SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant:
Filed by a Party other than the Registrant:
Check the appropriate box:
____________________________________________________________________________
Preliminary Proxy Statement Confidential, for Use of
x Definitive Proxy Statement the Commission Only (as
Definitive Additional Materials permitted by Rule 14a-
6(e)(2))
____________________________________________________________________________
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COTTON VALLEY RESOURCES CORPORATION
____________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
Not Applicable
____________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
____________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
____________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
____________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
(5) Total fee paid:
____________________________________________________________________________
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
____________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
____________________________________________________________________________
(3) Filing Party:
____________________________________________________________________________
(4) Date Filed:
____________________________________________________________________________
<PAGE>
COTTON VALLEY RESOURCES CORPORATION
6510 Abrams Road, Suite 300, Dallas, Texas 75231
____________________________
PROXY STATEMENT
for the
SPECIAL MEETING OF SHAREHOLDERS
to be held June 29, 1999
____________________________
SOLICITATION AND REVOCABILITY OF PROXIES
A Proxy in the accompanying form is being solicited by the Board of
Directors of Cotton Valley Resources Corporation (the "Company" or the
"Corporation") for use at the Company's Special Meeting of Shareholders (the
"Meeting") to be held at 6510 Abrams Road, Suite 300, Dallas, Texas 75231, at
10:00 A.M., Central Daylight Time, on June 29, 1999, and at any adjournment
thereof. The Company will bear the cost of such solicitation. Proxies,
together with copies of this Proxy Statement, are being mailed to shareholders
of the Company on or about May 27, 1999.
The persons named in the enclosed form of proxy are directors or officers
of the Corporation.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING OTHER
THAN THE PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY. SUCH RIGHT MAY BE
EXERCISED BY STRIKING OUT THE NAMES OF THE PERSONS DESIGNATED IN THE ENCLOSED
FORM OF PROXY AND BY INSERTING IN THE BLANK SPACE PROVIDED FOR THAT PURPOSE THE
NAME OF THE DESIRED PERSON OR BY COMPLETING ANOTHER PROPER FORM OF PROXY AND, IN
EITHER CASE, DELIVERING THE COMPLETED AND EXECUTED PROXY TO THE CORPORATION
BEFORE THE TIME OF THE MEETING OR ANY ADJOURNMENT THEREOF.
A shareholder forwarding the enclosed proxy may indicate the manner in
which the appointee is to vote with respect to any specific item by checking the
appropriate space. If the shareholder giving the proxy wishes to confer a
discretionary authority with respect to any item of business, then the space
opposite the item is to be left blank. The shares represented by the proxy
submitted by a shareholder will be voted in accordance with the directions, if
any, given in the proxy. A shareholder who has given a proxy may revoke it at
any time in so far as it has not been exercised. A proxy may be revoked, as to
any matter on which a vote shall not already have been cast, pursuant to the
authority conferred by such proxy, by instrument in writing executed by the
shareholder or by his attorney authorized in writing or, if the shareholder is a
body corporate, by an officer or attorney thereof duly authorized, and deposited
either at the registered office of the Corporation at any time up to and
including the last business day preceding the day of the Meeting, or any
adjournment thereof, at which the proxy is to be used or with the Chairman of
such Meeting on the day of the Meeting or any adjournment thereof, and upon
either of such deposits the proxy is revoked. A proxy may also be revoked in any
other manner permitted by law.
A Proxy, when executed and not revoked, will be voted in accordance with
the instructions thereon. In the absence of specific instructions, Proxies will
be voted by the individuals named in this Proxy "FOR" the proposal to authorize
the issuance during fiscal years 1999 and 2000 of up to fifteen million
additional Common Shares for equity capital in private placements approved by
the Board of Directors, "FOR" the proposal to authorize the issuance during
fiscal years 1999 and 2000 of up to twenty-five million additional Common Shares
for acquisitions and/or mergers approved by the Board of Directors, and, in
accordance with their best judgment, on all other matters that may properly come
before the meeting.
<PAGE>
VOTING SECURITIES AND QUORUM
The authorized capital of the Corporation consists of an unlimited number
of common shares (the "Common Shares") and an unlimited number of preference
shares. On May 1, 1999, an aggregate of 22,733,198 Common Shares and no
preference shares were issued and outstanding. Each Common Share entitles the
holder thereof to one (1) vote at all meetings of shareholders of the
Corporation.
