 

EXHIBIT 10.1

 

STRICT FORECLOSURE AGREEMENT

 

This STRICT FORECLOSURE AGREEMENT made as of the 4th day of November, 2016 among
WESTPORT ENERGY LLC, a Delaware limited liability company with a principal place
of business located at 100 Overlook Center, 2nd Floor, Princeton, NJ 08540
(“Westport”), WESTPORT ENERGY ACQUISITION INC., a Delaware corporation with a
principal place of business located at 100 Overlook Center, 2nd Floor,
Princeton, NJ 08540 (“WEA”), WESTPORT ENERGY HOLDINGS INC., a Delaware
corporation with a principal place of business located at 100 Overlook Center,
2nd Floor, Princeton, NJ 08540 (“Debtor”) (Westport, WEA and Debtor are referred
to, collectively, as the “Debtor Parties”) and COOS BAY ENERGY LLC, a Nevada
limited liability company with a principal place of business located at 1001 SW
5th Avenue, Suite 1100, Portland, OR 97204 (“Coos Bay Energy”), YA GLOBAL
INVESTMENTS, L.P., a Cayman Islands exempt limited partnership with a principal
place of business located at 1012 Springfield Avenue, Mountainside, NJ 07092
(“YA Global”), QUEENSBURY INC., a corporation with a principal place of business
located at 23501 Cinco Ranch Blvd., B-225, Katy TX 77494 (“Queensbury”) and
MOUNTAINVILLE LTD., a corporation with a principal place of business located at
62 Potterstown Road, Lebanon, NJ 08833 (“Mountainville”) (YA Global, Queensbury
and Mountainville are referred to, collectively, as the “Lenders”). The Debtor
Parties and the Lenders shall each be referred to herein as a “Party” and
collectively as the “Parties.”

 

INTRODUCTORY STATEMENT

 

  A. Debtor owns all of the outstanding shares of its direct subsidiary, WEA,
and WEA owns 100% of the outstanding membership interests of its direct
subsidiary, Westport, subject only to the security interests and liens of the
Secured Party.         B. Westport owns all assets related to its coalbed
methane exploration and development operations in Coos Bay, Oregon (the “Coos
Bay Project”), subject only to the security interests and liens of the Secured
Party.         C. Westport’s operations in connection with the Coos Bay Project
are the only operations of Westport, and Debtor and WEA have no operations other
than those operations carried on by Westport in connection with the Coos Bay
Project.         D. YA Global, Queensbury and Mountainville, are members of Coos
Bay Energy and the holders of certain senior secured convertible debentures in
the aggregate original principal amount of $40,768,492, as set forth in Schedule
A (the “Debentures”), which were issued by the Debtor in order to fund
Westport’s operations in connection with the Coos Bay Project.         E. To
secure the obligations under the Debentures, the Secured Party and the Debtor
Parties also entered into certain securities purchase agreements, guarantees,
pledge and escrow agreements and leasehold deeds of trust, as set forth in
Schedule B (collectively, the “Security Documents”).

 

   

 

 

