tornado global hydrovacs ltd. annual general and … · tornado global hydrovacs ltd. notice of...
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TORNADO GLOBAL HYDROVACS LTD.
ANNUAL GENERAL AND SPECIAL MEETING
OF SHAREHOLDERS
NOTICE OF MEETING AND
MANAGEMENT PROXY AND INFORMATION CIRCULAR
TO BE HELD ON:
MONDAY, AUGUST 28, 2017
TO BE HELD AT:
The Glencoe Club
Gallery Room
636 29 Ave S.W.
Calgary, Alberta T2S 0P1
2:00 p.m.
THIS NOTICE OF MEETING AND MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN
CONNECTION WITH THE SOLICITATION BY THE MANAGEMENT OF TORNADO GLOBAL
HYDROVACS LTD. OF PROXIES TO BE VOTED AT THE ANNUAL GENERAL AND SPECIAL
MEETING OF SHAREHOLDERS OF TORNADO GLOBAL HYDROVACS LTD. TO BE HELD ON
AUGUST 28, 2017.
Dated: July 26, 2017
TORNADO GLOBAL HYDROVACS LTD.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual and special meeting (the “Meeting”) of holders (“Shareholders”)
of common shares (“Common Shares”) of Tornado Global Hydrovacs Ltd. (the “Corporation”) will be held at 2:00 p.m.
(Calgary time) on Monday, August 28, 2017, at The Glencoe Club, Gallery Room, 636 29 Ave SW, Calgary, Alberta,
Canada for the following purposes:
1. to receive the consolidated financial statements of the Corporation for the financial year ended December 31, 2016
together with the auditors’ report thereon;
2. to elect directors of the Corporation;
3. to appoint auditors of the Corporation;
4. to consider an ordinary resolution to re-approve the 10% rolling stock option plan of the Corporation; and
5. to transact such other business as may properly come before the Meeting or any adjournment thereof.
The accompanying management information circular (the “Information Circular”) provides detailed information
with respect to the matters to be considered at the Meeting and forms part of this notice.
If you are a registered Shareholder of the Corporation and are unable to attend the Meeting or any adjournment
thereof in person, please complete, sign and mail the enclosed form of proxy to AST Trust Company (Canada) formerly
known as CST Trust Company (“AST”), the registrar and transfer agent for the Corporation, at P.O. Box 721, Agincourt,
Ontario, or by facsimile at 1-866-781-3111 (North America) or (416) 368-5202 (International), or through the website of
AST at www.cstvotemyproxy.com at least 48 hours (excluding Saturdays, Sundays and statutory holidays in Alberta) prior
to the Meeting or, in the case of any adjournment or postponement of the meeting, not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time of the adjourned or postponed meeting.
If you are a beneficial Shareholder of the Corporation and receive these materials through your broker or through
another intermediary, please complete and return the form of proxy or voting instruction form you are provided by your
broker or other intermediary in accordance with the instructions provided therein. Without specific instructions, brokers
and other intermediaries are prohibited from voting the shares of their clients.
Only registered Shareholders as at July 21, 2017 and their duly appointed proxyholders will be entitled to vote at
the Meeting. Your vote is important, please ensure you follow the instructions applicable to you so that your vote is counted
at the Meeting.
If you are not sure if you are a registered Shareholder or a beneficial Shareholder, please contact AST at 1-800-387-
0825 (toll free in North America) or 1-416-682-3860 (outside North America).
Additional information on attending and voting at the Meeting is included in the Information Circular.
By order of the Board of Directors of Tornado Global Hydrovacs Ltd.
(signed) “Bill Rollins”
Bill Rollins
Chief Executive Officer
July 26, 2017
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TABLE OF CONTENTS
PART I – GENERAL PROXY MATTERS .................................................................................................................................. 1 Purpose of Solicitation ................................................................................................................................................... 1 Appointment and Revocation of Proxy ......................................................................................................................... 1 Voting of Proxies ........................................................................................................................................................... 2 Voting of Shares ............................................................................................................................................................ 3 Advice to Beneficial Holders ......................................................................................................................................... 3 Voting Securities and Principal Holders of Voting Securities ....................................................................................... 4
Common Shares ..................................................................................................................................................... 4 Principal Shareholders .......................................................................................................................................... 4
PART II – BUSINESS OF THE MEETING ................................................................................................................................ 5 Receipt of Financial Statements and Auditors’ Report .................................................................................................. 5 Election of Directors ...................................................................................................................................................... 5 Appointment of Auditors ............................................................................................................................................... 7 Re-Approval of Stock Option Plan ................................................................................................................................ 7 Other Business ............................................................................................................................................................... 8 Interest of Certain Persons in Matters to be Acted Upon .............................................................................................. 8 PART III – STATEMENT OF EXECUTIVE COMPENSATION ............................................................................................ 8 Compensation Discussion and Analysis ........................................................................................................................ 8 Summary Compensation Table .................................................................................................................................... 12 PART IV – ADDITIONAL DISCLOSURE................................................................................................................................ 14 Securities Authorized for Issuance under Equity Compensation Plans ....................................................................... 14 Indebtedness of Directors and Officers ....................................................................................................................... 14 Interest of Informed Persons in Material Transactions ................................................................................................ 14 Cease Trade Orders, Bankruptcies, Penalties and Sanctions ....................................................................................... 15 Management Contracts ................................................................................................................................................ 16 Additional Information ................................................................................................................................................ 16 PART V – CORPORATE GOVERNANCE ............................................................................................................................... 16 PART VI - AUDIT COMMITTEE ............................................................................................................................................. 18 SCHEDULE “A” – STOCK OPTION PLAN ............................................................................................................................. A-1
SCHEDULE “B” – AUDIT COMMITTEE CHARTER ............................................................................................................. B-1
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MANAGEMENT INFORMATION CIRCULAR
July 26, 2017
PART I – GENERAL PROXY MATTERS
Purpose of Solicitation
The information contained in this management information circular (the “Information
Circular”) is furnished in connection with the solicitation of proxies by or on behalf of management
of Tornado Global Hydrovacs Ltd. (the “Corporation”), for use at the annual and special meeting
(the “Meeting”) of the holders (“Shareholders”) of common shares (“Common Shares”) of the
Corporation to be held at 2:00 p.m. (Calgary time) on Monday, August 28, 2017, at The Glencoe
Club, Gallery Room, 636 29 Ave SW, Calgary, Alberta, Canada for the purposes set out in the
accompanying Notice of Annual and Special Meeting of Shareholders (the “Notice”).
As a Shareholder you are cordially invited to be present at the Meeting. To ensure that you will be
represented at the Meeting in the event that you are a registered Shareholder and unable to attend
personally, you are requested to date, complete and sign the accompanying form of proxy enclosed herewith
and return it to AST Trust Company (Canada) formerly known as CST Trust Company (“AST”), the
registrar and transfer agent for the Corporation, at P.O. Box 721, Agincourt, Ontario, or by facsimile at 1-
866-781-3111 (North America) or (416) 368-5202 (International), or through the website of =AST at
www.cstvotemyproxy.com at least 48 hours (excluding Saturdays, Sundays and statutory holidays in
Alberta) prior to the Meeting or, in the case of any adjournment or postponement of the meeting, not less
than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or postponed
meeting. If you are a beneficial Shareholder and receive these materials through your broker or through
another intermediary, please complete and return the form of proxy or voting instruction form that you are
provided by them in accordance with the instructions provided therein. Except where otherwise stated,
reference to a Shareholder herein is reference to a registered Shareholder.
The solicitation of proxies is intended to be primarily by mail but may also be made by telephone,
facsimile or other electronic means of communication or in person by directors, officers, employees or
consultants of the Corporation. The cost of such solicitation will be borne by the Corporation.
Except where otherwise stated, the information contained herein is given as of July 26, 2017.
Appointment and Revocation of Proxy
A Shareholder has the right to designate a person (who need not be a Shareholder) other than
Bill Rollins, Chief Executive Officer or, failing him, Al Robertson, Chief Financial Officer, who are
the management designees, to attend and act for such Shareholder at the Meeting. Such right may be
exercised by inserting in the blank space provided the name of the person to be designated and deleting
therefrom the names of the management designees or by completing another instrument of proxy and, in
either case, delivering the resulting instrument of proxy to the Secretary of the Meeting prior to any matter
upon which a vote has not already been cast pursuant to the authority conferred by the instrument of proxy.
A form of proxy will not be valid and will not be acted upon or voted unless it is duly completed
and delivered to the attention of the Secretary of the Corporation, or AST, the registrar and transfer agent
for the Corporation, at P.O. Box 721, Agincourt, Ontario, or by facsimile at 1-866-781-3111 (North
America) or (416) 368-5202 (International), or through the website of AST Trust Company at
www.cstvotemyproxy.com at least 48 hours (excluding Saturdays, Sundays and statutory holidays in
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Alberta) prior to the Meeting or, in the case of any adjournment or postponement of the meeting, not less
than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or postponed
meeting. The instrument appointing a proxy must be in writing and must be executed by the Shareholder
or the Shareholder’s attorney authorized in writing or, if the Shareholder is a corporation, under its corporate
seal or by an officer or attorney thereof duly authorized.
A record date for the determination of Shareholders entitled to receive notice of the Meeting has
been set as July 21, 2017 (the “Record Date”). Only holders of Common Shares of record as at that date
are entitled to receive notice of and to vote at the Meeting unless after the Record Date, such holder transfers
any Common Shares and the transferee of such shares produces properly endorsed share certificates or
otherwise establishes ownership of these Common Shares and demands, not later than ten (10) days before
the Meeting, that his name be included in the list of Shareholders, entitled to vote at the Meeting.
In addition to any other manner permitted by law, a Shareholder who has given a proxy may revoke
it as to any matter upon which a vote has not already been cast by completing an instrument in writing
executed by the Shareholder or his attorney authorized in writing, or if the Shareholder is a corporation,
under its corporate seal by an officer or attorney thereof duly authorized, and by depositing such instrument
of revocation either with the Secretary of the Corporation, or AST, the registrar and transfer agent for the
Corporation, at P.O. Box 721, Agincourt, Ontario, at any time up to and including the last business day
preceding the day of the Meeting, or with the Chairman of the Meeting on the date of the Meeting
immediately prior to the commencement thereof or any adjournment(s) thereof. In addition, a proxy may
be revoked by the Shareholder personally attending at the Meeting and voting his Common Shares.
Voting of Proxies
All the Corporation’s Common Shares represented at the Meeting by properly executed proxies
will be voted by the persons named in such proxy as proxy holder on any poll that may be called for and
where a choice with respect to any matter to be acted upon has been specified in the instrument of proxy,
the shares represented by the proxy will be voted in accordance with such specification. In the absence of
any such specifications, the management designees, if named as proxy, will vote in favour of ALL the
matters set out thereon.
The enclosed instrument of proxy confers discretionary authority upon the management
designees, or other persons named as proxy, with respect to any amendment to or variation of the
matters identified in the Notice and any other matters which may properly come before the Meeting.
At the date of this Information Circular, the management of the Corporation is not aware of any
such amendments, variations or other matters. If other matters should properly come before the
Meeting, it is the intention of the persons named in the enclosed form of proxy to vote such proxy
according to their best judgment.
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Voting of Shares
The Corporation has 59,480,843 Common Shares issued and outstanding as at July 26, 2017, each
of which is entitled to one vote at the Meeting. Unless otherwise specified herein, every resolution to be
put before the Meeting, shall be determined by a majority of the votes cast, in each case, in person or by
proxy, by holders of Common Shares on the resolution.
