**Exhibit10.36**

THIS NOTE AND THESECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THISNOTE HAS BEEN ACQUIRED FOR INVESTMENT ANDNOT WITH A VIEW TO DISTRIBUTION OR RESALE. THIS NOTE AND THE SECURITIESISSUABLE UPON CONVERSION HEREOF MAY NOT BESOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, ASAMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATIONPROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLESTATE SECURITIES LAWS.

**ALBEMARLE BIO-REFINERY, INC.CONVERTIBLEPROMISSORY NOTE**
| Raleigh,  North Carolina |         |
|--------------------------|--------------|
|                     |         |
| $2,000,000               | May 31, 2006 |

1.         Principal. AlbemarleBio-Refinery, Inc., a North Carolina corporation (the “***Company***”)*,*having an address of 28809 US Highway64,**Jamesville, North Carolina 27846, for value received, hereby promisesto pay to the order of **Earth****Biofuels, Inc.** (“***Holder***”)**having an address of 3001 Knox Street,Suite 403 Dallas, Texas 75205, in lawfulmoney of the United States of America, the principal amount of Two MillionDollars ($2,000,000), together with interest as set forth below.

2.         Interestand Maturity. The Company promises to pay simple interest on the unpaid principal amount from the date hereofuntil such principal amount is paid in full at the rate of four and85/100 percent (4.85%) per annum, or such lesser rate as shall be the maximum rate allowable under applicablelaw. Interest from the date hereof shall be computed on the basis of a365-day year. Unless converted or prepaid earlier as set forth below, all outstanding principal and accruedand unpaid interest on this Note shall be due and payable on June 1,2007 (the “***Maturity Date***”).

3.         Prepayment.Principal and unpaid accrued interest of this Note may be**prepaidwithout penalty, in whole or in part at any time at the option of the Company. Anyprepayment of this Note will be credited first against accrued interest, thenprincipal. Upon payment in full of theamount of all principal and interest payable hereunder, this Note shall besurrendered to the Company for cancellation.

4.         Conversion.

4.1       Mandatory Conversion. Alloutstanding principal on this Note and all accrued and unpaid interest thereon,as of the close of the business day immediately preceding the date of the firstclosing of an Equity Financing (as defined below) of the Company, shall beautomatically converted upon the first closing of such Equity

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Financing into such shares of capital stock of theCompany as are issued in such Equity Financing. The number of shares of capitalstock of the Company to be issued upon conversion of this Note shall bedetermined by dividing the principal and accrued and unpaid interest thereon(as set forth above) of this Note by the Conversion Price (as defined below).For purposes of this Note, an “***Equity Financing***”**shallmean the Company’s closing of its issuance and sale of equity securities, in asingle transaction or series of related transactions, to the Holder. Forpurposes of this Note, the “***Conversion Price***”**isthe purchase price per share of the securities issued in the Equity Financing.

4.2       Effect of Conversion. Uponconversion of this Note, the applicable amount of outstanding principal andaccrued and unpaid interest of the Note shall be converted without any furtheraction by the Holder; provided, however, that the Company shallnot be obligated to issue certificates evidencing the securities issuable uponsuch conversion unless such Note is either delivered to the Company or itstransfer agent, or the holder notifies the Company or its transfer agent thatsuch Note has been lost, stolen or destroyed and executes an agreementsatisfactory to the Company to indemnify it from any loss incurred by it inconnection with the loss, theft or destruction of such Note. The Company shall,as soon as practicable after such delivery, or**such agreement and indemnification, issue and deliver at such officeto the Holder of such Note, a certificate or certificates for the securities towhich the Holder shall be entitled and a check payable to the Holder in theamount of any cash amounts payable as the result of a conversion intofractional shares of the securities, as determined by the Board of Directors ofthe Company. Such conversion shall be deemed to have been made concurrentlywith the first closing of the Equity Financing. The person or persons entitledto receive securities issuable upon such conversion shall be treated for allpurposes as the record holder or holders of such securities on such date. Inany case, the Company shall not issuefractional shares of securities but shall pay the dollar equivalent of any fractional shares promptly following theclosing date of the Equity Financing.

4.3       Lockup Agreement. The Holderagrees, in connection with the Company’s initial public offering, upon requestof the Company or any underwriters managing any underwritten offering of theCompany’s securities, not to sell, make any short sale of, loan, grant anyoption for the purchase of, or otherwise dispose of any securities of theCompany without the prior written consent of the Company or such underwritersfor such period of time (not to exceed 180 days) from the effective date ofsuch registration as may be**requestedby the underwriters; provided, however, that all of the Company’sexecutive officers and directors agree to similar restrictions.

5.         Attorney’s Fees. If theindebtedness represented by this Note or any part thereof is collected inbankruptcy, receivership or other judicial proceedings or if this Note isplaced in the hands of attorneys for collection after default, the Companyagrees to pay, in addition to the principal and interest payable hereunder,reasonable attorneys’ fees and costs incurred by Holder.

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6.         Notices.**All notices hereunder shall be in writingand shall be deemed given three (3) business days after**being sent by certified or registered mail,postage prepaid, return receipt requested,at the addresses set forth above.

