SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
October 31, 1996
Date of Report (Date of earliest event reported)
AMERICAN OILFIELD DIVERS, INC.
(Exact name of Registrant as specified in its charter)
LOUISIANA 0-22032 72-0918249
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification Number)
130 East Kaliste Saloom Road
Lafayette, Louisiana 70508
(Address of principal executive offices) (Zip Code)
(318) 234-4590
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
Pursuant to the terms of an unsolicited cash tender offer, AOD
Acquisition Corp., a Yukon, Canada corporation and a wholly owned
subsidiary of Registrant, ("AOD Acquisition") has purchased
approximately 9.6 million (97%) of the outstanding common shares of
Hard Suits Inc., a British Columbia, Canada corporation ("HSI") for an
aggregate cash purchase price of approximately U.S. $11.8 million.
The shares were purchased at various times over the period beginning
October 31, 1996 and ending November 15, 1996. The price paid for the
HSI shares was established by Registrant on the basis of publicly
available information concerning HSI and Registrant's assessment of
HSI's strategic value to Registrant. The per share purchase price
offered by AOD Acquisition in connection with the tender offer was
initially Cdn. $1.50 and was subsequently increased to Cdn. $1.65, the
price at which the HSI shares were purchased. The blended conversion
price per share was approximately U.S. $1.23. Also in connection with
the transaction Registrant anticipates that it will provide advances
to HSI for the payment of HSI liabilities (currently estimated at $2.1
million) and working capital; approximately U.S.$1.1 million has been
advanced to date. The amounts required to fund the purchase price of
the acquisition, acquisition costs and HSI financing and working
capital requirements have initially been funded by Registrant out of
working capital and by an increase in Registrant's previously existing
line of credit with First National Bank of Commerce of New Orleans.
Registrant intends to refinance some or all of these expenditures
pursuant to a term loan.
AOD Acquisition anticipates that in the near future it will take steps
to delist the HSI shares from the Toronto Stock Exchange. AOD
Acquisition also intends, as soon as practicable under Canadian
federal and provincial law, to effect a transaction by which HSI would
become its wholly owned subsidiary and, immediately thereafter, to
delist the HSI shares from the Vancouver Stock Exchange.
HSI manufactures and markets a one-atmosphere diving suit known as the
"NEWTSUIT(TM)" and provides underwater services using the NEWTSUIT(TM)
and other diving systems. HSI has a facility in North Vancouver,
British Columbia, Canada where it manufactures and develops its
products and services. Registrant anticipates that it will continue
HSI's operations at these facilities and will make use of the
NEWTSUIT(TM) and other diving systems in connection with its own
operations. The acquisition of HSI will immediately allow operations
to expand to the 1,200-foot level and provide the potential for deeper
water expansion in approximately twelve months.
Item 5.
On October 29, 1996, the Registrant issued a press release in the form
attached hereto as Exhibit 99.2 announcing the execution of a Lock-up
Agreement and an Acquisition Agreement with Rene T. Nuytten, Chairman
and Chief Executive Officer of HSI, pursuant to which Mr. Nuytten
agreed to tender his HSI shares and, along with other of HSI's
officers and directors, to resign his position with HSI.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
It is impracticable to provide the financial statements required
by Item 7 of Form 8-K at this time. The financial statements will be
filed as an amendment to this Form 8-K not later than 60 days after
the date hereof.
(b) Pro Forma Financial Information.
It is impracticable to provide the pro-forma financial
information required by Item 7 of Form 8-K at this time. Such
information will be filed as an amendment to this Form 8-K not later
than 60 days after the date hereof.
(c) Exhibits.
10.1 Lock-Up Agreement dated October 29, 1996 between AOD
Acquisition Corp., a wholly owned subsidiary of Registrant,
and Rene T. Nuytten.
10.2 Acquisition Agreement dated October 29, 1996 between
Registrant, Rene T. Nuytten, and certain other parties.
99.1 Offer to Purchase all of the Outstanding Common Shares of
Hard Suits Inc. by AOD Acquisition Corp., a wholly owned
subsidiary of American Oilfield Divers, Inc., dated
September 25, 1996.
99.2 Notice of Extension of Offer to Purchase dated October 16,
1996.
99.3 Notice of Variation of Offer to Purchase dated October
18,1996.
99.4 Notice of Extension and Change of Offer to Purchase dated
October 29, 1996.
SIGNATURES
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 hereunto duly authorized.
By: /s/ CATHY M. GREEN
------------------------------
Cathy M. Green
Vice President - Finance
and Chief Financial Officer
Dated: November 15, 1996
Exhibit 10.1
LOCK-UP AGREEMENT
THIS AGREEMENT made the 28th day of
October, 1996
AMONG:
RENE T. NUYTTEN, Businessman, of 4032
Glenview Crescent, North Vancouver,
British, Columbia, V7R 3G4
(Nuytten")
AND:
AOD ACQUISITION CORP., a Yukon company
having an office at Suite 1500 - 885
West Georgia Street, Vancouver, British
Columbia, V6C 3E8
("AOD")
AND:
AMERICAN OILFIELD DIVERS, INC., a
Louisiana company having an office at
130 E. Kaliste Saloom Road, Lafayette,
Louisiana, 70508.
("AOD PARENT")
WHEREAS:
A. Nuytten is the direct or indirect
beneficial owner of not less than 1.5 million common shares ("Subject
Shares") in the capital of Hard Suits Inc. ("HSI") and 2,500,000 Class
A Performance Shares in the capital of HSI (the "Performance Shares");
B. AOD has made an offer (the "Offer") to
purchase all of the issued and outstanding common shares ("Common
Shares") of HSI at a price of Cdn. $1.65 per Common Share pursuant to
a take-over bid circular dated September 25, 1996 and a notice of
variation dated October 18, 1996;
C. The parties wish to enter into this
Agreement to evidence their agreement with respect to the Subject
Shares and the other matters set forth herein.
NOW THEREFORE THIS AGREEMENT WITNESSES
THAT in consideration of the premises and the respective covenants and
agreements herein contained, the parties hereto covenant and agree as
follows:
1.0 LOCKUP AND ACQUISITION AGREEMENT
1.1 Concurrently with the execution hereof,
each of Nuytten, AOD and AOD Parent will enter into the Acquisition
Agreement with HSI and each of its other directors in the form
attached has Schedule "A" (the "Acquisition Agreement').
1.2 On or before 5:00 p.m. (Vancouver time)
on October 29, 1996 AOD or AOD Parent shall provide to Nuytten and HSI
written confirmation of the deposit of at least $1.0 million (Cdn.)
With Price Waterhouse (Vancouver), in trust for the account of AOD,
and upon Nuytten depositing the Subject Shares under the Offer, such
funds shall be held and disbursed pursuant to Section 1.1(5) of the
Acquisition Agreement.
1.3 Subject to receipt of the confirmation
referred to in Section 1.2, Nuytten shall forthwith, and in any event
no later than 8:00 p.m. (Vancouver time) on October 29, 1996,
irrevocably deposit all of the Subject Shares under the Offer, and
thereafter deposit any additional Common Shares acquired by him upon
exercise of any outstanding options or warrants held by him under the
Varied Offer prior to the Expiry Time, and will not withdraw or take
any action to withdraw any of the Subject Shares deposited under the
Offer or such other Common Shares deposited under the Varied Offer
notwithstanding any statutory rights or rights under the terms of the
Offer or the Varied Offer which he might otherwise have unless this
Agreement is terminated prior to the taking up of any Common Shares
under the Offer or the Varied Offer.
2.0 VARIED OFFER
2.1 As soon as is reasonably practicable
following the execution and delivery of this Agreement, AOD and AOD
Parent agree, subject to the terms hereof and the Acquisition
Agreement:
(a) to vary the Offer to disclose this
Agreement and the Acquisition Agreement;
(b) to vary the Offer by extending the
Expiry Time of the Offer to no earlier
than 12:01 a.m. on the 10th day after
the mailing of the Offer as varied as
provided herein (subject to further
extension of the Offer Period by AOD in
accordance with applicable laws);
(c) to forthwith prepare, file and deliver
such notices of change or variation,
reports or circulars as may be required
under all applicable securities
legislation to give notice of the Offer,
as varied; and
2.2 AOD shall have the right to further vary
the Offer from time to time, provided such variation is carried out in
compliance with all applicable laws, does not result in a decrease in
the price offered for the Common Shares and is not inconsistent with
any of the provisions of this Agreement. For greater certainty, in
the event the consideration offered under the Offer is increased,
Nuytten shall be entitled to be paid such higher price for the Subject
Shares deposited and taken up by AOD. The Offer, as varied pursuant
to Section 2.1 or as subsequently varied pursuant to this Section 2.2,
is hereinafter referred to as the "Varied Offer".
3.0 TERMINATION
3.1 The obligations of the parties hereunder
shall terminate:
(1) at Nuytten's election at any time after
5:00 p.m. (Vancouver time) on October
29, 1996, if AOD has not satisfied the
conditions set out in Section 1.2 by
such time;
(2) at AOD's election at any time after 8:00
p.m. (Vancouver time) on October 29,
1996 if Nuytten has not deposited the
Subject Shares by such time under the
Offer;
(3) if any and all of the Subject Shares are
not taken up and paid for prior to the
date which is 46 days after the date of
the Offer; or
(4) on the Varied Offer being withdrawn; or
(5) on the Varied Offer being amended or
varied in a manner that is inconsistent
with the terms hereof.
Upon termination hereof, this Agreement
shall be null and void and of no force or effect and Nuytten shall
thereupon be entitled to the return of all shares previously deposited
by him under the Varied Offer.
4.0 CLOSING ARRANGEMENTS
4.1 Concurrently with AOD taking up and
paying for the Subject Shares deposited under the Offer, in accordance
with the terms and conditions hereof and of the Offer.
(1) all stock options or warrants held by
Nuytten which are not "in the money"
shall be released, surrendered for
cancellation and be of no further force
or effect;
(2) Nuytten shall surrender the certificate
representing Performance Shares, duly
endorsed for cancellation or failing
that, a stock power of attorney to
transfer the shares to HSI, together
with such other documents, if any, as
are required for the cancellation of
such shares; and
(3) AOD and AOD Parent shall execute and
deliver to Nuytten and each of the
officers and directors of HSI and its
subsidiaries a release and indemnity in
a form satisfactory to such releasees
releasing and indemnifying them of and
from any and all actions, suits, claims,
proceedings, liabilities, costs or
expenses, howsoever incurred, arising
out of or in connection with their
acting as a director, officer or
employee of HSI or any of its
subsidiaries except such liability which
a court of competent jurisdiction has
determined to be attributable to the
gross neglect, wilful misconduct or
intentional violation of law.
5.0 ADDITIONAL COVENANTS OF NUYTTEN
5.1 Non-Solicitation and Co-operation
Except as otherwise provided for herein,
Nuytten covenants with AOD that so long as Nuytten is obligated to
deposit any of the Subject Shares pursuant to the Offer or is not
entitled to withdraw any of the Subject Shares from the Offer.
(1) Nuytten will not (unless consented to in
writing by AOD) and will use his
reasonable endeavours to cause HSI to
not, take action of any kind which may
reduce the likelihood of success of the
Offer or the Varied Offer, including but
not limited to, any action to initiate,
encourage, assist or participate in
proposals or offers from, or provide
information relating to HSI or any of
the Subject Shares to any person, entity
or group in connection with the
acquisition or disposition of all or any
substantial part of the HSI's issued and
outstanding securities, or any
amalgamation, merger, arrangement,
private placement of equity or
convertible securities (including any
proposed private placement to British
Columbia Mercantile Corporation and
Venture Management Inc.), sale of all or
any substantial part of the assets of
HSI, take-over bid, reorganization,
recapitalization, liquidation or
winding-up, or other business
combination, similar transaction or any
other transaction which interferes, by
delay or otherwise, with the
transactions contemplated hereby
including the Offer or the Varied Offer;
(2) Nuytten will notify AOD forthwith upon
his becoming award of any proposal or
offer referred to in section 5.1(1) and
inform AOD of all information (including
the identity of any prospective offeror)
known to Nuytten at the time regarding
such proposal or offer;
(3) Other than the matters contemplated
under the Acquisition Agreement, Nuytten
will use his reasonable endeavours to
cause the business and affairs of HSI to
be operated in the normal course and
with a view to the best interests of HSI
and all of its shareholders and, in
furtherance to the foregoing, not to
cause HSI to enter into any agreement,
commitment or understanding to acquire
any material assets or enter into any
agreement, understanding or commitment
to sell any material assets or part
thereof of HSI or to make any other
material change in the business, assets,
liabilities, operations, capital or
affairs of HSI considered as a whole,
unless such agreement, commitment,
understanding or material change is
satisfactory to and is approved in
writing by AOD, acting reasonably;
(4) Nuytten will use all reasonable efforts,
at AOD's expense, to assist AOD to
complete the transactions contemplated
hereby, including the Offer and the
Varied Offer, including cooperating (and
using all reasonable efforts to cause
HSI to cooperate) with AOD in making all
requisite regulatory filings; and
(5) Nuytten agrees not to directly or
indirectly solicit the employment of any
HSI employee for a period of one year
after the date upon which all of the
Subject Shares deposited under the Offer
have been taken-up and paid for.
5.2 Nothing in Section 5.1 shall be
interpreted or construed so as to impose any obligation or duty which
would in any way fetter Nuytten's discretion in acting as or in
keeping with his fiduciary duties as a director or officer of HSI or
any of its subsidiaries or in a manner contrary to law.
5.3 Nuytten will prior to the Time of Expiry
of the Varied Offer exercise any options or warrants held by Nuytten
which are "in the money" and tender such Common Shares into the Varied
Offer.
6.0 REPRESENTATIONS AND WARRANTIES OF
NUYTTEN
6.1 Nuytten hereby represents and warrants
to AOD as follows:
(1) the Subject Shares and the Performance
Shares are now, or at the time at which
AOD takes up and pays for such shares
will be, registered in the name of
Nuytten or a company controlled by
Nuytten and owned by Nuytten or a
company controlled by Nuytten as the
sole beneficial owner with a good and
marketable title thereto, free and clear
of any and all mortgages, liens,
charges, restrictions, security
interests, adverse claims, pledges,
encumbrances and demands of any nature
of kind whatsoever, other than the
pledge of the Performance Shares to
Federal Business Development Bank
securing not more than $40,000 (which
amount is to be paid from the Completion
Financing provided for in section 1 of
the Acquisition Agreement) the
restrictions contained in HSI's articles
and restrictions imposed on control
block holders by applicable securities
legislation, and to the best of
Nuytten's knowledge, are issued and
outstanding as fully paid and non-
assessable;
(2) no person, firm or corporation has any
agreement or option, or any right or
privilege (whether by law, pre-emptive
or contractual) capable of becoming an
agreement or option, for the purchase,
acquisition or transfer from Nuytten of
any of the Subject Shares or any
interest therein or right thereto,
except AOD pursuant hereto;
(3) this Agreement has been duly executed
and delivered by and on behalf of
Nuytten and constitutes a valid and
binding obligation of Nuytten
enforceable in accordance with its
terms;
(4) there has been no material adverse
change in the business, results of
operations, assets, liabilities,
financial condition or affairs of HSI
considered as a whole, financial or
otherwise, since June 30, 1996 that has
not been generally disclosed and
reported in accordance with law to the
applicable securities regulatory
authorities and there is not, to the
knowledge of Nuytten, any undisclosed
material adverse information in regard
to the current and prospective
operations of HSI; and
(5) he is not aware of any material fact
concerning the business, operations,
capital or affairs of HSI considered as
a whole which has not previously been
generally disclosed other than the
transaction contemplated by this
Agreement, or any material contractual
right of HSI which may be impaired or
otherwise adversely affected so as to
materially adversely affect HSI
considered as a whole when a change in
control of HSI occurs, or of any
covenant, term or condition of any of
HSI's instruments or agreements that is
or may be materially adverse to HSI
considered as whole when a change in
control of HSI occurs.
7.0 REPRESENTATIONS AND WARRANTIES OF AOD
AND AOD PARENT
7.1 AOD and AOD Parent jointly and severally
represents and warrants to Nuytten as follows:
(1) each of AOD and AOD Parent is a validly
subsisting corporation and has all
necessary corporate power and authority
to execute and deliver this Agreement
and to perform its obligations hereunder
and AOD has all necessary corporate
power and authority to purchase any and
all of the Common Shares tendered under
the Varied Offer, including the Subject
Shares;
(2) this Agreement has been duly executed
and delivered by and on behalf of each
of AOD and AOD Parent and constitutes a
valid and binding obligation of AOD and
AOD Parent enforceable in accordance
with its terms; and
(3) AOD and AOD Parent have made adequate
arrangements to ensure that the required
funds are available to effect payment in
full for any and all Common Shares
tendered under the Offer or the Varied
Offer.
8.0 GENERAL
8.1 Assignment
(1) AOD and AOD Parent may assign their
rights under this Agreement by
instrument in writing to a wholly-owned
(directly or indirectly) subsidiary of
AOD or AOD Parent provided however, if
such assignment takes place, AOD or AOD
Parent, as the case may be, shall
continue to be liable to Nuytten
hereunder and for any default in
performance by the assignee or by any
such subsidiary. This Agreement shall
not otherwise be assignable by any party
hereto.
(2) This Agreement shall be binding upon and
shall enure to the benefit of and be
enforceable by Nuytten, AOD, AOD Parent
and their respective heirs, executors,
administrators, successors and permitted
assigns.
8.2 Time
Time shall be of the essence of this
Agreement.
8.3 Notice
Any notice, document or communication
required or permitted to be given hereunder shall be in writing and
may be given by delivery by hand or by telecopier to the party to
which it is to be given as follows:
(a) if to Nuytten:
#3 - 1225 East Keith Road
North Vancouver, British Columbia
V7J 1J3
Attention: Mr. Rene T. Nuytten
Telecopier: (604) 988-3029
(b) if to AOD and AOD Parent:
130 East Kaliste Saloom Road
Lafayette, Louisiana
70508
Attention: Mr. George Yax
Telecopier: (318) 232-7306
In the event any notice, document or communication required or
permitted hereunder is delivered by hand or telecopier after 5:00 p.m.
it shall be deemed to have been delivered by 9:00 a.m. on the
following day.
8.4 Governing Law
This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed
and interpreted in accordance with the laws of the Province of British
Columbia and the laws of Canada applicable therein and each of the
parties hereto attorns to the exclusive jurisdiction of the courts of
such Province.
8.5 Shares
References to the Common Shares or the
Performance Shares include any shares into which the foregoing may be
reclassified, sub-divided, consolidated or converted and any rights
and benefits arising therefrom including any extraordinary
distributions of securities which may be declared in respect of the
Common Shares or the Performance Shares.
8.6 Expenses
Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expense and each of the parties agrees that except as disclosed
to the other parties hereto, it has not engaged any broker or finder
as to whom the other party would be liable for fees or other amounts.
