**EXHIBIT 10.29**

**THIS WARRANT AND THE SECURITIESISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATESECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS A REGISTRATIONSTATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BEEFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER THESECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTIONWITH SUCH OFFER OR SALE OR TRANSFER.**

### **THIS WARRANT AMENDS, RESTATES AND SUPERCEDESWARRANT NO. 1 FOR 750,00 SHARES OF COMMON STOCK PREVIOUSLY ISSUED TO EVOLUTIONMASTER FUND, LTD. ON MAY 26, 2006.**

**WARRANT**

**TO PURCHASE COMMON STOCK**

**OF**

**EARTH BIOFUELS, INC.**

**Issue Date: May 26, 2006****                                                                                                                                                                                                                                                                                                                                                                                                                                             WarrantNo. 1r**

THIS CERTIFIESthat EVOLUTION MASTER FUND, LTD or any subsequent holder hereof (the “***Holder***”), has the right to purchasefrom EARTH BIOFUELS, INC., a Delaware corporation (the “***Company***”),up to 750,000 fully paid and nonassessable shares of the Company’s commonstock, par value $0.001 per share (the “***Common Stock***”),subject to adjustment as provided herein, at a price per share equal to theExercise Price (as defined below), at any time and from time to time beginningon the date on which this Warrant is issued (the “***IssueDate***”) and ending at 5:00 p.m., eastern time, on the fifth (5th) anniversary of the IssueDate or, if such day is not a Business Day, on the next succeeding Business Day(the “***Expiration Date***”). ThisWarrant is issued pursuant to the Amended and Restated Securities PurchaseAgreement, dated as of May 26, 2006 (the “***Securities PurchaseAgreement***”). Capitalized terms used herein and not otherwisedefined shall have the respective meanings set forth in the Securities PurchaseAgreement.

1.                                       *EXERCISE.*

(a)                                  Rightto Exercise; Exercise Price. The Holder shall have the right to exercisethis Warrant at any time and from time to time during the period beginning onthe Issue Date and ending on the Expiration Date as to all or any part of theshares of Common Stock covered hereby (the “***WarrantShares***”). The “***Exercise Price***”for each Warrant Share purchased by the

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Holder upon theexercise of this Warrant shall be $2.50, subject to adjustment for the eventsspecified in ***Section 6*** below.

(b)                                 ExerciseNotice. In order to exercise this Warrant, the Holder shall (i) send byfacsimile transmission, at any time prior to 5:00 p.m., eastern time, on theBusiness Day on which the Holder wishes to effect such exercise (the “***Exercise Date***”), to the Company anexecuted copy of the notice of exercise in the form attached hereto as ***Exhibit A*** (the “***ExerciseNotice***”), (ii) deliver the original Warrant or a copy thereof,and (iii) in the case of a Cash Exercise (as defined below), the Exercise Priceto the Company. The Exercise Notice shall also state the name or names in whichthe Warrant Shares issuable on such exercise shall be issued. In the case of adispute as to the calculation of the Exercise Price or the number of WarrantShares issuable hereunder (including, without limitation, the calculation ofany adjustment pursuant to ***Section 6***below),the Company shall promptly issue to the Holder the number of Warrant Sharesthat are not disputed and shall submit the disputed calculations to a certifiedpublic accounting firm of national recognition (other than the Company’sindependent accountants) within two (2) Business Days following the date onwhich the Exercise Notice is delivered to the Company. The Company shall useits best efforts to cause such accountant to calculate the Exercise Priceand/or the number of Warrant Shares issuable hereunder and to notify theCompany and the Holder of the results in writing no later than two (2) BusinessDays following the day on which such accountant received the disputedcalculations (the “***Dispute Procedure***”). Suchaccountant’s calculation shall be deemed conclusive absent manifest error. Thefees of any such accountant shall be borne by the party whose calculations weremost at variance with those of such accountant.

(c)                                  Holderof Record. The Holder shall, for all purposes, be deemed to have become theholder of record of the Warrant Shares specified in an Exercise Notice on theExercise Date specified therein, irrespective of the date of delivery of suchWarrant Shares. Except as specifically provided herein, nothing in this Warrantshall be construed as conferring upon the Holder hereof any rights as astockholder of the Company prior to the Exercise Date.

(d)                                 Cancellationof Warrant. This Warrant shall be canceled upon its exercise and, if thisWarrant is exercised in part, the Company shall, at the time that it deliversWarrant Shares to the Holder pursuant to such exercise as provided herein,issue a new warrant, and deliver to the Holder a certificate representing suchnew warrant, with terms identical in all respects to this Warrant (except thatsuch new warrant shall be exercisable into the number of shares of Common Stockwith respect to which this Warrant shall remain unexercised); *provided, however*, that the Holder shall be entitled toexercise all or any portion of such new warrant at any time following the timeat which this Warrant is exercised, regardless of whether the Company hasactually issued such new warrant or delivered to the Holder a certificatetherefor.

