Document:

EXHIBIT 10.5

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION
AGREEMENT (this “Agreement”) is entered into as of September 29, 2005,
between Meadows Springs, Inc., a Nevada corporation, dba Earth Biofuels, Inc.
(the “Company”), and Bruce Blackwell (“Indemnitee”).

WHEREAS, the Company and
Indemnitee recognize that currently D&O liability coverage is in place, but
in today’s litigious society the limits may be inadequate. Further the parties
recognize the continued difficulty in obtaining liability insurance for
directors, officers, employees, agents and fiduciaries of the Company , the
significant increases in the cost of such insurance and the general reductions
in the coverage of such insurance;

WHEREAS, the Company and
Indemnitee further recognize the substantial increase in corporate litigation
in general, subjecting directors, officers, employees, agents and fiduciaries
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited;

WHEREAS, Indemnitee does not
regard the current protection available as adequate under the present
circumstances, and Indemnitee and other directors, officers, employees, agents
and fiduciaries of the Company may not be willing to continue to serve in such
capacities without additional protection;

WHEREAS, the Company desires
to attract and retain the services of highly qualified individuals, such as
Indemnitee, to serve the Company and, in part, in order to induce Indemnitee to
continue to provide services to the Company, desires to provide for the
indemnification and advancement of expenses to Indemnitee to the maximum extent
permitted by law; and

WHEREAS, in view of the
considerations set forth above, the Company desires that Indemnitee be
indemnified by the Company as set forth herein.

NOW, THEREFORE, the Company
and Indemnitee hereby agree as follows:

1.                                       Indemnification.

(a)                                  Indemnification of Expenses.  The Company shall indemnify
Indemnitee to the fullest extent permitted by applicable law if Indemnitee was
or is or becomes a party to or witness or other participant in, or is
threatened to be made a party to or witness or other participant in, any
threatened, pending or completed action, suit, proceeding or alternative
dispute resolution mechanism, or any hearing, inquiry or investigation that
Indemnitee in good faith believes might lead to the institution of any such
action, suit, proceeding or alternative dispute resolution mechanism, whether
civil, criminal, administrative, investigative or other (a “Claim”) by reason of (or arising in part out of) any event or occurrence
related to the fact that Indemnitee is or was a director, officer, employee,
agent or fiduciary of the Company, or any subsidiary of the Company, or is or
was serving at the request of the Company as a director, officer, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust or
other enterprise, or by reason of any action or inaction on the part of
Indemnitee while serving in such capacity (an “Indemnifiable Event”)
against any and all expenses (including attorneys’ fees and all other costs,
expenses and obligations incurred in connection with investigating, defending,
being a witness in or participating in (including on appeal), or

 

preparing to defend, be a witness in or participate in, any such
action, suit, proceeding, alternative dispute resolution mechanism, hearing,
inquiry or investigation), judgments, fines, penalties and amounts paid in
settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) of such Claim and any federal,
state, local or foreign taxes imposed on Indemnitee as a result of the actual
or deemed receipt of any payments under this Agreement (collectively, “Expenses”), including all interest, assessments and other charges paid or
payable in connection with or in respect of such Expenses.  Such payment of Expenses shall be made by the
Company as soon as practicable but in any event no later than 25 days
after written demand by Indemnitee therefor is presented to the Company.

(b)                                 Reviewing Party.  Notwithstanding any provision of
Section 1(a) to the contrary, (i) the obligations of the
Company under Section 1(a) shall be subject to the condition that
the Reviewing Party (as described in Section 10(e)) shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 1(c) is involved) that Indemnitee
would not be permitted to be indemnified under applicable law, and (ii) the
obligation of the Company to make an advance payment of Expenses to Indemnitee
pursuant to Section 2(a) (an “Expense Advance”)
shall be subject to the condition that, if, when and to the extent that the
Reviewing Party determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled to be
reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all
such amounts theretofore paid; provided, however, that if
Indemnitee has commenced or thereafter commences legal proceedings in a court
of competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial determination is made in
respect thereof (as to which all rights of appeal therefrom have been exhausted
or lapsed).  Indemnitee’s obligation to
reimburse the Company for any Expense Advance shall be unsecured and no
interest shall be charged thereon.  If
there has not been a Change in Control (as defined in Section 10(c)),
the Reviewing Party shall be selected by the Board of Directors of the Company
(the “Board”), and if there has been such a Change in Control (other
than a Change in Control which has been approved by a majority of the Board who
were directors immediately prior to such Change in Control), the Reviewing
Party shall be the Independent Legal Counsel referred to in Section 1(c).  If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence litigation
seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, including the legal
or factual bases therefor, and the Company hereby consents to service of
process and to appear in any such proceeding. 
Any determination by the Reviewing Party otherwise shall be conclusive
and binding on the Company and Indemnitee.

