TRANSFER OF SECURITIES ACKNOWLEDGMENT AND AGREEMENT
THIS
TRANSFER OF SECURITIES ACKNOWLEDGMENT AND AGREEMENT (this "Agreement") is made as of June
26, 2008, between PNG Ventures,
Inc., a Nevada corporation (the "Company"), and YA Global Investments, L.P., f/k/a
Cornell Capital Partners (the "Investor").
WHEREAS, reference is hereby
made to (i) that certain Settlement Exchange Agreement (the "Settlement Exchange
Agreement"), dated as of June 26, 2008, pursuant to which, Earth
Biofuels, Inc., a Delaware corporation (the "EBOF") has sold 12%
Convertible Promissory Note of PNG Ventures, Inc., a Nevada corporation (the
"Company") having an
aggregate principal amount of $3,857.14 (the "Exchanged Notes"), which are
convertible into shares of common stock, $0.001 par value of the Company (the
"Conversion Shares"), to
YA Global Investments, L.P., f/k/a Cornell Capital Partners(the "Investor") and (ii) that
certain Release and Acknowledgement Agreement by and between the Investor and
the Company with respect to the release without prejudice, of the Company and
its subsidiaries being acquired in the Share Exchange (as hereinafter defined)
of any and all indebtedness, penalties, liabilities or other obligations (the
"Release").
WHEREAS, concurrently
herewith, EBOF, Earth LNG, Inc., a wholly owned subsidiary of EBOF and New Earth
LNG, LLC, a Delaware limited liability company and a wholly owned subsidiary of
Earth LNG, Inc. ("LNG
Sub") and the Issuer have entered into that certain Share Exchange
Agreement (the "Share Exchange
Agreement") pursuant to which EBOF will exchange (the "Share Exchange") 100% of the
membership interests of LNG Sub for 7,000,000 shares of common stock, $0.001 par
value of the Issuer (the "Common Stock").
WHEREAS, the Company desires
to enter into this Agreement as a condition to closing of the Share Exchange and
in order to induce the Investor to enter into the Release.
NOW, THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
1. The
Company hereby agrees to take all actions necessary to effect the transfer of
the Exchanged Notes to the Investor, including, without limitation, having new
notes (in such denominations as the Investor may reasonably request)
representing the Exchanged Notes registered in the name of the Investor;
provided, that the Company and the Investor hereby agree that until the Closing
Date (as defined in the Share Exchange Agreement), the Company shall not effect
any conversion of the Exchanged Notes, and the Investor shall not have the right
to convert any portion of the Exchanged Note, pursuant to Section 4 of the
Exchanged Note or otherwise.
2. The
Company hereby represents and warrants to the Investor as follows:
(a) The
Company is a corporation duly organized and validly existing in good standing
under the laws of the State of Nevada, and has the requisite corporate power
and
authorization
to own its properties and to carry on its business as now being conducted. The
Company is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership of property or the nature
of the business conducted by it prior to the Share Exchange makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not reasonably be expected to have a
Material Adverse Effect. As used in this Agreement, "Material Adverse
Effect" means any material adverse effect on the business, properties, assets,
operations, results of operations, condition (financial or otherwise) or
prospects of the Company, taken as a whole, or on the transactions contemplated
hereby, under the Exchanged Notes and the Share Exchange Agreement or by the
agreements and instruments to be entered into in connection herewith or
therewith (collectively, the "Transaction Documents"), or on
the authority or ability of the Company to perform its obligations under the
Transaction Documents.
(b) The
Company has the requisite power and authority to enter into and perform its
obligations under the Transaction Documents and to issue the Exchanged Notes and
Conversion Shares in accordance with the terms hereof and
thereof. The execution and delivery of the Transaction Documents by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby, including, without limitation, the issuance of the Exchanged
Notes and the reservation and issuance of the Conversion Shares into escrow as
well as the release from escrow upon conversion of the Exchanged Notes have been
duly authorized by the Company's Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders. This Agreement and the other Transaction Documents have
been duly executed and delivered by the Company, and constitute the legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors' rights and
remedies.
