<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Hariston Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Hariston Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
HARISTON CORPORATION
SUITE 1555 - 1500 WEST GEORGIA STREET
VANCOUVER, BC V6G 2Z6
July 3, 1998
Dear Shareholder:
On behalf of Hariston Corporation, I cordially invite you to attend a
special meeting of shareholders on Tuesday, August 25, 1998 at Suite 1600, 925
West Georgia Street, Vancouver, British Columbia, Canada at 10:00 a.m.
At the meeting, shareholders will vote on (i) the reduction of the
minimum number of directors of Hariston to three; (ii) the removal of L. James
Porter as a director, and (iii) the election of three persons to the board of
directors. Further information concerning the meeting and the nominees for
director can be found in the accompanying Notice and Proxy Statement. In
addition, there will be a report on the status of Hariston's business and an
opportunity for you to express your views on subjects related to Hariston's
business.
The directors and officers of Hariston hope that as many shareholders
as possible will be present at the meeting. Because the vote of each shareholder
is important, we ask that you sign and return the enclosed proxy card in the
envelope provided, whether or not you now plan to attend the meeting. If you
attend the meeting, you may vote in person even if you have previously mailed a
proxy card.
We appreciate your co-operation and interest in Hariston. To assist us
in preparation for the meeting, please return the proxy card at your earliest
convenience.
Sincerely yours,
/s/ JAMES P. ANGUS
Chairman, President and Chief Executive Officer
<PAGE> 3
2
HARISTON CORPORATION
SUITE 1555 - 1500 WEST GEORGIA STREET
VANCOUVER, BC V6G 2Z6
To the Holders of Common Stock July 3, 1998
of Hariston Corporation
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN THAT a special meeting (the "Meeting") of
shareholders of Hariston Corporation (the "Company") will be held on Tuesday,
August 25, 1998 at Suite 1600, 925 West Georgia Street, Vancouver, British
Columbia, Canada, at 10:00 a.m. (Vancouver time), for the following purposes:
(a) to consider, and if thought fit approve, a special resolution
to amend the Company's articles to reduce the minimum number
of directors of the Company to three (3);
(b) to remove L. James Porter from the office of director of the
Company;
(c) to elect three (3) directors for the ensuing year; and
(d) to transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has specified that proxies to be used at the
Meeting or any adjournment thereof must be deposited at Vancouver, British
Columbia, Canada, with Montreal Trust Company as transfer agent for the Company,
not later than 5:00 p.m. (Vancouver time), August 24, 1998. Shareholders of
record at the close of business on July 10, 1998, are entitled to vote at the
meeting and any adjournment thereof.
This notice and the accompanying proxy material are sent to you by
order of the Board of Directors.
/s/ JAMES P. ANGUS
Chairman, President and Chief Executive Officer
YOU ARE REQUESTED TO FILL IN, SIGN, DATE AND RETURN THE PROXY
SUBMITTED HEREWITH IN THE RETURN ENVELOPE PROVIDED FOR YOUR USE. THE GIVING
OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY OR TO VOTE IN
PERSON SHOULD YOU LATER DECIDE TO ATTEND THE MEETING.
<PAGE> 4
3
HARISTON CORPORATION
SUITE 1555 - 1500 WEST GEORGIA STREET
VANCOUVER, BC V6G 2Z6
MANAGEMENT PROXY CIRCULAR
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 25, 1998
This Proxy Statement, dated July 3, 1998, is furnished in connection
with the solicitation by the management of Hariston Corporation ("Hariston" or
the "Company") of proxies to be voted at a special meeting of Hariston
shareholders on August 25, 1998, and any adjournment thereof (the "Meeting"). It
is currently anticipated that definitive copies of this Proxy Statement and the
accompanying Proxy and the Annual Report to Shareholders will be mailed to
shareholders on or about July 29, 1998. THIS IS A MANAGEMENT PROXY CIRCULAR AND
PROXIES ARE SOLICITED BY OR ON BEHALF OF THE MANAGEMENT OF THE COMPANY FOR USE
AT THE MEETING.
Mr. L. James Porter, a director and the Corporate Secretary and Chief
Financial Officer of the Company, has informed the directors of Hariston in
writing that he intends to oppose the action to be taken by management set forth
in the Notice of Meeting.
Holders of record of the Company's Common Stock, without par value
("Shareholders") at the close of business on July 10, 1998, are entitled to
receive notice of the meeting and to vote the shares held on that date. The
number of voting securities of Hariston outstanding on July 3, 1998 was
12,663,113 shares of Common Stock, without par value ("Common Stock"). Each
share of Common Stock is entitled to one vote.
In this Proxy Statement, all references to dollar amounts are in United
States dollars unless otherwise noted.
MARKET PRICES FOR THE COMPANY'S COMMON EQUITY
The Company's Common Stock trades on the OTC Bulletin Board in the
United States, an over-the-counter market regulated by the National Association
of Securities Dealers, Inc. The Company's trading symbol is "HRSNF." On the
Record Date, there will be approximately 4,000 record holders of the Common
Stock. On July 2, 1998, the trading day immediately preceding the date of this
Proxy Circular, the last sale price of the Common Stock on the OTC Bulletin
Board was $0.34.
CHANGE OF MINIMUM NUMBER OF DIRECTORS OF THE COMPANY TO THREE
Management of the Company propose that the minimum number of directors
of the Company be reduced from four (4) to three (3). Presently, the Company's
articles provide that the minimum number of directors of the Company is four and
the maximum number of directors is 15. Management believe that it is in the best
interests of the Company to have the flexibility of a smaller board of three
persons, and accordingly recommend that Shareholders approve a special
resolution (the text of which is set forth in Appendix A) amending the Company's
articles to provide that the minimum number of directors of the Company be
three. The maximum number of directors of the Company would continue to be 15.
To be effective, this special resolution must be passed by a majority
of not less than two-thirds of the votes cast by the Shareholders either present
in person at the meeting or represented by proxy voting in respect of such
resolution.
<PAGE> 5
4
NEGOTIATIONS WITH GEREX BIOTECH INC.
On July 3, 1998 the Company and Gerex Biotech Inc. ("Gerex") executed a
letter of intent regarding a possible transaction with Gerex and its principals.
