Document:

exhibit10_96.htm

Exhibit 10.96

    THE
UNITED STATES BANKRUPTCY COURT

    FOR
THE DISTRICT OF DELAWARE

    

    In
re:                                                                |           Chapter
7 (Involuntary Petition Pending)

    |

    EARTH
BIOFUELS,
INC.,                                                                           |           Case
No. 07-10928 (CSS)

    |

    |           Hearing Date: December 10, 2007 at
11:00 a.m.

    Debtor.                      |           Objection Deadline: December 3, 2007
at 4:00 p.m. (ET)

    |

    ______________________________|                                                                                     Related Docket No.
88

    

    NOTICE
OF FILING OF EXECUTED

    INTERIM RESTRUCTURING
AGREEMENT

    

    TO:           All
parties on the attached service list.

    PLEASE TAKE NOTICE THAT, on
November 14, 2007, the above-captioned involuntary debtor (the "Involuntary
Debtor") and certain petitioning creditors (the "Petitioning Creditors"), by and
through its undersigned counsel, filed their Joint Motion of Debtor and
Petitioning Creditors Holding 94% of Notes to Approve Interim Settlement
Agreement and Dismiss Involuntary Bankruptcy Petition Pursuant to 11 U.S.C. §
105 (a) and 3036)(1) and Federal Rule of Bankruptcy Procedure 9019
[Docket No. 88] (the "Motion"), which
included an unexecuted copy of the Interim Restructuring Agreement as Exhibit
A.

    PLEASE TAKE FURTHER NOTICE
THAT, the executed Interim Restructuring Agreement and exhibits are being
held in escrow, subject to the Escrow Agreement, dated November 14, 2007,
attached to the Interim Restructuring Agreement as Exhibit E (the "Escrow
Agreement").

    PLEASE TAKE FURTHER NOTICE
THAT, subject to the Escrow Agreement, the Involuntary Debtor and
Petitioning Creditors have filed the executed version of the
Interim

    DKT.
NO.                                89

    DT.
FILED                                11-19-07

    Restructuring
Agreement, together with executed exhibits, copies of which are annexed hereto
as Exhibit 1.1.1

    Dated:
November 19,
2007                                                                                                  /s/ A.
Winfree                                           

    William
P. Bowden (#2553)

    Don A.
Beskrone (#4380)

    Amanda M.
Winfree (#4615)

    ASHBY
& GEDDES, P.A.

    500
Delaware Avenue, 8th Floor

    P.O. Box
1150

    Wilmington,
DE 19899

    Telephone:
(302) 654-1888

    

    -and-

    

    Charles
R. Gibbs

    S. Margie
Venus

    Sarah
Link Schultz

    AKIN GUMP
STRAUSS HAUER & FELD

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Telephone:
214-969-4213

    

      

    

      
      1           Evolution
Master Fund Ltd. SPC, Segregated Portfolio M; Capital Ventures International;
Cranshire Capital, LP; and Kings Road Investments Ltd. (collectively, the
“Selling Noteholders”) are not parties to the Interim Restructuring Agreement.
Instead, subject to (among other things) the Court’s entering a final,
non-appealable order on the docket dismissing the above-captioned bankruptcy
case, Castlerigg Master Investments, Ltd. has agreed to purchase the notes and
warrants of the Selling Noteholders and one-half of the notes and warrants of
Portside Growth and Opportunity Fund, which is a party to the Interim
Restructuring Agreement.

    

    
      
         

      

      
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    EXHIBIT
1

    

    EXECUTED
VERSION

    

    INTERIM RESTRUCTURING
AGREEMENT

    

    THIS INTERIM RESTRUCTURING
AGREEMENT, (the "Agreement"), is dated
of the.13th day of November, 2007 ("Agreement Date") by
and among (i) the LENDERS that are signatories
hereto. (collectively, the "Lenders"); (ii) EARTH BIOFUELS, INC., a
Delaware Corporation, ("EBOF"); (iii) DENNIS MCLAUGHLIN, ("McLaughlin") an
individual; and (iv) entities listed on the SCHEDULE OF EBOF SUBSIDIARIES
attached hereto as Schedule A (individually, a "Subsidiary" and
collectively, the "Subsidiaries").

    

    RECITALS

    

    WHEREAS,
Radcliffe SPC, Ltd. for and on behalf.of the Class A Convertible Crossover
Segregated.Portfolio ("Radcliffe"),
Castlerigg Master Investments Ltd. ("Castlerigg"), and
Capital Ventures International ("CVI"; collectively,
the "Initial Bridge
Lenders") are parties to a Securities Purchase Agreement, dated as of
June 7, 2006 (the "Initial Bridge Securities
Purchase Agreement") with
Earth Biofiiels, Inc. ("EBOF"), pursuant to
which EBOF issued, among other things, warrants to purchase 1,500,000 shares of
common stock, $0.001 par value (the "Common Stock"), of EBOF at
the exercise price of $2.93 (the "Initial Bridge
Warrants") and in connection with the Initial Bridge Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement (the "Initial Bridge Registration
Rights Agreement," collectively with the Initial Bridge Securities
Purchase Agreement and the Initial Bridge Warrants, the "Initial Bridge Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Initial Bridge Securities Purchase Agreement;

    

    WHEREAS,
Castlerigg (the "Second Bridge
Lender") is a party to a Securities Purchase Agreement, dated as of July
10, 2006 (the "Second
Bridge Securities Purchase Agreement") with EBOF, pursuant to which EBOF
issued, among. other things, warrants 'to purchase 1,500,000 shares of Common
Stock at the exercise price of $2.50 (the "Second Bridge
Warrants") and in connection with the Second Bridge Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement (the "Second Bridge Registration
Rights Agreement," collectively with the, .Second Bridge Securities
Purchase Agreement, Second Bridge Warrants, the "Second Bridge Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Second Bridge Securities Purchase Agreement;

    

    WHEREAS,
Radcliffe, Castlerigg, CVI, YA Global Investments, L.P. (formerly known as
Cornell Capital, L.P. ("Yorkville")),
Cranshire Capital L.P. ("Cranshire"), Portside
Growth and Opportunity Fund ("Portside"), Evolution
Master Fund Ltd. SPC, Segregated Portfolio M ("Evolution"), and
Kings Road Investments Ltd. ("Kings Road";
collectively, the "Noteholders") are
parties to a Securities Purchase Agreement, dated as of July 24, 2006 (the
"Securities Purchase
Agreement") with EBOF, pursuant to which EBOF issued (i) 8% Senior
Convertible Notes (collectively, the "Notes") in the
aggregate principal amount of $52.5 million, which were unsecured and
convertible into shares of Common Stock at $2.90 per share, and (ii) warrants to
purchase in excess of 9,000,000 shares of common stock of EBOF at the exercise
price of $2.90 (the "Warrants") and in
connection with the Securities Purchase Agreement, EBOF

    
      
         

      

      
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    executed
a Registration Rights Agreement (the "Registration Rights
Agreement," collectively with the Initial Bridge Transaction Documents,
the Second Bridge Transaction. Documents, the Securities Purchase Agreement,
Notes, and Warrants, the "Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Securities Purchase Agreement;

    

    WHEREAS,
each Noteholder delivered an Event of Default Redemption Notice to EBOF
Identifying various events of default under its Note and demanding that EBOF
redeem the Noteholder's interest in the Note at the Event of Default Redemption
Price and EBOF failed to remit the Event of Default Redemption
Price;

    

    WHEREAS,
numerous Events of Default as defined in the Transaction Documents have occurred
and are continuing;

    

    WHEREAS,
on July 11, 2007, Radcliffe, 'Yorkville, Portside, Castlerigg and Evolution (the
"Petitioning
Creditors") commenced an involuntary bankruptcy proceeding against EBOF
pursuant to Title 11 of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of Delaware, Case No.
07-10928 (CSS) (the "Bankruptcy
Case");

    

    WHEREAS,
for the past several months, EBOF has engaged in discussions with Castlerigg and
certain of the other Noteholders regarding the terms of an out-of-court
restructuring;

    

    WHEREAS,
EBOF wishes to further explore the possibility of restructuring and modifying
the existing rights and obligations under the Transaction Documents with the
Noteholders, through one or more definitive documents to be negotiated during
the course of the next 6 to 1 2 months (the "Restructuring
Transaction");

    

    WHEREAS,
at EBOF's request, the Lenders are willing, subject to and on the. terms and
conditions hereof and of the documents to be executed in connection herewith, to
forbear from exercising rights and remedies under the Transaction Documents and,
as applicable, to consent to dismissal of the Bankruptcy Case in exchange for
the terms hereof and of the documents to be executed in connection
herewith.

    

    NOW,
THEREFORE, for and in consideration of the foregoing and other good and valuable
consideration recited in this Agreement, the receipt and sufficiency of which
are herein acknowledged, the Lenders, EBOF, McLaughlin and the Subsidiaries
(each, a "Party”; collectively,
the "Parties")
agree to the following:

    

    1.           Dismissal of Bankruptcy
Case

    

    (a)           EBOF
and each Lender that is a Petitioning Creditor shall consent, subject to section
-2(b) below, to the dismissal of the Bankruptcy Case pursuant to Section 303 (j)
of the Bankruptcy Code, with each Party to bear its own costs.

    
      
         

      

      
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    (b)           Concurrently
with the filing of the joint motion to dismiss (the "Dismissal Motion"),
which shall be in form and substance acceptable to the Lenders that are
Petitioning Creditors, EBOF shall also file with the Bankruptcy Court a verified
list of creditors who shall receive notice of the motion to dismiss the
Bankruptcy Case.

    

    (c)           EBOF
and the Lenders that are Petitioning Creditors shall file the Dismissal Motion
to dismiss the Bankruptcy Case with the Bankruptcy Court by no later November
19, 2007.

    

    2.           New Collateral
Documents

    

    (a)           Concurrently
with the execution of this Agreement, the Parties (as applicable) shall execute
the following documents, forms of which are attached hereto as Exhibits A - D)
(collectively, the "Collateral Documents") all which shall be effective as of
the Dismissal Date (as defined in section 8 below):

    

    (i)           release
agreement;

    

    (ii)           guaranty
from McLaughlin ("McLaughlin Guaranty") in favor of the Lenders;

    

    (iii)           confessions
of judgment by EBOF in favor of each of the Lenders (individually and
collectively, the "Confessions of Judgment"); and

    

    (iv)           guaranty
from the Subsidiaries ("Subsidiary Guaranty") in favor of the
Lenders.

    

    3.           Forbearance

    

    (a)           Each
Lender hereby agrees to forebear from exercising or enforcing any contractual,
legal or equitable rights or remedies (including, but not limited
to,  exercising any creditor remedies) arising under or related to the
Transaction Documents or Collateral Documents from the Dismissal Date (defined
in section 8  below) until the earliest of the following to occur
(each a "Standstill Expiration Event"):

    

    (i)           June
25, 2008, which may be extended with the prior written consent of all Lenders in
their sole discretion;

    

    (ii)           180
days from the Dismissal Date, which may be extended with the prior written
consent of all Lenders in their sole discretion;

    

    (iii)           final
consummation of all aspects of the restructuring (as determined by the Lenders
holding. 66, %% of the aggregate principal amount of the Notes (the "Required
Lenders") in their sole discretion);

    
      
         

      

      
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    (iv)           any_
of the following events occur:

    

    (1)           prior
to the Restructuring Consummation Deadline (as defined in section 3(a)(iv)(5)
below), either (x) an order for relief is entered in a case under the Bankruptcy
Code with respect to EBOF or any Subsidiary, or (y) an involuntary bankruptcy
petition is filed against either EBOF or any Subsidiary and such petition is not
dismissed on or before sixty (60) days after the date such petition is
filed;

    

    (2)           failure
of EBOF to execute security documents (in form and substance acceptable to the
Required Lenders as determined by the Required Lenders in their sole discretion)
sufficient to provide the Lenders with liens, subject only to any valid
then-existing liens, on all of EBOF's assets to secure EBOF's obligations under
the Confessions of Judgment and the Transaction Documents on or before ten (10)
days after the Dismissal Date;

    

    (3)           failure
of all Subsidiaries to execute security documents (in form and substance
acceptable to the Required Lenders as determined by the Required Lenders in
their sole discretion) in favor of the Lenders subject only to any valid
then-existing liens, securing their respective obligations tinder the Subsidiary
Guaranty on or before ten (10) days after the Dismissal Date;

    

    (4)           failure
of EBOF and Subsidiaries to execute a term sheet with the material terms of a
restructuring (in form and substance acceptable to the Required Lenders in their
sole discretion) (the "Restructuring Term Sheet") on or before thirty (30) days
after the Dismissal  Date;

    

    (5)           failure
of EBOF and Subsidiaries to consummate the transactions contemplated in the
Restructuring Term Sheet fully (as determined by the Required Lenders in their
reasonable discretion). ("Restructuring Consummation Deadline") on or before one
hundred and twenty (120) days after the Dismissal Date;

    

    (6)           any
action is commenced to void, avoid, invalidate, subordinate, recharacterize,
reduce or recover (in whole or in part) any or all of the Collateral Documents,
any claim of any of the Lenders under any of the Notes or any of the other
Transaction Documents, any lien granted to secure any such claim or any
obligation under any of the Collateral Documents or any of the Transaction
Documents (including, without limitation, the actions described in sections 5
(b) and (c) below), or any payment made in respect of such claim or obligation;
and

    

    (7)           EBOF
or any Subsidiary grants or permits to exist any lien not in existence as of the
date of this Agreement on any of its assets.

    
      
         

      

      
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    (b)           The
Required Lenders can waive a Standstill Expiration Event under section
3(a)(iv)(1)-(7) only by a writing signed by'the Required Lenders delivered to
EBOF with written notice to all other Lenders.

    

    (c)           Any
proceeds 'recovered by any Lender under any of the Collateral Documents shall be
held by such other Lender in trust for the Pro Rata benefit of the other Lenders
and distributed accordingly. The term "Pro Rata" shall mean, as to any Lender,
the ratio determined by dividing (x) the face amount of Notes then held by such
Lender by (y) the face amount of Notes then held by all Lenders. This provision
shall survive termination of this Agreement.

    

    (d)           Nothing
herein shall be deemed to prohibit any Lender from (i) acquiring, holding,
voting or disposing of any securities 'issued upon the exercise of the Warrants
or upon the conversion of the Notes, (ii) exercising or refraining from
exercising, the Warrants, (iii) converting, or refraining from converting, the
Notes, or (iv) taking any action to compel EBOF to comply with any such exercise
or conversion.

    

    
      	
              4.

            	
              Restructuring
      Transaction. Until the occurrence of a Standstill Expiration Event,
      each Lender expressly agrees that it shall be bound to accept any
      Restructuring Transaction proposed by EBOF and accepted in writing by the
      Required Lenders with written notice to all Lenders; provided, however, that
      no proposed Restructuring Transaction or any other transaction or
      agreement with EBOF, its Subsidiaries or any of their affiliates or with
      McLaughlin relating to the Transaction Documents shall be approved or
      accepted by any Lender unless the transaction or agreement offers the same
      consideration and the same terms and conditions to all Lenders, with each
      such Lender’s share of such consideration to be determined on a Pro Rata
      basis, and no consideration is offered or given to any person or entity in
      connection therewith other than the Lenders. The Parties acknowledge that
      the Restructuring Transaction may be implemented in stages. Nothing
      contained in this section, elsewhere in this Agreement or in any
      Collateral Document shall, or shall be used to, impose on any Lender any
      monetary obligation (including, without limitation, making any loan,
      investing any capital, or making any other financial accommodation) as a
      result of, or relating to, or arising out of the Bankruptcy Case or the
      Restructuring Transaction without the prior written consent of such
      Lender, which may be granted or withheld in such Lender's sole discretion.
      No Lender shall be bound by any such obligation absent such prior written
      consent by it.

            

    

    

    5.           Acknowledgement of Total
Debt

    

    (a)           Subject
only to section 6 below, EBOF, McLaughlin and the Subsidiaries acknowledge, that
the aggregate amount due and owing from EBOF to the Noteholders pursuant to the
Transaction Documents is $100,651,173 (as of September 28, 2007) (as set forth
on Schedule B) plus fees, costs, and expenses, and that such amount is
immediately due and payable to the Noteholders without set-off, counterclaim,
deduction, offset or defense (the "Total
Debt").

    
      
         

      

      
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    (b)           Subject
only to section 6 below, EBOF, McLaughlin, and the Subsidiaries shall not
directly or indirectly object to, challenge, contest or otherwise seek to
invalidate or reduce (or support directly or indirectly any other person or
entity in any such objection, challenge or contest) the existence, validity or
amount of the Total Debt, the obligations under the Transactions Documents or
the Collateral Documents or any lien granted to secure such obligations to the
extent such claims are held by or obligations are owed to the
Lenders.

    

    (c)           EBOF,
McLaughlin and the Subsidiaries shall not directly or indirectly seek
tosubordinate or recharacterize any claim of any Lender.

    

    
      	
              6.

            	
              Reservation of
      Rights. The acknowledgement and covenants in section 5 above
      shall  only apply with respect to the claims and liens that are
      held by the Lenders. EBOF  reserves all rights to challenge any
      claim held by any Noteholder that is not a signatory to  this
      Agreement.

            

    

    

    
      	
              7.

            	
              After Acquired
      Claims. In the event that a Lender acquires and continues to hold
      the Notes and Warrants (the "Excluded Securities") under the Transaction
      Document of a Noteholder that is not a signatory hereto (an "Excluded
      Noteholder"), such Excluded Securities acquired (and held) by such Lender
      shall be deemed to be Notes and Warrants of such Lender governed by the
      terms and conditions of this Agreement and the Collateral Documents, (and
      the benefits thereunder) as if such Excluded Securities were held by such
      Lender as of the date of this Agreement (but only for so long as such
      Excluded Securities are held by such Lender). The Pro Rata share of any
      Lender that acquires Notes from an .Excluded Noteholder (or that transfers
      any portion of its Notes) shall be adjusted
  accordingly.

            

    

    

    
      	
              8.

            	
              Effective Date.
      This Agreement and the Collateral Documents shall be placed into escrow
      pursuant to an escrow agreement (the form of which is attached hereto as
      Exhibit E) and shall be released from escrow and shall become effective on
      the date that an order dismissing the Bankruptcy Case (a "Dismissal
      Order") is entered on the docket provided that such order is not stayed
      (the "Dismissal Date"); rop vided, however, that if the Dismissal Date
      fails to occur on or before December 21, 2007 (or such later date as may
      be agreed in writing by all Lenders prior to the expiration of such date
      or dates) (a "Failure Event"), then, (a) EBOF shall, immediately file a
      notice to withdraw the Dismissal Motion (the "Withdrawal Notice"), which
      the Lenders that are Petitioning Creditors hereby authorize upon the
      occurrence of a Failure Event (or if EBOF fails to do so, EBOF hereby.
      authorizes the Lenders that are Petitioning Creditors to do so on EBOF's
      behalf), and (b) this Agreement and the Collateral Documents shall be null
      and void upon entry of the Withdrawal Notice on the docket of the
      Bankruptcy Court, provided that a Dismissal Order has not been previously
      docketed. If (i) the Dismissal Motion is denied, then this Agreement and
      the Collateral Documents shall be null and void or (ii) a Withdrawal
      Notice is filed before a Dismissal Order (if any) is entered, then this
      Agreement and the Collateral Documents shall be null and void as
      contemplated in clause (b) above, and, in each case, to the fullest extent
      possible, each of the Parties shall be restored to the position it held
      immediately before the Agreement Date. The Parties shall cooperate to seek
      dismissal of the Bankruptcy Case as expeditiously as possible and such
      cooperation agreement shall

            

    

    
      
         

      

      
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              be
      effective upon execution of this Agreement. Notwithstanding the foregoing,
      sections 1, 2, 7, 8-15, and 17-20 shall be effective immediately upon
      execution of this Agreement and such sections shall terminate and be of no
      further force or effect if this Agreement and the Collateral Documents
      become null and void as described
above.

            

    

    

    
      	
              9.

            	
              Interim
      Protections. Between the date of execution of this Agreement and
      the Dismissal Date, neither EBOF nor any of its Subsidiaries shall (a)
      incur any debt or transfer any asset outside the ordinary course of
      business, (b) grant any lien or permit any lien to arise on any of its
      assets, or (c) otherwise take any action that would be inconsistent with,
      or adverse in any way to, any of the terms of this Agreement or of any of
      the Collateral. Documents, as if such agreements were in full force and
      effect, without the prior written consent of the Required
      Lenders.

            

    

    

    
      	
              10.

            	
              Governing Law;
      Jurisdiction: Jury Trial. All questions concerning the
      construction, validity, enforcement and interpretation of this Agreement
      shall be governed by the internal laws of the State of New York, without
      giving effect to any choice of law or conflict of law provision or rule
      (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the
      State of New York. Each Party hereby irrevocably submits t.o the exclusive
      jurisdiction of the state and federal courts sitting in The City of New
      York, Borough of Manhattan, for the adjudication of any dispute hereunder
      or in connection herewith or with any transaction contemplated hereby or
      discussed herein, and hereby irrevocably waives, and agrees not to assert
      in any suit, action or proceeding, any claim that it, is not personally
      subject to the jurisdiction of any such court, that such suit, action or
      proceeding is brought in an inconvenient forum or that the venue of such
      suit, action or proceeding is improper. Each Party hereby irrevocably
      waives personal service of process and consents to process being served in
      any such suit, action or proceeding by mailing a copy thereof to such
      Party at the address for such notices to it under this Agreement and
      agrees that such service shall constitute good. and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to
      limit in any way any right to. serve process in any manner permitted by
      law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
      AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
      TRANSACTION CONTEMPLATED HEREBY.

            

    

    

    
      	
              11.

            	
              Counterparts.
      This Agreement may be executed in two or more identical counterparts, all
      of which shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered
      to the other party; provided that a facsimile signature shall be
      considered due execution and shall be binding upon the signatory thereto
      with the same force and effect as if the signature were an original, not a
      facsimile signature.

            

    

    

    
      	
              12.

            	
              Headings. The
      headings of this Agreement are for convenience of reference and shall not
      form part of, or affect the interpretation of, this
    Agreement.

            

    

    
      
         

      

      
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              13.

            	
              Recitals. Each
      of the Recitals is incorporated herein by this reference and shall become
      part of the Agreement.

            

    

    

    
      	
              14.

            	
              No Conflict
      Intended. Any inconsistency between this Agreement and the Exhibits
      attached. hereto shall be resolved in favor of this
    Agreement.

            

    

    

    
      	
              15.

            	
              Integration:
      Effect. This Agreement constitutes the entire agreement of the
      Parties pertaining to the subject matter hereof and all prior negotiations
      and- representations relating thereto are merged herein. The terms and
      conditions set forth in this Agreement are the product of joint
      draftsmanship by all Parties, each being represented or having the
      opportunity to be represented by counsel, and any ambiguities in this
      Agreement or any documentation prepared pursuant to or in connection with
      this Agreement shall not be construed against any of the parties because
      of draftsmanship. This Agreement, is not intended to modify and does not
      modify the rights, remedies and obligations of the signatories under the
      Transaction Documents, except to the extent expressly set forth herein and
      then only with respect to the Parties
hereto.

            

    

    

    16.           Pending Litigation.
To the extent that any Lender and EBOF are currently parties to an action on
the Notes or other Transaction Documents, at the request of such Lender,
EBOF
shall consent to the dismissal of such action    without
prejudice and with each side to bear
its own costs.

    

    
      	
              17.

            	
              Waiver of Adjustment
      of Conversion Price Upon Issuance of Common Stoclc. EB.OF and the
      Lenders (as applicable) agree to waive the application of section 7(a). of
      the Notes, section 6(e) of the Initial Bridge Warrants, section 6(e) of
      the Second Bridge Warrants, and section 2(a) of the Warrants
      (collectively, the "Anti-Dilution
      Provisions") beginning on the date hereof and continuing .until the
      earlier of (i) the date that this Agreement
and

            

    

    
      	
               
      

            	
              the
      Collateral Documents becomes null and void pursuant to section 8 of this
      Agreement; or (ii) the occurrence of a Standstill Expiration Event (each,
      a "Termination
      Event"). If a Termination Event occurs, and upon such Termination
      Event occurring, the Anti-Dilution Provisions shall apply retroactively to
      any dilutive issuances that occur between the date hereof and the
      occurrence of such Termination
Event.

