Document:

EXHIBIT
10.34

REGISTRATION
RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of June 2,
2006, is made by and between Earth Biofuels, Inc., a Delaware corporation (the “Company”), and Marc Weill (the “Investor”).

WHEREAS:

A.            In
connection with the Convertible Promissory Note in the principal amount of $500,000
of even date herewith by and between the Company and the Investor (the “Note”), the Company has agreed to
issue to the Investor shares of the Company’s common stock (the “Common Stock”) upon the terms and
subject to the limitations and conditions set forth in the Note; and

B.            To
induce the Investor to execute the Note, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and
the rules and regulations thereunder (collectively, the “1933 Act”), and applicable state
securities laws;

NOW,
THEREFORE, in
consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Investor hereby agree as follows:

1.             DEFINITIONS.

As used in this Agreement,
the following terms shall have the following meanings:

(i)            “Investor”
means the Investor and any transferee or assignee who agrees to become bound by
the provisions of this Agreement in accordance with Section 9 hereof.

(ii)           “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing a Registration Statement in compliance
with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor
rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration of
effectiveness of such Registration Statement by the United States Securities
and Exchange Commission (the “SEC”).

(iii)         “Registrable Securities”
means the all of the shares of Common Stock issued or issuable upon conversion
pursuant to the Note.

(iv)          “Registration Statement”
means a registration statement of the Company under the 1933 Act.

 

 

2.             REGISTRATION.

a.             Mandatory
Registration.  The Investor shall be entitled to make
written request for registration of the Registrable Securities, no later than
90 days following conversion of the Note. 
Provided that the Investor has made a timely request therefore, the
Company shall effect the registration of the Registrable Securities.  Within forty-five (45) days of receipt of written
request from the Investor, the Company shall file with the SEC a Registration
Statement to effect the registration of the Registrable Securities that the
Company has been requested to register for disposition as described in the
request of the Investor.

b.             Piggy-Back
Registrations.  Subject to the last sentence of this Section
2(b), if at any time prior to the expiration of the Registration Period (as
hereinafter defined) the Company shall determine to file with the SEC a
Registration Statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other
than on Form S-4 or Form S-8 relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans), the Company shall send to the Investor written notice of such
determination and, if within fifteen (15) days after the effective date of such
notice, the Investor shall so request in writing, the Company shall include in
such Registration Statement all or any part of the Registrable Securities the Investor
requests to be registered.  If an
offering in connection with which the Investor is entitled to registration
under this Section 2(b) is an underwritten offering, then the Investor shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.  Notwithstanding
anything to the contrary set forth herein, the registration rights of the Investor
pursuant to this Section 2(b) shall only be available in the event the Company
fails to timely file, obtain effectiveness or maintain effectiveness of any
Registration Statement to be filed pursuant to Section 2(a) in accordance with
the terms of this Agreement.

c.             Eligibility
for Form SB-2.  The Company represents and warrants that it
meets the requirements for the use of SB-2 for registration of the sale by the Investor
of the Registrable Securities.   The
Company agrees to file all reports required to be filed by the Company with the
SEC in a timely manner so as to remain eligible or become eligible, as the case
may be, and thereafter to maintain its eligibility, for the use of Form SB-2.

3.             OBLIGATIONS
OF THE COMPANY.

In
connection with the registration of the Registrable Securities, the Company
shall have the following obligations:

a.             The Company shall keep the Registration Statement
effective pursuant to Rule 415 at all times until such date as is the earlier
of (i) the date on which all of the Registrable Securities have been sold and
(ii) the date on which the Registrable Securities (in the opinion of counsel to
the Investor) may be immediately sold to the public without registration or
restriction (including, without limitation, as to volume by the holder thereof)
under the 1933 Act (the “Registration Period”),
which Registration Statement (including any amendments or

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supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein not misleading.

b.             The Company shall prepare and file with the
SEC such amendments (including post-effective amendments) and supplements to
the Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to keep the Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition thereof as set forth in the
Registration Statement.

