Exhibit
10.4


Tatum, LLC


Executive Services Agreement


December 29, 2006


Mr. J. D. McGraw


President


Nova Biosource
Fuels, Inc.


2777 Allen
Parkway, Suite 860


Houston, Texas  77019


Dear Mr. McGraw:


Tatum, LLC (“Tatum”)
understands that Nova Biosource Fuels, Inc. (the “Company”) desires to engage a
partner of Tatum to serve as Vice President and Chief Financial Officer.  This
Executive Services Agreement (this “Agreement”) sets forth the conditions under
which such services will be provided.


Services, Salary, Equity Awards, Fees and other
Benefits


Tatum will make
available to the Company Mr. David G. Gullickson (the “Tatum Partner”), who
will serve as a Vice President and Chief Financial Officer of the Company. 
The Tatum Partner will become an employee and, if applicable, a duly
elected or appointed officer of the Company and subject to the supervision and
direction of the Chief Executive Officer of the Company, the board of directors
of the Company, or both.  Tatum will have
no control or supervision over the Tatum Partner.


Collective monthly
salary and fee amounts will total $20,000 and are discussed below.


The Company will
pay the Tatum Partner directly a salary of $16,000 a month (“Salary”).  As soon as practical after the date of hire
as an employee, the Company will grant the Tatum Partner non-qualified stock
options under its 2006 Equity Incentive Plan to purchase in the aggregate
25,000 shares of common stock at an exercise price per share equal to the fair
market value of the common stock on the date of grant as determined pursuant to
such plan.  The options granted will
expire ten years from the date of grant and vest in six equal monthly
installments over a six (6)-month period beginning on the date of grant.  The form of the Company’s Stock Option Grant Notice,
Stock Option Agreement and 2006 Equity Incentive Plan is attached in Schedules
A, B and C, respectively.


In addition, the
Company will pay directly to Tatum a fee of $4,000 a month (“Fees”) as partial
compensation for resources provided.


In lieu of the
Tatum Partner participating in the Company-sponsored employee medical insurance
and other benefits plans, the Tatum Partner will remain on his or her current
medical and other benefits plans provided by Tatum.  The Company will reimburse the Tatum Partner
for amounts paid by the Tatum Partner for medical insurance and other benefits
plans for himself and his family of approximately $500 per month upon
presentation of reasonable documentation of premiums paid by the Tatum Partner.  The reimbursement amounts are intended to
approximate amounts incurred by the Company for employees in similar management
positions.  In accordance with the U.S.
federal tax law, such amount will not be considered reportable W-2 income, but
instead non-taxable benefits expense. 












As an employee,
the Tatum Partner will be eligible for any Company employee retirement or
401(k) plan and for vacation and holidays consistent with the Company’s policy
as it applies to senior management, and the Tatum Partner will be exempt from
any delay periods otherwise required for eligibility.


Payments, Deposit


Payments to Tatum should
be made by direct deposit through the Company’s payroll or by an automated
clearing house (“ACH”) payment at the same time as payments are made to the
Employee.  If such payment method is not
available and payments are made by check, Tatum will issue invoices to the
Company, and the Company agrees to pay such invoices no later than ten (10)
days after receipt of invoices.


The Company will
reimburse the Tatum Partner directly for out-of-pocket expenses incurred by the
Tatum Partner in providing services hereunder to the same extent that the
Company is responsible for such expenses of senior managers of the Company.


Company agrees to
pay Tatum and to maintain a security deposit of $10,000 for the Company’s
future payment obligations to both Tatum and the Tatum Partner under this
Agreement or any prior agreements between Tatum and the Company (the “Deposit”).  If the Company breaches this Agreement and
fails to cure such breach as provided in this Agreement, Tatum will be entitled
to apply the Deposit to its damages resulting from such breach.  Upon termination or expiration of this
Agreement, Tatum will return to the Company the balance of the Deposit
remaining after application of any amounts to unfulfilled payment obligations
of the Company to Tatum or the Tatum Partner as provided for in this Agreement.


Converting Interim to Permanent


The Company will have the opportunity to make
the Tatum Partner a permanent member of Company management at any time during
the term of this Agreement by entering into another form of Tatum agreement,
the terms of which will be negotiated at such time.


Hiring Tatum
Partner Outside of Agreement


During the twelve
(12)-month period following termination or expiration of this Agreement, other
than in connection with another Tatum agreement, the Company will not employ
the Tatum Partner, or engage the Tatum Partner as an independent contractor, to
render services of substantially the same nature as those to be performed by
the Tatum Partner as contemplated by this Agreement.  The parties
recognize and agree that a breach by the Company of this provision would result
in the loss to Tatum of the Tatum Partner’s valuable expertise and revenue
potential and that such injury will be impossible or very difficult to
ascertain.  Therefore, in the event this provision is breached, Tatum will
be entitled to receive as liquidated damages an amount equal to forty-five
percent (45%) of the Tatum Partner’s Annualized Compensation (as defined
below), which amount the parties agree is reasonably proportionate to the
probable loss to Tatum and is not intended as a penalty.  If, however, a
court or arbitrator, as applicable, determines that liquidated damages are not
appropriate for such breach, Tatum will have the right to seek actual damages.
 The amount will be due and payable to Tatum upon written demand to the
Company.  For this purpose, ‘‘Annualized Compensation’’ will mean monthly
Salary equivalent to what the Tatum Partner would receive on a full-time basis
multiplied by twelve (12), plus the maximum amount of any bonus for which
the Tatum Partner was eligible with respect to the then current bonus year.



