Document:

Exhibit 10.47

 

Petro Capital Advisors, LLC

1845 Woodall Rodgers Freeway

Ste 1700

Dallas, Texas 75201

 

	
   

  	
  July 9,
  2003

  

 

Beta Oil & Gas, Inc.

6120 S. Yale

Suite 813

Tulsa, OK 74136

 

	
  Attention:

  	
   

  	
  Mr. David Wilkins

  
	
   

  	
   

  	
  President and Chief Executive Officer

  

 

Dear Mr. Wilkins:

 

This letter confirms our understanding that Beta Oil & Gas, Inc.
(the “Company”) and its collective subsidiaries (the “Company”) have engaged
Petro Capital Advisors, LLC (“Petro Capital”) as its exclusive financial
advisor with respect to mergers and acquisitions, including Defense Advisory
and with respect to responding to merger or acquisition proposals.   Except as provided, this letter agreement
supercedes that certain letter agreement between the Company and Petro Capital
dated as of March 14, 2003; provided, however that the indemnification of
Petro Capital provided in the March 14, 2003 letter agreement shall remain
unaffected.  For purposes of this
agreement, the term “Defense Advisory” shall mean advising, from a financial
point of view, the Company with respect to an assessment of its vulnerability
to an unsolicited acquisition proposal, including advising with respect to
adoption of a Shareholder Rights Plan.

 

1.                                       Petro Capital in
its capacity as a financial advisor to the Company, will perform the following
financial advisory services:

 

(A)                              Study
and evaluate the Company and its business prospects.

 

(B)                                Assist
in identifying potential acquisition targets and structuring a transaction
between the Company and such targets.

 

(C)                                With
respect to merger and/or acquisition proposals from other entities,  assist in evaluating such proposals from a
financial point of view, and, if directed by the Company, negotiating with
third parties to achieve the goals of the Company with respect to any such
proposal.  Petro Capital shall, as
requested, make presentations to the Company Board of Directors.

 

1

 

(D)                               In
connection with Defense Advisory:  (i)
review, from a financial point of view, the vulnerability of the Company to an
unsolicited acquisition proposal; (ii) work with Company management and counsel
to analyze the Company’s preparedness with respect to any such unsolicited
proposal; and (iii) make recommendations to the Company with respect to enhancing
defense preparedness.  If requested by
the Company, assist in the adoption of a Shareholder Rights Plan.

 

(E)                                 If
requested by the Company in connection with a merger or acquisition that takes
the form of a disposition of more than 50% of the voting securities or assets
of the Company, Petro Capital will provide, in accordance with its customary
practice, an opinion (the “Opinion”) to the Board of Directors of the Company,
with respect to the adequacy or fairness, from a financial point of view, of the
consideration to be received in such transaction, it being understood that the
Opinion shall be in such form as Petro Capital shall determine and Petro
Capital may qualify the Opinion in such manner as Petro Capital believes
appropriate.  The Opinion shall not
address the Company’s underlying business decision to effect a
transaction.  Notwithstanding anything
to the contrary contained elsewhere herein, the Company may reproduce the
Opinion in full in any filings required to be made by the Company with the
Securities and Exchange Commission pursuant to the Securities Act of 1933 or
the Securities Exchange Act of 1934 in connection with the Sale and in
materials delivered to the stockholders of the Company which are part of such
filings (the “Statement”).  In such
event, the Company may include references to the Opinion and to Petro Capital
(in each case in such form as Petro Capital shall approve) in the Statement.

 

(F)                                 Provide
such other financial advisory services as may from time to time be mutually agreed
upon in writing by Petro Capital and the Company.

 

In rendering its services to the Company hereunder, Petro Capital is
not assuming any responsibility for the Company’s underlying business decision
to effect any course of action.

