**EXHIBIT10.12**

**MEMBERSHIPINTERESTS PURCHASE AGREEMENT**

 

THIS MEMBERSHIP INTERESTSPURCHASE AGREEMENT (this “*Agreement*”),dated as of the 1st day of March, 2006, is made by and betweenEarth Biofuels, Inc., a Delaware corporation (“*Buyer*”),and Dr. Miguel J. Dabdoub (“*Seller*”).

 

RECITALS:

A.            Seller currently owns an aggregateone hundred percent (100%) membership interest in Earth Biofuels Technology Company, a Texas limited liabilitycompany (the “*Company*”).

B.            Buyer wishes to pay Seller the sumof Two Hundred Twenty-Five Thousand Dollars ($225,000.00); shares of ApolloResources International, Inc. and shares of the Buyer’s Common Stock asconsideration for the purchase of **fifty percent (50%)**of Seller’s entire membership interests in the Company, its capital accounts,all rights represented by such membership interests, and all goodwillassociated therewith (the “*Interests*”).

C.            Seller wishes to sell the Intereststo Buyer upon the terms and subject to the conditions set forth in thisAgreement.

**Agreement**

NOW, THEREFORE, inconsideration of the foregoing premises and the representations, warranties,and covenants hereinafter set forth, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree as follows:

**1.             Sale and Purchase**.Subject to the terms and conditions herein set forth, and in reliance upon therepresentations, warranties and covenants contained herein, Buyer agrees topurchase the Interests from Seller, and Seller agrees to sell the Interests toBuyer.

**2.             PurchasePrice**.  The purchaseprice for the Interests shall be as follows:

(a)           thesum of Two Hundred Twenty-Five Thousand Dollars ($225,000.00);

(b)                               onemillion eight hundred thousand (1,800,000) shares of the common stock of Buyer;and

(c)                                onehundred thousand (100,000) shares of the common stock of Apollo ResourcesInternational, Inc.

**3.**             **Closing**.Closing of the transactions contemplated herein (the “*Closing*”) shall be made effective on March 1, 2006.(The date on which the Closing is held shall be referred to in this Agreementas the “*Closing Date*.”)

(a)           At the Closing, Seller shall deliverto Buyer (i) a Bill of Sale and Assignment in the forms of Exhibit Aattached hereto, (ii) all of the Company’s books of

----

account and businessrecords, and (iii) the resignations of all officers, directors andmanagers of the Company, against delivery of the item specified in Paragraph 3(b).

(b)           At the Closing, Buyer shall deliverthe sum of Two Hundred Twenty-Five Thousand Dollars ($225,000.00) to Seller inthe form of a cashier’s check or wire transfer of immediately available funds;and shall cause to be delivered certificates representing the shares describedin Section 2 of this Agreement.

**4.**             **Representations and Warranties of Seller**. Sellerhereby represents and warrants to Buyer that:

(a)           Seller owns all of the issued andoutstanding Interests in the Company.

(b)           Seller is, and will continue to beuntil Closing, the sole legal and beneficial owner of the Interests, free andclear of any and all liens, claims, and encumbrances, with full power totransfer the same as contemplated herein.

(c)           Seller is not party to or bound byany contract, promissory note, agreement, commitment, or obligation, creatingor securing indebtedness, obligations, or liabilities, a breach or default ofwhich would be triggered by Seller’s execution and delivery of this Agreement.

(d)           The Company is a limited liabilitycompany duly organized, validly existing and in good standing under the laws ofthe State of Delaware. To the best of Seller’s knowledge, there are no pendingactions or proceedings (i) to limit or impair the Company’s power toengage in business or (ii) to dissolve the Company.

(e)           The Company will not enter into anynew contracts or agreements between the date of this Agreement and the Closing,except in the ordinary course of business.

**5.**             **Representations,Warranties and Covenants of Buyer**. Buyer hereby represents andwarrants to Seller that:

## (a)           Buyer is a company duly organized,validly existing and in good standing under the laws of the State of Delaware,and has all requisite corporate power and authority to enter into, perform andcarry out all of its duties and obligations in the transaction contemplated bythis Agreement.

## (b)           The execution, delivery andperformance of this Agreement and the consummation of the transactions on thepart of Buyer contemplated hereunder have been duly authorized by all necessary[corporate] action on the part of Buyer. This Agreement is (or will be whenexecuted and delivered pursuant hereto) the legal, valid and binding obligationof Buyer, enforceable in accordance with its terms.

