IRREVOCABLE VOTING PROXY
This
IRREVOCABLE VOTING PROXY ("Proxy"), dated as of June 25,
2008, is by and between Earth LNG, Inc., a Texas corporation (“Shareholder”) in favor of Castlerigg PNG
Investments LLC ("Castlerigg").
A. Concurrently
herewith, Shareholder is selling all of its assets (but not liabilities, tax
liabilities or contingent tax liabilities), including, without limitation, Earth
LNG, Inc. (“New Earth
LNG”) along with its subsidiaries, to PNG Ventures, Inc., a Nevada
corporation (“PNG”)
pursuant to that certain Share Exchange Agreement (the "Exchange Agreement") pursuant
to which, among other things, Shareholder will exchange (the "Exchange") 100% of the
membership interests of New Earth LNG for 7,000,000 shares of common stock,
$.001 par value of PNG (the "Common Stock") (such shares
together with any other shares of Common Stock acquired by EBOF after the date
hereof or issued in exchange therefore, being collectively referred to herein as
the "Shares"; provided, however, that the
term "Shares" shall not include any shares of Common Stock issued to Shareholder
or its parent, Earth Biofuels, Inc., a Delaware corporation (“EBOF”) or its assigns, upon
conversion of that certain $171,000 principal amount Convertible Promissory Note
issued as of June 5, 2008, by PNG, to EBOF or any shares transferred to
beneficially or of record to any third parties from time to time.
B. Concurrently
herewith, certain creditors of EBOF (including Castlerigg) (the "Subordinated Creditors") have
entered into those certain Amendment and Exchange Agreements (each an "Amendment and Exchange
Agreement"), pursuant to which EBOF has agreed to (i) amend and restate
the existing senior secured convertible notes of the Subordinated Creditors and
(ii) issue certain additional senior secured subordinated convertible notes to
the Subordinated Creditors (the indebtedness referred to in clauses (i) and
(ii), collectively, the "Subordinated Debt"), and (iii)
amend and restate the security documents related to such Subordinated
Debt.
C. Effective
upon the consummation of the Exchange (the "Closing Date"), and as
additional consideration for the execution of an Amendment and Exchange
Agreement by EBOF, Shareholder, PNG and Castlerigg desire the granting of an
irrevocable voting proxy by Shareholder with respect to the Shares in favor of
Castlerigg.
In
consideration of the mutual covenants and agreements contained herein and
intending to be legally bound hereby, the parties agree as follows:
1. Termination
Date.
(a) This
proxy is granted through the earliest to occur of (x) such time wherein no
Exchange Shares are held by the Shareholder, EBOF or any of its affiliates and
(y) such date Castlerigg delivers a written notice to the Shareholder electing
to terminate this agreement, or (the "Termination
Date").
(b) In
the event that Castlerigg resigns or is unable to serve as proxy holder herein,
Castlerigg may appoint a successor to act as proxy holder at its sole
discretion.
2. Grant of
Proxy/ Authority to Vote. Until the Termination Date, at any
meeting of shareholders of PNG however called (or any action by written consent
in lieu of a meeting), Castlerigg shall vote the Shares in any manner it deems
advisable including, without limitation, in accordance with all other votes cast
at such meeting.
3. Grant of
Irrevocable Proxy.
(a) Subject
to Sections 1 and 5(a), Shareholder hereby irrevocably grants to and appoints,
Castlerigg, and each of its successors (individually, an "Authorized Party" and,
collectively, the "Authorized
Parties"), and each of them individually, as Shareholder’s proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of Shareholder, to vote the Shares (the "Proxy"), Shareholder, and EBOF
as a control person of Shareholder, agrees to execute and deliver any separate
irrevocable proxy or other instrument that may be requested in furtherance of
this Section 5
from time to time. The Proxy is irrevocable pursuant to Section
78:355 of the Nevada Revised Statutes. Castlerigg has received this
Proxy in connection with the exchange of consideration with EBOF pursuant to an
Amendment and Exchange Agreement and the proxy is coupled with an interest and
is irrevocable subject to Sections 1 and 5(a).
(b) Shareholder
shall, and EBOF take all actions necessary to cause Shareholder to, grant,
execute and deliver from time to time, any proxy, instrument, power of attorney,
certificate, affidavit or other instrument necessary from time to time in order
to effectuate the grant of the Proxy herein to Castlerigg or any successor
necessary to act as Authorized Party.
