Document:

Exhibit 10.23

NEITHER
THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THIS
SECURITY, FILED AND MADE EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND SUCH APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF
COUNSEL ADDRESSED AND SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
REGISTRATION UNDER SUCH ACT AND SUCH APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

May
4, 2006

WARRANT TO PURCHASE SHARES OF COMMON STOCK

- of -

EARTH
BIOFUELS, INC.

For
value received, EARTH BIOFUELS, INC.,
a Delaware corporation (the “Company”), hereby grants to GREENWICH
POWER, L.L.C., or its registered successor or assigns (the “Holder”)
the right to purchase from the Company shares of the Common Stock of the
Company (the “Common Stock”), at the option of the Holder, upon surrender
hereof at the principal office of the Company, with the subscription form
attached hereto duly executed, and simultaneous payment therefor as hereinafter
provided of the Warrant Exercise Price multiplied by the number of shares of
Common Stock for which the Warrant is exercised. The number and Warrant
Exercise Price of such shares of Common Stock are subject to adjustment as
provided below.

This
Warrant (the “Warrant”) is duly authorized and issued by the Company. In furtherance
thereof, and in consideration of the premises, covenants, promises,
representations and warranties hereinafter set forth, the Company hereby agrees
as follows:

1.    Term of Warrant. Subject to the
terms and conditions set forth herein, this Warrant shall be exercisable, in whole
or in part, during the term commencing on the date hereof and ending on May 31,
2011.

 

2.    Number of Shares and Warrant Exercise
Price. The Holder shall be entitled to subscribe for and purchase from the
Company 920,810 validly issued, fully paid and non assessable shares (the “Warrant
Shares”) of the Company’s Common Stock, par value $0.001 per share, at a
purchase price equal to the Warrant Exercise Price. The “Warrant Exercise Price”
is the lesser of (a) $2 per share or (b) 80% of the average of the last
reported sale prices of the Common Stock on each trading day during the thirty
(30) consecutive calendar days immediately preceding the effective date of
exercise, or if the last reported sale price information is not available for
such days, the average of the mean of the closing bid and asked prices for such
day (the “Determination Period”).  The
Holder covenants that during the Determination Period, Holder shall refrain
from trading in, or entering into short positions or other derivative transactions
relating to, shares of common stock of the Company.

3.    Exercise of Warrant.

3.1.                              Duration and Exercise of Warrant. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole or in part, at any time after
the date hereof and prior to the expiration of the term of this Warrant, by the
surrender of this Warrant and the Notice of Exercise attached hereto as Exhibit
A duly executed, at the principal office of the Company (or such other office
of the Company as it may designate by notice in writing to the Holder at the
address of the Holder), upon payment (i) in cash, by check or by wire transfer,
(ii) by cancellation by the Holder of indebtedness of the Company, to the
Holder, or (iii) by a combination of (i) and (ii), of the Warrant Exercise
Price multiplied by the number of shares of Common Stock to be purchased. Any
notice of exercise of this Warrant may, at the election of the Holder, be
stated to be effective upon the future effectiveness of a registration statement
with respect to the Warrant Shares.

3.2.                              Net Issue Election (Cashless Exercise). The Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares equal to the
value of this Warrant or any portion hereof by surrender of this Warrant or
such portion to the Company with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the Company shall issue
to the Holder such number of fully paid and nonassessable shares of Common
Stock as is computed using the following formula:

	
   

  	
  X = Y (A-B)

  	
   

  
	
   

  	
  A

  	
   

  

 

	
  Where

  	
   

  	
  X =

  	
   

  	
  the number of shares to be issued to the Holder
  pursuant to this Section 3.2.

  
	
   

  	
   

  	
  Y =

  	
   

  	
  the number of shares covered by this Warrant in
  respect of which the net issue election is made pursuant to this Section 3.2.

  
	
   

  	
   

  	
  A =

  	
   

  	
  the fair market value of one share of Common Stock,
  as determined in accordance with the provisions of this Section 3.2.