(c)                                  Change in Control.  If there is a Change in Control
(other than a Change in Control which has been approved by a majority of the
Board who were directors immediately prior to such Change in Control) then, in
respect of all matters thereafter arising concerning the rights of Indemnitee
to payments of Expenses and Expense Advances under this Agreement or any other
agreement or under the Company’s Articles

 

of Incorporation (the “Charter”) or the Company’s Bylaws (“Bylaws”)
as now or hereafter in effect, Independent Legal Counsel (as defined in Section 10(d))
shall be selected by Indemnitee and approved by the Company (which approval
shall not be unreasonably withheld). 
Such counsel shall, among other things, render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law and Indemnitee and the Company
shall abide by such opinion.  The Company
shall pay the reasonable fees of the Independent Legal Counsel referred to
above and shall fully indemnify such counsel against any and all expenses
(including attorneys’ fees), claims, liabilities and damages arising out of or
relating to this Agreement or its engagement pursuant hereto.

(d)                                 Mandatory Payment of Expenses.  Notwithstanding any other provision
of this Agreement to the contrary (other than Section 9), to the
extent that Indemnitee has been successful on the merits or otherwise,
including, without limitation, the dismissal of an action without prejudice, in
defense of any action, suit, proceeding, inquiry or investigation referred to
in Section (1)(a) or in the defense of any claim, issue or matter
therein, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.

2.                                       Expenses; Indemnification Procedure.

(a)                                  Advancement of Expenses.  The Company shall advance all
Expenses incurred by Indemnitee.  The
advances to be made hereunder shall be paid by the Company to Indemnitee as
soon as practicable but in any event no later than 10 days after written
demand by Indemnitee therefor to the Company.

(b)                                 Notice/Cooperation by Indemnitee.  Indemnitee shall, as a condition
precedent to Indemnitee’s right to be indemnified under this Agreement, give
the Company notice in writing as soon as practicable of any Claim made against
Indemnitee for which indemnification will or could be sought under this
Agreement.  Notice to the Company shall
be directed to the Chief Executive Officer of the Company at the address shown
on the signature page of this Agreement (or such other address as the Company
shall designate in writing to Indemnitee). 
In addition, Indemnitee shall give the Company such information and
cooperation as it may reasonably require and as shall be within Indemnitee’s
power.

(c)                                  No Presumptions; Burden of Proof.  For purposes of this Agreement,
the termination of any Claim by judgment, order, settlement (whether with or
without court approval) or conviction, or upon a plea of nolo contendere, or its equivalent, shall
not create a presumption that Indemnitee did not meet any particular standard
of conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.  In addition, neither the failure of the
Reviewing Party to have made a determination as to whether Indemnitee has met
any particular standard of conduct or had any particular belief, nor an actual
determination by the Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under applicable law, shall be a defense to Indemnitee’s
claim or create a presumption that Indemnitee has not met any particular
standard of conduct or did not have any particular belief.  In connection with any determination by the
Reviewing Party or otherwise as to whether Indemnitee is entitled to

 

be indemnified hereunder, the burden of proof shall be on the Company
to establish that Indemnitee is not so entitled.

(d)                                 Notice to Insurers.  If, at the time of the receipt
by the Company of a notice of a Claim pursuant to Section 2(b), the
Company has liability insurance in effect that may cover such Claim, the
Company shall give prompt notice of the commencement of such Claim to the
insurers in accordance with the procedures set forth in the respective
policies.  The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of Indemnitee, all amounts payable as a result of such action, suit,
proceeding, inquiry or investigation in accordance with the terms of such
policies.

(e)                                  Selection of Counsel.  If the Company shall be
obligated hereunder to pay the Expenses of any Claim, the Company shall be
entitled to assume the defense of such Claim with counsel approved by
Indemnitee, which approval shall not be unreasonably withheld, upon the
delivery to Indemnitee of written notice of its election so to do.  After delivery of such notice, approval of
such counsel by Indemnitee and the retention of such counsel by the Company,
the Company will not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee in respect of the same Claim; provided,
however, that (i) Indemnitee shall have the right to employ
Indemnitee’s counsel in any such Claim at Indemnitee expense and (ii) if
(A) the employment of counsel by Indemnitee has been previously authorized
by the Company, (B) Indemnitee shall have reasonably concluded that there
is a conflict of interest between the Company and Indemnitee in the conduct of
any such defense, or (C) the Company shall not continue to retain such
counsel to defend such Claim, then the fees and expenses of Indemnitee counsel
shall be at the expense of the Company. 
The Company shall have the right to conduct such defense as it sees fit
in its sole discretion, including the right to settle any claim against
Indemnitee without the consent of the Indemnitee.