            

    

    

    
      	
              18.

            	
              Third
      Party Beneficiaries. Unless expressly stated herein, this Agreement shall
      be solely for the benefit of the Parties hereto and no other person or
      entity shall be a third-party beneficiary
  hereof.

            

    

    

    
      	
              19.

            	
              Successors
      and Assigns. This Agreement shall be binding upon, and shall inure to the
      benefit of, each Party and its respective successors and assigns ("Assigns"). In
      the case of an assignment or transfer of a Note, the assignee or
      transferee acquiring any interest in the Note shall execute and deliver to
      each Lender and EBOF (other than the respective assignor or transferor) a
      written acknowledgment of receipt of a copy of this Agreement and the
      written agreement by such person to be bound by the terms of this
      Agreement.

            

    

    
      
         

      

      
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    20.           Notices.
Any written notice required to be given under this Agreement shall be sent to
the following by mail, electronic mail or facsimile, and shall be deemed given
upon such mailing and sending by facsimile:

    

    If to
Earth Biofiels, Dennis McLaughlin, or the Subsidiaries:

    

    3001 Knox
Street, Suite 403

    Dallas,
Texas 75205

    Telephone:                                (214)
389-9800

    Facsimile:                                (214)
389-9805

    Attention:
Dennis McLaughlin

    

    with a
copy to:

    

    Akin Gump
Strauss Hauer & Feld LLP

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Telephone:                                (214)
969-4710

    Facsimile:                                (214)
96974343

    Attention:
Charles R. Gibbs, Esq.

    

    If to
Castlerigg (to the extent it executes this Agreement):

    

    40
West'57th Street

    26th
Floor

    New York,
New
York                                                      10019

    Telephone:                                (212)
603-5700

    Facsimile:                                (212)
603-5710

    Attention:                                Cem
Hacioglu (chacioglu@sandellmgmt.com)

    Matthew
Pliskin (mpliskin@sandellmgmt.com)

    

    with a
copy to:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq.(david.hillman(@,srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    If to
Radcliffe (to the extent it executes this Agreement):

     

     

    c/o RG
Capital Management, L.P.

    3 Bala
Plaza - East, Suite 501

    Bala
Cynwyd, PA 19004

    Telephone:                                (610)
..617-5911

    Facsimile:                                (610)
617-0570

    Attention:                                Gerald
F. Stahlecker

    (gstahlecker@radcliffefunds.com)

    

    with a
copy to:

    

    Wilmer
Cutler Pickering Hale and Dorr LLP

    399 Park
Avenue

    New York,
New York 10022

    Telephone:                                (212)
230-8800

    Facsimile:                                (212)
230-8888

    Attention:
Philip D: Anker, Esq. (Philip.Anker@wilmerhale.com)

    

    If to
Yorkville (the extent it executes this Agreement):

    

    101
Hudson Street, Suite 3700

    Jersey
City, New Jersey 07303

    Attention:
Eric Hansen, Esq.

    (ehansen@yorlcvilleadvisors.com)

    

    with a
copy to:

    

    Baker
Botts L.L.P.

    2001 Ross
Avenue Dallas, Texas 75201

    Telephone:                                (214)'953-6571

    Facsimile:                                (2.14)
953-6503

    Attention:
C. Luckey McDowell, Esq.

    (luckey.mcdowell@bakerbbtts.com)

    

    If to
Cranshire (to the extent it executes this Agreement): -

    

    Greenberg
Traurig LLP

    77 W.
Wacker Dr., Suite 2500

    Chicago,
Illinois                                           60601

    Telephone:                                (312)
456-8448

    Facsimile:                                (312)
456-8435

    Attention:                                Todd
Mazur, Esq. (mazurt@gtlaw.com)

    Peter
Lieberman (liebermanp@gtlaw.com)

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    If to
Evolution (the extent it executes this Agreement):

    

    c/o
Evolution Capital Management LLC

    2425
Olympic Boulevard, Suite. 120E

    Santa
Monica, California 90404

    Telephone:                                (310)
315-8866

    Attention:                                Brian
S. Yeh (brian.yeh@evofiind.co

    

    with a
copy to:

    

    Cadwalader,
Wickersham & Taft LLP

    One World
Financial Center

    New York,
New York 10281

    Telephone:                                (212)
504-6373

    Facsimile:                                (212)
504-6666

    Attention:                                Gregory
M. Petrick, Esq.

    (gregory.petrick@cwt.com)

    

    If to
Kings Road (the extent it executes this Agreement

    

    c/o
Polygon Investment Partners LP

    598
Madison Avenue, 14th Floor

    New York,
New York 10022

    Telephone:                                (212)
359-7300

    Facsimile:                                (212)
359-7303

    Attention:                                Erik
M.W. Casperson

    (ecaspersen@polygoninv.com)

    Brandon
L. Jones (bjones@polygoninv.com)

    

    with a
copy to:

    

    Latham
& Watkins LLP

    633 West
Fifth Street, Suite 4000

    Los
Angeles, California 90071

    Telephone:                                (213)
485-1234

    Facsimile:                                (213)
891-8763

    Attention:                                Russell
Sauer, Esq. (russ.sauer@lw.com)

    

    If to CVI
(the extent it executes this Agreement):

    

    c/o
Heights Capital Management

    101
California Street, Suite 3250

    San
Francisco, California 94111

    Telephone:                                (415)
403-6510

    Facsimile:                                (610)
617-3896

    Attention:                                Michael
Spolan (Michael.Spolan@sig.com)

    

    with a
copy to:

    

    Klehr,
Harrison, Harvey, Branzburg & Ellers, LLP

    919
Market Street, Suite 1000

    Wilmington,
Delaware 19801

    Telephone:                                (302)
426-1189

    Facsimile:                                (302)
426-9193

    Attention:                                Richard
M. Beck, Esq. (rbeck@ldehr.com)

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    If to
Portside (the extent it executes this Agreement):

    

    c/o
Ramius Capital Group, L.L.C.

    666 Third
Avenue, 26th Floor

    New York,
New York 10017

    Telephone:                                (212)
845-7955

    Facsimile:                                (212)
201-4802

    Attention:                                Jeffrey
Smith                                (jsmith@ramius.com)

    Peter
Feld (pfeld@ramius.com)

    Owen
Littman (olittman@ramius.com)

    

    with a
copy to:

    

    Hennigan,
Bennett & Dorman

    601 South
Figueroa Street, Suite 3300

    Los
Angeles, California 90017

    Telephone:                                (213)
694-1012

    Facsimile:                                (213)
694-1234

    Attention:                                Bruce
Bennett, Esq. (bennettb@hbdlawyers.com)

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties to this
Agreement have caused their respective signature page to this Interim
Restructuring Agreement to be duly executed as of the date first written
above.

    

    Earth
Biofuels,
Inc.                                                                                     Castlerigg
Master Investments Ltd.

    By: Sandell Asset Management
Corp.

    

    By:  _____________________________

    By: /s/ Dennis
McLaughlin                                                                           Name:

    Name:  Dennis
McLaughlin                                                                                     Title:

    Title: CEO

    

    Evolution
Master Fund. SPC,
Segregated                                                                                                Capital
Ventures International

    Portfolio
M                                                                                     By:           Heights
Capital Management, Inc.

    its authorized agent

    

    By:
____________________________                                                                                                By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Radcliffe
SPC, Ltd. for and on behalf of
the                                                                                                           YA
Global Investments, L.P. (formerly,

    Class A
Convertible Crossover
Segregated                                                                                                Cornell
Capital Partners, LP

    Portfolio                                                                           By:           Yorkville
Advisors, LLC

    By:           RG
Capital Management
Company,                                                                                     Its:           General
Partner

    L.P.

    By:           RGC
Management Company, LLC

    

    By:
_______________________________                                                                                                           By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Cranshire
Capital,
LP                                                                                                Portside
Growth and Opportunity Fund

    

    By:
________________________________                                                                                                           By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Kings
Road Investments Ltd.

    

    By:
________________________________

    Name:

    Title:

    

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties to this
Agreement have caused their respective signature page to this Interim
Restructuring Agreement to be duly executed as of the date first written
above.

    

    Dennis
McLaughlin

    Name

    /s/ Dennis
McLaughlin

    Signature

    3001 Knox Street, #403,
Dallas, TX 75205

    Address

    

    

    STATE OF
TEXAS )

                )
ss.

    COUNTY OF
DALLAS)

    

    BEFORE ME,  the duly
undersigned authority, on this day personally appeared DENNIS MCLAUGHLIN, known
to me to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed, and in the capacity therein stated.

    

    Given under my hand and seal of office,
this 13th
day of Nov.,
2007.

    

    /s/ Marcella Smith

    [NOTARY
STAMP]                                                                                     Notary
Public, State of Texas

    

    My
Commission Expires: June 27, 2009

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

               IN
WITNESS WHEREOF, the parties to this Agreement have caused their respective
signature page to this Interim Restructuring Agreement to be duly executed as of
the date first written above.

    

    Earth
LNG,
Inc.                                                                                     Earth
Biofuels Technology Co, LLC

    d/b/a Advanced Biofuels Technology,
LLC

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Applied
LNG Technologies USA,
LLC                                                                                                Earth
Biofuels Distribution Co.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Alternative
Dual Fuels,
Inc.                                                                                                Earth
Biofuels of Cordele, LLC

    d/b/a
Apollo Leasing, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Arizona
LNG,
LLC                                                                                     B20
Customs, LLC

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Fleet
Star,
Inc.                                                                                     Earth
Biofuels Operating, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Durant
Biofuels,
LLC                                                                                                Earth
Biofuels Retail Fuels, Co.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    Earth
Ethanol of Washington,
LLC                                                                                                Earth
Ethanol, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    
      	
              SCHEDULE A

            
	 
      
	
              SCHEDULE OF EBOF
    SUBSIDIARIES

            
	 
      
	
              Subsidiary

            
	 
      
	
              Earth
      LNG, Inc.

            
	 
      
	
              Applied
      LNG Technologies USA, LLC

            
	 
      
	
              Alternative
      Dual Fuels, Inc.

            
	
              d/b/a
      Apollo Leasing, Inc.

            
	 
      
	
              Arizona
      LNG, LLC

            
	 
      
	
              Fleet
      Star, Inc.

            
	 
      
	
              Durant
      Biofuels, LLC

            
	 
      
	
              Earth
      Biofuels Technology Co., LLC

            
	
              d/b/a
      Advanced Biofuels Technology, LLC

            
	 
      
	
              Earth
      Biofuels Distribution Co.

            
	 
      
	
              Earth
      Biofuels of Cordele, LLC

            
	 
      
	
              B20
      Customs, LLC

            
	 
      
	
              Earth
      Biofuels Operating, Inc.

            
	 
      
	
              Earth
      Biofuels Retail Fuels, Co.

            
	 
      
	
              Earth
      Ethanol, Inc.

            
	 
      
	
              Earth
      Ethanol of Washington, LLC

            

    

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    SCHEDULE
B

    

    SCHEDULE OF AMOUNTS DUE AND
OWING

    

    
      	
              Lender

            	
              Amount
      Due as of September 28, 2007

            
	 
      	 
      
	
              Castlerigg
      Master Investments Ltd.

               

            	
              $21,760,827

            
	
              Evolution
      Master Fund Ltd. SPC, Segregated Portfolio M

               

            	
              $22,036,827

            
	
              Kings
      Road Investments Ltd.

               

            	
              $19,162,458

            
	
              Capital
      Ventures International

               

            	
              $15,526,233

            
	
              Radcliffe
      SPC, Ltd. for and on behalf of the Class A Convertible Crossover
      Segregated Portfolio

               

            	
              $9,581,229

            
	
              YA
      Global Investments, L.P. (formerly, Cornell Capital Partners,
      L.P.)

               

            	
              $5,876,738

            
	
              Portside
      Growth & Opportunity Fund

               

            	
              $3,832,492

            
	
              Cranshire
      Capital LP

               

            	
              $2,874,369

            
	
              Total

            	
              $100,651,173

            

    

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    EXECUTION
VERSION

    

    RELEASE

    

    EARTH BIOFUELS, INC. ("EBOF") and each
entity listed on the SCHEDULE
OF EBOF SUBSIDIARIES attached hereto as Exhibit A (individually, a "Subsidiary" and
collectively, the "Subsidiaries") on
behalf of themselves their present and former employees, officers, directors,
members, attorneys, subsidiaries, affiliates, divisions, assignors,
predecessors, successors and assigns, in their capacities as such (collectively,
the "EBOF
Releasors"), hereby release and forever discharge each entity listed on
the SCHEDULE OF EBOF
NOTEHOLDERS attached hereto. as Exhibit B that are signatories hereto
(individually, a "Noteholder", and collectively, the "Noteholders") and
their present and former employees, officers, directors, members, attorneys,
parents, subsidiaries, affiliates, divisions, assignors, investment managers,
control persons, partners, shareholders; predecessors, successors and assigns,
in their capacities as such (collectively the "Released Parties"), of and
from any and all claims, liabilities, demands, rights, obligations, damages,
expenses, attorneys' fees and causes of action whatsoever from the beginning of
the world to the date of this Release, whether individual, class or derivative
in nature, whether at law or in equity, whether based on federal, state or
foreign law, foreseen or unforeseen, matured or unmatured, known or unknown,
accrued or not accrued, which Releasors have, had, or can, shall or may
hereafter have against the Released Parties that arise out of, relate to, or are
in any way connected with (i) the Securities Purchase Agreement,. dated as of
June 7, 2006 between EBOF and certain Noteholders (the "Initial Bridge Securities
Purchase Agreement"); (ii) the warrants to purchase 1,500,000 shares of
common stock, $0.001 par value (the "Common Stock"), of
EBOF at the exercise price of $2.93 issued by EBOF to certain Noteholders
pursuant to the Initial Bridge Securities Purchase Agreement (the "Initial Bridge
Warrants"); (iii) the Registration Rights Agreement issued in connection
with the Initial Bridge Securities Purchase Agreement (the "Initial Bridge Registration
Rights Agreement", collectively with the Initial Bridge Securities
Purchase Agreement and the Initial Bridge Warrants, the "Initial Bridge Transaction
Documents"); (iv) the Securities Purchase Agreement, dated as of
July  10, 2006 between EBOF and certain Noteholders (the "Second Bridge Securities
Purchase Agreement"); (v) the warrants to purchase 1,500,000 shares of
Common Stock at the exercise price of $2.50 issued by EBOF to certain
Noteholders pursuant to the Second Bridge Securities Purchase Agreement (the
"Second Bridge
Warrants"); (vi) the Registration Rights Agreement issued in connection
with the Second Bridge Securities Purchase Agreement (the "Second Bridge Registration
Rights Agreement", collectively with the Second Bridge Securities
Purchase Agreement, Second Bridge Warrants, the "Second Bridge Transaction
Documents"); (vii) the Securities Purchase Agreement, dated .as of July
24, 2006 between EBOF and the Noteholders (the "Securities Purchase
Agreement" ); (viii) the 8% Senior Convertible Notes (collectively, the
"Notes") in the
aggregate principal amount of $52.5 million issued by EBOF to the Noteholders
pursuant to the Securities Purchase Agreement; (ix) the warrants to purchase in
excess of 9,000,000 shares of common stock of EBOF at the exercise price of
$2.90 (the "Warrants") issued by
EBOF to the Noteholders in connection with the Securities Purchase Agreement;
(x) the Registration Rights Agreement ") issued in connection with the
Securities Purchase Agreement; (the "Registration Rights
Agreement" collectively with the Initial Bridge Transaction Documents,
the Second Bridge Transaction Documents, the Securities Purchase Agreement,
Notes, and Warrants, the "Transaction
Documents") or (xi) the 

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    involuntary
bankruptcy proceeding commenced against EBOF by certain Noteholders on July 11,
2007 pursuant to Title 11 of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"),
Case No. 07-10928 (CSS) (the "Bankruptcy Case")
including but not limited to, all claims that could have been asserted under
Section 303(i) of the Bankruptcy Code and any counterclaims or cross-claims
related thereto.

    

    The
Noteholders on behalf of themselves their present and former employees,
officers, directors, members, attorneys, subsidiaries, affiliates, divisions,
assignors, predecessors, successors and assigns, investment managers, control
persons, partners, shareholders, in their capacities as such (collectively, the
"Noteholder
Releasors"), hereby release and forever discharge the present and former
employees, officers, directors, and attorneys of EBOF and the Subsidiaries (but
not EBOF or such Subsidiaries themselves), in their capacities as such
(collectively, the "EBOF Released
Parties"), of and from any and all claims, liabilities, demands, rights,
obligations, damages, expenses, attorneys' fees and causes of action whatsoever
from the beginning of the world to the date of this Release, whether individual,
class or derivative in nature, whether at law or in equity, whether based on
federal, state or foreign law right of action, foreseen or unforeseen, matured
or unmatured, known or unknown, accrued or not accrued, which Noteholder
Releasors have, had, or can, shall or may hereafter have against the EBOF
Released Parties that arise out of, relate to, or are in any way connected with
(i) the Transaction Documents, or (ii) the Bankruptcy Case. For the avoidance of
doubt, the EBOF Released Parties shall not include EBOF or any of its
Subsidiaries.

    

    This
Release shall be placed into escrow pursuant to an escrow agreement (the "Escrow Agreement,"
the form of which is attached hereto as Exhibit C) and shall be released
therefrom and become effective in accordance with its terms upon on the date
that the order by the Bankruptcy Court dismissing the Bankruptcy Case is entered
on the docket and such order is not subject to a stay (the "Dismissal Date")
provided that such Dismissal Date occurs on or before December 21, 2007 (unless
extended in writing by all Noteholders). If any Purchase and Sale Agreement (as
defined in the Escrow Agreement) terminates prior to the Dismissal Date in
accordance with section 2(c) thereof, this Escrow Agreement shall be null, void
and of no further force and effect as between the EBOF Releasors and the seller
under such terminated Purchase and Sale Agreement.

    

    The EBOF
Releasors and Noteholder Releasors hereby acknowledge that they may hereafter
discover facts in addition to or different from those which they now know or
believe to be true with respect to the subject matter of this Release but that
it is their intention, to, and they do hereby fully, finally and forever settle
and release any and all claims, liabilities, demands, and causes of action,
known or unknown, suspected and unsuspected, of every kind and nature
whatsoever, which now exist, may hereafter exist, or may heretofore have existed
with respect to the subject matter of this Release. In furtherance of such
intention, they acknowledge that this Release shall be and remain in effect as a
full and complete release, notwithstanding the subsequent discovery or existence
of any such additional or different facts.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    Nothing
in this release shall release EBOF or its Subsidiaries with respect to any
obligation to the Noteholders including, but not limited to, obligations arising
out of any of the Transaction Documents, the Interim Restructuring Agreement,
dated November 13, 2007 (the "Interim Restructuring
Agreement"), or any of the documents contemplated in the Interim
Restructuring Agreement. Nothing in this release shall release Dennis McLaughlin
from any obligation to the Noteholders arising out of the Interim Restructuring
Agreement or any of the documents contemplated in the Interim Restructuring
Agreement, including, without limitation, the Guaranty by Dennis McLaughlin,
dated November 13, 2007.

    

    In any litigation arising from or
related to an alleged breach of this Release, this Release may be pleaded as a
defense, counterclaim or cross claim, and shall be admissible into evidence
without any foundation testimony whatsoever.

    

    The EBOF Releasors expressly covenant
and agree that this Release shall be binding in all respects upon their
respective successors, assigns and transferees, and shall inure to the benefit
of successors and assigns of the Released Parties.

    

    This Release shall be governed by New
York law without giving effect to any conflict of law provisions and shall not
be altered, amended or modified in any respect, except by a writing duly signed
by the party against whom.the alteration, amendment or modification is to be
charged.

    

    

    [SIGNATURE
PAGE FOLLOWS]

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned has duly executed this Release.

    

    EARTHBIOFUELS,
INC. on behalf of itself and

    the
Subsidiaries

    

    Bv: /s/ Dennis
McLaughlin                                                                           

    Name:  Dennis
McLaughlin

    Title:                      CEO

    Date:                      11-13-07

    

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the undersigned has duly executed this Release.

    

    CASTLERIGG
MASTER
INVESTMENTS                                                                                                           EVOLUTION
MASTER FUND LTD. SPC,

    LTD                                                                                     SEGREGATED
PORTFOLIO M

    By:
Sandell Asset Management Corp.

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    CAPITAL
VENTURES
INTERNATIONAL                                                                                                RADCLIFFE
SPC, LTD. FOR AND ON

    By:
Heights Capital Management, Inc.
its                                                                                                BEHALF
OF THE CLASS A

    authorized
agent                                                                                     CONVERTIBLE
CROSSOVER

    SEGREGATED
PORTFOLIO

    By: RG
Capital Management, L.P.

    By:                                                                By: RGC Management Company,
LLC

    Name:

    Title:                                                                           By:

    Name:

    Title:

    YA GLOBAL
INVESTMENTS,
L.P.                                                                                                CRANSHIRE
CAPITAL, LP

    

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    PORTSIDE
GROWTH AND

    OPPORTUNITY
FUND

    

    

    By:                                                                

    Name:

    Title:

    

    

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    RELEASE EXHIBIT
A

    

    SCHEDULE OF EARTH BIOFUELS,
INC. SUBSIDIARIES

    
      	 
      
	
               

              SUBSIDIARY

            
	 
      
	
              Earth
      LNG, Inc.

            
	 
      
	
              Applied
      LNG Technologies USA, LLC

            
	 
      
	
              Alternative
      Dual Fuels, Inc.

               

            
	
              d/b/a
      Apollo Leasing, Inc.

            
	 
      
	
              Arizona
      LNG, LLC

            
	 
      
	
              Fleet
      Star, Inc.

            
	 
      
	
              Durant
      Biofuels, LLC

            
	 
      
	
              Earth
      Biofuels Technology Co., LLC

               

            
	
              d/b/a
      Advanced Biofuels Technology, LLC

            
	 
      
	
              Earth
      Biofuels Distribution Co.

            
	 
      
	
              Earth
      Biofuels of Cordele, LLC

            
	 
      
	
              B20
      Customs, LLC

            
	 
      
	
              Earth
      Biofuels Operating, Inc.

            
	 
      
	
              Earth
      Biofuels Retail Fuels, Co.

            
	 
      
	
              Earth
      Ethanol, Inc.

            
	 
      
	
              Earth
      Ethanol of Washington, LLC

               

            

    

    

    

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    RELEASE EXHIBIT
B

    

    SCHEDULE
OF NOTEHOLDERS

    

    
      	
              NOTEHOLDERS

               

            
	
              CASTLERIGG
      MASTER INVESTMENTS LTD.

               

            
	
              PORTSIDE
      GROWTH & OPPORTUNITY FUND

               

            
	
              YA
      GLOBAL INVESTMENTS, L.P. FORMERLY KNOWN AS CORNELL CAPITAL PARTNERS,
      LP

               

            
	
              EVOLUTION
      MASTER FUND LTD. SPC, SEGREGATED PORTFOLIO M

               

            
	
              RADCLIFFE
      SPC, LTD. FOR AND ON BEHALF OF THE CLASS A CONVERTIBLE CROSSOVER
      SEGREGATED PORTFOLIO

               

            
	
              CRANSHIRE
      CAPITAL LP

               

            
	
              CAPITAL
      VENTURES INTERNATIONAL

               

            

    

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    [RELEASE] EXHIBIT
C

    

    ESCROW
AGREEMENT

    

    Escrow
Agreement dated as of November 13, 2007 (the "Agreement Date")
among (i) SCHULTE ROTH &
ZABEL LLP ("SRZ"); (ii) LENDERS that are signatories
hereto (collectively, the "Lenders"); (iii)
EARTH BIOFUELS, INC., a
Delaware Corporation, ("EBOF"); (iv) DENNIS MCLAUGHLIN, ("McLaughlin") an
individual; and (v) entities listed on the SCHEDULE OF EBOF SUBSIDIARIES
attached hereto as Schedule A (individually, a "Subsidiary" and
collectively, the "Subsidiaries"). SRZ,
the Lenders, EBOF, McLaughlin, and the Subsidiaries shall each be referred to
herein as a "Party" and
collectively, the "Parties."

