**EXHIBIT 10.35**

**THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES ISSUABLEUPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF1933**(THE “SECURITIES ACT”) OR ANYSECURITIES LAW OF ANY STATE OF THE UNITED STATES.  THIS CONVERTIBLE PROMISSORY NOTE AND THESHARES ISSUABLE UPON CONVERSION HEREOF MAY BEREOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THESECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY PURSUANT TO REGISTRATIONUNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROMREGISTRATION.

**CONVERTIBLEPROMISSORY NOTE**
| $500,000.00 |   | Dallas, Texas |   | June 2, 2006 |
|-------------|--------|---------------|--------|--------------|

 

FORVALUE RECEIVED, the undersigned, Earth Biofuels, Inc., a Delaware corporation (“*Borrower*”), promises to pay to theorder of Marc Weill (“*Lender*”),the sum of Five Hundred Thousand and No/100 Dollars ($500,000.00), withinterest from the date of advancement on the unpaid balance hereof from time totime remaining unpaid at a rate of 8% per annum, in (i) lawful money of theUnited States of America or (ii) equity securities of the Borrower as providedherein, both principal and interest being payable at the address designated innumbered paragraph 15 below or at such other place as Lender may, from time totime, designate in writing.  All interestunder this Note shall be computed on the basis of the actual number of dayselapsed over an assumed year consisting of three hundred sixty-five (365) days.

Theprincipal of this Note shall mature and be due and payable on April 28, 2007.  Simple interest payable on this Note shall bepayable upon each Conversion Date (as defined below), July 28, 2006, October 28,2006, January 28, 2007, and on the maturity date, when the principal andremaining accrued but unpaid interest shall be due and payable.

Allpast due principal and accrued interest on this Note shall bear interest frommaturity until paid at the highest (non-usurious) rate for which Borrower maylegally contract under applicable law. All payments on past due principal and accrued interest hereunder shallbe payable in lawful money of the United States of America which shall be legaltender for public and private debts at the time of payment.  As used herein, the term “*Holder*” shall initially mean Lender,and shall subsequently mean each person or entity to which this Note is dulyassigned.

ThisNote evidences indebtedness incurred by Borrower for interim financing providedto Borrower.

1.             Conversion Option.  All or any portion of the unpaid principal ofthis Note, plus accrued interest hereon, shall be convertible, at the option ofLender, into shares of Common Stock, $0.001 par value, issued by Borrower (the “*CommonStock*”).  At the time of any such conversion ofthe aggregate of the principal amount and accrued interest, or a portionthereof, the rights of the Lender with respect to such portion of the aggregateof the principal amount and accrued interest so converted shall cease and theLender shall be deemed to have become the

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record holder of the Common Stockissuable upon such conversion.  TheBorrower covenants with the Lender that it will at all times reserve and keepavailable out of its authorized Common Stock and solely for the purpose ofconversion as provided herein, and conditionally allot to the Lender, suchnumber of shares of Common Stock as shall then be issuable upon the conversionof this Note.  The Borrower covenantswith the Lender that all shares of Common Stock which shall be so issuableshall be duly and validly issued as fully-paid and non-assessable.

The Common Stock into whichthis Note may be converted shall be referred to herein as the “*Conversion Shares*.”  The number of Conversion Shares shall bedetermined by dividing the Conversion Amount (defined below) by the ConversionPrice Per Share (defined below).  Uponany such conversion, the Lender shall execute any and all customary andappropriate documents to implement the foregoing.  Additionally, the Lender shall be entitled todemand registration rights and piggyback registration rights pursuant to theRegistration Rights Agreement of even date herewith, executed by Borrower andLender (“*Registration Rights Agreement*”).

1.1           Definitions.  Unless otherwise specified, for purposeshereof, the following terms shall have the following meanings:

1.1.1        “*ConversionAmount*” means an amount equal to the then outstanding principalplus any accrued but unpaid interest under this Note, or such lesser amount asHolder shall determine.

