<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number: 0-13966
HARISTON CORPORATION
(Exact name of registrant as specified in its charter)
CANADA 33-0645339
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
1500 WEST GEORGIA STREET, SUITE 1555, VANCOUVER, V6G 2Z6
BRITISH COLUMBIA (Zip Code)
(Address of principal executive offices)
(604) 685-8514
(Registrant's telephone number, including area code)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [ X ] NO [ ]
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:
AS OF MAY 12, 1998, 12,663,113 SHARES OF THE REGISTRANT'S COMMON STOCK
WERE OUTSTANDING.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited Consolidated Statements of Income, Loss and Deficit for
the three month periods ended March 31, 1998 and March 31, 1997, the unaudited
Consolidated Statements of Changes in Financial Position for the three month
periods ended March 31, 1998 and March 31, 1997 and the unaudited Consolidated
Balance Sheets as at March 31, 1998 and December 31, 1997, of Hariston
Corporation ("Hariston" or the "Company") follow.
<PAGE> 3
HARISTON CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997
- ----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 3,061 $ 3,266
Short-term investments (Note 11) 204 8
Short-term notes receivable 500 500
Other receivables 6 20
Prepaids 11 11
Assets of discontinued operations -- 230
-------- --------
3,782 4,035
Furniture and equipment 17 20
-------- --------
$ 3,799 $ 4,055
======== ========
LIABILITIES
Current
Payables and accruals $ 150 $ 315
Liabilities of discontinued operations -- 30
-------- --------
150 345
SHAREHOLDERS' EQUITY
Capital stock 31,999 31,999
Deficit (28,350) (28,289)
-------- --------
3,649 3,710
-------- --------
$ 3,799 $ 4,055
======== ========
</TABLE>
- ----------------------------------------------------------------------------
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE> 4
HARISTON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME, LOSS AND DEFICIT (UNAUDITED)
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
3 MONTHS ENDED MARCH 31 1998 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES $ -- $ --
OPERATING AND CORPORATE EXPENSES
Administration, office, and travel 41 51
Consultants and directors fees, salaries and
employee benefits 46 126
Accounting, legal and other professional fees 38 71
Rent 4 14
Franchise taxes 3 3
Depreciation and amortization 3 2
------------ ------------
135 267
------------ ------------
(135) (267)
------------ ------------
OTHER
Net interest income (expense) 42 (30)
Net gain on sale of shares 17 5,328
Foreign exchange loss -- (28)
Other income 15 2
------------ ------------
74 5,272
------------ ------------
NET INCOME (LOSS) FROM CONTINUING OPERATIONS $ (61) $ 5,005
------------ ------------
Results of multimedia software and book
operations -- (473)
------------ ------------
NET INCOME (LOSS) $ (61) $ 4,532
------------ ------------
DEFICIT, beginning of period (28,289) (30,591)
------------ ------------
DEFICIT, END OF PERIOD $ (28,350) $ (26,059)
============ ============
CONTINUING OPERATIONS --
Basic income (loss) per share $ -- $ 0.40
Diluted income (loss) per share $ -- $ 0.40
------------ ------------
DISCONTINUED OPERATIONS --
Basic income (loss) per share $ -- $ (0.04)
Diluted income (loss) per share $ -- $ (0.04)
------------ ------------
Shares used in basic computation (Note 9) 12,663,113 12,663,113
Shares used in diluted computation (Note 9) 12,663,113 12,663,113
------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE> 5
HARISTON CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (UNAUDITED)
(EXPRESSED IN THOUSAND OF U.S. DOLLARS)
<TABLE>
<CAPTION>
3 MONTHS ENDED MARCH 31 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (61) $ 4,532
Non-cash items:
Depreciation and amortization 3 185
Gain on sale of shares (17) (5,328)
------- -------
(75) (611)
Net increase in non-cash working capital items (150) (401)
------- -------
CASH USED FOR OPERATING ACTIVITIES (225) (1,012)
------- -------
FINANCING ACTIVITIES
Term debt payments -- (3,320)
Amount paid upon exercise of put option -- (175)
------- -------
CASH USED FOR FINANCING ACTIVITIES -- (3,495)
------- -------
INVESTING ACTIVITIES
Net purchase of assets -- (18)
Net issuance of notes receivable -- (1,000)
Net proceeds from sale of shares 20 6,521
------- -------
CASH PROVIDED BY INVESTING ACTIVITIES 20 5,503
------- -------
NET INCREASE (DECREASE) IN CASH (205) 996
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,266 2,805
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,061 3,801
======= =======
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these
consolidated financial statements
<PAGE> 6
HARISTON CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN U.S. DOLLARS)
3 MONTHS ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
NOTE 1. OPERATIONS
The Company is incorporated under the Canada Business Corporations Act and has
operated historically as a diversified holding company. In December 1997 and
February 1998 the Company sold its multimedia software operations and became
inactive. The Company is currently examining acquisition targets and intends to
recommence active business operations by purchasing an existing business.
NOTE 2. ACCOUNTING POLICIES
BASIS OF PRESENTATION
In accordance with the requirements of the Canada Business Corporations Act, the
Company's accounting and reporting policies conform to Canadian generally
accepted accounting principles ("Canadian GAAP"). Accordingly, these interim
consolidated financial statements have been prepared in accordance with Canadian
GAAP. These interim statements also conform in all material respects with United
States generally accepted accounting principles ("U.S. GAAP"). For further
information on the Company's accounting policies, reference should be made to
Note 2 of the Notes to Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
In the opinion of management, all adjustments necessary to fairly state the
results of operations for the three months ended March 31, 1998, are of a normal
recurring nature and have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission. These interim consolidated financial
statements should therefore be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
PRINCIPLES OF CONSOLIDATION
These interim consolidated financial statements include the accounts of the
Company, Hariston Corporation, and its wholly-owned subsidiaries EuroEastern
Investment Corp., Educorp Multimedia, Inc., Educorp Direct, Inc., and HighText
Interactive, Inc. All significant intercompany accounts and transactions have
been eliminated on consolidation.