The proposed transaction would entail Gerex restructuring itself by transferring
all of its current assets and businesses into a newly formed subsidiary company,
Gerex Pharmaceuticals Inc. ("Gerex Pharmaceuticals").
The proposed transaction contemplates that the Company would acquire
approximately 44% of Gerex Pharmaceuticals by purchasing of 5,294,118 common
shares for cash consideration of $1.8 million and 3,529,412 redeemable voting
preferred shares for cash consideration of $1.2 million. Gerex Pharmaceuticals
would hold the $1.2 million subscription proceeds from the preferred shares in
escrow for the benefit of the Company. The Company would be required to convert
the preferred shares into an equivalent number of Gerex Pharmaceuticals common
shares upon Gerex Pharmaceuticals meeting certain performance criteria, the
principal one being the issuance to Gerex Pharmaceuticals on or before March 1,
2000 of an Investigational New Drug Authorization (the "IND") by the applicable
regulatory authorities in the United States, Canada, Japan or the European
Community.If Gerex Pharmaceuticals fails to meet these performance criteria,
the Company, is entitled to cause Gerex Pharmaceuticals to redeem the preferred
shares and repay to the Company the escrowed $1.2 million subscription proceeds.
Upon satisfaction of certain conditions, all Gerex Pharmaceuticals
shareholders other than the Company would have the right to exchange their Gerex
Pharmaceuticals shares for shares of the Company. Conversely, upon satisfaction
of certain conditions, the Company would have the right to require all Gerex
Pharmaceuticals shareholders other than the Company to exchange their Gerex
Pharmaceuticals shares for shares of Hariston, or to require Gerex
Pharmaceuticals to list its shares on a recognized stock exchange in Canada or
the United States.
Gerex is a Vancouver-based early-stage biopharmaceutical corporation
specializing in research regarding the treatment of Alzheimer disease and other
degenerative disorders associated with ageing and holds the exclusive license to
issued patents covering the use of non-steroidal anti-inflammatory drugs for the
treatment of dementia. Gerex is proposing to develop a proprietary drug
treatment that is intended to arrest or substantially slow the progression of
Alzheimer disease.
Management's discussions with Gerex are at a preliminary stage and the
Company and Gerex have not yet entered into any binding agreement regarding any
proposed transaction. In the event that the directors determine that it is not
in the best interests of the Company to pursue a transaction involving Gerex,
the directors will consider other opportunities to maximize shareholder value,
or, in the alternative, the liquidation and dissolution of the Company.
Because the Company does not presently carry on, either directly or
through subsidiaries, any active business, it would be an "investment company"
for the purposes of the United States Investment Company Act of 1940 (the "1940
Act") but for its intention, evidenced by board of directors resolution dated
December 19, 1997 to, as soon as reasonably possible, engage primarily in a
business other than investing, reinvesting, owning, holding or trading in
securities. The completion of the proposed transaction with Gerex will result in
the purchase of securities for the purposes of the 1940 Act and therefore cause
Hariston to be an investment company.
Because the Company is not a United States company, it will not be
required to register under the 1940 Act. However, if the Company becomes an
investment company, it would be unlawful for it to make a public offering of its
securities in the United States in the absence of such registration. The Company
does not expect to register under the 1940 Act and accordingly would be
prevented from offering its securities to the public in the United States until
such time as it ceases to be an investment company. The Company does not
consider this disability to be materially adverse to it as it has no present
intention to offer securities to the public in the United States. Registration
under the 1940 Act would have a material adverse effect on the Company and its
results of operations due to significant substantive restrictions and
requirements imposed by the 1940 Act.
<PAGE> 6
5
Hariston shareholders, whether resident in the United States or
elsewhere, will not be restricted in their ability to trade in Hariston's shares
as a result of Hariston becoming an investment company.
REMOVAL OF L. JAMES PORTER AS A DIRECTOR
Pursuant to the Canada Business Corporations Act (the "CBCA"),
shareholders will be asked at the meeting to pass an ordinary resolution to
remove L. James Porter from the office of director.
ELECTION OF DIRECTORS
Pursuant to the CBCA, as implemented by Hariston's Certificate of
Incorporation and By-laws, all corporate powers are exercised by and under the
direction of the board of directors, and the Company's business, property and
affairs are managed by and under the direction of the board of directors.
NOMINEES
Directors are elected at each annual meeting of shareholders and hold
office until the next annual meeting of shareholders or until their respective
successors are elected and qualified. Management of the Company is of the
opinion that the election to the board of directors of the persons identified
below would be in the best interests of the Company Two currently serve as
directors of the Company. Each of the nominees have consented to serve or
continue to serve if elected. The names of the nominees are as follows: James P.
Angus, Philip J. Langridge and Neil S. MacKenzie. Information concerning these
nominees is submitted by management.
Set forth below is certain information with respect to each person
proposed to be nominated by management for election as a director of the
Corporation. Information with respect to ages of the directors is as of July 3,
1998 and information as to their ownership of shares of Hariston Common Stock as
of that date is provided under the caption "OWNERSHIP OF COMMON STOCK"
JAMES P. ANGUS, age 51, was appointed to the Company's Board of
Directors in December 1994 and became President and Chief Executive Officer of
the Company in December, 1997. Mr. Angus has been President of Angroup Holdings
Limited, a private investment holding company, since 1988. Mr. Angus' ordinary
residence is West Vancouver, British Columbia, Canada.
PHILIP J. LANGRIDGE, age 50, is President of Churchill International
Property Corporation, a private real estate investment and development company
founded in 1987. Mr. Langridge has specialized in real estate development and
finance since graduating in London, England as a Fellow of The Royal Institution
of Chartered Surveyors in 1971. Mr. Langridge's ordinary residence is West
Vancouver, British Columbia, Canada.
NEIL S. MACKENZIE, age 53, was appointed to the Board of Directors in
December 1994. Mr. MacKenzie is also President of NS MacKenzie & Company
Limited, a management consulting firm, a position he has held since 1991, a
partner with the Chancellor Partners, a company engaged in management
consulting, Secretary/Treasurer of Canadian Fine Papers (B.C.) Corp., a private
merchant of fine papers, President of 509306 B.C. Limited, a private children's
software developer, President of Interlearn Holdings Ltd., a public holding
company, a director of Mineral Solutions, Inc., a private marketer of coal
combustion products, a director of RTDS Technologies, Inc., a private
manufacturer of software and hardware for the electric utility industry, and a
director of Advanced Process Control Ltd., a private manufacturer of software
for computer controlled industrial processes. From 1976 to 1991, Mr. MacKenzie
was a Partner and held various other positions with Ernst & Young, Management
Consultants. Mr. MacKenzie's ordinary residence is Vancouver, British Columbia,
Canada.
