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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 5 )*
COTTON VALLEY RESOURCES CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
221905-10-2
- --------------------------------------------------------------------------------
(CUSIP Number)
John M. Liviakis, 2420 "K" St., #220, Sacramento, CA 95816, (916) 448-6084
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 6, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED
IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY
VALID OMB CONTROL NUMBER.
SEC 1746 (2-98)
<PAGE> 2
CUSIP No. 221905-10-2 Page 2 of 23
1. Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only).
Liviakis Financial Communications, Inc. 68-0311399
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2. Check the Appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ X ]
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3. SEC Use Only
---------------------------------------------------------------------
4. Source of Funds (See Instructions)
OO, WC, AF
---------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
---------------------------------------------------------------------
6. Citizenship or Place of Organization
California
---------------------------------------------------------------------
7. Sole Voting Power
Number of 2,870,851
Shares --------------------------------------------------------
Beneficially 8. Shared Voting Power
Owned by 0
Each --------------------------------------------------------
Reporting 9. Sole Dispositive Power
Person With 2,870,851
--------------------------------------------------------
10. Shared Dispositive Power
0
--------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,870,851
---------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [X]
---------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
15.8%
---------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
CO
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<PAGE> 3
CUSIP No. 221905-10-2 Page 3 of 23
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
John M. Liviakis
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2. Check the Appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ X ]
---------------------------------------------------------------------
3. SEC Use Only
---------------------------------------------------------------------
4. Source of Funds (See Instructions)
PF, AF, OO
---------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
---------------------------------------------------------------------
6. Citizenship or Place of Organization
United States
---------------------------------------------------------------------
7. Sole Voting Power
Number of 171,000
Shares --------------------------------------------------------
Beneficially 8. Shared Voting Power
Owned by 2,870,851
Each --------------------------------------------------------
Reporting 9. Sole Dispositive Power
Person With 171,000
--------------------------------------------------------
10. Shared Dispositive Power
2,870,851
--------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,041,851
---------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [X]
---------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
16.7%
---------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
---------------------------------------------------------------------
<PAGE> 4
CUSIP No. 221905-10-2 Page 4 of 23
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Robert B. Prag
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2. Check the Appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ X ]
---------------------------------------------------------------------
3. SEC Use Only
---------------------------------------------------------------------
4. Source of Funds (See Instructions)
PF, AF, OO
---------------------------------------------------------------------
5. Check if the Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
---------------------------------------------------------------------
6. Citizenship or Place of Organization
United States
---------------------------------------------------------------------
7. Sole Voting Power
Number of 275,000
Shares --------------------------------------------------------
Beneficially 8. Shared Voting Power
Owned by 2,870,851
Each --------------------------------------------------------
Reporting 9. Sole Dispositive Power
Person With 275,000
--------------------------------------------------------
10. Shared Dispositive Power
2,870,851
--------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
3,145,851
---------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [X]
---------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
17.1%
---------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
---------------------------------------------------------------------
<PAGE> 5
CUSIP No. 221905-10-2 Page 5 of 23
1. Names of Reporting Persons
I.R.S. Identification Nos. of above persons (entities only)
Renee A. Liviakis
---------------------------------------------------------------------
2. Check the Appropriate Box if a Member of a Group (a) [ ]
(See Instructions) (b) [ X ]
---------------------------------------------------------------------
3. SEC Use Only
---------------------------------------------------------------------
4. Source of Funds (See Instructions)
AF, OO
---------------------------------------------------------------------
5. Check if Disclosure of Legal Proceedings
is Required Pursuant to Items 2(d) or 2(e)
---------------------------------------------------------------------
6. Citizenship or Place of Organization
United States
---------------------------------------------------------------------
7. Sole Voting Power
Number of 0
Shares --------------------------------------------------------
Beneficially 8. Shared Voting Power
Owned by 2,870,851
Each --------------------------------------------------------
Reporting 9. Sole Dispositive Power
Person With 0
--------------------------------------------------------
10. Shared Dispositive Power
2,870,851
--------------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
2,870,851
---------------------------------------------------------------------
12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions) [X]
---------------------------------------------------------------------
13. Percent of Class Represented by Amount in Row (11)
15.8%
---------------------------------------------------------------------
14. Type of Reporting Person (See Instructions)
IN
---------------------------------------------------------------------
<PAGE> 6
Page 6 of 23
1. SECURITY AND ISSUER.
The title of the class of equity securities to which this amended
statement relates is common stock (the "Common Stock") issued by Cotton Valley
Resources Corporation, an Yukon, Canada corporation (the "Corporation"). The
principal offices of the Corporation are located at 6510 Abrams Road, Suite 300,
Dallas, Texas 75231.