  F. Pursuant to the Security Documents, the Debtor Parties pledged, as
collateral to secure the obligations under the Debentures, and granted YA Global
a first-priority security interest and lien upon (i) all outstanding shares of
WEA (the “WEA Equity Collateral”); (ii) 100% of the membership interest of
Westport, which membership interest is wholly-owned by WEA (the “Westport Equity
Collateral”); and (iii) all of Westport’s assets directly and indirectly related
to its Coos Bay Project (the “Westport Asset Collateral”), all as more
particularly identified in the Security Documents (collectively, the
“Collateral”).         G. Pursuant to separate assignment agreements, YA Global
assigned portions of certain Debentures held by YA Global to Queensbury and
Mountainville and pursuant to the respective assignment agreements the parties
agreed that YA Global would act as collateral agent for Queensbury and
Mountainville in connection with any actions to be taken by the Lenders with
respect to the Collateral (YA Global individually, and as collateral agent for
Queensbury and Mountainville, is referred to as the “Secured Party”).         H.
Westport also entered into Royalty Agreements with YA Global and Queensbury
dated February 5, 2014, pursuant to which YA Global and Queensbury were each
granted 12.5% royalties on the “Net Sales” from certain wells at the Coos Bay
Project (the “Royalty Agreements”).         I. As of the close of business on
September 12, 2016, the aggregate outstanding principal balance owed to the
Lenders pursuant to the Debentures was $34,583,478, plus accrued and unpaid
interest and accrued and unpaid fees, expenses and charges (the “Obligations”),
which Obligations are immediately due and payable.         J. Under the terms of
the Debentures, any “Event of Default” under one Debenture constitutes an “Event
of Default” under the other Debentures, thus giving the Lenders and the Secured
Party the right to exercise all applicable rights and remedies under all of the
Debentures, the Security Documents, the UCC and other applicable law.         K.
Debtor has defaulted under the Debentures and the Security Documents by failing
to make required payments of principal and interest by the applicable due dates,
and the Lenders and the Secured Party thus have the right to exercise all
applicable rights and remedies under the Debentures, the Security Documents, the
UCC and other applicable law;         L. On September 17, 2016 the Lenders
delivered to the Debtor Parties default notices with respect to the Debentures,
which notices (i) indicated that the Debtor was in default under Section 2 (a)
(i) of the Debentures for failure to pay principal amounts, accrued interest and
other amounts when and as due under the Debentures and the Security Documents;
(ii) indicated that the Debtor was in default under Section 2 (a) (iii) of the
Debentures, as a result of defaults in our obligations under other Debentures
and such indebtedness becoming or being declared payable; (iii) demanded
immediate payment of all Obligations due and owing to the Lenders pursuant to
the Debentures and Security Documents (the “Default Notices”) and (iv) proposed
that Debtor transfer, convey, assign and surrender to Coos Bay Energy, as
nominee for the Lenders, all of Debtor’s possession, right, title and interest
in the Transferred Collateral (as defined below) if Debtor and/or the other
Debtor Parties are unable to make the payments demanded in the Default Notices.

 

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  M. Upon receipt of the Default Notices, Debtor informed the Lenders that it
was unable to pay its Obligations pursuant to the Default Notices. In addition,
Debtor has admitted in writing that it is generally unable to pay its debts as
they become due, which constitutes a further default under Section 2 (a) (ii) of
the Debentures and the Security Documents. Specifically, Debtor filed a Current
Report on Form 8-K on September 21, 2016, and stated, among other matters: ” . .
. our existing capital resources are not sufficient to pay the remaining
liabilities of Westport Energy Holdings, Inc. and of its subsidiaries, generally
as they will become due”;         N. In order to avoid an adversarial process
that would further burden the Debtor Parties, the Debtor Parties agreed that
Debtor would transfer, convey, assign and surrender to Coos Bay Energy, as the
nominee for the Lenders, all of Debtor’s possession, right, title and interest
in the WEA Equity Collateral, free and clear of all liens, claims, interests and
encumbrances, in full satisfaction of the Debtor Parties’ Obligations in
accordance with and subject to the provisions set forth more fully below (the
“Transferred Collateral”);         O. The Transferred Collateral, which includes
Debtor’s (i) direct interest in the WEA Equity Collateral; (ii) indirect
interest in the Westport Equity Collateral; and (iii) indirect interest in the
Westport Asset Collateral, is described in further detail in Schedule C;        
P. The Lenders agree to accept Debtor’s transfer of the Transferred Collateral
to Coos Bay Energy, in full satisfaction of the Debtor Parties’ Obligations in
accordance with and subject to the provisions set forth more fully below; and  
      Q. On the Effective Date, (i) title to the Transferred Collateral will be
transferred to Coos Bay Energy, as nominee for the Lenders and (ii) the Secured
Party’s security interests and liens on the Collateral will be fully
extinguished.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereby agree as follows:

 

1. RECITALS INCORPORATED. The Introductory Statement and prefatory phrases and
paragraphs set forth above are hereby incorporated in full, and made a part of,
this Agreement.

 

2. RULES OF CONSTRUCTION. All incorporations by reference of provisions from
other agreements are incorporated as if such provisions were fully set forth
into this Agreement, and include all necessary definitions and related
provisions from those other agreements. All references to the “UCC” or “Uniform
Commercial Code” are deemed to be references to the Uniform Commercial Code as
in effect from time to time in the State of New Jersey; provided, however, that
if a term is defined in Article 9 of the Uniform Commercial Code differently
than in another Article thereof, the term shall have the meaning set forth in
Article 9 of the UCC; provided further that, if by reason of mandatory
provisions of law, perfection, or the effect of perfection or non-perfection, of
a security interest in any Transferred Collateral or the availability of any
remedy hereunder is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New Jersey, “Uniform Commercial Code” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such perfection or effect of perfection or
non-perfection or availability of such remedy, as the case may be. Unless the
context in which it is used otherwise clearly requires, all references to days,
weeks and months mean calendar days, weeks and months.

