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EXHIBIT 10.5
PIGGYBACK REGISTRATION AGREEMENT
Venus Exploration, Inc., a Delaware corporation (the "COMPANY"),
and_____________, an individual residing in ___________ County, Texas, (the
"NOTE HOLDER"), hereby mutually agree and covenant to be bound in accordance
with the provisions of this Piggyback Registration Agreement (the "PIGGYBACK
REGISTRATION AGREEMENT").
This Agreement is executed in conjunction with a 7.0% Convertible
Subordinated Note dated as of ____________, 1999 among the Company and the Note
Holder (the "NOTE"), and this is the Piggyback Registration Agreement referred
to in the Note. Unless otherwise indicated herein, capitalized terms used in
this Piggyback Registration Agreement have the same meanings as set forth in the
Note; provided, however, the term "NOTE HOLDER" as used herein shall include the
original Note Holder, any person who subsequently becomes a Note Holder, and any
person holding shares of Common Stock issuable upon conversion of the Note.
1. Piggyback Registration Rights.
(a) If at any time the Company proposes to register any shares
of Common Stock on any form for the registration of securities under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), whether or not for
its own account (other than a registration form solely relating to: (i) a
registration of a stock option, stock purchase or compensation or incentive plan
or of stock issued or issuable pursuant to any such plan, or a dividend
investment plan; (ii) a registration of securities proposed to be issued in
exchange for securities or assets of, or in connection with a merger or
consolidation with another corporation, or (iii) a registration of securities
proposed to be issued in exchange for the other securities of the Company), in a
manner which would permit registration of shares of the Company?s Common Stock
owned by the Note Holder (the "REGISTRABLE SECURITIES") for sale to the public
under the Securities Act (a "PIGGYBACK REGISTRATION"), it will at such time give
prompt written notice to the Note Holder of its intention to do so and of the
Note Holder's rights under this Part 1. Upon the written request of the Note
Holder made within 20 days after the giving of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by the Note
Holder and the intended method of disposition thereof), the Company will include
in the Registration Statement the Registrable Securities which the Company has
been so requested to register by the Note Holder.
(b) If, at any time after giving written notice of its
intention to register any securities but prior to the effective date of the
related Registration Statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities the
Company may, at its election, give written notice of such determination to the
Note Holder and thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration.
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(c) If a Piggyback Registration requested pursuant to this
Part 1 involves an underwritten offering and the Note Holder requests to have
Registrable Securities included in the Company's registration, then: (i) the
Note Holder must sell his Registrable Securities to the underwriters selected by
the Company on the same terms and conditions as apply to other selling
shareholders; and (ii) not later than the time of final pricing of any firm
commitment, underwritten offering or, for any other offering, not later than
three Business Days prior to the effectiveness of the Registration Statement
filed in connection with such registration, the Note Holder may elect in writing
not to have his Registrable Securities included in connection with such
registration.
(d) The Company will pay all registration expenses in
connection with each registration of Registrable Securities requested pursuant
to this Part 1, except for the fees and disbursements of separate counsel, if
any, retained by the Note Holder and underwriting fees, discounts and
commissions and transfer taxes, if any, relating to the Registrable Securities
being registered by the Note Holder.
(e) If a registration pursuant to this Part 1 involves an
underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of shares which the Holders of
Registrable Securities and any other persons participating in such registration
intend to include in such offering (the "SELLING SHAREHOLDERS") would have an
adverse effect on such offering, including a decrease in the price at which such
securities can be sold, then the securities to be included in the offering will
include (i) first the securities that the Company proposes to register for its
own account, and (ii) second, to the extent that additional securities can be
registered, in the opinion of the underwriter, the Registrable Securities that
the Note Holder and the Other Note Holders propose to register and the
securities any Selling Shareholders propose to register, reduced pro rata among
the Note Holder, the Other Note Holders and the other Selling Shareholders to
the extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter.
2. Future Grants of Registration Rights. The Company shall not grant
any new registration rights, the effect of which would be to adversely impact
the rights of the Note Holders under this Agreement, including the rights of the
Note Holders under Section 1(e).
3. Duration of Piggyback Registration Rights. The registration rights
granted to the Note Holder by Part 2 shall survive the conversion of the Note
into shares of Company Common Stock.