3.                                       Additional Indemnification Rights;
Nonexclusivity.

(a)                                  Scope.  The Company hereby shall indemnify Indemnitee to the
fullest extent permitted by law, notwithstanding that such indemnification is
not specifically authorized by the other provisions of this Agreement, the
Charter, the Bylaws or by statute.  In
the event of any change after the date hereof in any applicable law, statute or
rule which expands the right of a Nevada corporation to indemnify a member of
its board of directors or an officer, employee, agent or fiduciary, it is the
intent of the parties hereto that Indemnitee shall enjoy by this Agreement the
greater benefits afforded by such change. 
In the event of any change in any applicable law, statute or rule that
narrows the right of a Nevada corporation to indemnify a member of its board of
directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties’ rights
and obligations hereunder except as set forth in Section 8(a).

(b)                                 Nonexclusivity.  The indemnification provided by
this Agreement shall be in addition to any rights to which Indemnitee may be
entitled under the Charter, the Bylaws, any agreement, any vote of stockholders
or disinterested directors, the Revised Statutes of the State of Nevada, or
otherwise.  The indemnification provided
under this

 

Agreement shall continue as to Indemnitee for any action Indemnitee
took or did not take while serving in an indemnified capacity even though
Indemnitee may have ceased to serve in such capacity.

4.                                       No Duplication of Payments.  The Company shall not be liable
under this Agreement to make any payment in connection with any Claim made
against Indemnitee to the extent Indemnitee has otherwise actually received
payment (under any insurance policy, the Charter, Bylaw or otherwise) of the
amounts otherwise indemnifiable hereunder.

5.                                       Partial Indemnification.  If Indemnitee is entitled under
any provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.

6.                                       Mutual Acknowledgement.  Both the Company and Indemnitee
acknowledge that in certain instances, federal law or applicable public policy
may prohibit the Company from indemnifying its directors, officers, employees,
agents or fiduciaries under this Agreement or otherwise.  Indemnitee understands and acknowledges that
the Company has undertaken or may be required in the future to undertake with
the Securities and Exchange Commission to submit the question of indemnification
to a court in certain circumstances for a determination of the Company’s right
under public policy to indemnify Indemnitee.

7.                                       Liability Insurance.  To the extent the Company
maintains liability insurance applicable to directors, officers, employees,
agents or fiduciaries, Indemnitee shall be covered by such policies in such a
manner as to provide Indemnitee the same rights and benefits as are accorded to
the most favorably insured of the Company’s directors, if Indemnitee is a
director; or of the Company’s officers, if Indemnitee is not a director of the
Company but is an officer; or of the Company’s key employees, agents or
fiduciaries, if Indemnitee is not an officer or director but is a key employee,
agent or fiduciary.

8.                                       Exceptions.  Notwithstanding any other provision of this Agreement to
the contrary, the Company shall not be obligated pursuant to the terms of this
Agreement:

(a)                                  Excluded Action or Omissions.  To indemnify Indemnitee for
Indemnitee’s acts, omissions or transactions from which Indemnitee may not be
relieved of liability under applicable law;

(b)                                 Claims Initiated by Indemnitee.  To indemnify or advance expenses
to Indemnitee in respect of Claims initiated or brought voluntarily by
Indemnitee and not by way of defense, except (i) in respect of actions or
proceedings brought to establish or enforce a right to indemnification under
this Agree­ment or any other agreement or insurance policy or under the Charter
or Bylaws now or hereafter in effect relating to Claims for Indemnifiable
Events, (ii) in specific cases if the Board has approved the initiation or
bringing of such Claim, or (iii) as otherwise required under the Nevada
Revised Statutes, regardless of whether Indemnitee ultimately is determined to
be entitled to such indemnification, advance expense payment or insurance
recovery, as the case may be;

 

(c)                                  Lack of Good Faith.  To indemnify Indemnitee for any
expenses incurred by Indemnitee in respect of any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by Indemnitee
in such proceeding was not made in good faith or was frivolous; or

(d)                                 Claims Under Section 16(b).  To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.

9.                                       Period of Limitations.  No legal action shall be brought
and no cause of action shall be asserted by or in the right of the Company
against Indemnitee, Indemnitee’s estate, spouse, heirs, executors or personal
or legal representatives after the expiration of two years from the date of
accrual of such cause of action, and any claim or cause of action of the
Company shall be extinguished and deemed released unless asserted by the timely
filing of a legal action within such two-year period; provided, however,
that if any shorter period of limitations is otherwise applicable to any such
cause of action, such shorter period shall govern.

