Exhibit 4.2


 


REGISTRATION
RIGHTS AGREEMENT


 


REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of July 24, 2006, by and among Earth Biofuels, Inc., a
Delaware corporation, with headquarters located at 3001 Knox Street, Suite 403,
Dallas, Texas 75205, (the “Company”),
and the undersigned buyers (each, a “Buyer”,
and collectively, the “Buyers”).


 


WHEREAS:


 


A.                                   In connection with the Securities Purchase
Agreement, dated as of July 24, 2006, by and among the Company and the
Buyers (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions set forth
in the Securities Purchase Agreement, to issue and sell to each Buyer (i) senior
convertible notes of the Company (the “Notes”),
which will, among other things, be convertible into shares of the Company’s
common stock, $0.001 par value per share (the ”Common Stock”, as converted, the “Conversion Shares”) in accordance with the terms of the Notes,
and (ii) two series of warrants (the “New Warrants”), which will be exercisable to purchase shares
of Common Stock (as exercised collectively, the “New Warrant Shares”).


 


B.                                     The Company and certain Buyers acquired
certain warrants (the “Bridge Warrants”,
and together with the New Warrants, the “Warrants”),
which are exercisable to purchase shares of Common Stock (as exercised
collectively, the “Bridge Warrant Shares”,
and together with the New Warrant Shares, the “Warrant Shares”), pursuant to (i) that certain Securities
Purchase Agreement, dated as of May 26, 2006, by and among the Company and
Buyers signatory thereto, (ii) that certain Securities Purchase Agreement,
dated as of June 7, 2006, by and among the Company and the Buyers
signatory thereto and (iii) that certain Securities Purchase Agreement,
dated as of July 10, 2006, by and among the Company and the Additional
Bridge Buyers signatory thereto.


 


C.                                     In accordance with the terms of the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities
laws.


 


NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
each of the Buyers hereby agree as follows:


 


1.                                       Definitions.


 


Capitalized terms used herein and not otherwise
defined herein shall have the respective meanings set forth in the Securities
Purchase Agreement. As used in this Agreement, the following terms shall have
the following meanings:


 

















 


a.                                       “Business
Day” means any day other than Saturday, Sunday or any other day on
which commercial banks in The City of New York are authorized or required by
law to remain closed.


 


b.                                      “Closing
Date” shall have the meaning set forth in the Securities Purchase
Agreement.


 


c.                                       “Effective
Date” means the date the Registration Statement has been declared
effective by the SEC.


 


d.                                      “Effectiveness
Deadline” means the date which is (i) in the event that the
Registration Statement is not subject to a review by the SEC, 60 calendar days
after the Closing Date or (ii) in the event that the Registration
Statement is subject to a review by the SEC, 120 calendar days after the
Closing Date.


 


e.                                       “Filing
Deadline” means 30 calendar days after the Closing Date.


 


f.                                         “Investor”
means a Buyer or any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement in accordance with the requirements of the
Transaction Documents and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 and any transferee or assignee
thereof to whom a transferee or assignee assigns its rights under this
Agreement in accordance with the requirements of the Transaction Documents and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 9.


 


g.                                      “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.


 


h.                                      “register,”
“registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements (as
defined below) in compliance with the 1933 Act and pursuant to Rule 415
and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.


 


i.                                          “Registrable
Securities” means (i) the Conversion Shares issued or issuable
upon conversion or redemption of the Notes, (ii) the Warrant Shares issued
or issuable upon exercise of the Warrants, (iii) any shares of Common
Stock issuable upon exercise of warrants issued to any placement agent as
compensation in connection with the financing that is the subject of the
Securities Purchase Agreement, (iv) any shares of Common Stock issuable
upon payment of the Make-Whole Amount (as such term is defined in the Notes)
pursuant to the Notes and (v) any capital stock of the Company issued or
issuable with respect to the Conversion Shares, the Notes, the Warrant Shares,
or the Warrants as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without regard to any
limitations on conversions of the Notes or exercises of the Warrants.


 


j.                                          “Registration
Statement” means a registration statement or registration statements
of the Company filed under the 1933 Act covering the Registrable Securities.


 


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k.                                       “Required
Holders” means the holders of at least a majority of the Registrable
Securities.


 


l.                                          “Required
Registration Amount” means 130% (or such lesser amount as the SEC may permit
as evidenced in comments received to a filed Registration Statement) of the sum
of (i) the number of Conversion Shares issued and issuable pursuant to the
Notes as of the trading day immediately preceding the applicable date of
determination, and (ii) the number of Warrant Shares issued and issuable
pursuant to the Warrants as of the trading day immediately preceding the
applicable date of determination, all subject to adjustment as provided in Section 2(e) (without
regard to any limitations on conversion of the Notes or exercise of the
Warrants).


 


m.                                    “Rule 415”
means Rule 415 under the 1933 Act or any successor rule providing for
offering securities on a continuous or delayed basis.


 


n.                                      “SEC”
means the United States Securities and Exchange Commission.


 


2.                                       Registration.


 


a.                                       Mandatory Registration. The Company shall prepare, and, as soon
as practicable but in no event later than the Filing Deadline, file with the
SEC the Registration Statement on Form S-3 covering the resale of all of
the Registrable Securities issuable upon then outstanding Securities. In the
event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration on
another appropriate form reasonably acceptable to the Required Holders,
subject to the provisions of Section 2(d). The Registration Statement
prepared pursuant hereto shall register for resale at least the number of
shares of Common Stock equal to the Required Registration Amount as of date the
Registration Statement is initially filed with the SEC. The Registration
Statement shall contain (except if otherwise directed by the Required Holders)
the “Selling Stockholders” and “Plan of Distribution” sections in
substantially the form attached hereto as Exhibit B. The
Company shall use its best efforts to have the Registration Statement declared
effective by the SEC as soon as practicable, but in no event later than the
Effectiveness Deadline. By 9:30 am on the date following the Effective Date,
the Company shall file with the SEC in accordance with Rule 424 under the
1933 Act the final prospectus to be used in connection with sales pursuant to
such Registration Statement.