Advice to Beneficial Holders
The information set forth in this section is of significant importance to many Shareholders,
as a substantial number of Shareholders do not own Common Shares in their own name. Shareholders
who do not hold their Common Shares in their own name (referred to in this Information Circular as
“Beneficial Shareholders”) should note that only proxies deposited by Shareholders whose names appear
on the records of the Corporation as the registered Shareholders can be recognized and acted upon at the
Meeting. If Common Shares are listed in an account statement provided to a Shareholder by a broker, then
in almost all cases those Common Shares will not be registered in the Shareholder’s name on the records
of the Corporation. Such Common Shares will more likely be registered under the name of the
Shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered
under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Inc., which
acts as nominee for many Canadian brokerage firms). Common Shares held by brokers or their agents or
nominees can only be voted (for or against any matters voted on at the Meeting) upon the instructions of
the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are
prohibited from voting the Common Shares for the broker’s clients. Therefore, Beneficial Shareholders
should ensure that instructions respecting the voting of their Common Shares are communicated to
the appropriate person.
Applicable laws and regulatory policy require intermediaries/brokers to seek voting instructions
from Beneficial Shareholders in advance of shareholder meetings. Every intermediary/broker has its own
mailing procedures and provides its own return instructions to clients, which should be carefully followed
by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting. The form
of proxy or voting instruction form supplied to a Beneficial Shareholder by its broker (or the agent of that
broker) is similar to the form of proxy provided to registered Shareholders by the Corporation. However,
its purpose is limited to instructing the registered Shareholder (the broker or agent of the broker) on how to
vote on behalf of the Beneficial Shareholder. The majority of brokers now delegate responsibility for
obtaining instructions from clients to other intermediaries such as Broadridge Financial Services, Inc. (the
“Intermediaries”). Intermediaries typically mails a scannable voting instruction form in lieu of the form
of proxy. The Beneficial Shareholder is requested to complete and return the voting instruction form to
them by mail or facsimile. Alternatively, the Beneficial Shareholder can call a toll-free telephone number
or visit www.proxyvote.com to vote the Common Shares held by the Beneficial Shareholder. Intermediaries
then tabulates the results of all instructions received and provides appropriate instructions respecting the
voting of Common Shares to be represented at the Meeting. A Beneficial Shareholder receiving a voting
instruction form cannot use that voting instruction form to vote Common Shares directly at the
Meeting as the voting instruction form must be returned as directed by Intermediaries well in
advance of the Meeting in order to have the Common Shares voted.
Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes
of voting Common Shares registered in the name of his or her broker (or agent of the broker), a Beneficial
Shareholder may attend at the Meeting as proxyholder for the registered Shareholder and vote the Common
Shares in that capacity. Beneficial Shareholders who wish to attend at the Meeting and vote their Common
Shares as proxyholder for the registered Shareholder should enter their own name in the blank space on the
form of proxy or voting instruction form provided to them and return the form to their broker (or the
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broker’s agent) in accordance with the instructions provided by such broker (or agent) or submit any other
document instructed by the broker (or agent), well in advance of the Meeting.
If you are not sure if you are a registered Shareholder or a Beneficial Shareholder, please contact
AST at 1-800-387-0825 (toll free in North America) or 1-416-682-3860 (outside North America).
The Corporation is not sending this Information Circular, the accompanying form of proxy or
Notice directly to non-objecting beneficial owners. The Corporation will pay for intermediaries to forward
the Information Circular, the accompanying form of proxy or the Notice to objecting beneficial owners or
any voting instruction form prepared by an intermediary to objecting beneficial owners.
All references to Shareholders in this Information Circular and the accompanying form of proxy
and Notice are to Shareholders of record unless specifically stated otherwise. Where documents are stated
to be available for review or inspection, such items will be shown upon request to registered Shareholders
who produce proof of their identity.
Voting Securities and Principal Holders of Voting Securities
Common Shares
The Corporation is authorized to issue an unlimited number of Common Shares without nominal
or par value, of which 59,480,843 were issued and outstanding as at July 26, 2017 as fully paid and non-
assessable.
The holders of the Common Shares are entitled to one vote per share at meetings of Shareholders
of the Corporation.
Principal Shareholders
To the knowledge of management of the Corporation, no persons beneficially own, directly or
indirectly, or exercise control or direction over, 10% or more of the outstanding voting securities of the
Corporation other than as set out in the following table.
Name and Municipality of
Residence
Type of
Ownership
Number of
Common Shares
Percentage of
Common Shares
James Chui(1)
Vancouver, Canada
Indirect 24,149,222 40.6%
Junliang Xie(2)
Vancouver, Canada
Direct 6,131,438 10.3%
Note:
(1) 21,234,661 Common Shares are owned directly by Shanghai Pursuance Intelligence Tech Limited Partnership, a private
limited partnership organized under the laws of the People’s Republic of China over which Mr. Chui exercises control
or direction and 2,914,561 Common Shares are owned directly by Excellence Raise Overseas Limited, a private
corporation incorporated under the laws of the British Virgin Islands over which Mr. Chui exercises control or direction. (2) Held by Canada Zhoufa Agricultural Holding Company Ltd., a private corporation controlled by Mr. Xie.
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PART II – BUSINESS OF THE MEETING
Receipt of Financial Statements and Auditors’ Report
The financial statements of the Corporation for the year ended December 31, 2016 and the auditors’
report thereon will be placed before the Shareholders at the Meeting however, no action is required to be
taken by Shareholders thereon.
Under National Instrument 51-102 - Continuous Disclosure Obligations, a person or corporation
who in the future wishes to receive financial statements from the Corporation must deliver a written request
for such material to the Corporation, together with a signed statement that the person or corporation is the
owner of securities (other than debt instruments) of the Corporation. Shareholders who wish to receive
financial statements are encouraged to send the enclosed return card, together with the completed form of
proxy to AST, the registrar and transfer agent for the Corporation, at P.O. Box 721, Agincourt, Ontario, or
by facsimile at 1-866-781-3111 (North America) or (416) 368-5202 (International), or through the website
of AST at www.cstvotemyproxy.com at least 48 hours (excluding Saturdays, Sundays and statutory
holidays in Alberta) prior to the Meeting or, in the case of any adjournment or postponement of the meeting,
not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or
postponed meeting.
Copies of the Corporation’s annual and interim financial statements are also available on SEDAR
at www.sedar.com.
Election of Directors
There are currently five (5) director of the Corporation and the board of directors (the “Board”)
has determined that five (5) directors will be elected at the meeting. Holders of Common Shares of the
Corporation will be asked to elect the five (5) nominees listed below for the ensuing year. The persons
named in the form of proxy accompanying this Information Circular intend to vote for the election of the
nominees whose names are set forth below, each of whom is now a director of the Corporation unless the
Shareholder who has given such proxy has directed that the Common Shares represented by such proxy be
withheld from voting in respect of the election of directors of the Corporation. Management of the
Corporation does not contemplate that any of such nominees will be unable to serve as a director of the
Corporation for the ensuing year but if that should occur for any reason prior to the Meeting or any
adjournment thereof, the persons named in the form of proxy accompanying this Information Circular have
the right to vote for the election of any other nominee and may vote for the election of any such nominee
in their discretion. Each director of the Corporation elected at the Meeting will hold office until the next
annual meeting of the Shareholders held following his election unless he resigns or is removed from office
prior to such date.
The names and municipality of residence of the nominees, their position with the Corporation, their
principal occupation during the last five years, the date upon which they became a director of the
Corporation and the number of Common Shares beneficially owned, directly or indirectly, by them, or over
which control or direction is exercised by them, as of July 26, 2017, are as follows:
Name and Municipality
of Residence
Office Held with the
Corporation Principal Occupation
Year First
Appointed
Number of Common
Shares Directly or
Indirectly Held
K. Guy Nelson(3)(4)
Toronto, Ontario
Director (Non-
Executive Chairman)
Chief Executive Officer
and Executive Chairman
of Empire
2016 2,500,001(1)
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Name and Municipality
of Residence
Office Held with the
Corporation Principal Occupation
Year First
Appointed
Number of Common
Shares Directly or
Indirectly Held
Industries Ltd., a public
steel fabrication and
engineering company
listed on the TSXV, since
1996.
James Chui
Vancouver, British
Columbia
Director Chairman & CEO of
Excellence Raise Overseas
Limited, a private
investment company,
since 2013.
Director/President of
Sino-Pacific Agency
Partners (Hong Kong)
Limited, a private
investment company
since 2010.
Director/President of
Sino-Pacific Agricultural
Investment Inc., a private
investment company from
2011 through
2015.
2016 24,149,222(2)
Darrick Evong(3)(4)
Calgary, Alberta
Director Chief Executive Officer of
Cordy Oilfield Services
Inc., a public energy
services company listed on
the TSXV, since
September 2016 and prior
thereto independent
consultant to Cordy from
February 2015.
President of Darsha
Business Consulting, a
private consulting
company, from 2014 to
present. Director of
Financial Projects for
Mullen Group Ltd., a
public transportation
company listed on the
TSX, from 2008 to 2014.
2016 NIL
Chuyu Wu
Shanghai, People’s
Republic of China
Director President of Shanghai
World Trade Resources
Group Co., Ltd., a private
consulting company, since
March 2016; General
Manager of Shanghai Kaya
Management Consultancy
Co., Ltd., a private
consulting company, from
January 2005 to December
2015.
2016 NIL
George Tai(3)(4)
Calgary, Alberta
Corporate Secretary &
Director
Partner at Carscallen LLP,
a law firm, since 2006.
2016 NIL
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Notes:
(1) Includes 1,620,047 Common Shares owned directly by Nelson Advisors Inc., a private corporation over which Mr. Nelson
exercises control or direction, and 442,454 Common Shares owned directly and held in the IPP of K. Guy Nelson, a pension
plan of which Mr. Nelson is the sole beneficial owner.
(2) 21,234,661 Common Shares are owned directly by Shanghai Pursuance Intelligence Tech Limited Partnership, a private
limited partnership organized under the laws of the People’s Republic of China over which Mr. Chui exercises control or
direction. See “Voting Securities and Principal Holders of Voting Securities”. 2,914,561 Common Shares are owned directly
by Excellence Raise Overseas Limited, a private corporation incorporated under the laws of the British Virgin Islands over
which Mr. Chui exercises control or direction.
(3) Member of the Audit Committee of the Corporation. Mr. Evong is the Chair of the Audit Committee.
(4) Member of the Compensation and Corporate Governance Committee of the Corporation. Mr. Tai is the Chair of the
Compensation and Corporate Governance Committee.
It is the intention of the management designees in the enclosed form of proxy for the Meeting,
if named as proxy, to vote FOR the election of each of the five (5) nominees listed above, unless a
Shareholder has specified in the proxy that its Common Shares are to be withheld from voting on
such resolution.
Appointment of Auditors
At the Meeting, Shareholders will be called upon to appoint MNP LLP, Chartered Accountants, as
the auditor of the Corporation to serve until the close of the next annual meeting of the Corporation at such
remuneration as may be approved by the Board. MNP LLP has been the auditors of the Corporation since
inception in 2016.
It is the intention of the management designees in the enclosed form of proxy for the Meeting,
if named as proxy, to vote FOR the appointment of MNP LLP, Chartered Accountants, as the auditor
of the Corporation unless a Shareholder has specified in the proxy that its Common Shares are to be
withheld from voting on such resolution.
Re-Approval of Stock Option Plan
The Corporation has adopted a rolling 10% stock option plan (the “Plan”) which reserves for
issuance upon the exercise of stock options, a number of Common Shares equal to up 10% of the issued
Common Shares at the time of any stock option grant. The Plan contemplates that, among other things, any
director, officer, consultant or employee of the Corporation, or its subsidiaries, or an employee of a person
or company which provides management services to the Corporation or its subsidiaries (each a
“Participant” and collectively the “Participants”), that ceases to occupy such position with the
Corporation for any reason (other than death), may exercise any vested stock options held by such
Participant within 90 days of the Participant holding its position with the Corporation.
