SUBSCRIPTION AGREEMENT
Beta Oil & Gas, Inc.
0000 X. Xxxx, Xxxxx 000
Xxxxx, XX 00000
Gentlemen:
1. Purchase and Sale. Beta Oil & Gas, Inc., a Nevada corporation (the
"Company"), has offered for sale, and the undersigned subscriber (the
"Subscriber") hereby tenders this subscription and applies for the purchase of
the number of Units set forth on the Signature Page at the purchase price per
Unit described in the Company's Confidential Private Placement Memorandum dated
March 20, 2001 (the "Memorandum"). Each Unit consists of one share of the
Company's 8% Convertible Preferred Stock ("Preferred Share") and one-half of one
Warrant to purchase one share of Company common stock (a "Warrant"). The
Preferred Shares and Warrants are referred to collectively herein as the
"Units".
Together with this Subscription Agreement, the Subscriber is delivering
to the Company the full amount of the purchase price for the Units (the
"Purchase Price"). This subscription may be rejected by the Company in its sole
discretion in whole or in part.
THE SIGNATURE OF THE UNDERSIGNED ON THE SIGNATURE PAGE CONSTITUTES THE
EXECUTION OF THIS SUBSCRIPTION AGREEMENT AND THE INVESTOR QUALIFICATION
CERTIFICATE.
2. Amount and Method of Payment. Payment of the Purchase Price required
to purchase the number of Units subscribed for hereunder is being made by check
or wire transfer payable to "Bank of Oklahoma, Escrow Agent for Beta Oil & Gas,
Inc." as Escrow Agent in the amount set forth on the Signature Page, which
represents payment in full for the Units.
3. Escrow of Funds. All payments made as provided in Section 2 hereof
shall be deposited in an account (the "Escrow Account") with Bank of Oklahoma,
Escrow Agent, until a closing occurs or until the termination of the Offering.
The Company may hold a closing at any time after subscriptions for a minimum of
$1,500,000 in Units have been accepted (the "Initial Closing"). The Company may
hold additional closings after the Initial Closing. Funds deposited in the
Escrow Account may not be withdrawn by the Subscriber. If a subscription is
rejected in whole or in part or if the Offering is terminated for any reason,
then this subscription shall be void and all funds received from the undersigned
shall be returned as soon as practicable to the undersigned Subscriber. At the
Initial Closing, funds in the Escrow Account shall be paid to the Company.
4. Accreditation. The Units are being offered to an unlimited number of
accredited investors, as defined in Rule 501 of Regulation D.
5. Representations and Warranties of Subscriber. In order to induce the
Company to accept this subscription, the Subscriber hereby represents and
warrants to, and covenants with, the Company as follows:
(a) (i) The Subscriber understands that the Units have not been
registered under the Securities Act of 1933, as amended (the "Act") or the
securities laws of any state, based upon an exemption from such
registration requirements for non-public offerings pursuant to Regulation D
under the Act or other exemptions thereunder;
(ii) The Units are and will be "restricted securities", as said
term is defined in Rule 144 of the Rules and Regulations promulgated
under the Act;
(iii) The Units may not be sold or otherwise transferred unless
they have been first registered under the Act and all applicable state
securities laws, or unless exemptions from such registration
provisions are available with respect to said resale or transfer.
(iv) The Subscriber is acquiring the Units solely for the account
of the undersigned, for investment purposes only, and not with a view
towards the resale or distribution thereof;
(v) The Subscriber will not sell or otherwise transfer any of the
Units or any Unit therein, unless and until (A) said Units shall have
first been registered under the Act and all applicable state
securities laws; or (B) the undersigned shall have first delivered to
the Company a written opinion of counsel (which counsel and opinion
shall be reasonably satisfactory to the Company) to the effect that
the proposed sale or transfer is exempt from the registration
provisions of the Act and all applicable state securities laws;
(vi) The Subscriber is an "accredited investor" as such term is
defined in Rule 501(a) of Regulation D, as promulgated under the Act.
(b) (i) The Subscriber has received and carefully reviewed the
Company's Memorandum and the Appendices attached thereto;
(ii) The Subscriber has had a reasonable opportunity to ask
questions and receive answers from the Company concerning the Company
and the Offering, and all such questions, if any, have been answered
to the full satisfaction of the Subscriber and the Subscriber has had
the opportunity to receive all other relevant documents concerning the
Company and the Offering;
(iii) The Subscriber has such knowledge and expertise in
financial and business matters that the Subscriber is capable of
evaluating the merits and risks involved in an investment in the Units
and acknowledges that an investment in the Units entails a number of
very significant risks and funds should only be invested by persons
able to withstand the total loss of their investment;
(iv) Except as set forth in this Agreement, no representations or
warranties have been made to the Subscriber by the Company or any
agent, employee or affiliate of the Company and in entering into this
transaction the Subscriber is not relying upon any information, other
than that contained in the Memorandum and the results of independent
investigation by the Subscriber;
(v) The Subscriber understands that the Units are being offered
and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgements and understandings of the Subscriber set forth in
this Subscription Agreement and in the related investor Qualification
Certificate in order to determine the applicability of such exemptions
and the suitability of the Subscriber to acquire the Units, and the
Subscriber acknowledges that it is solely the Subscriber's
responsibility to satisfy itself as to the full observance by this
Offering and the sale of the Units to Subscriber of the laws of any
jurisdiction outside the United States and Subscriber has done so; and
(vi) The Subscriber has full power and authority to execute and
deliver this Subscription Agreement and to perform the obligations of
the undersigned hereunder, and this Subscription Agreement is a
legally binding obligation of the Subscriber enforceable against
Subscriber in accordance with its terms.