The presence, in person, of two (2) individual holders of Common Shares is
necessary to constitute a quorum at the meeting. Each holder of Common Shares
will be entitled to one vote per share held. The Articles of Amalgamation of
the Company do not provide for cumulative voting rights.
All holders of Common Shares of the Corporation of record as at May 25,
1999 (the "Record Date") are entitled either to attend the meeting and vote
thereat in person the shares held by them, or provided a completed and executed
proxy shall have been delivered to the Corporation, to attend and vote thereat
by proxy the shares held by them.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Shares as of May 1, 1999, by (i) each person
who beneficially owns more than 5% of all outstanding Common Shares, (ii) each
director and executive officer, and (iii) all directors and executive officers
as a group. Except as otherwise indicated, all persons listed below have (a)
sole voting power and investment power with respect to their Common Shares
except to the extent that authority is shared by spouses under applicable law,
and (b) record or beneficial ownership of their shares.
Name Amount and
Nature of Percentage
Beneficial of
Ownership Ownership
------------------------------------------------------
Eugene A. Soltero (1) 4,394,333(3) 18.85%
James E. Hogue (1) 4,594,333(4) 19.88%
Wayne T. Egan (2) 78,000(5) *
John M. Haley, M.D. 290,000 1.28%
Anne Holland 70,000 *
HBK Investments L.P. 1,170,806(6) 5.15%
Liviakis Financial 3,041,851(7) 13.03%
Communications, Inc.
All directors and executive
officers as a group (five
persons) 9,401,666(8) 39.58%
__________________________
*Less than 1%.
(1) Mr. Soltero is the Chairman of the Board, a director, Chief Executive
Officer and Chief Financial Officer of the Company and Mr. Hogue is a
director, President and Chief Operating Officer of the Company. Messrs.
Soltero and Hogue may be deemed promoters of the Company. The address
of Messrs. Soltero and Hogue is 6510 Abrams Road, Suite 300, Dallas,
Texas 75231
(2) Mr. Egan is a director of the Company. The address of Mr. Egan is Weir
& Foulds, Suite 1600, 2 First Canadian Place, Toronto, Ontario, Canada
M5X 1J5.
(3) Includes 583,333 Common Shares subject to employee stock options and the
following shares, beneficial ownership of which is disclaimed: 710,000
Common Shares owned by the Soltero Family Limited Partnership, 36,000
Common Shares held by Mr. Soltero's wife and approximately 3,000,000
shares, which represents 50% of the 6,000,000 shares owned by others
subject to a voting trust agreement and voting covenants under certain
agreements.
(4) Includes 583,333 Common Shares subject to employee stock options and the
following shares, beneficial ownership of which is disclaimed: 740,000
Common Shares owned by the Hogue Family Limited Partnership, 231,000
Common Shares held by Mr. Hogue's wife and approximately 3,000,000
shares, which represents 50% of the 6,000,000 shares owned by others
subject to a voting trust agreement and voting covenants under certain
agreements.
(5) Includes 20,000 Common Shares subject to employee stock options.
(6) Includes 702,484 Common Shares held by Montrose Investments Ltd., over
which HBK Investments L.P. has sole voting and dispositive power and
68,322 shares held by Westover Investments L.P., over which HBK
Investments L.P. has shared voting and dispositive power.
(7) Includes 611,351 shares issuable upon exercise of warrants held by
Liviakis Financial Communications, Inc, ("LFC") and does not include
150,000 Common Shares issuable upon exercise of warrants and 125,000
shares owned by Robert B. Prag, an officer of LFC. The address of LFC
is 2420 "K" Street, Sacramento, California 95816.
(8) Includes approximately 6 million shares subject to a voting trust
agreement and voting covenants under certain agreements.
<PAGE>
Voting Agreements
Under the terms of a Voting Trust Agreement (the "Voting Agreement"),
unaffiliated parties that transferred their interests in certain properties to
the Company in exchange for securities provided a power of attorney to Eugene A.