c.             The Company shall furnish to the Investor (i) promptly
(but in no event more than two (2) business days) after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company, one
copy of each Registration Statement and any amendment thereto, each preliminary
prospectus and prospectus and each amendment or supplement thereto, and (ii) promptly
(but in no event more than two (2) business days) after the Registration
Statement is declared effective by the SEC, such number of copies of a
prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by the Investor.  The Company will
immediately notify the Investor by facsimile of the effectiveness of each Registration
Statement or any post-effective amendment. 
The Company will promptly (but in no event more than five (5) business
days) respond to any and all comments received from the SEC (which comments
shall promptly be made available to the Investor upon request), with a view
towards causing each Registration Statement or any amendment thereto to be
declared effective by the SEC as soon as practicable, shall promptly file an
acceleration request as soon as practicable (but in no event more than two (2)
business days) following the resolution or clearance of all SEC comments or, if
applicable, following notification by the SEC that any such Registration
Statement or any amendment thereto will not be subject to review and shall
promptly file with the SEC a final prospectus as soon as practicable (but in no
event more than two (2) business days) following receipt by the Company from
the SEC of an order declaring the Registration Statement effective.

d.             The Company shall use reasonable efforts to (i) register
and qualify the Registrable Securities covered by the Registration Statement
under such other securities or “blue sky” laws of such jurisdictions in the
United States as the Investor reasonably requests, (ii) prepare and file
in those jurisdictions such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however,
that the Company shall not be required in connection therewith or as a
condition thereto to (a) qualify to do business in any jurisdiction where
it would not otherwise be required to qualify but for this Section 3(d), (b) subject
itself to general taxation in any such jurisdiction, (c) file a general

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consent to service of
process in any such jurisdiction, or (d) provide any undertakings that
cause the Company undue expense or burden.

e.             As promptly as practicable after becoming
aware of such event, the Company shall notify the Investor of the happening of
any event, of which the Company has knowledge, as a result of which the
prospectus included in any Registration Statement, as then in effect, includes
an untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and use its best efforts promptly to prepare a supplement or
amendment to any Registration Statement to correct such untrue statement or
omission, and deliver such number of copies of such supplement or amendment to the
Investor as the Investor may reasonably request.

f.              The Company shall use its best efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
any Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest possible moment and to notify the Investor
of the issuance of such order and the resolution thereof.

g.             The Company shall take all other reasonable
actions necessary to expedite and facilitate disposition by the Investor of
Registrable Securities pursuant to a Registration Statement.

4.             OBLIGATIONS
OF THE INVESTOR.

In
connection with the registration of the Registrable Securities, the Investor
shall have the following obligations:

a.             The Investor shall furnish to the Company
such information regarding himself, the Registrable Securities held by him and
the intended method of disposition of the Registrable Securities held by him as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such
registration as the Company may reasonably request.  At least three (3) business days prior to the
first anticipated filing date of the Registration Statement, the Company shall
notify the Investor of the information the Company requires from the Investor.

b.             The Investor agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder.

c.             The Investor agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 3(e) or 3(f), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Investor’s receipt of the copies of a
supplemented or amended prospectus and, if so directed by the Company, the Investor
shall deliver to the Company or destroy (and deliver to the Company a
certificate of destruction) all copies in the Investor’ possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.

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5.             EXPENSES
OF REGISTRATION.

All
reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant
to Sections 2 and 3, including, without limitation, all registration, listing
and qualification fees, printers and accounting fees, and the fees and
disbursements of counsel for the Company, shall be borne by the Company.