8.7 Entire Agreement
This Agreement sets forth the entire
Agreement and understanding of the parties hereto in respect of the
transactions contemplated hereby. There are no warranties,
representations, terms, conditions or collateral agreements,
expressed, implied or statutory, between Nuytten, AOD and AOD Parent
other than as expressly set forth in this Agreement, the Varied Offer
and the Acquisition Agreement.
8.8 Business Day
A business day for the purpose of this
Agreement shall mean any day other than Saturday, Sunday or a Canadian
federal holiday or a day on which national banks are open for business
in the City of Vancouver.
8.9 Disclosure
The parties hereto agree not to disclose
or to divulge to any other person, other than their legal, financial
or other advisors, the terms and conditions hereof or of the
negotiations or other matters discussed between the parties prior to
the entering into of this Agreement, except as may be required by
applicable law or pursuant to an order of a court or other competent
authority or as may be approved in writing by each of the parties,
acting reasonably.
IN WITNESS WHEREOF the parties hereto
have set their hands and corporate seals as of the date first above
written.
SIGNED, SEALED AND DELIVERED by RENE )
T. NUYTTEN in the presence of: )
)
________________________________________ )
Name )
)
________________________________________ ) ________________________
Address ) RENE T. NUYTTEN
)
________________________________________ )
________________________________________ )
)
)
________________________________________ )
Occupation
THE CORPORATE SEAL OF AOD
ACQUISITION CORP. Was hereunto affixed in )
the presence of: ) C/S
)
)
________________________________________ )
Title: __________________________________ )
(Authorized Signatory) )
THE CORPORATE SEAL OF AMERICAN
OILFIELD DIVERS, INC. was hereunto affixed )
in the presence of: ) C/S
)
________________________________________ )
Title: _________________________________ )
(Authorized Signatory) )
Exhibit 10.2
ACQUISITION AGREEMENT
THIS AGREEMENT MADE THE 28th day of October, 1996.
AMONG:
RENE T. NUYTTEN, Businessman, of 4032
Glenview Crescent, North Vancouver,
British Columbia, V7R. 3G4
("Nuytten")
AND:
EDWARD G. HAUPTMANN, Businessman, of
3870 Sharon Drive, West Vancouver,
British Columbia, V7V 2N3
("Hauptmann")
AND:
DAVID S. PORTER, Businessman, of 8668 -
184th Street, Surrey, British Columbia,
V4N 3G3
("Porter")
AND:
HARD SUITS INC., a British Columbia
company, having its registered office at
2100 - 1111 West Georgia Street,
Vancouver, British Columbia, V7X 1K9
("Hard Suits")
AND:
AOD ACQUISITION CORP, a Yukon company
having an office at Suite 1500 - 885
West Georgia Street, Vancouver, British
Columbia, V6C 3E8
("AOD")
AND:
AMERICAN OILFIELD DIVERS, INC., a
Louisiana company having an office at
130 E. Kaliste Saloom Road, Lafayette,
Louisiana, 70508
("AOD Parent")
WHEREAS:
A. AOD has made an offer (the "Offer") to
purchase all of the issued and outstanding common shares ("Common
Shares") of Hard Suits at a price of Cdn. $1.65 per Common Share
pursuant to a take-over bid circular dated September 25, 1996 and a
notice of variation dated October 18, 1996;
B. Nuytten has concurrently herewith
entered into a Lock-up Agreement with AOD and AOD Parent (the "Lock-up
Agreement") under which he has agreed to tender all of his Common
Shares owned directly or indirectly by him (the "Subject Shares") of
Hard Suits pursuant to the Offer.
C. Each of Nuytten, Porter and Hauptmann is
a director of Hard Suits (the "Directors");
D. The parties wish to enter into this
Agreement to evidence their Agreement with respect to the matters set
forth herein;
NOW THEREFORE THIS AGREEMENT WITNESSES
that in consideration of the premises and the respective covenants and
agreements herein contained, the parties hereto covenant and agree as
follows:
1. TRANSITIONAL PROVISIONS
1.1 Upon Nuytten depositing the Subject
Shares under the Offer pursuant to the Lock-up Agreement:
(1) Nuytten will resign as a director and
officer of Hard Suits and of all corporate subsidiaries of Hard Suits
and will terminate his management agreement with such companies.
Hauptmann will resign as a director of Hard Suits;
(2) Porter as the continuing director of
Hard Suits, will appoint Rodney Stanley and Douglas Irwin directors of
Hard Suits and increase the permitted number of directors of Hard
Suits to four;
(3) AOD will use reasonable commercial
efforts to arrange sufficient debt or equity financing for Hard Suits
to permit Hard Suits to pay its existing bona fide liabilities in the
ordinary course of business, provided that Hard Suits represents that
such liabilities, inclusive of the accounts payable under section
1.1(5), do not exceed Cdn.$2,775,000.
(4) AOD will agree to advance or arrange for
third party financing to Hard Suits, as soon as reasonably possible
after the date hereof, and upon receipt of any required regulatory
approvals, for the purposes of providing Hard Suits with working
capital of Cdn.$500,000 (the "Working Capital Financing") on the terms
set forth in the term sheet attached as Schedule "A" hereto.
(5) AOD and AOD Parent hereby irrevocably
direct Price Waterhouse to advance, upon having been provided with a
copy of a receipt issued by The R-M Trust Company confirming the
deposit of the Subject Shares under the Offer, to Hard Suits the
Cdn.$1,000,000 (the "Completion Financing") held by them for the
account of AOD, as contemplated in the notice to be given pursuant to
section 1.2 of the Lock-up Agreement, such funds to be disbursed by
Price Waterhouse in the manner directed by Porter and Hauptmann to pay
the accrued liabilities and expenses of Hard Suits in such amounts and
to such persons as they may see fit (including payment of expenses
owing to Nuytten), upon receiving such verification as they may
reasonably deem sufficient from Price Waterhouse in connection
therewith. For greater clarity, the disbursement of any monies to
British Columbia Mercantile Corporation and Ventura Management Ltd.
under this section 1.1(5) is subject to British Columbia Mercantile
Corporation and Ventura Management Ltd. providing an acknowledgement
confirming that, upon payment by Hard Suits to them of not more than
Cdn.$270,000, Hard Suits is released from any and all further
obligations or liabilities to either of them, or their officers,
directors or shareholders; and
(6) Nuytten will, for himself and on behalf
of any company (collectively the "Nuytcos") directly or indirectly
controlled by him (including Nuytco Services Ltd. And Nuytco Research
Ltd.), assign, transfer, quit claim and release to Hard Suits all
right, title and interest held by Nuytten and the Nuytcos in all
technology and products now, or formerly, under development by or on
behalf of Hard Suits or any of its subsidiaries, in particular the
"Shallow Water NEWTSUIT(TM)", the "Remora", the NEWTSUIT(TM) and any
improvements thereon.
2. MUTUAL COOPERATION
2.1 The parties agree to provide each other
with such further documents, certificates or agreements as may be
reasonably requested by the other to better evidence and to give
effect to the transactions referred to herein.
2.2 Except as may be required by law, the
parties will refrain from making public comment on their discussions
and negotiations relating to the Offer and, in particular, refrain
from comment critical of, or tending to call into disrepute, the
actions taken by any of the other parties and, their respective
directors or officers.
3. GENERAL
3.1 Time
Time shall be of the essence of this
Agreement.
3.2 Notice
Any notice, document or communication
required or permitted to be given hereunder shall be in writing and
may be given by delivery by hand or by telecopier to the party to
which it is to be given as follows:
(a) if to Nuytten:
#3 - 1225 East Keith Road
North Vancouver, British Columbia
V7J 1J3
Attention: Mr. Rene T. Nuytten
Telecopier: (604) 988-3029
(b) if to Hard Suits:
Campney & Murphy
2100 - 1111 West Georgia Street
Vancouver, British Columbia
V7X 1K9
Attention: Mr. Paul C. MacNeill
Telecopier: (604) 688-0829
(c) if to AOD or AOD Parent:
130 E. Kaliste Saloom Road
Lafayette, Louisiana
70508
Attention: Mr. George Yax
Telecopier: (318) 232-7306
3.3 Governing Law
This Agreement and the rights and
obligations of the parties hereto shall be governed by and construed
and interpreted in accordance with the laws of the Province of British
Columbia and the laws of Canada applicable therein and each of the
parties hereto attorns to the exclusive jurisdiction of the courts of
such Province.
3.4 Expenses
Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expense and each of the parties agrees that except as disclosed
to the other parties hereto, it has not engaged any broker or finder
as to whom the other party would be liable for fees or other amounts.
3.5 Entire Agreement
This Agreement sets forth the entire
Agreement and understanding of the parties hereto in respect of the
transactions contemplated hereby. There are no warranties,
representations, terms, conditions or collateral Agreements,
expressed, implied or statutory, between any of the parties hereto
other than as expressly set forth in this Agreement, the Varied Offer
and the Lock-up Agreement.
3.6 Disclosure
The parties hereto agree not to disclose
or to divulge to any other person, other than their legal, financial
or other advisors, the terms and conditions hereof or of the
negotiations or other matters discussed between the parties prior to
the entering into of this agreement, except as may be required by
applicable law or pursuant to an order of a court or other competent
authority or as may be approved in writing by each of the parties,
acting reasonably.
IN WITNESS WHEREOF the parties hereto
have set their hands and corporate seals as of the date first above
written.
SIGNED, SEALED AND DELIVERED )
by RENE T. NUYTTEN )
in the presence of: )
)
)
__________________________________ ) ______________________________
Signature of Witness ) RENE T. NUYTTEN
)
Name: ____________________________ )
)
Address: _________________________ )
)
__________________________________ )
)
Occupation: ______________________ )
SIGNED, SEALED AND DELIVERED )
by EDWARD G. HAUPTMANN )
in the presence of: )
)
__________________________________ ) ______________________________
Signature of Witness ) EDWARD G. HAUPTMANN
)
Name: ____________________________ )
)
Address: _________________________ )
)
__________________________________ )
)
Occupation: ______________________ )
SIGNED, SEALED AND DELIVERED )
by DAVID S. PORTER )
in the presence of: )
)
__________________________________ ) ______________________________
Signature of Witness ) DAVID S. PORTER
)
Name: ____________________________ )
)
Address: _________________________ )
)
__________________________________ )
)
Occupation: ________________________ )
The CORPORATE SEAL of )
AOD ACQUISITION CORP. was )
hereunto affixed in the )
presence of: )
) c/s
__________________________________ )
)
__________________________________ )
The CORPORATE SEAL of )
HARD SUITS INC. was )
hereunto affixed in the )
presence of: )
) c/s
)
__________________________________ )
)
)
__________________________________ )
The CORPORATE SEAL of )
AMERICAN OILFIELD DIVERS, INC. )
was hereunto affixed in the )
presence of: )
) c/s
)
__________________________________ )
)
)
__________________________________ )
SCHEDULE A
FINANCING TERM SHEET
WORKING CAPITAL FINANCING
Amount - Cdn.$500,000.
Interest Rate - 8.5% per annum, calculated and payable monthly at the
end of each month.
Security - General Security Agreement in form satisfactory to AOD,
acting reasonably, constituting a first charge on all of the assets of
Hard Suits, subject only to a prior charge in favour of Federal
Business Development Bank in an amount not more than Cd.$30,000.
Payment - Principal due 6 months after the Expiry Date of the Varied
Offer, subject to earlier repayment upon the occurrence of events of
default set out in the General Security Agreement.
COMPLETION FINANCING
Amount - Cdn.$1,000,000.
Other Terms - same as for the Working Capital Financing.
Corporate Office Phone: 318-234-4590
130 East Kaliste Saloom Road Toll free: 1-800-299-3483
Lafayette, Louisiana 70508 http://www.amdive.com
________________________________________________________________________________
AOD ACQUISITION CORP.
a wholly-owned subsidiary of American Oilfield Divers, Inc.
September 25, 1996
Dear Shareholder of Hard Suits Inc.:
AOD Acquisition Corp. (the "Offeror"), a wholly-owned subsidiary of
American Oilfield Divers, Inc. ("AOD" -- NASDAQ trading symbol: "DIVE"), is
making an offer (the "Offer") to purchase any and all of the outstanding
common shares (the "Common Shares") of Hard Suits Inc. ("Hard Suits")
(formerly International Hard Suits Inc.), at a cash price of Cdn. $1.50 per
Common Share. The Offer is open for acceptance until 12:01 a.m. (local time)
on October 17, 1996.
AOD is a leading provider of diving services, subsea products and
engineering, marine construction and environmental services to the offshore
oil and gas industry, primarily in the U.S. Gulf of Mexico, U.S. West Coast,
internationally and to certain U.S. inland customers. AOD management
believes that the acquisition of Hard Suits would enhance its shareholder
value by strategically improving AOD's capabilities to service its
customers' needs with the addition of the NEWTSUIT(R), a one atmosphere
diving suit, to its compliment of diving equipment. This acquisition will
enable the combined company to maintain Hard Suits' North Vancouver facility
and to more effectively further the development, marketing and
commercialization of the NEWTSUIT(R) diving system. The Offer will also
allow the existing shareholders of Hard Suits to realize a 41% premium to
the current market price of the Common Shares. For a summary of trading in
the Common Shares and Hard Suits' financial performance please refer to
"Price Range and Trading Volume of the Common Shares" and "Selected
Financial Information" on pages 19 and 20 of the accompanying Offering
Circular.
Based upon the public information available to the Offeror, there are
currently 9,242,688 Common Shares outstanding. The largest holder of Common
Shares is Rene T. (Phil) Nuytten, who directly or indirectly owns 2,126,427
Common Shares, representing 23% of the total number of Common Shares
outstanding, of which 416,666 shares (or 4.5%) are owned by Can-Dive
Services Ltd., which is in receivership.
AOD is concerned that, unless significant changes and improvements are
made in the very near future, the deteriorating financial condition of Hard
Suits, its lack of working capital and its recent management turnover could
prevent its shareholders from ever realizing value from their investment in
Hard Suits. It is the intention of the Offeror to acquire all of the Common
Shares and to take whatever steps are necessary or appropriate, in full
compliance with all applicable laws, to privatize Hard Suits, so that it
will become a wholly-owned subsidiary of AOD.
The Common Shares are listed on The Toronto Stock Exchange (the "TSE") and
the Vancouver Stock Exchange (the "VSE"). The purchase of Common Shares
pursuant to the Offer will reduce the number of Common Shares that might
otherwise trade publicly and may reduce the number of holders of Common
Shares and could adversely affect the liquidity and market value of the
remaining Common Shares. Depending upon the number of Common Shares acquired
under the Offer, the Common Shares may no longer meet minimum listing
requirements of the TSE or VSE and, accordingly, the Common Shares could be
delisted. It is the intention of the Offeror to acquire all of the
outstanding Common Shares and to seek the delisting of such shares from both
the TSE and VSE as soon as possible.
This letter is accompanied by the following documents:
(a) the Offer (please refer to pages 9-17 of the accompanying Offering
Circular);
(b) an Offering Circular providing information with respect to the
Offer, the Offeror and Hard Suits (please refer to pages 18-30 of the
accompanying Offering Circular); and
(c) a Letter of Transmittal, Notice of Guaranteed Delivery and return
envelope for your use in accepting the Offer.
You may accept the Offer by completing the Letter of Transmittal in
accordance with the instructions contained therein and delivering it,
together with the share certificate or certificates representing your Common
Shares and all other documents required by the Letter of Transmittal, to one
of the offices of The R-M Trust Company specified in the Letter of
Transmittal, or by requesting your stockbroker, investment dealer, bank,
trust company or other nominee to effect the transaction for you. Full
details regarding the manner and time of acceptance of the Offer are set out
in the Offer.
It is important that you read the documents accompanying this letter as
soon as possible. If you are in any doubt as to how to deal with the Offer,
you should consult your stockbroker, investment dealer, bank manager, lawyer
or other professional advisor.
For further information, Shareholders in Canada should call the
Consultant, J. Proust & Associates Inc., at 1-888-331-3341 (toll free), and
Shareholders in the United States should call the Information Agent,
Corporate Investor Communications, Inc., at 1-800-346-7885 (toll free).
Yours truly,
AOD Acquisition Corp.
By: ______________________________
George C. Yax
Chairman of the Board
President and Chief Executive Officer
_____________________________________________________________________________
_____________________________________________________________________________
AOD ACQUISITION CORP.
a wholly-owned subsidiary of
AMERICAN OILFIELD DIVERS, INC.
OFFER TO PURCHASE
all of the Outstanding Common Shares of
HARD SUITS INC.
(formerly International Hard Suits Inc.)
at a price of
$1.50 cash
for each Common Share
THE OFFER WILL BE OPEN FOR ACCEPTANCE UNTIL 12:01 A.M. (LOCAL TIME) ON
OCTOBER 17, 1996, UNLESS WITHDRAWN OR EXTENDED.
The Offer is conditional upon, among other things, there being validly
deposited under the Offer and not withdrawn such number of common shares
(the "Common Shares") of Hard Suits Inc. ("Hard Suits") as is required in
order for AOD Acquisition Corp. (the "Offeror"), together with its
affiliates, to own at least 50.1% of the voting rights attaching to all of
the Common Shares and Class "A" Performance Shares of Hard Suits
outstanding upon completion of the Offer (calculated on a fully-diluted
basis). See Section 4 of the Offer, "Conditions of the Offer".
The closing price of the Common Shares on The Toronto Stock Exchange on
September 24, 1996, the trading day immediately prior to the announcement
of the Offer, was $1.06. The Offer is at a 41% premium to this price.
Shareholders who wish to accept the Offer must properly complete and
execute the accompanying Letter of Transmittal (printed on blue paper) or
a manually executed facsimile thereof and deposit it, together with
certificates representing their Common Shares, in accordance with the
instructions and rules in the Letter of Transmittal. Alternatively,
Shareholders may follow the procedures for guaranteed delivery set forth
under Section 3 of the Offer, "Manner of Acceptance -- Procedure for
Guaranteed Delivery".
Questions and requests for assistance may, in the case of Shareholders in
Canada, be directed to the Offeror, the Depositary or the Consultant and,
in the case of Shareholders in the United States, to the Offeror, the
Depositary or the Information Agent. Additional copies of this document,
the Letter of Transmittal and the Notice of Guaranteed Delivery may be
obtained without charge on request from those persons at their respective
offices shown on the Letter of Transmittal.
Shareholders whose Common Shares are registered in the name of a nominee
should contact their broker, investment dealer, bank, trust company or
other nominee for assistance.
Shareholders should be aware that, during the period of the Offer, the
Offeror or its affiliates, directly or indirectly, may bid for or make
purchases of Common Shares subject to the Offer, as permitted by
applicable laws or regulations of Canada or its provinces or territories.
September 25, 1996
This document is important and requires your immediate attention. If you
are in any doubt as to how to deal with it, you should consult your
investment dealer, stockbroker, bank manager, lawyer or other professional
advisor.
_____________________________________________________________________________
_____________________________________________________________________________
Notice to Shareholders in the United States of America
Holders of Common Shares in the United States or other jurisdictions
should be aware that disposition of the securities described herein may have
tax consequences both in the United States or such other jurisdictions, as
applicable, and Canada. Such consequences for investors who are resident in
or citizens of the United States or such other jurisdictions, as applicable,
are not described herein.
