SUBSCRIPTION AGREEMENT
TO: PNG
Ventures, Inc.
0000
Xxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxx Xxxx, Esq.
Ladies
and Gentlemen:
The undersigned (the “Subscriber”)
hereby tenders Subscriber’s subscription to PNG Ventures, Inc., a Delaware
corporation (the “Company”), on the terms and conditions hereinafter set
forth:
1. DEFINITIONS
1.1 “Effective
Date” shall mean June __, 2008.
1.2 “Subscriber
Shares” are the number of shares of Common Stock to be issued to Subscriber
pursuant to this Subscription Agreement.
1.3 “Exchange
Agreement” shall mean that certain Share Exchange Agreement among Earth
Biofuels, Earth LNG, Inc., New Earth LNG, Inc. and its subsidiaries and the
Company dated as of the Effective Date.
1.4 “Credit
Agreement” shall mean that certain Amended and Restated Credit Agreement dated
as of the Effective Date between New Earth LNG, Subscriber and the other parties
listed therein, whereby New Earth LNG, as a subsidiary of the Company, will be
primary borrower.
1.5 “Master
Rights Agreement” shall mean that certain Master Rights Agreement between the
Company and Subscriber regarding certain registration and other rights related
to the Subscriber Shares.
1.6 “Earth
Biofuels” shall mean Earth Biofuels, Inc.
1.7 “New
Earth LNG” shall mean New Earth LNG, Inc., a Delaware Corporation.
1.8 “Common
Stock” shall mean the common stock of the Company, $.001 par value per
share.
1.9 “Securities
Act” shall mean the Securities Act of 1933, as amended.
1.10 “Subscription
Agreement” shall mean this Subscription Agreement.
1.11 “Affiliate”
shall mean and any individual, corporation, partnership, association, or
business that directly or indirectly through intermediaries, controls, is
controlled by or is under common control with Subscriber.
1.12 “Commission”
shall mean the Securities and Exchange Commission.
1.13 “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended
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2.
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SUBSCRIBER
SHARES
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2.1 Subscription. Subscriber
hereby irrevocably subscribes for 1,100,000 shares of Common Stock
(the “Subscriber Shares”), to be issued to Subscriber upon closing of the
transaction contemplated by the Exchange Agreement and as partial consideration
for the Credit Agreement and the proceeds thereunder.
2.2 Closing. The
issuance of the Subscriber Shares shall occur contemporaneously with the
execution and delivery of the Credit Agreement, the closing relating to the
Exchange Agreement and Master Rights Agreement at a closing (the “Closing”) to
be held at a time and place agreed upon by the parties. At the
Closing, Subscriber and the Company shall each deliver an executed copy of this
Subscription Agreement and the Company will deliver to Subscriber a stock
certificate for the Subscriber Shares.
2.3 Transfer. Subscriber
acknowledges and agrees that Subscriber will not sell, transfer, or otherwise
dispose of the Subscriber Shares unless (i) to an Affiliate, subject to
compliance with federal and state securities laws, (ii) the Company agrees to
such transfer, subject to compliance with federal and state securities laws, or
(iii) the Common Stock is registered under the Securities Act as provided under
the Master Rights Agreement or otherwise, or unless such sale, transfer, or
other disposition would be in compliance with all applicable federal and state
laws and regulations and Subscriber provides the Company with a legal opinion
reasonably acceptable in form and substance stating that such sale, transfer or
other disposition may be made without registration under the Act or under any
applicable state laws and regulations.
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3.
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REPRESENTATIONS
AND WARRANTIES OF COMPANY
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The Company represents and warrants to
Subscriber as follows:
3.1 Organization. The
Company is a corporation duly organized and validly existing under the laws of
the State of Nevada, with full corporate power and authority to conduct its
business as it is now being conducted, to own or use the properties and assets
that it purports to own or use.
3.2 Capitalization. The
authorized capital stock of the Company consists of Fifty Million (50,000,000)
shares of common stock, $.001 par value per share, of which _______ shares are
issued and outstanding, and 1,900,000 shares of Common Stock are issued
in
electronic
form to the Company’s transfer agent as escrow agent, for issuance upon
conversion of the Note (as defined in the Exchange Agreement), no shares are
held in the treasury of the Company. The Subscriber Shares will
represent approximately 8.66% of the fully diluted shares of Common Stock
immediately following the Closing. The Subscriber Shares have
been duly authorized for issuance and, when issued in accordance with the terms
of this Subscription Agreement, will be validly issued, fully paid and
nonassessable. Subscriber will acquire good and valid title to the
Subscriber Shares, free of all claims, liens, options, preemptive rights,
charges, encumbrances, and restrictions of any kind whatsoever, except for
restriction on their transferability under the Securities Act. All of
the issued and outstanding shares of capital stock of the Company are validly
issued, fully paid and nonassessable and are not subject to, nor were they
issued in violation of, any preemptive rights. There are no
outstanding options, warrants or other rights, agreements or commitments of any
kind obligating the Company to issue any additional shares of its capital stock,
except as set forth in Section 3.3 of the Exchange Agreement.