    

    WHEREAS,
EBOF and certain Noteholders2 are parties to a Securities Purchase
Agreement, dated as of July 24, 2006 (the "Securities Purchase
Agreement"), pursuant to which EBOF issued (i) 8% o Senior Convertible
Notes in the aggregate principal amount of $52.5 million, which were unsecured
and convertible into shares of EBOF's common stock at $2.90 per share, and (ii)
warrants to purchase in excess of 9,000,000 shares of common stock of EBOF at
the exercise price of $2.90; and in connection with the Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement under which it agreed
to cooperate in the registration of the securities under the Securities Purchase
Agreement.

    

    WHEREAS,
on July 11, 2007, Radcliffe, Yorkville, Castlerigg, Portside and Evolution
(collectively, the "Petitioning
Creditors") commenced an involuntary bankruptcy proceeding against EBOF
pursuant to Title 11 of the United States Code in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"),
Case No. 07-10928 (CSS) (the "Bankruptcy
Case");

    

    WHEREAS,
pursuant to the Interim Restructuring Agreement dated November 13, 2007 (the
"Interim Restructuring
Agreement"), the parties thereto agreed to execute the Interim
Restructuring Agreement and related exhibits and to place the executed agreement
and related exhibits in escrow with SRZ pending the release condition described
below;

    

    WHEREAS,
pursuant to the Purchase and Sale Agreements, each dated November 13, 2007 (the
"Purchase and Sale
Agreements"), the parties thereto agreed to execute the Purchase and Sale
Agreements and to place each executed agreement in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
pursuant to the Release, dated November 13, 2007 (the "Release") the parties
thereto agreed to execute the Release and to place the executed Release in
escrow with SRZ pending the release condition described below;

    

      

    

      
      2 "Noteholders" shall mean Castlerigg
Master Investments Ltd. ("Castlering"); Radcliffe SPC, Ltd. for and on behalf of
the Class A Convertible Crossover Segregated Portfolio ("Radcliffe"); Cranshire
Capital L.P. ("Cranshire"); and YA Global Investments, L.P. (formerly known as
Cornell Capital, L.P. ("Yorkville")), Portside Growth and opportunity Fund
("Portside"), Capital Ventures International, Evolution Master Fund Ltd. SPC,
Segregated Portfolio M ("Evolution"), and Kings Road Investments
Ltd.

    

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    WHEREAS,
pursuant to the Guaranty by Dennis McLaughlin, dated November 13, 2007 (the
"McLaughlin
Guaranty") the parties thereto agreed to execute the McLaughlin Guaranty
and to place the executed McLaughlin Guaranty in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
pursuant to the Guaranty by the Subsidiaries, dated November 13, 2007 (the
"Subsidiary
Guaranty") the parties thereto agreed to execute the Subsidiary Guaranty
and to place the executed Subsidiary Guaranty in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
pursuant to the Confessions of Judgment, each dated November 13, 2007 (the
"Confessions of
Judgment") EBOF agreed to execute the Confessions of Judgment and to
place the executed Confessions of Judgment in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
SRZ has agreed to serve as escrow agent pursuant to the terms and conditions
hereof and to hold and release the (i) Interim Restructuring Agreement; (ii)
Purchase and Sale Agreements; (iii) Release; (iv) McLaughlin Guaranty; (v)
Subsidiary Guaranty; and (vi) Confessions of Judgment (collectively, the "Escrow Documents") in
accordance with section 3 of this Escrow Agreement.

    

    NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein, the Parties hereto agree as follows:

    

    1.           Appointment of and
Acceptance by SRZ. The Parties hereby appoint SRZ to serve as escrow
agent hereunder. SRZ hereby accepts such appointment and, upon receipt of the
Escrow Documents, agrees to hold and release the Escrow Documents in accordance
with this Escrow Agreement. SRZ does not have any interest in the Escrow
Documents but is serving as escrow agent only and having only possession
thereof.

    

    2.           Delivery of Escrow Documents
to SRZ. Each Party hereto agrees to deliver original versions of the
executed Escrow Documents (applicable to such Party) to SRZ.

    

    3.           Release Conditions.
SRZ shall hold the Escrow Documents until the date that is the earlier of (i) an
order dismissing the Bankruptcy Case (a "Dismissal Order") is
entered on the Bankruptcy Court's docket and such order is not subject to a stay
(the "Dismissal
Date"); and (ii) December 21, 2007. If the Dismissal Date occurs on or
before December 21, 2007 (or such later date as may be agreed in writing by all
Lenders prior to the expiration of such date or dates), the provisions of the
Escrow Documents not already effective shall become effective upon the Dismissal
Date with no further action required by any Party, and SRZ shall release the
Escrow Documents to the respective Parties that are signatories to such
documents. If the Dismissal Date fails to occur on or before December 21, 2007
(or such later date as may be agreed in writing by all Lenders prior to the
expiration of such date or dates) (a "Failure Event"),
then, (a) EBOF shall immediately file a notice of withdrawal of the joint motion
to dismiss the Bankruptcy Case (the "Withdrawal Notice"),
which the Lenders that are Petitioning Creditors hereby authorize upon the
occurrence of a Failure Event (or if EBOF fails to do so, EBOF hereby authorizes
the Lenders that are Petitioning Creditors to do so on EBOF's behalf), and (b)
the Escrow Documents shall be of no further force or effect, and SRZ shall

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

     

    return
the Escrow Documents to the respective Parties that delivered such documents to
SRZ upon entry of the Withdrawal Notice on the docket of the Bankruptcy Court,
provided that a Dismissal Order has not been previously docketed. If the joint
motion to dismiss the Bankruptcy Case is denied, or a Withdrawal Notice is filed
before a Dismissal Order (if any) is entered as provided above, in each case, to
the fullest extent possible each of the Parties shall be restored to the
position it held immediately before the Agreement Date, the Escrow Documents
shall be of no further force or effect, and SRZ shall return the Escrow
Documents to the respective Parties that delivered such documents to
SRZ.

    

    4.           Termination of Purchase and
Sale Agreement. If any Purchase and Sale Agreement terminates prior to
the Dismissal Date in accordance with section 2(c) thereof, such Purchase and
Sale Agreement shall be null, void and of no further force and effect, and SRZ
shall return such Purchase and Sale Agreement and the related Release to the
parties that delivered such documents to SRZ.

    

    5.           Duties and Responsibilities
of SRZ. The Parties acknowledge and agree that SRZ (i) shall be obligated
only for the performance of such duties as are specifically set forth in this
Escrow Agreement; (ii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by it to
be genuine and to have been signed or presented by the proper person, and shall
have no responsibility for determining the accuracy thereof.

    

    6.           Exculpation and
Indemnification. SRZ shall not be liable for, and each Party, shall
jointly and severally indemnify and hold SRZ harmless from and against, any and
all losses, liabilities, claims, actions, damages and expenses, including
attorneys' fees and disbursements, arising out of or in connection with this
Escrow Agreement. This section shall survive termination of this Escrow
Agreement.

    

    7.           Termination. This
Escrow Agreement shall continue in effect until the earlier of the following to
occur: (i) all Escrow Documents are released, or (ii) December 21, 2007, unless
such date is extended in writing by all Lenders.

    

    8.           Notices. Any written
notice required to be given under this Escrow Agreement shall be sent to the
following by mail, electronic mail or facsimile, and shall be deemed given upon
such mailing and sending by facsimile:

    

    If to
SRZ:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq. (david.hillman@srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    

    If to
EBOF, Dennis McLaughlin, or the Subsidiaries:

    

    3001 Knox
Street, Suite 403

    Dallas,
Texas 75205

    Telephone:                                (214)
389-9800

    Facsimile:                                (214)
389-9805

    Attention:
Dennis McLaughlin

    

    with a
copy to:

    

    Akin Gump
Strauss Hauer & Feld LLP

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Telephone:                                (214)
969-4710

    Facsimile:                                (214)
969-4343

    Attention:
Charles R. Gibbs, Esq.

    

    If to
Castlerigg (the extent a signatory hereto):

    

    40 West
57th Street

    26th
Floor

    New York,
New York 10019

    Telephone:                                (212)
603-5700

    Facsimile:                                (212)
603-5710

    Attention:                                Cem
Hacioglu (chacioglu@sandellmgmt.com)

    Matthew
Pliskin (mpliskin@sandellmgmt.com)

    

    with a
copy to:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq.(david.hillman@srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

    

    If to
Radcliffe (the extent a signatory hereto):

    

    c/o RG
Capital Management, L.P.

    3 Bala
Plaza East, Suite 501

    Bala
Cynwyd, PA 19004

    Telephone:                                (610)
617-5911

    Facsimile:                                (610)
617-0570

    Attention:                                Gerald
F. Stahlecker

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    (gstahlecker@radcliffefunds.com)

    

    with a
copy to:

    

    Wilmer
Cutler Pickering Hale and Dorr LLP

    399 Park
Avenue

    New York,
New York 10022

    Telephone:                                (212)
230-8800

    Facsimile:                                (212)
230-8888

    Attention:
Philip D. Anker, Esq. (Philip.Anker@wilmerhale.com)

    

    If to
Yorkville (the extent a signatory hereto):

    

    101
Hudson Street, Suite 3700

    Jersey
City, New Jersey 07303

    Attention:
Eric Hansen, Esq.

    (ehansen@yorkvilleadvisors.com)

    

    with a
copy to:

    

    Baker
Botts L.L.P.

    2001 Ross
Avenue

    Dallas,
Texas 75201

    Telephone:                                (214)
953-6571

    Facsimile:                                (214)
953-6503

    Attention:
C. Luckey McDowell, Esq.

    (luckey.mcdowell@bakerbotts.com)

    

    If to
Cranshire (the extent a signatory hereto):

    

    Greenberg
Traurig LLP

    77 W.
Wacker Dr., Suite 2500

    Chicago,
Illinois 60601

    Telephone:                                (312)
456-8448

    Facsimile:                                (312)
456-8435

    Attention:                                Todd
Mazur, Esq.- (mazurt@gtlaw.com)

    Peter
Lieberman (liebermanp@gtlaw.com)

    

    If to
Evolution (the extent a signatory hereto):

    

    c/o
Evolution Capital Management LLC

    2425
Olympic Boulevard, Suite 120E

    Santa
Monica, California 90404

    Telephone:                                (310)
315-8866

    Attention:                                Brian
S. Yeh (brian.yeh@evoftind.com)

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    with a
copy to:

    

    Cadwalader,
Wickersham & Taft LLP

    One World
Financial Center

    New York,
New York 10281

    Telephone:                                (212)
504-6373

    Facsimile:                                (212)
504-6666

    Attention:                                Gregory
M. Petrick, Esq.

    (gregory.petrick@cwt.com)

    

    If to
Kings Road (the extent a signatory hereto):

    

    c/o
Polygon Investment Partners LP

    598
Madison Avenue, 14th Floor

    New York,
New York 10022

    Telephone:                                (212)
359-7300

    Facsimile:                                (212)
359-7303

    Attention:                                Erik
M.W. Casperson

    (ecaspersen@polygoninv.com)

    Brandon
L. Jones (bjones@polygoninv.com)

    

    with a
copy to:

    

    Latham
& Watkins LLP

    633 West
Fifth Street, Suite 4000

    Los
Angeles, California 90071

    Telephone:                                (213)
485-1234

    Facsimile:                                (213)
891-8763

    Attention:                                Russell
Sauer, Esq. (russ.sauer@lw.com)

    

    If to CVI
(the extent a signatory hereto):

    

    c/o
Heights Capital Management

    101
California Street, Suite 3250

    San
Francisco, California 94111

    Telephone:                                (415)
403-651.0

    Facsimile:                                (610)
617-3896

    Attention:                                Michael
Spolan (Michael.Spolan@sig.com)

    

    with a
copy to:

    

    Klehr,
Harrison, Harvey, Branzburg & Ellers, LLP

    919
Market Street, Suite 1000

    Wilmington,
Delaware 19801

    Telephone:                                (302)
426-1189

    Facsimile:                                (302)
426-9193

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    Attention:                                Richard
M. Beck, Esq. (rbeck@klehr.com)

    

    If to
Portside (the extent a signatory hereto):

    

    c/o
Ramius Capital Group, L.L.C.

    666 Third
Avenue, 26th Floor

    New York,
New York 10017

    Telephone:                                (212)
845-7955

    Facsimile:                                (212)
201-4802

    Attention:                                Jeffrey
Smith Osmith@ramius.com)

    Peter
Feld (pfeld@ramius.com)

    Owen
Littman (olittman@ramius.com)

    

    with a
copy to:

    

    Hennigan,
Bennett & Dorman

    601 South
Figueroa Street, Suite 3300

    Los
Angeles, California 90017

    Telephone:                                (213)
694-1012

    Facsimile:                                (213)
694-1234

    Attention:                                Bruce
Bennett, Esq. (bennettb@hbdlawyers.com)

    

    9.           Governing Law. Jurisdiction.
Jury
Trial.          All
questions concerning the construction, validity, enforcement and interpretation
of this Escrow Agreement shall be governed by the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdiction other than the
State of New York. The Parties hereby irrevocably submit to the exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waive, and agree not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum o_r that the venue of such suit, action or proceeding
is improper. ' The Parties hereby irrevocably waive personal service of process
and consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such Party at the address for such notices to it under
this Escrow Agreement and agree that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS ESCROW AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    10.           Counterparts. This
Escrow Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

    

    11.           Headings. Section
headings are for convenience of reference only and shall in no way affect the
interpretation of this Escrow Agreement.

    

    12.           Recitals. The recital
and introductory paragraphs hereof are a part hereof, form a basis for this
Escrow Agreement and shall be. considered prima facie evidence of the facts and
documents referred to therein.

    

    13.           Effective Date. This
Escrow Agreement shall be effective as of the date first mentioned
above.

    

    

    

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Parties to this Escrow Agreement have caused their
respective signature page to this Escrow Agreement to be duly executed as of the
date first written above.

    

    Earth
Biofuels,
Inc.                                                                                     Castlerigg
Master Investments Ltd.

    By: Sandell Asset Management
Corp.

    

    By:  _____________________________

    By: /s/ Dennis
McLaughlin                                                                           Name:

    Name:  Dennis
McLaughlin                                                                                     Title:

    Title: CEO

    

    Evolution
Master Fund. SPC,
Segregated                                                                                                Capital
Ventures International

    Portfolio
M                                                                                     By:           Heights
Capital Management, Inc.

    its authorized agent

    

    By:
____________________________                                                                                                By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Radcliffe
SPC, Ltd. for and on behalf of
the                                                                                                           YA
Global Investments, L.P. (formerly,

    Class A
Convertible Crossover
Segregated                                                                                                Cornell
Capital Partners, LP

    Portfolio                                                                           By:           Yorkville
Advisors, LLC

    By:           RG
Capital Management
Company,                                                                                     Its:           General
Partner

    L.P.

    By:           RGC
Management Company, LLC

    

    By:
_______________________________                                                                                                           By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Cranshire
Capital,
LP                                                                                                Portside
Growth and Opportunity Fund

    

    By:
________________________________                                                                                                           By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Kings
Road Investments Ltd.

    

    By:
________________________________

    Name:

    Title:

    

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties to this Agreement have caused their respective
signature page to this Interim Restructuring Agreement to be duly executed as of
the date first written above.

    

    
 

    Name

    

    Signature

    

    Address

    

    

    STATE OF
TEXAS )

    ) ss.

    COUNTY OF
DALLAS )

    

    BEFORE ME,  the duly
undersigned authority, on this day personally appeared DENNIS MCLAUGHLIN, known
to me to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed, and in the capacity therein stated.

    

    Given under my hand and seal of office,
this ___ day of _______, 2007.

    

    

    (Seal)                                                                                     Notary
Public, State of Texas

    

    (Notary’s Name Typed or
Printed)

    My
Commission Expires:

               IN
WITNESS WHEREOF, the parties to this Agreement have caused their respective
signature page to this Interim Restructuring Agreement to be duly executed as of
the date first written above.

    

    Earth
LNG,
Inc.                                                                                     Earth
Biofuels Technology Co, LLC

    d/b/a Advanced Biofuels Technology,
LLC

    

    By:                                                                By:                                                                

    Name:                                                                           Name:

    Title:                                                                                     Title:

    

    Applied
LNG Technologies USA,
LLC                                                                                                Earth
Biofuels Distribution Co.

    

    By:                                                                By:                                                                

    Name:                                                                           Name:

    Title:                                                                                     Title:

    

    Alternative
Dual Fuels,
Inc.                                                                                                Earth
Biofuels of Cordele, LLC

    d/b/a
Apollo Leasing, Inc.

    

    By:                                                                By:                                                                

    Name:                                                                           Name:

    Title:                                                                                     Title:

    

    Arizona
LNG,
LLC                                                                                     B20
Customs, LLC

    

    By:                                                                By:                                                                

    Name:                                                                           Name:

    Title:                                                                                     Title:

    

    Fleet
Star,
Inc.                                                                                     Earth
Biofuels Operating, Inc.

    

    By:                                                                By:                                                                

    Name:                                                                           Name:

    Title:                                                                                     Title:

    

    Durant
Biofuels,
LLC                                                                                                Earth
Biofuels Retail Fuels, Co.

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

    Earth
Ethanol of Washington,
LLC                                                                                                Earth
Ethanol, Inc.

    

    By:                                                                By:                                                                

    Name:                                                                           Name:

    Title:                                                                                     Title:

    

    
      
         

      

      
        37

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties to this
Escrow Agreement have caused their respective signature page to this Escrow
Agreement to be duly executed as of the date first written above.

    

    SCHULTE ROTH & ZABEL,
LLP

    In its capacity as escrow
agent

    

    

    By:

    Title:

    [ESCROW] EXHIBIT
A

    

    SCHEDULE OF EBOF
SUBSIDIARIES

    

    

    
      	
              Subsidiary

            
	 
      
	
              Earth
      LNG, Inc.

            
	 
      
	
              Applied
      LNG Technologies USA, LLC

            
	 
      
	
              Alternative
      Dual Fuels, Inc.

            
	
              d/b/a
      Apollo Leasing, Inc.

            
	 
      
	
              Arizona
      LNG, LLC

            
	 
      
	
              Fleet
      Star, Inc.

            
	 
      
	
              Durant
      Biofuels, LLC

            
	 
      
	
              Earth
      Biofuels Technology Co., LLC

            
	
              d/b/a
      Advanced Biofuels Technology, LLC

            
	 
      
	
              Earth
      Biofuels Distribution Co.

            
	 
      
	
              Earth
      Biofuels of Cordele, LLC

            
	 
      
	
              B20
      Customs, LLC

            
	 
      
	
              Earth
      Biofuels Operating, Inc.

            
	 
      
	
              Earth
      Biofuels Retail Fuels, Co.

            
	 
      
	
              Earth
      Ethanol, Inc.

            
	 
      
	
              Earth
      Ethanol of Washington, LLC

            

    

    

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    MCLAUGHLIN
GUARANTY

    EXECUTION
VERSION

    

    GUARANTY
AGREEMENT

    

    THIS
GUARANTY AGREEMENT (the "Guaranty") is
executed as of November 13, 2007, by Dennis McLaughlin (the "Guarantor"), for the
ratable benefit of the lenders listed that are signatories hereto (collectively,
the "Lenders").

    

    W I T N E S S E T
H:

    

    WHEREAS,
Radcliffe SPC, Ltd. for and on behalf of the Class A Convertible Crossover
Segregated Portfolio ("Radcliffe"),
Castlerigg Master Investments Ltd. ("Castlerigg"), and
Capital Ventures International ("CVI"; collectively, the "Initial Bridge
Lenders") are parties to a Securities Purchase Agreement, dated as of
June 7, 2006 (the "Initial Bridge Securities
Purchase Agreement") with
Earth Bioftiels, Inc. ("EBOF"), pursuant to
which EBOF issued, among other things, warrants to purchase 1,500,000 shares of
common stock, $0.001 par value (the "Common Stock"), of EBOF at
the exercise price of $2.93 (the "Initial Bridge
Warrants") and in connection with the Initial Bridge Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement: (the "Initial Bridge Registration
Rights Agreement," collectively with the Initial Bridge Securities
Purchase Agreement and the Initial Bridge Warrants, the "Initial Bridge Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Initial Bridge Securities Purchase Agreement;

    

    WHEREAS,
Castlerigg (the "Second Bridge
Lender") is a party to a Securities Purchase Agreement, dated as of July
10, 2006 (the "Second
Bridge Securities Purchase Agreement") with EBOF, pursuant to which EBOF
issued, among other things, warrants to purchase 1,500,000 shares of Common
Stock at the exercise price of $2.50 (the "Second Bridge
Warrants") and in connection with the Second Bridge Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement (the "Second Bridge Registration
Rights Agreement," collectively with the Second Bridge Securities
Purchase Agreement, Second Bridge Warrants, the "Second Bridge Transaction
Documents") under which it agreed, to cooperate in the registration of
the securities under the Second Bridge Securities Purchase
Agreement;

    

    WHEREAS,
Radcliffe, Castlerigg, CVI, YA Global Investments, L.P. (formerly known as
Cornell Capital, L.P. ("Yorkville")),
Cranshire Capital L.P. ("Cranshire"), Portside
Growth

    and
Opportunity Fund ("Portside"), Evolution
Master Fund Ltd. SPC, Segregated Portfolio. M ("Evolution"), and
Kings Road Investments Ltd. ("Kings Road"; collectively,
the "Noteholders") are
parties to a Securities Purchase Agreement, dated as of July 24, 2006 (the
"Securities
Purchase
Agreement") with EBOF, pursuant to which EBOF issued (i) 8% Senior
Convertible Notes (collectively, the "Notes") in the
aggregate principal amount of $52.5 million, which were unsecured and
convertible into shares of Common Stock at $2.90 per share, and (ii) warrants to
purchase in excess of 9,000,000 shares of common stock of EBOF at the exercise
price of $2.90 (the "Warrants") and in
connection with the Securities Purchase Agreement, EBOF executed a. Registration
Rights Agreement (the "Registration Rights
Agreement," collectively with the Initial Bridge Transaction Documents,
the Second Bridge Transaction 

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

    Documents,
the Securities Purchase Agreement, Notes, and Warrants, the "Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Securities Purchase Agreement;

    

    WHEREAS,
certain Noteholders individually delivered an Event of Default Redemption Notice
to EBOF identifying various events of default under the Notes and demanding that
EBOF redeem the Noteholders' interest in the Notes at the so-called Event of
Default Redemption Price, and EBOF failed to remit the Event of Default
Redemption Price;

    

    WHEREAS,
Guarantor acknowledges that Events of Default (as defined in the Transaction
Documents) have occurred and are continuing;

    

    WHEREAS,
EBOF and Guarantor acknowledge that the aggregate amount of the outstanding
amount due and owing to the Noteholders is $100,651,173.00 (as of September 28,
2007), plus fees, costs, and expenses, and such amount is payable to the
Noteholders without setoff, counterclaim, deduction, offset or defense (the
"Total
Debt");

    

    WHEREAS,
on July 11, 2007, Radcliffe, Yorkville, Portside, Castlerigg and Evolution
commenced an involuntary bankruptcy proceeding against EBOF pursuant to Title 11
of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of Delaware, Case No.
07-10928 (CSS) (the "Bankruptcy
Case");

    

    WHEREAS,
EBOF wishes to explore the possibility of restructuring and modifying the
existing rights and obligations under the Transaction Documents with the
Noteholders through one or more definitive documents to be negotiated during the
course of the next 6 to 12 months (the "Restructuring
Transaction");

    

    WHEREAS,
at EBOF's request, the Lenders are willing, subject to and on the terms and
conditions set forth in the Interim Restructuring Agreement (as defined below)
and in the documents to be executed in connection therewith, to forbear from
exercising rights and remedies under the Transaction Documents and to consent to
dismissal of the Bankruptcy Case in exchange for the terms hereof and of the
Interim Restructuring Agreement and the other documents to be executed in
connection therewith;

    

    WHEREAS,
pursuant to the Interim Restructuring Agreement, dated November 13, 2007 (the
"Interim Restructuring
Agreement"), EBOF has, among other things, executed confessions of
judgment (the "Confessions of
Judgment"), which shall not be filed until the occurrence of certain
events specified in the Interim Restructuring Agreement;

    

    WHEREAS,
to facilitate a consensual restructuring Guarantor has agreed to guarantee a
portion of the Total Debt for the ratable benefit of the Lenders;

    

    WHEREAS,
Guarantor is the owner of direct or indirect interests in EBOF and EBOF's
subsidiaries (the "Subsidiaries") (as
the case may be), and Guarantor will directly benefit from the restructuring
negotiations.