 

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3. CONDITION OF EFFECTIVENESS. This Agreement shall be null and void and of no
legal effect if the Debtor Parties do not execute and deliver this Agreement to
the Lenders on or before November 4, 2016 (the “Effective Date”), unless such
date is extended by the Lenders in writing.

 

4. TRANSFER OF TRANSFERRED COLLATERAL. Pursuant to Section 9-620 of the UCC, the
Debtor Parties hereby voluntarily convey, assign and relinquish to Coos Bay
Energy (as nominee of the Lenders) any and all of their legal, equitable and
beneficial right, title and interest in and to the Transferred Collateral,
including all proceeds thereof, wherever located, and cash proceeds relating to
the Transferred Collateral presently in the possession or control of the Debtor
Parties.

 

5. ACCEPTANCE OF TRANSFERRED COLLATERAL. Subject to the Debtor Parties’
fulfillment of their obligations under this Agreement, the Secured Party and the
Lender hereby accept the transfer to Coos Bay Energy (as nominee of the Lenders)
from the Debtor Parties pursuant to Section 9-620 of the UCC and other
applicable laws, of all of the Debtor’s possession, right, title and interest in
and to the Transferred Collateral in full satisfaction of all of the Debtor
Parties’ Obligations under the Debentures in amounts allocated as follows: (i)
$33,570,532 in principal plus related accrued and unpaid interest and expenses
will be extinguished on account of the transfer, conveyance, assignment and
surrender of the YA Global portion of the Transferred Collateral to Coos Bay
Energy; (ii) $540,000 in principal plus related accrued and unpaid interest and
expenses will be extinguished on account of the transfer, conveyance, assignment
and surrender of the Queensbury portion of the Transferred Collateral to Coos
Bay Energy and (iii) $472,946 in principal plus related accrued and unpaid
interest and expenses will be extinguished on account of the transfer,
conveyance, assignment and surrender of the Mountainville portion of the
Transferred Collateral to Coos Bay Energy

 

6. EFFECT OF TRANSFER AND ACCEPTANCE OF TRANSFERRED COLLATERAL. (a) The Parties
acknowledge and agree that the transfer and acceptance of the Transferred
Collateral shall be in full satisfaction of the Obligations and, as such, is in
full satisfaction of the Obligations pursuant to Section 9-620 et seq. of the
UCC. After Coos Bay Energy has received the Transferred Collateral as provided
in Section 5 above, the (i) Debentures shall be marked satisfied and surrendered
to the Debtor; (ii) Secured Party’s security interests and liens on the
Collateral shall be fully extinguished; and (iii) the Royalty Agreements shall
be terminated.

 

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(b) To the extent not waived in writing to the sole satisfaction of the Lenders,
the Lenders have sent or will send notices of the transfer of the Transferred
Collateral contemplated hereby to (i) all parties entitled thereto under
applicable provisions of the UCC and (ii) those parties listed on Schedule D
hereto (the “Notice Parties”). The Debtor Parties: (a) agree that they have
received notice sufficient for compliance with Sections 9-620 and 9-621 of the
UCC and, in the alternative, hereby expressly waive (i) any requirement for
receipt of such notice and any right to notification of sale, transfer,
conveyance or surrender of the Transferred Collateral pursuant to Sections 9-620
and 9-621 of the UCC or otherwise, and (ii) any remedies, rights, defenses or
actions the Debtor Parties might have as a result of failure to have received
such notice; (b) waives the right to redeem the Transferred Collateral under
Section 9-623 of the UCC or otherwise; (c) waive any right to object to the
sale, transfer, conveyance or surrender of the Transferred Collateral pursuant
to Section 9-620 of the UCC or otherwise; (d) waives any obligation of the
Secured Party or Lenders to dispose of the Transferred Collateral; (e) waives
any other right, whether legal or equitable, which the Debtor Parties may
possess in and to the Transferred Collateral; and (f) agrees that the
transactions contemplated herein are commercially reasonable. The Debtor Parties
acknowledge and agree that the waivers set forth in this Section and elsewhere
in this Agreement constitute material consideration for the agreement of the
Secured Party and Lenders to execute and deliver this Agreement.

