Document:

Exhibit 10.5

Project Agreement

December 28, 2006

Nova Biosource Fuels, Inc.

The Riviana Building

2777 Allen Parkway, Suite 860

Houston, Texas  77019

Dear Mr. McGraw:

Tatum, LLC (“Tatum,” “we,”
or “us”) is pleased that Nova Biosource Fuels, Inc. (the “Company,” “you” or “your”)
has selected us to perform certain financial services on behalf of the Company
(the “Services”).  This letter along with
the terms and conditions attached as Exhibit A which are incorporated herein by
reference (collectively, the “Agreement”) confirms our mutual understanding of
the terms and conditions upon which the Services will be provided.

As previously discussed,
we will provide the following Services: 
Conduct an assessment of the current financial, accounting and
information systems and an assessment as to how these systems may affect
internal management reporting, external financial reporting and internal
controls over financial reporting.

Any additional Services
requested by you from time to time are subject to Tatum’s consent.  You
acknowledge that Tatum’s success in performing the Services depends on
the participation, cooperation, and support of your most senior
management.  Accordingly, you will
designate a management-level individual to be responsible for overseeing the Services.  Throughout the course of providing the Services, we will meet with your
representative to discuss the findings and recommendations resulting from the
Services.

The Services will be
performed under the direction of the Chief Executive Officer of the Company and
will be performed by employees of the Company or member(s) of Tatum including
Mr. David Gullickson (collectively, the “Tatum Resources”).

We will begin providing
the Services on December 3, 2006.  It is
expected that, with the Company’s cooperation, it will take until about of
December 31, 2006 to complete the Services. 
We will keep you apprised of any anticipated changes to the schedule.

In consideration for the
Services provided, you will pay us a monthly fee equal to $21,000 per Tatum
Resource.  The fees will be prorated for
the first and final fee period based on the number of days in such period.  Upon the written agreement of the parties,
the fees may be adjusted from time to time. 
In addition, you will reimburse Tatum or the Tatum Resources directly
for all reasonable travel and out-of-pocket expenses incurred by Tatum or the
Tatum Resources.

As a condition to
providing the Services, we require a security deposit in an amount equal to
$10,000 (the “Deposit”), which will only be used by us under the limited
circumstances described on Exhibit A and as a deposit for the Executive
Services Agreement also under consideration by Tatum and the Company.  The Deposit is due upon the execution of this
Agreement.

We appreciate the
opportunity to serve you and believe this Agreement accurately reflects our
mutual understanding of the terms upon which the Services will be
provided.  We would be pleased to discuss
this Agreement with you at your convenience. 
If the foregoing is in accordance with your understanding, please sign a
copy of this Agreement and return it to my attention.

Sincerely,

Tatum,
LLC

	
  Bob Litschi

  
	
   

  
	
  Managing Partner

  
	
   

  
	
   

  
	
  /s/ Bob Litschi

  	
   

  	
   

  
	
   

  
	
   

  
	
  Accepted and agreed:

  
	
   

  
	
  Nova Biosource Fuels, Inc.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ J. D.
  McGraw

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  J. D. McGraw

  
	
   

  	
   

  
	
  Title:

  	
  President

  
	
   

  	
   

  
	
  Date:

  	
  December 28, 2006

  
						

 

Exhibit
A

Terms
and Conditions

1.                                      Relationship of the Parties.  The parties agree that Tatum and the Tatum
Resources will be serving the Company as independent contractors for all
purposes and not as employees, agents, or partners of or joint venturers with
the Company.  Tatum and the Tatum
Resources will have control over the order and sequence of the Services and the
specific hours worked, will have the opportunity for entrepreneurial profit,
and will not be subject to Company withholding of income or employment
taxes.  The Tatum Resources will not be
or serve as an employee, manager, officer, or director of the Company, nor will
the Tatum Resources have any authority or control over the employees of the
Company or the authority to sign any documents on behalf of the Company,
including, without limitation, checks and other means of payment, federal or
state securities filings, tax filings, or representations and warranties.  Accordingly, the Company will not (i) give or
require the Tatum Resources to use the titles “Chief Financial Officer,” “Chief
Information Officer,” “Chief Operating Officer,” or any other title that
suggests such individual is an employee, manager, officer, or director of the
Company, (ii) represent or require the Tatum Resources to represent to any
third party that the Tatum Resources are anything other than consultants to the
Company, or (iii) require or request that the Tatum Resources supervise or
control the employees of the Company or sign any documents on behalf of the
Company.

