SUBSCRIPTION AGREEMENT
TO: PNG
Ventures, Inc.
2038
Corte Del Nogal, Suite 110
Carlsbad,
California 92011
Attention:
Mark Baum, 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
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 enforceabilit
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