NFI GROUP INC. (Formerly New Flyer Industries Inc.) Annual Information Form March 20, 2019 TABLE OF CONTENTS GENERAL ................................................................................................................................................... 3 CORPORATE STRUCTURE ..................................................................................................................... 4 GENERAL DEVELOPMENT OF THE BUSINESS .................................................................................. 5 Recent Developments ..................................................................................................................... 5 DESCRIPTION OF THE BUSINESS ......................................................................................................... 9 Business of the Company................................................................................................................ 9 Industry Overview .......................................................................................................................... 9 Company History .......................................................................................................................... 11 Business Strengths ........................................................................................................................ 12 Corporate Mission Statement and Strategy ................................................................................... 14 Environmental, Social and Governance Focus ............................................................................. 15 Products and Services ................................................................................................................... 15 Transit Bus and Motor Coach Manufacturing Operations ............................................................ 16 Product Development and Innovation .......................................................................................... 17 Aftermarket Parts and Support Services ....................................................................................... 19 Customers ..................................................................................................................................... 22 Forward Visibility of Orders and Backlog .................................................................................... 23 Bus and Motor Coach Sales and Marketing.................................................................................. 24 Aftermarket Sales and Marketing ................................................................................................. 26 Facilities and Manufacturing Process ........................................................................................... 26 Product Warranty and Other Contractual Provisions .................................................................... 30 Bonding Requirements.................................................................................................................. 31 Materials and Suppliers for Production ........................................................................................ 32 Capital Expenditures ..................................................................................................................... 32 People and Labour Relations ........................................................................................................ 33 Collective Bargaining Agreements ............................................................................................... 34 Pensions ........................................................................................................................................ 34 Competition .................................................................................................................................. 35 Legal and Regulatory Matters ....................................................................................................... 37 DESCRIPTION OF CAPITAL STRUCTURE ......................................................................................... 43 Share Capital ................................................................................................................................. 43 Shareholder Rights Plan ................................................................................................................ 43 Book-Entry Settlement and Clearance .......................................................................................... 44 Dividend Policy ............................................................................................................................ 45 Credit Facility ............................................................................................................................... 46 DIRECTORS, OFFICERS AND MANAGEMENT ................................................................................. 46 - i - TABLE OF CONTENTS (continued) Directors and Management ........................................................................................................... 46 Long-Term Incentive Plans ........................................................................................................... 54 Insurance Coverage and Indemnification ..................................................................................... 56 AUDIT COMMITTEE AND AUDITOR’S FEES .................................................................................... 56 Relevant Education and Experience of Audit Committee Members ............................................ 56 Non-Audit Services ....................................................................................................................... 56 External Auditor Service Fees ...................................................................................................... 57 Audit Committee Oversight .......................................................................................................... 57 Risk Management ......................................................................................................................... 57 RISK FACTORS ....................................................................................................................................... 57 Risks Related to General Economic and Market Factors ............................................................. 58 Risks Related to the Business Environment ................................................................................. 61 Risks Related to Operations .......................................................................................................... 63 Risks Related to Strategy .............................................................................................................. 72 Risks Related to Financing ........................................................................................................... 74 Risks Related to Capital Structure and Tax .................................................................................. 75 MARKET FOR SECURITIES .................................................................................................................. 79 Common Shares ............................................................................................................................ 79 AUDITORS, TRANSFER AGENT, REGISTRAR AND TRUSTEE ...................................................... 79 MATERIAL CONTRACTS ...................................................................................................................... 79 LEGAL PROCEEDINGS .......................................................................................................................... 80 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ...................... 80 INTERESTS OF EXPERTS ...................................................................................................................... 80 ADDITIONAL INFORMATION .............................................................................................................. 80 APPENDIX “A” ........................................................................................................................................ 81 - ii - NFI GROUP INC. (Formerly New Flyer Industries Inc.) GENERAL The information, including any financial information, disclosed in this Annual Information Form is stated as at December 30, 2018 or for the year ended December 30, 2018, 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 NFI Group Inc., formerly 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”), The Aftermarket Parts Company, LLC (“TAPC”), TCB Enterprises, LLC (“TCB”), ARBOC Specialty Vehicles, LLC (“ARBOC”), Carfair Composites Inc. and Carfair Composites USA, Inc. (together, “Carfair”) and Motor Coach Industries International, Inc. and its affiliated entities engaged in the motor coach and related parts and service businesses (collectively, “MCI”). References to “New Flyer” generally refer collectively to NFI ULC, NFAI, TAPC, Carfair and TCB.