(c) The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby will not (i) result in a violation of the Certificate of Incorporation
of the Company, any capital stock of the Company or the Bylaws of the Company or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, except
(solely with respect to clause (ii) above) as would not be reasonably be
expected to have a Material Adverse Effect, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of Pink
Sheets LLC or the OTC Bulletin Board (as applicable, the "Principal Market")) applicable
to the Company or by which any property or asset of the Company is bound or
affected.
(d) The
issuance of the Exchanged Notes are duly authorized and, upon issuance shall be
free from all taxes, liens and charges with respect to the issue
thereof. As of date hereof, a number of shares of Common Stock shall
have been duly authorized and reserved for issuance which equals or exceeds 100%
of the aggregate of the maximum number of shares of Common
Stock
issuable upon conversion of the Notes. Upon conversion in accordance
with the Exchanged Notes, the Conversion Shares will be validly issued, fully
paid and nonassessable and free from all preemptive or similar rights, taxes,
liens and charges with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.
(e) The
Exchanged Notes are, and upon issuance in accordance with the Exchanged Notes,
the Conversion Shares shall be, unrestricted securities issued pursuant to
Section 3(a)(10) of the Securities Act (in accordance with the Settlement
Agreement and Order (as defined in the Settlement Agreement) relating to the
same). The Conversion Shares, when issued, shall be freely tradable
on the NASDAQ OTC Bulletin Board without restriction and will not contain any
restrictive legend.
(f) The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency or any other person in order for it to
execute, deliver or perform any of its obligations under or contemplated by the
Transaction Documents, in each case in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof, and the
Company and is unaware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registration, application or
filings pursuant to the preceding sentence. The Company is not in
violation of the listing requirements of the Principal Market and has no
knowledge of any facts which would reasonably lead to delisting or suspension of
the Common Stock in the foreseeable future.
(g) There
is no action, suit, proceeding, or to the knowledge of the Company, inquiry or
investigation before or by either Principal Market, any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Common Stock or any of the Company's officers or directors in their capacities
as such, that is expected to have a Material Adverse Effect.
(h) To
the Company's knowledge, neither this Agreement, the other Transaction
Documents, nor any other written statements or certificates made or delivered in
connection herewith, when taken as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made.
(i) The
Company represents and warrants to the Investor all of the representations and
warrants of the Company set forth in the Share Exchange Agreement, as if such
representations and warranties are set forth herein, mutatis
mutandis.
(j) The
Company represents and warrants that (A) the individuals set forth on Table I of
Schedule 2(j) hereto hold the offices set forth opposite their names on Table I
of
Schedule
2(j) hereto at the Company and (B) the individuals set forth on Table
II of Schedule 2(j) hereto are the only directors of the Company.
Notwithstanding
anything to the contrary in this Agreement, under no circumstances shall the
foregoing covenants or warranties or other provisions herein, be deemed to cause
the Company in any way to assume or otherwise be or become, directly or
indirectly, liable or responsible for the indebtedness or any other liabilities
or obligations of the EBOF or any of its Subsidiaries owed to Investor, as more
fully set out in the Release or, to cause the Release to be
invalidated.
3. The
Investor hereby represents and warrants to the Company all of the
representations and warrants of the Investor set forth in the Settlement
Exchange Agreement, as if such representations and warranties are set forth
herein, mutatis
mutandis.
4. On
or before 8:30 a.m., New York City time, on the fourth (4th) Business Day
following the date of the Share Exchange, the Company shall file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the
Share Exchange Agreement and the Settlement Exchange Agreement in the form
required by the 1934 Act and attaching the material documents related thereto
not previously filed (including, without limitation, this Agreement, the Share
Exchange Agreement, the Settlement Exchange Agreement, the Releases and the
Exchanged Note (including all attachments, the "8-K Filing"). From
and after the filing of the 8-K Filing with the SEC, the Investor shall not be
in possession of any material, nonpublic information received from the Company,
any of its subsidiaries or any of its respective officers, directors, employees
or agents, that is not disclosed in the 8-K Filing. The Company shall
not, and shall cause each of its subsidiaries and its and each of their
respective officers, directors, employees and agents, not to, provide the
Investor with any material, nonpublic information regarding the Company or any
of its subsidiaries from and after the filing of the 8-K Filing with the SEC
without the express written consent of the Investor or as may be required under
the terms of this Agreement. Subject to the foregoing, neither the
Company, its subsidiaries nor the Investor shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby;
provided, however, that the Company shall be entitled, without the prior
approval of the Investor, to make any press release or other public disclosure
with respect to such transactions (i) in substantial conformity with the 8-K
Filing and contemporaneously therewith and (ii) as is required by applicable law
and regulations (provided that in the case of clause (i) the Investor shall be
consulted by the Company in connection with any such press release or other
public disclosure prior to its release). Without the prior written
consent of the Investor, neither the Company nor any of its subsidiaries or
affiliates shall disclose the name of the Investor in any filing, announcement,
release or otherwise, unless such disclosure is required by law, subpoena, court
order, government agency, or self regulatory organization investigation or rule
or regulation or the Eligible Market in which the Common Stock is then traded or
listed.
