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EXHIBIT 10.14
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), dated and effective as of November
7, 1996 is entered into by and between COTTON VALLEY RESOURCES CORPORATION, an
Ontario, Canada corporation (herein referred to as the "Company") and LIVIAKIS
FINANCIAL COMMUNICATIONS, INC., a California corporation (herein referred to as
the "Consultant").
RECITALS
WHEREAS, Company is a publicly held corporation with its common stock
traded through the Canadian Dealing Network; and
WHEREAS, Consultant has experience in the area of corporate finance,
investor communications and financial and investor public relations; and
WHEREAS, Company desires to engage the services of Consultant to assist
and consult with the Company in matters concerning corporate finance and to
represent the company in investors' communications and public relations with
existing shareholders, brokers, dealers and other investment professionals as
to the Company's current and proposed activities;
NOW THEREFORE, in consideration of the promises and the mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Term of Consultancy. Company hereby agrees to retain the Consultant to act
in a consulting capacity to the Company, and the Consultant hereby agrees to
provide services to the Company commencing November 7, 1996 and ending on
January 2, 1998.
2. Duties of Consultant. The Consultant agrees that it will generally provide
the following specified consulting services through its officers and employees
during the term specified in Section 1.:
(a) Advise and assist the Company in developing and implementing
appropriate plans and materials for presenting the Company and its business
plans, strategy and personnel to the financial community, establishing an image
for the Company in the financial community, and creating the foundation for
subsequent financial public relations efforts;
(b) Introduce the Company to the financial community;
(c) With the cooperation of the Company, maintain an awareness during the
term of this Agreement of the Company's plans, strategy and personnel, as they
may evolve during such period, and advise and assist the Company in
communicating appropriate information regarding such plans, strategy and
personnel to the financial community;
(d) Assist and advise the Company with respect to its (i) stockholder and
investor relations, (ii) relations with brokers, dealers, analysts and other
investment professionals, and (iii) financial public relations generally;
(e) Perform the functions generally assigned to investor/stockholder
relations and public relations departments in major corporations, including
responding to telephone and written
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inquiries (which may be referred to the Consultant by the Company); preparing
or reviewimg press releases, reports and other communications with or to
shareholders, the investment community and the general public; advising with
respect to the timing, form, distribution and other matters related to such
releases, reports and communications; and consulting with respect to corporate
symbols, logos, names, the presentation of such symbols, logos and names, and
other matters relating to corporate image;
(f) Disseminate information regarding the Company to shareholders, brokers,
dealers, other investment community professionals and the general investing
public;
(g) Conduct meetings, in person or by telephone, with brokers, dealers,
analysts and other investment professionals to advise them of the Company's
plans, goals and activities, and assist the Company in preparing for press
conferences and other forums involving the media, investment community
professionals and the general investment public;
(h) At the Company's request, review business plans, strategies, mission
statements budgets, proposed transactions and other plans for the purpose of
advising the Company of the investment community implications thereof; and
(i) Otherwise perform as the Company's financial relations and public
relations consultant.
It is understood that until January 2, 1997, the Consultant will only be
responsible to advise the Company on matters concerning corporate finance and
to assist the Company in creation of its investor relations infrastructure. The
Consultant will not be expected to perform any proactive investor relations or
financial public relations activities until January 2, 1997.
3. Allocation of Time and Energies. The Consultant hereby promises to perform
and discharge well and faithfully the responsibilities which may be assigned to
the Consultant from time to time by the officers and duly authorized
representatives of the Company in connection with the conduct of its financial
and investor public relations and communications activities, so long as such
activities are in compliance with applicable securities laws and regulations.
Consultant shall diligently and thoroughly provide the consulting services
required hereunder. Although no specific hours-per-day requirement will be
required, Consultant and the Company agree that Consultant will perform the
duties set forth hereinabove in a diligent and professional manner. The parties
acknowledge and agree that a disproportionately large amount of the effort to be
expended and the costs to be incurred by the Consultant and the benefits to be
received by the Company are expected to occur upon and shortly after, and in any
event, within one month of the effectiveness of this Agreement. It is
explicitly understood that Consultant's performance of its duties hereunder will
in no way be measured by the price of the Company's common stock, nor the
trading volume of the Company's common stock, both of which cannot be guaranteed
by the Consultant. It is also understood that the Company is entering into this
Agreement with Liviakis Financial Communications, Inc. ("LFC"), a corporation
and not any individual member of LFC, and with such, Consultant will not be
deemed to have breached this Agreement if any member, officer or director of LFC
leaves the firm or dies or becomes physically unable to perform any meaningful
activities during the term of the Agreement, provided the Consultant otherwise
performs its obligations under this Agreement.