IF NO CHOICE IS SPECIFIED IN THE FORM OF PROXY AS TO THE MANNER IN
WHICH THE PERSON NAMED IN THE PROXY IS REQUIRED TO VOTE THE SHARES REPRESENTED
THEREBY, THE PERSON NAMED AS PROXY INTENDS TO VOTE ALL SHARES FOR WHICH HE
RECEIVES SUCH PROXIES FOR THE ELECTION OF THE NOMINEES IDENTIFIED
<PAGE> 7
6
HEREIN. If authority is withheld by the Shareholder giving the proxy with
respect to one or more of such nominees, the shares will not be voted for the
election of any directors as to whom such authority is withheld. The person
named as proxy is not permitted to vote for a greater number of persons than the
three persons named as nominees herein.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held nine meetings during the fiscal year ended
December 31, 1997. Among the incumbent nominees for membership on the Board of
Directors, no Director attended fewer than 75% of the aggregate of the meetings
of the Board and the Committees upon which he served.
COMMITTEES OF THE BOARD
The Board of Directors has standing Audit and Compensation Committees,
but does not have a Nominating Committee. In practice, the entire Board performs
the function of a Nominating Committee.
Audit Committee. The Audit Committee of the Board of Directors held
four meetings during the fiscal year ended December 31, 1997. The Committee's
responsibility is to review and act or report to the Board of Directors with
respect to various audit and accounting matters, including the selection of
independent auditors, the determination of the scope of audit procedures, the
nature of the services to be performed by and the fees to be paid to the
Company's independent auditors, the establishment of the accounting practices of
the Company, and the monitoring of all financial aspects of the Company's
operations. The Audit Committee is composed of Mr. James P. Angus, Mr. Neil S.
MacKenzie and Mr. L. James Porter.
Compensation Committee. The Compensation Committee of the Board of
Directors held one meeting during the fiscal year ended December 31, 1997. The
Committee is responsible for making recommendations to the Board concerning such
executive compensation arrangements and plans as it deems appropriate. The
Compensation Committee was composed of Mr. Nuno Brandolini (prior to his
resignation as Chairman and Chief Executive Officer and director in December,
1997), Mr. James P. Angus and Mr. Neil S. MacKenzie. The Compensation Committee
is presently comprised of Mr. James P. Angus and Mr. Neil S. MacKenzie.
DIRECTOR COMPENSATION ARRANGEMENTS
Directors receive a fee from the Company equal to $C1,000 per month
plus $C500 per meeting attended.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors hereby presents to
the shareholders of the Company this report concerning the compensation of the
Company's executive officers, including the Named Executive Officers. The
Compensation Committee is responsible for setting and administering the
compensation policies of the Company with respect to its executive officers and,
on an annual basis, determining the compensation of each executive officer.
The Company's executive compensation program is designed to align
executive compensation with the Company's business strategy and performance. The
goals of the executive compensation program are: (i) to attract and retain key
executives critical to the success of the Company; (ii) to provide levels of
compensation which are competitive with those offered by the Company's
competitors and by other companies of similar size; and (iii) to motivate
executives to enhance long-term shareholder value by building appropriate
ownership in the Company.
The annual compensation for the executive officers includes base
salaries, coupled with cash bonuses and stock options. Base salaries are the
fixed component of the executive officers'
<PAGE> 8
7
compensation package. Salaries are set and adjusted based upon competitive
standards and individual performance. The compensation of Mr. Brandolini, the
Company's Chairman and Chief Executive Officer for part of the last fiscal year,
and Mr. McCarthy, the Company's President for part of the last fiscal year, was
rendered through an arrangement between Hariston and Scorpion Holdings Inc.
described below.
The award of cash bonuses is based upon the performance of the Company
during the prior year and the contribution of each individual executive officer
to the Company's performance. Among the factors (the "Performance Factors")
which the Committee has established to assess the Company's overall performance
are: the Company's performance against budget and targets for sales, expenses
and profits, and the successful implementation of both short and long-term
corporate strategies for enhancing shareholder value (e.g., strategic
acquisitions, divestitures, facilities expansion, productivity improvements,
etc.).
A substantial portion of the compensation of executive officers is
based upon the award of stock options which rely on increases in the value of
the Company's Common Shares. The award of options is intended to encourage such
employees to establish a meaningful, long-term ownership interest in the Company
consistent with the interests of the Company's shareholders. Under the Company's
stock option plans, options are granted from time to time to certain officers
and key employees of the Company and its subsidiaries at the fair market value
of the Company's Common Shares at the time of grant. Because the compensation
element of options is dependent on increases over time in the market value of
such shares, stock options represent compensation that is tied to the Company's
long-term performance. The award of stock options to executive officers is
determined based upon individual performance, level of compensation and position
with the Company.
The Committee has reviewed the 1998 base salaries of each of the
executive officers and is of the opinion that such salaries are not unreasonable
in view of those paid by the Company's competitors and by other companies of
similar size.
The Committee has also reviewed Mr. Brandolini's compensation for 1997
and is of the opinion that his compensation was not unreasonable in view of
those paid to CEO's of the Company's competitors and by other companies of
similar size. Mr. Brandolini was not paid a cash bonus for 1997. Mr. Angus was
paid no compensation for serving as Chairman, President and Chief Executive
Officer during 1997.
COMPENSATION COMMITTEE:
James P. Angus
Neil S. MacKenzie
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid or accrued for services rendered to the Company in all
capacities during the years ended December 31, 1996, and 1997 to Mr. Brandolini,
and during the years ended December 31, 1995, 1996 and 1997 to and Mr. Angus,
who both served as Chief Executive Officer of the Company during portions of
1997, and Mr. Porter, who was the only executive officer of the Company whose
total salary and bonus for 1997 exceeded $C100,000 (collectively, the "Named
Executive Officers").