 


b.                                      Allocation of Registrable Securities. The initial number of Registrable
Securities included in any Registration Statement and any increase in the
number of Registrable Securities included therein shall be allocated pro rata
among the Investors based on the number of Registrable Securities held by each
Investor at the time the Registration Statement covering such initial number of
Registrable Securities or increase thereof is declared effective by the SEC. In
the event that an Investor sells or otherwise transfers any of such Investor’s
Registrable Securities, each transferee shall be allocated a pro rata portion
of the then remaining number of Registrable Securities included in such
Registration Statement for such transferor. Any shares of Common Stock included
in a Registration Statement and which remain allocated to any Person which
ceases to hold any Registrable Securities covered by such Registration


 


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Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement. Other than as set forth in Schedule 2(b),
in no event shall the Company include any securities other than Registrable
Securities on any Registration Statement without the prior written consent of
the Required Holders.


 


c.                                       Legal Counsel. Subject to Section 5 hereof, the
Required Holders shall have the right to select one legal counsel to review and
oversee any registration pursuant to this Section 2 (“Legal Counsel”), which shall be Schulte
Roth & Zabel LLP or such other counsel as thereafter designated by the
Required Holders. The Company and Legal Counsel shall reasonably cooperate with
each other in performing the Company’s obligations under this Agreement.


 


d.                                      Ineligibility for Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the
Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then in
effect until such time as a Registration Statement on Form S-3 covering
the Registrable Securities has been declared effective by the SEC.


 


e.                                       Sufficient Number of Shares Registered. In the event the number of shares
available under a Registration Statement filed pursuant to Section 2(a) is
insufficient to cover all of the Registrable Securities required to be covered
by such Registration Statement or an Investor’s allocated portion of the
Registrable Securities pursuant to Section 2(b), the Company shall amend
the applicable Registration Statement, or file a new Registration Statement (on
the short form available therefor, if applicable), or both, so as to cover
at least the Required Registration Amount as of the trading day immediately
preceding the date of the filing of such amendment or new Registration
Statement, in each case, as soon as practicable, but in any event not later
than thirty (30) days after the necessity therefor arises. The Company shall
use its best efforts to cause such amendment and/or new Registration Statement
to become effective as soon as practicable following the filing thereof. For
purposes of the foregoing provision, the number of shares available under a
Registration Statement shall be deemed “insufficient to cover all of the
Registrable Securities” if at any time the number of shares of Common Stock
available for resale under the Registration Statement is less than the product
determined by multiplying (i) the Required Registration Amount as of such
time by (ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on the conversion of the Notes
or the exercise of the Warrants and such calculation shall assume that the
Notes are then convertible into shares of Common Stock at the then prevailing
Conversion Rate (as defined in the Notes) and that the Warrants are then
exercisable for shares of Common Stock at the then prevailing Exercise Price
(as defined in the Warrants).


 


f.                                         Effect of Failure to File and Obtain and
Maintain Effectiveness of Registration Statement. Subject to Section 4(a), if (i) a
Registration Statement covering all of the Registrable Securities required to
be covered thereby and required to be filed by the Company pursuant to this
Agreement is (A) not filed with the SEC on or before the respective Filing


 


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Deadline (a “Filing Failure”) or (B) not declared
effective by the SEC on or before the respective Effectiveness Deadline (an “Effectiveness Failure”) or (ii) on any
day after the Effective Date sales of all of the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(r))
pursuant to such Registration Statement or otherwise (including, without
limitation, because of a failure to keep such Registration Statement effective,
to disclose such information as is necessary for sales to be made pursuant to
such Registration Statement, to register a sufficient number of shares of
Common Stock or to maintain the listing of the Common Stock) (a “Maintenance Failure”) then, as partial
relief for the damages to any holder by reason of any such delay in or
reduction of its ability to sell the underlying Shares of Common Stock (which
remedy shall not be exclusive of any other remedies available at law or in
equity), the Company shall pay to each holder of Registrable Securities
relating to such Registration Statement an amount in cash equal to one and
one-half percent (1.5%) of the aggregate Purchase Price (as such term is
defined in the Securities Purchase Agreement) of such Investor’s Notes relating
to the Registrable Securities included in such Registration Statement on each
of the following dates: (i) the day of a Filing Failure and on every
thirtieth day (pro rated for periods totaling less than thirty days) after a
Filing Failure until such Filing Failure is cured; (ii) the day of an
Effectiveness Failure and on every thirtieth day (pro rated for periods
totaling less than thirty days) after an Effectiveness Failure until such
Effectiveness Failure is cured; and (iii) the initial day of a Maintenance
Failure and on every thirtieth day (pro rated for periods totaling less than
thirty days) after a Maintenance Failure until such Maintenance Failure is
cured; provided, however, that in no event shall the Company be liable for more
than one and one-half percent (1.5%) of penalties during any thirty day period
or for multiple events during any thirty day period. The payments to which a
holder shall be entitled pursuant to this Section 2(g) are referred
to herein as “Registration Delay Payments.”  Registration Delay Payments shall accrue on
the day of the Filing Failure, Effectiveness Failure and the initial day of a
Maintenance Failure, as applicable, and thereafter shall accrue and be paid on
the earlier of (I) the thirtieth day after the event or failure giving rise to
the Registration Delay Payments has occurred and (II) the Business Day after
the event or failure giving rise to the Registration Delay Payments is cured.
In the event the Company fails to make Registration Delay Payments in a timely
manner, such Registration Delay Payments shall bear interest at the rate of one
and one-half percent (1.5%) per month (prorated for partial months) until paid
in full. Notwithstanding anything herein to the contrary, in no event shall the
Registration Delay Payments exceed twelve and one-half percent (12.5%) of the
aggregate Purchase Price for all Investors (the “Registration Delay Payments Cap”). Any amount in excess of the
Registration Delay Payments Cap (the “Excess
Registration Delay Payments”) shall cause the Conversion Price of
the Investor’s Notes to be lowered by an amount equal to the quotient of the
amount of such Investors Excess Registration Delay Payments divided by the then
outstanding amount of such Investor’s Notes. Notwithstanding anything to the
contrary contained herein, in no event shall the Company be liable for any
damages in connection with the Warrant or Warrant Shares.