As a result of implementing a rolling 10% stock option plan, the TSX Venture Exchange (“TSXV”)
requires that approval of the Plan be sought by the Corporation every year from the Shareholders.
Accordingly, Shareholders will be asked to consider and if thought fit, approve an ordinary resolution
approving the Plan as amended. See “Incentive Plan Awards – Stock Option Plan” for a summary of the
Plan (including the proposed amendment). The complete text of the ordinary resolution which management
intends to place before the Meeting for approval, confirmation and adoption, with or without modification,
is as follows:
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“BE IT RESOLVED, as an ordinary resolution of the holders of common shares of Tornado Global
Hydrovacs Ltd. (the “Corporation”), that
1. the stock option plan (the “Stock Option Plan”) of the Corporation, substantially in the form
attached as Schedule “A” to the Management Information Circular of the Corporation prepared for
the purpose of the Meeting be and is hereby approved, ratified and confirmed;
2. the form of the Stock Option Plan may be amended in order to satisfy the requirements or requests
of any regulatory authorities, or at the discretion of the Board of Directors acting in the best interests
of the Corporation without requiring further approval of the shareholders of the Corporation;
3. the shareholders of the Corporation hereby expressly authorize the Board of Directors to revoke
this resolution before it is acted upon without requiring further approval of the shareholders in that
regard; and
4. any one (or more) directors or officers of the Corporation be and is hereby authorized and directed,
on behalf of the Corporation, to take all necessary steps and proceedings and to execute, deliver
and file any and all declarations, agreements, documents and other instruments and do all such
other acts and things (whether under corporate seal of the Corporation or otherwise) that may be
necessary or desirable to give effect to this resolution.”
The Board believes that approving the Plan is in the best interest of the Corporation and
recommends that the Shareholders vote in favour of the resolution.
It is the intention of the management designees in the enclosed form of proxy for the Meeting,
if named as proxy, to vote FOR the resolution approving the Plan unless a Shareholder has specified
in the proxy that its Common Shares are to be voted against such resolution.
Other Business
As of the date of this Information Circular, the Board does not know of any other matters to be
brought to the Meeting, other than those set forth in the Notice. If other matters are properly brought before
the Meeting or if any amendments are made to the matters set out in the Notice, the persons named in the
enclosed proxy have been conferred with discretionary authority to vote on such matters.
Interest of Certain Persons in Matters to be Acted Upon
Except as described elsewhere herein, none of the directors or executive officers of the Corporation,
nor any of their associates or affiliates, has any substantial interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in any matter to be acted upon at the meeting.
PART III – STATEMENT OF EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Board of Directors
The Compensation and Corporate Governance Committee evaluates and assesses the compensation
of the Corporation’s directors and executive officers (as defined below) and makes recommendations to the
Board who, in considering such recommendations, makes determinations with respect to the compensation
of the Directors and executive officers of the Corporation. The primary objective of the Compensation and
9
Corporate Governance Committee in regards to compensation is to ensure that the overall compensation
provided to the directors and executive officers of the Corporation is determined with regard to, and is
consistent with, the business strategies and objectives of the Corporation, such that the financial interests
of the directors and executive officers of the Corporation is congruent with the financial interests of the
shareholders of the Corporation. Additionally, the Compensation and Corporate Governance Committee
seeks to establish compensation practices which will attract and retain qualified executive officers and
present a total compensation package that is competitive within the marketplace. The compensation
program of the Corporation is designed to reward performance that is consistent with these objectives.
In arriving at its compensation decisions, the Compensation and Corporate Governance Committee
considers a number of factors, including the responsibilities and experience of the individuals, the
performance of the individuals with the Corporation, the overall performance of the Corporation and the
long-term interest of the Corporation. The Compensation and Corporate Governance Committee discusses
their collective knowledge and understanding of salaries paid to executive officers at companies that the
members have personal knowledge of however, no formal benchmark group of companies has been
referenced. The Compensation and Corporate Governance Committee has not considered the implications
of the risks associated with the Corporation’s compensation policies and practices. Furthermore, the
Corporation does not have any policies that restrict executive officers or directors from buying securities
designed to hedge or offset a decrease in market value of securities of the Corporation that are granted as
compensation to such persons.
The compensation program of the Corporation is comprised of base salary, stock options and non-
equity compensation (which may include cash bonuses or one time payments).
Base Salaries
The Compensation and Corporate Governance Committee of the Corporation recommends base
salaries for each of the executive officers of the Corporation. Base salaries are determined based on an
evaluation of an officer’s scope of responsibility and performance. The Compensation and Corporate
Governance Committee anticipates that base salary levels will be reviewed and considered annually taking
into consideration the current potential contribution of the executive officer to the success of the
Corporation and what the Corporation believes based on its collective experiences and informal discussions
regarding industry compensation practices. From time to time, the Compensation and Corporate
Governance Committee may consider adjustments to base salary levels based upon promotions or other
changes in job responsibility or merit-based increases based on assessments of individual performance. To
date, the base salaries reflect the initial base salaries that were negotiated at the time of initial employment
and it is expected that such salaries will require future adjustments to these amounts to reflect market
increases, the growth and stage of development of the Corporation, an executive officers’ performance and
increased experience, any changes in an executive officers’ roles and responsibilities and other factors
which may arise.
The base salary component of the executive officer compensation program is not designed to
incentivize near-term company or individual performance (as bonuses are designed to do), but rather to
provide a baseline level of compensation to executive officers. In most cases, the base salary component
will represent the largest annual form of compensation to executive officers, although there is no formal
policy regarding the allocation between base salary and other forms of compensation. In making decisions
regarding base salary levels, the Compensation and Corporate Governance Committee will consider and
evaluate the total compensation package, including cash bonuses (if any) and periodic option grants,
received or to be received by a particular executive officer, and seek to ensure that such total compensation
package is fair, reasonable and competitive.
10
The base salaries paid to Named Executive Officers (as defined herein) in the year ended December
31, 2016 are set forth in the Summary Compensation Table below.
Stock Option Plan
The purpose of the Plan is to afford individuals who provide services to the Corporation or any of
its subsidiaries or affiliates, including directors, officers, employees and consultants (“Participants”), an
opportunity to obtain a proprietary interest in the Corporation by permitting them to purchase Common
Shares and to aid in attracting, as well as retaining and encouraging the continued involvement of, such
individuals with the Corporation. The Corporation believes that equity-based compensation in the form of
stock options (“Options”) links the interests of the executive officers of the Corporation with the long-term
interests of the Corporation’s stockholders.
The Corporation has no formal policy regarding when Options are to be granted, and such grants
are not directly tied to any pre-established company or individual goals. The Corporation does not have a
formal policy regarding the size or amount of Option awards to executive officers. The Compensation and
Corporate Governance Committee will, however, consider and evaluate the total compensation package,
including base salary and cash bonuses (if any), received or to be received by a particular executive officer,
and seek to ensure that such total compensation package is fair, reasonable and competitive.
When recommending the grant of Options, consideration is given to the exercise price and the
aggregate number of Common Shares which would be subject to Options held by the individual after the
grant under consideration, the evaluation of the former, current and potential contribution of the individual
to the success of the Corporation and the relative position of the individual.
The number of Common Shares subject to each Option, the exercise price of each Option, the
expiration date of each Option, the extent to which each Option is exercisable and/or vested from time to
time during the term of the Option and any other terms and conditions relating to the Options are to be
determined by the Board. The term of an Option shall not exceed ten years from the date of grant of the
Option and the exercise price (the “Exercise Price”) shall, in no circumstances, be lower than the closing
price of the Common Shares on the TSXV on the last trading day preceding the day on which the Options
are granted.
Number of Shares Under Plan
The maximum number of unissued Common Shares that may be subject to Options granted and
outstanding under the Plan at any time shall be 10% of the number of the issued and outstanding Common
Shares on an undiluted basis, including any Common Shares issued as a result of the exercise of any Stock
Options under the Plan from time to time, provided that:
(a) in no event shall Options be granted to an individual to purchase in excess of five percent
of the then outstanding Common Shares of the Corporation in any twelve (12) month
period;
(b) no more than two percent of the issued Common Shares of the Corporation may be granted
to any one consultant in any twelve (12) month period;
(c) no more than an aggregate of two percent of the issued Common Shares of the Corporation
may be granted to an employee conducting investor relations activities, in any 12 month
period and Options granted to persons performing investor relations activities will contain
11
vesting provisions such that vesting occurs over at least 12 months with no more than one
(¼) quarter of the Options vesting in any three (3) month period; and
(d) if option rights granted to an individual under the Plan in respect of certain optioned shares
expire or terminate for any reason without having been exercised, such optioned shares
may be made available for other options to be granted under the Plan.
Amendment and Discontinuance of Plan
The may from time to time amend or revise the terms of the Plan or may discontinue the Plan at
any time, provided that no such action may in any manner adversely affect the rights under any Options
earlier granted to a participant under the Plan without shareholder approval.
In the event of the death of a participant, options held by such participant may be exercised until
the earlier of the expiry date of such options or one (1) year from the date of death, after which the options
will terminate.
If a participant shall cease to be a director, officer, consultant or employee of the Corporation for
any reason (other than death), such participant may exercise his option to the extent that the participant was
entitled to exercise it at the date of such cessation, provided that such exercise must occur within 180 days
after the participant ceases to be a director, officer, consultant or employee of the Corporation, unless such
participant was engaged in investor relations activities, in which case such exercise must occur within 30
days after the cessation of the participant’s services to the Corporation.
Non-Equity Compensation
In addition to base salaries and the grant of options, the Corporation may award discretionary cash
bonuses to employees of the Corporation, including executive officers based on the performance of the
Corporation and individual performance during the year. Bonus levels for the Chief Executive Officer,
Chief Financial Officer and other employees are established by the Compensation and Corporate
Governance Committee. In the case of non-executive employees, bonuses are based on the employee’s
contribution in advancing the development of its mining projects, adding share value, reducing costs and
the employee’s contribution to overall corporate goals. In the case of executive officers, including the Chief
Executive Officer, bonus awards are discretionary and there are no specified targets or criteria set out,
although matters such as the completion of annual goals, impact of efficiency of operations, and economic
outcome of decisions within their respective areas of responsibility are considered in the determination of
bonus awards. No maximum bonus has been established for any executive officer. Annual bonuses are not
tied to the achievement of any specific predetermined performance goals, but are based on overall
performance, as well as the performance of the Corporation, during a given period of time, as determined
by the Compensation and Corporate Governance Committee.
The Corporation believes that the discretionary cash bonuses motivate executive officers and
employees to improve both company and individual performance, and promote teamwork and near-term
growth of the business. By retaining discretion in awarding cash bonuses rather than tying such bonuses to
predetermined goals in advance, the Corporation believes that it can more effectively adapt its
compensation program to changes in its business and industry and to other events beyond its control. If
events occur during the course of a given year that require the executive officers of the Corporation to shift
their attention to different or other strategic objectives, the discretionary nature of the bonus program allows
the Compensation and Corporate Governance Committee to ensure that its overall compensation program
remains fair, reasonable and competitive under those particular circumstances. This is particularly
important to the Corporation, given its stage of development and the varying challenges that it faces. It has
12
no formal policy regarding the allocation between cash bonuses, Options or other forms of compensation,
but the Compensation and Corporate Governance Committee will consider and evaluate the total
compensation package, including base salary and Options received or to be received by a particular
executive officer, and seek to ensure that such total compensation package is fair, reasonable and
competitive.