(e)                                  CharterAmendment. In the event there are insufficient shares of Common Stockauthorized, unreserved and available for issuance upon exercise of thisWarrant, the Company shall use its best efforts to effect an amendment of itscertificate of incorporation so as to increase the authorized shares of CommonStock to accommodate such exercise.

(f)                                    PrincipalMarket Regulation. The Company shall not be obligated to issue any

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shares of CommonStock upon exercise of this Warrant if the issuance of such shares of CommonStock would exceed that number of shares of Common Stock which the Company mayissue upon exercise of this Warrant without breaching the Company’s obligationsunder the rules or regulations of the Principal Market (the “***Exchange Cap***”), except that suchlimitation shall not apply in the event that the Company (A) obtains theapproval of its shareholders as required by the applicable rules of thePrincipal Market for issuances of shares of Common Stock in excess of suchamount or (B) obtains a written opinion from outside counsel to the Companythat such approval is not required, which opinion shall be reasonablysatisfactory to the holders of the Warrant representing at least a majority ofthe shares of Common Stock underlying the Warrants then outstanding issuedunder the Securities Purchase Agreement. Until such approval or writtenopinion is obtained, no Purchaser shall be issued, upon exercise of anyWarrants, shares of Common Stock in an amount greater than the product of theExchange Cap multiplied by a fraction, the numerator of which is the totalnumber of shares of Common Stock issued to such Purchaser pursuant to theSecurities Purchase Agreement on the Issuance Date and the denominator of whichis the aggregate number of shares of Common Stock issued to the Purchaserspursuant to the Securities Purchase Agreement on the Issuance Date (withrespect to each Purchaser, the “***Exchange Cap Allocation***”“). Inthe event that any Purchaser shall sell or otherwise transfer any of such Purchaser’sWarrants, the transferee shall be allocated a pro rata portion of suchPurchaser’s Exchange Cap Allocation, and the restrictions of the prior sentenceshall apply to such transferee with respect to the portion of the Exchange CapAllocation allocated to such transferee. In the event that any holder ofWarrants shall exercise all of such holder’s Warrants into a number of sharesof Common Stock which, in the aggregate, is less than such holder’s ExchangeCap Allocation, then the difference between such holder’s Exchange CapAllocation and the number of shares of Common Stock actually issued to suchholder shall be allocated to the respective Exchange Cap Allocations of theremaining holders of Warrants on a pro rata basis in proportion to the sharesof Common Stock underlying the Warrants then held by each such holder. Inthe event that the Company is prohibited from issuing any Warrant Shares forwhich an Exercise Notice has been received as a result of the operation of this***Section 1(f)***, the Company shall paycash in exchange for cancellation of such Warrant Shares, at a price perWarrant Share equal to the difference between the closing sale price and theExercise Price as of the date of the attempted exercise.

2.                                       *DELIVERY OF WARRANT SHARES UPON EXERCISE*.

Uponreceipt of an Exercise Notice pursuant to ***Section 1***above, the Company shall, (A) in the case of a Cash Exercise (as defined below)no later than the close of business on the later to occur of (i) the third(3rd) Business Day following the Exercise Date set forth in such ExerciseNotice and (ii) the date on which the Company has received payment of theExercise Price, (B) in the case of a Cashless Exercise (as defined below), nolater than the close of business on the third (3rd) Business Day following theExercise Date set forth in such Exercise Notice, and (C) with respect toWarrant Shares that are the subject of a Dispute Procedure, the close ofbusiness on the third (3rd)Business Day following the determination made pursuant to ***Section1(b)*** (each of the dates specified in (A), (B) or (C) beingreferred to as a “***Delivery Date***”), issue anddeliver or cause to be delivered to the Holder the number of Warrant Shares asshall be determined as provided herein. The Company shall effect delivery ofWarrant Shares to the Holder, as long as the Company’s designated transferagent or co-transfer agent in the United States for the

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Common Stock (the “***Transfer Agent***”) participates in theDepository Trust Company (“***DTC***”) FastAutomated Securities Transfer program (“***FAST***”), by creditingthe account of the Holder or its nominee at DTC (as specified in the applicableExercise Notice) with the number of Warrant Shares required to be delivered, nolater than the close of business on such Delivery Date. In the event that theTransfer Agent is not a participant in FAST, or if the Holder so specifies inan Exercise Notice or otherwise in writing on or before the Exercise Date, theCompany shall effect delivery of Warrant Shares by delivering to the Holder orits nominee physical certificates representing such Warrant Shares, no laterthan the close of business on such Delivery Date. If any exercise would createa fractional Warrant Share, such fractional Warrant Share shall be disregardedand the number of Warrant Shares issuable upon such exercise, in the aggregate,shall be the nearest whole number of Warrant Shares. Warrant Shares deliveredto the Holder shall not contain any restrictive legend unless such legend isrequired pursuant to the terms of the Securities Purchase Agreement.

