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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1996
REGISTRATION NO. ____________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
HARISTON CORPORATION
(Exact name of registrant as specified in charter)
CANADA 33-0645339
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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<S> <C>
JAMES V. MCGOODWIN
HARISTON CORPORATION
1500 WEST GEORGIA STREET, SUITE 1555 611 ANTON BOULEVARD, SUITE 1270
VANCOUVER, BRITISH COLUMBIA, CANADA V6G 2Z6 COSTA MESA, CALIFORNIA 92626
Address, including zip code, and (Name, address, including zip code,
telephone number, including area code, of and telephone number, including area
registrant's principal executive offices) code, of agent for service)
</TABLE>
Approximate date of commencement of proposed sale to public: From time
to time after the effective date of this Registration Statement, as determined
by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Amount maximum maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered per unit(1) offering price fee
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<S> <C> <C> <C> <C>
Common Stock, no par value .................. 346,139 $1.00 $346,139 $120.00
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(1) Calculated pursuant to Rule 457, as of July 8, 1996.
____________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
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PART I
INFORMATION REQUIRED IN PROSPECTUS
PREMIER LASER SYSTEMS, INC.
CROSS REFERENCE SHEET
Between Items in Part I of Registration Statement
(Form S-3) and Prospectus Pursuant to Rule 404(c)
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Item
No. Form S-3 Caption Heading in Prospectus
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1 Forepart of the Registration Statement Cover Page
and Outside Front Cover Page of
Prospectus
2 Inside Front and Outside Front Cover Available Information; Incorporation
Pages of Prospectus of Certain Documents by Reference;
Back Cover Page
3 Summary Information, Risk Factors and The Company; Risk Factors
Ratio of Earnings to Fixed Charges
4 Use of Proceeds Not Applicable
5 Determination of Offering Price Not Applicable
6 Dilution Not Applicable
7 Selling Security Holders Selling Securityholders
8 Plan of Distribution Plan of Distribution
9 Description of Securities to be Cover Page; Risk Factors;
Registered Description of Securities
10 Interest of Named Experts and Counsel Legal Matters
11 Material Changes The Company; Risk Factors
12 Incorporation of Certain Incorporation of Certain Documents
Information by Reference by Reference
13 Disclosure of Commission Position Indemnification of Directors and Officers
on Indemnification for Securities Act
Liabilities
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SUBJECT TO COMPLETION, DATED JULY 10, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
HARISTON CORPORATION
346,139 SHARES OF COMMON STOCK
The shares of Common Stock ("Common Stock") of Hariston Corporation
(the "Company") which are the subject of this Prospectus have been registered
under the Securities Act of 1933, as amended (the "Act"), to permit certain
securityholders of the Company (the "Selling Securityholders"), to offer and
sell such securities (the "Securities") from time to time in the future in the
manner set forth herein. The Securities may be offered (the "Offering") in
regular brokerage transactions through registered broker-dealers, in privately
negotiated transactions, or otherwise, at market prices prevailing at the time
of the sale, or at prices otherwise negotiated.
The Company's Common Stock is traded on the Nasdaq SmallCap Market. On
July 8, 1996, the closing sale price of the Company's Common Stock, as reported
by Nasdaq was $1.00 per share. None of the proceeds from the sale of the
Securities which are the subject of this Prospectus will be received by the
Company.
The Selling Securityholders will each be individually responsible for
the payment of any applicable selling commissions, transfer taxes or other
miscellaneous expenses related to the sale of the Securities. The Company knows
of no existing selling arrangement between any broker or dealer and the Selling
Securityholders. The Selling Securityholders may be deemed to be "underwriters"
within the meaning of the Act. Brokers or dealers who execute sales for the
Selling Securityholders may also be deemed to be "underwriters" within the
meaning of said Act, and the commissions and trading profits received by
participating brokers and dealers, respectively, may be deemed to be
underwriting commissions within the meaning of the Act.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF ITS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________
THE DATE OF THIS PROSPECTUS IS ___________, 1996
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith the Company files reports and other information with the
Securities and Exchange Commission (the "Commission"). Certain information
concerning the Company is disclosed in proxy statements and annual reports
distributed to shareholders of the Company and filed with the Commission. Such
proxy statements, reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at 450 5th Street,
N.W., Washington, D.C. 20549 and at certain of its regional offices, located at
26 Federal Plaza, Room 1102, New York, New York 10278; Room 1204, Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois 60604;
and Suite 1710, 10960 Wilshire Boulevard, Los Angeles, California 90024. Copies
of all such material may be obtained from the Public Reference Section of the
Commission, 500 North Capital Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Company's outstanding Common Stock is listed on the Nasdaq SmallCap
Market. Copies of such reports, proxy statements and other information
concerning the Company may be inspected at the offices of the Nasdaq Stock
Market. The Company intends to provide its security holders with annual reports
which include audited financial information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by this reference into this Prospectus:
1. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995, filed July 5, 1996.
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995, filed November 14, 1995, as amended by Form 10-Q/A
filed November 16, 1995.
3. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended by Form 10-K/A filed April 19, 1996 and Form
10-K/A filed April 13, 1996, pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which Report contains
among other information, a description of the Company's business, as amended by
Form 10-K/A Amendment No. 1 filed April 19, 1996, and as amended by Form 10-K/A
Amendment No. 2 filed June 28, 1996.
4. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1996, filed May 13, 1996.
5. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 20-FR filed with the Commission on
November 1, 1985.
All documents filed by the Company with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the Offering which is the
subject of this Prospectus shall be deemed to be incorporated herein by this
reference and to be made a part hereof from the date of filing of such
documents.
Upon the written or oral request of any person to whom this Prospectus
is delivered, the Company will provide, without charge, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents). Requests for such informational documents
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should be directed to Hariston Corporation, 1500 West Georgia Street, Suite
1555, Vancouver, British Columbia, Canada V6G 2Z6, telephone number (604)
685-8514, Attention: Chief Financial Officer.
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THE COMPANY
GENERAL
Hariston Corporation ("Hariston" or the "Company") is a Canadian
holding company which has historically made investments in a wide variety of
start-up or early-stage businesses. Within the last twelve months, management
commenced efforts to sell all of its assets except the Company's investment in
Polish Life Improvement, S.A. ("PLI"), an early-stage supermarket and
home-improvement retailer in Poland, and subsequently invested the proceeds in a
business or businesses that might offer the potential to increase long-term
share value.
In July 1995, the Company sold Metanetix Corporation and related
technology to Consolidated Western and Pacific Corporation ("Consolidated"), its
partner in the development of a metals recovery project in Butte, Montana, for a
purchase price of up to $9 million, with payments dependent upon the Butte
project's future profitability. Consolidated subsequently informed the Company
that it did not want to acquire the related technology license, thereby reducing
the maximum purchase price to approximately $7 million.
In August 1995, the Company sold its ownership interests in
approximately 40 Canadian oil and natural gas properties to a private third
party for $2.4 million cash and the assumption of $957,000 million of debt.
During this period, the Company also sold a portion of its investment in Madison
Partners Limited, as market conditions would allow.
Concurrently with these divestitures, the Company's Board of Directors
adopted a strategy to position the Company, through one or more select
acquisitions, as a publisher and distributor of educational multimedia software.
In August 1995, Hariston, through a wholly-owned subsidiary, acquired certain
assets and liabilities of a CD-ROM catalog retailer doing business under the
name "Educorp." Located in San Diego, this subsidiary has since been renamed
Educorp Direct ("Direct"), with a strategic focus on the direct marketing and
distribution of educational CD-ROM software. The businesses previously operated
under the name "Educorp" which were acquired in August 1995 may be deemed a
predecessor of the Company.
In January 1996, Hariston, through a wholly-owned subsidiary, completed
the purchase of certain assets and liabilities of a book and multimedia software
publisher known as HighText Publications, Inc. Also located in San Diego, and
since renamed HighText Interactive, Inc. ("HighText"), this subsidiary is
focused on the development and publishing of adult-learning interactive
multimedia software.
Direct and HighText are operated as the sole operating subsidiaries of
Educorp Multimedia, Inc. ("Educorp"), Hariston's multimedia software subsidiary.
Educorp is positioned as a developer, publisher, and distributor of interactive
multimedia software with an emphasis on adult-learning titles.
Hariston's other major remaining asset is its investment in PLI, a
supermarket and home improvement retailer, co-founded by the Company in 1992.
Following several partial sales from the Company's initial stock ownership
position in PLI, Hariston now retains an approximately 23% ownership interest in
PLI and a $7 million note, currently in default, secured by an additional 20%
ownership interest. PLI is now one of the largest multi-store retail chains in
Poland operating eight supermarkets under the name MAX, and four
home-improvement stores under the name NOMI. PLI generated unaudited total
revenues of approximately $33 million in 1995, an increase of 120% over the
prior year.
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Hariston's strategy is to seek to increase Company value through the
independent development and growth of Educorp, and to continue to explore
possibilities for maximizing value from its investment in PLI. As a 100% owned
subsidiary, Educorp is currently the Company's primary focus.
The principal offices of the Company are located at 1500 West Georgia
Street, Suite 1555, Vancouver, British Columbia, Canada V6G 2Z6, telephone (604)
685-8514, with offices in the United States located at 611 Anton Boulevard,
Suite 1270, Costa Mesa, California 92626, and its telephone number is (714)
556-1755.
