THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS,
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL
BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW
IS AVAILABLE .
PNG VENTURES, INC.
CONVERTIBLE PROMISSORY NOTE
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Principal
Amount: $171,000
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Issuance
Date:
June ___ ,2008
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Interest
Rate: 12%
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Maturity
Date: June
___, 2009
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PNG
VENTURES, INC., a Nevada corporation (the “ Company
”) hereby promises to pay to the order of EARTH
BIOFUELS, INC., a Delaware corporation (the “
Noteholder
”), at such place as Noteholder may from time to time
designate, in lawful money of the United States of America,
ONE HUNDRED SEVENTY ONE THOUSAND DOLLARS ($171,000) due and
payable on June ___, 2009. This Note is issued pursuant to a
Settlement Agreement and Release (the “ Settlement
Agreement ” a copy of which has been attached
hereto as Exhibit
A ), and is subject to other terms as set forth in the
Settlement Agreement.
1.
INTEREST
. Beginning on the issuance date of this Note (the
“ Issuance
Date ”), the outstanding principal balance of
this Note shall bear interest, in arrears, at a rate per annum
equal to twelve percent (12%). Interest shall be computed on
the basis of a 360-day year of twelve (12) 30-day months and
shall accrue commencing on the Issuance Date.
2.
PREPAYMENT
. This Note may be prepaid, in whole or in part, by
the Company only upon the prior written consent of the
Noteholder.
3.
TRANSFER
AND ASSIGNMENT . This Note shall be freely
transferable and assignable by the Noteholder provided such
transfer is in compliance with applicable federal and state
securities laws.
4.
CONVERSION
OF NOTE
. The
Noteholder shall have the right from and after the date of the
issuance of this Note and then at any time until this Note is
fully paid, to convert any outstanding and unpaid principal
portion of this Note, into fully paid and non-assessable
shares of the common stock of the Company (the “
Common
Stock ”) as such st
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