**EXHIBIT 10.78**

----

 

 

**SUBLICENSE AGREEMENT**

 

----

 

----

** **

**BIODIESEL VENTURE, L.P.**

**AND**

**EARTH BIOFUELS, INC.**

----

** **

**APRIL 1, 2006**

----

 

**SUBLICENSE**AGREEMENT****

**TABLE OF CONTENTS**
| 1.     |   | Sublicense Grant                                                     |   | 1      |   |
|--------|--------|----------------------------------------------------------------------|--------|--------|--------|
|   |   |                                                                 |   |   |   |
| 2.     |   | Representations  and Warranties                                      |   | 2      |   |
|   |   |                                                                 |   |   |   |
| 3.     |   | No Assignment or  Sublicensing                                       |   | 3      |   |
|   |   |                                                                 |   |   |   |
| 4.     |   | Term and  Termination                                                |   | 3      |   |
|   |   |                                                                 |   |   |   |
| 5.     |   | Payments                                                             |   | 5      |   |
|   |   |                                                                 |   |   |   |
| 6.     |   | Statements and  Payments                                             |   | 8      |   |
|   |   |                                                                 |   |   |   |
| 7.     |   | Audit;  Inspections                                                  |   | 9      |   |
|   |   |                                                                 |   |   |   |
| 8.     |   | Quality,  Approvals; Samples; Right to Use; Sublicensee Restrictions |   | 9      |   |
|   |   |                                                                 |   |   |   |
| 9.     |   | Required  Markings                                                   |   | 12     |   |
|   |   |                                                                 |   |   |   |
| 10.    |   | Ownership of  Mark                                                   |   | 13     |   |
|   |   |                                                                 |   |   |   |
| 11.    |   | Trademark and  Copyright Protection and Infringements                |   | 13     |   |
|   |   |                                                                 |   |   |   |
| 12.    |   | Indemnification                                                      |   | 14     |   |
|   |   |                                                                 |   |   |   |
| 13.    |   | Insurance                                                            |   | 15     |   |
|   |   |                                                                 |   |   |   |
| 14.    |   | Notices                                                              |   | 16     |   |
|   |   |                                                                 |   |   |   |
| 15.    |   | Relationship of  the Parties                                         |   | 17     |   |
|   |   |                                                                 |   |   |   |
| 16.    |   | Choice of Laws                                                       |   | 17     |   |
|   |   |                                                                 |   |   |   |
| 17.    |   | Waiver                                                               |   | 17     |   |
|   |   |                                                                 |   |   |   |
| 18.    |   | Severability                                                         |   | 17     |   |
|   |   |                                                                 |   |   |   |
| 19.    |   | Headings                                                             |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 20.    |   | Revocation of  Prior Agreements                                      |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 21.    |   | Third-Party  Beneficiaries                                           |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 22.    |   | Counsel                                                              |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 23.    |   | Incorporation                                                        |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 24.    |   | Counterparts                                                         |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 25.    |   | Binding Effect;  Successors and Assigns                              |   | 18     |   |
|   |   |                                                                 |   |   |   |
| 26.    |   | Injunctive  Relief                                                   |   | 19     |   |
|   |   |                                                                 |   |   |   |
| 27.    |   | Defined Terms                                                        |   | 19     |   |

 

i

----

**SUBLICENSE AGREEMENT**

**This SUBLICENSE AGREEMENT**(this “Agreement”), dated this 1st day of April, 2006 (the “Effective Date”), is entered into by and between **BIODIESEL VENTURE, L.P.**,a Texas limited partnership (“Venture”),and **EARTH BIOFUELS,INC.**, a Delaware corporation (“Sublicensee”).

**R E C I T A L S:**

**WHEREAS**, Venture is alicensee of certain rights in the Mark (as defined below) pursuant to theMaster License (as defined below);

**WHEREAS**, Sublicensee hasexperience in distributing for resale (i) agricultural based so-called “biodiesel”fuel, and (ii) blends of petrochemical petroleum fuel (“PetroleumFuel”) with such agricultural based so-called “biodiesel fuel”; and

**WHEREAS**, Sublicensee desiresto obtain, and Venture is willing to grant to Sublicensee, the right to use theMark during the Term (as defined below) and within the Territory (as definedbelow), pursuant to the terms and conditions of this Agreement, solely in orderto Distribute (as defined below) Biodiesel Fuel (as defined below).

**NOW, THEREFORE**, inconsideration of the mutual promises, covenants and conditions containedherein, it is hereby agreed as follows:

# **1.            ****Sublicense Grant****.**

## (a)           Grant.Subject to the terms and conditions hereof, Venture hereby grants toSublicensee, and Sublicensee hereby accepts, for the Term and within theTerritory, the right and license to use the Mark for the sole, distinct andlimited purposes of Distributing Biodiesel Fuel (the “Sublicense”).

## (b)           PromotionalUse of Mark. Subject to such restrictions (i) as may be set forth inthe Master License, or (ii) as may be provided to Sublicensee by Venture fromtime to time during the Term, Sublicensee may use the Mark to advertise andpromote Biodiesel Fuel during the Term in electronic, print, broadcast or othermedia throughout the Territory; provided,however, Sublicensee shall have first obtained the prior written approval ofVenture, which shall be subject in all respects to the approval of Owner (asdefined below) under the Master License, with respect to each such use (the “Promotional Uses”).

## (c)           OwnerIdentification. Unless otherwise specifically approved in writing byVenture (which approval may be given or withheld in its Sole Discretion andwhich shall be subject in all respects to the approval of Owner under the MasterLicense) in advance and with respect to each particular use (and terms andconditions thereof) on a case by case basis, Sublicensee shall have no right touse, display, perform, sublicense, reproduce or otherwise exploit, in anymanner or in any media, the Owner Identification (as defined below).

## (d)           NoDenigration. Sublicensee shall not denigrate, permit, allow or causethe denigration of, the Mark or the Owner Identification, and shall not takeany other action not 

----

## approved by Venture as provided herein (whichshall be subject in all respects to the approval of Owner under the MasterLicense) that is harmful or potentially harmful to or which disparages,ridicules or demeans the goodwill, honor and reputation of Venture, Venture’sAffiliates, Owner, Owner’s Affiliates, the Mark or the Owner Identification.

## (e)           Exclusivity.Notwithstanding anything contained herein to the contrary but subjectnotwithstanding to Section 8(j) hereof, during the Term and within theTerritory, Venture covenants and agrees that it shall not grant to any otherPerson, other than Sublicensee, the right to use the Mark in order toDistribute biodiesel fuel (in pure form or blended in any concentration withPetroleum Fuel).

