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Dennis G. McLaughlin, III
Chief Executive Officer
Earth Biofuels, Inc.
Earth LNG, Inc.
3001 Knox Street, Suite 303
Dallas, Texas 75205

Re:           Acquisition of Earth LNG, Inc.

Dear Mr. McLaughlin:

This binding letter of intent (the “Letter of Intent”) sets forth the
understanding of the mutual intentions of the below parties regarding the
proposed transaction between on the one hand, PNG Ventures, Inc., a Nevada
corporation, (“PNGX”) and, on the other hand, both Earth Biofuels, Inc., a
Delaware corporation (“EBOF”) and Earth LNG, Inc., a Texas corporation and
wholly owned subsidiary of EBOF (“Earth LNG” and, together with EBOF, the “EBOF
Parties”) (PNGX, EBOF and Earth LNG may be referred to hereinafter individually
as a “Party” and collectively as the “Parties”).

Each Party understands and acknowledges that this is a binding Letter of Intent
and therefore creates a legally binding contract, which will be subject to the
Definitive Agreements (as defined below). All Parties agree to make all best and
expeditious efforts to complete the Definitive Agreement on or before June 30,
2008 (the “Closing Date”).

1.             Transaction Architecture.  Earth LNG currently owns and will own
at closing, through one or more subsidiary entities, (i) 100% of the “LNG”
production facility located in Topock, Arizona, (ii) certain lease, rental,
delivery, purchase, contract and related rights, and (iii) all fixtures,
buildings, machinery and other assets of Earth LNG and its subsidiaries
(collectively, the “LNG Assets”) as are currently in place. PNGX will acquire
from EBOF, 100% of the issued and outstanding shares of Earth LNG (which shall
at closing, include and thereby transfer, all of the LNG Assets) such that Earth
LNG and all of its subsidiaries will be wholly owned by PNGX (the
“Transaction”).  Pursuant to the Transaction, and presuming satisfaction of all
closing conditions and satisfactory Definitive Agreements, PNGX will acquire
100% of Earth LNG (which, for the avoidance of doubt, shall include all of the
LNG Assets held by it or its subsidiaries) in exchange for a controlling
interest of PNGX common stock.  Additionally, shares of PNGX may be used to
discharge certain secured and unsecured indebtedness, so that total indebtedness
of Earth LNG and its subsidiaries include no more than $32,500,000, some or all
of which may be secured only by a lien on the actual assets an not by any pledge
of securities of PNGX or of the subsidiaries.  PNGX shall acquire Earth LNG
without having to issue debt or assume any indebtedness (provided that
indebtedness of the subsidiaries secured by land in the Topock Arizona property
only is acceptable).  The Transaction may be structured as a securities purchase
agreement, asset purchase or similar transaction. No assurance can be made that
the Transaction will not be taxable.

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2.             Definitive Agreements.    After receipt of this fully executed
Letter of Intent, the Parties will commence preparation of definitive agreements
which will effect the Transaction and arrangements contemplated herein (the
“Definitive Agreements”). The Definitive Agreements will contain the provisions
outlined above, in addition to the usual and customary representations and
warranties, covenants assuring marketable title to Earth LNG and of the LNG
Assets by Earth LNG and its subsidiaries, conditions, and indemnifications for
transaction of this kind, including, without limitations: environmental, tax and
securities filings, and corporate filings, and the accuracies of all of the
same.

3.             Due Diligence.      For a period not to exceed ten (10) days
subsequent to the execution of this Letter of Intent, the Parties shall comply
with reasonable requests to review relevant information concerning themselves
and business entities they are affiliated with, insofar as such requests are
reasonably related to the completion of the Transaction and the execution of the
going-forward plan of operating the post-Transaction business. Upon the
execution of this Letter of Intent by all Parties, the Parties shall immediately
mutually exchange the following:

-   All Financial Statements

-   History of financings and related documents

-   Certificate of Incorporation (with any amendments thereto)

-   All board minutes

-   Bylaws (with any amendments thereto)

-   Current shareholder list

-   Title report relating to the Topock Arizona LNG facility and its buildings
and structures and UCC report relating to fixtures, as well as a schedule of
assets, leases (including, without limitation equipment, vehicle and heavy
machinery leases) and rental/lease obligations, as well as a current list of
orders, all as of a recent date, all of which shall be kept confidential.