2. IDENTITY AND BACKGROUND.
This amended statement is filed by Liviakis Financial Communications,
Inc., a California corporation ("LFC"), John M. Liviakis ("JML"), Robert B. Prag
("RBP"), and Renee A. Liviakis ("RAL"). LFC's principal business is as a
consultant in the areas of investor communications, financial and investor
public relations and corporate finance. LFC's principal business and principal
office address is 2420 "K" Street, Suite 220, Sacramento, California 95816.
LFC's President is JML, its Senior Vice President is RBP, and its
Treasurer, Chief Financial Officer and Secretary is RAL. JML, RBP and RAL are
the only executive officers of LFC. The activities associated with these
positions constitute the principal occupation and employment of JML, RBP and
RAL, respectively. JML, RBP and RAL are LFC's only directors, and JML and RAL
are its sole stockholders. JML, RBP and RAL are citizens of the United States,
and their business address is LFC's principal business address listed above.
During the last five years, none of LFC, JML, RBP and RAL has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and during such period none of them has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, the
result of which was to subject such person to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Consulting Agreement (the "Consulting Agreement")
effective as of November 7, 1996 by and between the Corporation and Liviakis
Financial Communications, Inc. ("LFC"), the Corporation agreed to issue to LFC
an aggregate of 1,490,000 shares of the Corporation's Common Stock ("Common
Stock"), all of which were issued to LFC between February 7, 1997 and October
21, 1997.
The Consulting Agreement also (i) granted LFC the right, which LFC has
exercised in its entirety, to purchase 375,000 units ("Units"), each consisting
of one share of Common Stock and one stock purchase warrant (a "Unit Warrant"),
entitling
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Page 7 of 23
the holder thereof to acquire one share of Common Stock at an exercise price of
One Dollar and Ten Cents Canadian (CDN$1.10) during the period commencing on
January 2, 1998 and terminating on November 7, 2001, and (ii) granted Robert B.
Prag ("RBP") the right, which RBP has exercised in its entirety, to purchase
125,000 Units.
Pursuant to the Consulting Agreement, LFC performed certain investor
communications, financial and investor public relations, corporate finance and
related services for the Corporation from November 7, 1996 through January 2,
1998. Pursuant to a December 3, 1997 letter from the Corporation to LFC (the
"Extension Letter"), the consulting arrangement between the Corporation and LFC
was extended through March 31, 1998. Copies of the Consulting Agreement, the
form of certificate representing the Unit Warrants, and the Extension Letter are
Exhibits "1", "2" and "6", respectively, to this Schedule 13D, as amended.
LFC has purchased 334,500 shares of Common Stock in open market
transactions from January through July, 1997. JML has purchased 171,000 shares
of Common Stock in open market transactions from June through August, 1997.
On June 30, 1997, LFC advanced to the Corporation $579,000 pursuant to a
9% Convertible Secured Promissory Note (the "Note") dated June 24, 1997. Amounts
outstanding under the Note were originally due on October 24, 1997, which
maturity date the Corporation extended pursuant to the terms of the Note to
November 24, 1997. The outstanding principal amount of the Note together with
accrued but unpaid interest were convertible by LFC into shares of Common Stock
at a conversion price of $1.6667 per share. On or about December 3, 1997, the
Corporation repaid $479,000 of the principal amount of the Note and paid all
interest accrued on the Note, and LFC converted $100,000 principal amount of the
Note into 60,000 shares of Common Stock. A copy of the Note is Exhibit "4" to
Schedule 13D, as amended.
In connection with the loan represented by the Note, the Corporation
issued to LFC warrants (the "Loan Warrants") expiring April 30, 2002 to purchase
161,351 shares of Common Stock at an exercise price of $2.08 per share. A copy
of the certificate representing the form of Loan Warrants is Exhibit "5" to the
Schedule 13D, as amended.
Pursuant to the Extension Letter, the Corporation on February 28, 1998
issued 75,000 and 25,000 Common Share Purchase Warrants (the "Acquisition
Warrants") to LFC and RBP, respectively, as consideration for acquisition advice
rendered by and through LFC. Previously, the Corporation and LFC had orally
amended the Extension Letter to provide that 75% of any Acquisition Warrants
issued pursuant to the Extension Letter would be issued to LFC and 25% of such
Acquisition Warrants would be issued to RBP. The Acquisition Warrants expire
December 31, 2000 and entitle the holder to purchase shares of the Corporation's
Common Stock at an exercise price of $3.50 per
<PAGE> 8
Page 8 of 23
share. A copy of the certificate representing the form of Acquisition Warrants
is Exhibit "7" to the Schedule 13D, as amended.