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Term and Termination


The term of the
Agreement will be indefinite but that, except as provided in the next
paragraph, effective upon thirty (30) days’ advance written notice, either
party may terminate this Agreement at any time, such termination to be
effective on the date specified in the notice, provided that such date is no
earlier than thirty (30) days after the date of delivery of the notice.  Tatum will continue to render services and
will be paid during such notice period.


Tatum retains the
right to terminate this Agreement immediately if (1) the Company is engaged in
or asks the Tatum Partner to engage in or to ignore any illegal or unethical
activity, (2) the Tatum Partner dies or becomes disabled, (3) the Tatum Partner
ceases to be a partner of Tatum for any other reason, or (4) upon written
notice by Tatum of non-payment by the Company of amounts due under this
Agreement.  For purposes of this
Agreement, disability will be as defined by the applicable policy of disability
insurance or, in the absence of such insurance, by Tatum’s management acting in
good faith.  The Company retains the
right to terminate the Tatum Partner’s employment and this Agreement
immediately if (a) the Tatum Partner indicates after the end of the two week
period after the date of commencement of employment that he is unwilling to
sign documents in the capacity of Principal Financial Officer of the Company,
(b) the commission by the Tatum Partner of an act of fraud, theft, wrongful
diversion of funds or dishonesty against the Company, (c) conviction of the
Tatum Partner for any felony, (d) willful or repeated tardiness or absenteeism
by the Tatum Partner, (e) insubordination by the Tatum Partner, (f)
self-dealing by the Tatum Partner, (g) willful or repeated violation by the
Tatum Partner of Company policy, (h) willful or repeated non-performance or
substandard performance of duties by the Tatum Partner, (i) willful violation
by the Tatum Partner of, or refusal by the Tatum Partner to enter into, any
confidentiality, intellectual property or other agreement with the Company as
are applicable to other senior executives of the Company, or (j) violation by
the Tatum Partner of any state or federal laws, rules or regulation in
connection with or during the performance of services as an officer of the
Company.


In the event that
either party commits a breach of this Agreement, other than for reasons
described in the above paragraph, and fails to cure the same within seven (7)
days following delivery by the non-breaching party of written notice specifying
the nature of the breach, the non-breaching party will have the right to
terminate this Agreement immediately effective upon written notice of such
termination.


Upon termination
of employment of the Tatum Partner, the Tatum Partner will promptly return all
documents (whether in hard copy or electronic form), files, equipment, supplies
and other Company property to the Company.


Insurance


The Company will
provide Tatum or the Tatum Partner with written evidence that the Company
maintains directors’ and officers’ insurance in an amount reasonably acceptable
to the Tatum Partner at no additional cost to the Tatum Partner, and the
Company will maintain such insurance at all times while this Agreement remains
in effect.


Furthermore, the
Company will maintain such insurance coverage with respect to occurrences
arising during the term of this Agreement for at least three years following
the termination or expiration of this Agreement or will purchase a directors’
and officers’ extended reporting period, or “tail,” policy to cover the Tatum
Partner.



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Disclaimers, Limitations of Liability and Indemnity


Tatum assumes no responsibility or liability under this Agreement other
than to render the services called for hereunder and will not be responsible
for any action taken by the Company in following or declining to follow any of
Tatum’s advice or recommendations.  Tatum
represents to the Company that Tatum has conducted its standard screening and
investigation procedures with respect to the Tatum Partner becoming a partner
in Tatum, and the results of the same were satisfactory to Tatum.  Tatum disclaims all other warranties, either
express or implied.  Without limiting the
foregoing, Tatum makes no representation or warranty as to the accuracy or
reliability of reports, projections, forecasts, or any other information
derived from use of Tatum’s resources, and Tatum will not be liable for any
claims of reliance on such reports, projections, forecasts, or information.
Tatum will not be liable for any non-compliance of reports, projections,
forecasts, or information or services with federal, state, or local laws or
regulations.  Such reports,
projections, forecasts, or information or services are for the sole benefit of
the Company and not any unnamed third parties.


In the event that
any partner of Tatum (including without limitation the Tatum Partner to the
extent not otherwise entitled in his or her capacity as an officer of the
Company) is subpoenaed or otherwise required to appear as a witness or Tatum or
such partner is required to provide evidence, in either case in connection with
any action, suit, or other proceeding initiated by a third party or by the
Company against a third party, then the Company shall reimburse Tatum for the
costs and expenses (including reasonable attorneys’ fees) actually incurred by
Tatum or such partner and provide Tatum with compensation at Tatum’s customary
rate for the time incurred.