 

The Company shall make available to Petro Capital all information
concerning the business, assets, operations and financial condition of the
Company and any other information Petro Capital reasonably requests in
connection with the services to be performed for the Company hereunder, and
shall provide Petro Capital with reasonable access to the Company’s officers,
directors, employees, independent accountants and other advisors and agents as
Petro Capital shall deem appropriate. 
The Company represents that all information furnished by it or on its
behalf to Petro Capital will be accurate and complete in all material respects.

 

2.                                       Petro Capital’s
compensation for services rendered under this engagement will consist of the
following cash fees:

 

2

 

(A)                              A
financial advisory fee equal to $6,250.00 per month, the first installment of
which is due and shall be paid by the Company upon the execution of this
agreement, and subsequent payments of which shall be made on the first day of
the succeeding eleven months.  In
connection with a Sale (defined as a sale, purchase or exchange of capital
stock, options or assets, a lease of assets with or without a purchase option,
a merger, consolidation or other business combination, an exchange or tender
offer, a recapitalization, a reorganization, the formation of a joint venture,
partnership or similar entity, or any similar transaction, or a change of
control of the Company (i.e. a party or group obtaining 50% or greater voting
control of the Company’s common stock)) of the Company and the Company’s
request for an Opinion, the Company agrees to pay Petro Capital $50,000 (which
amount shall be credited to fees owed pursuant to subparagraph 2(B) below) upon
Petro Capital notifying that the Company that it is prepared to render the
Opinion.

 

(B)                                In
connection with any merger or acquisition transaction, a transaction fee equal
to 3% of the Aggregate Consideration (as defined below) paid or received;
provided, however, that the minimum transaction fee payable to Petro Capital
pursuant to this sentence shall be $75,000. 
Compensation, if any, which is payable to Petro Capital pursuant to this
subparagraph 2(B) shall be contingent upon the consummation of the transaction
and paid by the Company on the closing date thereof; it being understood and
agreed that, with respect to any Sale of the Company, if more than 50% of the
outstanding voting securities of the Company on a fully diluted basis are
acquired (the “First Step”) and the Acquiror (as hereinafter defined) proposes
to acquire any additional voting securities, assets or businesses of the
Company in a subsequent transaction, Petro Capital shall be entitled to its
full compensation pursuant to this subparagraph 2(B) upon consummation of the
First Step.

 

For purposes of this subparagraph 2(B), the term Aggregate
Consideration shall mean the total amount of cash and the fair market value (on
the date of payment) of all securities and other property paid or payable,
directly or indirectly, by the acquiring party (the “Acquiror”) to the acquired
party or the seller of the acquired business or assets (in either case, the
“Acquired”), or to the Acquired’s security holders or its employees, or by the
Acquired to the Acquired’s security holders, in connection with a Sale or a
transaction related thereto.  Aggregate
Consideration shall also include the value of any liabilities, including
indebtedness (whether paid or assumed by the Acquiror), of the Acquired.  As used in this agreement, the terms
“payment”, “paid” or “payable” shall be deemed to include, as applicable, the
issuance or delivery of securities or other property other than cash.

 

3

 

(C)                                In
the event that the parties hereto agree that Petro Capital should provide
additional financial advisory services to the Company, then the Company shall
pay such fees to Petro Capital in such amounts and such services shall be
provided upon such other terms as the Company and Petro Capital shall mutually
agree in writing.

 

(D)                               In
addition to any fees payable by the Company to Petro Capital hereunder, the
Company shall reimburse Petro Capital on a monthly basis for any reasonable
travel and other reasonable out-of-pocket expenses (including all fees,
disbursements and other charges of counsel to be retained by Petro Capital, and
of other consultants and advisors retained by Petro Capital, with the Company’s
consent) incurred in connection with, or arising out of Petro Capital’s
activities under or contemplated by, this engagement;  provided, however, that such expenses shall not exceed $2,500
without the prior written consent of the Company.

 

3.                                       The
Company recognizes and confirms that, in advising the Company and in completing
its engagement hereunder, Petro Capital will be using and relying on publicly
available information and on data, material, and other information furnished to
Petro Capital by the Company and other parties.  It is understood that in performing under this engagement Petro
Capital may assume and rely upon the accuracy and completeness of, and is not
assuming any responsibility for independent verification of, such publicly
available information and the other information so furnished.

