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Exhibit 99.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this " Agreement "),
dated December 19, 2006, among Nova Biosource Fuels, Inc., a Nevada
corporation (the " Company "), and the purchasers identified
on the signature pages attached hereto (each, a " Purchaser
" and collectively, the " Purchasers ").
This Agreement is made pursuant to the Securities Purchase
Agreements, dated as of the date hereof between the Company and
each of the Purchasers (the " Purchase Agreements ").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants
contained in this Agreement, and for other good and valuable
consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Purchasers agree as follows:
1.
Definitions . Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreements shall
have the meanings given such terms in the Purchase
Agreements. References to filing a document with the
Securities and Exchange Commission (the " Commission ")
shall mean to file such document with the Commission via the
Commission’s Electronic Data Gathering, Analysis and
Reporting, or EDGAR, system. As used in this Agreement, the
following terms shall have the respective meanings set forth in
this Section 1:
" Additional Effectiveness Deadline " shall have the
meaning specified in Section 2(b).
" Common Stock " means the common stock of the Company,
$0.001 par value per share.
" Effective Date " means the date that a Registration
Statement filed pursuant to Section 2(a) is first declared
effective by the Commission.
" Effectiveness Deadline " means the Initial
Effectiveness Deadline and the Additional Effectiveness Deadline,
as applicable.
" Effectiveness Period " shall have the meaning set forth
in Section 2(a).
" Exchange Act " means the Securities Exchange Act of
1934, as amended.
" Filing Deadline " means: (a) with respect to the
initial Registration Statement to be filed pursuant to Section
2(a), the 30th day following the first Closing Date under the
Purchase Agreements, and (b) with respect to any additional
Registration Statement filed pursuant to Section 2(b), the earlier
of (i) the 30th day following the date on which the Commission
shall indicate as being the first date or time that such filing may
be made and (ii) six (6) months following the Effective Date.
" Holder " or " Holders " means the holder or
holders, as the case may be, from time to time of Registrable
Securities.
" Indemnified Party " shall have the meaning set forth in
Section 5(c).
" Indemnifying Party " shall have the
meaning set forth in Section 5(c).
" Initial Effectiveness Deadline " means the earlier of:
(i) in the event that the Registration Statement filed pursuant to
Section 2(a) is not subject to a review by the Commission, ninety
(90) calendar days after the Closing Date, (ii) in the event that
the Registration Statement filed pursuant to Section 2(a) is
subject to a review by the Commission, one-hundred and twenty (120)
calendar days after the Closing Date, and (iii) the fifth Trading
Day following the date on which the Company is notified by the
Commission that the Registration Statement filed pursuant to
Section 2(a) will not be reviewed or is no longer subject to
further review and comments.
" Losses " shall have the meaning set forth in Section
5(a).
" Proceeding " means an action, claim, suit,
investigation or proceeding (including, without limitation, an
investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
" Prospectus " means the prospectus included in a
Registration Statement (including, without limitation, a prospectus
that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance
upon Rule 430A or 430B promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such
Prospectus.
" Registrable Securities " means the Shares issued
pursuant to the Purchase Agreements and the Warrant Shares,
together with any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar
event, or any conversion price adjustment with respect thereto.
" Registration Statement " means: (i) the initial
registration statement which is required to register the resale of
the Registrable Securities pursuant to Section 2(a), and (ii) each
additional registration statement, if any, contemplated by Section
2(b), and including, in each case, the Prospectus, amendments and
supplements to each such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
" Required Holders " means the holders of at least
two-thirds of the Registrable Securities.
" Rule 144 " means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such
Rule.
" Rule 415 " means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such
Rule.
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" Rule 424 " means Rule 424 promulgated by
the Commission pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
effect as such Rule.
" Securities Act " means the Securities Act of 1933, as
amended.
" Shares " means the shares of Common Stock issued to the
Purchasers pursuant to the Purchase Agreements.
" Warrants " means the Common Stock purchase warrants
issued to the Purchasers pursuant to the Purchase Agreements.
" Warrant Shares " means the shares of Common Stock
issuable upon execution of the Warrants.
2.
Registration .
(a)
On or prior to each Filing Deadline, the Company shall prepare and
file with the Commission a Registration Statement covering the
resale of all Registrable Securities not already covered by an
existing and effective Registration Statement for an offering to be
made on a continuous or delayed basis pursuant to Rule 415.