# **2.            ****Representationsand Warranties****.**

## (a)           Venture.Venture represents, warrants and covenants to Sublicensee, as of the EffectiveDate, that:

### (i)            Venture is a licensee of the Markpursuant to the Master License;

### (ii)           Subject to the provisions of thisAgreement, Venture has the right to grant the Sublicense when approved asprovided herein;

### (iii)          to the best of Venture’s knowledge, noregistered United States intellectual property right of any third parties willbe infringed or otherwise violated by Sublicensee’s use of the Mark in strictaccordance with the terms of this Agreement;

### (iv)          Venture has not granted to any thirdparties any rights that would preclude Venture from granting the right to usethe Mark within the Territory as provided herein; and

### (v)           this Agreement has been duly executedand delivered by Venture.

## (b)           Sublicensee.Sublicensee represents, warrants and covenants to Venture and Owner that:

### (i)            Sublicensee is a corporation dulyincorporated, validly existing and in good standing under the laws of the Stateof Delaware, and is, and shall remain, duly qualified and in good standing ineach jurisdiction in which the nature of its business requires, or in thefuture shall require it to be so qualified;

### (ii)           Sublicensee has the power andauthority to own its property and assets, to conduct its business as it is nowbeing conducted and to execute and deliver this Agreement and to perform thetransactions contemplated hereby;

### (iii)          no consent of or other action by, andno notice to or filing with, any governmental agency is required for theexecution, delivery and performance by Sublicensee of this Agreement;

### (iv)          this Agreement has been duly executedand delivered on behalf of Sublicensee;

2

----

###  

### (v)           this Agreement, and each provisionhereof, is the legal, valid and binding obligation of Sublicensee enforceableagainst Sublicensee in accordance with its terms;

### (vi)          Sublicensee shall comply with allApplicable Laws (as defined below) governing the distribution, sale, promotion,marketing and advertisement of Biodiesel Fuel;

### (vii)         Sublicensee has obtained and shallmaintain at all times during the Term all licenses, permits, orders,authorizations and approvals that are required under any governmental law orregulation in connection with Sublicensee’s business activities and properties;and

### (viii)        the execution, delivery and performanceof this Agreement (A) have been duly authorized by all necessary action on thepart of Sublicensee; (B) do not contravene or cause Sublicensee to be indefault of any contractual or other restriction contained in any agreement or instrumentbinding on, applicable to or affecting Sublicensee or its property or assets orany law, rule, regulation, order, writ, judgment, award, injunction or decreebinding on, applicable to or affecting Sublicensee or its property or assets;and (C) do not result in the creation or imposition of any lien, charge orencumbrance of any nature whatsoever upon any of the properties or assets ofSublicensee.

**3.            ****No Assignment orSublicensing****.** Sublicensee shall not have the right to assign thisAgreement (by operation of law, change of control, merger or otherwise) or toassign, dispose, mortgage transfer, pledge, encumber or sublicense (or permitany of the foregoing, whether voluntarily or involuntarily) any of its rightshereunder without the prior written approval of Venture (which approval shallbe subject in all respects to the approval of Owner under the Master License),which Venture may withhold at its Sole Discretion.

# **4.            ****Term andTermination****.**

## (a)           Term.Unless terminated pursuant to Sections 4(b) or 4(c) hereof, the initial term ofthis Agreement shall commence as of the Effective Date and shall continue for aperiod of two (2) years therefrom (the “Initial Term”).Thereafter, Sublicensee shall have the right to renew this Agreement uponwritten notice given to Venture no later than ninety (90) days prior to theexpiration of the Initial Term (or any, if any, Renewal Terms, as applicable)for a total of four (4) additional periods of two (2) years each (each, a “Renewal Term,” and together with the InitialTerm, collectively, the “Term”); provided, however,any and all such renewals shall be subject to, as of the commencement of eachRenewal Term, (i) Sublicensee not then being in breach of this Agreement, and(ii) all accrued but unpaid Agreement Payments (as defined in Section 7(a)below) due or outstanding as of such renewal having been paid in full.

## (b)           Termination.

### (i)            Breach — NoCure. Without limitation of any other rights or remedies availableat law or in equity, Venture shall have the right (but not the obligation) toterminate this Agreement by written notice effective immediately upon thegiving of such notice, without the opportunity to cure provided in Section4(b)(ii) below, in the event that:

#### (1)           Sublicensee is dissolved;

3

----

####  

#### (2)           Sublicensee files a petition inbankruptcy, is adjudicated as bankrupt or insolvent, makes a general assignmentfor the benefit of creditors, discontinues its business or if a receiver,trustee or custodian is appointed for Sublicensee (or Sublicensee’s business)which receiver, trustee or custodian is not discharged within thirty (30) daysof appointment;

#### (3)           Sublicensee sells, transfers, leasesor otherwise disposes of all or substantially all of its assets;

#### (4)           Sublicensee fails to pay its debts asthey become due;

#### (5)           A Change of Control of Sublicenseeoccurs (for purposes hereof, the term “Change ofControl” shall mean that Apollo Resource Intl., Blue Wireless &Data Inc. and Dennis McLaughlin shall fail at any time to collectively own,directly or indirectly, less than 51% of each class of outstanding voting stockof Sublicensee);

#### (6)           Sublicensee materially breaches anyof the terms or conditions of this Agreement (a “MaterialBreach”). For avoidance of doubt, and without limitation of anyother potential breaches that may be deemed a Material Breach of thisAgreement, any breach by Sublicensee of any provision found in Sections 1, 3,5, 6, 7, 8 and 13 hereof shall constitute a Material Breach of this Agreement;

#### (7)           the Biodiesel Fuel sold bySublicensee fails to meet the requirements of Section 8(h) hereof;

#### (8)           Sublicensee pledges or grants asecurity interest in all or any part of this Agreement as collateral orsecurity for any liability or indebtedness of Sublicense or any other Person;or

#### (9)           Sublicensee, either directly orindirectly (including, without limitation, through its agents) engages, orattempts to engage, in the sale or distribution of biodiesel fuel other thanthe Biodiesel Fuel in contravention of Section 8(k) hereof.

### (ii)           Breach — SevenDay Cure. Without limitation of any other rights or remediesavailable at law or in equity, in the circumstances set forth in this Section4(b)(ii), Sublicensee must commence and complete the cure of the applicablebreach as soon as possible, but in no event later than seven (7) days afterVenture’s notice of breach, or Venture shall have the right (but not theobligation) to terminate this Agreement, in the event that:

#### (1)           Sublicensee is subject to anyvoluntary order of any government agency involving the safety, health or otherhazards or risks to the public;

#### (2)           Sublicensee breaches any provision ofthis Agreement not constituting a Material Breach; or

#### (3)           Sublicensee distributes or sellsdefective Biodiesel Fuel without taking steps reasonably to correct or repairthe defect immediately upon the earlier to occur of (a) 

4

----

#### receipt of notice of the defect by Venture,or (b) Sublicensee’s otherwise becoming aware of such defect.

## (c)           AdditionalRights to Terminate.

### (i)            Required toTerminate. Sublicensee acknowledges and agrees that Venture may atanytime during the Term terminate this Agreement in the event (A) Venture isrequired to do so by law, or (B) the Master License terminates (for anyreason), and in either case, Sublicensee acknowledges that such terminationshall not constitute a breach of this Agreement.

### (ii)           Owner Rights.Without limitation of any other rights or remedies at law or in equity,Sublicensee acknowledges and agrees that Owner shall have the right (but notthe obligation), acting on behalf of Venture, to directly terminate thisAgreement by written notice to Sublicensee effective immediately upon thegiving of such notice, in the event that Sublicensee breaches the terms of thisAgreement and Venture fails to exercise its rights to terminate this Agreementin accordance with its terms.

## (d)           Effect ofTermination. Upon termination or expiration of this Agreement, allrights herein granted shall immediately and without further notice terminateand revert to Venture. Not in limitation of the foregoing, Sublicensee shallimmediately discontinue all use of the Mark and any items confusingly similarthereto, and destroy all printed materials bearing the Mark. Sublicenseeacknowledges all rights, title and interests in and to the Mark and thegoodwill associated therewith shall remain the sole and exclusive property ofOwner (subject to Venture’s express rights pursuant to the Master License) andthat Sublicensee shall have no right to use the Mark or any derivationsthereof, subsequent to the expiration or termination of this Agreement

# **5.            ****Payments****.**

## (a)           AdvancePayments.

### (i)            AdvancePayments Directly to Venture. For each Contract Year of the Termhereof, Sublicensee agrees that it will pay directly to Venture, an amountequal to One Hundred Fifty Thousand Dollars ($150,000), which amount shall bepayable in equal monthly payments of Twelve Thousand Five Hundred Dollars($12,500.00) each (the “Venture Advance Payments”).Venture Advance Payments shall be due and payable in full and in readilyavailable funds on the first day of each calendar month during the Term hereof.