Soltero and James E. Hogue to vote approximately 3.28 million Common Shares held
by such property contributors in Messrs. Soltero's and Hogue's discretion
between January 1, 1996, and January 1, 2001. The Voting Agreement expires with
respect to the Common Shares transferred by any property contributor to an
unaffiliated third party. The Company believes that as of May 1, 1999,
approximately 2.5 million Common Shares were subject to the Voting Agreement.
Liviakis Financial Communications, Inc. ("LFC") and its beneficial holders
have agreed that, with respect to any Common Shares acquired by them pursuant to
a consulting agreement with the Company entered into during November 1997, they
will vote such Common Shares for a period of five years for directors nominated
by Messrs. Hogue and Soltero. Approximately 1.9 million shares are currently
subject to this agreement.
Pursuant to the terms of a definitive acquisition agreement, the four
previous shareholders of Aspen Energy Corporation, a wholly-owned subsidiary of
the Company, agreed, for a period of five years, to vote their Common Shares for
directors nominated by Messrs. Hogue and Soltero. Approximately 1.6 million
shares are currently subject to this agreement.
Section 16(a) Beneficial Ownership Reporting Compliance
Except for Form 3 "Initial Statement of Beneficial Ownership of
Securities", which filing was due in December 1998, from each of John Haley and
Anne Holland, the two recent additions to the board of directors, the Company
is not aware of any transactions in its outstanding securities by or on behalf
of any director, executive officer or 10% holder of the Common Shares, which
would require the filing of any report pursuant to Section 16(a) that was not
filed with the Company.
PROPOSAL 1--AUTHORIZATION OF THE BOARD TO ISSUE
UP TO FIFTEEN MILLION COMMON SHARES FOR NEW CAPITAL
The Shareholders of the Corporation are being asked to consider and, if
thought advisable, approve, confirm and ratify, by means of an ordinary
resolution in the form attached to this Proxy Statement as Exhibit 1, the
authorization for the Board of Directors to approve the issuance of up to
fifteen million (15,000,000) Common Shares to be issued in connection with
private placements for cash during the remainder of fiscal year 1999 and during
fiscal year 2000.
As a company subject to the rules of the Canadian Dealing Network, the
Corporation is required to have shareholder approval before completing the
issuance of more than 25% of its outstanding Common Shares. Because the nature
of investor interest and market timing, a private placement might be available
on short notice, but not be available if the investor had to wait the normal 60
days to have a vote of shareholders. The Corporation seeks approval from its
shareholders at this time to issue up to fifteen million Common Shares for one
or more private placements for cash where the Board of Directors deems such
private placement(s) to be in the best interests of the Corporation.
Accordingly, the shareholders are urged to give authority to the Board of
Directors to act upon private placement opportunities at hand by voting in
favour of the resolution. Unless otherwise specified, the persons named in the
enclosed form of proxy will vote FOR the resolution.
PROPOSAL 2-AUTHORIZATION OF THE BOARD TO ISSUE
UP TO TWENTY-FIVE MILLION COMMON SHARES FOR ACQUISITIONS
The Shareholders of the Corporation are being asked to consider and, if
thought advisable, approve, confirm and ratify, by means of an ordinary
resolution in the form attached to this Proxy Statement as Exhibit 2, the
authorization for the Board of Directors to approve the issuance of up to
twenty-five million (25,000,000) Common Shares to be issued in connection with
acquisitions of companies, properties and/or other assets during the remainder
of fiscal year 1999 and during fiscal year 2000.
Following the closing of an exchange transaction between the Corporation
and the holders of its 7% Secured Convertible Debentures in March 1999, the
management of the Corporation has intensified its program to seek a merger with,
or acquisition of, one or more other companies inside and outside the petroleum
industry, where such a combination would seek to enhance overall shareholder
value.
<PAGE>
As a company subject to the rules of the Canadian Dealing Network, the
Corporation is required to have shareholder approval before completing the
issuance of more than 25% of its outstanding Common Shares. The nature of
corporate and property acquisitions for small companies is such that many
transactions contemplated and even contracted will frequently not be completed
and closed due to discrepancies found during final due diligence or other
unrelated reasons. Therefore, the Corporation seeks approval from its
shareholders at this time to issue up to twenty-five million Common Shares for
one or more acquisitions where the Board of Directors deems such acquisition(s)
to be in the best interests of the Corporation. By way of example, during
calendar year 1998 the Corporation entered into three separate acquisition
agreements in the range of $4 million to $7 million which were not completed.
