Exhibit 4.4


 


 


SHARE LOAN REGISTRATION RIGHTS AGREEMENT


 


AMONG


 


NOVA BIOSOURCE FUELS, INC., A NEVADA CORPORATION,


 


THE LENDERS LISTED HEREIN AND


 


JEFFERIES & COMPANY, INC.


 


AS OF SEPTEMBER 28, 2007


 

















 


TABLE OF CONTENTS


 


	
   

  	
  Page

  
	
   

  	
   

  
	
  Definitions

  	
  1

  
	
   

  	
   

  
	
  Initial Registration

  	
  3

  
	
   

  	
   

  
	
  Subsequent Registrations

  	
  4

  
	
   

  	
   

  
	
  Registration Defaults

  	
  4

  
	
   

  	
   

  
	
  Registration Procedures

  	
  6

  
	
   

  	
   

  
	
  Registration Expenses

  	
  9

  
	
   

  	
   

  
	
  Indemnification

  	
  9

  
	
   

  	
   

  
	
  No Inconsistent Agreements

  	
  9

  
	
   

  	
   

  
	
  Amendments and Waivers

  	
  9

  
	
   

  	
   

  
	
  Notices

  	
  10

  
	
   

  	
   

  
	
  Remedies

  	
  10

  
	
   

  	
   

  
	
  Successors

  	
  10

  
	
   

  	
   

  
	
  Counterparts

  	
  10

  
	
   

  	
   

  
	
  Headings

  	
  11

  
	
   

  	
   

  
	
  Applicable Law

  	
  11

  
	
   

  	
   

  
	
  Severability

  	
  11

  
	
   

  	
   

  
	
  Securities Held by the Company, etc.

  	
  11

  
	
   

  	
   

  
	
  Schedule A

  	
   

  



 


i

















 


Nova Biosource Fuels, Inc.,
a corporation organized under the laws of Nevada (the “Company”), proposes to
issue and sell to certain purchasers (the “Purchasers”), its 10% Convertible
Senior Secured Notes due 2012 (the “Notes”), upon the terms set forth in the
Purchase Agreement between the Company and each of the Purchasers dated as of
September 27, 2007 (the “Purchase Agreement”). The Notes will be convertible
into fully paid, nonassessable shares of common stock, par value $.001 per
share, of the Company (the “Common Stock”) on the terms, and subject to the conditions,
set forth in the Indenture (as defined herein).


 


The Lenders and the Company
are entering into this agreement to facilitate hedging transactions by the
Purchasers and future, other holders of the Notes and, relatedly, to facilitate
the Lenders’ satisfying an obligation under the Master Securities Loan
Agreement to have available shares of Common Stock as Loaned Securities (as
defined therein) that are not restricted for purposes of the U.S. federal
securities laws. Jefferies & Company, Inc. (“Jefferies”) is entering into
this Agreement with the Company and the Lenders for the limited purposes stated
herein. In consideration of the foregoing and for good and valuable
consideration, the parties hereto hereby agree as follows:


 


1.             Definitions.
Capitalized terms used herein without definition shall have their respective
meanings set forth in the Purchase Agreement. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:


 


“Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder.


 


“Affiliate” shall have the
meaning specified in Rule 405 under the Act and the terms “controlling” and “controlled”
shall have meanings correlative thereto.


 


“Borrower” shall mean
Jefferies & Company, Inc., as Borrower under the Master Securities Loan
Agreement.


 


“Business Day” shall mean
any day other than a Saturday, a Sunday or a legal holiday or a day on which
banking institutions or trust companies are authorized or obligated by law to
close in New York City.


 


“Closing Date” shall mean
the date of the first issuance of the Notes.


 


“Commission” shall mean the
Securities and Exchange Commission.


 


“Common Stock” shall have
the meaning set forth in the preamble hereto.


 


“Confirmation” shall have
the meaning set forth in the Master Securities Loan Agreement.


 


“Damages Payment Date” shall
mean the sixteenth day of each month.


 

















 


“Exchange Act” shall mean
the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.


 


 “Holder” shall have the meaning set forth in
the preamble hereto.


 


“Indenture” shall mean the
Indenture relating to the Notes, dated as of


 


September 28, 2007, between the Company, the Guarantors named
therein, Nova Holding Seneca LLC and The Bank of New York, as trustee, as the
same may be amended from time to time in accordance with the terms thereof.