This Amended Schedule 13D is being filed to report: 2,259,500 shares of
Common Stock owned by LFC, 375,000 shares of Common Stock which LFC has the
right to acquire within the next sixty days through exercise of the Unit
Warrants, 161,351 shares of Common Stock which LFC has the right to acquire
within the next sixty days through exercise of the Loan Warrants, 75,000 shares
of Common Stock which LFC has the right to acquire within the next sixty days
through exercise of the Acquisition Warrants, 171,000 shares of Common Stock
owned by JML, 125,000 shares of Common Stock owned by RBP, 125,000 shares of
Common Stock which RBP has the right to acquire within the next sixty days
through the exercise of the Unit Warrants, and 25,000 shares of Common Stock
which RBP has the right to acquire within the next sixty days through exercise
of the Acquisition Warrants.
Of the 2,259,500 shares of Common Stock owned by LFC, 1,490,000 were
received in consideration of services rendered, and 60,000 were received upon
conversion of $100,000 principal amount of the Note. LFC acquired 375,000 shares
of Common Stock through the purchase of 375,000 Units at a cost of $281,250. LFC
also acquired an aggregate of 334,500 shares of Common Stock through open market
purchases in the over-the-counter market for aggregate consideration of
$680,131, or an average of $2.03 per share. The source of funds LFC used in
purchasing Units and making open market purchases of 135,000 shares of Common
Stock for aggregate consideration of $253,275 was advances by John M. Liviakis
to LFC on an open account basis, payable on demand. The source of funds for the
balance of the open market purchases, as well as the loan to the Corporation
represented by the Note, was LFC's working capital, including working capital
acquired through margin loans provided by Everen Securities, Inc. LFC received
the Loan Warrants in consideration of making the loan represented by the Note.
LFC received the Acquisition Warrants in consideration of services rendered to
the Corporation. In the event LFC acquires additional shares of Common Stock
through the exercise of Unit Warrants, Loan Warrants or Acquisition Warrants, in
open market purchases or otherwise, it would anticipate utilizing its working
capital as its source of funds.
JML acquired an aggregate of 171,000 shares of Common Stock through
open market purchases in the over-the-counter market for aggregate consideration
of $245,780, or an average of $1.44 per share. The source of funds used by JML
in making open market purchases of the 171,000 shares of Common Stock was JML's
personal funds. In the event JML acquires additional shares of Common Stock in
open market purchases or otherwise, he would anticipate utilizing his personal
funds as his source of funds.
<PAGE> 9
Page 9 of 23
The 125,000 shares of Common Stock owned by RBP were acquired through
the purchase of 125,000 Units at a cost of $93,750. The source of funds RBP used
in purchasing Units was RBP's personal funds. RBP received 25,000 Acquisition
Warrants in consideration of services rendered by and through his employer, LFC.
In the event RBP acquires additional shares of Common Stock through the exercise
of Unit Warrants or Acquisition Warrants or otherwise, he would anticipate
utilizing personal funds as his source of funds.
5. INTEREST IN SECURITIES OF THE ISSUER.
LFC has the sole power to direct the vote or disposition of the
2,259,500 shares of Common Stock owned by LFC and expects to have the sole power
to direct the vote or disposition of such of the 611,351 shares of Common Stock
which LFC has the right to acquire within the next sixty days through the
exercise of Unit Warrants, Loan Warrants and Acquisition Warrants as LFC in fact
acquires. Such power is exercised through LFC's directors and officers.
JML has the sole power to direct the vote or disposition of the 171,000
shares of Common Stock owned by JML.
RBP has the sole power to direct the vote or disposition of the 125,000
shares of Common Stock owned by RBP and expects to have the sole power to direct
the vote or disposition of such of the 150,000 shares of Common Stock which RBP
has the right to acquire within the next sixty days through the exercise of Unit
Warrants and Acquisition Warrants as RBP in fact acquires.
The 2,870,851 shares of Common Stock that LFC owns or has the right to
acquire within sixty days of the date hereof, and as to which LFC has or would
have the sole power to direct the vote or disposition, represent approximately
15.8% of that class of securities. The 171,000 shares of Common Stock that JML
owns, and as to which JML has the sole power to direct the vote or disposition,
represent approximately 1.0% of that class of securities. The 275,000 shares of
Common Stock that RBP owns or has the right to acquire within sixty days of the
date hereof, and as to which RBP has or would have the sole power to direct the
vote or disposition, represent approximately 1.5% of that class of securities.
