Signature:
                                                  -----------------------------

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

                                       Addresses:

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

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

                                        7
<PAGE>   8

                             ASSIGNMENT OF DEBENTURE

FOR VALUE RECEIVED, __________________________________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Unit of
Debenture (Certificate No. _______) with respect to the number of Units of the
debenture thereby set forth below, unto:

<TABLE>
<CAPTION>
NAME OF ASSIGNEE                   ADDRESS                        NO. OF UNITS
----------------                   -------                        ------------
<S>                                <C>                            <C>

</TABLE>

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

                                                     ---------------------------
                                           Witness:
                                                    ----------------------------

                                        8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00015-of-00352.parquet"}]]