10.                                 Construction of Certain Phrases.

(a)                                  For purposes of this Agreement, references to
the “Company” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger that, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees, agents or fiduciaries, so that if Indemnitee is or was a
director, officer, employee, agent or fiduciary of such constituent
corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions of
this Agreement in respect of the resulting or surviving corporation as
Indemnitee would have in respect of such constituent corporation if its
separate existence had continued.

(b)                                 For purposes of this Agreement, references to
“other enterprises” shall include employee benefit plans; references to “fines”
shall include any excise taxes assessed on Indemnitee in respect of an employee
benefit plan; and references to “serving at the request of the Company”
shall include any service as a director, officer, employee, agent or fiduciary
of the Company that imposes duties on, or involves services by, such director,
officer, employee, agent or fiduciary in respect of an employee benefit plan,
its participants or its beneficiaries; and if Indemnitee acted in good faith
and in a manner Indemnitee reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan, Indemnitee shall be
deemed to have acted in a manner “not opposed to the best interests of the
Company” as referred to in this Agreement.

(c)                                  For purposes of this Agreement a “Change
in Control” shall be deemed to have occurred if (i) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, (A) who is or
becomes the

 

beneficial owner, directly or indirectly, of securities of the Company
representing 10% or more of the combined voting power of the Company’s then outstanding
Voting Securities, increases its beneficial ownership of such securities by 5%
or more over the percentage so owned by such person, or (B) becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than 20% of the total voting power
represented by the then outstanding Voting Securities, (ii) during any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board and any new director whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of
at least two-thirds of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation other than a
merger or consolidation which would result in the Voting Securities outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 80% of the total voting power represented by the Voting
Securities or such surviving entity outstanding immediately after such merger
or consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of (in one transaction or a series of transactions) all or
substantially all of the Company’s assets.

(d)                                 For purposes of this Agreement, “Independent
Legal Counsel” means an attorney or firm of attorneys, selected in
accordance with Section 1(c), who shall not have otherwise
performed services for the Company or Indemnitee within the last three years
(other than in respect of matters concerning the rights of Indemnitee under
this Agreement, or of other indemnitees under similar indemnity agreements).

(e)                                  For purposes of this Agreement, a “Reviewing
Party” means any appropriate person or body consisting of a member or
members of the Board or any other person or body appointed by the Board who is
not a party to the particular Claim for which Indemnitee is seeking
indemnification, or Independent Legal Counsel.

(f)                                    For purposes of this Agreement, “Voting
Securities” means any securities of the Company that vote generally in the
election of directors.

11.                                 Counterparts.  This Agreement may be executed in
multiple counterparts, each of which shall constitute an original.

12.                                 Binding Effect; Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of and be enforce­able by the parties hereto and
their respective successors, assigns, including any direct or indirect
successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company, spouses, heirs,
and personal and legal representatives. 
The Company shall require and cause any successor (whether direct or
indirect by purchase, merger, consolidation or otherwise) to all, substantially
all, or a substantial part, of the business and/or assets of the Company, by
written agreement in form and substance satisfactory to Indemnitee, expressly
to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place.  This Agreement shall
continue in effect in respect of Claims relating to Indemnifiable Events
regardless of whether Indemnitee continues to serve as

 

a director, officer,
employee, agent or fiduciary of the Company or of any other enterprise at the
Company’s request.

13.                                 Attorneys’ Fees.  If any action is instituted by
Indemnitee under this Agreement or under any liability insurance policies
maintained by the Company to enforce or interpret any of the terms hereof or
thereof, Indemnitee shall be entitled to be paid all Expenses incurred by
Indemnitee in respect of such action, regardless of whether Indemnitee is
ultimately successful in such action, and shall be entitled to the advancement
of Expenses in respect of such action, unless, as a part of such action, a
court of competent jurisdiction over such action determines that each of the
material assertions made by Indemnitee as a basis for such action was not made
in good faith or was frivolous.  If an
action is instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be paid all Expenses incurred by Indemnitee in defense of such
action (including costs and expenses incurred in respect of Indemnitee
counterclaims and cross-claims made in such action), and shall be entitled to
the advancement of Expenses in respect of such action, unless, as a part of
such action, a court having jurisdiction over such action determines that each
of Indemnitee’s material defenses to such action was made in bad faith or was
frivolous.

14.                                 Notice.  All notices and other communications required or permitted
hereunder shall be in writing, shall be effective when given, and shall in any
event be deemed to be given (i) five days after deposit with the U.S.
Postal Service or other applicable postal service, if delivered by first class
mail, postage prepaid, (ii) upon delivery, if delivered by hand,
(iii) one business day after the business day of deposit with Federal
Express or similar overnight courier, freight prepaid, or (iv) one day
after the business day of delivery by facsimile transmission, if delivered by
facsimile transmission, with copy by first class mail, postage prepaid, and
shall be addressed if to Indemnitee, at Indemnitee’s address as set forth
beneath Indemnitee’s signature to this Agreement and if to the Company at the
address of its principal corporate offices (attention:  Secretary) or at such other address as such
party may designate by ten days’ advance written notice to the other party
hereto.

