Annual Information Form
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ANNUAL INFORMATION FORM FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 February 21, 2019 TABLE OF CONTENTS EXPLANATORY NOTES .................................................................................................................................................... 1 CAUTIONARY NOTE REGARDING FORWARD‐LOOKING INFORMATION ........................................................................ 1 CORPORATE STRUCTURE ............................................................................................................................................... 2 GENERAL DEVELOPMENT OF THE BUSINESS ................................................................................................................. 3 BUSINESS OF CARGOJET ................................................................................................................................................ 7 DIVIDENDS ................................................................................................................................................................... 16 DESCRIPTION OF CAPITAL STRUCTURE ........................................................................................................................ 17 MARKET FOR SECURITIES ............................................................................................................................................ 19 DIRECTORS AND EXECUTIVE OFFICERS ........................................................................................................................ 20 AUDIT COMMITTEE ...................................................................................................................................................... 24 RISK FACTORS .............................................................................................................................................................. 25 LEGAL PROCEEDINGS ................................................................................................................................................... 33 REGULATORY ACTIONS ................................................................................................................................................ 33 INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ................................................................ 33 TRANSFER AGENT AND REGISTRAR ............................................................................................................................. 33 MATERIAL CONTRACTS ................................................................................................................................................ 33 INTERESTS OF EXPERTS ................................................................................................................................................ 35 ADDITIONAL INFORMATION ........................................................................................................................................ 35 SCHEDULE A ‐ CHARTER OF THE AUDIT COMMITTEE ........................................................... 36 - i - EXPLANATORY NOTES Unless otherwise stated, the information in this annual information form (the “Annual Information Form”) is stated as at February 21, 2019. Unless otherwise noted or the context otherwise indicates, “Cargojet”, the “Company” and “our” refers to Cargojet Inc. and its subsidiaries. All currency amounts are stated in Canadian dollars, unless otherwise stated. This Annual Information Form should be read in conjunction with the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations (“MD&A”) for the years ended December 31, 2018 and 2017. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (“GAAP”), as set out in the CPA Canada Handbook ‐ Accounting (“CPA Handbook”), which incorporates International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), except for any financial information specifically denoted otherwise. The annual financial statements, quarterly financial statements, press releases and additional information relating to Cargojet filed with regulatory authorities are available on SEDAR at sedar.com or at our website at www.cargojet.com. CAUTIONARY NOTE REGARDING FORWARD‐LOOKING INFORMATION This AIF contains “forward‐looking information” within the meaning of applicable Canadian securities legislation. Forward‐looking information includes, but is not limited to, statements with respect to the products and services offered by Cargojet, its business strategies, planned 2019 operating fleet, and relations with suppliers, customers and employees. In certain cases, forward‐looking information can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. In particular, this AIF contains forward‐looking information relating to the business strategies of Cargojet. Forward‐ looking information regarding Cargojet is based on certain material expectations and assumptions of Cargojet concerning anticipated financial performance, business prospects, strategies, regulatory developments, exchange rates, interest rates, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities, the continued and timely development of infrastructure, the availability and cost of labour and services and the ability to obtain financing on acceptable terms, market conditions and potential timing delays. Although Cargojet considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward‐looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Cargojet to be materially different from those expressed or implied by such forward‐looking information, including but not limited to: loss of key contracts, restrictions of existing indebtedness and finance lease obligations reducing flexibility, the Canada ‐ US “Open Skies” agreement, competition, government regulations relating to aviation, transportation, environmental, labour, employment and other laws, treaties and regulations, threats to the Company’s cyber security, availability of adequate insurance, maintaining leased and owned aircraft and availability of future aircraft (and financing therefor), fixed costs, fuel prices, costs related to mechanical and maintenance problems and replacement of equipment and parts, foreign exchange fluctuations, the ability of the Company to maintain profitability and manage growth, industry risk and economic sensitivity, terrorism, dependence on key personnel, labour relations, severe weather patterns, seasonal fluctuations, dependence of the Company on international trade, future sales of Voting Shares by directors and officers of the Company, income tax matters, increase in interest rates, ability to maintain dividends, potential volatility of the price of our Voting Shares, as well as those factors discussed in the section entitled “Risk Factors” herein. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward‐looking information, there may be other factors beyond the Company’s control that cause actions, events or results not to be as anticipated, - 1 - estimated or intended. There can be no assurance that forward‐looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward‐looking information. Forward‐looking information is provided as of the date of this AIF, and the Company assumes no obligation to update or revise such forward‐looking information to reflect new events or circumstances except as required under applicable securities laws. CORPORATE STRUCTURE Cargojet Inc. was incorporated under the Business Corporations Act (Ontario) (the “OBCA”) on April 7, 2010 and is the successor to Cargojet Income Fund (the “Fund”), following the completion of the conversion of the Fund from an income trust to a public corporation by way of a court‐approved statutory plan of arrangement (the “Arrangement”) under Section 182 of the OBCA completed on January 1, 2011. The head and registered office address of the Company is 2281 North Sheridan Way, Mississauga, Ontario L5K 2S3. The following chart illustrates the corporate structure of the Company (including jurisdiction of establishment or incorporation of the various entities and percentage ownership of voting securities) as at February 21, 2019. The following diagram illustrates the material operating subsidiaries of the Company as of the date hereof, and excludes the Company’s holding companies and non‐material subsidiaries. Voting Debentureholders Shareholders (CJT.DB.C) (CJT, CJT.A) (CJT.DB.D) 100% GP Common Shares Cargojet Inc. (Ontario) Cargojet GP Inc. (Ontario) 100% Ordinary LP Units Cargojet Holdings 100% GP Units