 

4.                                       The Company
agrees to separately indemnify Petro Capital in accordance with the
indemnification provisions (the “Indemnification Provisions”) as set forth in
Schedule I attached to this Agreement, which Indemnification Provisions
are incorporated herein and made a part hereof.

 

5.                                       Petro Capital
has been retained under this agreement as an independent contractor with no
fiduciary or agency relationship to the Company or to any other party.  The advice (oral or written) rendered by
Petro Capital pursuant to this agreement is intended solely for the benefit and
use of the Board of Directors of the Company in considering the matters to
which this agreement relates, and the Company agrees that such advice may not
be relied upon by any other person, used for any other purpose, reproduced,
disseminated, quoted or referred to at any time, in any manner or for any
purpose, nor shall any public references to Petro Capital be made by the
Company, without the prior written consent of Petro Capital.

 

6.                                       This agreement
and Petro Capital’s engagement hereunder may be terminated by either the Company
or Petro Capital at any time after July 15, 2004 upon prior written notice
thereof to the other party; provided, however, that (a) termination of Petro
Capital’s engagement hereunder shall not affect the Company’s continuing

 

4

 

obligation to indemnify Petro Capital as provided for in
Schedule I, and its continuing obligations and agreements under paragraph
5 hereof, (b) notwithstanding any such termination by the Company, Petro
Capital shall be entitled to all fees theretofore paid or then due and payable,
as defined in subparagraphs 2(A) and 2(B). The termination of Petro Capital’s
engagement hereunder shall not affect the Company’s obligation to reimburse the
expenses accruing prior to such termination to the extent provided for
herein.  If a merger or acquisition
transaction in which Petro Capital assisted the Company closes within nine
months subsequent to the termination of this letter agreement, the Company
agrees to pay Petro Capital the fees to which it otherwise would be entitled
under subparagraphs 2(A) and/or 2(B).

 

7.                                       The Company
agrees that Petro Capital shall have the right to place advertisements in
financial and other newspapers and journals at its own expense describing its
services to the Company hereunder, provided that Petro Capital will submit a
copy of any such advertisement to the Company for its approval, which approval
shall not be unreasonably withheld or delayed.

 

8.                                       The validity and
interpretation of this Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

 

9.                                       This agreement
may be executed in counterparts, each of which together shall be considered a
single document.  This agreement shall
be binding upon Petro Capital and the Company and their respective successors
and assigns.  This agreement is not
intended to confer any rights upon any shareholder, owner, partner of the
Company, or any other person not a party hereto other than the indemnified
persons referenced in the indemnification agreement referred to above.

 

10.                                 Petro Capital agrees
to keep confidential information concerning the Company provided to it during
the course of this engagement; provided, however, that Petro Capital’s
obligation of confidentiality shall, with respect to specific information,
terminate if such confidential information becomes public from a source other
than Petro Capital.

 

11.                                 Any payments to be
made to Petro Capital hereunder and under the related indemnification agreement
referred to above shall be in U.S. dollars.

 

Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter, which shall thereupon constitute a binding agreement between Petro
Capital and the Company.

 

5

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  PETRO CAPITAL ADVISORS, LLC

  
	
   

  	
   

  
	
   

  	
  Date: 

  	
  7-14-03

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rosser C. Newton

  	
   

  
	
   

  	
   

  	
  Rosser C. Newton

  
	
   

  	
   

  	
  Managing Director

  
							

 

ACCEPTED AND AGREED TO:

BETA OIL & GAS, INC.