### (ii)           AdvancePayments Directly to Owner. For each Contract Year of the Termhereof and in addition to the payments of the Venture Advance Payments,Sublicensee agrees that it will pay directly to Owner, an amount equal to OneHundred Fifty Thousand Dollars ($150,000), which amount shall be payable inequal monthly installments of Twelve Thousand Five Hundred Dollars ($12,500.00)each (the “Owner Advance Payments”). OwnerAdvance Payments shall be due and payable in full and in readily availablefunds on the first day of each calendar month during the Term hereof.

5

----

###  

## (b)           RoyaltyPayments.

### (i)            RoyaltyPayments to Venture. Throughout the Term hereof, Sublicensee agreesthat it will pay to Venture, without offset or deduction of any kind or naturewhatsoever, as royalty payments (collectively, the “VentureRoyalty Payments”), one cent ($.01) per gallon of Biodiesel FuelDistributed by Sublicensee or any of its Affiliates; provided,however, that for each calendar monthduring the Term hereof, the first Twelve Thousand Five Hundred Dollars($12,500.00) of such Venture Royalty Payments for such month shall be offsetand reduced by that month’s Venture Advance Payment actually paid to Venturefor such month. Venture Royalty Payments shall be paid monthly as provided forin Section 6(b) below.

### (ii)           RoyaltyPayments to Owner. Throughout the Term hereof, in addition to theVenture Royalty Payments, Sublicensee agrees that it will pay directly toOwner, without offset or deduction of any kind or nature whatsoever, as royaltypayments (collectively, the “Owner Royalty Payments”),one cent ($.01) per gallon of Biodiesel Fuel Distributed by Sublicensee or anyof its Affiliates; provided, however, that for each calendar month during theTerm hereof, the first Twelve Thousand Five Hundred Dollars ($12,500.00) ofsuch Owner Royalty Payments for such month shall be offset and reduced by thatmonth’s Owner Advance Payment actually paid to Owner for such month. OwnerRoyalty Payments shall be paid monthly as provided for in Section 6(b) below.

## (c)           Increase inPayments. Simultaneously with the commencement of each and everyRenewal Term, if any, hereunder, each Agreement Payment set forth in thisAgreement shall be automatically adjusted (without any action or notice byVenture) by an amount equal to the percentage increase in the CPI (as definedbelow) during the preceding twenty-four (24) months. The “CPI” is defined asthe Consumer Price Index for all Urban Consumers, U.S. City Average, All Items(1982-1984 = 100) for the United States published by the Bureau of LaborStatistics of the U.S. Department of Labor, and if the CPI is discontinued, thesuccessor index most nearly comparable thereto.

## (d)           Yearly TrueUp.

### (i)            True-Up Procedure/Venture.If Sublicensee determines that for any given Contract Year during the Term, ithas actually paid, in the aggregate during such Contract Year, to Venture asVenture Minimum Payments an amount in excess of the aggregate Venture RoyaltyPayments that were due and payable and actually paid by Sublicensee to Venturefor the twelve calendar months during such Contract Year (any, if any purportedexcess, the “Venture Excess Advance Amount”),Sublicensee shall prepare and deliver to Venture a statement (each, a “Venture Statement”) setting forth the amount andcalculation of such Venture Excess Advance Amount and a description of thebasis for such Venture Excess Advance Amount. Venture shall have thirty (30) calendar days from its receipt of such VentureStatement (the “Venture Objection Period”)to review such Venture Statement.  Uponthe expiration of such Venture Objection Period, Venture shall be deemed tohave accepted, and shall be bound by, such Venture Statement and the amount ofsuch Venture Excess Advance Amount, unless Venture shall have informedSublicensee in writing of its disagreement with such Venture Excess AdvanceAmount prior to the expiration of the applicable Venture Objection Period (the “Venture Objection”), setting forth in reasonabledetail the basis for each such dispute (each, a “VentureDisputed Item”). 

6

----

### Sublicensee shall have ten (10) calendar daysfrom the date on which it receives the Venture Objection (the date on whichsuch ten (10) calendar day period ends, the “VentureResponse Date”) to review and respond to such Venture Objection. IfVenture and Sublicensee are able to negotiate a mutually agreeable resolutionof each Venture Disputed Item, and each signs a certificate to that effect, theVenture Statement and the calculation therein of the Venture Excess AdvanceAmount, as adjusted to reflect such resolution, shall be deemed final,non-appealable and binding for purposes of this Agreement. Venture shall remitto Sublicensee (a) the Venture Excess Advance Amount if no Venture Objection ismade by Venture during the Venture Objection Period, (b) the amount of themutually agreeable resolved Venture Excess Advance Amount if Venture submits aVenture Objection within the Venture Objection Period, upon the mutually agreeableresolution as described above. If, however,within thirty (30) calendar days of the Venture Response Date any VentureDisputed Items have not been resolved upon mutual agreement as provided herein,such Venture Disputed Items shall be settled by final and binding arbitrationadministered by the American Arbitration Association under its then inexistence Commercial Arbitration Rules. The arbitration shall take place in orabout Dallas, Texas. Judgment on the award rendered by the arbitrator(s) may beentered in any court having jurisdiction thereof. The arbitrator(s) shall applyTexas law, without regard to its rules of conflict of law. Each party shallinitially bear its own attorney’s fees, costs, and disbursements arising out ofthe arbitration and shall pay an equal share of the up-front fees and costs ofthe arbitration and the arbitrator(s); *provided*, *however*, the prevailing party shall be awarded, as part ofthe arbitration, full reimbursement for its reasonable attorneys’ fees, costsand disbursements (including, for example, expert witness fees and expenses,photocopy charges, travel expenses, etc.), and the fees and costs of thearbitration and the arbitrator(s).

### (ii)           True-UpProcedure/Owner. If Sublicensee determines that for any givenContract Year during the Term, it has actually paid, in the aggregate duringsuch Contract Year, to Owner as Owner Minimum Payments an amount in excess ofthe aggregate Owner Royalty Payments that were due and payable and actuallypaid by Sublicensee to Owner for the twelve calendar months during suchContract Year (any, if any purported excess, the “OwnerExcess Advance Amount”), Sublicensee shall prepare and deliver toOwner a statement (each, an “Owner Statement”)setting forth the amount and calculation of such Owner Excess Advance Amountand a description of the basis for such Owner Excess Advance Amount. Ownershall have thirty (30) calendar days from its receipt of such Owner Statement(the “Owner Objection Period”) to reviewsuch Owner Statement. Upon the expiration of such Owner Objection Period, Ownershall be deemed to have accepted, and shall be bound by, such Owner Statementand the amount of such Owner Excess Advance Amount, unless Owner shall haveinformed Sublicensee in writing of its disagreement with such Owner ExcessAdvance Amount prior to the expiration of the applicable Owner Objection Period(the “Owner Objection”), setting forth inreasonable detail the basis for each such dispute (each, an “Owner Disputed Item”). Sublicensee shall have ten(10) calendar days from the date on which it receives the Owner Objection (thedate on which such ten (10) calendar day period ends, the “Owner Response Date”) to review and respond tosuch Owner Objection. If Owner and Sublicensee are able to negotiate a mutuallyagreeable resolution of each Owner Disputed Item, and each signs a certificateto that effect, the Owner Statement and the calculation therein of the OwnerExcess Advance Amount, as adjusted to reflect such resolution, shall be deemedfinal, non-appealable and binding for purposes of this Agreement.  Owner shall remit to Sublicensee (a) theOwner Excess Advance Amount if no Owner Objection is made by Owner during theOwner Objection Period, (b) the amount of the 