7.         Acceleration. All outstanding principal of and accrued and unpaid interest on thisNote shall automatically become immediately due and payable, withoutpresentment, demand, protest or notice of any kind, all of which are expresslywaived, if (i) the Company shall default in the payment of any principal orinterest hereunder when due; (ii) the Company commences any proceeding inbankruptcy or for dissolution, liquidation, winding up or other relief understate or federal bankruptcy or similar laws; or (iii) any such proceeding iscommenced against the Company, or a receiver or trustee is appointed forthe Company or a substantial part of its property, and such proceeding or appointmentis not dismissed or discharged within sixty (60) days after its commencement.Upon any such declaration of acceleration, such principal and interest shallbecome immediately due and payable and the Holder shall be entitled to exerciseall of its rights and remedies hereunderwhether at law or in equity. The failure of the Holder to declare theNote due and payable shall not be a waiver of its right to do so, and the Holder shall retain the right to declare theNote due and payable unless it shall execute a written waiver.

8.         No Dilution or Impairment. The Company will not, by amendment of itsCertificate of Incorporation or Bylaws, each as amended to date, or through anyreorganization, transfer of assets, consolidation, merger, dissolution,issue or sale of securities or any othervoluntary action, avoid or seek to avoid the observance or performance of anyof the terms of this Note, but will at all times in good faith assist in thecarrying out of all such terms and in the taking of all such action as may benecessary or appropriate in order to protect the rights of the holder of thisNote against dilution or otherimpairment.

9.         Waiverof Notice of Presentment. The Company hereby waives presentment, demand for performance, notice of non-performance,protest, notice of protest and notice of dishonor. No delay on the partof Holder in exercising any right hereunder shall operate as a**waiver of such right or any other right.

10.       NonWaiver. The failure of the Holder to enforce or exercise any right or remedy provided in this Note or at law or inequity upon any default or breach shall not be construed as waiving the rightsto enforce or exercise such or any other right or remedy at any laterdate. No exercise of the rights and powers granted in or held pursuant to this Note by the Holder, and no delaysor omissions in the exercise of such rights and powers shall be held to exhaustthe same or be construed as a waiver thereof, and**every such right and power may be exercised at any time andfrom time to time.

11.       Governing Law. This Note shall be construed in accordance with the laws of the Stateof North Carolina, without regard to its conflicts of laws or choice of lawprovisions.

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12.       No StockholderRights. Nothing contained in this Note shall be construed as conferringupon the Holder or any other person the right to vote or to consent or**to receive notice as a stockholder of theCompany.

13.            Amendment. This Note may not be amended or waived in anyway except by a writing signed by the Company and the Holder.

14.            HolderRepresentations. The Holder herebyrepresents and warrants as follows:

14.1         Investment Representations. It is the Holder’spresent intention to acquire the Note andany shares of common stock issuable upon conversion or exercise of the Note(collectively, the “***Securities***”)**which it may receive pursuant to thisNote, for its own account and thateach such Security is being and will be acquired by it for the purposeof investment and not with a view to distribution or resale. The Holder warrantsand agrees that it will not sell or transferany such Security without registration under applicable federal andstate securities laws, or the availability of appropriate exemptions therefrom. The Holder agrees that each suchSecurity will bear a restrictive legend or legends stating that the same has not been registered under applicablefederal and state securities laws and referring to restrictions on itstransferability and sale.

14.2     Knowledge,Experience and Due Diligence. TheHolder acknowledges that it is**asophisticated investor and has such knowledge and experience in financial and business matters that it is capable of evaluatingthe merits and risks of this investment and has substantial experiencein making investment decisions of the type contemplated hereby. The Holder canbear the economic risks of this investment, can afford a complete loss of its investment and has no present need forliquidity in conjunction with the purchaseof the Securities. During the course of this transaction and prior to the saleof the Securities hereunder, theHolder acknowledges that it has had the opportunity to ask questions of, andhas received satisfactory answers from, management of the Company concerningthe terms and conditions of this investment and the business and operations ofthe Company.

14.3     Power and Authority. The Holder confirms that it has full power and authority and has taken all required actionnecessary to permit it to purchase this Note. The Holder represents and warrants that this Note is the legal, validand binding obligation of such Holder, enforceable in accordance withits terms.

14.4     Accredited Investor. The Holder meets the criteria of an “accreditedinvestor” as defined in Rule 501 of Regulation D adopted under theSecurities Act of 1933, as amended.

14.5     Indemnification.Holder hereby agrees to defend, indemnify and hold the Company harmless for any damages, loss, reasonable attorney’s fees or anyother costs arising out of any claim or action arising out of a breach byHolder of Holder’s representations and warranties set**forth in this Section 14.

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This Note ishereby issued by the Company, and agreed and acknowledged by Holder, as of the year and date first abovewritten.
|            | ** ** | ** ** | **COMPANY:**                     | ** **            |
|------------|------------|------------|----------------------------------|-----------------------|
| ** ** | ** ** | ** ** | ** **                       | ** **            |
| ** ** | ** ** | ** ** | **ALBEMARLE BIO-REFINERY, INC.** | ** **            |
| ** ** | ** ** | ** ** | ** **                       | ** **            |
| ** ** | ** ** | ** ** | ** **                       | ** **            |
|       |       |       | By:                              | /s/ William R. Horton |   |
|       |       |       | Name:                            | William R. Horton     |   |
|       |       |       | Title:                           | CEO / President       |   |
|            |            |            |                                  |                       |  |  |

Acknowledged and agreed with regard to Section 14above:
| **Earth Biofuels, Inc.** | ** **          | ** ** | ** ** |
|--------------------------|---------------------|------------|------------|
| ** **               | ** **          | ** ** | ** ** | ** ** |
| By:                      | /s/ George Lowrance |       |       |   |   |
| Name:                    | George Lowrance     |       |       |   |   |
| Title:                   | Vice President      |       |       |   |   |
|                          |                     |            |            |  |  |  |

 

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