6.             INDEMNIFICATION.

In
the event any Registrable Securities are included in a Registration Statement
under this Agreement:

a.             To the extent permitted by law, the Company
will indemnify, hold harmless and defend (i) the Investor who holds such
Registrable Securities and (ii) the directors, officers, partners,
employees, agents and each person who controls the Investor within the meaning
of the 1933 Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”), if any, (each, an “Indemnified Person”), against any
joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, “Claims”) to which any of them
may become subject insofar as such Claims arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of a material fact in a
Registration Statement or the omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading; or (iii) any violation or alleged violation by the
Company of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in the
foregoing clauses (i) through (iii) being, collectively, “Violations”).  The Company shall reimburse the Indemnified
Person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by the Indemnified
Person in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(a):
(i) shall not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished in writing
to the Company by any Indemnified Person expressly for use in connection with
the preparation of such Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) hereof; (ii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior
written consent of the Company, which consent shall not be unreasonably
withheld; and (iii) with respect to any preliminary prospectus, shall not inure
to the benefit of any Indemnified Person if the untrue statement or omission of
material fact contained in the preliminary prospectus was corrected on a timely
basis in the prospectus, as then amended or supplemented, such corrected
prospectus was timely made available by the Company pursuant to Section 3(c)
hereof, and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a Violation and such

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Indemnified Person,
notwithstanding such advice, used it. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person.

b.             In connection with any Registration Statement
in which the Investor are participating, the Investor agrees to indemnify, hold
harmless and defend, to the same extent and in the same manner set forth in
Section 6(a), the Company, each of its directors, each of its officers who
signs the Registration Statement, each person, if any, who controls the Company
within the meaning of the 1933 Act or the 1934 Act, any underwriter and any
other shareholder selling securities pursuant to the Registration Statement or
any of its directors or officers or any person who controls such shareholder or
underwriter within the meaning of the 1933 Act or the 1934 Act (collectively
and together with an Indemnified Person, an “Indemnified
Party”), against any Claim to which any of them may become
subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim
arises out of or is based upon any Violation by such Investor, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished to the Company by such
Investor expressly for use in connection with such Registration Statement; and such
Investor will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that such
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds to such
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented.

c.             Promptly after receipt by an Indemnified
Person or Indemnified Party under this Section 6 of notice of the commencement
of any action (including any governmental action), such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying party
a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or
Indemnified Party shall have the right to retain its own counsel with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. 
The indemnifying party shall pay for only one separate legal counsel for
the Indemnified Persons or the Indemnified Parties, as applicable, and such
legal counsel shall be selected by the Investor if the Investor is entitled to
indemnification

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hereunder, or the Company,
if the Company is entitled to indemnification hereunder, as applicable.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action.  The indemnification
required by this Section 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.

7.             CONTRIBUTION.

To
the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under
Section 6 to the fullest extent permitted by law; provided, however,
that (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation, and (iii)contribution
(together with any indemnification or other obligations under this Agreement)
by any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.

8.             REPORTS
UNDER THE 1934 ACT.

With
a view to making available to the Investor the benefits of Rule 144 promulgated
under the 1933 Act or any other similar rule or regulation of the SEC that may
at any time permit the Investor to sell securities of the Company to the public
without registration (“Rule 144”),
the Company agrees to:

a.             make and keep public information available,
as those terms are understood and defined in Rule 144;

b.             file with the SEC in a timely manner all
reports and other documents required of the Company under the 1933 Act and the
1934 Act so long as the Company remains subject to such requirements and the
filing of such reports and other documents is required for the applicable
provisions of Rule 144; and

c.             furnish to the Investor so long as the Investor
owns Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements
of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to
Rule 144 without registration.

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9.             ASSIGNMENT
OF REGISTRATION RIGHTS.

The
rights under this Agreement shall be automatically assignable by the Investor
to any transferee of all or any portion of the Note if: (i) the Investor
agrees in writing with the transferee or assignee to assign such rights, and a
copy of such agreement is furnished to the Company within a reasonable time
after such assignment, (ii) the Company is, within a reasonable time after
such transfer or assignment, furnished with written notice of the name and
address of such transferee or assignee, (iii) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein, and (iv) such transferee shall be an “accredited investor” as that term
defined in Rule 501 of Regulation D promulgated under the 1933 Act.

10.          AMENDMENT
OF REGISTRATION RIGHTS.

Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with written consent of the Company and the Investor.  Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon the Investor and the
Company.