The 3,316,351 shares of Common Stock which LFC, JML and RBP in the aggregate own
or have the right to acquire within sixty days of the date hereof, and as to
which LFC, JML or RBP has or would have the sole power to direct the vote or
disposition, represent approximately 18.1% of that class of securities. In each
case, the calculation of the percentage of the class of Common Stock is based on
the 17,608,278 shares of Common Stock which the Corporation reported in its
Amended Quarterly Report on Form 10-QSB for the quarterly period ended September
30, 1998 as being outstanding as of September 30, 1998.
<PAGE> 10
Page 10 of 23
LFC disclaims any beneficial interest in any shares of Common Stock
owned by JML or RBP or which RBP has the right to acquire. JML and RAL disclaim
any beneficial interest in any shares of Common Stock owned by RBP or which RBP
has the right to acquire. RBP disclaims any beneficial interest in any shares of
Common Stock owned by LFC or JML or which LFC has the right to acquire, except
for such beneficial interest in shares owned by LFC or which LFC has the right
to acquire as may be associated with RBP's service as an officer and director of
LFC.
During the past sixty days, LFC, JML, RBP and RAL have not engaged in
any transactions in Common Stock.
6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Corporation has issued shares of Common Stock to LFC in
consideration for consulting services performed by LFC pursuant to the
Consulting Agreement and has issued Acquisition Warrants to LFC and RBP in
consideration for services performed by or through LFC pursuant to the Extension
Letter. The Corporation has also sold Units to LFC and RBP pursuant to the
Consulting Agreement. In the Consulting Agreement and in the certificates
representing the Unit Warrants and the Loan Warrants, the Corporation grants to
LFC and RBP certain rights to have shares of Common Stock registered under the
Securities Act of 1933, as amended.
Except for the Consulting Agreement, the Loan Warrants, the Unit
Warrants and the Acquisition Warrants, there are no contracts, arrangements,
understandings or relationships between any of the persons named in Item 2 of
the Amended Schedule 13D and any other person with respect to any securities of
the Corporation.
7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 - Consulting Agreement, dated effective as of November 7,
1996, by and between the Corporation and LFC.
Exhibit 2 - Form of Warrant certificate, representing the Unit Warrants.
Exhibit 3 - Joint Filing Agreement of LFC and RBP pursuant to Rule
13d-1(f).
Exhibit 4 - Convertible Secured Promissory Note dated June 24, 1997
issued by the Corporation to LFC.
Exhibit 5 - Certificate for Common Stock Purchase Warrants dated as of
June 24, 1997 issued by the Corporation to LFC, representing the Loan Warrants.
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Exhibit 6 - Letter dated December 3, 1997 from the Corporation to LFC.
Exhibit 7 - Form of Certificate for Common Share Purchase Warrant
representing the Acquisition Warrants.
Exhibit 8 - Joint Filing Agreement among LFC, JML, RBP and RAL pursuant
to Rule 13d-1(f).
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 18, 1998
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ John M. Liviakis
-------------------------------------
John M. Liviakis, President
/s/ John M. Liviakis
------------------------------------------
John M. Liviakis
/s/ Robert B. Prag
------------------------------------------
Robert B. Prag
/s/ Renee A. Liviakis
------------------------------------------
Renee A. Liviakis
<PAGE> 12
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EXHIBIT "6"
December 3, 1997
Mr. John Liviakis
Liviakis Financial Communications, Inc.
2420 K Street, Suite 220
Sacramento, CA 95816
Dear John:
This confirms our understanding reached today that:
1. Liviakis Financial Communications, Inc. ("LFC") will continue to
provide investor relations and financial consulting services to
Cotton Valley through March 31, 1998 for a fee of $5,000 per
month plus approved expenses, plus the 2.5% fee for introduction
of financing sources. A definitive contract, substantially in the
form of the proposed LFC extension agreement, (as modified by
this letter agreement) will be executed later today by the
parties.
2. LFC will also receive an acquisition advice bonus in the amount
of 100,000 warrants exercisable at US$3.50 per share until
December 31, 2000, which will be issued in connection with all
completed Cotton Valley acquisitions between now and the
completion of the LFC contract. (This form of compensation will
allow us flexibility in the income statement treatment of the
value of the warrants.)
3. The contract will provide for an extension through the end of
1998 with the written acknowledgment of both parties and the
agreement of additional warrant and/or stock compensation. (This
extension option will allow you to talk about a one year
arrangement, if you so desire.)
4. LFC will convert $100,000 of its outstanding note to common
shares. Cotton Valley will immediately wire transfer the
outstanding balance of principal and accrued interest.
5. Cotton Valley will retain Jeff Salzwedell as its retail brokerage
community investor relations advisor for the calendar year 1998
(with 30-day notice provisions) for a fee of $3,000 per month to
cover incidental out-of-pocket expenses, including telephone.
