EXHIBIT
10.6


 


NEITHER
THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.


 


WESTPORT
ENERGY HOLDINGS INC.


 


Secured
Convertible Debenture


 


Principal Amount: $540,000.00



Debenture
Issuance Date: February 5, 2014


Debenture
Number: CICS-28 (B)


 


FOR
VALUE RECEIVED, WESTPORT ENERGY HOLDINGS INC., a Delaware corporation (the “Company”), hereby promises
to pay to the order of Queensbury, Inc., or its registered assigns (the “Holder”) the amount set out above
as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”)
when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance
with the terms hereof) and to pay interest (“Interest”) on any outstanding Principal at the applicable Interest
Rate from the date set out above as the Debenture Issuance Date (the “Issuance Date”) until the same becomes
due and payable, whether upon an Interest Date (as defined below), the Maturity Date or acceleration, conversion, redemption or
otherwise (in each case in accordance with the terms hereof). This Secured Convertible Debenture (including all debentures issued
in exchange, transfer or replacement hereof, this “Debenture”) was originally issued pursuant to the Securities
Purchase Agreement dated February 5, 2014, (the “Securities Purchase Agreement”) between the YA Global Investments,
L.P. (“YA Global”) and the Company. Certain capitalized terms used herein are defined in Section 17.


 




    	 



    	 



    


 


(1) GENERAL
TERMS


 


(a) Payment
of Principal. The Company shall pay to the Holder in cash all outstanding Principal in twelve consecutive and equal monthly
installments (each in the amount equal to one twelfth of the original Principal Amount of this Debenture), no later than the fifteenth
day of each month, commencing on February 1, 2015. Notwithstanding the foregoing, on a monthly basis the Company shall allocate
fifty percent of the net cash flow from the Allocated Wells towards the repayment of this Debenture and all other Debentures issued
in connection with the Securities Purchase Agreement (on a pro-rata basis based on the amount outstanding under each Debenture
at the time each payment is allocated), and shall pay to the Holder its pro-rata share on the first business day of each calendar
month during which there is positive cash flow from the Allocated Wells, which payment shall applied by the Holder to the outstanding
obligations under this Debenture in the following order: (i) costs incurred by the Holder in connection with collection under
this Debenture (if applicable), (ii) accrued and unpaid interest, and (iii) Principal (to be applied to the most recent Principal
installments first). The “Maturity Date” shall be February 4, 2016, as may be extended at the option of the
Holder (i) in the event that, and for so long as, an Event of Default (as defined below) shall have occurred and be continuing
on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall have occurred and be continuing on the
Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and the failure to cure would result
in an Event of Default. The Company may prepay or redeem any portion of the outstanding Principal without the prior written consent
of the Holder provided that any such payments are made on a pro rata basis to all holders of the debentures issued pursuant to
the Securities Purchase Agreement that are outstanding at the time of each such payment.


 


(b) Interest
Rate and Payment of Interest. Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to
twelve percent (“Interest Rate”). Interest shall be calculated on the basis of a 365-day year and the actual
number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid in eighteen consecutive monthly
payments, no later than the fifteenth day of each month, commencing on August 15, 2014 (or sooner as provided herein) to the Holder
or its assignee in whose name this Debenture is registered on the records of the Company regarding registration and transfers
of Debentures in cash, or, provided that the Equity Conditions are then satisfied, and with the consent of the Holder, converted
into Common Stock at the Conversion Price on the Trading Day it is paid.


 


(c) Security.
This Debenture is secured by a grant of a security interest as set forth in the Securities Purchase Agreement.


 


(2) EVENTS
OF DEFAULT.


 


(a) An
“Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body):


 


(i) the
Company’s failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Debenture
or any other Transaction Document;


 




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(ii) The
Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of
the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the
Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect
relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company
any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty
one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the
Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay,
its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors
with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company
shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or
any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the
foregoing;


 


(iii) The
Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit
agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or
by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring
arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists
or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable;


 


(iv) The
Common Stock shall cease to be quoted or listed for trading, fail to have a bid price or VWAP, or fail to maintain a trading market
on any Primary Market, for a period of five (5) consecutive Trading Days;


 


(v) The
Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 6) unless
in connection with such Change of Control Transaction this Debenture is retired;


 


(vi) the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five
(5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to any holder of the Debentures, including
by way of public announcement, at any time, of its intention not to comply with a request for conversion of any Debentures into
shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);


 


(vii) The
Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business
Days after such payment is due;


 




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(viii) The
Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach
or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction
Document (as defined in Section 17) which is not cured within the time prescribed.