11.          MISCELLANEOUS.

a.             A person or entity is deemed to be a holder
of Registrable Securities whenever such person or entity owns of record such
Registrable Securities.  If the Company
receives conflicting instructions, notices or elections from two or more
persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.

b.             All notices and other communications
hereunder shall be in writing or by telecopy, and shall be deemed to have been
duly made when delivered in person or sent by telecopy, same day or overnight
courier, or 72 hours after having been deposited in the United States
registered or certified mail return receipt requested, postage prepaid, to a
party at the address set forth below (which may be changed in accordance with
these notice procedures):

If to
the Company:

Earth Biofuels, Inc.

3001 Knox Street, Suite 403

Dallas, TX 75205

Fax Number: (214) 389-9805

Attention:  Chief Executive Officer

With a copy to:

Roger A. Crabb

Scheef & Stone, LLP

5956 Sherry Lane, Suite 1400

Dallas, TX  75225

Fax
number:  (214) 706-4242

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If to the Investor:

Marc Weill

440
Roundhill Road

Greenwich,
CT  06831-2639

Fax number: (203) 629-0679

c.             Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, shall not operate as a waiver thereof.

d.              This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.  In the event of a dispute involving this
Agreement or any other instruments executed in connection herewith, the parties
irrevocably agree that exclusive venue for such dispute shall lie in any court
of competent jurisdiction in Dallas County, Texas, and the parties waive any
claim that such forum is inappropriate or inconvenient.

e.             In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform with such statute or
rule of law.  Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.

f.              This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter
hereof.  There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein and therein.  This Agreement
supersedes all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof.

g.             Subject to the requirements of Section 9 hereof,
this Agreement shall be binding upon and inure to the benefit of the parties
and their successors and assigns.

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

i.              This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other parties.  This Agreement, once executed by a party, may
be delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.

j.              Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other parties may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

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IN WITNESS WHEREOF, the Company and the Investor have caused this Agreement to be duly
executed as of the date first above written.

	
  EARTH BIOFUELS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ DENNIS G. MCLAUGHLIN, III

  	
   

  
	
  Name:

  	
  Dennis G. McLaughlin, III

  
	
  Title:

  	
  Chief Executive Officer

  
	
   

  
	
   

  
	
  MARC WEILL

  
	
   

  
	
   

  
	
  /s/ MARC WEILL

  	
   

  
	
  Marc Weill, individually

  
				

 

 10EXHIBIT 10.35

THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES ISSUABLE
UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE “SECURITIES ACT”) OR ANY
SECURITIES LAW OF ANY STATE OF THE UNITED STATES.  THIS CONVERTIBLE PROMISSORY NOTE AND THE
SHARES ISSUABLE UPON CONVERSION HEREOF MAY BE
REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION.

CONVERTIBLE
PROMISSORY NOTE

	
  $500,000.00

  	
   

  	
  Dallas, Texas

  	
   

  	
  June 2, 2006

  

 

FOR
VALUE RECEIVED, the undersigned, Earth Biofuels, Inc., a Delaware corporation (“Borrower”), promises to pay to the
order of Marc Weill (“Lender”),
the sum of Five Hundred Thousand and No/100 Dollars ($500,000.00), with
interest from the date of advancement on the unpaid balance hereof from time to
time remaining unpaid at a rate of 8% per annum, in (i) lawful money of the
United States of America or (ii) equity securities of the Borrower as provided
herein, both principal and interest being payable at the address designated in
numbered paragraph 15 below or at such other place as Lender may, from time to
time, designate in writing.  All interest
under this Note shall be computed on the basis of the actual number of days
elapsed over an assumed year consisting of three hundred sixty-five (365) days.

The
principal of this Note shall mature and be due and payable on April 28, 2007.  Simple interest payable on this Note shall be
payable upon each Conversion Date (as defined below), July 28, 2006, October 28,
2006, January 28, 2007, and on the maturity date, when the principal and
remaining accrued but unpaid interest shall be due and payable.

All
past due principal and accrued interest on this Note shall bear interest from
maturity until paid at the highest (non-usurious) rate for which Borrower may
legally contract under applicable law. 
All payments on past due principal and accrued interest hereunder shall
be payable in lawful money of the United States of America which shall be legal
tender for public and private debts at the time of payment.  As used herein, the term “Holder” shall initially mean Lender,
and shall subsequently mean each person or entity to which this Note is duly
assigned.

