407 INTERNATIONAL INC. Annual Information Form For the Year Ended December 31, 2019 As at February 19, 2020 ANNUAL INFORMATION FORM TABLE OF CONTENTS FORWARD-LOOKING STATEMENTS ............................................................................................... 5 CORPORATE STRUCTURE ............................................................................................................... 5 1. Name, Address, Incorporation and Ownership ................................................................. 5 2. Intercorporate Relationships ................................................................................................ 5 GENERAL DEVELOPMENT OF BUSINESS .................................................................................... 6 1. Traffic ......................................................................................................................................... 6 2. Construction ............................................................................................................................. 6 3. Information Technology ......................................................................................................... 6 4. Customer Service .................................................................................................................... 7 5. Other Developments ............................................................................................................... 7 5.1. International Organization for Standardization (“ISO”) ........................................................... 7 5.2. 407 ETR Team Charter ............................................................................................................. 7 5.3. 407 ETR in the Community ....................................................................................................... 8 5.4 Data Theft Incident .................................................................................................................... 8 1. General Summary .................................................................................................................... 8 2. Production and Services ........................................................................................................ 9 3. Specialized Skill and Knowledge ........................................................................................13 4. Competitive Conditions .........................................................................................................13 5. Highway 407.............................................................................................................................14 5.1. Construction Activities ..............................................................................................................14 5.2. Tolling and Back Office Activities ............................................................................................15 6. New Products ..........................................................................................................................15 7. Intangible Properties ..............................................................................................................16 8. Seasonal Variations ...............................................................................................................16 9. Economic Dependence..........................................................................................................16 9.1. Authorized Requester Electronic Data Services Agreement ................................................16 9.2. MTO Enforcement Services .....................................................................................................17 9.3. Police Services Agreement ......................................................................................................17 9.4. Transponder Supply and Leasing/Toll System Technology and Licensing ........................18 10. Employees................................................................................................................................18 11. Social and Environmental Policies .....................................................................................18 11.1. Environmental Pollution Prevention & Climate Change Risk ...............................................18 11.2. Management Commitment.......................................................................................................19 11.3. Corporate Awareness ...............................................................................................................19 11.4. Stakeholder Awareness and Participation..............................................................................19 11.5. Performance Monitoring and Reporting ..................................................................................19 12. Risk Factors .............................................................................................................................20 12.1. Construction of Extensions and Deferred Interchanges .......................................................20 12.2. Toll Exempt Vehicles and Unbillable Transactions ...............................................................20 12.3. Traffic Volumes and Toll Revenue ..........................................................................................20 12.4. Possible Transportation Improvement ....................................................................................20 12.5. Operating and Maintenance Expenses ..................................................................................21 12.6. Technology Infrastructure ........................................................................................................21 12.7. Cybersecurity ............................................................................................................................21 12.8. Ownership of Intellectual Property and Reliance on Certain Suppliers ...............................21 12.9. Liquidity ......................................................................................................................................22 12.10. Inflation ......................................................................................................................................22 12.11. Adequate Insurance/Risk Management .................................................................................22 12.12. Changes in Laws ......................................................................................................................22 Page 2 of 77 12.13. Market for Securities .................................................................................................................22 13. Insurance ..................................................................................................................................22 DIVIDENDS ................................................................................................................................23 DESCRIPTION OF CAPITAL STRUCTURE ..............................................................................23 1. General Description of Capital Structure...........................................................................23 2. Ratings ......................................................................................................................................23 3. Existing Indebtedness ...........................................................................................................24 3.1. July 1999 Bonds .......................................................................................................................25 3.2. August 1999 Bonds ..................................................................................................................26 3.3. March 2000 Bonds....................................................................................................................26 3.4. July 2000 Bonds .......................................................................................................................27 3.5. December 2004 Notes .............................................................................................................28 3.6. February 2006 Notes ................................................................................................................29 3.7. November 2010 Notes .............................................................................................................29 3.8. November 2011 Notes .............................................................................................................29 3.9. April 2012 Notes .......................................................................................................................29 3.10. September 2012 Notes ............................................................................................................30 3.11. October 2013 Notes .................................................................................................................30 3.12. May 2014 Notes ........................................................................................................................30 3.13. March 2015 Notes ....................................................................................................................31 3.14. May 2015 Notes ........................................................................................................................31 3.15. May 2016 Notes