1,250,000 Units
COTTON VALLEY RESOURCES CORPORATION
Each Unit Consisting of
Two Shares of Common Stock and
Two Redeemable Common Stock Purchase Warrants
,1997
SELECTED DEALER AGREEMENT
Dear Sirs:
NATIONAL SECURITIES CORPORATION ("National") and the several
underwriters (collectively, the "Underwriters"), on whose behalf National is
acting as managing underwriters and Representative (the "Representative"), have
severally agreed to purchase from COTTON VALLEY RESOURCES CORPORATION, a
corporation organized under the laws of the Province of Ontario, Canada (the
"Company"), (a) an aggregate of 1,250,000 Units, each Unit consisting of two
shares of Common Stock, without par value, of the Company ("Common Stock"), and
two redeemable common stock purchase warrants (individually, a "Warrant"), each
of which entitles the holder thereof to purchase one share of Common Stock at a
price of $___ (such Units, together with (A) the shares of Common Stock and
Warrants comprising the Units and (B) the shares of Common Stock issuable upon
exercise of such Warrants, are collectively referred to herein as the
"Underwritten Securities"), plus (b) up to 187,500 additional Units pursuant to
an option for the purpose of covering over-allotments (such additional Units,
together with (A) the shares of Common Stock and Warrants comprising such
additional Units and (B) the shares of Common Stock issuable upon exercise of
such Warrants, are collectively referred to herein as the "Option Securities";
the Underwritten Securities and the Option Securities are collectively referred
to herein as the "Securities"; and the Units included in the Securities are
collectively referred to herein as the "Registered Units"), all as set forth in
the Preliminary Prospectus dated ______, 1996, as amended and supplemented from
time to time, and subject to the terms of the Underwriting Agreement referred to
therein. The Registered Units and the terms upon which they are to be offered
for sale by the several Underwriters are more particularly described in the
Preliminary Prospectus, additional copies of which will be supplied in
reasonable quantities upon request to the Underwriters.
1. Offering to Dealers. The Registered Units are to be offered to the
public by the Underwriters at the price per unit set forth on the cover page of
the Preliminary Prospectus (the "Public Offering Price"). The several
Underwriters, acting through the Representative, and subject to the terms and
conditions hereof, are severally offering a portion of the Registered Units to
certain dealers (the "Dealers") as principals, at the Public Offering Price of
$_____ per Unit, less a selling concession of $____ per Unit (the "Selling
Concession"). Dealers must be actually engaged in the investment banking or
securities business and be either (i) a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD") who agrees that in making
sales of the Registered Units it will comply with the Rules of Fair Practice,
including Sections 8, 24 and 36 of Article m, and the Interpretation of the
Board of Governors of the NASD with respect to Free-Riding and Withholding, or
(ii) dealers with their principal place of business located outside the United
States, its territories and possessions and not registered as brokers or dealers
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), who
have agreed not to make any sales within the United States, its territories or
its possessions or to persons who are nationals thereof or residents therein,
and who agree that in making sales of the Registered Units outside the United
States, they will comply with the requirements of the Rules of Fair Practice of
the NASD, including Sections 8, 24 and 36 of Article m of such Rules, and
Section 25 of such Article as that Section applies to non-member foreign
dealers, and the Interpretation of the Board of Governors of the NASD with
respect to Free-Riding and Withholding.
Under this Agreements the Representative shall have full authority to
take such action as they may deem advisable in respect to all matters pertaining
to the public offering of the Registered Units.
If you desire to purchase any of the Registered Units, your
confirmation should reach the Representative promptly by mail or facsimile
transmission at the office of the Representative, NATIONAL SECURITIES
CORPORATON, 0000 Xxxxxxxxxxx, Xxxxx 000, Xxxxxx, XX, 00000, attention: Xxxxxx X.
Xxxxx, III facsimile number (000) 000-0000. The Representative reserve the right
to reject subscriptions in whole or in part, to make allotments and to close the
subscription books at any time without notice. The Registered Units allotted to
you and the method and terms of the offering of the Registered Units will be
confirmed to you.
2. Offering by Dealers. Any Registered Units purchased by you under the
terms of this Agreement may be immediately offered to the public in conformity
with the terms of the offering set forth herein and in the Preliminary
Prospectus, subject to the securities or blue sky laws of the various states or
other jurisdictions.
Neither you nor any other person is, or has been, authorized by the
Company or the Representative to give any information or make any representation
in connection with the sale of the Registered Units other than those contained
in the Preliminary Prospectus.