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4.             Transaction Document Expenses.  The EBOF Parties shall
individually and collectively be solely responsible for all fees and expenses of
the Parties agents, advisors, attorneys and accountants with respect to the
negotiation of this Letter of Intent, the negotiation and drafting of the
Definitive Agreements and, if Definitive Agreements are executed, the closing of
the Transaction.

5.             Termination Fee/No Shop.      Until August 30, 2008, neither
EBOF, Earth LNG nor any of their subsidiaries or principals may enter into any
transaction or agreement to enter into a transaction for the sale of Earth LNG,
its subsidiaries or any of the LNG Assets or otherwise encumber or enter into an
agreement that would encumber any of the foregoing or enter into any agreement
outside of the ordinary course of business or that would otherwise hinder PNGX’s
rights or intentions under this agreement.  Similarly, PNGX may not solicit or
enter into agreements with other businesses for the acquisition of such
business, and neither party may enter into any transaction that would frustrate
the intent of the Parties herein. In the event the Transaction is terminated by
the EBOF Parties or the Transaction does not close by the Closing Date
regardless of reason (other than clear bad faith of PNGX) (a “Termination”), the
EBOF Parties shall jointly and severally pay to PNGX, a termination fee of
$100,000 (the “Termination Fee”) in addition to the Deposit (as defined below).
The Termination Fee shall compensate PNGX for all fees, expenses and losses of
opportunity associated with the Transaction and the Termination thereof. On the
earlier date of (i) 60 days from the execution of this Letter of Intent and (ii)
the date PNGX (a) closes any equity or debt financing or (b) sells any asset,
EBOF shall deliver to PNGX, or its creditor/assignee, a $50,000 non-refundable
deposit payment (the “Deposit”) via electronic wire transfer or overnight
delivery of a cashiers check to PNGX’s address first listed above. The Deposit
may be used by PNGX for any purpose, including repayment of professional fees or
consulting fees, and as part of the consideration for entering into settlement
and indemnification agreement with its principals.  The Deposit shall be
delivered to PNGX from EBOF’s interest in the proceeds from the sale of Biofuels
Company of America, LLC, an Illinois limited liability company, and shall be
delivered pursuant to the Irrevocable Funds Instruction Letter attached hereto
as Exhibit A.

6.             EBOF Series A Preferred Redemption.   EBOF currently has issued
and outstanding shares of its Series A Preferred Stock. As part of the
Transaction terms and in consideration of PNGX entering into the Letter of
Intent, PNGX shall, at closing, assume all of EBOF’s obligations to pay the
total Redemption Price (as defined in the Certificate of Designation relating to
the Series A Preferred Stock) currently owed by EBOF to holders of the Series A
Preferred Stock.  After such assumption, EBOF shall no longer be required to
make such payment but such payment shall be the sole obligation of PNGX and its
subsidiaries.
 
 

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7.             Public Announcement.    Within five (5) days following the
following the date of this Letter of Intent, the Parties shall (i) individually
release a Form 8-K with the U.S. Securities and Exchange Commission regarding
the Transaction (collectively the “Form 8-K’s” copies of which has been attached
hereto as Exhibit B and Exhibit C) and (ii) jointly release a press release
regarding the Transaction (the “Joint Press Release” a copy of which has been
attached hereto as Exhibit D).  With the exception of the Form 8-K’s and Joint
Press Release, the Parties agree not to issue any further press releases or make
any further public announcement regarding the Transaction without prior written
mutual consent of all Parties, except where a public announcement is otherwise
required by law.