4. Registration Procedures. If and whenever the Company is required to
cause the registration of any Registrable Securities under the Securities Act as
provided herein, the Company will as expeditiously as practicable:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements relating to the registration of the Registrable
Securities on an appropriate form under
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the Securities Act, and use its best efforts to cause such Registration
Statements to become effective; provided that before filing a Registration
Statement or prospectus or any amendment or supplement thereto, including,
without limitation, documents incorporated therein by reference after the
initial filing of any Registration Statement, the Company will furnish to the
Note Holder and the underwriters, if any, copies of all such documents proposed
to be filed, which documents will be subject to the review of the Note Holder
and the underwriters;
(b) prepare and file with the SEC such amendments and
post-effective amendments to a Registration Statement as may be necessary to
keep such Registration Statement effective for the period necessary to effect
the distribution of the Registrable Securities being registered, but in no event
shall such period exceed 90 days; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Securities Act or any successor provision
thereto; and comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the intended plan of distribution by the sellers
thereof set forth in such Registration Statement or amendment or supplement to
such Prospectus;
(c) notify the selling Note Holder and the managing
underwriters, if any, promptly, and (if requested by any such Person) confirm
such notification in writing: (i) when a Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the SEC for the Company to file amendments or supplements
to a Registration Statement or related Prospectus or for additional information;
(iii) of the issuance by the SEC of any order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose;
(iv) if at any time the representations and warranties of the Company
contemplated by Part 3(n) below cease to be true and correct; (v) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; and (vi) of
the happening of any event that makes any statement made in the Registration
Statement, the Prospectus or any exhibit thereto or document incorporated
therein by reference untrue or which requires the making of any change in the
Registration Statement or Prospectus so that they 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;
(d) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(e) if reasonably requested by the managing underwriters,
immediately incorporate in a Prospectus supplement or post-effective amendment
to a Registration Statement such information as the managing underwriters
believe (on advice of counsel), should be included therein as required by
applicable law relating to such sale of Registrable Securities, including,
without limitation, information with respect to the purchase price being paid
for the Registrable Securities by such underwriters and with respect to any
other terms of the offering;
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and make all required filings of such Prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(f) furnish to the Note Holder and each managing underwriter,
without charge, at least one signed copy or reproduced counterpart of the
Registration Statement and any post-effective amendment thereto including,
without limitation, financial statements and schedules, all documents
incorporated therein by reference and all exhibits (including those incorporated
by reference);
(g) deliver to the Note Holder and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including each
preliminary prospectus) and any amendment or supplement thereto as such Persons
may request. The Company consents to the use of such Prospectus or any
supplement thereto by the Note Holder and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus or any supplement thereto;
(h) prior to any public offering of Registrable Securities,
cooperate with the selling Note Holder, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions as any seller or underwriter requests in writing, keep
each such registration or qualification effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the applicable
Registration Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject the Company to general
service of process or general taxation in any jurisdiction where it is not at
the time so subject;
(i) cooperate with the selling Note Holder and the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends; and enable such Registrable Securities
to be in such denominations and registered in such names as the managing
underwriters may request at least two (2) Business Days prior to any sale of
Registrable Securities to the underwriters;
(j) use reasonable efforts to cause the Registration Statement
covering the Registrable Securities to be registered with or approved by such
other governmental agencies or authorities within the United States as may be
necessary to enable the seller or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(k) upon the occurrence of any event contemplated by Part
3(c)(vi) above, prepare a post-effective amendment or supplement to the
applicable Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required
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document so that, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading;
(l) with respect to each issue or class of Registrable
Securities, use its best efforts to cause all Registrable Securities covered by
the Registration Statement to be listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed;
(m) provide a CUSIP number for all Registrable Securities, not
later than the effective date of the applicable Registration Statement;
(n) in connection with an underwritten offering only, enter
into such agreements (including an underwriting agreement) and take all such
other actions reasonably required in connection therewith in order to expedite
or facilitate the disposition of such Registrable Securities and in such
connection: (i) make such representations and warranties to the underwriters in
form, substance and scope as are customarily made by issuers to underwriters in
underwritten offerings and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and updates thereof, which counsel and
opinions must be satisfactory in form, substance and scope to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by the Note
Holder and underwriters; (iii) obtain "cold comfort" letters and updates thereof
from the Company's independent certified public accountants addressed to the
Note Holder and the underwriters, if any, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
by independent certified public accountants in connection with underwritten
offerings; (iv) the underwriting agreement shall set forth in full the
indemnification provisions and procedures of Part 3 hereof with respect to all
parties to be indemnified pursuant to said Part 3; and (v) the Company shall
deliver such documents and certificates as may be reasonably requested by the
Note Holder and the managing underwriters, if any, to evidence compliance with
clause (i) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company; the above shall be
done at each closing under such underwriting or similar agreement or as and to
the extent required thereunder;
(o) make available to a representative of the Note Holder, any
underwriter participating in any disposition pursuant to such registration, and
any attorney or accountant retained by the selling Note Holder or underwriter,
all financial and other records, pertinent corporate documents and properties of
the Company reasonably requested, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection such person?s
due diligence regarding such registration; provided, that any records,
information or documents that are designated by the Company in writing as
confidential shall be kept confidential by such Persons unless disclosure of
such records, information or documents is requested by court or administrative
order or is required by law;
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(p) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders an earnings statement, covering a period of not less than 12
months satisfying the provisions of Section 11(a) of the Securities Act and of
Rule 158 of the Securities Act not later than the last day of the 15th month
after the first day of the month following the effective date of the applicable
Registration Statement; and
(q) except as otherwise provided in this Piggyback
Registration Agreement, the Company shall have sole control in connection with
the preparation, filing, withdrawal, amendment or supplementing of each
Registration Statement, the selection of underwriters, and the distribution of
any preliminary prospectus included in the Registration Statements and may
include within the coverage thereof additional shares of Common Stock or other
securities for its own account or for the account of one or more of its other
security holders.