  
	
   

  	
   

  	
  B =

  	
   

  	
  the Purchase Price in effect under this Warrant at
  the time the net issue 

  

 

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election is made pursuant to
this Section 3.2.

For
purposes of this Section 3.2, the “fair market value” per share of the Company’s
Common Stock shall mean the last reported sale price of the Common Stock on the
effective date of exercise of the net issue election, or if the last reported
sale price information is not available for such day, the average of the mean
of the closing bid and asked prices for such day.

3.3.                              Delivery of Warrant; Fractional Shares

(a)                                  This
Warrant shall be deemed to have been exercised immediately prior to the close
of business on the date of its surrender for exercise as provided above, and
the person entitled to receive the shares of Common Stock issuable upon such
exercise shall be treated for all purposes as the holder of record of such
shares as of the close of business on such date (the “Exercise Date”). Not
later than three business days after any Exercise Date, the Company will
deliver or cause to be delivered to the Holder a certificate or certificates
representing the Warrant Shares. The Company shall, if available and if allowed
under applicable securities laws, use its best efforts to deliver any
certificate or certificates required to be delivered by the Company under this
paragraph electronically through the Depository Trust Corporation or another
established clearing corporation performing similar functions. If such
certificate or certificates are not delivered to or as directed by the Holder
by the third business day after a Exercise Date, The Holder shall be entitled
by written notice to the Company at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such exercise, in which
event the Company shall immediately return this Warrant. Moreover, if the
Company fails for any reason to deliver to the Holder such certificate or certificates
by the third business day after the Exercise Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, 1% per business
day of the fair market value of the Warrant Shares (increasing to 2% per
business day after ten business days after such damages begin to accrue) for
each business day until such certificates are delivered. The Company’s
obligations to issue and deliver the Warrant Shares upon exercise of this
Warrant in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other person of any obligation to the Company or
any violation or alleged violation of law by the Holder or any other person,
and irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such
Warrant Shares. In the event that the Holder shall elect exercise this Warrant
in whole or in any part, the Company may not refuse exercise based on any claim
that the Holder or anyone associated or affiliated with the Holder has been
engaged in any violation of law, agreement or for any other reason, unless an
injunction from a court, on notice, restraining and or enjoining exercise of
all or part of this Warrant shall have been sought and obtained and the Company
posts a surety bond for the benefit of the Holder in the amount of 150% of the
fair market value of the Warrant

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Shares, which
is subject to the injunction, which bond shall remain in effect until the
completion of litigation of the dispute and the proceeds of which shall be
payable to the Holder to the extent it obtains judgment. In the absence of an
injunction precluding the same, the Company shall issue Warrant Shares upon a
properly noticed exercise. Nothing herein shall limit the Holder’s right to
other remedies for the Company’s failure to deliver Warrant Shares within the
period specified herein, and the Holder shall have the right to pursue all
remedies available to it at law or in equity including without limitation a
decree of specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit the Holder from seeking to enforce damages
pursuant to any other provision hereof or under applicable law. In the
alternative and at the Holder’s election, if the Company fails for any reason
to deliver to the Holder such certificate or certificates by the third business
day after the Exercise date, and if after such third business day the Holder is
required by its brokerage firm to purchase (in an open market transaction or
otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such conversion (a “Buy-In”),
then the Company shall (i) pay in cash to the Holder (in addition to any other
remedies available to or elected by the Holder) the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number
of shares of Common Stock that such the Holder anticipated receiving from the
exercise at issue multiplied by (2) the actual sale price of the Common Stock
at the time of the sale (including brokerage commissions, if any) giving rise
to such purchase obligation and (ii) at the option of the Holder, either
reissue this Warrant in amount equal to the attempted conversion or deliver to
the Holder the number of shares of Common Stock that would have been issued had
the Company timely complied with its delivery requirements hereunder.

(b)                                 No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant, but in lieu of such fractional shares, the
Company shall deliver to the Holder one whole share.