The Compensation and Corporate Governance Committee does not follow a specific process for
determining perquisites and personal benefits as they do not form a significant portion of any Named
Executive Officers (as defined below) compensation package. Any such compensation is determined by
the Compensation and Corporate Governance Committee on an ad hoc basis.
Summary
The Corporation’s compensation policies have allowed the Corporation to attract motivated
professionals and support staff working towards the common goal of enhancing shareholder value. The
Compensation and Corporate Governance Committee and the Board will continue to review compensation
policies to ensure that they are competitive within the mining industry and consistent with the performance
of the Corporation.
The Corporation became a reporting issuer effective June 27, 2016 upon completion of the
Arrangement. The Arrangement was a restructuring transaction involving Empire however, all directors
and executive officers of the Corporation commenced such positions on or after June 27, 2016 but during
the financial year ended December 31, 2016. All executive officers of the Corporation are employees of
the Corporation. Prior to June 27, 2016, the Corporation did not have executive officers or any directors as
such functions were performed by Empire.
Summary Compensation Table
The following table sets forth certain information concerning the compensation paid to the
Corporation’s Chief Executive Officer, Chief Financial Officer and the most highly compensated executive
officer of the Corporation with total annual compensation during the financial year ended December 31,
2016 exceeding $150,000 (the “Named Executive Officers”) as well as the Corporation’s Directors.
Table of Compensation excluding Compensation Securities
Name and
Position(1)
Year
Salary, Consulting
Fee, Retainer or
Commission
($)
Bonus
($)
Committee
or Meeting
Fees
($)
Value of
Perquisites
($)
Value of all
other
Compensation
($)
Total
Compensation
( $)
Bill Rollins(2)
Chief Executive
Officer
2016
$84,231
$Nil
$Nil
$Nil
$Nil
$84,231
Connie Ping
Chief Financial
Officer
2016
$65,663 $Nil $Nil $Nil $3,850 $69,513
K. Guy Nelson(3)
Director
2016
$Nil $Nil $Nil $Nil $Nil $Nil
James Chui
Director
2016
$Nil $Nil $Nil $Nil $Nil $Nil
13
Table of Compensation excluding Compensation Securities
Name and
Position(1)
Year
Salary, Consulting
Fee, Retainer or
Commission
($)
Bonus
($)
Committee
or Meeting
Fees
($)
Value of
Perquisites
($)
Value of all
other
Compensation
($)
Total
Compensation
( $)
Darrick Evong
Director
2016
$Nil $Nil $Nil $Nil $Nil $Nil
Chuyu Wu(4)
Director
2016 $Nil $Nil $Nil $Nil $Nil $Nil
George Tai
Director
2016
$Nil $Nil $Nil $Nil $Nil $Nil
Chao Huang(4)
Director
2016 $Nil $Nil $Nil $Nil $Nil $Nil
Notes:
(1) All Named Executive Officers and Directors of the Corporation commenced such positions during the financial year ended
December 31, 2016. The figures in the above chart are the actual amounts earned in the financial year ended December 31,
2016 and have not been annualized.
(2) Mr. Rollins’ total compensation for 2016, including compensation paid while an employee of Empire prior to the Arrangement,
was $180,000.
(3) Mr. Nelson was the President of the Corporation prior to completion of the Arrangement when the Corporation had no material
operations other than its activities to complete the Arrangement. Mr. Nelson received no compensation for his position with
the Corporation during such time.
(4) Effective November 8, 2016, Mr. Wu replaced Mr. Huang as a Director.
Stock Options and Other Compensation Securities
The Corporation has adopted the Plan as part of its approach to compensation however, since
becoming a reporting issuer upon completion of the Arrangement on June 27, 2016, the Corporation has
not issued any Options pursuant to the Plan. Accordingly, there were no stock compensation securities
granted or issued to any Director or Named Executive Officer by the Corporation during the financial year
ended December 31, 2016.
Employment Agreements
The employment agreement of Bill Rollins provides for an annual base salary of $180,000 paid
monthly, an annual bonus calculated as 4% of the annual pre-tax earnings of the Corporation and in the
event that the Corporation terminates the employment of Mr. Rollins without just cause, the Corporation
must make a severance payment to Mr. Rollins in the amount equal to thirty times his monthly base salary
plus two times his average annual bonus in the preceding two years.
The Corporation was party to a written employment agreement with Connie Ping which provides
for an annual base salary of $140,000 paid monthly, an annual retention bonus equal to 10% of her base
salary, an annual performance bonus based upon certain criteria including the annual net income of the
Corporation, it’s material subsidiaries and the performance evaluation of Ms. Ping. Additionally, Ms. Ping
was eligible to participate in the Corporation’s stock option plan.
Ms. Ping ceased to hold the office of Chief Financial Officer effective December 20, 2016 and her
employment with the Corporation was terminated effective March 31, 2017. Upon termination, the
14
Corporation made a severance payment to Ms. Ping in the amount of $29,077 representing six months base
salary plus 5% as a personal RRSP contribution less the base salary and 5% personal RRSP contribution
she previously received from the Corporation in 2017.
PART IV – ADDITIONAL DISCLOSURE
Securities Authorized for Issuance under Equity Compensation Plans
Plan Category
Number of Securities to be
Issued upon Exercise of
Outstanding
Options (1)
Weighted-Average
Exercise Price of
Outstanding Options
Number of Securities
Remaining Available for
Future Issuance under Equity
Compensation Plans(1)
Equity compensation plans
approved by security
holders
Nil Nil 5,948,084(1)
Equity compensation plans
not approved by security
holders
Nil Nil Nil
Total Nil Nil 5,984,084
Note:
(1) The Corporation has a stock option plan but has not issued any options to acquire Common Shares pursuant thereto. The
Corporation has no other equity compensation plans.
Indebtedness of Directors and Officers
As at July 26, 2017 no current or former director, executive officer, senior officer, proposed
nominee for election as a Director of the Corporation or associate of any of the foregoing had any
indebtedness to, or the benefit of any guarantee, support agreement, letter of credit or other similar financial
assistance by the Corporation or its subsidiaries, nor was any indebtedness, guarantee, support agreement,
letter of credit or other similar financial assistance provided to such persons at any time during the fiscal
year ended December 31, 2016.
Interest of Informed Persons in Material Transactions
Except as disclosed below, no Director, executive officer of the Corporation, nominee for election
as director, shareholder owning more than 10% of the outstanding Common Shares nor any known associate
or affiliate of such persons, have had a material interest, direct or indirect, of or in any transaction since the
commencement of the last financial year and in any proposed transaction which has materially affected or
would materially affect the Corporation.
Guy Nelson, the Non-Executive Chairman of the Corporation is the Executive Chairman and Chief
Executive Officer of Empire Industries Ltd. (“Empire”). Empire is a secured lender of the Corporation
and has been since June 27, 2016. Effective June 27, 2016, Empire completed a plan arrangement (the
“Arrangement”) whereby the Corporation was spun-out of Empire. As part of the Arrangement, Empire
provided a subordinated loan (the “Empire Loan”) to the Corporation with a principal amount of
$2,895,000. The Empire Loan bears interest at a rate of 2.7% per annum, payable annually for a term of
seven (7) years. Principal on the Empire Loan is payable in an amount of $20,000 per month for the first
five (5) years of the term with lump sum payments of approximately $900,000 payable on the sixth (6th)
and seventh (7th) anniversaries of the closing of the Arrangement. The Empire Loan is secured by all
personal property of the Corporation and subordinated to the Corporation’s principal lender and convertible
into Common Shares under certain conditions including but not limited to, a default of the terms of the
Empire Loan that has not been remedied within sixty (60) days and the approval of the TSXV. The
15
conversion price of the Empire Loan will be equal to the volume weighted average trading price of the
Tornado Common Shares for the thirty (30) days ending on the fifth (5th) trading day preceding conversion.
Cease Trade Orders, Bankruptcies, Penalties and Sanctions
To the knowledge of management of the Corporation, other than as disclosed below, no director
nominee:
(a) is, as at the date of this Information Circular, or has been, within 10 years before the date
of this Information Circular, a director, chief executive officer or chief financial officer of
any company (including the Corporation) that,
(i) was subject to an order that was issued while the proposed director was acting in
the capacity as director, chief executive officer or chief financial officer; or
(ii) was subject to an order that was issued after the proposed director ceased to be a
director, chief executive officer or chief financial officer and which resulted from
an event that occurred while that person was acting in the capacity as director, chief
executive officer or chief financial officer;
(b) is, as at the date of this Information Circular, or has been within 10 years before the date
of this Information Circular, a director or executive officer of any company (including the
Corporation) that, while that person was acting in that capacity, or within a year of that
person ceasing to act in that capacity, became bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a receiver, receiver
manager or trustee appointed to hold its assets; or
(c) has, within the 10 years before the date of this Information Circular, become bankrupt,
made a proposal under any legislation relating to bankruptcy or insolvency or become
subject to or instituted any proceedings, arrangement or compromise with creditors or had
a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
For purpose of the above, “order” means:
(a) a cease trade order;
(b) an order similar to a cease trade; or
(c) an order that denied the relevant company access to any exemption under securities
legislation,
that was in effect for a period of more than 30 consecutive days.
No proposed director has been subject to:
(a) any penalties or sanctions imposed by a court relating to securities legislation or by a
securities regulatory authority or has entered into a settlement agreement with a securities
regulatory authority; or
16
(b) any other penalties or sanctions imposed by a court or regulatory body that would likely be
considered important to a reasonable security holder in deciding whether to vote for a
proposed director.
Management Contracts
The management functions of the Corporation are not to any substantial degree performed by any
person other than its directors and executive officers.
Additional Information
Additional information relating to the Corporation is available on SEDAR at www.sedar.com and
on the Corporation’s website at www.tornadotrucks.com. Shareholders can request copies of the
Corporation’s financial statements and management’s discussion & analysis by e-mailing Derek Li at:
[email protected] or by requesting a copy from Tornado Global Hydrovacs Ltd. at Suite 510, 7015 MacLeod
Trail South, Calgary, Alberta, T2H 2K6. The Corporation’s financial information is provided in the
Corporation’s comparative, consolidated financial statements and management’s discussion & analysis for
its most recently completed financial year, which are available on SEDAR and the Corporation’s website.
PART V – CORPORATE GOVERNANCE
Corporate governance relates to the activities of the Board, the members of which are elected by
and are accountable to the shareholders, and take into account the role of the individual members of
management who are appointed by the Board and who are charged with the day-to-day management of the
Corporation. The Board is committed to sound corporate governance practices which are both in the interest
of its shareholders and contribute to effective and efficient decision making.
Pursuant to National Instrument 58-101 - Disclosure of Corporate Governance Practices
(“NI 58-101”), the Corporation is required to disclose its corporate governance practices as summarized
below.
Board of Directors
The Corporation’s Board is comprised of five (5) directors, two of whom are independent. Messrs.
Evong and Wu are independent directors of the Corporation.
Mr. Nelson is not independent for the purposes of NI 58-101 because he is the Executive Chairman
and Chief Executive Officer of Empire which is the Corporation’s largest creditor and accordingly, has a
“material relationship” with the Corporation. Additionally, prior to the completion of the Arrangement,
Mr. Nelson was an officer of the Corporation and accordingly, is not an independent director. Mr. Tai is
not independent for the purposes of NI 58-101 because he is a partner of Carscallen LLP, corporate counsel
to the Corporation, which has accepted fees in an amount greater than $75,000 within a 12 month period
within the past three years in connection with its engagement. Mr. Chui is not independent as he exercises
control or direction over greater than 10% of the Common Shares. It is the intention of the Corporation to
continue its search for new or additional board members so that a majority of the Board is “independent”.