 


“Initial Registration
Statement” shall have the meaning set forth in Section 2 hereof.


 


“Lenders” means Kenneth T.
Hern and J.D. McGraw, as Lenders under the Master Securities Loan Agreement.


 


“Liquidated Damages” shall
have the meaning set forth in Section 4 hereof.


 


“Loan Availability Period”
shall mean the period during which shares may be borrowed pursuant to the
Master Securities Loan Agreement.


 


“Master Securities Loan
Agreement” means the Master Securities Loan Agreement dated as of September 28,
2007 among the Borrower and the Lenders.


 


“Majority Holders” shall
mean, on any date, Holders of a majority of the aggregate original principal
amount of Notes then outstanding.


 


“NASD Rules” shall mean the
Conduct Rules and the By-Laws of the NASD.


 


“Notes” shall have the
meaning set forth in the preamble hereto.


 


“Prospectus” shall mean a
prospectus included in a Registration Statement (including, without limitation,
a prospectus that discloses information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A  under the Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any
portion of the Common Stock covered by such Registration Statement, and all
amendments and supplements thereto, including any and all exhibits thereto and
any information incorporated by reference therein.


 


“Purchase Agreement” shall
have the meaning set forth in the preamble hereto.


 


“Purchasers” shall have the
meaning set forth in the preamble hereto.


 


“Record Date” shall mean the
first day of any month.


 


2

















 


“Record Holder” shall mean
with respect to any Damages Payment Date, each person who is a Holder of Notes
at the close of business on the Record Date immediately preceding such Damages
Payment Date.


 


“Registration Request” shall
have the meaning set forth in Section 3  hereof.


 


“Registration Statement”
shall mean a registration statement of the Company pursuant to the provisions
of Section 2 or Section 3  hereof
which covers the Securities on an appropriate form under the Act, amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all materials incorporated by reference therein; provided,
however, that for purposes of Section 2 hereof, the Company shall use
commercially reasonable efforts to effect such Registration Statement by means
of a post effective amendment to the Company’s existing registration statement
on Form S-3.


 


“Securities” shall mean 8
million shares of Common Stock to be borrowed by Borrower pursuant to the
Master Securities Loan Agreement.


 


“Trustee” shall mean the
trustee with respect to the Securities under the Indenture.


 


“Underwriting Agreement”
shall mean a customary underwriting agreement between the Company, the Lenders
and the Borrower relating to the offering of the Securities pursuant to a
Registration Statement. In any such Underwriting Agreement, the Company shall
agree to provide Borrower with, among other things, an auditor’s comfort letter
and opinion of counsel (including a 10b-5 statement), in each case in a form
customary for underwritten securities offerings.


 


2.             Initial
Registration. (a)  The Company shall
no later than the first date on which the Purchase Agreement is executed, file
with the Commission an amendment to its existing Registration Statement (the “Initial
Registration Statement”) providing for the registration of the Securities in
connection with the contemplated use of them under the Master Securities Loan
Agreement.


 


(b)           The Company shall use its reasonable
best efforts to cause the Initial Registration Statement to become or be
declared effective under the Act as promptly as practicable (but in no event
more than (1) 30 calendar days after the Closing Date in the event the Initial
Registration Statement is not reviewed by Commission or (2) 120 days if the
Initial Registration Statement is reviewed by the Commission).


 


(c)           The Company shall use its reasonable
best efforts to keep the Initial Registration Statement effective, supplemented
and amended as required by the Act, in order to permit the Prospectus forming
part thereof to be usable by the Borrower from the date the Initial
Registration Statement is declared effective by the Commission until the
earlier of (i) the date all of the Securities loaned to the Borrower pursuant
to the initial loan under the Master Securities Loan Agreement have been
disposed of by the Borrower and (ii) the date the Borrower notifies the Company
that the disposition of the Securities under the Initial Registration Statement
has terminated.


 


3

















 


(d)           The Company shall cause the Initial
Registration Statement and the related Prospectus and any amendment or
supplement thereto, as of the effective date of the Initial Registration
Statement or such amendment or supplement, (i) to comply in all material
respects with the applicable requirements of the Act; and (ii) not to contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein (in the case of the Prospectus, in the light of the circumstances under
which they were made) not misleading.