4.    Replacement of Warrant. On receipt
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction, or mutilation of this Warrant and, in the case of loss, theft, or
destruction, on delivery of an indemnity agreement reasonably satisfactory in
form and substance to the Company or, in the case of mutilation, on surrender
and cancellation of this Warrant, the Company shall execute and deliver, in
lieu of this Warrant, a new warrant of like tenor and amount.

5.    Rights of Stockholders. Until the
Warrant shall have been exercised and the shares of Common Stock purchasable
upon the exercise hereof shall have been issued, nothing contained herein shall
be construed to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive dividends or subscription rights or the like,
except as may be otherwise provided herein or in the Note and Warrant Purchase
Agreement.

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6.    Divisibility of Warrant; Transfer of
Warrant.

(a)                                  Subject
to the provisions of this Section 6, this Warrant may be divided into no more
than ten (10) warrants of one thousand (1,000) shares or multiples thereof,
upon surrender at the principal office of the Company, without charge to any
Warrantholder. Upon such division, the Warrants may be transferred of record as
the then Warrantholder may specify without charge to such Warrantholder (other
than any applicable transfer taxes). In addition, subject to the provisions of
this Section 6, the Warrantholder shall also have the right to transfer this Warrant
in its entirety to any person or entity; provided, however, that
any such transfer is in compliance with any and all applicable securities laws
and is exempt from registration.

(b)                                 The
Company will maintain a register (the “Warrant Register”) containing the name
and address of the Holder. The Holder may change its address as shown on the
Warrant Register by written notice to the Company requesting such change. Any
notice or written communication required or permitted to be given to the Holder
may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant
is transferred on the Warrant Register, the Company may treat the Holder as
shown on the Warrant Register as the absolute owner of this Warrant for all
purposes, notwithstanding any notice to the contrary.

(c)                                  The
Warrant and the Common Stock shall not be transferable except upon the
conditions specified in this Section 6, which conditions are intended to ensure
compliance with the provisions of the Act. Each holder of this Warrant or
Common Stock issuable hereunder will cause any proposed transferee of the
Warrant and the Common Stock to agree to take and hold such securities subject
to the provisions and upon the conditions specified in this Section 6.

(d)                                 Each
certificate representing (i) this Warrant, (ii) the Common Stock and (iii) any
other securities issued in respect to the Common Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of this Section 6 or unless such
securities have been registered under the Act) be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

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(e)                                  The
Holder of this Warrant and each person to whom this Warrant is subsequently
transferred represents and warrants to the Company (by acceptance of such
transfer) that it will not transfer the Warrant (or Common Stock issuable upon
exercise hereof) except (i) to an affiliate, (ii) pursuant to an effective
registration statement under the Act, or (iii) upon the Company’s reasonable
determination, upon advice of counsel to the Company, that no applicable
securities laws would be violated as a result of such transfer. The Company may
require an opinion of counsel acceptable to the Company to the effect that such
transfer (whether by sale, encumbrance, assignment or otherwise) may be effected
without registration under the Act.

7.    Registration Rights. Upon exercise
of this Warrant for Common Stock, the Company shall take whatever action
necessary such that the Holder shall be entitled to exercise, together with all
other holders of registrable shares possessing registration rights under the
Registration Rights Agreement between the parties of even date herewith the
rights of registration granted under the Registration Rights Agreement to the
holders of Common Stock, if any.

8.    Shares to be Fully Paid; Reservation of
Shares. The Company covenants and agrees that all shares of Common Stock
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder and free
of all taxes, liens and charges with respect to the issue thereof. The Company
further covenants and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved, for the purpose of issue or transfer upon
exercise of the purchase rights conveyed by this Warrant, a sufficient number
of shares of authorized but unissued Common Stock, or other securities and property,
when and as required to provide for the exercise of the rights represented by
this Warrant. The Company will take all action as may be necessary or advisable
to assure that such shares of Common Stock may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements
of any domestic securities exchange upon which the Common Stock may be listed.