3.                                       *FAILURE TO DELIVER WARRANT SHARES*.

(a)                                  Inthe event that the Company fails for any reason (other than as a result of theHolder’s failure, in the case of a Cash Exercise (as defined below), to pay theaggregate Exercise Price for the Warrant Shares being purchased) to deliver tothe Holder the number of Warrant Shares specified in the applicable ExerciseNotice (without any restrictive legend to the extent permitted by the terms ofthe Securities Purchase Agreement) on or before the second (2nd) Business Day following the DeliveryDate therefor (an “***Exercise Default***”), the Holdershall have the right to receive from the Company an amount equal to (i) (N/365)multiplied by (ii) the aggregate Exercise Price of the Warrant Shareswhich are the subject of such Exercise Default multiplied by (iii) thelower of sixteen percent (16%) and the maximum rate permitted by applicable lawor by the applicable rules or regulations of any Governmental Agency (the “***Default Interest Rate***”), where “N”equals the number of days elapsed between the original Delivery Date of suchWarrant Shares and the date on which such Exercise Default has been cured. Inthe event that shares of Common Stock are purchased by or on behalf of theHolder in order to make delivery on a sale effected in anticipation ofreceiving Warrant Shares upon an exercise, the Holder shall have the right toreceive from the Company, in addition to the foregoing amounts, (i) theaggregate amount paid by or on behalf of the Holder for such shares of CommonStock minus (ii) the aggregate amount of net proceeds, if any, receivedby the Holder from the sale of the Warrant Shares issued by the Companypursuant to such exercise. Amounts payable under this ***Section3(a)*** shall be paid to the Holder in immediately available fundson or before the fifth (5th) Business Day following written notice from theHolder to the Company specifying the amount owed to it by the Company pursuantto this ***Section 3(a)***.

(b)                                 Inaddition to its rights under ***Section 3(a)***above, upon an Exercise Default, the Exercise Price applicable to theapplicable exercise shall be automatically be adjusted to the lower of (i) the ExercisePrice in effect on the Exercise Date and (ii) the lowest Exercise Priceoccurring from the first date of such Exercise Default through the date onwhich all Warrant Shares to which the Holder is entitled have been delivered inaccordance with the terms of this Warrant. The Holder shall have the right topursue all other remedies available to it at law or in equity (including,without limitation, a decree of specific performance and/or injunctive relief).

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4.                                       *EXERCISE LIMITATION*.

In noevent shall the Holder be permitted to exercise this Warrant, or part thereof,if, upon such exercise, the number of shares of Common Stock beneficially ownedby the Holder (other than shares which may be deemed beneficially owned exceptfor being subject to a limitation on exercise or exercise analogous to thelimitation contained in this ***Section 4***),would exceed 4.99% of the number of shares of Common Stock then issued andoutstanding, it being the intent of the Company and the Holder that the Holdernot be deemed at any time to have the power to vote or dispose of greater than4.99% of the number of shares of Common Stock issued and outstanding at anytime. Nothing contained herein shall be deemed to restrict the right of theHolder to exercise this Warrant at such time as such exercise will not violatethe provisions of this ***Section 4***. Asused herein, beneficial ownership shall be determined in accordance withSection 13(d) of (i) Securities Exchange Act of 1934, as amended, and the rulesthereunder. To the extent that the limitation contained in this ***Section 4*** applies (and withoutlimiting any rights the Company may otherwise have), the Company may rely onthe Holder’s determination of whether this Warrant is exercisable pursuant tothe terms hereof, the Company shall have no obligation whatsoever to verify orconfirm the accuracy of such determination, and the submission of an ExerciseNotice by the Holder shall be deemed to be the Holder’s representation thatthis Warrant is exercisable pursuant to the terms hereof. The Company shallhave no liability to any person if the Holder’s determination of whether thisWarrant is exercisable pursuant to the terms hereof is incorrect.

5.                                       *PAYMENT OF THE EXERCISE PRICE; CASHLESS EXERCISE*.

TheHolder may pay the Exercise Price in either of the following forms or, at theelection of Holder, a combination thereof:

(a)                                  througha cash exercise (a “***Cash Exercise***”) by deliveringimmediately available funds, or

(b)                                 througha cashless exercise (a “***Cashless Exercise***”)if, following the one-year anniversary of the Issue Date, an effectiveRegistration Statement is not available for the resale of all of the WarrantShares issuable hereunder at the time an Exercise Notice is delivered to theCompany, or if the Company otherwise consents in writing. The Holder shalleffect a Cashless Exercise by surrendering this Warrant to the Company andnoting on the Exercise Notice that the Holder wishes to effect a CashlessExercise, upon which the Company shall issue to the Holder a number of WarrantShares determined as follows:

X = Yx (A-B)/A

where:                                                                                                                X= the number of Warrant Shares to be issued to the Holder;

Y = the number of WarrantShares with respect to which this Warrant is being exercised;

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A = the Market Price as of the Exercise Date; and

B = the Exercise Price.