NI 58-101 suggests that the board of directors of a public company should be constituted with a
majority of individuals who qualify as “independent” directors. An “independent” director is a director
who has no direct or indirect material relationship with the Corporation. A material relationship is a
relationship which could, in the view of the board of directors, reasonably interfere with the exercise of a
director’s independent judgment. The independent directors do not hold regularly scheduled meetings at
17
which non-independent directors and members of management are not in attendance. The Board facilitates
independent supervision of management through meetings of the Board and through informal discussions
among independent members of the Board and management. In addition, the members of the Board have
free access to the Corporation’s external auditors, legal counsel and to any of the Corporation’s officers.
Directorships
The following directors of the Corporation are presently directors of other reporting issuers:
Name of Director Name of Other Issuer
K. Guy Nelson Empire Industries Ltd.
Orientation and Continuing Education
The Corporation has not implemented a formal orientation and continuing education program. At
present, new directors are given an outline of the nature of the Corporation’s business, its corporate strategy
and current issues with the Corporation. New directors are also expected to meet with management of the
Corporation to discuss and better understand the Corporation’s business, may visit the Corporation’s head
office and operating facilities and will be advised by counsel to the Corporation of their legal obligations
as directors of the Corporation. Additionally, directors may request that the Corporation arrange for their
participation in any cost effective continuing education program that is relevant to their role as directors
and committee members of the Corporation.
The introduction and education process will be reviewed on an annual basis by the Board and will
be revised as necessary.
Ethical Business Conduct
At this time, the Board of Directors has not adopted a written code of business conduct and ethics.
The Board of Directors is currently formulating a written code of business conduct and ethics and intends
to adopt it during the 2017 fiscal year.
The Board and the Audit Committee have also established a whistleblower policy to encourage
employees, officers and directors to raise concerns regarding any matters, including accounting, internal
controls or auditing matters, on a confidential basis free from discrimination, retaliation or harassment.
The Board is also of the view that the fiduciary duties placed on individual directors by the
Corporation’s governing corporate legislation and the common law and the restrictions placed by applicable
corporate legislation on an individual director’s participation in decisions of the Board in which the director
has an interest is also adequate to ensure that the Board operates independently of management and in the
best interests of the Corporation.
Nomination of Directors and Compensation
The Compensation and Corporate Governance Committee is responsible for the development and
implementation of principles and systems for the management of corporate governance and identifying
qualified candidates and recommending nominees for director and board committee appointments. The
committee is also responsible for reviewing all compensation strategy, objectives and policies; annually
reviewing and assessing the performance of the executive officers; determining the compensation of
executive officers and reviewing executive appointments. No compensation was paid to directors of the
18
Corporation in their capacity as directors in 2016, however, it is intended that compensation will be paid
commencing in 2017. Directors are eligible for grants of Options.
Other Board of Directors Committees
The Corporation has no standing committees at this time other than the Audit Committee and the
Compensation and Corporate Governance Committee. See “Part III - Statement of Executive
Compensation” and “Part VI - Audit Committee”.
Assessments
The Board has not implemented a process for assessing its effectiveness. As a result of the
Corporation’s size, its stage of development and the limited number of individuals on the Board, the Board
consider a formal assessment process to be inappropriate at this time. The Board plan to continue evaluating
its own effectiveness on an ad hoc basis.
The Board does not formally assess the performance or contribution of individual Board members
or committee members.
PART VI - AUDIT COMMITTEE
Composition of the Audit Committee
The directors of the Corporation have established the Audit Committee consisting of Messrs.
Evong, Nelson and Tai, all of whom are “financially literate” for the purposes of the Multilateral Instrument
52-110 - Audit Committees (“MI 52-110”). Mr. Evong is the Chair of the Audit Committee and is
independent however, Mr. Nelson and Mr. Tai are not independent. The Corporation is relying on the
exemption in Section 6.1 of MI 52-110 exempting it from the requirements of Part 3 (Composition of the
Audit Committee) to allow the Audit Committee to include members who are not independent.
The Audit Committee is responsible for, and assists the Board in fulfilling its responsibility for: (i)
the oversight and supervision of the audit of financial statements of the Corporation; (ii) the management
of the relationship with the auditor of the Corporation; (iii) meeting with the auditor as required in
connection with the audit services provided by the auditor; (iv) the oversight and supervision of the
accounting and financial reporting practices and procedures of the Corporation; (v) the oversight and
supervision of the adequacy of the Corporation’s internal accounting controls and procedures; and (vi) the
oversight and supervision of the quality and integrity of the Corporation’s financial statements.
Audit Committee Charter
The full text of the audit committee charter is included in Schedule “B” of this Information Circular.
Education and Experience
Each member of the Audit Committee has adequate education and experience that will be relevant
to his performance as an Audit Committee member and, in particular, the requisite education and experience
that have provided members with:
(a) an understanding of the accounting principles used to prepare the Corporation’s financial
statements;
19
(b) the ability to assess the general application of the above-noted principles in connection
with estimates, accruals and reserves;
(c) experience preparing, auditing, analyzing or evaluating financial statements that present a
breath and level of complexity of accounting issues that are generally comparable to the
breadth and complexity of issues that can reasonably be expected to be raised by the
Corporation’s financial statements; and
(d) an understanding of internal controls and procedures for financial reporting.
The following are brief descriptions of the current members of the Audit Committee:
Name of Audit Committee
Member
Independent Financially
Literate
Relevant Education and Experience
Darrick Evong
Yes Yes Mr. Evong has been Chief Executive Officer of Cordy
Oilfield Services Inc., a public energy services company
listed on the TSXV, since September 2016. He is a
Chartered Accountant as well as a Chartered Business
Valuator. From 2014 to 2016, he was President of Darsha
Business consulting, a consultancy that provides
strategic and financial services to small and medium
sized businesses, including Cordy, that provides truck
mounted equipment services like hydrovac excavation.
From 2008, through 2014, he was Director of Financial
Products at Mullen Group Ltd., a TSX company that
provides freight transportation services and other
transportation and logistical services. Prior to this, Mr.
Evong served in progressively senior financial positions
at various publicly traded energy businesses, as well as
serving at Ernst & Young LLP as an accountant and
corporate finance analyst.
K. Guy Nelson
No Yes Mr. Nelson is the Non-Executive Chairman of the
Corporation. He is Executive Chairman and CEO of
Empire Industries, Ltd. Chairman of Better Work Place
Inc. from September 2001 to present. He was the CEO
and Director of Associated Proteins LP from 2004 to
2007, Vice President and Director of Bracknell
Corporation between1991 and 1997, VP Investments,
Cavendish Investing Ltd. from 1988 to 1991. Guy holds
an MBA from the Ivey Business School and a B.Comm
from University of Alberta.
George Tai
No Yes Since 2006, Mr. Tai has been a partner at Carscallen
LLP, a business law firm based in Calgary, AB. He
specializes in mergers, acquisitions & divestitures,
securities and corporate finance, intellectual property, oil
& gas/energy, and corporate governance issues. He is a
member of the Law Society of Alberta, having been
called to the bar in 1992. He holds a Bachelor of Science
in Biochemistry as well as a Bachelor of Laws from the
University of Western Ontario.
Pre-Approval Policies and Procedures
The Audit Committee reviews and pre-approves any engagement for non-audit services to be
provided by the external auditors or its affiliates, together with estimated fees and considers the impact on
the independence of the external auditor. No formal policies or procedures have been adopted.
20
External Auditor Service Fees (by Category)
The following table provides information about the fees billed to the Corporation for professional
services rendered by MNP LLP during fiscal years 2016 and 2015:
2016 2015(1)
Audit Fees (2) $65,997 $Nil
Audit-Related Fees (3) $3,105 $Nil
Tax Fees (4) $18,190 $Nil
Total $87,292 $Nil
Notes:
(1) The Corporation became a reporting issuer effective June 27, 2016 upon completion of the Arrangement. Accordingly, it did
not incur any fees for professional services for years prior to 2016.
(2) Audit fees consist of fees for the audit of the Corporation’s annual financial statements or services that are normally provided
in connection with statutory and regulatory filings or engagements.
(3) Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit
or review of the Corporation’s financial statements and are not reported as audit fees.
(4) Tax fees consist of fees for tax compliance services, tax advice and tax planning.
Reliance on Certain Exemptions
At no time during the year ended December 31, 2016 has the Corporation relied on the exemption
in Section 2.4 of MI 52-110 (De Minimis Non-audit Services), subsection 6.1.1(4) (Circumstances Affecting
the Business or Operations of the Venture Issuer), subsection 6.1.1(5) (Events Outside Control of Member),
subsection 6.1.1(6) (Death, Incapacity or Resignation) or an exemption from MI 52-110, in whole or in
part, granted under Part 8 of MI 52-110.
Approval
The contents and sending of this Information Circular has been approved by the Board of Directors
of the Corporation.
A-1
SCHEDULE “A”
STOCK OPTION PLAN
1. INTERPRETATION
In this Plan (including this clause), unless there is something in the subject or context inconsistent therewith, words
importing the singular number includes the plural and vice versa, words importing the masculine gender includes the
feminine and neuter genders and the expressions following have the following meanings, respectively:
(a) “Associate” has the meaning ascribed thereto in the Securities Act;
(b) “Board” means the Board of Directors of the Corporation;
(c) “Committee” means a committee of Directors appointed by the Board as contemplated by Clause 3
hereof;
(d) “Common Share” means a voting Class “A” Common Share in the capital stock of the Corporation
as constituted at April 27, 2016, and, after any adjustments pursuant to Clause 7 hereof, means the
shares or other securities or property which, as a result of such adjustments and all prior adjustments
pursuant to Clause 7, the holders of Options are then entitled to receive on the exercise thereof;
(e) “Consultant” means an individual or company other than an employee or a director of the
Corporation that is engaged to provide on an ongoing basis consulting, technical or management or
other services to the Corporation under a written contract and spends a significant amount of time
and attention on the affairs of the Corporation such that they are knowledgeable about the business
and affairs of the Corporation;
(f) “Corporation” means Tornado Global Hydrovacs Ltd. and any successor or continuing corporation
resulting from any form of corporate reorganization;
(g) “Early Termination Date” means, in respect of any Option, 5:00 p.m. (Calgary time) on the date
that an Option terminates prior to the Normal Expiry Date;
(h) “Expiry Date” means the Normal Expiry Date or the Early Termination Date, as the case may be;
(i) “Insider” has the meaning ascribed thereto in the Securities Act;
(j) “Market Price” at any date and in respect of an Option, means:
(i) where the Common Shares are not listed and posted for trading on a stock exchange, the
value conclusively determined by the Board or Committee, as the case may be, on the
Option Date; or
(ii) where the Common Shares are listed and posted for trading on a stock exchange, either:
(A) the closing price of the Common Shares on the principal stock exchange on which
they are traded on the last business day preceding the Option Date; or
(B) if the Common Shares did not trade on the last business day preceding the Option
Date, the average of the bid and ask prices in respect of the Common Shares at
the close of trading on such date on the principal stock exchange on which the
Common Shares are listed and posted for trading;
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(k) “Normal Expiry Date” means, in respect of any Option, 5:00 p.m. (Calgary time) on the date
determined by the Corporation and specified in the particular Option Agreement on which the
Option would normally terminate, which date may not be later than five years after the Option Date;
(l) “Option” means a right to purchase Common Shares pursuant to the Plan and an Option Agreement;
(m) “Option Agreement” means an agreement entered into between the Corporation and a Participant
pursuant to which an Option is granted to a Participant and which contains such provisions not
inconsistent with the Plan as the Board or the Committee may determine;
(n) “Option Date” means the date on which an Option is granted by the Corporation to a Participant
which for greater certainty is the date on which the grant of the Option is approved by the Board or
the Committee, as the case may be;
(o) “Option Shares” means the Common Shares which a Participant is entitled to purchase under an
Option whether or not the rights to purchase all such Common Shares have vested in and to the
Optionee;
(p) “Optionee” means a Participant who has entered into an Option Agreement with the Corporation;
(q) “Participant” means, on any date, a person who is at least one of the following:
(i) a person who is bona fide regularly employed by the Corporation or one of its subsidiaries
on that date;
(ii) an officer of the Corporation or one of its subsidiaries on that date;
(iii) a director of the Corporation or one of its subsidiaries on that date;
(iv) a bona fide consultant or advisor to the Corporation or one of its subsidiaries on that date;
or
(v) to a corporation, the shares of which are wholly owned by a person described in subclause
(i), (ii), (iii) or (iv);
(r) “Plan” means the Corporation’s “Stock Option Plan” embodied herein, as from time to time
amended;
(s) “Purchase Price” means the purchase price of Option Shares under an Option Agreement
determined as provided in subclause 6(b) of this Plan; and
(t) “Securities Act” means the Securities Act (Alberta), as amended.