 

 

	
  Date:

  	
  7-11-03

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joseph L. Burnett

  	
   

  
				

 

 

(Schedule I follows)

 

6

 

SCHEDULE I

 

1.                    The entity or
person (the “Company”) engaging the services of Petro Capital Advisors, LLC.
(“Petro Capital”) pursuant to the attached agreement (the “Agreement”) hereby
agrees to indemnify and hold harmless Petro Capital and its affiliates, the
respective directors, officers, employees, and agents of Petro Capital and its
affiliates, and each other person, if any, controlling Petro Capital or any of
its affiliates (Petro Capital and each of the foregoing persons or entities
being each referred to herein as an “Indemnified Party”) from and against any
and all losses, claims, damages and liabilities whatsoever, joint or several,
and expenses incurred by them (including fees and disbursements of counsel) to
which any such Indemnified Party may become subject which (a) are related to or
arise out of (i) action taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company, or (ii)
action taken or omitted to be taken by an Indemnified Party with the Company’s
consent or in conformity with the Company’s actions or omissions; or (b) are
otherwise related to or arise out of Petro Capital’s activities on the
Company’s behalf under the Agreement (INCLUDING, WITHOUT LIMITATION, ANY LOSSES, CLAIMS,
ACTIONS, DAMAGES, LIABILITIES (WHETHER JOINT OR SEVERAL), AND EXPENSES ARISING
OUT OF OR RESULTING FROM THE SOLE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR
VICARIOUS LIABILITY OF ANY INDEMNIFIED PARTY), and will reimburse
any Indemnified Party for all expenses (including fees and disbursements of
counsel) as they are incurred in connection with the investigation of,
preparation for or defense of any pending or threatened claim or any action or
proceeding arising therefrom, regardless of whether such Indemnified Party is a
party and regardless of whether such claim, action or proceeding is initiated
or brought by or on behalf of the Company. 
The Company will not be liable to any Indemnified Party under the
foregoing indemnification provisions to the extent that any loss, claim,
damage, liability or expense otherwise subject to indemnification under clause
(b) above is finally judicially determined to have resulted primarily from the
willful misconduct or gross negligence of such Indemnified Party.  The Company also agrees that no Indemnified
Party shall have any liability (WHETHER DIRECT OR INDIRECT, IN CONTRACT OR TORT OR
OTHERWISE, AND WHETHER ARISING OUT OF OR RESULTING FROM THE SOLE OR CONCURRENT
NEGLIGENCE, STRICT LIABILITY OR VICARIOUS LIABILITY OF SUCH INDEMNIFIED PARTY)
to the Company or its security holders or creditors related to or arising out
of the engagement of Petro Capital or its activities on behalf of the Company,
except to the extent that any loss, claim, damage, liability or expense is
finally judicially determined to have resulted primarily from the Indemnified
Party’s willful misconduct or gross negligence.  The Company further agrees that it will not, without the prior
written consent of any Indemnified Party, settle or compromise or consent to
the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any Indemnified Party is an active or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or

 

7

 

consent
includes an unconditional release of each affected Indemnified Party from all
liability arising out of such claim, action, suit or proceeding.

 

2.                    Promptly after
receipt by an Indemnified Party of notice of any complaint or the commencement
of any action or proceeding with respect to which indemnification may be sought
hereunder, such Indemnified Party shall notify the Company in writing of such
complaint or of the commencement of such action or proceeding, but failure to
so notify the Company will not relieve the Company from any liability which it
may have hereunder or otherwise, except to the extent that such failure results
in the Company’s forfeiture of or material prejudice to any substantial rights
or defenses.  If the Company so elects
or is requested by such Indemnified Party, the Company will assume the defense
of such action or proceeding, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and the payment of the fees and
disbursements of such counsel.  Each
Indemnified Party shall have the right to employ separate counsel in any such
action or proceeding and to participate in the defense thereof, but the fees
and expenses of such separate counsel shall be at the expense of such
Indemnified Party unless (a) the employment thereof has been specifically
authorized by the Company; (b) the Company has failed to promptly assume the
defense and employ counsel reasonably acceptable to such Indemnified Party; or
(c) the named parties, or parties threatened to be named, to any such action or
proceeding (including any impleaded parties or parties threatened to be
impleaded) include both such Indemnified Party and the Company, and such
Indemnified Party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional
to those available to the Company (in each of which cases such Indemnified
Party shall have the right to employ its own counsel and in each of such cases
any fees and expenses of such counsel shall be paid by the Company).  The Company shall pay the fees and expenses
of legal counsel engaged in accordance with the foregoing provisions promptly
after such fees and expenses are invoiced.

