exhibit10.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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.

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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

    


    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    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



    


    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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