tornado global hydrovacs ltd. annual general and … · 2. to elect directors of the corporation...
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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, JULY 8, 2019
TO BE HELD AT:
at the offices of Dentons LLP
in the Fenerty Boardroom, 15th Floor, Bankers Court,
850 - 2nd Street SW Calgary, Alberta T2P 0R8, Canada
10:00 a.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 JULY
8, 2019.
Dated: June 5, 2019
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 10:00 a.m. (Calgary time) on Monday, July 8, 2019, at the offices of
Dentons LLP in the Fenerty Boardroom, 15th Floor, Bankers Court, 850 - 2nd Street SW Calgary,
Alberta T2P 0R8, Canada for the following purposes:
1. to receive the consolidated financial statements of the Corporation for the financial year ended
December 31, 2018 together with the auditors’ report thereon;
2. to elect directors of the Corporation for the ensuing year;
3. to appoint auditors of the Corporation for the ensuing year and authorize the directors to fix the
remuneration to be paid to the auditors;
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) 368-2502 (International), or through the website of AST at www.astvotemyproxy.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 June 3, 2019 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
June 5, 2019
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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 .................................................................................................................................................... 2 ADVICE TO BENEFICIAL HOLDERS.............................................................................................................................. 3 VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES .................................................................... 4
PART II – BUSINESS OF THE MEETING ................................................................................................................................ 4 RECEIPT OF FINANCIAL STATEMENTS AND AUDITORS’ REPORT ................................................................................. 4 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 OUTSTANDING SHARE-BASED AND OPTION-BASED AWARDS .................................................................................. 13 INCENTIVE PLAN AWARDS — VALUE VESTED OR EARNED DURING THE YEAR ....................................................... 13 TERMINATION AND CHANGE OF CONTROL BENEFITS ............................................................................................... 13 DIRECTOR COMPENSATION ...................................................................................................................................... 14 DIRECTORS’ OUTSTANDING SHARE-BASED AND OPTION-BASED AWARDS ............................................................. 14
PART IV – ADDITIONAL DISCLOSURE ................................................................................................................................ 15 SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS ................................................... 15 INDEBTEDNESS OF DIRECTORS AND OFFICERS ......................................................................................................... 15 INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS ............................................................................. 15 CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES AND SANCTIONS .................................................................... 16 MANAGEMENT CONTRACTS ..................................................................................................................................... 17 ADDITIONAL INFORMATION ..................................................................................................................................... 17
PART V – CORPORATE GOVERNANCE ............................................................................................................................... 17 BOARD OF DIRECTORS ............................................................................................................................................. 17 DIRECTORSHIPS ........................................................................................................................................................ 18 ORIENTATION AND CONTINUING EDUCATION .......................................................................................................... 18 ETHICAL BUSINESS CONDUCT .................................................................................................................................. 18 NOMINATION OF DIRECTORS AND COMPENSATION .................................................................................................. 18 OTHER BOARD OF DIRECTORS COMMITTEES ............................................................................................................ 19 ASSESSMENTS .......................................................................................................................................................... 19
PART VI - AUDIT COMMITTEE ............................................................................................................................................. 19 COMPOSITION OF THE AUDIT COMMITTEE ............................................................................................................... 19 AUDIT COMMITTEE CHARTER .................................................................................................................................. 19 EDUCATION AND EXPERIENCE .................................................................................................................................. 19 PRE-APPROVAL POLICIES AND PROCEDURES ........................................................................................................... 20 EXTERNAL AUDITOR SERVICE FEES (BY CATEGORY)............................................................................................... 21 RELIANCE ON CERTAIN EXEMPTIONS ....................................................................................................................... 21 APPROVAL ................................................................................................................................................................ 21
SCHEDULE “A” – STOCK OPTION PLAN .......................................................................................................... A-1
SCHEDULE “B” – AUDIT COMMITTEE CHARTER .......................................................................................... B-1
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MANAGEMENT INFORMATION CIRCULAR
June 5, 2019
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 10:00 a.m. (Calgary time) on Monday, July 8, 2019, at the offices of
Dentons LLP in the Fenerty Boardroom, 15th Floor, Bankers Court, 850 - 2nd Street 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) 368-2502 (International), or through the website of
AST at www.astvotemyproxy.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. Proxies may be solicited personally
by directors, officers and employees of the Corporation, at no additional compensation. The cost of such
solicitation will be borne by the Corporation.
Except where otherwise stated, the information contained herein is given as of June 5, 2019.
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) 368-2502 (International), or through the website of AST Trust Company at
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www.astvotemyproxy.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. 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 June 3, 2019 (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 or ballot 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.
Voting of Shares
The Corporation has 126,771,119 Common Shares issued and outstanding as at June 5, 2019,
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.
