Document:

Exhibit
4.3

 

WARRANT
AGREEMENT

 

THIS WARRANT
AGREEMENT (this “Agreement”) is made and entered into as of
                    ,
between BETA
OIL & GAS, INC., a Nevada corporation (the “Company”) and
                    ,
(“Holder”).

 

R
E  C  I  T  A  L  S

 

WHEREAS, the
Company proposes to issue to
Holder           warrants
(the “Warrants”), each such Warrant entitling the holder thereof to purchase
one share of Common Stock, $0.001 par value, of the Company (the “Shares” or
the “Common Stock”); and

 

WHEREAS, the Warrants
which are the subject of this Agreement will be issued by the Company to Holder
as part of consideration payable to Holder in connection with an investment by
the Holder pursuant to the concurrent private offering of the Company (the
“Offering”).

 

NOW, THEREFORE, in
consideration of the premises and the mutual agreements herein set forth, the
parties hereto agree as follows:

 

A
G  R  E  E  M  E  N  T

 

1.                                       Warrant
Certificates.  The warrant
certificates to be delivered pursuant to this Agreement (the “Warrant
Certificates”) shall be in the form set forth in Exhibit A, attached hereto and
made a part hereof, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Warrant Agreement.

 

2.                                       Right
to Exercise Warrants.  Each Warrant
may be exercised from the date of this Agreement until 11:59 P.M. (Tulsa time)
on the date that is five years after the date of this Agreement (the
“Expiration Date”).  Each Warrant not
exercised on or before the Expiration Date shall expire.

 

Each Warrant shall
entitle its holder to purchase from the Company one share of Common Stock at an
exercise price of $         per share,
subject to adjustment as set forth below (“Exercise Price”).

 

The Company shall
not be required to issue fractional shares of capital stock upon the exercise
of this Warrant or to deliver Warrant Certificates which evidence fractional
shares of capital stock.  In the event
that a fraction of an Exercisable Share would, except for the provisions of
this paragraph 2, be issuable upon the exercise of this Warrant, the Company
shall pay to the Holder exercising the Warrant an amount in cash equal to such
fraction multiplied by the current market value of the Exercise Share.  For purposes of this paragraph 2, the
current market value shall be determined as follows:

 

(a)                                  if
the Exercise Shares are traded in the over-the-counter market and not on any
national securities exchange and not in the NASDAQ Reporting System, the
average of the mean

 

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between the last bid and
asked prices per share, as reported by the National Quotation Bureau, Inc., or
an equivalent generally accepted reporting service, for the last business day
prior to the date on which this Warrant is exercised, or, if not so reported,
the average of the closing bid and asked prices for an Exercise Share as
furnished to the Company by any member of the National Association of
Securities Dealers, Inc., selected by the Company for that purpose.

 

(b)                                 if
the Exercise Shares are listed or traded on a national securities exchange or
in the NASDAQ Reporting System, the closing price on the principal national
securities exchange on which they are so listed or traded or in the NASDAQ
Reporting System, as the case may be, on the last business day prior to the
date of the exercise of this Warrant. 
The closing price referred to in this Clause (b) shall be the last
reported sales price or, in case no such reported sale takes place on such day,
the average of the reported closing bid and asked prices, in either case on the
national securities exchange on which the Exercise Shares are then listed on in
the NASDAQ Reporting System; or

 

(c)                                  if
no such closing price or closing bid and asked prices are available, as
determined in any reasonable manner as may be prescribed by the Board of
Directors of the Company.

 

3.                                       Mutilated
or Missing Warrant Certificates.  In
case any of the Warrant Certificates shall be mutilated, lost, stolen or
destroyed prior to its expiration date, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and in substitution for the Warrant Certificate
lost, stolen or destroyed, a new Warrant Certificate of like tenor and
representing an equivalent right or interest.

 

4.                                       Reservation
of Shares.  The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Shares or its authorized and issued Shares
held in its treasury for the purpose of enabling it to satisfy its obligation
to issue Shares upon exercise of Warrants, the full number of Shares
deliverable upon the exercise of all outstanding Warrants.

 

The Company
covenants that all Shares which may be issued upon exercise of Warrants will be
validly issued, fully paid and nonassessable outstanding Shares of the Company.

 

5.                                       Rights
of Holder.   The Holder shall not,
by virtue of anything contained in this Warrant Agreement or otherwise, prior
to exercise of this Warrant, be entitled to any right whatsoever, either in law
or equity, of a stockholder of the Company, including without limitation, the
right to receive dividends or to vote or to consent or to receive notice as a
shareholder in respect of the meetings of shareholders or the election of
directors of the Company of any other matter.