It is intended andacknowledged that the Warrant Shares issued in a Cashless Exercise transactionshall be deemed to have been acquired by the Holder, and the holding period forthe Warrant Shares required by Rule 144 shall be deemed to have been commenced,on the Issue Date.

6.                                       *ANTI-DILUTION ADJUSTMENTS; DISTRIBUTIONS; OTHEREVENTS*.

The Exercise Price and the number of Warrant Sharesissuable hereunder shall be subject to adjustment from time to time as providedin this ***Section 6***.

(a)                                  StockSplits, Stock Interests, Etc. If, at any time on or after the Issue Date,the number of outstanding shares of Common Stock is increased by a stock split,stock dividend, combination, reclassification or other similar event, the ExercisePrice shall be proportionately reduced, or if the number of outstanding sharesof Common Stock is decreased by a reverse stock split, combination,reclassification or other similar event, the Exercise Price shall beproportionately increased. In such event, the Company shall notify the Company’stransfer agent of such change on or before the effective date thereof.

(b)                                 MajorTransactions. If, at any time after the Issue Date, any Major Transactionshall occur, then the Holder shall thereafter have the right to receive upon exercise,in lieu of the shares of Common Stock otherwise issuable, such shares of publiclytraded stock, securities and/or other property as would have been issued orpayable upon such Major Transaction with respect to or in exchange for thenumber of shares of Common Stock which would have been issuable upon exercisehad such Major Transaction not taken place (without giving effect to anylimitations on such exercise contained in this Warrant or the SecuritiesPurchase Agreement). Notwithstanding the foregoing, following a MajorTransaction in which all or substantially all of the outstanding Common Stockof the Company is exchanged for, converted into, acquired for or constitutesthe right to receive solely cash (a “***Triggering Event***”),at the written request of the Holder delivered before the 30th day after suchTriggering Event, the Company (or the successor entity) shall purchase thisWarrant from the Holder by paying to the Holder, within five days after suchrequest, cash in an amount equal to the Black-Scholes Value (as defined below)of the remaining unexercised portion of this Warrant. “***Black-ScholesValue***” means the value of the unexercised portion of thisWarrant calculated using the Black-Scholes Option Pricing Model determined asof the day immediately following the public announcement of the applicableTriggering Event and reflecting (i) a risk-free interest rate corresponding tothe U.S. Treasury rate for a period equal to the remaining term of this Warrantas of the date of such request and (ii) an expected volatility equal to thelesser of (a) the 100 day volatility obtained from the HVT function onBloomberg or (b) a volatility of 60. The Company shall not effect any MajorTransaction unless (i) the Holder has received written notice of suchtransaction at least thirty (30) days prior thereto (which period shall beincreased to sixty one (61) days if, at such time, without giving effect to thelimitation on exercise contained in ***Section 4***hereof, the Holder would beneficially own more than 4.9% of the Common Stockthen outstanding, and the

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Holder has notified theCompany in writing of such circumstance) but in no event later than fifteen(15) days prior to the record date for the determination of stockholdersentitled to vote with respect thereto; *provided*, *however*, that the Company shall publicly disclose thematerial terms of any such Major Transaction on or before the date on which itdelivers notice of a Major Transaction to the Holder, and (ii) the resultingsuccessor or acquiring entity (if not the Company) assumes by writteninstrument (in form and substance reasonable satisfactory to the Holder) theobligations of the Company under this Warrant. The above provisions shall applyregardless of whether or not there would have been a sufficient number ofshares of Common Stock authorized and available for issuance upon exercise ofthis Warrant as of the date of such transaction, and shall similarly apply tosuccessive Major Transactions.

(c)                                  Distributions.If, at any time after the Issue Date, the Company declares or makes anydistribution of cash or any other assets (or rights to acquire such assets) toholders of Common Stock, including without limitation any dividend ordistribution to the Company’s stockholders in shares (or rights to acquireshares) of capital stock of a subsidiary) (a “***Distribution***”), the Company shall deliver written noticeof such Distribution (a “***DistributionNotice***”) to the Holder at least fifteen (15) days prior to theearlier to occur of (i) the record date for determining stockholders entitledto such Distribution (the “***Record Date***”)and (ii) the date on which such Distribution is made (the “***DistributionDate***”)(the earlier of such dates being referred to as the “***Determination Date***”). Upon receiptof the Distribution Notice, the Holder shall promptly (but in no event laterthan three (3) Business Days) notify the Company whether it has elected (A) to receivethe same amount and type of assets (including, without limitation, cash) beingdistributed as though the Holder were, on the Determination Date, a holder of anumber of shares of Common Stock into which this Warrant is exercisable as ofsuch Determination Date (such number of shares to be determined without givingeffect to any limitations on such exercise) or (B) upon any exercise of this Warranton or after the Distribution Date, to reduce the Exercise Price applicable tosuch exercise by reducing the Exercise Price in effect on the Business Dayimmediately preceding the Record Date by an amount equal to the fair marketvalue of the assets to be distributed divided by the number of shares ofCommon Stock as to which such Distribution is to be made, such fair marketvalue to be reasonably determined in good faith by the independent members ofthe Company’s Board of Directors. Upon receipt of such election notice from theHolder, the Company shall timely effectuate the transaction or adjustmentcontemplated in the foregoing ***clause (A) or (B)***,as applicable. If the Holder does not notify the Company of its electionpursuant to the preceding sentence on or prior to the Determination Date, the Holdershall be deemed to have elected clause (A) of the preceding sentence.