 

(c) This Agreement shall not constitute an agreement to assign (now or at any
time hereafter) any claim, contract, license, lease, commitment, sale or
purchase order or any claim or right or any benefit arising thereunder or
resulting therefrom if an attempted transfer or assignment thereof (now or at
any time hereafter), without the consent of a third party thereto, would
constitute a breach thereof or in any way affect the rights of the Secured Party
or the Lenders. If such consent is not obtained, or if an attempted transfer,
sublease or assignment thereof (now or at any time hereafter) would be
ineffective or would affect the rights of the Secured Party or the Lender
hereunder so that the Secured Party or Lenders would not, in fact, receive all
such rights, the agreements of Westport to convey these rights to Coos Bay
Energy shall remain in full force and effect for so long after the closing as is
necessary to convey those rights, and Westport will use its best efforts to
convey such rights, and until conveyed, will cooperate with the Secured Party
and the Lenders to the extent reasonably practicable to provide for the Secured
Party and the Lenders the benefits under any such claims, contracts, licenses,
leases, commitments, sales or purchase orders or any claim or right or any
benefit arising thereunder or resulting therefrom, including enforcement for the
benefit of the Secured Party or the Lenders of any and all rights of Westport
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise, with costs of litigation, if any, borne solely by the
Secured Party or the Lenders. The Secured Party and the Lenders shall, as
Westport reasonably requests, cooperate fully with Westport to obtain such
releases of Westport (it being understood that a failure to obtain any such
release shall not be required hereby and shall not excuse Westport, or any other
Debtor Parties, for its obligations hereunder); and any transfer, sublease, or
assignment to Coos Bay Energy by Westport of any Transferred Collateral which
shall require the consent or approval of any third party (now or at any time
hereafter), shall be made subject to such consent or approval being obtained.

 

7. SEGREGATION AND DELIVERY OF TRANSFERRED COLLATERAL BY WESTPORT. The Debtor
shall hold for the benefit of, and in trust for, the Secured Party and the
Lenders all income, including all income received by or on behalf of the Debtor
by a third party, with respect to all Transferred Collateral. All such income
constitutes Transferred Collateral and must be remitted immediately by Westport
or such third party directly to Coos Bay Energy and must not be commingled with
other property of the Debtor Parties or any Affiliate of the Debtor Parties.

 

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8. AUTHORIZATION. The Debtor Parties and the Lenders each represent and warrant
as follows:

 

(a) That it has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder;

 

(b) That this Agreement has been duly executed and delivered by it and
constitutes its valid and legally binding obligation enforceable in accordance
with its terms; and

 

(c) It is in good standing under the laws of the state in which it was
organized, and has obtained all consents and other approvals necessary for the
execution, delivery and performance of this Agreement.

 

9. FURTHER ASSURANCES AND ASSISTANCE. (a) Upon prior written request by any of
the Lenders, and at the Lenders’ expense, the Debtor Parties agree to perform
any and all acts and execute any and all documents in such manner and at such
location as may be required by any of the Lenders in its discretion to protect,
perfect or enforce any of the rights, privileges and entitlements granted or
promised to the Secured Party or the Lenders under this Agreement, including,
without limitation, executing and delivering such deeds, assignments, bills of
sale and other instruments of sale, transfer, conveyance, assignment and
delivery covering the Transferred Collateral, or any part thereof, executed by
one or more of the Debtor Parties or other appropriate parties, as any of the
Lenders has reasonably requested to assure the full and effective sale,
transfer, conveyance, assignment and delivery to Coos Bay of the Transferred
Collateral, free and clear of any rights and claims of any third parties.

 

(b) If any of the Debtor Parties shall have failed, following 5 days’ written
notice from a Lender, to perform any act or execute any document referred to in
this Section 9 (a) above, the Lenders shall have the right to do so in the place
and stead of the Debtor Parties, as its lawfully appointed attorney-in-fact,
coupled with an interest, and the Debtor Parties hereby irrevocably appoint YA
Global as its attorney-in-fact for such purposes.

 

(c) The Debtor Parties shall cooperate with the Secured Party and the Lenders in
any proceedings involving the Transferred Collateral, including providing such
information as the Secured Party or Lenders may reasonably request, provided
that the Secured Party or Lenders shall reimburse the Debtor Parties for any
reasonable costs or expenses incurred by the Debtor Parties in providing such
cooperation.