    
      
         

      

      
        40

        
          

        

      

      
         

      

    

    NOW,
THEREFORE, as an inducement to the Lenders to negotiate a restructuring, and for
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties do hereby agree as
follows:

    

    ARTICLE
I

    

    NATURE
AND SCOPE OF GUARANTY

    

    Section
1.1         Guaranty of
Debt.                  Guarantor
hereby irrevocably and unconditionally guarantees for the ratable benefit3 of each Lender the prompt payment of each such
Lender's Pro Rata Share of the Total Debt in the maximum aggregate amount of
$7,000,000.00 (the "Maximum Guaranty Amount"), which shall be immediately due
and payable upon demand after the occurrence of a Trigger Event (as defined
below).

    

    Section
1.2          Guaranty Reduction.
Subject to the limitation set forth below, the Maximum Guaranty Amount shall be
reduced by $500,000 for each $1,000,000 of cash or non-cash
consideration distributed from and after the date hereof to the Lenders in
satisfaction of the Total Debt, provided that the Lenders holding 66%% of the
aggregate face amount of the Notes then outstanding (the "Required Lenders")
shall determine the value of all non-cash consideration in good faith and in
their sole discretion. The foregoing reduction in the Maximum Guaranty Amount
shall not apply if any of the following events occurs (each a "Trigger
Event"):

    

    (a)           prior
to the Restructuring Consummation Deadline. (as defined in section 1.2(e)
below), either (x) an order for relief is entered in a case under the Bankruptcy
Code with respect to McLaughlin, EBOF, or any Subsidiary, or (y) an involuntary
bankruptcy petition is filed against EBOF or any Subsidiary and such petition is
not dismissed on or. before sixty (60) days after the date such petition is
filed;

    

    (b)           failure
of EBOF to execute security documents (in form and substance acceptable to
the Required Lenders, as determined by the Required Lenders in their sole
discretion) sufficient to provide the Lenders with liens, subject only to any
then-valid existing liens, on all of EBOF's assets to secure EBOF's obligations
under the Confessions of Judgment and/or the Transaction Documents on or. before
ten (10) days after the date that, the order dismissing the Bankruptcy Case is
entered on the docket4;

    

    (c)           failure
of all of the Subsidiaries to execute security documents (in form and substance
acceptable to the Required Lenders as determined by the Required

    

      

    

      
      3 The
ratable benefit will be determined by calculating the Lender's pro rata share
("Pro Rata
Share"), which means the ratio determined by dividing (x) the face amount
of the Notes then held by such Lender by (y) the face amount of Notes then held
by all Lenders.

    

      
      4 The date
that the order dismissing the Bankruptcy Case is entered on the docket and such
order is not subject to any stay shall be referred to herein as the "Dismissal
Date."

    

    
      
         

      

      
        41

        
          

        

      

      
         

      

    

    Lenders
in their sole discretion), in favor of the Lenders, subject only to any
then-valid existing liens,

    

    securing
their respective obligations under the guaranty by the Subsidiaries on or before
ten (10) days after the Dismissal Date;

    

    (d)           failure
of EBOF and Subsidiaries to execute a term sheet with the material terms of a
restructuring (in form and substance acceptable to the Required Lenders in their
sole discretion) (the "Restructuring Term
Sheet") on or before thirty (30) days after the Dismissal
Date;

    

    (e)           failure
of EBOF and Subsidiaries to consummate the transactions contemplated in the
Restructuring Term Sheet fully (as determined by the Required Lenders in their
reasonable discretion) on or before one hundred and twenty (120) days after the
Dismissal Date (the "Restructuring Consummation
Deadline");

    

    (f)           any
action is commenced to void, avoid, invalidate, subordinate, recharacterize,
reduce or recover (in whole or in part) any or all of the Release, this
Guaranty, the Noteholders' claims against EBOF, the Confessions of Judgment, the
Subsidiary Guaranty (each as described in the Interim Restructuring Agreement
and collectively, the "Collateral
Documents"), any claim of any of the Lenders under any of the Notes or
any of the other Transaction Documents, any lien granted to secure any such
'claim or obligation under any of the Collateral Documents or any of the
Transaction Documents (including, without limitation, the actions described in
sections 5 (b) and (c) of the Interim Restructuring Agreement), or any payment
made in respect of any such claim or obligation; or (g) EBOF or any Subsidiary
grants or permits to exist any lien not in existence as of the date of this
Guaranty on any of its assets.

    

    Section
1.3                                Elimination of
Guaranty. If EBOF and its Subsidiaries fully consummate the transactions
contemplated in the Restructuring Term Sheet (as determined by the Required
Lenders in their reasonable discretion) on or before the Restructuring
Consummation Deadline, this Guaranty shall terminate and no longer be of any
force and effect unless there is any action commenced seeking to void, avoid,
invalidate, subordinate, recharacterize, reduce or recover (in whole or in part)
any such transactions or any lien granted to secure, or any payment made on, any
obligation owing to the Lenders in connection with any such transactions, any of
the Transaction Documents, or any of the Collateral Documents.

    

    Section
1.4                                Nature of Guaranty.
This Guaranty is an irrevocable, absolute, continuing guaranty of payment and
performance and not a guaranty of collection. This Guaranty shall not be
discharged by the assignment or negotiation of all or part of the
Notes.

    

    Section
1.5                                Guaranteed Obligations Not
Reduced by Offset. The Guaranty and obligations of the Guarantor to the
Lenders shall not be reduced, discharged or released because or by reason of any
existing 

    
      
         

      

      
        42

        
          

        

      

      
         

      

    

    or future
offset, claim or defense of EBOF or any of its Subsidiaries, or any other party,
against the Lenders.

    

    Section
1.6                                Payment By Guarantor.
If all or any part of the obligations under this Guaranty shall not be
punctually paid when due, the Guarantor shall, immediately upon demand by the
Lenders pay in lawful money of the United States of America, the amounts due to
the Lenders at the addresses as set forth herein for the Lenders. Such demand
shall be deemed made, given and received in accordance with the notice
provisions hereof.

    

    Section
1.7                                No Duty To Pursue
Others. It.shall not be necessary for the Lenders (and the Guarantor
hereby waives any rights that the Guarantor may have to require the Lenders), in
order to enforce the obligations of the Guarantor hereunder, first to (a)
institute suit or exhaust its remedies against EBOF or any Subsidiary or others
liable under the Transaction Documents or the Confessions of Judgment or any
other person, (b) enforce the Lenders' rights against any collateral which shall
ever have been given to secure any of the obligations of EBOF or its
Subsidiaries, (c) enforce the Lenders' rights against any other guarantors, (d)
join EBOF or its Subsidiaries or any others liable on the Total Debt in any
action seeking to enforce this Guaranty, or (f) resort to any other means of
obtaining payment of the Total Debt. The Lenders shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Total Debt.

    

    Section
1.8                                Payment of Expenses.
In the event that the Guarantor should breach or fail to timely perform any
provision of this Guaranty, the Guarantor shall, immediately upon demand by the
Lenders, pay the Lenders all reasonable out-of-pocket costs and expenses
(including court costs and attorneys' fees) incurred by the Lenders in the
enforcement hereof or the preservation of the Lenders' rights
hereunder.

    

    Section
1.9                                Effect of Bankruptcy.
In the event that, pursuant to any insolvency, bankruptcy, reorganization,
receivership or other debtor relief law, or any judgment, order or decision
thereunder, the Lenders must rescind or restore any payment, or any part
thereof, received by the Lenders in satisfaction of the obligations hereunder,
any prior release or discharge from the terms of this Guaranty given to the
Guarantor by the Lenders shall be without effect, and this Guaranty shall remain
in full force and effect. It is the intention of the Guarantor that the
Guarantor's obligations hereunder shall not be discharged except by the
Guarantor's indefeasible payment of such obligations and then only to the extent
of such performance.

    

    Section
1.10                                Waiver of Subrogation.
Reimbursement and Contribution. Notwithstanding anything to the contrary
contained in this Guaranty, Guarantor hereby unconditionally and irrevocably
waives, releases and abrogates any and all rights it may now or hereafter have
under any agreement, at law or in equity (including, without limitation, any law
subrogating the Guarantor to the rights of the Lenders), to assert any claim
against or seek contribution, indemnification or any other form of reimbursement
from EBOF, its Subsidiaries, or any other party liable for payment of any or all
of the Total Debt for any payment made by Guarantor under or in connection with
this Guaranty or otherwise.

    

    ARTICLE
II

    
      
         

      

      
        43

        
          

        

      

      
         

      

    

    EVENTS
AND CIRCUMSTANCES NOT REDUCING

    OR
DISCHARGING GUARANTOR'S OBLIGATIONS

    

    Guarantor
hereby consents and agrees to each of the following, and agrees that Guarantor's
obligations under this Guaranty shall not be released, diminished, impaired,
reduced or adversely affected by any of the following, and waives any common
law, equitable, statutory or other rights (including without limitation rights
to notice) except as otherwise expressly provided herein which Guarantor might
otherwise have as a result of or in connection with any of the
following:

    

    Section
2.1                                Modifications. Any
renewal, extension, increase, modification, alteration or rearrangement of all
or any part of the Total Debt under the Transaction Documents.

    

    Section
2.2                                Adjustment. Any
adjustment, indulgence, forbearance or compromise that might be granted or given
by the Lenders to EBOF.

    

    Section
2.3                                Condition of EB.OF.
Subsidiaries, or Guarantor. The insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability, dissolution or lack of power
of EBOF or any Subsidiary or any other party at any time liable for the payment
of all or part of the Total Debt; or any dissolution of EBOF or any Subsidiary,
or any sale, lease or transfer of any or all of the assets of EBOF or any
Subsidiary, or any changes in the shareholders, partners or members of EBOF or
any Subsidiary; or any reorganization of EBOF, any Subsidiary, or the
Guarantor.

    

    Section
2.4                                Invalidity of Guaranteed
Obligations. The invalidity, illegality or unenforceability of all or any
part of the' Total Debt, or any document or agreement executed in connection
with the Total Debt, for any reason whatsoever is illegal, uncollectible or
unenforceable.

    

    Section
2.5                                Release of Obligors.
Any full or partial release of the liability of EBOF or any Subsidiary on the
Total Debt or any part thereof, or of any co-guarantors, or any other person or
entity now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Total Debt, or any part thereof.

    

    Section
2.6                                Other Collateral. The
taking or accepting of any other security, collateral or guaranty, or other
assurance of payment, for all or any part of the Total Debt.

    

    Section
2.7                                Offset. Any existing
or future right of offset, claim or defense of EBOF or any Subsidiary against
the Lenders, or any other person, or against payment of the Total Debt, whether
such right of offset, claim or defense arises in connection with the Total Debt
or otherwise.

    

    Section
2.8                                Merger. The
reorganization, merger or consolidation of EBOF or any Subsidiary into or with
any other corporation or entity.

    
      
         

      

      
        44

        
          

        

      

      
         

      

    

    Section
2.9                                Preference. Any
payment by EBOF or any Subsidiary to the Lenders is held to constitute a
preference under bankruptcy laws, or for any reason the Lenders are required to
refund such payment or pay such amount to EBOF or any Subsidiary or someone
else.

    

    ARTICLE
III

    

    REPRESENTATIONS
AND WARRANTIES

    

    To induce
Lenders to negotiate a restructuring of the Total Debt, Guarantor represents and
warrants to the Lenders as follows:

    

    Section
3.1                                Benefit. Guarantor is
the owner of direct and indirect interests in EBOF and the Subsidiaries, and has
received, or will receive, direct and indirect benefits from the making of this
Guaranty.

    

    Section
3.2                                Familiarity and
Reliance. Guarantor is familiar with, and has independently reviewed
books and records regarding, the financial condition of EBOF and its
Subsidiaries; however, Guarantor is not relying on such financial condition as
an inducement to enter into this Guaranty.

    

    Section
3.3                                No Representation By
Lenders. None of the Lenders, or any other party has made any
representation, warranty or statement to the Guarantor in order to induce the
Guarantor to execute this Guaranty.

    

    Section
3.4                                Guarantor's Financial
Condition. As of the date hereof, and after giving effect to this
Guaranty and the contingent obligation evidenced hereby, Guarantor, is, and will
be, solvent, and has and will have assets which, fairly valued, exceed its
obligations, liabilities (including contingent liabilities) and debts, and has
and will have property and assets sufficient to satisfy and repay its
obligations and liabilities.

    

    Section
3.5                                Legality. The
execution, delivery and performance by Guarantor of this Guaranty and the
consummation of the transactions contemplated hereunder do not, and will not,
contravene or conflict with any law, statute or regulation whatsoever to which
Guarantor is subject or constitute a default (or an event which with notice or
lapse of time or both would constitute a default) under, or result in the breach
of, any indenture, mortgage, deed of trust, charge, lien, or any contract,
agreement or other instrument to which Guarantor is a party or which may be
applicable to Guarantor. This Guaranty is a legal and binding obligation of
Guarantor and is enforceable in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors' rights.

    

    Section
3.6                                Survival. All
representations and warranties made by Guarantor herein shall survive the
execution hereof.

    

    ARTICLE
IV

    

    MISCELLANEOUS

    
      
         

      

      
        45

        
          

        

      

      
         

      

    

    

    Section
4.1                                Effective Date. This
Guaranty shall be placed into escrow pursuant to an escrow agreement (the form
of which is attached hereto as Exhibit A) and shall be released from escrow and
become effective as of the Dismissal Date.

    

    Section
4.2                                Waiver. No failure to
exercise, and no delay in exercising, on the part of the Lenders, any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right. The rights of the Lenders hereunder shall be in addition to
all other rights provided by law. No modification or waiver of any provision of
this Guaranty, nor consent to departure therefrom, shall be effective unless in
writing and no such consent or waiver shall extend beyond the particular case
and purpose involved. No notice or demand given in any case shall constitute a
waiver of the right to take other action in the same, similar or other instances
without such notice or demand.

    

    (a)           Notices. Any written
notice required to be given under this Guaranty shall be sent to the following
by mail, electronic mail or facsimile, and shall be deemed given upon such
mailing and sending by facsimile:

    

    If to
EBOF, Dennis. McLaughlin, or the Subsidiaries:

    

    3001 Knox
Street, Suite 403

    Dallas,
Texas 75205

    Telephone:                                (214)
389-9800

    Facsimile:                                (214)
389-9805

    Attention:
Dennis McLaughlin

    

    with a
copy to:

    

    Akin Gump
Strauss Hauer & Feld LLP

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Telephone:                                (214)
969-4710

    Facsimile:                                (214)
969-4343

    Attention:.
Charles R. Gibbs, Esq.

    

    If to
Castlerigg (to the extent a signatory hereto):

    

    40 West
57th Street

    26th
Floor

    New York,
New York 10019

    Telephone:                                (212)
603-5700

    Facsimile:                                (212)
603-5710

    Attention:                                Cem
Hacioglu (chacioglu@sandellmgmt.com)'

    Matthew
Pliskin (mpliskin@sandellmgmt.com)

    
      
         

      

      
        46

        
          

        

      

      
         

      

    

    with a
copy to:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq.(david.hillman@srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

    

    If to
Radcliffe (to the extent a signatory hereto):

    

    c/o RG
Capital Management, L.P.

    3 Bala
Plaza East, Suite 501

    Bala
Cynwyd, PA 19004

    Telephone:                                (610)
617-5911

    Facsimile:                                (610)
617-0570

    Attention:                                Gerald
F. Stahlecker

    (gstahlecker@radcliffefunds.com)

    

    with a
copy to:

    

    Wilmer
Cutler Pickering Hale and Dorr LLP

    399 Park
Avenue

    New York,
New York 10022

    Telephone:                                (212)
230-8800

    Facsimile:                                (212)
230-8888

    Attention:
Philip D. Anker, Esq. (Philip.Anker@wilmerhale.com)

    

    If to
Yorkville (to the extent a signatory hereto):

    

    101
Hudson Street, Suite 3700

    Jersey
City, New Jersey 07303

    Attention:
Eric Hansen, Esq.

    (ehansen@yorkvilleadvisors.com)

    

    with a
copy to:

    

    Baker
Botts L.L.P.

    2001 Ross
Avenue

    Dallas,
Texas 75201

    Telephone:                                (214)
953-6571

    Facsimile:                                (214)
953-6503

    Attention:
C. Luckey McDowell, Esq.

    (luckey.mcdowell@bakerbotts.com)

    
      
         

      

      
        47

        
          

        

      

      
         

      

    

    If to
Cranshire (to the extent a signatory hereto

    

    Greenberg
Traurig LLP

    77 W.
Wacker Dr., Suite 2500

    Chicago,
Illinois 60601

    Telephone:                                (312)
456-8448

    Facsimile:                                (312)
456-8435

    Attention:                                Todd
Mazur, Esq.- (mazurt@gtlaw.com)

    Peter
Lieberman (liebermanp@gtlaw.com)

    

    If to
Evolution (the extent it executes this Agreement):

    

    c/o
Evolution Capital Management LLC

    2425
Olympic Boulevard, Suite 120E

    Santa
Monica, California 90404

    Telephone:                                (310)
315-8866

    Attention:                                Brian
S. Yeh (brian.yeh@evoftind.com)

    

    with a
copy to:

    

    Cadwalader,
Wickersham & Taft LLP

    One World
Financial Center

    New York,
New York 10281

    Telephone:                                (212)
504-6373

    Facsimile:                                (212)
504-6666

    Attention:                                Gregory
M. Petrick, Esq.

    (gregory.petrick@cwt.com)

    

    If to
Kings Road (the .extent it executes this Agreement):

    

    c/o
Polygon Investment Partners LP

    598
Madison Avenue, 14th Floor

    New York,
New York 10022

    Telephone:                                (212)
359-7300

    Facsimile:                                (212)
359-7303

    Attention:                                Erik
M.W. Casperson

    (ecaspersen@polygoninv.com)

    Brandon
L. Jones (bjones@polygoninv.com)

    

    with a
copy to:

    

    Latham
& Watkins LLP

    633 West
Fifth Street, Suite 4000

    Los
Angeles, California 90071

    Telephone:                                (213)
485-1234

    Facsimile:                                (213)
891-8763

    
      
         

      

      
        48

        
          

        

      

      
         

      

    

    Attention:                                Russell
Sauer, Esq. (russ.sauer@lw.com)

    

    If to CVI
(the extent it executes this Agreement):

    

    c/o
Heights Capital Management

    101
California Street, Suite 3250

    San
Francisco, California 94111

    Telephone:                                (415)
403-651.0

    Facsimile:                                (610)
617-3896

    Attention:                                Michael
Spolan (Michael.Spolan@sig.com)

    

    with a
copy to:

    

    Klehr,
Harrison, Harvey, Branzburg & Ellers, LLP

    919
Market Street, Suite 1000

    Wilmington,
Delaware 19801

    Telephone:                                (302)
426-1189

    Facsimile:                                (302)
426-9193

    Attention:                                Richard
M. Beck, Esq. (rbeck@klehr.com)

    

    If to
Portside (the extent it executes this Agreement):

    

    c/o
Ramius Capital Group, L.L.C.

    666 Third
Avenue, 26th Floor

    New York,
New York 10017

    Telephone:                                (212)
845-7955

    Facsimile:                                (212)
201-4802

    Attention:                                Jeffrey
Smith Osmith@ramius.com)

    Peter
Feld (pfeld@ramius.com)

    Owen
Littman (olittman@ramius.com)

    

    with a
copy to:

    

    Hennigan,
Bennett & Dorman

    601 South
Figueroa Street, Suite 3300

    Los
Angeles, California 90017

    Telephone:                                (213)
694-1012

    Facsimile:                                (213)
694-1234

    Attention:                                Bruce
Bennett, Esq. (bennettb@hbdlawyers.com)

    

    Section
4.3                                Governing Law, Jurisdiction.
Jury Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Guaranty shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdiction other than the State of New York. The guarantor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in 

    
      
         

      

      
        49

        
          

        

      

      
         

      

    

    connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. The Guarantor hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Guaranty and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
THE GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED
HEREBY.

    

    Section
4.4                                Amendments. This
Guaranty may be amended only by an instrument in writing executed by the party
or an authorized representative of the party against whom such amendment is
sought to be enforced.

    

    Section
4.5                                Parties Bound: Assignment:
Joint and Several. This Guaranty shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and legal
representatives; provided, however, that Guarantor may not, without the prior
written consent of the Lenders, assign any of its rights, powers, duties or
obligations hereunder.

    

    Section
4.6                                Headings. Section
headings are for convenience of reference only and shall in no way affect the
interpretation of this Guaranty.

    

    Section
4.7                                Recitals. The recital
and introductory paragraphs hereof are a part hereof, form a basis for this
Guaranty and shall be considered prima facie evidence of the facts and documents
referred to therein.

    

    Section
4.8                                Rights and Remedies.
The exercise by the Lenders of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.

    

    Section
4.9                                Confidentiality.
Except to the extent required by applicable law, the terms and conditions of
this Guaranty shall remain confidential and shall not be disclosed to anyone
without the written consent of the Guarantor. The existence of a partial
guaranty may be publicly disclosed in connection with the dismissal of the
Bankruptcy Case.

    

    Section
4.10                                Extensions of Deadlines and
Notice of Trigger Events. Any deadline under this Guaranty, including but
not limited to, the timeframes set forth in sections 1.2 (a)-(g) herein may be
extended by the mutual written agreement of the Lenders and the Guarantor. In
the event of any default under this Guaranty, including but not limited to, the
expiration of any deadline set forth in sections 1.2(a)-(g) herein, the
defaulting party shall

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    be
entitled to three (3) business days' notice of the default and the opportunity
to cure such default.

    

    Section
4.11                                Recovery. By Lenders.
Any proceeds recovered by any Lender under this Guaranty in excess of its Pro
Rata Share of the Total Debt shall be held by such Lender in trust for the pro
rata benefit of the other Lenders and distributed accordingly. This provision
shall survive termination of this Guaranty.

    

    Section
4.12                                After-Acquired
Claims. In the event that a Lender acquires (and continues to hold) the
Notes and Warrants (the "Excluded Securities")
under the Transaction Document of a Noteholder that is not a signatory hereto
(an "Excluded
Noteholder"), such Excluded Securities acquired (and held) by such Lender
shall be deemed to be Notes and Warrants of such Lender governed by the terms
and conditions of this Guaranty and the Collateral Documents (and the benefits
hereunder) as if such Excluded Securities were held by such Lender as of the
date of this Guaranty (but only for so long as such Excluded Securities are held
by such Lender). The Pro Rata Share of any lender that acquires Notes from an
Excluded Noteholder (or that transfers any portion of its Notes) shall be
adjusted accordingly.

    

    Section
4.13                                Entirely. THIS
GUARANTY EMBODIES THE FINAL AND ENTIRE AGREEMENT OF GUARANTOR WITH RESPECT TO
GUARANTOR'S GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS
INTENDED BY GUARANTOR AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE
GUARANTY, AND NO COURSE OF DEALING BETWEEN OR AMONG GUARANTOR AND ANY LENDER, NO
COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY
ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN OR AMONG THE
GUARANTOR AND ANY LENDER.

    
      
         

      

      
        51

        
          

        

      

      
         

      

    

    EXECUTED
as of the day and year first above written.

    

    

    GUARANTOR

    

    /s/ Dennis
McLaughlin                                                      

    Dennis
McLaughlin

    

    
      
         

      

      
        52

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Lenders below have caused their respective signature page
to this Guaranty to be duly executed as of the date first written
above.

    

    Castlerigg
Master Investments
Ltd.                                                                                                Kings
Road Investments Ltd.

    By:           Sandell
Asset Management Corp.

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Evolution
Master Fund Ltd. SPC,
Segregated                                                                                                Capital
Ventures Internationl

    Portfolio
M                                                                                     By:           Heights
Capital Management, Inc.

    its authorized agent

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Radcliffe
SPC, Ltd. for and on behalf of
the                                                                                                           YA
Global Investment, L.P., (formerly,

    Class A
Convertible Crossover
Segregated                                                                                                Cornell
Capital Partners, LP

    Portfolio                                                                           By:           Yorkville
Advisors, LLC

    By:           RG
Capital Management
Company,                                                                                     Its:           General
Partner

    L.P.