If each of those had been for Common Shares at the current market price, a
separate vote of shareholders would have been required for each transaction.
Besides the large cost of preparing and distributing documents for a shareholder
vote on an acquisition, the notice and waiting periods could preclude the
Corporation from several viable opportunities. Accordingly, the shareholders
are urged to give authority to the Board of Directors to act upon acquisition
opportunities at hand by voting in favour of the resolution. Unless otherwise
specified, the persons named in the enclosed form of proxy will vote FOR the
resolution.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be brought
before the meeting. If any other matters, however, are properly brought before
the meeting, the persons named in the enclosed Proxy will have discretionary
authority to vote all Proxies with respect to such matters in accordance with
their best judgment.
By Order of the Board of Directors
/S/ Eugene A. Soltero
Eugene A. Soltero
Chairman of the Board and Chief
Executive Officer
<PAGE>
EXHIBIT 1
Text of Ordinary Resolution to
Authorize the Issuance of up to Fifteen Million Common
Shares for Private Placements
WHEREAS the Corporation has presently embarked upon a program to seek
additional capital to retire debt and develop its properties, with a view to
enhancing shareholder value;
AND WHEREAS the Corporation wishes to have authority to issue up to
fifteen million (15,000,000) Common Shares of the Corporation to facilitate one
or more private placements of Common Shares;
AND WHEREAS as a listed company on The Canadian Dealing Network, the
Corporation must seek shareholder approval before completing the issuance of
more than 25% of its outstanding common shares;
NOW THEREFORE BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:
1. The issuance by the Corporation of up to fifteen million (15,000,000)
Common Shares during fiscal years 1999 and 2000 in connection with one or
more private placements for cash to be sought out and negotiated by
management of the Corporation with the approval of the board of directors
of the Corporation with a view to enhancing shareholder value, be and the
same is hereby authorized, approved and consented to; and
2. any one director or officer of the Corporation, upon further
authorization by the board of directors of the Corporation, be and is
hereby authorized and directed for or on behalf of the Corporation to
execute, whether under the corporate seal or otherwise, and to deliver
all such documents and to do all such other acts and things as such
director or officer may consider necessary or desirable in order to give
full effect to the foregoing.
EXHIBIT 2
Text of Ordinary Resolution to
Authorize the Issuance of up to Twenty-Five Million
Common Shares for Acquisitions and Mergers
WHEREAS the Corporation has presently embarked upon a program to seek
a merger with, or acquisition of, one or more other companies inside and outside
the petroleum industry, with a view to enhancing shareholder value;
AND WHEREAS the Corporation wishes to have authority to issue up to
twenty-five million (25,000,000) Common Shares of the Corporation to facilitate
a merger or acquisition;
AND WHEREAS as a listed company on The Canadian Dealing Network, the
Corporation must seek shareholder approval before completing the issuance of
more than 25% of its outstanding common shares;
NOW THEREFORE BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:
1. The issuance by the Corporation of up to twenty-five million (25,000,000)
Common Shares during fiscal years 1999 and 2000 in connection with one or
more acquisitions or mergers to be sought out and negotiated by
management of the Corporation with the approval of the board of directors
of the Corporation with a view to enhancing shareholder value, be and the
same is hereby authorized, approved and consented to; and
2. any one director or officer of the Corporation, upon further
authorization by the board of directors of the Corporation, be and is
hereby authorized and directed for or on behalf of the Corporation to
execute, whether under the corporate seal or otherwise, and to deliver
all such documents and to do all such other acts and things as such
director or officer may consider necessary or desirable in order to give
full effect to the foregoing.