Expenses incurred in connection with this Part 3 shall be borne as set
forth in Part 1(d) of this Piggyback Registration Agreement.
The Company may require the Note Holder to furnish to the Company such
information regarding the distribution of such securities and such other
information as may otherwise be required to be included in such Registration
Statement, as the Company may from time to time reasonably request in writing.
The Note Holder agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Part 3(c) hereof, the Note Holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus until the receipt by the Note Holder of the
copies of the supplemented or amended Prospectus contemplated by Part 3(k)
hereof, or until it is advised in writing by the Company that the use of the
applicable Prospectus may be resumed, and it has received copies of any
additional or supplemental filings which are incorporated by reference in such
Prospectus, and, if so directed by the Company, the Note Holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in the Note Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the
fullest extent permitted by law, the Note Holder and his agents against all
losses, claims, damages, liabilities and expenses (including fees and
disbursements of counsel) arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
Prospectus or preliminary prospectus or in any amendments or supplements
thereto, or any
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omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
circumstances under which they are made, not misleading; provided however, that
the Company shall not be liable for such indemnification amounts to the extent,
but only to the extent, that any such loss, claim, damage, liability or expense
arises out of an untrue statement or omission made in reliance upon and in
conformity with information furnished in writing to the Company by the Note
Holder expressly for use in any Registration Statement, Prospectus or
preliminary prospectus. If for any reason the foregoing indemnification is
unavailable to the Note Holder or his agents or is insufficient to hold them
harmless, then the Company shall contribute to the amount paid or payable by the
Note Holder or his agents as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the relative benefits
received by the Company and its stockholders on the one hand and the indemnified
party on the other hand but also the relative fault of the Company and the
indemnified party, as well as any relevant equitable considerations. The Company
will also indemnify the underwriters, selling brokers, dealer managers, and
similar securities industry professionals participating in the distribution,
their officers, directors and partners and each Person who controls such Persons
(within the meaning of the Securities Act) to the same extent as provided above
with respect to the indemnification of the Note Holder.
(b) In connection with any registration, the Note Holder
agrees to indemnify, to the same extent as the indemnification provided by the
Company in Part 4(a), the Company, its directors and officers and each Person
who controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses (including fees and
disbursements of counsel) arising out of or based upon any untrue statement of a
material fact in any Registration Statement, Prospectus or preliminary
prospectus or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, that such untrue statement or omission is
contained in such document in reliance upon and in conformity with written
information furnished by the Note Holder to the Company expressly for inclusion
in such Registration Statement, Prospectus or preliminary prospectus. In no
event shall the liability of the Note Holder hereunder be greater in amount than
the dollar amount of the net proceeds received by the Note Holder upon the sale
of the Registrable Securities giving rise to such indemnification obligation.
(c) Any party entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) permit such indemnifying party to assume the
defense of such claim. However, any person entitled to indemnification hereunder
shall have the right to employ separate counsel and to participate in the
defense of such claim, but the fees and expenses of such counsel shall be at the
expense of such person unless: (i) the indemnifying party has agreed to pay such
fees or expenses; (ii) the indemnifying party shall have failed to assume the
defense of such claim and employ counsel reasonably satisfactory to such persons
within a reasonable time after notice of the assertion of such claim; or (iii)
counsel for such person shall have concluded that there may be defenses
available to such person which are different from or additional to those
available to the indemnifying party and in such counsel's opinion, counsel for
the indemnifying party would have
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a conflict of interest in asserting such additional or different defenses (in
which case the indemnifying party shall not have the right to assume the defense
of such claim on behalf of such person) in any of which events such fees and
expenses shall be borne by the indemnifying party. If such defense is not
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld or delayed). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff with respect
to such indemnified party of a release from all liability in respect to such
claim or litigation. An indemnifying party who is not entitled to, or elects not
to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels. Delay in giving notice
pursuant to this Part 4 shall not impair the rights of a party to
indemnification hereunder unless the indemnifying party is prejudiced by such
delay.
This Piggyback Registration Agreement is executed as of this the ___
day of _______________, 1999.
NOTE HOLDER:
COMPANY:
VENUS EXPLORATION, INC.
By:
_____________________, President
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