2. PURPOSE OF THE PLAN
The purpose of the Plan is to develop the interest of Optionees in the growth and development of the Corporation by
providing such persons with the incentive and opportunity to acquire an increased proprietary interest in the
Corporation and to better enable the Corporation and its subsidiaries to attract and retain persons of desired experience
and ability.
3. ADMINISTRATION, PARTICIPANTS AND ALLOTMENTS
(a) The Board will administer the Plan. The Board may at any time or from time to time delegate to a
Committee the responsibility for administering the Plan or elements thereof. The Board, or the
Committee if so empowered, will determine from time to time those Participants to whom Options
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should be granted, the Normal Expiry Date, the number of Common Shares which should be
optioned from time to time to any Participant, the Purchase Price and such other terms and
conditions of the Option Agreement, not inconsistent with the Plan, as the Board or the Committee
in its discretion may determine. The Board or the Committee may prescribe rules and regulations
relating to the Plan and any Options granted hereunder and may approve the form and content and
prescribe the use of such forms of applications, directions, powers of attorney, and other documents
or instruments, either generally or in specific cases, as may be deemed necessary or advisable, for
the grant or issuance of Options under the Plan and for the proper administration and operation of
the Plan. The Board or the Committee will review the Plan from time to time with a view to making
revisions to it, granting additional Options and, in the case of the Committee, making appropriate
recommendations to the Board. Nothing contained in the Plan or in any resolution adopted or to be
adopted by the Board or by the Committee constitutes an Option hereunder. An Option granted by
the Board or the Committee to a Participant pursuant to the Plan is subject to, and is of no force and
effect until, the execution and delivery of, an Option Agreement by both the Corporation and such
Participant.
(b) The Corporation is responsible for all costs of administration of the Plan.
(c) The implementation of the Plan, the grant or exercise of any Options pursuant to the Plan and, from
time to time, the operation and administration of the Plan is subject to receipt by the Corporation of
all necessary approvals, advance rulings, exemptions or registrations required or deemed advisable
under applicable law or regulatory policy including without limiting the generality of the foregoing,
all necessary approvals or registrations required by any and all stock exchanges upon which the
Common Shares are listed and posted for trading.
(d) The Board or the Committee, as the case may be, may at any time and subject to regulatory
approvals:
(i) discontinue or terminate the Plan; or
(ii) amend or revise the terms and conditions of the Plan and any outstanding Options granted
under the Plan,
provided that no such action adversely affects any Options previously granted under the Plan or the
rights of Optionees in respect of those Options without the prior written consent or agreement of
those Optionees. Disinterested shareholder approval will be obtained for any reductions in the
exercise price of Options held by Insiders.
4. COMMON SHARES SUBJECT TO PLAN
(a) The Corporation reserves for issuance that number of Common Shares equal to 10% of the
Corporation’s outstanding Common Shares from time to time, for the purposes of issuance pursuant
to the exercise of outstanding Options granted to the Participants pursuant to the Plan. In no event
may the number of Option Shares issued under the Plan exceed the total number of Common Shares
reserved for issuance hereunder.
(b) The number of Option Shares that may be reserved for allotment to any one Participant pursuant to
Options in any 12 month period must not exceed 5% of the issued and outstanding Common Shares.
(c) The number of Option Shares that may be reserved for allotment to any one consultant of the
Corporation (or any of its subsidiaries) pursuant to Options in any 12 month period must not exceed
2% of the issued and outstanding Common Shares.
(d) The number of Option Shares that may be reserved for allotment to any one person employed to
provide investor relations activities pursuant to Options in any 12 month period must not exceed 2%
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of the issued and outstanding Common Shares. Options granted to consultants performing investor
relations activities will contain vesting provisions such that vesting occurs over at least 12 months
with no more than ¼ of the Options vesting in any 3 month period and a condition that such Options
will expire 30 days after the Optionee ceases to be employed to provide investor relations activities.
For the purposes hereof, the number of issued and outstanding Common Shares is determined as the number of
Common Shares that are issued and outstanding immediately prior to a proposed grant of Options excluding Common
Shares issued pursuant to share compensation arrangements during the preceding one-year period.
5. PARTICIPATION VOLUNTARY
Participation in the Plan by a Participant is entirely voluntary and does not affect the Participant’s employment or
continued retainer by, or other engagement with, the Corporation or its subsidiaries. None of the Plan or any Options
granted under the Plan of itself gives any Participant the right to continue to be an employee, officer, director or
consultant of the Corporation or any subsidiary thereof. None of the terms and conditions governing the Option are
affected by any change in the Optionee’s employment by or engagement with the Corporation so long as the Optionee
continues to be a Participant.
6. CERTAIN TERMS OF OPTION AGREEMENTS
In order to constitute a valid Option granted under this Plan, the Optionee and the Corporation must enter into an
Option Agreement in the form acceptable to the Board or the Committee, as the case may be.
An Option Agreement may, in respect of any Option, specify a number or percentage of Option Shares that the
Participant may exercise in any specified period, year or number of years. In addition, Option Agreements are deemed
to contain the following provisions with respect to the exercise of Options under the Plan:
(a) An Option under the Plan is only exercisable for a minimum of 100 Common Shares at any one
time.
(b) The Purchase Price must not be less than the Market Price subject always to the discount from the
Market Price allowed under the policies, rules or by-laws of the applicable stock exchange(s) on
which the Common Shares are listed and posted for trading, which discount is to be considered in
setting the Purchase Price wholly at the discretion of the Board or Committee, as the case may be,
and upon exercise of the Option must be paid in full in respect of those Option Shares being acquired
in Canadian funds by cash, certified cheque or bank draft payable to or to the order of the
Corporation at the time of exercise.
(c) Each Option terminates on its Normal Expiry Date but subject always to the provisions of subclause
6(d) of this Plan.
(d) If, after the Option Date and on or before the exercise in full of the Option or the Normal Expiry
Date, the Optionee ceases to be a Participant:
(i) by reason of the Optionee’s permanent physical or mental disability, or death, then such
Optionee’s Option may be exercised to purchase the total number of Option Shares not
previously purchased by the Optionee whether or not the rights to purchase some or all of
those Option Shares have previously vested in and are exercisable by the Optionee as at
the date of such ceasing to be a Participant, provided such exercise occurs at any time on
or before the earlier of the Normal Expiry Date and the date that is 90 days after the date
the Optionee ceases to be a Participant due to such permanent physical or mental disability,
or death. Thereafter, the Option and all unexercised rights to acquire Option Shares
thereunder cease and expire and are of no further force and effect. For greater certainty
but without limiting the generality of the foregoing, if the Optionee is deemed to be an
employee of the Corporation pursuant to a medical or disability plan of the Corporation or
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a subsidiary thereof, the Optionee is deemed to be an employee for the purpose of the Plan
and the Option; or
(ii) by reason of the Optionee’s office, directorship or employment or services agreement with
the Corporation terminating or ending otherwise than by reason of permanent physical or
mental disability, or death or termination with or without notice or entitlement to a period
of notice of such termination or compensation in lieu thereof, then such Optionee’s Option
may be exercised to purchase the total number of Option Shares not previously purchased
by the Optionee but only to the extent that rights to purchase Option Shares have vested in
and are exercisable by the Optionee as at the date of such ceasing to be a Participant,
provided such exercise occurs at any time on or before the earlier of the Normal Expiry
Date and the date that is 21 days after the date the Optionee ceases to be a Participant due
to the termination or ending of the Participant’s office, directorship or employment or
services agreement. Thereafter, the Option and all unexercised rights to acquire Option
Shares thereunder, whether or not such rights have vested to and in favour of the Optionee,
cease and expire and are of no further force and effect; or
(iii) by reason of the Optionee’s termination without notice or entitlement to a period of notice
of such termination or compensation in lieu thereof, the Optionee may exercise the Option
to purchase Option Shares not previously purchased by the Optionee but only to the extent
that rights to purchase Option Shares have vested in and are exercisable by the Optionee
as at the date of such ceasing to be a Participant, provided that such exercise occurs at any
time on or before the earlier of the Normal Expiry Date and the date that the Optionee
ceases to be a Participant. Thereafter, the Option and all unexercised rights to acquire
Option Shares thereunder, whether or not such rights have vested to and in favour of the
Optionee, cease and expire and are of no further force and effect; or
(iv) by reason of the Optionee’s termination, and the Optionee is entitled to reasonable notice
of termination or compensation in lieu thereof, then:
(A) the Optionee may exercise the Option to purchase Option Shares not previously
purchased by the Optionee but only to the extent that rights to purchase Option
Shares have vested in and are exercisable by the Optionee on or before the date
of such ceasing to be a Participant, provided that such exercise occurs at any time
on or before the earlier of the Normal Expiry Date and:
1) where the Optionee is given a reasonable period of notice prior to
termination, the date the Optionee ceases to be a Participant; or
2) where the Optionee is paid compensation in lieu of reasonable notice of
termination, the date that is 21 days after the Optionee ceases to be a
Participant; and
(B) the Optionee is not entitled:
1) to further time to exercise the Option during such reasonable notice
period or during such specific notice period; or
2) compensation in lieu thereof by way of general damages, or special
damages, whether in contract, tort or otherwise.
Thereafter, the Option and all unexercised rights to acquire Option Shares thereunder, whether or
not such rights have vested to and in favour of the Optionee, cease and expire and are of no further
force and effect.
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(e) With respect to subclause 6(d)(i), the rights under the Option exercisable after the death or disability
of the Optionee, as therein specified, may be exercised by the person or persons to whom the
Optionee’s rights under the applicable Option Agreement pass by will or applicable law or, if no
such person has such right, by the deceased or disabled Optionee’s legal representatives.
(f) If the Optionee does not continue to be a director, officer, consultant or employee of the Resulting
Issuer upon completion of the Corporation’s Qualifying Transaction (as such terms are defined in
the policies of the TSX Venture Exchange), the Options granted hereunder must be exercised by the
Optionee within the later of 12 months after completion of the Qualifying Transaction and 90 days
after the Participant ceases to become a director, officer, consultant or employee of the Resulting
Issuer.
(g) An Optionee has no rights whatsoever as a shareholder in respect of any of the Option Shares
(including any right to receive dividends or other distributions therefrom or thereon) other than in
respect of Common Shares in respect of which the Optionee has exercised his Option to purchase
thereunder, which the Optionee has actually taken up and paid for, and which have been duly issued
to the Optionee and are outstanding as fully paid and non-assessable Common Shares.