A description of the Company's business is set forth in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (the
"Company Form 10-K"), as amended, which description is incorporated herein by
this reference.
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RISK FACTORS
The Securities offered hereby are highly speculative in nature and
involve a high degree of risk. Prospective investors should carefully consider,
along with the other information contained in this Prospectus, the following
considerations and risks in evaluating an investment in the Company.
Risk of Inability to Satisfy Requirements for Additional Funds. The
Company's principal capital requirements include working capital to finance the
internal expansion of Educorp, and costs which may be incurred in connection
with the acquisition of businesses in the future. Historically, the Company has
also required capital to finance operating losses. With the subsequent
acquisition of HighText, and the need to finance product development and general
corporate expenses until both Direct and HighText earn a sufficient profit, the
Company will have to raise additional equity and/or debt capital in 1996. To the
extent excess cash is generated from operations, the Company intends to reinvest
it in the growth and development of its multimedia software publishing and
distribution operations. There is no assurance that cash flows from operations
will be sufficient to meet operating requirements or, if required, that
additional debt or equity financing will be available at all, or will be
available on terms acceptable to the Company. Any additional equity financings
may be dilutive to shareholders, and debt financing, if available, may involve
restrictive covenants. Adequate funds for the Company's operations may not be
available when needed or on terms acceptable to the Company. The Company's
inability to obtain additional financing when needed would have a material
adverse effect on the Company.
Risk from Accumulated Deficit, Tangible Net Worth and Operating Losses.
As of December 31, 1995, the Company had an accumulated deficit of approximately
$25,626,000 and negative tangible net worth of approximately $406,000. For the
year ended December 31, 1995, the Company had an operating loss of approximately
$1.8 million. There can be no assurance that the Company's continuing operations
will result in net income.
Risk from Competitors of Educorp. The software industry is intensely
competitive. Educorp competes primarily against other companies that publish or
distribute multimedia CD-ROM software in the education, entertainment, and
reference categories. Educorp has competition in several areas. As a distributor
of third party titles, Educorp competes with other direct marketing companies
such as Micro Warehouse, Tiger Direct, Multiple Zones, and Creative Computers.
On the retail level, Educorp competes with large computer retailers such as Comp
USA, Computer City, Best Buy, and Micro Center; software vendors such as
Egghead; and mass merchants such as Toys R Us, Walmart, Price/Costco and Sears.
As a software developer and publisher, Educorp competes indirectly against
developers and publishers that sell multimedia titles outside of Educorp's
subject focus, and directly against software developers and publishers that
offer multimedia product for the adult consumer, higher education, and corporate
management and training markets. Examples of established competitors include
Softkey, Cliff Studyware, Princeton Review, and Export Software. Products in the
market compete primarily on the basis of subjective factors such as
entertainment value and objective factors such as price, graphics and sound
quality. Large diversified entertainment, cable and telecommunications
companies, in addition to large software companies such as Microsoft
Corporation, are increasing their focus on the interactive entertainment and
education software market, which will result in even greater competition for
Educorp. Many of these companies have substantially greater financial, marketing
and technical resources than Educorp. As competition increases, significant
price competition and reduced profit margins may result. In response to
increased competition for shelf space, Educorp may need to increase marketing
expenditures. In addition, competition from new technologies (such as new
hardware platforms) may reduce demand in markets in which Educorp has
traditionally competed. Manufacturers and developers of cartridge-based video
games, such as Nintendo and Sega and their licensees, also are indirect
competitors of Educorp. Prolonged price competition or reduced demand as a
result of competing
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technologies would have a material adverse effect on Educorp's business,
financial condition and operating results. There can be no assurance that
Educorp will be able to compete successfully against current or future
competitors or that competitive pressures faced by Educorp will not materially
and adversely affect its business, operating results or financial condition.
Risk from Uncertainty of Market Acceptance. Consumer preferences for
adult-learning, education and entertainment software products are continually
changing and are extremely difficult to predict. Few such products achieve
sustained market acceptance. There can be no assurance that new products
distributed or introduced by Educorp will achieve any significant degree of
market acceptance or that any such acceptance, if achieved, will be sustained
for a sufficient period of time to permit Educorp to recover its development and
marketing costs. There can be no assurance that HighText's products will be
accepted by the adult-learning market to the extent necessary for such products
to be profitable or even for HighText to recover its development and marketing
costs related to such products. In addition, Educorp believes that as ownership
of CD-ROM-based personal computers ("PC's") and other emerging platforms becomes
more widespread, and as Educorp diversifies its product offerings, it must
market its products to a broader market than it has in the past, thereby
increasing overall marketing expenditures without any assurance of profitability
justifying expansion into such broader markets. In seeking to appeal to a
broader market, Educorp will face significant new challenges, including intense
competition from larger companies with established market positions. Educorp
will also face the risk that it may lose existing customers who may dislike the
changes in Educorp's products and marketing approach. There can be no assurance
that Educorp will be able to compete successfully in this broader market.
Risk from Dependence on Vendors. Educorp either purchases or licenses a
material proportion of its products, or certain rights to products, from
vendors. The termination or interruption of Educorp's relationships with these
vendors, or modification of the terms or discontinuance of the license
agreements with Educorp, could adversely affect Educorp's operating income and
cash flow. Educorp's success is, in part, dependent upon the ability of its
vendors to develop and market products that meet the changing requirements of
the marketplace. Similarly, even if certain of Educorp's vendors introduce new
products that are popular, there can be no assurance that Educorp will be able
to obtain authorizations to offer such products.
Risk of Diminished Ability to Compete Resulting from Changing Methods
of Distribution. The manner in which personal computers and related software and
products are distributed and sold is changing, and new methods of distribution
and sale, such as on-line shopping services and catalogs published on CD-ROM,
may emerge. Hardware and software vendors have sold, and may intensify their
efforts to sell, their products directly to end users. From time to time,
certain vendors have instituted programs for the direct sale of large order
quantities of software to certain major corporate accounts. These types of
programs may continue to be developed and used by various vendors. Vendors also
may attempt to increase the volume of software products distributed
electronically to end users' personal computers. Any of these competitive
programs, if successful, could have a material adverse effect on Educorp's
business and financial results.
Risk from Rising Postage, Shipping and Paper Costs. Postage and
shipping are significant expenses in the operation of Educorp's business.
Educorp ships its products to customers by overnight delivery and ground
delivery services and generally mails its catalogs through the U.S. Postal
Service. As is customary in the direct response marketing industry, Educorp
generally passes on only a portion of the costs of overnight delivery and parcel
shipments directly to customers as separate shipping and handling charges. Any
increases in postal or shipping rates in the future could therefore have an
adverse effect on Educorp's operating results. The cost of paper is also a
significant expense of Educorp in printing its catalogs. The cost of paper has
increased significantly over the last several years. Educorp
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may not be able to pass through a significant portion of these increased postage
and paper costs to its customers through increased prices, thereby having a
material adverse effect on Educorp's business and financial results.
Risk of Delays in Introduction of New Products. Educorp's success
depends on its ability to identify, develop and make timely introductions of
successful new products or enhancements of existing products to replace
declining revenues from older products. The effective lives of the products that
Educorp distributes have tended to become shorter due to the introduction of new
hardware platforms, technologies and competitive products, the increase in
competition for retail shelf space among software products and other factors. As
a result, Educorp's ability to introduce and distribute new products on a timely
basis has become increasingly important, as revenues from new products are
essential to replace declining revenues from older products. As its products
have become more complex and costly to develop and market, it has become more
difficult to bring products to market profitably. It is highly likely that
Educorp will experience delays in developing and introducing at least some
future new products. There can be no assurance that such delays will not have a
material adverse effect on Educorp's business and operating results.
Risk from Increasing Complexities and Technical Sophistication of Newly
Developed Products. Because of increasing competition in the adult-learning
interactive software market and as a result of increasingly sophisticated
products, HighText must develop titles incorporating high-quality graphics,
animation, images, video and audio. Such increasing competition and
sophistication has necessitated the allocation of increased financial and human
resources to new product development, packaging, preparation of user
instructional materials and marketing. Due to competitive pressures, however,
HighText's ability to increase product prices is limited. Greater product
development, identification and marketing expenditures also result in greater
financial risk to HighText if the product is not successful.
Risk from Business Interruption. Educorp believes that its success to
date has been, and future results of operations will be, dependent in large part
upon its ability to provide prompt and efficient service to its customers. As a
result, any disruption of the Educorp's day-to-day operations could have a
material adverse effect upon Educorp and any failure of Educorp's management
information systems, distribution center or telephone system could impair its
ability to receive and process customer orders and ship products on a timely
basis."
Risk from Seasonality and Substantial Fluctuations in Revenue.
Educorp's business is seasonal, with the highest level of net sales and earnings
typically occurring during the months from August to January of each year, and
substantially lower levels in other months. Educorp's quarterly operating
results may fluctuate throughout the year as a result of a variety of additional
factors, including delays in market acceptance, changes in platform standards,
the timing of new product introductions by Educorp or its competitors, the
timing of orders for Educorp's products and increases in product returns.
Because a majority of the unit sales for a particular new product typically
occurs in the first several months after the product is introduced, Educorp's
revenues may increase in a quarter in which a major product introduction occurs
and may decline in subsequent quarters.
Risk from Dependence on Key Personnel. Educorp's success depends on the
continued service of its key product design, development, sales, marketing and
management personnel and its ability to continue to attract, motivate and retain
highly qualified employees and contractors. In order to introduce timely and
successful new products, Educorp must retain its key design, development and
purchasing personnel. Competition for skilled product buyers, designers, artists
and technical personnel is intense. The inability of Educorp to attract or
retain product buyers and key design and development personnel could have a
material and adverse effect on Educorp's business and operating results.
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International Risks. Educorp anticipates that international sales will
continue to account for a material share of Educorp's total revenues in the
future. International sales are subject to inherent risks, including changes in
export controls, tariffs and other regulatory requirements and fluctuating
exchange rates. European and Asian distribution channels are more decentralized
and hence more difficult to enter efficiently. Effective competition in
international markets is also likely to require Educorp to translate and
culturally adapt its products and documentation. This will result in higher
levels of specialized inventory and a greater risk of inventory obsolescence.
Furthermore, the laws of certain foreign countries may not protect Educorp's
intellectual property rights to the same extent as do the laws of the United
States. The Company's interest in PLI is also subject to the risks inherent in
transacting business internationally, such as export and monetary controls,
political instability, language and cultural barriers and fluctuating exchange
rates.
Risk of Increased Government Regulation. Legislation has been proposed
to establish an independent agency to work with the video game industry to
create a system for providing parents and other purchasers of software with
information about graphic violence or sexually explicit material contained in
such software. The implementation of such a system may require software
publishers to communicate information regarding the content of their products
(particularly violent or sexually explicit material) to consumers through
appropriate package labeling, advertising and marketing presentations. Similar
developments are also taking place outside the United States. Educorp is unable
to predict what effect, if any, a rating system may have on Educorp's business
and there can be no assurance that such a rating system would not adversely
affect Educorp's results of operations.
Risk from Limited Protection of Proprietary Rights. Educorp regards its
software as proprietary and relies on a combination of patent, trade secret,
copyright and trademark laws, nondisclosure agreements, license agreements and
certain technical measures to protect its proprietary rights. There can be no
assurance that these efforts will be successful. Educorp is aware that
unauthorized copying occurs within the entertainment and education software
industry. It may be possible for third parties to copy Educorp's products or
otherwise obtain and use information that Educorp regards as proprietary.
Policing unauthorized use of Educorp's products is difficult and costly, and
software piracy and unauthorized copying can be expected to be a major
persistent problem. The laws of the United States provide only limited
protection of intellectual property rights, and the laws of certain other
countries in which Educorp's products are or may be distributed provide less
protection. As the number of entertainment and education software products
increases and the functionality of these products overlaps, Educorp believes
that software developers and publishers may increasingly become subject to
infringement claims. From time to time, Educorp may receive communications from
third parties asserting that features or content of certain of its products may
infringe upon intellectual property rights of such parties. There can be no
assurance that claims against Educorp will not result in costly litigation and
require Educorp to license the intellectual property of others. There can be no
assurance that such licenses will be available on reasonable terms, or at all.
Risk of Supply Interruption. Substantially all Educorp's products are
stored on CD-ROM media. As is typical in the industry, Educorp out-sources the
CD-ROM manufacturing function to third parties. In the future, it is possible
that there may be periodic shortages of CD-ROM media and potentially late
deliveries of CD-ROM products from outside duplicating sources. Educorp's
dependence on third parties to perform the manufacturing function could result
in material problems if production were substantially delayed. Educorp produces
its diskette-based products by duplicating master software diskettes onto blank
diskettes acquired in quantity from a number of sources. Educorp occasionally
has difficulty in obtaining blank diskettes of appropriate quality. In addition,
Educorp has occasionally incurred higher than normal production expenses as a
result of supplementing its internal production staff with outside contractors
to meet production deadlines.
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Repatriation Risk. In order to access funds generated by PLI if and
when such excess funds are available, if ever, PLI must either declare and pay
dividends or the Company must sell shares of its PLI stock. PLI is not expected
to declare dividends in the foreseeable future. Although there is currently a
market for PLI's common stock on the Warsaw Stock Exchange, the Company's
ability to sell any of its holdings in PLI is limited. Even if the Company is
more easily able to sell some or all of its PLI common stock, there can be no
assurance that the Company will be able to repatriate the proceeds of such sale.
Risk of Rapid Industry Changes. Both the supermarket and home
improvement industries in Poland are new. As such industries develop in Poland,
they are undergoing accelerated change as producers, manufacturers, distributors
and retailers seek to lower costs and increase services in an increasingly
competitive environment of relatively static over-all demand. More traditional
distribution outlets may have more long term customer loyalty, thus making
extrapolation of current trends an ineffective method of predicting future
results. As investors and established foreign retailers have come to recognize
the retail opportunities in Poland, an increasing number of foreign retailers
have entered the market. PLI has competition, particularly in Warsaw, from
several more established, better capitalized companies. As their home markets
become increasingly competitive, retailers from Germany (Hit), France (Dock de
France), Austria (Billa), and England have opened stores, or acquired an
interest in stores, in Poland. No assurance can be given that increasing
competition in PLI's markets will not adversely affect its financial performance
and results of operations in future periods.
Risk from Changing Economic Conditions. PLI's retail stores are subject
to regional and local economic conditions. There can be no assurance that future
regional or local economic downturns will not have a material adverse effect on
PLI's results of operations and financial condition.
Risk from Competitors of PLI. In its retail operations, PLI competes
with other food outlets on the basis of price, quality and assortment, store
location and format, sales promotions, advertising, availability of parking,
hours of operation and store appeal. To meet the challenges of a rapidly
changing and highly competitive retail environment, PLI must maintain
operational flexibility and develop effective strategies across many market
segments. No assurance can be given that PLI will maintain such flexibility and
develop effective strategies.
Investment Risk Resulting from Volatility of Stock Price. The market
price of the Company's Common Stock has been highly volatile. Such volatility
does not necessarily relate to the Company's financial performance. In the
future, the market price of the Company's Common Stock may be significantly
affected by factors such as the announcement of new products or technological
innovations by the Company or its competitors, quarterly variations in the
Company's results of operations, market conditions in the entertainment and
education software industry, market conditions or political instability in
Eastern Europe, general conditions in the financial markets, conditions in the
economy in general or other factors that might affect discretionary spending by
consumers. In addition, the stock market has experienced and continues to
experience extreme price and volume fluctuations that have particularly affected
the market price for many entertainment and education software companies and
that have often been unrelated to the operating performance of these companies.
These broad market fluctuations, as well as general economic and political
conditions, may adversely affect the market price of the shares offered hereby.
Risk from Unprofitable Acquisitions. The Company, in the ordinary
course of its business, considers acquisitions of, and mergers and other
strategic transactions with, third parties on a regular basis, and it is likely
that the Company will engage in more such transactions in the future. Such
-12-
<PAGE> 13
transactions often involve substantial risks, and there can be no assurance that
any such transactions that are consummated will prove to be beneficial.
Risk from Litigation. The Company is currently a defendant in one
lawsuit and has received a letter from the Environmental Protection Agency that
its former subsidiary (since amalgamated with the Company) may be a "potentially
responsible party" under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("CERCLA").
In September 1995, CAPOZZI, ET AL. V. HARISTON CORPORATION, ET AL., was
filed in the Superior Court of the Province of Quebec, District of Montreal
(Case No. CSM: 500-05-010184-958). The complaint alleges that the Company
(through the actions of persons allegedly acting on its behalf) made
misrepresentations which caused the plaintiffs to suffer a loss in connection
with the plaintiffs' transactions in the stock of the Company. The damages
claimed in this matter are approximately CDN $112,000. The litigation is in its
preliminary stages, and the ultimate outcome cannot be determined.
Until mid-1995, the Company's former subsidiary, Metanetix Corporation
("Metanetix") was engaged in the business of developing certain technology for
the removal of minerals and other inorganic compounds from water, soil and
sludge. In connection with these development efforts, Metanetix and affiliated
corporations operated a laboratory and plant in Butte, Montana, at the site of a
former copper mine which held large volumes of contaminated water. The Metanetix
operations involved, among other things, treating contaminated water extracted
from the mine, and returning the treated water to the mine shaft. This mine and
surrounding areas are part of a Superfund Area designated by the Environmental
Protection Agency ("EPA") under CERCLA. Under CERCLA, the EPA designates
"potentially responsible parties," including current and former owners of
property or property rights in the Superfund Area, and operators in connection
therewith, as parties who may be jointly and severally liable for clean-up costs
attributable to hazardous materials on and from their properties.
Pending the EPA's investigation of the mine and surrounding area, the
Company has received notification from the EPA indicating that the EPA believes
Metanetix to be a "potentially responsible party." The designation of a party as
a "potentially responsible party" under CERCLA does not necessarily mean that
party is liable under CERCLA, or that the EPA has decided to assert a CERCLA
claim against that party. Neither the EPA nor any other governmental agency have
made any formal claim that the Company is liable under CERCLA or any other
similar statute with respect to the Butte operations. No assurance can be given,
however, that such a claim will not be made in the future. If such a claim is
made and is successful, the costs (including defense costs), damages and fines
that may be imposed on the Company as a result could have a material adverse
effect on the Company.
Risk from Decision Not to Pay Dividends. The Company has not paid any
cash dividends upon its Common Stock since its inception and, by reason of its
present financial status and its contemplated financial requirements, does not
anticipate paying any cash dividends in the foreseeable future.
Risk from Possible Delisting of Securities from Nasdaq Stock Market.