Salzwedell will also receive an
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acquisitions advice bonus, vesting monthly, in the amount of
200,000 warrants exercisable at US$3.50 per share until December
31, 2000, which will be issued in connection with all completed
Cotton Valley acquisitions during 1998.
6. The press release announcing the structure of our investor
communications team for next year will include information about
how well LFC as done for us, its role in making a smooth
transition and the allocation of responsibilities for the future
between Salzwedell and Johnson.
If the foregoing correctly sets forth our agreement, please sign in the space
provided below and ask your attorneys to revise the extension agreement.
Sincerely yours,
COTTON VALLEY RESOURCES CORPORATION
/s/ Eugene A. Soltero
- -------------------------------
Eugene A. Soltero
Chairman
ACCEPTED AND AGREED
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
BY: /s/ John M. Liviakis
---------------------------
Name:
Title: President
Date:
<PAGE> 14
Page 14 of 23
EXHIBIT "7"
Warrant Certificate No. M-___
THIS SHARE PURCHASE WARRANT WILL BE VOID AND OF NO VALUE
UNLESS EXERCISED BEFORE 4:30 P.M. (C.S.T.)
ON DECEMBER 31, 2000
COTTON VALLEY RESOURCES CORPORATION
(The "Corporation")
COMMON SHARE PURCHASE WARRANT
THIS IS TO CERTIFY THAT, for value received, _____________________________ (the
"Holder") has the right, upon and subject to the terms and conditions
hereinafter set forth, to subscribe for __________________ (_______) common
shares in the capital of the Corporation (as constituted at the date hereof) at
or any time prior to 4:30 p.m. (Central Standard Time) on December 31, 2000 (the
"Expiration Date"), at and for a subscription price of US$3.50 per common share
(the "Exercise Price").
The right to purchase common shares in the capital of the Corporation may be
exercised prior to the Expiration Date by:
a. surrendering this share purchase warrant to the Corporation at
its registered office in Dallas, Texas; and
b. paying the appropriate subscription price for the common shares
of the Corporation subscribed for either by cash or certified
cheque payable in U.S. dollars;
c. to or to the order of the Corporation.
Upon surrender and payment, the Corporation will issue to the person or persons
named in the subscription form the number of common shares subscribed for and
such persons will be shareholders of the Corporation in respect of such common
shares as at the date of surrender and payment. As soon as practicable after
surrender and payment the Corporation will mail or deliver to such persons at
the address or addresses specified in the subscription form a certificate or
certificates evidencing the common shares subscribed for. If the Holder
subscribes for a lesser number of common shares than the number of common shares
referred to in this share purchase warrant, the Holder shall be entitled to
receive a further share purchase warrant in respect of common shares referred to
in this share purchase warrant but not subscribed
<PAGE> 15
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for. If the Holder transfers all or part of this share purchase warrant, the
Holder and the transferee, as applicable, shall be entitled to a share purchase
warrant of like terms to this share purchase warrant with appropriate changes.
For the purpose of this Warrant, the term "Common Shares" means common shares
without nominal or par value in the capital of the Corporation as constituted on
the date hereof; provided that in the event of a change, subdivision,
redivision, reduction, combination or consolidation thereof or any other
adjustment, or successive such changes, subdivisions, redivisions, reductions,
combinations, consolidations or other adjustments, then subject to the
adjustments, if any, having been made in accordance with the provisions of this
Warrant Certificate, "Common Shares" shall thereafter mean the shares, other
securities or other property resulting from such change, subdivision,
redivision, reduction, combination or consolidation or other adjustment.
This share purchase warrant may be combined with other warrants issued to the
Holder or divided into other share purchase warrants issued to the Holder
provided that no fraction of a share purchase warrant shall be issued by the
Corporation.
Nothing contained herein shall confer on the Holder or any other person any
right to subscribe for or purchase common shares in the capital of the
Corporation at any time subsequent to 4:30 o'clock in the afternoon, Central
Standard Time, on the Expiration Date and from and after such time, this share
purchase warrant and all rights hereunder shall be void and of no value.
This share purchase warrant shall not entitle the Holder to any rights
whatsoever as a shareholder of the Corporation.
In the event of any subdivision or change or subdivisions or changes of the
common shares of the Corporation at any time while this share purchase warrant
is outstanding into a greater number of common shares, the Corporation shall
thereafter deliver, and the Holder shall accept, at the time of purchase of
common shares under this share purchase warrant, in lieu of the number of common
shares in respect of which the right to purchase is then being exercised, such
greater number of common shares of the Corporation as would result from said
subdivision or change or subdivisions or changes had the right of purchase been
exercised before such subdivision or change or subdivisions or changes without
the Holder making any additional payment or giving any other consideration
therefor.