7. CHANGES IN STOCK
In the event:
(a) of any change or proposed change in the Common Shares through subdivision, consolidation,
reclassification, amalgamation, merger or otherwise;
(b) of any issuance, dividend or distribution to all or substantially all the holders of Common Shares of
any shares, securities, property or assets of the Corporation other than in the ordinary course;
(c) that any rights are granted to holders of Common Shares to purchase Common Shares at prices
materially below fair market value; or
(d) that as a result of any recapitalization, merger, consolidation or otherwise the Common Shares are
converted into or exchangeable for any other shares or securities;
then in any such case:
(e) the Board will proportionately adjust the number of Option Shares available for Options, the number
of Option Shares covered by outstanding Options, the securities or other property that may be
acquired upon the exercise of an Option and the price per Option Share in such Option, or one or
more of the foregoing, to prevent substantial dilution or enlargement of the rights granted to, or
available for, Optionees/Participants; and
(f) the Board, in its discretion, may determine that:
(i) all or any part of the unexercised and unvested outstanding Options granted under the Plan
vest and are exercisable on a date specified by the Board and the unexercised and unvested
portion of such Options are thereupon deemed to have been vested and are exercisable on
and after the date so specified in respect of any and all Option Shares for which the
Optionee has not exercised the Option (notwithstanding that an Option Agreement states
that those Options are exercisable only during a later period or year); or
(ii) such Options may be exercisable for a limited period of time only and, if so, the Board will
determine such period of time,
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and such determination or limitation, once made or set, is deemed to be incorporated into the
applicable Option Agreement(s).
8. TAKEOVER BID
Notwithstanding the terms of any Option Agreement and Clause 6 of this Plan:
(i) where an unsolicited Offer for the Common Shares is made, all unexercised and unvested
outstanding Options granted under the Plan vest and become immediately exercisable in
respect of any and all Option Shares for which the Optionee has not exercised the Option
(notwithstanding that an Option Agreement states that those Options are exercisable only
during a later period or year); or
(ii) where an Offer for the Common Shares (other than an unsolicited Offer) is made, the Board
may by resolution and subject to regulatory approval accelerate the unmatured portions of
any outstanding Options so that any unexercised and unvested Options granted under the
Plan vest and become exercisable on such terms as the Board so determines
(notwithstanding that an Option Agreement states that those Options are exercisable only
during a later period or year).
For the purposes hereof, “Offer” means an offer made generally to the holders of the Corporation’s voting securities
in one or more jurisdictions to acquire, directly or indirectly, voting securities of the Corporation and which is in the
nature of a “takeover bid” as defined in the Securities Act and, where the Common Shares are listed and posted for
trading on a stock exchange, not exempt from the formal bid requirements of the Securities Act. For the purposes
hereof, an “unsolicited Offer” means an Offer in respect of which neither the Board nor management of the
Corporation solicited, sought out, or otherwise arranged for the offeror party to make such Offer. Any Option
remaining unexercised following the earlier of the withdrawal of such Offer and the expiry of such Offer in accordance
with its terms again becomes vested or unvested subject to the original terms of the Option Agreement as if the Offer
had not been made.
9. SALE OF ASSETS OR CHANGE IN CONTROL
Notwithstanding the terms of any Option Agreement and Clause 6 of this Plan, if:
(a) the Corporation sells or otherwise disposes of all or substantially of its assets; or
(b) any person who does not hold more than 20% of the issued and outstanding Common Shares
acquires more than 20% of the outstanding Common Shares without the prior consent of the Board,
in any way other than by way of takeover bid (which circumstance is addressed in Clause 8 of this
Plan),
all unexercised, unvested and outstanding Options granted under the Plan vest and are immediately exercisable in
respect of any and all Option Shares for which the Optionee has not exercised the Option (notwithstanding that an
Option Agreement states that those Options are exercisable only during a later period or year). The Board, in its
discretion, may determine whether such Options may be exercisable for a limited period of time only and, if so, the
Board will determine such period of time and such determination or limitation, once made or set, is deemed to be
incorporated into the applicable Option Agreement(s).
10. COMMON SHARES FULLY PAID AND NON-ASSESSABLE
All Common Shares issued upon the exercise of any Option are to be issued as fully paid and non-assessable Common
Shares.
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11. CONDITIONS OF ISSUANCE OF SHARES
(a) If at any time the Board or Committee (as the case may be) determines, in its discretion that:
(i) the registration or qualification of the Common Shares which are the subject of any Option
Agreement upon, or the consent or approval of, any securities exchange or any stock
exchange upon which the Common Shares are listed;
(ii) the registration or qualification under any laws of Canada or any Province thereof or of the
United States or any state thereof or the consent or approval of any regulatory authority
thereof;
(iii) evidence (in form and content satisfactory to the Board) of the investment intent of the
Optionee; or
(iv) an undertaking of the Optionee as to the sale or disposition of such Option Shares that may
purchased pursuant to an Option Agreement to the effect that such Option Shares once
purchased are not to be traded by the Optionee for a specified period of time,
is necessary or desirable as a condition of the issuance of any Option Shares pursuant to any Option
Agreement, then the issuance of any Common Shares is not to be made unless and until such registration,
qualification, consent, approval, evidence or undertaking has been effected or obtained free of any condition
not acceptable to the Board or Committee.
(b) Any trade by the Optionee in any Common Shares issued to the Optionee pursuant to the Plan
including, without limiting the generality of the foregoing, any sale or disposition for valuable
consideration, and any transfer, pledge or encumbrance of any Common Shares issued to an
Optionee pursuant to the Plan, is subject to such regulatory approvals and other restrictions under
applicable securities laws and regulatory policies as may be required at the time of such trade.
Accordingly, the Corporation makes no representation as to the ability of any Optionee to trade in
such Common Shares.
(c) The Corporation cannot assure a profit or protect the Optionee against a loss on the Common Shares
purchased under the Plan. The Corporation assumes no responsibility relating to any tax liability of
the Optionee by reason of the exercise of any Option or any subsequent trade.
12. ACCOUNTS AND STATEMENTS
The Corporation will maintain records indicating the number of Options granted to each Optionee and the number of
Options exercised under the Plan. Upon written request from an Optionee, the Corporation will furnish to that
Optionee a statement indicating the number of Options held on his behalf.
13. RESTRICTION ON TRANSFER
The Options granted to an Optionee are personal and non-assignable and any rights in regard thereto cannot be
transferred or assigned except upon the death of the Optionee as provided for in the Plan.
14. INTERPRETATION, AMENDMENT AND DISCONTINUANCE
The Board may interpret the Plan, prescribe, amend or rescind rules and regulations relating to it, and make all other
determinations necessary or advisable for its administration. In the event of a conflict between the terms of the Plan
and an Option Agreement, the terms of the Plan prevail. The Board may from time to time alter, suspend or discontinue
the Plan provided that such alteration, suspension or discontinuance does not, except as specifically noted in this Plan
or the Option Agreement, alter or impair any Option such Optionee may have under any Option Agreement previously
executed and delivered by the Corporation and such Optionee. Any amendment to this Plan is subject to receipt of
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any necessary regulatory approvals and any amendment required by applicable law or regulatory policy to be approved
by shareholders does not become effective until so approved. Subject to the foregoing provisions of this Clause, the
Board may terminate the Plan at any time and, upon such termination, any outstanding Option remains exercisable in
accordance with its terms as specified herein and in the Option Agreement.
15. WAIVER
No waiver by the Corporation of any term of this Plan or any breach thereof by an Optionee is effective or binding on
the Corporation unless the same is expressed in writing and any waiver so expressed does not limit or affect its rights
with respect to any other or future breach.
16. NOTICES
The manner of giving notices to the Corporation or to an Optionee is to be specified in the Option Agreement with
such Optionee.
17. GENERAL
(a) This Plan and each Option granted under the Plan are to be governed by and construed in accordance
with the laws of the Province of Alberta and any Option Agreement entered into pursuant to the
Plan is to be treated in all respects as an Alberta contract.
(b) Nothing contained herein restricts or limits or is deemed to restrict or limit the rights or powers of
the Board in connection with any allotment and issuance of shares in the capital stock of the
Corporation which are not reserved for issuance hereunder.
(c) The Plan and any Option Agreement entered into pursuant hereto enure to the benefit of and are
binding upon the Corporation, its successors and assigns. The interest of any Optionee hereunder
or under any Option Agreement is not transferable or alienable by the Optionee either by assignment
or in any other manner whatsoever and, during his lifetime, is vested only in him, but, subject to the
terms hereof and of the Option Agreement, enures to the benefit of and is binding upon the legal
personal representatives of the Optionee.
18. SHAREHOLDER APPROVAL AND EFFECTIVE DATE
Although this Plan is effective as and from the date hereof, each of the Option Agreements in respect of Options
granted pursuant to this Plan is to contain a restriction to the effect that, where the Common Shares are listed and
posted for trading on a stock exchange, no Common Shares are to be issued pursuant to the exercise of an Option
unless and until this Plan is approved by shareholders of the Corporation (such restriction to be removed or deemed
hereby to be of no further effect once shareholder approval is obtained). Shareholder approval will be deemed to be
received upon the completion of the Corporation’s initial public offering provided a summary of this Plan is included
in the Corporation’s prospectus related to such initial public offering.
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SCHEDULE “B”
AUDIT COMMITTEE CHARTER
OVERALL ROLE AND RESPONSIBILITY
The primary role and responsibilities of the Audit Committee shall be to:
(a) assist the board of directors (the “Board”) of Tornado Global Hydrovacs Ltd. (the “Corporation”)
in its oversight role with respect to:
(i) the quality and integrity of financial reporting and information;
(ii) the independent auditor's performance, qualifications and independence; and
(iii) the Corporation's compliance with legal and regulatory requirements;
(b) prepare such reports of the Audit Committee required to be included in any documents in accordance
with applicable laws or the rules of applicable securities regulatory authorities;
(c) assess the processes related to the determination and mitigation of risks and the maintenance of an
effective control environment; and
(d) strengthen the role of the outside directors by facilitating in depth discussions between the directors
on the Audit Committee, management and independent auditors.
MEMBERSHIP AND MEETINGS
The Audit Committee shall consist of three or more directors of the Corporation appointed by the Board, all of whom
in the opinion of the Board shall, whenever practicable, be independent and unrelated to the Corporation and as such
shall not be officers (other than a non-executive Chairman or Corporate Secretary who is not an employee of the
Corporation) or employees of or have a meaningful business relationship with the Corporation or any of the
Corporation's affiliates or be an immediate family member of any of the foregoing. Each of the members of the Audit
Committee shall satisfy the applicable independence and financial literacy requirements of the laws governing the
Corporation, the applicable stock exchanges on which the Corporation's securities are listed and applicable securities
regulatory authorities.
The Board shall designate one member of the Audit Committee as the Committee Chair. Each member of the Audit
Committee shall be financially literate as such qualification is interpreted by the Board in its business judgment.
Any members of the Audit Committee may be removed or replaced at any time by the Board and will cease to be a
member of the Audit Committee as soon as such member ceases to be a director. The Board may fill vacancies on the
Audit Committee by appointment from among its members. If and whenever a vacancy exists on the Audit
Committee, the remaining members may exercise all its powers so long as a quorum remains. Subject to the foregoing,
following the appointment as a member of the Audit Committee, each member will hold such office until the Audit
Committee is reconstituted.
STRUCTURE AND OPERATIONS
The affirmative vote of a majority of the members of the Audit Committee participating in any meeting of the Audit
Committee is necessary for the adoption of any resolution. In case of an equality of votes, the Chairman of the meeting
shall be entitled to a second or casting vote.
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The Chair will preside at all meetings of the Audit Committee, unless the Chair is not present, in which case the
members of the Audit Committee that are present will designate from among such members the Chair for the purposes
of the meeting.