The Company's Common Stock is listed on the Nasdaq SmallCap Market. For
continued inclusion on the Nasdaq SmallCap Market, the Company will have to
maintain specified levels of total assets and capital and surplus, as well as
meeting additional criteria concerning the minimum bid price of the Common
Stock, the number and value of shares in the public float, the number of active
market makers, and the number of holders of Common Stock.
If the Company is unable to satisfy Nasdaq's maintenance requirements,
its securities may be delisted from Nasdaq. In such event, trading, if any, in
the Common Stock may thereafter be conducted
-13-
<PAGE> 14
in the over-the-counter market in the so-called "pink sheets" or the NASD's
"Electronic Bulletin Board." Consequently, the liquidity of the Company's
securities could be impaired, not only in the number of securities which could
be bought and sold, but also through delays in the timing of the transactions,
reduction in security analysts' and the news media's coverage of the Company,
and lower prices for the Company's securities than might otherwise be attained.
Furthermore, the Company's Common Stock could become subject to Rule 15g-9 under
the Exchange Act, which imposes additional sales practice requirements on
broker-dealers, including requirements pertaining to the suitability of the
investment for the purchaser and the delivery of specific disclosure materials
and monthly statements. Consequently, this rule may adversely affect the ability
of broker-dealers to sell the Company's securities and may adversely affect the
ability of purchasers in this Offering to sell any of the securities acquired
hereby in the secondary market.
-14-
<PAGE> 15
SELLING SECURITYHOLDERS
The Securities offered hereby are being offered by the Selling
Securityholders listed in the table set forth below in the manner described
elsewhere herein. See "Plan of Distribution." The table sets forth certain
information as of June 26, 1996 concerning the Selling Securityholders,
including the securities offered by them and their beneficial ownership of the
Company's Common Stock.
<TABLE>
<CAPTION>
Securities Beneficially Securities to Ownership After the
Owned be Offered(1) Sale of the
Name of Securityholder Common Stock CommonStock Offered Securities(1)
- ---------------------- ----------------------- ------------- ----------------------
<S> <C> <C> <C>
Vahe Guzelimian 190,000 190,000 0
Suzanne Nawabi 10,000 10,000 0
Harry L. Helms 48,713 48,713 0
Carol S. Lewis 48,713 48,713 0
Jack W. Lewis 48,713 48,713 0
</TABLE>
- ---------------
(1) Assumes no exercise of warrants or options held by any Selling
Securityholder. No Selling Securityholder's ownership before or after
the sale of the offered securities exceeds 1% of the outstanding number
of such securities.
-15-
<PAGE> 16
DESCRIPTION OF SECURITIES
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of the shareholders. The
outstanding shares of Common Stock are entitled to such dividends as are
declared by the Board of Directors. Holders of Common Stock have no preemptive
rights and no right to convert their Common Stock into any other securities. In
the event of a liquidation, dissolution or winding up of the Company, holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities. There are no redemption or sinking fund provisions applicable to
the Common Stock. All outstanding shares are fully paid and nonassessable and
legally issued. The Board of Directors is authorized to issue additional shares
of Common Stock within the limits authorized by the Company's charter and
without shareholder action.
PLAN OF DISTRIBUTION
The Selling Securityholders have indicated to the Company that they
intend to offer the Securities for resale to the public from time to time in
regular brokerage transactions in the over-the-counter market, in privately
negotiated transactions or a combination of such methods of sale, at market
prices prevailing at the time of sale or at prices otherwise negotiated. Usual
and customary brokerage commissions will be paid by the Selling Securityholders
in connection with such sales, where appropriate.
Under the terms of certain agreements between the Company and certain
of the Selling Securityholders, the Company has agreed to indemnify such Selling
Securityholders against certain liabilities, including liabilities arising under
the Securities Act of 1933, as amended.
-16-
<PAGE> 17
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Bylaws of the Company provide that, subject to Section 124 of the
Canada Business Corporations Act ("CBCA"), the Company shall indemnify a
director or officer of the Company, a former director or officer of the Company
or a person who acts or acted at the Company's request as a director or officer
of a body corporate of which the Company is or was a shareholder or creditor,
and his heirs and legal representatives, against all costs, charges and expenses
reasonably incurred by him in respect of certain actions or proceedings to which
he is made a party by reason of his office, if he met certain specified
standards of conduct, and the Company shall also indemnify any such person in
such other circumstances as the CBCA or law permits or requires.
The Company believes the foregoing provisions are necessary to attract
and retain qualified persons as directors and officers.
At present, there is no litigation or proceeding pending involving a
director of the Registrant as to which indemnification is being sought, nor is
the Registrant aware of any threatened litigation that may result in claims for
indemnification by any director.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
-17-
<PAGE> 18
================================================================================
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offering described herein, and, if given or
made such other information or representations must not be relied upon as having
been authorized by the Company or the Selling Securityholders. This Prospectus
does not constitute an offer of any securities other than those to which it
relates or an offer to sell or a solicitation of an offer to buy in any
jurisdiction to any person to whom it is not lawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus, nor
any sale made hereunder, shall, under any circumstances, create an implication
that there has been no change in the facts herein set forth since the date
hereof.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information .................................................... 4
Incorporation of Certain Documents
by Reference............................................................ 4
The Company............................................................... 6
Risk Factors ............................................................. 8
Selling Securityholders................................................... 15
Description of Securities................................................. 16
Plan of Distribution...................................................... 16
Indemnification of Directors and Officers................................. 17
</TABLE>
================================================================================
================================================================================
Until ________________, 1996, all dealers effecting transactions in the
registered securities, whether or not participating in this distribution, may be
required to deliver a Prospectus.
HARISTON CORPORATION
____________ 1996
================================================================================
<PAGE> 19
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses of the Registrant
in connection with the issuance and distribution of the securities described in
the Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee........ $ 120.00
Legal Fees and Expenses ................................... 9,000.00
Accounting Fees and Expenses............................... 3,000.00
Printing and Engraving Expenses ........................... 2,000.00
Miscellaneous ............................................. 500.00
Total ..................................................... $14,620.00
==========
</TABLE>
All of the above expenses will be paid by the Registrant.
15. Indemnification of Directors and Officers.
The Bylaws of the Registrant provide that, subject to Section 124 of
the Canada Business Corporations Act ("CBCA"), the Registrant shall indemnify a
director or officer of the Registrant, a former director or officer of the
Registrant or a person who acts or acted at the Registrant's request as a
director or officer of a body corporate of which the Registrant is or was a
shareholder or creditor, and his heirs and legal representatives, against all
costs, charges and expenses reasonably incurred by him in respect of certain
actions or proceedings to which he is made a party by reason of his office, if
he met certain specified standards of conduct, and the Registrant shall also
indemnify any such person in such other circumstances as the CBCA or law permits
or requires.
The inclusion of the above provision in the Bylaws of the Registrant
may have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter shareholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Registrant and its
shareholders.
At present, there is no litigation or proceeding pending involving a
director of the Registrant as to which indemnification is being sought, nor is
the Registrant aware of any threatened litigation that may result in claims for
indemnification by any director.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
II-1
<PAGE> 20
16. Exhibits.
2.1 Acquisition Agreement dated as of July 28, 1995 by and
among Hariston Corporation, a Canadian corporation, and
Consolidated Western and Pacific Resources Corp., a
British Columbia corporation*
5 Opinion of Rutan & Tucker, LLP*
23.1 Consent of Raymond, Chabot, Martin, Pare*
23.2 Consent of Doane Raymond*
23.3 Consent of Arthur Andersen*
23.4 Consent of Jay J. Shapiro*
- ----------------------
* Filed herewith.
17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to:
(i) Include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) Include any material or changed information on the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1) (i) and (1) (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That for the purpose of determining liability under the Securities
Act of 1933, the Registrant will treat each post-effective amendment as a new
Registration Statement of the securities offered, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To file a post-effective amendment or remove from registration any
of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
II-2
<PAGE> 21
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Costa Mesa, State of California, on the 9th day of
July, 1996.
HARISTON CORPORATION
By: /s/ JAMES V. McGOODWIN
-----------------------------------
James V. McGoodwin, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James V. McGoodwin Director, Chief Executive July 9, 1996
- -----------------------
James V. McGoodwin Officer, President (Principal
Executive Officer) and
authorized representative in
the United States
/s/ L. James Porter Director, Secretary and Chief July 9, 1996
- -----------------------
L. James Porter Financial Officer (Principal
Financial Officer)
/s/ James Angus Director July 9, 1996
- -----------------------
James Angus
Director ______, 1996
- -----------------------
Nuno Brandolini
/s/ Neil S. MacKenzie Director July 9, 1996
- -----------------------
Neil S. MacKenzie
</TABLE>
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Pages
----------- ----------- --------------
<S> <C> <C>
2.1 Acquisition Agreement dated as of July 28, 1995 by and
among Hariston Corporation, a Canadian corporation, and
Consolidated Western and Pacific Resources Corp., a
British Columbia corporation*
5 Opinion of Rutan & Tucker, LLP*
23.1 Consent of Raymond, Chabot, Martin, Pare*
23.2 Consent of Doane Raymond*
23.3 Consent of Arthur Andersen & Co.*
23.4 Consent of Jay J. Shapiro*
</TABLE>
- ------------------
* Filed herewith.
