EXHIBIT
10.5


 


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 (A)


 


FOR
VALUE RECEIVED, WESTPORT ENERGY HOLDINGS INC., a Delaware corporation (the “Company”), hereby promises to
pay to the order of YA Global Master SPV, Ltd, 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)
RESERVED. 


 


(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.


 


(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.


 




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(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.


 


(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.


 




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(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
	 	 
	If
    to the Holder:	YA
        Global Master SPV, Ltd.

        1012
        Springfield Avenue

        Mountainside,
        NJ 07092

	 	 
	 	Attention:
    Mark Angelo
	 	Telephone:
    (201) 983-8300


 




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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.


 




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(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.


 


(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)
“Bloomberg” means Bloomberg Financial Markets.


 


(c)
“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.


 


(d)
“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).


 


(e)
“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.


 


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


 


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


 




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(h)
“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.


 


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


 


(j)
“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


 


(k)
“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.


 


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


 


(m)
“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.


 


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


 


(o)
“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.


 


(p)
“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.


 


(q)
“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.


 


(r)
“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-28 (A) 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: