K‐BROLINENINC.

ANNUALINFORMATIONFORM

MARCH13,2019

14903‐137Avenue,Edmonton,Alberta,CanadaT5V1R9Phone780.453.5218|Fax780.455.6676

www.k‐brolinen.com|inquiries@k‐brolinen.com

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TABLEOFCONTENTS

MEANINGOFCERTAINREFERENCES ....................................................................................................... 3 

FORWARDLOOKINGINFORMATION ........................................................................................................ 3 

CORPORATESTRUCTURE ........................................................................................................................... 4 

DESCRIPTIONOFTHEBUSINESS–CANADIANOPERATIONS ................................................................ 6 

DESCRIPTIONOFTHEBUSINESS–UKOPERATIONS ............................................................................ 10 

DESCRIPTIONOFCAPITALSTRUCTURE ................................................................................................. 16 

MARKETFORSECURITIES ........................................................................................................................ 17 

DIVIDENDINFORMATION ........................................................................................................................ 18 

AUDITCOMMITTEEINFORMATION ........................................................................................................ 20 

RISKFACTORS ........................................................................................................................................... 21 

LEGALPROCEEDINGS ............................................................................................................................... 29 

REGULATORYACTIONS ............................................................................................................................ 29 

CONFLICTSOFINTEREST ......................................................................................................................... 29 

INTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONS ..................................... 30 

AUDITORS,TRANSFERAGENTANDREGISTRAR ................................................................................... 30 

MATERIALCONTRACTS ............................................................................................................................ 31 

INTERESTSOFEXPERTS ........................................................................................................................... 32 

ADDITIONALINFORMATION ................................................................................................................... 32 

APPENDIXA–AUDITCOMMITTEECHARTER

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MEANINGOFCERTAINREFERENCES

Allreferencesto“K‐Bro”,“theCorporation”,“us”,“our”or“we”inthisAnnualInformationForm(“AIF”)includesK‐Bro Linen Inc. and its wholly owned subsidiaries, including the operations controlled and consolidated bythem,unlessotherwiseindicated.Allreferencesto“Management”refertodirectorsandexecutiveofficersoftheCorporation.

Unlessspecificallystatedotherwise,alldollarreferencesaretoCanadiandollars.Allreferencesto“fiscal2018”refertothe12‐monthperiodfromJanuary1,2018toDecember31,2018.Allreferencesto“fiscal2017”refertothe12‐monthperiodfromJanuary1,2017toDecember31,2017.Allreferencesto“fiscal2016”refertothe12‐monthperiodfromJanuary1,2016toDecember31,2016.

FORWARDLOOKINGINFORMATION

IntheinterestofprovidingshareholdersoftheCorporation(“Shareholders”)withinformationregardingfutureplans and operations, this AIF contains forward‐looking information that represents internal expectations,estimates or beliefs concerning, among other things, future activities or future operating results of theCorporation and various components thereof. The use of any of the words “anticipate”, “continue”, “expect”,“may”, “will”, “project”, “should”, “could”, “intend”, “plan”, “believe”,andsimilarexpressionssuggestingfutureoutcomesoreventsareintendedtoidentifyforward‐lookinginformation.Statementsregardingsuchforward‐looking information reflectManagement’s currentbeliefs andarebasedon information currently available toManagement.

These statements are not guarantees of future performance and are based on Management’s estimates andassumptionsthataresubjecttoinherentrisksanduncertainties,whichcouldcauseK‐Bro’sactualperformanceandfinancialresultsinfutureperiodstodiffermateriallyfromtheforward‐lookinginformationcontainedinthisAIFand inK‐Bro’s2018annualmanagement’sdiscussionandanalysis,which is incorporatedby referencehereinandisfiledundertheCorporation’sprofileonSEDARatwww.sedar.com.Theserisksanduncertaintiesinclude,among other things, (i) risks associated with acquisitions, including the possibility of undisclosed materialliabilities;(ii)K‐Bro'scompetitiveenvironment;(iii)utilityandlabourcosts;(iv)K‐Bro'sdependenceonlong‐termcontractswith the associated renewal risk, (v) increased capital expenditure requirements; (vi) relianceonkeypersonnel; (vii) the availability of future financing; (viii) global textile demand; and (ix) foreign currency risk.Pleaserefertopage20ofthisAIFforadiscussionoftheseandotherrisksanduncertaintiesinvolvedinK‐Bro’soperations.Materialfactorsorassumptionsthatwereappliedindrawingaconclusionormakinganestimatesetoutintheforward‐lookinginformationinclude:(i)volumesandpricingassumptions;(ii)utilitycosts;(iii)expectedimpact of labour cost initiatives; (iv) the level of capital expenditures; and (v) global and Canadian economicconditions.Although the forward‐looking information contained in this AIF is based upon what Management believes arereasonableassumptions,therecanbenoassurancethatactualresultswillbeconsistentwiththeseforward‐lookingstatements. Certain statements regarding forward‐looking information included in this AIFmay be considered“financialoutlook”forpurposesofapplicablesecuritieslaws,andsuchfinancialoutlookmaynotbeappropriateforpurposesotherthanthisAIF.Allforward‐lookinginformationinthisAIFisqualifiedbythesecautionarystatements.Readersarecautionednottoplaceundueimportanceonforward‐lookinginformation.Forward‐lookinginformationinthisAIFispresentedonlyasofthedatemadeandreadersshouldnotrelyuponsuchinformationasofanyotherdate.TheCorporationusesforwardlookingstatementsbecauseitbelievessuchstatementsprovideusefulinformationwithrespecttothecurrentlyexpectedfutureoperationsandfinancialperformanceoftheCorporation,andcautionsreadersthattheinformationmaynotbeappropriateforotherpurposes.Exceptasrequiredbylaw,theCorporationdisclaimsanyintention or obligation to update or revise any forward‐looking statements to reflect subsequent events orcircumstances.

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CORPORATESTRUCTURE

K‐BroLinenInc.(the“Corporation”or“K‐Bro”)wasincorporatedundertheBusinessCorporationsAct(Alberta)(“ABCA”)onNovember20,2010.TheCorporationsucceededK‐BroLinenIncomeFund(the“Fund”)followingthecompletionofitsconversiononJanuary1,2011fromanincometrusttoacorporationpursuanttoacourt‐approvedplanofarrangementundertheABCA(the“Conversion”).

K‐BroisthelargestownerandoperatoroflaundryandlinenprocessingfacilitiesinCanada.K‐Broanditswhollyowned subsidiaries operate across Canada and the U.K and provide a range of linen services to healthcareinstitutions,hotelsandothercommercialaccountsthatincludetheprocessing,managementanddistributionofgenerallinenandoperatingroomlinen.

The Corporation’s operations in Canada include nine processing facilities and two distribution centres underthree distinctive brands: K‐Bro Linen Systems Inc., Buanderie HMR and Les Buanderies Dextraze. TheCorporationoperates in tenCanadiancities:QuébecCity,Montréal,Toronto,Regina,Saskatoon,PrinceAlbert,Edmonton,Calgary,VancouverandVictoria.

TheCorporation’soperationsintheUKincludeFishersTopcoLtd.("Fishers")whichwasacquiredbyawhollyownedsubsidiaryofK‐BroonNovember27,2017.Fishers,establishedin1900,isaleadingcommerciallaundrybusiness inScotlandandtheNorthEastofEngland.Fishersoperates laundryand linenprocessingfacilities inScotlandandprovideslinenrental,workwearhireandcleanroomgarmentservicestothehospitality,healthcare,manufacturing andpharmaceutical sectors. Fishers operates in six cities: Cupar, Perth,Newcastle, Livingston,InvernessandCoatbridge.

TheCorporationisareportingissuerinalloftheprovincesandterritoriesofCanada.Theregisteredandheadoffice of the Corporation is located at #14903‐137 Avenue, Edmonton, Alberta, T5V 1R9 and its head officetelephonenumberis780.453.5218.

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IntercorporateRelationships

The following organization chart sets forth the relationships between the Corporation and its materialsubsidiaries,aswellastheirrespectivejurisdictionsofincorporationorformationandK‐Bro’sownershipstakeasatDecember31,2018:

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GENERALDEVELOPMENTOFTHEBUSINESS

History

K‐Browasfoundedintheearly1950sasanEdmonton‐basedclothdiaper launderingcompany.Sincethen,K‐Brohasgrownorganically throughacquisitionsandbyentry intonewmarkets.K‐Bro’sexpansionbeyond itsroots began in the 1980s, when the Corporationmoved into the healthcare and hospitality segments of thelaundryandlinenservicesindustryinbothEdmontonandToronto.AsofMarch13,2019,K‐Brooperatesninelaundry and linen processing facilities and two distribution centers in ten cities across Canada, and sevenfacilities, including one distribution center, across Scotland and the North East of England, employingapproximately2,200and670employees,respectively.

RecentmilestonesinK‐Bro’sdevelopmenthaveincluded:

‐ 2017–openedanewprocessingplantinMississaugatoservicetheGreaterTorontoarea;

‐ 2017 – completed an equity offering of 1,518,000 common shares of the Corporation (“CommonShares”)at$38.00perCommonSharetofundthebuildoutoftheCorporation’sfacilitiesinTorontoandVancouver,torepayindebtednessandforgeneralcorporatepurposes;

‐ 2017 – acquired Fishers for £35.0 million, less a working capital adjustment of £1.1 million (the“PurchasePrice”).ThePurchasePricecomprisedacashpaymentof£4.3million(netofthe£1.1millionworkingcapitaladjustment)plustherepaymentofFishers’outstandingdebtfacilitiesintheamountof£29.6million.

‐ 2017–completedanequityofferingof924,600CommonSharesat$37.35perCommonSharetoacquireFishers;

‐ 2018–openedanewprocessingplantinBurnabytoservicetheGreaterVancouverarea, refurbishedone its existing two facilities and consolidated existing operations into the new and refurbishedfacilities;and

‐ 2018–completedtheacquisitionof9306145CanadaCorp.operatingasLinitek.,aprivatehospitalitylinen‐focusedprocessingplantinCalgary,Alberta.

DESCRIPTIONOFTHEBUSINESS–CANADIANOPERATIONS

Overview

K‐Bro is the largestownerandoperatorof laundryand linenprocessing facilities inCanada.TheCorporationprovides a range of services to large healthcare institutions, hotels and other commercial accounts. Theseservices include the processing, management and distribution of linen, including sheets, blankets, towels,operatingroomlinenandavarietyofothertypesoflinen.

K‐Bro’scontractswithitsCanadianhealthcarecustomerstypicallyrangefromseventotenyears.K‐Bro’scontractsintheCanadianhospitalitysectortypicallyrangefromtwotofiveyears.

IndustryandMarket

K‐Broprovideslaundryandlinenservicestoprimarilytothehealthcareandhospitalitysectors.Typicalservicesoffered by K‐Bro include the processing,management and distribution of general and operating room linens(“KOR Services”), including sheets, blankets, towels, tablecloths, surgical gowns and drapes and other linen.Other types of processors in K‐Bro’s industry in Canada include independent/privately owned facilities (i.e.,typically, small single facility companies), public sector central laundries and public and private sector on‐premise laundries(“OPLs”).Participants inothersegmentsof the laundryand linenservices industry,suchas

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uniformrentalcompanies(whichownandlaunderuniformswornbytheircustomers’employees)andfacilitiesmanagementcompanies(whichmanagepublicsectorcentrallaundriesandOPLs),typicallydonotofferservicesthatsignificantlyoverlapwiththoseofferedbyK‐Bro.

While recognized industry statistics are not available, Management estimates that the size of themarket forservicesofferedbyK‐BrotothehealthcareandhospitalitysegmentsoftheCanadianlaundryandlinenservicesindustryisbetween$550millionand$700million,includingbetween$450and$550millionofrevenuederivedfromthehealthcaresegmentandbetween$100and$150millionderivedfromthehospitalitysegment.

Managementbelieves that thehealthcare andhospitality segmentsof the laundry and linen services industryrepresentastablebaseofannualrecurringbusinesswithopportunitiesforgrowthasadditionalhealthcarebedsandfundsaremadeavailabletomeettheneedsofanagingCanadianpopulation.

Linenprocessingrequirements inthehospitalitysegmentare, toasignificantextent,relatedtothenumberofhotel rooms and associated hotel room occupancy rates. The numbers of hotel rooms across Canada andassociatedoccupancyratesinCanadahaveremainedrelativelyconsistentoverthepastfiveyears.

IndustryCharacteristicsandTrends

Managementbelieves that thehealthcareandhospitality segmentsofCanada’s linen services industryexhibitthefollowingprimarycharacteristicsandtrends.

StableIndustrywithModerateCyclicality

Thelinenprocessingrequirementsofhealthcareandhospitalityinstitutionsaregenerallystableasthenumberof approved hospital beds in the healthcare system and hotel rooms remains fairly constant. In addition, acharacteristicoftheindustryisthatservicerelationshipsaretypicallyformalizedthroughcontracts,rangingupto tenyears in thehealthcare segment and two to five years in thehospitality segment. In general, customerturnoverratesarelow.

Thehealthcaresegmentofthe laundryand linenservices industry inCanadaexhibitsmoderateseasonalityasusagefallsduringholidayseasons.Linenprocessingvolumesinthehospitalitysegmentexhibitmoreseasonalitycomparedwiththehealthcaresegmentasusagetypicallyincreasesinthesummermonths.

OutsourcingandPrivatization

Healthcare institutions inmany largeCanadiancitiescurrentlyprocessalloraportionof their linens throughpublic sector central laundries or on‐premise laundries located within public sector facilities. Managementbelieves that thereareoftenadvantages tohealthcare institutions inoutsourcing theprocessingofhealthcarelinen to private sector laundry companies such as K‐Bro. Management believes that larger private sectorcompanies such as K‐Bro that have economies of scale and significant management expertise can providelaundry and linen services on a more comprehensive and cost‐effective basis than customers can achievethrough operating their own laundry facilities. In recent years, healthcare institutions in Vancouver, Calgary,Edmonton, Saskatchewan and, to a lesser extent, Southern Ontario have elected to outsource their linenprocessing requirements. As the largest provider of laundry and linen services to healthcare and hospitalitycustomersinCanada,K‐Brobelievesthatitiswell‐positionedtocapitalizeonanyfurtheroutsourcingofvolume.

Fragmentation

Most Canadian cities have at least one and sometimes several private sector competitors operating in thehealthcareandhospitalitysegmentsofthelaundryandlinenservices industry.ManagementismonitoringtheimpactofitsCanadiancompetitorsandnewinitiativesundertakenbysuchcompetitorsinordertorespondasappropriate. Presently,theCompanycompeteswithitscompetitorsbyprovidingexceptionalcustomerserviceatcompetitiveprices.

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Managementbelievesthatthepresenceoftheseoperatorsprovidesacquisitionandconsolidationopportunitiesforlargerindustryparticipantswiththefinancialmeanstocompleteacquisitions,suchasK‐Bro.

CustomersandSectors

K‐Bro’s customers include some of the largest healthcare and hospitality institutions in Canada. K‐Bro’shealthcare customers include hospitals and long‐term care facilities. Most of K‐Bro’s hospitality customers(typically250+rooms)generatebetween500,000and3millionpoundsoflinenperyear.Healthcarecustomerstypicallygenerateapproximately500,000poundsoflinenperyearforahospitalandupto40millionpoundsoflinenperyearforahealthcareregion.

For the year ended December 31, 2018, the relative revenue contributions from K‐Bro’s healthcare andhospitalitycustomerswereapproximately56%and44%,respectivelyonaconsolidatedbasis.

Operations

Aspartoftheprovisionof laundryandlinenservices,K‐Brohasinvestedinlinen,cartsandequipment.Thesesignificant investments enable K‐Bro to maintain a high level of service over long periods of time for itscustomers fromitshighlyautomatedandefficientplants.ThefollowingparagraphsdescribethevariousstepsinvolvedintheprocessingoflinenforK‐Bro’shealthcareandhospitalitycustomers.

LinenPurchasesandLinenManagement

K‐Broistypicallyresponsibleforpurchasinglinenforitshealthcarecustomers,whileitshospitalitycustomersgenerallyownandpurchasetheirownlinen.EachhealthcarecontractspecifiestheamountoflinenthatK‐Bromustpurchaseatthecommencementofthecontractterm.K‐BroisrequiredtoreplacelinenonamonthlybasisduringthelifeofthecontractandthetypicalhealthcarecontractprovidesforaspecifiedreimbursementtobepaidtoK‐Bro forsuchexpenditures. Linenrequired isreadilyavailable fromnumerousdomesticand foreignsources at pricing that is reflective of a competitive globalmarket for textile sales aswell as the commoditypricesofinputs,suchascotton.Historically,K‐BrohasnotbeenrequiredtoreplacelinenatacosttoK‐Broinexcessof themaximumreimbursableamounts. Linen,onaverageoveralldifferent types,hasa two‐year lifecycle.Managementbelievesthatowninghealthcarelinengivesitgreatercontroloverlinenqualityandquantity,whichisimportantbothforcustomersatisfactionandK‐Bro’soperatingprocesses(i.e.,poorqualitylinendrawscustomer complaints and is more difficult to process). Most of K‐Bro’s customer contracts include penaltyprovisionsforshortfallsinlinenshipmentsandforlinenthatdoesnotmeetwell‐definedandmeasurablequalitystandards.K‐Brohasenteredintofixedpricelinensupplycontractsforthree‐yeartermsinanefforttolimitourexposuretoincreasesincottonpricing.

ThemajorityofK‐Bro’sprocessedvolumeoflinenisforhealthcareauthorities,suchasAlbertaHealthServices,Fraser Health Authority, Vancouver Coastal Health Authority and 3sHealth, which represent a number ofdifferent institutions. In these cases, K‐Bro consolidates and standardizes (or “pools”) linen, purchasing andprocessing the same pool of linen for all customers using a common stock of linen. This provides significantoperatingbenefitstoK‐Bro,asiteliminatestheneedtomanageeachinstitution’svolumeseparatelyandreducescostsfortheassociatedhealthauthority.

LinenProcessing

K‐Bro’s employees or its customers collect the soiled linen in designated soiled linen collection containers,knownas“tubs”.TubsofsoiledlinenaretransportedusingK‐Bro’sdeliveryfleetthatincludesmid‐sizetrucksandtractortrailers.InVancouverandSaskatchewan,K‐Brooutsourcesportionsofitsdeliveriesbyutilizingthirdpartydeliverycompanies.Oncecollected, thesoiled linen isdelivered toK‐Bro’s facilities tobeunloadedandstagedonthewashfloorforprocessing.

Themajority of K‐Bro’s laundry is processed in tunnelwashers. Tunnelwashers are generallymore efficientthansmallerindustrialwashers,whichreducestheCorporation’snaturalgas,electricityandwaterconsumption

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and labour costs. After the washing and water extraction processes are completed, linen is automaticallytransported into the dryers. Once the drying process is completed, linen is discharged and automaticallyconveyed to the finishing department for ironing and dryfold. Any linen requiring ironing is processed byadvancedironersthatemployautomatedfeedersandfolderstoensurehighqualityandproductivity. Productthat does not require ironing (i.e., terry towels) is processed in the dryfold department through automatedfoldingequipmentor“smallpiecefolders”.

Followinglaunderingandprocessing,fullyloadedexchangecartsareplacedontodeliveryvehiclesforreturntothehealthcarefacility.Thefullexchangecartsaredeliveredtotheend‐userdepartmentandthereturnlinencartissentbacktotheK‐Broplantforrefilling.TubsandcartsusedinthisprocessareownedbyK‐Broateachofitsfacilities,otherthaninEdmonton.

ManagementandLabourForce

K‐Bro’sgeneralmanagershavebeenintheindustryfrom20to30+years,andfourbegantheircareersatK‐Broinotherrolesbeforebeingpromotedtotheircurrentpositions.K‐Bro’sorganizationalstructurehasbeendevelopedtoenablethegeneralmanagersofitsplantstofocusongrowthandoperationsintheirindividualmarkets,whileenabling aggressive business development and tight management controls through K‐Bro's separate corporateteam.K‐Bro’sChiefExecutiveOfficerhasbeenwiththeCorporationfortwenty‐oneyearsandhasservedinthiscapacityforthepastsixteenyears.

Asofthedatehereof,K‐Broemploysapproximately2,200people,approximately2,000ofwhomareemployedon an hourly basis, with the balance being salaried plant and corporate personnel. K‐Bro’s Toronto plantemployees are covered by collective bargaining agreements with the United Food and CommercialWorkersunion (the “UFCW”), which represents approximately 200 employees. The UFCW collective bargainingagreementinTorontoexpiresinOctober2020.K‐Bro’sQuébecCityplantemployeesarecoveredbycollectivebargaining agreements with the UFCW, which represents approximately 85 employees. This collectivebargaining agreement expires December 31, 2020. K‐Bro’s original Vancouver plant has approximately 460employeeswhoarecoveredbyacollectiveagreementwithTeamstersCanadawhichexpires in2020.K‐Bro’sRegina facility has approximately 200 employeeswho are covered by a collective agreementwith the UFCWwhichexpiresinMarch2019.TheEdmonton,Calgary,Victoria,MontréalandsecondVancouverplantemployeesarenotunionized.

UtilityCostManagement

AsasignificantportionofK‐Bro’scoststructurerelatestotheconsumptionofnaturalgasandelectricity,K‐Brohasenteredintofixedpricenaturalgasandelectricitycontractswithfixedtermsbetweenoneandthreeyearstofixthepriceonaportionofitsnaturalgasandelectricityrequirementsoverthistimeperiod.Uponexpirationofthesecontracts,K‐Browillbesubject toprevailingmarketrates. K‐Broreviews itsnaturalgasandelectricityrequirements and the related forward pricing regularly to determine if it is feasible and desirable to lock inadditionalvolumesoryears.