The Offer is made for securities of a Canadian issuer and is subject to
Canadian disclosure and other requirements. Shareholders should be aware
that such requirements are different from those of the United States.
The enforcement by Shareholders of civil liabilities under the United
States federal securities laws may be affected adversely by the fact that
the Offeror is incorporated under the laws of the Yukon Territory, Canada
and that some or all of its officers and directors may be residents of
Canada.
This document does not constitute an offer or a solicitation to any person
in any jurisdiction in which such offer or solicitation is unlawful. The
Offer is not being made to, nor will deposits be accepted from or on behalf
of, holders of Common Shares in any jurisdiction in which the making or
acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Offeror or its agents may, in their sole
discretion, take such action as they may deem necessary to extend the Offer
to holders of Common Shares in such jurisdiction.
TABLE OF CONTENTS
Page
----
DEFINITIONS 4
SUMMARY 6
The Offer 6
The Offeror and AOD 6
Hard Suits 6
Purpose of the Offer 6
Conditions of the Offer 6
Acquisition of Common Shares
Not Deposited 7
Effect of the Offer on Market
and Listings 7
Time for Acceptance 7
Manner of Acceptance 7
Withdrawal of Deposited Common
Shares 7
Payment 8
Market Price of Common Shares 8
Canadian Federal Income Tax
Considerations 8
Depositary 8
Solicitation of Acceptances 8
OFFER 9
1. The Offer 9
2. Time for Acceptance 9
3. Manner of Acceptance 9
4. Conditions of the Offer 10
5. Extension and Variation of
the Offer 12
6. Payment for Deposited
Common Shares 13
7. Return of Common Shares 13
8. Withdrawal of Deposited
Common Shares 14
9. Dividends and
Distributions; Liens 15
10. Acquisition of Common
Shares Not Deposited 15
11. Mail Service Interruption 15
12. Notice 15
13. Market Purchases 16
14. Other Terms of the Offer 16
OFFERING CIRCULAR 18
The Offeror and AOD 18
Hard Suits 18
Price Range and Trading Volume
of the Common Shares 19
Selected Financial Information 20
Background to the Offer 21
Purpose of the Offer and Plans
for Hard Suits 22
Source of Funds 22
Holdings of Securities of Hard
Suits 23
Trading in Securities of Hard
Suits 23
Commitments to Acquire Common
Shares 23
Arrangements, Agreements or
Understandings 23
Material Changes and Other
Information 23
Effect of the Offer on Market
and Listing 24
Depositary and U.S. Forwarding 24
Agent Solicitation of
Acceptances 24
Acquisition of Common Shares
Not Deposited 24
Canadian Federal Income Tax
Considerations 26
Available Information 28
Statutory Rights 28
Consent 29
APPROVAL AND CERTIFICATE 30
DEFINITIONS
In the accompanying Summary, Offer and Offering Circular, unless the
subject matter or context is inconsistent therewith, the following terms
shall have the meanings indicated:
"affiliate" has the meaning ascribed thereto in the Securities Act;
"AOD" means American Oilfield Divers, Inc., a corporation incorporated under
the laws of Louisiana;
"associate" has the meaning ascribed thereto in the Securities Act;
"Circular" means the accompanying Offering Circular;
"Common Shares" means the common shares without par value in the capital of
Hard Suits;
"Consultant" means J. Proust & Associates Inc., a company incorporated under
the laws of British Columbia, which is owned by Mr. John Proust;
"Depositary" means The R-M Trust Company;
"Eligible Institution" means a Canadian chartered bank, a trust company in
Canada, a commercial bank or trust company having an office, branch or
agency in the United States or a member firm of the TSE, The Montreal
Exchange, the VSE, the Investment Dealers Association of Canada, a national
securities exchange in the United States or the National Association of
Securities Dealers, Inc.;
"Expiry Time" means 12:01 a.m. (local time) on October 17, 1996, or such
later time and date or times and dates as may be fixed by the Offeror from
time to time pursuant to Section 5 of the Offer, "Extension and Variation of
the Offer";
"fully-diluted basis" means, with respect to the number of Common Shares,
the number of Common Shares that would be outstanding assuming all
outstanding options, warrants and other rights to acquire Common Shares had
been exercised;
"Hard Suits" means Hard Suits Inc., a company incorporated under the laws of
British Columbia, previously named "International Hard Suits Inc.";
"Information Agent" means Corporate Investor Communications, Inc.;
"Letter of Transmittal" means a letter of transmittal in the form
accompanying this Offer and the Circular (printed on blue paper);
"Notice of Guaranteed Delivery" means a notice of guaranteed delivery of the
Common Shares being tendered by the holder, in the form accompanying this
Offer and the Circular (printed on green paper);
"Offer" means the offer to purchase the Common Shares made hereby to
Shareholders by the Offeror, the terms and conditions of which are set forth
in the accompanying Offer, the Circular, the Letter of Transmittal and the
Notice of Guaranteed Delivery;
"Offeror" means AOD Acquisition Corp., a corporation incorporated under the
laws of the Yukon Territory, which is a wholly-owned subsidiary of AOD;
"Offer Period" means the period commencing on September 25, 1996 and ending
at the Expiry Time;
"OSC" means the Ontario Securities Commission;
"Performance Shares" means the Class "A" Performance Shares without par
value in the capital of Hard Suits;
"Policy 9.1" means OSC Policy Statement No. 9.1, as amended;
"Securities Act" means the Securities Act (British Columbia);
"Shareholders" means the holders of Common Shares;
"Subsequent Transaction" has the meaning ascribed thereto under "Acquisition
of Common Shares Not Deposited" in the Circular;
"subsidiary" has the meaning ascribed thereto in the Securities Act;
"TSE" means The Toronto Stock Exchange;
"U.S. Forwarding Agent" means ChaseMellon Shareholder Services LLC;
"U.S. Holder" means a citizen of the United States or any person resident in
the United States for U.S. federal income tax purposes; and
"VSE" means the Vancouver Stock Exchange.
_____________________________________________________________________________
All dollar references in the accompanying Summary,
Offer and Offering Circular are in Canadian dollars unless otherwise stated.
SUMMARY
The following is a summary only and is qualified by the detailed
provisions contained elsewhere in the Offer and the Circular. The
information concerning Hard Suits contained in the Offer and the Circular
has been taken from or based upon publicly available documents and records
on file with Canadian securities regulatory authorities and other public
sources.
The Offer
The Offeror is offering, upon the terms and subject to the conditions of
the Offer, to purchase all of the Common Shares issued and outstanding at
the Expiry Time, including Common Shares which may become outstanding on the
exercise of stock options or warrants, at a price of $1.50 per Common Share
in cash.
Based upon the information available to the Offeror, the number of Common
Shares currently issued and outstanding is 9,242,688 (10,355,693 after
giving effect to the exercise of stock options to purchase 812,905 Common
Shares and share purchase warrants exercisable for 300,000 Common Shares
which are currently outstanding).
The Offeror and AOD
The Offeror is a corporation incorporated under the laws of the Yukon
Territory and is a wholly-owned subsidiary of AOD (a Louisiana corporation).
AOD is a U.S.-based company that is a leading single-source provider of
diving, subsea products and engineering and related services to the offshore
oil and gas industries in the Gulf of Mexico, United States west coast and
select international markets, and which provides inland underwater services
to domestic industrial and governmental customers.
As of the date hereof, the Offeror does not own any Common Shares of Hard
Suits.
Hard Suits
Hard Suits develops, manufactures and markets a one atmosphere diving
suit, known as the "NEWTSUIT(R)", and provides underwater services using the
NEWTSUIT(R) and other diving systems. Hard Suits manufactures the
NEWTSUIT(R), thruster packs and ancillary equipment at its facility in North
Vancouver, British Columbia. The services provided by Hard Suits include
diving services and the provision of NEWTSUIT(R)s, remote vehicles and
manned submersibles.
Purpose of the Offer
The purpose of the Offer is to acquire control of Hard Suits. It is the
present intention of the Offeror to acquire all of the Common Shares. See
"Acquisition of Common Shares Not Deposited" in the Circular. The
acquisition of Hard Suits would create significant synergies with AOD by
allowing AOD to better service its existing clients through the creation of
a substantially larger and more competitive international subsea products
and services company, with the managerial focus, financial resources and
systems and facilities to compete more effectively in both domestic and
international markets. The Offeror is of the opinion that the Offer is in
the best interests of the Shareholders due to the deteriorating financial
condition of Hard Suits, its lack of working capital and its recent
management turnover.
Conditions of the Offer
The Offeror reserves the right to withdraw the Offer and not take-up and
pay for any Common Shares deposited under the Offer unless the conditions
described in Section 4 of the Offer, "Conditions of the Offer" are
satisfied. The Offer is conditional upon, among other things:
(a) the valid deposit under the Offer and non-withdrawal of such
number of Common Shares as is required in order for the Offeror, together
with its affiliates, to own at least 50.1% of the voting rights attaching
to all Common Shares and Performance Shares outstanding upon completion of
the Offer (calculated on a fully-diluted basis);
(b) the board of directors of Hard Suits not adopting a shareholder
rights plan that, in the sole judgment of the Offeror, adversely affects
or impedes the purchase of Common Shares by the Offeror in accordance with
the Offer or under any Subsequent Transaction;
(c) there being no existing, pending or threatened action or
proceeding in Canada or elsewhere that, in the sole judgment of the
Offeror, could cease trade, enjoin or prohibit the sale by any holder of
Common Shares or the purchase by the Offeror of Common Shares in
accordance with the Offer or a Subsequent Transaction or the right of the
Offeror to own Common Shares to be acquired in accordance with the Offer;
(d) the Offeror having determined in its sole judgment that neither
Hard Suits nor any of its subsidiaries has taken any action which might
make it inadvisable for the Offeror to proceed with the Offer or the
taking up and paying for Common Shares under the Offer including, without
limitation, Hard Suits or any of its subsidiaries entering into,
releasing, relinquishing, renewing, extending or amending any contract,
right, privilege or entitlement that in any such case is, in the sole
judgment of the Offeror, material to Hard Suits or any of its
subsidiaries; and
(e) the board of directors of Hard Suits having been reconstituted
such that a majority of its members are persons nominated by the Offeror.
The conditions to the Offer are for the exclusive benefit of the Offeror and
may be asserted by the Offeror regardless of the circumstances (including
any action or inaction by the Offeror) giving rise to the assertion or may
be waived by the Offeror in its sole discretion, in whole or in part, at any
time and from time to time without prejudice to any other right that the
Offeror may have under the Offer.
Acquisition of Common Shares Not Deposited
If the Offer is successful, the Offeror currently intends to pursue, to
the extent possible, such means as are permitted by applicable law to seek
to effect a Subsequent Transaction for the purpose of enabling it, or a
wholly- owned subsidiary of the Offeror, to acquire all of the Common Shares
not deposited under the Offer. See "Acquisition of Common Shares Not
Deposited" in the Circular.
Effect of the Offer on Market and Listings
Depending on the number of Common Shares acquired under the Offer, the
Common Shares may no longer meet the minimum listing requirements of the TSE
and VSE and, accordingly, the Common Shares could be delisted. It is the
intention of the Offeror to acquire all of the Common Shares and to seek the
delisting of such shares from both the TSE and VSE as soon as possible.
Time for Acceptance
The Offer will be open for acceptance until 12:01 a.m. (Vancouver time) on
October 17, 1996, or until such later time and date to which the Offer may
be extended, unless withdrawn by the Offeror.
Manner of Acceptance
A Shareholder wishing to accept the Offer must deposit certificates
representing Common Shares, together with a properly completed and duly
executed Letter of Transmittal, or a manually signed facsimile thereof, at
any one of the offices of the Depositary or the U.S. Forwarding Agent
specified in the Letter of Transmittal prior to the Expiry Time.
Instructions are contained in the Letter of Transmittal (printed on blue
paper) which accompanies the Offer. If a Shareholder wishes to deposit
Common Shares pursuant to the Offer and the certificates representing such
Common Shares are not immediately available, or such Shareholder is not able
to deliver such certificates and all other required documents to the
Depositary or the U.S. Forwarding Agent prior to the Expiry Time, such
Common Shares may nevertheless be deposited in compliance with the
procedures for guaranteed delivery. See Section 3 of the Offer, "Manner of
Acceptance -- Procedure for Guaranteed Delivery".
Shareholders will not be required to pay any fee or commission if they
accept the Offer by transmitting their Common Shares directly to the
Depositary or the U.S. Forwarding Agent.
Withdrawal of Deposited Common Shares
Any Common Shares deposited in acceptance of the Offer may be withdrawn at
any time before 12:01 a.m. (local time) on October 17, 1996, and, if not
taken up and paid for by the Offeror prior to the receipt by the Depositary
or the U.S. Forwarding Agent of a notice of withdrawal in respect of such
Common Shares, may be withdrawn at any time after 45 days after the Offer is
mailed to Shareholders. In addition, additional withdrawal rights may be
available under other circumstances as required by applicable law. See
Section 8 of the Offer, "Withdrawal of Deposited Common Shares". Except as
so indicated or as otherwise required by applicable law, deposits of Common
Shares are irrevocable.
In order for any withdrawal to be made, notice of the withdrawal must be
in writing (which includes a telegraphic communication or notice by
electronic means that produces a printed copy), and must be actually
received by the Depositary or the U.S. Forwarding Agent at the place of
deposit of the applicable Common Shares (or Notice of Guaranteed Delivery in
respect thereof) or by facsimile transmission to the Vancouver office of the
Depositary within the period permitted for withdrawal. Any such notice of
withdrawal must (i) be signed by or on behalf of the person who signed the
Letter of Transmittal that accompanied the Common Shares (or Notice of
Guaranteed Delivery in respect thereof) to be withdrawn, and (ii) specify
such person's name, the number of Common Shares to be withdrawn, the name of
the registered holder and the certificate number shown on each certificate
representing the Common Shares to be withdrawn.
Payment
If all the conditions referred to under Section 4 of the Offer,
"Conditions of the Offer", have been fulfilled or waived by the Offeror at
the Expiry Time, the Offeror will become obligated to take up the Common
Shares validly deposited and not withdrawn pursuant to the Offer not later
than ten days after the Expiry Time and to pay for Common Shares taken up as
soon as possible, but in any event not later than three days after taking up
the Common Shares. See Section 6 of the Offer, "Payment for Deposited Common
Shares".
Market Price of Common Shares
The Common Shares are listed and posted for trading on the TSE and VSE. On
September 24, 1996, the trading day immediately prior to the public
announcement of the intention of the Offeror to make the Offer, the closing
price of the Common Shares on the TSE was $1.06 per share.
Canadian Federal Income Tax Considerations
A Shareholder resident in Canada who sells Common Shares pursuant to the
Offer will be required to report the sale as a taxable transaction for
Canadian federal income tax purposes and may thereby realize a capital gain
or capital loss. Shareholders who have never been resident in Canada should
not, in most circumstances, be subject to Canadian income tax on a
disposition of Common Shares resulting from acceptance of the Offer. See
"Canadian Federal Income Tax Considerations" in the Circular.
Depositary
The R-M Trust Company is acting as Depositary under the Offer. ChaseMellon
Shareholder Services LLC of New York is acting as U.S. Forwarding Agent. The
Depositary and the U.S. Forwarding Agent will receive deposits of
certificates representing the Common Shares and accompanying Letters of
Transmittal at the offices listed in the Letter of Transmittal. The
Depositary will receive Notices of Guaranteed Delivery at its office in
Vancouver only.
Solicitation of Acceptances
The Offeror will solicit acceptances of the Offer, both in Canada and the
United States, and the Consultant will solicit acceptances of the Offer in
Canada. The Offeror does not currently intend to retain a dealer manager or
to form a soliciting dealer group to solicit such acceptances. However, the
Offeror has retained Corporate Investor Communications, Inc. as the
Information Agent in the United States and may also retain a person or
corporation to act in a similar capacity in Canada. Shareholders resident in
Canada may direct questions or requests for assistance to the Consultant by
calling 1-888-331-3341 (toll free). Shareholders resident in the United
States may direct questions or requests for assistance to the Information
Agent by calling 1-800-346-7885 (toll free).
OFFER
September 25, 1996
TO: THE HOLDERS OF COMMON SHARES OF
HARD SUITS INC.
1. The Offer
The Offeror hereby offers to purchase, upon the terms and subject to the
conditions hereinafter specified, all of the Common Shares issued and
outstanding at the Expiry Time, including Common Shares which may become
outstanding on the exercise of stock options or warrants, at a price of
$1.50 per Common Share in cash.
The Offer is made only for the Common Shares and is not made for any
Performance Shares, options, warrants or rights to purchase Common Shares or
for any other securities convertible into or exchangeable for Common Shares.
Any holder of such options, warrants, rights or securities who wishes to
accept the Offer should exercise the options, warrants, rights or conversion
or exchange rights in order to obtain certificates representing Common
Shares and deposit the same in accordance with the Offer.
The accompanying Circular, Letter of Transmittal and Notice of Guaranteed
Delivery, which are incorporated into and form part of the Offer, contain
important information which should be read carefully before making a
decision with respect to the Offer.
2. Time for Acceptance
The Offer is open for acceptance until 12:01 a.m. (Vancouver time) on
October 17, 1996, or until such later time and date to which the Offer may
be extended, unless withdrawn by the Offeror.
3. Manner of Acceptance
The Offer may be accepted by delivering to the Depositary or the U.S.
Forwarding Agent at any of the offices listed in the Letter of Transmittal
(printed on blue paper) so as to arrive there prior to the Expiry Time:
(a) the certificate or certificates representing the Common Shares in
respect of which the Offer is being accepted in proper form for transfer;
(b) a Letter of Transmittal in the form accompanying the Offer, or a
manually signed facsimile thereof, duly completed and executed as required
by the instructions and rules set out in the Letter of Transmittal; and
(c) any other relevant documents required by the instructions and
rules set out in the Letter of Transmittal.
Except as may otherwise be provided in the instructions and rules to the
Letter of Transmittal, the signature on the Letter of Transmittal must be
guaranteed by an Eligible Institution. If a Letter of Transmittal is
executed by a person other than the registered holder of the certificate(s)
representing Common Shares deposited therewith, the certificate(s) must be
endorsed or be accompanied by an appropriate share transfer power duly and
properly completed by the registered holder, with the signature on the
endorsement panel or share transfer power guaranteed by an Eligible
Institution.