 

6.                                       Investment
Intent.  Holder represents and
warrants to the Company that Holder is acquiring the Warrants for investment
and with no present intention of distributing or reselling any of the Warrants.

 

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7.                                       Certificates
to Bear Language.  The Warrants and
the certificate or certificates therefor shall bear the following legend by
which each holder shall be bound:

 

“THE WARRANTS
REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK (OR OTHER
SECURITIES) ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.”

 

The Shares and the
certificate or certificates evidencing any such Shares shall bear the following
legend:

 

“THE SHARES (OR
OTHER SECURITIES) REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.  THE
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.”

 

Certificates for
Warrants without such legend shall be issued if such warrants or shares are
sold pursuant to an effective registration statement under the Securities Act
of 1933 (the “Act”) or if the Company has received an opinion from counsel
reasonably satisfactory to counsel for the Company, that such legend is no
longer required under the Act.

 

8.                                       Registration
Rights.  The Company is obligated to
register the shares of Common Stock underlying the Warrants in any subsequent
registration statement filed by the Company with the Securities and Exchange
Commission, so that holders of such Common Stock shall be entitled to sell the
same simultaneously with and upon the terms and conditions as the securities sold
for the account of the Company are being sold pursuant to any such registration
statement, subject to such lock-up provisions as may be proposed by the
underwriter of said registration statement and agreed to by the investors (the
“Piggyback Registration Right”).

 

9.                                       Adjustment
of Number of Shares and Class of Capital Stock Purchasable.  The Number of Shares and Class of Capital
Stock purchasable under this Warrant Agreement are subject to adjustment from
time to time as set forth in this Section.

 

(a)                                  Adjustment
for Change in Capital Stock.  If the
Company:

 

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(i)                                     pays
a dividend or makes a distribution on its Common Stock, in each case, in shares
of its Common Stock;

 

(ii)                                  subdivides
its outstanding shares of Common Stock into a greater number of shares;

 

(iii)                               combines
its outstanding shares of Common Stock into a smaller number of shares;

 

(iv)                              makes
a distribution on its Common Stock in shares of its capital stock other than
Common Stock; or

 

(v)                                 issues
by reclassification of its shares of Common Stock any shares of its capital
stock;

 

then the number and
classes of shares purchasable upon exercise of each Warrant in effect
immediately prior to such action shall be adjusted so that the holder of any Warrant
thereafter exercised may receive the number and classes of shares of capital
stock of the Company which such holder would have owned immediately following
such action if such holder had exercised the Warrant immediately prior to such
action.

 

For a dividend or
distribution the adjustment shall become effective immediately after the record
date for the dividend or distribution. 
For a subdivision, combination or reclassification, the adjustment shall
become effective immediately after the effective date of the subdivision,
combination or reclassification.

 

If after an
adjustment the holder of a Warrant upon exercise of it may receive shares of
two or more classes of capital stock of the Company, the Board of Directors of
the Company shall in good faith determine the allocation of the adjusted
Exercise Price between or among the classes of capital stock.  After such allocation, that portion of the
Exercise Price applicable to each share of each such class of capital stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to Common Stock in this Agreement. 
Notwithstanding the allocation of the Exercise Price between or among
shares of capital stock as provided by this Section 9(a), a Warrant may only be
exercised in full by payment of the entire Exercise Price currently in effect.

 

(b)                                 Consolidation,
Merger or Sale of the Company.  If
the Company is a party to a consolidation, merger or transfer of assets which
reclassifies or changes its outstanding Common Stock, the successor corporation
(or corporation controlling the successor corporation or the Company, as the
case may be) shall by operation of law assume the Company’s obligations under
this Warrant Agreement.  Upon
consummation of such transaction the Warrants shall auto­matically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger or transfer if the holder had exercised the Warrant immediately before
the effective date of such transaction. 
As a condition to the consummation of such transaction, the Company
shall arrange for the person or entity obligated

 

4

 

to issue securities or
deliver cash or other assets upon exercise of the Warrant to, concurrently with
the consummation of such transaction, assume the Company’s obligations
hereunder by executing an instrument so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 9.

 

10.                                 Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or Holder shall bind and inure
to the benefit of their respective successor and assigns hereunder.

 

11.                                 Counterparts.  This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all proposes be deemed
to be an original, and such counterparts shall together constitute by one and
the same instrument.