7

----

### mutually agreeable resolved Owner ExcessAdvance Amount if Owner submits an Owner Objection within the Owner ObjectionPeriod, upon the mutually agreeable resolution as described above. If, however, within thirty (30) calendar days of theOwner Response Date any Owner Disputed Items have not been resolved upon mutualagreement as provided herein, such Owner Disputed Items shall be settled byfinal and binding arbitration administered by the American ArbitrationAssociation under its then in existence Commercial Arbitration Rules. Thearbitration shall take place in or about Dallas, Texas. Judgment on the awardrendered by the arbitrator(s) may be entered in any court having jurisdictionthereof. The arbitrator(s) shall apply Texas law, without regard to its rulesof conflict of law. Each party shall initially bear its own attorney’s fees,costs, and disbursements arising out of the arbitration and shall pay an equalshare of the up-front fees and costs of the arbitration and the arbitrator(s); *provided*, *however*, theprevailing party shall be awarded, as part of the arbitration, fullreimbursement for its reasonable attorneys’ fees, costs and disbursements(including, for example, expert witness fees and expenses, photocopy charges,travel expenses, etc.), and the fees and costs of the arbitration and thearbitrator(s).

# **6.            ****Statements andPayments****.**

## (a)           Statements;Payments. Within ten (10) days after the end of each calendar monthduring the Term of this Agreement (each such month, an “AccountingPeriod”), Sublicensee shall provide to each of Venture and Owner acomplete and accurate statement (individually, an “AccountingStatement” and, collectively, the “AccountingStatements”) for that month of all of Sublicensee’s sales ofBiodiesel Fuel during such Accounting Period, certified as accurate by Sublicenseeand accompanied by the payment of all Venture Royalty Payments and OwnerRoyalty Payments (collectively, the “Royalty Payments”)due with respect to such Accounting Period.

## (b)           AccountingStatements. Each Accounting Statement, which shall be in conformancewith the requirements of Venture and Owner, must be submitted whether or notany Royalty Payments are due during the Accounting Period. AccountingStatements and accompanying Royalty Payments; if any, Venture Minimum Paymentsand Owner Minimum Payments shall be delivered to Venture and Owner c/o MarkRothbaum & Associates, 36 Mill Plain Road, Suite 406, Danbury, CT 06811,Attn: Mark Rothbaum, via hand delivery or nationally recognized overnightcourier service that obtains acknowledgment of receipt by the addressee.

## (c)           Acceptance.Acceptance by Venture or Owner of any Accounting Statement furnished or RoyaltyPayment made shall not preclude Venture or Owner from later questioning itscorrectness and, in the event that any inconsistencies or mistakes arediscovered, they shall be rectified, or caused to be rectified, by Sublicenseewithin seven (7) calendar days of receipt by Sublicensee of Venture’s or Owner’swritten notice of the inconsistency or mistake.

## (d)           Time is ofthe Essence. Time is of the essence with respect to all payments tobe made hereunder, and interest at a rate of one and one-half percent (1.5%)per month, compounded monthly on the unpaid balance, or the maximum legal rateof interest, whichever is lower, shall accrue on any amount due Venture orOwner, as applicable, calculated from the date on which payment was initiallydue. For avoidance of doubt, the parties agree that Sublicensee’s 

8

----

## only remedy in the event that the interestrate specified in this Section 6(d) or Section 7(c) hereof is higher than themaximum legal rate of interest is to have the interest rate specified in thisSection 6(d) or Section 7(c) hereof reduced to the maximum legal rate ofinterest

## (e)           Tax Returns.Each year, a copy of all annual finalized federal tax returns as filed forSublicensee shall be forwarded to Venture and Owner at the address specifiedherein no later than thirty (30) days following the filing of such returns withthe Internal Revenue Service.

# **7.            ****Audit;Inspections****.**

## (a)           Books andRecords. Sublicensee shall keep complete and accurate books ofaccount (in such reasonable detail as to allow Venture and Owner to determinethe correctness of any and all Royalty Payments, Venture Minimum Payments andOwner Minimum Payments (collectively, the “AgreementPayments” made hereunder) at its principal place of businesscovering all transactions relating to this Agreement.

## (b)           Maintenance.All such books of account and records of Sublicensee relating to this Agreementshall be retained for at least five (5) years after the end of each fiscal yearto which they pertain.

## (c)           Audit Rights.Venture, Owner and/or their respective duly authorized representative(s) shallhave the right, at reasonable hours of the day and upon reasonable, advancenotice, and, at Venture’s or Owner’s respective cost, to examine, audit andcopy such books of account, records and all other documents and material inSublicensee’s possession or control with respect to this Agreement and to makesummaries thereof. In the event that such an audit reveals an underpayment bySublicensee, Sublicensee shall, within seven (7) calendar days after Venture’sor Owner’s notice of such underpayment, remit payment to Venture and/or Ownerin the amount of the underpayment plus interest calculated at the rate of oneand one-half percent (1.5%) per month, compounded monthly on the unpaidbalance, or the maximum legal rate of interest, whichever is lower, calculatedfrom the date such payment(s) were initially due. With respect to anyparticular Accounting Statement, Venture or Owner must give written notice ofits intent to exercise the rights granted in this Section 7(c) no later thanthe third anniversary of Venture’s or Owner’s actual receipt of such AccountingStatement that is the subject of the examination. If Sublicensee’s payments inthe aggregate for any given period are incorrect by more than five percent(5%), Sublicensee shall pay the costs and expenses of the audit.

# **8.            ****Quality,Approvals; Samples; Right to Use; Sublicensee Restrictions****.**

## (a)           Venture’sRight of Approval. Sublicensee acknowledges that the loyalty ofOwner’s fans and customers is an asset of tremendous value to Owner, and thatmeeting fans’ and customers’ expectations for high quality products is ofparamount importance to Owner. Subject to Section 8(i) below, Venture shallhave the right and opportunity to approve or disapprove in writing each andevery aspect of Sublicensee’s distribution and sale of Biodiesel Fuel,including, without limitation, (1) the quality, constitution and blendpercentages of Biodiesel Fuel (the “BD Components”),and (2) each particular use of the Mark, including (without limitation):

9

----

### (i)            each use of the Mark in connectionwith all aspects of the Distribution and of the Biodiesel Fuel (the “Distribution Uses”);

### (ii)           any other materials or articles ofany kind or nature whatsoever that are used in connection with the Mark or theBiodiesel Fuel (“Other Materials”; suchOther Materials and together with the Promotional Uses, BD Components and theDistribution Uses, referred to herein individually as a “LicensedItem” and, collectively, as the “LicensedItems”).

## (b)           Submissionfor Approval. Sublicensee shall, without failure and in strictaccordance with the terms hereof, submit to Venture for written approval, foreach and every Licensed Item (i) at least one (1) prototype (each, a “Prototype”) of each such Licensed Item prior toits manufacture or production, and (2) at least one (I) post-manufacture,pre-distribution sample (each, a “Sample”)of such Licensed Item prior to sale or public distribution of such LicensedItem. The Licensed Item shall be submitted with all of its proposed labeling,if possible, but no Licensed Item shall be deemed approved unless and until itscorresponding labeling is also approved, in the event they are submittedseparately. If Sublicensee elects to first submit a design, which Ventureapproves, Sublicensee must still thereafter submit both the Prototype andSample for Venture’s approval hereunder. With respect to matched print advertising,Sublicensee must provide Venture with a copy of the advertisement as itappeared in any and all media promptly upon the first appearance of theadvertisement in any medium. As an example, if the identical advertisement isrun for three (3) succeeding days in the same newspaper, Sublicensee needprovide only the first (1st) day’s advertisement, but Sublicensee shallindicate the additional days on which the advertisement will appear in thatnewspaper for Venture’s approval hereunder. Prototypes and Samples submitted bySublicensee shall not be required to be returned by Venture.

