RELEASE,
CONSENT AND ACKNOWLEDGEMENT
This Release, Consent and
Acknowledgment (this “ Release
”), dated as of June 26, 2008, is made by and among
Earth Biofuels, Inc., a Delaware corporation (the “
Parent
”), Durant Biofuels, LLC, an Oklahoma limited liability
company (“Durant”), Earth LNG, Inc. f/k/a Apollo
LNG, Inc., a Texas corporation (“ Earth
LNG ”), and its direct wholly owned subsidiary,
New Earth LNG, LLC, a Delaware limited liability company
(“ New Earth
LNG ”) and Earth LNG’s direct and indirect
subsidiaries Arizona LNG, L.L.C., a Nevada limited liability
company, Fleet Star, Inc., a Delaware corporation, Earth
Leasing, Inc. f/k/a Alternative Dual Fuels, Inc., a Texas
corporation and Applied LNG Technologies USA, L.L.C., a
Delaware limited liability company (each of such
subsidiaries, together with Earth LNG, and New Earth LNG, an
“ LNG
Party ” and collectively, the “
LNG
Parties ”), PNG Ventures, Inc., a Nevada
corporation (“ PNG
”), and Castlerigg PNG Investments LLC, as Collateral
Agent (the “ Collateral
Agent ”), for each of the holders of the
“Notes” (as defined below), and Castlerigg PNG
Investments LLC., as a creditor (in such capacity, the
“ Creditor
”).
RECITALS
A. Reference
is made to (i) a Securities Purchase Agreement, dated as of
June 7, 2006, by and among Earth Biofuels, Inc., a Delaware
corporation and parent company of Earth LNG, and certain
buyers, pursuant to which, among other things, such buyers
purchased from Parent certain notes (the “ Notes
”), (ii) a Securities Purchase Agreement, dated as of
July 24, 2006, pursuant to which, among other things, certain
buyers purchased from the Parent senior convertible notes (the
“ 2006
Notes ”, and together with the Notes, the “
Existing
Notes ”) and (iii) an Interim Restructuring
Agreement, dated as of November 13, 2007, by and among the
Parent, Dennis McLaughlin III, and certain buyers, pursuant to
which, among other things, the Parent agreed to grant to each
holder of the Notes a security interest in certain assets of
the Parent and the Parent’s direct and indirect
subsidiaries, including, without limitation, the LNG Parties,
as evidenced by (x) a Pledge and Security Agreement, dated as
of December 20, 2007, by the Parent and such subsidiaries,
including, without limitation, the LNG Parties (the “
Existing Pledge
Agreement ”), (y) a Guaranty Agreement, dated as
of November 13, 2007, by the Parent’s subsidiaries,
including, without limitation, the LNG Parties (the “
Existing
Guaranty Agreement ”), and (z) each other
agreement, instrument, document and other writing entered into
in connection with the Existing Pledge Agreement and the
Existing Guaranty Agreement (the documents described in
clauses (x), (y) and (z), as heretofore amended, modified,
supplemented, restated or replaced from time to time, or any
forbearance or extension thereto, collectively the “
Collateral
Agreements ”);
B. Parent
is a debtor under the Amended and Restated Senior Secured
Exchangeable Note and Senior Subordinated Secured Convertible
Exchangeable Note, issued to the Collateral Agent and to the
Creditor and certain other creditors, pursuant to an Amendment
and Exchange Agreement, dated as of June 25, 2008, by and
among the Parent, PNG and the Creditor (the “
Exchange
Agreement ”) and certain related agreements,
instruments, documents and other writings (collectively the
“ Amended Parent
Credit Documents ”) pursuant to which, for the
avoidance of doubt, none of the LNG Parties is obligated in
any respect;
1) Parent,
Earth LNG and New Earth LNG, as assignee of the subsidiaries
of Earth LNG, have entered into a Share Exchange
Agreement, dated as of June 24, 2008 (the " Share Exchange
Agreement ") for the sale of all of the membership
interests in New Earth LNG to PNG and, in connection therewith
and as a condition thereof, the LNG Parties have requested
that the Collateral Agent and the Creditor release the LNG
Parties and PNG from any and all liabilities under or in
connection with the Collateral Agreements and otherwise, and
release any collateral held as security by the Collateral
Agent or the Creditor as security for any such liabilities
(whether such security interest is perfected or otherwise),
and that the Parent and Durant consent to such releases and
acknowledge certain related matters, all to which the parties
desire to agree pursuant to the terms hereof; and
D. Durant,
Earth Biofuels Technology Co., LLC, The Wing Sail Company,
Earth Biofuels of Cordele, LLC, B20 Customs, LLC, Earth
Biofuels Operating, Inc., Earth Biofuels Retail Fuel Company,
LLC, Earth Ethanol of Washington L.L.C. and Earth Ethanol,
Inc. (collectively, the “ Non-LNG
Subsidiaries ”) are entering into to an Amended
and Restated Guaranty Agreement (the “ Restated
Guaranty ”) in favor of the Creditor, and (b) the
Parent and the Non-LNG Subsidiaries are entering into an
Amended and Restated Pledge and Security Agreement (the
“ Restated Pledge
Agreement ”) in favor of the Collateral Agent, to
which agreements New Earth and the Subsidiaries are no longer
parties or obligors.
AGREEMENT
In consideration of the
foregoing premises, the covenants and conditions set forth
herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
undersigned do hereby acknowledge, consent and agree as
follows:
1.