<PAGE> 7
HARISTON CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN U.S. DOLLARS)
3 MONTHS ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
NOTE 3. SUMMARY OF SECURITIES ISSUED DURING THE FIRST QUARTER
None.
NOTE 4. SUMMARY OF OPTIONS GRANTED DURING THE FIRST QUARTER
Effective February 2, 1998 the Company adopted the 1998 Stock Option Plan and
options were granted under the plan as follows:
<TABLE>
<CAPTION>
NO. SHARES EXERCISE
OPTIONEE UNDER OPTION PRICE ($)
<S> <C> <C>
James P. Angus 200,000 0.25
Neil S. MacKenzie 200,000 0.25
L. James Porter 200,000 0.25
</TABLE>
NOTE 5. AUTHORIZED AND ISSUED SHARE CAPITAL AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Class Par Value Authorized Number Issued Number Amount
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common None Unlimited 12,663,113 $31,999,167
</TABLE>
NOTE 6. SHARES IN ESCROW OR SUBJECT TO POOLING AS OF MARCH 31, 1998
None.
NOTE 7. LIST OF DIRECTORS AS OF MARCH 31, 1998
James P. Angus Neil S. MacKenzie L. James Porter
(Chairman)
<PAGE> 8
HARISTON CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN U.S. DOLLARS)
3 MONTHS ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
NOTE 8. OPTIONS AND WARRANTS OUTSTANDING AS OF MARCH 31, 1998
<TABLE>
<CAPTION>
Number of Shares Exercise Market Price Option
OPTIONEE under Vested Option Price on Date of Grant Expiry Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
S. David Anfield 20,000 3.53 4.57 March 31, 1998
- -------------------------------------------------------------------------------------------------
James P. Angus 40,000 1.25 1.25 July 17, 2003
Nuno Brandolini 40,000 1.25 1.25 July 17, 2003
Neil S. MacKenzie 40,000 1.25 1.25 July 17, 2003
Nicholas Mosich 90,000 1.25 1.25 July 17, 2003
L. James Porter 50,000 1.25 1.25 July 17, 2003
- -------------------------------------------------------------------------------------------------
James P. Angus 80,000 1.25 1.25 August 16, 2003
Neil S. MacKenzie 80,000 1.25 1.25 August 16, 2003
L. James Porter 126,666 1.25 1.25 August 16, 2003
- -------------------------------------------------------------------------------------------------
James P. Angus 200,000 0.25 0.10 February 02, 2005
Neil S. MacKenzie 200,000 0.25 0.10 February 02, 2005
L. James Porter 200,000 0.25 0.10 February 02, 2005
- -------------------------------------------------------------------------------------------------
1,166,666
==========
</TABLE>
<TABLE>
WARRANT Number of Shares Exercise Market Price Option
HOLDER under Vested Option Price on Date of Grant Expiry Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kinaro S.A. 250,000 2.50 2.25 August 24, 2000
Neval Management Ltd. 250,000 2.50 2.25 August 24, 2000
Privatim Finanz A.G. 250,000 2.50 2.25 August 24, 2000
Zocal Foundation 250,000 2.50 2.25 August 24, 2000
---------
1,000,000
=========
</TABLE>
NOTE 9. INCOME (LOSS) PER SHARE
Basic and diluted income (loss) per share have been computed using the weighted
average number of shares of common stock outstanding during the periods
presented. Stock options and warrants have not been included in these
calculations as their impact would be antidilutive.
<PAGE> 9
HARISTON CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(EXPRESSED IN U.S. DOLLARS)
3 MONTHS ENDED MARCH 31, 1998
- --------------------------------------------------------------------------------
NOTE 10. DISCONTINUED OPERATIONS
On February 21, 1997 the Company sold its book publishing operations. On
December 19, 1997 the Company sold its Educorp Direct multimedia software
operations. On February 13, 1998 the Company sold the assets of its HighText
Interactive multimedia software business. The Company is no longer engaged in
active business operations.
NOTE 11. INVESTMENTS
<TABLE>
<CAPTION>
Amount
--------
<S> <C>
Byron Preiss Multimedia Company, Inc. $199,500
Northpoint Corporation 4,802
Arch Publishers Group, Inc. 1
--------
Investments as of March 31, 1998 $204,303
========
</TABLE>
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following information should be read in conjunction with the
consolidated financial data and the notes thereto included in Item 1.
<PAGE> 11
HARISTON CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
OVERVIEW
During the first quarter of 1998 Hariston completed the sale of its multimedia
software operations by closing the sale, on February 13, 1998, of the assets of
HighText Interactive, Inc. to Byron Preiss Multimedia Company, Inc. ("Preiss"),
a developer of educational software and a publisher of books and software for
educational and consumer markets. Preiss is a public company whose common shares
trade on the Nasdaq SmallCap Market tier of The Nasdaq Stock Market under the
symbol "CDRM". The sale had no impact on first quarter profit as the loss on
sale was fully provided for as of December 31, 1997. The Company received
150,000 shares of common stock of Preiss subject to adjustment intended to
provide $1.33 in proceeds per share for shares sold during the six months period
commencing February 13, 1999.
In accordance with the Board's strategy to reposition the Company, Hariston's
management and Board devoted considerable time and attention during the first
quarter to the selection and review of viable acquisition candidates. This
process is ongoing and the Board is hopeful that a transaction will be concluded
during the third quarter of 1998.
Also during the first quarter, the Company took further steps to curtail
spending and control costs. The Company's success in this area is reflected in a
49% lower level of corporate expenses incurred in the first quarter of 1998 as
compared to the first quarter of 1997.
CORPORATE STRUCTURE
Hariston is a Canada Business Corporations Act company originally incorporated
in 1952, continued in 1980 and amalgamated with two Canadian subsidiary
companies effective January 1, 1995. Hariston has four U.S. subsidiaries, all of
which are currently inactive.
RESULTS OF OPERATIONS
The Company incurred a consolidated net loss of $61,405 for the three months
ended March 31, 1998. During the three months ended March 31, 1997, the Company
earned net income of $4,531,815. Excluding gains earned on the sale of
investments in each year and an associated foreign exchange loss in 1997, the
Company incurred a net loss of $78,404 in the first quarter of 1998 and a net
loss of $768,595 in the first quarter of 1997. Further excluding the results of
the discontinued software and book operations, the Company's first quarter 1997
net loss was $295,045.