In the event of any consolidation or consolidations of the common shares of the
Corporation at any time while this share purchase warrant is outstanding into a
lesser number of common shares, the Corporation shall thereafter deliver, and
the Holder shall accept, at the time of purchase of common shares under this
share purchase warrant, in lieu of the number of common shares in respect of
which the right to
<PAGE> 16
Page 16 of 23
purchase is then being exercised, such lesser number of common shares of the
Corporation as would result from such consolidation or consolidations had the
right of purchase been exercised before such consolidation or consolidations.
In the event of (a) any reclassification or reclassification of the common
shares of the Corporation, (b) the consolidation, amalgamation or merger of the
Corporation with or into another person, or (c) the transfer of the undertaking
or assets of the Corporation as an entirety or substantially as an entirety at
any time while this share purchase warrant is outstanding, the Corporation shall
thereafter deliver, and the Holder shall accept, at the time of purchase of
common shares under this share purchase warrant the number of shares of the
Corporation of the appropriate class or classes resulting from said
reclassification or reclassification, consolidation, amalgamation or merger or
transfer, as the subscriber would have been entitled to receive in respect of
the number of common shares in respect of which the right of purchase is then
being exercised had the right of purchase been exercised before such
reclassification or reclassification, consolidation, amalgamation or merger or
transfer.
If the Corporation, at any time while this share purchase warrant is
outstanding, shall distribute any class of shares or rights, options, warrants
or convertible or exchangeable securities (other than those referred to above)
or evidence of indebtedness or property to holders of shares in the capital of
the Corporation, the number of shares to be issued by the Corporation under this
share purchase warrant shall, at the time of purchase, be appropriately adjusted
and: (a) in the case of a distribution of any class of shares, evidences of
indebtedness or property, the Holder shall receive in addition to the number of
shares in respect of which the right to purchase is then being exercised, the
aggregate number of shares, evidences of indebtedness or property that the
Holder would have been entitled to receive as a result of such event if, on the
record date thereof, the Holder has been the registered holder of the number of
shares to which the Holder was theretofore entitled upon exercise of the rights
of the Holder hereunder; and (b) In the case of a distribution of rights,
options, warrants or convertible or exchangeable securities (a "Rights
Offering"), the Exercise Price shall be adjusted effective immediately after the
record date on which holders of common shares are determined for the purposes of
the Rights Offering to a price determined by multiplying the Exercise Price in
effect on such record date by a fraction:
1. the numerator of which shall be the aggregate of:
a. the number of common shares outstanding on the record date for
the Rights Offering, and
b. the number determined by dividing (I) the product obtained by
multiplying either (1) the number of common shares issuable upon
exercise of the rights, options or warrants under the Rights
Offering, by the price at which
<PAGE> 17
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each one of such common shares is offered or (2) the maximum
number of common shares for or into which the securities offered
pursuant to the Rights Offering may be exchanged or converted by
the exchange or conversion price of each of such securities so
offered, as the case may be, by (II) the price per share equal to
the average market price of the common shares as determined by
the directors of the Corporation in their discretion, as of the
record date for the Rights Offering; and
c. the denominator of which shall be the aggregate of the number of
common shares outstanding on the record date for the Rights
Offering (A) and the number of common shares offered pursuant to
the Rights Offering or (B) the maximum number of common shares
for or into which the convertible or exchangeable securities
offered pursuant to the Rights Offering may be converted or
exchanged, as the case may be, in both cases after giving effect
to the Rights Offering.
To the extent that such rights, options or warrants are not exercised prior to
the expiry date thereof, the Exercise Price shall be readjusted effective
immediately after such expiry date to the Exercise Price which would then have
been in effect based upon the number of common shares, or the maximum number of
common shares which may be issued upon the exercise or conversion of the
securities exchangeable for or convertible into common shares, as the case may
be, actually delivered on the exercise of such rights, options or warrants.
If the Corporation, at any time while this share purchase warrant is
outstanding, shall pay any stock dividend or stock dividends upon shares of the
Corporation of the class or classes in respect of which the right to purchase is
then given under this share purchase warrant, then the Corporation shall
thereafter deliver at the time of purchase of shares of the Corporation under
this share purchase warrant, in addition to the number of shares in respect of
which the right of purchase is then being exercised, the additional number of
shares of the appropriate class or classes as would have been payable on the
shares of the Corporation so purchased if the shares so purchased had been
outstanding on the record date for the payment of the said stock dividend or
stock dividends.