9.    Amendments. This Warrant may be
amended only with the written consent of the Holder. No waiver of or exceptions
to any term, condition or provision of this Warrant, in any one or more
instances, shall be deemed or construed as a further or continuing waiver of
any such term, condition or provision.

10.    Adjustments; Anti-Dilution. The
number of Warrant Shares purchasable hereunder and the Warrant Exercise Price
are subject to adjustment from time to time as follows:

(a)                                  Merger,
Sale of Assets, Etc. If at any time, while this Warrant, or any portion
thereof, is outstanding and unexpired there shall be (i) a reorganization
(other than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), (ii) a merger or consolidation of the Company
with or into another corporation in 

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which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company’s capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company’s properties and assets
as, or substantially as, an entirety to any other person, and if, as a part of
such reorganization, merger, consolidation, sale or transfer, provisions are
made so that the holders of capital stock are thereafter entitled to receive
shares of stock or other securities or property of the successor corporation
resulting from such reorganization, merger, consolidation, sale or transfer,
the Company shall then ensure that the Holder also shall be entitled to shares
of stock or other securities or property of the successor corporation resulting
from such reorganization, consolidation, merger, sale or transfer as if this
Warrant had been exercised in full immediately prior to such reorganization,
merger, consolidation, sale or transfer, all subject to further adjustment as
provided in this Section 10. The obligations of this Section 10 shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation which are at
the time receivable upon the exercise of this Warrant. If the per share
consideration payable to the Holder for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be jointly determined by the Company and the
Holder. In all events, appropriate adjustment shall be made in the application
of the provisions of this Warrant with respect to the rights and interests of
the Holder after the transaction, to the end that the provisions of this
Warrant shall be applicable after that event, as near as reasonably may be, in
relation to any shares or other property deliverable after that event upon
exercise of this Warrant.

(b)                                 Reclassification,
Etc. If the Company, at any time while this Warrant, or any portion
thereof, remains outstanding and unexpired, by reclassification of securities
or otherwise, intends to change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Warrant immediately prior to
such reclassification or other change and the number of Warrant Shares
purchasable hereunder shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 10.

(c)                                  Split,
Subdivision or Combination of Shares. If the Company at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired shall split,
subdivide or combine the securities as to which purchase rights under this
Warrant exist, into a different number of securities of the same class, the
Company warrants that the number of Warrant Shares purchasable hereunder shall
be proportionately adjusted.

(d)                                 Adjustments
for Dividends in Stock or Other Securities or Property.

(i)                                     If while this Warrant, or any portion hereof,
remains outstanding and unexpired, holders of Common Stock shall have received,
or, on or after the record 

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date fixed for the
determination of eligible stockholders, shall have become entitled to receive,
without payment therefor, cash of the Company by way of dividend, then and in
each case, the Warrant Exercise Price shall be reduced by adding the amount of
cash of the Company which such holder would have received had it been the
Holder of record of the security on the date such dividend was paid to the
numerator used to calculate the Warrant Exercise Price as set forth in Section
2 of this Warrant;

(ii)                                  If while this Warrant, or any portion hereof,
remains outstanding and unexpired, holders of Common Stock shall have received,
or, on or after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive, without payment therefor,
other or additional stock or other securities or property (other than cash) of
the Company by way of dividend, then and in each case, this Warrant shall
represent the right to acquire, in addition to the number of shares of the
security receivable upon exercise of this Warrant, and without payment of any
additional consideration therefor, the amount of such other or additional stock
or other securities or property (other than cash) of the Company which such
holder would hold on the date of such exercise had it been the Holder of record
of the security receivable upon exercise of this Warrant on the date thereof
and had thereafter, during the period from the date hereof to and including the
date of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
appropriate adjustments provided by this Section 10.