1.1.2        “*Conversion Price Per Share*” means a price per share ofCommon Stock equal to the lower of (i) $0.50 per share or (ii) 70% of the volumeweighted average price per share of the Common Stock (“*VWAP*”).  Notwithstanding the foregoing, the price setforth in part (i) of the preceding sentence shall be lowered from $0.50 pershare to $0.30 per share if both of the following shall have occurred withinthe 10-month time frame commencing 60 days from the date of this note andending 12 months from the date of this note: (A) the VWAP shall have fallen below $0.50 per share and (B) Borrowershall have more than 200,000,000 shares of Common Stock issued andoutstanding.  The VWAP shall be determinedas follows:  (x) the daily volumeweighted average price of the Common Stock for such date on the OTC BulletinBoard as reported by Bloomberg Financial L.P. (based on a trading day from 9:30a.m. Eastern Time to 4:02 p.m. Eastern Time); (y) if the Common Stock isnot then listed or quoted on the OTC Bulletin Board and if prices for theCommon Stock are then reported in the “Pink Sheets” published by the PinkSheets, LLC (or a similar organization or agency succeeding to its functions ofreporting prices), the most recent bid price per share of the Common Stock soreported; or (z) in all other cases, the fair market value of a share ofCommon Stock as determined by an independent appraiser selected in good faithby the Holder and reasonably acceptable to the Borrower.

1.2           Conversion Procedures.

1.2.1        Holder may exerciseits conversion right by giving written notice (in the form attached hereto, the“*Conversion Notice*”)to the Borrower of the exercise of such right. The conversion of this Note (or such portion thereof as Holder shalldetermine) will be deemed to have been effected as of the date of receipt ofthe Conversion Notice

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(the “*Conversion Date*”).  If Holder has exercised its conversion right,the outstanding principal (or such portion thereof as Holder shall determine)and any accrued but unpaid interest under this Note shall be automaticallyconverted into such number of shares of the Common Stock to be issued byBorrower equaling the quotient of (i) the Conversion Amount, and (ii) theConversion Price Per Share.

1.2.2        Within five businessdays of the Conversion Date, the Holder shall surrender this Note at theprincipal office of the Borrower, for replacement or cancellation.

1.2.3        Within five businessdays of the surrender of the Note by Holder, the Borrower will deliver to theconverting Holder (a) a certificate or certificates representing ConversionShares and (b) a replacement note for the unconverted principal balance (ifany) of this Note.  Borrower agrees thatits issuance of this Note shall constitute full authority to its officers,agents, and transfer agents who are charged with the duty of executing andissuing stock certificates to execute and issue the necessary certificates forshares of Common Stock upon the conversion of this Note.

1.2.4        On the ConversionDate, the rights of the Holder of this Note to receive payment of such portionof the principal and interest as Holder has converted hereunder will cease andthe person or persons in whose name or names any certificate or certificatesfor Conversion Shares are to be issued upon such conversion will be deemed tohave become the holder or holders of record of the shares represented thereby.

1.2.5        The issuance ofcertificates for the Conversion Shares will be made without charge to theHolder for any issuance tax in respect thereof or other cost incurred by theBorrower in connection with such conversion and the related issuance ofConversion Shares.

1.2.6        If any fractionalinterest in Conversion Shares would, except for the provisions of this Section1, be deliverable upon any conversion of this Note, in lieu of delivering thefractional share therefor, the number of Conversion Shares shall be rounded tothe nearest whole number.

2.             Adjustment of Conversion PricePer Share.  The Conversion Price PerShare, the number of Conversion Shares, and the number and kind of shares orother securities to be issued upon conversion determined pursuant to Section1.2, shall be subject to adjustment from time to time upon the happening ofcertain events while this conversion right remains outstanding, as follows:

2.2.1        Merger, Sale of Assets.  If the Borrower at any time shall consolidatewith or merge into or sell or convey all or substantially all its assets to anyother corporation, this Note, as to the unpaid principal portion thereof andaccrued interest thereon, shall thereafter be deemed to evidence the right topurchase such number and kind of shares or other securities and property aswould have been issuable or distributable on account of such consolidation,merger, sale or conveyance, upon or with respect to the securities subject tothe conversion or purchase right immediately prior to such consolidation,

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merger,sale or conveyance.  The foregoingprovision shall similarly apply to successive transactions of a similar natureby any such successor or purchaser. Without limiting the generality of the foregoing, the anti-dilutionprovisions of this Section shall apply to such securities of such successor orpurchaser after any such consolidation, merger, sale or conveyance.