 


3.         Subsequent Registrations. After the Initial Registration Statement
has been declared effective, the Company shall effect any additional
registrations as provided in this Section 3.


 


(a)           If less than the full number
of Securities are borrowed pursuant to the Initial Registration Statement, at any
time during the period beginning after the date on which the Initial Registration Statement has been declared
effective and ending on the last day of the Loan Availability Period and if
requested by any Lenders, such Lenders shall have the right, solely in
connection with a Confirmation that the Borrower intends to submit pursuant to
the Master Securities Loan Agreement, to submit to the Company a written
request pursuant to this Section 3  (“Registration
Request”) that the Company file a Registration Statement under the Securities
Act with respect to the Securities that such Lenders specify in the
Registration Request. Following receipt of the Registration Request, the
Company shall use its commercially reasonable efforts to as promptly as
practicable file with the Commission a Registration Statement providing for the
registration of such Securities (but in no event more than 30 days following
the date of the Registration Request. The Company shall use its commercially
reasonable efforts to cause any such Registration Statement to become or be
declared effective under the Act as promptly as practicable following the
filing thereof (but in no event more than 120 days following the date of the
Registration Request; provided
that such 120-day period shall be tolled for each day at the conclusion of such
120-day period during which the Registration Statement may not be declared
effective by the Commission as a result of the applicable provisions of
Regulation S-X under the Exchange Act prior to the filing of the Company’s
Annual Report on Form 10-K with the Commission (a “Subsequent Registration
Extension”).


 


(b)           The Company shall use its
commercially reasonable efforts to keep any Registration Statement filed
pursuant to this Section 3 effective, supplemented and amended as required by the Act, in order to permit the
Prospectus forming part thereof to be usable by the Borrower from the date the
Registration Statement is declared effective by the Commission until the
earlier of (i) the date all of the Securities registered pursuant to such
Registration Statement have been disposed of by the Borrower or (ii) the date
the Lenders notify the Company that the disposition of the Securities pursuant
to such Registration Statement has terminated.


 


(c)           The Company shall cause any
such Registration Statement and the related Prospectus and any amendment or
supplement thereto, as of the effective date of such Registration Statement or such amendment or
supplement, (i) to comply in all material respects with the applicable requirements
of the Act; and (ii) not to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading.


 


4

















 


4.                                                                                       Registration
Defaults. (a)  If:


 


(i)                                     the
Initial Registration Statement is not filed with the Commission on or prior to the date of the first execution
of the Purchase Agreement;


 


(ii)                                  the
Initial Registration Statement is not declared effective by the Commission on
or before the 30th calendar day following the Closing Date, if the
Initial Registration Statement is not reviewed by the Commission, and the 120th
calendar day if the Initial Registration Statement is reviewed by the
Commission;


 


(iii)                               any subsequent
Registration Statement is not filed with the Commission on or prior to the 30th
day following the delivery of Registration Request;


 


(iv)                              any
subsequent Registration Statement is not declared effective by the Commission
on or before the 120th calendar day following the delivery of a
Registration Request (except in the event of a Subsequent Registration
Extension, in which case a Registration Default will occur if such Registration
Statement is not declared effective at the conclusion of such Subsequent
Registration Extension);


 


(v)                                 in
connection with any Registration Statement, the Company does not execute the
Underwriting Agreement when required, such Underwriting Agreement does not
comply with Section 6 hereof, the Company does not provide customary legal
opinions (including a 10b-5 statement) or a customary comfort letter in
connection with such Underwriting Agreement, or the Company does not comply with any other material agreements or satisfy
any other material conditions set forth in such Underwriting Agreement; provided
that such events shall constitute a Registration Default (as defined below)
only if such events have not been cured by the 30th calendar day
following the Closing Date or the delivery of a Registration Request, as
applicable, and then such Registration Default shall be deemed to begin on such
30th day; and provided, further, for the avoidance of doubt,
any such Registration Default shall only exist until such default is cured; and
provided, further, to the extent any such failure to comply with such
agreements or satisfy such conditions relates to deficiencies in the
Registration Statement (or changes in circumstances after the Registration
Statement has become effective), such failure may be cured through the filing
of appropriate amendments or supplements to such Registration Statement and
entering into a new Underwriting Agreement (so long as the foregoing agreements
and conditions are met with respect to the new Underwriting Agreement);