(e)                                  Certificate
as to Adjustments; No Impairment. Upon the occurrence of each adjustment or
readjustment pursuant to this Section 10, the Company shall promptly compute
such adjustment or readjustment in accordance with the terms hereof and furnish
to the Holder a certificate setting forth such adjustment or readjustment and
the facts upon which such adjustment or readjustment is based. At any time upon
written request of the Holder, the Company shall furnish to the Holder a like
certificate setting forth: (a) a description of all such adjustments and
readjustments; (b) the Warrant Exercise Price at the time in effect; and (c)
the number of shares which at the time would be received upon the exercise of
the Warrant. The Company will not, by any voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed
hereunder, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 10 and in the taking of all such action as
may be necessary or advisable to protect the rights of the Holder against
impairment.

11.    Representations and Warranties of the
Company. The Company hereby represents and warrants to the Holder as
follows:

(a)                                  Corporate
Power and Authorization. The Company has all requisite corporate power and
authority to issue this Warrant and to perform each of its obligations hereunder.
All corporate action on the part of the Company, its directors and stockholders
necessary or advisable for the authorization, execution, delivery and
performance by the 

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Company of
this Warrant has been taken. This Warrant is a valid and binding obligation of
the Company, enforceable in accordance with its terms.

(b)                                 Offering.
The offer, issuance and sale of the Warrant is, and the issuance of shares of
Common Stock upon exercise of the Warrant will be, exempt from the registration
requirements of the Act, and are exempt from the qualification requirements of
any applicable state securities laws; and neither the Company nor anyone acting
on its behalf will take any action hereafter that would cause the loss of such
exemptions.

(c)                                  Binding
Effect. This Warrant shall be binding upon any corporation succeeding the
Company by merger, consolidation or acquisition of all or substantially all of
the Company’s assets. All of the obligations of the Company relating to the
shares of Common Stock issuable upon the exercise of this Warrant shall survive
the exercise and termination of this Warrant. All of the agreements of the
Company shall inure to the benefit of the successors and assigns of the Holder
hereof. The Company will, at the time of exercise of this Warrant whether in
whole or in part, acknowledge in writing its continuing obligation to the
Holder hereof in respect of any rights (including, without limitation, any
right to registration of the shares of Common Stock) to which the Holder hereof
shall continue to be entitled after such exercise in accordance with this
Warrant; provided, that the failure of the Company to make any such
acknowledgement shall not affect the continuing obligation of the Company to
the Holder hereof in respect of such rights.

12.    Miscellaneous.

(a)                                  Failure
to Act and Waiver. No failure or delay by the Holder to require the
performance of any term or terms of this Warrant or to exercise any right or
remedy shall constitute a waiver of any such term or of any right, nor shall
such delay or failure preclude the Holder from exercising any such right or
remedy at any later time or times.

(b)                                 Consent
to Jurisdiction. The Company hereby agrees and consents that any action,
suit or proceeding arising out of this Warrant shall be brought exclusively in
any appropriate state or federal court in the New York County, New York, at the
sole election of the Holder hereof, and by the issuance and execution of this
Warrant the Company irrevocably consents to the jurisdiction of each such
court. Trial by jury in any action, proceeding or counterclaim with respect
hereto is hereby waived.

(c)                                  Governing
Law. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS WARRANT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT
REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA.

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IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly
authorized officer as of the date first above written.

	
  

  	
   

  	
  EARTH BIOFUELS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DENNIS G. MCLAUGHLIN, III

  	
   

  
	
   

  	
   

  	
   

  	
  Dennis G.
  McLaughlin, III

  
	
   

  	
   

  	
   

  	
  President

  

 

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EXHIBIT A

NOTICE OF EXERCISE

To:          Earth
Biofuels, Inc.

(A)          The undersigned hereby elects to
purchase                            
shares of the Common Stock of Earth Biofuels, Inc. (“Common Stock”) pursuant
to the terms of the attached Warrant, and tenders herewith payment of the
purchase price of such shares in full.

(B)           In exercising this Warrant, the
undersigned hereby confirms and acknowledges that the shares of Common Stock
are being acquired solely for the account of the undersigned and not as a
nominee for any other party, and for investment, and that the undersigned will
not offer, sell, or otherwise dispose of any such shares of Common Stock except
under circumstances that will not result in a violation of the Securities Act
of 1933, as amended, or any state securities laws.