(d)                                 ConvertibleSecurities; Options. If, at any time after the Issue Date, the Companyissues Convertible Securities or Options to the record holders of the CommonStock, whether or not such Convertible Securities or Options are immediatelyconvertible, exercisable or exchangeable, then the Holders shall be entitled,upon any exercise of this Warrant after the date of record for determiningstockholders entitled to receive such Convertible Securities or Options (or ifno such record is taken, the date on which such Convertible Securities orOptions are issued), to receive the aggregate number of Convertible Securitiesor Options which the Holder would have received with respect to the shares ofCommon Stock issuable upon such exercise (without giving effect to anylimitations on such exercise contained in this Warrant or the SecuritiesPurchase Agreement) had the Holder been the holder of such shares of Common

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Stock on the record datefor the determination of stockholders entitled to receive such ConvertibleSecurities or Options (or if no such record is taken, the date on which suchConvertible Securities or Options were issued).

(e)                                  DilutiveIssuances.

(i)                                     AdjustmentUpon Dilutive Issuance. If, at any time after the Issue Date, the Companyissues or sells, or in accordance with ***Section 6(e)(ii)***isdeemed to have issued or sold, any shares of Common Stock for no considerationor for a consideration per share less than the Exercise Price on the date ofsuch issuance or sale (or deemed issuance or sale) (a “***Dilutive Issuance***”), then the Exercise Price shall beadjusted as follows:

(A)                              ifsuch Dilutive Issuance occurs on or prior to the eighteen (18) monthanniversary of the Issue Date, then effective immediately upon such DilutiveIssuance, the Exercise Price shall be adjusted so as to equal the considerationreceived or receivable by the Company (on a per share basis) for the additionalshares of Common Stock so issued, sold or deemed issued or sold in such DilutiveIssuance (which, in the case of a deemed issuance or sale, shall be calculatedin accordance with ***Section 6(e)(ii)*** below). Notwithstandingthe foregoing, no adjustment shall be made pursuant to this ***Section 6(e)(i)(A)*** if suchadjustment would result in an increase in the Exercise Price.

(B)                                ifsuch Dilutive Issuance occurs after the eighteen (18) month anniversary of theIssue Date, then effective immediately upon the Dilutive Issuance, the ExercisePrice shall be adjusted so as to equal an amount determined by multiplying suchExercise Price by the following fraction:

## N0 + N1

## N0 + N2

where:

N0 = thenumber of shares of Common Stock outstanding immediately prior to such DilutiveIssuance (without taking into account any Convertible Securities or Options, includingthe Notes and Warrants);

N1 = the number of shares of Common Stock whichthe aggregate consideration, if any, received or receivable by the Company forthe total number of such additional shares of Common Stock so issued, sold ordeemed issued or sold in such Dilutive Issuance (which, in the case of a deemedissuance or sale, shall be calculated in accordance with ***Section6(e)(ii)*** below) would purchase at the Exercise Price in effectimmediately prior to such Dilutive Issuance; and

N2 = the number of suchadditional shares of Common Stock so issued, sold or deemed issued or sold insuch Dilutive Issuance.

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Notwithstanding theforegoing, no adjustment shall be made pursuant hereto if such adjustment wouldresult in an increase in the Exercise Price.

(ii)                                  EffectOn Exercise Price Of Certain Events. For purposes of determining theadjusted Exercise Price under ***Section 6(e)(i)***,the following will be applicable:

(A)                              IssuanceOf Options. If the Company issues or sells any Options, whether or notimmediately exercisable, and the price per share for which Common Stock isissuable upon the exercise of such Options (and the price of any conversion ofConvertible Securities, if applicable) is less than the Exercise Price ineffect on the date of issuance or sale of such Options, then the maximum totalnumber of shares of Common Stock issuable upon the exercise of all such Options(assuming full conversion, exercise or exchange of Convertible Securities, ifapplicable) shall, as of the date of the issuance or sale of such Options, bedeemed to be outstanding and to have been issued and sold by the Company forsuch price per share. For purposes of the preceding sentence, the “price pershare for which Common Stock is issuable upon the exercise of such Options”shall be determined by dividing (x) the total amount, if any, received orreceivable by the Company as consideration for the issuance or sale of all suchOptions, plus the minimum aggregate amount of additional consideration, if any,payable to the Company upon the exercise of all such Options, plus, inthe case of Convertible Securities issuable upon the exercise of such Options,the minimum aggregate amount of additional consideration payable upon theconversion, exercise or exchange thereof (determined in accordance with thecalculation method set forth in ***Section 6(e)(ii)(B)***below) at the time such Convertible Securities first become convertible,exercisable or exchangeable, by (y) the maximum total number of shares ofCommon Stock issuable upon the exercise of all such Options (assuming fullconversion, exercise or exchange of Convertible Securities, if applicable). Nofurther adjustment to the Exercise Price shall be made upon the actual issuanceof such Common Stock upon the exercise of such Options or upon the conversion,exercise or exchange of Convertible Securities issuable upon exercise of suchOptions.