It is assumed that the Registered Units will be effectively placed for
investment. If during the term of this Agreement, the Representative shall
purchase or contract to purchase any Registered Units purchased by you
hereunder, the Representative may, at their election, either (a) require you to
repurchase such Registered Units at a price equal to the total costs of such
purchase by the Representative, including brokerage commissions, if any, and
transfer taxes on the redelivery, or (b) charge you with and collect from you an
amount equal to the Selling Concession originally allowed you with respect to
the Registered Units so purchased by you.
3. Payment and Delivery. Payment for the Registered Units that you have
agreed to purchase hereunder shall be made by you through the Depository Trust
Company ("DTC"), payable in same-day funds to the order of ________, at such
time and on such date as _______ may designate, against delivery of such
Registered Units to you through the facilities of the DTC. The above payment
shall be made by you at $___ per Unit.
4. Blue Sky Matters. Upon request, you will be informed as to the
states and other jurisdictions in which the Underwriters have been advised that
the Registered Units are qualified for sale under the respective securities or
blue sky laws of such states or jurisdictions. However, neither the
Representative nor any of the other Underwriters shall have any obligation or
responsibility with respect to the right of any Dealer to sell the Registered
Units in any jurisdiction and you shall indemnify and hold harmless the
Representative and the other Underwriters and any person controlling the
Representative and the other Underwriters from and against any and all losses,
claims, damages, expenses or liabilities to which any of them may become subject
as a result of your failure to comply with the laws of any jurisdiction in
connection with the offer and the sale of Registered Units. In compliance with
the General Business law of the State of New York, it may be necessary for you
to file a Further State Notice respecting the Registered Units, in the form
required by said Law, prior to offering any of the Registered Units in such
state.
5. Termination. This Agreement shall terminate when the Representative
shall have determined that the public offering of the Registered Units has been
completed and upon facsimile notice to you of such termination, or, if not
theretofore terminated, it shall terminate 45 days after the initial public
offering of the Registered Units; provided, however, that the Representative
shall have the right to extend this Agreement for a period or periods not to
exceed an additional 45 days in the aggregate upon facsimile notice to you. The
Representative may terminate this Agreement at any time without prior notice to
you. Notwithstanding termination of this Agreement, you shall remain liable for
your portion of any transfer tax or other liability that may be asserted or
assessed against the Representative, any of the other Underwriters or any of the
Dealers based upon the claim that the Dealers or any of them constitute a
partnership, an association, an unincorporated business or other separate
entity.
6. Obligations and Positions of Dealers. Notwithstanding any provision
herein, your confirmation hereof will constitute a binding obligation on your
part to purchase, upon the terms and conditions hereof, the aggregate amount of
the Registered Units reserved for you and accepted by you and to perform and
observe all the terms and conditions hereof. You are not authorized to act as
agent of the Representative or the other Underwriters in offering the Registered
Units to the public or otherwise. Nothing contained herein shall constitute the
Dealers an association or other separate entity, or partners with the
Representative or the other Underwriters, but you will be responsible for your
share of any liability or expense based on any claim to the contrary. Neither
the Representative nor the other Underwriters shall be under any liability to
you for or in respect of the value, validity or form of the Registered Units, or
the delivery of the Registered Units, or the performance by anyone of any
agreement on its part, or the qualification of the Registered Units for sale
under the laws of any jurisdiction, or for or in respect of any other matter
relating to this Agreement, except for lack of good faith and matters expressly
assumed by the Representative and the other Underwriters in this Agreement, and
no obligation on the part of the Representative or the other Underwriters shall
be implied therefrom. The foregoing provisions shall not be deemed a waiver of
any liability imposed under the Securities Act of 1933, as amended (the "Act"),
or the Exchange Act.
You agree that at any time or times prior to the termination of the
Agreement you will, upon the request of the Representative, report to the
Representative the number of Registered Units purchased by you under this
Agreement that then remain unsold by you and will, upon the request of the
Representative at such time or times, sell to the Underwriters for their
account, such number of unsold Registered Units as the Representative may
designate, at the Public Offering Price, less the Selling Concession or such
part thereof as the Representative may determine.
The Representative shall have full authority to take such actions as
they may deem advisable in respect of all matters pertaining to the offering of
the Registered Units or arising hereunder. No obligation not expressly assumed
by the Representative in this Agreement shall be implied hereby or inferred
herefrom.