An analysis of the 1998 results is presented below, with 1997 comparatives as
applicable.
REVENUES
Due to the divestitures during February and December 1997 and February 1998 of
the multimedia software and book operations, the Company earned no revenues from
continuing operations during the first quarter of 1998. The Company realized
$19,500 of net proceeds from the sale of shares in Northpoint Corporation during
the quarter.
By comparison, during the first quarter of 1997 the Company earned revenues of
$907,954 from the discontinued software and book operations and realized net
proceeds of approximately $6,522,000 from the sale of shares in Polish Life
Improvement S.A.
<PAGE> 12
OPERATING AND CORPORATE EXPENSES
The majority of the Company's operating and corporate expenses for the first
quarter of 1998 were general, administrative and salary costs, including $40,979
of salaries and consultants fees, $37,682 in legal and accounting fees, $14,593
of insurance costs, $9,224 of shareholder communications costs, $5,775 of
directors fees and $3,974 of office rent.
By comparison, during the first quarter of 1997, excluding costs associated with
the discontinued software and book operations, the Company incurred $125,469 of
salaries and consultants fees, $67,928 of legal and accounting fees, $20,393 of
insurance costs, $8,004 of shareholder communications costs, $5,939 of directors
fees and $13,207 of office rent.
INVESTMENTS
ARCH PUBLISHERS GROUP, INC. ("APG")
APG is a private, Elmsford, New York based multimedia software publisher and
distributor. Hariston owns a 15% shareholding in APG, which shareholding was
acquired on the December 19, 1997 sale of the assets and operations of Educorp
Direct, Inc., a Hariston subsidiary formally engaged in the publishing,
distribution and direct mail marketing of multimedia software titles on CD-ROM .
The shareholding in APG is recorded at nominal value due to the difficulty of
establishing a value as APG's shares are not publicly traded. However,
Hariston's management is hopeful that significant value will ultimately be
realized from the sale of Hariston's shareholding in APG. APG is actively
pursuing acquisitions, strategic alliances and internal growth of its business.
BYRON PREISS MULTIMEDIA COMPANY, INC. ("PREISS")
Preiss is a public, New York, New York based multimedia software and book
publisher and distributor whose shares are listed for trading on the SmallCap
Market tier of The Nasdaq Stock Market. Hariston owns 150,000 shares of Preiss,
which shares were acquired on the February 13, 1998 sale of the assets of
HighText Interactive, Inc., a Hariston subsidiary formally engaged in the
publishing and sale of multimedia software titles on CD-ROM . The shareholding
in Preiss is recorded at $199,500, being the guaranteed minimum proceeds the
Company will receive if the shares are sold in the six month period commencing
February 13, 1999.
NORTHPOINT CORPORATION ("NORTHPOINT")
Northpoint is a Toronto, Canada based marketer of products to home-based
businesses. Hariston initially held a 31% shareholding in a predecessor company
to Northpoint, which shareholding Hariston acquired in 1992. Hariston currently
owns 155,981 Northpoint shares representing less then a 2% shareholding in
Northpoint. Northpoint's shares trade on the Canadian Dealing Network and recent
trades have been in the range Cdn$0.35 to Cdn$0.50 per share. The Company's
shares in Northpoint are recorded at a value of approximately $0.03 per share.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998 the Company had cash balances in excess of $3 million, a
working capital ratio of 25.2 and a debt/equity ratio of 0.04. This compares
favorably with prior period figures.
Subsequent to quarter-end, the Company collected in full the $500,000 note
receivable, bringing its cash position to in excess of $3.5 million.
<PAGE> 13
The Company's principal capital requirements include working capital to finance
ongoing corporate expenses and costs which may be incurred in connection with
the acquisition of a business in the future.
Historically, the Company has also required capital to finance operating losses.
As of March 31, 1998, the Company had an accumulated deficit of $28,350,721.
However, the Company has disposed of or written off substantially all of the
operations and investments that gave rise to this accumulated deficit.
The Company is in discussions with various parties concerning alternative
financing and acquisition transactions. Depending on which transactions the
Company ultimately concludes, the Company may need to raise additional equity
and/or debt capital in 1998. There is no assurance that additional debt or
equity financing, if required, will be available on terms acceptable to the
Company.
FORWARD LOOKING INFORMATION
This Quarterly Report includes forward-looking information, which may include
but is not limited to information concerning the Company's business strategies
and financing plans. These forward looking statements are subject to risks and
uncertainties, including uncertainty as to whether the Company will be able to
locate and acquire a business meeting the Company's selection criteria, risk and
uncertainty as to the Company's projected cash flows and cash requirements, risk
and uncertainty as to whether the Company will be able to raise any necessary
financing on fair or favorable terms or at all, risk and uncertainty as to the
Company's ability to recruit and retain qualified personnel, and risk and
uncertainty as to other factors that could cause actual results to differ from
those projected.
<PAGE> 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
During the quarter ended March 31, 1998 the Company did not submit any
matters to a vote of the Company's shareholders.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description
- ----------- -----------------------
<S> <C>
4.10 1998 Hariston Corporation Stock Option Plan
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K: None
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Description Page
- ----------- ----------------------- ----
<S> <C> <C>
4.10 1998 Hariston Corporation Stock Option Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARISTON CORPORATION
Dated: May 12, 1998 By: /s/ L. James Porter
-----------------------------
L. James Porter,
Chief Financial Officer
(Duly authorized officer and Principal
Financial and Accounting Officer)
<PAGE> 1
Exhibit 4.10
1998 HARISTON CORPORATION
STOCK OPTION PLAN
(Effective as of February 2, 1998)
1. NAME, PURPOSE AND TERM OF PLAN
1.1 The stock option Plan constituted hereby shall be known as 1998 Hariston
Corporation Stock Option.
1.2 The purpose of the Plan is to provide an incentive to officers,
consultants, and employees for continuing beneficial service to the Company
and its affiliates by encouraging and facilitating the acquisition and
ownership of common shares of the Company.