Releases by
Collateral Agent and Creditor.
a. Effective
on the “Waiver Effective Date” (as hereinafter
defined), the Collateral Agent and the Creditor (collectively,
the “ Creditor
Parties ”), for themselves, their respective
officers, directors, employees, agents, attorneys,
subsidiaries, affiliates and predecessors and the respective
heirs, executors, administrators, legal representatives,
successors and assigns of each of the foregoing (all of the
foregoing being collectively the “ Releasors
”), hereby and with prejudice unconditionally and
irrevocably remise, release and forever discharge the LNG
Parties and PNG, their respective officers, directors,
employees, agents, attorneys, subsidiaries and predecessors
and the respective heirs, executors, administrators, legal
representatives, successors and assigns of each of the
foregoing (all of the foregoing , collectively, the “
Released
Persons ”) of and from any and all manner of
action and actions, cause and causes of action, suits, debts,
dues, sums of money, accounts, reckoning, bonds, bills,
specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments,
executions, claims (including, without limitation, any and all
defenses, counter-claims and cross-claims against, and rights
to indemnification or contribution from, any of the Released
Persons), demands, liabilities and obligations of whatever
kind or nature whatsoever (whether joint or several, direct or
indirect, absolute or contingent or otherwise, as maker,
endorser, surety, guarantor or otherwise, and whether
evidenced by any promissory note, court order, or other
instrument, or carried as an open account payable or
otherwise) in respect of any of the Collateral Agreements or
any other contract, instrument, liability, lien or claim
relating
thereto,
whether by operation of law or otherwise or to the business
dealings directly between Releasors and Parent and Non-LNG
Subsidiaries (other than any business dealings in which PNG
has signed a written acknowledgment with respect thereto or in
which PNG is a party), whether in law (including, without
limitation, any domestic or foreign federal, state, local or
other statute, regulation or other law), in equity or as
third-party beneficiary or otherwise, whether known or
unknown, suspected or unsuspected or otherwise, which any one
or more of the Releasors ever had, now has or in the future
can, shall or may have, against or otherwise involving any of
the Released Persons or any asset or property of any thereof,
for any reason whatsoever, or as a result of any matter
occurring or failing to occur or otherwise, at any time or
times whether heretofore or hereafter occurring; provided
, however ,
that the foregoing releases shall not apply to any liabilities
or obligations of PNG itself to any of the Creditor Parties
under or in respect of the "Transfer Agreement" itself (as
defined below) (to the extent that such representations relate
to PNG and are not representations or covenants of Parent,
Non-LNG Subsidiaries or LNG Parties or Creditors) or this
Release (collectively, " Related
Obligations ").
b. Effective
on the “Waiver Effective Date” (as hereinafter
defined), the Releasors hereby and with prejudice
unconditionally and irrevocably remise, release and forever
discharge Parent, its respective officers, directors,
employees, agents, attorneys, subsidiaries and predecessors
and its heirs, executors, administrators, legal
representatives, successors and assigns of each of the
foregoing (all of the foregoing, collectively, the “
EBOF
Released Persons ”) of and from any and all
manner of action and actions, cause and causes of action,
suits, debts, dues, sums of money, accounts, reckoning, bonds,
bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages,
judgments, executions, claims (including, without limitation,
any and all defenses, counter-claims and cross-claims against,
and rights to indemnification or contribution from, any of the
EBOF Released Persons), demands, liabilities and obligations
of whatever kind or nature whatsoever (whether joint or
several, direct or indirect, absolute or contingent or
otherwise, as maker, endorser, surety, guarantor or otherwise,
and whether evidenced by any promissory note, court order, or
other instrument, or carried as an open account payable or
otherwise) in respect of the Creditor's "Note" and "Exchanged
Notes" (as defined in "Settlement Exchange Agreement", as
defined in the "Transfer Agreement" defined below) and any
security interests in the shares of common stock, $0.0001 par
value, of PNG issuable upon conversion in accordance with the
terms thereof, whether by operation of law or otherwise),
whether in law (including, without limitation, any domestic or
foreign federal, state, local or other statute, regulation or
other law), in equity or as third-party beneficiary or
otherwise, whether known or unknown, suspected or unsuspected
or otherwise, which any one or more of the Releasors ever had,
now has or in the future can, shall or may have, against or
otherwise involving any of the EBOF Released Persons or any
asset or property of any thereof, for any reason whatsoever,
or as a result of any matter occurring or failing to occur or
otherwise, at any time or times whether heretofore or
hereafter occurring.
c. Parent
shall continue to be obligors under and parties to the Amended
Parent Credit Documents.
2.
Termination of
Collateral Agreements and Related
Security.
a. Effective
on the Waiver Effective Date , the Creditor Parties
acknowledge and agree that (i) as to the Released Persons
only, the Collateral Agreements are hereby fully, and finally
terminated and discharged in all respects, with prejudice, and
none of the Released Persons has any further or remaining
liability or obligation thereunder, and (ii) as to all assets
of the Released Persons only, all security interests and other
liens, security agreements, mortgages, deeds of trust,
assignments, pledges, guaranties, subordinations and other
collateral or security granted to or existing in favor of the
Creditor Parties or any of them in connection with obligations
under the Collateral Agreements, or in connection with any
other obligations of any of the Released Persons to the
Creditor Parties or any of them, are satisfied, discharged,
released and terminated in all respects.
b. Effective
on the Waiver Effective Date, the LNG Parties and their
designees (including, without limitation, Greenfield
Commercial, L.L.C.) are immediately authorized to file or
record termination statements for each Uniform Commercial Code
financing statement of public record naming any LNG Party as
debtor and the Creditor Parties or any of them as secured
party, including, without limitation, the Uniform Commercial
Code financing statements described on Exhibit A to this
Release.
c. Effective
on the Waiver Effective Date, promptly upon any further
written request of any LNG Party, each of the Creditor
Parties, as applicable, will provide such LNG Party with any
other instruments or writings and take any other actions
reasonably required to (a) confirm the satisfaction, payment,
discharge and
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