3.3 Articles
of Incorporation. A true and complete copy of each of the
Company’s Articles of Incorporation and Bylaws, as in effect on the Effective
Date, have been provided to Subscriber.
3.4 No
Conflict. Neither the execution and delivery of this
Subscription Agreement, nor the Master Rights Agreement, nor the transactions
contemplated hereby and thereby, do or will (i) violate any provision of the
Articles of Incorporation or Bylaws of the Company, (ii) violate, contravene or
conflict in any material respect with any resolution adopted by the board of
directors or the shareholders of the Company, (iii) to the knowledge of the
Company, violate any law or order applicable to the Company or any of its
assets, properties or businesses, (iv) result in a breach of, constitute a
default (or an event which, with or without the giving of notice or lapse of
time or both, would become a default) under, require any consent under, or give
to others any right of termination, amendment, acceleration, suspension,
revocation or cancellation of, any material contract or agreement to which the
Company is a party or is bound, or (v) result in the creation of any lien or
encumbrance on any of the Subscriber Shares.
3.5 Authority. This
Subscription Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms except
as enforceability may be limited by applicable laws relating to bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors’ rights generally and except as such enforceability is
subject to general principles of equity. The Company has the right,
power, authority and capacity to execute and deliver this Subscription Agreement
and perform its obligations hereunder.
3.6 Litigation. The
Company is not a party to any material pending litigation or, to its knowledge,
any governmental proceedings are threatened against the Company, other than as
relates to the Settlement Agreement (as defined in the Exchange Agreement), and
related Amended Court Order (as defined in the Exchange Agreement) already
provided to and reviewed by Subscriber.
3.7 Periodic
Reports. The
Company is current in the filing of all quarterly or annual
financial
or reports with the Commission, and has been a reporting company under the
Exchange Act. All such reports and statements filed by the Company
with the Commission did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstance under which they were made,
not misleading.
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4.
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REPRESENTATIONS
AND WARRANTIES OF SUBSCRIBER
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In order to induce the Company to
accept this Subscription Agreement, Subscriber hereby represents and warrants as
follows:
4.1 Access to
Information.
(a) Documents and
Records. Subscriber acknowledges that all requested documents,
records, and books pertaining to the Company have been made available for
inspection by Subscriber or its representatives including, without limitation,
the Settlement Agreement and related Amended Court Order, and the Exchange
Agreement. Subscriber has had a reasonable opportunity to ask
questions of and receive answers from the officers of the Company concerning the
terms and conditions of the offering of the Subscriber Shares, and to obtain
additional information, to the extent possessed or obtainable without
unreasonable effort or expense by the officers of the Company. All
such questions have been answered to the satisfaction of
Subscriber.
(b) Experience. Subscriber
has such knowledge and experience in financial and business matters as to enable
Subscriber to (i) evaluate the merits and risks associated with the purchase of
the Subscriber Shares, and (ii) make an informed decision with respect
thereto. Subscriber is financially capable of bearing the risk of
loss of any and all consideration paid for the Subscriber Shares, and
acknowledges that an investment in the Subscriber Shares involves a high degree
of risk, including a possible total loss of investment. Subscriber is
acquiring the Subscriber Shares for its own account, not as a nominee or agent,
and not with a view to, or for sale in connection with, any distribution
thereof. Subscriber understands that the Subscriber Shares has not been
registered under the Securities Act, or any state securities laws, by reason of
specific exemptions from the registration provisions of the Securities Act and
such laws that may depend upon, among other things, the bona fide nature of
Subscribers’ investment intent as expressed herein.
(c) Accredited
Investor. Subscriber is an “accredited investor” within the
meaning of Regulation D promulgated by the Commission under the Securities
Act. Subscriber acknowledges that the Company will rely upon the
representations and warranties made by Subscriber in this Subscription Agreement
in order to establish an exemption from the registration requirements of the
Securities Act and applicable state securities laws and that Company shall place
the legend described in Section 4.2 (the “Legend”) on the certificate
representing the Subscriber Shares to reflect that the Subscriber Shares have
not been registered under the Securities Act and applicable state
laws.