    By:           RGC
Management Company, LLC

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Cranshire
Capital,
LP                                                                                                Portside
Growth and Opportunity Fund

    

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    CONFESSIONS OF
JUDGMENT

    EXECUTION
VERSION

    

    SUPREME
COURT OF THE STATE OF NEW YORK

    COUNTY OF NEW
YORK                                                                                                                     

    |

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

    PORTSIDE
GROWTH AND OPPORTUNITY FUND,
LTD.                                                                                                                                |           AFFIDAVIT OF

    |           CONFESTION OF

    Plaintiff                                                      |           JUDGMENT

    |

    -against-                                                                                     |           Index
No.

    |

    EARTH
BIOFUELS,
INC.                                                                                                                     |

    |

    Defendant.                                                                |

    ______________________________________________________|

    

    

    STATE OF
NEW YORK  )

    ) ss

    COUNTY OF
NEW YORK  )

    

    Mr.
Dennis McLaughlin, being duly sworn, deposes and says:

    

    1.           I
am the Chief Executive Officer of Earth Biofuels, Inc. ("EBOF") the Defendant in
the above-entitled action, whose corporate address is 3001 Knox Street, Suite
403, Dallas, TX 75205.

    

    2.           I
am authorized by EBOF to confess judgment on EBOF's behalf, in favor of
plaintiff, Portside Growth and Opportunity Fund ("Portside") for the sum of
$1,916,246 (as of September 28, 2007);

    

    3.           Pursuant
to Section 3218 of the New York Civil Practice Law and Rules, I hereby confess
judgment on EBOF's behalf, in favor of Portside for $1,916,246 (as of September
28, 2007), and authorize it and its parents, subsidiaries, affiliates, agents,
representatives, attorneys, executors, administrators, directors, officers,
shareholders, employees, successors, assigns, predecessors, transferees, and
insurers to enter judgment in the Supreme Court of the State of New York, County
of New York, against EBOF in the amount of $1,916,246 (as of September 28,
2007).

    

    4.           This
confession of judgment is for a debt due and owing to Portside, and arises under
certain a promissory note dated July 24, 2006 issued pursuant to a Securities
Purchase Agreement dated July 24, 2006 (the "Transaction
Documents").

    

    5.           The
debt is unconditionally due and owing to Portside by virtue of numerous events
of default arising under the Transaction Documents which have been acknowledged
by EBOF in an interim restructuring agreement dated November 13, 2007 (the
"Interim Restructuring Agreement") and as such are undisputed.

    

    

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

    6.           Pursuant
to the Interim Restructuring Agreement, EBOF also agreed and acknowledged that
it is indebted to Portside in the amount of $1,916,246 (as of September 28,
2007), and confesses judgment herein on that debt.

    

    7.           Further,
as set forth in Section 3 of the Interim Restructuring Agreement if EBOF failed
to meet the conditions set forth in Section 3 of the Interim Restructuring
Agreement by the dates specified therein, then EBOF authorized Portside to file
this Affidavit of Confession of Judgment in which EBOF confesses judgment in
favor of Portside and against EBOF in the amount of $1,916,246 (as of September
28, 2007).

    

    8.           This
confession of judgment does not violate section 3201 of the New York Civil
Practice Law and Rules because it was "not executed prior to the time a default
in the payment of an installment occurs in connection with the purchase of
fifteen hundred dollars or less of any commodities for any use other than a
commercial or business use upon any plan of deferred payments whereby the price
or cost is payable in two or more installments."

    

    9.           This
confession of judgment is not for the purpose of securing plaintiff against a
contingent liability.

    

    

    By:  /s/ Dennis
McLaughlin                                                                           

    Dennis McLaughlin

    Chief Executive Officer

    Earth Biofuels, Inc.

    

    Sworn to
before me this 13th
day

    Of Nov 2007

    

    /s/ Marcella
Smith                                           

    NOTARY
PUBLIC

    

    [NOTARY STAMP]

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    EXECUTION
VERSION

    

    SUPREME
COURT OF THE STATE OF NEW YORK

    COUNTY OF NEW
YORK                                                                                                                     

    |

    CASTLERIGG
MASTER INVESTMENTS,
LTD                                                                                                                                |           AFFIDAVIT OF

    |           CONFESTION OF

    Plaintiff                                                      |           JUDGMENT

    |

    -against-                                                                                     |           Index
No.

    |

    EARTH
BIOFUELS,
INC.                                                                                                                     |

    |

    Defendant.                                                                |

    ______________________________________________________|

    

    

    STATE OF
NEW YORK )

    ) ss

    COUNTY OF
NEW YORK )

    
 

    Mr.
Dennis McLaughlin, being duly sworn, deposes and says:

    

    1.           I
am the Chief Executive Officer of Earth Biofuels, Inc. ("EBOF") the Defendant in
the above-entitled action, whose corporate address is 3001 Knox Street, Suite
403, Dallas, TX 75205.

    

    2.           I
am authorized by EBOF to confess judgment on EBOF's behalf, in favor of
plaintiff, Castlerigg Master Investments, Ltd. ("Castlerigg") for the sum of
$80,919,551 (as of September 28, 2007);

    

    3.           Pursuant
to Section 3218 of the New York Civil Practice Law and Rules, I hereby confess
judgment on EBOF's behalf, in favor of Castlerigg for $80,919,551 (as of
September 28, 2007), and authorize it and its parents, subsidiaries, affiliates,
agents, representatives, attorneys, executors, administrators, directors,
officers, shareholders, employees, successors, assigns, predecessors,
transferees, and insurers to enter judgment in the Supreme Court of the State of
New York, County of New York, against EBOF in the amount of $80,919,551 (as of
September 28, 2007).

    

    4.           This
confession of judgment is for a debt due and owing to Castlerigg, and arises
under certain a promissory note dated July 24, 2006 issued pursuant to a
Securities Purchase Agreement dated July 24, 2006 (the "Transaction
Documents").

    

    5.           The
debt is unconditionally due and owing to Castlerigg by virtue of numerous events
of default arising under the Transaction Documents which have been acknowledged
by EBOF in an interim restructuring agreement dated November 13, 2007 (the
"Interim Restructuring Agreement") and as such are undisputed.

    
      
         

      

      
        57

        
          

        

      

      
         

      

    

    

    6.           Pursuant
to the Interim Restructuring Agreement, EBOF also agreed and acknowledged that
it is indebted to Castlerigg in the amount of $80,919,551 (as of September 28,
2007), and confesses judgment herein on that debt.

    

    7.           Further,
as set forth in Section 3 of the Interim Restructuring Agreement if EBOF failed
to meet the conditions set forth in Section 3 of the Interim Restructuring
Agreement by the dates specified therein, then EBOF authorized Castlerigg to
file this Affidavit of Confession of Judgment in which EBOF confesses judgment
in favor of Castlerigg and against EBOF in the amount of $80,919,551 (as of
September 28, 2007).

    

    8.           This
confession of judgment does not violate section 3201 of the New York Civil
Practice Law and Rules because it was "not executed prior to the time a default
in the payment of an installment occurs in connection with the purchase of
fifteen hundred dollars or less of any commodities for any use other than a
commercial or business use upon any plan of deferred payments whereby the price
or cost is payable in two or more installments."

    

    9.           This
confession of judgment is not for the purpose of securing plaintiff against a
contingent liability.

    

    

    By:  /s/ Dennis
McLaughlin                                                                           

    Dennis McLaughlin

    Chief Executive Officer

    Earth Biofuels, Inc.

    

    Sworn to
before me this 13th
day

    Of Nov 2007

    

    /s/ Marcella
Smith                                           

    NOTARY
PUBLIC

    

    [NOTARY STAMP]

    
      
         

      

      
        58

        
          

        

      

      
         

      

    

    EXECUTION
VERSION

    

    SUPREME
COURT OF THE STATE OF NEW YORK

    COUNTY OF NEW
YORK                                                                                                                     

    |

    RADCLIFFE
SPC, LTD. FOR AND ON BEHALF OF
THE                                                                                                                                |           AFFIDAVIT OF

    CLASS A
CONVERTIBLE CROSSOVER
SEGREGATED                                                                                                                                |           CONFESTION OF

    PORTFOLIO                                                                                                           |           JUDGMENT

    Plaintiff                                                      |

    |           Index
No.

    -against-                                                                                     |

    |

    EARTH
BIOFUELS,
INC.                                                                                                                     |

    |

    Defendant.                                                                |

    ______________________________________________________|

    

    

    STATE OF
NEW YORK   )

                )
ss

    COUNTY OF
NEW YORK  )

    

    Mr.
Dennis McLaughlin, being duly sworn, deposes and says:

    

    1.           I
am the Chief Executive Officer of Earth Biofuels, Inc. ("EBOF") the Defendant in
the above-entitled action, whose corporate address is 3001 Knox Street, Suite
403, Dallas, TX 75205.

    

    2.           I
am authorized by EBOF to confess judgment on EBOF's behalf, in favor of
plaintiff, Radcliffe SPC, Ltd. for and on behalf of the Class A Convertible
Crossover

    Segregated
Portfolio ("Radcliffe") for the sum of $9,581,229 (as of September 28,
2007);

    

    3.           Pursuant
to Section 3218 of the New York Civil Practice Law and Rules, I hereby confess
judgment on EBOF's behalf, in favor of Radcliffe for $9,581,229 (as of
September 28, 2007), and authorize it and its parents, subsidiaries, affiliates,
agents, representatives, attorneys, executors, administrators, directors,
officers, shareholders, employees, successors, assigns, predecessors,
transferees, and insurers to enter judgment in the Supreme Court of the State of
New York, County of New York, against EBOF in the amount of $9,581,229 (as
of September 28, 2007).

    

    4.           This
confession of judgment is for a debt due and owing to Radcliffe, and arises
under certain a promissory note dated July 24, 2006 issued pursuant to a
Securities Purchase Agreement dated July 24, 2006 (the "Transaction
Documents").

    

    5.           The
debt is unconditionally due and owing to Radcliffe by virtue of numerous events
of default arising under the Transaction Documents which have been acknowledged
by EBOF in an interim restructuring

    
      
         

      

      
        59

        
          

        

      

      
         

      

    

    agreement
dated November 13, 2007 (the "Interim Restructuring Agreement") and as such are
undisputed.

    

    6.           Pursuant
to the Interim Restructuring Agreement, EBOF also agreed and acknowledged that
it is indebted to Radcliffe in the amount of $80,919,551 (as of September 28,
2007), and confesses judgment herein on that debt.

    

    7.           Further,
as set forth in Section 3 of the Interim Restructuring Agreement if EBOF failed
to meet the conditions set forth in Section 3 of the Interim Restructuring
Agreement by the dates specified therein, then EBOF authorized Radcliffe to file
this Affidavit of Confession of Judgment in which EBOF confesses judgment in
favor of Radcliffe and against EBOF in the amount of $80,919,551 (as of
September 28, 2007).

    

    8.           This
confession of judgment does not violate section 3201 of the New York Civil
Practice Law and Rules because it was "not executed prior to the time a default
in the payment of an installment occurs in connection with the purchase of
fifteen hundred dollars or less of any commodities for any use other than a
commercial or business use upon any plan of deferred payments whereby the price
or cost is payable in two or more installments."

    

    9.           This
confession of judgment is not for the purpose of securing plaintiff against a
contingent liability.

    

    

    By:  /s/ Dennis
McLaughlin                                                                           

    Dennis McLaughlin

    Chief Executive Officer

    Earth Biofuels, Inc.

    

    Sworn to
before me this 13th
day

    Of Nov 2007

    

    /s/ Marcella
Smith                                           

    NOTARY
PUBLIC

    

    [NOTARY STAMP]

    

    
      
         

      

      
        60

        
          

        

      

      
         

      

    

    EXHIBIT
D

    

    SUBSIDIARY
GUARANTY

    EXECUTION
VERSION

    

    GUARANTY
AGREEMENT

    

    THIS
GUARANTY AGREEMENT (the "Guaranty") is
executed as of November 13, 2007, by the entities listed on the SCHEDULE OF EBOF SUBSIDIARIES
attached hereto as Exhibit A (each, a "Guarantor" and
collectively, the “Guarantors”), for the
ratable benefit of the lenders listed that are signatories hereto (collectively,
the "Lenders").

    

    W I T N E S S E T
H:

    

    WHEREAS,
Radcliffe SPC, Ltd. for and on behalf of the Class A Convertible Crossover
Segregated Portfolio ("Radcliffe"),
Castlerigg Master Investments Ltd. ("Castlerigg"), and
Capital Ventures International ("CVI"; collectively, the "Initial Bridge
Lenders") are parties to a Securities Purchase Agreement, dated as of
June 7, 2006 (the "Initial Bridge Securities
Purchase Agreement") with
Earth Bioftiels, Inc. ("EBOF"), pursuant to
which EBOF issued, among other things, warrants to purchase 1,500,000 shares of
common stock, $0.001 par value (the "Common Stock"), of EBOF at
the exercise price of $2.93 (the "Initial Bridge
Warrants") and in connection with the Initial Bridge Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement: (the "Initial Bridge Registration
Rights Agreement," collectively with the Initial Bridge Securities
Purchase Agreement and the Initial Bridge Warrants, the "Initial Bridge Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Initial Bridge Securities Purchase Agreement;

    

    WHEREAS,
Castlerigg (the "Second Bridge
Lender") is a party to a Securities Purchase Agreement, dated as of July
10, 2006 (the "Second
Bridge Securities Purchase Agreement") with EBOF, pursuant to which EBOF
issued, among other things, warrants to purchase 1,500,000 shares of Common
Stock at the exercise price of $2.50 (the "Second Bridge
Warrants") and in connection with the Second Bridge Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement (the "Second Bridge Registration
Rights Agreement," collectively with the Second Bridge Securities
Purchase Agreement, Second Bridge Warrants, the "Second Bridge Transaction
Documents") under which it agreed, to cooperate in the registration of
the securities under the Second Bridge Securities Purchase
Agreement;

    

    WHEREAS,
Radcliffe, Castlerigg, CVI, YA Global Investments, L.P. (formerly known as
Cornell Capital, L.P. ("Yorkville")),
Cranshire Capital L.P. ("Cranshire"), Portside
Growth

    and
Opportunity Fund ("Portside"), Evolution
Master Fund Ltd. SPC, Segregated Portfolio. M ("Evolution"), and
Kings Road Investments Ltd. ("Kings Road"; collectively,
the "Noteholders") are
parties to a Securities Purchase Agreement, dated as of July 24, 2006 (the
"Securities
Purchase
Agreement") with EBOF, pursuant to which EBOF issued (i) 8% Senior
Convertible Notes (collectively, the "Notes") in the
aggregate principal amount of $52.5 million, which were unsecured and
convertible into shares of Common Stock at $2.90 per share, and (ii) warrants to
purchase in excess of 9,000,000 shares of common stock of EBOF at the exercise
price of $2.90 (the "Warrants") and in
connection with the Securities Purchase Agreement, EBOF executed a Registration
Rights Agreement (the "Registration Rights
Agreement," collectively with the Initial Bridge Transaction Documents ,
the Second Bridge Transaction

    
      
         

      

      
        61

        
          

        

      

      
         

      

    

     Documents,
the Securities Purchase Agreement, Notes, and Warrants, the "Transaction
Documents") under which it agreed to cooperate in the registration of the
securities under the Securities Purchase Agreement;

    

    WHEREAS,
certain Noteholders individually delivered an Event of Default Redemption Notice
to EBOF identifying various events of default under the Notes and demanding that
EBOF redeem the Noteholders' interest in the Notes at the so-called Event of
Default Redemption Price, and EBOF failed to remit the Event of Default
Redemption Price;

    

    WHEREAS,
the Guarantors acknowledge that Events of Default (as defined in the Transaction
Documents) have occurred and are continuing;

    

    WHEREAS,
EBOF and Guarantors acknowledge that the aggregate amount of the outstanding
amount due and owing to the Noteholders is $100,651,173.00 (as of September 28,
2007), plus fees, costs, and expenses, and such amount is payable to the
Noteholders without setoff, counterclaim, deduction, offset or defense (the
"Total
Debt");

    

    WHEREAS,
on July 11, 2007, Radcliffe, Yorkville, Portside, Castlerigg and Evolution
commenced an involuntary bankruptcy proceeding against EBOF pursuant to Title 11
of the United States Code (the "Bankruptcy Code") in
the United States Bankruptcy Court for the District of Delaware, Case No.
07-10928 (CSS) (the "Bankruptcy
Case");

    

    WHEREAS,
EBOF wishes to explore the possibility of restructuring and modifying the
existing rights and obligations under the Transaction Documents with the
Noteholders through one or more definitive documents to be negotiated during the
course of the next 6 to 12 months (the "Restructuring
Transaction");

    

    WHEREAS,
at EBOF's request, the Lenders are willing, subject to and on the terms and
conditions set forth in the Interim Restructuring Agreement (as defined below)
and in the documents to be executed in connection therewith, to forbear from
exercising rights and remedies under the Transaction Documents and to consent to
dismissal of the Bankruptcy Case in exchange for the terms hereof and of the
Interim Restructuring Agreement and the other documents to be executed in
connection therewith;

    

    WHEREAS,
pursuant to the Interim Restructuring Agreement, dated November 13, 2007 (the
"Interim Restructuring
Agreement"), EBOF has, among other things, executed confessions of
judgment (the "Confessions of
Judgment"), which shall not be filed until the occurrence of certain
events specified in the Interim Restructuring Agreement;

    

    WHEREAS,
to facilitate a consensual restructuring and the dismissal of the Bankruptcy
Case, without which the Guarantors could themselves end up in bankruptcy and
without the support of EBOF, the Guarantors have agreed to guarantee a portion
of the Total Debt for the ratable benefit of the Lenders;

    
      
         

      

      
        62

        
          

        

      

      
         

      

    

    WHEREAS,
interests in each Guarantor are owned of directly or indirectly (as the case may
be) by EBOF, and each Guarantor will directly benefit from the restructuring
negotiations.

    

    NOW,
THEREFORE, as an inducement to the Lenders to negotiate a restructuring, and for
other good and valuable consideration, the receipt and legal sufficiency of
which are hereby acknowledged, the parties do hereby agree as
follows:

    

    ARTICLE
I

    

    NATURE
AND SCOPE OF GUARANTY

    

    Section
1.1                                Guaranty of
Debt.              Each
Guarantor hereby irrevocably and unconditionally guarantees for the ratable
benefit5 of each Lender the prompt payment of each such
Lender's Pro Rata Share of the Total Debt, which shall be immediately due and
payable upon any of the following events:.

    

    (a)           prior
to the Restructuring Consummation Deadline. (as defined in section 1.2(e)
below), either (x) an order for relief is entered in a case under the Bankruptcy
Code with respect to McLaughlin, EBOF, or any Subsidiary, or (y) an involuntary
bankruptcy petition is filed against EBOF or any Subsidiary and such petition is
not dismissed on or. before sixty (60) days after the date such petition is
filed;

    

    (b)           failure
of EBOF to execute security documents (in form and substance acceptable to the
Lenders holding 662/3 of the
aggregate face amount of the Notes then outstanding (the “Required Lenders”) as
determined by the Required Lenders in their sole discretion) sufficient to
provide the Lenders with liens, subject only to any then-valid existing liens,
on all of EBOF's assets to secure EBOF's obligations under the Confessions of
Judgment and/or the Transaction Documents on or. before ten (10) days after the
date that, the order dismissing the Bankruptcy Case is entered on the
docket6;

    

    (c)           failure
of all of the Subsidiaries to execute security documents (in form and substance
acceptable to the Required Lenders as determined by the Required Lenders in
their sole discretion), in favor of the Lenders, subject only to any then-valid
existing liens,

    

    securing
their respective obligations under the guaranty by the Subsidiaries on or before
ten (10) days after the Dismissal Date;

    

      

    

      
      5 The
ratable benefit will be determined by calculating the Lender's pro rata share
("Pro Rata
Share"), which means the ratio determined by dividing (x) the face amount
of the Notes then held by such Lender by (y) the face amount of Notes then held
by all Lenders.

    

      
      6 The date
that the order dismissing the Bankruptcy Case is entered on the docket and such
order is not subject to any stay shall be referred to herein as the "Dismissal
Date."

    

    
      
         

      

      
        63

        
          

        

      

      
         

      

    

    (d)           failure
of EBOF and Subsidiaries to execute a term sheet with the material terms of a
restructuring (in form and substance acceptable to the Required Lenders in their
sole discretion) (the "Restructuring Term
Sheet") on or before thirty (30) days after the Dismissal
Date;

    

    (e)           failure
of EBOF and Subsidiaries to consummate the transactions contemplated in the
Restructuring Term Sheet fully (as determined by the Required Lenders in their
reasonable discretion) on or before one hundred and twenty (120) days after the
Dismissal Date (the "Restructuring Consummation
Deadline");

    

    (f)           any
action is commenced to void, avoid, invalidate, subordinate, recharacterize,
reduce or recover (in whole or in part) any or all of the Release, this
Guaranty, the Noteholders' claims against EBOF, the Confessions of Judgment, the
Subsidiary Guaranty (each as described in the Interim Restructuring Agreement
and collectively, the "Collateral
Documents"), any claim of any of the Lenders under any of the Notes or
any of the other Transaction Documents, any lien granted to secure any such
'claim or obligation under any of the Collateral Documents or any of the
Transaction Documents (including, without limitation, the actions described in
sections 5 (b) and (c) of the Interim Restructuring Agreement), or any payment
made in respect of any such claim or obligation; or (g) EBOF or any Subsidiary
grants or permits to exist any lien not in existence as of the date of this
Guaranty on any of its assets.

    

    (g)           EBOF
or any Subsidiary grants or permits to exist any lien not in existence as of the
date of this Guaranty or any of its assets.

    

    Section
1.2                                Elimination of
Guaranty. If EBOF and its Subsidiaries fully consummate the transactions
contemplated in the Restructuring Term Sheet (as determined by the Required
Lenders in their reasonable discretion) on or before the Restructuring
Consummation Deadline, this Guaranty shall terminate and no longer be of any
force and effect unless there is any action commenced seeking to void, avoid,
invalidate, subordinate, recharacterize, reduce or recover (in whole or in part)
any such transactions or any lien granted to secure, or any payment made on, any
obligation owing to the Lenders in connection with any such transactions, any of
the Transaction Documents, or any of the Collateral Documents.

    

    Section
1.3                                Nature of Guaranty.
This Guaranty is an irrevocable, absolute, continuing guaranty of payment and
performance and not a guaranty of collection. The obligations of each Guarantor
to the Lenders under this Guaranty shall be joint and several. This Guaranty
shall not be discharged by the assignment or negotiation of all or part of the
Notes.

    

    Section
1.4                                Guaranteed Obligations Not
Reduced by Offset. The Guaranty and obligations of the Guarantors to the
Lenders shall not be reduced, discharged or released because or by reason of any
existing or future offset, claim or defense of EBOF or any of its Subsidiaries,
or any other party, against the Lenders.

    
      
         

      

      
        64

        
          

        

      

      
         

      

    

    Section
1.5                                Payment By.
Guarantor. If all or any part of the obligations under this Guaranty
shall not be punctually paid when due, the Guarantors shall, immediately upon
demand by the Lenders pay in lawful money of the United States of America, the
amounts due to the Lenders at the addresses as set forth herein for the Lenders.
Such demand shall be deemed made, given and received in accordance with the
notice provisions hereof.

    

    Section
1.6                                No Duty To Pursue
Others. It.shall not be necessary for the Lenders (and the Guarantors
hereby waives any rights that the Guarantors may have to require the Lenders),
in order to enforce the obligations of the Guarantors hereunder, first to (a)
institute suit or exhaust its remedies against EBOF or any Subsidiary or others
liable under the Transaction Documents or the Confessions of Judgment or any
other person, (b) enforce the Lenders' rights against any collateral which shall
ever have been given to secure any of the obligations of EBOF or its
Subsidiaries, (c) enforce the Lenders' rights against any other guarantors, (d)
join EBOF or its Subsidiaries or any others liable on the Total Debt in any
action seeking to enforce this Guaranty, or (f) resort to any other means of
obtaining payment of the Total Debt. The Lenders shall not be required to
mitigate damages or take any other action to reduce, collect or enforce the
Total Debt.

    

    Section
1.7                                Payment of Expenses.
In the event that any Guarantor should breach or fail to timely perform any
provision of this Guaranty, the Guarantors shall, immediately upon demand by the
Lenders, pay the Lenders all reasonable out-of-pocket costs and expenses
(including court costs and attorneys' fees) incurred by the Lenders in the
enforcement hereof or the preservation of the Lenders' rights hereunder. For the
avoidance of doubt, the foregoing payment obligation shall be a joint and
several obligation of the Guarantors.