<PAGE> 9
8
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
=========================================================================================================================
Long Term
Compensation
------------------
Securities
Other Annual Underlying All Other
Name and Principal Salary Bonus Compensation Options Compensation
Position Year ($) ($) ($) (#) ($)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Nuno Brandolini(1) 1997 (2) (2) Nil. Nil. (2)
Chairman and Chief 1996 (2) (2) Nil. 440,000 (2)
Executive Officer
- -------------------------------------------------------------------------------------------------------------------------
James P. Angus(3) 1997 Nil. Nil. Nil. Nil. Nil.
President and Chief 1996 Nil. Nil. Nil. 160,000 Nil.
Executive Officer 1995 Nil. Nil. Nil. 150,000(4) Nil.
- -------------------------------------------------------------------------------------------------------------------------
L. James Porter 1997 100,000 Nil. Nil. Nil. Nil.
Chief Financial Officer 1996 95,833 7,000 Nil. 240,000 Nil.
and Corporate Secretary 1995(5) 64,167 7,000 Nil. 250,000(4) Nil.
=========================================================================================================================
</TABLE>
- ----------------------
(1) Mr. Brandolini resigned as Chief Executive Officer and as a director of
the Company in December, 1997.
(2) Mr. Brandolini received no salary or bonus payments from the Company.
As described below, Mr. Brandolini's services were rendered through an
arrangement between the Company and Scorpion Holdings, Inc. During
1997, the Company paid $194,876, and during 1996, the Company paid
$107,741, to Scorpion Holdings, Inc. pursuant to this arrangement.
Prior to Mr. Brandolini's appointment as Chief Executive Officer in
July, 1996, Mr. Brandolini received directors fees from the Company of
$4,777 in 1996 and $4,766 in 1995.
(3) Mr. Angus was appointed President and Chief Executive Officer of the
Company in December, 1997. The amounts of Mr. Angus's compensation for
1997 disclosed is the amount paid to him in respect of the portion of
December, 1997 that he served as President and Chief Executive Officer.
Prior to such appointment, Mr. Angus received directors fees from the
Company of $15,851 in 1997, $14,808 in 1996 and $16,327 in 1995.
(4) All outstanding option grants under the 1995 Stock Option Plan were
cancelled on July 17, 1996.
(5) Mr. Porter was appointed Chief Financial Officer and Corporate
Secretary of the Company in February, 1995.
OPTION GRANTS AND EXERCISES
No options were granted to the Named Executive Officers during the fiscal year
ended December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
The following table sets forth information with respect to exercises of stock
options by the Named Executive Officers during the fiscal year ended December
31, 1997 and the number and value of securities underlying unexercised options
held by the Named Executive Officers as of December 31, 1997. No Named Executive
Officer other than those listed in the following table held any options as of
December 31, 1997.
<PAGE> 10
9
<TABLE>
<CAPTION>
======================================================================================================================
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at December 31, December 31, 1997
Acquired on Value Realized 1997 (#) ($)(1)
Name Exercise (#) ($) Exercisable / Unexercisable Exercisable / Unexercisable
======================================================================================================================
<S> <C> <C> <C> <C>
Nuno Brandolini 0 0 306,667 / 133,333 0 / 0
- ----------------------------------------------------------------------------------------------------------------------
James P. Angus 0 0 120,000 / 40,000 0 / 0
- ----------------------------------------------------------------------------------------------------------------------
L. James Porter 0 0 176,666 / 63,334 0 / 0
======================================================================================================================
</TABLE>
- -------------
(1) Based on the closing price of the Common Stock of $0.24 on December
31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the current members of the Compensation Committee are
Messrs. Angus and MacKenzie. Mr. Angus serves as the President and Chief
Executive Officer of the Company.
STOCK OPTIONS
1996 Stock Option Plan. In July 1996, the Company adopted the 1996
Stock Option Plan (the "1996 Plan") covering an aggregate of 260,000 shares of
the Company's Common Stock. The purpose of the 1996 Plan is to attract and
retain qualified personnel, to provide additional incentives to employees,
officers, directors and consultants of the Company and to promote the success of
the Company's business. Pursuant to the 1996 Plan, the Company may grant
incentive and nonstatutory (non-qualified) stock options to key employees,
officers, directors or consultants of the Company.
The 1996 Plan is administered by the Board of Directors, which has sole
discretion and authority, consistent with the provisions of the 1996 Plan, to
determine which eligible participants will receive options, the time when
options will be granted, the terms of options granted and the number of shares
which will be subject to options granted under the 1996 Plan. The Board may also
appoint a committee to administer the 1996 Plan and, subject to applicable law,
to exercise all of the powers of the Board under the 1996 Plan. As of December
31, 1997, 260,000 options were outstanding under the 1996 Plan at a weighted
average exercise price equal to $1.25 per share.
The maximum term of a stock option under the 1996 Plan is seven years.
If an optionee terminates his or her service to the Company, the optionee may
exercise only those option shares vested as of the date of termination. The
exercise price of incentive stock options granted under the 1996 Plan must be at
least equal to the fair market value of the Common Stock subject to the option
on the date of grant. The exercise price of incentive stock options granted to
an optionee who owns stock possessing more than 10% of the voting power of the
Company's outstanding capital stock must equal to at least 110% of the fair
market value of the Common Stock subject to the option on the date of grant. The
exercise price of nonstatutory stock options granted under the 1996 Plan shall
be determined by the Board. Payment of the exercise price under an option may be
made in cash, previously acquired shares of the Company's Common Stock or such
other consideration as may be determined by the Board of Directors.
The 1996 Plan may be amended at any time by the Board of Directors,
although certain amendments would require Shareholder approval. The 1996 Plan
will terminate in July 2006 unless earlier terminated by the Board.
1996 Stock Option Plan No. 2. In August 1996, the Company adopted the
1996 Stock Option Plan No. 2 (the "1996 Plan No.2") covering an aggregate of
2,000,000 shares of the Company's Common Stock. The purpose of the 1996 Plan
No.2 is to attract and retain qualified personnel, to provide additional
incentives to employees, officers, directors and consultants of the Company and
to promote the success of the Company's business. Pursuant to the 1996 Plan
No.2, the Company may grant incentive and nonstatutory (non-qualified) stock
options to key employees, officers, directors or consultants of the Company.