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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 mail 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 tabulate 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 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 relying on the notice and access delivery procedures outlined in National
Instrument 54-101 - Communications with Beneficial Owners of Securities of a Reporting Issuer to
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distribute copies of the proxy related materials in connection with the Meeting. 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 126,771,119 were issued and outstanding as at June 5, 2019 as fully paid and non-
assessable. The holders of the Common Shares are entitled to one vote per Common 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
Direct and indirect 52,065,667 41.1%
Empire Industries Ltd.
Winnipeg, Canada
Direct 30,185,544 23.8%
Note:
(1) 138,667 Common Shares are owned directly by Mr. Chui. 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 30,692,339 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.
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, 2018 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,
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Agincourt, Ontario, or by facsimile at 1-866-781-3111 (North America) or (416) 368-2502
(International), or through the website of AST at www.astvotemyproxy.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) directors 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 June 5, 2019, 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
Canada
Director (Non-
Executive Chairman)
Chief Executive Officer
and Executive Chairman of
Empire Industries Ltd., a
public ride manufacturing
and engineering company
listed on the TSXV, since
2006.
2016 4,893,382(1)
James Chui
Vancouver, British
Columbia
Canada
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
2016 52,065,667(2)
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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
2011 through 2015.
Director of Empire
Industries Ltd., a public
steel fabrication and
engineering company listed
on the TSXV since 2017.
Darrick Evong(3)(4)
Calgary, Alberta
Canada
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 138,667
Chuyu Wu
Shanghai, People’s
Republic of China
Director President of Shanghai
World Trade Resources
Group Co., Ltd., a private
investing company, since
March 2016; General
Manager of Shanghai Kaya
Management Consultancy
Co., Ltd., a private
consulting company, from
January 2005 to December
2015.
2016 132,889
George Tai(3)(4)
Calgary, Alberta
Canada
Corporate Secretary &
Director
Partner at Dentons Canada
LLP, a law firm, since
September 2017. Prior
thereto Partner at
Carscallen LLP, a law
firm, from January 2006 to
August 2017.
2016 138,667
Notes:
(1) Includes 3,874,761 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 and 576,167 owned personally.
(2) Includes 21,234,661 Common Shares 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". Also includes 30,692,339
Common Shares 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.
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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 its 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. 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:
“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
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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 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
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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 is appropriate 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. It is expected that such salaries will require future adjustments 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, 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.
The base salaries paid to Named Executive Officers (as defined herein) in the year ended
December 31, 2018 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,
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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 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 Corporation 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.
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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 hydrovac business, 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. This
is particularly important to the Corporation, given its stage of development and the varying challenges
that it faces. It has 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 hydrovac industry and consistent
with the performance of the Corporation.
The Corporation became a reporting issuer effective June 27, 2016 upon completion of a statutory
plan of arrangement transaction (the “Arrangement”) whereby the Corporation was spun-out of Empire
Industries Ltd. (“Empire”). The Arrangement was a restructuring transaction involving Empire however,
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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. 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, 2018
exceeding $150,000 (the “Named Executive Officers”).
Name and
Position Year
Salary
($)
Share-
based
awards(1)
($)
Option-
based
awards(2)
($)
Non-equity incentive plan
compensation
Pension
Value(3)
($)
All other
Compensation
($)
Total
Compensation
($)
Annual
incentive
plans
Long term
incentive
plans
Bill Rollins(4)
Chief Executive Officer
2018
2017
2016(9)
$196,154
$190,423
$84,231
$Nil
$Nil
$Nil
$Nil
$87,975
$Nil
$71,939
$23,113
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$23,023 (4)
$47,028 (4)
$16,923
$291,116
$348,539
$84,231
Alastair J. Robertson(5)
Chief Financial Officer
2018
2017
2016
$37,568
$46,075
$Nil
$Nil
$Nil
$Nil
$Nil
$20,302
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$2,936
$1,565
$Nil
$40,504
$67,942
$Nil
Sean Li(6)
President and Chief
Operating Officer of
Tornado Global
Hydrovacs (Beijing) Ltd
2018
2017
2016
$233,314
$233,551
$93,956
$Nil
$Nil
$Nil
$Nil
$60,906
$Nil
$Nil
$93,809
$37,583
$30,794
$46,914
$18,873
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$264,108
$435,180
$150,412
Connie Ping(7)
Chief Financial Officer
2018
2017
2016
$Nil
$37,180
$65,663
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$42,002
$3,850
$Nil
$79,182
$69,513
Johnathan Nysse(8)
Director of Business
Development, Sales &
Marketing of Tornado
Global Hydrovacs (North
America) Inc.