Procedure for Guaranteed Delivery
If a Shareholder wishes to deposit Common Shares pursuant to the Offer and
(i) the certificates representing such Common Shares are not immediately
available, or (ii) such Shareholder is not able to deliver such certificates
and all other required documents to the Depositary or the U.S. Forwarding
Agent prior to the Expiry Time, such Common Shares may nevertheless be
deposited pursuant to the Offer provided that each of the following
conditions is met:
(a) such deposit is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed
Delivery (printed on green paper) in the form accompanying the Offer, or a
manually signed facsimile thereof, together with a guarantee by an
Eligible Institution in the form set forth in the Notice of Guaranteed
Delivery, is received by the Depositary, at its office in Vancouver as set
forth in the Notice of Guaranteed Delivery, prior to the Expiry Time; and
(c) the certificates representing such deposited Common Shares, in
proper form for transfer, together with a properly completed and duly
executed Letter of Transmittal (printed on blue paper) in the form
accompanying the Offer, or a manually signed facsimile thereof, relating
to such Common Shares and any other documents required by the instructions
and rules set out in the Letter of Transmittal, are received at the office
of the Depositary in Vancouver on or before 4:30 p.m. (Vancouver time) on
the third trading day on the TSE after the date of execution of the Notice
of Guaranteed Delivery. Delivery to any office other than the Vancouver
office of the Depositary will not constitute delivery for the purpose of
satisfying a guaranteed delivery.
A Notice of Guaranteed Delivery may be delivered by hand or sent by
facsimile transmission or mail to the Depositary at the office specified
above and must include a signature guaranteed by an Eligible Institution in
the form set forth in the Notice of Guaranteed Delivery.
General
In all cases, payment for the Common Shares deposited and taken up by the
Offeror pursuant to the Offer will be made only after timely receipt by the
Depositary or the U.S. Forwarding Agent of certificates representing such
Common Shares, a properly completed and duly executed Letter of Transmittal,
or a manually signed facsimile copy thereof, relating to such Common Shares
with the signature thereon guaranteed by an Eligible Institution in
accordance with the instructions set out therein, and any other required
documents.
The method of delivery of certificates representing the Common Shares, the
Letter of Transmittal and all other required documents is at the option and
risk of the person depositing the same. The Offeror recommends that such
documents be delivered by hand to the Depositary or the U.S. Forwarding
Agent and a receipt obtained therefor or, if mailed, that registered mail
(with an acknowledgment of receipt requested) be used and that proper
insurance be obtained.
Shareholders whose Common Shares are registered in the name of a nominee
should contact their broker, investment dealer, bank, trust company or other
nominee for assistance in depositing such Common Shares.
The acceptance of the Offer pursuant to the procedures set forth above
will constitute an agreement between the depositing Shareholder and the
Offeror in accordance with the terms and conditions of the Offer (including
the Letter of Transmittal and the Notice of Guaranteed Delivery).
All questions as to the validity, form, eligibility (including timely
receipt) and acceptance of any Common Shares deposited pursuant to the Offer
will be determined by the Offeror in its sole discretion, and depositing
Shareholders agree that such determination shall be final and binding. The
Offeror reserves the absolute right to reject any and all deposits which it
determines not to be in proper form or which may, in the opinion of the
Offeror, be unlawful to accept under the laws of any jurisdiction. The
Offeror also reserves the absolute right to waive any defect or irregularity
in the deposit of any Common Shares. There shall be no obligation on the
Offeror, the Depositary or the U.S. Forwarding Agent to give notice of any
defects or irregularities in any deposit and no liability shall be incurred
by any of them for failure to give any such notice. The Offeror's
interpretation of the terms and conditions of the Offer (including the
Circular, the Letter of Transmittal and the Notice of Guaranteed Delivery)
shall be final and binding.
The Offeror reserves the right to permit the Offer to be accepted in a
manner other than that set out above.
4. Conditions of the Offer
Notwithstanding any other provision of the Offer, the Offeror shall not be
required to take up or accept for payment or pay for any Common Shares, may
postpone the taking up or acceptance for payment of, or payment for,
deposited Common Shares, and may, in its sole discretion, terminate or amend
the Offer, unless, at or prior to the time that Common Shares will be taken
up and accepted for payment, each of the following conditions has been
satisfied:
(a) there shall have been validly deposited under the Offer and not
withdrawn such number of Common Shares as is required in order for the
Offeror, together with its affiliates, to own at least 50.1% of the voting
rights attaching to all outstanding Common Shares and Performance Shares
(calculated on a fully-diluted basis);
(b) the board of directors of Hard Suits shall not have adopted a
shareholder rights plan that, in the sole judgment of the Offeror,
adversely affects or impedes the purchase of Common Shares by the Offeror
in accordance with the Offer or under any Subsequent Transaction;
(c) no material adverse change shall have occurred in the financial
markets or the price of the Common Shares nor shall any change (or any
condition, event or development involving a prospective change) have
occurred or been threatened in the general economic, financial, currency
exchange or securities or commodity market conditions in Canada or
elsewhere that, in the sole judgment of the Offeror, has or may have a
material adverse effect on the value of the Common Shares to the Offeror;
(d) there shall not have occurred (or, if there shall have previously
occurred, the Offeror shall not, prior to the commencement of the Offer,
have been made aware of) any change (or any condition, event or
development involving a prospective change) in the business, operations,
assets, capitalization, financial condition, prospects, licences, permits,
rights, privileges or liabilities, whether contractual or otherwise, of
Hard Suits or any of its subsidiaries which, in the sole judgment of the
Offeror, is materially adverse or may be considered to be significant to a
purchaser of Common Shares;
(e) all requisite governmental, regulatory or judicial approvals or
exemptions which the Offeror considers necessary or advisable in
connection with the Offer or the acquisition of Common Shares in
accordance with the Offer or a Subsequent Transaction shall have been
obtained on terms satisfactory to the Offeror in its sole judgment;
(f) the Offeror shall have determined in its sole judgment that no
action, suit or proceeding shall have been threatened or taken before or
by any domestic or foreign court, tribunal, governmental agency, stock
exchange or other regulatory or administrative agency or commission or
before or by any elected or appointed public official or private person
(including, without limitation, any individual, corporation, firm, group
or other entity in Canada or elsewhere whether or not having the force of
law), and no law, regulation, policy or directive (whether or not having
the force or law) shall have been proposed, enacted, promulgated or
applied:
(i) to cease trade, enjoin, prohibit or impose material limitations or
conditions on the purchase by or the sale to the Offeror of the Common
Shares or the right of the Offeror to own or exercise full rights of
ownership of the Common Shares;
(ii) which has had or might have a material adverse effect on Hard Suits
and its subsidiaries on a consolidated basis; or
(iii) which could interfere with or prevent completion of a Subsequent
Transaction;
(g) the Offeror shall have determined in its sole judgment that
neither Hard Suits nor any of its subsidiaries has taken any action which
might make it inadvisable for the Offeror to proceed with the Offer or the
taking up and paying for Common Shares under the Offer including, without
limitation, Hard Suits or any of its subsidiaries entering into,
releasing, relinquishing, renewing, extending or amending any contract,
right, privilege or entitlement that in any such case is, in the sole
judgment of the Offeror, material to Hard Suits or any of its
subsidiaries;
(h) the unconditional release or waiver on terms reasonably
satisfactory to the Offeror by all applicable third parties of all
material provisions contained in any indenture, instrument, agreement,
undertaking or commitment to which Hard Suits or any of its subsidiaries
is a party or by which Hard Suits or any of its subsidiaries or any
material assets of any of them is bound that requires Hard Suits or any of
its subsidiaries to be owned or controlled by Rene T. Nuytten or any of
his associates or affiliates or that are otherwise required in connection
with the acquisition by the Offeror of the Common Shares;
(i) all outstanding rights to purchase or otherwise acquire
authorized and unissued Common Shares under stock options, warrants,
rights, privileges or other entitlements, other than the Performance
Shares, shall have been exercised in full or irrevocably released,
surrendered and waived by the holders thereof, conditional upon the
Offeror taking up and paying for the Common Shares, on terms and
conditions satisfactory to the Offeror;
(j) the Offeror shall not have determined in its sole judgment that
Hard Suits or any of its subsidiaries does not hold good and marketable
title, free and clear of any undisclosed adverse claims, rights, interests
or other restrictions of any kind whatsoever, to any material asset,
including, without limitation, any patent, trademark, trade secret or
other intellectual property right;
(k) there shall not exist any prohibition of law against, or any
judicial or regulatory decree or order precluding, the Offeror making the
Offer or taking up and paying for any or all of the Common Shares under
the Offer or completing any Subsequent Transaction and no change (or any
condition, event or development involving a prospective change) shall have
occurred in any law, regulation, policy, order or directive which, in the
sole judgment of the Offeror, might make it inadvisable for the Offeror to
proceed with the Offer or take up and pay for Common Shares under the
Offer; and
(l) the board of directors of Hard Suits shall have been
reconstituted such that a majority of its members are persons nominated by
the Offeror.
The foregoing conditions are for the exclusive benefit of the Offeror and
may be asserted by the Offeror regardless of the circumstances (including
any action or inaction by the Offeror) giving rise to any such assertion or
may be waived by the Offeror in its sole discretion, in whole or in part, at
any time and from time to time, both before and after the Expiry Time,
without prejudice to any other rights which the Offeror may have under the
Offer. The failure by the Offeror at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any
time and from time to time. Any determination by the Offeror concerning the
events described in this Section 4 will be final and binding upon all
parties.
Any waiver of a condition or the withdrawal of the Offer shall be
effective upon written notice or other communication confirmed in writing by
the Offeror to that effect given to the Depositary at its principal office
in Vancouver. The Offeror, forthwith after giving any such notice, shall
make a public announcement of such waiver or withdrawal, shall cause the
Depositary to provide as soon as practicable thereafter a copy of such
notice in the manner set forth in Section 12 of the Offer, "Notice", to the
Shareholders, and shall provide a copy of such notice to the TSE and VSE. If
the Offer is withdrawn, the Offeror shall not be obligated to take up or pay
for any Common Shares deposited under the Offer and the Depositary will
promptly return all certificates for deposited Common Shares, Letters of
Transmittal, Notices of Guaranteed Delivery and related documents to the
parties by whom they were deposited.
5. Extension and Variation of the Offer
The Offer is open for acceptance until, but not after, the Expiry Time.
The Offeror expressly reserves the right, in its sole discretion, at any
time and from time to time during the Offer Period, to extend the Expiry
Time or to vary the Offer by giving written notice or other communication
confirmed in writing of such extension or variation to the Depositary at its
principal office in Vancouver, and by causing the Depositary to provide as
soon as practicable thereafter a copy of such notice in the manner set forth
in Section 12 of the Offer, "Notice", to all Shareholders whose Common
Shares have not been taken up prior to such extension or variation. The
Offeror shall, as soon as practicable after giving notice of an extension or
variation to the Depositary, make a public announcement of such extension or
variation and provide a copy of such notice to the TSE and the VSE. Any
notice of extension or variation will be deemed to have been given and to be
effective on the day on which it is delivered or otherwise communicated to
the Depositary at its principal office in Vancouver.
Notwithstanding the foregoing, the Expiry Time may not be extended by the
Offeror if all of the terms and conditions of the Offer, except those waived
in writing by the Offeror, have been fulfilled or complied with, unless the
Offeror first takes up and pays for all Common Shares validly deposited
under the Offer and not withdrawn.
If there is a variation in the terms of the Offer, other than a variation
consisting solely of the waiver of a condition of the Offer, the Offer shall
not expire before ten days after the notice of variation in respect of such
variation has been given to the Shareholders unless otherwise permitted by
applicable law and subject to abridgment or elimination of that period
pursuant to such order or orders as may be granted by applicable Canadian
courts or securities regulatory authorities.
During any such extension or in the event of any variation, all Common
Shares previously deposited and not taken up or withdrawn will remain
subject to the Offer and may be taken up and paid for by the Offeror in
accordance with the terms hereof, subject to Section 8 of the Offer,
"Withdrawal of Deposited Common Shares". An extension of the Expiry Time or
a variation of the Offer will not constitute a waiver by the Offeror of its
rights under Section 4 of the Offer, "Conditions of the Offer". If, prior to
the Expiry Time, the consideration being offered for the Common Shares under
the Offer is increased by the Offeror, the increased consideration will be
paid to all depositing Shareholders whose Common Shares are taken up under
the Offer.
6. Payment for Deposited Common Shares
If all of the conditions referred to under Section 4 of the Offer,
"Conditions of the Offer", have been fulfilled or waived, the Offeror will
become obligated to take up and pay for the Common Shares validly deposited
and not withdrawn pursuant to the Offer not later than ten days after the
Expiry Time and to make such payment for the Common Shares taken up as soon
as practicable, but in any event not later than three days after taking up
the Common Shares. In accordance with applicable law, the Offeror will take
up and pay for Common Shares deposited under the Offer subsequent to the
date on which it first takes up Common Shares deposited under the Offer not
later than ten days after the deposit of such Common Shares.
Subject to applicable law, the Offeror expressly reserves the right in its
sole discretion to delay taking up or paying for any Common Shares or to
terminate the Offer and not take up or pay for any Common Shares if any
condition specified in Section 4 of the Offer, "Conditions of the Offer", is
not satisfied or waived by the Offeror, by giving written notice thereof or
other communication confirmed in writing to that effect to the Depositary at
its principal office in Vancouver. The Offeror also expressly reserves the
right, in its sole discretion and notwithstanding any other condition of the
Offer, to delay taking up and paying for Common Shares in order to comply,
in whole or in part, with any applicable law.
The Offeror will be deemed to have taken up and accepted for payment
Common Shares validly deposited and not withdrawn pursuant to the Offer if,
as and when the Offeror gives written notice or other communication
confirmed in writing to that effect to the Depositary at its principal
office in Vancouver.
The Offeror will pay for Common Shares validly deposited and not withdrawn
pursuant to the Offer by providing the Depositary with sufficient funds (by
bank transfer or other means satisfactory to the Depositary) for transmittal
to depositing Shareholders. Under no circumstances will interest accrue or
be paid by the Offeror or the Depositary to persons depositing Common Shares
on the purchase price of Common Shares purchased by the Offeror, regardless
of any delay in making such payment.
The Depositary will act as the agent of persons who have deposited Common
Shares in acceptance of the Offer for the purposes of receiving payment from
the Offeror and transmitting payment to such persons, and receipt of payment
by the Depositary will be deemed to constitute receipt of payment by persons
depositing Common Shares.
Settlement will be made by the Depositary issuing or causing to be issued
a cheque payable in Canadian funds in the amount to which the depositing
Shareholder is entitled. Unless otherwise directed in the Letter of
Transmittal, the cheque will be issued in the name of the registered holder
of Common Shares so deposited. Unless the person who deposits Common Shares
instructs the Depositary to hold the cheque for pickup by checking the
appropriate box in the Letter of Transmittal, cheques will be forwarded by
first class mail to such persons at the address specified in the Letter of
Transmittal. If no address is therein specified, a cheque will be forwarded
to the address of the holder as shown on the Common Share register
maintained by Hard Suits. Cheques mailed in accordance with this paragraph
will be deemed to have been delivered at the time of mailing.
Depositing Shareholders will not be obligated to pay any fee or commission
if they accept the Offer by depositing their Common Shares directly with the
Depositary or the U.S. Forwarding Agent.
7. Return of Common Shares
If any deposited Common Shares are not taken up and paid for by the
Offeror pursuant to the Offer for any reason, or if certificates are
submitted for more Common Shares than are deposited, certificates for
unpurchased Common Shares will be returned at the Offeror's expense as soon
as practicable following the Expiry Time or withdrawal or termination of the
Offer by either sending new certificates representing Common Shares not
purchased or returning the deposited certificates (and other relevant
documents).
Certificates (and other relevant documents) will be forwarded by first
class mail in the name of and to the address specified by the Shareholder in
the Letter of Transmittal or, if such name or address is not so specified,
in such name and to such address as shown on the Common Share register
maintained by Hard Suits as soon as practicable following the Expiry Time or
withdrawal or termination of the Offer.
8. Withdrawal of Deposited Common Shares
Except as otherwise stated in this Section 8, all deposits of Common
Shares pursuant to the Offer are irrevocable. Any Common Shares deposited in
acceptance of the Offer may be withdrawn by or on behalf of the depositing
Shareholder (unless otherwise required or permitted by applicable law) at
any time before 12:01 a.m. (local time) on October 17, 1996 and, unless
theretofore taken up and paid for by the Offeror, at any time after November
9, 1996.
Unless otherwise required or permitted by applicable law, if:
(a) there is a variation of the terms of the Offer before the Expiry
Time (including any extension of the period during which Common Shares may
be deposited hereunder or the modification of a term or condition of the
Offer, but excluding, unless otherwise required by applicable law, (i) a
variation consisting solely of an increase in the consideration offered
under the Offer where the time for deposit is not at the same time
extended for more than ten days after the notice of variation has been
delivered, or (ii) a variation consisting solely of the waiver of a
condition of the Offer); or
(b) before the Expiry Time or after the Expiry Time but before the
expiry of all rights of withdrawal with respect to the Common Shares, a
change occurs in the information contained in the Offer or the Circular,
as amended from time to time, that would reasonably be expected to affect
the decision of a Shareholder to accept or reject the Offer, unless such
change is not within the control of the Offeror or affiliates of the
Offeror;
any Common Shares deposited under the Offer and not taken up and paid for by
the Offeror at such time may be withdrawn by or on behalf of the depositing
Shareholder at the place of deposit at any time until the expiration of ten
days after the date upon which the notice of such variation or change is
mailed, delivered or otherwise communicated, subject to abridgment or
elimination of that period pursuant to such order or orders as may be
granted by applicable Canadian courts or securities regulatory authorities.
In order for any withdrawal to be made, notice of the withdrawal must be
in writing (which includes a telegraphic communication or notice by
electronic means, including a facsimile transmission, that produces a
printed copy), and must be actually received by the Depositary or the U.S.
Forwarding Agent at the place of deposit of the applicable Common Shares (or
Notice of Guaranteed Delivery in respect thereof) or by facsimile
transmission to the Vancouver office of the Depositary within the period
permitted for withdrawal. Any such notice of withdrawal must be (i) signed
by or on behalf of the person who signed the Letter of Transmittal that
accompanied the Common Shares (or Notice of Guaranteed Delivery in respect
thereof) to be withdrawn, and (ii) specify such person's name, the number of
Common Shares to be withdrawn, the name of the registered holder of the
Common Shares to be withdrawn and the certificate number shown on each
certificate representing the Common Shares to be withdrawn. Any signature in
a notice of withdrawal must be guaranteed by an Eligible Institution in the
same manner as in the Letter of Transmittal or Notice of Guaranteed Delivery
(as described in the instructions and rules set out in such letter).
All questions as to the validity (including, without limitation, timely
receipt) and form of notices of withdrawal will be determined by the Offeror
in its sole discretion, and depositing Shareholders agree that such
determination shall be final and binding. There shall be no obligation on
the Offeror, the Depositary or the U.S. Forwarding Agent to give notice of
any defects or irregularities in any notice of withdrawal, and no liability
shall be incurred by any of them for failure to give any such notice.
If the Offeror is delayed in taking up or paying for Common Shares or is
unable to take up or pay for Common Shares for any reason, then, without
prejudice to the Offeror's other rights, Common Shares may not be withdrawn
except to the extent that depositing holders of Common Shares are entitled
to withdrawal rights as set forth in this Section 8 or pursuant to
applicable law.
Any Common Shares withdrawn will be deemed not validly deposited for the
purposes of the Offer, but may be redeposited at any subsequent time prior
to the Expiry Time by following any of the procedures described in Section 3
of the Offer, "Manner of Acceptance".