4. Remuneration. As full and complete compensation for services described in
this Agreement, the Company shall compensate Consultant as follows:
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4.1 In connection with Consultant undertaking this engagement, the Company
agrees to sell, and Consultant and Xxxxxx X. Xxxx ("RBP"), an affiliate
of consultant, severally agree to buy, for One Canadian Dollar (C$1.00)
per unit five hundred thousand (500,000) units (the "Units"), each
consisting of one share of the Company's common stock ("Common Stock")
and one stock purchase warrant (a "Warrant") entitling the holder thereof
to purchase a share of Common Stock at an exercise price of One Dollar
and Ten Cents Canadian (C$1.10) through November 7, 2001. The Warrants
shall be evidenced by the form of warrant certificate attached hereto as
Exhibit A. It is understood that the Units, the shares of Common Stock
and Warrants constituting the Units, and the shares of Common Stock
issuable upon exercise of the Warrants have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and
consequently such securities constitute and will constitute "restricted
securities" as defined in Rule 144 promulgated under the Securities Act,
unless registered under the Securities Act.
Consultant shall purchase three hundred seventy-five thousand (375,000)
Units, for which he shall deliver to the Company his promissory note in
the amount of Two Hundred Eighty-One Thousand Two Hundred Fifty United
States Dollars (US$281,250), payable in four monthly installments on the
fifteenth (15th) day of December 1996 and January, February and March
1997 of US$56,250, US$75,000, US$75,000 and US$75,000, respectively. RBP
shall purchase one hundred twenty-five thousand (125,000) Units, for which
he shall deliver to the Company his promissory note in the amount of
Ninety-Three Thousand Seven Hundred Fifty United States Dollars
(US$93,750), payable in four monthly installments on the fifteenth (15th)
day of December 1996 and January, February and March 1997 of US$18,750,
US$25,000, US$25,000, and US$25,000 respectively. Certificates
representing the shares of Common Stock and Warrants constituting the
Units shall be issued in the names of Consultant and RBP and delivered in
trust to Xxxx & Xxxxxx, counsel to the Company, pursuant to irrevocable
instructions under which Xxxx & Xxxxxx is to deliver the certificates
representing such securities to Consultant and RBP, respectively, pro
rata as such promissory notes are paid.
In addition, as consideration for Consultant undertaking this
engagement, the Company shall issue and deliver to Consultant an aggregate
of one million four hundred ninety thousand (1,490,000) shares (the
"Consideration Shares") of Common Stock. The Consideration Shares shall
be issued by the Company and delivered to Consultant in accordance with
the following schedule:
Number of Shares Date
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400,000 Upon execution of this agreement
800,000 January 2, 1997
50,000 January 31, 1997
50,000 February 28,1997
50,000 March 31, 1997
50,000 April 31, 1997
50,000 May 31, 1997
40,000 June 30, 1997
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1,490,000
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It is understood that the Consideration Shares have not been registered
under the Securities Act and consequently such securities constitute and will
constitute "restricted securities" as defined in Rule 144 promulgated under
the Securities Act, unless registered under the Securities Act.
The Company agrees that, when issued and delivered to Consultant and RBP,
the Consideration Shares, the shares of Common Stock constituting part of the
Units and the shares of Common Stock issuable upon exercise of the Warrants
shall be duly authorized, validly outstanding, fully paid and non-assessable.
The Company also understands and agrees that Consultant has foregone
significant opportunities to accept this engagement and that the Company
derives substantial benefit from the execution of this Agreement and the
ability to announce its relationship with Consultant. The Consideration
Shares, therefore, constitute payment for Consultant's agreement to represent
the Company and are a nonrefundable, non-apportionable and non-ratable
retainer. If the Company elects to terminate this Agreement prior to January
2, 1998 for any reason whatsoever, it is agreed and understood that
Consultant will not be and may not be required or requested by the company to
return any of the Consideration Shares or any securities constituting the
Units or issued upon exercise of the Warrants.
The Consideration Shares and the shares of Common Stock constituting the
Units shall have the benefit of the same registration rights as the shares of
Common Stock issuable upon exercise of the Warrants receive pursuant to the
terms of the warrant certificates representing the Warrants. The Company
agrees to file by November 30, 1997 and thereafter to prosecute diligently to
effectiveness a registration statement under the Securities Act covering,
among other securities, such Consideration Shares, shares of common Stock
constituting part of the Units, and shares of Common Stock issuable upon
exercise of the Warrants as Consultant and RBP may request. Consultant and
RBP agree that they, respectively, will not sell shares of Common Stock
received hereunder prior to January 2, 1998.
