Exhibit 10.2
REGISTRATION RIGHTS
AGREEMENT
This Registration Rights Agreement (this
“ Agreement ” ), dated September 27,
2007, is entered by and 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.
“ Conversion Shares ”
means the shares of Common Stock issuable upon conversion of the
Securities pursuant to the terms of the Indenture and the
Securities.
“ Effective Date ”
means the date that a Registration Statement filed pursuant to
Section 2(a) or Section 2(b), as applicable, 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) one-hundred and twenty
(120) calendar days after the Closing Date, and (ii) 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 Securities issued pursuant to the Purchase
Agreements and the Conversion 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 ” means
the Securities issued to the Purchasers pursuant to the Purchase
Agreements to be unconditionally guaranteed, jointly and severally,
on a senior basis by Nova Holding Clinton County, LLC and Nova
Biofuels Clinton County, LLC, each a subsidiary of the
Company.
“ Securities Act ”
means the Securities Act of 1933, as amended.
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 have been sold pursuant to Rule 144, or
(iiii) 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 (iv)
with respect to subsequent Holders only, the date two years after
the date that the Registration Statement is declared effective by
the Commission, or (v) the date when all Registrable Securities
cease to be outstanding (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 120 days following the date on
which the Company becomes aware that such Registration Statement is
required to be filed under this Agreement (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
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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 15 consecutive
days or more than 45 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 15th 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 additional
interest (“ Additional Interest ”) and not as a
penalty, will accrue at a rate per annum of 0.50% of the principal
amount of such Registrable Securities included (or to be included)
in such Registration Statement for the first 90-day period
following such Event Date; and (y) thereafter at a rate per annum
of 1.00% of the principal amount of such Registrable Securities,
provided , that 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 Additional Interest 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. In the event the Company
fails to pay Additional Interest in a timely manner, such
Additional Interest shall bear interest at the rate of one percent
(1.0%) per month (prorated for partial months) until paid in
full.
(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
Registrable Securities 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
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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, or an exemption therefrom, 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.
(h)
By 9:30 am, New York City time, on the Business Day following the
Effective Date, the Company shall file with the Commission in
accordance with Rule 424 under the Securities Act the final
prospectus to be used in connection with sales pursuant to such
Registration Statement.
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 to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith. Each Registration
Statement, as of its filing and effective dates and each day
thereafter (including all amendments or supplements thereto, as of
their respective filing and effective dates and each day
thereafter), shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein, or necessary to make the statements therein not
misleading, and the prospectus contained in such Registration
Statement, as of its filing date and each day thereafter (including
all amendments and supplements thereto, as of their respective
filing dates and each day thereafter), shall not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading.
(b)
(i) Prepare and file with the Commission such amendments, including
post- effective amendments, to each Registration Statement and the
Prospectus used in connection
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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 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 herein, at any time after
the Effective Date of the initial Registration Statement, the
Company may delay the disclosure of material, non-public
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information concerning the Company the
disclosure of which at the time is not, in the good faith opinion
of the board of directors of the Company and its counsel, in the
best interest of the Company and, in the opinion of counsel to the
Company, otherwise required (a “ Grace Period ”
) ; provided, that the Company shall promptly (i) notify the
Purchasers in writing of the existence of material, non-public
information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material,
non-public information to the Purchasers) and the date on which the
Grace Period will begin, and (ii) notify the Purchasers in writing
of the date on which the Grace Period ends; and, provided further,
that such Grace Periods shall not exceed an aggregate of forty-five
(45) days in any 12 month period, (ii) each such Grace Period shall
not exceed fifteen (15) consecutive days and (iii) that the first
day of any Grace Period must be at least five (5) Trading Days
after the last day of any prior Grace Period. For purposes of
determining the length of a Grace Period above, the Grace Period
shall begin on and include the date the Purchasers receive the
notice referred to in clause (i) and shall end on and include the
later of the date the Purchasers receive the notice referred to in
clause (ii) and the date referred to in such notice.
(d)
Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment.
(e)
Furnish to each Holder, without charge, at least one conformed copy
of each Registration Statement and each amendment thereto and all
exhibits to the extent requested by such Person (including those
previously furnished or incorporated by reference) promptly after
the filing of such documents with the Commission; provided, that
the Company shall have no obligation to provide any document
pursuant to this clause that is available on the EDGAR
system.
(f)
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