2.2.2        Reclassification.  If the Borrower at any time shall, byreclassification or otherwise, change the Common Stock into the same or adifferent number of securities of any class or classes that may be issued oroutstanding, this Note, as to the unpaid principal portion thereof and accruedinterest thereon, shall thereafter be deemed to evidence the right to purchasean adjusted number of such securities and kind of securities as would have beenissuable as the result of such change with respect to the Common Stockimmediately prior to such reclassification or other change.

2.2.3        Stock Splits, Combinations and Dividends.  If the shares of Common Stock are subdividedor combined into a greater or smaller number of shares of Common Stock, or if adividend is paid on the Common Stock in shares of Common Stock, the Conversion Priceshall be proportionately reduced in case of subdivision of shares or stockdividend or proportionately increased in the case of combination of shares, ineach such case by the ratio which the total number of shares of Common Stockoutstanding immediately after such event bears to the total number of shares ofCommon Stock outstanding immediately prior to such event.

Whenever the Conversion PricePer Share is adjusted pursuant to this Section 2.2, the Borrower shall promptlymail to the Holder a notice setting forth the Conversion Price Per Share aftersuch adjustment and setting forth a brief statement of the facts requiring suchadjustment.

3.             Optional Prepayment.  This Note may be prepaid by Borrower in wholeor in part without the consent of the Lender and without prepayment penalty ofany kind.

4.             Default; Remedies.  For the purposes of this Agreement, an Eventof Default (herein so called) shall have occurred if (i) Borrower shall fail topay when due any principal of or interest on this Note, and such failure shallcontinue for a period of ten (10) days after the due date, (ii) Borrower shallhave failed to perform any covenant or other obligation contained herein or inthe Registration Rights Agreement, and such failure shall continue for a periodof ten (10) business days after Lender shall have given Borrower written noticeof such failure, (iii) Borrower shall commence a voluntary case or otherproceeding seeking liquidation or reorganization with respect to itself or itsdebts under any bankruptcy, insolvency or other similar law now or hereafter ineffect or seeking the appointment of a trustee, receiver, liquidator, custodianor other similar official of it or any substantial part of its property, orshall consent to any such relief or to the appointment of or taking possessionby any such official in an involuntary case or other proceeding commencedagainst it, or shall make a general assignment for the benefit of creditors,and such case or other proceeding shall remain undismissed and unstayed for aperiod of 30 consecutive days; or (iv) an involuntary case or other proceedingshall be commenced against Borrower seeking liquidation, reorganization orother relief with respect to it or its debts under any bankruptcy, insolvencyor other similar now or hereafter in effect or seeking the appointment of atrustee, liquidator, receiver, custodian or other similar

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official of it or anysubstantial part of its property, and such involuntary case or other proceedingshall remain undismissed and unstayed for a period of 60 consecutive days.

IfBorrower fails or refuses to pay any part of the principal of or interest uponthis Note as the same becomes due, or upon the occurrence of an Event ofDefault hereunder, then in any such event the Holder hereof may, at its option(i) declare the entire unpaid balance of principal and accrued interest onthis Note to be immediately due and payable without notice, (ii) reduceany claim to judgment, and/or (iii) demand, pursue and enforce any of Lender’srights and remedies, pursuant to any applicable law or agreement.  Each right and remedy available to Lendershall be cumulative of and in addition to each other such right andremedy.  No delay on the part of Lenderin the exercise of any right or remedy available to Lender shall operate as awaiver thereof, nor shall any single or partial exercise thereof preclude otheror further exercise thereof or exercise of any other such right or remedy.