 


(each such event referred to in the foregoing clauses
(i) through (v), a “Registration Default”), the Company hereby agrees to pay
liquidated damages (“Liquidated Damages”) with respect to the Notes from and
including the day following the Registration Default to but excluding the
earlier of (1) the day two years following the Closing Date and (2) the day on
which the 


 


5

















 


Registration Default has been cured to each Holder
cash in an amount per month equal to 0.25% of the accreted principal amount of
the Notes (such Liquidated Damages to accrue daily and be paid monthly),
increasing by an additional 0.25% for each additional 90 day period during
which time a Registration Default has occurred and is continuing, up to a
maximum of 1.0%.


 


(b)           Liquidated Damages shall
accrue daily. All accrued Liquidated Damages shall be paid in arrears to Record
Holders by the Company on each Damages Payment Date by wire transfer of immediately available funds
or by federal funds check. Following the cure of all Registration Defaults, the
further accrual of Liquidated Damages with respect to all Notes will cease. All
Liquidated Damages shall be computed on the basis of a 360-day year composed of
twelve 30-day months.


 


(c)           The parties hereto agree that
the Liquidated Damages provided for in this Section 7 constitute a reasonable
estimate of the damages that may be incurred by Holders by reason of a Registration Default and that
such Liquidated Damages are the only monetary damages available to Holders with
respect to a Registration Default.


 


5.             Registration
Procedures. The following provisions shall apply in connection with any Registration Statement.


 


(a)           The Company shall use its reasonable
best efforts to furnish to the Lenders and the Borrower and to their counsel,
not less than two Business Days in the case of an Initial Registration
Statement and not less than five Business Days in the case of any subsequent
Registration Statement, prior to the filing with the Commission a copy of the
Registration Statement and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein (including any documents
incorporated by reference therein after the initial filing) and will reflect in
each such document when so filed with the Commission, such comments as each of
the Lenders and the Borrower reasonably propose (it being understood that the
Company and the Lenders shall accept the comments of the Borrower regarding its
status in the plan of distribution or underwriting section of any Prospectus as
a potential or deemed underwriter and the response of the Company or the
Lenders to the Commission in any response to comment letters regarding any
Registration Statement).


 


(b)           The Company shall give notice
to the Lenders and the Borrower: (i) when the Registration Statement and any
amendment thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become effective; (ii) of any request by the Commission for any
amendment or supplement to the Registration Statement or the Prospectus or for
additional information; (iii) of
the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution of any proceeding for that
purpose; (iv) of the receipt by
the Company of any notification with respect to the suspension of the
qualification of the Securities included therein for sale in any jurisdiction
or the institution of any proceeding for such purpose; and (v) of the happening of any event that requires
any change in the Registration Statement or the Prospectus so that, as of such
date, they (A) do not contain
any untrue statement of a material fact and (B) do not omit to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which 


 


6

















 


they were made) not
misleading; provided that the Company shall not specify the nature of any such
event in such notice.


 


(c)           The Company shall use its
reasonable best efforts to prevent the issuance of any order suspending the
effectiveness of the Registration Statement or the qualification of the securities therein for sale in any
jurisdiction, and if issued, to obtain as soon as possible the withdrawal
thereof.


 


(d)           Prior to the effectiveness of
the Registration Statement, the Company shall provide, and shall cause its
affiliates to provide all the information necessary to enable the Borrower to make all required filings with the NASD
related to the Registration Statement and shall assist the Borrower in
complying with the NASD Rules.


 


(e)           Prior to any offering of
Securities pursuant to the Registration Statement, the Company shall arrange
for the qualification of the Securities for sale under the laws of such jurisdictions as the Lenders shall reasonably
request and shall maintain such qualification in effect so long as required;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not then so qualified or to take any
action in connection therewith that would subject it to taxation or service of
process in suits, other than those arising out of any offering pursuant to the
Registration Statement, in any jurisdiction where it is not then so subject.


 


(f)            Prior to any offering of
Securities pursuant to the Registration Statement, the Company shall have the
Securities approved for listing on the American Stock Exchange, subject only to official notice of issuance.