 

12.                                 Notices.   All notices or other communications under
this Warrant shall be in writing and shall be deemed to have been given if
delivered by hand or mailed by certified mail, postage prepaid, return receipt
requested, addressed as follows:  if to
the Company: Beta Oil & Gas, Inc., 6120 S. Yale Ave., Suite 813, Tulsa,
Oklahoma 74136, Attention: Chief Executive Officer, and to the Holder: at the
address of the Holder appearing on the books of the Company or the Company’s
transfer agent, if any.

 

Either the Company
or the Holder may from time to time change the address to which notices to it
are to be mailed hereunder by notice in accordance with the provisions of this
Paragraph 12.

 

13.                                 Supplements
and Amendments.   The Company may
from time to time supplement or amend this Warrant Agreement without the
approval of any Holders of Warrants in order to cure any ambiguity or to be
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision, or to make any other provisions in
regard to matters or questions herein arising hereunder which the Company may
deem necessary or desirable and which shall not materially adversely affect the
interest of the Holder.

 

14.                                 Severability.
  If for any reason any provision,
paragraph or term of this Warrant Agreement is held to be invalid or
unenforceable, all other valid provisions herein shall remain in full force and
effect and all terms, provisions and paragraphs of this Warrant shall be deemed
to be severable.

 

15.                                 Governing
Law and Venue.   This Warrant shall
be deemed to be a contract made under the laws of the State of Oklahoma and for
all purposes shall be governed and construed in accordance with the laws of
said State.  Any proceeding arising
under this Warrant Agreement shall be instituted in Tulsa County, State of
Oklahoma.

 

16.                                 Headings.   Paragraphs and subparagraph headings, used
herein are included herein for convenience of reference only and shall not
affect the construction of this Warrant Agreement nor constitute a part of this
Warrant Agreement for any other purpose.

 

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IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed, as
of the date and year first above written.

 

 

	
  “COMPANY”

  	
  “HOLDER”

  
	
   

  	
   

  
	
  BETA OIL & GAS,
  INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  ITS: President

  	
  Its:

  	
   

  	
   

  
								

 

6Exhibit 10.26

 

September 16, 2002

 

David A. Wilkins

8217 S. Yale

Tulsa, Oklahoma 74137

 

Dear David:

 

The purpose of
this letter is to set forth the basic terms of your proposed employment as
President and Chief Executive Officer of Beta Oil & Gas, Inc. (the
“Company”).  These terms would be as
follows:

 

A.  Salary – $160,000 annually.

 

B.  Incentive Compensation–The following items
of incentive compensation all require that you be employed by the Company at
the respective dates on which the payments or grants are to be made.

 

1.             Regular
Bonus – you would receive a bonus equal to not less than 40% of your annual
salary at the end of calendar year 2003.

 

2.             In
consideration of your forfeiture of the unvested options you held with your
prior employer, you would receive the following bonus payments:

 

	
  (a)

  	
   

  	
  $50,000 to be paid upon commencement of your employment;

  
	
  (b)

  	
   

  	
  $250,000 payable January 2, 2003;

  
	
  (c)

  	
   

  	
  $150,000 payable July 1, 2003; and

  
	
  (d)

  	
   

  	
  $150,000 payable January 2, 2004.

  

 

 

C. 
Stock Options–The following options will
be granted to you.  They will vest over
a three-year period, with the first third becoming exercisable on the first
anniversary of the grant, the second third on the second anniversary and the
balance on the third anniversary of the grant.

 

1.             Upon the commencement of your
employment, you will receive an option to purchase a total of 500,000 shares of
common stock of the Company at a price equal to the closing price reported on
The Nasdaq Stock Market on the first day of your employment.

 

2.             On December 31, 2003, you will be
granted an option to purchase an additional 100,000 shares of the Company’s
common stock at a price equal to the closing price of the stock on The Nasdaq
Stock Market on the immediately preceding trading date.

 

 

3.             Options are to have a ten year
term.

 

We are excited
about the commencement of your position with us and look forward to an exciting
and productive tenure.

 

 

	
   

  	
  Yours very truly,

  
	
   

  	
   

  
	
   

  	
  Beta Oil & Gas, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph L. Burnett

  	
   

  
	
   

  	
   

  
	
   

  	
  Joseph L. Burnett

  
	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert E. Davis, Jr.

  	
   

  
	
   

  	
  Robert E. Davis, Jr.

  
	
   

  	
  Director

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