 

10. DEBTOR PARTIES’ REPRESENTATIONS AND WARRANTIES. The Debtor Parties represent
and warrant to the Lenders that:

 

(a) Westport is the lawful owner of, has good legal and beneficial title to, and
has the right to assign its right, title and interest in and to the Transferred
Collateral;

 

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(b) The gas leases, permits and other agreements (the “Westport Agreements”)
that are part of the Transferred Collateral are valid and subsisting agreements,
which are in full force and effect;

 

(c) The Debtor Parties are not aware of any defaults or acts by Westport under
the Westport Agreements that permit, or would permit, any parties to terminate
the Westport Agreements;

 

(d) Except for any liens, security interests or other encumbrances against the
Transferred Collateral created in connection with the Debentures, there are no
liens, security interests or other encumbrances affecting the Transferred
Collateral;

 

(e) There is no litigation or other proceedings pending or threatened against
the Debtor Parties or the Transferred Collateral that would have a material
adverse effect on this Agreement or the transfer and acceptance of the
Transferred Collateral hereunder;

 

(f) The Debentures and the Security Documents constitute legal, valid and
binding agreements and obligations of the Debtor Parties, as applicable,
enforceable in accordance with their terms, and the Secured Party and the
Lenders are presently entitled to exercise enforcement rights and remedies under
the Debentures and the Security Documents;

 

(g) The Debtor Parties agree that they do not and shall not dispute the
validity, priority, enforceability or extent of the Secured Party’s liens and
security interests in any part of the Transferred Collateral, nor the Secured
Party’s or Lenders entitlement to the immediate possession of the Transferred
Collateral, in any judicial, administrative or other proceeding;

 

(h) The Debtor Parties knowingly and freely have entered into this Agreement
without any duress, coercion or undue influence exerted by or on behalf of the
Secured Party, the Lenders or any of their affiliates;

 

(i) The execution, delivery and performance by the Debtor Parties of this
Agreement and the performance under the Debentures do not and will not
contravene: (i) the Debtor Parties’ organizational documents; (ii) any law,
judgment, award, rule, regulation, order, decree, writ or injunction of any
court, legislature, agency, board, bureau, commission, instrumentality of any
legislative, administrative or regulatory body (in each case whether federal,
state, local, foreign or domestic or any agreement); or (iii) any agreement,
instrument, or indenture, binding on or otherwise affecting the Debtor Parties;

 

(j) None of the Lenders or Secured Party has breached any obligation to the
Debtor Parties in connection with the Debentures, the Security Documents, or any
other agreement, as applicable, (i) between or among one or more of the Debtor
Parties on the one hand and one or more of the Lenders or the Secured Party on
the other hand and the Lenders and the Secured Party have fully performed all
obligations they may have had or now have to the Debtor Parties;

 

(k) No party other than Westport, the Secured Party and the Lenders has any
other claim or interest in the Transferred Collateral, and that, upon execution
hereof, the Secured Party and the Lenders (though its nominee, Coos Bay Energy)
shall have full legal title to the Transferred Collateral and are entitled to
the immediate transfer by Westport to Coos Bay Energy of the Transferred
Collateral free and clear of any and all liens, claims, interests and
encumbrances.

 

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11. WAIVER/RELEASE OF CLAIMS BY DEBTOR PARTIES. Effective upon the date hereof,
the Debtor Parties and their respective officers, directors and managers
(collectively, the “Debtor Releasors”), hereby (a) irrevocably and
unconditionally release and forever discharge the Lenders and their officers,
agents, professionals, employees, attorneys, representatives, affiliates,
subsidiaries, directors, predecessors, successors and assigns, and each of them
(collectively, the “Secured Releasees”), from any and all rights, claims,
remedies and causes of action relating to the Notices of Default and this
Agreement, whether known or unknown, liquidated or unliquidated, contingent or
absolute, accrued or unaccrued, matured or unmatured, insured or uninsured,
joint or several, determined or undetermined, determinable or otherwise (the
“Released Claims”) and (b) covenant not to sue any of the Releasees on account
of any Released Claims. Notwithstanding anything herein to the contrary, nothing
herein shall constitute a waiver or release by any of the Releasors in favor of
any of the Releasees of any of the terms and conditions of this Agreement.

 

12. WAIVER/RELEASE OF CLAIMS BY LENDERS. Effective upon the date hereof, the
Lenders hereby (a) irrevocably and unconditionally release and forever discharge
the Debtors Parties and their officers, agents, professionals, employees,
attorneys, representatives, affiliates, subsidiaries, directors, managers,
predecessors, successors and assigns, and each of them (collectively, the
“Debtor Releasees”), from any and all rights, claims, remedies and causes of
action relating to the Notice of Default and this Agreement whether known or
unknown, liquidated or unliquidated, contingent or absolute, accrued or
unaccrued, matured or unmatured, insured or uninsured, joint or several,
determined or undetermined, determinable or otherwise (the “Released Claims”)
and (b) covenant not to sue any of the Debtor Releasees on account of any
Released Claims. Notwithstanding anything herein to the contrary, nothing herein
shall constitute a waiver or release by any of the Lenders in favor of any of
the Debtor Releasees of any of the terms and conditions of this Agreement,
including but not limited to, the accuracy of (i) the representations and
warranties made in this Agreement, (ii) the information set forth in the
Schedules to this Agreement, and (iii) the information set forth in any public
filing of the Debtor.