2018
2017
2016
$163,209
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$Nil
$9,718
$Nil
$Nil
$172,927
$Nil
$Nil
Notes:
(1) The Corporation does not have a share-based awards plan.
(2) Option-based awards amounts do not represent cash received. They represent the theoretical value ascribed to options
granted to the officers on the date of the grant. This value is determined using the Black-Scholes model, with various
assumptions made at the time of grant relating to unit volatility and risk-free interest rates. All grants were made with
exercise prices equal to or above the market price at the time of grant.
(3) The Corporation does not have a pension plan.
(4) For 2018, Mr. Rollins earned a bonus of $71,939 which was paid in April 2019. For 2017, Mr. Rollins earned a bonus of
$23,113 which was paid in May 2018. All other compensation includes (but is not limited to) the following items which
exceed 25% of the total amount: (i) a vehicle allowance; and (ii) with respect to 2017, vacation pay for prior years.
(5) Mr. Robertson was appointed Chief Financial Officer on July 1, 2017. Mr. Robertson provides his services to the
Corporation pursuant to the terms of a consulting agreement and as such is not an employee of the Corporation.
(6) Mr. Li provided his services to the Corporation pursuant to the terms of a consulting agreement and as such is not an
employee of the Corporation. Pursuant to the consulting agreement, for 2017 Mr. Li earned an annual bonus of $93,809
which was paid in May 2018. No annual bonus was earned in 2018. In addition in 2018 he earned $30,794 under a long term
retention bonus plan which, together with amounts earned in 2016 and 2017, was paid in March, 2019. Mr. Li’s consulting
contact terminated on March 31, 2019 at which time he left the Corporation.
(7) 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 Corporation made a severance payment to Ms.
Ping in the amount of $29,077, which is included in all other compensation.
(8) Mr. Nysse provides his services to the Corporation pursuant to the terms of a consulting agreement entered into in January
2018 and as such is not an employee of the Corporation. All amounts are in equivalent Canadian dollars. Pursuant to the
consulting agreement in 2018 Mr. Nysse earned consulting fees of US$125,962 and a signing bonus of US$7,500.
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(9) With respect to the financial year ended December 31, 2016 the figures are the actual amounts earned and have not been
annualized.
Outstanding Share-Based and Option-Based Awards
The following table sets forth information in respect of all option-based awards outstanding at
December 31, 2018 for each of the Named Executive Officers. The Corporation had no share-based
awards for the year-ended December 31, 2018.
Option-based Awards
Name
Number of
securities
underlying
unexercised
Options
#
Option
exercise
price
$ Option expiration date
Value of unexercised in-the-
money Options(1)
$
Bill Rollins 1,300,000 $0.11 November 21, 2022 $52,000
Sean Li (2) 900,000 $0.11 November 21, 2022 $36,000
Alastair Robertson 300,000 $0.11 November 21, 2022 $12,000
Johnathan Nysse Nil
Notes:
(1) Value is calculated based on the difference between the exercise price of the Options and the closing price of the Common
Shares on the Exchange on December 31, 2018 of $0.15.
(2) Mr. Li’s options expired on March 31, 2019
Incentive Plan Awards — Value Vested or Earned During the Year
The following table sets forth information relating to the value vested or earned during the Corporation's
financial year ended December 31, 2018, in respect of option-based awards and non-equity incentive plan
compensation for Named Executive Officers. The Corporation had no share-based awards for the year-
ended December 31, 2018.
Name
Option-based awards - Value vested
during the year(1)
($)
Non-equity incentive plan
compensation – Value earned during
the year
($)
Bill Rollins $17,333 Nil
Sean Li Nil Nil
Alastair Robertson Nil Nil
Johnathan Nysse Nil Nil
Notes:
(1) Value is calculated based on the difference between the exercise price of the Options and the closing price of the Common
Shares on the Exchange on December 31, 2018 of $0.15.
Termination and Change of Control Benefits
The employment agreement of Bill Rollins, effective September 1, 2017 provides for an annual
base salary of $200,000 paid monthly and an annual bonus calculated as 4% of the annual pre-tax
earnings of the Corporation’s North American segment. For the stub period from September 1 to
December 31, 2017 such bonus was prorated. 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 eighteen times his monthly base salary plus 1.5 times both his annual
bonus for the financial year preceding the termination and the value of the benefits provided in the
preceding calendar year.
-14-
Director Compensation
In 2017, the Board approved the payment of an annual retainer fee of $20,000 to be paid to all
non-management directors in recognition of services provided to the Corporation. The retainer fees are
payable quarterly in advance. In addition, meeting fees are payable as follows: (i) each Board Meeting
attended in person - $1,000; and (ii) each Board Meeting attended by conference call - $500. In addition,
all directors may also receive Options under the Stock Option Plan.
