Document:

Exhibit 4.(b)(3)

 

FORM
OF SUPPLEMENTAL INDENTURE

(Senior Notes)

PUBLIC SERVICE COMPANY

OF COLORADO

TO

THE BANK OF NEW YORK TRUST COMPANY, N.A.,

as Trustee

SUPPLEMENTAL INDENTURE

Dated as of                     

Supplementing the Indenture

dated as of July 1, 1999

Establishing the Securities of Series         

designated           % Senior
Notes due                           

THIS                     
SUPPLEMENTAL INDENTURE, dated as of                         ,
is between PUBLIC SERVICE COMPANY OF COLORADO, a Colorado corporation
(hereinafter called the “Issuer” or the “Company”), having its principal office
at 1225 17th Street, Denver, Colorado 80202, and THE BANK OF NEW YORK TRUST
COMPANY, N.A., as Trustee (hereinafter called the “Trustee”), having its
principal corporate trust office at 101 Barclay Street, New York, New York
10286.

Recitals of the Issuer

The Issuer has heretofore executed and delivered an
Indenture, dated as of July 1, 1999 (the “Original Indenture”, the Original
Indenture, previously supplemented and as further supplemented by this
supplemental indenture being hereinafter referred to as the “Indenture”), relating
to the issuance at any time or from time to time of its Securities on terms to
be specified at the time of issuance. Terms used and not otherwise defined
herein shall (unless the context otherwise clearly requires) have the
respective meanings given to them in the Original Indenture.

The Original Indenture provides in Article Three
thereof that, prior to the issuance of Securities of any series, the form of
such Securities and the terms applicable to such series shall be established
in, or pursuant to, the authority granted in a resolution of the Board of
Directors or established in one or more indentures supplemental thereto.

The Issuer desires by this supplemental indenture,
among other things, to establish the form of the Securities of a series, to be
titled         % Notes due                                 
of the Issuer, and to establish the terms applicable to such series, pursuant
to Sections 201, 301 and 901 of the Original Indenture.  The Issuer has duly authorized the execution
and delivery of this supplemental indenture.

Article Nine of the Original Indenture provides that
the Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time amend the Indenture without the
consent of Securityholders for certain purposes enumerated in Section 901
thereof, including the purposes set forth in subsection (7) of said Section
901.

The execution and delivery of this supplemental
indenture by the parties hereto are in all respects authorized by the
provisions of the Indenture.

All things necessary have been done to make this
supplemental indenture a valid agreement of the Issuer, in accordance with its
terms.

NOW, THEREFORE, THIS             
SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of the premises, it is
mutually covenanted and agreed, as follows:

ARTICLE I

Establishment of % Notes due

Section 1.01.          The title of the series of the
Securities established by this supplemental indenture shall be         %
Notes due                                     
of the Issuer (hereinafter called the “Series       
Notes”).

Section 1.02.          The Series       
Notes shall be limited to [$                            ]
in aggregate principal amount.

Section 1.03.          The Series       
Notes may be issued in whole or in part as one or more Global Securities and
The Depository Trust Company, or a nominee thereof, shall be the Depository for
such Global Security or Global Securities. 
The Depository for such Global Security or Global Securities
representing Series        Notes may surrender
one or more Global Securities representing Series       
Notes in exchange in whole or in part for individual Series       
Notes on such terms as are acceptable to the Issuer and such Depository and
otherwise subject to the terms of the Indenture.

Section 1.04.          The principal of the Series       
Notes shall be payable on                                   .

Section 1.05.          The Series       
Notes shall bear interest at the rate of       %
per annum and shall accrue from                           .
The Interest Payment Dates shall be                         
and                           
in each year, commencing                               .
The Regular Record Dates in respect of such Interest Payment Dates shall be                                 
and                               
in each year, respectively.

Section 1.06.          The Corporate Trust Office of The Bank
of New York Trust Company, N.A. shall be the place at which the principal of
the Series        Notes shall be payable.  Any interest thereon shall be paid as
specified in Section 307 of the Original Indenture.

Section 1.07.          [Interest Payment Deferral Provisions,
if any.]

Section 1.08.          [Optional Redemption Provisions, if
any.]

Section 1.09.          [Mandatory Redemption Provisions, if
any.]

Section
1.10.                             The
Series        Notes shall be issued in
denominations of [$              ]
and any integral multiple thereof.

Section 1.11.          [Original Issue Discount Provisions,
if any.]

Section 1.12.          [Additional Defaults, if any.]

Section 1.13.          Sections 1301 and 1302 of the
Indenture shall be applicable to the Series       
Notes.

 3
 

Section 1.14.          [Currency, if other than U.S.
Dollars.]

Section 1.15.          [Additional Covenants, if any.]

Section 1.16.          The Issuer hereby appoints, or
confirms the appointment of, The Bank of New York Trust Company, N.A. as the
initial Trustee, Securities Registrar and Paying Agent, subject to the
provisions of the Indenture with respect to resignation, removal and
succession, and subject, further, to the right of the Issuer to appoint
additional agents (including Paying Agents).