15.                                 Consent to Jurisdiction.  The Company and Indemnitee each
hereby irrevocably consent to the jurisdiction of the courts of the State of
Texas for all purposes in connection with any action or proceeding that arises
out of or relates to this Agreement and agree that any action instituted under
this Agreement shall be commenced, prosecuted and continued only in a Texas
state court sitting in Dallas County, Texas, which shall be the exclusive and
only proper forum for adjudicating such a claim.

16.                                 Severability.  The provisions of this Agreement
shall be severable if any of the provisions hereof (including any provision
within a single section, paragraph or sentence) are held by a court of
competent jurisdiction to be invalid, void or otherwise unenforceable, and the
remaining provisions shall remain enforceable to the fullest extent permitted
by applicable law.  Furthermore, to the
fullest extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void or otherwise unenforceable, that is not itself invalid, void or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.

17.                                 Choice of Law.  This Agreement shall be governed
by and its provisions construed and enforced in accordance with the laws of the
State of Nevada, as applied to contracts between Nevada residents, entered into
and to be performed entirely within the State of Nevada, without regard to the
conflict of laws principles thereof.

 

18.                                 Subrogation.  In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee who shall execute all documents required and shall do all
acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

19.                                 Amendment and Termination.  No amendment, modification,
termination or cancellation of this Agreement shall be effective unless it is
in writing signed by both the parties hereto. 
No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.

20.                                 Integration and Entire Agreement.  This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.

21.                                 No Construction as Employment Agreement.  Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries.

* * * * *

[THE REMAINDER OF THIS PAGE
IS INTENTIONALLY LEFT BLANK]

 

IN WITNESS WHEREOF, the
parties hereto have executed and delivered this Agreement as of the date first
above written.

	
  THE COMPANY:

  
	
   

  
	
  MEADOWS SPRINGS, INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ DENNIS G. MCLAUGHLIN, III

  	
   

  
	
  Name:

  	
  Dennis G. McLaughlin, III

  
	
  Title:

  	
  Chairman of the Board of Directors

  
	
   

  	
   

  
	
  Address:

  	
  3001 Knox Street, Suite 403

  
	
   

  	
  Dallas, Texas
  75205

  
	
   

  	
  214 389 9800

  
	
  Facsimile No.:

  	
  214 389 9805

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ MORGAN FREEMAN

  	
   

  
	
  Name:

  	
  Morgan Freeman

  
	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ TOMMY W. JOHNSON

  	
   

  
	
  Name:

  	
  Tommy W. Johnson

  
	
  Title:

  	
  Director, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ WILLIAM O. LUCKETT, JR.

  	
   

  
	
  Name:

  	
  William O. Luckett, Jr.

  
	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
  INDEMNITEE:

  
	
   

  
	
   

  
	
  /s/ BRUCE BLACKWELL

  	
   

  
	
  BRUCE BLACKWELL

  
	
   

  
	
  Address:

  	
  6070 I55 North

  
	
   

  	
  Jackson,
  Mississippi

  
	
   

  	
  601 372 8445

  
	
  Facsimile:

  	
  601 372 6455Exhibit 10.6

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and
entered into as of the       day of October, 2005,
between R. BRUCE BLACKWELL (the “Lessor”), and EARTH BIOFUELS, LLC,
a Mississippi limited liability company (the “Lessee”).

STATEMENT OF BACKGROUND INFORMATION

The Lessor is the
owner of that certain parcel of real property and the improvements thereon
located in Grenada County, Mississippi and more particularly described on Exhibit
A attached hereto (the “Leased Premises”).

The Lessor desires
to lease to the Lessee and the Lessee desires to lease from the Lessor the
Leased Premises on the terms and conditions described herein.

STATEMENT OF AGREEMENT

NOW, THEREFORE,
for and in consideration of the mutual covenants and conditions contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:

1.    Term. The Lessee shall use and occupy
the Leased Premises for a Term of five years commencing on the date hereof, and
ending five years after such date (the “Term”), unless sooner terminated
as hereinafter provided.

2.    Rent. During the Term, the Lessee
shall pay to the Lessor as rent (the “Rent”) for the Leased Premises the
sum of $120,000.00 per year (the “Annual Rental”), payable in equal
monthly installments. Monthly installments of Rent shall be paid in advance on
the first day of each and every calendar month during the Term.