 

13. ASSURANCE OF NO ASSIGNMENT. Except as otherwise disclosed herein, each Party
represents that it owns and has not assigned or transferred to any other Person
or entity any or all of its rights, property interests, and claims as are being
altered, transferred or otherwise affected by this Agreement including, without
limitation, the Transferred Collateral and the Released Claims.

 

14. REAFFIRMATION. The Debtor parties confirm to the Lenders that until the
Effective Date, the Obligations are and continue to be secured by each security
interest granted by the Debtor Parties in favor of the Secured Party under the
Debentures and the Security Documents.

 

15. INSOLVENCY FILINGS. The Debtor Parties each covenant that it shall not
include any of the Transferred Collateral in any schedules of assets to be filed
in connection with any subsequent petition filed by or against it under Title 11
of the United States Code (the “Bankruptcy Code”) or any similar proceeding
under applicable state or federal law.

 

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16. REVIVAL OF OBLIGATIONS. Notwithstanding any other provision of this
Agreement, and in the event any of the Debtor Parties becomes a debtor in a case
under Bankruptcy Code, subject to such Debtor Party’s rights under the
Bankruptcy Code, in the event that the transfer of the Transferred Collateral,
or any part thereof, is subsequently invalidated, declared to be a fraudulent or
preferential transfer, set aside and/or required to be repaid to a trustee,
receiver or any other party, whether under any bankruptcy law, state or federal
law, common law or equitable cause, or otherwise, then the Obligations under the
Debentures and the Security Documents, to the extent they remain unsatisfied
under the terms of the Debentures and the Security Documents, shall be revived
and reinstated and shall continue in full force and effect until the Lenders
have received payment in full on such Obligations.

 

17. MISCELLANEOUS.

 

(a) No Third-Party Beneficiaries. The terms and provisions of this Agreement are
intended solely for the benefit of the parties hereto and their respective
successors and permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person or entity, and this
Agreement does not confer any such rights.

 

(b) Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes any
prior understandings, agreements or representations by or between the parties
hereto, written or oral, with respect to such subject matter.

 

(c) Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the parties named herein and their respective successors and
permitted assigns. No party hereto may assign either this Agreement or any of
its rights, interests or obligations hereunder without the prior written
approval of the other party. Any such purported assignment in violation of the
above provisions shall be null and void.

 

(d) Drafting. The parties have participated jointly in the negotiation and
drafting of this Agreement and, in the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.

 

(e) Notices. All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
against written acknowledgement of receipt or by facsimile transmission or
mailed (by registered or certified mail, postage prepaid, return receipt
requested) or delivered by reputable overnight courier, fee prepaid, to the
parties hereto at the addresses or facsimile numbers set forth in Schedule D.
Any party hereto may change the address to which notices, requests, demands,
claims and other communications hereunder are to be delivered by giving the
other party hereto notice in the manner set forth herein.

 

(f) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of [New Jersey], without giving effect to
any choice of law or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the state of New Jersey.

 

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(g) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless such amendment is in writing and signed by each of the
parties hereto. No waiver by any party hereto of any default, misrepresentation
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence. No waiver shall be valid
unless such waiver is in writing and signed by the party against whom such
waiver is sought to be enforced.

 

(h) Severability. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under any present or future Law, and if the rights or
obligations of any party hereto under this Agreement will not be materially and
adversely affected thereby, (a) such provision will be fully severable, (b) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms of such illegal,
invalid or unenforceable provision as may be possible without materially and
adversely affecting any of the parties hereto.

 

(i) Specific Performance. The parties hereto agree that irreparable damage would
occur in the event that any provision of this Agreement was not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof in addition to any other remedy
available to them at law or equity. In addition, the parties hereto agree to
WAIVE ANY RIGHTS TO A TRIAL BY JURY relating to any disputes arising from
performance of obligations pursuant to the provisions of this Agreement.

 

(j) Headings. The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

(k) Counterparts. This Agreement may be executed in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.