## (c)           Neither the execution and delivery ofthis Agreement by Buyer, nor Buyer’s compliance with any of the terms andprovisions of this Agreement, nor the

2

----

consummation of the transactions contemplated hereby, will conflictwith or result in a violation of, or constitute a material default under, its [Articlesof Incorporation, Bylaws] or any other agreement, contract or commitment towhich it is a party; nor will the performance by Buyer of its obligationshereunder violate any judgment, order, injunction, decree, regulation or rulingof any court or governmental authority to which Buyer is subject.

**6.             ConditionsPrecedent to Buyer’s Obligations**. Buyer’s obligation topurchase the Interests under this Agreement is subject to the satisfaction, ator before the Closing, of all the following conditions:

(a)          Seller shall execute and deliver toBuyer the form of Bill of Sale and Assignment attached as Exhibit A;

(b)         Seller shall deliver to Buyer all ofthe Company’s books of account and business records; and

(b)           Seller shall deliver to Buyer, theresignations of all officers, directors and managers of the Company.

Buyer may waiveany or all of these conditions, in whole or in part, without prior notice;provided, however, that no such waiver of a condition shall constitute a waiverby Buyer of any of its other rights or remedies, at law or in equity, for theSeller’s breach of any of its representations, warranties, or covenants underthis Agreement.

**7.**             **Seller’sIndemnities**. For a period of one (1) year after the Closing,Seller shall indemnify and hold Buyer harmless from and against any and allclaims, losses, costs, expenses, obligations, liabilities, damages, recoveriesand deficiencies (including interest, penalties, and reasonable attorney,expert witness and consultant fees), incurred by Buyer in connection withSeller’s breach of or failure to perform, any of its representations,warranties, or covenants in this Agreement.

**8.             Attorney Fees**. Ifany legal action or other proceeding is brought for the enforcement of thisAgreement or any other agreement, document, contract, instrument or otherwriting entered into in connection herewith, because of an alleged dispute,breach, default, or misrepresentation, in connection with any of the provisionsof this Agreement or such other writing, the successful or prevailing partyshall be entitled to recover its reasonable attorney fees, and other costs and expenses,incurred in such action or proceeding, in addition to any other relief to whichit or they may be entitled.

3

----

**9.             Notices**. In orderto be effective all notices, consents, approvals and disapprovals (“*Notice*”) requiredby this Agreement must be in writing, signed by the party giving such Notice,or in the case of Buyer, by an officer thereof, and either (i) personallydelivered; (ii) placed in the mail, properly addressed and certified,return receipt requested, with postage prepaid thereon; or (iii) depositedfor delivery by a recognized, private overnight courier for next businessmorning delivery, properly addressed, and with the full waybill prepaid. Noticeshall be deemed received and effective on the earlier of the date actuallyreceived, or, if applicable, three (3) business days after being sent asspecified in clause (ii) of this Paragraph 9. Notices must be addressed tothe parties hereto at the following addresses, unless the same shall be changedby Notice in accordance herewith:
| If to Seller: | Dr. Miguel J. Dabdoub                          |
|---------------|-----------------------------------------------------|
|          | Rua Bernardino  De Campos 786 Ap. 71                |
|          | Ribeirao Preto,  Sp                                 |
|          | Sao Paulo,  Brazil CEP 14015-130                    |
|          | migjodab@usp.br                                     |
|          |                                                |
| If to Buyer:  | Attn: Dennis G. McLaughlin, Chief Executive Officer |
|          | 3001 Knox  Street, Suite 403                   |
|          | Dallas, Texas  75205                                |
|          | Facsimile: 214  389 9805                            |

**10.**          **EntireAgreement; Amendments**. Each of the parties represents that nopromise or agreement which is not expressed in this Agreement, has been made tosuch party in executing this Agreement, and neither of the parties is relyingupon any statement or representation not contained in this Agreement. ThisAgreement, including the Exhibit hereto, constitutes the entireunderstanding between the parties hereto relative to the subject matter hereof,superseding any and all prior agreements, arrangements, and understandings,written or oral, between the parties. This Agreement may be amended only by awritten instrument signed by the parties.

**11.**          **BindingEffect; Permissibility of Assignment**. This Agreement and all of theprovisions hereof shall be binding upon and inure to the benefit of the partieshereto and their respective successors and permitted assigns.

**12.          Governing Law**. ThisAgreement shall be governed by and construed in accordance with the laws of theState of Texas, without reference to its conflict of laws rules.

**13.**          **NoBrokers**. Each party represents and warrants that it has dealt withno broker or finder in connection with the transaction contemplated by thisAgreement, and that no broker or other person is entitled to any commission orfinder’s fee in connection with this transaction. Each party agrees toindemnify, defend and hold harmless the other party against any commission orfinder’s fee alleged to be payable because of any act, omission or statement ofthe indemnifying party.