3.    Maintenance and Repairs. During the
Term of this Lease, the Lessee covenants to keep the Leased Premises
(including, without limitation, the exterior and structure of the building, all
improvements thereon and all heating, plumbing, electrical, air-conditioning,
mechanical and other fixtures and equipment now or hereafter on the Leased
Premises) in good order, condition and repair, reasonable use and wear only
excepted, and to make all repairs and replacements.

4.    Utilities. The Lessee shall pay or
cause to be paid all charges for gas, water, sewer, electricity, heat, air
conditioning, telephone or other utility or service used in connection with the
Leased Premises during the Term. The Lessor shall be under no obligation to
furnish any utilities to the Leased Premises and shall not be liable for any
interruption or failure in the supply of any such utilities.

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5.    Taxes and Insurance. The Lessee shall
pay all ad valorem taxes and assessments levied on the Leased Premises during
the Term. The Lessee also shall obtain and keep in force during the Term fire
and extended coverage property insurance covering the Leased Premises in an
amount not less than the full cost of the replacement value thereof, against
all perils included within the classification of fire, extended coverage,
vandalism, malicious mischief, and special extended perils (“all risk” as such
term is used in the insurance industry) naming the Lessor as insured. In
addition, the Lessee shall obtain and keep in force comprehensive public
liability insurance in amounts acceptable to Lessor and with the Lessor named
as an additional insured. All personal property belonging to the Lessee located
in or about the Leased Premises shall be at the sole risk of the Lessee.

6.    Compliance with Law. The Lessee shall
make all repairs, alterations, additions or replacements to the Leased Premises
required by any law or ordinance of any public authority; keep the Leased
Premises equipped with all safety appliances so required; and to comply with
the orders and regulations of all governmental authorities with respect to zoning,
building, fire, health, environmental regulations and other codes, regulations,
ordinances or laws applicable to the Leased Premises.

7.    Surrender at End of Term. The Lessee
shall quit and surrender the Leased Premises at the expiration of the Term or
earlier termination of this Lease in as good condition as reasonable use will
permit, damage by fire and elements accepted.

8.    Damage by Fire or Other Cause. If the
Leased Premises shall be partially damaged by fire or other cause, the damage
shall be repaired by the Lessor to the extent of insurance proceeds received by
the Lessor. If all or substantially all of the Leased Premises becomes unfit
for occupancy and use as a result of fire or other cause, the Lessor may elect
(a) to terminate this Lease as of the time when the Leased Premises are
made unfit for occupancy and use by giving written notice to the Lessee within
fifteen (15) days after that date, or (b) to repair, restore or
rehabilitate the Leased Premises to the extent of insurance proceeds received
by the Lessor within one hundred eighty (180) days after the Lessor is able to
take possession of the Leased Premises and undertake reconstruction or repairs,
in which latter event this Lease shall not terminate but the Rent shall be
abated on a per diem basis while the Leased Premises are unfit for occupancy
and use. If the Lessor elects to restore, repair or rehabilitate the Leased
Premises and does not substantially complete the work within said one hundred
eighty (180) day period, either party shall have the right to terminate this
Lease as of the time when the Leased Premises became unfit for occupancy and
use by written notice to the other party not later then ten (10) days after the
expiration of said period. In the event of such termination of this Lease, the
Lessee’s liability for the Rent shall cease as of the date the Leased Premises
were made unfit for occupancy and use.

9.    Condemnation. If any part of the
Leased Premises shall be taken or condemned for any public use by any legally
constituted authority by right of eminent domain and a part thereof remains
which, in the Lessor’s judgment, is suitable for the full conduct of the Lessee’s
business, this Lease as to the part to be taken shall terminate as of the date
title vests in the

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condemnor (or such
earlier date on which possession of the Leased Premises must be given to the
condemnor), the Lessor shall promptly restore the portion of the Leased
Premises not taken, and the rent payable hereunder shall be adjusted equitably.
If Lessor determines that the aforementioned taking renders the remainder of
the Leased Premises unsuitable for the Lessee’s use, the Lessor may terminate
this Lease as of the date when the Lessor determines that the Leased Premises
are unsuitable for the Lessee’s use by giving notice to that effect within
thirty (30) days after such determination.

If all or
substantially all of the Leased Premises are taken or condemned or so much
thereof that the use by the Lessee shall be substantially impaired, this Lease
shall terminate. All compensation awarded or granted shall be the property of
the Lessor. Notwithstanding the provisions herein, the Lessee shall have the
right to make a separate claim with the condemning authority for the value of
the Lessee’s trade fixtures and relocation expenses.