(C)           Please issue a certificate or
certificates representing the purchased shares of Common Stock in the name of
the undersigned or in such other name as is specified below:

	
  

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  

 

(D)          Please issue a new Warrant for the
unexercised portion of the attached Warrant in the name of the undersigned or
in such other name as is specified below:

	
  

  	
   

  	
   

  
	
  Date

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

FORM
OF NET ISSUE ELECTION

(To be signed only on net issue exercise of the Warrant)

The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant with respect to                                  shares
of Common Stock of Earth Biofuels, Inc., pursuant to the net issuance
provisions set forth in this Warrant, and requests that the certificates for
the number of shares of Common Stock issuable pursuant this Warrant after
application of the net issuance formula to such                          
shares to be issued in the name of, and delivered to                        ,
Federal Taxpayer Identification Number                         ,
whose address is                                           .

	
  Dated

  	
   

  	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)EXHIBIT
10.24

UNCONDITIONAL
GUARANTY OF PAYMENT AND PERFORMANCE

WHEREAS, pursuant to the Convertible Secured Promissory
Note — Bridge Loan (the “Note”), Warrant to Purchase Shares of Common Stock and
Registration Rights Agreement being entered into concurrently herewith between
Earth Biofuels, Inc. (“Borrower”) and Greenwich Power, L.L.C. (“Lender”) (such Note,
Warrant and Agreement are hereinafter collectively referred to as the “Agreements”),
the undersigned (“Guarantor”) will receive substantial economic benefits, and
Guarantor has requested that Lender enter into the Agreements with Borrower;
and Lender is willing to enter into the Agreements but only upon the condition,
among others, that Guarantor shall have executed and delivered this Guaranty to
Lender.

NOW, THEREFORE, in consideration of the foregoing
recitals and of the mutual covenants contained in this Guaranty and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties agree as follows:

1. To induce Lender to advance
funds to Borrower upon the terms and conditions set forth in the Note, and in
consideration thereof, Guarantor hereby unconditionally and irrevocably
guaranties to Lender, and to its successors, endorsees, transferees, and
assignees, Borrower’s prompt and complete payment when due, whether at the
stated maturity, by acceleration or otherwise, of Borrower’s obligations under
the Note, and Borrower’s prompt and complete performance of all of its other
covenants, obligations and agreements contained in the Note and the other Agreements.

2. This is intended to be and
shall be construed as a continuing guaranty and shall remain in full force and
effect and shall be binding in accordance with and to the extent of its terms
upon Guarantor and its successors and assigns, and shall inure to the benefit
of Lender and its successors, endorsees, transferees and assigns.

3. If all or any parts of the obligations
of Borrower to Lender are not paid when due, Guarantor hereby guarantees that
it will pay the same to Lender, upon demand, without setoff or counterclaim and
without reduction by reason of any taxes, levies, imposts, charges and
withholdings, restrictions or conditions of any nature that are now or may
hereafter be imposed, levied or assessed by any country, political subdivision
or taxing authority, all of which will be for the account of and paid by
Guarantor, and Lender need not first proceed to preserve, utilize or exhaust
any other rights or remedy against Borrower or other guarantor or any security
that Lender may have to obtain payment. The payment shall be made in cash, bank
check or immediately available funds at Lender’s office at 537 Steamboat Road,
Greenwich, Connecticut 06830-7153 or at such other place as Lender may
designate in writing.