5.             Representations, Warranties andCovenants of Borrower.  Borrowerrepresents and warrants that Borrower has authority and has obtained allapprovals and consents necessary to enter into this Note and Borrower’sexecution, delivery, and performance of this Note will not violate or conflictwith the terms of Borrower’s Certificate of Incorporation.  Borrower will use of the proceeds of thisNote for development of Borrower’s biodiesel plant located in Durant, Oklahoma,and for fees associated with this Note.  Subject to the provisions of Regulation FD, upon request ofLender, Borrower shall provide to Lender such information and materials asLender may request, including unaudited monthly and quarterly and auditedyearly financial statements, an annual budget, internal management documents,reports of operations, reports of adverse developments, copies of any managementletters, communications with shareholders or directors, press releases andregistration statements, and access to all senior managers.

6.     Representations andWarranties of Lender.

6.1  Suitability.  The Lender is an “accredited investor” assuch term is defined in Regulation D issued by the Securities and ExchangeCommission, and such Lender’s financial condition is such that it is able tobear the economic risk of its investment in the Note. Lender has such knowledgeand experience in financial and business matters as is necessary to make aninvestment in the Note.

6.2  Purchase for Own Account.  This Note is being acquired by Lender forinvestment purposes only and not with a view to the distribution of all or anypart thereof.  Lender has no present intentionof selling, transferring, disposing or granting any participation in the Noteand is not a party to any contract, agreement or understanding that wouldresult in any such sale, transfer or disposition of all or any portion of thisNote.

7.             No Waiver; Cumulative Rights.  No delay on the part of the Holder of thisNote in the exercise of any power or right under this Note shall operate as awaiver thereof, nor shall a single or partial exercise of any power or rightpreclude other or further exercise thereof or the exercise of any other poweror right.

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8.             Waiver.  Borrower waives demand, presentment, protest,notice of dishonor, notice of nonpayment, notice of intention to accelerate,notice of acceleration, notice of protest and any and all lack of diligence ordelay in collection or the filing of suit hereon which may occur, and agrees toall extensions and partial payments, before or after maturity, withoutprejudice to the Holder hereof.

9.             Collection Costs.  In the event that, upon an Event of Default,any amount under this Note is collected in whole or in part through suit,arbitration or mediation, then and in any such case there shall be added to theunpaid principal balance hereof all costs of collection, (including, but notlimited to, reasonable attorneys’ fees and expenses) whether or not suit isfiled.

10.           Governing Law.  This Note shall be governed by and construedin accordance with the laws of the State of Texas.  In the event of a dispute involving this Noteor any other instruments executed in connection herewith, the partiesirrevocably agree that exclusive venue for such dispute shall lie in any courtof competent jurisdiction in Dallas County, Texas, and the parties waive anyclaim that such forum is inappropriate or inconvenient.

11.           Headings.  The headings of the sections of this Note areinserted for convenience of reference only and shall not be deemed toconstitute a part hereof.

12.           Usury.  All agreements between Borrower and the Holderof this Note, whether now existing or hereafter arising and whether written ororal, are expressly limited so that in no contingency or event whatsoever,whether by acceleration of the maturity of this Note or otherwise, shall theamount paid, or agreed to be paid, to the Holder hereof for the use, forbearanceor detention of the money to be loaned hereunder or otherwise, exceed themaximum amount permissible under applicable law.  If from any circumstances whatsoeverfulfillment of any provision of this Note, at the time performance of suchprovision shall be due, shall involve transcending the limit of validityprescribed by law, then *ipso facto,*theobligation to be fulfilled shall be reduced to the limit of such validity, andif from any such circumstances the Holder of this Note shall ever receiveanything of value as interest or deemed interest by applicable law under thisNote or otherwise in an amount that would exceed the highest lawful rate, suchamount that would be excessive interest shall be applied to the reduction ofthe principal amount owing under this Note, and not to the payment of interest,or if such excessive interest exceeds the unpaid balance of principal of thisNote, such excess shall be refunded to Borrower.  In determining whether or not the interestpaid or payable with respect to any indebtedness of Borrower to the Holderhereof, under any specific contingency, exceeds the highest lawful rate,Borrower and the Holder hereof shall, to the maximum extent permitted byapplicable law, (i) characterize any nonprincipal payment as an expense, fee orpremium rather than as interest, (ii) amortize, prorate, allocate and spreadthe total amount of interest throughout the full term of such indebtedness sothat the actual rate of interest on account of such indebtedness is uniform throughoutthe term thereof, and/or (iii) allocate interest between portions of suchindebtedness, to the end that no such portion shall bear interest at a rategreater than that permitted by law.  Theterms and provisions of this paragraph shall control and supersede every otherconflicting provision of all agreements between Borrower and the Holder hereof.