This
Note evidences indebtedness incurred by Borrower for interim financing provided
to Borrower.

1.             Conversion Option.  All or any portion of the unpaid principal of
this Note, plus accrued interest hereon, shall be convertible, at the option of
Lender, into shares of Common Stock, $0.001 par value, issued by Borrower (the “Common
Stock”).  At the time of any such conversion of
the aggregate of the principal amount and accrued interest, or a portion
thereof, the rights of the Lender with respect to such portion of the aggregate
of the principal amount and accrued interest so converted shall cease and the
Lender shall be deemed to have become the

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record holder of the Common Stock
issuable upon such conversion.  The
Borrower covenants with the Lender that it will at all times reserve and keep
available out of its authorized Common Stock and solely for the purpose of
conversion as provided herein, and conditionally allot to the Lender, such
number of shares of Common Stock as shall then be issuable upon the conversion
of this Note.  The Borrower covenants
with the Lender that all shares of Common Stock which shall be so issuable
shall be duly and validly issued as fully-paid and non-assessable.

The Common Stock into which
this Note may be converted shall be referred to herein as the “Conversion Shares.”  The number of Conversion Shares shall be
determined by dividing the Conversion Amount (defined below) by the Conversion
Price Per Share (defined below).  Upon
any such conversion, the Lender shall execute any and all customary and
appropriate documents to implement the foregoing.  Additionally, the Lender shall be entitled to
demand registration rights and piggyback registration rights pursuant to the
Registration Rights Agreement of even date herewith, executed by Borrower and
Lender (“Registration Rights Agreement”).

1.1           Definitions.  Unless otherwise specified, for purposes
hereof, the following terms shall have the following meanings:

1.1.1        “Conversion
Amount” means an amount equal to the then outstanding principal
plus any accrued but unpaid interest under this Note, or such lesser amount as
Holder shall determine.

1.1.2        “Conversion Price Per Share” means a price per share of
Common Stock equal to the lower of (i) $0.50 per share or (ii) 70% of the volume
weighted average price per share of the Common Stock (“VWAP”).  Notwithstanding the foregoing, the price set
forth in part (i) of the preceding sentence shall be lowered from $0.50 per
share to $0.30 per share if both of the following shall have occurred within
the 10-month time frame commencing 60 days from the date of this note and
ending 12 months from the date of this note: 
(A) the VWAP shall have fallen below $0.50 per share and (B) Borrower
shall have more than 200,000,000 shares of Common Stock issued and
outstanding.  The VWAP shall be determined
as follows:  (x) the daily volume
weighted average price of the Common Stock for such date on the OTC Bulletin
Board as reported by Bloomberg Financial L.P. (based on a trading day from 9:30
a.m. Eastern Time to 4:02 p.m. Eastern Time); (y) if the Common Stock is
not then listed or quoted on the OTC Bulletin Board and if prices for the
Common Stock are then reported in the “Pink Sheets” published by the Pink
Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported; or (z) in all other cases, the fair market value of a share of
Common Stock as determined by an independent appraiser selected in good faith
by the Holder and reasonably acceptable to the Borrower.

1.2           Conversion Procedures.

1.2.1        Holder may exercise
its conversion right by giving written notice (in the form attached hereto, the
“Conversion Notice”)
to the Borrower of the exercise of such right. 
The conversion of this Note (or such portion thereof as Holder shall
determine) will be deemed to have been effected as of the date of receipt of
the Conversion Notice

 2
 

 

(the “Conversion Date”).  If Holder has exercised its conversion right,
the outstanding principal (or such portion thereof as Holder shall determine)
and any accrued but unpaid interest under this Note shall be automatically
converted into such number of shares of the Common Stock to be issued by
Borrower equaling the quotient of (i) the Conversion Amount, and (ii) the
Conversion Price Per Share.

1.2.2        Within five business
days of the Conversion Date, the Holder shall surrender this Note at the
principal office of the Borrower, for replacement or cancellation.