    

    Section
1.8                                Effect of Bankruptcy.
In the event that, pursuant to any insolvency, bankruptcy, reorganization,
receivership or other debtor relief law, or any judgment, order or decision
thereunder, the Lenders must rescind or restore any payment, or any part
thereof, received by the Lenders in satisfaction of the obligations hereunder,
any prior release or discharge from the terms of this Guaranty given to the
Guarantors by the Lenders shall be without effect, and this Guaranty shall
remain in full force and effect. It is the intention of the Guarantors that the
Guarantors’ obligations hereunder shall not be discharged except by the
Guarantors’ indefeasible payment of such obligations and then only to the extent
of such performance.

    

    Section
1.9                                Waiver of Subrogation.
Reimbursement and Contribution. Notwithstanding anything to the contrary
contained in this Guaranty, each Guarantor hereby unconditionally and
irrevocably waives, releases and abrogates any and all rights it may now or
hereafter have under any agreement, at law or in equity (including, without
limitation, any law subrogating the Guarantor to the rights of the Lenders), to
assert any claim against or seek contribution, indemnification or any other form
of reimbursement from EBOF, its Subsidiaries, or any other party liable for
payment of any or all of the Total Debt for any payment made by any Guarantor
under or in connection with this Guaranty or otherwise.

    

    
      
        
        

      

      
        65

        
          

        

      

      
        
        

      

    

    ARTICLE
II

    

    EVENTS
AND CIRCUMSTANCES NOT REDUCING

    OR
DISCHARGING GUARANTOR'S OBLIGATIONS

    

    Each
Guarantor hereby consents and agrees to each of the following, and agrees that
Guarantors’ obligations under this Guaranty shall not be released, diminished,
impaired, reduced or adversely affected by any of the following, and waives any
common law, equitable, statutory or other rights (including without limitation
rights to notice) except as otherwise expressly provided herein which the
Guarantors might otherwise have as a result of or in connection with any of the
following:

    

    Section
2.1                                Modifications. Any
renewal, extension, increase, modification, alteration or rearrangement of all
or any part of the Total Debt under the Transaction Documents.

    

    Section
2.2                                Adjustment.  Any
adjustment, indulgence, forbearance or compromise that might be granted or given
by the Lenders to EBOF.

    

    Section
2.3                                Condition of EB.OF.
Subsidiaries, or Guarantors. The insolvency, bankruptcy, arrangement,
adjustment, composition, liquidation, disability, dissolution or lack of power
of EBOF or any Subsidiary or any other party at any time liable for the payment
of all or part of the Total Debt; or any dissolution of EBOF or any Subsidiary,
or any sale, lease or transfer of any or all of the assets of EBOF or any
Subsidiary, or any changes in the shareholders, partners or members of EBOF or
any Subsidiary; or any reorganization of EBOF, any Subsidiary, or the
Guarantors.

    

    Section
2.4                                Invalidity of Guaranteed
Obligations. The invalidity, illegality or unenforceability of all or any
part of the' Total Debt, or any document or agreement executed in connection
with the Total Debt, for any reason whatsoever is illegal, uncollectible or
unenforceable.

    

    Section
2.5                                Release of Obligors.
Any full or partial release of the liability of EBOF or any Subsidiary on the
Total Debt or any part thereof, or of any co-guarantors, or any other person or
entity now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Total Debt, or any part thereof.

    

    Section
2.6                                Other Collateral. The
taking or accepting of any other security, collateral or guaranty, or other
assurance of payment, for all or any part of the Total Debt.

    

    Section
2.7                                Offset. Any existing
or future right of offset, claim or defense of EBOF or any Subsidiary against
the Lenders, or any other person, or against payment of the Total Debt, whether
such right of offset, claim or defense arises in connection with the Total Debt
or otherwise.

    

    Section
2.8                                Merger. The
reorganization, merger or consolidation of EBOF or any Subsidiary into or with
any other corporation or entity.

    
      
         

      

      
        66

        
          

        

      

      
         

      

    

    Section
2.9                                Preference. Any
payment by EBOF or any Subsidiary to the Lenders is held to constitute a
preference under bankruptcy laws, or for any reason the Lenders are required to
refund such payment or pay such amount to EBOF or any Subsidiary or someone
else.

    

    ARTICLE
III

    

    REPRESENTATIONS
AND WARRANTIES

    

    To induce
Lenders to negotiate a restructuring of the Total Debt, each Guarantor
represents and warrants to the Lenders as follows:

    

    Section
3.1                                Benefit. EBOF is the
direct or indirect owner of interests in each Guarantor(as the case may be), and
each Guarantor has received, or will receive, direct and indirect benefits from
the making of this Guaranty.

    

    Section
3.2                                Familiarity and
Reliance. Each Guarantor is familiar with, and has independently reviewed
books and records regarding, the financial condition of EBOF and its
Subsidiaries; however, no Guarantor is relying on such financial condition as an
inducement to enter into this Guaranty.

    

    Section
3.3                                No Representation By
Lenders. None of the Lenders, or any other party has made any
representation, warranty or statement to any Guarantor in order to induce a
Guarantor to execute this Guaranty.

    

    Section
3.4                                Guarantors’ Financial
Condition. As of the date hereof, and after giving effect to this
Guaranty and the contingent obligation evidenced hereby, each Guarantor, is, and
will be, solvent, and has and will have assets which, fairly valued, exceed its
obligations, liabilities (including contingent liabilities) and debts, and has
and will have property and assets sufficient to satisfy and repay its
obligations and liabilities.

    

    Section
3.5                                Legality. The
execution, delivery and performance by each Guarantor of this Guaranty and the
consummation of the transactions contemplated hereunder do not, and will not,
contravene or conflict with any law, statute or regulation whatsoever to which
such Guarantor is subject or constitute a default (or an event which with notice
or lapse of time or both would constitute a default) under, or result in the
breach of, any indenture, mortgage, deed of trust, charge, lien, or any
contract, agreement or other instrument to which such Guarantor is a party or
which may be applicable to such Guarantor. This Guaranty is a legal and binding
obligation of each Guarantor and is enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditors' rights.

    

    Section
3.6                                Survival. All
representations and warranties made by the Guarantors herein shall survive the
execution hereof.

    

    ARTICLE
IV

    
      
         

      

      
        67

        
          

        

      

      
         

      

    

    MISCELLANEOUS

    

    Section
4.1                                Effective Date. This
Guaranty shall be placed into escrow pursuant to an escrow agreement (the form
of which is attached hereto as Exhibit B) and shall be released from escrow and
become effective as of the Dismissal Date.

    

    Section
4.2                                Limitation of
Liability. Each Guarantor hereby confirms that it intends
that its obligations under this Guaranty will not constitute fraudulent
transfers or conveyances
under the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform
Fraudulent
Transfer Act, or any similar foreign, federal, or state law. To the extent
necessary to effectuate
the foregoing intention, each Guarantor irrevocably agrees that its obligations
under this
Guaranty at any time shall be limited to the maximum amount as will result in
such obligations
not constituting a fraudulent transfer or conveyance under such foreign,
federal, or state
law.

    

    Section
4.3                                Other Contractual
Obligations. To the extent that any provision of this Guaranty results in
an event of default under any agreement entered between any Guarantor and a
third party before the effective date of this Guaranty, such provision of this
Guaranty shall become null and void only to the extent such provision results in
the event of default.

    

    Section
4.4                                Waiver. No failure to
exercise, and no delay in exercising, on the part of the Collateral Agent or
Lenders, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of the Lenders hereunder
shall be in addition to all other rights provided by law. No modification or
waiver of any provision of this Guaranty, nor consent to departure therefrom,
shall be effective unless in writing and no such consent or waiver shall extend
beyond the particular case and purpose involved. No notice or demand given in
any case shall constitute a waiver of the right to take other action in the
same, similar or other instances without such notice or demand.

    

    (a)           Notices.
Any written notice required to be given under this Guaranty shall be sent to the
following by mail, electronic mail or facsimile, and shall be deemed given upon
such mailing and sending by facsimile:

    

    If to
EBOF or the Guarantors:

    

    3001 Knox
Street, Suite 403

    Dallas,
Texas 75205

    Telephone:                                (214)
389-9800

    Facsimile:                                (214)
389-9805

    Attention:
Dennis McLaughlin

    

    with a
copy to:

    

    Akin Gump
Strauss Hauer & Feld LLP

    
      
         

      

      
        68

        
          

        

      

      
         

      

    

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Telephone:                                (214)
969-4710

    Facsimile:                                (214)
969-4343

    Attention:.
Charles R. Gibbs, Esq.

    

    If to
Sandell (to the extent a signatory hereto):

    

    40 West
57th Street

    26th
Floor

    New York,
New York 10019

    Telephone:                                (212)
603-5700

    Facsimile:                                (212)
603-5710

    Attention:                                Cem
Hacioglu (chacioglu@sandellmgmt.com)

    Matthew
Pliskin (mpliskin@sandellmgmt.com)

    

    with a
copy to:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq.(david.hillman@srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

    

    If to
Radcliffe (to the extent a signatory hereto):

    

    c/o RG
Capital Management, L.P.

    3 Bala
Plaza East, Suite 501

    Bala
Cynwyd, PA 19004

    Telephone:                                (610)
617-5911

    Facsimile:                                (610)
617-0570

    Attention:                                Gerald
F. Stahlecker

    (gstahlecker@radcliffefunds.com)

    

    with a
copy to:

    

    Wilmer
Cutler Pickering Hale and Dorr LLP

    399 Park
Avenue

    New York,
New York 10022

    Telephone:                                (212)
230-8800

    Facsimile:                                (212)
230-8888

    Attention:
Philip D. Anker, Esq. (Philip.Anker@wilmerhale.com)

    

    If to
Yorkville (to the extent a signatory hereto):

    
      
         

      

      
        69

        
          

        

      

      
         

      

    

    

    101
Hudson Street, Suite 3700

    Jersey
City, New Jersey 07303

    Attention:
Eric Hansen, Esq.

    (ehansen@yorkvilleadvisors.com)

    

    with a
copy to:

    

    Baker
Botts L.L.P.

    2001 Ross
Avenue

    Dallas,
Texas 75201

    Telephone:                                (214)
953-6571

    Facsimile:                                (214)
953-6503

    Attention:
C. Luckey McDowell, Esq.

    (luckey.mcdowell@bakerbotts.com)

    

    If to
Cranshire (to the extent a signatory hereto

    

    Greenberg
Traurig LLP

    77 W.
Wacker Dr., Suite 2500

    Chicago,
Illinois 60601

    Telephone:                                (312)
456-8448

    Facsimile:                                (312)
456-8435

    Attention:                                Todd
Mazur, Esq.- (mazurt@gtlaw.com)

    Peter
Lieberman (liebermanp@gtlaw.com)

    

    If to
Evolution (the extent it executes this Agreement):

    

    c/o
Evolution Capital Management LLC

    2425
Olympic Boulevard, Suite 120E

    Santa
Monica, California 90404

    Telephone:                                (310)
315-8866

    Attention:                                Brian
S. Yeh (brian.yeh@evoftind.com)

    

    with a
copy to:

    

    Cadwalader,
Wickersham & Taft LLP

    One World
Financial Center

    New York,
New York 10281

    Telephone:                                (212)
504-6373

    Facsimile:                                (212)
504-6666

    Attention:                                Gregory
M. Petrick, Esq.

    (gregory.petrick@cwt.com)

    

    If to
Kings Road (the .extent it executes this Agreement):

    
      
         

      

      
        70

        
          

        

      

      
         

      

    

    c/o
Polygon Investment Partners LP

    598
Madison Avenue, 14th Floor

    New York,
New York 10022

    Telephone:                                (212)
359-7300

    Facsimile:                                (212)
359-7303

    Attention:                                Erik
M.W. Casperson

    (ecaspersen@polygoninv.com)

    Brandon
L. Jones (bjones@polygoninv.com)

    

    with a
copy to:

    

    Latham
& Watkins LLP

    633 West
Fifth Street, Suite 4000

    Los
Angeles, California 90071

    Telephone:                                (213)
485-1234

    Facsimile:                                (213)
891-8763

    Attention:                                Russell
Sauer, Esq. (russ.sauer@lw.com)

    

    If to CVI
(the extent it executes this Agreement):

    

    c/o
Heights Capital Management

    101
California Street, Suite 3250

    San
Francisco, California 94111

    Telephone:                                (415)
403-651.0

    Facsimile:                                (610)
617-3896

    Attention:                                Michael
Spolan (Michael.Spolan@sig.com)

    

    with a
copy to:

    

    Klehr,
Harrison, Harvey, Branzburg & Ellers, LLP

    919
Market Street, Suite 1000

    Wilmington,
Delaware 19801

    Telephone:                                (302)
426-1189

    Facsimile:                                (302)
426-9193

    Attention:                                Richard
M. Beck, Esq. (rbeck@klehr.com)

    

    If to
Portside (the extent it executes this Agreement):

    

    c/o
Ramius Capital Group, L.L.C.

    666 Third
Avenue, 26th Floor

    New York,
New York 10017

    Telephone:                                (212)
845-7955

    Facsimile:                                (212)
201-4802

    Attention:                                Jeffrey
Smith Osmith@ramius.com)

    Peter
Feld (pfeld@ramius.com)

    Owen
Littman (olittman@ramius.com)

    
      
         

      

      
        71

        
          

        

      

      
         

      

    

    

    with a
copy to:

    

    Hennigan,
Bennett & Dorman

    601 South
Figueroa Street, Suite 3300

    Los
Angeles, California 90017

    Telephone:                                (213)
694-1012

    Facsimile:                                (213)
694-1234

    Attention:                                Bruce
Bennett, Esq. (bennettb@hbdlawyers.com)

    

    Section
4.5                                Governing Law, Jurisdiction.
Jury Trial. All questions concerning the construction, validity,
enforcement and interpretation of this Guaranty shall be governed by the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdiction other than the State of New York. Each Guarantor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each Guarantor hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Guaranty and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. EACH
GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED
HEREBY.

    

    Section
4.6                                Amendments. This
Guaranty may be amended only by an instrument in writing executed by the party
or an authorized representative of the party against whom such amendment is
sought to be enforced.

    

    Section
4.7                                Parties Bound: Assignment:
Joint and Several. This Guaranty shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns and legal
representatives; provided, however, that Guarantor may not, without the prior
written consent of the Lenders, assign any of its rights, powers, duties or
obligations hereunder.

    

    Section
4.8                                Headings. Section
headings are for convenience of reference only and shall in no way affect the
interpretation of this Guaranty.

    
      
         

      

      
        72

        
          

        

      

      
         

      

    

    Section
4.9                                Recitals. The recital
and introductory paragraphs hereof are a part hereof, form a basis for this
Guaranty and shall be considered prima facie evidence of the facts and documents
referred to therein.

    

    Section
4.10                                Rights and Remedies.
The exercise by the Lenders of any right or remedy hereunder or under any other
instrument, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.

    

    Section
4.11                                Intentionally
Omitted.

    

    Section
4.12                                Extensions of Deadlines and
Notice of Trigger Events. Any deadline under this Guaranty, including but
not limited to, the timeframes set forth in sections 1.2 (a)-(g) herein may be
extended by the mutual written agreement of the Lenders and EBOF (on behalf of
the Guarantors). In the event of any default under this Guaranty, including but
not limited to, the expiration of any deadline set forth in sections 1.2(a)-(g)
herein, the defaulting party shall be entitled to three (3) business days'
notice of the default and the opportunity to cure such default.

    

    Section
4.13                                Recovery. By Lenders.
Any proceeds recovered by any Lender under this Guaranty in excess of its Pro
Rata Share of the Total Debt shall be held by such Lender in trust for the Pro
Rata Benefit of the other Lenders and distributed accordingly. This provision
shall survive termination of this Guaranty.

    

    Section
4.14                                After-Acquired
Claims. In the event that a Lender acquires (and continues to hold) the
Notes and Warrants (the "Excluded Securities")
under the Transaction Document of a Noteholder that is not a signatory hereto
(an "Excluded
Noteholder"), such Excluded Securities acquired (and held) by such Lender
shall be deemed to be Notes and Warrants of such Lender governed by the terms
and conditions of this Guaranty and the Collateral Documents (and the benefits
hereunder) as if such Excluded Securities were held by such Lender as of the
date of this Guaranty (but only for so long as such Excluded Securities are held
by such Lender). The Pro Rata Share of any lender that acquires Notes from an
Excluded Noteholder (or that transfers any portion of its Notes) shall be
adjusted accordingly.

    

    Section
4.15                                Entirely. THIS
GUARANTY EMBODIES THE FINAL AND ENTIRE AGREEMENT OF THE GUARANTORS WITH RESPECT
TO GUARANTORS’ GUARANTY OF THE GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS
INTENDED BY GUARANTORS AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE
GUARANTY, AND NO COURSE OF DEALING BETWEEN OR AMONG GUARANTORS AND THE LENDERS,
NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC
EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY
ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN OR AMONG THE
GUARANTORS AND ANY LENDER.

    
      
         

      

      
        73

        
          

        

      

      
         

      

    

    EXECUTED
as of the day and year first above written.

    

    Earth
LNG,
Inc.                                                                                     Earth
Biofuels Technology Co, LLC

    d/b/a Advanced Biofuels Technology,
LLC

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Applied
LNG Technologies USA,
LLC                                                                                                Earth
Biofuels Distribution Co.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Alternative
Dual Fuels,
Inc.                                                                                                Earth
Biofuels of Cordele, LLC

    d/b/a
Apollo Leasing, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Arizona
LNG,
LLC                                                                                     B20
Customs, LLC

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Fleet
Star,
Inc.                                                                                     Earth
Biofuels Operating, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Durant
Biofuels,
LLC                                                                                                Earth
Biofuels Retail Fuels, Co.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    
      
         

      

      
        74

        
          

        

      

      
         

      

    

    Earth
Ethanol of Washington,
LLC                                                                                                Earth
Ethanol, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    
      
         

      

      
        75

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Lenders below have caused their respective signature page
to this Guaranty to be duly executed as of the date first written
above.

    

    Castlerigg
Master Investments
Ltd.                                                                                                Kings
Road Investments Ltd.

    By:           Sandell
Asset Management Corp.

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Evolution
Master Fund Ltd. SPC,
Segregated                                                                                                Capital
Ventures Internationl

    Portfolio
M                                                                                     By:           Heights
Capital Management, Inc.

    its authorized agent

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Radcliffe
SPC, Ltd. for and on behalf of
the                                                                                                           YA
Global Investment, L.P., (formerly,

    Class A
Convertible Crossover
Segregated                                                                                                Cornell
Capital Partners, LP

    Portfolio                                                                           By:           Yorkville
Advisors, LLC

    By:           RG
Capital Management
Company,                                                                                     Its:           General
Partner

    L.P.

    By:           RGC
Management Company, LLC

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Cranshire
Capital,
LP                                                                                                Portside
Growth and Opportunity Fund

    

    

    By:                                                                By:                                                                

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    
      
         

      

      
        76

        
          

        

      

      
         

      

    

    [SUBSIDIARY GUARANTY]
EXHIBIT A

    

    SCHEDULE OF EBOF
SUBSIDIARIES

    

    

    
      	
              Subsidiary

            
	 
      
	
              Earth
      LNG, Inc.

            
	 
      
	
              Applied
      LNG Technologies USA, LLC

            
	 
      
	
              Alternative
      Dual Fuels, Inc.

            
	
              d/b/a
      Apollo Leasing, Inc.

            
	 
      
	
              Arizona
      LNG, LLC

            
	 
      
	
              Fleet
      Star, Inc.

            
	 
      
	
              Durant
      Biofuels, LLC

            
	 
      
	
              Earth
      Biofuels Technology Co., LLC

            
	
              d/b/a
      Advanced Biofuels Technology, LLC

            
	 
      
	
              Earth
      Biofuels Distribution Co.

            
	 
      
	
              Earth
      Biofuels of Cordele, LLC

            
	 
      
	
              B20
      Customs, LLC

            
	 
      
	
              Earth
      Biofuels Operating, Inc.

            
	 
      
	
              Earth
      Biofuels Retail Fuels, Co.

            
	 
      
	
              Earth
      Ethanol, Inc.

            
	 
      
	
              Earth
      Ethanol of Washington, LLC

            

    

    

    
      
         

      

      
        77

        
          

        

      

      
         

      

    

    EXHIBIT
E

    

    EXECUTION
VERSION

    

    ESCROW
AGREEMENT

    

    Escrow
Agreement dated as of November 13, 2007 (the "Agreement Date")
among (i) SCHULTE ROTH &
ZABEL LLP ("SRZ"); (ii) LENDERS that are signatories
hereto (collectively, the "Lenders"); (iii)
EARTH BIOFUELS, INC., a
Delaware Corporation, ("EBOF"); (iv) DENNIS MCLAUGHLIN, ("McLaughlin") an
individual; and (v) entities listed on the SCHEDULE OF EBOF SUBSIDIARIES
attached hereto as Schedule A (individually, a "Subsidiary" and
collectively, the "Subsidiaries"). SRZ,
the Lenders, EBOF, McLaughlin, and the Subsidiaries shall each be referred to
herein as a "Party" and
collectively, the "Parties."

    

    WHEREAS,
EBOF and certain Noteholders7 are parties to a Securities Purchase
Agreement, dated as of July 24, 2006 (the "Securities Purchase
Agreement"), pursuant to which EBOF issued (i) 8% o Senior Convertible
Notes in the aggregate principal amount of $52.5 million, which were unsecured
and convertible into shares of EBOF's common stock at $2.90 per share, and (ii)
warrants to purchase in excess of 9,000,000 shares of common stock of EBOF at
the exercise price of $2.90; and in connection with the Securities Purchase
Agreement, EBOF executed a Registration Rights Agreement under which it agreed
to cooperate in the registration of the securities under the Securities Purchase
Agreement.

    

    WHEREAS,
on July 11, 2007, Radcliffe, Yorkville, Castlerigg, Portside and Evolution
(collectively, the "Petitioning
Creditors") commenced an involuntary bankruptcy proceeding against EBOF
pursuant to Title 11 of the United States Code in the United States Bankruptcy
Court for the District of Delaware (the "Bankruptcy Court"),
Case No. 07-10928 (CSS) (the "Bankruptcy
Case");

    

    WHEREAS,
pursuant to the Interim Restructuring Agreement dated November 13, 2007 (the
"Interim Restructuring
Agreement"), the parties thereto agreed to execute the Interim
Restructuring Agreement and related exhibits and to place the executed agreement
and related exhibits in escrow with SRZ pending the release condition described
below;

    

    WHEREAS,
pursuant to the Purchase and Sale Agreements, each dated November 13, 2007 (the
"Purchase and Sale
Agreements"), the parties thereto agreed to execute the Purchase and Sale
Agreements and to place each executed agreement in escrow with SRZ pending the
release condition described below;

    

      

    

      
      7 "Noteholders" shall mean Castlerigg
Master Investments Ltd. ("Castlering"); Radcliffe SPC, Ltd. for and on behalf of
the Class A Convertible Crossover Segregated Portfolio ("Radcliffe"); Cranshire
Capital L.P. ("Cranshire"); and YA Global Investments, L.P. (formerly known as
Cornell Capital, L.P. ("Yorkville")), Portside Growth and opportunity Fund
("Portside"), Capital Ventures International, Evolution Master Fund Ltd. SPC,
Segregated Portfolio M ("Evolution"), and Kings Road Investments
Ltd.

    

    
      
         

      

      
        78

        
          

        

      

      
         

      

    

    WHEREAS,
pursuant to the Release, dated November 13, 2007 (the "Release") the parties
thereto agreed to execute the Release and to place the executed Release in
escrow with SRZ pending the release condition described below;

    

    WHEREAS,
pursuant to the Guaranty by Dennis McLaughlin, dated November 13, 2007 (the
"McLaughlin
Guaranty") the parties thereto agreed to execute the McLaughlin Guaranty
and to place the executed McLaughlin Guaranty in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
pursuant to the Guaranty by the Subsidiaries, dated November 13, 2007 (the
"Subsidiary
Guaranty") the parties thereto agreed to execute the Subsidiary Guaranty
and to place the executed Subsidiary Guaranty in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
pursuant to the Confessions of Judgment, each dated November 13, 2007 (the
"Confessions of
Judgment") EBOF agreed to execute the Confessions of Judgment and to
place the executed Confessions of Judgment in escrow with SRZ pending the
release condition described below;

    

    WHEREAS,
SRZ has agreed to serve as escrow agent pursuant to the terms and conditions
hereof and to hold and release the (i) Interim Restructuring Agreement; (ii)
Purchase and Sale Agreements; (iii) Release; (iv) McLaughlin Guaranty; (v)
Subsidiary Guaranty; and (vi) Confessions of Judgment (collectively, the "Escrow Documents") in
accordance with section 3 of this Escrow Agreement.