 


3.                                       Related Obligations.


 


At such time as the Company is obligated to file a
Registration Statement with the SEC pursuant to Section 2(a), 2(d) or
2(e), the Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall have the following
obligations:


 


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a.                                       The Company shall promptly prepare and
file with the SEC a Registration Statement with respect to the Registrable
Securities and use its reasonable best efforts to cause such Registration
Statement relating to the Registrable Securities to become effective as soon as
practicable after such filing (but in no event later than the Effectiveness
Deadline). Subject to Allowable Grace Periods, the Company shall keep each
Registration Statement effective pursuant to Rule 415 at all times until
the earlier of (i) the date as of which the Investors may sell all of
the Registrable Securities covered by such Registration Statement without
restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
under the 1933 Act or (ii) the date on which the Investors shall have sold
all of the Registrable Securities covered by such Registration Statement (the “Registration Period”). The Company shall
ensure that each Registration Statement (including any amendments or supplements
thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading other than such information as provided in writing by Investors for
use in such Registration Statement or prospectus. The term “best efforts” shall
mean, among other things, that the Company shall submit to the SEC, within two (2) Business
Days after the later of the date that (i) the Company learns that no
review of a particular Registration Statement will be made by the staff of the
SEC or that the staff has no further comments on a particular Registration
Statement, as the case may be, and (ii) the approval of Legal Counsel
(which shall not be unreasonably withheld or delayed) pursuant to Section 3(c) (which
approval is immediately sought), a request for acceleration of effectiveness of
such Registration Statement to a time and date not later than two (2) Business
Days after the submission of such request.


 


b.                                      The Company shall prepare and file with
the SEC such amendments (including post-effective amendments) and supplements
to a Registration Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this
Agreement (including pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-QSB, Form 10-KSB or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall have
incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement
for the Company to amend or supplement such Registration Statement.


 


c.                                       The Company shall (A) permit Legal
Counsel and the Investors to review and comment upon (i) a Registration
Statement at least three (3) Business Days prior to its filing with the
SEC and (ii) all amendments and supplements to all Registration Statements
(except for Annual Reports on Form 10-KSB, and Reports on Form 10-QSB
and any similar or successor reports) within a reasonable number of days prior
to their filing with the SEC, and (B) not file any Registration Statement
or amendment or supplement thereto in a form to which Legal Counsel or any
Investor reasonably objects; provided, however, that no
liquidated damages under Section 2 shall be due to any Investor if Legal
Counsel or any Investor shall have


 


6

















 


unnecessarily objected to
the filing or effectiveness of any Registration Statement such as to delay its
filing or effectiveness. The Company shall furnish to Legal Counsel and the
Investors, without charge, (i) copies of any correspondence from the SEC
or the staff of the SEC to the Company or its representatives relating to any
Registration Statement, to the extent containing information which the Company
believes does not constitute material, nonpublic information concerning the
Company and (ii) promptly after the same is prepared and filed with the
SEC, one copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor (if not available pursuant to
Rule 424(b)). The Company shall reasonably cooperate with Legal Counsel
and the Investors in performing the Company’s obligations pursuant to this Section 3.


 


d.                                      The Company shall furnish to each
Investor whose Registrable Securities are included in any Registration
Statement, without charge, (i) promptly after the same is prepared and
filed with the SEC, at least one copy of such Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, all
exhibits and each preliminary prospectus, (ii) upon the effectiveness of
any Registration Statement, ten (10) copies of the prospectus included in
such Registration Statement and all amendments and supplements thereto (or such
other number of copies as such Investor may reasonably request) and (iii) such
other documents, including copies of any preliminary or final prospectus, as
such Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such
Investor.


 


e.                                       The Company shall use its best efforts to
(i) register and qualify, unless an exemption from registration and
qualification applies, the resale by Investors of the Registrable Securities
covered by a Registration Statement under such other securities or “blue sky”
laws of all applicable jurisdictions in the United States, (ii) prepare
and file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all other actions reasonably necessary or advisable
to qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(e), (y)
subject itself to general taxation in any such jurisdiction, or (z) file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify Legal Counsel and each Investor who holds Registrable
Securities of the receipt by the Company of any notification with respect to
the suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of notice of the initiation or threatening
of any proceeding for such purpose.


 


f.                                         The Company shall notify Legal Counsel
and each Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under


 


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which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and, subject to Section 3(r), promptly prepare a
supplement or amendment to such Registration Statement to correct such untrue
statement or omission, and deliver ten (10) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall
also promptly notify Legal Counsel and each Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to
Legal Counsel and each Investor by facsimile or e-mail on the same day of such
effectiveness), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s determination that a
post-effective amendment to a Registration Statement would be appropriate.


 


g.                                      The Company shall use its best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
a Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Legal Counsel and each Investor who
holds Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of notice of the initiation or threat of any
proceeding for such purpose.


 


h.                                      If, after the execution of this
Agreement, an Investor believes, after consultation with its legal counsel,
that it could reasonably be deemed to be an underwriter of Registrable
Securities, at the request of such Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated such date, from the Company’s independent
certified public accountants in form and substance as is customarily given
by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the Investors, and (ii) an opinion, dated as
of such date, of counsel representing the Company for purposes of such
Registration Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the Investors.


 


i.                                          If after the execution of this Agreement
an Investor believes, after consultation with its legal counsel, that it could
reasonably be deemed to be an underwriter of Registrable Securities, at the
request of such Investor, the Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel and (iii) one firm of accountants or
other agents retained by the Investors (collectively, the “Inspectors”), all pertinent financial and
other records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as
shall be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree
to hold in strict confidence and shall not make any disclosure (except to an
Investor) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the release of
such Records is ordered pursuant to a


 


8

















 


final, non-appealable
subpoena or order from a court or government body of competent jurisdiction, or
(c) the information in such Records has been made generally available to
the public other than by disclosure in violation of this Agreement. Each
Investor agrees that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, the Records deemed confidential. Nothing herein
(or in any other confidentiality agreement between the Company and any
Investor) shall be deemed to limit the Investors’ ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and
regulations.


 


j.                                          The Company shall hold in confidence and
not make any disclosure of information concerning an Investor provided to the
Company unless (i) disclosure of such information is necessary to comply
with federal or state securities laws or the rules and regulations of any
applicable trading market, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (iii) the release of such information is ordered pursuant to a
subpoena or other final order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement or any
other agreement. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a
court or governmental body of competent jurisdiction or through other means,
give prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake appropriate action to prevent disclosure of,
or to obtain a protective order for, such information.