<PAGE> 1
Exhibit 2.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT ("Agreement") is made this 28th day of
July, 1995, by and among HARISTON CORPORATION, a Canadian corporation
("Hariston"), and CONSOLIDATED WESTERN AND PACIFIC RESOURCES CORP., a British
Columbia corporation ("Resources") with respect to the following facts:
RECITALS
A. Hariston is a diversified corporation engaged in the business,
among others, of developing certain technologies for extracting metals and
minerals from water, soil and other substances. In connection with this
business, Hariston formed a joint venture with Resources, pursuant to a
Shareholder Agreement dated August 17, 1993 between Metanetix Corporation,
Western and Pacific Resources Corporation and Metanetix Marketing Corporation
(the "Shareholder Agreement"). Such agreement related to the formation and
governance of Metanetix Marketing Corporation ("Marketing"), which was the
entity formed to carry out the activities of the joint venture. The activities
of the joint venture were principally carried out at a laboratory and treatment
plant located in Butte, Montana (collectively the "Butte Plant").
B. In connection with the above-described business, Hariston
obtained an ownership interest in certain technology from a subsidiary of The
Toronto Harbour Commissioners ("THC"), under a Co-Ownership Agreement dated
December 15, 1992, between 981011 Ontario Inc. ("THC Sub") and Hariston's
former subsidiary, Metanetix Corporation (the "Co-Ownership Agreement"). A
copy of the Co-Ownership Agreement is attached hereto as Exhibit A. For
purposes hereof, the term "Technology" has the meaning given to it under the
Co-Ownership Agreement. Subsequent to the execution of such agreement,
Metanetix Corporation amalgamated into Hariston, with Hariston being the
surviving entity.
C. Under a Technology License Agreement dated August 17, 1993
between Metanetix Corporation and Marketing (the "Technology Agreement"),
Metanetix Corporation licensed the Technology to Marketing for certain limited
purposes. Under a Mine Lease Agreement dated August 17, 1993 between Resources
and Marketing, Resources sold to Marketing minerals located in the mine water
present on the property which was the subject of such agreement (the "Mine
Agreement"). The Technology Agreement and Mine Agreement were entered into in
connection with the operation of the Butte Plant. An affiliate of Resources,
Kelley Resources Recovery Corp. ("Kelley"), was subcontracted to carry out
certain construction and operational activities at the Butte Plant.
<PAGE> 2
D. Hariston owns all of the outstanding capital stock of
Metanetix Technical Services, Inc., a Delaware corporation ("MTS"), which
provides technical services to Marketing, and which owns certain plant and
equipment used in connection with the operations conducted by Marketing.
E. The parties desire that Hariston sell to Resources, on the
terms specified herein, all of the shares of capital stock of Marketing and MTS
owned by Hariston, and that it sell to Resources all of its rights in the
Co-Ownership Agreement upon the fulfillment of certain conditions.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements of the parties contained herein, the parties do hereby agree as
follows:
1. Purchase and Sale of Marketing and MTS.
1.1 Agreement to Purchase. Subject to fulfillment of the
conditions specified herein, and for the consideration specified in Section 1.2
below, Hariston agrees to sell, transfer and assign to Resources, and Resources
agrees to purchase from Hariston, the following (referred to herein
collectively as the "Securities"):
(a) All of the outstanding capital stock of MTS,
consisting of one hundred (100) shares of common stock;
(b) Five thousand (5,000) shares of common stock of
Marketing, representing all of the outstanding common stock of
Marketing owned by Hariston and 50% of all of the outstanding common
stock of Marketing owned by all shareholders.
1.2 Purchase Price. The purchase price for the Securities shall
be an amount equal to 50% of the Net Income (as defined below) derived by
Resources, up to a maximum aggregate purchase price of $7,000,000 (the "Maximum
Amount"). The amounts so payable shall be subject, however, to the provisions
of Section 1.2(e) below.
(a) For purposes hereof, the term "Net Income" shall mean
all revenues and receipts received by Resources, Marketing or any of
their affiliates which derive from or relate to any operation or
activity involving the Butte Plant including, without limitation,
revenues or receipts derived from the sale of minerals extracted from
water or other materials using the Technology and/or the Butte Plant,
from licensing fees, or from the remediation of environmental
pollutants, and also including proceeds from the liquidation of the
Butte Plant if such liquidation occurs more than 12 months after the
"Closing Date," as defined below, less:
-2-
<PAGE> 3
(i) all operating expenses incurred in
connection with the operation of the Butte Plant including,
without limitation, reasonable salaries and employment
expenses of employees of Resources and its affiliates actually
incurred in connection with the operations of the Butte Plant
(but not including the salaries or employment expenses of
general administrative personnel or personnel engaged in
activities unrelated to the Butte Plant);
(ii) amounts paid to any unaffiliated
third parties, if any, with whom Resources has entered into
joint ventures, or with whom Resources may in the future enter
into joint ventures, concerning the development and/or
operation of the Butte Plant;
(iii) amounts paid for capital
improvements to the Butte Plant;
(iv) amounts paid pursuant to Section
6.3(a) below; and
(v) amounts paid to Resources in
repayment of "Qualifying Investments," as defined below.
For purposes of the above, no deduction shall be made for
lease payments, overhead charges, management fees, consulting charges,
commissions, royalties or similar charges payable to Resources or any
of its affiliates, and no deduction shall be made for any general or
administrative expenses not directly related to the Butte Plant. No
additional deduction shall be made for any expense that qualifies
under any of the clauses set forth above if a deduction has already
been made for such expense under a different clause. Furthermore, in
calculating Net Income no payments for operating expenses or capital
improvements shall be deducted to the extent that such payments exceed
the amounts that would normally be charged by unaffiliated third
parties in arm's length transactions.
(b) The amounts payable to Hariston hereunder shall be
paid on a quarterly basis within 60 days after the end of each
calendar quarter until such time as the Maximum Amount has been paid.
In connection with the payment of such amounts, Resources shall
provide Hariston with the reports and inspection rights as specified
in Section 6.1(c) below.
(c) Effective at the "Closing" as defined below, Hariston
agrees to forgive or cause to be forgiven all loans made by it or MTS
to Marketing or Kelley, in excess of the amount of $3,000,000, so that
after such debt forgiveness, Marketing and/or Kelley shall be indebted
to Hariston for the maximum aggregate amount of $3,000,000 (the
"Debt"). In addition, the remaining Debt of $3,000,000 shall be
forgiven at such time as Resources makes additional Qualifying
Investments (as defined below) in the further development and
-3-
<PAGE> 4
operation of the Butte Plant, pursuant to the following formula: The
proportion of the total amount of the $3,000,000 Debt forgiven shall
be equal to a fraction (not exceeding 1/1) having as its numerator the
total amount of Qualifying Investment made by Resources in the further
development and operation of the Butte Plant, and having as its
denominator $500,000. As a result, at such time as Resources had made
a Qualifying Investment of $500,000, the full amount of the $3,000,000
Debt from Marketing to Hariston shall be forgiven.
(d) For purposes hereof, the term "Qualifying Investment"
shall mean funds actually advanced by Resources after April 28, 1995
to pay:
(i) future operating expenses of the
Butte Plant;
(ii) the currently accrued expenses
described on Exhibit 4.1(e) hereto; or
(iii) the cost of future capital
improvements to the Butte Plant.
The term "Qualifying Investment" shall not include any
payments to affiliates of Resources (other than those listed on
Exhibit 4.1(e)). A Qualifying Investment may be repaid to Resources
only out of future cash generated by the operation of the Butte Plant
or from the proceeds of the liquidation of the Butte Plant. All
Qualifying Investments may be repaid to Resources before any amounts
are payable to Hariston under Section 1.2.
(e) In the event that any Debt of Marketing to Hariston
remains unforgiven under Section 1.2(c) above after that date one year
from the date hereof, the Net Income received after such date shall be
allocated and paid 60% to Hariston and 40% to Resources, with the
amounts so allocated to Hariston being used to repay such amount of
the Debt as remains unpaid from time to time. At such time as the
Debt has been repaid in full, the allocation and payment of Net Income
shall be made 50% to Hariston and 50% to Resources, as set forth
above. Any amounts so applied to the repayment of Debt shall not be
counted towards the payment of the Maximum Amount of the purchase
price.
(f) For purposes hereof, the term "affiliate" shall mean,
with respect to any person, corporation, partnership or other legal
entity (the "Subject Entity"), any other person, corporation,
partnership or other legal entity which controls, is controlled by, or
is under common control with the Subject Entity. For purposes hereof,
any party which owns or controls the right to vote 50% or more of the
voting securities of any corporation, partnership or other legal
entity shall conclusively be deemed to control such other corporation,
partnership or other legal entity, although in appropriate
-4-
<PAGE> 5
circumstances a person may control another entity even though he owns
or controls a lesser proportion of the outstanding voting securities.
1.3 Closing. The closing of the transactions contemplated hereby
(the "Closing") shall be effected through the exchange of the documents set
forth below, which may be accomplished through the use of the mails or
commercial messengers. The transactions specified herein shall be deemed
closed when all of the conditions to closing have either been met or waived,
and each of the parties has received all of the documents required to be
received by it hereunder. These transactions shall be closed on the latest of:
(1) July ___, 1995; (2) the earliest practicable date after the satisfaction of
all of the conditions to closing set forth herein; or (3) such later date as
the parties may mutually agree; provided that neither party shall have any
obligation to close such transactions if such closing has not occurred by
____________, 1995.
(a) At the Closing, Hariston shall deliver to Resources:
(i) Executed assignments of the
certificates representing the Securities, with all
endorsements necessary for purposes of transferring such
Securities on the books of Marketing and MTS;
(ii) Certified resolutions of the Board
of Directors of Hariston approving the transactions set forth
herein.
