BETA OIL & GAS, INC.
SELECTED DEALER AGREEMENT
PUBLIC OFFERING OF UP TO 1,650,000 SHARES OF COMMON STOCK
______________________, 1998
=====================
=====================
Ladies and Gentlemen:
Brookstreet Securities Corporation (the "Underwriter") has agreed to
use its best efforts to offer and sell on behalf of Beta Oil & Gas, Inc. (the
"Company") up to 1,650,000 shares of Common Stock, par value $.001 per share
(the "Shares"), all as set forth in the prospectus (the "Prospectus"), which is
part of the registration statement (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") on Form S-1 (File No.
333-68381) under the Securities Act of 1933, as amended (the "Act"), subject to
the terms of the Underwriting Agreement referred to therein (the "Underwriting
Agreement").
1. The Public Offering. The Shares are to be offered to the public by
the Underwriter, on best efforts basis, at a price of $6.00 per share (the
"Public Offering Price"), in accordance with the terms of the Offering set forth
in the Prospectus. The Underwriter has full authority to solicit the services of
other broker/dealers who are registered as such with the Commission and who are
members of the National Association of Securities Dealers, Inc.
("NASD").
2. Appointment of Selected Dealer. By executing this Selected Dealer
Agreement (the "Agreement"), you are appointed as a Selected Dealer to offer and
sell the Shares during the term of the Offering on a nonexclusive basis.
3. Offering by Selected Dealer. By executing this Agreement, you agree
to use your best efforts to offer and sell the Shares in accordance with the
terms and conditions of this Agreement, the Registration Statement, the
Prospectus, and any revisions, supplements or amendments thereof, and the
applicable federal and state securities laws and regulations in connection with
the Offering.
4. Conduct of Offering. On becoming a Selected Dealer and in offering
and selling the Shares, you agree to comply with all applicable requirements of
the Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Conduct Rules of the NASD, including, but not limited to, Rules 2730,
2740, 2420, and 2750 of said Conduct Rules. As a Selected Dealer, you shall be
supplied with such quantities of the Prospectus as, from time to time, you may
reasonably request.
Upon acceptance of your signed Agreement, you shall be informed as to
the states in which the Underwriter has been advised that the Shares have been
qualified for sale under the respective securities or blue sky laws of such
states; however, the Underwriter assumes no obligation or responsibility as to
the right of any Selected Dealer to sell the Shares in any state or as to any
sale made therein.
The Underwriter and the Company reserve the right to refuse to accept
any and all orders or sales secured by you.
5. Escrow Agent. The Escrow Agent for the Offering is Southern
California Bank. Upon your receipt of subscription funds and documents for the
Offering, you hereby agree to immediately forward such funds and documents to:
Southern California Bank
Escrow Division
Escrow # 012794GG
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Fax: 949/000-0000
6. Closing of Offering. Unless at least 800,000 Shares are sold within
10 days of the date of the Final Prospectus (the "Minimum Offering"), the
Offering will terminate, none of the Shares will be deemed to have been sold and
all proceeds received will be returned in full with interest thereon to
subscribers and no commissions shall be paid to you pursuant to Section 7 of
this Agreement. If the Minimum Offering is sold, the proceeds will be released
from escrow and deposited to the Company's account. Within 10 days after the
date that the Company receives the proceeds from the sale of the Minimum
Offering, the Company shall instruct the Escrow Agent to remit to you the amount
of the commission to be paid to you pursuant to Section 7 of this Agreement.
7. Amount of Sales Commissions. Provided that the proceeds from the
sale of the Minimum Offering are received by the Company, the Company shall pay
you a sales commission in an amount equal to 8% percent of the cash proceeds to
the Company of the purchase price of each Share sold by you (the "Commission").
The Company also agrees to pay to you a non-accountable expense allowance equal
to 2% of the aggregate principal amount of the Shares sold by you (the
"Nonaccountable Expense Allowance"). In the event that the Offering is
terminated for any reason, the Company shall pay you for any reasonable
accountable expenses you have incurred. In addition to the Commission and the
Nonaccountable Expense Allowance, you shall be entitled to receive (the
"Selected Dealer Warrants") for the purchase of an amount of shares of Common
Stock of the Company equal to 10% of the number of Shares actually sold by you
in the public offering. The Selected Dealer Warrants shall be issued in the form
set forth in the Selected Dealer Warrant included in the Registration Statement.
The Selected Dealer Warrants shall be exercisable, in whole or in part, for a
period of four years commencing one year from the date of the completion of the
Offering at an exercise price of $7.50 per share. The Selected Dealer Warrants
shall be non-exercisable for one year from the effective date of the Offering,
and non-transferable for one year (whether by sale, transfer, assignment, or
hypothecation) except for (i) transfers to officers of the broker/dealer who are
also shareholders of the broker/dealer; and (ii) transfers occurring by
operation of law.