 


k.                                       The Company shall use its best efforts
either to (i) cause all of the Registrable Securities covered by a
Registration Statement to be listed on each securities exchange on which
securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (ii) secure the inclusion for
quotation of all of the Registrable Securities on the Nasdaq National Market or
(iii) if, despite the Company’s best efforts, the Company is unsuccessful
in satisfying the preceding clauses (i) and (ii), to secure the inclusion
for quotation of all of the Registrable Securities on the American Stock
Exchange for such Registrable Securities and, without limiting the generality of
the foregoing, to use its best efforts to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
(“NASD”) as such with respect to
such Registrable Securities or (iv) if, despite the Company’s best efforts,
the Company is unsuccessful in satisfying the preceding clauses (i)-(iii), to
secure the inclusion for quotation of all of the Registrable Securities on the
NASD’s OTC Bulletin Board. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(k).


 


l.                                          The Company shall cooperate with the
Investors who hold Registrable Securities being offered and, to the extent
applicable, facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the Investors may reasonably
request and registered in such names as the Investors may request.


 


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m.                                    If requested by an Investor, the Company
shall (i) as soon as practicable incorporate in a prospectus supplement or
post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price
being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering; (ii) as soon as practicable make
all required filings of such prospectus supplement or post-effective amendment
after being notified of the matters to be incorporated in such prospectus
supplement or post-effective amendment; and (iii) as soon as practicable,
supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities.


 


n.                                      The Company shall use its best efforts to
cause the Registrable Securities covered by a Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.


 


o.                                      The Company shall make generally
available to its security holders as soon as practical, but not later than
ninety (90) days after the close of the period covered thereby, an earnings
statement (in form complying with, and in the manner provided by, the
provisions of Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company’s fiscal quarter next
following the effective date of a Registration Statement.


 


p.                                      The Company shall otherwise use its best
efforts to comply with all applicable rules and regulations of the SEC in
connection with any registration hereunder.


 


q.                                      Within two (2) Business Days after a
Registration Statement which covers Registrable Securities is declared
effective by the SEC, the Company shall deliver, and shall cause legal counsel
for the Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investors whose Registrable Securities are
included in such Registration Statement) confirmation that such Registration
Statement has been declared effective by the SEC in the form attached
hereto as Exhibit A.


 


r.                                         Notwithstanding anything to the contrary
herein, at any time after the Effective Date, the Company may delay the disclosure
of material, non-public information concerning the Company the disclosure of
which at the time is not, in the good faith opinion of the Board of Directors
of the Company (following consultation with its counsel), in the best interest
of the Company (a “Grace Period”);
provided, that the Company shall promptly (i) notify the Investors in
writing that such determination has been made (provided that in each notice the
Company will not disclose the content of such material, non-public information
to the Investors) and the date on which the Grace Period will begin, and (ii) notify
the Investors in writing of the date on which the Grace Period ends; and,
provided further, that during any three hundred sixty five (365) day period
such Grace Periods shall not exceed an aggregate of thirty (30) days and the
first day of any Grace Period must be at least two (2) trading days after
the last day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes of determining the
length of a Grace Period above, the Grace Period shall begin on and include the


 


10

















 


date the Investors
receive the notice referred to in clause (i) and shall end on and include
the later of the date the Investors receive the notice referred to in clause (ii) and
the date referred to in such notice. The provisions of Section 3(g) hereof
shall not be applicable during the period of any Allowable Grace Period. Upon
expiration of the Grace Period, the Company shall again be bound by the first
sentence of Section 3(f) with respect to the information giving rise
thereto unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Stock to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale and delivered a copy of the
prospectus included as part of the applicable Registration Statement
(unless an exemption from such prospectus delivery requirement exists) prior to
the Investor’s receipt of the notice of a Grace Period and for which the
Investor has not yet settled.


 


4.                                       Obligations of the Investors.


 


a.                                       At least five (5) Business Days
prior to the first anticipated filing date of a Registration Statement, the
Company shall notify each Investor in writing of the information the Company
requires from each such Investor if such Investor elects to have any of such
Investor’s Registrable Securities included in such Registration Statement. It
shall be a condition precedent to the obligations of the Company to complete
the registration pursuant to this Agreement with respect to the Registrable
Securities of a particular Investor (and to the Company’s liability for damages
under Section 2(f) to such Investor) that such Investor shall furnish
to the Company a completed and updated “Selling Stockholder Questionnaire,” in
the form attached hereto as Exhibit C, and such other
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect the effectiveness of the registration of
such Registrable Securities and shall execute such documents in connection with
such registration as the Company may reasonably request.


 


b.                                      Each Investor, by such Investor’s
acceptance of the Registrable Securities, agrees to cooperate with the Company
as reasonably requested by the Company in connection with the preparation and
filing of any Registration Statement hereunder, unless such Investor has
notified the Company in writing of such Investor’s election to exclude all of
such Investor’s Registrable Securities from such Registration Statement.


 


c.                                       Each Investor agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 3(g) or the first sentence of 3(f), such
Investor will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Investor’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(g) or the first sentence of 3(f) or
receipt of notice that no supplement or amendment is required. Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection with any sale
of Registrable Securities with respect to which an Investor has entered into a
contract for sale prior to the Investor’s


 


11

















 


receipt of a notice from
the Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) and for which the Investor has not yet settled.


 


d.                                      Each Investor covenants and agrees that
it will comply with the prospectus delivery requirements of the 1933 Act as
applicable to it or an exemption therefrom in connection with sales of
Registrable Securities pursuant to the Registration Statement.


 


5.                                       Expenses of Registration.


 


All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings
or qualifications pursuant to Sections 2 and 3, including, without limitation,
all registration, listing and qualifications fees, printers and accounting
fees, and fees and disbursements of counsel for the Company shall be paid by
the Company. The Company shall also reimburse the Investors for the fees and
disbursements of Legal Counsel in connection with registration, filing or
qualification pursuant to Sections 2 and 3 of this Agreement which amount shall
be limited to $10,000.