 


(g)           Upon the occurrence of any
event contemplated by subsections (b)(ii) through (v) above, the Company shall
promptly (or within the time period provided for by Section 5(h) hereof, if applicable) prepare a
post-effective amendment to the Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the securities included therein,
the Prospectus will not include an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.


 


(h)           Notwithstanding the provisions
of Section 3 hereof, the Company may defer filing of, or delay effectiveness
of, a Registration Statement other than the Initial Registration Statement (or, in the case of a “shelf’
Registration Statement, suspend the use of such “shelf’ Registration Statement
and any related Prospectus) for a maximum of 15 consecutive, not to exceed an
aggregate of 45 days in any 12 month period, if (i) the Company, in its reasonable judgment,
believes it may possess material non-public information the disclosure of which
would have a material adverse effect on the Company and its subsidiaries taken
as a whole or (ii) any
Registration Statement and related Prospectus would, in the Company’s judgment,
contain a material misstatement or omission as a result of an event that has
occurred or is continuing. Any suspension period described in this Section 4(h)
shall be referred to herein as the “Deferral Period.” The Company shall give
notice to the Lenders of any Deferral Period, and the Lenders agree that no
Securities shall be sold pursuant to any Registration Statement until the
Lenders 


 


7

















 


receive copies of the
supplemented or amended Prospectus provided for in Section 5(g) hereof, or
until it is advised in writing by the Company that the Prospectus may be used,
and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus. The
Company shall not specify the nature of the event giving rise to a suspension
in any notice to the Lenders of the existence of such a suspension. For the
avoidance of doubt, the provisions of this Section 4(h) shall not apply to the
Initial Registration Statement.


 


(i)            The Company shall comply with
all applicable rules and regulations of the Commission and shall make generally
available to its security holders an earnings statement satisfying the provisions of Section 1l(a) of
the Act as soon as practicable after the effective date of the Registration
Statement and in any event no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company’s first fiscal quarter commencing after the effective date
of the Initial Registration Statement .


 


(j)            The Company shall take all
appropriate actions as reasonably requested by the Lenders and the Borrower in
order to expedite or facilitate the registration or the disposition of the Securities.


 


(k)                                  From
time to time, upon the request of the Borrower, the Company shall:


 


(i)                                     make
reasonably available for inspection during normal business hours by the
Borrower, and any attorney, accountant or other agent retained by the Borrower all relevant financial and other records and
pertinent corporate documents of the Company and its subsidiaries to permit the
Borrower to conduct a customary due diligence investigation of the Company and
the Lenders;


 


(ii)                                  cause
the Company’s officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Borrower or
any such attorney, accountant or agent in connection with the
offering of the Securities pursuant to the Registration Statement as is
customary for similar due diligence examinations;


 


(iii)                               enter
into the Underwriting Agreement if requested by the Borrower, make the
representations and warranties, comply with the agreements and satisfy the
conditions to the obligations of the Borrower (including, without limitation, obtaining customary legal opinions (including
a 10b-5 negative assurance statement regarding the disclosure contained in the
Registration Statement and the Prospectus) and customary accountants comfort
letters) set forth in the Underwriting Agreement;


 


(iv)                              following
the initial delivery of these items, cause the outside counsel to the Company
to deliver, from time to time as requested by the Borrower, additional customary legal opinions (including a 10b-5
negative assurance statement regarding the Registration Statement and the
Prospectus) and 


 


8

















 


the Company outside registered accountants to
deliver customary comfort letters, as provided for in such underwriting
agreement; and


 


(v)           deliver such
other documents and certificates as may be reasonably requested by the Borrower.


 


(l)            The Company shall upon (i)
the filing of the Initial Registration Statement and (ii) the effectiveness of
the Initial Registration Statement, announce the same, in each case by release to the Business Wire service or an
successor thereto.


 


(m)          The Company shall use its reasonable
best efforts to take all other steps necessary to effect the registration of
the Securities pursuant to the terms hereof.


 


(n)           The Company, the Lenders and
the Borrower shall use their reasonable best efforts to cooperate in response
to any comments from the Commission in respect of any Registration Statement.


 


(o)           The
Lenders shall cooperate with the Company regarding the obligations of the
Company under this Agreement to facilitate the registration of the Securities
as contemplated hereby.