**14.**          **Severability**.If any provision of this Agreement is held to be invalid or unenforceable byany court of competent jurisdiction, it is the intent of all of the partiesthat all

4

----

other provisionsof this Agreement be construed to remain fully valid, enforceable and bindingon the parties.

**15**.          **Covenant of Good Faith andFair Dealing**. With regard totheir respective obligations and commitments under this Agreement, each ofBuyer and Seller covenants that it shall act in good faith and deal fairly withthe other party.

**16.**          **ReasonableCooperation**. Each party hereto agrees to execute and deliver suchinstruments and take such other action as the other party may reasonablyrequest in order to carry out the intent of this Agreement.

**17.**          **Counterparts**.This Agreement may be executed in multiple counterparts, each of which shall bedeemed an original, but all of which together shall constitute one and the sameinstrument.

IN WITNESSWHEREOF, the parties hereto have caused their duly authorized representativesto execute this Agreement as of the date first above written.

**“Buyer”**
| **EARTH BIOFUELS, INC.** |
|--------------------------|
| ** **               |   |
| ** **               |   |
| By:                      | /s/ DENNIS G. MCLAUGHLIN, III |   |
|                     | Dennis G.  McLaughlin, III |
|                     | Chief Executive  Officer |
|                     |   |
|                     |   |
| **“Seller”**   |
| ** **               |   |
| ** **               |   |
| By:                      | /s/ DR. MIGUEL J. DABDOUB |   |
|                     | Dr. Miguel  J. Dabdoub |
|                          |  |  |  |

5

----

Exhibit A

**BILL OF SALE AND ASSIGNMENT**

THIS BILL OF SALE AND ASSIGNMENT (this “*Bill of Sale*”),dated as of March 1, 2006 (the “*ClosingDate*”), is made and delivered by and between Earth Biofuels, Inc.(“*Buyer*”), and Dr. MiguelJ. Dabdoub (“*Seller*”). ThisBill of Sale is being executed and delivered pursuant to the terms of thatcertain Membership Interests Purchase Agreement, dated as of the Closing Date(the “*Purchase Agreement*”),by and among Seller and Buyer. Capitalized terms used in this Bill of Sale andnot otherwise defined shall have the meanings assigned in the Agreement.

Recitals

A.            Selleris the owner of an undivided one hundred percent (100%) membership interest in Earth Biofuels Technology Company**,** a Texas limited liability company(“*Company*”).

B.            Sellerdesires to assign to Buyer fifty percent (50%) membership interest in Company,including all of its related rights and capital account and all associatedgoodwill.

C.            Buyerdesires to accept such assignment and pay Seller the agreed upon Purchase Pricetherefor established in the Purchase Agreement.

Agreement

INCONSIDERATION OF the foregoing premises, and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties agree as follows:

1.             Sellerhereby assigns, transfers, conveys, and sells to Buyer fifty percent (50%) ofSeller’s entire one hundred percent (100%) membership interest in Company,together with Seller’s related capital account, all rights represented by suchmembership interest, and all goodwill associated therewith (collectively, the “*Interest*”).

2.             Sellerhereby represents, warrants and certifies to Buyer that on or before the datehereof, Seller has delivered to Company all Company property in its possessionor control or to which it has had access during its association with theCompany, and that it has retained no copy thereof.

3.             Sellerhereby acknowledges receipt of the Purchase Price (as defined in the Agreement)due and payable as of the Closing Date.

6

----

4.             Eachparty shall promptly execute and deliver to the other party all such furtherinstruments, assignments, assurances and other documents as such party mayreasonably request in connection with its performance under this Bill of Saleand the transactions contemplated hereby and by the Purchase Agreement.

5.             Seller,for itself and its personal representatives and assigns, covenants and agreesto warrant and defend the transfer, assignment and conveyance of the Interestand Buyer’s title thereto.

7.             ThisBill of Sale shall be governed by and construed in accordance with the laws ofthe State of Texas, and shall inure to the benefit of and be binding upon theparties hereto, their heirs, personal representatives, successors and assigns.

IN WITNESS WHEREOF, theundersigned have executed and delivered this Bill of Sale effective as of theday and year first written above.
| **“Buyer”**     |
|---------------------------|
| ** **                |
| **EARTH  BIOFUELS, INC.** |
| ** **                |
| ** **                |
| By:                       | /s/ Dennis G.  McLaughlin, III |   |
|                      | Dennis G.  McLaughlin, III |   |
|                      | Chief Executive  Officer |   |
|                      |
|                      |
|                      |
|                      |
| **“Seller”**    |
| ** **                |
| ** **                |
| By:                       | /s/ Miguel J.  Dabdoub |   |

 

7

----