In case the Corporation shall take any action affecting the common shares of the
Corporation not previously described herein, either or both the Exercise Price
and the number of common shares purchasable upon exercise of this share purchase
warrant shall be adjusted in such manner, if any, and at such time, by the
directors of the Corporation, as may be equitable in the circumstances.
On the happening of each and every such event the applicable[sic] provisions of
this share purchase warrant shall, ipso facto, be deemed to be amended
accordingly and
<PAGE> 18
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the Corporation shall take all necessary action so as to comply with such
provisions as so amended.
The Corporation covenants and agrees that it is duly authorized to create and
issue this share purchase warrant and the common shares to be issued hereunder
and that this share purchase warrant when signed by the Corporation as herein
provided will be a valid and enforceable obligation of the Corporation in
accordance with the provisions hereof and that, subject to the provisions
hereof, it will cause the common shares from time to time subscribed for and
purchased in the manner herein provided, and the certificates evidencing such
common shares, to be duly issued, and that at all times up to and including the
Expiration Date, while this share purchase warrant shall be outstanding it shall
reserve and there shall remain unissued out of its authorized capital a
sufficient number of common shares to satisfy the right of purchase herein
provided for should the Holder of this share purchase warrant determine to
exercise such right in respect of all the common shares for the time being
called for by this share purchase warrant. All common shares which shall be
issued upon the exercise of the right of purchase herein provided for, upon
payment therefor of the amount at which such common shares may at that time be
purchased pursuant to the provisions hereof, shall be issued as fully paid and
non-assessable common shares and the holders thereof shall not be liable to the
Corporation or its creditors in respect thereof.
The adjustments in the number of shares issuable pursuant to the rights
attaching to this share purchase warrant provided for above are to be
cumulative, and all such adjustments as are appropriate shall be made. If and
whenever any action is taken which requires an adjustment in the number of
shares issuable upon the exercise of the right to purchase attaching to this
share purchase warrant, the Corporation shall forthwith deliver to the Holder a
certificate of the Corporation setting forth the details of the action taken and
that adjusted number of shares issuable upon the exercise of this share purchase
warrant and the details of the calculation of such adjustment. In the event of
any dispute arising with respect to the number of shares issuable as the result
of any such events, such dispute shall be conclusively determined by a firm of
chartered accountants carrying on business in the City of Dallas, nominated by
the Corporation, who may be the auditors of the Corporation; such accountants
shall have access, at the office of the Corporation, to all necessary records
and the determination of such chartered accountants shall be binding upon the
Corporation and the Holder.
At least twenty-one (21) days prior to the effective date or record date, as the
case may be, of any event which requires or might require an adjustment in the
subscription rights hereunder, the Corporation shall give notice by mail,
delivery or telecopier to the Holder of the particulars of such event to the
extent then known including, if determinable, the required adjustment.
Time shall be of the essence.
<PAGE> 19
Page 19 of 23
This share purchase warrant shall be governed by and construed in accordance
with the laws of the Yukon Territory and the federal laws of Canada applicable
therein.
If any Warrant Certificate becomes stolen, lost, mutilated or destroyed, the
Corporation shall, on such terms as it may in its discretion acting reasonable
impose, issue and sign a new Warrant Certificate of like denomination, tenor and
date as the Warrant Certificate so stolen, lost, mutilated or destroyed for
delivery to the Holder.
The Corporation may deem and treat the registered holder of any Warrant
Certificate as the absolute owner of the Warrants represented thereby for all
purposes, and the Corporation shall not be affected by any notice of knowledge
to the contrary except where the Corporation is required to take notice by
statute or by order of a court of competent jurisdiction. A Holder shall be
entitled to the rights evidenced by such Warrant free from all equities or
rights of set-off or counterclaim between the Corporation and the original or
any intermediate holder thereof and all persons may act accordingly and the
receipt by any such Holder of the Common Shares purchasable pursuant to such
Warrant shall be a good discharge to the Corporation for the same and the
Corporation shall not be bound to inquire into the title of any such Holder
except where the Corporation is required to take notice by statute or by order
of a court of competent jurisdiction.
This share purchase warrant shall not be valid for any purpose whatsoever until
it has been signed by the Corporation.
IN WITNESS WHEREOF the Corporation has caused this warrant to be executed under
its corporate seal by its proper officers duly authorized on that behalf.
DATED as of the 28th day of February 1998.
COTTON VALLEY RESOURCES CORPORATION
By:
---------------------------------
Eugene A. Soltero
Chief Executive Officer
<PAGE> 20
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SUBSCRIPTION FORM
TO: COTTON VALLEY RESOURCES CORPORATION (the "Corporation")
The undersigned holder of the within share purchase warrant hereby subscribes
for common shares in the capital of the Corporation referred to in the within
share purchase warrant according to the conditions hereof and herewith makes
payment of the purchase price for the said number of common shares.