1.3 The Plan shall become effective as of the date set forth above (the
"Effective Date"). Except with respect to options then outstanding, if not
sooner terminated under Section 16.1, the Plan shall terminate upon, and no
further options shall be granted after, the expiration of ten years from
the Effective Date.
2. INTERPRETATION
In this Plan, unless the context otherwise requires:
2.1 "Board of Directors" means the Board of Directors of the Company.
2.2 "Committee" means a committee of the Board of Directors appointed by
the Board of Directors as contemplated in subsection 4.2.
2.3 "Company" means Hariston Corporation and any successor or continuing
Company resulting from the amalgamation of the Company and any other
Company or resulting from any other form of corporate reorganization.
2.4 "Employee" means an individual who is an officer, director, consultant,
or a bona fide full-time salaried employee of the Company or any of its
Subsidiaries or of any partnership of such corporations or companies.
2.5 "Market Price" means the average price per Share computed on the basis
of the closing market price for board lots of the Shares (which shall be
deemed to be the mean of the closing bid and ask prices of the Shares, on
any day on which the Shares are not traded) on the OTC Bulletin Board for
the most recent twenty (20) trading days preceding the date on which an
Option is granted.
1
<PAGE> 2
2.6 "Option" means any option granted pursuant to the Plan and evidenced by
an agreement in such form and not inconsistent with the Plan as the
President shall approve from time to time.
2.7 "Optionee" means an Employee who has been granted an Option.
2.8 "Option Price" means the price at which Optioned Shares may be
subscribed for pursuant to an Option as determined pursuant to Section 6
(Option Price).
2.9 "Optioned Shares" means the Shares subject to an Option or Options as
the case may be.
2.10 "Plan" means the Stock Option Plan as embodied herein and as from time
to time amended in accordance with the provisions hereof, and the
guidelines, rules and regulations from time to time in effect hereunder.
2.11 "Shares" means common shares without par value in the capital of the
Company, as constituted at the effective date hereof.
2.12 "Subsidiary" means any corporation or company of which outstanding
securities to which are attached more than 50% of the votes that may be
cast to elect directors thereof are held (provided that such votes are
sufficient to elect a majority of such directors), other than by way of
security only, by or for the benefit of the Company and/or by or for the
benefit of any other corporation or company in like relation to the
Company, and includes any corporation or company in like relation to a
Subsidiary.
2.13 The masculine gender shall include the feminine gender and the singular
shall include the plural and vice versa.
2.14 A reference to a section include all subsections in that section.
3. SHARES SUBJECT TO THE PLAN
Subject to adjustment in accordance with the provisions of Section 15
(Changes in Capitalization or Number of Outstanding Shares), the
maximum number of Shares which may be reserved for issuance under the
Plan shall be six hundred thousand (600,000).
4. GRANT OF OPTIONS AND ADMINISTRATION OF THE PLAN
4.1 Persons eligible to receive grants of Options under the Plan shall be
limited to Employees.
4.2 This Plan will be administered by the Board or a committee of the Board
duly appointed for this purpose by the Board and consisting of not less than
three directors,
2
<PAGE> 3
a majority of whom shall not be full time employees of the
Company. If a committee is appointed for this purpose, all references to the
term "Board of Directors," other than in this subsection 4.2 and subsection
4.3.5, will be deemed to be references to the Committee.
4.3 Subject only to the express provisions of the Plan, the Board of
Directors shall have, and hereby is specifically granted, the sole
authority:
4.3.1 to grant Options to Employees and to determine the terms of,
and the limitations, restrictions and conditions upon, such
grants;
4.3.2 to authorize any officer or officers to execute and deliver
any option agreement, notice or document and to do any other
act as contemplated by the terms of the Plan for and on behalf
of the Company;
4.3.3 to interpret the Plan and to adapt, amend and rescind such
administrative guidelines and other rules and regulations
relating to the Plan as it may from time to time deem
advisable;
4.3.4 to make all other determinations and perform all such other
actions as the Board of Directors deems necessary or advisable
to implement and administer the Plan; and
4.3.5 to appoint a Committee to make recommendations to the Board of
Directors regarding the grant of Options to specified
Employees, and to delegate to such Committee on such terms as
the Board of Directors in its discretion determines all or any
part of the powers and authority of the Board of Directors
hereunder to implement and administer the Plan.
4.3.6 With the consent of the affected holders of options, to
reprice any outstanding options under the Plan, and/or to
cancel any outstanding options under the Plan and to grant in
substitution therefor new options under the Plan pursuant to
terms consistent therewith, covering the same or different
numbers of shares of stock.
4.4 The determinations of the Board of Directors under the Plan (including,
without limitation, determinations of the Employees who are to receive
grants of Options and the amount and timing of such grants), need not be
uniform and may be made by it selectively among Employees who receive, or
are eligible to receive, grants of Options under the Plan, whether or not
such Employees are similarly situated as to office, length of service,
salary or any other factor. The Board of Directors may, in its discretion,
authorize the granting of additional Options to an Optionee before an
existing Option has terminated.
3
<PAGE> 4
4.5 All guidelines, rules, regulations, decisions and interpretations of the
Board of Directors respecting the Plan or Options shall be binding and
conclusive on the Company and on all Optionees and their respective legal
personal representatives, heirs and legatees and on all Employees.
5. TERM OF OPTIONS
Each Option shall be for the term determined by the Board of Directors,
but in no case shall an Option be granted by the Board of Directors for a term
of longer than seven years from the date of the granting of the Option.
6. OPTION PRICE
The Option Price in any Option shall be determined from time to time by
the Board of Directors but shall not be less than 85% of the Market Price on the
date on which the Option is granted.
7. EXERCISE OF OPTIONS
7.1 Subject to the provisions of subsection 7.4 and of Sections 10 (No
Fractional Shares), 11 (Death of Optionee), 12 (Termination of Employment
of Optionee) and 14 (Changes in Capitalization or Number of Outstanding
Shares), the terms for exercise of each Option shall be determined by the
Board of Directors.