 


(b) During
the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount
of this Debenture, together with interest and other amounts owing in respect thereof, to the date of acceleration shall become
at the Holder’s election, immediately due and payable in cash. Furthermore, in addition to any other remedies, the Holder
shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity
Date at the Conversion Price. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other
notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace
period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such
declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall
affect any subsequent Event of Default or impair any right consequent thereon.


 


(3) ASSIGNMENT
OF RIGHTS UNDER ASSIGNMENT AGREEMENT. The Company acknowledges and agrees that (a) the Holder’s rights and remedies
under this Debenture are subject to the terms and conditions of the Assignment Agreement; and (b) the Holder has irrevocably appointed
YA Global as its agent with the exclusive right to enforce the Holder’s rights and remedies under this Debenture, except
with respect to the enforcement of conversions permitted hereunder.


 


(4) CONVERSION
OF DEBENTURE. This Debenture shall be convertible into shares of the Company’s Common Stock, on the terms and conditions
set forth in this Section 4.


 


(a) Conversion
Right. Subject to the provisions of Section 4(c), at any time or times on or after the Issuance Date, the Holder shall be
entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable
shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common
Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such
Conversion Amount by (y) the Conversion Price (the “Conversion Rate”). The Company shall not issue any fraction
of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any
and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion
of any Conversion Amount.


 


(i) “Conversion
Amount” means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise with respect
to which this determination is being made.


 




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(ii) “Conversion
Price” means, as of any Conversion Date (as defined below) or other date of determination 90% of the lowest daily VWAP
during the 10 consecutive Trading Days immediately preceding the Conversion Date or other date of determination (the “Conversion
Price”). The Conversion Price shall be adjusted from time to time pursuant to the other terms and conditions of this
Debenture.


 


(b) Mechanics
of Conversion.


 


(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”),
the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such
date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the “Conversion Notice”)
to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery
service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to
this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt
of a Conversion Notice (the “Share Delivery Date”), the Company shall (X) if legends are not required to be
placed on certificates of Common Stock and provided that the Transfer Agent is participating in the Depository Trust Company’s
(“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock
to which the Holder shall be entitled to the Holder’s or its designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the
Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall
not bear any restrictive legends unless required pursuant to rules and regulations of the Commission. If this Debenture is physically
surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after
receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding
Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this
Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission
of a Conversion Notice.


 


(ii) Company’s
Failure to Timely Convert. If within three (3) Trading Days after the Company’s receipt of the facsimile copy of a Conversion
Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder’s balance account with
DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder’s conversion of any Conversion
Amount (a “Conversion Failure”), and if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion
that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3)
Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions and other out of pocket expenses, if any) for
the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation
to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the
Closing Bid Price on the Conversion Date.


 




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(iii) Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with
the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion
Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which
notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture.
The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions
or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender
of this Debenture upon conversion.


 


(c) Limitations
on Conversions.


 


(i) Beneficial
Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert
any portion of this Debenture or receive shares of Common Stock as payment of interest hereunder to the extent that after giving
effect to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would beneficially
own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99%
of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as
payment of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may
hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock
in excess of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially
owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction
contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the
limitation contained in this Section applies, the determination of which portion of the principal amount of this Debenture is
convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal
amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would
result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall
honor the conversion for the maximum principal amount permitted to be converted on such Conversion Date in accordance with Section
4(a) and, any principal amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under
this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon
not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.


 




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(d) Other
Provisions.


 


(i) The
Company shall at all times reserve and keep available out of its authorized Common Stock the full number of shares of Common Stock
issuable upon conversion of all outstanding amounts under this Debenture; and within three (3) Business Days following the receipt
by the Company of a Holder’s notice that such minimum number of Underlying Shares is not so reserved, the Company shall
promptly reserve a sufficient number of shares of Common Stock to comply with such requirement.