(b) At the Closing, Resources shall deliver to Hariston:
(i) Certified resolutions of the Board of
Directors of Resources approving the transactions set forth
herein.
1.4 Termination of Agreements. Effective at the Closing, without
further action on the part of either of the parties hereto and without
liability to either party, the Shareholder Agreement, Article V of the
Technology Agreement, and Article IV of the Mine Lease Agreement, shall be
automatically terminated.
2. Transfer of Technology License Rights.
2.1 Agreement to Purchase and Sell. Subject to fulfillment of the
conditions specified herein (including the consent by THC Sub or the expiration
of its right of first refusal with respect to the "Co-Ownership Rights," as
defined below), and for the consideration specified in Section 2.2 below,
Hariston agrees to sell, transfer and assign to Resources, and Resources agrees
to purchase from Hariston, all of Hariston's rights (the "Co-Ownership Rights")
under the Co-Ownership Agreement. Upon the transfer of the Co-Ownership
Rights, Resources shall assume all of Hariston's obligations under the
Co-Ownership Agreement, except the obligation to pay to THC Sub the $250,000
minimum royalty due December 31,
-5-
<PAGE> 6
1995. The parties expressly acknowledge and agree that Hariston's agreement to
sell the Co-Ownership Rights is in consideration, among other things, of
Resources' agreement under Section 6.1(a) below to make a Qualifying Investment
in the Butte Plant of no less than $500,000. The parties expressly agree that
should the Co-Ownership Rights not be transferred under this Section 2 for any
reason, the failure to consummate such transfer shall not affect the other
transactions contemplated hereby, including, without limitation, the purchase
and sale of Securities, which shall continue to be valid and binding.
2.2 Purchase Price. The purchase price for the Co-Ownership
Rights shall consist of an amount equal to 50% of the "Net Rights Income" (as
defined below) earned by Resources or any affiliate of Resources from any use
of the Technology covered by the Co-Ownership Rights, up to a maximum purchase
price of $2,000,000. The amounts payable under this Section 2.2 shall be in
addition to the amounts payable under Section 1.2 above.
(a) For purposes hereof, the term "Net Rights Income"
shall mean all revenues and receipts received by Resources or any of
its affiliates which derive from or relate to any use or sublicense of
the Technology (except for revenues and receipts relating to the Butte
Plant and used for purposes of calculating Net Income as set forth in
Section 1.2(a) above), less all reasonable and normal operating
expenses associated with such activities or operations. Such Net
Rights Income shall be calculated without deduction for overhead
charges, management fees, consulting charges or other similar charges
payable to Resources or any affiliate of Resources in connection with
such activities or operations, and without deduction for any general
or administrative expenses not directly related to the Butte Plant.
Furthermore, in calculating Net Rights Income no payments for
operating expenses shall be deducted to the extent that such payments
exceed the amounts that would normally be charged by unaffiliated
third parties in arm's length transactions.
2.3 Conditions. It shall be a condition to Hariston's obligation
to sell, and Resources obligation to buy, the Co-Ownership Rights, that THC Sub
shall have given its consent to such sale, or shall have declined to exercise
its right of first refusal as required under the Co-Ownership Agreement.
Immediately upon execution of this Agreement, Hariston shall use its best
efforts to obtain THC Sub's consent to the transfer of the Co-Ownership Rights.
Resources agrees to fully cooperate with Hariston in seeking such consent. In
connection with the transfer of the Co-Ownership Rights, Resources agrees to
assume all of the obligations of Hariston (as the successor to Metanetix
Corporation) under the Co-Ownership Agreement, except the $250,000 minimum
royalty due December 31, 1995.
2.4 Sublicense of Co-Ownership Rights Prior to Transfer. The
parties acknowledge that prior to the date hereof Hariston and its
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<PAGE> 7
affiliates have contacted several parties with respect to potential
sublicensing arrangements concerning the Technology. The parties that have
been contacted prior to the date hereof are referred to herein as the "Existing
Contacts," and are identified on Exhibit 2.4 hereto. Until such time as the
Co-Ownership Rights have been transferred to Resources pursuant to this Section
2, Hariston shall be entitled, in accordance with the provisions of the
Co-Ownership Agreement, to sublicense the Co-Ownership Rights to any of the
Existing Contacts (including, without limitation, Dr. Irving Devoe and/or
Hampshire Chemical); provided, however, that any such sublicense to Dr. Devoe
shall be only for use in connection with one of the Existing Contacts, and not
for uses or applications which have not been at least preliminarily discussed
prior to the date hereof. In the event such a sublicense is agreed to,
Hariston shall be entitled to keep and retain all license fees and other
consideration paid by the sublicensor until such time as the Co-Ownership
Rights are transferred under this Section 2 to Resources. Following such
transfer, all license fees and other consideration payable under the sublicense
after such date shall be allocated and paid, upon receipt, 50% to Hariston and
50% to Resources. None of the payments made to Hariston under this Section 2.4
shall be counted towards payment of the maximum amounts payable under Sections
1.2 and 2.2, and instead shall be in addition to the amounts payable under such
Sections.
2.5 Closing. The closing of the transactions contemplated by this
Section 2 (the "Rights Closing") shall take place as soon as practicable after
receipt of consent from THC Sub and/or THC, as appropriate. Such Rights
Closing shall, to the extent practicable, be effected in the same manner as the
Closing under Section 1.3 above. At the Rights Closing, the parties shall
execute and deliver to each other such instruments of assignment and assumption
relating to the Co-Ownership Agreement and Co-Ownership Rights as are necessary
to effect the assignment of such agreement and the rights thereunder in
accordance with this Section 2.
3. Permitted Joint Ventures.
In connection with Resources' operation of the Butte Plant after the
Closing Date, Resources shall be entitled to form a joint venture with such
third parties as Resources may elect, provided, however, that in the case of
any such joint venture, Resources shall acknowledge that all payments due to
it, including any commissions, override payments, or royalties for minerals,
shall be included as revenues for purposes of the calculation of "Net Income"
as set forth above. To the extent that Resources acquires or controls the
joint venture partner, the revenues of the joint venture partner, to the extent
that they would otherwise qualify as the type of revenues or receipts that are
taken into account in calculating Net Income or Net Rights Income, shall be
deemed revenues of Resources.
-7-
<PAGE> 8
4. Representations and Warranties.
4.1 Representations and Warranties by Hariston. In order to
induce Resources to enter into this Agreement, Hariston hereby represents and
warrants to Resources as follows:
(a) Due Authorization; Enforceability. Hariston has the
full legal right and corporate power required to enter into, execute
and deliver this Agreement and the other agreements, instruments and
documents contemplated hereby, and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered by and
is the valid and binding obligation of Hariston enforceable in
accordance with its terms, subject to the limitation on enforceability
under applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the rights and
remedies of creditors, and general principles of equity.
(b) Title to Securities. At the Closing, Hariston shall
deliver to Resources good and marketable title to the Securities, free
and clear of all liens, claims, encumbrances, security interests and
restrictions other than restrictions on transferability imposed under
applicable securities laws.
(c) Assets. All of the tangible and intangible assets
owned by Hariston or any of its subsidiaries or affiliates (other than
the Co-Ownership Rights) are owned by either MTS or Marketing.
(d) Capitalization of MTS. The total authorized capital
stock of MTS consists of 3,000 shares of common stock, of which 100
shares (constituting the shares to be transferred to Resources
hereunder) are outstanding. All of the outstanding shares are duly
and validly issued, fully paid and non-assessable.
(e) MTS and Marketing Liabilities. Attached hereto as
Exhibit 4.1(e) is a list, prepared to best knowledge of Hariston, of
the accounts payable relating to operating expenses of MTS and
Marketing as of April 28, 1995.
4.2 Representations and Warranties by Resources. In order to
induce Hariston to enter into this Agreement, Resources hereby represents and
warrants to Hariston as follows:
(a) Due Authorization; Enforceability. Resources has the
full legal right and corporate power required to enter into, execute
and deliver this Agreement and the other agreements, instruments and
documents contemplated hereby and to perform fully its obligations
hereunder. This Agreement has been duly executed and delivered by and
is the valid and binding obligation of Resources enforceable in
accordance with its terms, subject to the limitations on
enforceability under applicable bankruptcy, insolvency,
reorganization, moratorium
-8-
<PAGE> 9
and other laws of general application affecting the rights and
remedies of creditors, and general principles of equity.
(b) Investigation. Resources has knowledge of the
operation of the Butte Plant and the assets maintained at such plant.
Resources is fully aware of the scientific principles involved in the
operations conducted at the Butte Plant, and has had such opportunity
as it deems necessary and appropriate to inspect the Butte Plant, and
to investigate all relevant scientific and financial aspects of such
operations. Resources acknowledges and agrees that Hariston makes no
representations regarding the scientific or commercial viability of
the mineral-extraction processes under development at the Butte Plant,
or of the Technology which is the subject of the Co-Ownership
Agreement. Resources has carefully reviewed the Co-Ownership
Agreement and is fully aware of the terms contained therein.