(vii) The Subscriber acknowledges that no general solicitation or
general advertising (including communications published in any
newspaper, magazine or other broadcast) has been received by him and
that no public solicitation or advertisement with respect to the
Offering of the Units.
6. Binding Effect. The Subscriber understands that this subscription is not
binding upon the Company until the Company accepts it, which acceptance is at
the sole discretion of the Company and is to be evidenced by the Company's
execution of the Signature Page where indicated. This Subscription Agreement
shall be null and void if the company does not accept it as aforesaid. Upon
acceptance by the Company and receipt of the Purchase Price, the Company will
issue one Share certificate and one-half Common Stock purchase warrant entitling
the holder to purchase one Share of the Company's Common Stock for each Unit
subscribed for.
7. Acceptance in Part. The Subscriber understands that the Company may, in
its sole discretion, reject this subscription in whole or in part and reduce
this subscription in any amount and to any extent.
8. Indemnification. The Subscriber agrees to indemnify the Company and hold
it harmless from and against any and all losses, damages, liabilities, costs and
expenses which it may sustain or incur in connection with the breach by the
Subscriber of any representation, warranty or covenant made by it herein.
9. Nontransferability. Neither this Subscription Agreement nor any of the
rights of the Subscriber hereunder may be transferred or assigned by the
Subscriber.
10. Registration.
(a) The Company shall, not later than one year from completion of the
offering of Units, file with the Securities and Exchange Commission and
thereafter shall use its reasonable best efforts to cause to be declared
effective under the Act a Registration Statement on Form S-3 or other
applicable form relating to the offer and sale of the company Common Stock
issuable upon exercise of the Warrants and conversion of the Preferred
Shares by the holders of such securities from time to time in accordance
with the methods of distribution elected by such holders and set forth in
such Registration Statement. The Company shall pay the expenses incurred in
connection with the registration, not including selling expenses or
commissions paid by holders upon any sale of any of the securities included
in the registration.
(b) The Company shall use its reasonable best efforts to keep the
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by holders until the earlier
of the sale of all the Securities covered by the Registration Statement
pursuant to the Registration Statement, or the date which is two years from
the date that the last of the Warrants were exercised (in any such case,
such period being called the "Registration Period"). The Company shall be
deemed not to have used its best efforts to keep the Registration Statement
effective during the requisite period if it voluntarily takes any action
that would result in holders of Securities covered thereby not being able
to offer and sell such securities during that period, unless (i) such
action is required by applicable law, or (ii) such action is taken by the
Company in good faith and for valid business reasons (not including
avoidance of the Company's obligations hereunder), including the
acquisition or divestiture of assets.
(c ) The Company shall furnish to the holders, prior to the filing
thereof with the Commission, a copy of any Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein.
(d) The Company will ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming part thereof and any
amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an 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 (iii) any Prospectus forming part of any
Registration Statement, and any amendment or supplement to such Prospectus,
does not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading.
(e) The Company shall advise the holders and, if requested by the
holders, confirm such advice in writing:
(i) when a 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; and
(ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with
respect to tile suspension of the qualification of the Securities
included therein for sale in any jurisdiction or the initiation of any
proceedings for such purpose; and
(iv) of the happening of any event that requires the making of
any changes in the Registration Statement or the Prospectus so that,
as of such date, the statements therein are not misleading and 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 light of the circumstances under which they were made)
not misleading (which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have
been made).
11. Amendment; Entire Agreement; Governing Law. This Subscription
Agreement (i) may only be modified by a written instrument executed by the
Subscriber and the Company, (ii) sets forth the entire agreement of the
Subscriber and the Company with respect to the subject matter hereof, (iii)
shall be governed by the laws of the State of Oklahoma applicable to contracts
made and to be wholly performed therein, and (iv) shall inure to the benefit of,
and be binding upon, the Company and the Subscriber and their respective heirs,
legal representatives, successors and assigns.
12. Power of Attorney. The Subscriber irrevocably constitutes and
appoints the President and the Secretary of the Company, with full power of
substitution, as his true and lawful attorney, in his name, place and xxxxx to
execute, acknowledge and deliver the Warrant Agreement for the Warrants included
in the Units and for no other purpose. The power of attorney granted herein
shall be a special power of attorney, and shall be deemed to be coupled with an
interest and shall be irrevocable and survive the death, incompetency, or
dissolution of the Subscriber. In the event of any conflict between the Warrant
Agreement and any instruments filed by the attorney-in-fact pursuant to the
power of attorney granted herein, the Warrant Agreement shall control.
13. Legend Requirements.
FOR ALL INVESTORS:
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE
MERITS AND RISKS INVOLVE. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY
ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY.
FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY
OR DETERMINED THE ADEQUACY OFT HIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD.
FLORIDA RESIDENTS:
THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT (THE "FLORIDA ACT") PROVIDES,
WHEN SALES ARE MADE TO FIVE OR MORE INVESTORS, ANY SALE MADE PURSUANT TO SECTION
517.061(11) OF THE FLORIDA ACT SHALL BE VOIDABLE BY SUCH FLORIDA SUBSCRIBER
EITHER WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH
SUBSCRIBER TO THE COMPANY, AN AGENT OF THE COMPANY, OR AN ESCROW AGENT OR WITHIN
THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH
SUBSCRIBER, WHICHEVER OCCURS LATER.
THIS SUBSCRIPTION AGREEMENT WILL BE DEEMED TO HAVE BEEN EXECUTED FOR ALL
PURPOSES WHEN THE SUBSCRIBER SIGNS THE SIGNATURE PAGE PROVIDED HEREWITH.