 

(l) Good Faith and Consultation with Legal Counsel. The Debtor Parties and the
Lenders have had access to and the opportunity to consult with independent legal
counsel. Each of the Debtor Parties and the Lenders acknowledges having read all
of the terms of this Agreement and enters into the Agreement voluntarily and
without duress.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

  10

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

WESTPORT ENERGY HOLDINGS INC.   WESTPORT ENERGY ACQUISITION INC.           By:
/s/ Stephen J. Schoepfer    By:  /s/ Stephen J. Schoepfer Name: Stephen J.
Schoepfer   Name: Stephen J. Schoepfer Title: Chief Executive Officer   Title:
President           WESTPORT ENERGY LLC   COOS BAY ENERGY LLC           By: /s/
Stephen J. Schoepfer    By:  /s/ Matthew Beckman Name: Stephen J. Schoepfer  
Name: Matthew Beckman Title: Manager   Title: Manager           YA GLOBAL
INVESTMENTS, L.P.   QUEENSBURY INC.           By: Yorkville Advisors LLC      
Its: Investment Manager   By: /s/ Raffi Attar        Name: Raffi Attar By: /s/
Mark Angelo    Title: President Name: Mark Angelo   Title: Portfolio Manager    
        MOUNTAINVILLE LTD.                 By: /s/ Gordon I. Miller        Name:
Gordon I. Miller       Title: Investment Manager      

 

  11

 

 

SCHEDULE A

 

DEBENTURES

 

Debenture
ID  Debenture Holder  Issuance
Date  Maturity
Date  Interest
Rate   Original Principal Amount   Outstanding Principal Amount  CCP-3  YA
Global  10/12/2005  12/31/2010   5.00%  $1,475,000   $592,360  CCP-4  YA Global 
2/8/2006  12/31/2010   5.00%  $3,050,369   $920,666  GSHF-3-1  YA Global 
6/26/2007  12/31/2010   12.00%  $570,000   $570,000  CICS-5  YA Global 
6/30/2009  12/31/2011   12.00%  $4,000,000   $3,249,501  CICS-6  YA Global 
8/17/2010  8/31/2012   9.00%  $27,640,712   $25,218,340  CICS-7  YA Global 
8/17/2010  8/12/2012   9.00%  $177,054   $177,054  CICS-7a  Mountainville 
12/31/13  8/1/2015   9.50%  $472,946   $472,946  CICS-8  YA Global  8/25/2011 
8/31/2012   9.00%  $120,000   $120,000  CICS-9  YA Global  12/6/2011 
12/31/2013   9.00%  $910,000   $910,000  CICS-10  YA Global  12/6/2011 
12/31/2013   9.00%  $172,411   $172,411  CICS-11  YA Global  5/31/2012 
12/31/2013   9.00%  $200,000   $200,000  CICS-12  YA Global  8/13/2012 
12/31/2013   9.00%  $25,000   $25,000  CICS-13  YA Global  8/29/2012 
12/31/2013   9.00%  $25,000   $25,000  CICS-14  YA Global  9/7/2012  12/31/2013 
 9.00%  $50,000   $50,000  CICS-15  YA Global  10/2/2012  12/31/2013   9.00% 
$50,000   $50,000  CICS-16  YA Global  11/6/2012  12/31/2013   9.00%  $75,000  
$75,000  CICS-17  YA Global  12/1/2012  12/31/2013   9.00%  $100,000   $100,000 
CICS-18  YA Global  1/15/2013  12/31/2013   9.00%  $50,000   $50,000  CICS-19 
YA Global  2/12/2013  12/31/2013   9.00%  $50,000   $50,000  CICS-20  YA Global 
3/21/2013  12/31/2013   9.00%  $50,000   $50,000  CICS-21  YA Global  5/14/2013 
12/31/2013   9.00%  $25,000   $25,000  CICS-22  YA Global  6/1/2013  12/31/2013 
 9.00%  $200,000   $200,000  CICS-23  YA Global  6/14/2013  12/31/2013   9.00% 
$25,000   $25,000  CICS-24  YA Global  7/12/2013  12/31/2013   9.00%  $25,000  
$25,000  CICS-28A  YA Global  2/5/2014  2/4/2016   12.00%  $540,000   $540,000 
CICS-28B  Queensbury  2/5/2014  2/4/2016   12.00%  $540,000   $540,000  CICS-29 
YA Global  1/28/2015  12/31/2016   9.00%  $150,000   $150,000                  
                          $40,768,492   $34,583,478 

 

  12

 

 

SCHEDULE B

 