(c) Professional Representation. Resources has obtained
such legal and accounting advice in connection with the transactions
contemplated hereby as are necessary to fully inform it of the legal,
tax and accounting issues pertaining to the transactions contemplated
by this Agreement. Resources acknowledges and agrees that the firm of
Rutan & Tucker has solely represented Hariston Corporation in
connection with these transactions.
5. Conditions to Closing.
5.1 Conditions to Obligations of Hariston. The obligations of
Hariston to consummate the transactions set forth herein shall be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions:
(a) The transactions contemplated hereby shall have been
approved by the Board of Directors of Hariston and, if required by
applicable law or deemed appropriate by the Board of Directors of
Hariston, by the shareholders of Hariston.
(b) Hariston shall have received all necessary
governmental approvals, consents and permits for the transactions
contemplated hereby.
(c) The holders of less than 1% of the Company's voting
securities shall have taken such actions as are necessary to exercise
their dissenters' appraisal rights under applicable law, on or prior
to the last date by which such actions may effectively be taken.
5.2 Conditions to Obligations of Resources. The obligation of
Resources to consummate the transactions set forth herein shall be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions.
-9-
<PAGE> 10
(a) The transactions contemplated hereby shall have been
approved by the Board of Directors of Resources and, if required by
applicable law or deemed appropriate by the Board of Directors of
Resources, by the shareholders of Resources.
(b) Resources shall have received all necessary
governmental approvals, consents and permits for the transactions
contemplated hereby.
6. Covenants of the Parties.
6.1 Covenants by Resources.
(a) Investment in the Butte Plant. Resources agrees,
within the 12 month period following the Closing Date, to make a
Qualifying Investment in the further operation and development of the
Butte Plant in the aggregate amount of no less than $500,000.
(b) Future Activities. Resources agrees to indemnify,
defend and hold harmless Hariston, its affiliates and their respective
officers, directors, shareholders and agents from and against any and
all loss, cost and liability relating to: (i) the operation of the
Butte Plant after the Closing Date; or (ii) the obligations set forth
in the Co-Ownership Agreement or the use of Technology after the
Rights Closing.
(c) Inspection and Audit Rights. All payments due to
Hariston hereunder shall be accompanied by an appropriate report
specifying the amounts of revenues, expenses and other items used to
calculate the payment made, in sufficient detail to allow Hariston to
verify the accuracy of the calculation of the amounts due. Hariston
or its designated representative shall have the right at any time
during normal business hours, upon reasonable notice, and in a manner
so as not to unreasonably disrupt the normal business of Resources, to
examine and make copies of or extracts from the books, records and
accounts of Resources insofar as they pertain to the calculation of
the amounts due to Hariston hereunder. Subject to the requirements of
legal process and applicable law, Hariston agrees to maintain in
confidence all nonpublic information concerning Resources. Such books
and records shall be retained by Resources for at least five years
following the period covered thereby. Any such examination of the
books and records of Resources shall be at the sole cost and expense
of Hariston, provided that if any such examination reveals an
underpayment of more than $10,000 in any twelve month period, the
expenses of such examination shall be borne by Resources. Hariston
shall have the right at all reasonable times to inspect Resources' use
of the Technology and the performance of all operations using such
Technology, and all relevant documents, materials and records
pertaining thereto. If the Co-Ownership Rights are transferred to
Resources,
-10-
<PAGE> 11
Resources shall provide Hariston with a copy of all reports provided
by Resources to THC Sub, THC or their successors under the Co-
Ownership Agreement. Resources shall also provide Hariston, at the
time any joint venture with a third party is agreed to, with copies of
all joint venture agreements and related documents which affect or
specify the terms of such joint venture.
6.2 Covenants of Hariston. Hariston covenants as follows:
(a) Maintenance of Co-Ownership Agreement. Subject to
Section 6.2(b) below, until such time as Hariston has conveyed the
Co-Ownership Rights to Resources under Section 2 above, or until
December 31, 1995, whichever is later, Hariston agrees to take such
reasonable steps as are necessary to maintain the ownership rights set
forth in the Co-Ownership Agreement as it now exists, and will use its
best efforts to continue to employ Dr. Irving Devoe as may be required
thereunder.
(b) Royalties. Hariston shall not be required to pay the
$250,000 royalty due under the Co-Ownership Agreement on December 31,
1995, but may do so at its own election. If Hariston elects not to
pay such royalty, it shall so notify Resources by no later than
December 1, 1995. If Hariston does not pay such royalty Resources
shall be entitled to retain the Co-Ownership Rights, but shall not be
obligated to pay the purchase price therefor set forth in Section 2.2
above. Resources acknowledges, however, that the Co-Ownership
Agreement requires the payment of minimum royalties, and that
Hariston's decision not to pay the minimum royalty due on December 31,
1995, may cause the Co-Ownership Agreement to terminate, and the
Co-Ownership Rights to be revested in THC Sub. Hariston shall have no
liability to Resources for Hariston's decision not to pay such minimum
royalty payment.
(c) Inspection and Audit Rights. In the event that
Hariston enters into a joint venture with respect to which Resources
is entitled to a portion of the license fees or other related
consideration under Section 2.4 above, Hariston agrees to maintain
separate books and records with respect to such joint venture and the
amounts payable to the parties thereunder. Such books and records
shall be maintained in sufficient detail to allow Resources to verify
the accuracy of the calculation of the amounts due. Resources or its
designated representative shall have the right at any time during
normal business hours, upon reasonable notice, and in a manner so as
not to unreasonably disrupt the normal business of Hariston, to
examine and make copies of or extracts from such books, records and
accounts insofar as they pertain to the calculation of the amounts due
to Resources hereunder. Subject to the requirements of legal process
and applicable law, Resources agrees to maintain in confidence all
nonpublic information concerning Hariston. Such books and records
shall be retained by Hariston for at least five years following the
-11-
<PAGE> 12
period covered thereby. Any such examination of the books and records
of Hariston shall be at the sole cost and expense of Resources,
provided that if any such examination reveals an underpayment of more
than $10,000 in any twelve month period, the expenses of such
examination shall be borne by Hariston.
6.3 Additional Covenants.
(a) Payment of Existing Liabilities for Operating
Expenses. Resources agrees to pay, following the Closing Date, one
half of those accounts payable of Marketing, Kelley and MTS set forth
at Exhibit 4.1(e) hereto, and to indemnify Hariston against loss, cost
or liability relating to the non-payment thereof. Hariston shall pay
the remaining one half of the payables identified in Exhibit 4.1(e)
hereto (and for such purposes all payments of such payables after
April 28, 1995 shall be considered payments under this Section
6.3(a)). Hariston shall also pay all accrued trade payables of
Marketing and MTS for services rendered or goods delivered in
connection with the operation of the Butte Plant prior to April 28,
1995, other than those payables identified on Exhibit 4.1(e) hereto.
Other than as set forth above, Hariston is not obligated to pay any
other liabilities. Resources agrees to apply the first revenues and
receipts that would be included under Section 1.2(a) above in
calculating Net Income to the reimbursement, pro rata, of Hariston and
itself for those payments made by them with respect to the payables
identified on Exhibit 4.1(e) hereto. The payments made for such
purpose shall be deducted under Section 1.2(a)(iv) in calculating Net
Income.
(b) Liquidation of Butte Plant. Resources and Hariston
jointly agree that in the event Resources elects to liquidate the
Butte Plant within 12 months from the Closing Date, except as set
forth in the following sentence, the equipment, supplies and other
assets located at such plant shall be liquidated and the proceeds
thereof shall be used to pay all of the accounts payable listed on
Exhibit 4.1(e), to the extent that they have not then been paid, then
to reimburse Resources and Hariston for such of the Exhibit 4.1(e)
payables that Resources and Hariston have paid, and the excess, if
any, shall be paid 50% to Resources and 50% to Hariston.
Notwithstanding the foregoing, to the extent Resources purchases
equipment after the Closing Date for use in connection with the Butte
Plant operations, any proceeds from the sale of such equipment shall
be retained by Resources.
7. Miscellaneous.
7.1 Currency; Accounting. Unless otherwise expressly set forth
herein, all amounts set forth herein are denominated in United States dollars,
and all amounts shall be calculated in
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<PAGE> 13
accordance with United States generally accepted accounting principles.
7.2 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute a single instrument.
7.3 Notices. Except as otherwise expressly provided herein, any
notice, demand or payment required or permitted to be given or paid shall be
deemed duly given or paid only if personally delivered or sent by first class
mail and shall be deemed to have been given when personally delivered or two
days after having been deposited in the first class mail, certified mail,
return receipt requested, properly addressed with postage prepaid. All notices
or demands shall be effective only if given in writing. For the purposes
hereof, the addresses of the parties hereto (until a notice of a change thereof
is given as provided in this Section 7.3) shall be as follows:
If to Hariston: Hariston Corporation
1500 West Georgia Street, Suite 1555
Vancouver, B.C. V6G 2Z6
Attention: James V. McGoodwin
If to Resources: David Anfield, Esq.
Sobolewski Anfield, Barristers
and Solicitors
16th Floor, Stock Exchange Tower
P.O. Box 10068 - Pacific Centre
Vancouver, British Columbia V7Y 1C3
With a copy to: Consolidated Western and Pacific
Resources Corp.
330 Spadina Road, Suite 2102
Toronto M5R 2V9
Ontario, Canada
Attention: Stephen J. Roth
7.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns. Neither party may assign its rights or obligations under this
Agreement without the express prior written consent of the other.