In addition to the foregoing rights of withdrawal, holders of Common
Shares in certain provinces of Canada are entitled to statutory rights of
rescission or to damages, or both, in certain circumstances. See "Statutory
Rights" in the Circular.
9. Dividends and Distributions; Liens
If, on or after the date of the Offer, Hard Suits should split, combine or
otherwise change any of the Common Shares or its capitalization, or shall
disclose that it has taken or intends to take any such action, then the
Offeror may, in its sole discretion and without prejudice to the Offeror's
rights under Section 4 of the Offer, "Conditions of the Offer", make such
adjustments as it considers appropriate to the purchase price and other
terms of the Offer (including, without limitation, the type of securities
offered to be purchased and the amounts payable therefor) to reflect such
split, combination or other change.
Common Shares acquired pursuant to the Offer shall be transferred by the
Shareholder and acquired by the Offeror free and clear of all liens,
restrictions, charges, encumbrances, claims and equities and together with
all rights and benefits arising therefrom, including the right to all
dividends, distributions, payments, securities, rights, warrants, assets or
other interests which may be declared, paid, accrued, issued, distributed,
made or transferred on or after September 25, 1996 (the date of announcement
of the Offer) on or in respect of the Common Shares. If Hard Suits should
declare or pay any cash dividend or stock dividend or declare, make or pay
any other distribution or payment on or declare, allot, reserve or issue any
securities, rights or other interests with respect to any of the Common
Shares which is or are payable or distributable to Shareholders on a record
date which is prior to the date of transfer into the name of the Offeror or
its nominees or transferees on the register of Shareholders maintained by
Hard Suits following acceptance thereof for purchase pursuant to the Offer,
then, without prejudice to the Offeror's rights under Section 4 of the
Offer: (a) in the case of any such cash dividend or cash distribution or
payment that does not exceed the purchase price per Common Share under the
Offer, the cash payable per Common Share pursuant to the Offer will be
reduced by the amount of any such dividend, distribution or payment; and (b)
in the case of any such cash dividend, cash distribution or payment that
exceeds the purchase price per Common Share under the Offer, or in the case
of any other dividend, distribution, payment, right or other interest, the
whole of any such dividend, distribution, payment, right or other interest
will be received and held by the depositing Shareholder for the account of
the Offeror and shall be promptly remitted and transferred by the depositing
Shareholder to the Depositary for the account of the Offeror, accompanied by
appropriate documentation of transfer. Pending such remittance, the Offeror
will be entitled to all rights and privileges as the owner of any such
dividend, distribution, payment, right or other interest, and may withhold
the entire purchase price payable by the Offeror pursuant to the Offer or
deduct from the purchase price payable by the Offeror pursuant to the Offer
the amount or value thereof, as determined by the Offeror in its sole
discretion.
10. Acquisition of Common Shares Not Deposited
If the Offer is successful, the Offeror currently intends, to the extent
possible, to pursue such means as are permitted by applicable law to seek to
effect a Subsequent Transaction for the purpose of enabling it, or a wholly-
owned subsidiary of the Offeror, to acquire all of the Common Shares not
deposited under the Offer. See "Acquisition of Common Shares Not Deposited"
in the Circular.
11. Mail Service Interruption
Notwithstanding the provisions of the Offer, the Circular, the Letter of
Transmittal or the Notice of Guaranteed Delivery, cheques issued by the
Depositary in payment for Common Shares purchased pursuant to the Offer and
certificates for any Common Shares to be returned need not be mailed if the
Offeror determines that delivery thereof by mail may be delayed. Persons
entitled to cheques and certificates which are not mailed for the foregoing
reason may take delivery thereof at the office of the Depositary or the U.S.
Forwarding Agent to which the Common Shares were deposited, upon application
to the Depositary or the U.S. Forwarding Agent, until such time as the
Offeror has determined that delivery by mail will no longer be delayed. The
Offeror shall provide notice of any such determination not to mail made
under this Section 11 as soon as reasonably practicable after the making of
such determination and in accordance with Section 12 of the Offer, "Notice".
Notwithstanding Section 6 of the Offer, "Payment for Deposited Common
Shares", the deposit of cheques with, or the payment of money to, the
Depositary or the U.S. Forwarding Agent in such circumstances shall
constitute delivery to the persons entitled thereto and the Common Shares
shall be deemed to have been paid for immediately upon such deposit.
12. Notice
Any notice to be given by the Offeror, the Depositary or the U.S.
Forwarding Agent pursuant to the Offer will be deemed to have been properly
given if it is mailed by first class mail, postage prepaid, to the
registered holders of Common Shares at their addresses as shown on the
register of Shareholders maintained by Hard Suits and will be deemed to have
been received on the first day following the date of mailing which is not a
Saturday, Sunday or statutory holiday in Canada. These provisions apply
notwithstanding any accidental omission to give notice to any one or more
holders of Common Shares and notwithstanding any interruption of mail
service in Canada following mailing. In the event of any interruption of
mail service following mailing, the Offeror intends to make reasonable
efforts to disseminate the notice by other means, such as publication.
Except as otherwise required or permitted by law, if post offices in Canada
are not open for the deposit of mail, any notice which the Offeror, the
Depositary or the U.S. Forwarding Agent may give or cause to be given to
Shareholders under the Offer will be deemed to have been properly given and
to have been received by holders of Common Shares if it is given to the TSE
and VSE for dissemination through their facilities and if a summary of the
material facts thereof is published once in the National Edition of The
Globe and Mail, provided that if the National Edition of The Globe and Mail
is not being generally circulated, publication in lieu thereof shall be made
in any other daily newspaper of general circulation published in the Cities
of Toronto and Vancouver.
The Offer will be mailed to registered Shareholders or made in such a
manner as is permitted by applicable regulatory authorities and the Offeror
will use its reasonable efforts to furnish the Offer to stockbrokers,
investment dealers, banks and similar persons in whose names, or the names
of whose nominees, appear on the register of Shareholders maintained by Hard
Suits, or, if security position listings are available in respect of Hard
Suits, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Common
Shares when such listing is received.
Wherever the Offer calls for documents to be delivered to the Depositary
or the U.S. Forwarding Agent, such documents will not be considered
delivered unless and until they have been physically received at one of the
addresses listed for the Depositary or the U.S. Forwarding Agent on the
Letter of Transmittal or the Notice of Guaranteed Delivery, as applicable.
Wherever the Offer calls for documents to be delivered to a particular
office of the Depositary or U.S. Forwarding Agent, such documents will not
be considered delivered unless and until they have been physically received
at the particular office at the address indicated on the Letter of
Transmittal or the Notice of Guaranteed Delivery, as applicable.
13. Market Purchases
The Offeror has no present intention of acquiring beneficial ownership of
Common Shares while the Offer is outstanding other than pursuant to the
Offer. However, the Offeror reserves the right to, and may, acquire Common
Shares by making purchases through the facilities of the TSE or VSE, subject
to applicable law, at any time or from time to time prior to the Expiry
Time. In no event will the Offeror make any such purchases of Common Shares
through the facilities of the TSE or VSE until the third clear trading day
following the date of the Offer. The aggregate number of Common Shares
acquired by the Offeror through the facilities of the TSE or VSE while the
Offer is outstanding shall not exceed 5% of the outstanding Common Shares as
of the date hereof. If the Offeror should acquire Common Shares by making
purchases through the facilities of the TSE or VSE during the Offer Period,
the Common Shares so purchased will be counted in any determination as to
whether the condition in subsection (a) of Section 4 of the Offer,
"Conditions of the Offer", has been fulfilled. Although the Offeror has no
present intention to sell Common Shares taken up under the Offer, it
reserves the right to make or enter into an arrangement, commitment or
understanding at or prior to the Expiry Time to sell any of such Common
Shares after the Expiry Time.
14. Other Terms of the Offer
The Offer and all contracts resulting from acceptance hereof shall be
governed by and construed in accordance with the laws of the Province of
British Columbia and the laws of Canada applicable therein. Each party to a
contract resulting from an acceptance of the Offer unconditionally and
irrevocably attorns to the jurisdiction of the courts of the Province of
British Columbia.
No broker, dealer or other person has been authorized to give any
information or make any representation on behalf of the Offeror not
contained herein or in the accompanying Circular, and, if given or made,
such information or representation must not be relied upon as having been
authorized.
The provisions of the Circular, the Letter of Transmittal and the Notice
of Guaranteed Delivery accompanying the Offer, including the instructions
and rules contained therein, as applicable, form part of the terms and
conditions of the Offer.
The Offeror shall, in its sole discretion, be entitled to make a final and
binding determination of all questions relating to the interpretation of the
Offer (including any conditions of the Offer), the Circular, the Letter of
Transmittal and the Notice of Guaranteed Delivery, the validity of any
acceptance of the Offer and the validity of any withdrawal of Common Shares.
The Offer is not being made to (nor will deposits be accepted from or on
behalf of) Shareholders residing in any jurisdiction in which the making of
the Offer or the acceptance thereof would not be in compliance with the laws
of such jurisdiction. In any jurisdiction where the laws of such
jurisdiction require the Offer to be made by a licenced broker or dealer,
the Offer will be deemed to be made on behalf of the Offeror by one or more
brokers or dealers duly licenced under the laws of such jurisdiction. The
Offeror may, in its sole discretion, take such action as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to
Shareholders in any such jurisdiction.
The Offeror reserves the right to assign to one or more affiliates of the
Offeror the right to purchase all or any portion of the Common Shares
deposited pursuant to the Offer, but any such assignment will not relieve
the Offeror of its obligations under the Offer and will in no way prejudice
the rights of persons depositing Common Shares to receive payment for Common
Shares validly deposited and accepted for payment pursuant to the Offer.
The accompanying Circular together with the Offer constitute the takeover
bid circular required under Canadian provincial securities legislation with
respect to the Offer.
Dated: September 25, 1996
AOD Acquisition Corp.
By: (signed) GEORGE C. YAX
Chairman of the Board,
President and Chief Executive Officer
OFFERING CIRCULAR
The following information is supplied with respect to the accompanying
Offer by the Offeror to purchase Common Shares (including Common Shares
which may become outstanding on the exercise of options or warrants to
acquire Common Shares). The terms and provisions of the Offer are
incorporated into and form part of the Circular. Shareholders should refer
to the Offer for details of its terms and conditions, including details as
to payment and withdrawal rights.
The information concerning Hard Suits contained in the Offer and the
Circular has been taken from or based upon publicly available documents and
records on file with Canadian securities regulatory authorities and other
public sources. Although the Offeror has no knowledge that would indicate
that any statements contained herein taken from or based on such documents
and records are untrue or incomplete, the Offeror does not assume any
responsibility for the accuracy or completeness of the information taken
from or based upon such documents and records, or for any failure by Hard
Suits to disclose events which may have occurred or may affect the
significance or accuracy of any such information which are unknown to the
Offeror.
THE OFFEROR AND AOD
The Offeror, a wholly-owned subsidiary of AOD, was incorporated under the
laws of the Yukon Territory on September 23, 1996. Its registered office is
located at Suite 200-204 Lambert Street, Whitehorse, Yukon, Y1A 3T2. The
Offeror was organized solely for the purpose of making this Offer and has
carried on no other business activity.
AOD is a Louisiana corporation, based in the United States, that is a
leading single-source provider of diving, subsea products and engineering
and related services to the offshore oil and gas industries in the Gulf of
Mexico, United States west coast and select international markets, and which
provides inland underwater services to domestic industrial and governmental
customers.
AOD has offices in the States of Louisiana, Texas, California, Kansas and
Ohio together with overseas offices in Aberdeen, Scotland, Lagos and Port
Harcourt, Nigeria, and Dubai, United Arab Emirates. With over 1,000
employees worldwide, AOD maintains a significant position in the subsea
marine construction industry. In addition to a wide array of diving and
related equipment, AOD also owns and operates 21 diving support vessels for
use in offshore diving operations.
AOD's Big Inch Marine subsidiary designs, manufactures and installs a
patented subsea pipeline connector product line for, amongst other things,
emergency repair of leaking or ruptured subsea pipelines. AOD's AMPOL
subsidiary is a full-service oil spill response and environmental
remediation contractor capable of handling a wide variety of large and small
projects. AOD's Tarpon subsidiary sells, manufactures and installs a
patented marginal well production system.
HARD SUITS
Hard Suits was incorporated on July 25, 1986 pursuant to the BCCA, under
the name "International Hard Suits Inc.". Hard Suits changed its name to
"Hard Suits Inc." on November 29, 1993.
Hard Suits develops, manufactures and markets a one atmosphere diving
suit, known as the "NEWTSUIT(R)", and provides underwater services using the
NEWTSUIT(R) and other diving systems. Hard Suits manufactures the
NEWTSUIT(R), thruster packs and ancillary equipment at its facility in North
Vancouver, British Columbia. The services provided by Hard Suits include
diving services and the provision of NEWTSUIT(R)s, remote vehicles and
manned submersibles.
Based upon the information available to the Offeror, the authorized
capital of Hard Suits consists of 100,000,000 Common Shares and 5,000,000
Performance Shares, of which 9,242,688 Common Shares and 2,500,000
Performance Shares are currently issued and outstanding. The Performance
Shares are convertible into Common Shares in the circumstances described in
Hard Suits' Articles, which provide that any Performance Shares not
converted by June 29, 2000 shall be surrendered to Hard Suits for
cancellation. The issued and outstanding Common Shares include 416,666
Common Shares held in escrow by Montreal Trust Company of Canada pursuant to
an escrow agreement which provides, among other things, that any of such
shares not released from escrow prior to May 1, 1997 will be cancelled.
Based upon the information available to the Offeror, the largest holder of
Common Shares is Rene I. Nuythen, who directly or indirectly owns 2,126,427
Common Shares, representing 23% of the total number Common Shares
outstanding, of which 416,666 shares (or 4.5%) are owned by Can-Dive
Services Ltd., which is in receivership, and are subject to the escrow
agreement referred to above.
In addition, based upon the information available to the Offeror, current
and former directors, officers and employees of Hard Suits or its
subsidiaries currently hold options to acquire up to an aggregate of 812,905
Common Shares at exercise prices ranging from $1.04 to $2.20 per share, and
Rodney W. Stanley, formerly the President and Chief Executive Officer of
Hard Suits, currently holds warrants to acquire up to 300,000 Common Shares
at an exercise price of $1.83 per share.
The holders of the Common Shares are entitled to one vote per share at all
meetings of shareholders of Hard Suits. The holders of the Performance
Shares are also entitled to one vote per share at all such meetings.
The registered office of Hard Suits is located at 2100 - 1111 West Georgia
Street, Vancouver, British Columbia, V7X 1K9. The principal and head offices
of Hard Suits are located at #3 - 1225 Keith Road, North Vancouver, British
Columbia, V7J 1J3.
PRICE RANGE AND TRADING VOLUME OF THE COMMON SHARES
The Common Shares are listed and posted for trading on the TSE and VSE.
The volume of trading and price ranges of the Common Shares on the TSE,
which is the principal trading market for the Common Shares, are set forth
in the following table for the periods indicated:
High Low Volume
---- --- ------
1994
March (1)............. $3.50 $2.15 506,500
Second Quarter........ $2.70 $1.90 225,300
Third Quarter......... $2.20 $2.10 150,300
Fourth Quarter........ $2.10 $1.45 199,468
1995
First Quarter......... $1.80 $1.25 275,380
Second Quarter........ $2.10 $1.50 491,700
Third Quarter......... $1.95 $1.40 393,800
Fourth Quarter........ $1.50 $0.85 1,065,200
1996
January............... $1.45 $1.11 31,800
February.............. $1.34 $1.00 136,100
March................. $1.15 $0.90 194,950
April................. $1.60 $0.85 615,600
May................... $1.50 $1.11 565,800
June.................. $1.20 $0.99 405,800
July.................. $1.55 $1.15 1,152,400
August................ $1.39 $1.05 254,400
September (to
September 24)......... $1.30 $1.05 148,200
(1) The Common Shares of Hard Suits were listed and posted for trading on
the TSE on March 4, 1994.
The closing price of the Common Shares on the TSE on September 24, 1996,
the last trading day preceding the announcement of the intention of the
Offeror to proceed with the Offer, was $1.06 per share.
The following chart sets forth the daily closing price (the bar graph) and
the 20 day average closing price (the line graph) of the Common Shares on
the TSE from March 4, 1994 to September 24, 1996. As indicated in the
preceding trading summary, the Common Shares recorded a high trading price
of $3.50 per share in March, 1994, compared to a high trading price of $1.30
per share in September, 1996 (to date), representing a 62% decline in 30
months of trading on the TSE.
LOGO
SELECTED FINANCIAL INFORMATION
The following table summarizes certain financial information of Hard Suits
which was obtained from its audited financial statements for the years ended
December 31, 1994 and 1995 and its unaudited financial statements for the
six months ended June 30, 1996.
For the Year Ended For the Six Months
December 31, Ended June 30,
1994 1995 1996
---------- ---------- ----------
Current Assets................ $5,124,340 $4,988,801 $2,696,156
Current Liabilities........... 2,082,190 4,089,798 2,967,642
Working Capital............... 3,102,150 899,003 (271,486)
Revenue....................... 10,314,362 18,247,983 4,364,223
Net Income (loss)............. 434,030 (3,523,808)(1) (1,270,189)
Retained Earnings (Accumulated (2,850,063) (6,373,871) (7,782,070)
Losses).....................
Shareholders Equity........... 6,217,135 3,565,237 2,388,436
(1) Including write-downs of patents, development costs, inventory and
receivables as well as severance and depreciation adjustments which totaled
$1.739 million for the year.
Although Hard Suits' revenue level increased from $10.3 million in fiscal
1994 to $18.2 million in fiscal 1995, or a 77% increase, Hard Suits' working
capital decreased by 71% in fiscal 1995 to $899,003, compared to $3.1
million of working capital as at December 31, 1994, and Hard Suits recorded
a net loss of $3.5 million in fiscal 1995 compared to net income of $434,030
in fiscal 1994. The negative trends in fiscal 1995 have continued for the
six months ending June 30, 1996, with Hard Suits recording a net loss of
$1.27 million for the period (after recording a gain of $250,000 on the sale
of its wholly-owned subsidiary, Sea Urchin Submersibles Ltd.) compared to a
net loss of $595,768 for the same period in 1995, or an increase of 113%,
and revenues of $4.36 million for the six month period ending June 30, 1996
compared to revenues of $5.62 million for the same period last year, or a
decrease of 22%. As at June 30, 1996, Hard Suits recorded negative working
capital of $271,486, compared to positive working capital of $2.8 million as
at June 30, 1995. Hard Suits' unaudited interim financial statements for the
six month period ended June 30, 1996 also disclose that, as at June 30,
1996, the accumulated losses of Hard Suits had increased to $7,782,070 from
$3,473,439 a year earlier, or an increase of 124%
BACKGROUND TO THE OFFER
In May, 1996, the Chairman of Hard Suits contacted the Chairman of the
Board, Chief Executive Officer and President of AOD to discuss a possible
joint venture or other transaction involving the two companies. Following
further meetings and communications between the two companies, Hard Suits
abruptly terminated the discussions in early August, 1996. AOD then advised
Hard Suits in August, 1996 that it remained interested in negotiating a
mutually beneficial arrangement with Hard Suits involving the purchase and
operation of NEWTSUIT(R) systems by AOD in exchange for a purchase price and
operating royalty to be agreed upon. Since making this proposal, AOD has
received no indication from Hard Suits that it is seriously interested in
pursuing this or any other mutually acceptable arrangement with AOD and has
written to Hard Suits terminating all ongoing discussions.