 


(p)           The Lenders shall provide to the
Company all information required to be supplied by the Lenders for inclusion in
the Initial Registration Statement
prior to the filing of the Initial Registration Statement. The Lenders shall
provide to the Company all information required to be supplied by the Lenders
for inclusion in any subsequent Registration Statement no later than ten
Business Days after the date of the corresponding Registration Request. The
Lenders shall promptly provide to the Company any additional information
requested by the Commission in connection with any Registration Statement. If
any Lender or Borrower fails to reasonably comply with Company requests for
information for or to be included in any Registration Statement for more than 5
days, then any Registration Default with respect to clauses 4(a)(i) through and
including (iv) shall be deemed tolled until such information is provided.


 


6.             Registration
Expenses. The Company shall bear all expenses incurred in connection with
the performance of its obligations under Sections 2, 3 and 4  hereof and shall reimburse the Lenders and the Borrower for
the reasonable fees and disbursements of their counsel (up to a maximum of
$50,000) in connection with any Registration Statement. To the extent the
provisions of the Underwriting Agreement with respect to expenses conflict with
this Section 5, the provisions of this Section 5 shall control.


 


7.             Indemnification. The Company
shall indemnify and hold harmless the Indemnified Persons (as defined in
Schedule A) in accordance with Schedule A. The terms and provisions of Schedule
A are incorporated by reference herein, constitute a part hereof and shall
survive any termination or expiration of this Agreement.


 


8.             Term. This Agreement shall
continue to be in effect until the termination by its terms of the Master
Securities Loan Agreement.


 


9

















 


9.             No Inconsistent Agreements.
The Company has not entered into, and agrees not to enter into, any agreement
with respect to its securities that is inconsistent with the rights granted to the Holders, the Lenders and the
Borrower herein or that otherwise conflicts with the provisions hereof.


 


10.           Amendments and Waivers. The
provisions of this Agreement may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless
the Company has obtained the written consent of the Lenders and the Borrower;
provided that no amendment, qualification, supplement, waiver or consent with
respect to (i) Section 2 hereof shall be effective unless consented to by the
Majority Holders (ii) or Section 4 hereof shall be effective as against any
Holder of Notes unless consented to in writing by such Holder; and provided,
further, that the provisions of this Section 9 may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Lenders and the Borrower, and provided, further, any amendment
of the first proviso of this Section 9 shall require the written consent of
each Holder.


 


11.           Notices. All notices, requests
and other communications provided for or permitted hereunder shall be made in
writing by hand-delivery, first-class mail, telex, facsimile or air courier guaranteeing overnight
delivery:


 


(a)                                  if
to the Borrower:


 


Jefferies & Company,
Inc.


520 Madison Avenue


New York, New York 10022


Attention: General Counsel


 


(b)                                 if
to the Company, initially at its address set forth in the Purchase Agreement.


 


(c)                                  if
the Lenders, initially at their address as set forth in the Master Securities
Loan Agreement.


 


All such notices and
communications shall be deemed to have been duly given on the earliest of (i)
at the time delivered, if delivered by hand-delivery; (ii) three business days
after being deposited in the mail, postage prepaid, if mailed by first-class
mail; (iii) when receipt is acknowledged and confirmed as sent by sender’s
telex or facsimile machine, if sent by telex or facsimile transmission; and
(iv) on the day delivered, if sent by overnight air courier guaranteeing next
day delivery.


 


The Borrower, the Lenders or the Company by notice to
the other parties may designate additional or different addresses for
subsequent notices or communications.


 


12.           Remedies.
Each party, in addition to being entitled to exercise all rights provided to it
herein, in the Indenture, the Purchase Agreement or the Placement Agent dated
as of September 27, 2007 by and between Jefferies & Company, Inc., as
placement agent, and the Company or granted by law, including recovery of
liquidated or other damages, will be entitled 


 


10

















 


to specific performance of its rights under this
Agreement. Each party agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive in any action for
specific performance the defense that a remedy at law would be adequate.


 


13.           Successors.
This Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. The Company hereby agrees to extend the benefits of this Agreement to any
Holder of Notes, including any subsequent Holders, and any Holder may
specifically enforce Section 2 and Section 7 of this Agreement as if an
original party hereto.


 


14.           Counterparts.
This Agreement may be signed in one or more counterparts, each of which shall
constitute an original and all of which together shall constitute one and the same agreement.


 


15.           Headings. The section headings
used herein are for convenience only and shall not affect the construction hereof.