10.  Default by the Lessee. If (a) the
Lessee defaults in the payment of the Rent or any additional charge or cost to
be paid by the Lessee as provided in this Lease and such default shall continue
uncorrected for a period of five (5) days after written notice, or (b) the
Lessee defaults in the performance and observance of any of the terms and
conditions of this Lease to be performed or observed by the Lessee and such
default shall continue uncorrected for a period of thirty (30) days after written
notice, or (c) any execution, attachment, or other order of court shall be
issued upon or against the interest of the Lessee in this Lease and shall
continue for a period of thirty (30) days after written notice, then and in any
such event, interest shall accrue on all monetary obligations owed under this
Lease at the lesser of the prime rate of BancorpSouth Bank (or its successor)
plus four percent (4%), or the maximum rate permissible by law, and in addition
to any and all rights and remedies allowed by law and equity, the Lessor may
terminate this Lease with written notice to the Lessee.

11.  Default by the Lessor. The Lessor’s
failure to perform or observe any of the Lessor’s obligations under this Lease
after a period of thirty (30) days after the Lessor receives written notice
from Lessee shall be a default by the Lessor. Upon the happening of a default
by the Lessor, the Lessee shall have the right, but not the obligation, to
perform the Lessor’s obligation and deduct any cost incurred by the Lessee from
the Rent due hereunder. In addition, the Lessee may pursue any other legal or
equitable remedies, including terminating this Lease.

12.  Indemnification. The Lessee shall save
Lessor harmless, and exonerate and indemnify Lessor from and against any and
all claims, liabilities or penalties asserted by or on behalf of any person,
firm, corporation or public authority on account of injury, death, damage or
loss to person or property in or upon the Leased Premises arising out of the
use or occupancy of the Leased Premises by Lessee or by any person claiming by,
through or under Lessee (including, without limitation, all patrons, employees
and customers of Lessee), or arising out of any delivery to or service supplied
to the Leased Premises, or on account of or based upon anything whatsoever done
on the Leased Premises, except if the same was caused by the gross negligence
or willful misconduct of Lessor, its agents, servants or employees. In respect
of all of the foregoing, Lessee shall indemnify Lessor from and against all
costs, expenses (including reasonable attorneys fees) and liabilities incurred
in or in connection with any such claim, action

 3
 

 

or proceeding brought
thereon; and, in case of any action or proceeding brought against Lessor by
reason of any such claim, Lessee, upon notice from Lessor and at Lessee’s
expense shall resist or defend such action or proceeding and employ counsel
therefor reasonably satisfactory to Lessor.

13.  Improvements, Fixtures and Trade Fixtures.
It is expressly understood and agreed that any and all signs, fixtures, trade
fixtures, machinery, fencing, furniture, appliances and equipment erected or
installed by the Lessee, whether or not attached to the Leased Premises, shall
remain the property of the Lessee and may be removed by the Lessee at or before
the expiration of this Lease and any renewals hereof, including the period of
any “holding over”, provided the Lessee repairs all damage which may be caused
by any such removal in a good and workman-like manner. The building and other
improvements located on the Leased Premises (excluding the items described
above), whether constructed or renovated by the Lessor or the Lessee, shall
remain the property of the Lessor at the termination of the Lease and any
renewals hereof.

14.  Quiet Enjoyment. The Lessor covenants
and agrees that upon the Lessee paying the Rent as provided herein and
performing all of the covenants and conditions herein set forth, the Lessee
shall and may peaceably and quietly have, hold and enjoy the Leased Premises
for the Term and for the intended uses and purposes, subject nevertheless to
the provisions of this Lease.

15.  Lessor’s Right to Enter. The Lessee
covenants and agrees to permit the Lessor and its agents to enter and examine
the Leased Premises at reasonable times and upon reasonable notice to the
Lessee and, during the last six months of the Term of the Lease, to keep
affixed in suitable places notices of availability of the Leased Premises.

16.  Ownership of Leased Premises. The
Lessor represents that the Lessor owns the Leased Premises in fee simple and
has the right to lease the same to the Lessee. The Lessor agrees to deliver to
the Lessee the Leased Premises free from the tenancy of any person or entity
other that the Lessee.

17.  Assignment and Subletting. The Lessee
may not convey, transfer, encumber or otherwise assign or sublease, whether
voluntarily or involuntarily or by operation of law, all or any part of its
interest in the Leased Premises without the express written consent of the Lessor,
which shall not be unreasonably withheld; provided, however, that the Lessee
may assign the Lease to a limited liability company controlled by the Lessee
without the requirement of obtaining the Lessor’s consent. For purposes of this
Section, an assignment of this Lease shall be deemed to include any change in
control of Lessee or any transaction pursuant to which Lessee is merged or
consolidated with another entity or pursuant to which all or substantially all
of Lessee’s assets are transferred to any other entity, as if such change in
control or transaction were an assignment of this Lease. No subletting or
assignment shall in any way impair the continuing primary liability of Lessee
under this Lease, and no consent to any subletting or assignment in a
particular instance shall be deemed to be a waiver of the obligation to obtain
the Lessor’s written approval in the case of any other subletting or
assignment. Any subletting,

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assignment or other
transfer of Lessee’s interest in this Lease in contravention of this Section
shall be voidable at Lessor’s option.