<PAGE> 11
10
The 1996 Plan No.2 is administered by the Board of Directors, which has
sole discretion and authority, consistent with the provisions of the 1996 Plan
No.2, to determine which eligible participants will receive options, the time
when options will be granted, the terms of options granted and the number of
shares which will be subject to options granted under the 1996 Plan No.2. The
Board may also appoint a committee to administer the 1996 Plan No.2 and, subject
to applicable law, to exercise all of the powers of the Board under the 1996
Plan No.2. As of December 31, 1997, 1,130,000 options were outstanding under the
1996 Plan No.2 at a weighted average exercise price equal to $1.25 per share.
The maximum term of a stock option under the 1996 Plan No.2 is seven
years. If an optionee terminates his or her service to the Company, the optionee
may exercise only those option shares vested as of the date of termination and
must effect such exercise within three months, although the Board may set longer
periods for exercise of supplemental stock options. The exercise price of
incentive stock options granted under the 1996 Plan No.2 must be at least equal
to the fair market value of the Common Stock subject to the option on the date
of grant. The exercise price of incentive stock options granted to an optionee
who owns stock possessing more than 10% of the voting power of the Company's
outstanding capital stock must equal to at least 110% of the fair market value
of the Common Stock subject to the option on the date of grant. The exercise
price of nonstatutory stock options granted under the 1996 Plan No.2 shall be
determined by the Board. Payment of the exercise price under an option may be
made in cash, previously acquired shares of the Company's Common Stock or such
other consideration as may be determined by the Board of Directors.
The 1996 Plan No.2 may be amended at any time by the Board of
Directors, although certain amendments would require Shareholder approval. The
1996 Plan No.2 will terminate in August 2006 unless earlier terminated by the
Board.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
As contemplated by section 124(4) of the CBCA, the Company has
purchased and paid the premiums for insurance with a limit of $1 million for
the policy period from February 28, 1998 to February 28, 1999 in respect of
potential claims against its directors and officers and in respect of losses
for which the Company may be required or permitted by law to indemnify such
directors and officers. The insurance excludes from coverage $175,000 in
respect of each claim arising from securities law matters under the
Company reimbursement portion of the insurance, and $75,000 in respect of all
other claims arising under the Company reimbursement portion of the insurance.
The annual premium for the policy is $37,500, which the Company pays on an
instalment basis. To date, the Company has paid instalments on the total
premium of $24,656 of which $563 consists of a financing charge.
OWNERSHIP OF COMMON STOCK
The following table sets forth the beneficial ownership, as of July 3,
1998, of the Company's Common Stock (i) by each person who is a director of the
Company (none of whom, except Mr. Porter, beneficially owns any Common Stock of
the Company), (ii) by each of the Named Executive Officers (none of whom, except
Mr. Porter, beneficially owns any Common Stock of the Company), (iii) by each
person who is known to be a beneficial owner of more than 5% of any class of the
Company's equity securities and (iv) by all directors and executive officers of
the Company as a group. A list of current executive officers of the Company is
attached as Annex A hereto. Unless otherwise indicated, the persons named in the
table possess sole voting and investment power with respect to the shares listed
(except to the extent such authority is shared with spouses under applicable
law).
<PAGE> 12
11
<TABLE>
<CAPTION>
Beneficial Ownership
----------------------------------------------------
5% Shareholders, Directors, Named Executive Officers
and all Directors and Executive Officers as a Group Shares Percent(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
L. James Porter............................................. 546,666(2) 4.3%
James P. Angus.............................................. 320,000(3) 2.5%
Neil S. MacKenzie........................................... 320,000(3) 2.5%
Pierre Anthamatten.......................................... 900,000(4) 7.1%
Pacific Mercantile Company Limited.......................... 696,000(5) 5.5%
All Directors and Officers as a Group (3 Persons)........... 1,256,666(6) 9.3%
</TABLE>
- -----------------
(1) Based on 12,663,113 shares of Common Stock, outstanding as of July 3,
1998.
(2) Includes 376,666 shares issuable upon exercise of options which are
exercisable within 60 days.
(3) Consists solely of shares issuable upon exercise of options which are
exercisable within 60 days.
(4) As reported on Schedule 13D filed by Mr. Anthamatten dated January 15,
1993, which Schedule 13D has not been amended. According to such
Schedule 13D, such shares are owned directly by Olinka, S.A., a
Luxembourg corporation, all of the outstanding shares of which are
owned by Mr. Anthamatten. According to such Schedule 13D, Olinka,
S.A.'s business address is 3, Rue Adames, L-1114 Luxembourg.
(5) As reported on Schedule 13D dated March 5, 1998, which Schedule 13D has
not been amended. According to such Schedule 13D, such shares are owned
directly by Cross Creek Financial Group Ltd., a British Columbia
corporation, all of the outstanding shares of which are owned by
Pacific Mercantile Company Limited, an Alberta corporation. According
to such Schedule 13D, Cross Creek Finance Group Ltd.'s business address
is Suite 220, 375 Water Street, Vancouver, British Columbia V6B 5C6.
(6) Includes 1,016,666 shares issuable upon exercise of options which are
exercisable within 60 days.
Based on review of the registered shareholders listing, JB Oxford &
Company is the registered holder of 934,508 shares of the Company's Common
Stock, representing a 7.4% interest in the Company. JB Oxford & Company was
previously a market maker in the Company's stock.
To the knowledge of the Directors and senior officers of the Company,
only the following own, directly or indirectly, or exercise control or
discretion over, shares carrying more than 10% of the voting rights attached to
all outstanding shares of the Company as of the date hereof:
<TABLE>
<CAPTION>
Percentage of Issued and
Name of Shareholder Number of Shares Outstanding Shares
--------------------------------------- -------------------------------- --------------------------------
<S> <C> <C>
CEDE & Co. 7,673,243* 60.6%
</TABLE>
* Management of the Company is not aware of the beneficial owners of the
shares.
The above information was supplied by the Registrar and Transfer Agent
and Management of the Company.
OTHER TRANSACTIONS AND CERTAIN RELATIONSHIPS
The services of Messrs. Brandolini and McCarthy, who were respectively the
Chairman and Chief Executive Officer and President of the Company prior to their
resignations in December, 1997, were rendered to the Company through an
arrangement between Hariston and Scorpion Holdings, Inc. ("Scorpion"). Under the
terms of this arrangement, Scorpion was paid a monthly fee of $20,000 which was
decreased to $10,000 in September, 1997. During 1997, the Company paid $194,876
(1996 - $107,741) to Scorpion pursuant to this arrangement.