The undersigned hereby directs that the common shares hereby subscribed for be
issued and delivered as follows:
Name in Full Address in Full Number of Shares
- --------------------------------------------------------------------------------
(Please state full names in which share certificates are to be issued, stating
whether Mr., Ms. or Miss. If any of the shares are to be issued to a person or
persons other than the Holder, the Holder must pay to the Corporation all
exigible[sic] transfer taxes and/or fees.)
DATED this _____ day of _________, _____.
--------------------------------
[SIGNATURE OF SUBSCRIBER]
<PAGE> 21
Page 21 of 23
TRANSFER FORM
For value received, the Warrants evidenced hereby are transferred to:
Name of Transferee:
-------------------------------------
Please print
Address of Transferee:
-------------------------------------
-------------------------------------
TO SUBSCRIBE, THE TRANSFEREE MUST FILL IN THE ABOVE PARTICULARS
Signature of Certificate Holder:
-------------------------------------
Signature Guaranteed by:
-------------------------------------
<PAGE> 22
Page 22 of 23
INSTRUCTIONS FOR SUBSCRIPTION
The above form of subscription is to be signed by the subscriber. The signature
to the subscription as signed by the registered holder must correspond in every
particular with the name written upon the face of this share purchase warrant.
If more than one subscribe jointly, all must sign. State whether Mr., Mrs., Ms.
or Miss or other applicable description.
Any signature may be by an agent or attorney if the authority of the agent or
attorney to sign is proven to the satisfaction of the Corporation.
This form of subscription must be signed and accompanied by payment in United
States funds at the subscription price specified in the within share purchase
warrant in cash or by certified cheque, bank draft or money order payable to the
Corporation in Dallas, Texas, before 4:30 p.m. in the afternoon, Central
Standard Time, on December 31, 2000, at which time the rights to subscribe will
expire.
No fraction of warrants may be brought or sold. Certificates for common shares
subscribed for will be delivered as soon as practicable after subscription.
Upon surrender and payment, the Corporation will issue to the person or persons
named in the subscription form the number of common shares subscribed for an
such persons will be shareholders of the Corporation in respect of the common
shares as at the date of surrender and payment. As soon as practicable after
surrender and payment, the Corporation will mail or deliver to such persons at
the address or addresses specified in the subscription form a certificate or
certificates evidencing the common shares subscribed for. If the holder
subscribes for a lesser number of common shares than the number of common shares
referred to in this share purchase warrant, the holder shall be entitled to
receive a further share purchase warrant in respect of common shares referred to
in this share purchase warrant, but not subscribed for.
<PAGE> 23
Page 23 of 23
EXHIBIT "8"
JOINT FILING AGREEMENT
Liviakis Financial Communications, Inc., John M. Liviakis, Robert B.
Prag and Renee A. Liviakis (collectively the "Parties" and individually a
"Party") hereby agree that they shall file a single statement on Schedule 13D
(as amended from time to time, the "Statement") with respect to their beneficial
ownership of shares of the Common Stock, without par value (the "Securities"),
of Cotton Valley Resources Corporation, a Yukon, Canada corporation, on behalf
of and in satisfaction of the obligations of all of the Parties and that they
shall amend the Statement from time to time as required by rules promulgated
under the Securities Exchange Act of 1934, as amended.
Each of the Parties represents and warrants that such Party is eligible
to use Schedule 13D with respect to information regarding the Securities and
agrees to assume responsibility for the timely filing of the Statement and any
amendments thereto. Each of the Parties hereby assumes responsibility for the
completeness and accuracy of the information concerning such Party contained in
the Statement. No Party shall be responsible for the completeness and accuracy
of the information contained in the Statement concerning the other Parties,
unless such Party knows or has reason to believe that such information is
incomplete or inaccurate. The execution of the Statement, including any
amendment thereto, by one of the Parties shall constitute a representation by
such Party that the information concerning such Party contained therein is
complete and accurate and that such Party neither knows nor has any reason to
believe that the information concerning the other Parties contained therein is
either incomplete or inaccurate. This Joint Filing Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but which
together shall constitute one and the same instrument.
In Witness Whereof, the Parties have executed this Joint Filing
Agreement this 18th day of December, 1998.
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ John M. Liviakis
----------------------------------------
John M. Liviakis, President
/s/ John M. Liviakis
--------------------------------------------
John M. Liviakis
/s/ Robert B. Prag
--------------------------------------------
Robert B. Prag
/s/ Renee A. Liviakis
--------------------------------------------
Renee A. Liviakis