Section 1.17.          [Exceptions to Business Day
Definition, if any.]

Section 1.18.          [Any Additional Terms.]

Section 1.19.          The Series       
Notes shall be substantially in the form set forth in Exhibit A hereto, and
shall have such further terms as are reflected in such form, subject to changes
in the form thereof made by the Issuer and acceptable to the Trustee.

ARTICLE II

Miscellaneous

Section 2.01.          The recitals contained herein shall be
taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity of this supplemental indenture. The
Indenture, as supplemented by this supplemental indenture, is in all respects
hereby adopted, ratified and confirmed.

Section 2.02.          This supplemental indenture may be
executed in any number of counterparts, and on separate counterparts, each of
which shall be an original; but such counterparts shall together constitute but
one and the same instrument.

Section 2.03.          If any provision of this supplemental
indenture limits, qualifies or conflicts with the duties imposed by any of
Sections 310 to 317, inclusive, of the Trust Indenture Act of 1939, as amended
by the Trust Indenture Reform Act of 1990, through operation of Section 318(c),
such imposed duties shall control.

Section 2.04.          The Article headings herein are for
convenience only and shall not affect the interpretation hereof.

 4
 

IN WITNESS WHEREOF, the parties hereto have caused
this Second Supplemental Indenture to be duly executed as of the         
day of                                   .

	
  

  	
  PUBLIC SERVICE COMPANY OF

  COLORADO 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK TRUST COMPANY, N.A. 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  
							

 

 5

EXHIBIT A

Form of       % Note due                         

[THIS SECURITY IS A GLOBAL SECURITY REGISTERED IN THE
NAME OF THE DEPOSITORY (REFERRED TO HEREIN) OR A NOMINEE THEREOF AND UNLESS AND
UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL SECURITIES
REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY.

UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY, A
NEW YORK CORPORATION (55 WATER STREET, NEW YORK, NEW YORK), TO THE TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TRUST COMPANY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

PUBLIC SERVICE COMPANY OF
COLORADO       % Note due                                         

	
  Interest Rate:

  	
   

  
	
   

  	
   

  
	
  Interest Payment
  Dates:

  	
   

  
	
   

  	
   

  
	
  Regular Record
  Dates:

  	
   

  
	
   

  	
   

  
	
  Original
  Interest Accrual Date:

  	
   

  
	
   

  	
   

  
	
  Stated Maturity:

  	
   

  
	
   

  	
   

  
	
  Registered No.

  	
  Principal Amount

  
	
   

  	
   

  
	
  CUSIP

  	
  $

  

 

PUBLIC SERVICE COMPANY OF COLORADO, a corporation duly
organized and existing under the laws of the State of Colorado (herein called
the “Company”, which term includes any successor corporation under the
Indenture referred to below) promises to pay to                               
or registered assigns the principal sum of                                               
Dollars on                                           
the Stated Maturity specified above.

1.                                       Interest.

The Company promises to pay interest on the principal
amount hereof at the Interest Rate per annum shown above from the Original
Interest Accrual Date specified above, or from the most recent Interest Payment
Date to which interest has been paid, semiannually in arrears, on the Interest
Payment Dates specified above, in each year, commencing with the Interest
Payment Date next succeeding the Original Interest Accrual Date specified
above, until the principal hereof is paid or duly provided for. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.

2.                                       Method
of Payment.

The Company will pay interest so payable to the person
who is the registered holder hereof at the close of business on the Regular
Record Date for the next Interest Payment Date, except as otherwise provided in
the Indenture and except that interest payable at Maturity will be paid to the
person to whom principal is paid at Maturity. Payment of principal shall be
made upon presentation hereof at the office of this Paying Agent. The Company
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. The Company
may pay principal and interest by check payable in such money. It may mail an
interest check to the holder’s registered address.

3.                                       Agents.

Initially, The Bank of New York Trust Company, N.A.,
101 Barclay Street, Floor 21 West, New York, New York 10286, Attention:
Corporate Trust Administration, will act as Paying Agent, and Securities
Registrar. The Company may change the Paying Agent to provide for more than one
such agent. The Company may appoint one or more Security Registers. The Company
or any Affiliate may act in any such capacity. The Trustee may appoint one or
more Authenticating Agents to authenticate the Securities.

4.                                       Indenture.

The securities of this series (the “Securities”) have
been issued under an Indenture dated as July 1, 1999 (the “Indenture”) between
the Company and The Bank of New York Trust Company, N.A. (the “Trustee,” which
term includes any successor trustee under the Indenture). The terms of the
Securities include those stated in the Indenture and in the Supplemental
Indenture creating the Securities and those made part of the Indenture by the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb). Securityholders
are referred to the Indenture, the Supplemental Indenture and the Act for a
statement of such terms.