 


(ii) All
calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.


 


(iii) The
Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock
solely for the purpose of issuance upon conversion of this Debenture and payment of interest on this Debenture, each as herein
provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less
than such number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions set
forth herein) upon the conversion of the outstanding principal amount of this Debenture and payment of interest hereunder. The
Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized,
issued and fully paid, nonassessable and, if the Underlying Shares Registration Statement has been declared effective under the
Securities Act, registered for public sale in accordance with such Underlying Shares Registration Statement.


 


(iv) Nothing
herein shall limit a Holder’s right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein
for the Company ’s failure to deliver certificates representing shares of Common Stock upon conversion within the period
specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide
other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any
other Section hereof or under applicable law.


 


(5) Adjustments
to Conversion Price


 


(a) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any
Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets
with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate
provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder’s
option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which
the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the
Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility
of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or
other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in
such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights
for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate
with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the
Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be
applied without regard to any limitations on the conversion or redemption of this Debenture.


 




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(b) Whenever
the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting
forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.


 


(c) In
case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale
by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related
transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of
this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to
be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such
aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales
would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder
a convertible Debenture with a principal amount equal to the aggregate principal amount of this Debenture then held by such Holder,
plus all accrued and unpaid interest and other amounts owing thereon, which such newly issued convertible Debenture shall have
terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights
and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued.
In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible
Debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such
transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The
terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive
the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision
shall similarly apply to successive such events.


 


(6) REISSUANCE
OF THIS DEBENTURE.


 


(a) Transfer.
If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the
registered transferee or assignee, representing the outstanding Principal being transferred by the Holder (along with any accrued
and unpaid interest thereof) and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance
with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by
acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion
or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal
stated on the face of this Debenture.


 




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(b) Lost,
Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss,
theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking
by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture,
the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding
Principal.


 


(c) Debenture
Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding
Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principal as is designated
by the Holder at the time of such surrender.


 


(d) Issuance
of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such
new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture,
the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c),
the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection
with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance
of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the
Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture, and (v) shall represent accrued
and unpaid Interest from the Issuance Date.


 


(7) NOTICES. Any
notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or
(iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed
to the party to receive the same. The addresses and facsimile numbers for such communications shall be:


 


	If
    to the Company, to:	Westport
    Energy Holdings Inc.
	 	100
    Overlook Capital, 2nd Floor
	 	Princeton,
    NJ 08540
	 	Attn:
    Chief Executive Officer
	 	Telephone:
    (609) 498-7029
	 	Facsimile:
    (609) 498-7029



 



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	If
    to the Holder:	Queensbury,
    Inc.
	 	23501
    Cinco Ranch Blvd., B-225
	 	Katy,
    TX 77494
	 	Attention:
    Raffi Attar
	 	Telephone:
    (832) 247-0147


 


or
at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified
by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation
of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.


 


(8) Except
as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute
and unconditional, to pay the principal of, interest and other charges (if any) on, this Debenture at the time, place, and rate,
and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company. As long as this Debenture
is outstanding, the Company shall not and shall cause their subsidiaries not to, without the consent of the Holder, (i) amend
its certificate of incorporation, bylaws or other charter documents so as to adversely affect any rights of the Holder; (ii) repay,
repurchase or offer to repay, repurchase or otherwise acquire shares of its Common Stock or other equity securities; or (iii)
enter into any agreement with respect to any of the foregoing.


 


(9) This
Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the
terms hereof.


 


(10) No
indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to interest, damages or upon
liquidation or dissolution or otherwise. Without the Holder’s consent, the Company will not and will not permit any of their
subsidiaries to, directly or indirectly, enter into, create, incur, assume or suffer to exist any indebtedness of any kind, on
or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits
there from that is senior in any respect to the obligations of the Company under this Debenture.


 




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(11) This
Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to
conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey
sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey
in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.


 


(12) If
the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for
all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any
action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout,
and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting
any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or
appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.