1.2.3        Within five business
days of the surrender of the Note by Holder, the Borrower will deliver to the
converting Holder (a) a certificate or certificates representing Conversion
Shares and (b) a replacement note for the unconverted principal balance (if
any) of this Note.  Borrower agrees that
its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the conversion of this Note.

1.2.4        On the Conversion
Date, the rights of the Holder of this Note to receive payment of such portion
of the principal and interest as Holder has converted hereunder will cease and
the person or persons in whose name or names any certificate or certificates
for Conversion Shares are to be issued upon such conversion will be deemed to
have become the holder or holders of record of the shares represented thereby.

1.2.5        The issuance of
certificates for the Conversion Shares will be made without charge to the
Holder for any issuance tax in respect thereof or other cost incurred by the
Borrower in connection with such conversion and the related issuance of
Conversion Shares.

1.2.6        If any fractional
interest in Conversion Shares would, except for the provisions of this Section
1, be deliverable upon any conversion of this Note, in lieu of delivering the
fractional share therefor, the number of Conversion Shares shall be rounded to
the nearest whole number.

2.             Adjustment of Conversion Price
Per Share.  The Conversion Price Per
Share, the number of Conversion Shares, and the number and kind of shares or
other securities to be issued upon conversion determined pursuant to Section
1.2, shall be subject to adjustment from time to time upon the happening of
certain events while this conversion right remains outstanding, as follows:

2.2.1        Merger, Sale of Assets.  If the Borrower at any time shall consolidate
with or merge into or sell or convey all or substantially all its assets to any
other corporation, this Note, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the right to
purchase such number and kind of shares or other securities and property as
would have been issuable or distributable on account of such consolidation,
merger, sale or conveyance, upon or with respect to the securities subject to
the conversion or purchase right immediately prior to such consolidation,

 3
 

 

merger,
sale or conveyance.  The foregoing
provision shall similarly apply to successive transactions of a similar nature
by any such successor or purchaser. 
Without limiting the generality of the foregoing, the anti-dilution
provisions of this Section shall apply to such securities of such successor or
purchaser after any such consolidation, merger, sale or conveyance.

2.2.2        Reclassification.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes that may be issued or
outstanding, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
an adjusted number of such securities and kind of securities as would have been
issuable as the result of such change with respect to the Common Stock
immediately prior to such reclassification or other change.

2.2.3        Stock Splits, Combinations and Dividends.  If the shares of Common Stock are subdivided
or combined into a greater or smaller number of shares of Common Stock, or if a
dividend is paid on the Common Stock in shares of Common Stock, the Conversion Price
shall be proportionately reduced in case of subdivision of shares or stock
dividend or proportionately increased in the case of combination of shares, in
each such case by the ratio which the total number of shares of Common Stock
outstanding immediately after such event bears to the total number of shares of
Common Stock outstanding immediately prior to such event.

Whenever the Conversion Price
Per Share is adjusted pursuant to this Section 2.2, the Borrower shall promptly
mail to the Holder a notice setting forth the Conversion Price Per Share after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment.

3.             Optional Prepayment.  This Note may be prepaid by Borrower in whole
or in part without the consent of the Lender and without prepayment penalty of
any kind.

4.             Default; Remedies.  For the purposes of this Agreement, an Event
of Default (herein so called) shall have occurred if (i) Borrower shall fail to
pay when due any principal of or interest on this Note, and such failure shall
continue for a period of ten (10) days after the due date, (ii) Borrower shall
have failed to perform any covenant or other obligation contained herein or in
the Registration Rights Agreement, and such failure shall continue for a period
of ten (10) business days after Lender shall have given Borrower written notice
of such failure, (iii) Borrower shall commence a voluntary case or other
proceeding seeking liquidation or reorganization with respect to itself or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking possession
by any such official in an involuntary case or other proceeding commenced
against it, or shall make a general assignment for the benefit of creditors,
and such case or other proceeding shall remain undismissed and unstayed for a
period of 30 consecutive days; or (iv) an involuntary case or other proceeding
shall be commenced against Borrower seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar now or hereafter in effect or seeking the appointment of a
trustee, liquidator, receiver, custodian or other similar

 4
 

 

official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 consecutive days.