SECURITY DOCUMENTS

 

1. Securities Purchase Agreement dated August 17, 2010 by and between Carbonics
Capital Corporation and YA Global Investments, L.P.     2. Securities Purchase
Agreement dated February 5, 2014 by and between Westport Energy Holdings, Inc.
and YA Global Investments, L.P.     3. Security Agreement dated August 17, 2010
in Favor of YA Global Investments by and among Carbonics Capital Corporation,
Westport Energy Acquisition Inc. and Westport Energy LLC.     4. Security
Agreement dated August 17, 2010 in Favor of New Earthshell Corporation by and
among Carbonics Capital Corporation, Westport Energy Acquisition Inc. and
Westport Energy LLC.     5. Pledge and Escrow Agreement dated August 17, 2010 in
Favor of YA Global Investments, L.P. by and among 4 Sea-Sons LLC, Carbonics
Capital Corporation, Westport Energy Acquisition Inc. and Westport Energy LLC.  
  6. Pledge and Escrow Agreement dated August 17, 2010 in Favor of New
Earthshell Corporation, L.P. by and among 4 Sea-Sons LLC, Carbonics Capital
Corporation, Westport Energy Acquisition Inc. and Westport Energy LLC.     7.
Leasehold Deed of Trust and Security Agreement with Assignment of Rents,
Financing Statement for As-Extracted Collateral and Fixture Filing dated August
17, 2010 with Westport Energy, LLC, as Grantor, YA Global Investments, L.P., as
Beneficiary, and Chicago Title Insurance Company, as Trustee.     8. Leasehold
Deed of Trust and Security Agreement with Assignment of Rents, Financing
Statement for As-Extracted Collateral and Fixture Filing dated August 17, 2010
with Westport Energy, LLC, as Grantor, New Earthshell Corporation, as
Beneficiary, and Chicago Title Insurance Company, as Trustee.     9. Guaranty
dated August 17, 2010 in Favor of YA Global Investments, L.P. by and among
Carbonics Capital Corporation, Westport Energy Acquisition, Inc. and Westport
Energy, LLC, as Guarantors.     10. Guaranty dated August 17, 2010 in Favor of
New Earthshell Corporation by and among Carbonics Capital Corporation, Westport
Energy Acquisition, Inc. and Westport Energy, LLC, as Guarantors.     11. Any
other security, collateral, pledge, guaranty or other agreements of any kind
entered into among any parties to the Debentures.

 

  13

 

 

SCHEDULE C

 

TRANSFERRED COLLATERAL

 

1,000 shares of common stock representing 100% of the issued and outstanding
capital stock of Westport Energy Acquisition, Inc. (Certificate Number WEA 001)*
owned by Westport Energy Holdings Inc.

 



 

 

*Westport Energy Acquisition, Inc. owns 100 LLC membership interests
representing 100% of the issued and outstanding membership interests in Westport
Energy, LLC. (Certificate number 1), which, in turn, owns the Westport Asset
Collateral.

 

  14

 

 

SCHEDULE D

 

NOTICE PARTIES

 

If to Westport Energy Holdings Inc., to:

Westport Energy Holdings Inc.

100 Overlook Center, 2nd Floor

Princeton, NJ 08540

Attention: Chief Executive Officer

Fax: 419-741-3043



    If to Westport Energy Acquisition Inc., to:

Westport Energy Acquisition Inc.

100 Overlook Center, 2nd Floor

Princeton, NJ 08540

Attention: President

Fax: 419-741-3043



    If to Westport Energy Acquisition Inc., to:

Westport Energy LLC

100 Overlook Center, 2nd Floor

Princeton, NJ 08540

Attention: Manager

Fax: 419-741-3043



    If to Coos Bay Energy LLC, to:

Coos Bay Energy LLC

1001 SW 5th Avenue, Suite 1100

Portland, OR 97024

Attention: Manager

Fax: 419-741-3043



    If to YA Global Investments LLP, to:

YA Global Investments, L.P.

1012 Springfield Avenue

Mountainside, NJ 07092

Attention: Mark Angelo

Fax: (___) ___-____



    If to Queensbury Inc., to:

Queensbury Inc.

23501 Cinco Ranch Blvd., B-225

Katy, TX 77494

Attention: Raffi Attar

Fax: (___) ___-____



        If to Mountainville Ltd., to:

Mountainville Ltd.

62 Potterstown Road

Lebanon, NJ 08833

Attention: Gordon I. Miller

Fax: (___) ___-____

 

  15

 

 

 


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