At the commencement of its negotiations with AOD, Mr. Rodney W. Stanley
was the President, Chief Executive Officer and a director of Hard Suits and
J. Proust & Associates Inc., a company owned by Mr. John Proust, was a
consultant to Hard Suits, providing it with investor relations and financial
services. Both Messrs. Stanley and Proust were involved, on behalf of Hard
Suits, in its negotiations with AOD.
On May 29, 1996, Mr. Stanley terminated his employment contract with, and
position as President, CEO and director of, Hard Suits, due to his lack of
confidence in the management of Hard Suits and differences of opinion with
respect to Hard Suits' proper direction. Hard Suits owes Mr. Stanley
approximately U.S. $100,000 pursuant to such employment contract. In March
1996, AOD's board of directors approved the addition of a senior executive
to be responsible for international operations and directed AOD's senior
management to review a number of candidates and recommend the most capable
candidate. AOD's senior management team, through a national executive search
firm, reviewed numerous candidates and in early June, 1996 interviewed five
finalists for the senior international position, including Mr. Stanley. In
late June, 1996, AOD's senior management team presented three finalists to
AOD's board of directors and AOD's full board interviewed Mr. Stanley for
the position. In August, 1996, Mr. Stanley accepted an offer to become
Senior Vice-President, International Operations of AOD. In this position,
Mr. Stanley is responsible for all of AOD's international operations and, as
such, has been involved in its negotiations with Hard Suits and in the
preparation of the Offer.
Effective on August 31, 1996, J. Proust & Associates Inc. terminated its
consulting agreement with Hard Suits, due to its lack of confidence in Hard
Suits' management and differences of opinion with respect to Hard Suits
proper direction. Hard Suits' owes J. Proust & Associates Inc. approximately
$10,000 pursuant to such consulting contract. Shortly after the termination
of such consulting contract, Mr. Proust met with representatives of AOD and
entered into a consulting arrangement with that company, under which his
firm has agreed to provide financial advisory services to AOD, including,
among other things, assisting AOD in connection with the preparation of its
Offer, coordinating matters relating thereto and soliciting acceptances of
the Offer from Shareholders in Canada, in exchange for a minimum monthly fee
of $10,000 (for a period of up to 12 months after the successful completion
of the Offer) and, if the Offer is successful, an additional fee equal to 3%
of the value of the Common Shares tendered pursuant to the Offer, other than
by Shareholders in the United States, plus the sum of $23,000.
In September, 1996, Mr. Stanley was appointed as Senior Vice-President,
International Operations and a director of the Offeror.
PURPOSE OF THE OFFER AND PLANS FOR HARD SUITS
Purpose of the Offer
The purpose of the Offer is to enable the Offeror to acquire control of
Hard Suits. It is the present intention of the Offeror to acquire all of the
Common Shares. See also "Acquisition of Common Shares Not Deposited" in the
Circular.
Since its formation in 1981, AOD has significantly expanded the scope of
its products and services through selective acquisitions, as well as
internal developments. AOD's acquisition strategy has been to identify
product and service lines which can be installed through the use of its
divers and diving support vessels and to enhance shareholder value through
the application of improved management and cost operating strategies to
these new products and services.
AOD is of the view that the acquisition of Hard Suits would enhance its
shareholder value by strategically improving AOD's capabilities to service
its customers' needs with the addition of the NEWTSUIT(R) to its compliment
of diving equipment. The Offeror believes that, if the Offer is successful,
the combination of AOD and Hard Suits will result in the creation of a
stronger and more competitive international subsea products and services
company, with the managerial focus, financial resources and systems and
facilities which will allow it to compete more effectively in both domestic
and international markets. This acquisition, together with improved
management resources and working capital, would enable the combined company
to more effectively further the development, marketing and commercialization
of the NEWTSUIT(R) diving system.
The Offeror is of the opinion that the Offer is in the best interests of
the Shareholders due to the deteriorating financial condition of Hard Suits,
its lack of working capital and its recent management turnover.
Plans for Hard Suits
It is a condition of the Offer that the board of directors of Hard Suits
shall have been reconstituted such that a majority of its members are
persons nominated by the Offeror. Accordingly, the Offeror will, if the
other conditions in Section 4 of the Offer, "Conditions of the Offer", have
been either satisfied or waived, promptly thereafter request Hard Suits to
provide it with such representation.
The Offeror believes that, if the combination of AOD and Hard Suits is
completed, substantial opportunities will exist for significantly improving
Hard Suits' financial condition. Specific opportunities include:
- adopting improved management, marketing, accounting and financial
strategies and systems;
- providing Hard Suits with the financial resources and working
capital to further the development, manufacture and marketing and
commercialization of the NEWTSUIT(R) systems; and
- utilizing the NEWTSUIT(R) systems in AOD's diving operations, both
in the Gulf of Mexico and internationally.
The Offeror intends, if the Offer is successful, to maintain Hard Suits'
North Vancouver, Canada facility and to conduct a detailed review of Hard
Suits and its assets, corporate structure, capitalization, operations,
properties, policies, management and personnel to determine what additional
changes would be desirable in light of the circumstances which exist at the
time of such review.
Except as set forth herein, the Offeror has no current plans or proposals
that would result in any material change in the affairs of Hard Suits,
including any contract or agreement under negotiation, any proposal to
liquidate Hard Suits, to sell, lease or exchange all or a substantial
portion of its assets, to amalgamate it with any other business organization
or to make any material changes in its business, corporate structure (debt
or equity), management or personnel.
SOURCE OF FUNDS
The Offeror estimates that, if the Offeror acquires all of the Common
Shares sought under the Offer, the total amount of cash required to purchase
such Common Shares and to pay related fees and expenses will be
approximately $15.5 million. AOD has agreed to fund the Offeror in an amount
sufficient to satisfy such cash requirement by way of equity investment in
and/or loans to the Offeror.
AOD will satisfy such cash requirements from available working capital and
from funds to be advanced under a bank line of credit in a principal amount
equivalent to $19 million (the "Credit Facility") made available to AOD by
First National Bank of Commerce, a U.S. national bank headquartered in New
Orleans, Louisiana, and two other participating financial institutions. All
amounts advanced under the Credit Facility are secured by the accounts
receivable of AOD and its subsidiaries and bear interest at 8.25% per annum.
HOLDINGS OF SECURITIES OF HARD SUITS
The Offeror does not own, or exercise control or direction over, any
Common Shares or other securities of Hard Suits. No Common Shares or other
securities of Hard Suits are beneficially owned by, nor is control or
direction over any such securities exercised by, any of the directors or
senior officers of the Offeror, nor, to the knowledge of the directors and
senior officers of the Offeror, by any associate of a director or senior
officer of the Offeror, any person or company holding more than 10% of any
class of equity securities of the Offeror or any person acting jointly or in
concert with the Offeror, other than 450,000 Common Shares, warrants to
acquire 300,000 Common Shares exercisable at $1.83 per share and stock
options to acquire 150,000 Common Shares exercisable at $1.04 per share
owned or held by Rodney W. Stanley, a senior officer of AOD and a senior
officer and director of the Offeror. The Common Shares owned by Mr. Stanley
represent 4.9% of the total number of Common Shares outstanding and the
Common Shares, warrants and stock options owned or held by Mr. Stanley
would, if such options and warrants were fully exercised, represent 9.3% of
the then outstanding Common Shares (in each case, calculated on an undiluted
basis).
Mr. Rodney W. Stanley has advised the Offeror that he intends either to
exercise his options and warrants and tender the Common Shares issued
thereunder, together with the Common Shares already owned by him, to the
Offeror under the Offer, or surrender such options or warrants for
cancellation, in order to facilitate the successful completion of the Offer.
TRADING IN SECURITIES OF HARD SUITS
No securities of Hard Suits have been traded during the six month period
preceding the date of the Offer by the Offeror or by any of its directors or
senior officers or, to the knowledge of the directors and senior officers of
the Offeror, by any associate of any director or senior officer of the
Offeror, any person or company holding more than 10% of any class of equity
securities of the Offeror or any person acting jointly or in concert with
the Offeror.
COMMITMENTS TO ACQUIRE COMMON SHARES
There are no arrangements, agreements, commitments or understandings made
by the Offeror or by any of its directors or senior officers or, to the
knowledge of the directors and senior officers of the Offeror, any associate
of any director or senior officer of the Offeror, any person or company
holding more than 10% of any class of equity securities of the Offeror or
any person acting jointly or in concert with the Offeror, to acquire any
equity securities of Hard Suits, except for Common Shares pursuant to the
Offer.
ARRANGEMENTS, AGREEMENTS OR UNDERSTANDINGS
There are no arrangements, agreements, commitments or understandings made
or proposed to be made between the Offeror and any of the directors or
senior officers of Hard Suits, and no payments or other benefits are
proposed to be made or given by way of compensation for loss of office or as
to such directors or senior officers remaining in or retiring from office,
if the Offer is successful.
MATERIAL CHANGES AND OTHER INFORMATION
On July 4, 1996, Hard Suits announced that it had received confirmation
from the U.S. Navy for the design and supply of a new generation of deeper
NEWTSUIT(R)s, known as the NEWTSUIT(R) 2000, and that the initial order
would total approximately $1.7 million.
Except as described or referred to in the Offer and the Circular, the
Offeror has no information which indicates any material change in the
affairs of Hard Suits since the date of the last published financial
statements of Hard Suits. Except as described or referred to in the Offer
and the Circular, the Offeror has no knowledge of any other matter that has
not previously been generally disclosed but which would reasonably be
expected to affect the decision of Shareholders to accept or reject the
Offer.
EFFECT OF THE OFFER ON MARKET AND LISTINGS
The Common Shares are listed on the TSE and VSE. The purchase of Common
Shares pursuant to the Offer will reduce the number of Common Shares that
might otherwise trade publicly and may reduce the number of holders of
Common Shares and could adversely affect the liquidity and market value of
the remaining Common Shares. Depending upon the number of Common Shares
acquired under the Offer, the Common Shares may no longer meet minimum
listing requirements of the TSE or VSE and, accordingly, the Common Shares
could be delisted. It is the intention of the Offeror to acquire all of the
outstanding Common Shares and to seek the delisting of such shares from both
the TSE and VSE as soon as possible.
If the Offer is successful, the Offeror currently intends, to the extent
possible, to pursue such means as are permitted by applicable law to seek to
effect a Subsequent Transaction. See "Acquisition of Common Shares Not
Deposited" in this Circular. If a Subsequent Transaction is effected, the
Common Shares would be delisted from the TSE and VSE.
DEPOSITARY AND U.S. FORWARDING AGENT
The Offeror has engaged the Depositary and the U.S. Forwarding Agent to
act as depositary for the receipt of certificates representing the Common
Shares and related Letters of Transmittal and Notices of Guaranteed Delivery
deposited under the Offer and in connection with the payment for Common
Shares purchased by the Offeror pursuant to the Offer. The Depositary will
be responsible for giving certain notices, if required, and for making
payment for all Common Shares acquired by the Offeror under the Offer.
The Depositary and the U.S. Forwarding Agent will receive reasonable and
customary compensation from the Offeror for their services in connection
with the Offer, will be reimbursed for certain out-of-pocket expenses and
will be indemnified against certain liabilities and expenses in connection
therewith.
SOLICITATION OF ACCEPTANCES
The Offeror will solicit acceptances of the Offer, both in Canada and the
United States. The Offeror has no current intention to retain a dealer
manager or to form a soliciting dealer group to solicit such acceptances.
Except as set forth or referred to in the Circular, the Offeror does not
currently intend to pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Common Shares pursuant to the Offer.
Brokers, dealers, commercial banks and trust companies and other nominees
will, upon request, be reimbursed by the Offeror for customary clerical and
mailing expenses incurred by them in forwarding materials to their
customers.
No fee or commission will be payable by any holder of Common Shares who
transmits his, her or its Common Shares to the Depositary or the U.S.
Forwarding Agent, either directly or through any broker, dealer, bank, trust
company or other person.
AOD has retained the Consultant to provide certain services in connection
with the Offer, including soliciting acceptances of the Offer from
Shareholders in Canada, for which the Consultant will be paid certain fees.
See "Background to the Offer" in this Circular.
Corporate Investor Communications, Inc. has been retained by the Offeror
as Information Agent in the United States in connection with the Offer. The
Information Agent may contact holders of Common Shares by mail, telephone,
telex, telegraph and personal interview and may request brokers, dealers and
other nominee shareholders to forward material relating to the Offer to
beneficial owners. Customary compensation will be paid for all such services
in addition to reimbursement of reasonable out-of-pocket expenses.
The Offeror may also retain a person or corporation to act in a similar
capacity as the Information Agent in Canada, on similar terms and
conditions.
ACQUISITION OF COMMON SHARES NOT DEPOSITED
Subsequent Transaction
If the Offer is successful, the Offeror currently intends, to the extent
possible, to pursue such means as are permitted by applicable law, including
by way of an amalgamation, statutory arrangement or other transaction
involving the Offeror and/or an affiliate of the Offeror, Hard Suits and the
Shareholders, for the purpose of enabling the Offeror, or a wholly-owned
subsidiary of the Offeror, to acquire all of the Common Shares not deposited
under the Offer (a "Subsequent Transaction"). In order to effect a
Subsequent Transaction, the Offeror may seek to cause a special meeting of
Shareholders to be called to consider such Subsequent Transaction. The
Offeror intends that the Common Shares acquired by it pursuant to the Offer
will be counted as part of any minority shareholder approval required to be
obtained in connection with any such transaction. The timing and details of
any such transaction will necessarily depend on a variety of factors,
including the number of Common Shares acquired pursuant to the Offer. In the
event of any such Subsequent Transaction, the holders of Common Shares,
other than the Offeror and its affiliates, could, in accordance with
Canadian law, receive cash, preferred shares (which may be immediately
redeemable for cash), debt or any combination thereof. The consideration
offered to holders of Common Shares in a Subsequent Transaction could have a
higher or lower value than the value of the consideration offered for the
Common Shares pursuant to the Offer.
Any such Subsequent Transaction may also result in holders of Common
Shares having the right to dissent in respect thereof and demand payment of
the fair value of their Common Shares. The exercise of such right of
dissent, if certain procedures are complied with by the holder, could lead
to a judicial determination of fair value required to be paid to such
dissenting holder of Common Shares for its Common Shares. The fair value so
determined could be more or less than the amount paid per Common Share
pursuant to such transaction or pursuant to the Offer.
Each of the methods of acquiring the remaining outstanding Common Shares
described above would be a "going private transaction" within the meaning of
Policy 9.1 and the regulations to securities legislation in certain of the
provinces of Canada (collectively, the "Regulations"), if such Subsequent
Transaction would result in the interest of a holder of Common Shares (the
"affected securities") being terminated without the consent of the holder
and without the substitution therefor of an interest of equivalent value in
a participating security of Hard Suits, a successor to the business of Hard
Suits or a person who controls Hard Suits or, in the case of Policy 9.1, a
person who controls a successor to the business of Hard Suits. In certain
circumstances, the provisions of Policy 9.1 may also deem certain types of
Subsequent Transactions to be "related party transactions".
Policy 9.1 and the Regulations provide that, unless exempted, a
corporation proposing to carry out a going private transaction is required
to prepare a valuation of the affected securities (and any non-cash
consideration being offered therefor) and provide to the holders of the
affected securities a summary of such valuation. Policy 9.1 has similar
requirements for related party transactions. The Offeror intends to rely on
any exemption then available or to seek waivers pursuant to Policy 9.1
exempting the Offeror or Hard Suits, as appropriate, from the requirement to
prepare a valuation in connection with a subsequent going private (or
related party) transaction.
Policy 9.1 would also require that, in addition to any other required
security holder approval, in order to complete a going private (or related
party) transaction, the approval of either a simple or a two-thirds majority
(depending on the nature of the transaction) of the votes cast by "minority"
holders of the affected securities be obtained. In relation to the Offer and
any Subsequent Transaction which constitutes a going private (or related
party) transaction, the "minority" holders will be, unless an exemption is
available or discretionary relief is granted by the OSC, as required, all
holders of Common Shares other than the Offeror, its directors and senior
officers and any associate or affiliate of the Offeror and its directors and
senior officers and any person or company acting jointly or in concert with
the Offeror or any of its directors or senior officers in connection with
the Offer or the subsequent going private (or related party) transaction.
Policy 9.1 also provides that the Offeror may treat Common Shares acquired
pursuant to the Offer as "minority" shares and to vote them, or to consider
them voted, in favour of such going private (or related party) transaction
if the consideration per security in the going private (or related party)
transaction is at least equal in value to the consideration paid under the
Offer. The Offeror currently intends that the consideration offered under
any Subsequent Transaction proposed by it would be identical to the
consideration offered under the Offer.
Prior to the adoption of Policy 9.1, Canadian courts, in several
instances, granted preliminary injunctions prohibiting or restraining
transactions involving "squeeze-out" amalgamations or similar going private
transactions. The current trend in both legislation in Canada and in
Canadian jurisprudence is towards permitting going private transactions to
proceed subject to compliance with procedures designed to ensure substantive
fairness to the minority shareholders. The Offeror intends to comply with
all applicable requirements in the event that a going private (or related
party) transaction is proposed.
The details of any Subsequent Transaction, including the timing of its
implementation and the consideration to be received by the minority holders
of Common Shares, would necessarily be subject to a number of
considerations, including the number of Common Shares acquired pursuant to
the Offer. There can be no assurance that any such transaction will be
proposed or, if proposed, completed.
Shareholders should consult their legal advisors for a determination of
their legal rights with respect to any transaction which may constitute a
going private transaction or a related party transaction.
See Section 4 of the Offer, "Conditions of the Offer". See also "Canadian
Federal Income Tax Considerations" in the Circular for a discussion of the
tax consequences to Shareholders in the event of a Subsequent Transaction.
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Fraser & Beatty, counsel to the Offeror, the following
summary describes the principal consequences under the Income Tax Act
(Canada) (the "Tax Act") generally applicable to Shareholders who dispose of
their Common Shares pursuant to the Offer or pursuant to certain
transactions described under "Acquisition of Common Shares Not Deposited" in
the Circular.
This summary is based on the provisions of the Tax Act and the regulations
thereunder in force as at the date hereof, all specific proposals to amend
the Tax Act and regulations publicly announced by the Minister of Finance
(Canada) prior to the date hereof, the 1980 Canada-U.S. Income Tax Treaty,
amended to the date hereof (the "Treaty"), and counsel's understanding of
the current administrative practises published by Revenue Canada. No
assurances can be given that the proposals will be enacted in the form
proposed. This summary is not exhaustive of all possible Canadian federal
income tax considerations and, except where specifically indicated, does not
otherwise take into account or anticipate any changes in the law, whether by
way of judicial decision or government or legislative action, and does not
take into account provincial, territorial or foreign income tax
considerations.