7.2 An Option may be exercised by the Optionee or his personal representatives,
heirs or legatees at the applicable times and in the applicable amounts by
giving to the Company at its principal executive office written notice of
exercise specifying the number of Shares to be subscribed for. Such notice
must be accompanied by full payment for the Shares to be subscribed for.
Upon any such exercise of an Option, the Company shall forthwith cause the
transfer agent and the registrar of the Company for the time being to
deliver to the Optionee or his personal representatives, heirs or legatees
(or as the Optionee or his personal representatives, heirs or legatees may
otherwise direct in the written notice of exercise) a certificate or
certificates in the name of the Optionee or his personal representatives,
heirs or legatees (or as otherwise directed in the written notice of
exercise) representing in the aggregate such number of shares as the
Optionee or his personal representatives, heirs or legatees shall have then
paid for.
7.3 All Shares subscribed for under an option shall be paid for in full at the
time of subscription.
7.4 Notwithstanding any other provision of the Plan, the Board of Directors may
at any time, by notice in writing to all Optionees under the Plan in
connection with (i) any proposed sale or conveyance of all or substantially
all of the property and assets of the Company, (ii) any proposed
consolidation, amalgamation or other form of corporate
4
<PAGE> 5
reorganization of the Company, other than emigration of the Company to a
foreign jurisdiction in which the options of the surviving Company are not
exchanged on a pro-rata basis for options held, or (iii) any proposed offer
by any person to acquire or redeem all outstanding voting or equity
securities of any class of the Company (in each case, a "Proposed
Transaction"), require each Optionee to elect either to, within such period
as the Board of Directors shall prescribe:
7.4.1 subscribe and pay for a part or the whole of the Optioned Shares then
remaining unsubscribed for under his Option (whether or not such Option
would otherwise then be exercisable), or to accept termination of his
Option in the event of his failing within such period to either subscribe
and pay for all such remaining Optional Shares or to elect to accept
payment under subsection 7.4.2 or subsection 7.4.3, as the case may be;
7.4.2 subject to subsection 7.5, accept payment in cash in respect of a part or
the whole of the Optioned Shares then remaining unsubscribed for under his
Option (whether or not such Option would otherwise then be exercisable) of
an amount equal to the result obtained by multiplying the excess, if any,
of the higher of (i) the Market Price of the Shares on the date notice is
given under this subsection 7.4 or (ii) the Market Price of the Shares of
the date of completion of the Proposed Transaction, over the Option Price,
by the number of Optioned Shares then remaining unsubscribed for under such
Option (whether or not such Option would otherwise then be exercisable), or
7.4.3 subject to subsection 7.5, if the Option Price for a part or the whole of
the Optioned Shares exceeds the Market Price of the Shares on both the date
notice is given under this subsection 7.4 and on the date of completion of
the Proposed Transaction, accept payment of a total of $1 in respect of all
rights to such Optioned Shares,
provided that if a Proposed Transaction in respect of which a notice has been
given under this subsection 7.4 has not been completed (in the case of an offer,
completed by taking up and paying for the securities tendered) within six months
after the date of such notice, any rights in respect of Optioned Shares under
such Options which have not been exercised as contemplated in subsection 7.4.1
and in respect of which payment has not been made as contemplated in subsections
7.4.2 or 7.4.3 shall continue in effect, exercisable in accordance with the
terms thereof as at the time immediately preceding the giving of such notice.
For the purposes of this subsection 7.4, the term "date of completion" means the
date on which the sale, conveyance, corporate reorganization, acquisition or
redemption contemplated by the subsection takes effect with respect to the
Shares. In the event that the Market Price of the Shares is not for any reason
available at the date of completion, the Board of Directors shall, in good faith
and in such manner as it considers appropriate, determine the current market
value of the Shares at that date, which shall be deemed to be the Market Price
of the Shares for the purpose of part (ii) of subsection 7.4.2 and for
subsection 7.4.3. If a Proposed Transaction is completed, the Market Price for
purposes
5
<PAGE> 6
of part (ii) of subsection 7.4.2 and for subsection 7.4.3 shall be the
same as the value of the consideration paid for Shares under the Proposed
Transaction.
7.5 The Board of Directors may require that an Optionee who has elected to
accept payment in cash in accordance with subsection 7.4.2 or subsection
7.4.3 in consideration for the cancellation of the Optionee's rights in
respect of the Optioned Shares remaining unsubscribed for under his Option
(whether or not such Option would otherwise then be exercisable) shall
accept such payment on a date prior to the date of completion of the
Proposed Transaction and based on the Market Price on the date notice is
given under subsection 7.4, provided that the Company shall forthwith after
completion of the Proposed Transaction pay to each such Optionee an amount
equal to the result obtained by multiplying the excess, if any, between (i)
the Market Price of the Shares at the date of completion of the Proposed
Transaction by the number of the Optioned Shares in respect of which that
Optionee previously received payment under subsection 7.4.2 or 7.4.3 and
(ii) the Market Price of the Shares on the date notice is given under
subsection 7.4.
7.6 The provisions of subsection 7.4 requiring Optionees to make an election to
exercise an Option or to accept payment in satisfaction of an Option, shall
only be invoked with respect to Optionees generally and not with respect to
one Optionee and not other Optionees.
8. RELATED RIGHTS AND OTHER BENEFIT PLANS
8.1 No Optionee shall have any of the rights of a shareholder of the Company
with respect to any Optioned Shares until such Optioned Shares have been
issued to him upon exercise of the Option and full payment therefor has
been made by him to the Company.
8.2 Participation in the Plan shall not affect an Employee's eligibility to
participate in any other benefit or incentive plan of the Company, its
Subsidiaries or any combination or partnership thereof.
8.3 Any Option granted pursuant to this Plan shall not obligate the Company to
make any benefit available to an Employee under any other plan of the
Company unless otherwise specifically provided therein.
8.4 Nothing contained in this Plan will prevent the Company, any Subsidiary or
any combination or partnership thereof from adopting other or additional
compensation arrangements for the benefit of any Employee, subject to any
required shareholder or regulatory approval.