<PAGE> 13
12
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN
The following graph shows a comparison of five year cumulative total
returns to shareholders of the Company's Common Stock, the NASDAQ Composite
Index and the NASDAQ - 100 Index over the same periods (assuming an initial
investment of $100 in the Company's Common Stock, the NASDAQ Composite Index and
the NASDAQ - 100 Index as of December 31, 1992 and reinvestment of all
dividends). This graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Circular into any filing
under the Securities Act of 1933 (U.S.) or the Exchange Act of 1934 (U.S.),
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
[GRAPH]
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
December 31, 1992 1993 1994 1995 1996 1997
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hariston Common Stock $100.00 $280.00 $106.66 $86.67 $12.50 $6.40
NASDAQ Composite Index $100.00 $114.75 $109.50 $155.42 $190.71 $237.09
NASDAQ - 100 Index $100.00 $110.57 $111.05 $159.98 $228.03 $275.08
------------------------------------------------------------------------------------------------------------------
</TABLE>
SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposal, including
nominations to the Board of Directors, intended for consideration at the next
annual meeting of shareholders of the Company must be received by the Company no
later than September 12, 1998 to be included in the proxy material for that
meeting. It is recommended that shareholders submitting proposals direct them to
the Secretary of the Company and utilize certified mail, return receipt
requested, in order to ensure timely delivery.
OTHER BUSINESS AND GENERAL PROXY INSTRUCTIONS
The enclosed form of Proxy confers discretionary authority upon the
person named therein with respect to amendments to matters mentioned in the
Notice of Meeting, or other matters which may properly come before the meeting.
The Board of Directors of the Company is not aware of any business or matter
other than those indicated above which may properly be presented at the meeting.
If any other matters come before the meeting or any adjournments thereof, the
person named in the accompanying form of proxy will vote in accordance with
their best judgment with respect to such matters.
TO BE EFFECTIVE, THE FORM OF PROXY MUST BE DELIVERED TO THE COMPANY AT THE
ADDRESS SET FORTH BELOW, OR TO THE COMPANY, C/O MONTREAL TRUST COMPANY OF
CANADA, AT 510 BURRARD STREET, VANCOUVER, BRITISH COLUMBIA V6C 3BP, IN EITHER
CASE PRIOR TO 5:00 P.M. ON AUGUST 24, 1998. A SELF ADDRESSED ENVELOPE IS
ENCLOSED.
<PAGE> 14
13
The expense of management's proxy solicitation will be borne by the
Company. In addition to the use of the mails, proxies may be solicited by
personal interview or by telephone. Banks, brokerage houses and other
institutions will be requested to forward the soliciting material to beneficial
owners and to obtain authorization for the execution of proxies; and, if they in
turn so request, the Company will reimburse such banks, brokerage houses and
other institutions, nominees or fiduciaries for their expenses in forwarding
such material. Directors, officers and regular employees of the Company may also
solicit proxies without additional remuneration therefor.
Shareholders are urged to read carefully the material in this Proxy
Statement, specify their choice on each matter by marking the appropriate box on
the enclosed Proxy and sign, date and return the Proxy in the envelope provided
for that purpose. If the enclosed Proxy is properly executed and timely
deposited with Montreal Trust Company as transfer agent for the Company, the
shares represented thereby will be voted in accordance with the instructions of
the shareholder giving the Proxy. IF NO CHOICE IS SPECIFIED IN THE FORM OF PROXY
AS TO THE MANNER IN WHICH THE PERSON NAMED IN THE PROXY IS REQUIRED TO VOTE THE
SHARES REPRESENTED THEREBY, THE PERSON NAMED AS PROXY INTENDS TO VOTE ALL SHARES
FOR WHICH HE RECEIVES SUCH PROXIES FOR THE SPECIAL RESOLUTION TO AMEND THE
COMPANY'S ARTICLES TO REDUCE THE MINIMUM NUMBER OF DIRECTORS TO THREE (3), FOR
THE ORDINARY RESOLUTION TO REMOVE L. JAMES PORTER AS A DIRECTOR OF THE COMPANY
AND FOR THE ELECTION OF THE NOMINEES IDENTIFIED HEREIN AS DIRECTORS. The persons
named as proxy is not permitted to vote for a greater number of persons than the
three persons named as nominees herein.
A shareholder giving a proxy may revoke it at any time prior to its
exercise by (a) by signing a proxy instrument bearing a later date and
depositing it with the Secretary of the Company; or (b) as to any matter on
which a vote shall not have already been cast pursuant to the authority
conferred by such proxy instrument, by signing a written notice or verification
and delivering it to the Secretary of the Meeting, or the Chair of the Meeting;
or (c) by attending the Meeting in person and personally voting the shares
represented by the proxy instrument; or (d) in addition to revocation in any
other manner permitted by law, a proxy may be revoked under Subsection 148(4) of
the CBCA by an instrument in writing executed by the shareholder or by his or
her attorney in writing (or if the shareholder is a Company, under its corporate
seal or by an officer or attorney thereof authorized in writing), deposited
either at the registered office of the Company at Suite 1600, 925 West Georgia
Street, Vancouver, British Columbia, Canada, V6C 3L2, at any time up to and
including the last business day preceding the day of the Meeting or any
adjournment thereof, or with the Chair of the Meeting on the day of the Meeting
or any adjournment thereof, and upon either of such deposits the proxy is
revoked.
The person designated in the accompanying form of Proxy is an Officer
and/or Director of the Company. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXY
TO REPRESENT HIM OR HER AT THE MEETING, OTHER THAN THE PERSON WHOSE NAME IS
PRINTED AS PROXY IN THE ACCOMPANYING FORM OF PROXY, BY STRIKING OUT THE SAID
PRINTED NAME AND BY INSERTING THE NAME OF HIS OR HER CHOSEN PROXY IN THE BLANK
SPACE PROVIDED FOR THAT PURPOSE IN THE FORM OF PROXY. THE PERSON SO NAMED AS
THE PROXY NEED NOT BE A SHAREHOLDER OF THE COMPANY.