(B)                                IssuanceOf Convertible Securities. If the Company issues or sells any ConvertibleSecurities, whether or not immediately convertible, exercisable orexchangeable, and the price per share for which Common Stock is issuable uponsuch conversion, exercise or exchange is less than the Exercise Price in effecton the date of issuance or sale of such Convertible Securities, then themaximum total number of shares of Common Stock issuable upon the conversion,exercise or exchange of all such Convertible Securities shall, as of the dateof the issuance or sale of such Convertible Securities, be deemed to beoutstanding and to have been issued and sold by the Company for such price pershare. If the Convertible Securities so issued or sold do not have afluctuating conversion or exercise price or exchange ratio, then for thepurposes of the immediately preceding sentence, the “price per share for whichCommon Stock is issuable upon such conversion, exercise or exchange” shall bedetermined by dividing (A) the total amount, if any, received or receivable bythe Company as consideration for the issuance or sale of all such ConvertibleSecurities, plus the minimum aggregate amount of additional consideration, ifany, payable to the Company upon the conversion, exercise or exchange thereof(determined in accordance with the calculation method set

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forth in this ***Section 6(e)(ii)(B)***)at the time such Convertible Securities first become convertible, exercisableor exchangeable, by (B) the maximum total number of shares of Common Stockissuable upon the exercise, conversion or exchange of all such ConvertibleSecurities. If the Convertible Securities so issued or sold have a fluctuatingconversion or exercise price or exchange ratio (a “***Variable Rate Convertible Security***”), then for purposesof the first sentence of this ***Section 6(e)(ii)(B)***,the “price per share for which Common Stock is issuable upon such conversion,exercise or exchange” shall be deemed to be the lowest price per share whichwould be applicable (assuming all holding period and other conditions to anydiscounts contained in such Variable Rate Convertible Security have beensatisfied) if the conversion price of such Variable Rate Convertible Securityon the date of issuance or sale thereof were equal to the actual conversionprice on such date (or such higher minimum conversion price if such VariableRate Convertible Security is subject to a minimum conversion price) (the “***Assumed Variable Market Price***”),and, further, if the conversion price of such Variable Rate ConvertibleSecurity at any time or times thereafter is less than or equal to the AssumedVariable Market Price last used for making any adjustment under this ***Section 6(e)*** with respect to anyVariable Rate Convertible Security, the Exercise Price in effect at such timeshall be readjusted to equal the Exercise Price which would have resulted ifthe Assumed Variable Market Price at the time of issuance of the Variable RateConvertible Security had been equal to the actual conversion price of suchVariable Rate Convertible Security existing at the time of the adjustmentrequired by this sentence; *provided, however*,that if the conversion or exercise price or exchange ratio of a ConvertibleSecurity may fluctuate solely as a result of provisions designed to protectagainst dilution, such Convertible Security shall not be deemed to be aVariable Rate Convertible Security. No further adjustment to the Exercise Priceshall be made upon the actual issuance of such Common Stock upon conversion,exercise or exchange of such Convertible Securities.

(C)                                ChangeIn Option Price Or Conversion Rate. If there is a change at any time in (x)the amount of additional consideration payable to the Company upon the exerciseof any Options; (y) the amount of additional consideration, if any, payable tothe Company upon the conversion, exercise or exchange of any ConvertibleSecurities; or (z) the rate at which any Convertible Securities are convertibleinto or exercisable or exchangeable for Common Stock (in each such case, otherthan under or by reason of provisions designed to protect against dilution),the Exercise Price in effect at the time of such change shall be readjusted tothe Exercise Price which would have been in effect at such time had suchOptions or Convertible Securities still outstanding provided for such changedadditional consideration or changed conversion, exercise or exchange rate, asthe case may be, at the time initially issued or sold.