8.             Jurisdiction.  Florida state courts, using Florida law.

We trust that these terms accurately reflect our understanding. If there are any
questions or comments regarding the same, please feel to contact me at your
convenience. Otherwise kindly execute this Letter of Intent acknowledging your
agreement to the terms outlined above and fax it to 760-804-8845.

Best regards,

PNG VENTURES, INC.

 /s/ Kevin Markey                            
By: Kevin Markey
Its: Interim Chief Executive Officer

Agreed and accepted by:

EARTH BIOFUELS, INC.

 /s/ Dennis G. McLaughlin, III                      
By: Dennis G. McLaughlin, III
Its: Chief Executive Officer
 
 
EARTH LNG, INC.

 /s/ Dennis G. McLaughlin, III                    
By: Dennis G. McLaughlin, III
Its: Chief Executive Officer

 

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Dennis G. McLaughlin, III
Chief Executive Officer
Earth Biofuels, Inc.
Earth LNG, Inc.
3001 Knox Street, Suite 303
Dallas, Texas 75205

Re:           First Amended and Restated Binding Letter of Intent.

On or about May 15, 2008 (i) PNG Ventures, Inc., a Nevada corporation, (“PNGX”)
on one hand, and, (ii) both Earth Biofuels, Inc., a Delaware corporation
(“EBOF”) and Earth LNG, Inc., a Texas corporation and wholly owned subsidiary of
EBOF (“Earth LNG” and, together with EBOF, the “EBOF Parties”) on the other
hand, entered into a binding letter of intent (the “Original LOI”). (PNGX, EBOF
and Earth LNG may be referred to hereinafter individually as a “Party” and
collectively as the “Parties”).

The Parties hereby enter into this First Amended and Restated Binding Letter of
Intent (the “Amended LOI”) whereby the Parties agree to ratify, assume and
incorporate by reference every term, condition, restriction, recital, preamble,
paragraph, section, subsection, article and executory page set forth in the
Original LOI, with the exception of the restatement of Sections 3 and 6 of the
Original LOI which shall be amended, completely restated and incorporated herein
as follows:

3.           Due Diligence.  The time during which the due diligence described
in the Original LOI may take place shall be extended ten (10) calendar days from
May 22, 2008.

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6.           Assumption of Financial Obligations.  The EBOF Parties are
currently indebted to: (i) Black Forest International, LLC (“BFI”) pursuant to
shares of EBOF’s Series A Preferred Stock currently issued to BFI; (ii) Fourth
Third Capital, LLC (“Fourth Third”) pursuant to the Credit Agreement dated
February 28, 2007; and (iii) Greenfield Commercial Credit, LLC (“Greenfield”)
pursuant to the Intercreditor Agreement dated as of March 1, 2007 and
subsequently amended on July 31, 2007. (“Greenfield”) (BFI, Fourth Third and
Greenfield may be referred to collectively as the “EBOF Obligees”).  PNGX shall
assume all financial obligations owed by the EBOF Parties to the EBOF Obligees.

Each Party understands and acknowledges that this is a binding agreement and
therefore creates a legally binding contract, which will be subject to the
Definitive Agreements (as defined in the Original LOI).

We trust that these terms accurately reflect our understanding. If there are any
questions or comments regarding the same, please feel to contact me at your
convenience. Otherwise kindly execute this Letter of Intent acknowledging your
agreement to the terms outlined above and fax it to 760-804-8845.

Best regards,

PNG VENTURES, INC.

 /s/ Kevin Markey                            
By: Kevin Markey
Its: Interim Chief Executive Officer

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Agreed and accepted by:

EARTH BIOFUELS, INC.

 /s/ Dennis G. McLaughlin, III                      
By: Dennis G. McLaughlin, III
Its: Chief Executive Officer
 
 
EARTH LNG, INC.

 /s/ Dennis G. McLaughlin, III                    
By: Dennis G. McLaughlin, III
Its: Chief Executive Officer

 
 

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