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13.           Successors and Assigns.  All of the stipulations, promises andagreements in this Note made by or on behalf of Borrower shall bind thesuccessors and assigns of Borrower, whether so expressed or not, and inure tothe benefit of the successors and assigns of Borrower and Lender.  Any assignee of Borrower or Lender shallagree in writing prior to the effectiveness of such assignment to be bound bythe provisions hereof.  The Lender fromtime to time also may sell to one or more financial institutions, institutionalinvestors or other persons a participation interest in all or any undividedportion of the rights, powers, privileges, remedies and interests of the Lenderunder this Note.

14.           Severability.  In the event any one or more of theprovisions contained in this Note shall for any reason be held to be invalid,illegal or unenforceable in any respect, such invalidity, illegality orunenforceability shall not affect any other provision hereof, and this Noteshall be construed as if such invalid, illegal or unenforceable provision hadnever been contained herein.

15.           Notices.  All notices and other communicationshereunder shall be in writing or by telecopy, and shall be deemed to have beenduly made when delivered in person or sent by telecopy, same day or overnightcourier, or 72 hours after having been deposited in the United Statesregistered or certified mail return receipt requested, postage prepaid, to aparty at the address set forth below (which may be changed in accordance withthese notice procedures):

If to Lender:

Name:  Marc Weill

Address:440 Roundhill Road

Greenwich,CT  06831-2639

Fax number: (203) 629-0679

If to Borrower:

Earth Biofuels, Inc.

3001 Knox Street, Suite 403

Dallas, TX  75205

Fax Number: (214) 389-9805

Attention:  ChiefExecutive Officer

With a copy to:

Roger A. Crabb

Scheef & Stone, LLP

5956 Sherry Lane, Suite 1400

Dallas, TX 75225

Faxnumber:  (214) 706-4242

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THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEENBORROWER AND LENDER CONCERNING THE MATTERS HEREIN AND MAY NOT BE CONTRADICTEDBY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THEPARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THEPARTIES.

INWITNESS WHEREOF, the undersigned have executed this Convertible Promissory Noteon and as of the date first set forth above.
|              | ***BORROWER:***          |                          |
|--------------|--------------------------|-------------------------------|
| *** *** |                     |
|         | EARTH BIOFUELS, INC.     |
|         |                     |
|         |                     |
|         | By:                      | /s/ DENNIS G. MCLAUGHLIN, III |   |
|         | Name:                    | Dennis G. McLaughlin, III     |
|         | Title:                   | Chief Executive Officer       |
|         |                     |                          |
|         |                     |                          |
| *** *** | ***LENDER:***            | *** ***                  |
| *** *** | *** ***             |
|         | Marc Weill               |
|         |                     |
|         |                     |
|         | /s/ Marc Weill           |                          |
|         | Marc Weill, individually |
|              |                          |                               |  |  |  |  |

 

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FORM OF

NOTICE OFCONVERSION

(To be Executed bythe Registered Holder in order to Convert the Note)

The undersigned hereby irrevocablyelects to convert $ 500,000.00 of the principal amount of the above Note intoshares of Common Stock of Earth Biofuels, Inc. according to the conditions ofsuch Note, as of the date written below.
| Date of Conversion                |                 |   |
|-----------------------------------|----------------------|--------|
|                              |
| Applicable Conversion Price $0.50 |
|                              |
|                              |
| Signature:                        |                 |   |
|                              |
| Printed Name: Marc Weill          |
|                              |
| Address:                          | 440 Round Hill  Road |
|                              |                 |
|                              | Greenwich, CT 06831  |
|                                   |                      |        |  |  |  |

 

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