This summary is not intended to be, nor should it be construed to be,
legal or tax advice to any particular Shareholder. Accordingly, Shareholders
should consult their own tax advisors for advice with respect to their
particular circumstances.
(a) Residents of Canada
The following portion of the summary is applicable to Shareholders who are
resident in Canada, who hold their Common Shares as capital property and who
deal at arm's length with the Offeror and Hard Suits for purposes of the Tax
Act (a "Resident Holder"). Common Shares will generally constitute capital
property to a Resident Holder unless the Resident Holder acquired such
Common Shares with an operating motivation of disposing of such shares at a
profit. Common Shares held by certain financial institutions, including a
bank, a trust company, a credit union, an insurance corporation, a
registered securities dealer or corporations controlled by one or more of
the foregoing, will generally not be held as capital property and will be
subject to special "mark-to-market" rules.
(i) The Offer
A Resident Holder whose Common Shares are taken up and paid for by the
Offeror pursuant to the Offer will realize a capital gain (or capital loss)
to the extent that the cash proceeds exceed (or are exceeded by) the
adjusted cost base to such Resident Holder of the Common Shares.
Three-quarters of any capital gain realized under the Offer must be
included in a Resident Holder's income as a taxable capital gain. A capital
gain may be subject to the alternative minimum tax rules contained in the
Tax Act. Capital gains included in income by a Canadian-controlled private
corporation (as defined in the Tax Act) will be subject to an additional
refundable tax of 6%. Three-quarters of any capital loss realized or
reported will generally be deductible to a Resident Holder as an allowable
capital loss against taxable capital gains realized in the year or in any
three years preceding the year or any year following the year to the extent
and under the circumstances described in the Tax Act. If the Resident Holder
is a corporation, any such capital loss may in certain circumstances be
reduced by the amount of any dividends which have been received on such
Common Shares. Analogous rules apply to a partnership or trust of which a
corporation, trust or partnership is a member or beneficiary.
(ii) Subsequent Transaction
As described under "Acquisition of Common Shares Not Deposited" in the
Circular, if the Offer is successful, it is currently the Offeror's
intention to pursue a Subsequent Transaction. The tax treatment of a
Subsequent Transaction to a Shareholder will depend upon the exact manner in
which the Subsequent Transaction is carried out. Shareholders should consult
their own tax advisers for advice with respect to the income tax
consequences to them of having their Common Shares acquired pursuant to a
Subsequent Transaction.
A Subsequent Transaction could be implemented by means of an amalgamation
of Hard Suits with the Offeror or one of its affiliates pursuant to which
Shareholders who have not tendered their Common Shares under the Offer would
have their Common Shares exchanged on the amalgamation for redeemable
preference shares of the amalgamated corporation ("Redeemable Shares") which
would then be immediately redeemed for cash. Such a holder would not realize
a capital gain or capital loss as a result of such exchange, and the cost of
the Redeemable Shares received would be the aggregate of the adjusted cost
base of the Common Shares to the holder immediately before the amalgamation.
Upon the redemption of Redeemable Shares, the holder thereof would be
deemed to have received a dividend (subject to the potential application of
subsection 55(2) of the Tax Act to holders of such shares that are
corporations as discussed below) equal to the amount by which the redemption
price of the Redeemable Shares exceeds their paid-up capital for purposes of
the Tax Act. The difference between the redemption price and the amount of
the deemed dividend would be treated as proceeds of disposition of such
shares for purposes of computing any capital gain or capital loss arising on
the disposition of such shares.
Subsection 55(2) of the Tax Act provides that where a corporate
Shareholder is deemed to receive a dividend under the circumstances
described above, all or part of the deemed dividend may be treated as
proceeds of disposition of the Redeemable Shares for the purpose of
computing the holder's capital gain on the disposition of such shares.
Accordingly, corporate Shareholders should consult their tax advisers for
specific advice with respect to the potential application of this provision.
Subject to the potential application of this provision, dividends deemed to
be received by a corporation as a result of the redemption of the Redeemable
Shares will be included in computing its income, but normally will also be
deductible in computing its taxable income unless the corporation is a
"specified financial institution" (as defined in the Tax Act). Dividends
deemed to be received on the Redeemable Shares by a specified financial
institution may not be deductible in computing its taxable income if the
term preferred share rules in the Tax Act are applicable. Corporations which
may be affected by such rules should consult their own tax advisers.
A Shareholder that is a "private corporation" or a "subject corporation"
(as such terms are defined in the Tax Act) may be liable to pay the 33 1/3%
refundable tax under Part IV of the Tax Act on dividends deemed to be
received on the Redeemable Shares to the extent that such dividends are
deductible in computing the corporation's taxable income.
In the case of a Shareholder who is an individual, dividends deemed to be
received as a result of the redemption of the Redeemable Shares will be
included in computing the Shareholder's income, and will be subject to the
gross-up and dividend tax credit rules normally applicable to taxable
dividends paid by a taxable Canadian corporation.
Under the current administrative practice of Revenue Canada, Shareholders
who exercise their right of dissent in respect of an amalgamation should be
considered to have disposed of their Common Shares for proceeds of
disposition equal to the amount paid by the amalgamated corporation to the
dissenting Shareholder therefor, other than interest awarded by the court.
Because of uncertainties under the relevant legislation as to whether such
amounts paid to a dissenting Shareholder will be treated entirely as
proceeds of disposition, or in part as the payment of a deemed dividend,
dissenting Shareholders should consult with their own tax advisers in this
regard.
If the Common Shares are currently held in an RRSP, RRIF or similar
deferred income plan, a delisting of the Common Shares from the TSE and VSE
would make such shares non-qualified investments for such plans, and a
penalty tax of 1% per month of the fair market value of such shares would
apply.
(b) Non-Residents of Canada
The following portion of the summary is applicable to Shareholders who are
neither residents nor deemed to be residents of Canada, who deal at arm's
length with the Offeror and Hard Suits, who hold their Common Shares as
capital property, who do not use or hold and are not deemed to use or hold
their Common Shares in carrying on a business in Canada and whose Common
Shares do not otherwise constitute taxable Canadian property (a "Non-
Resident Holder"). Common Shares will generally not constitute taxable
Canadian property to a Non-Resident Holder unless, at any time during the
five year period immediately preceding the disposition of Common Shares, not
less than 25% of the issued shares of any class or any series of any class
of the capital stock of Hard Suits was owned by the Non-Resident Holder, to
persons with whom such Non-Resident Holder did not deal at arm's length or
to any combination thereof. In any event, even if shares are taxable
Canadian property but the fair market value of such shares is not
represented more than 50% by Canadian real estate owned by Hard Suits, such
shares are generally not taxable in Canada under the Treaty.
No tax will be payable on any capital gain realized by a Non-Resident
Holder whose shares are taken up and paid for under the Offer.
If the Offeror pursues a Subsequent Transaction, the tax treatment of such
a transaction to a non-resident Shareholder will depend on the exact manner
in which the transaction is carried out and may be substantially the same as
or materially different than described above. A non-resident Shareholder may
realize a capital gain or a capital loss and/or a deemed dividend. Dividends
paid or deemed to be paid to a non-resident will be subject to Canadian
withholding tax at a rate of 25%. Such rate may be reduced under the
provisions of an applicable international tax treaty to which Canada is a
party. Non-resident Shareholders should consult their own tax advisers for
advice with respect to the potential income tax consequences to them of
having their Common Shares acquired pursuant to such a transaction.
The Canadian federal income tax considerations set forth above are for
general information only. Shareholders are urged to consult their own tax
advisers to determine the particular tax effects to them of the Offer,
including under provincial and foreign tax legislation.
AVAILABLE INFORMATION
The Common Shares are listed on the TSE and VSE and, as such, Hard Suits
is required to file reports and other information relating to its business,
financial affairs and other matters with the TSE and VSE pursuant to the
rules of such exchanges. Copies of such material filed with the TSE and VSE
should be available for inspection at such exchanges.
Hard Suits is also subject to the information reporting requirements of
the securities laws of certain provinces of Canada. In accordance therewith,
Hard Suits is also required to file reports and other information with
certain securities regulatory authorities in Canada relating to its
business, financial statements and other matters. Information as of
particular dates concerning Hard Suits' directors and officers, their
remuneration, stock options granted to them, the principal holders of Common
Shares, any material interests of such persons in transactions with Hard
Suits and certain other matters is required to be disclosed in management
information circulars distributed to Shareholders and filed with certain of
such securities regulatory authorities and with the TSE and VSE.
Pursuant to the provisions of the securities laws of various provinces of
Canada, the directors of Hard Suits are required, within 10 days after the
date of the Offer, to send a Directors' Circular to all Shareholders in
connection with the Offer, which circular must disclose any material changes
in the affairs of Hard Suits subsequent to the date of the most recent
published financial statements of Hard Suits, as well as certain other
information relating to Hard Suits, its directors and senior officers.
STATUTORY RIGHTS
Securities legislation in certain of the provinces and territories of
Canada provides holders of Common Shares with, in addition to any other
rights they may have at law, rights of rescission or to damages, or both, if
there is a misrepresentation in a circular or notice that is required to be
delivered to the holders of Common Shares. However, such rights must be
exercised within prescribed time limits. Holders of Common Shares should
refer to the applicable provisions of the securities legislation of their
province or territory for particulars of those rights or consult with a
lawyer.
CONSENT
TO: The Directors of AOD Acquisition Corp.
We hereby consent to the reference to our opinion contained under
"Summary" and "Canadian Federal Income Tax Considerations" in the Offering
Circular accompanying the Offer dated September 25, 1996 made by AOD
Acquisition Corp. to the holders of Common Shares of Hard Suits Inc.
Vancouver, Canada (Signed) FRASER & BEATTY
September 25, 1996
APPROVAL AND CERTIFICATE
The contents of this Offer and the accompanying Offering Circular have
been approved, and the sending, communication or delivery thereof to the
holders of common shares of Hard Suits Inc. has been authorized by, the
board of directors of AOD Acquisition Corp. The foregoing contains no untrue
statement of a material fact and does not omit to state a material fact that
is required to be stated or that is necessary to make a statement not
misleading in the light of the circumstances in which it was made. In
addition, the foregoing does not contain any misrepresentation likely to
affect the value or the market price of the common shares of Hard Suits Inc.
subject to the Offer.
DATE: September 25, 1996
(Signed) GEORGE C. YAX (Signed) CATHY M. GREEN
Chairman of the Board, Vice President- Finance
President and Chief Executive and Chief Financial
Officer Officer
On behalf of the Board of Directors
(Signed) RODNEY W. STANLEY (Signed) QUINN J. HEBERT
Director Director
NOTICE OF EXTENSION
To the OFFER TO PURCHASE AND TAKEOVER BID CIRCULAR dated September 25, 1996
in respect of the offer by AOD Acquisition Corp., a wholly-owned subsidiary
of American Oilfield Divers, Inc., for all of the issued and outstanding
Common Shares of Hard Suits Inc.
TO: THE HOLDERS OF COMMON SHARES
OF HARD SUITS INC.
This Notice of Extension extends the Expiry Time of the offer
(the "Offer") made by AOD Acquisition Corp. (the "Offeror"), a wholly-owned
subsidiary of American Oilfield Divers, Inc., to purchase all of the Common
Shares without par value ("Common Shares") of Hard Suits Inc. ("Hard Suits")
issued and outstanding at the Expiry Time at a price of $1.50 per Common
Share in cash, on terms and conditions set forth in the offer to purchase
(the "Offer to Purchase") and the accompanying circular (the "Circular")
dated September 25, 1996, to 12:01 a.m. (Vancouver time) on October 30,
1996.
This Notice of Extension also effects certain consequential
amendments to the Offer to Purchase and the Circular (together the "Offer
Documents"). Except as otherwise set forth in this Notice of Extension, the
terms and conditions previously set forth in the Offer Documents will
continue to be applicable in all respects, and this Notice of Extension
should be read in conjunction with the Offer Documents. Unless the context
requires otherwise, the capitalized terms not defined herein have the
meanings set forth in the Offer Documents. The term "Amended Offer" means
the Offer Documents, as amended by this Notice of Extension.
THE AMENDED OFFER TO PURCHASE
1. Extension of the Offer
The Offeror gives notice that it has varied the Offer by
extending the Expiry Time of the Offer from 12:01 a.m. (Vancouver time) on
October 17, 1996 to 12:01 a.m. (Vancouver time) on October 30, 1996.
Accordingly, the "Expiry Time" as defined on page 4 of the Offer Documents
is hereby amended to read as follows:
"Expiry Time" means 12:01 a.m. (Vancouver time) on October 30,
1996, or such later time and date or times and dates as may be
fixed by the Offeror from time to time pursuant to section 5 of
the Offer, "Extension and Variation of the Offer;"
2. Time for Acceptance
The Amended Offer is open for acceptance until 12:01 a.m.
(Vancouver time) on October 30, 1996, or until such later time and date to
which the Amended Offer may be further extended, unless withdrawn by the
Offeror.
3. Withdrawal of Deposited Common Shares
Section 8 of the Offer to Purchase is amended by deleting:
"at any time before 12:01 a.m. (Local time) on October 17, 1996"
which appears on lines 3 and 4 of paragraph 8 on page 14 and substituting
the following therefor:
"at any time before 12:01 a.m. (Vancouver time) on October 30,
1996".
The manner in which withdrawals of the Common Shares deposited
pursuant to the Offer to Purchase must be effected is set out in Section 8
of the Offer to Purchase, "Withdrawal of Deposited Common Shares".
4. Date by Which Common Shares Must be Taken Up by the Offeror
If all the conditions referred to under Section 4 of the Offer
to Purchase, "Conditions of the Offer", have been fulfilled or waived at the
Expiry Time (as defined in the Amended Offer), the Offeror will become
obligated to take up and pay for the Common Shares validly deposited and not
withdrawn pursuant to the Offer not later than ten days after the Expiry
Time and to make such payment for the Common Shares taken up as soon as
practicable, but in any event not later than three days, after taking up the
Common Shares. In accordance with applicable law, the Offeror will take up
and pay for Common Shares deposited under the Offer subsequent to the date
on which it first takes up Common Shares deposited under the Offer not later
than ten days after the deposit of such Common Shares.
5. Price Range and Trading Volume of the Common Shares Since the
Date of the Offer
The Common Shares are listed and posted for trading on the TSE.
The volume of trading and price ranges of the Common Shares on the TSE since
the date of the Offer are set forth in the following table:
Period (1996) High Low Volume
September 25 1.45 1.33 61,000
September 26 1.55 1.40 47,900
September 27 1.50 1.42 20,100
September 30 1.51 1.43 91,700
October 1 1.42 1.42 11,300
October 2 1.47 1.30 57,800
October 3 1.45 1.43 128,100
October 4 1.46 1.40 7,800
October 7 1.50 1.30 303,000
October 8 1.52 1.48 74,400
October 9 1.53 1.48 53,500
October 10 1.52 1.45 106,600
October 11 1.50 1.48 84,200
October 15 1.50 1.48 171,133
6. Material Changes in the Affairs of Hard Suits
On October 10, 1996 Hard Suits announced that it had reached
agreement in principle with Ventura Management Inc. And British Columbia
Mercantile Corporation, both of Vancouver, for the private placement of
$2,500,000 of subordinated redeemable debenture units. Each unit will
consist of one $50,000 debenture and warrants to purchase 70,000 Common
Shares, exercised at a price of $1.50 per share until March 31, 2000. The
transaction is subject to the approval of all relevant regulatory
authorities.
The Board of Directors of Hard Suits announced on October 10,
1996 that it had issued a supplement to its Directors' Circular dated
October 7, 1996. The supplement advises that the Board of Directors is
making no recommendation with respect to the acceptance or rejection of the
Offer. In reaching its decision, the Board of Directors of Hard Suits
considered a fairness opinion dated October 9, 1996 prepared by C.M. Oliver
& Company Limited which concluded that the consideration offered to the
holders of the Common Shares pursuant to the Offer was adequate from a
financial point of view.
7. Financial Advisor/Solicitation
On September 27, 1996 the Offeror retained 1991 Capital West
Partners to act as its financial advisor. Pursuant to this engagement, 1991
Capital West Partners will be paid a work fee of $25,000 per week and a
success fee equal to the lesser of the work fee paid and $100,000 together
with reimbursement of all reasonable out-of-pocket expenses. In addition,
the Offeror has agreed to pay to registered brokers a solicitation fee equal
to $0.04 for each Common Share tendered under the Offer, subject to a
minimum payment of $50 and a maximum payment of $1,500 to each beneficial
owner of Common Shares.
The financial advisory agreement between the Offeror and J.
Proust & Associates, Inc. has been amended to provide that J. Proust &
Associates Inc. will be paid a success fee of $200,000, if any Common Shares
are taken up under the Offer, and that the success fee will not be based
upon the number of Common Shares tendered pursuant to the Offer. The
remaining terms of the agreement with J. Proust & Associates Inc. remain
unchanged.
APPROVAL AND CERTIFICATE
The contents of the Offer and accompanying Circular, as amended
by this Notice of Extension (the "Amended Offer"), have been approved, and
the sending, communication or delivery thereof to the Shareholders of Hard
Suits Inc. has been authorized by, the Board of Directors of the Offeror.
The Amended Offer contains no untrue statement of a material fact and does
not omit to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in the light of the
circumstances in which it was made. In addition, the Amended Offer does not
contain any misrepresentation likely to affect the value or the market price
of the common shares of Hard Suits Inc. which are the subject of the Offer.
DATE: October 16, 1996
(Signed) GEORGE C. YAX (Signed) CATHY M. GREEN
Chairman of the Board, President Vice President-Finance and
and Chief Executive Officer Chief Financial Officer
On behalf of the Board of Directors
(Signed) RODNEY W. STANLEY (Signed) QUINN J. HEBERT
Director Director
NOTICE OF VARIATION
To the OFFER TO PURCHASE AND TAKEOVER BID CIRCULAR dated September 25, 1996
in respect of the offer by AOD Acquisition Corp., a wholly-owned subsidiary
of American Oilfield Divers, Inc., for all of the issued and outstanding
Common Shares of Hard Suits Inc.
TO: THE HOLDERS OF COMMON SHARES
OF HARD SUITS INC.
This Notice of Variation amends the offer (the "Offer") made by
AOD Acquisition Corp. (the "Offeror"), a wholly-owned subsidiary of American
Oilfield Divers, Inc., to purchase all of the common shares without par
value ("Common Shares") of Hard Suits Inc. ("Hard Suits") issued and
outstanding at the Expiry Time, on the terms and conditions set forth in the
offer to purchase (the "Offer to Purchase") and the accompanying circular
(the "Circular") dated September 25, 1996, as amended by the Notice of
Extension dated October 16, 1996 (the "Notice of Extension"), by increasing
the consideration offered for each Common Share from $1.50 to $1.65, payable
in cash.