 


6.                                       Indemnification.


 


In the event any Registrable Securities are included
in a Registration Statement under this Agreement:


 


a.                                       To the fullest extent permitted by law,
the Company will, and hereby does, indemnify, hold harmless and defend each
Investor, the directors, officers, members, partners, employees, agents,
representatives of, and each Person, if any, who controls any Investor within
the meaning of the 1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several, (collectively, “Claims”)
incurred in investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the foregoing by or
before any court or governmental, administrative or other regulatory agency,
body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as
such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon:  (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary
to make the statements made therein, in the light of the circumstances under
which the statements therein were made, not misleading, (iii) any
violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state securities law, or any rule or
regulation thereunder


 


12

















 


relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement or (iv) any
violation of this Agreement (the matters in the foregoing clauses (i) through
(iv) being, collectively, “Violations”).
Subject to Section 6(c), the Company shall reimburse the Indemnified
Persons, promptly as such expenses are incurred and are due and payable, for
any legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 6(a):  (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person for such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto, if such prospectus was timely
made available by the Company pursuant to Section 3(d) and (ii) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld or delayed. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9.


 


b.                                      In connection with any Registration
Statement in which an Investor is participating, each such Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within the meaning
of the 1933 Act or the 1934 Act (each, an “Indemnified
Party”), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise,
insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(c), such Investor
will reimburse any legal or other expenses reasonably incurred by an
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent
shall not be unreasonably withheld or delayed; provided, further, however, that
the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
such Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investors
pursuant to Section 9.


 


c.                                       Promptly after receipt by an Indemnified
Person or Indemnified Party under this Section 6 of notice of the
commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party
shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the
right to participate in, and, to


 


13

















 


the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and
any other party represented by such counsel in such proceeding. In the case of
an Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates. The
Indemnified Party or Indemnified Person shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person which relates to such action or Claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person reasonably
apprised at all times as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent,
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such Claim or litigation, and such settlement shall not
include any admission as to fault on the part of the Indemnified Party.
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability
to defend such action.


 


d.                                      The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Damages are incurred.


 


e.                                       The indemnity agreements contained herein
shall be in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be
subject to pursuant to the law.


 


14

















 


7.                                       Contribution.


 


To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that:  (i) no
contribution shall be made under circumstances where the maker would not have
been liable for indemnification under the fault standards set forth in Section 6
of this Agreement, (ii) no Person involved in the sale of Registrable
Securities, which Person is guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) in connection with such
sale, shall be entitled to contribution from any Person involved in such sale
of Registrable Securities who was not guilty of fraudulent misrepresentation;
and (iii) contribution by any seller of Registrable Securities shall be
limited in amount to the net amount of proceeds received by such seller from
the sale of such Registrable Securities pursuant to such Registration Statement.


 


8.                                       Reports Under the 1934 Act.


 


With a view to making available to the Investors the
benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to sell
securities of the Company to the public without registration (“Rule 144”), the Company agrees to:


 


a.                                       make and keep public information
available, as those terms are understood and defined in Rule 144;


 


b.                                      file with the SEC in a timely manner all
reports and other documents required of the Company under the 1933 Act and the
1934 Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the applicable
provisions of Rule 144; and


 


c.                                       furnish to each Investor so long as such
Investor owns Registrable Securities, promptly upon request, (i) a written
statement by the Company, if true, that it has complied with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy
of the most recent annual report of the Company and such other reports and
documents so filed by the Company (but only if such reports are not publicly
available on the EDGAR system), and (iii) such other information as may be
reasonably requested to permit the Investors to sell such securities pursuant
to Rule 144 without registration.


 


9.                                       Assignment of Registration Rights.


 


The rights under this Agreement shall be
automatically assignable by the Investors to any transferee of all or any
portion of such Investor’s Registrable Securities if:  (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment; (ii) the
Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii) immediately
following such transfer or assignment the further disposition of such
securities by the transferee


 


15

















 


or
assignee is restricted under the 1933 Act or applicable state securities laws; (iv) at
or before the time the Company receives the written notice contemplated by
clause (ii) of this sentence the transferee or assignee agrees in writing
with the Company to be bound by all of the provisions contained herein; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Securities Purchase Agreement.


 


10.                                 Amendment of Registration Rights.


 


Provisions of this Agreement may be amended and
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of at least two-thirds of the
Registrable Securities. Any amendment or waiver effected in accordance with
this Section 10 shall be binding upon each Investor and the Company. No
such amendment shall be effective to the extent that it applies to less than
all of the holders of the Registrable Securities. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.


 


11.                                 Miscellaneous.


 


a.                                       A Person is deemed to be a holder of
Registrable Securities whenever such Person owns or is deemed to own of record
such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the such record owner of such Registrable
Securities.


 


b.                                      Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:


 


	
   

  	
  If to the Company:

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  Earth Biofuels, Inc.

  	 

	 
	
   

  	
   

  	
  3001 Knox Street, Suite 403

  
	 
	
   

  	
   

  	
  Dallas, Texas 75205

  
	
   

  	
   

  	
  Telephone:

  	
  (214) 389-9800

  	 

	 
	
   

  	
   

  	
  Facsimile:

  	
  (214) 389-9806

  
	 
	
   

  	
   

  	
  Attention:

  	
  Dennis McLaughlin

  
	 
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  	 

									



 


16

















 


	
   

  	
   

  	
  Scheef & Stone, LLP

  
	
   

  	
   

  	
  5956 Sherry Lane, Suite 1400

  
	
   

  	
   

  	
  Dallas, Texas 75225

  
	
   

  	
   

  	
  Telephone:

  	
  (214) 706-4200

  
	
   

  	
   

  	
  Facsimile:

  	
  (214) 706-4242

  
	
   

  	
   

  	
  Attention:

  	
  Roger A. Crabb, Esq.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If to Legal Counsel:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Schulte Roth &
  Zabel LLP

  
	
   

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Telephone:

  	
  (212) 756-2000

  
	
   

  	
   

  	
  Facsimile:

  	
  (212) 593-5955

  
	
   

  	
   

  	
  Attention:

  	
  Eleazer N. Klein, Esq.

  



 


If
to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers attached hereto, with copies to such Buyer’s representatives as set
forth on the Schedule of Buyers, or to such other address and/or facsimile
number and/or to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) days prior
to the effectiveness of such change. Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s facsimile machine containing the
time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.


 


c.                                       Failure of any party to exercise any
right or remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver thereof.


 


d.                                      All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient


 


17

















 


service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. If any provision of
this Agreement shall be invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability
of the remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE,
AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.


 


e.                                       This Agreement, the other Transaction
Documents (as defined in the Securities Purchase Agreement) and the instruments
referenced herein and therein constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein and therein. This Agreement, the other Transaction
Documents and the instruments referenced herein and therein supersede all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.