7. Compliance with Securities Laws. On becoming a Dealer, and in
offering and selling the Registered Units, you agree to comply with all of the
applicable requirements of the Act and the Exchange Act. You confirm that you
are familiar with Rule 15c2-8 under the Exchange Act relating to the
distribution of preliminary and final prospectuses for securities of an issuer
and confirm that you have complied and will comply therewith with respect to the
offering of the Registered Units.
8. Stabilization and Over-Allotment. Each Underwriter has authorized
the Representative, in the discretion of the Representative, to make purchases
and sales of Registered Units, for long or short account, on such terms and at
such prices as the Representative deem advisable, to cover any short position so
incurred and to over-allot in arranging sales.
Each Underwriter has agreed that, during the term of the Agreement
Among Underwriters, or such shorter period as the Representative may determine,
it will not buy or sell any Securities of the Company except as a broker
pursuant to unsolicited orders and as otherwise provided in said Agreement.
Your attention is directed to Rule 10b-6 of the General Rules and
Regulations under the 1934 Act, which contains certain prohibitions against
trading by a person interested in a distribution until such person has completed
its participation in such distribution.
9. Notices. Any notice from you to the Representative should be mailed
or sent by facsimile transmission to the Representative at the addresses and
facsimile numbers set forth in Section 1 hereof. Any notice from the
Representative to you shall be mailed or sent by facsimile transmission to you
at the address and facsimile number set forth on the confirmation executed by
you in the form attached hereto as Exhibit A. Mailed notices shall be sent by
registered mail, return receipt requested. Notices shall be effective upon
receipt.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to the
choice of law or conflicts of law or principles thereof.
If you desire to purchase any Registered Units, please confirm your
agreement by signing and returning to the Representative by mail or facsimile
transmission your confirmation in the form attached hereto as Exhibit A even
though you may have previously advised the Representative thereof.
Very truly yours,
NATIONAL SECURITIES CORPORATION
By:
Xxxxxx X. Xxxxx, III
For itself and the other several Underwriters
in Schedule I to the Underwriting Agreement
EXHIBIT A
Confirmation
NATIONAL SECURITIES CORPORATION 0000 Xxxxxxxxxxx, Xxxxx 000 Xxxxxx, Xxxxx 00000
Facsimile Number (000) 000-0000 Dear Sirs:
The undersigned hereby confirms its agreement to purchase Units of
COTTON VALLEY RESOURCES CORPORATION, a corporation organized under the laws of
the Province of Ontario, Canada (the "Registered Units"), each Registered Unit
consisting of two shares of Common Stock, without par value, and two Redeemable
Common Stock Purchase Warrants, each of which entitles the holder thereof to
purchase one share of Common Stock at a price of $___. The purchase price shall
be $____per Registered Unit, less a selling concession of $___ per Registered
Unit, subject to the terms and conditions of the foregoing Selected Dealer
Agreement, and the undersigned agrees to take up and pay for such Registered
Units on the terms and conditions set forth in such Agreement. The undersigned
hereby acknowledges receipt of the Preliminary Prospectus relating to the
Securities (as defined in the Selected Dealer Agreement) and confirms that in
agreeing to purchase the Registered Units it has relied on said Preliminary
Prospectus and on no other statement whatsoever, written or oral. The
undersigned represents that it has complied and will comply with the
requirements of Rule 15c2-8 under the Securities Exchange Act of 1934, as
amended, with respect to the offering of the Registered Units.
The undersigned confirms that it is a member in good standing of the
National Association of Securities Dealers, Inc. (the "NASD") and represents
that in making sales of the Registered Units it will comply with the Rules of
Fair Practice (including Sections 8, 24 and 36 of Article m) and the
Interpretation of the Board of Governors of the NASD with respect to Free-Riding
and Withholding; alternatively, the undersigned represents that it is a foreign
dealer that is not eligible for membership in the NASD and agrees not to offer
or sell the Registered Units in the United States, its territories or its
possessions or to persons it has reason to believe are nationals thereof or
residents therein, and further agrees that in making sales of the Registered
Units outside the United States, it will comply with the requirements of the
Rules of Fair Practice (including Sections 8, 24 and 36 of Article m, and
Section 25 of such Article as that Section applies to non-member foreign
dealers) and the Interpretation of the Board of Governors of the NASD with
respect to Free-Riding and Withholding.
By:
Name:
Title:
Address:
Facsimile
Number:
Dated , 1997