(c) Shareholder
represents that any proxies heretofore given in respect of its Shares are
revocable, and that any such proxies have been or are hereby forever
revoked.
(d) Shareholder
and EBOF hereby further affirms that the Proxy granted in connection with this
instrument is coupled with an interest and may under no circumstances be
revoked, except as otherwise provided in this Proxy. EBOF and
Shareholder hereby each ratifies and confirms all that the Proxy may lawfully do
or cause to be done by virtue hereof. The Proxy is executed and
intended to be irrevocable prior to termination of this Proxy in accordance with
the provisions of this Proxy and Nevada law, and the Proxy shall be valid until
the Termination Date.
(e) This
Proxy is revocable only following the Termination Date.
4. Representations
and Warranties of EBOF and Shareholder. EBOF and
Shareholder each represents and warrants to PNG and Castlerigg as
follows:
(a) Authorization. EBOF
and Shareholder each have the absolute and unrestricted right, power, authority
and capacity to execute and deliver this Proxy and to perform his, her or its
obligations hereunder. This Proxy has been duly executed and
delivered by Shareholder and EBOF and constitutes a legal, valid and binding
obligation of Shareholder and EBOF, enforceable against them in accordance with
its terms. This Proxy has been duly approved
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by
Shareholder’s board of directors and EBOF as sole shareholder of Shareholder,
and by EBOF’s board of directors.
(b) No Conflicts, Required
Filings and Consents.
(i) The
execution and delivery of this Proxy by EBOF and Shareholder does not, and the
performance of this Proxy by them will not: (A) conflict with or violate any
legal requirement applicable to EBOF or Shareholder or by which they or any of
their properties are bound or affected, whether under a debt
instrument or otherwise; or (B) result in any breach of or constitute a default
or breach (immediately or after the giving of notice, passage of time, or both)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien, debt, charge, or other
encumbrance of any kind whatsoever or the shares or pursuant to any agreement,
instrument or obligation to which EBOF or Shareholder is a party or by which
EBOF or Shareholder or any of their properties, assets or subsidiaries are bound
or affected.
(ii) The
execution and delivery of this Proxy by Shareholder and EBOF does not, and the
performance of this Proxy by such Shareholder and EBOF, will not, require the
consent or approval of any person, creditor or third party which has not been
obtained and there are no third party beneficiaries under this
Proxy.
(c) Ownership and Title to
Shares. As of the closing of the transaction relating to the
Exchange Agreement (“Closing
Date”), Shareholder will own of record and beneficially all 7,000,000
Shares and such Shares constitute all Common Stock owned of record or
beneficially by EBOF or Shareholder as of the Closing Date. As of the
Closing Date, Shareholder will have sole voting power and sole power of
disposition with respect to all of its Shares, provided, however, that the
Shares shall be appropriately legended to reflect the Proxy granted
herein. As of the Closing Date, Shareholder will own all of the
Shares, free and clear of any lien, charge or other encumbrance, other than this
Proxy, and one or more pledges of the all or a portion of the Shares or of
Shareholder itself, to certain creditors, the provisions of which pledge
agreements shall provide that such creditors will continue to be subject hereto
(each, a “Pledge
Agreement”).
(d) Accuracy of
Representations. The representations and warranties of EBOF and
Shareholder contained in this Proxy are accurate in all respects as of the date
of this Proxy, and will be accurate in all respects at all times through the
Termination Date.
(e) Legends. Shareholder
authorizes and directs Castlerigg and any successor Authorized Party, to file
the Proxies with the secretary of PNG and PNG's Common Stock transfer agent and
authorizes Castlerigg to substitute any successor Authorized Party as proxy
holder and to file the substitution instrument with the Secretary and/or
transfer agent of PNG from time to time.
The
following legend shall be placed on the Shares (and otherwise reflected in any
electronic ledger or journals maintained by the transfer agent evidencing
ownership and encumberances on the Shares whether such shares are held in
electronic format or otherwise):
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THESE
SHARES ARE SUBJECT TO AN IRREVOCABLE PROXY, DATED JUNE 25, 2008, PURSUANT TO
WHICH A DESIGNEE OF SHAREHOLDER HAS THE RIGHT TO VOTE ALL SUCH SHARES
REPRESENTED BY THIS CERTIFICATE. A COPY OF THE PROXY CAN BE OBTAINED
BY CONTACTING THE COMPANY OR THE TRANSFER AGENT AND REQUESTING A COPY OF THE
SAME AT ANY TIME. IN ADDITION, THESE SHARES MAY NOT BE TRANSFERRED
ABSENT CONSENT OF THE PROXY HOLDER IN ACCORDANCE WITH SUCH PROXY.