If
Borrower fails or refuses to pay any part of the principal of or interest upon
this Note as the same becomes due, or upon the occurrence of an Event of
Default hereunder, then in any such event the Holder hereof may, at its option
(i) declare the entire unpaid balance of principal and accrued interest on
this Note to be immediately due and payable without notice, (ii) reduce
any claim to judgment, and/or (iii) demand, pursue and enforce any of Lender’s
rights and remedies, pursuant to any applicable law or agreement.  Each right and remedy available to Lender
shall be cumulative of and in addition to each other such right and
remedy.  No delay on the part of Lender
in the exercise of any right or remedy available to Lender shall operate as a
waiver thereof, nor shall any single or partial exercise thereof preclude other
or further exercise thereof or exercise of any other such right or remedy.

5.             Representations, Warranties and
Covenants of Borrower.  Borrower
represents and warrants that Borrower has authority and has obtained all
approvals and consents necessary to enter into this Note and Borrower’s
execution, delivery, and performance of this Note will not violate or conflict
with the terms of Borrower’s Certificate of Incorporation.  Borrower will use of the proceeds of this
Note for development of Borrower’s biodiesel plant located in Durant, Oklahoma,
and for fees associated with this Note.  Subject to the provisions of Regulation FD, upon request of
Lender, Borrower shall provide to Lender such information and materials as
Lender may request, including unaudited monthly and quarterly and audited
yearly financial statements, an annual budget, internal management documents,
reports of operations, reports of adverse developments, copies of any management
letters, communications with shareholders or directors, press releases and
registration statements, and access to all senior managers.

6.     Representations and
Warranties of Lender.

6.1  Suitability.  The Lender is an “accredited investor” as
such term is defined in Regulation D issued by the Securities and Exchange
Commission, and such Lender’s financial condition is such that it is able to
bear the economic risk of its investment in the Note. Lender has such knowledge
and experience in financial and business matters as is necessary to make an
investment in the Note.

6.2  Purchase for Own Account.  This Note is being acquired by Lender for
investment purposes only and not with a view to the distribution of all or any
part thereof.  Lender has no present intention
of selling, transferring, disposing or granting any participation in the Note
and is not a party to any contract, agreement or understanding that would
result in any such sale, transfer or disposition of all or any portion of this
Note.

7.             No Waiver; Cumulative Rights.  No delay on the part of the Holder of this
Note in the exercise of any power or right under this Note shall operate as a
waiver thereof, nor shall a single or partial exercise of any power or right
preclude other or further exercise thereof or the exercise of any other power
or right.

 5
 

 

8.             Waiver.  Borrower waives demand, presentment, protest,
notice of dishonor, notice of nonpayment, notice of intention to accelerate,
notice of acceleration, notice of protest and any and all lack of diligence or
delay in collection or the filing of suit hereon which may occur, and agrees to
all extensions and partial payments, before or after maturity, without
prejudice to the Holder hereof.

9.             Collection Costs.  In the event that, upon an Event of Default,
any amount under this Note is collected in whole or in part through suit,
arbitration or mediation, then and in any such case there shall be added to the
unpaid principal balance hereof all costs of collection, (including, but not
limited to, reasonable attorneys’ fees and expenses) whether or not suit is
filed.

10.           Governing Law.  This Note shall be governed by and construed
in accordance with the laws of the State of Texas.  In the event of a dispute involving this Note
or any other instruments executed in connection herewith, the parties
irrevocably agree that exclusive venue for such dispute shall lie in any court
of competent jurisdiction in Dallas County, Texas, and the parties waive any
claim that such forum is inappropriate or inconvenient.

11.           Headings.  The headings of the sections of this Note are
inserted for convenience of reference only and shall not be deemed to
constitute a part hereof.