 

3.                    In the event
that an Indemnified Party is requested or required to appear as a witness
(including through depositions) in any action or proceeding brought by or on
behalf of, or against, the Company in which such Indemnified Party is not named
as a defendant, the Company agrees to reimburse Petro Capital or the
Indemnified Party, as the case may be, for all expenses incurred by it in
connection with such Indemnified Party’s appearing and preparing to appear as
such a witness, including, without limitation, the fees and disbursements of
its legal counsel.

 

4.                    If for any
reason (other than as specified in the second sentence of Paragraph 1 above)
the foregoing indemnification provisions are held by a court to be unavailable
to an Indemnified Party or insufficient to hold any Indemnified Party harmless
in respect of any losses, claims, damages, liabilities or expenses (or actions
in respect thereof) referred to herein, then the Company and Petro Capital
shall contribute to the amount paid or payable by any of the Indemnified
Parties as a result of such claim, damage, loss, liability or expense in such
proportion as is appropriate to reflect not only the relative benefits received
by the Company, on the one hand, and Petro Capital, on the other hand, in
connection with Petro Capital’s engagement referred to above, but also the
relative fault of the Company, on the one hand, and

 

8

 

Petro Capital,
on the other hand, as well as any relevant equitable considerations; provided,
that Petro Capital’s obligation to make contribution will not exceed under any
circumstances the amount of fees actually received by Petro Capital from the
Company pursuant to the Agreement.  The
relative benefits received by the Company, on the one hand, and Petro Capital,
on the other hand, shall be deemed to be in the same proportions as (i) the
total value paid or proposed to be paid or received or proposed to be received
by the Company or its stockholders pursuant to the transaction, whether or not
consummated, for which Petro Capital is engaged to render financial advisory services
bears to (ii) the fee paid or proposed to be paid to Petro Capital in
connection with the Agreement.  The
relative fault of the Company, on the one hand, and Petro Capital, on the other
hand, shall be determined by reference to, among other things, the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent the alleged act, statement or omission giving rise to such loss, claim,
damage, liability or expense.  The
Company and Petro Capital agree that it would not be just and equitable if
contribution were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above.  The amount paid or payable by
an Indemnified Party as a result of the losses, claims, damages, liabilities or
expense (or actions in respect thereof) referred to above shall be deemed to
include any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such claim.

 

5.                    The foregoing
indemnification, reimbursement and contribution obligations of the Company
shall be (i) in addition to any rights that any Indemnified party may have at
common law or otherwise, and (ii) APPLICABLE, TO THE EXTENT SET FORTH ABOVE, REGARDLESS
OF WHETHER SOLE OR CONCURRENT NEGLIGENCE (BUT NOT GROSS NEGLIGENCE), STRICT
LIABILITY OR VICARIOUS LIABILITY OF ANY INDEMNIFIED PARTY IS ALLEGED OR PROVEN.  No investigation or failure to investigate
by an Indemnified Party shall impair the foregoing indemnification and
contribution obligations of the Company or any right an Indemnified Party may
have.  The Company acknowledges and
agrees that Petro Capital has been retained to provide certain services to the
Company more specifically described in the Agreement.  In such capacity, Petro Capital shall act as an independent
contractor, and any duties of Petro Capital arising out of its engagement
pursuant to the Agreement shall be owed solely to the Company.

 

It is understood that, in connection with Petro Capital’s
above-mentioned engagement, Petro Capital may also be engaged to act in one or
more additional capacities, and that the terms of the original engagement or
any such additional engagement may be embodied in one or more separate written
agreements. The foregoing indemnification provisions shall apply to the
original engagement, any such additional engagement and any modification of the
original engagement or such additional engagement and shall remain in full
force of effect following the completion or termination of Petro Capital’s
engagement(s).