6
<PAGE> 7
9 NON-TRANSFERABILITY OF OPTIONS
No Option granted under the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution.
During the lifetime of the Optionee, an Option granted under the Plan
shall be exercisable only by the Optionee. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any option granted under the
Plan, or any right thereunder, contrary to the provisions hereof, shall
be void and ineffective, shall give no right to the purported
transferee, and shall, at the sole discretion of the committee, result
in forfeiture of the option with respect to the shares involved in such
attempt.
10. NO FRACTIONAL SHARES
Under no circumstances shall the Company be obligated to issue
any fractional Shares upon the exercise of an Option. To the extent
that an Optionee would otherwise have been entitled to receive on the
exercise or partial exercise of an Option a fraction of a Share in any
year, that fraction of a Share shall be added to and become available
to the Optionee upon exercise of the Option in the next succeeding year
following the anniversary of the date of grant of the Option. To the
extent that an Optionee would otherwise have been entitled to receive
on an exercise or partial exercise of an Option a fraction of a share
or any other kind of share or obligation as result of a change in
capitalization or number of outstanding Shares as described in Section
15 (Change in Capitalization or Number of Outstanding Shares), the
Company shall pay to the Optionee the current market value of such
fraction computed in a manner which the Board of Directors considers
appropriate.
11. DEATH OF OPTIONEE
11.1 In the event of the termination of employment of an Optionee by reason of
death at any time during the term of an Option, then within 90 days of the
date of death, the option may be exercised by the Optionee's legal personal
representative or representatives up to such maximum number of Optioned
Shares which the Optionee was entitled to exercise at the date of his
death, but in no event shall the Option be exercisable beyond the
expiration date set forth in the Option at the time of its grant.
12. TERMINATION OF EMPLOYMENT OF OPTIONEE
12.1 Nothing contained in the Plan or any Option shall confer on any Optionee
any right to, or guarantee of, continued employment by the Company or any
Subsidiary or any combination or partnership thereof, or in any way limit
the right of the Company or Subsidiary or any combination or partnership
thereof to terminate the employment of the Optionee at any time.
7
<PAGE> 8
13. SHARES RELEASED FROM OPTIONS
Any shares released from an Option by the provisions of
Section 11 (Death of Optionee) may be made the subject of further
Option or Options.
14. CHANGE IN CAPITALIZATION OR NUMBER OF OUTSTANDING SHARES
14.1 If, and whenever, prior to the issuance by the Company of all the Optioned
Shares under an Option, the Shares are from time to time consolidated into
a lesser number of Shares or subdivided into a greater number of Shares,
the number of Optioned Shares unissued under the Option shall be decreased
or increased proportionately, as the case may be, and the subscription
price to be paid by the Optionee for each such share shall be adjusted
accordingly.
14.2 Subject to subsection 7.4, if the Company enters into, and is continued or
survives as a result of, any amalgamation or merger with one or more other
companies or corporations whether by way of arrangement, by the sale of its
assets and undertaking or otherwise, then and in each such case each Option
shall extend to and cover the number, class and kind of shares or other
obligations to which the Optionee would have been entitled had the Option
been fully exercised immediately prior to the date such amalgamation or
merger becomes effective (whether or not such Option would otherwise then
have been fully exercisable) and the then prevailing subscription price of
the shares or other obligations so covered shall be correspondingly
adjusted if and to the extent that the Board of Directors considers it to
be equitable and appropriate.
14.3 Except as expressly provided in this Section 14, the grant of any option
shall not in any way limit or affect the rights or powers of the Company or
its directors or shareholders to make any changes or deal in any manner
with the authorized, issued or unissued shares or any other securities of
the Company and no such change or dealing shall give any right or
entitlement to the holder of any Option in respect or as a result thereof.
15. AMENDMENT AND TERMINATION OF THE PLAN AND OPTIONS
15.1 Subject to applicable legislation, any required regulatory or shareholder
approval and the rules of any stock exchange on which shares in the capital
of the Company are listed, the Board of Directors may at any time terminate
the Plan or make such amendments to the Plan as it shall deem advisable
provided that, except as otherwise specifically provided by Section 14 and
subsection 7.4, no such termination or amendment shall adversely affect the
rights of any Optionee under any Option previously granted except with the
consent of such Optionee. Each such amendment of the Plan (a) extending the
period within which options may be granted under the Plan, (b) increasing
the aggregate number of shares of Common Stock to be optioned under the
Plan except as provided in the adjustment provisions hereof, (c) materially
8
<PAGE> 9
modifying the requirements as to eligibility of employees or consultants
receiving options under, or changing the eligibility of employees or class
of employees to whom options may be granted hereunder, or (d) materially
increasing the benefits to Optionees under the Plan, shall, in each case,
be subject to approval by the shareholders of the Company. The committee
may, with the consent of the person or persons entitled to exercise any
outstanding option granted under the Plan, amend such option; provided,
however, that any such amendment shall be subject to shareholder approval
when required as set forth above. The Committee may at any time or from
time to time, in its discretion, in the case of any option previously
granted under the Plan which is not them immediately exercisable in full,
accelerate the time or times at which such option may be exercised to any
earlier time or times.
15.2 If the Plan is terminated, the provisions of the Plan and any
administrative guidelines and other rules and regulations adopted by the
Board of Directors and in force on the date of termination will continue in
effect as long as any Option or any rights pursuant thereto remain
outstanding and, notwithstanding the termination of the Plan. The Board of
Directors shall remain able to make such amendments to the Plan or the
Options as they would have been entitled to make if the Plan were still in
effect.
16. GENERAL REQUIREMENTS
Each grant of an Option under the Plan shall be subject to the
requirement that if at any time the Board of Directors shall determine
that any agreement, undertaking or other action or cooperation on the
part of an Optionee including in respect to a disposition of the
shares, is necessary or desirable as a condition of, or in connection
with (i) the listing, registration or qualification of the Shares
subject to the Plan upon any stock exchange or under the laws of any
applicable jurisdiction, or (ii) obtaining a consent or approval of any
governmental or other regulatory body, the exercise of such Option and
the issue of Shares thereunder may be deferred in whole or in part by
the Board of Directors until such times as the agreement, undertaking
or other action or cooperation shall have been obtained in a form and
on terms acceptable to the Board of Directors.
