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Annual Information Form NEW FLYER INDUSTRIES INC. Annual Information Form March 24, 2014 TABLE OF CONTENTS GENERAL...................................................................................................................................................1 CORPORATE STRUCTURE......................................................................................................................3 The Issuer........................................................................................................................................3 Ownership Structure .......................................................................................................................3 GENERAL DEVELOPMENT OF THE BUSINESS..................................................................................4 Recent Developments .....................................................................................................................4 DESCRIPTION OF THE BUSINESS .........................................................................................................7 Business of the Company................................................................................................................7 Industry Overview...........................................................................................................................8 Company Overview ........................................................................................................................9 New Flyer History...........................................................................................................................9 NABI History................................................................................................................................10 Business Strengths ........................................................................................................................10 Corporate Mission Statement and Strategy...................................................................................13 Products and Services ...................................................................................................................14 Bus Manufacturing Operations .....................................................................................................15 Product Development and Innovation...........................................................................................16 Aftermarket Parts and Support Services .......................................................................................17 Customers .....................................................................................................................................21 Forward Visibility of Orders and Backlog....................................................................................22 Sales and Marketing......................................................................................................................24 Facilities and Manufacturing Process ...........................................................................................27 Product Warranty and Other Contractual Provisions....................................................................30 Bonding Requirements..................................................................................................................31 Materials and Suppliers for Production.........................................................................................31 Capital Expenditures.....................................................................................................................32 People and Labour Relations ........................................................................................................32 Long-Term Collective Bargaining Agreements............................................................................35 Pensions ........................................................................................................................................35 Competition...................................................................................................................................35 Legal and Regulatory Matters.......................................................................................................36 DESCRIPTION OF CAPITAL STRUCTURE .........................................................................................42 Share Capital.................................................................................................................................42 Shareholder Rights Plan................................................................................................................42 Description of Debentures ............................................................................................................42 - i - TABLE OF CONTENTS (continued) Book-Entry Settlement and Clearance..........................................................................................44 Dividend Policy.............................................................................................................................46 Credit Facility ...............................................................................................................................48 DIRECTORS, OFFICERS AND MANAGEMENT .................................................................................48 Directors and Management ...........................................................................................................48 Long-Term Incentive Plans...........................................................................................................55 Insurance Coverage for the Company and Indemnification..........................................................57 AUDIT COMMITTEE AND AUDITOR’S FEES ....................................................................................57 Relevant Education and Experience of Audit Committee Members ............................................57 Non-Audit Services.......................................................................................................................58 External Auditor Service Fees ......................................................................................................58 Audit Committee Oversight..........................................................................................................58 Risk Management .........................................................................................................................58 RISK FACTORS........................................................................................................................................59 Risks Related to the Business of the Company.............................................................................59 Risks Related to the Capital Structure ..........................................................................................72 MARKET FOR SECURITIES ..................................................................................................................80 Common Shares ............................................................................................................................80 Debentures ....................................................................................................................................81 AUDITORS, TRANSFER AGENT, REGISTRAR AND TRUSTEE ......................................................81 MATERIAL CONTRACTS ......................................................................................................................81 LEGAL PROCEEDINGS ..........................................................................................................................83 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ......................83 INTERESTS OF EXPERTS ......................................................................................................................83 ADDITIONAL INFORMATION..............................................................................................................83 APPENDIX “A” ........................................................................................................................................84 - ii - NEW FLYER INDUSTRIES INC. GENERAL The information, including any financial information, disclosed in this Annual Information Form is stated as at December 29, 2013 or for the year ended December 29, 2013, as applicable, unless otherwise indicated. Unless otherwise indicated, all dollar amounts are expressed in U.S. dollars and references to “$”, “US$” and “U.S. dollars” are to the lawful currency of the United States. References to C$ are to the lawful currency of Canada. References in this Annual Information Form to “we”, “us”, “our” or the “Company” refer to New Flyer Industries Inc. (“NFI”) and all of its direct or indirect subsidiaries, including New Flyer Industries Canada ULC (“NFI ULC”), New Flyer of America Inc. (“NFAI”), NABI Bus, LLC (“NABI Bus”) and NABI Parts, LLC (“NABI Parts”) and references to “NFI” or the “Issuer” refer to New Flyer Industries Inc. References to “New Flyer” refer just to NFI ULC and NFAI. References to “NABI” refer to NABI Bus and NABI Parts. References in this Annual Information Form to “management” are to management of the Company. Certain statements in this Annual Information Form are “forward-looking statements”, which reflect the expectations of management regarding the Company’s future growth, results of
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