The Company agrees
that, with respect to any claims the Company may assert against Tatum in
connection with this Agreement or the relationship arising hereunder, Tatum’s
total liability will not exceed two (2) months of Fees.


As a condition for
recovery of any liability, a party to this Agreement must assert any claim
against the other party within three (3) months after discovery or sixty (60)
days after the termination or expiration of this Agreement, whichever is
earlier.


No party will be
liable in any event for incidental, consequential, punitive, or special
damages, including without limitation, any interruption of business or loss of
business, profit, or goodwill.


Arbitration


If the parties are
unable to resolve any dispute arising out of or in connection with this
Agreement, either party may refer the dispute to arbitration by a single
arbitrator selected by the parties according to the rules of the American
Arbitration Association (“AAA”), and the decision of the arbitrator will be
final and binding on both parties.  Such
arbitration will be conducted by the New York, New York office of the AAA and
will be conducted pursuant to the AAA rules for commercial arbitration then in
effect.  In the event that the parties
fail to agree on the selection of the arbitrator within thirty (30) days after
either party’s request for arbitration under this paragraph, the arbitrator
will be chosen by AAA.  The arbitrator
may in his discretion order such discovery as is reasonable or appropriate in
light of the nature of the dispute.  The
arbitrator will render his decision within ninety (90) days after the call for
arbitration.  The arbitrator will have no
authority to award punitive damages. 
Judgment on the award of the arbitrator may be entered in and enforced
by any court of competent jurisdiction. 
The arbitrator will have no authority to award damages in excess or in
contravention of this Agreement and may not amend or disregard any provision of
this Agreement, including this paragraph. 
Notwithstanding the foregoing, either 



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party may seek
appropriate injunctive relief from a court of competent jurisdiction, and
either party may seek injunctive relief in any court of competent jurisdiction.


Miscellaneous


Tatum will be
entitled to receive all reasonable costs and expenses incidental to the
collection of overdue amounts under this Resources Agreement, including but not
limited to attorneys’ fees actually incurred.


The Company agrees to allow Tatum to use the Company’s
logo and name on Tatum’s website and other marketing materials for the sole
purpose of identifying the Company as a client of Tatum.  Tatum will not use the Company’s logo or name
in any press release or general circulation advertisement without the Company’s
prior written consent.


Neither the
Company nor Tatum will be deemed to have waived any rights or remedies accruing
under this Agreement unless such waiver is in writing and signed by the party electing
to waive the right or remedy.  This
Agreement binds and benefits the respective successors of Tatum and the
Company.


Neither party will
be liable for any delay or failure to perform under this Agreement (other than
with respect to payment obligations) to the extent such delay or failure is a
result of an act of God, war, earthquake, civil disobedience, court order,
labor dispute, or other cause beyond such party’s reasonable control.


The provisions on
the attached Schedules A, B and C are incorporated herein by reference.  The provisions concerning payment of
compensation and reimbursement of costs and expenses, limitation of liability,
directors’ and officers’ insurance, and arbitration will survive the expiration
or any termination of this Agreement.


This Agreement
will be governed by and construed in all respects in accordance with the laws
of the State of New York, without giving effect to conflicts-of-laws principles
that would apply any other law.


The terms of this
Agreement are severable and may not be amended except in writing signed by the
party to be bound.  If any portion of
this Agreement is found to be unenforceable, the rest of the Agreement will be
enforceable except to the extent that the severed provision deprives either
party of a substantial benefit of its bargain.


Nothing in this
Agreement shall confer any rights upon any person or entity other than the
parties hereto and their respective successors and permitted assigns and the
Tatum Partner.


Each person
signing below is authorized to sign on behalf of the party indicated, and in
each case such signature is the only one necessary.


Bank Lockbox Mailing Address for Deposit and Fees:


Tatum, LLC

P.O. Box 403291

Atlanta, GA  30384-3291



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Electronic Payment Instructions for Deposit and Fees:


	
  Bank Name:

  	
   

  	
   

  	
   

  
	
  Branch:

  	
   

  	
   

  	
   

  
	
  Routing Number:

  	
  For ACH Payments:

  	
   

  	
   

  
	
   

  	
  For Wires:

  	
   

  	
   

  
	
  Account Name:

  	
   

  	
   

  
	
  Account Number:

  	
   

  	
   

  
	
  Please reference “Nova Biosource Fuels, Inc.” in the
  body of the wire.

  
														



 


Please
sign below and return a signed copy of this letter to indicate the Company’s
agreement with its terms and conditions.


We
look forward to serving you.


Sincerely yours,


	
  

  	
  Acknowledged and agreed by:

  
	
   

  	
   

  
	
  TATUM,
  LLC

  	
  Nova Biosource Fuels, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Bob Litschi 

  	
   

  	
  /s/ J. D. McGraw

  	
   

  
	
  Bob Litschi

  	
  J. D. McGraw

  
	
  Area Managing
  Partner

  	
  President

  
	
   

  	
   

  
	
   

  	
  December 29,
  2006

  
				



 



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