 


(13) Any
waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist
upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must
be in writing.


 


(14) If
any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and
if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and
circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws
governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate
of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Debenture as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this
indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted
to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.


 


(15) Whenever
any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day.


 


(16) THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE PARTIES’ ACCEPTANCE OF THIS AGREEMENT.


 




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(17) CERTAIN
DEFINITIONS  For purposes of this Debenture, the following terms shall have the following meanings:


 


(a) “Allocated
Wells” shall have the meaning assigned to it in the Securities Purchase Agreement.


 


(b) “Assignment
Agreement” means the agreement dated December __, 2013 between the Holder and YA Global pursuant to which the Holder
acquired this Debenture.


 


(c) “Bloomberg”
means Bloomberg Financial Markets.


 


(d) “Business
Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or
a day on which banking institutions are authorized or required by law or other government action to close.


 


(e) “Change
of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through
legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of
the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder
of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement
at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by
a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are
serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority
of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent
(50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or
into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound,
providing for any of the events set forth above in (a), (b) or (c).


 


(f) “Closing
Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange
which the Common Stock is then listed as quoted by Bloomberg.


 


(g) “Convertible
Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable
or exchangeable for Common Stock.


 


(h) “Commission”
means the Securities and Exchange Commission.


 




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(i) “Common
Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares
may hereafter be changed or reclassified.


 


(j) “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


 


(k) “Fundamental
Transaction” means any of the following: (1) the Company effects any merger or consolidation of the Company with
or into another Person and the Company is the non-surviving company (other than a merger or consolidation with a wholly owned
subsidiary of the Company for the purpose of redomiciling the Company), (2) the Company effects any sale of all or substantially
all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or
another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property


 


(l) “Original
Issue Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless
of the number of instruments, which may be issued to evidence such Debenture.


 


(m) “Person”
means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision
thereof or a governmental agency.


 


(n) “Primary
Market” means any of (a) the NYSE Amex (b) the New York Stock Exchange, (c) the Nasdaq Stock Market, (d) the Nasdaq
Capital Market, (e) OTC Bulletin Board and (f) OTC Markets Group Inc. (including any of the OTCQX, OTCQB and the OTC Pink) or
(f) any successor to any of the foregoing markets or exchanges.


 


(o) “Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


(p) “Trading
Day” means a day on which the shares of Common Stock are quoted or traded on a Primary Market on which the shares of
Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted,
then Trading Day shall mean a Business Day.


 


(q) “Transaction
Document(s)” shall mean this Debenture, along with the Securities Purchase Agreement, and any other documents or agreements
entered into in connection with the foregoing.


 


(r) “Underlying
Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as payment of interest in accordance
with the terms hereof.


 


(s) “VWAP”
means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market
as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or,
if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such security as reported in the “pink sheets”
by Pink Sheets LLC.


 


[Signature
Page Follows]


 




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IN
WITNESS WHEREOF, the Company has caused this Secured Convertible Debenture to be duly executed by a duly authorized officer
as of the date set forth above.


 


	 	COMPANY:
	 	WESTPORT ENERGY HOLDINGS INC.
	 	 	 
	 	By:	 
	 	Name:	Stephen
    Schoepfer 
	 	Title:	Chief
    Executive Officer



 



    	 



    	 



    


 


EXHIBIT
I


CONVERSION
NOTICE


 


(To
be executed by the Holder in order to Convert the Debenture)


 


TO: 


 



The
undersigned hereby irrevocably elects to convert $____________________ of the principal amount of Debenture No. CICS-27 (B) into Shares of Common
Stock of WESTPORT ENERGY HOLDINGS INC., according to the conditions stated therein, as of the Conversion Date written below.


 


	Conversion
    Date:	 	 
	Conversion
    Amount to be converted:	 	$
	Conversion
    Price:	 	$
	Number
    of shares of Common Stock to be issued:	 	 



 

Please
issue the shares of Common Stock in the following name and to the following address:


 


Issue
to:


 



	Authorized
    Signature:	 	 
	Name:	 	 
	Title:	 	 
	Broker
    DTC Participant Code:	 	 
	Account
    Number: