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MASTER RIGHTS AGREEMENT
 
THIS MASTER RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
the 26th day of June, 2008 (“Effective Date”) by and among PNG Ventures, Inc., a
Nevada corporation (the “Company”), and Fourth Third LLC, a Delaware limited
liability company (“Fourth Third”).
 
WHEREAS, the Company is acquiring from Earth LNG, Inc. (“Seller”) all of the
issued and outstanding membership interests of New Earth LNG, LLC (“Earth LNG”)
pursuant to that certain Share Exchange Agreement dated as of even date herewith
(the “Exchange Agreement”);
 
WHEREAS, as a condition to the closing under the Exchange Agreement, Earth LNG
has entered into that certain Amended and Restated Credit Agreement dated as of
even date herewith (the “Credit Agreement”) with Fourth Third, whereby Earth LNG
will receive an aggregate of $34,000,000 (the “Loan Proceeds”);
 
WHEREAS, as partial consideration for the Credit Agreement and the Loan
Proceeds, the Company has issued 1,100,000 shares of Common Stock (the “Shares”)
to Fourth Third;
 
WHEREAS, the parties have agreed herewith that, if the Company offers or issues
Common Stock for less than $10.00 per Share or the Common Stock otherwise trades
below such price at certain times as agreed to herein, Fourth Third and the
Company desire that the Company issue to Fourth Third certain  Additional Shares
(as hereinafter defined); and
 
WHEREAS, in connection with the closing under the Credit Agreement, Fourth Third
and the Company desire to enter into this Agreement to address the registration
rights with respect to the Shares and the Additional Shares and the issuance to
Fourth Third of Additional Shares as provided herein.
 
AGREEMENT
 
NOW THEREFORE, in consideration of the following mutual covenants and
agreements, and subject to the terms and conditions set forth herein, the
parties hereto agree as follows:
 

 
1.           Definitions.  As used herein, the following terms shall have the
following meanings.
 
“Additional Shares” means shares of Common Stock issued to Fourth Third as
provided in Section 10 hereof
 
"Affiliate" means, with respect to any Person, any other Person controlling,
controlled by, or under common control with such Person.  For purposes of this
Agreement, the term "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with" as used with respect to any
Person) means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person whether
through ownership of voting securities, by contract or otherwise.
 

 
 

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“Assumed Value” means $10.00 per Share (as adjusted for stock splits, stock
combinations or consolidations, stock dividends, mergers or similar
transactions).
 
"Common Stock" means, collectively, (i) the Company's Common Stock, $0.001 par
value per share and (ii) any other class of common stock of the Company, and
(iii) any capital stock of the Company issued or issuable with respect to the
securities referred to in clauses (i) or (ii) above whether by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
 
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
 
"Free Writing Prospectus" means a free-writing prospectus, as defined in Rule
405 of the Securities Act.
 
“Holder” shall mean Fourth Third and its Affiliates or their Permitted
Transferees, subject to the terms of this Agreement
 
"Permitted Transferee" means (i) any other Holder; (ii) any Affiliate of any
Holder; (iii) any one or more members of a class consisting of the spouse,
children and grandchildren of a Holder, or a trust for the benefit of any one or
more members of such class; or (iv) any shareholder or partner of any
non-natural Holder upon a pro rata distribution by such a non-natural Holder to
its partners, shareholders, interest holders or otherwise upon the dissolution
or liquidation of the non-natural Holder.
 
"Person" means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or other entity, or a governmental entity (or any
department, agency or political subdivision thereof).
 
“PIPE Securities” or “PIPE Offering” means shares of Common Stock issued to
investors in a private placement financing transaction with net proceeds to the
Company of at least $7,500,000, of which $5,000,000 is applied to reduce the
indebtedness under the Credit Agreement, and which include registration rights
with respect thereto.
 
“Price Determination Date” means the date that is the earliest to occur of (i)
the closing of a PIPE Offering, (ii) the date that the indebtedness under the
Credit Agreement is reduced to $30,000,000 or below, and (iii) December [20],
2008, (iv) the date that a Registration Statement with respect to the Shares is
declared effective.
 
"Registrable Securities" means (i) any shares of Common Stock acquired by,
issued or issuable to, or otherwise owned by the Holder, including without
limitation, the Shares and the Additional Shares; and (ii) any shares of capital
stock of the Company issued or issuable with respect to the securities referred
to in clause (i) by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, merger, consolidation or other
reorganization.  For purposes of this Agreement, a Person will be deemed to be a
holder of Registrable Securities whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon conversion or exercise
in connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.  Such securities will cease to be
Registrable Securities when and to the extent eligible to be sold pursuant to
Rule 144 without restriction.
 

 
 

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"Registration Expenses" means all expenses incident to the Company's performance
of or compliance with this Agreement, including without limitation all
registration, qualification and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger and delivery
expenses, fees and expenses of custodians, and fees and disbursements of counsel
for the Company and all independent certified public accountants, underwriters
(excluding discounts and commissions) and other Persons retained by the Company.
 
“Repurchase Amount” shall be as defined in Section 9.
 
"Rule 144" means Rule 144 under the Securities Act (or any similar rule then in
force).
 
"Securities Act" means the Securities Act of 1933, as amended.
 
2.           Short-Form Registrations.
 
(a)           Requests for Registration.  Subject to this Section 2, the holders
of a majority of the Registrable Securities may, at any time or from time to
time after six months following the Effective Date or, if earlier, upon the
grant of similar rights pursuant to the PIPE Offering, request registration,
whether underwritten or otherwise, under the Securities Act of all or part of
their Registrable Securities on Form S-3 or any similar short-form registration
("Short-Form Registrations"), if available.  Each request for a Short-Form
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering.  Within twenty (20) days after receipt of any such request for a
Short-Form Registration, the Company shall give written notice of such requested
registration to all other holders of Registrable Securities and shall include
(subject to the provisions of this Agreement including clause (d) below) in such
registration (and in all related registrations or qualifications under blue sky
laws or in compliance with other registration requirements and in any related
underwriting) all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within twenty (20) days after
the receipt of the Company's notice.
 
(b)           Short-Form Registrations.  The holders of a majority of the
Registrable Securities will be entitled to request an unlimited number of
Short-Form Registrations in which the Company shall pay all Registration
Expenses.
 
(c)           Priority on Short-Form Registrations.  The Company shall not
include in any Short-Form Registration any securities which are not Registrable
Securities (other than securities owned by the Company which the Company
proposes to register or PIPE Securities) without the prior written consent of
the holders of at least a majority of the Registrable Securities included in
such registration.  If a Short-Form Registration is an underwritten offering and
the managing underwriters advise the Company in writing that in their opinion
the number of Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold therein
without adversely affecting the marketability of the offering, the Company shall
include in such registration, (i) first, the number of Registrable Securities
and PIPE Securities requested to be included in such registration pro rata, if
necessary, among the holders of Registrable Securities and PIPE Securities based
on the number of shares of Registrable Securities or PIPE Securities owned by
each such holder at such time, and (ii) second, any other securities of the
Company requested to be
 

 
 

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included in such registration pro rata, if necessary, on the basis of the number
of shares of such other securities owned by each such holder at such time.
 
(d)           Restrictions on Short-Form Registrations.  The Company shall not
be obligated to effect any Short-Form Registration (i) within six (6) months
after the effective date of a previous Short-Form Registration or (ii) if the
Company shall furnish to the holders requesting such Short-Form Registration a
certificate signed by the Company's Chief Executive Officer stating that in the
good faith judgment of the Board of Directors of the Company, it would be
materially harmful to the economic prospects of the Company for such Short-Form
Registration to be effected at such time, in which event the Company shall have
the right to defer such filing for a period of not more than 120 days after
receipt of the initial request for the Short-Form Registration; provided, that
such right to delay a request shall be exercised by the Company not more than
once in any twelve-month period.
 
(e)           Selection of Underwriters.  In the case of a Short-Form
Registration, the Company will have the right to select the investment banker(s)
and manager(s) to administer the offering, which investment banker(s) and
manager(s) will be nationally recognized and reasonably acceptable to the
holders of a majority of the Registrable Securities included in such Short-Form
Registration.
 
3.           Piggyback Registrations.
 
(a)           Right to Piggyback.  Whenever the Company proposes to register any
of its Common Stock under the Securities Act other than pursuant to a Short Form
Registration or a  registration statement on Form S-8 or S-4 or any similar or
successor form and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"),  the
Company shall give prompt written notice to all holders of Registrable
Securities of its intention to effect such a registration and shall, subject to
the provisions of this Agreement including clauses (c) and (d) below, include in
such registration (and in all related registrations or qualifications under blue
sky laws or in compliance with other registration requirements and in any
related underwriting) all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within twenty (20)
days after the receipt of the Company's notice.
 
(b)           Priority on Primary Registrations.  If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, the Company shall
include in such registration all securities requested to be included in such
registration; provided, that if the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include in such registration (i) first, the securities the Company proposes to
sell, (ii) second, the number of Registrable Securities and PIPE Securities
requested to be included in such registration by the holders of Registrable
Securities and PIPE Securities, if necessary, pro rata among the holders of such
Registrable Securities and PIPE Securities on the basis of the number of shares
of such Registrable Securities or PIPE Securities owned by such holder at such
time, and (iii) third, any other securities of the Company requested to be
included in such registration pro rata, if necessary, on the basis of the number
of shares of such other securities owned by each such holder at such time.
 
(c)           Priority on Secondary Registrations.  If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities (which
 

 
 

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registration was granted in accordance with Section 2(g) above), the Company
shall include in such registration all securities requested to be included in
such registration; provided, that if the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Company shall include in such registration the securities and Registrable
Securities and PIPE Securities requested to be included therein pro rata, if
necessary, among the holders of such securities and Registrable Securities and
PIPE Securities on the basis of the number of securities and Registrable
Securities or PIPE Securities owned by each such holder at such time.
 
(d)           Selection of Underwriters.  In case of a Piggyback Registration
that is an underwritten offering, the Company will have the right to select the
investment banker(s) and manager(s) to administer the offering, which investment
banker(s) and manager(s) will be nationally recognized and reasonably acceptable
to the holders of a majority of the Registrable Securities included in such
Piggyback Registration.  The Company will not be required to include any
Registrable Securities in such underwritten offering unless the holders of a
majority of the Registrable Securities comply with Section 8 hereof.
 
(e)           Other Registrations.  If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
Section 2 or this Section 3, and if such previous registration has not been
withdrawn or abandoned, the Company will not file or cause to be effected any
other registration of any of its equity securities or securities convertible or
exchangeable into or exercisable for its equity securities under the Securities
Act (except on Forms S-4 or S-8 or any similar or successor forms), whether on
its own behalf or at the request of any holder or holders of such securities,
until a period of at least six (6) months has elapsed from the effective date of
such previous registration.
 
(f)           Obligations of Seller. During such time as any holder of
Registrable Securities may be engaged in a distribution of securities pursuant
to an underwritten Piggyback Registration, such holder shall distribute any
Registrable Securities held by such holder only under the registration statement
and solely in the manner described in the registration statement.
 
4.           Holdback Agreements.
 
(a)           No holder of Registrable Securities shall sell, transfer, make any
short sale of, grant any option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale (including sales
pursuant to Rule 144) (a "Sale Transaction") of any equity securities of the
Company, or any securities convertible into or exchangeable or exercisable for
any such equity securities, during the seven (7) days prior to and the 90-day
period beginning on the effective date of such underwritten registration (each a
"Holdback Period"), except as part of such underwritten registration, unless the
underwriters managing such public offering otherwise agree in writing or unless
the holders of PIPE Securities are subject to substantially similar
restrictions.  If (i) the Company issues an earnings release or other material
news or a material event relating to the Company and its Subsidiaries occurs, in
either case during the last 17 days of the Holdback Period or (ii) prior to the
expiration of the Holdback Period, the Company announces that it will release
earnings results during the 16-day period beginning upon the expiration of such
period, then to the extent necessary for a managing or co-managing underwriter
of a registered offering required hereunder to comply with NASD Rule 2711(f)(4),
the Holdback Period will be extended until 18 days after the earnings release or
the occurrence of the material news or event, as the case may be
 

 
 

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(such period referred to herein as the "Holdback Extension").  The Company may
impose stop-transfer instructions with respect to the shares of Common Stock (or
other securities) subject to the foregoing restriction until the end of such
period, including any period of any Holdback Extension.
 
(b)           The Company (i) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to and during
such period of time as may be determined by the underwriters managing such
underwritten registration following the effective date of any underwritten Short
Form Registration or Piggyback Registration (not to exceed 90 days (except as
extended during the period of any Holdback Extension)) (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree in writing, and (ii) shall cause each holder of at least 5% (on
a fully-diluted basis) of its Common Stock, PIPE Securities, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased from
the Company at any time after the date of this Agreement (other than in a
registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such period (as extended by any Holdback Extension), except as part of
such underwritten registration, if otherwise permitted, unless the underwriters
managing the registered public offering otherwise agree in writing.
 
5.           Registration Procedures.  Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered as
permitted by this Agreement, the Company shall use its best efforts to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof, and pursuant thereto the Company
shall as expeditiously as possible:
 
(a)           in accordance with the Securities Act and all applicable rules and
regulations promulgated thereunder, prepare and file with the Securities and
Exchange Commission a registration statement, and all amendments and supplements
thereto and related prospectuses, with respect to such Registrable Securities
and use its best efforts to cause such registration statement to become
effective (provided, that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company shall furnish to one
counsel selected by the holders of a majority of the Registrable Securities
covered by such registration statement copies of all such documents proposed to
be filed, which documents shall be subject to the review and comment of such
counsel), and include in any such registration such additional information
reasonably requested by a majority of the Registrable Securities registered
under the applicable registration statement, or the underwriters, if any, for
marketing purposes, whether or not required by applicable securities laws;
 
(b)           notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for the lesser of
(x) 180 days and (y) such shorter period which will terminate when all
Registrable Securities covered by the registration statement have been sold and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
 

 
 

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(c)           furnish to each seller of Registrable Securities thereunder such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus), each Free Writing Prospectus and such other documents
as such seller may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such seller;
 
(d)           use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection, (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process (i.e.,
service of process which is not limited solely to securities law violations) in
any such jurisdiction);
 
(e)           notify each seller of such Registrable Securities, (i) promptly
after it receives notice thereof, of the date and time when such registration
statement and each post-effective amendment thereto has become effective or a
prospectus or supplement to any prospectus relating to a registration statement
has been filed and when any registration or qualification has become effective
under a state securities or blue sky law or any exemption thereunder has been
obtained, (ii) promptly after receipt thereof, of any request by the Securities
and Exchange Commission for the amendment or supplementing of such registration
statement or prospectus or for additional information, and (iii) at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
promptly prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
 
(f)           prepare and file promptly with the Securities and Exchange
Commission, and notify such holders of Registrable Securities prior to the
filing of, such amendments or supplements to such registration statement or
prospectus as may be necessary to correct any statements or omissions if, at the
time when a prospectus relating to such securities is required to be delivered
under the Securities Act, when any event has occurred as the result of which any
such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and, in case any such holders of Registrable Securities or any underwriter for
any such holders is required to deliver a prospectus at a time when the
prospectus then in circulation is not in compliance with the Securities Act or
the rules and regulations promulgated thereunder, the Company shall use its best
efforts to prepare promptly upon request of any such holders or underwriters
such amendments or supplements to such registration statement and prospectus as
may be necessary in order for such prospectus to comply with the requirements of
the Securities Act and such rules and regulations;
 
(g)           cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
 

 
 

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(h)           provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
 
(i)           enter into and perform such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
participation in "road shows," investor presentations and marketing events and
effecting a stock split or a combination of shares);
 
(j)           make available at reasonable times for inspection by any seller of
Registrable Securities, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such registration statement
subject to the applicable person(s) executing a nondisclosure agreement in
reasonable form and substance if reasonably required by the Company;
 
(k)           otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission;
 
(l)           permit any holder of Registrable Securities, which holder, in the
Company’s judgment, is or might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration or
comparable statement and to require the insertion therein of material, furnished
to the Company in writing, which in the reasonable judgment of such holder and
its counsel should be included;
 
(m)           use its best efforts to prevent the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any common stock included in such registration statement for
sale in any jurisdiction, and in the event of the issuance of any such stop
order or other such order the Company shall advise such holders of Registrable
Securities of such stop order or other such order promptly after it shall
receive notice or obtain knowledge thereof and shall use its best efforts
promptly to obtain the withdrawal of such order;
 
(n)           use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate  the disposition of such Registrable Securities;
 
(o)           provide a legal opinion of the Company's outside counsel, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) in customary form and covering such matters of the type
customarily covered by legal opinions of such nature.
 
If any such registration or comparable statement refers to any holder by name or
otherwise as the holder of any securities of the Company and if, in the
Company’s judgment, such holder is or might
 

 
 

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be deemed to be a controlling person of the Company, such holder will have the
right to require (i) the insertion therein of language, in form and substance
reasonably satisfactory to such holder and presented to the Company in writing,
to the effect that the holding or sale by such holder of such securities is not
to be construed as a recommendation by such holder of the investment quality of
the Company's securities covered thereby and that such holding or sale does not
imply that such holder shall assist in meeting any future financial requirements
of the Company, or (ii) in the event that such reference to such holder by name
or otherwise is not required by the Securities Act or any similar Federal
statute then in force, the deletion of the reference to such holder; provided,
that with respect to this clause (ii) such holder shall furnish to the Company
an opinion of counsel to such effect, which opinion and counsel shall be
reasonably satisfactory to the Company.
 
6.           Registration Expenses.  All Registration Expenses, shall be borne
as provided in this Agreement, except that the Company shall, in any event, pay
its internal expenses (including, without limitation, all salaries and expenses
of its officers and employees performing legal or accounting duties), the
expense of any annual audit or quarterly review, the expense of any liability
insurance and the expenses and fees for listing the securities to be registered
on each securities exchange on which similar securities issued by the Company
are then listed.  Each Person that sells securities pursuant to a Short Form
Registration or Piggyback Registration hereunder shall bear and pay all
underwriting discounts and commissions applicable to the securities sold for
such Person's account.
 
7.           Indemnification.
 
(a)           The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its partners, members, officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
arising out of or based upon any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, and shall reimburse such holder,
partners, members, director, officer or controlling person for any legal or
other expenses reasonably incurred by such holder, partner, member, officer,
director or controlling person in connection with the investigation or defense
of such loss, claim, damage, liability or expense, except insofar as the same
are caused by or contained in any information furnished in writing to the
Company by such holder expressly for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same.  In connection with an underwritten
offering, the Company shall indemnify such underwriters, their officers and
directors and each Person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the holders of Registrable Securities.
 
(b)           In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall (i) indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact relating to such holder and provided by such
 

 
 

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holder to the Company or the Company's agent contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in, or based upon, any information or affidavit so furnished in
writing by such holder; provided, that the obligation to indemnify will be
individual, not joint and several, to each holder and will be limited to the net
amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement, and (ii) reimburse the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) for any legal or other expenses
reasonably incurred by such Persons in connection with the investigation or
defense of such loss, claim, damage, liability or expense, except insofar as the
same are caused by or contained in any information furnished to such holder of
Registrable Securities by such Persons expressly for use therein.  In connection
with an underwritten offering in which a holder of Registrable Securities is
participating, each such holder shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act).
 
(c)           Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided, that failure to give such notice shall
not affect the right of such Person to indemnification hereunder unless such
failure is prejudicial to the indemnifying party's ability to defend such claim)
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party.  If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its prior
written consent (but such consent shall not be unreasonably withheld).  An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
 
(d)           The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.  The Company and
each holder also agree to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event the
indemnification provided for herein is unavailable for any reason.
 
(e)           If the indemnification provided for in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party or is
otherwise unenforceable with respect to any loss, claim, damage, liability or
action referred to herein, then the indemnifying party, in lieu of indemnifying
such indemnified party hereunder, shall contribute to the amounts paid or
payable by such indemnified party as a result of such loss, claim, damage,
liability or action in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and of the indemnified party on
the other hand in connection with the statements or omissions which resulted in
such loss, claim, damage, liability or action as well as any other relevant
equitable
 

 
 

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considerations; provided, that the maximum amount of liability in respect of
such contribution shall be limited, in the case of each seller of Registrable
Securities, to an amount equal to the net proceeds actually received by such
seller from the sale of Registrable Securities effected pursuant to such
registration.  The relative fault of the indemnifying party and of the
indemnified party will be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.  The parties hereto agree that it would not be just or
equitable if the contribution pursuant to this Section 7(f) were to be
determined by pro rata allocation or by any other method of allocation that does
not take into account such equitable considerations.  The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to herein will be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject
hereof.  No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
Person who is not guilty of such fraudulent misrepresentation.
 
(f)           No indemnifying party shall, except with the consent of the
indemnified party, consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof given by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
 
(g)           Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with an underwritten public offering conflict with
the foregoing provisions, the provisions in the underwriting agreement will
control.
 
8.           Participation in Underwritten Registrations.  No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements (including pursuant to any over-allotment or "green
shoe" option requested by the underwriters, provided, that no holder of
Registrable Securities or PIPE Securities shall be required to sell more than
the number of Registrable Securities or PIPE Securities such holder has
requested to include) and (b) completes and executes all customary
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements; provided, that no holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder's intended method of
distribution.  Each holder of Registrable Securities agrees to execute and
deliver such other agreements as may be reasonably requested by the Company and
the lead managing underwriter(s) that are consistent with such holder's
obligations under Section 4 or that are necessary to give further effect
thereto.
 
9.           Rule 144 Reporting.  With a view to making available to the holders
of Registrable Securities the benefits of certain rules and regulations of the
Securities and Exchange Commission which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to use its
best efforts to:
 

 
 

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(a)           make and keep current public information available, within the
meaning of Rule 144 or any similar or analogous rule promulgated under the
Securities Act, at all times after it has become subject to the reporting
requirements of the Exchange Act;
 
(b)           file with the Securities and Exchange Commission, in a timely
manner, all reports and other documents required of the Company under the
Securities Act and Exchange Act (after it has become subject to such reporting
requirements); and
 
(c)           so long as any party hereto owns any Registrable Securities,
furnish to such Person forthwith upon request, a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time commencing ninety (90) days after the effective date of the first
registration filed by the Company for an offering of its securities to the
general public), the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements); a copy of the most recent
annual or quarterly report of the Company; and such other reports and documents
as such Person may reasonably request in availing itself of any rule or
regulation of the Securities and Exchange Commission allowing it to sell any
such securities without registration.
 
10.           Additional Shares.
 
(a)           On the Price Determination Date, the Company shall make a
determination of the actual trading value of the shares of Common Stock of the
Company by averaging any consecutive or non consecutive five (5) day, daily
weighted average trading price during the 40 trading days immediately prior to
the Price Determination Date as reported on Bloomberg news service, or, if the
securities are trading on an exchange or quoted on any Nasdaq market, based on
the official transaction pricing reporting of such exchange or Nasdaq market
(the “Assumed Value”); provided, that if the Price Determination Date occurs due
to the closing of a PIPE Offering, the Assumed Value shall be the price of the
PIPE Securities,  and,  as soon thereafter as possible issue to Fourth Third
such number of additional shares of Common Stock (the “Additional Shares” ) as
equals “Y” where “Y” equals the sum of (A) $11,000,000 divided by (B) the
Assumed Value, less the number of Shares issued hereby as adjusted for stock
splits, combinations or similar transactions, up to a maximum of 1,100,000
Additional Shares.  By way of examples only, (i) if the Assumed Value as
determined at a Price Determination Date is determined to be $8.00, then, in
addition to the 1,100,000 Shares previously issued, 275,000 Additional Shares
shall be issued, and (ii) if the Assumed Value is determined to be $5.00, then,
in addition to the 1,100,000 Shares previously issued, 1,100,000 Additional
Shares shall be issued.
 
(b)           At any time that there is indebtedness outstanding under the
Credit Agreement, the Company may, at its sole and absolute discretion,
repurchase, for consideration (the “Repurchase Amount”) of (i) $5,000,000, a
portion of the Shares and Additional Shares held by all holders, equal to all
such Shares and Additional Shares in excess of 635,231 shares of Common Stock,
as adjusted for stock splits, recombination or similar transactions, or (ii)
$10,000,000, all Shares and Additional Shares held by all holders.
 
(c)           Notwithstanding the foregoing, the Assumed Value shall not be
increased and no Shares or Additional Shares issued to the Holder shall be
cancelled.  The Adjustment is in addition to the other rights of the Holder
described in this Agreement. The certificate(s) representing all Shares and
Additional Shares (if any) issued to Fourth Third and its assigns shall be
appropriately legended reflecting the foregoing.
 

 
 

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(d)           Upon the occurrence of each Adjustment, the Company, at its
expense, shall promptly compute such Adjustment or readjustment and prepare and
furnish to the Holder a certificate setting forth such Adjustment and showing in
detail the facts upon which such Adjustment is based.  Upon the occurrence of
each Adjustment, the Company shall issue and deliver to the Holder, a stock
certificate or certificates representing the Additional Shares or immediately
pay the Repurchase Amount.
 