 


16.           Applicable Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York. The parties
hereto each hereby waive any right to trial by jury  in any action, proceeding or counterclaim arising out of or
relating to this Agreement.


 


17.           Severability. In the event
that any one of more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.


 


18.           Securities Held by the Company,
etc. Whenever the consent or approval of Holders of Notes is required
hereunder, Notes held by the Company or its Affiliates (other than subsequent Holders of Securities who are
Affiliates by virtue of their ownership of equity securities of the Company)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.


 


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If the foregoing is in
accordance with the understanding of the parties hereto and listed below,
please sign and return to us the enclosed duplicate hereof; whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and the Borrower.


 


	
   

  	
  Nova Biosource Fuels, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Kenneth T.
  Hern

  	
   

  
	
   

  	
   

  	
  Kenneth T. Hern

  	
   

  
	
   

  	
   

  	
  Chairman and CEO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Lenders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/

  	
    Kenneth T.
  Hern

  	
   

  
	
   

  	
   

  	
  Kenneth T. Hern

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/

  	
  J.D. McGraw

  	
   

  
	
   

  	
   

  	
  J.D. McGraw

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Jefferies & Company,
  Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Courtney Tuttle

  	
   

  
	
   

  	
   

  	
  Name:  Courtney Tuttle

  	
   

  
	
   

  	
   

  	
  Title:  Managing Director

  	
   

  



 


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SCHEDULE
A


 


Indemnification by
the Company


 


Nova Biosource Fuels,
Inc., (the “Company”) shall, notwithstanding any termination of the
Registration Rights Agreement (the “Agreement”) dated as of September 28, 2007,
by and between the Company, Jefferies & Company, Inc. (the “Borrower”) and
Kenneth T. Hern and J.D. McGraw (collectively, the “Lenders”), indemnify and
hold harmless the (i) Borrower, (ii) its officers, directors, agents,
investment advisors, partners, members, shareholders, trustees and employees,
each person who controls any such Indemnified Party (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and (iii)
the officers, directors, agents, trustees and employees of each such
controlling Person ((i) – (iii), collectively the “Indemnified Parties”), to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable costs of preparation and reasonable attorneys’ fees) and expenses
(collectively, “Losses”),
as incurred, arising out of or relating to (i) any misrepresentation or breach
of any representation or warranty made by the Company in the Agreement or any
other certificate, instrument or document contemplated thereby, (ii) any breach
of any covenant, agreement or obligation of the Company contained in the
Agreement or any other certificate, instrument or document contemplated
thereby, or (iii) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or any issuer free writing prospectus or arising out of or relating
to any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto or any issuer free
writing prospectus, in light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding such
Indemnified Party or its intended method of distribution furnished in writing
to the Company by such Indemnified Party expressly for use therein. The Company
shall notify the Indemnified Parties promptly of the institution, threat or
assertion of any proceeding of which the Company is aware in connection with
the transactions contemplated by the Agreement.


 


If any proceeding shall
be brought or asserted against any Indemnified Party, such Indemnified Party
shall promptly notify the Company (the “Indemnifying
Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to the
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.


 


An Indemnified Party
shall have the right to employ separate counsel in any such Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the
Indemnifying Party shall have failed promptly to 


 


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assume the defense of
such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the
Indemnifying Party), provided,
that the Indemnifying Party shall not be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties (in addition to any local counsel). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter
of such Proceeding and does not contain any admission of wrongdoing by such
Indemnified Party.


 


All fees and expenses of
the Indemnified Party (including reasonable fees and expenses to the extent
incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within fifteen business days of written notice
thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).


 


If a claim for
indemnification is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and Indemnified Party on the other hand in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include, subject to the limitations set
forth in the immediately preceeding paragraph, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in this Section was available
to such party in accordance with its terms.


 


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The parties hereto agree
that it would not be just and equitable if such contribution were determined by
pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of the immediately
preceeding paragraph, no Indemnified Party shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the proceeds
actually received by such Indemnified Party from the sale of the Securities (as
defined in the Agreement) subject to the Proceeding exceeds the amount of any
damages that such Indemnified Party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.


 


The indemnity and
contribution agreements contained in this Schedule are in addition to any other
liability that the Indemnifying Party may have to the Indemnified Parties.


 


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