5. Certain
Covenants of the EBOF and Shareholder. Except in accordance
with the terms of this Proxy, and in addition to those agreements and covenants
set forth above, EBOF and Shareholder hereby each covenants and agrees as
follows:
(a) Restriction on Transfer,
Proxies and Non-Interference. Prior to the termination of this Proxy,
EBOF and Shareholder will not, except as contemplated by this Proxy, any Pledge
Agreement or the exchange provisions of the Subordinated Debt, (i) sell,
transfer, give, pledge, encumber, assign or otherwise dispose of, or enter into
any contract, option or other arrangement or understanding with respect to the
sale, transfer, gift, pledge, encumbrance, assignment or other disposition of
any of the Shares (each of the foregoing, a "Transfer"), (ii) grant any
proxies, deposit any Shares into a voting trust or enter into a voting
agreement, power of attorney or voting trust with respect to any of the Shares
or (iii) take any action that would make any representation or warranty of the
EBOF and Shareholder contained herein untrue or incorrect in any material
respect or have the effect of preventing or disabling EBOF or Shareholder from
performing its obligations under this Proxy. Notwithstanding the
foregoing, the Shares may be sold or exchanged for outstanding Subordinated Debt
from time to time, in order to satisfy the debt obligations of EBOF and
Shareholder. Upon any such sale or exchange, the Shares sold or
exchanged for outstanding Subordinated Debt shall not be deemed to be subject to
this Proxy, the Authorized Party shall not be deemed to have any authority to
vote such Shares, and such assignee shall not be deemed a “Shareholder”
hereby.
(b) Additional
Shares. EBOF and Shareholders will promptly notify the
Authorized Party of the number of shares of Common Stock, or any options,
warrants or other rights to acquire shares of Common Stock, that are acquired
directly or beneficially by EBOF or Shareholder, if any, from time to time after
the date hereof, as a dividend on, distribution on or in exchange for, the
Shares. Any such shares of Common Stock acquired by EBOF after the
date hereof will become Shares for the purposes of this Proxy.
(c) Further Assurances.
At any time and from time to time after the date hereof and without additional
consideration, EBOF and Shareholder will cooperate with the Authorized Party and
the board of PNG (to the extent required to effectuate such board’s actions as
required herein), to take such action and execute and deliver, or cause to be
executed and delivered, such additional or further transfers, assignments,
endorsements, proxies, consents and other instruments as the Authorized Party
may reasonably request for the purpose of effectively carrying out and
furthering the intent of this Proxy.
6. Certain
Events. EBOF and
Shareholder each agrees that (a) except with respect to sales of Shares with the
written consent of Castlerigg, this Proxy and the obligations hereunder shall
attach to his, her or its Shares and shall be binding upon any entity or other
person
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to which
legal or beneficial ownership of such Shares shall pass, whether by operation of
law or otherwise, including Shareholder’s administrators or successors; and (b)
in the event of any stock split, stock dividend, merger, reorganization,
recapitalization or other change in the capital structure of PNG affecting the
Common Stock or other voting securities of PNG, the number of Shares shall be
deemed adjusted appropriately and this Proxy and the obligations hereunder shall
attach to any additional shares of Common Stock or other voting securities of
PNG issued to or acquired by Shareholder or EBOF in connection with the
Shares.
7. Notices.
Until otherwise specified in writing, the mailing addresses and fax numbers of
the Parties of this Proxy shall be as follows:
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To:
Earth
Biofuels, Inc.
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Earth
Biofuels, Inc.
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0000
Xxxx Xxxxxx, Xxxxx 000,
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Xxxxxx,
Xxxxx 00000
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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Attention:
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Xxxxxx
XxXxxxxxxx
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with a copy (for information purposes
only) to:
Sichenzia Xxxx Xxxxxxxx
Xxxxxxx
Counsel to Earth Biofuels, Inc. and
Earth LNG, Inc.