 

9Exhibit 10.48

 

Petro Capital Advisors, LLC

1845 Woodall Rodgers Freeway

Ste 1700

Dallas, Texas 75201

 

	
   

  	
  October 18, 2003

  

 

Beta Oil & Gas, Inc.

6120 S. Yale

Suite 813

Tulsa, OK 74136

 

	
  Attention:

  	
  Mr. David Wilkins

  
	
   

  	
  President and Chief Executive Officer

  

 

Dear David:

 

Reference is made to the engagement letter between Beta Oil & Gas,
Inc. (the “Company”) and its collective subsidiaries (the “Company”) and Petro
Capital Advisors, LLC (“Petro Capital”) dated as of July 9, 2003 (the
“Engagement Letter”).   The purpose of
this letter agreement is to amend certain enumerated portions of the Engagement
Letter only with respect to the proposed transaction between PetroHawk Energy,
LLC and the Company, whereby PetroHawk Energy, LLC proposes to purchase from
the Company $25 million of Company common stock at $1.65 per share, $35 million
of Company convertible subordinated debt having an 8% interest rate and a $2.00
per share conversion price, and warrants to purchase 10 million shares of
Company common stock having a $1.65 per share exercise price (the “PetroHawk
Transaction”).  Any other transaction,
or any transaction with PetroHawk Energy, LLC that is materially different from
the PetroHawk Transaction, shall be governed by the original terms of the
Engagement Letter.

 

The Company and Petro Capital hereby acknowledge that the PetroHawk
Transaction and similar transactions shall be governed by the Engagement
Letter.  The Company and Petro Capital
hereby agree to amend paragraph 2A of the Engagement Letter to replace the
reference to “$50,000” with “$100,000.” 
Further, the Company and Petro Capital hereby agree to amend paragraph
2B of the Engagement Letter by deleting the first sentence of such paragraph 2B
in its entirety, and replacing it with the following sentence: “In connection
with any merger or acquisition transaction, a transaction fee equal to 3% of
the Aggregate Consideration (as defined below) paid or received; provided,
however, that the minimum transaction fee payable to Petro Capital pursuant to
this sentence shall be $75,000; provided, further, that in
connection with the PetroHawk Transaction, Petro Capital shall receive a
transaction fee equal to $600,000.”   It
is expected that transaction related expenses reimburseable under the
Engagement Letter will be approximately $10,000, including expenses of Haynes
& Boone law firm which Petro Capital has

 

1

 

retained with your
permission.  As such, The Company and
Petro Capital hereby agree to amend paragraph 2D of the Engagement Letter to
replace the reference to “$2,500” with “$10,000.”   Finally, the Company and Petro Capital hereby agree that the
$6,250.00 monthly financial advisory fee payable pursuant to paragraph 2A of
the engagement letter shall terminate on the second day of the month following
final closing of the PetroHawk Transaction.

 

It is agreed that all other terms of the Engagement Letter not
expressly described herein shall remain in full force and effect, including the
Indemnification Provisions referenced in paragraph 4 of the Engagement Letter.

 

Please confirm that the foregoing is in accordance with your
understanding by signing and returning to us the enclosed duplicate of this
letter, which shall thereupon constitute a binding agreement between Petro
Capital and the Company.

 

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  PETRO CAPITAL ADVISORS, LLC

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  October 18,2003

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rosser C. Newton

  	
   

  
	
   

  	
   

  	
  Rosser C. Newton

  	
   

  
	
   

  	
   

  	
  Managing Director

  	
   

  
						

 

	
  ACCEPTED AND AGREED TO:

  
	
  BETA OIL & GAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  October 21, 2003

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/David A. Wilkins

  	
   

  
	
   

  	
  David A. Wilkins

  
	
   

  	
  President, CEO

  
						

 

2

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