4.2 Consultant and Prag (hereinafter referred to as "Consultants") acknowledge
that the shares of Common Stock, the Options and the shares issuable upon the
exercise of the Options to be issued pursuant to this Agreement
(collectively, the "Shares") have not been registered under the Securities
Act of 1933, and accordingly are "restricted securities" within the meaning
of Rule 144 of the Act. As such, the Options and the Shares may not be
resold or transferred unless the Company has received an opinion of counsel
reasonably satisfactory to the Company that such resale or transfer is
exempt from the registration requirements of that Act.
4.3 In connection with the acquisition of Shares hereunder, the Consultants
represent and warrant to the Company as follows:
(a) Consultants acknowledge that the Consultants have been afforded the
opportunity to ask questions of and receive answers from duly authorized
officers or other
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representatives of the Company concerning an investment in the Shares,
and any additional information which the Consultants have requested.
(b) Consultants' investment in restricted securities is reasonable in
relation to the Consultants' net worth, which is in excess of ten (10) times
the Consultants' cost basis in the Shares. Consultants have had experience
in investments in restricted and publicly traded securities, and
Consultants have had experience in investments in speculative securities
and other investments which involve the risk of loss of investment.
Consultants acknowledges that an investment in the Shares is speculative
and involves the risk of loss. Consultants have the requisite knowledge to
assess the relative merits and risks of this investment without the
necessity of relying upon other advisors, and Consultants can afford the
risk of loss of his entire investment in the Shares. Consultants are (i)
accredited investors, as that term is defined in Regulation D promulgated
under the Securities Act of 1933, and (ii) a purchaser described in Section
25102(f)(2) of the California Corporate Securities Law of 1968, as
amended.
(c) Consultants are acquiring the Shares for the Consultants' own
account for long-term investment and not with a view toward resale or
distribution thereof except in accordance with applicable securities laws.
(d) In any vote of shareholders for the election of directors or any
related matter (such as increasing or decreasing the authorized number of
directors or creating a classified board of directors) held prior to
January 1, 2001, Consultants shall vote any shares of Common Stock received
by Consultants pursuant to this Agreement, either directly or through the
exercise of warrants, and then held by Consultants (i) in connection with
the election of directors for such nominees as may be designated by Xxxxxx
X. Xxxxxxx and Xxxxx X. Xxxxx and (ii) with respect to related matters in
such manner as Messrs. Xxxxxxx and Xxxxx may designate. Any designation
regarding voting by Messrs. Xxxxxxx and Xxxxx shall be made in a written
notice executed by Messrs. Xxxxxxx and Xxxxx and delivered to Consultants.
It is understood that any shares of Common Stock transferred by Consultants
to person or entities not subject to the control of Consultants shall be
transferred free of any obligation with respect to voting arising under
this subparagraph.
5. Financing "Finder's Fee". It is understood that in the event Consultant
introduces Company, or its nominees, to a lender or equity purchaser, not
already having a preexisting relationship with the Company, who Company, or
its nominees, ultimately finances or causes the completion of such
financing, Company agrees to compensate Consultant for such services with a
"finder's fee" in the amount of 2.5% of total gross financing provided by
Company payable in cash. This will be in addition to any fees payable by
Company to any other intermediary, if any, which shall be per separate
agreements negotiated between Company and such other intermediary.
5.1 It is further understood that Company, and not Consultant, is responsible
to perform any and all due diligence on such lender or equity purchaser
introduced to it by Consultant under this Agreement, prior to Company
receiving funds. However, Consultant will not introduce any parties to
Company about which Consultant has any prior knowledge of questionable,
unethical or illicit activities.
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5.2 Company agrees that said compensation to Consultant shall be paid in full
at the time said financing is closed. Moreover, said compensation, will be
a condition precedent to the closing of such or financing and Company shall
execute any and all documents necessary to effect said compensation.
5.3 As further consideration to Consultant, Company, or its nominees, agrees
not to obtain any other financing from any lender or equity purchaser
supplied or referred to Company by Consultant for a period of five years
from the date of this Agreement, either directly or indirectly through
third parties or nominees. In the event of circumvention by Company, or
its nominees, Consultant shall receive a fee equal to that outlined in
Section "5" herein.
5.4 Consultant will notify Company of introductions it makes for potential
sources of financing in a timely manner (approximately 3 days within
introduction) via facsimile memo. If Company has a preexisting
relationship with such nominee and believes such party should be excluded
from this Agreement, then Company will notify Consultant immediately of
such circumstance via facsimile memo.
6. Expenses. Consultant agrees to pay for all its expenses (phone, mailing,
labor, etc.), other than extraordinary items (travel required by/or
specifically requested by the Company, luncheons or dinners to large groups
of investment professionals, mass faxing to a sizable percentage of the
Company's constituents, investor conference calls, print advertisements in
publications, etc.) approved by the Company prior to its incurring an
obligation for reimbursement.
7. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials, other than those designated
by the Company to the Consultant as "confidential" or "Company private",
furnished to Consultant by the Company with respect to financial affairs,
operations, profitability and strategic planning of the Company are accurate
and Consultant may rely upon the accuracy thereof without independent
investigation. The Company will protect, indemnify and hold harmless
Consultant against any claims or litigation including any damages,
liability, cost and reasonable attorney's fees with respect thereto
resulting from Consultant's communication or dissemination of any said
information, documents or materials not designated by the Company to the
Consultant as "confidential" or "Company private", excluding any such claims
or litigation resulting from Consultant's communication or dissemination of
information not provided or authorized by the Company. To the extent
feasible, the Company agrees to make Consultant an additional insured on any
and all commercial liability and directors and officers liability insurance
policies and to provide Consultant with current Certificates of Insurance
reflecting the same.
8. Representations. Consultant represents that it is not required to
maintain any licenses and registrations under federal or any state
regulations necessary to perform the services set forth herein. Consultant
acknowledges that to the best of its knowledge, the performance of the
services set forth under this Agreement will not violate any rule or
provision of any regulatory agency having jurisdiction over Consultant.
Consultant acknowledges that, to the best of its
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knowledge, Consultant and its officers and directors are not the subject of any
investigation, claim, decree or judgment involving any violation of the SEC or
securities laws. Consultant further acknowledges that it is not a securities
Broker Dealer or a registered investment advisor.
Company acknowledges that, to the best of its knowledge, it has not
violated any rule or provision of any regulatory agency having jurisdiction
over the Company. Company acknowledges that, to the best of its knowledge,
Company is not the subject of any investigation, claim, decree or judgment
involving any violation of the SEC or securities laws.
9. Legal Representation. The Company acknowledges that it has been represented
by independent legal counsel in the preparation of this Agreement. Consultant
represents that they have consulted with independent legal counsel and/or tax,
financial and business advisors, to the extent the Consultant deemed necessary.
10. Status as Independent Contractor. Consultant's engagement pursuant to
this Agreement shall be as independent contractor, and not as an employee,
officer or other agent of the Company. Neither party to this Agreement shall
represent or hold itself out to be the employer or employee of the other.
Consultant further acknowledges the consideration provided hereinabove is a
gross amount of consideration and that the Company will not withhold from such
consideration any amounts as to income taxes, social security payments or any
other payroll taxes. All such income taxes and other such payment shall be made
or provided for by Consultant and the Company shall have no responsibility or
duties regarding such matters. Neither the Company or the Consultant possess
the authority to bind each other in any agreements without the express written
consent of the entity to be bound.
11. Attorney's Fee. If any legal action or any arbitration or other
proceeding is brought for the enforcement or interpretation of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with or related to this Agreement, the successful or prevailing
party shall be entitled to recover reasonable attorneys' fees and other costs
in connection with that action or proceeding, in addition to any other relief
to which it or they may be entitled.
12. Waiver. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any subsequent breach by such other party.
13. Notices. All notices, requests, and other communications hereunder shall
be deemed to be duly given if sent by U.S. mail, postage prepaid, addressed to
the other party at the address as set forth herein below:
To the Company: Xx. Xxxxx X. Xxxxx, President
Cotton Valley Resources Corporation
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx X0000
Xxxxxx, XX 00000
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To the Consultant: Liviakis Financial Communications, Inc.
Xxxx X. Xxxxxxxx, President
0000 "X" Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000.
It is understood that either party may change the address to which notices
for it shall be addressed by providing notice of such change to the other party
in the manner set forth in this paragraph.
14. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of
California. The parties agree that Sacramento County, CA. will be the venue of
any dispute and will have jurisdiction over all parties.
15. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof, or relating to Consultant's activities
or remuneration under this Agreement, shall be settled by binding arbitration
in California, in accordance with the applicable rules of the American
Arbitration Association, and judgment on the award rendered by the arbitrator(s)
shall be binding on the parties and may be entered in any court having
jurisdiction thereof. The provisions of Title 9 of Part 3 of the California
Code of Civil Procedure, including section 1283.05, and successor statutes,
permitting expanded discovery proceedings shall be applicable to all disputes
that are arbitrated under this paragraph.
16. Complete Agreement. This Agreement instrument contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
and its terms may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
AGREED TO:
"Company" COTTON VALLEY RESOURCES CORPORATION
Date: By:
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Xxxxx Xxxxx, Secretary/Treasurer
& Its Duly Authorized Officer
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: By:
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Xxxx X. Xxxxxxxx Xxxxxx X. Xxxx
President Sr. Vice President
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