This Notice of Variation also effects certain consequential
amendments to the Offer to Purchase and the Circular, as amended by the
Notice of Extension (together the "Offer Documents"). Except as otherwise
set forth in this Notice of Variation, the terms and conditions previously
set forth in the Offer Documents will continue to be applicable in all
respects, and this Notice of Variation should be read in conjunction with
the Offer Documents. Unless the context requires otherwise, the capitalized
terms not defined herein have the meanings set forth in the Offer Documents.
The term "Amended Offer" means the Offer Documents, as amended by this
Notice of Variation.
1. Variation of the Offer
The Offeror gives notice that it has varied the Offer by
increasing the consideration offered for each Common Share under the Offer
from $1.50 to $1.65, payable in cash.
The Offer, as varied, is at a 55% premium to the closing price
of the Common Shares on The Toronto Stock Exchange (the "TSE") on September
24, 1996, the trading day immediately prior to the announcement of the
Offer. The closing price of the Common Shares on the TSE on September 24,
1996 was $1.06.
2. Background to Amendment of the Offer
(a) Hard Suits' Response to the Offer
As disclosed in the Notice of Extension, on October 10, 1996 the
board of directors of Hard Suits issued a supplement to its
director's circular which advised that the board is making no
recommendation with respect to the acceptance or rejection of
the Offer. The supplemental directors' circular disclosed a
fairness opinion dated October 9, 1996, prepared by C.M. Oliver
& Company Limited, which concluded that the consideration
offered to the holders of Common Shares pursuant to the Offer
was adequate from a financial point of view.
(b) Debt Financing Proposed by Hard Suits
On October 10, 1996 Hard Suits also announced its intention to
enter into a $2.5 million financing arrangement with British
Columbia Mercantile Corp. and Ventura Management Inc. (the "Debt
Financing"), on terms which, in the opinion of the Offeror, are
not in the best interests of either Hard Suits or its
shareholders. The proposed Debt Financing would involve the
issuance of debentures and warrants on terms which include,
among other things, an average interest rate of 14% per annum, a
redemption premium which could be as high as 100% and the
issuance of warrants which, when exercised, would represent more
than 27% of the outstanding Common Shares.
(c) Hearing Before the British Columbia Securities Commission
It is the Offeror's position that the Debt Financing would
deprive Hard Suits' shareholders of the opportunity to sell
their Common Shares under the Offer by making it impossible to
fulfill two of the conditions stipulated in the Offer.
Accordingly, the Offeror has made an application to the British
Columbia Securities Commission (the "Commission") for, among
other things, an order cease trading the debentures and warrants
proposed to be issued by Hard Suits in connection with the Debt
Financing.
On October 17, 1996 the Commission issued a notice of hearing
under sections 96 and 144 of the Securities Act of British
Columbia (the "Act") to consider:
(i) the allegations of the Offeror that Hard Suits has made
misleading and improper disclosure in connection with the
Offer and the Offeror's request for orders under
Section 96(1) of the Act relating to such disclosure;
(ii) the Offeror's request for orders under Section 144 of the
Act cease trading the debentures and warrants proposed to
be issued by Hard Suits in connection with the Debt
Financing; and
(iii) such other matters as may properly come before the
Commission.
This hearing is scheduled for 10:00 a.m. on Friday, October 18,
1996. As of the time of this Notice of Variation, the
Commission has not announced its decision with respect to the
foregoing. However, the Offeror understands that Hard Suits has
been advised by the TSE that certain of the terms of the Debt
Financing are not acceptable, and, accordingly, that such
financing, as originally structured, will not proceed.
(d) Offer to Provide Interim Financing
Since making the Offer, the Offeror has had discussions with
Hard Suits and Mr. Nuytten relating, among other things, to the
deposit of Mr. Nuytten's Common Shares under the Offer and the
interim financing of Hard Suits. As of the date of this Notice
of Variation, no undertakings, arrangements, agreements or
commitments have been concluded or entered into with either
Mr. Nuytten or Hard Suits with respect to any matters relating
to the Offer.
On October 17, 1996 the solicitors for Hard Suits and
Mr. Nuytten requested AOD to make an offer to provide interim
financing to Hard Suits. In response to this request, AOD has
advised Hard Suits that it is prepared to advance the sum of
$500,000, which is the amount which AOD understands to be
initially required by Hard Suits to satisfy its immediate
working capital requirements. AOD has offered to provide this
financing at an interest rate equal to AOD's cost of funds
(which is currently about 8.5% per annum), on the condition
that:
(i) Hard Suits provides AOD with security which is customary
for such loans, including a first charge over all of Hard
Suits' assets (subject to prior existing security in
favour of Western Economic Diversification Fund);
(ii) Mr. Nuytten resigns as a director and officer of Hard
Suits and a nominee of AOD is appointed to the board in
his place; and
(iii) board approval is required for any disbursement of funds.
If the Offer is not successful, AOD's nominee would resign from
the board and Hard Suits would have 30 days to repay the loan
and all accrued and unpaid interest thereon.
(e) Purpose of Amendment of the Offer
The Offeror believes that, by offering to provide interim
financing to Hard Suits on commercially reasonable terms and
increasing the consideration offered for Common Shares under the
Offer, it has taken reasonable steps in order to satisfy the
concerns of the board of directors of Hard Suits with respect to
the initial Offer. The Offeror is of the opinion that the
Offer, as varied, provides the shareholders of Hard Suits with
an excellent opportunity to realize a return on their
investment, at a price which is now more than adequate from a
financial point of view, particularly in light of the opinion of
C. M. Oliver & Company Limited that the initial Offer was
financially adequate.
3. Time for Acceptance
As disclosed in the Notice of Extension, the Amended Offer is
open for acceptance until 12:01 a.m. (Vancouver time) on October 30, 1996,
or until such later time and date to which the Amended Offer may be further
extended, unless withdrawn by the Offeror.
4. Manner of Acceptance
The varied Offer may be accepted in the manner set out in
Section 3 of the Offer to Purchase, "Manner of Acceptance".
5. Withdrawal of Deposited Common Shares
As disclosed in the Offer Documents, any Common Shares deposited
under the Offer may be withdrawn by or on behalf of the depositing
Shareholder at the place of deposit at any time before 12:01 a.m. (Vancouver
time) on October 30, 1996.
The manner in which withdrawals of the Common Shares deposited
pursuant to the Offer to Purchase must be effected are set out in Section 8
of the Offer to Purchase, "Withdrawal of Deposited Common Shares", as
amended by the Notice of Extension.
6. Date by Which Common Shares Must be Taken up by the Offeror
If all of the conditions referred to under Section 4 of the
Offer to Purchase, "Conditions of the Offer", have been fulfilled or waived,
the Offeror will become obligated to take up and pay for the Common Shares
validly deposited and not withdrawn pursuant to the Offer not later than 10
days after the Expiry Time and to make such payment for the Common Shares
taken up as soon as practicable, but in any event not later than three days,
after taking up the Common Shares. In accordance with applicable law, the
Offeror will take up and pay for Common Shares deposited under the Offer
subsequent to the date on which it first takes up Common Shares deposited
under the Offer not later than 10 days after the deposit of such Common
Shares.
7. Price Range and Trading Volume of the Common Shares Since the
Date of the Offer
The Common Shares are listed and posted for trading on the TSE.
The volume of trading and price ranges of the Common Shares on the TSE since
the date of the Offer are set forth in the following table:
Period (1996) High Low Volume
September 25.................... $1.45 $1.33 61,000
September 26.................... 1.55 1.40 47,900
September 27.................... 1.50 1.42 20,100
September 30.................... 1.51 1.43 91,700
October 1....................... 1.42 1.42 11,300
October 2....................... 1.47 1.30 57,800
October 3....................... 1.45 1.43 128,100
October 4....................... 1.46 1.40 7,800
October 7....................... 1.50 1.30 303,000
October 8....................... 1.52 1.48 74,400
October 9....................... 1.53 1.48 53,500
October 10...................... 1.52 1.45 106,600
October 11...................... 1.50 1.48 84,200
October 15...................... 1.50 1.48 171,133
October 16...................... 1.49 1.40 101,900
October 17...................... 1.49 1.40 75,033
8. Source of Funds
The Offeror estimates that, if it acquires all of the Common
Shares sought under the Amended Offer, the total amount of cash required to
purchase such Common Shares and to pay related fees and expenses will be
approximately $17,100,000. AOD has agreed to fund the Offeror in an amount
sufficient to satisfy such cash requirement by way of equity investment in
and/or loans to the Offeror. AOD will satisfy such cash requirements from
the sources disclosed under "Source of Funds" in the Circular.
9. Statutory Rights
Securities legislation in certain of the provinces and
territories of Canada provides holders of Common Shares with, in addition to
any other rights they may have at law, rights of rescission or to damages,
or both, if there is a misrepresentation in a circular or notice that is
required to be delivered to the holders of Common Shares. However, such
rights must be exercised within prescribed time limits. Holders of Common
Shares should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights
or consult with a lawyer.
APPROVAL AND CERTIFICATE
The contents of the Offer and accompanying Circular, as amended
by the Notice of Extension dated October 16, 1996 and by this Notice of
Variation (collectively, the "Amended Offer"), have been approved, and the
sending, communication or delivery thereof to the Shareholders of Hard Suits
Inc. has been authorized, by the Board of Directors of the Offeror. The
Amended Offer contains no untrue statement of a material fact and does not
omit to state a material fact that is required to be stated or that is
necessary to make a statement not misleading in the light of the
circumstances in which it was made. In addition, the Amended Offer does not
contain any misrepresentation likely to affect the value or the market price
of the common shares of Hard Suits Inc. which are the subject of the Offer.
DATE: October 18, 1996
(Signed) GEORGE C. YAX (Signed) CATHY M. GREEN
Chairman of the Board, Vice President-Finance and
President and Chief Executive Officer Chief Financial Officer
On behalf of the Board of Directors
(Signed) RODNEY W. STANLEY (Signed) QUINN J. HEBERT
Director Director
NOTICE OF EXTENSION AND CHANGE
To the OFFER TO PURCHASE AND TAKEOVER BID CIRCULAR dated September 25, 1996
in respect of the offer by AOD Acquisition Corp., a wholly-owned subsidiary
of American Oilfield Divers, Inc., for all of the issued and outstanding
Common Shares of Hard Suits Inc.
TO: THE HOLDERS OF COMMON SHARES
OF HARD SUITS INC.
This Notice of Extension and Change extends the offer (the
"Offer") made by AOD Acquisition Corp. (the "Offeror"), a wholly-owned
subsidiary of American Oilfield Divers, Inc. ("AOD"), to purchase all of the
common shares without par value ("Common Shares") of Hard Suits Inc. ("Hard
Suits") issued and outstanding at the Expiry Time, on the terms and
conditions set forth in the offer to purchase (the "Offer to Purchase") and
the accompanying circular (the "Circular") dated September 25, 1996, as
amended by the Notice of Extension dated October 16, 1996 (the "Notice of
Extension") and the Notice of Variation dated October 18, 1996 (the "Notice
of Variation") to 12:01 a.m. (Vancouver time) on November 8, 1996 and
discloses the entering into of a Lock-Up Agreement (the "Lock-Up Agreement")
dated October 28, 1996 among Rene T. Nuytten ("Nuytten"), the Offeror and
AOD with respect to Nuytten's agreement to tender his shares to the Offeror
and the entering into of an Acquisition Agreement (the "Acquisition
Agreement") dated October 28, 1996 among Nuytten, Edward G. Hauptmann, David
S. Porter, Hard Suits, the Offeror and AOD with respect to certain
transitional provisions regarding the acquisition by the Offeror of the
Common Shares of Hard Suits.
This Notice of Extension and Change also effects certain
consequential amendments to the Offer to Purchase and the Circular, as
amended by the Notice of Extension and the Notice of Variation (together the
"Offer Documents"). Except as otherwise set forth in this Notice of
Extension and Change, the terms and conditions previously set forth in the
Offer Documents will continue to be applicable in all respects, and this
Notice of Extension and Change should be read in conjunction with the Offer
Documents. Unless the context requires otherwise, the capitalized terms not
defined herein have the meanings set forth in the Offer Documents. The term
"Amended Offer" means the Offer Documents, as amended by this Notice of
Extension and Change.
1. Extension of the Offer
The Offeror gives notice that it has varied the Offer by
extending the Expiry Time of the Offer from 12:01 a.m. (Vancouver time) on
October 30, 1996 to 12:01 a.m. (Vancouver time) on November 8, 1996.
Accordingly, the "Expiry Time" as defined on page 4 of the Offer Documents
is hereby amended to read as follows:
""Expiry Time" means 12:01 a.m. (Vancouver time) on
November 8, 1996, or such later time and date or
times and dates as may be fixed by the Offeror from
time to time pursuant to SectionE5 of the Offer,
"Extension and Variation of the Offer;"
2. Time for Acceptance
The Amended Offer is open for acceptance until 12:01 a.m.
(Vancouver time) on November 8, 1996, or until such later time and date to
which the Amended Offer may be further extended, unless withdrawn by the
Offeror.
3. Manner of Acceptance
The Amended Offer may be accepted in the manner set out in
Section 3 of the Offer to Purchase, "Manner of Acceptance".
4. Withdrawal of Deposited Common Shares
As disclosed in the Offer Documents, any Common Shares deposited
under the Offer may be withdrawn by or on behalf of the depositing
Shareholder at the place of deposit at any time before 12:01 a.m. (Vancouver
time) on November 8, 1996.
The manner in which withdrawals of the Common Shares deposited
pursuant to the Offer to Purchase must be effected are set out in Section 8
of the Offer to Purchase, "Withdrawal of Deposited Common Shares", as
amended by the Notice of Extension.
5. Date by Which Common Shares Must be Taken up by the Offeror
If all of the conditions referred to under Section 4 of the
Offer to Purchase, "Conditions of the Offer", have been fulfilled or waived,
the Offeror will become obligated to take up and pay for the Common Shares
validly deposited and not withdrawn pursuant to the Offer not later than 10
days after the Expiry Time and to make such payment for the Common Shares
taken up as soon as practicable, but in any event not later than three days,
after taking up the Common Shares. In accordance with applicable law, the
Offeror will take up and pay for Common Shares deposited under the Offer
subsequent to the date on which it first takes up Common Shares deposited
under the Offer not later than 10 days after the deposit of such Common
Shares.
6. Arrangements with Hard Suits
On October 28, 1996, the Offeror entered into the Lock-Up
Agreement with Nuytten and AOD. Under the Lock-Up Agreement, Nuytten has
agreed to irrevocably deposit not less than 1,500,000 Common Shares, being
all of the shares then beneficially owned by Nuytten, pursuant to the
Amended Offer. Nuytten has further agreed to deposit any additional Common
Shares acquired by him upon exercise of any outstanding options or warrants.
AOD has agreed to advance to Price Waterhouse, AOD's auditors,
Cdn.$1,000,000. These funds will be used to repay bona fide liabilities of
Hard Suits, including certain liabilities owed to Nuytten and certain fees
payable in connection with the termination of the financing which was to
have been provided by British Columbia Mercantile Corporation and Ventura
Management Inc. Nuytten has also agreed to surrender for cancellation all
of the Class A Performance shares of Hard Suits owned by him.
On October 28, 1996, the Offeror entered into the Acquisition
Agreement with Nuytten, Ed Hauptmann, David Porter, Hard Suits and AOD.
Under the Acquisition Agreement, upon Nuytten tendering his Common Shares
into the Amended Offer, Mr. Nuytten and Mr. Hauptmann will resign as
directors and officers of Hard Suits and its corporate subsidiaries. Rod
Stanley, the Vice-President International Operations of AOD and Doug Irwin
of Vancouver, British Columbia will be appointed directors of Hard Suits.
Concurrently, AOD will fund or arrange for Cdn.$500,000 in working capital
financing for Hard Suits. The Cdn.$500,000 working capital financing and
the Cdn.$1,000,000 financing described above will bear interest at 8.5% per
annum, calculated and payable monthly at the end of each month and will be
secured by a general security agreement in a form satisfactory to AOD acting
reasonably, constituting a first charge on all the assets of Hard Suits,
subject only to a prior charge in favour of Federal Business Development
Bank in an amount of not more than Cdn.$40,000.
7. Price Range and Trading Volume of the Common Shares Since the
Date of the Offer
The Common Shares are listed and posted for trading on the TSE.
The volume of trading and price ranges of the Common Shares on the TSE since
the date of the Offer are set forth in the following table:
Period (1996) High Low Volume
September 25.................... $1.45 $1.33 61,000
September 26.................... 1.55 1.40 47,900
September 27.................... 1.50 1.42 20,100
September 30.................... 1.51 1.43 91,700
October 1....................... 1.42 1.42 11,300
October 2....................... 1.47 1.30 57,800
October 3....................... 1.45 1.43 128,100
October 4....................... 1.46 1.40 7,800
October 7....................... 1.50 1.30 303,000
October 8....................... 1.52 1.48 74,400
October 9....................... 1.53 1.48 53,500
October 10...................... 1.52 1.45 106,600
October 11...................... 1.50 1.48 84,200
October 15...................... 1.50 1.48 171,133
October 16...................... 1.49 1.40 101,900
October 17...................... 1.49 1.40 75,033
October 18...................... 1.60 1.59 165,100
October 21...................... 1.60 1.55 35,300
October 22...................... 1.60 1.55 33,600
October 23...................... 1.60 1.56 9,099
October 24...................... 1.59 1.57 6,000
October 25...................... 1.60 1.50 45,000
October 28...................... 1.62 1.59 49,700
8. Statutory Rights
Securities legislation in certain of the provinces and
territories of Canada provides holders of Common Shares with, in addition to
any other rights they may have at law, rights of rescission or to damages,
or both, if there is a misrepresentation in a circular or notice that is
required to be delivered to the holders of Common Shares. However, such
rights must be exercised within prescribed time limits. Holders of Common
Shares should refer to the applicable provisions of the securities
legislation of their province or territory for particulars of those rights
or consult with a lawyer.
APPROVAL AND CERTIFICATE
The contents of the Offer and accompanying Circular, as amended
by the Notice of Extension dated October 16, 1996, by the Notice of
Variation dated October 18, 1996 and by this Notice of Extension and Change
(collectively, the "Amended Offer"), have been approved, and the sending,
communication or delivery thereof to the Shareholders of Hard Suits Inc. has
been authorized, by the Board of Directors of the Offeror. The Amended
Offer contains no untrue statement of a material fact and does not omit to
state a material fact that is required to be stated or that is necessary to
make a statement not misleading in the light of the circumstances in which
it was made. In addition, the Amended Offer does not contain any
misrepresentation likely to affect the value or the market price of the
common shares of Hard Suits Inc. which are the subject of the Offer.
DATE: October 29, 1996
(Signed) GEORGE C. YAX (Signed) CATHY M. GREEN
Chairman of the Board, Vice President-Finance and
President and Chief Executive Officer Chief Financial Officer
On behalf of the Board of Directors
(Signed) RODNEY W. STANLEY (Signed) QUINN J. HEBERT
Director Director