    

    NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein, the Parties hereto agree as follows:

    

    1.           Appointment of and
Acceptance by SRZ. The Parties hereby appoint SRZ to serve as escrow
agent hereunder. SRZ hereby accepts such appointment and, upon receipt of the
Escrow Documents, agrees to hold and release the Escrow Documents in accordance
with this Escrow Agreement. SRZ does not have any interest in the Escrow
Documents but is serving as escrow agent only and having only possession
thereof.

    

    2.           Delivery of Escrow Documents
to SRZ. Each Party hereto agrees to deliver original versions of the
executed Escrow Documents (applicable to such Party) to SRZ.

    

    3.           Release Conditions.
SRZ shall hold the Escrow Documents until the date that is the earlier of (i) an
order dismissing the Bankruptcy Case (a "Dismissal Order") is
entered on the Bankruptcy Court's docket and such order is not subject to a stay
(the "Dismissal
Date"); and (ii) December 21, 2007. If the Dismissal Date occurs on or
before December 21, 2007 (or such later date as may be agreed in writing by all
Lenders prior to the expiration of such date or dates), the provisions of the
Escrow Documents not already effective shall become effective upon the Dismissal
Date with no further action required by any Party, and SRZ shall release the
Escrow Documents to the respective Parties that are signatories to such
documents. If the Dismissal Date fails to occur on or before December 21, 2007
(or such later date as may be agreed in writing by all Lenders prior to the
expiration of such date or dates)

    
      
         

      

      
        79

        
          

        

      

      
         

      

    

     (a
"Failure
Event"), then, (a) EBOF shall immediately file a notice of withdrawal of
the joint motion to dismiss the Bankruptcy Case (the "Withdrawal Notice"),
which the Lenders that are Petitioning Creditors hereby authorize upon the
occurrence of a Failure Event (or if EBOF fails to do so, EBOF hereby authorizes
the Lenders that are Petitioning Creditors to do so on EBOF's behalf), and (b)
the Escrow Documents shall be of no further force or effect, and SRZ shall
return the Escrow Documents to the respective Parties that delivered such
documents to SRZ upon entry of the Withdrawal Notice on the docket of the
Bankruptcy Court, provided that a Dismissal Order has not been previously
docketed. If the joint motion to dismiss the Bankruptcy Case is denied, or a
Withdrawal Notice is filed before a Dismissal Order (if any) is entered as
provided above, in each case, to the fullest extent possible each of the Parties
shall be restored to the position it held immediately before the Agreement Date,
the Escrow Documents shall be of no further force or effect, and SRZ shall
return the Escrow Documents to the respective Parties that delivered such
documents to SRZ.

    

    4.           Termination of Purchase and
Sale Agreement. If any Purchase and Sale Agreement terminates prior to
the Dismissal Date in accordance with section 2(c) thereof, such Purchase and
Sale Agreement shall be null, void and of no further force and effect, and SRZ
shall return such Purchase and Sale Agreement and the related Release to the
parties that delivered such documents to SRZ.

    

    5.           Duties and Responsibilities
of SRZ. The Parties acknowledge and agree that SRZ (i) shall be obligated
only for the performance of such duties as are specifically set forth in this
Escrow Agreement; (ii) may rely on and shall be protected in acting or
refraining from acting upon any written notice, instruction, instrument,
statement, request or document furnished to it hereunder and believed by it to
be genuine and to have been signed or presented by the proper person, and shall
have no responsibility for determining the accuracy thereof.

    

    6.           Exculpation and
Indemnification. SRZ shall not be liable for, and each Party, shall
jointly and severally indemnify and hold SRZ harmless from and against, any and
all losses, liabilities, claims, actions, damages and expenses, including
attorneys' fees and disbursements, arising out of or in connection with this
Escrow Agreement. This section shall survive termination of this Escrow
Agreement.

    

    7.           Termination. This
Escrow Agreement shall continue in effect until the earlier of the following to
occur: (i) all Escrow Documents are released, or (ii) December 21, 2007, unless
such date is extended in writing by all Lenders.

    

    8.           Notices. Any written
notice required to be given under this Escrow Agreement shall be sent to the
following by mail, electronic mail or facsimile, and shall be deemed given upon
such mailing and sending by facsimile:

    

    If to
SRZ:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    
      
         

      

      
        80

        
          

        

      

      
         

      

    

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq. (david.hillman@srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

    

    If to
EBOF, Dennis McLaughlin, or the Subsidiaries:

    

    3001 Knox
Street, Suite 403

    Dallas,
Texas 75205

    Telephone:                                (214)
389-9800

    Facsimile:                                (214)
389-9805

    Attention:
Dennis McLaughlin

    

    with a
copy to:

    

    Akin Gump
Strauss Hauer & Feld LLP

    1700
Pacific Avenue, Suite 4100

    Dallas,
Texas 75201

    Telephone:                                (214)
969-4710

    Facsimile:                                (214)
969-4343

    Attention:
Charles R. Gibbs, Esq.

    

    If to
Castlerigg (the extent a signatory hereto):

    

    40 West
57th Street

    26th
Floor

    New York,
New York 10019

    Telephone:                                (212)
603-5700

    Facsimile:                                (212)
603-5710

    Attention:                                Cem
Hacioglu (chacioglu@sandellmgmt.com)

    Matthew
Pliskin (mpliskin@sandellmgmt.com)

    

    with a
copy to:

    

    Schulte
Roth & Zabel LLP

    919 Third
Avenue

    New York,
New York 10022

    Telephone:                                (212)
756-2000

    Facsimile:                                (212)
593-5955

    Attention:                                David
M. Hillman, Esq.(david.hillman@srz.com)

    Jeffrey
S. Sabin, Esq. (jeffrey.sabin@srz.com)

    

    If to
Radcliffe (the extent a signatory hereto):

    

    c/o RG
Capital Management, L.P.

    
      
         

      

      
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    3 Bala
Plaza East, Suite 501

    Bala
Cynwyd, PA 19004

    Telephone:                                (610)
617-5911

    Facsimile:                                (610)
617-0570

    Attention:                                Gerald
F. Stahlecker

    (gstahlecker@radcliffefunds.com)

    

    with a
copy to:

    

    Wilmer
Cutler Pickering Hale and Dorr LLP

    399 Park
Avenue

    New York,
New York 10022

    Telephone:                                (212)
230-8800

    Facsimile:                                (212)
230-8888

    Attention:
Philip D. Anker, Esq. (Philip.Anker@wilmerhale.com)

    

    If to
Yorkville (the extent a signatory hereto):

    

    101
Hudson Street, Suite 3700

    Jersey
City, New Jersey 07303

    Attention:
Eric Hansen, Esq.

    (ehansen@yorkvilleadvisors.com)

    

    with a
copy to:

    

    Baker
Botts L.L.P.

    2001 Ross
Avenue

    Dallas,
Texas 75201

    Telephone:                                (214)
953-6571

    Facsimile:                                (214)
953-6503

    Attention:
C. Luckey McDowell, Esq.

    (luckey.mcdowell@bakerbotts.com)

    

    If to
Cranshire (the extent a signatory hereto):

    

    Greenberg
Traurig LLP

    77 W.
Wacker Dr., Suite 2500

    Chicago,
Illinois 60601

    Telephone:                                (312)
456-8448

    Facsimile:                                (312)
456-8435

    Attention:                                Todd
Mazur, Esq.- (mazurt@gtlaw.com)

    Peter
Lieberman (liebermanp@gtlaw.com)

    

    If to
Evolution (the extent a signatory hereto):

    

    c/o
Evolution Capital Management LLC

    
      
         

      

      
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    2425
Olympic Boulevard, Suite 120E

    Santa
Monica, California 90404

    Telephone:                                (310)
315-8866

    Attention:                                Brian
S. Yeh (brian.yeh@evoftind.com)

    

    with a
copy to:

    

    Cadwalader,
Wickersham & Taft LLP

    One World
Financial Center

    New York,
New York 10281

    Telephone:                                (212)
504-6373

    Facsimile:                                (212)
504-6666

    Attention:                                Gregory
M. Petrick, Esq.

    (gregory.petrick@cwt.com)

    

    If to
Kings Road (the extent a signatory hereto):

    

    c/o
Polygon Investment Partners LP

    598
Madison Avenue, 14th Floor

    New York,
New York 10022

    Telephone:                                (212)
359-7300

    Facsimile:                                (212)
359-7303

    Attention:                                Erik
M.W. Casperson

    (ecaspersen@polygoninv.com)

    Brandon
L. Jones (bjones@polygoninv.com)

    

    with a
copy to:

    

    Latham
& Watkins LLP

    633 West
Fifth Street, Suite 4000

    Los
Angeles, California 90071

    Telephone:                                (213)
485-1234

    Facsimile:                                (213)
891-8763

    Attention:                                Russell
Sauer, Esq. (russ.sauer@lw.com)

    

    If to CVI
(the extent a signatory hereto):

    

    c/o
Heights Capital Management

    101
California Street, Suite 3250

    San
Francisco, California 94111

    Telephone:                                (415)
403-651.0

    Facsimile:                                (610)
617-3896

    Attention:                                Michael
Spolan (Michael.Spolan@sig.com)

    

    with a
copy to:

    
      
         

      

      
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    Klehr,
Harrison, Harvey, Branzburg & Ellers, LLP

    919
Market Street, Suite 1000

    Wilmington,
Delaware 19801

    Telephone:                                (302)
426-1189

    Facsimile:                                (302)
426-9193

    Attention:                                Richard
M. Beck, Esq. (rbeck@klehr.com)

    

    If to
Portside (the extent a signatory hereto):

    

    c/o
Ramius Capital Group, L.L.C.

    666 Third
Avenue, 26th Floor

    New York,
New York 10017

    Telephone:                                (212)
845-7955

    Facsimile:                                (212)
201-4802

    Attention:                                Jeffrey
Smith Osmith@ramius.com)

    Peter
Feld (pfeld@ramius.com)

    Owen
Littman (olittman@ramius.com)

    

    with a
copy to:

    

    Hennigan,
Bennett & Dorman

    601 South
Figueroa Street, Suite 3300

    Los
Angeles, California 90017

    Telephone:                                (213)
694-1012

    Facsimile:                                (213)
694-1234

    Attention:                                Bruce
Bennett, Esq. (bennettb@hbdlawyers.com)

    

    9.           Governing Law. Jurisdiction.
Jury Trial.       All questions
concerning the construction, validity, enforcement and interpretation of this
Escrow Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdiction other than the State of
New York. The Parties hereby irrevocably submit to the exclusive jurisdiction of
the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waive, and agree not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum o_r that the venue of such suit, action or proceeding is
improper. ' The Parties hereby irrevocably waive personal service of process and
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such Party at the address for such notices to it under
this Escrow Agreement and agree that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS ESCROW AGREEMENT OR ANY 

    
      
         

      

      
        84

        
          

        

      

      
         

      

    

     

     

     

    TRANSACTION CONTEMPLATED
HEREBY.

    

    10.           Counterparts. This
Escrow Agreement may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

    

    11.           Headings. Section
headings are for convenience of reference only and shall in no way affect the
interpretation of this Escrow Agreement.

    

    12.           Recitals. The recital
and introductory paragraphs hereof are a part hereof, form a basis for this
Escrow Agreement and shall be. considered prima facie evidence of the facts and
documents referred to therein.

    

    13.           Effective Date. This
Escrow Agreement shall be effective as of the date first mentioned
above.

    

    

    

    
      
         

      

      
        85

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Parties to this Escrow Agreement have caused their
respective signature page to this Escrow Agreement to be duly executed as of the
date first written above.

    

    

    Earth
Biofuels,
Inc.                                                                                     Castlerigg
Master Investments Ltd.

    By: Sandell Asset Management
Corp.

    

    By:  _____________________________

    By: /s/ Dennis
McLaughlin                                                                           Name:

    Name:  Dennis
McLaughlin                                                                                     Title:

    Title: CEO

    

    Evolution
Master Fund. SPC,
Segregated                                                                                                Capital
Ventures International

    Portfolio
M                                                                                     By:           Heights
Capital Management, Inc.

    its authorized agent

    

    By:
____________________________                                                                                                By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Radcliffe
SPC, Ltd. for and on behalf of
the                                                                                                           YA
Global Investments, L.P. (formerly,

    Class A
Convertible Crossover
Segregated                                                                                                Cornell
Capital Partners, LP

    Portfolio                                                                           By:           Yorkville
Advisors, LLC

    By:           RG
Capital Management
Company,                                                                                     Its:           General
Partner

    L.P.

    By:           RGC
Management Company, LLC

    

    By:
_______________________________                                                                                                           By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Cranshire
Capital,
LP                                                                                                Portside
Growth and Opportunity Fund

    

    By:
________________________________                                                                                                           By:
______________________________

    Name:                                                                                     Name:

    Title:                                                                                     Title:

    

    Kings
Road Investments Ltd.

    

    By:
________________________________

    Name:

    Title:

    
      
         

      

      
        86

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties to this Agreement have caused their respective
signature page to this Interim Restructuring Agreement to be duly executed as of
the date first written above.

    

    Dennis
McLaughlin

    Name

    /s/ Dennis
McLaughlin

    Signature

    3001 Knox Street, #403,
Dallas, TX 75205

    Address

    

    

    STATE OF
TEXAS  )

    ) ss.

    COUNTY OF
DALLAS  )

    

    BEFORE ME,  the duly
undersigned authority, on this day personally appeared DENNIS MCLAUGHLIN, known
to me to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration
therein expressed, and in the capacity therein stated.

    

    Given under my hand and seal of office,
this 13th
day of Nov.,
2007.

    

    /s/ Marcella Smith

    [NOTARY
STAMP]                                                                                     Notary
Public, State of Texas

    

    My
Commission Expires: [June 27,2009]

    
      
         

      

      
        87

        
          

        

      

      
         

      

    

               IN
WITNESS WHEREOF, the parties to this Agreement have caused their respective
signature page to this Interim Restructuring Agreement to be duly executed as of
the date first written above.

    

    Earth
LNG,
Inc.                                                                                     Earth
Biofuels Technology Co, LLC

    d/b/a Advanced Biofuels Technology,
LLC

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Applied
LNG Technologies USA,
LLC                                                                                                Earth
Biofuels Distribution Co.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Alternative
Dual Fuels,
Inc.                                                                                                Earth
Biofuels of Cordele, LLC

    d/b/a
Apollo Leasing, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Arizona
LNG,
LLC                                                                                     B20
Customs, LLC

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Fleet
Star,
Inc.                                                                                     Earth
Biofuels Operating, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    Durant
Biofuels,
LLC                                                                                                Earth
Biofuels Retail Fuels, Co.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    
      
         

      

      
        88

        
          

        

      

      
         

      

    

    Earth
Ethanol of Washington,
LLC                                                                                                Earth
Ethanol, Inc.

    

    By: /s/ Dennis
McLaughlin                                                                                     By: /s/ Dennis
McLaughlin

    Name: Dennis
McLaughlin                                                                                                Name:
Dennis McLaughlin

    Title:
CEO                                                                                     Title:
CEO

    

    
      
         

      

      
        89

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties to this
Escrow Agreement have caused their respective signature page to this Escrow
Agreement to be duly executed as of the date first written above.

    

    SCHULTE ROTH & ZABEL,
LLP

    In its capacity as escrow
agent

    

    

    By:

    Title:

    [ESCROW AGREEMENT] EXHIBIT
A

    

    SCHEDULE OF EBOF
SUBSIDIARIES

    

    

    
      	
              Subsidiary

            
	 
      
	
              Earth
      LNG, Inc.

            
	 
      
	
              Applied
      LNG Technologies USA, LLC

            
	 
      
	
              Alternative
      Dual Fuels, Inc.

            
	
              d/b/a
      Apollo Leasing, Inc.

            
	 
      
	
              Arizona
      LNG, LLC

            
	 
      
	
              Fleet
      Star, Inc.

            
	 
      
	
              Durant
      Biofuels, LLC

            
	 
      
	
              Earth
      Biofuels Technology Co., LLC

            
	
              d/b/a
      Advanced Biofuels Technology, LLC

            
	 
      
	
              Earth
      Biofuels Distribution Co.

            
	 
      
	
              Earth
      Biofuels of Cordele, LLC

            
	 
      
	
              B20
      Customs, LLC

            
	 
      
	
              Earth
      Biofuels Operating, Inc.

            
	 
      
	
              Earth
      Biofuels Retail Fuels, Co.

            
	 
      
	
              Earth
      Ethanol, Inc.

            
	 
      
	
              Earth
      Ethanol of Washington, LLC

            

    

    

    
      
         

      

      
        90

        
          

        

      

      
         

      

    

    IN
THS UNITED STATES BANKRUPTCY COURT

    FOR
THE DISTRICT OF DELAWARE

    

    In
re:                                                                           |           Chapter
7 (Involuntary Petition Pending)

    |

    EARTH
BIOFUELS,
INC.,                                                                                     |           Case
No. 07-10928 (CSS)

    |

    Debtor.                                           |           Related Docket
No.   88

    ____________________________________|

    

    ORDER
GRANTING JOINT MOTION OF DEBTOR AND PETIONING CREDITORS

    HOLDING
94% OF NOTES TO APPROVE INTERIM SETTLEMENT AGREEMENT

    AND
DISMISS INVOLUNTARY BANKRUPTCY PETITION PURSUANT TO 11 U.S.C.

    §§ 105(a) AND 303(j)(2) AND
FEDERAL RULE OF BANKRUPTCY PROCEDURE 9019

    

    Upon
consideration of the Joint Motion of Petitioning Creditors and Debtor to Approve
Interim Settlement Agreement and Dismiss Involuntary Bankruptcy Petition
Pursuant to 11 U.S.C. §§ 105(a) and 303(j)(2) and Federal Rule of Bankruptcy
Procedure 9019 (the “Motion”);8  and
it appearing that the Motion was property and timely served; and it appearing
that notice of the Motion was properly served on all parties required by 11
U.S.C. § 303(j) and Bankruptcy Rule 1017; and the Court having convened a
hearing on the Motion on December 10, 2007 (the “Hearing”); and it appearing
that the relief requested in the Motion is in the best interests of the Debtor
and its creditors; and good cause having been shown, it is hereby

    ORDERED that the Motion is GRANTED in
part and DENIED in part for the reasons set forth on the record at the Hearing;
and it is further

    ORDERED that this order shall be
immediately effective upon entry on the docket and not subject to any stay; and
it is further

    ORDERED that the involuntary bankruptcy
petition filed against the Debtor on July 11, 2007 is dismissed without
prejudice.

    

    

      

    

      
      8 All
capitalized terms not herein defined shall have the same meaning as ascribed to
them in the Motion.

    

    
      
         

      

      
        91

        
          

        

      

      
         

      

    

    Dated:
December 10, 2007

    Wilmington,
Delaware                                                                                     __/s/__ Christopher S.
Sontchi______

    The Honorable Christopher S.
Sontchi

    United States Bankruptcy
Judge

    
      
         

      

      
        92

        
          

        

      

      
         

      

    

    UNITED
STATES DISTRICT COURT

    SOUTHERN
DISTRICT OF NEW YORK

    _________________________________________________________________

    |

    RADCLIFFE
SPC,
LTD.                                                                                                           |

    for and
on behalf of
the                                                                                                           |

    Class A
Segregated
Portfolio,                                                                                                           |

    f/k/a the
Class A
Convertible                                                                                                                     |

    Crossover
Segregated                                                                                                                     |

    Portfolio                                                                                                |     1:07-cv-02400-GBD

    |

    Plaintiff,                                           |

    |

    -against-                                                                |

    |

    EARTH
BIOFUELS,
INC.,                                                                                                                     |

    |

    Defendant.                                                      |

    ______________________________________________________|

    

    STIPULATION AND ORDER OF
DISMISSAL WITHOUT PREJUDICE

    

    Plaintiff
Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio,
f/k/a

    the Class
A Convertible Crossover Segregated Portfolio ("Radcliffe"), and Defendant
Earth

    Biofuels,
Inc. ("Earth Biofuels") have agreed to dismiss all claims pending in this
litigation

    without
prejudice, with each party (except as they may have otherwise agreed in writing)
to bear

    its own
costs and attorneys' fees. Accordingly, pursuant to Fed. R. Civ. P. 41(a)(ii),
the parties

    respectfully
request that this Court enter an order dismissing this case in its entirety
without

    prejudice.

    

    Date:                      New
York, NY

    January 31 ,
2008

    

    Respectfully
submitted,

    

    By /s/ Philip
Anker                                                      

    Philip D.
Anker (PA-7833)

    Robert
Trenchard (RT-3 291)

    WILMER
CUTLER PICKERING

    
      
         

      

      
        93

        
          

        

      

      
         

      

    

    HALE AND
DORR LLP

    399 Park
Avenue

    New York,
NY 10022

    (212)
230-8800

    Attorneys
for Plaintiff

    Radcliffe
SPC, Ltd. for and on behalf of the

    Class A
Segregated Portfolio, f/k/a the

    Class A
Convertible Crossover Segregated Portfolio

    

    

    

    By /s/ Daniel I.
Goldberg                                                                

    SALON
MARROW DYCKMAN

    NEWMAN
& BROUDY, LLP

    292
Madison Avenue

    New York,
New York 10017

    (212)
661-7100

    Counsel
for Defendant

    Earth
Biofuels, Inc.

    

    

    IT IS SO
ORDERED this __ day of January, 2008.

    

    ____________________

    

    U.S.
District Court Judge

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
        94

        
          

        

      

      
         

      

    

    UNITED
STATES DISTRICT COURT

    SOUTHERN
DISTRICT OF NEW YORK

    _________________________________________________________________

    |

    EVOLUTION
MASTER FUND LTD. SPC,
SEGREGATED                                                                                                                                |

    PORTFOLIO
M                                                                                                           |

    Plaintiff,                                           |

    |

    -against-                                                                |

    |     1:07-cv-02279-GBD

    EARTH
BIOFUELS,
INC.,                                                                                                                     |

    Defendant.                                                      |

    ______________________________________________________|

    

    STIPULATION AND ORDER OF
DISMISSAL WITHOUT PREJUDICE

    

    Plaintiff
Evolution Master Fund Ltd. Segregated Portfolio M (“Evolution”), and Defendant
Earth Biofuels, Inc. ("Earth Biofuels") have agreed to dismiss all claims
pending in this litigation without prejudice, with each party (except as they
may have otherwise agreed in writing) to bear its own costs and attorneys' fees.
Accordingly, pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii), the parties
respectfully request that this Court enter an order dismissing this case in its
entirety without prejudice.

    

    Date:                      New
York, NY

    January 18, 2008

    

    Respectfully
submitted,

    

    By /s/ Gregory M
Petrick                                                                By /s/ Daniel I.
Goldberg

    CADWALADER
WICKERSHAM & TAFT
LLP                                                                                                                     SALON
MARROW DYCKMAN

    One World
Financial
Center                                                                                                           NEWMAN
& BROUDY, LLP

    New York,
New York
10281                                                                                                           292
Madison Avenue

    (212)
504-6000                                                                                                New
York, New York 10017

    Attorneys
for
Plaintiff                                                                                                (212)
661-7100

    
      	
              Evolution
      Master Fund Ltd. SPC, Segregated

            	
              Counsel
      for Defendant Earth

            

    

    Portfolio
M                                                                                                Biofuels,
Inc.