17. RIGHT TO OPTIONS
Nothing contained herein or in any resolution previously or
hereafter adopted by the Board of Directors shall vest the right in any
person whomsoever to receive any Option. No person shall acquire any of
the rights of any Optionee unless and until a written option agreement,
in form satisfactory to the President of the Company, shall have been
duly executed on behalf of the Company and delivered to the Optionee
and executed and delivered by the Optionee to the Company. Any
agreement purporting to be an Option shall, to the extent it may be
contrary to the express provisions of the Plan, be unenforceable by the
Optionee against the Company.
9
<PAGE> 10
18. WITHHOLDING
Whenever the Company proposes or is required to issue or
transfer Shares pursuant to an Option, the Company shall have the right
to withhold from salary payments or to require the recipient of such
Shares to remit to the Company an amount sufficient to satisfy any
federal, provincial, state and/or local withholding tax requirements
prior to the delivery of any certificate or certificates for such
Shares. Whenever under the Plan payments are to be made in cash such
payments shall be net of an amount sufficient to satisfy any federal,
provincial, state and/ or local withholding tax requirements.
19. INTERPRETATION
Any question or interpretation of the Plan or any Option shall
be determined by the Board of Directors and such determination shall be
final and binding upon all persons.
10
<PAGE> 11
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement" is effective
as of the 2nd day of February, 1998, by and between
_______________________________("Optionee") and HARISTON CORPORATION, a
corporation organized under the Canada Business Corporations Act (the
"Company").
R E C I T A L S
A. The Board of Directors of this Company has adopted the 1998 Hariston
Corporation Stock Option Plan (the "Plan") which provides for the granting of
options to officers, directors, employees and consultants of the Company. The
terms of this Agreement are governed solely by the Plan, a copy of which has
been delivered to the Optionee. For the purposes hereof, the term "Employee"
shall have the definition set forth in the Plan.
B. The Board has authorized the grant of options to purchase Common Stock of the
Company pursuant to the terms and conditions set forth herein and in the Plan.
This option is not intended to qualify as and will not be treated as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
C. Optionee has been advised to read the Plan and consult with an attorney and a
tax advisor before making any decision concerning the Plan, this Agreement or an
exercise of any option granted hereby. THE UNTIMELY EXERCISE OF THE OPTION
GRANTED HEREBY AND THE SALE OF STOCK ACQUIRED AS A RESULT OF SUCH EXERCISE MAY
CAUSE OPTIONEE TO INCUR LIABILITIES UNDER THE TAXATION AND SECURITIES LAWS OF
WHICH OPTIONEE MAY BE OTHERWISE UNAWARE WITHOUT SEEKING THE ADVICE OF ADVISORS.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. Grant to Optionee
The Company hereby grants to Optionee, subject to the terms and
conditions of the Plan and subject to the terms and conditions herein set forth
herein, an option (the "Option") to purchase from the Company all or any part of
an aggregate of two hundred thousand (200,000) shares of the Company's Common
Stock.
1
<PAGE> 12
2. Exercise of the Option.
(a) Exercise Price The exercise price of this Option is 25/100 dollars
($0.25) per share in U.S. funds. Payment of the exercise price per share is due
in full upon exercise of all or any part of this option. Optionee may elect, to
the extent permitted by applicable statutes and regulations, to make payment of
the exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in cash (including
cheque) at the time of exercise;
(ii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Globe & Mail,
Financial Post or Wall Street Journal, payment by delivery of already-owned
shares of Common Stock, held for the period required to avoid a charge to the
Company's reported earnings, and owned free and clear of any liens, claims,
encumbrances or security interests, which Common Stock shall be valued at its
fair market value (as defined in the Plan, the "Fair Market Value") on the date
of exercise;
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Globe & Mail,
Financial Post or Wall Street Journal, and provided further, that the exercise
hereof pursuant to this Section 2(a) (iii) (a "Net Exercise") will not result in
a charge to the company's earnings, payment by delivery and surrender of this
Option with a Net Exercise Notice (in the form attached hereto as Exhibit B) In
the event of a Net Exercise, the Optionee shall exchange the Option for such
number of shares of Common Stock underlying the Option determined by multiplying
such number of shares by a fraction, the numerator of which shall be difference
between the Fair Market Value per share of the Common Stock as of the date the
duly executed Net Exercise Notice is received by the Company and the exercise
price per share of the Option, and the denominator of which shall be the Fair
Market Value per share of the Common Stock;
(iv) To the extent permitted by applicable law, payment by a
combination of the methods of payment permitted by Sections 2(a) (i), (ii) and
(iii) above.
(b) Exercise Notice. In order to exercise this Option, Optionee or any
other person or persons entitled to exercise the Option shall give written
notice to the Secretary of the Company or to such other person as may be
designated by the Company, in the form set forth on Exhibit A or Exhibit B
hereto, specifying the number of shares to be purchased. This notice shall be
accompanied by payment of the exercise price for the shares as provided in
Section 2(a). Optionee shall also deliver such additional documents as the
Company may then require pursuant to the Plan.
2
<PAGE> 13
(c) Compliance with Securities Laws. Notwithstanding anything to the
contrary continued herein, this Option may not be exercise unless
the shares issuable upon exercise of this Option are then
registered under the Act, or, if such shares are not then so
registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the
Act.
(d) Additional Terms and Conditions. By exercising this Option,
Optionee agrees that the Company may require (as a condition to the exercise of
this Option) Optionee to enter an arrangement providing for the payment by
Optionee to the Company of any tax withholding obligation of the Company arising
by reason of (1) the exercise of the Option; (2) the lapse of any substantial
risk of forfeiture to which the shares are subject at the time of exercise; or
(3) the disposition of shares acquired upon such exercise.
3. Vesting Schedule.
The Option granted hereby is immediately exercisable, and not subject
to any vesting restrictions.