(e)           Unless permitted by the applicable rules and regulations of the
principal securities market on which the Common Stock is then listed or traded,
in no event shall the Company issue pursuant to this Agreement, more than the
maximum number of shares of Common Stock that the Borrower can issue pursuant to
any rule of the principal United States securities market on which the Common
Stock is then traded, subject to equitable adjustment from time to time for
stock splits, reverse stock splits, stock dividends, combinations, capital
reorganizations and similar events relating to the Common Stock occurring after
the date hereof.  If such rules or regulations would prohibit an issuance of
Additional Shares pursuant to the Adjustment, the Company shall pay the Holder
the Repurchase Amount, or, at the Holder’s option, issue the Holder non-voting
Common Stock or issue the Holder a promissory amount reflecting the dollar value
of the Adjustment and the material terms of the indebtedness under the Credit
Agreement.
 
(f)           Until the Price Determination Date, Holder may not, on its own or
through entities under its control, sell, short sell, agree to sell or sell or
write calls options or warrants, hypothecate, loan, or enter into or maintain
any short equivalent position, arbitrage arrangement or hedging transaction
resulting in a short equivalent position, with respect to any of the Shares on
any market, quotation service or exchange where the Common Stock is trading or
authorized for quotations.
 
11.           Notices.  All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this 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 the Holder 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.
2038 Corte Del Nogal, Suite 110
Carlsbad, California  92011
Attention: Mark Baum, Esq.
Tel. (760) 804-8844 x205
Facsimile: (760) 804-8845

with a copy to:

Hodgson Russ, LLP
1540 Broadway, 24th Floor
New York, NY 10036

 
 

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Attention: Ron Levy, Esq.
Tel. (212) 751-4300
Fax. (212) 751-0928
Email: rlevy@hodgsonruss.com

If to Fourth Third:

Fourth Third LLC
375 Park Avenue
Suite 3304
New York, NY 10152
Attention: Brian J. Cavanagh, CFO
Tel (212) 759-7577
Facsimile: (212) 759-0091
Email: brian@medleycapital.com

King & Spalding, LLP
1185 Avenue of the Americas
New York, NY 10036
Attention: Gerald Woods, Esq.
Tel. (212) 556-2232
Facsimile: (212) 556-2222
Email: GWoods@KSLAW.com

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.
 
12.           Miscellaneous.
 
(a)           No Inconsistent Agreements.  The Company shall not enter into any
agreement which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.
 
(b)           Remedies.  Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law.  The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
 
(c)           Amendments and Waivers.  Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and the holders of at least a majority of the
Registrable Securities.  Notwithstanding anything to the contrary, no
modification, amendment or waiver of any provision that materially and adversely
affects the rights or obligations hereunder of any particular holder of
Registrable
 

 
 

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Securities or group of holders of Registrable Securities while not similarly
affecting the rights or obligations hereunder of all holders of Registrable
Securities shall be effective against such holder or group of holders unless
approved in writing by such holder or the holders of a majority of the
Registrable Securities held by such group of holders, as the case may be.  The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
 
(d)           Successors and Assigns.  All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.  In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
 
(e)           Severability.  Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
 
(f)           Counterparts.  This 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 Agreement shall be acceptable and binding.
 
(g)           GOVERNING LAW.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS 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.
 
(h)           Time is of the Essence; Computation of Time.  Time is of the
essence for each and every provision of this Agreement.  Whenever the last day
for the exercise of any privilege or the discharge of any duty hereunder shall
fall upon a Saturday, Sunday, or any date on which banks in New York, New York
are authorized to be closed, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next succeeding day which
is a regular business day.
 
(i)           Entire Agreement.  This Agreement and all other agreements
contemplated by this 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.
 
(j)           Descriptive Headings.  The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
 
            *   *   *   *   *   *

 
 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Master Rights
Agreement as of the Effective Date.
 

 
PNG VENTURES, INC.
 

 
By:           /s/ Kevin
Markey                                                   
Name: Kevin Markey
Title: Chief Executive Officer
 

 
FOURTH THIRD LLC
 

 
By:           /s/ Seth R.
Taube                                                   
Name: Seth R. Taube
Title: Authorized Signatory
 

 
 

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