4. Guarantor hereby waives notice
of the acceptance of this Guaranty and of the transactions as above specified
and the state of Borrower’s account at any time, and expressly agrees to any
extensions, renewals, accelerations or modifications of any of the terms of the
Agreements or any of them, and waives diligence, presentment, demand, protest
or notice, whether of non-payment, dishonor, protest or otherwise, of any
document or documents and notice of any extension, renewal, modification or
default and assents to the release, substitution 

 

or variation of any
collateral that may at any time be held as security for the Note, all without
relieving Guarantor of any liability under this Guaranty. The obligations of
Guarantor under this Guaranty shall be an unconditional obligation to make
prompt payment and performance to Lender irrespective of the genuineness,
validity, regularity or enforceability of any indebtedness or evidence of
indebtedness of Borrower to Lender or of other circumstances that might otherwise
under the laws of any jurisdiction constitute a legal or equitable discharge of
a surety or a guarantor or a bar (in the nature of a moratorium or otherwise)
to the enforcement of Lender’s rights either (i) against Borrower on all or any
part of its obligations under the Agreements or (ii) under this Guaranty.

5. Notwithstanding any payment or
payments made by Guarantor under this Guaranty or any setoff or application of
funds of Guarantor by Lender, Guarantor shall not be entitled to be subrogated
to any of the rights of Lender against Borrower or any collateral security or
guarantee or right of offset held by Lender for the payment or performance of
the obligations of Borrower, nor shall Guarantor seek any reimbursement from
Borrower in respect of payments made by Guarantor under this Guaranty, until
all amounts then owing and any other performance then due to Lender by Borrower
for or on account of the obligations of Borrower to Lender are irrevocably paid
and satisfied in full.

6. Any indebtedness of Borrower
now or hereafter owed to or held by Guarantor is hereby subordinated to the
indebtedness of Borrower to Lender; and such indebtedness of Borrower to Guarantor
if Lender so requests shall be collected, enforced and received by Guarantor as
trustee for Lender and be paid over to Lender on account of the indebtedness of
Borrower to Lender but without reducing or affecting in any manner the
liability of Guarantor under the other provisions of this Guaranty.

7. No failure to exercise and no
delay in exercising, on the part of Lender, any right, power or privilege under
this Guaranty shall operate as a waiver of right, power or privilege, nor shall
any single or partial exercise of any right, power or privilege preclude any
other or further exercise of the right, power or privilege, or the exercise of
any other power or right.  The rights and
remedies provided in this Guaranty are cumulative and not exclusive of any
rights or remedies provided by law.

8. Any notice or demand required
or permitted to be made or given hereunder shall be deemed sufficiently made
and given if given by personal service or by the mailing of such notice or
demand by certified or registered mail, return receipt requested, or by
overnight courier service providing for proof of delivery, addressed to the
parties at their respective last known addresses and, if to Guarantor, with a
copy to Roger A. Crabb, Esq., Scheef & Stone, L.L.P., 5956 Sherry Lane —
Suite 1400, Dallas, Texas 75225-8031; or if to Lender, with a copy to Hilary B.
Miller, Esq., 112 Parsonage Road, Greenwich, Connecticut 06830-3942. Either
party may change its address by like notice to the other party.

9. Guarantor hereby represents,
warrants, and covenants to Lender that: (a) except as disclosed to Lender in
writing prior in the execution of this Guaranty, no action, suit, investigation
or proceeding is pending or known to be threatened against or affecting
Guarantor that, if adversely determined, would have a material adverse effect
upon its financial condition;

 

(b) Guarantor is not in
default under any indenture relating to borrowed money, any agreement to which it
is a party or by which it is bound, any other indenture, or any order,
regulation, ruling or requirement of a court or public body or authority by
which it is bound, which default would have a material adverse effect on the
financial position of Guarantor; and (c) no license, consent or approval of, or
filing with, any governmental body or other regulatory authority is required
for the making and performance of, or any instrument or transaction contemplated
by, this Guaranty.

10. No provision of this Guaranty
shall be waived, amended or supplemented except by a written instrument
executed by Lender.