Proxies, ballots and voting tabulations identifying Shareholders are
kept private and will not be available to anyone except as actually necessary to
meet legal requirements. Access to proxies and other individual Shareholder
voting records is limited to the inspectors of election appointed by the Company
and certain of the Company's employees who must acknowledge in writing their
responsibility to comply with this policy of confidentiality.
The mailing address of the Company is: Hariston Corporation, Suite
1555-1500 West Georgia Street, Vancouver, British Columbia, Canada V6G 2Z6.
<PAGE> 15
14
FILINGS UNDER SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)") requires the Company's directors, officers and beneficial
owners of more than 10% of its common stock to file reports of holdings and
transactions of the Company's Common Stock with the Securities and Exchange
Commission. Based upon Company records and other information, the Company
believes that with respect to the fiscal year ended December 31, 1997, each of
the Company's directors, officers and beneficial owners of more than 10% of its
Common Stock were in compliance with the filing requirements of Section 16(a).
QUORUM AND REQUISITE VOTE
Two persons present and each holding or representing by proxy at least
one issued share of Common Stock constitute a quorum of Shareholders for the
Meeting. Pursuant to applicable law, only votes cast "for" a matter constitute
affirmative votes. Shares voted by a broker on a routine matter or matters (such
as election of directors or approval of auditors) but as to which the broker
indicates it lacks authority to vote on non-routine matters will be counted as
present for purposes of determining the presence or absence of a quorum and as
entitled to vote, and will be voted, with respect to the routine matter(s), but
not entitled to vote, and will not be voted, with respect to the non-routine
matter(s). Shares as to which a broker indicates it lacks authority to vote, or
shares which the broker does not vote, will not be counted as present for
purposes of determining the presence or absence of a quorum.
The special resolution approving the amendment of the Company's
articles to reduce the minimum number of directors of the Company must be passed
by a majority of not less than two-thirds of the votes cast at the Meeting in
person or represented by proxy voting in respect of such resolution. The
ordinary resolution to remove L. James Porter as a director of the Company must
be passed by a simple majority of the votes cast at the Meeting in person or
represented by proxy voting in respect of such resolution. The three nominees
for director receiving a plurality of the votes cast at the Meeting in person or
by proxy shall be elected.
INFORMATION FOR BENEFICIAL HOLDERS OF COMMON STOCK
THE INFORMATION SET FORTH IN THIS SECTION IS OF SIGNIFICANT IMPORTANCE TO MANY
PERSONS WHO BENEFICIALLY OWN COMMON STOCK BUT DO NOT HOLD COMMON STOCK IN THEIR
OWN NAMES. Persons who do not hold their Common Stock in their own names
(referred to in this Management Proxy Circular as "Beneficial Holders") should
note that only proxies deposited by Shareholders whose names appear on the
records of the Company as the registered holders of Common Stock can be
recognized and acted upon at the Meeting. If Common Stock are listed in an
account statement provided to a Beneficial Holder by a broker, then in almost
all cases those Common Stock will not be registered under the name of the
broker or an agent of a broker. In Canada, the vast majority of such Common
Stock are registered under the name of CDS & Co. (the registration name for The
Canadian Depository for Securities Limited, which acts as nominee for many
Canadian brokerage firms). Common Stock held by brokers or their nominees can
only be voted (for or against resolutions) or withheld from voting upon the
instructions of the Beneficial Holder. Without specific instructions,
brokers/nominees are prohibited from voting Common Stock on behalf of their
clients. The directors of the Company do not know for whose benefit the Common
Stock registered in the names of CDS & Co. are held. Therefore, Beneficial
Holders cannot be recognized at the Meeting for the purpose of voting their
Common Stock in person or by way of proxy.
Applicable regulatory policy requires intermediaries and brokers to seek voting
instructions from Beneficial Holders in advance of shareholders' meetings. Every
intermediary and broker has its own mailing procedures and provides is own
return instructions, which should be carefully followed by Beneficial Holders in
order to ensure that their Common Stock are voted at the Meeting. Often, the
form
<PAGE> 16
15
of proxy supplied to a Beneficial Holder by its broker is identical to that
provided to registered Shareholders. However, its purpose is limited to
instructing the registered Shareholder how to vote on behalf of the Beneficial
Holder. The majority of brokers now delegate responsibility for obtaining
instructions from clients to Independent Investor Communications Corp. ("IICC").
IICC typically applies a special sticker to the proxy forms or, alternatively,
prepares a separate "voting instruction" form, mails those forms to the
Beneficial Holders and asks Beneficial Holders to return the proxy or voting
instruction forms to IICC. IICC then tabulates the results of all instructions
received and provides appropriate instructions respecting the voting of Common
Stock to be represented at the Meeting. A Beneficial Holder receiving a proxy
with an IICC sticker on it, or a voting instruction form, cannot use that proxy
or form to vote Common Stock directly at the Meeting - the proxy or form must be
returned to IICC well in advance of the Meeting in order to have the Common
Stock voted.
IF YOU ARE A BENEFICIAL HOLDER AND WISH TO VOTE IN PERSON AT THE MEETING, PLEASE
CONTACT YOUR BROKER OR AGENT WELL IN ADVANCE OF THE MEETING TO DETERMINE HOW YOU
CAN DO SO.
APPROVAL OF CIRCULAR
The undersigned hereby certifies that the contents and the sending of
this Management Proxy Circular have been approved by the directors of the
Company.
DATED at Vancouver, British Columbia this 3rd day of July, 1998.
BY ORDER OF THE BOARD
HARISTON CORPORATION
/s/ JAMES P. ANGUS
Chairman, President and Chief Executive Officer
<PAGE> 17
ANNEX A
EXECUTIVE OFFICERS OF HARISTON
The following individuals are the current executive officers of the
Company. The executive officers of the Company are elected annually by the Board
to serve until the next annual election of officers and until their respective
successors have been elected and have qualified unless removed by the Board.
JAMES P. ANGUS, age 51, was appointed President and Chief Executive
Officer of the Company in December, 1997. See the biography of Mr. Angus
included in this Proxy Statement.