5. For
the purposes of Rule 144, the Company acknowledges that the holding period of
the Note (as defined in the Settlement Exchange Agreement) (including the
corresponding shares of Common Stock issuable upon conversion of the Note) may
be tacked onto the holding period of the Exchanged Notes (including the
corresponding Conversion Shares issuable upon conversion of the Exchanged
Notes), and the Company agrees not to take a position contrary to this Section
5. The Company agrees to take all actions, including, without
limitation, the issuance by its legal counsel of any necessary legal opinions,
necessary to issue the Conversion Shares as defined in
the
Settlement Exchange Agreement) that (other than as to "Affiliates" of the
Company as used in Rule 144, which shall be subject to such rules and
restrictions set forth in Rule 144) are freely tradable on the NASDAQ OTC
Bulletin Board without restriction and not containing any restrictive
legend without the need for any action by the Investor.
6. So
long as the Investor owns any Exchanged Notes or Conversion Shares (the "Registrable Securities"), with
a view to making available to the Investor the benefits of Rule 144, the Company
agrees to:
(a) make
and keep public information available, as those terms are understood and defined
in Rule 144;
(b) file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements and the filing of such reports and other documents
is required for the applicable provisions of Rule 144; and
(c) furnish
to the Investor so long as the Investor owns the Company Registrable Securities,
promptly upon request, (i) a written statement by the Company, if true, that it
has complied with the reporting requirements of Rule 144, the 1933 Act and the
1934 Act, (ii) a copy of the most recent annual report of the Company and such
other reports and documents so filed by the Company (but only if such reports
are not publicly available on the XXXXX system), (iii) a written statement of
the number of shares of Common Stock then outstanding and (iv) such other
information as may be reasonably requested to permit the Investor to sell such
securities pursuant to Rule 144 without registration.
7. [Intentionally
Omitted]
8. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
9. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
10. If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that
would
otherwise be conferred upon the parties. The parties will endeavor in
good faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable
provision(s).
11. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
12. This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
13. Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
14. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent, and no rules of strict construction will
be applied against any party.
15. This
Agreement supersedes all other prior oral or written agreements between the
Investor, the Company, their affiliates and Persons acting on their behalf with
respect to the matters discussed herein, and this Agreement (other than the
Release, which shall remain in full force and effect) and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth
herein or therein, neither the Company nor the Investor makes any
representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended other than by
an instrument in writing signed by the Company and the Investor. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought.
16. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns in accordance with the terms of the
Settlement Exchange Agreement.
[Signature
Page Follows]
IN WITNESS WHEREOF, the
Investor and the Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.
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COMPANY:
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PNG
VENTURES, INC.
By:
Name:
Xxxxx Xxxxxx
Title: Chief
Executive Officer
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Copy
to:
Xxxxxxx
Xxxx, LLP
0000
Xxxxxxxx
00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxx Xxxx, Esq.
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IN WITNESS WHEREOF, the
Investor and the Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.
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INVESTOR:
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YA
Global Investments, L.P., f/k/a Cornell Capital Partners
By:
Yorkville Advisors, LLC, its Investment Manager
By:
Name:
Xxxxx Xxxxx
Title: Managing
Member
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Copy
to:
Xxxxxxx
Xxxxx LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention: Xxxx
X. Xxxxxxxxxxx
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