7.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties relating to the subject matter hereof, is
intended as a complete and exclusive statement of the terms of this Agreement
among the parties with respect thereto, and supersedes all prior agreements,
representations and understandings, whether written or oral.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above indicated.
HARISTON CORPORATION
By: /s/ James V. McGoodwin
------------------------------
James V. McGoodwin
Its: Chief Executive Officer
CONSOLIDATED WESTERN AND PACIFIC
RESOURCES CORP.
By: /s/ Stephen J. Roth
-------------------------------
Stephen J. Roth
Its: Chairman
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<PAGE> 15
EXHIBIT A
CO-OWNERSHIP AGREEMENT BETWEEN 981011 ONTARIO INC. AND
METANETIX CORPORATION
-15-
<PAGE> 16
EXHIBIT 2.4
LIST OF EXISTING CONTACTS
1. Advanced Recovery Systems - Atlanta, Georgia
2. Battelle Environmental Systems & Technology - Columbus, Ohio and
Hartford, Washington
3. CAGO, Inc. - Oklahoma City, Oklahoma
4. Dupont Specialty Chemicals - Inglewood, California and Vancouver,
Washington
5. Hampshire Chemical Corporation - Lexington, Massachusetts
6. Monsanto - Columbus, Ohio
7. Noranda Inc. - Pointe Clair, Quebec
8. Scientific Ecology Group - Richland, Washington
9. Speigel Industries - Harrison, New Jersey
10. Westinghouse Hanford Company - Hartford, Washington
-16-
<PAGE> 17
EXHIBIT 4.1(e)
LIST OF KNOWN ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
Vendor Amount
- ------ ------
<S> <C>
2M Company 17,091.24
ADT Security Systems 1,999.00
Aldrich Chemical Co., Inc. 144.85
Alfa Laval Separation Inc. 8,273.96
Allied Technical Sales 458.09
Anderson Steel Supply 13,160.00
ANM Equipment 19,553.75
AT&T 606.34
Bob Earhart Design & Ad 593.00
Big Spring Water 171.50
45.50
BLUCRS Insurance Coordinators 7,240.70
Butte Silverbow County 115,608.70
Butte Silverbow Water Div. 348.24
Camford Information Service 325.00
Centrico, Inc. 13,486.07
Chamberlin Pump Service 2,842.00
Corette Pohlman Law Offices 1,856.29
Culgan Summit Valley Water 45.00
D & S Electrical Supply 832.99
E.I. Du Pont Company 3,000.00
EIMCO 26,497.00
Electrode Corporation 253.00
Dyce Chemical 79,413.15
</TABLE>
-17-
<PAGE> 18
<TABLE>
<CAPTION>
Vendor Amount
- ------ ------
<S> <C>
Federal Express 874.79
158.48
Fisher Scientific 3,125.79
Franklin Miller, Inc. 3,730.00
Galle Plumbing & Heating 13,049.00
Genderal Distributing Co. 2,649.63
Glacier State Electric 1,113.81
Grainger 2,084.83
Graphite Machining, Inc. 388.75
Great Northern Equipment 5,425.15
GSA Resources 974.42
Harrington Plastics 2,215.33
Hawk America, Inc. 5,210.50
Hertz Rental 4,735.52
Insty Prints 933.40
892.31
Interior Plant Designs 200.00
JWI Inc. 1,001.50
Kavinoky & Cook 1,472.75
1,388.05
Keystone Filter Division 598.80
Klondike Land & Develop. 5,000.00
Knight Ridder 4.86
Kustom Call 162.00
Lavelle Powder Co. 1,284.40
Lightnin 0.00
Liquid Air Corp. 25.80
</TABLE>
-18-
<PAGE> 19
<TABLE>
<CAPTION>
Vendor Amount
- ------ ------
<S> <C>
Lydia's 95.00
Mackenzie & Feimann 0.00
M.E.C. Consultants 3,000.00
Micrologic Software 56.85
Milner Fenerty 1,373.85
Montana Broom & Brush 492.95
672.20
Montana International Inc. 3,000.00
Montana Power 5,770.43
MSHA 2,878.00
National Filter Media 3,769.79
Newland and Company 1,508.72
Northern Specialty 2,408.71
Northwest Instruments 1,000.00
Northwest Scientific 572.38
Office Stop 1,177.23
O'Keefer Drilling 1,520.00
Oregonian Publishing Co. 331.20
Perkin Elmer 453.02
Petrolane Gas Service 14.23
Pioneer Concrete & Fuel 1,646.55
Pitney Bowes 299.52
Pump Industries, Inc. 624.85
Quality Control Services 619.40
R&M Septic Service 420.00
REDA Lockbox 2,025.45
</TABLE>
-19-
<PAGE> 20
<TABLE>
<CAPTION>
Vendor Amount
- ------ ------
<S> <C>
Security Armored Express 9,707.00
Gregory Sparks PC 3,148.35
Special Resource Management 1,500.88
Spokane Pump, Inc. 1,402.06
Stonehand Industries 2,328.62
Ted Brown & Associates 3,421.11
Triple S Building Center 241.80
Unfield Engineering 287.12
4,808.73
United Agri Products 2,665.00
United Parcel Service 126.39
US West Communications 427.29
US West Direct 23.90
Vulcanium Corp. 928.00
War Bonnet Inn 1,719.53
Rent A Wreck 388.00
</TABLE>
-20-
<PAGE> 1
Exhibit 5
RUTAN & TUCKER, LLP
July 9, 1996
Hariston Corporation
1500 West Georgia Street, Suite 1555
Vancouver, British Columbia, Canada V6G 2Z6
Ladies and Gentlemen:
At your request, we have examined the form of Registration
Statement on Form S-3 (the "Registration Statement") which has been filed by
Hariston Corporation (the "Company") with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act") for the purpose
of registering 346,139 shares of Common Stock.
We are familiar with the proceedings taken and proposed to be
taken in connection with the issuance and sale of securities in the manner set
forth in the Registration Statement. Accordingly, we are of the opinion that all
of the securities included in the Registration Statement for sale by the Selling
Shareholders identified therein have been duly authorized and are validly and
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement, or any amendment thereto.
Respectfully submitted,
/s/ Rutan & Tucker, LLP
<PAGE> 1
Exhibit 23.1
Consent of Independent Accountant
Raymond, Chabot, Martin, Pare
Securities and Exchange Commission
Washington, D.C. 20549
We refer to Form S-3 Registration Statement of Hariston Corporation
("Hariston") to be dated on or about July 3, 1996 relating to the offering by
certain security holders to sell registered common shares of Hariston.
We consent to the inclusion by reference in the Registration Statement of our
audit report dated March 22, 1994 on the financial statements of Hariston for
the year ended December 31, 1993, including the consolidated balance sheet as at
December 31, 1993 and the consolidated statements of earnings, deficit and
changes in cash resources for the year then ended. The inclusion by reference
is made to the Form 10-K of Hariston for the fiscal year ended December 31,
1995 which contains those financial statements.
We have read the Registration Statement and have no reason to believe that
there are any misrepresentations in the information contained therein that is
derived from the financial statements upon which we have reported or that is
within our knowledge as a result of our audit of such financial statements.
This letter is provided to the securities regulatory authority to which it is
addressed pursuant to the requirements of its securities legislation and not
for any other purpose.
/s/ Raymond, Chabot, Martin, Pare
July 8, 1996
<PAGE> 1
Exhibit 23.2
Consent of Independent Accountant
Doan Raymond
Securities and Exchange Commission
Washington, D.C. 20549
We refer to Form S-3 Registration Statement of Hariston Corporation ("Hariston")
to be dated on or about July 8, 1996 relating to the offering by certain
security holders to sell registered common shares of Hariston.
We consent to the inclusion by reference in the Registration Statement of our
audit report dated March 24, 1995 on the financial statements of Hariston for
the year ended December 31, 1994, including the consolidated balance sheet as
at December 31, 1994 and the consolidated statements of loss and deficit and
changes in financial position for the year then ended. The inclusion by
reference is made to the Form 10-K of Hariston for the fiscal year ended
December 31, 1995 which contains those financial statements.
We have read the Registration Statement and have no reason to believe that there
are any misrepresentations in the information contained therein that is derived
from the financial statements upon which we have reported or that is within our
knowledge as a result of our audit of such financial statements.
This letter is provided to the securities regulatory authority to which it is
addressed pursuant to the requirements of its securities legislation and not
for any other purpose.
/s/ Doane Raymond
July 8, 1996
<PAGE> 1
Exhibit 23.3
Consent of Independent Accountant
Arthur Andersen
We consent to the inclusion in this registration statement on
Form S-3 through the incorporation by reference of our report dated March 18,
1996 on our audit of the financial statements of Hariston Corporation for the
fiscal year ended December 31, 1995.
/s/ Arthur Andersen & Co.
Vancouver, British Columbia
July 8, 1996
<PAGE> 1
Exhibit 23.4
Consent of Independent Accountant
Jay J. Shapiro, C.P.A.
I consent to the inclusion in this registration statement on
Form S-3 through the incorporation by reference of my report dated March 20,
1996 on my audit of the financial statements of Gazelle Technologies, Inc. and
affiliates for the period from March 1, 1995 to August 24, 1995, and my report
dated October 31, 1995 for the fiscal years ended February 28, 1995, 1994 and
1993.
/s/ Jay J. Shapiro, C.P.A.
June 30, 1996