    

    IT IS SO
ORDERED this _ day of ____________________, 2008

    

    __________________________________

    U.S.
District Court Judge

    
      
         

      

      
        95

        
          

        

      

      
         

      

    

    UNITED
STATES DISTRICT COURT

    SOUTHERN
DISTRICT OF NEW YORK

    _________________________________________________________________

    |

    PORTSIDE
GROWTH AND OPPORTUNITY
FUND,                                                                                                                                |

                                                                               |

    Plaintiff,                                           |

    |

    -against-                                                                |

    |     1:07-cv-5582-GBD

    EARTH
BIOFUELS,
INC.,                                                                                                                     |

    Defendant.                                                      |

    ______________________________________________________|

    

    STIPULATION AND ORDER OF
DISMISSAL WITHOUT PREJUDICE

    

    Plaintiff
Portside Growth and Opportunity Fund (“Portside”), and Defendant Earth Biofuels,
Inc. ("Earth Biofuels") have agreed to dismiss all claims pending in this
litigation without prejudice, with each party (except as they may have otherwise
agreed in writing) to bear its own costs and attorneys' fees. Accordingly,
pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii), the parties respectfully request
that this Court enter an order dismissing this case in its entirety without
prejudice.

    

    Date:                      New
York, NY

    January 18, 2008

    

    Respectfully
submitted,

    

    By /s/ A. Brent
Truitt                                                                           By /s/ Daniel I.
Goldberg

    HENNIGAN,
BENNETT & DORMAN
LLP                                                                                                           SALON
MARROW DYCKMAN

    245 Park
Avenue, Suite
3962                                                                                                           NEWMAN
& BROUDY, LLP

    New York,
New York
10167                                                                                                           292
Madison Avenue

    (212)
672-1966                                                                                                New
York, New York 10017

    Attorneys
for Plaintiff Portside Growth
and                                                                                                                     (212)
661-7100

    
      	
              Opportunity
      Fund

            	
              Counsel
      for Defendant Earth

            

    

    Biofuels, Inc.

    

    IT IS SO
ORDERED this _ day of ____________________, 2008

    

    __________________________________

    U.S.
District Court Judgeexhibit10_97.htm

    

      Exhibit
10.97

      

      

      AMENDED
AND RESTATED EARTH BIOFUELS, INC.

      2006
STOCK OPTION AND AWARD PLAN

      

      (as of
November 17, 2007)

      

       

      EARTH
BIOFUELS, INC., a Delaware corporation (the “Company”),
hereby adopts this Amended and Restated 2006 Stock Option and Award Plan (the
“Plan”),
effective as of the 17th day
of November 2007, under which options to acquire stock of the Company or bonus
stock may be granted from time to time to employees, including officers and
directors of the Company and/or its subsidiaries. In addition, at the discretion
of the board of directors or other administrator of this Plan, options to
acquire stock of the Company or bonus stock may from time to time be granted
under this Plan to other individuals who contribute to the success of the
Company or its subsidiaries but who are not employees of the Company, all on the
terms and conditions set forth herein.

       

       

      1.           
Purpose of the
Plan. The Plan is intended to aid the Company in maintaining and
developing a management team, attracting qualified officers and employees
capable of assisting in the future success of the Company, and rewarding those
individuals who have contributed to the success of the Company. It is designed
to aid the Company in retaining the services of executives and employees and in
attracting new personnel when needed for future operations and growth and to
provide such personnel with an incentive to remain employees of the Company, to
use their best efforts to promote the success of the Company’s business, and to
provide them with an opportunity to obtain or increase a proprietary interest in
the Company. It is also designed to permit the Company to reward those
individuals who are not employees of the Company but who are perceived by
management as having contributed to the success of the Company or who are
important to the continued business and operations of the Company. The above
aims will be effectuated through the granting of nonqualified options (“Options”)
to purchase shares of common stock of the Company, par value $0.001 per share
(the “Stock”),
or the granting of awards of bonus stock (“Stock
Awards”), all subject to the terms and conditions of this Plan. If the
Company has a class of securities registered under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), it is intended that Options or Stock
Awards granted pursuant to this Plan qualify for the exemption provided for in
Rule 16b-3 (“Rule
16b-3”) promulgated under the Exchange Act or any amendment or successor
rule of like tenor when granted in accordance with the provisions of such
rule.

       

       

      2.           
Adoption. The
Plan shall become effective immediately on adoption by the board of directors of
the Company (the “Board”)
and awards under the Plan can be made at that time or at any subsequent
time.

       

       

       

      3.           
Administration of the
Plan. Administration of the Plan shall be determined by the Board.
Subject to compliance with applicable provisions of governing law, the Board may
delegate administration of the Plan or specific administrative duties with
respect to the Plan, on such terms and to such committees of the Board as it
deems proper. Any Option or Stock Award approved by the Board shall be approved
by a majority vote of those members of the Board in attendance at a meeting at
which a quorum is present. Any Option or Stock Award approved by a committee
designated by the Board shall be approved as specified by the Board at the time
of delegation. The interpretation and construction of the terms of the Plan by
the Board or a duly authorized committee shall be final and binding on all
participants in the Plan absent a showing of demonstrable error. No member of
the Board or duly authorized committee shall be liable for any action taken or
determination made in good faith with respect to the Plan.

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

       

      The
Board’s or duly authorized committee’s determination under the Plan (including
without limitation determinations of the persons to receive Options or Stock
Awards, the form, amount, and timing of such Options or Stock Awards, the terms
and provisions of such Options or Stock Awards, and the agreements evidencing
same) need not be uniform and may be made by the Board or duly authorized
committee selectively among persons who receive, or are eligible to receive,
Options or Stock Awards under the Plan, whether or not such persons are
similarly situated.

       

       

      4.           
Shares of Stock
Subject to the Plan.  A total of 40,000,000 shares of Stock may
be subject to, or issued pursuant to, Options or Stock Awards granted under the
terms of this Plan. Any shares subject to an Option or Stock Award under the
Plan, which Option or Stock Award for any reason expires or is forfeited,
terminated, or surrendered unexercised as to such shares, shall be added back to
the total number of shares reserved for issuance under the terms of this Plan.
If any right to acquire Stock granted under the Plan is exercised by the
delivery of shares of Stock or the relinquishment of rights to shares of Stock,
only the net shares of Stock issued (the shares of Stock issued less the shares
of Stock surrendered) shall count against the total number of shares reserved
for issuance under the terms of this Plan.  The number of shares of
Stock subject to the Plan is subject to adjustment as set forth in Section 15
hereof.

       

       

      5.           
Reservation of Stock
on Granting of Option.  At the time of granting any Option
under the terms of this Plan, there will be reserved for issuance on the
exercise of the Option the number of shares of Stock of the Company subject to
such Option. The Company may reserve either authorized but unissued shares or
issued shares that have been reacquired by the Company.

       

       

      6.           
Eligibility.
Options or Stock Awards under the Plan may be granted to employees, including
officers and directors, of the Company or its subsidiaries, as may be existing
from time to time, and to other individuals who are not employees of the Company
as may be deemed in the best interest of the Company by the Board or a duly
authorized committee. Such Options or Stock Awards shall be in the amounts, and
shall have the rights and be subject to the restrictions, as may be determined
by the Board or a duly authorized committee at the time of grant, all as may be
within the general provisions of this Plan.

       

       

      7.           
Term of Options and
Certain Limitations on Right to Exercise.

       

         

      (a)           
Each Option shall have the term established by the Board or duly authorized
committee at the time the Option is granted but in no event may an Option have a
term in excess of five years.

       

      (b)           
The term of the Option, once it is granted, may be reduced only as provided for
in this Plan or under the written provisions of the Option.

       

      (c)           
Unless otherwise specifically provided by the written provisions of the Option,
no holder or his or her legal representative, legatee, or distributee will be,
or shall be deemed to be, a holder of any shares subject to an Option unless and
until the holder exercises his or her right to acquire all or a portion of the
Stock subject to the Option and delivers the required consideration to the
Company in accordance with the terms of this Plan and the Option, and then only
to the extent of the number of shares of Stock acquired. Except as specifically
provided in this Plan or as otherwise specifically provided by the written
provisions of the Option, no adjustment to the exercise price or the number of
shares of Stock subject
to the Option shall be made for dividends or other rights for which the record
date is prior to the date the Stock subject to the Option is acquired by the
holder.

         

      

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (d)           
Options under the Plan shall vest and become exercisable at such time or times
and on such terms as the Board or a duly authorized committee may determine at
the time of the grant of the Option.

       

             
(e)            Options
granted under the Plan shall contain such other provisions, including, without
limitation, further restrictions on the vesting and exercise of the Option, as
the Board or a duly authorized committee shall deem advisable.

       

             
(f)            In no
event may an Option be exercised after the expiration of its term.

       

       

       

      8.           
Exercise Price.
The exercise price of each Option issued under the Plan shall be determined by
the Board or a duly authorized committee on the date of grant.

       

       

      9.           
Payment of Exercise
Price. The exercise of any Option shall be contingent on receipt by the
Company of cash, certified bank check to its order, or other consideration
acceptable to the Company; provided that, at the
discretion of the Board or a duly authorized committee, the written provisions
of the Option may provide that payment can be made in whole or in part in shares
of Stock of the Company that have been owned by the optionee for more than six
months or by the surrender of Options to acquire Stock from the Company that
have been held for more than six months, which Stock or Options shall be valued
at their then fair market value as determined by the Board or a duly authorized
committee. Any consideration approved by the Board or a duly authorized
committee that calls for the payment of the exercise price over a period of more
than one year shall provide for interest, which shall not be included as part of
the exercise price, that is equal to or exceeds the imputed interest provided
for in section 483 of the Code or any amendment or successor section of like
tenor.

       

       

      10.           
Withholding. If
the grant of a Stock Award or the grant or exercise of an Option pursuant to
this Plan, or any other event in connection with any such grant or exercise,
creates an obligation to withhold income and employment taxes pursuant to the
Code or applicable state or local laws, such obligation may, at the discretion
of the Board or a duly authorized committee at the time of the grant of the
Option or Stock Award and to the extent permitted by the terms of the Option or
Stock Award and the then governing provisions of the Code and the Exchange Act,
be satisfied (i) by the holder of the Option or Stock Award delivering to the
Company an amount of cash equal to such withholding obligation; (ii) by the
Company withholding from any compensation or other amount owing to the holder of
the Option or Stock Award the amount  (in cash, Stock, or other
property as the Company may determine) of the withholding obligation; (iii) by
the Company withholding shares of Stock subject to the Option or Stock Award
with a fair market value equal to such obligation; or (iv) by the holder of the
Option or Stock Award either delivering shares of Stock that have been owned by
the holder for more than six months or canceling Options or other rights to
acquire Stock from the Company that have been held for more than six months with
a fair market value equal to such requirements. In all events, delivery of
shares of Stock issuable on exercise of the Option or on grant of the Stock
Award shall be conditioned upon and subject to the satisfaction or making
provision for the satisfaction of the withholding obligation of the Company
resulting from the grant or exercise of the Option, grant of the Stock Award, or
any other event. The Company shall be further authorized to take such other
action as may be necessary, in the opinion of the Company, to satisfy all
obligations for the payment of such taxes.

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

       

      11.           
Awards to Directors
and Officers. To the extent the Company has a class of securities
registered under the Exchange Act, Options or Stock Awards granted under the
Plan to directors and officers (as used in Rule 16b-3 promulgated under the
Exchange Act or any amendment or successor rule of like tenor) intended to
qualify for the exemption from section 16(b) of the Exchange Act provided in
Rule 16b-3 shall, in addition to being subject to the other restrictions and
limitations set forth in this Plan, be made as follows:

       

       

      (a)           
A transaction whereby there is a grant of an Option or Stock Award pursuant to
this Plan must satisfy one of the following:

       

       

      (i)           
The transaction must be approved by the Board or a duly authorized committee
composed solely of two or more non-employee directors of the Company (as defined
in Rule 16b-3);

       

       

      (ii)           
The transaction must be approved or ratified, in compliance with section 14 of
the Exchange Act, by either: the affirmative vote of the holders of a majority
of the securities of the Company present or represented and entitled to vote at
a meeting of the stockholders of the Company held in accordance with the
applicable laws of the state of incorporation of the Company; or, if allowed by
applicable state law, the written consent of the holders of a majority, or such
greater percentage as may be required by applicable laws of the state of
incorporation of the Company, of the securities of the Company entitled to vote.
If the transaction is ratified by the stockholders, such ratification must occur
no later than the date of the next annual meeting of stockholders;
or

       

       

      (iii)           
The Stock acquired must be held by the officer or director for a period of six
months subsequent to the date of the grant; provided that, if the
transaction involves a derivative security (as defined in section 16 of the
Exchange Act), this condition shall be satisfied if at least six months elapse
from the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than on exercise or conversion) or
its underlying equity security.

       

        

      (b)           
Any transaction involving the disposition to the Company of its securities in
connection with Options or Stock Awards granted pursuant to this Plan
shall:

       

      

      (i)           
be approved by the Board or a duly authorized committee composed solely of two
or more non-employee directors; or

       

       

      (ii)           
be approved or ratified, in compliance with section 14 of the Exchange Act, by
either: the affirmative vote of the holders of a majority of the securities of
the Company present, or represented, and entitled to vote at a meeting duly held
in accordance with the applicable laws of the state of incorporation of the
Company or, if allowed by applicable state law, the written consent of the
holders of a majority, or such greater percentage as may be required by
applicable laws of the state of incorporation of the Company, of the securities
of the Company entitled to vote; provided that, such
ratification occurs no later than the date of the next annual meeting of
stockholders.

       

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      All of
the foregoing restrictions and limitations are based on the governing provisions
of the Exchange Act and the rules and regulations promulgated there under as of
the date of adoption of this Plan. If at any time the governing provisions are
amended to permit an Option to be granted or exercised or Stock Award to be
granted pursuant to Rule 16b-3 or any amendment or successor rule of like tenor
without one or more of the foregoing restrictions or limitations, or the terms
of such restrictions or limitations are modified, the Board or a duly authorized
committee may award Options or Stock Awards to directors and officers, and may
modify outstanding Options or Stock Awards, in accordance with such changes, all
to the extent that such action by the Board or a duly authorized committee does
not disqualify the Options or Stock Awards from exemption under the provisions
of Rule 16b-3 or any amendment or successor rule of similar tenor.

       

       

      12.           
Stock
Awards.  The Board or a duly authorized committee may grant Stock
Awards to individuals eligible to participate in this Plan, in the amount, and
subject to the provisions determined by the Board or a duly authorized
committee. The Board or a duly authorized committee shall notify in writing each
person selected to receive a Stock Award hereunder as soon as practicable after
he or she has been so selected and shall inform such person of the number of
shares he or she is entitled to receive, the approximate date on which such
shares will be issued, and the Forfeiture Restrictions applicable to such
shares. (For purposes hereof, the term “Forfeiture Restrictions” shall mean any
prohibitions against sale or other transfer of shares of Stock granted under the
Plan and the obligation of the holder to forfeit his or her ownership of or
right to such shares and to surrender such shares to the Company on the
occurrence of certain conditions.) The Board or a duly authorized committee may,
at its discretion, require the payment in cash to the Company by the award
recipient of the par value of the Stock. The shares of Stock issued pursuant to
a Stock Award shall not be sold, exchanged, transferred, pledged, hypothecated,
or otherwise disposed of during such period or periods of time which the Board
or a duly authorized committee shall establish at the time of the grant of the
Stock Award. If a Stock Award is made to an employee of the Company or its
subsidiaries, the employee shall be obligated for no consideration other than
the amount, if any, of the par value paid in cash for such shares, to forfeit
and surrender such shares as he or shall have received under the Plan which are
then subject to Forfeiture Restrictions to the Company if he or she is no longer
an employee of the Company or its subsidiaries for any reason; provided that, in the event
of termination of the employee’s employment by reason of death or total and
permanent disability, the Board or duly authorized committee, in its sole
discretion, may cancel the Forfeiture Restrictions. Certificates representing
shares subject to Forfeiture Restrictions shall be appropriately legended as
determined by the Board or a duly authorized committee to reflect the Forfeiture
Restrictions, and the Forfeiture Restrictions shall be binding on any transferee
of the shares.

       

       

      13.           
Assignment. At
the time of grant of an Option or Stock Award, the Board or duly authorized
Committee, in its sole discretion, may impose restrictions on the
transferability of such Option or Stock Award and provide that such Option shall
not be transferable other than by will or the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined in the Code and
that, except as permitted by the foregoing, such Options or Stock Awards granted
under the Plan and the rights and privileges thereby conferred shall not be
transferred, assigned, pledged, or hypothecated in any way (whether by operation
of law or otherwise), and shall not be subject to execution, attachment, or
similar process. On any attempt to transfer, assign, pledge, hypothecate, or
otherwise dispose of the Option or Stock Award, or of any right or privilege
conferred thereby, contrary to the provisions thereof, or on the levy of any
attachment or similar process on such rights and privileges, the Option or Stock
Award and such rights and privileges shall immediately become null and
void.

       

       

      14.           
Additional Terms and
Provisions of Awards. The Board or duly authorized committee shall have
the right to impose additional limitations on individual awards under the Plan.
For example, and without limiting the authority of the Board or a duly
authorized committee, an individual award may be conditioned on continued
employment for a specified period or may be voided based on the award holder’s
gross negligence in the performance of his or her duties, substantial failure to
meet written standards established by the Company for the performance of his or
her duties, criminal misconduct, or willful or gross misconduct in the
performance of his or her duties.     

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      In
addition, the Board or a duly authorized committee may establish additional
rights in the holders of individual awards at the time of grant. For example,
and without limiting the authority of the Board or a duly authorized committee,
an individual award may include the right to immediate payment of the value
inherent in the award on the occurrence of certain events such as a change in
control of the Company, all on the terms and conditions set forth in the award
at the time of grant. The Board or a duly authorized committee may at the time
of the grant of the Option or Stock Award, establish any other terms,
restrictions, or provisions on the exercise of an Option or the holding of Stock
subject to the Stock Award as it deems appropriate. All such terms,
restrictions, and provisions must be set forth in writing at the time of grant
in order to be effective.

       

       

      15.           
Dilution or Other
Adjustment. In the event that the number of shares of Stock of the
Company from time to time issued and outstanding is increased pursuant to a
stock split or a stock dividend, the number of shares of Stock then covered by
each outstanding Option granted hereunder shall be increased proportionately,
with no increase in the total purchase price of the shares then so covered, and
the number of shares of Stock subject to the Plan shall be increased by the same
proportion. Shares awarded under the terms of a Stock Award shall be entitled to
the same rights as other issued and outstanding shares of Stock, whether or not
then subject to Forfeiture Restrictions, although any additional shares of Stock
issued to the holder of a Stock Award shall be subject to the same Forfeiture
Restrictions as the Stock Award. In the event that the number of shares of Stock
of the Company from time to time issued and outstanding is reduced by a
combination or consolidation of shares, the number of shares of Stock then
covered by each outstanding Option granted hereunder shall be reduced
proportionately, with no reduction in the total purchase price of the shares
then so covered, and the number of shares of Stock subject to the Plan shall be
reduced by the same proportion. Shares awarded under a Stock Award shall be
treated as other issued and outstanding shares of Stock, whether or not then
subject to Forfeiture Restrictions. In the event that the Company should
transfer assets to another corporation and distribute the stock of such other
corporation without the surrender of Stock of the Company, and if such
distribution is not taxable as a dividend and no gain or loss is recognized by
reason of section 355 of the Code or any amendment or successor statute of like
tenor, then the total purchase price of the Stock then covered by each
outstanding Option shall be reduced by an amount that bears the same ratio to
the total purchase price then in effect as the market value of the stock
distributed in respect of a share  of the Stock of the Company,
immediately following the distribution, bears to the aggregate of the market
value at such time of a share of the Stock of the Company plus the stock
distributed in respect thereof. Shares issued under a Stock Award shall be
treated as issued and outstanding whether or not subject to Forfeiture
Restrictions, although any stock of the other corporation to be distributed with
respect to the shares awarded under the Stock Award shall be subject to the
Forfeiture Restrictions then applicable to such shares and may be held by the
Company or otherwise subject to restrictions on transfer until the expiration of
the Forfeiture Restrictions. In the event that the Company distributes the stock
of a subsidiary to its stockholders, makes a distribution of a major portion of
its assets, or otherwise distributes a significant portion of the value of its
issued and outstanding Stock to its stockholders, the number of shares then
subject to each outstanding Option and the Plan, or the exercise price of each
outstanding Option, may be adjusted in the reasonable discretion of the Board or
a duly authorized committee. Shares awarded under a Stock Award shall be treated
as issued and outstanding, whether or not subject to Forfeiture Restrictions,
although any Stock, assets, or other rights distributed shall be subject to the
Forfeiture Restrictions governing the shares awarded under the Stock Award and,
at the discretion of the Board or a duly authorized committee, may be held by
the Company or otherwise subject to restrictions on transfer by the Company
until the expiration of such Forfeiture Restrictions. All such adjustments shall
be made by the Board or duly authorized committee, whose determination upon the
same, absent demonstrable error, shall be final and binding on all participants
under the Plan. No fractional shares shall be issued, and any fractional shares
resulting from the computations pursuant to this section shall be eliminated
from the respective Option or Stock Award. No adjustment shall be made for cash
dividends, for the issuance of additional shares of Stock for consideration
approved by the Board, or for the issuance to stockholders of rights to
subscribe for additional Stock or other securities.

       

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      16.           
Options or Stock
Awards to Foreign Nationals. The Board or a duly authorized committee
may, in order to fulfill the purposes of this Plan and without amending the
Plan, grant Options or Stock Awards to foreign nationals or individuals residing
in foreign countries that contain provisions, restrictions, and limitations
different from those set forth in this Plan and the Options or Stock Awards made
to United States residents in order to recognize differences among the countries
in law, tax policy, and custom. Such grants shall be made in an attempt to
provide such individuals with essentially the same benefits as contemplated by a
grant to United States residents under the terms of this Plan.

       

       

      17.           
Listing and
Registration of Shares. Unless otherwise expressly provided on the
granting of an award under this Plan, the Company shall have no obligation to
register any securities issued pursuant to this Plan or issuable on the exercise
of Options granted hereunder. Each award shall be subject to the requirement
that if at any time the Board or a duly authorized committee shall determine, in
its sole discretion, that it is necessary or desirable to list, register, or
qualify the shares covered thereby on any securities exchange or under any state
or federal law, or obtain the consent or approval of any governmental agency or
regulatory body as a condition of, or in connection with, the granting of such
award or the issuance or purchase of shares there under, such award may not be
made or exercised in whole or in part unless and until such listing,
registration, consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Board or a duly authorized
committee.

       

      

      18.           
Expiration and
Termination of the Plan. The Plan may be abandoned or terminated at any
time by the Board or a duly authorized committee except with respect to any
Options or Stock Awards then outstanding under the Plan. The Plan shall
otherwise terminate on the earlier of the date that is: (i) ten years after the
date the Plan is adopted by the Board; or (ii) ten years after the date the Plan
is approved by the stockholders of the Company.

       

       

      19.           
Form of Awards.
Awards granted under the Plan shall be represented by a written agreement which
shall be executed by the Company and which shall contain such terms and
conditions as may be determined by the Board or a duly authorized committee and
permitted under the terms of this Plan.

       

       

      20.           
No Right of
Employment. Nothing contained in this Plan or any Option or Stock Award
shall be construed as conferring on a director, officer, or employee any right
to continue or remain as a director, officer, or employee of the Company or its
subsidiaries.

       

       

      21.           
Leaves of
Absence. The Board or duly authorized committee shall be entitled to make
such rules, regulations, and determinations as the Board or duly authorized
committee deems appropriate under the Plan in respect of any leave of absence
taken by the recipient of any Option or Stock Award. Without limiting the
generality of the foregoing, the Board or duly authorized committee shall be
entitled to determine (a) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan, and (b)
the impact, if any, of any such leave of absence on any Option or Stock Award
under the Plan theretofore made to any recipient who takes such leave of
absence.

       

       

      22.           
Amendment of the
Plan. The Board or a duly authorized committee may modify and amend the
Plan in any respect.  Subject to the foregoing and, if the Company is
subject to the provisions of 16(b) of the Exchange Act, the limitations of Rule
16b-3 promulgated under the Exchange Act or any amendment or successor rule of
like tenor, the Plan shall be deemed to be automatically amended as is necessary
to maintain the awards made under the Plan in compliance with the provisions of
Rule 16b-3 promulgated under the Exchange Act or any amendment or successor rule
of like tenor.

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

       

       

      DATE:
November 17,
2007                                                                                     
ATTEST:

       

       

      

       

      By: /s/
Christopher
Chambers

                  Christopher
Chambers, Secretary

      

      

      

      
        
           

        

        
          
            8

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