## (c)           Venture’sApproval of Licensed Items. Venture shall use its good-faithcommercially reasonable efforts to send a written notice of approval ordisapproval of each submission as outlined in Section 8(b) within fifteen (15)calendar days following Venture’s receipt of the submitted Prototype or Sample.Written approval or disapproval shall be sent via facsimile or nationallyrecognized overnight courier service that obtains acknowledgment of receipt bythe addressee. Notwithstanding anything contained herein to the contrary,failure of Sublicensee to receive written approval of any such submitted itemwithin fifteen (15) calendar days following Venture’s receipt of Sublicensee’ssubmission (which receipt can be verified by independent documentation producedby Sublicensee) shall constitute disapproval of the proposed Licensed Item.However, if Venture provides Sublicensee with written confirmation thatSublicensee may use such submitted item, even after the expiration of thefifteen (15) calendar day period, Sublicensee is authorized, subject to theterms and conditions of this Agreement to use the submitted item. Sublicenseeshall not have the right to use the Licensed Item or any element thereof unlessand until the particular use by Sublicensee has been approved by Venture (whichapproval shall be subject in all respects to the approval of Owner under theMaster License) as provided in this Section 8(c).

## (d)           Conformityof Licensed Item to Approved Samples. Once approved hereunder, allLicensed Items shall conform in all respects, including blend, composition,elements, materials, contents, workmanship and overall quality, to the Samplethat Venture has approved in writing.

 

10

----

### (i)            Approval Withdrawal for Failure to Conform. Ifany Licensed Item later fails to conform to the approved Sample, then, withinseven (7) calendar days after Sublicensee’s receipt of written notice fromVenture, Venture shall have the right to withdraw its approval of such LicensedItem by delivery of a further written notice if the failure identified in theinitial notice has not been cured. Sublicensee shall then, upon receipt of suchfurther notice, immediately cease use of the particular Licensed Item identifiedin the notice.

### (ii)           Continuing Samples. Upon Venture’s request fromtime to time and at any time during the Term, Sublicensee will furnish toVenture, without charge, a reasonable number of Samples of each Licensed Itemwith its usual packaging and labeling, to permit Venture to confirm thatVenture’s standards are being observed. Additionally, Venture or itsrepresentatives shall also have the right to inspect the Licensed Items andtake a reasonable number of Samples for purposes of quality inspection.

## (e)           Withdrawal of Approval. Approval by Venture of aLicensed Item can be withdrawn (which withdrawal shall be subject in allrespects to the agreement of Owner under the Master License) at any time atVenture’s Sole Discretion upon seven (7) days’ advance, written notice toSublicensee at which time all withdrawn Licensed Items shall be destroyed,unless Venture approves in writing to another manner of disposition.

## (f)            Ownership of Artwork.

### (i)            New Developments. All designs, logos and othercreative renderings incorporating any one or more elements of the Mark in anyand all media now known or hereafter invented (collectively, “Artwork”), and all rights, including allcopyrights and trademark rights in and to the Artwork, shall be solely andexclusively owned by Owner. Without limiting the foregoing, Sublicenseeacknowledges and confirms that all of Sublicensee’s services in connection withthe creation of the Artwork are and shall be rendered for, at the instigationand under the overall direction and supervision of Owner, and the Artwork isand at all times shall be regarded as a “work made for hire” (as that term isused in the U.S. Copyright Act, 17 U.S.C. § 101, *et seq.* (the “Act”)) by Sublicensee for Owner. Without limitingthe acknowledgment contained in the previous sentence, Sublicensee herebyassigns, grants and delivers (and hereby further agrees to assign, grant anddeliver) exclusively unto Owner all rights, title and interests of every kindand nature whatsoever in and to the Artwork and all copies and versionsthereof, including all copyrights therein and thereto and all renewals thereof.Sublicensee further agrees to execute and deliver to Owner, its successors andassigns, such other and further instruments and documents as Owner reasonablymay request for the purpose of establishing, evidencing and enforcing ordefending its complete, exclusive, perpetual and worldwide ownership of allrights, title and interests of every kind and nature whatsoever, including allcopyrights, in and to the Artwork, and Sublicensee hereby constitutes andappoints Owner as Sublicensee’s agent and attorney-in-fact, with full power ofsubstitution, to execute and deliver such documents or instruments asSublicensee may fail or refuse to execute and deliver within ten (10) days (orsuch shorter period as designated by Owner if reasonably necessary), this powerand agency being coupled with an interest and being irrevocable. Sublicenseecovenants, warrants and represents that the Artwork will not violate or infringeany copyright of any person, firm or corporation, and Sublicensee has not andwill not order, commission or otherwise obtain or receive from any other person(other than an “employee” of 

11

----

### Sublicensee working “within the scope of employment” (as those termsare understood under the Act)) any work on or contribution to the Artworkwithout obtaining a valid and binding work-for-hire and/or assignment agreementin a form approved in advance by Venture (which approval shall be subject inall respects to the approval of Owner under the Master License).

### (ii)           Delivery Upon Termination. Any and all Artworkshall be sent to Owner at no cost and prepaid at Owner’s request not later thanthirty (30) days following the expiration or earlier termination of this Agreement.

## (g)           Approval Not a Warranty. Venture’s approval of aLicensed Item or item of Artwork does not mean that Venture has determined thatsuch Licensed Item conforms to Applicable Laws, that the Licensed Item is safeor fit for its intended purpose or that the Licensed Item does not infringe theintellectual property or contractual rights of others. Venture may also revokean approval if a Licensed Item subsequently proves to be deficient in quality,to violate any law or to violate the rights of others that are subsequentlylearned to have existed at the time approval was granted.

## (h)           Biodiesel Minimum Standards. At all times duringthe Term hereof and not in limitation of any of Venture’s approval rightshereunder, Sublicensee shall only purchase for Distribution hereunder biodieselfuel that meets the then current highest industry standards for biodiesel fuel.

## (i)            Owner Quality Control Rights. Notwithstandinganything contained herein to the contrary, Owner shall have the right and theauthority (A) at any time to exercise, on behalf of and in the place ofVenture, any and all of Venture’s approval, consent and/or quality controlrights hereunder; and (B) to approve and ratify or disapprove (in his SoleDiscretion) any and all actions of Venture hereunder (including, withoutlimitation, the approval, consent and quality control rights of Venturepursuant to this Section 8 and Section 9 hereof and Venture’s ability towithdraw an approved Licensed Item pursuant to Section 8(e) above).

## (j)            Right to Use. For avoidance of doubt, Ventureshall retain for itself the right to engage in the Distribution of BiodieselFuel during the Term within the Territory.

## (k)           No Other Biodiesel Fuel. As a material conditionof Venture in entering into this Agreement, Sublicensee expressly acknowledgesand agrees that it will not for itself or for any other Person sell, disposeof, or in any manner distribute, any form, or blend, of agricultural basedso-called “biodiesel fuel” other than the Biodiesel Fuel at any time during theTerm.