18.  Rights of Mortgagees. This Lease, and
all rights of Lessee hereunder, are and shall be subject and subordinate to all
mortgages, which may now or hereafter affect the Leased Premises, to each and
every advance made or hereafter to be made under such mortgages, and to all
renewals, modifications, replacements and extensions of such mortgages. This
Section shall be self-operative and no further instrument of subordination
shall be required. In confirmation of such subordination, Lessee shall promptly
execute, acknowledge and deliver any instrument that Lessor or the holder of
any such mortgage may reasonably request to evidence such subordination. Any
mortgage to which this Lease is, at the time referred to, subject and
subordinate, is herein called a “Superior Mortgage” and the holder of a
Superior Mortgage is herein called the “Superior Mortgagee”.

If any Superior
Mortgagee or its nominee shall succeed to the rights of Lessor under this
Lease, then at the request of such party so succeeding to Lessor’s rights (the “Successor
Landlord”) and upon such Successor Landlord’s written agreement to accept
Lessee’s attornment, Lessee shall attorn to and recognize such Successor
Landlord as Lessee’s landlord under this Lease and shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment. Upon such attornment, this Lease shall continue in
full force and effect as a direct lease between the Successor Landlord and
Lessee upon all of the terms, conditions and covenants as set forth in this
Lease. Lessee agrees at any time and from time to time to execute a suitable
instrument in confirmation of Lessee’s agreement to attorn, as aforesaid.

19.  Assigns. The terms, covenants and
conditions contained in this Lease shall bind and inure to the benefit of the
Lessor and the Lessee and their legal representatives, successors and assigns,
subject to Section 17 herein.

20.  Severability. In case any one or more
of the provisions contained in this Lease shall 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 Lease
shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein unless to do so would materially alter the benefits
and burdens the parties hereto have bargained for.

21.  Entire Agreement. This lease contains
the entire agreement between the parties and shall not be modified in any
manner except by an instrument in writing executed by the parties or their
respective successors in interest.

22.  Memorandum of Lease. This Lease may not
be recorded in the land records. Upon request of the Lessee, the Lessor shall
execute a “short form” or memorandum of lease providing notice of Lessee’s
interest in the Leased Premises.

23.  Attorneys Fees. In the event it becomes
necessary for either party to enforce the terms of this Lease, the prevailing
party shall be entitled, in addition to such damages or other

 5
 

 

relief as may be granted,
to recover reasonable attorneys’ fees and costs, such attorneys’ fees to
include those incurred on any appeal.

IN WITNESS
WHEREOF, the parties have executed this Lease effective as of date first above written.

	
  

  	
   

  	
  - LESSOR -

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ R. Bruce Blackwell

  
	
   

  	
   

  	
  R. BRUCE BLACKWELL

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  - LESSEE -

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EARTH BIOFUELS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Bruce Blackwell

  
	
   

  	
   

  	
  R. Bruce Blackwell, Manager

  

 6
 

 

EXHIBIT A

Legal Description of Leased Premises

See attached

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  253 HWY 7 NORTH

  
	
   

  	
   

  	
  GRENADA, MS

  

 

EXHIBIT “A”

3.898
acres of land, more or less, lying in the East 1¤2 of Section
14, T-23-N, R-4-E, Choctaw Meridian, Grenada County, Mississippi, and more
particularly described as follows:

Beginning
at a iron bar at the intersection of South R.O.W. of Mississippi Highway
No. 7 with the Westerly R.O.W. of Country Meadows Road located 1482.2 feet
West and 2805.5 feet North of the Southeast corner of said Section 14,
thence S 32° 58’ East along the Westerly line of Country Meadows Road for 438.0
feet to an iron bar, thence S 65° 34’ West along a fence for 459.7 feet to an
iron bar on the East line of a gravel road, thence N 28° 02’ West along the
Easterly line of a gravel road for 333.5 feet to an iron bar on the Southerly
R.O.W. of Mississippi Highway No. 7, thence run N 52° East along the said
Highway R.O.W. for 427.6 feet, more or less, to the Point of Beginning.

	
  SIGNED FOR IDENTIFICATION

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Richard B Blackwell

  	
   

  
	
  RICHARD B BLACKWELL

  	
   

  
			

 

 8

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