8. Relationship of Selected Dealers and the Underwriter. You represent
that you are a member in good standing of the NASD. You are not authorized to,
and you agree not to, give any information or to make any representations other
than as contained in the Prospectus, or to act as agent or sub-agent for the
Underwriter. Nothing herein shall constitute the Selected Dealer as an
association, unincorporated business, or other separate entity of or partners
with the Underwriter, or with each other, but you shall be liable for the
Underwriter's share of any tax, liability, or expense based on any claim to the
contrary. The Underwriter shall not be under any liability to you, except for
obligations expressly assumed by the Underwriter in this Agreement; however, no
obligations on the Underwriter's part shall be implied or inferred herefrom.
9. Effectiveness of Agreement. This Agreement will become effective as
of the date first set forth above.
10. Termination of Agreement. This Agreement may be terminated by
notice hereunder at any time by the Underwriter or the Company, with or without
cause. If not terminated sooner, this Agreement shall terminate concurrently
with the Termination of the Offering. Upon any termination you shall continue to
have the right to receive compensation hereunder for Shares sold by you, for
which you have not yet been compensated.
11. Indemnification and Contribution.
(a) You hereby indemnify and hold harmless the Company and
each person who controls the Company within the meaning of Section 15 of the Act
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and counsel fees) caused by (i) any breach by
you of the representations, warranties or covenants by you contained in or made
pursuant to this Agreement, (ii) the failure by you to give, deliver or send a
copy of the Prospectus as appropriate to any person to whom the Shares are
offered or sold or to offer or sell the Shares in accordance with the provisions
of and applicable rules, regulations and published administrative
interpretations under the Act and the securities or blue sky laws of any
jurisdiction in which the Shares are offered or sold by or through you, (iii)
any unauthorized representations made by you or (iv) any unauthorized conduct
which adversely affects the availability of exemption from registration under
the Act or the rules and regulations thereunder or any provisions of the
securities laws of any jurisdiction.
(b) The Company hereby indemnifies and holds harmless each
person who controls you (within the meaning of Section 15 of the Act) against
any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and counsel fees) caused by (i) any breach by
the Company of the representations, warranties or covenants by the Company
contained in or made pursuant to this Agreement, (ii) any untrue statement of a
material fact contained in the Prospectus, Registration Statement, or in any
amendment or supplement thereto or (iii) any omission to state in the
Prospectus, Registration Statement or in any amendment or supplement thereto any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading; provided, however, that the Company shall not be responsible for,
nor does the Company indemnify or hold harmless you or your controlling persons
against any losses, claims, damages, liabilities or expenses arising out of or
resulting from the offer or sale of the Shares to any person who was not given,
delivered or sent a copy of the Prospectus as appropriate, or the failure by you
to offer and sell the Shares in accordance with the provisions of and applicable
rules, regulations and published administrative interpretations under the Act
and rules thereunder and the securities or blue sky laws of any jurisdiction in
which the Shares are offered or sold by or through you.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section. In case any such action is brought against any indemnified
party, and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party, similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
under joint control thereof over the defense in conjunction with the indemnified
party and after notice from the indemnifying party to such indemnified party, of
its election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and the indemnified
party may, but shall not be obligated to, participate in the defense of its own
expense with its own counsel.
12. Representations and Indemnities to Survive Delivery. The
indemnities, agreements, representations, warranties, and other statements by
you set forth in or made in writing pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
the Company, or any controlling person and will survive delivery of and payment
for the Shares, and the Company, or any controlling person, as the case may be,
shall be entitled to the benefit of the indemnity agreements.
13. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California.
14. Notices. All communications hereunder will be in writing sent by
certified, first class mail, return receipt requested each party at the address
set forth below. Notices will be effective only when received or when first
attempted to be delivered by the mails. Addresses for notice may be changed by
notice to the other parties hereunder.
15. Modifications and Waivers. No modification or waiver of any term
hereof shall be effective unless in writing, signed by the party to be charged.
16. Multiple Counterparts. This Agreement is made, and may be executed,
in multiple counterparts, each of which shall constitute an original hereof.
17. Assignability. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs and successors but
shall not be assignable by a party without the prior written consent of the
other party.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement between us in accordance with its terms.
Very truly yours,
BROOKSTREET SECURITIES CORPORATION
----------------------------------
BY: Xxxxxxx X. Xxxxxx
ITS: President
SELECTED DEALER
------------------------------------
(Name of Selected Dealer)
------------------------------------
(Signature)
By:_________________________________
Its: _______________________________
------------------------------------
------------------------------------
(Selected Dealer Address)
Tax I.D. No.:_______________________
List states that Selected Dealer is
authorized to conduct business:
------------------------------------
------------------------------------
------------------------------------