The Company shall use its best efforts to cause the Registration
Statement to be declared effective under the Securities Act as soon
as possible but, in any event, no later than the Effectiveness
Deadline, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until the
earliest of (i) the date when all Registrable Securities
covered by the Registration Statement have been sold, or
(ii) the date when all Registrable Securities covered by the
Registration Statement may be sold without restriction pursuant to
Rule 144(k), as determined by counsel to the Company pursuant to a
written opinion letter to such effect, upon actual receipt by the
Holders of a notice from the Company stating that the Company will
deliver certificates without restrictive legends upon surrender by
the Holders of the existing certificates along with appropriate
seller’s and broker’s representation letters, or (iii)
with respect to subsequent Holders only, the date two years after
the date that the Registration Statement is declared effective by
the Commission (the " Effectiveness Period ").
(b)
If for any reason the Commission does not permit all of the
Registrable Securities to be included in the Registration Statement
initially filed pursuant to Section 2(a), then the Company shall
prepare and file as soon as possible after the date on which the
Commission shall indicate as being the first date or time that such
filing may be made, but in any event by the 30th day following such
date, or, in the event the Commission does not so indicate, no
later than six (6) months after the Effective Date of the
Registration Statement filed pursuant to Section 2(a), an
additional Registration Statement covering the resale of all
Registrable Securities not already covered by an existing and
effective Registration Statement for an offering to be made on a
continuous or delayed basis pursuant to Rule 415. The Company
shall use its best efforts to cause each such Registration
Statement to be declared effective under the Securities Act as soon
as possible but, in any event, no later than the (i) 90th day
following the date on which the Company becomes aware that such
Registration Statement is required to be filed under this Agreement
in the event that the Registration Statement is not subject to a
review by the
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Commission, or (ii) 120th days following the date
on which the Company becomes aware that such Registration Statement
is required to be filed under this Agreement in the event that the
Registration Statement is subject to a review by the Commission, as
applicable, (each such 90th day or 120th day, as applicable, the "
Additional Effectiveness Deadline " for such Registration
Statement), and shall use its best efforts to keep such
Registration Statement continuously effective under the Securities
Act during the Effectiveness Period. To the extent the staff
of the Commission does not permit all of the Registrable Securities
that have not yet been covered on an effective Registration
Statement (the " Unregistered Registrable Securities ") to
be registered on such additional Registration Statement, the
Company shall file additional Registration Statements successively
trying to register on each such Registration Statement the maximum
number of Unregistered Registrable Securities until all of the
Registrable Securities have been registered with the
Commission.
(c)
If: (i) a Registration Statement is not filed on or prior to its
Filing Deadline, or (ii) a Registration Statement is not declared
effective by the Commission on or prior to its required
Effectiveness Deadline, or (iii) after its Effective Date, such
Registration Statement ceases for any reason to be effective and
available to the Holders as to all Registrable Securities to which
it is required to cover at any time prior to the expiration of its
Effectiveness Period for an aggregate of more than 30 days in any
365 consecutive day period or the Company’s Common Stock is
not listed or included for quotation on a Trading Market (as
defined in the Purchase Agreements) for any period of more than
five consecutive Trading Days, (any such failure or breach being
referred to as an " Event ," and for purposes of clauses (i)
or (ii) the date on which such Event occurs, or for purposes of
clause (iii) the date which such 30th consecutive day (or 45th day
in the aggregate) is exceeded, being referred to as " Event
Date "), then, in addition to any other rights available to the
Holders: (x) on such Event Date the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a
penalty, equal to 1.5% of the aggregate purchase price paid by such
Holder pursuant to the Purchase Agreement for such Registrable
Securities included (or to be included) in such Registration
Statement; and (y) on each monthly anniversary of each such Event
Date thereof (if the applicable Event shall not have been cured by
such date) until the applicable Event is cured, the Company shall
pay to each Holder an amount in cash, as liquidated damages and not
as a penalty, equal to 1.5% of the aggregate purchase price paid by
such Holder pursuant to the Purchase Agreement for such Registrable
Securities included (or to be included) in such Registration
Statement, provided , that (i) the maximum amount of
liquidated damages payable by the Company to such Holder pursuant
to this Agreement shall not exceed 10.0% of the aggregate purchase
price paid by such Holder pursuant to the Purchase Agreement and
(ii) all periods shall be tolled, with respect to a Holder, by
the number of days in excess of five (5) during which such Holder
fails to provide the Company with information regarding such Holder
which was requested by the Company in writing in order to effect
the registration of such Holder’s Registrable Securities
other than with respect to an Event covered by clause (iii) of this
paragraph unrelated to such Holder’s information. It
shall be a condition precedent to the obligations of the Company to
pay any liquidated damages pursuant to this Section 2 with respect
to the Registrable Securities of any Holder that such Holder shall
furnish to the Company such information regarding itself and the
Registrable Securities held by it as contemplated by the preceding
sentence. If the Company fails to pay any liquidated damages
pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 8% per
annum (or such lesser maximum amount that is permitted to be paid
by applicable law) to the Holder, accruing daily from the date
such
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liquidated damages are due until such amounts,
plus all such interest thereon, are paid in full. The
liquidated damages pursuant to the terms hereof shall apply on a
pro rata basis for any portion of a month prior to the cure of an
Event and shall be paid on the fifth day after the cure
thereof.