The Audit Committee shall meet as often as it determines, but not less frequently than quarterly. A quorum for
meetings of the Audit Committee will be a majority of its members and the rules for calling, holding, conducting and
adjourning meetings of the Audit Committee will be the same as those governing the Board unless otherwise
determined by the Audit Committee or the Board.
The Chief Financial Officer will attend meetings of the Audit Committee where matters relating to the functions of
the Audit Committee are dealt with, unless otherwise excused from all or part of any such meeting by the Chairman.
The Audit Committee may invite such officers, directors and employees of the Corporation as it sees fit from time to
time to attend at meetings of the Audit Committee and assist in the discussion and consideration of the matters being
considered by the Audit Committee.
The Audit Committee will meet with the external auditor at least once per year (in connection with the preparation of
the year-end planning and the delivery of their report on the financial statements) and at such other times as the external
auditor and the Audit Committee consider appropriate. The Audit Committee is expected to establish and maintain
free and open communication with management and the independent auditor and shall periodically meet separately
with each of them.
Agendas, approved by the Chairman, will be circulated to the Audit Committee members along with background
information on a timely basis prior to the Audit Committee meetings. Minutes of all meetings of the Audit Committee
will be taken. The minutes of the Audit Committee will be recorded and maintained and the Audit Committee shall
report to the Board on its activities after each of its meetings, at which time minutes of the prior Audit Committee
meeting shall be available for the Board.
Any issues arising from these meetings that bear on the relationship between the Board and management should be
communicated to the Chairman of the Board by the Audit Committee Chair.
SPECIFIC DUTIES
Oversight of the Independent Auditor
(a) Make recommendations to the Board for the appointment and replacement of the Corporation’s
independent auditor.
(b) Responsibility for the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or related work. The independent
auditor shall report directly to the Audit Committee.
(c) Authority to pre-approve all audit services and permitted non-audit services to be performed by the
Corporation’s independent auditor.
(d) Evaluate the qualifications, performance and independence of the independent auditor, including (i)
reviewing and evaluating the lead partner on the independent auditor's engagement with the
Corporation, and (ii) considering whether the auditor's quality controls are adequate and the
provision of permitted non-audit services is compatible with maintaining the auditor's independence.
(e) Obtain and review any of the independent auditor’s reports to be included in any documents as
required by the laws governing the Corporation, the applicable stock exchanges on which the
Corporation's securities are listed and applicable securities regulatory authorities.
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(f) Ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the
audit and the audit partner responsible for reviewing the audit, as required by law (currently at least
every 5 years).
(g) When there is to be a change in the auditor, review all issues relating to the change including any
reportable events, and all information to be included in the required notice to securities regulators
of such change.
Financial Reporting
(a) Review and discuss with management and the independent auditor, as applicable:
(i) prior to the annual audit the scope, planning and staffing of the annual audit,
(ii) the annual audited financial statements,
(iii) the Corporation’s annual and quarterly disclosures made in management’s discussion and
analysis,
(iv) if applicable, approve any reports for inclusion in the Corporation’s Annual Report, as
required by applicable legislation,
(v) the Corporation’s quarterly financial statements, including the results of the independent
auditor's review of the quarterly financial statements and any matters required to be
communicated by the independent auditor under applicable review standards,
(vi) the Corporation’s depletion, depreciation and amortization expenses detailed by the
Corporation's cash generating units;
(vii) the Corporation’s general and administrative expenses on an uncapitalized basis, including
an overview of how the Corporation's general and administrative expenses compares to the
Corporation's annual and quarterly budgets;
(viii) the Corporation’s existing tax pools by category;
(ix) significant accruals, reserves or other estimates, such as the ceiling test calculation;
(x) accounting treatment of unusual or non-recurring transactions;
(xi) compliance with covenants under loan agreements;
(xii) disclosure requirements for commitments and contingencies;
(xiii) adjustments raised by the external auditors, whether or not included in the financial
statements;
(xiv) significant variances with comparative reporting periods;
(xv) significant financial reporting issues and judgments made in connection with the
preparation of the Corporation's financial statements;
(xvi) any significant changes in the Corporation's selection or application of accounting
principles;
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(xvii) any major issues as to the adequacy of the Corporation's internal controls and any special
steps adopted in light of material control deficiencies, and
(xviii) other material written communications between the independent auditor and management,
such as any management letter or schedule of unadjusted differences.
(b) Discuss with the independent auditor matters relating to the conduct of the audit, including any
difficulties encountered in the course of the audit work, any restrictions on the scope of activities or
access to requested information and any significant disagreements with management.
(c) Review the financial statements, prospectuses, management’s discussion and analysis, annual
information form and all public disclosure containing audited or unaudited financial information
(including, without limitation, annual and interim press releases and any other press releases
disclosing earnings or financial results) before release and prior to Board approval. The Audit
Committee must be satisfied that adequate procedures are in place for the review of the
Corporation’s disclosure of all other financial information. The Audit Committee and will
periodically access the accuracy of those procedures.
(d) Providing it has a quorum, the Audit Committee will approve the Corporation’s unaudited quarterly
financial statements and Management’s Discussion and Analysis. In the event the Audit Committee
does not have a quorum, the Board shall approve the Corporation’s unaudited financial statements
and Management’s Discussion and Analysis. All audited financial statements must be approved by
the Board, subsequent to review and recommendation for approval by the Audit Committee.
(e) Conduct an investigation sufficient to provide reasonable grounds for believing that the financial
statements, management’s discussion and analysis and any public disclosure documents containing
financial information are complete in all material respects and consistent with the information
known to Audit Committee members, and assess whether the financial statements reflect appropriate
accounting principles.
Risk Assessment and Risk Management
(a) Discuss with Corporation management guidelines and policies governing the risk assessment and
risk management processes.
(b) Review with Corporation’s management and the independent auditors, significant risks and
exposures, including management's plans and processes to minimize these risks, such as insurance
coverage.
(c) Evaluate whether Corporation’s management is adequately communicating the importance of
internal control to all relevant personnel.
(d) Review with the Corporation’s Chief Executive Officer and Chief Financial Officer, the
Corporation’s disclosure controls and procedures.
(e) Review with the Corporation’s Chief Executive Officer and Chief Financial Officer, the
Corporation’s cash management policy.
(f) Periodically privately consult with the independent auditor about internal controls and the
completeness and accuracy of the Corporation’s financial statements.
(g) Review with the Corporation’s Chief Executive Officer and Chief Financial Officer, the
Corporation’s internal control over financial reporting including: (i) any material weaknesses to
such controls; (ii) the impact of the material weaknesses, if any, on the issues financial reporting
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and internal controls; and (iii) the proposed actions to be taken by the Corporation to remedy the
material weaknesses.
(h) Review whether any internal control recommendations made by the independent auditor are being
implemented by the Corporation’s management and, if not, why not.
Other Responsibilities
(a) Periodically, as the Audit Committee deems appropriate:
(i) review the Chief Executive Officer’s expenses and perquisites; and
(ii) may review all consulting fees paid by the Corporation where such fees exceed $50,000
annually.
(b) Institute special investigations, if necessary, and hire special counsel or experts to assist, if
appropriate.
(c) Establish, and review periodically, as the Audit Committee deems appropriate, a procedure for:
(i) the receipt, retention, and treatment of complaints received by the Corporation regarding
accounting, internal accounting controls, or auditing matters; and
(ii) the confidential, anonymous submission by employees of the Corporation regarding
questionable accounting or auditing matters and resolution of such concerns, if any.
(d) To comply with the procedure above, the Audit Committee shall ensure that the Corporation advises
all employees, by way of a written code of business conduct and ethics (the “Code of Ethics”), that
any employee who reasonably believes that questionable accounting, internal accounting controls,
or auditing matters have been employed by the Corporation or their external auditors is strongly
encouraged to report such concerns by way of communication directly to the Chair of the Audit
Committee of the Corporation.
(e) Review with the Board, any issues that arise with respect to the quality or integrity of the
Corporation’s financial statements, the Corporation’s compliance with legal or regulatory
requirements and the performance and independence of the Corporation’s independent auditors.
(f) Establish and recommend to the Board, policies regarding whistleblowing, privacy, confidentiality
of information, employee trading, insider trading and reporting and the Code of Ethics.
(g) Perform other oversight functions as requested by the Board.
AUDIT COMMITTEE'S ROLE
The Audit Committee has the oversight role set out in this Charter. The Audit Committee shall review and assess the
adequacy of this Charter periodically and, where necessary, will recommend changes to the Board for its approval.
Management, the Board, the independent auditor and the internal auditor (if any) all play important roles in respect of
compliance and the preparation and presentation of financial information. Management is responsible for compliance
and the preparation of financial statements and periodic reports. Management is responsible for ensuring the
Corporation’s financial statements and disclosures are complete, accurate, in accordance with generally accepted
accounting principles and applicable laws. The Board in its oversight role is responsible for ensuring that management
fulfills its responsibilities. The independent auditor, following the completion of its annual audit, opines on the
presentation, in all material respects, of the financial position and results of operations of the Corporation in
accordance with Canadian generally accepted accounting principles.
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FUNDING FOR THE INDEPENDENT AUDITOR AND RETENTION OF OTHER INDEPENDENT
ADVISORS
The Corporation shall provide for appropriate funding, as determined by the Audit Committee, for payment of
compensation to the independent auditor for the purpose of issuing an audit report and to any advisors retained by the
Audit Committee. The Audit Committee shall also have the authority to retain such other independent advisors as it
may from time to time deem necessary or advisable for its purposes and the payment of compensation therefor shall
also be funded by the Corporation.
APPROVAL OF AUDIT AND PERMITTED NON-AUDIT SERVICES PROVIDED BY EXTERNAL
AUDITORS
Over the course of any year there will be two approvals that will be provided.
(a) The first is the annual Audit Committee approval of the audit engagement and identifiable permitted
non-audit services for the coming year.
(b) The second is in-year Audit Committee pre-approvals of proposed audit and permitted non-audit
services as they arise. Any proposed audit and permitted non-audit services to be provided by an
external auditor to the Corporation or its subsidiaries must receive prior approval from the Audit
Committee, in accordance with this protocol.
The Chief Financial Officer shall act as the primary contact to receive and assess any proposed engagements from an
external auditor.
Following receipt and initial review for eligibility by the primary contact, a proposal would then be forwarded to the
Audit Committee for review and confirmation that a proposed engagement is permitted.
In the majority of such instances, proposals may be received and considered by the Chair of the Audit Committee (or
such other member of the Audit Committee who may be delegated authority to approve audit and permitted non-audit
services), for approval of the proposal on behalf of the Audit Committee. The Audit Committee Chair will then inform
the Audit Committee of any approvals granted at the next scheduled meeting.
PROCEDURE GOVERNING ERRORS OR MISSTATEMENTS IN FINANCIAL STATEMENTS
In the event a director or an officer of the Corporation has reason to believe, after discussion with management, that a
material error or misstatement exists in financial statements of the Corporation, that director or officer shall forthwith
notify the Audit Committee and the auditor of the error or misstatement of which the director or officer becomes aware
in a financial statement that the auditor or a former auditor has reported on.
If the auditor or a former auditor of the Corporation is notified or becomes aware of an error or misstatement in a
financial statement on which the auditor or former auditor has reported, and if in the auditor’s or former auditor's
opinion the error or misstatement is material, the auditor or former auditor shall inform each director accordingly.
When the Audit Committee or the Board is made aware of an error or misstatement in a financial statement, the Board
shall prepare and issue revised financial statements or otherwise inform the shareholders of the Corporation and file
such revised financial statements, as required.
LIMITATION ON AUDIT COMMITTEE MEMBERS' DUTIES
Nothing in this Charter is intended, or may be construed, to impose on any member of the Audit Committee a standard
of care or diligence that is in any way more onerous or extensive than the standard required by law.