<PAGE>
COTTON VALLEY RESOURCES CORPORATION
6510 Abrams Road, Suite 300, Dallas, Texas 75231
FORM OF PROXY SOLICITED BY THE
MANAGEMENT OF COTTON VALLEY RESOURCES CORPORATION
FOR USE AT THE SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD ON June 29, 1999
The undersigned shareholder(s) of COTTON VALLEY RESOURCES CORPORATION (the
"Corporation") hereby appoint(s) in respect of all of his or her shares of the
Corporation, EUGENE A. SOLTERO, Chief Executive Officer, Chairman of the Board
and a director of the Corporation, or failing him, JAMES E. HOGUE, President,
Chief Operating Officer and a director of the Corporation, or in lieu of the
foregoing _______________________________________, as nominee of the
undersigned, with power of substitution, to attend, act and vote for the
undersigned at the special meeting (the "Meeting") of shareholders of the
Corporation to be held on the 29th day of June, 1999, and any adjournment or
adjournments thereof, and direct(s) the nominee to vote the shares in the manner
indicated below:
1. TO VOTE FOR ( ) AGAINST ( ) ABSTAIN ( ) Proposal 1--Ordinary
resolution authorizing the directors of the Corporation to issue up to
fifteen million Common Shares to facilitate one or more private placements
for cash approved by the board of directors.
2. TO VOTE FOR ( ) AGAINST ( ) ABSTAIN ( ) Proposal 2--Ordinary
resolution authorizing the directors of the Corporation to issue up to
twenty-five million Common Shares to facilitate one or more mergers or
acquisitions approved by the board of directors.
If any amendments or variations to matters identified in the Notice of the
Meeting are proposed at the Meeting or if any other matters properly come before
the Meeting, this proxy confers discretionary authority to vote on such
amendments or variations or such other matters according to the best judgment of
the person voting the proxy at the Meeting.
DATED the ______ day of ______________, 1999.
Signature of Shareholder(s)
_____________________________________
Print Name:
NOTES:
(1) This form of proxy must be dated and signed by the appointor or his or her
attorney authorized in writing or, if the appointor is a body corporate,
this form of proxy must be executed by an officer or attorney thereof duly
authorized. If the proxy is not dated, it will be deemed to bear the date
on which it was mailed.
(2) The shares represented by this proxy will be voted or withheld from voting
in accordance with the instructions of the shareholder on any ballot that
may be called for.
(3) A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO ATTEND AND ACT FOR HIM OR HER AND ON HIS OR HER BEHALF AT
THE MEETING OTHER THAN THE PERSONS DESIGNATED IN THIS FORM OF PROXY. SUCH
RIGHT MAY BE EXERCISED BY STRIKING OUT THE NAMES OF THE PERSONS DESIGNATED
IN THIS FORM OF PROXY AND BY INSERTING IN THE BLANK SPACE PROVIDED FOR THAT
PURPOSE THE NAME OF THE DESIRED PERSON OR BY COMPLETING ANOTHER FORM OF
PROXY AND, IN EITHER CASE, DELIVERING THE COMPLETED AND EXECUTED PROXY TO
THE CORPORATION AT 6510 ABRAMS ROAD, SUITE 300, DALLAS, TEXAS 75231, AT
ANY TIME PRIOR TO 4:00 P.M. (DALLAS TIME) ON THE 28th DAY OF JUNE, 1999.
(4) IN THE ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE PERSONS NAMED IN THIS
PROXY WILL VOTE FOR EACH OF THE MATTERS IDENTIFIED IN THIS PROXY.
(5) This proxy ceases to be valid one year from its date.
(6) If your address as shown is incorrect, please give your correct address
when returning this proxy.
(7) THIS PROXY SHOULD BE FOLDED, STAPLED, STAMPED AND MAILED TO ONE OF THE TWO
ADDRESSES ON THE REVERSE SIDE. CANADIAN AND EUROPEAN RESIDENTS SHOULD USE
THE TORONTO ADDRESS. UNITED STATES RESIDENTS SHOULD USE THE DALLAS
ADDRESS.
<PAGE>
Return Address:
____________________________
____________________________
____________________________
COTTON VALLEY RESOURCES CORPORATION
6510 ABRAMS ROAD, SUITE 300
DALLAS, TEXAS 75231
ATTN: SCRUTINEER
- ----------------------------------Fold Here---------------------------
- ------------------------------------------Fold Here------------------------
Return Address:
____________________________
____________________________
____________________________
EQUITY TRANSFER SERVICES, INC.
RICHMOND ADELAIDE CENTRE
TORONTO, ONTARIO M5H 3V1
ATTN: MS. LOUISA ROBERTO