(D)                               CalculationOf Consideration Received. If any Common Stock, Options or ConvertibleSecurities are issued or sold for cash, the consideration received thereforwill be the amount received by the Company therefor. In case any Common Stock,Options or Convertible Securities are issued or sold for a consideration partor all of which shall be other than cash, including in the case of a strategicor similar arrangement in which the other entity will provide services to theCompany, purchase services from the Company or otherwise provide intangibleconsideration to the Company, the amount of the consideration other than cashreceived by the Company

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(including the net present value of the consideration expected by theCompany for the provided or purchased services) shall be the fair market valueof such consideration. In case any Common Stock, Options or ConvertibleSecurities are issued in connection with any merger or consolidation in whichthe Company is the surviving corporation, the amount of consideration thereforwill be deemed to be the fair market value of such portion of the net assetsand business of the non-surviving corporation as is attributable to such CommonStock, Options or Convertible Securities, as the case may be. The independentmembers of the Company’s Board of Directors shall calculate reasonably and ingood faith, using standard commercial valuation methods appropriate for valuingsuch assets, the fair market value of any consideration.

(iii)                               ExceptionsTo Adjustment Of Exercise Price. Notwithstanding the foregoing, noadjustment to the Exercise Price shall be made pursuant to this ***Section 6(e)*** upon the issuance ofany Excluded Securities.

(iv)                              NoticeOf Adjustments. Upon the occurrence of each adjustment or readjustment ofthe Exercise Price pursuant to this ***Section 6(e)***resulting in a change in the Exercise Price by more than one percent (1%), orany change in the number or type of stock, securities and/or other propertyissuable upon exercise of this Warrant, the Company, at its expense, shallpromptly compute such adjustment, readjustment or change and prepare andfurnish to the Holder a certificate setting forth such adjustment, readjustmentor change and showing in detail the facts upon which such adjustment,readjustment or change is based. The Company shall, upon the written request atany time of the Holder, furnish to the Holder a like certificate setting forth(i) such adjustment, readjustment or change, (ii) the Exercise Price at thetime in effect and (iii) the number of shares of Common Stock and the amount,if any, of other securities or property which at the time would be receivedupon exercise of this Warrant.

(v)                                 Adjustments;Additional Shares, Securities or Assets. In the event that at any time, asa result of an adjustment made pursuant to this ***Section6***, the Holder of this Warrant shall, upon exercise of thisWarrant, become entitled to receive securities or assets (other than CommonStock) then, wherever appropriate, all references herein to shares of CommonStock shall be deemed to refer to and include such shares and/or othersecurities or assets; and thereafter the number of such shares and/or othersecurities or assets shall be subject to adjustment from time to time in amanner and upon terms as nearly equivalent as practicable to the provisions ofthis ***Section 6***. Any adjustment madeherein that results in a decrease in the Exercise Price shall also effect aproportional increase in the number of shares of Common Stock into which thisWarrant is exercisable.

7.                                       *MISCELLANEOUS*.

(a)                                  Failureto Exercise Rights not Waiver. No failure or delay on the part of theHolder in the exercise of any power, right or privilege hereunder shall operateas a waiver thereof, nor shall any single or partial exercise of any suchpower, right or privilege preclude any other or further exercise thereof. Allrights and remedies of the Holder hereunder are cumulative and not exclusive ofany rights or remedies otherwise available. In the event that the Company breachesany of its obligations hereunder to issue Warrant Shares or pay any amounts asand when due, the Company shall bear all costs incurred by the Holder incollecting such amount,

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including withoutlimitation reasonable legal fees and expenses.

(b)                                 Notices.Any notices, consents, waivers or other communications required or permitted tobe given under the terms of this Warrant must be in writing and will be deemedto have been delivered: (i) upon receipt, when delivered personally; (ii) uponreceipt, when sent by facsimile (provided confirmation of transmission ismechanically or electronically generated and kept on file by the sendingparty); or (iii) one Business Day after deposit with an overnight courierservice, in each case properly addressed to the party to receive the same. Theaddresses and facsimile numbers for such communications shall be:
| if to the Company:                                 |                         |
|----------------------------------------------------|------------------------------|
|                                               |                         |   |   |
|                                               | Earth Biofuels, Inc.         |
|                                               | 3001 Knox Street, Suite 403, |
|                                               | Dallas, Texas 75205          |
|                                               | Telephone:                   | 214.389.9800 |
|                                               | Facsimile:                   | 214.389.9806 |
|                                               | Attention:                   | Dennis McLaughlin |
|                                               |                         |   |   |
| with a copy (for  informational purposes only) to: |                         |
|                                               |                         |   |   |
|                                               | Scheef & Stone, LLP      |
|                                               | Telephone:                   | 214.706.4200 |
|                                               | Facsimile:                   | 214.706.4242 |
|                                               | Attention:                   | Roger A. Crabb, Esq. |
|                                                    |                              |  |  |  |  |

 

and if to the Holder, tothe address and facsimile number as to which the Holder has notified theCompany in writing. Written confirmation of receipt (A) given by the recipientof such notice, consent, waiver or other communication, (B) mechanically orelectronically generated by the sender’s facsimile machine containing the time,date, recipient facsimile number and an image of the first page of suchtransmission or (C) provided by an overnight courier service shall berebuttable evidence of personal service, receipt by facsimile or receipt froman overnight courier service in accordance with clause (i), (ii) or (iii)above, respectively.