 


f.                                         Subject to the requirements of Section 9,
this Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.


 


g.                                      The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.


 


h.                                      This Agreement may be executed in
identical counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by
facsimile transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement.


 


i.                                          Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as any other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.


 


j.                                          All consents and other determinations
required to be made by the Investors pursuant to this Agreement shall be made,
unless otherwise specified in this Agreement, by the Required Holders.


 


k.                                       The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent and no rules of strict construction will be applied against any
party.


 


18

















 


l.                                          This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.


 


m.                                    The obligations of each Buyer hereunder
are several and not joint with the obligations of any other Buyer, and no
provision of this Agreement is intended to confer any obligations on any Buyer
vis-à-vis any other Buyer. Nothing contained herein, and no action taken by any
Buyer pursuant hereto, shall be deemed to constitute the Buyers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Buyers are in any way acting in concert or as a
group with respect to such obligations or the transactions contemplated herein.


 


[Signature Page Follows]


 


19

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused
their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  EARTH BIOFUELS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused
their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above.


 


 


	
   

  	
  BUYERS:

  
	
   

  	
   

  
	
   

  	
  CASTLERIGG MASTER INVESTMENTS

  LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  EVOLUTION MASTER FUND LTD. SPC,

  SEGREGATED PORTFOLIO M

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  RADCLIFFE SPC, LTD. FOR AND ON

  BEHALF OF THE CLASS A

  CONVERTIBLE CROSSOVER

  SEGREGATED PORTFOLIO

  
	
   

  	
  By: RG Capital Management, L.P.

  
	
   

  	
  By: RGC Management Company, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  CAPITAL VENTURES INTERNATIONAL

  
	
   

  	
  By: Heights Capital Management, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  PORTSIDE GROWTH AND OPPORTUNITY

  FUND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  CORNELL CAPITAL PARTNERS, LP

  
	
   

  	
  BY:

  	
  YORKVILLE ADVISORS, LLC

  
	
   

  	
  ITS:

  	
  GENERAL PARTNER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark Angelo

  
	
   

  	
   

  	
  Title:

  	
  Portfolio Manager

  
						



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  CRANSHIRE CAPITAL L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Registration Rights Agreement to be duly
executed as of the date first written above.


 


 


	
   

  	
  KINGS ROAD INVESTMENTS LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 

















 


SCHEDULE OF
BUYERS


 


	
  Buyer

  	
   

  	
  Buyer’s Address

  and Facsimile Number

  	
   

  	
  Buyer’s Representative’s Address

  and Facsimile Number

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Castlerigg Master Investments Ltd

  	
   

  	
  c/o Sandell Asset Management Corp.

  40 West 57th Street

  26th Floor

  New York, New York 10019

  Attention: Cem Hacioglu/Matthew Pliskin

  Facsimile:       (212) 603-5710

  Telephone:      (212) 603-5775

  	
   

  	
  Schulte Roth & Zabel LLP

  919 Third Avenue

  New York, New York 10022

  Attn: Eleazer Klein, Esq.

  Facsimile: (212) 593-5955

  Telephone: (212) 756-2000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolution Master Fund Ltd. SPC, Segregated Portfolio
  M

  	
   

  	
  c/o Evolution Capital Management LLC

  Walker House, Mary Street

  P.O. Box 908 GT

  George Town, Cayman Island

  Attn: Richard Chisholm

  Facsimile: 808-441-4946

  Telephone: 808-441-4917

  Residence: Cayman Islands



  Additional Copy to:



  Evolution Capital Management, LLC

  1132 Bishop Street,

  Suite 1880

  Honolulu, Hawaii 96813

  Attention: Richard Chisholm

  Facsimile: 808-441-4946

  Telephone: 808-441-4917

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Radcliffe SPC, Ltd. For and on behalf of the Class A
  Convertible Crossover Segregated Portfolio

  	
   

  	
  c/o RG Capital Management, LP

  3 Bala Plaza-East, Suite 501

  Bala Cynwyd, PA 19004

  Attention: Gerald F. Stahlecker

  Facsimile: (610) 617-0570

  Telephone: (610) 617-5911

  Residence: Cayman Islands

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capital Ventures International

  	
   

  	
  c/o Heights Capital Management

  101 California Street, Suite 3250

  San Francisco, CA 94111

  Attention: Martin Kobinger,

  Investment Manager

  Facsimile: 415-403-6525

  Telephone: 415-403-6500

  Residence: Cayman Islands

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Portside Growth and Opportunity Fund

  	
   

  	
  c/o Ramius Capital Group, L.L.C.

  666 Third Avenue,

  26th Floor

  New York, New York 10017

  Attention: Jeffrey Smith

                   Michael
  Neidell

  Facsimile: (212) 845-7999

  Telephone: (212) 845-7955

  Residence: Cayman Islands

  	
   

  	
   

  	
   

  



 

















 


	
  Cornell Capital Partners, LP

  	
   

  	
  101 Hudson Street

  Suite 3700

  Jersey City, NJ 07303

  Attention: Mark Angelo

  Facsimile: (201) 985-8266

  Telephone: (201) 985-8300

  Residence: Delaware

  	
   

  	
  Troy Rillo, Esq.

  101 Hudson Street – Suite 3700

  Jersey City, NJ 07302

  Facsimile: (201) 985-8266

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cranshire Capital L.P.

  	
   

  	
  c/o Downsview Capital, Inc.

  The General Partner

  666 Dundee Road,

  Suite 1901

  Northbrook, IL 60062

  Attention: Mitchell D. Kopin

  Facsimile: (847) 562-9031

  Telephone: (847) 562-9030

  Residence: Illinois

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kings Road Investments Ltd.

  	
   

  	
  c/o Polygon Investment Partners LP

  598 Madison Avenue

  14th Floor

  New York, NY 10022

  Attention: Erik M.W. Caspersen

                  
  Brandon L. Jones

  Facsimile: (212) 359-7303

  Telephone: (212) 359-7300

  Residence: Cayman Islands

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT A


 


FORM OF
NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


 


[Transfer
Agent]


[Address]


Attention:


 


Re:                   EARTH BIOFUELS, INC..