**9.            ****Required Markings****.** Sublicensee willdisplay on all applicable Licensed Items any legends, markings or notices thatare required by law or that Venture may reasonably request from time to time.Notwithstanding the foregoing, Sublicensee shall not make any reference to aLicensed Item without including the ® or TM symbol, as appropriate, andincluding the notation “[mark] is used under license.” Sublicensee may onlyeliminate any or all legends, markings, notices or references with the expressprior approval of Venture, in each case. Upon receipt of written notice fromVenture, Sublicensee shall have seven (7) days to cure or cause the cure of,any omissions of such legends, markings or notices. Sublicensee shall notdisplay its own respective copyright or trademark notice(s) on any LicensedItems.

12

----

**10.          ****Ownership of Mark****.**

## (a)           Owner.Sublicensee acknowledges that Owner is the sole and exclusive owner of allrights in and to the Mark and the goodwill associated therewith throughout theworld.

## (b)           No Challenge.Sublicensee agrees, during the Term of this Agreement and thereafter, never tochallenge or attack the rights of Owner in and to the Mark or the validity ofthe Sublicense being granted herein by Venture.

## (c)           Benefit.Sublicensee agrees, during the Term of this Agreement and thereafter, that itsuse of the Mark inures to the sole benefit of Owner and that Sublicensee shallnot acquire any rights whatsoever in or to the Mark, other than the rightsexpressly provided in this Agreement.

## (d)           Reservation.All rights of Owner and Venture not expressly granted to Sublicensee herein areexpressly reserved to Owner and Venture, respectively.

## (e)           No Use.Sublicensee agrees and acknowledges that following the expiration or earliertermination of this Agreement for any reason, Sublicensee shall have no rightto use for itself in any manner, or sublicense, the Mark to any third party forany purpose.

# **11.          ****Trademark andCopyright Protection and Infringements****.**

## (a)           NoRegistration. Sublicensee agrees that it shall not at any time,anywhere in the world, apply for any registration of the Mark or any copyright,trademark or other designation which would affect the ownership of the Mark byOwner or file any document with any governmental authority to take any actionwhich would affect the sole and absolute ownership of the Mark by Owner.

## (b)           No Confusion.Sublicensee agrees that it shall, at no time during the Term or thereafter, useor authorize the use of any trademark, trade name or other designationidentical with or confusingly or substantially similar to the Mark or any markuniquely associated with Venture or Owner.

## (c)           Cooperation.Sublicensee agrees to cooperate with Venture (and his Affiliates) in protectingthe Mark and, for that purpose, Sublicensee will supply to Venture or itsrepresentatives from time to time and at no charge such Samples and informationregarding sales of the Biodiesel Fuel sold or distributed by Sublicensee asreasonably may be requested.

## (d)           SublicenseeAssistance/Claims. When requested by Venture, Sublicensee agrees toassist Venture in connection with any intellectual property claims dealing withthe enforcement of Owner’s rights in the Mark. Venture agrees to reimburseSublicensee’s reasonable out-of-pocket expenses incurred in providing suchassistance. With respect to any intellectual property actions not caused by anybreach of this Agreement by Sublicensee that Venture may choose to bring(subject to the terms of the Master License), Venture shall, at Venture’s costand expense, employ counsel of its own choice to direct the handling of suchclaims and any settlement thereof. Subject to the terms of the Master Licenseand the approval of 

13

----

## Owner, Venture shall be entitled to receiveand retain all amounts awarded as damages, profits or otherwise awarded toVenture in connection with such suits.

## (e)           TerritoryExpansion. Sublicensee acknowledges and agrees that the Mark iscurrently only registered with the United States Patent and Trademark Office.At any time during the Term hereof when Sublicensee has the authority toDistribute Biodiesel Fuel outside of the United States and Sublicensee desiresto Distribute Biodiesel Fuel outside of the United States (a “Non-US Jurisdiction”), then Sublicensee must,prior to undertaking any activity with respect to such Non-US Jurisdiction,provide Venture with advance prior written notice of such proposed activity(the “Expansion Notice”). Upon Venture’sreceipt of the Expansion Notice, Venture shall notify Owner of Sublicensee’sintent and Venture will cause Owner to use commercially reasonable efforts toapply to register the Mark in such Non-US Jurisdiction. In the event thatVenture is unable to cause Owner to obtain a registration in such Non-USJurisdiction, Sublicensee shall not have, notwithstanding anything containedherein to the contrary, the right or authority to Distribute Biodiesel Fuel insuch Non-US Jurisdiction.

# **12.          ****Indemnification****.**

## (a)           Indemnificationby Sublicensee. Sublicensee will defend, indemnify, and holdVenture, Owner and Venture’s and Owner’s respective Affiliates, employees,agents, attorneys, heirs, successors, and assigns, harmless against and inrespect of: (i) any and all loss, damage, or liability resulting from anybreach or claim of breach of any representation or warranty or thenon-fulfillment of any covenant, agreement or obligation on the part ofSublicensee hereunder; and (ii) any and all claims, actions, suits,proceedings, demands, assessments, judgments, costs and expenses (includingreasonable attorneys’ fees and expenses) (collectively, “Claims”)arising out of or relating to the foregoing, or resulting from tort claims orother claims arising out of Sublicensee’s use of the Mark, including (A)product liability claims arising out of or related to the sale, promotionand/or distribution of the Licensed Items produced by, or at the order of,Sublicensee, and (B) injury, wrongful death or negligence arising out of orrelated to the sale, promotion, advertisement, marketing and distribution ofthe Licensed Items.

## (b)           Indemnificationby Venture. Venture will defend, indemnify and hold Sublicensee andSublicensee’s officers, directors, employees, agents, managers, attorneys,members, successors and assigns harmless against and in respect of: (i) any andall loss, damage, or liability resulting from any breach of any representationor warranty or the non-fulfillment of any covenant, agreement or obligation onthe part of Venture hereunder, and (ii) any and all Claims arising out of orrelating to the foregoing.

## (c)           Notification.If any demand, claim or suit is asserted or instituted with respect to which aparty may be entitled to indemnification under Sections 12(a) and (b) hereof,such party will give prompt notice thereof to the party who or which may beliable for indemnification, including full details to the extent known.

## (d)           Third-PartyIntellectual Property Claims. With respect to infringement claims bythird parties against Sublicensee asserting that Sublicensee’s use of the Markinfringes their rights, Sublicensee will give prompt notice thereof to Ventureand Owner. Subject to the Master License and the approval of Owner, Ventureshall have the right to control, defend, and settle the 

14

----

## claim at its option, and the reasonable coststhereof (including attorneys’ fees, costs, disbursements and the cost ofsettlement), if any, shall be divided evenly between Venture and Sublicensee,unless such claims are based on the breach of this Agreement by Sublicensee, inwhich case such costs shall be borne exclusively by Sublicensee. If Venturedeclines to exercise this option, it shall not be liable or responsible for anyof the costs arising from the defense and settlement of the claim, unless theclaim arises from Venture’s breach of its representations and/or warrantiespursuant to this Agreement

## (e)           Limitationof Liability. EXCEPT AS PROVIDED IN SECTIONS 4(d), 12(a), 12(b) AND26 HEREOF, EACH PARTY’S SOLE REMEDY AGAINST THE OTHER FOR LOSS OR DAMAGEARISING OUT OF THE PERFORMANCE OR NON-PERFORMANCE UNDER THIS AGREEMENT WILL BEPROVEN DIRECT, ACTUAL DAMAGES AND NEITHER PARTY WILL BE LIABLE FOR ANYINDIRECT, INCIDENTAL, RELIANCE, SPECIAL OR CONSEQUENTIAL DAMAGES ARISING OUT OFITS PERFORMANCE OR NON-PERFORMANCE UNDER THIS AGREEMENT, WHETHER OR NOT THATPARTY HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDINGANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL THE CUMULATIVEAMOUNTS PAID BY VENTURE IN CONNECTION WITH ANY OR ALL LOSSES, DAMAGES ORLIABILITIES PURSUANT TO THIS AGREEMENT EXCEED THE TOTAL OF ALL AGREEMENTPAYMENTS THAT VENTURE HAS THEN RECEIVED TO DATE PURSUANT TO THIS AGREEMENT.