2.                                      Payment Terms.  The Company will pay all amounts
owed to Tatum no later than 10 days from the receipt of invoice by electronic
transfer in accordance with the instructions set forth below.  All reimbursement of expenses directly to the
Tatum Resources will occur within five days of submission of expense reports to
the Company.  In lieu of terminating this
Agreement, Tatum may suspend the provision of Services if amounts owed are not
paid in accordance with the terms of this Agreement.

Bank Name:  

Branch:  

Account Name:  

Account Number:  

Routing Number for ACH
Payments:  

Please reference
Company name in the body of the payment.

If the
Company is unable to make electronic payments, the Company will mail all
payments to Tatum, LLC, P.O. Box 403291, Atlanta, Georgia 30384-3291 or such
other address as may be designated by Tatum in writing from time to time.

3.                                      Deposit. 
If the Company breaches this Agreement and fails to cure such breach as
provided for herein, Tatum will be entitled to apply the Deposit to its damages
resulting from such breach.  In the event
the Deposit falls below the amount required, the Company will pay Tatum an
additional amount equal to the shortfall. 
Upon the expiration or termination of this Agreement, Tatum will return
to the Company the balance of the Deposit remaining after application of any
amounts to damages as provided for herein, including, without limitation,
unfulfilled payment obligations of the Company to Tatum or the Tatum Resources.

4.                                      Term and Termination.

(a)                                  This Agreement will be
effective as of the earlier of (i) the date Tatum begins providing Services to
the Company, and (ii) the date the Company signs the Agreement as indicated on
the signature page.

(b)                                 Either party may
terminate this Agreement at any time for any reason upon written notice to the
other. Tatum will continue to provide, and the Company will continue to pay
for, the Services until the termination effective date.

(c)                                  The expiration or
termination of this Agreement will not destroy or diminish the binding force
and effect of any of the provisions of this Agreement that expressly, or by
reasonable implication, come into or continue in effect on or after such expiration
or termination, including, without limitation, provisions relating to payment
of fees and expenses (including witness fees and expenses), hiring the Tatum
Resources, governing law, arbitration, and limitation of liability.

5.                                      Hiring Tatum
Resource Outside of a Tatum Agreement.  During the 12-month
period following the termination or expiration of this Agreement, other than in
connection with another Tatum agreement, the Company will not employ any Tatum
Resource, or engage any Tatum Resource as an independent contractor, to render 

services similar to those that the Tatum Resource will be
rendering pursuant to 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 Resource’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 45% of Tatum’s Annualized Project Fees
(as defined below), which amount the parties agree is reasonably proportionate
to the probable loss to Tatum and is not intended as a penalty.  The amount will be due and payable to Tatum
upon written demand to the Company.  If a
court or arbitrator determines that liquidated damages are not appropriate for
such breach, Tatum will have the right to seek actual damages and/or injunctive
relief.  “Annualized Project Fees” means
the equivalent of what Tatum would receive under this Agreement for the Tatum
Resource on a full-time annual basis plus the maximum amount of any bonus
for which Tatum was eligible with respect to the then-current bonus year.

6.                                      Warranties and Disclaimers.  It is understood that Tatum does
not have a contractual obligation to the Company other than to provide the
Services using commercially reasonably efforts in accordance with industry
standards.  The Company acknowledges that any information, including any resources
delivered through Tatum’s proprietary information and technology system, will
be provided by Tatum as a tool to be used in the discretion of the
Company.  Tatum will not be responsible
for any action taken by the Company in following or declining to follow any of
Tatum’s or the Tatum Resources’ advice or recommendations.  Tatum disclaims all other
warranties, whether express, implied or statutory.  Without limiting the
foregoing, Tatum makes no representation or warranty as to the accuracy or
reliability of reports, projections, certifications, opinions, representations,
or any other information prepared or made by Tatum or the Tatum Resources
(collectively, the “Information”) even if derived from Tatum’s intellectual
capital, and Tatum will not be liable for any claims of reliance on the Information.  The Information is for the sole benefit of
the Company and not any unnamed third parties. 
Tatum will not be liable for any non-compliance of the Information with
federal, state, or local laws or regulations. 
The Services will not constitute an audit, review, or compilation, or
any other type of financial statement reporting or attestation engagement that
is subject to the rules of the AICPA or other similar state or national
professional bodies.