 A-2
 

5.                                       Redemption.

[This Security is not redeemable prior to maturity.]
or [This Security is subject to redemption upon not less than 30 days’ notice
by first class mail, in whole or in part from time to time on and after             
at the option of the Company at a redemption price equal to                                 

In the event of redemption of this Security in part
only, a new Security or Securities of this series for the unredeemed portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.]

6.                                       [Notice
of Redemption.

Notice of redemption will be mailed at least 30 days
before the redemption date to the holder hereof at his address appearing on the
Security Register.

A notice of redemption shall provide that it is
subject to the occurrence of any event before the date fixed for such
redemption as described in such notice (“Conditional Redemption”) and such notice
of Conditional Redemption shall be of no effect unless all such conditions to
the redemption have occurred before such date or have been waived by the
Company.]

7.                                       Denominations,
Transfer, Exchange.

The Securities of this series are in registered form without
coupons in denominations of                         
and whole multiples of                     .
The transfer of this Security may be registered and this Security may be
exchanged as provided in the Indenture. The Securities Registrar may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or the Indenture. The
Securities Registrar need not exchange or register the transfer of any Security
of this series or portion thereof selected for redemption. Also, it need not
exchange or register the transfer of any Security for a period of 15 days
before a selection of Securities of this series to be redeemed.

8.                                       Persons
Deemed Owners.

The registered holder of a Security may be treated as
its owner for all purposes.

9.                                       Amendments
and Waivers.

Subject to certain exceptions, the Indenture may be
amended with the consent of the holders of a majority in outstanding principal
amount of the Securities. Subject to certain exceptions, a default under the
Indenture may be waived with the consent of the holders of a majority in
outstanding principal amount of the Securities.

 A-3
 

Without the consent of any Securityholder, the
Indenture may be amended, among other things, to cure any ambiguity, omission,
defect or inconsistency; to provide for assumption of Company obligations to
Securityholders; or to make any change that does not materially adversely
affect the rights of any Securityholder.

10.                                 Restrictive
Covenants.

The Securities are unsecured general obligations of
the Company limited to [$                          ]
principal amount. The Indenture does not limit the amount of debt the Company
may issue thereunder or otherwise.

11.                                 Successors.

When a successor assumes all the obligations of the
Company under the Securities and the Indenture, the Company will be released
from those obligations.

12.                                 Defeasance
Prior to Redemption or Maturity.

Subject to certain conditions, the Company at any time
may terminate some or all of its obligations hereunder and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest hereon to redemption or maturity. U.S.
Government Obligations are securities backed by the full faith and credit of
the United States of America or certificates representing an ownership interest
in such Obligations.

13.                                 Defaults
and Remedies.

If an Event of Default occurs and is continuing, the
Trustee or the holders of at least 25% in principal amount of the outstanding
Securities may declare the principal of all such Securities to be due and
payable immediately.  Securityholders may
not enforce the Indenture or the Securities except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Securities. Subject to certain limitations,
holders of a majority in principal amount of the Securities may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment
of principal or interest or any sinking fund installment) if it determines that
withholding notice is in their interests. The Company must furnish annual
compliance certificates to the Trustee.

14.                                 Trustee
Dealings with Company.

The Bank of New York Trust Company, N.A., the Trustee
under the Indenture, in its individual or any other capacity, may make loans
to, accept deposits from, and perform services for the Company or its
Affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not Trustee.

 A-4
 

15.                                 No
Recourse Against Others.

A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.

16.                                 Authentication.

This Security shall not be valid for any purpose and
shall not be entitled to any benefit under the Indenture until authenticated by
a manual signature of the Trustee or any Authenticating Agent.

17.                                 Abbreviations.

Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (tenants in common), TEN ENT
(tenants by the entireties) , JT TEN (joint tenants with right of survivorship
and not as tenants in common), CUST (custodian), and U/G/M/A (Uniform Gifts to
Minors Act).

The Company will furnish to any Securityholder upon
written request and without charge a copy of the Indenture, including the
Supplemental Indenture which contains the text of this Security in larger type.
Requests may be made to: Public Service Company of Colorado, 1225 17th Street,
Denver, Colorado, 80202 attention: Corporate Secretary.

 A-5
 

 

	
  

  	
  PUBLIC SERVICE COMPANY OF 

  COLORADO 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
     [corporate seal] 

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
										

 

This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.

	
  

  	
  THE BANK OF NEW YORK TRUST 

  COMPANY, N.A., as Trustee 

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
					

 

 A-6
 

ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to:

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Insert assignee’s social
  security or tax I.D. no.)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

(Print or type assignee’s name, address and zip code)

and irrevocably appoint                                         
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.

	
  Date:

  	
  Your Signature:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
				

 

(Sign exactly as your name appears on the other side
of this Security)

 A-7Exhibit
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.

 2
 

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.

 3
 

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 

 4
 

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

 5
 

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

  
				

 

 6

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