00 Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx, XX 00000
Tel. (000) 000-0000
Fax. (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx,
Partner
email: xxxxxxxxxx@xxxx.xxx
To: Castlerigg at:
c/o
Sandell Asset Management
00 Xxxx
00xx Xx
00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attention:
Cem Hacioglu
Xxxxxxx
Xxxxxxx
Facsimile: 000-000-0000
Telephone:
000-000-0000
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with
a copy (for informational purposes only)
to:
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Xxxxxxx
Xxxx & Xxxxx LLP
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000
Xxxxx Xxxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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Attention:
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Xxxxxxx
X. Xxxxx, Esq.
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with a copy to Shareholder and
PNG;
and to:
PNG Ventures, Inc.
0000 Xxxx Xxxxxx, Xxxxx
000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
Tel. (000) 000-0000
Fax. (000) 000-0000
XXxxxxx@xxxxxxxxxxxxxxx.xxx
and with copy(for information purposes
only) to:
Xxxxxxx Xxxx, LLP
0000 Xxxxxxxx
00xx
Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxx,
Esq.
(000) 000-0000
email: xxxxx@xxxxxxxxxxx.xxx
Any
notice or statement given under this Proxy shall be deemed to have been given if
sent by any of registered mail, recognized overnight courier or hand delivery,
each with signature or receipt confirmation, addressed to the other
party at the address indicated above or at such other address which shall have
been furnished in writing to the addressor.
8. Miscellaneous.
(a) Assignment. Neither
this Proxy nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of PNG as determined by the majority of its
board. Subject to the preceding sentence, this Proxy shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns. Nothing in this Proxy, express or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Proxy
(b) Amendments. This
Proxy may not be modified, amended, waived, altered or supplemented, except upon
the execution and delivery of a written agreement executed by the parties hereto
(other than with respect to termination on the Termination Date or appointment
of a replacement Authorized Party.
(c) Indemnification.
Shareholder and EBOF, for themselves and any of their affiliates, each hereby
waives and disclaims any right of duty of Authorized Party
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indemnifies
and holds harmless Castlerigg, PNG and its board members and officers, and any
other Authorized Party, taken by such persons in connection with this Proxy or
with any matters approved or disapproved by such Authorized Party and Auhtoirzed
Party shall not have a right of fiduciary responsibility or duty to Shareholder
or EBOF in connection with his/her/its determination to vote on any matter in
accordance with his/her/its wishes
(d) Specific Performance.
Shareholder and EBOF each recognizes and acknowledges that a breach of any of
their covenants contained in this Proxy will cause PNG and Authorized Party or
PNG to sustain damages for which he / it would not have an adequate remedy at
law, and therefore in the event of any such breach the aggrieved party shall be
entitled to the remedy of specific performance of such covenants and agreements
and injunctive and other equitable relief in addition to any other remedy to
which it may be entitled, at law or in equity.
(e) Counterparts. This
Proxy may be executed by facsimile signatures and in multiple counterparts, each
of which shall be deemed an original. It shall not be necessary that each party
executes each counterpart, or that any one counterpart be executed by more than
one party so long as each party executes at least one counterpart.
(f) Descriptive Headings.
The descriptive headings used herein are inserted for convenience of reference
only and are not intended to be part of or to affect the meaning or
interpretation of this Proxy.
(g) Severability. If any
term or other provision of this Proxy is invalid, illegal or incapable of being
enforced by any rule of law, or public policy, all other conditions and
provisions of this Proxy shall nevertheless remain in full force and effect so
long as the economic or legal substance of this Proxy is not affected in any
manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Proxy so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the terms of this Proxy remain as originally
contemplated to the fullest extent possible.
[signature page
follows]
IN
WITNESS WHEREOF, each of the parties hereto has executed this Proxy by the
authorized officer named below.
EARTH
LNG, INC.
By:
______________________
Name:
Xxxxxx X. XxXxxxxxxx, III
Title:
President
EBOF:
EARTH
BIOFUELS, INC.
By:
______________________
Name:
Xxxxxx X. XxXxxxxxxx, III
Title:
Chief Executive Officer
Acknowledged
and Accepted by:
PNG:
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PNG
VENTURES, INC.
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By:
___________________
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Name:
Xxxxx Xxxxxx
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Title:
Chief Executive Officer
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-Receipt Acknowledged by Authorized
Party-
CASTLERIGG
PNG INVESTMENTS LLC
By:
Castlerigg Master Investments Ltd.,
its
managing member and sole member
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By:
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____________________ |
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Name:
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Title:
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