# **13.          ****Insurance****.**

## (a)           Liability. Sublicensee shall throughout the Termof this Agreement and for a period of two (2) years thereafter, obtain andmaintain at its own cost and expense, from a qualified insurance company,general liability and product liability insurance, the form of which must beacceptable to Owner and Venture, naming, with respect to such policy, Ventureand Owner as additional named insureds. The amount of coverage for such policyshall be a minimum of Ten Million Dollars ($10,000,000) combined single limit,with a commercially reasonable deductible amount, for each single occurrencefor bodily injury and/or for property damage. Such policy shall provide fortwenty (20) days notice to Venture and Owner from the insurer by registered orcertified mail, return receipt requested, in the event of any modification,cancellation or termination of such insurance. Sublicensee agrees to furnish toeach of Venture and Owner certificates of insurance evidencing same withinthirty (30) days after execution of this Agreement and, in no event, shallSublicensee use the Mark prior to receipt by Owner and Venture of such evidenceof insurance.

## (b)           Errors and Omissions. Sublicensee shallthroughout the Term of this Agreement, obtain and maintain at its own cost andexpense, from a qualified insurance company, errors and omissions insurance,the form of which must be acceptable to Owner and Venture, naming with respectto such policy, Owner and Venture as additional named insureds. The amount ofcoverage for such policy shall be a minimum of Five Million Dollars($5,000,000), with a commercially reasonable deductible amount, and shall coverany and all loss, damage, or liability resulting from Sublicensee’s use of theMark pursuant to this Agreement. Such policy shall provide for twenty (20) daysnotice to Owner and Venture from the insurer by registered or certified mail,return receipt requested, in the event of any modification, cancellation ortermination of such 

15

----

## insurance. Sublicensee agrees to furnish Owner and Venture certificatesof insurance evidencing same within thirty (30) days after execution of thisAgreement and, in no event, shall Sublicensee use the Mark prior to receipt byOwner and Venture of such evidence of insurance.

**14.          ****Notices**.Except as provided in Section 6(b) of this Agreement with respect to AgreementPayments and Accounting Statements, all notices required to be sent to a partyshall be in writing to the following addresses unless notification of a newaddress is properly provided in accordance herewith. All notices shall bedelivered by facsimile and simultaneously sent for next day delivery via anationally recognized overnight courier service that obtains writtenacknowledgment of receipt by the addressee (“ReceiptAcknowledgement”). Notice shall be deemed given upon receipt, asestablished by the Receipt Acknowledgement.
| To Venture:     |   | Biodiesel Venture, L.P.             |
|-----------------|--------|-------------------------------------|
|            |   | c/o Mark  Rothbaum & Associates |
|            |   | 36 Mill Plain  Road                 |
|            |   | Room 406                            |
|            |   | Danbury,  Connecticut 06811         |
|            |   | Attn: Mark  Rothbaum                |
|            |   | (f) (203)  791-9014                 |
|            |   |                                |
| and             |   | Haynes and Boone, LLP               |
|            |   | 901 Main Street                     |
|            |   | Suite 3100                          |
|            |   | Dallas, Texas  75202                |
|            |   | Attn: William C.  Wilshusen, Esq.   |
|            |   | (f) (214)  200-0635                 |
|            |   |                                |
| To Sublicensee: |   | Earth Biofuels, Inc.                |
|            |   |                                |
|            |   |                                |
|            |   | (f)                                 |   |
|            |   |                                |
| and             |   |                                |
|            |   |                                |
|            |   |                                |
|            |   | (f)                                 |   |
|            |   |                                |
| To Owner:       |   | Willie Nelson                       |
|            |   | c/o Mark  Rothbaum                  |
|            |   | 36 Mill Plain  Road                 |
|            |   | Room 406                            |
|            |   | Danbury,  Connecticut 06811         |
|            |   | (f) (203)  791-9014                 |
|            |   |                                |
|            |   |                                |

16

----

 
| and    |   | Greenberg Traurig LLP             |
|--------|--------|-----------------------------------|
|   |   | 3290 Northside  Pkwy              |
|   |   | Suite 400                         |
|   |   | Atlanta, Georgia  30327           |
|   |   | Attn: Robert A.  Rosenbloum. Esq. |
|   |   | (f) (678)  553-2212               |

 

**15.          ****Relationship ofthe Parties****.**This Agreement does not constitute and will not be construed as constituting apartnership or joint venture between Venture and Sublicensee, and neitherVenture nor Sublicensee shall hold itself out to third parties to the contrary.It is expressly acknowledged and agreed to by Sublicensee that Sublicenseeshall have no authority to bind Venture.

**16.          ****Choice of Laws****.** THIS AGREEMENTHAS BEEN ENTERED INTO IN THE STATE OF TEXAS, AND THE VALIDITY, INTERPRETATIONAND LEGAL EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATEOF TEXAS APPLICABLE TO CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THESTATE OF TEXAS (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES UNDERTEXAS LAW). THE TEXAS COURTS (STATE AND FEDERAL), SHALL HAVE SOLE AND EXCLUSIVEJURISDICTION OF ANY CONTROVERSIES REGARDING THIS AGREEMENT; ANY ACTION OR OTHERPROCEEDING WHICH INVOLVES SUCH A CONTROVERSY SHALL BE BROUGHT IN THOSE COURTSIN                           COUNTY, TEXAS AND NOT ELSEWHERE. THE PARTIES WAIVE ANY AND ALL OBJECTIONS TOVENUE IN THOSE COURTS AND HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THOSECOURTS. ANY PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY, AMONG OTHER METHODS,BE SERVED UPON A PARTY BY DELIVERING IT OR MAILING IT, BY REGISTERED ORCERTIFIED MAIL OR BY OVERNIGHT COURIER OBTAINING PROOF OF DELIVERY, DIRECTED TOTHE ADDRESS SET FORTH IN SECTION 14 OR SUCH OTHER ADDRESS AS A PARTY MAYDESIGNATE PURSUANT TO SECTION 14. ANY SUCH DELIVERY OR MAIL SERVICE SHALL BEDEEMED TO HAVE THE SAME FORCE AND EFFECT AS PERSONAL SERVICE WITHIN THE STATEOF TEXAS. THE NON-PREVAILING PARTY IN ANY LEGAL ACTION BETWEEN THE PARTIESARISING FROM OR RELATED TO THIS AGREEMENT, WHETHER INSTITUTED BY VENTURE OR BYSUBLICENSEE, SHALL PROMPTLY REIMBURSE THE PREVAILING PARTY FOR ALL COSTS ANDEXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES) INCURRED IN CONNECTIONTHEREWITH.

**17.          ****Waiver****.** No waiver by anyparty of a breach or a default hereunder shall be deemed a waiver by such partyof a subsequent breach or default of a similar nature.

**18.          ****Severability****.** In the eventthat any term or provision of this Agreement shall for any reason be held to beinvalid, illegal or unenforceable in any respect, such invalidity, illegalityor unenforceability shall not affect any other term or provision and thisAgreement shall be interpreted and construed as if such term or provision, tothe extent, but only to the extent, the same shall have been held to beinvalid, illegal or unenforceable, had never been contained herein.