4. Expiration Date.
(a) The Option shall terminate and expire at 5:00 p.m., British
Columbia time, on February 2, 2005 (the "Expiration Date") (which date shall not
be more than seven (7) years from the date this Option is granted), or such
earlier time as may be required by the Plan. In no event may this Option be
exercised after the date on which it terminates. This Option shall terminate
prior to the expiration of its term at the expiration of a period of ninety (90)
days after the Optionee's death. In such event, this Option may be exercised by
the Optionee's estate or by the person or persons who acquire the right to
exercise such Option by bequest or inheritance.
5. Nontransferable.
This Option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during Optionee's life only by
Optionee or pursuant to a qualified domestic relations order satisfying the
requirements of Rule 16b-3 of the Securities Exchange Act of 1934, as amended,
and the rules thereunder (a QDRO). By delivering written notice to the Company,
in a form satisfactory to the Company, Optionee may designate a third party who,
in the event of Optionee's death, shall thereafter be entitled to exercise this
Option.
6. No Right to Continued Employment or Engagement by the Company.
This Agreement is not an employment contract and nothing in this Option
shall be deemed to create in any way whatsoever any obligation on Optionee's
part to continue in
3
<PAGE> 14
the employ of the Company, or of the Company or an affiliate to continue
Optionee's employment with the Company or an affiliate. In the event that this
Option is granted to Optionee in connection with the performance of services as
a consultant or director, references to employment, employee and similar terms
shall be deemed to include the performance of services as a consultant or a
director, as the case may be; provided, however, that no rights as an employee
shall arise by reason of the use of such terms.
7. No Rights as a Stockholder.
The holder of this Option shall not have any of the rights of a
stockholder with respect to the shares subject to the Option until such holder
shall have exercised the option and paid the exercise price.
8. Notices.
Any notice provided for in this Option or the Pan shall be given in
writing and shall be deemed effectively given upon receipt or five (5) days
after deposit in the Canada mail, postage prepaid, certified mail addressed to
Optionee of the Company at the address specified below or at such other address
as the parties may hereafter designate by written notice:
Optionee: ________________________________________________
________________________________________________
________________________________________________
The Company: Hariston Corporation
Suite 1555, 1500 West Georgia Street,
Vancouver, B.C. V6G 2Z6
Attn. Corporate Secretary
9. Subject to the Plan.
This Option is subject to all the provisions of the Plan, a copy of
which has been provided to the Optionee, and its provisions are hereby made a
part of this Option, and is further subject to all interpretations, amendments,
rules and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
this Option and those of the Plan, the provisions of the Plan shall control.
4
<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first set forth above.
"Company" HARISTON CORPORATION,
a corporation organized under the Canada Business
Corporations Act
By:_______________________________________
Title:_____________________________________
"Optionee" __________________________________________
Social Insurance No.:________________________
5
<PAGE> 16
EXHIBIT A
EXERCISE NOTICE
Hariston Corporation
Suite 1555, 1500 West Georgia Street,
Vancouver, B.C. V6G 2Z6
Attention: Corporate Secretary
Re. Exercise of Stock Option
Ladies and Gentlemen:
Pursuant to Section 2 of that certain Nonstatutory Stock Option
Agreement (the "Agreement") between the undersigned and Hariston Corporation, a
corporation organized under the Canada Business Corporations Act (the
"Company"), the undersigned hereby elects to exercise the option granted thereby
to purchase __________ shares of Common Stock of the Company at a price of
US$0.25 per share. Accompanying this Notice is the payment in full for such
shares as permitted by the terms of the 1998 Hariston Corporation stock Option
Plan, which Plan is specifically made a part of this Agreement and has been read
and understood by the undersigned.
The undersigned represents and warrants to the company that the
undersigned is acquiring the shares for investment only and not with a view to
distribution or resale.*
Dated:_________________ ______________________________________
Signature
______________________________________
Print Name
______________________________________
Please print here the exact name
desired to be on the stock certificate
and the records of the company.
- ----------------
*This paragraph is not applicable if a registration statement on Form S-8 (or a
successor form) is on file with respect to the shares issuable upon exercise of
the option.
6
<PAGE> 17
EXHIBIT B
NET EXERCISE NOTICE
Hariston Corporation
Suite 1555, 1500 West Georgia Street,
Vancouver, B.C. V6G 2Z6
Attention: Corporate Secretary
Re. Net Exercise of Stock Option
Ladies and Gentlemen:
Pursuant to Section 2 (a) (iii) of that certain Nonstatutory Stock
Option Agreement (the "Agreement") between the undersigned and Hariston
Corporation, a corporation organized under the Canada Business Corporations Act
(the "Company"), the undersigned hereby irrevocably elects to exchange the
Option granted thereby for _________ shares of Common Stock of the Company, as
permitted by the terms of the 1998 Hariston Corporation Stock Option Plan, which
Plan is specifically made a part of this Agreement and has been read and
understood by the undersigned.
If the number of shares referenced in this Net Exercise Notice shall
not be all of the shares exchangeable or purchasable under the Option, a new
Agreement shall be issued in the name of the undersigned for the balance
remaining of the shares purchasable thereunder rounded up to the next higher
number of shares.
The undersigned represents and warrants to the Company that the
undersigned is acquiring the shares for investment only and not with a view to
distribution or resale.*
Dated:_________________ ______________________________________
Signature
______________________________________
Print Name
______________________________________
Please print here the exact name
desired to be on the stock certificate
and the records of the company.
NOTE: This form may only be used if the net exercise will not result in a charge
to the Company's reported earnings.
- ----------
*This paragraph is not applicable if a registration statement on Form S-8 (or a
successor form) is on file with respect to the shares issuable upon exercise of
the option.
7
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,061
<SECURITIES> 204
<RECEIVABLES> 500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,782
<PP&E> 42
<DEPRECIATION> 24
<TOTAL-ASSETS> 3,799
<CURRENT-LIABILITIES> 150
<BONDS> 0
<COMMON> 31,999
0
0
<OTHER-SE> (28,350)
<TOTAL-LIABILITY-AND-EQUITY> 3,799
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 135
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (42)
<INCOME-PRETAX> (61)
<INCOME-TAX> 0
<INCOME-CONTINUING> (61)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (61)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