7.                                      Limitation of Liability.  The liability of Tatum in any and all
categories and for any and all causes arising out of this Agreement, whether
based in contract, tort, negligence, strict liability or otherwise will, in the
aggregate, not exceed the actual fees paid by the Company to Tatum over the previous
two months’ of the Agreement.  In no
event will Tatum be liable for incidental, consequential, punitive, indirect or
special damages, including, without limitation, any interruption or loss of
business, profit or goodwill.  As a
condition for recovery of any liability, the Company must assert any claim
against Tatum within three months after discovery or 60 days after the
termination or expiration of this Agreement, whichever is earlier.

8.                                      Governing Law, Arbitration, and Witness
Fees.

(a)                                  This Agreement will be
governed by and construed in accordance with the laws of the State of Georgia,
without regard to conflicts of laws provisions.

(b)                                 If the parties are
unable to resolve any dispute arising out of or in connection with this
Agreement, the parties agree and stipulate that any such disputes will be
settled by binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (“AAA”).  The arbitration will be conducted in the
Atlanta, Georgia office of the AAA by a single arbitrator selected by the
parties according to the rules of the AAA, and the decision of the arbitrator
will be final and binding on both parties. 
In the event that the parties fail to agree on the selection of the
arbitrator within 30 days after either party’s request for arbitration under
this Section, the arbitrator will be chosen by the AAA.  The arbitrator may in his or her discretion
order documentary discovery but will not allow depositions without a showing of
compelling need.  The arbitrator will
render his or her decision within 90 days after the call for arbitration.  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 Section.  Notwithstanding the foregoing, either party
may seek appropriate injunctive relief from any court of competent jurisdiction,
and Tatum may pursue payment of undisputed amounts through any court of
competent jurisdiction.

(c)                                  In the event any
member or employee of Tatum (including, without limitation, any Tatum Resource)
is requested or authorized by the Company or is required by government
regulation, subpoena, or other legal process to produce documents or appear as
witnesses in connection with any action, suit or other proceeding initiated by
a third party against the Company or by the Company against a third party, the
Company will, so long as 

Tatum is not a party to the proceeding in which the
information is sought, reimburse Tatum for its member’s or employee’s
professional time (based on customary rates) and expenses, as well as the fees
and expenses of its counsel (including the allocable cost of in-house counsel),
incurred in responding to such requests.

9.                                      Miscellaneous.

(a)                                  This Agreement
constitutes the entire agreement between the parties with regard to the subject
matter hereof and supersede any and all agreements, whether oral or written,
between the parties with respect to its subject matter.  No amendment or modification to this
Agreement will be valid unless in writing and signed by both parties.

(b)                                 If any portion of this
Agreement is found to be invalid or unenforceable, such provision will be
deemed severable from the remainder of this Agreement and will not cause the
invalidity or unenforceability of the remainder of this Agreement, except to
the extent that the severed provision deprives either party of a substantial
portion of its bargain.

(c)                                  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.  The
waiver by any party of a breach or violation of any provision of this Agreement
will not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision of this Agreement.

(d)                                 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.

(e)                                  The Company may not
assign its rights or obligations under this Agreement without the express
written consent of Tatum.  Nothing in
this Agreement will confer any rights upon any person or entity other than the
parties hereto and their respective successors and permitted assigns and the
Tatum Resources.

(f)                                    The Company agrees to
reimburse Tatum for all costs and expenses incurred by Tatum in enforcing
collection of any monies due under this Agreement, including, without limitation,
reasonable attorneys’ fees.

(g)                                 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.Exhibit 10.6

Summary of
Compensatory Arrangements with Certain Executive Officers

On January 23, 2007, the Compensation Committee of the
Board of Directors of Nova Biosource Fuels, Inc. established and approved base
salaries and special bonuses for certain named executive officers of the
Company. Effective as of February 1, 2007, the base salaries of Kenneth T.
Hern, Chairman of the Board and Chief Executive Officer of the Company, and
Dallas Neil, the Vice President-Corporate Development of the Company, were
increased to $125,000 per year. Additionally, the Committee approved special
bonuses of $30,000, each of which became payable immediately, for Lewis W.
Powers, Chief Operating Officer of the Company, and J.D. McGraw, President of
the Company.

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