The following table sets out all amounts of compensation provided to the directors of the
Corporation for the fiscal year ended December 31, 2018.
Name
Fees
earned
($)
Share-
based
awards(1)
($)
Option-based
awards
($)
Non-equity
incentive plan
compensation
($)
Pension
Value(2)
($)
All other
compensation
($)
Total
($)
K. Guy Nelson $24,000 Nil Nil Nil Nil Nil $24.000
James Chui $23,000 Nil Nil Nil Nil Nil $23.000
Darrick Evong $24,000 Nil Nil Nil Nil Nil $24,000
Chuyu Wu $22,000 Nil Nil Nil Nil Nil $22,000
George Tai $23,000 Nil Nil Nil Nil Nil $23,000
Notes:
(1) The Corporation does not have share-based awards.
(2) The Corporation does not have a pension plan.
Directors’ Outstanding Share-Based and Option-Based Awards
The Corporation does not have a share-based awards plan. The following table sets forth
information in respect of all Option-based awards outstanding at the end of the financial year ended
December 31, 2018 to the directors of the Corporation.
Option-based Awards
Name
Number of
securities
underlying
unexercised
Options
Option
exercise price
($)
Option expiration
date
Value of unexercised
in-the-money Options(1)
($)
K. Guy Nelson 650,000 $0.11 November 21, 2022 $26,000
James Chui 650,000 $0.11 November 21, 2022 $26,000
Darrick Evong 650,000 $0.11 November 21, 2022 $26,000
Chuyu Wu 650,000 $0.11 November 21, 2022 $26,000
George Tai 650,000 $0.11 November 21, 2022 $26,000
Notes:
(1) Value is calculated based on the difference between the exercise price of the Options and the closing price of the Common
Shares on the Exchange on December 31, 2018 of $0.15.
Directors Incentive Plan Awards – Value Vested or Earned During the Year
The following table sets forth information in respect of the value vested or earned during the
Corporation's financial year ended December 31, 2018 of share-based awards, option-based awards and
non-equity incentive plan compensation for directors of the Corporation.
-15-
Name
Option-based awards – Value vested
during the year(1)(2)
($)
Non-equity incentive plan
compensation – Value earned during
the year
($)
K. Guy Nelson $8,667 Nil
James Chui $8,667 Nil
Darrick Evong $8,667 Nil
Chuyu Wu $8,667 Nil
George Tai $8,667 Nil
Notes:
(1) The Corporation does not have share-based awards.
(2) Value is calculated based on the difference between the exercise price of the Options and the closing price of the Common
Shares on the Exchange on December 31, 2018 of $0.15.
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
Equity compensation plans
approved by security
holders
8,400,000 $0.11 4,271,652(2)
Equity compensation plans
not approved by security
holders
Nil Nil Nil
Total 8,400,000 Nil 4,271,652
Notes:
(1) Reflects the number of Common Shares reserved for issuance upon exercise of outstanding stock options granted under the
Option Plan as of December 31, 2018. The Corporation has no other equity compensation plans.
(2) Represents the number of Common Shares remaining available for future issuance upon exercise of stock options that may
be granted under the Option Plan as of December 31, 2018 and based on 10% of the number of Common Shares issued and
outstanding as of December 31, 2018.
Indebtedness of Directors and Officers
As at June 5, 2019 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, 2018.
Interest of Informed Persons in Material Transactions
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.
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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
(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.
-17-
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 Industries Ltd which since September 15, 2017
exercises control or direction over greater than 10% of the Common Shares and prior thereto was 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. Chui is not independent as he exercises control or
direction over greater than 10% of the Common Shares. Mr. Tai is not independent as he is a partner in a
firm that provides legal services to the Corporation.
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
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.
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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
James Chui 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
The Board of Directors has adopted a written code of business conduct and ethics.
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.
Compensation is paid to directors of the Corporation in their capacity as directors as previously
disclosed. Directors are eligible for grants of Options.
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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 considers 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;
(b) the ability to assess the general application of the above-noted principles in connection
with estimates, accruals and reserves;
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(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 September 2017, Mr. Tai has been a partner at
Dentons Canada LLP, a business law firm forming part
of Dentons, a global law firm. Prior thereto, Mr. Tai was
a partner at Carscallen LLP from January 2006 to August
2017, 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 from the University of Toronto 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.
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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 2018 and 2017:
2018 2017
Audit Fees(1) $50,275 $51,765
Audit-Related Fees(2) $8,603 $7,500
Tax Fees (3) $36,320 $8,500
Total $95,198 $67,765
Notes:
(1) 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.
(2) 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.
(3) 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, 2018 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.
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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.