(d) Transfer. Subject
to Section 2.3, Subscriber will not transfer any shares of Common Stock without
registration under the Securities Act and applicable state securities laws
unless the transfer is exempt from registration under the Securities Act and
such laws and is made in compliance with the Legend.
(e) Authorization. All
action on the part of Subscriber necessary for the authorization, execution,
delivery and performance of all obligations of Subscriber under this
Subscription Agreement have been taken prior to Closing. This
Subscription Agreement, when executed and delivered by such Subscriber, will
constitute the valid and binding obligation of such Subscriber, except as
enforceability may be limited in accordance with bankruptcy, insolvency or other
laws affecting the enforcement of creditors’ rights generally, and except that
the availability of the remedy of specific performance or other equitable relief
is subject to the discretion of the court before which any proceeding thereof
may be brought.
4.2 Legend. Subscriber
understands that there will be placed on the certificates for the Subscriber
Shares, when issued and delivered, the Legend, stating in substance as
follows:
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“THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT, OR THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER
REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER THAT AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
AVAILABLE.”
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5.
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GOVERNING
LAW
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ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS SUBSCRIPTION AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE
OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF DELAWARE.
6. ENTIRE AGREEMENT
This Subscription Agreement, the Master
Rights Agreement and all other agreements contemplated by this Subscription
Agreement supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof and contain the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof.
6. NOTICES
All
notices, demands or other communications to be given or delivered under or by
reason of the provisions of this Subscription Agreement shall be in writing and
shall be deemed to have been given when delivered personally, mailed by
certified or registered mail, return receipt requested and postage prepaid, or
sent via a nationally recognized overnight courier, or sent via facsimile to the
recipient accompanied by a certified or registered mailing. Such
notices, demands and other communications shall be sent to the Company and
Subscriber at the addresses set forth below and to the other parties hereto at
such address or to the attention of such other person as is specified in the
Company's books and records:
If to the
Company:
PNG
Ventures, Inc.
0000
Xxxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxxx,
Xxxxxxxxxx 00000
Attention:
Xxxx Xxxx, Esq.
Tel.
(000) 000-0000 x000
Facsimile:
(000) 000-0000
with a
copy to:
Xxxxxxx
Xxxx, LLP
0000
Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Attention:
Xxx Xxxx, Esq.
Tel.
(000) 000-0000
Fax.
(000) 000-0000
Email:
xxxxx@xxxxxxxxxxx.xxx
If to
Subscriber:
______________________
______________________
______________________
Attention
Xxx Xxxxxx
Tel.
(___) __-___________
Facsimile:
(___)___-_____
Email:
xxx@xxxxxxxxxxxxx.xxx
King & Spalding, LLP
0000 Xxxxxx xx xxx
Xxxxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx,
Esq.
Tel. (000) 000-0000
Facsimile: (000) 000-0000
Email: XXxxxx@xxxxx.xxx
or such
other address or to the attention of such other Person as the recipient party
shall have specified by prior written notice to the sending party.
7. WAIVER
Waiver by either party of any term or
provision of this Subscription Agreement shall be in writing and shall not
constitute a continuing waiver thereof nor of any further or additional rights
such party may hold under this Subscription Agreement.
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8.
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SEVERABILITY
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If any provision of this Subscription
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality or enforceability of the remaining provisions shall not in any way be
affected or impaired.
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9.
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CUMULATIVE
RIGHTS
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Unless expressly stated to the contrary
elsewhere in this Subscription Agreement, all rights, powers and privileges
conferred hereunder upon the parties hereto shall be cumulative and not
restrictive of those given by law.
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10.
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HEADINGS
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The descriptive headings of this
Subscription Agreement are inserted for convenience only and do not constitute a
part of this Subscription Agreement.
11. COUNTERPARTS
This Subscription Agreement may be
executed simultaneously in two or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together shall constitute one and the same agreement. Facsimile or
scanned and emailed counterparts signatures to this Subscription Agreement shall
be acceptable and binding.
IN WITNESS WHEREOF, the undersigned has
executed this Subscription Agreement as of the Effective Date.
Subscriber:
FOURTH
THIRD LLC
By: /s/ Xxxx X.
Xxxxx
Name: Xxxx X.
Xxxxx
Title: Authorized
Signatory
ACCEPTED
AND AGREED TO:
Company:
PNG
VENTURES, INC.
By: /s/ Xxxxx
Xxxxxx
Name:Xxxxx
Xxxxxx
Title:
Chief Executive
Officer