11. The obligations of Guarantor
under this Guaranty shall continue in full force and effect and shall remain in
operation until all of the obligations of Borrower under the Agreements shall
have been paid in full or otherwise fully satisfied, and continue to be effective
or be reinstated, as the case may be, if at any time payment or other
satisfaction of any of such obligations is rescinded or must otherwise be
restored or returned upon the bankruptcy, insolvency, or reorganization of Borrower,
or otherwise, as though such payment had not been made or other satisfaction
occurred. No invalidity, irregularity or unenforceability by reason of applicable
bankruptcy laws or any other similar law, or any law or order of any government
or government agency purporting to reduce, amend or otherwise affect, the obligations
of Borrower shall impair, affect, be a defense to or claim against the
obligations of Guarantor under this Guaranty.

12. In addition to its guaranty
of Borrower’s payment of the obligations of Borrower under the Note and
Borrower’s performance of all covenants, obligations and agreements contained
in the Agreements, Guarantor shall pay all actual costs and expenses (including
reasonable attorneys’ fees) paid or incurred by Lender in connection with the
enforcement of this Guaranty.

13. Guarantor hereby agrees to
execute any and all further documents, agreements, and instruments, and take
all further actions, that Lender shall reasonably request to effectuate or
further preserve, evidence, perfect the rights purported to be created in favor
of Lender under this Guaranty. Guarantor hereby assumes responsibility for
keeping itself informed of the financial condition of Borrower, and any and all
endorsers and/or other guarantors of any instrument or document evidencing all
or any part of the obligations of Borrower, and of all other circumstances
bearing upon the risk of nonpayment of the Note, or any part of the obligations
of Borrower, that diligent inquiry would reveal, and Guarantor hereby agrees
that Lender shall have no duty to advise Guarantor of information known to
Lender regarding such condition or any such circumstances. If Lender, in its
sole discretion, undertakes at any time or from time to time to provide any
such information to Guarantor, Lender shall be under no obligation (i) to
undertake any investigation not a part of its regular business routine, (ii) to
disclose any information that pursuant to accepted or reasonable commercial
finance practices, Lender wishes to maintain confidential, or (iii) to make any
other or future disclosures of such information or any other information to
Guarantor.

 

14. Guarantor hereby grants to
Lender a security interest in the Guaranty Collateral to secure the full and
prompt payment and performance of all of Guarantor’s obligations under this
Guaranty. Guarantor represents and warrants to Lender that it is the sole owner
of the Guaranty Collateral, free and clear of all liens, claims and encumbrances.
For purposes of this Guaranty, “Guaranty Collateral” means certificates for
10,000,000 shares of common stock, $0.001 par value, of Borrower, registered in
the name of Guarantor, which certificates are being delivered to Lender’s
counsel, duly endorsed for transfer in blank with signatures guaranteed, to be
held in escrow by such counsel pending the full performance of the aforesaid
obligations of Guarantor. Guarantor shall from time to time execute and deliver
to Lender, at the request of Lender, all documents that Lender may reasonably
request, in form satisfactory to Lender, to perfect and continue perfected
Lender’s security interest in the Guaranty Collateral and in order to fully
consummate all of the transactions contemplated hereunder. In the event of a
default hereunder, Lender shall have all rights and remedies of a secured party
provided by the Uniform Commercial Code in effect in the State of Delaware.

15.This Guaranty shall be
construed and enforced in accordance with the substantive laws of the State of
Delaware without regard to conflict of law principles. Each party hereby
consents and submits to the exclusive personal and subject matter jurisdiction
of the state and federal courts located in New York County, New York for
purposes of any action or proceeding related to this Guaranty. Trial by jury in
any action arising, proceeding or counterclaim arising hereunder or with
respect hereto is hereby waived.

IN WITNESS WHEREOF, intending to be legally bound, and
intending that this Guaranty shall constitute as instrument executed under
seal, the Guarantor has caused this Guaranty to be executed as of May 4, 2006.

	
  

  	
   

  	
  APOLLO INTERNATIONAL RESOURCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ DENNIS G. MCLAUGHLIN, III

  	
   

  
	
   

  	
   

  	
   

  	
  Dennis G.
  McLaughlin, III

  
	
   

  	
   

  	
   

  	
  Its President

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