 


Ladies
and Gentlemen:


 


[We are][I am] counsel to Earth Biofuels, Inc.,
a Delaware corporation (the “Company”),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the “Securities Purchase
Agreement”) entered into by and among the Company and the buyers
named therein (collectively, the “Holders”)
pursuant to which the Company issued to the Holders senior convertible notes
(the “Notes”) convertible into the
Company’s common stock, $0.001 par value per share (the ”Common Stock”) and warrants exercisable for
shares of Common Stock (the “Warrants”).
Pursuant to the Securities Purchase Agreement, the Company also has entered
into a Registration Rights Agreement with the Holders (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement), including the
shares of Common Stock issuable upon conversion of the Notes and the shares of
Common Stock issuable upon exercise of the Warrants, under the Securities Act of
1933, as amended (the “1933 Act”).
In connection with the Company’s obligations under the Registration Rights
Agreement, on
                           ,
200  , the Company filed a Registration Statement on Form S-3
(File No. 333-                        )
(the “Registration Statement”)
with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names each
of the Holders as a selling stockholder thereunder.


 


In connection with the foregoing, [we][I] advise you
that a member of the SEC’s staff has advised [us][me] by telephone that the SEC
has entered an order declaring the Registration Statement effective under the
1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.


 


This letter shall serve as our standing opinion to
you that the shares of Common Stock are freely transferable by the Holders
pursuant to the Registration Statement. You need not require further letters
from us to effect any future legend-free issuance or reissuance of


 

















 


shares
of Common Stock to the Holders as contemplated by the Company’s Irrevocable
Transfer Agent Instructions dated July   , 2006.


 


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  [ISSUER’S COUNSEL]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  CC:    [LIST
  NAMES OF HOLDERS]

  	
   

  



 

















 


EXHIBIT B


 


SELLING
STOCKHOLDERS


 


The shares of Common Stock being offered by the
selling stockholders are issuable upon conversion of the convertible notes and
upon exercise of the warrants. For additional information regarding the
issuance of those convertible notes and warrants, see “Private Placement of
Convertible Notes and Warrants” above. We are registering the shares of Common
Stock in order to permit the selling stockholders to offer the shares for
resale from time to time. Except for the ownership of the Convertible Notes and
the Warrants issued pursuant to the Securities Purchase Agreement, the selling
stockholders have not had any material relationship with us within the past
three years.


 


The table below lists the selling stockholders and
other information regarding the beneficial ownership of the shares of Common
Stock by each of the selling stockholders. The second column lists the number
of shares of Common Stock beneficially owned by each selling stockholder, based
on its ownership of the convertible notes and warrants, as of              ,
200  , assuming conversion of all convertible notes and exercise of
the warrants held by the selling stockholders on that date, without regard to
any limitations on conversions or exercise.


 


The third column lists the shares of Common Stock
being offered by this prospectus by the selling stockholders.


 


In accordance with the terms of a registration
rights agreement with the selling stockholders, this prospectus generally
covers the resale of at least 130% of the sum of (i) the number of shares
of Common Stock issuable upon conversion of the convertible notes as of the
trading day immediately preceding the date the registration statement is
initially filed with the SEC and (ii) the number of shares of Common Stock
issuable upon exercise of the related warrants as of the trading day
immediately preceding the date the registration statement is initially filed
with the SEC. Because the
conversion price of the convertible notes and the exercise price of the
warrants may be adjusted, the number of shares that will actually be
issued may be more or less than the number of shares being offered by this
prospectus. The fourth column assumes the sale of all of the shares offered by
the selling stockholders pursuant to this prospectus.


 


Under the terms of the convertible notes and the
warrants, a selling stockholder may not convert the convertible notes or
exercise the warrants to the extent such conversion or exercise would cause
such selling stockholder, together with its affiliates, to beneficially own a
number of shares of Common Stock which would exceed 4.99% of our then
outstanding shares of Common Stock following such conversion or exercise,
excluding for purposes of such determination shares of Common Stock issuable
upon conversion of the convertible notes which have not been converted and upon
exercise of the warrants which have not been exercised. The number of shares in
the second column does not reflect this limitation. The selling stockholders may sell
all, some or none of their shares in this offering. See “Plan of Distribution.”


 

















 


	
  Name of Selling Stockholder

  	
   

  	
  Number of Shares Owned

  Prior to Offering

  	
   

  	
  Maximum Number of Shares

  to be Sold Pursuant to this

  Prospectus

  	
   

  	
  Number of Shares Owned

  After Offering

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Castlerigg
  Master Investments (1)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Evolution
  Master Fund Ltd. SPC, Segregated Portfolio M

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Radcliffe
  SPC, Ltd. For and on behalf of the Class A Convertible Crossover
  Segregated Portfolio

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capital
  Ventures International

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Portside
  Growth and Opportunity Fund

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cornell
  Capital Partners, LP

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cranshire
  Capital L.P.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Kings
  Road Investments Ltd.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






(1)                                  Sandell Asset Management Corp. is the
investment manager of Castlerigg Master Investment Ltd. (“Castlerigg”) and has
shared voting and dispositive power over the securities owned by Castlerigg.
Sandell Asset Management Corp. and Thomas E. Sandell, its sole shareholder,
disclaim beneficial ownership of the securities owned by Castlerigg.


 

















 


PLAN OF
DISTRIBUTION


 


We are registering the shares of Common Stock
issuable upon conversion of the convertible notes and upon exercise of the
warrants to permit the resale of these shares of Common Stock by the holders of
the convertible notes and warrants from time to time after the date of this
prospectus. We will not receive any of the proceeds from the sale by the selling
stockholders of the shares of Common Stock. We will bear all fees and expenses
incident to our obligation to register the shares of Common Stock.


 


The selling stockholders may sell all or a
portion of the shares of Common Stock beneficially owned by them and offered
hereby from time to time directly or through one or more underwriters,
broker-dealers or agents. If the shares of Common Stock are sold through
underwriters or broker-dealers, the selling stockholders will be responsible
for underwriting discounts or commissions or agent’s commissions. The shares of
Common Stock may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of the sale, at varying prices determined
at the time of sale, or at negotiated prices. These sales may be effected
in transactions, which may involve crosses or block transactions,


 


•                  on any national securities exchange or
quotation service on which the securities may be listed or quoted at the
time of sale;


 


•                  in the over-the-counter market;


 


•                  in transactions otherwise than on these
exchanges or systems or in the over-the-counter market;


 


•                  through the writing of options, whether such
options are listed on an options exchange or otherwise;


 


•                  ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;


 


•                  block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;


 


•                  purchases by a broker-dealer as principal and
resale by the broker-dealer for its account;


 


•                  an exchange distribution in accordance with
the rules of the applicable exchange;


 


•                  privately negotiated transactions;


 


•                  to cover short sales made after the date this
Registration Statement is declared effective by the SEC;


 


•                  sales pursuant to Rule 144;


 

















 


•                  broker-dealers may agree with the
selling securityholders to sell a specified number of such shares at a
stipulated price per share;


 


•                  a combination of any such methods of sale;
and


 


•                  any other method permitted pursuant to
applicable law.