(d)
The initial number of Registrable Securities included in any
Registration Statement and any increase in the number of
Registrable Securities included therein shall be allocated pro rata
among the Purchasers based on the number of Registrable Securities
held by each Purchaser at the time the Registration Statement
covering such initial number of Registrable Securities or increase
thereof is filed with the Commission. In the event that a
Purchaser sells or otherwise transfers any of such
Purchaser’s Registrable Securities, each transferee shall be
allocated a pro rata portion of the then remaining number of
Registrable Securities included in such Registration Statement for
such transferor. Any shares of Common Stock included in a
Registration Statement which remain allocated to any Person which
ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining
Purchasers, pro rata based on the number of Registrable Securities
then held by such Purchasers which are covered by such Registration
Statement. In no event shall the Company include any
securities other than Registrable Securities on any Registration
Statement without the prior written consent of the Required
Holders.
(e)
Each Holder shall comply with the prospectus delivery requirements
of the Securities Act in connection with the offer or sale of any
Registrable Securities pursuant to the Registration Statement.
(f)
Each Purchaser, by such Purchaser’s acceptance of the
Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of any Registration Statement hereunder,
unless such Purchaser has notified the Company in writing of such
Purchaser’s election to exclude all of such Purchaser’s
Registrable Securities from such Registration Statement.
(g)
In the event that Form S-3 is not available for the registration of
the resale of Registrable Securities hereunder, the Company shall
(i) register the resale of the Registrable Securities on another
appropriate form reasonably acceptable to a majority of the
Required Holders and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the Commission.
3.
Registration Procedures .
In connection with the Company’s registration obligations
hereunder, the Company shall:
(a)
Not less than four Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment
or supplement thereto, the Company shall furnish to the Holders
copies of all such documents proposed to be filed which documents
(other than those incorporated by reference) will be subject to the
review of such Holders. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or
supplements thereto
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to which the Holders of a majority of the
Registrable Securities shall reasonably object in good
faith.
(b)
(i) Prepare and file with the Commission such amendments, including
post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep
such Registration Statement continuously effective as to the
applicable Registrable Securities for its Effectiveness Period and
prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus
supplement or "issuer free writing prospectus" (as defined by Rule
405 promulgated by the Commission pursuant to the Securities Act)
so that such Prospectus does not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein, and as so supplemented or amended to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect
to each Registration Statement or any amendment thereto and, as
promptly as reasonably possible provide the Holders true and
complete copies of all correspondence from and to the Commission
relating to such Registration Statement that pertains to the
Holders as Selling Stockholders but not any comments that would
result in the disclosure to the Holders of material and non-public
information concerning the Company; and (iv) comply in all material
respects with the provisions of the Securities Act and the Exchange
Act with respect to the Registration Statements and the disposition
of all Registrable Securities covered by each Registration
Statement.
(c)
Notify the Holders as promptly as reasonably possible, but in no
event later than 5:30 p.m, Eastern time, of the following Trading
Day, (i)(A) when a Registration Statement, Prospectus, any
Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies
the Company whether there will be a "review" of such Registration
Statement and whenever the Commission comments in writing on such
Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the
Holders that pertain to the Holders as a Selling Stockholder or to
the Plan of Distribution, but not information which the Company
believes would constitute material and non-public information); and
(C) with respect to each Registration Statement or any
post-effective amendment, when the same has become effective; (ii)
of any request by the Commission or any other Federal or state
governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information
that pertains to the Holders as Selling Stockholders or the Plan of
Distribution; (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of a Registration Statement
covering any or all of the Registrable Securities or the initiation
of any Proceedings for that purpose, including pursuant to Section
8A of the Securities Act; (iv) of the receipt by the Company
of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and
(v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in such
Registration Statement or Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that, in
the case of such Registration Statement or the
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Prospectus, as the case may be, it will not
contain any 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 light of the circumstances under
which they were made, not misleading. Notwithstanding
anything to the contrary her
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