12.           Usury.  All agreements between Borrower and the Holder
of this Note, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever,
whether by acceleration of the maturity of this Note or otherwise, shall the
amount paid, or agreed to be paid, to the Holder hereof for the use, forbearance
or detention of the money to be loaned hereunder or otherwise, exceed the
maximum amount permissible under applicable law.  If from any circumstances whatsoever
fulfillment of any provision of this Note, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any such circumstances the Holder of this Note shall ever receive
anything of value as interest or deemed interest by applicable law under this
Note or otherwise in an amount that would exceed the highest lawful rate, such
amount that would be excessive interest shall be applied to the reduction of
the principal amount owing under this Note, and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of principal of this
Note, such excess shall be refunded to Borrower.  In determining whether or not the interest
paid or payable with respect to any indebtedness of Borrower to the Holder
hereof, under any specific contingency, exceeds the highest lawful rate,
Borrower and the Holder hereof shall, to the maximum extent permitted by
applicable law, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) amortize, prorate, allocate and spread
the total amount of interest throughout the full term of such indebtedness so
that the actual rate of interest on account of such indebtedness is uniform throughout
the term thereof, and/or (iii) allocate interest between portions of such
indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by law.  The
terms and provisions of this paragraph shall control and supersede every other
conflicting provision of all agreements between Borrower and the Holder hereof.

 6
 

 

13.           Successors and Assigns.  All of the stipulations, promises and
agreements in this Note made by or on behalf of Borrower shall bind the
successors and assigns of Borrower, whether so expressed or not, and inure to
the benefit of the successors and assigns of Borrower and Lender.  Any assignee of Borrower or Lender shall
agree in writing prior to the effectiveness of such assignment to be bound by
the provisions hereof.  The Lender from
time to time also may sell to one or more financial institutions, institutional
investors or other persons a participation interest in all or any undivided
portion of the rights, powers, privileges, remedies and interests of the Lender
under this Note.

14.           Severability.  In the event any one or more of the
provisions contained in this Note shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof, and this Note
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

15.           Notices.  All notices and other communications
hereunder shall be in writing or by telecopy, and shall be deemed to have been
duly made when delivered in person or sent by telecopy, same day or overnight
courier, or 72 hours after having been deposited in the United States
registered or certified mail return receipt requested, postage prepaid, to a
party at the address set forth below (which may be changed in accordance with
these notice procedures):

If to Lender:

Name:  Marc Weill

Address:
440 Roundhill Road

Greenwich,
CT  06831-2639

Fax number: (203) 629-0679

If to Borrower:

Earth Biofuels, Inc.

3001 Knox Street, Suite 403

Dallas, TX  75205

Fax Number: (214) 389-9805

Attention:  Chief
Executive Officer

With a copy to:

Roger A. Crabb

Scheef & Stone, LLP

5956 Sherry Lane, Suite 1400

Dallas, TX 
75225

Fax
number:  (214) 706-4242

 7
 

 

THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN
BORROWER AND LENDER CONCERNING THE MATTERS HEREIN AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.

IN
WITNESS WHEREOF, the undersigned have executed this Convertible Promissory Note
on and as of the date first set forth above.

	
  

  	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
   

  	
  EARTH BIOFUELS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DENNIS G. MCLAUGHLIN, III

  	
   

  
	
   

  	
  Name:

  	
  Dennis G. McLaughlin, III

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  
	
   

  	
  Marc Weill

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Marc Weill

  	
   

  
	
   

  	
  Marc Weill, individually

  
							

 

 8
 

 

FORM OF

NOTICE OF
CONVERSION

(To be Executed by
the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably
elects to convert $ 500,000.00 of the principal amount of the above Note into
shares of Common Stock of Earth Biofuels, Inc. according to the conditions of
such Note, as of the date written below.

	
  Date of Conversion

  	
   

  	
   

  
	
   

  
	
  Applicable Conversion Price $0.50

  
	
   

  
	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  
	
  Printed Name: Marc Weill

  
	
   

  
	
  Address:

  	
  440 Round Hill
  Road

  
	
   

  	
   

  
	
   

  	
  Greenwich, CT 06831

  
						

 

 9

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