 


If the selling stockholders effect such transactions
by selling shares of Common Stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive
commissions in the form of discounts, concessions or commissions from the
selling stockholders or commissions from purchasers of the shares of Common
Stock for whom they may act as agent or to whom they may sell as
principal (which discounts, concessions or commissions as to particular
underwriters, broker-dealers or agents may be in excess of those customary
in the types of transactions involved). In connection with sales of the shares
of Common Stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales
of the shares of Common Stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of Common Stock
short and deliver shares of Common Stock covered by this prospectus to close
out short positions and to return borrowed shares in connection with such short
sales. The selling stockholders may also loan or pledge shares of Common
Stock to broker-dealers that in turn may sell such shares.


 


The selling stockholders may pledge or grant a
security interest in some or all of the convertible notes, warrants or shares
of Common Stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell
the shares of Common Stock from time to time pursuant to this prospectus or any
amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933, as amended, amending, if necessary,
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer and donate the shares of Common
Stock in other circumstances in which case the transferees, donees, pledgees or
other successors in interest will be the selling beneficial owners for purposes
of this prospectus.


 


The selling stockholders and any broker-dealer
participating in the distribution of the shares of Common Stock may be
deemed to be “underwriters” within the meaning of the Securities Act, and any
commission paid, or any discounts or concessions allowed to, any such
broker-dealer may be deemed to be underwriting commissions or discounts
under the Securities Act. At the time a particular offering of the shares of
Common Stock is made, a prospectus supplement, if required, will be distributed
which will set forth the aggregate amount of shares of Common Stock being
offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.


 


Under the securities laws of some states, the shares
of Common Stock may be sold in such states only through registered or
licensed brokers or dealers. In addition, in some states the shares of Common
Stock may not be sold unless such shares have been registered or qualified


 

















 


for
sale in such state or an exemption from registration or qualification is
available and is complied with.


 


There can be no assurance that any selling
stockholder will sell any or all of the shares of Common Stock registered
pursuant to the shelf registration statement, of which this prospectus forms a
part.


 


The selling stockholders and any other person
participating in such distribution will be subject to applicable provisions of
the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, including, without limitation, Regulation M of the Exchange Act,
which may limit the timing of purchases and sales of any of the shares of
Common Stock by the selling stockholders and any other participating person.
Regulation M may also restrict the ability of any person engaged in the
distribution of the shares of Common Stock to engage in market-making
activities with respect to the shares of Common Stock. All of the foregoing may affect
the marketability of the shares of Common Stock and the ability of any person
or entity to engage in market-making activities with respect to the shares of
Common Stock.


 


We will pay all expenses of the registration of the
shares of Common Stock pursuant to the registration rights agreement, estimated
to be $[     ] in total, including, without
limitation, Securities and Exchange Commission filing fees and expenses of
compliance with state securities or “blue sky” laws; provided, however, that a
selling stockholder will pay all underwriting discounts and selling
commissions, if any. We will indemnify the selling stockholders against
liabilities, including some liabilities under the Securities Act, in accordance
with the registration rights agreements, or the selling stockholders will be
entitled to contribution. We may be indemnified by the selling
stockholders against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to
us by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreement, or we may be
entitled to contribution.


 


Once sold under the shelf registration statement, of
which this prospectus forms a part, the shares of Common Stock will be freely
tradable in the hands of persons other than our affiliates.


 

















 


EXHIBIT C


 


SELLING
STOCKHOLDER QUESTIONNAIRE


 


The undersigned hereby provides the following
information to the Company and represents and warrants that such information is
accurate:


 


1.                                      Name.


 


(a)                                  Full Legal Name of Selling Securityholder


 


 


(b)                                 Full Legal Name of Registered Holder (if not
the same as (a) above) through which Registrable Securities Listed in Item
3 below are held:


 


 


(c)                                  Full Legal Name of Natural Control Person
(which means a natural person who directly or indirectly alone or with others
has power to vote or dispose of the securities covered by the questionnaire):


 


 


2. Address for Notices to Selling Securityholder:


 


 


Telephone:


Fax:


Contact
Person:


 


3.
Beneficial Ownership of Registrable Securities:


 


Type and Principal Amount of Registrable Securities
beneficially owned:


 


 


 

















 


4.
Broker-Dealer Status:


 


(a)                                  Are you a broker-dealer?


 


Yes   o         No   o


 


Note:                   If yes, the SEC’s staff has indicated that
you should be identified as an underwriter in the Registration Statement.


 


(b)                                 Are you an affiliate of a broker-dealer?


 


Yes   o         No   o


 


(c)                                  If you are an affiliate of a broker-dealer,
do you certify that you bought the Registrable Securities in the ordinary
course of business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable Securities?


 


Yes   o         No   o


 


Note:                   If no, the SEC’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.


 


5.
Beneficial Ownership of Other Securities of the Company Owned by the Selling
Securityholder.


 


Except as set forth below in this
Item 5, the undersigned is not the beneficial or registered owner of any
securities of the Company other than the Registrable Securities listed above in
Item 3.


 


Type and Amount of Other Securities beneficially
owned by the Selling Securityholder:


 


 


 


6.
Relationships with the Company:


 


Except as set forth below, neither
the undersigned nor any of its affiliates, officers, directors or principal
equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates) during the
past three years.


 


State any exceptions here:


 


 


 

















 


The
undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to
the date hereof and prior to the Effective Date for the Registration Statement.


 


By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the
Company in connection with the preparation or amendment of the Registration
Statement and the related prospectus.


 


IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.


 


	
  Dated:

  	
   

  	
   

  	
  Beneficial Owner:

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
						



 


PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE
AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:


 


[    ]