L. JAMES PORTER, age 33, has been Chief Financial Officer and Corporate
Secretary of the Company and a Director since February 1995. Mr. Porter is a
director of Arch Publishing Group, Inc., a private U.S. corporation engaged in
multimedia software publishing and distribution. From September 1987 to February
1995, Mr. Porter was employed as a Senior Tax Manager and held various other
positions with Arthur Andersen, Chartered Accountants. Mr. Porter is a Chartered
Accountant and a Chartered Financial Analyst. Mr. Porter's ordinary residence is
West Vancouver, British Columbia, Canada.
<PAGE> 18
17
Appendix A to
Management Proxy Circular of
Hariston Corporation
July 3, 1998
SPECIAL RESOLUTION TO REDUCE THE MINIMUM NUMBER OF DIRECTORS TO THREE
RESOLVED, as a Special Resolution, that the articles of amalgamation of Hariston
Corporation (the "Company") be amended to reduce the minimum number of directors
of the Company to three (3) directors, and that any one director or officer of
the Company be and he hereby is authorized and directed execute, on behalf of
the Company, under the Company's seal or otherwise, and cause to be filed with
the Director of the Canada Business Corporations Act, all necessary instruments
to effect the foregoing.
<PAGE> 19
HARISTON CORPORATION
PROXY
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 25, 1998
THIS PROXY IS SOLICITED BY MANAGEMENT IN CONJUNCTION WITH THE SPECIAL MEETING OF
SHAREHOLDERS OF HARISTON CORPORATION TO BE HELD IN VANCOUVER, BRITISH COLUMBIA,
CANADA, ON AUGUST 25, 1998 AT THE TIME AND LOCATION SET FORTH IN THE NOTICE OF
SPECIAL MEETING DATED JULY 3, 1998.
The undersigned shareholder of HARISTON CORPORATION (the "Corporation") hereby
appoints NEIL S. MACKENZIE, or failing him JAMES P. ANGUS, or instead of either
individual:
_________________________________ of ___________________________,
with full power of substitution, as nominee of the undersigned to attend and act
for the undersigned and on behalf of the undersigned at the special meeting (the
"Meeting") of the shareholders of the Corporation to be held on August 25, 1998
and at any adjournment or adjournments thereof in the same manner, to the same
extent and with the same power as if the undersigned were present at the said
meeting or any adjournment or adjournments thereof with respect to the matters
set out below, any amendments or variations to such matters and any other
matters properly to come before the meeting. WITH RESPECT TO ANY AMENDMENTS OR
VARIATIONS TO ANY MATTER DESCRIBED BELOW AND ANY OTHER MATTERS WHICH MAY
PROPERLY COME BEFORE THE MEETING, I HEREBY CONFER DISCRETIONARY AUTHORITY ON THE
PERSON WHO VOTES AND ACTS ON MY BEHALF HEREUNDER TO WITH RESPECT TO THE
PARTICULAR MATTER AS HE OR SHE THINKS FIT.
I direct that my registered common shares of the Corporation shall be voted or
withheld from voting as specified below:
1. In respect of the Special Resolution, the full text of which is set forth in
Appendix A to the Management Proxy Circular of the Corporation dated July 3,
1998, to reduce the minimum number of directors of the Company to three (3):
FOR ___________ AGAINST ______________
2. In respect of an ordinary resolution to remove L. James Porter from the
office of director of the Company:
FOR ___________ AGAINST ______________
3. In respect of the election of Directors as follows:
JAMES P. ANGUS FOR ____________ WITHHELD ___________
PHILIP J. LANGRIDGE FOR ____________ WITHHELD ___________
NEIL S. MacKENZIE FOR ____________ WITHHELD ___________
THE UNDERSIGNED HEREBY REVOKES ANY PROXY PREVIOUSLY GIVEN.
DATED this ______ day of __________________, 1998.
(x)
-----------------------------------
NAME OF SHAREHOLDER (PLEASE PRINT) SIGNATURE OF SHAREHOLDER
Address:
-------------------------
- ---------------------------------
<PAGE> 20
25
INSTRUCTIONS FOR PROXY
1. The shares represented by this Proxy will be voted on Items 1, 2 and 3 as the
undersigned may have specified by marking an "x" in the spaces provided for
that purpose. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED AS IF THE
SHAREHOLDER HAD SPECIFIED AN AFFIRMATIVE VOTE.
2. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PROXY HOLDER (WHO NEED NOT BE A
SHAREHOLDER) TO ATTEND AND ACT FOR THE SHAREHOLDER ON HIS OR HER BEHALF
AT THE MEETING OTHER THAN THE PERSON DESIGNATED ABOVE. SUCH RIGHT MAY BE
EXERCISED BY STRIKING OUT THE NAMES OF THE SPECIFIED PERSON AND BY INSERTING
IN THE SPACE PROVIDED THE NAME OF THE PERSON THE SHAREHOLDER WISHES TO
APPOINT INSTEAD.
3. This form of Proxy should be dated and must be executed by the shareholder
or his or her attorney duly authorized in writing or, if the shareholder
is a corporation, under its corporate seal or by an officer or attorney
thereof duly authorized. If this form of Proxy is not dated, it will be
deemed to bear the date on which it is mailed to the shareholder.
4. The signature should agree with the name on this form of Proxy. Executors,
administrators, trustees, etc., should so indicate when signing. Where
shares are held jointly, each owner must sign.
5. To be effective, this form of Proxy must be deposited with the Registrar and
Transfer Agent of the Corporation, Montreal Trust Company, 510 Burrard
Street, Vancouver, British Columbia, Canada, V6C 3B9, not later than
5:00 p.m. (Vancouver time), August 24, 1998.
6. IN THE CASE OF REVOCATION OF A PROXY PREVIOUSLY GIVEN, THIS FORM OF PROXY
MUST BE DEPOSITED WITH THE REGISTERED OFFICE OF THE CORPORATION AT SUITE
1600, 925 WEST GEORGIA STREET, VANCOUVER, BRITISH COLUMBIA, CANADA, V6C 3L2,
AT ANY TIME UP TO AND INCLUDING THE LAST BUSINESS DAY PRECEDING THE MEETING
OR ANY ADJOURNMENT THEREOF, OR WITH THE CHAIR OF THE MEETING ON THE DAY OF
THE MEETING OR ANY ADJOURNMENT THEREOF. The accompanying Management Proxy
Circular sets out the rights of the shareholder to revoke a proxy previously
given in greater detail.