(c)                                  Amendments.No amendment, modification or other change to, or waiver of any provision of,this Warrant may be made unless such amendment, modification or change is setforth in writing and is signed by the Company and the Holder.

(d)                                 Transferof Warrant. The Holder may sell, transfer or otherwise dispose of all orany part of this Warrant (including without limitation pursuant to a pledge) toany person or entity as long as such sale, transfer or disposition is thesubject of an effective registration statement under the Securities Act of1933, as amended, and applicable state securities laws, or is exempt fromregistration thereunder, and is otherwise made in accordance with theapplicable provisions of the Securities Purchase Agreement. From and after thedate of any such sale, transfer or disposition, the transferee hereof shall bedeemed to be the holder of the portion of this Warrant acquired by suchtransferee, and the Company shall, as promptly as practicable, issue anddeliver to such transferee a new Warrant identical in all respects to this

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Warrant, in the name ofsuch transferee. The Company shall be entitled to treat the original Holder asthe holder of this entire Warrant unless and until it receives written noticeof the sale, transfer or disposition hereof.

(e)                                  Lostor Stolen Warrant. Upon receipt by the Company of evidence of the loss,theft, destruction or mutilation of this Warrant, and (in the case of loss,theft or destruction) of indemnity or security reasonably satisfactory to theCompany, and upon surrender and cancellation of this Warrant, if mutilated, theCompany shall execute and deliver to the Holder a new Warrant identical in allrespects to this Warrant.

(f)                                    GoverningLaw. This Warrant shall be governed by and construed in accordance with thelaws of the State of New York applicable to contracts made and to be performedentirely within the State of New York.

(g)                                 Successorsand Assigns. The terms and conditions of this Warrant shall inure to thebenefit of and be binding upon the respective successors (whether by merger orotherwise) and permitted assigns of the Company and the Holder. The Company maynot assign its rights or obligations under this Warrant except as specificallyrequired or permitted pursuant to the terms hereof.

(h)                                 Taxes.The issue of stock certificates on exercises of this Warrant shall be madewithout charge to the exercising Holder for any tax in respect of the issuethereof. The Company shall not, however, be required to pay any tax which maybe payable in respect of any transfer involved in the issue and delivery ofstock in any name other than that of the Holder of any Warrant exercised, andthe Company shall not be required to issue or deliver any such stockcertificate unless and until the person or persons requesting the issue thereofshall have paid to the Company the amount of such tax or shall have establishedto the reasonable satisfaction of the Company that such tax has been paid.

[Signature Page toFollow]

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IN WITNESS WHEREOF, the Company has duly executed and delivered thisWarrant as of the Issue Date.
|        | EARTH BIOFUELS, INC. |
|--------|----------------------|
|   |                 |
|   |                 |
|   | By:                  | /s/ DENNIS G. MCLAUGHLIN, III |
|   |                 | Name: Dennis G.  McLaughlin, III |
|   |                 | Title: Chief  Executive Officer |

 

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EXHIBIT A to WARRANT

EXERCISE NOTICE

Theundersigned Holder hereby irrevocably exercises the right to purchase                  of the shares of Common Stock(“Warrant Shares”) of EARTH BIOFUELS, INC. evidenced by the attachedWarrant (the “Warrant”). Capitalized terms used herein and not otherwisedefined shall have the respective meanings set forth in the Warrant.

1.             Form of Exercise Price. The Holderintends that payment of the Exercise Price shall be made as:

            a Cash Exercise with respect to                                   Warrant Shares; and/or

            a Cashless Exercise with respect to                                   Warrant Shares, as permitted by Section 5(b) of the attached Warrant.

2.             Payment of Exercise Price. In the eventthat the Holder has elected a Cash Exercise with respect to some or all of theWarrant Shares to be issued pursuant hereto, the Holder shall pay the sum of $                                to the Company in accordance with the terms of the Warrant.
| Date:                     |   |   |
|---------------------------|--------|--------|
|                      |   |
|                      |   |
| Name of Registered Holder |   |
|                      |   |
|                      |   |
| By:                       |   |   |
|                      | Name:  |   |
|                      | Title: |   |
|                           |        |        |  |  |

 

Bytendering this Exercise Notice, the Holder represents to the Company that it isan “accredited investor” as that term is defined in Rule 501 of Regulation D,and that it is acquiring the Warrants Shares solely for its own account, andnot with a present view to the public resale or distribution of all or any partthereof, except pursuant to sales that are registered under the Securities Actor are exempt from the registration requirements of the Securities Act; provided,however, that, in making such representation, the Holder does not agreeto hold the Warrants Shares for any minimum or specific term and reserves theright to sell, transfer or otherwise dispose of the Warrants Shares at any timein accordance with the provisions of the Warrant and with Federal and statesecurities laws applicable to such sale, transfer or disposition.

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