17

----

**19.          ****Headings****.** The headings inthis Agreement are solely for convenience only and shall not be used tointerpret or construe this Agreement.

**20.          ****Revocation ofPrior Agreements****.** This Agreement represents the entire understanding betweenthe parties hereto, or their respective Affiliates, with respect to the subjectmatter hereof and supersedes all previous representations, understandings oragreements, oral or written, between the parties with respect to the subjectmatter hereof and cannot be modified except by a written instrument signed byall of the parties hereto. Accordingly, any and all prior understandings andagreements relative to the licensing of all or part of the Mark and to anyother matters discussed herein, are hereby revoked, and the provisions of thisAgreement alone shall be determinative of the conditions pursuant to whichSublicensee shall be licensed to use the Mark and the resolution of such otherdescribed matters. Each party hereto expressly disclaims reliance upon anyfacts, promises, undertakings or representations made by any other party, orits agents, representatives or attorneys, prior to the execution of thisAgreement.

**21.          ****Third-PartyBeneficiaries****.** Venture and Sublicensee acknowledge and agree that Owneris intended as and hereby constitutes a third party beneficiary of thisAgreement and as such shall be fully entitled and authorized to enforce any ofthe covenants, obligations or commitments made or undertaken by Venturehereunder against such party as full as if Owner were a party hereto(including, without limitation, Section 26 hereof). Except as expressly setforth in the immediately preceding sentence with respect to Owner, no otherPerson shall be a direct or indirect beneficiary of, or shall have any director indirect cause of action or claim in connection with, this Agreement.

**22.          ****Counsel****.** Each of Ventureand Sublicensee acknowledges and agrees that it has been represented byindependent counsel of its own choice for purposes of advising it in connectionwith the negotiation and execution of this Agreement.  Additionally, each of Venture and Sublicenseeacknowledges and agrees that either it or its independent legal counsel has hadthe opportunity to investigate and inquire about all of the relevant facts,circumstances and effects in connection with its entering into and executingthis Agreement.  The parties acknowledgeto each other that each party and its respective counsel have participated indrafting and have edited this Agreement. Accordingly, the normal rule ofconstruction to the effect that any ambiguities are resolved against thedrafting party will not be employed in the interpretation of this Agreement.

**23.          ****Incorporation****.** All exhibitsmentioned in this Agreement are hereby incorporated by reference into thisAgreement as fully as if copied herein verbatim.

**24.          ****Counterparts****.** This Agreementmay be executed in any number of counterparts, each of which shall constitutean original and all of which together shall constitute one and the sameagreement. The signature of a party obtained via facsimile shall be valid andbinding for all purposes.

**25.          ****Binding Effect;Successors and Assigns****.** Except as otherwise provided in this Agreement, thisAgreement, and the rights and obligations of the parties hereunder, will bebinding upon and inure to the benefit of their respective successors andpermitted assigns.

18

----

**26.          ****Injunctive Relief****.** Sublicenseeagrees that a breach of any of the covenants contained in this Agreement maycause irreparable injury to Owner and Venture for which the remedy at law maybe inadequate and would be difficult to ascertain. Therefore, in the event ofthe breach or threatened breach of any such covenants, Venture shall beentitled, in addition to any other rights and remedies it may have at law or inequity, to seek an injunction to restrain Sublicensee from any threatened oractual activities in violation of any such covenants. Sublicensee herebyconsents and agrees that temporary and permanent injunctive relief may begranted in any proceedings which might be brought to enforce any such covenantswithout the necessity of proving of actual damages or posting a bond, and inthe event Venture does apply for such an injunction, Sublicensee shall notraise as a defense thereto that Venture has an adequate remedy at law.

**27.          ****Defined Terms****.**

“Affiliate” of aperson shall mean any person, directly or indirectly, through one or moreintermediaries, controlling, controlled by, or under common control with, suchperson, as applicable. The term “control,”as used in the immediately preceding sentence, shall mean with respect to acorporation or limited liability company the right to exercise, directly orindirectly, more than fifty percent (50%) of the voting rights attributable tothe controlled corporation or limited liability company, and, with respect toany individual, partnership, trust, other entity or association, thepossession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of the controlled entity.

“Applicable Law”shall mean any law, rule, statute, regulation, order, judgment, decree, treaty,directive or other requirement in force at any time during the Term whichapplies to or is otherwise intended to govern or regulate any activity(including, without limitation, the blending or Distribution of biodiesel fuelor Petroleum Fuel) or Person.

“Biodiesel Fuel”shall mean biodiesel fuel, whether or not blended with Petroleum Fuel,Distributed hereunder bearing the Mark, which notwithstanding anythingcontained herein, shall meet the then current highest industry standards forbiodiesel fuel.

“Contract Year”means each successive period of twelve (12) months occurring during the Termcommencing upon the Effective Date.

“Distribute” or “Distribution” or “Distributing”shall mean the sale and/or distribution of Biodiesel Fuel to retail sellers,distributors, users and/or consumers of Biodiesel Fuel.

“Mark” shall meanthe trademark BIOWILLIE, including U.S. Application Serial No. 78/569432therefor.

“Master License”shall mean that certain Master License Agreement, by and between Owner andVenture, as amended from time to time.

“Owner” shall meanWillie Nelson.

“Owner Identification”shall mean (a) the name, image and likeness of Owner, and (b) any and allcopyrights, marks, trade names, trademarks, design marks, logos or other itemsof 

19

----

intellectual propertyowned or controlled by, or in any way affiliated or associated with, Owner orhis Affiliates, other than the Mark.

“Person” shallmean any natural person or any corporation, association, partnership, limitedliability company, joint venture, company, business trust, organization,business, other incorporated or unincorporated legal entity or form, orgovernment or any governmental agency or political subdivision of anygovernment.

“Sole Discretion”shall mean Venture’s right, in its sole and absolute discretion (subject to andin accordance with the Master License and Owner’s Sole Discretion rightscontained therein), to take or refrain from taking a particular action.

“Territory” shallmean the world.

[Signatures are on theNext Page.]

 

20

----

**IN WITNESS WHEREOF**,by their execution below, the parties hereto have agreed to all of the termsand conditions of this Agreement as of the Effective Date.
|        |   |   | **VENTURE****:**             |                       |
|--------|--------|--------|------------------------------|----------------------------|
|   |   |   |                         |                       |   |
|   |   |   | **BIODIESEL  VENTURE, L.P.** |                       |
|   |   |   |                         |                       |   |
|   |   |   | By:                          | Biodiesel Venture GP, LLC, |   |
|   |   |   |                         | its General Partner        |   |
|   |   |   |                         |                       |   |
|   |   |   |                         |                       |   |

 
|        |   |   |   | By:    | /s/ Willie Nelson |   |
|--------|--------|--------|--------|--------|-------------------|--------|
|   |   |   |   | Name:  | Willie Nelson     |   |
|   |   |   |   | Title: | Manager           |   |

 
|            |       |   | **SUBLICENSEE****:**      |                       |
|------------|------------|--------|---------------------------|----------------------------|
|       |       |   |                      |                       |   |
|       |       |   | **EARTH  BIOFUELS, INC.** |                       |
|       |       |   |                      |                       |   |
|       |       |   |                      |                       |   |
|            | ** ** |   | By:                       | /s/ Dennis McLaughlin, III |   |
| ** ** | ** ** |   | Name:                     | Dennis McLaughlin, III     |   |
| ** ** | ** ** |   | Title:                    | Chief Executive Officer    |   |

 

21

----