IntellectualProperty

Managementbelievesthatseveralofthetrademarks,namesandlogos(collectively,the“identities”)ownedbyK‐Bro enjoy significant brand recognition and market awareness throughout the Canadian laundry and linenindustry. As a result, K‐Bro takes an active approach to protecting its brand identities. K‐Bro has registeredtrademarksforseveralofitsownedandlicensedbrandnames,logosanddesigns,includingthename,designandlogo for each of “K‐Bro”, “K‐Bro Linen Systems” and “KOR Services”, as well as the identities for its locallybrandedoperationsinQuébec.

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ChangestoContracts

OnMarch1,2019,K‐Browasawardedaone‐yearextension toprovide laundryand linen services toAlbertaHealthServices,Calgary(“AHS”).ThecontractextendstheexistingrelationshipbetweenK‐BroandAHS.

Effective January1,2019,K‐Broreplaced itsexistingagreementwithAvendraCanada, Inc.(“Avendra”)withanewfive‐yearagreementpursuanttowhichK‐BrobecameanAvendra‐approvedprovideroflaundryandlinenservicesacrossCanada,withexclusivityinK‐Bro’smarketscommencingatvariousstagesthroughouttheterm.AvendraisNorthAmerica’sleadinghospitalityprocurementandsupplychainserviceprovider.WhileK‐Brohasexistingcontractswithandservicesthecustomersinitiallycoveredbytheagreement,thenewarrangementwithAvendrawillstrengthenitsrelationshipswiththesecustomersandsecureK‐Bro’spositionwiththemaswellasopen up new opportunities in the hospitality segment. These existing customers currently representapproximately24%ofK‐Bro’sCanadianhospitalityrevenuefortheyearendedDecember31,2018.

EnvironmentalProtection

K‐Bro does not use toxic materials or produce hazardous waste in its laundry facilities. All waste water isdischarged through the municipal sewer system in compliance with applicable environmental laws andregulations and is regularly tested by the relevant authorities to ensure compliance with local by‐laws.Compliancewithenvironmentallawsandregulationshasnotandisnotexpectedtogiverise,intheaggregate,toanymaterialadversefinancialoroperationaleffectsuponK‐Bro'sbusiness.Also,suchcompliancehasnotandisnotexpectedtoaffectK‐Bro’scompetitiveposition.Environmentallawsandregulationsandtheirinterpretation,however,havechangedrapidlyovertheyearsandmaycontinuetodosointhefuture.

DESCRIPTIONOFTHEBUSINESS–UKOPERATIONS

Overview

Fishers,establishedin1900,isaleadingcommerciallaundrybusinessinScotlandandtheNorthEastofEngland.FishersoperateslaundryandlinenprocessingfacilitiesinScotlandandprovideslinenrental,workwearhireandcleanroom garment services to the hospitality, healthcare, manufacturing and pharmaceutical sectors. Fishers'client base includesmajor hotel chains and prestigious venues across Scotland and the North East of England.Fishersoperatessevenfacilities,includingonedistributioncenter,inScotlandandtheNorthEastofEnglandwhicharelocatedinCupar,Perth,Newcastle,Livingston,InvernessandCoatbridge.

IndustryandMarket

Fishers’provideslaundryandlinenservicestohealthcare,hospitalityandothercommercialcustomers.TypicalservicesofferedbyFishersincludetheprocessing,managementanddistributionofgeneral,workwearandcleanroom garment services. Other types of processors in Fishers’ industry in the United Kingdom includeindependent privately‐owned facilities (i.e., typically, small single facility companies), public sector centrallaundriesandpublicandprivatesectorOPLs.

While recognized industry statistics are not available, Management estimates that the size of themarket forservices offered by Fishers to the healthcare and hospitality segments of the UK and the laundry and linenservicesindustryinScotlandandtheNorthEastofEnglandtobeapproximately£750millionand£100million,respectively.

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Linenprocessingrequirements inthehospitalitysegmentare, toasignificantextent,relatedtothenumberofhotelroomsandassociatedhotelroomoccupancyrates.ThenumbersofhotelroomsacrosstheUnitedKingdomandassociatedoccupancy rates in theUnitedKingdomhave remained relatively consistentover thepast fiveyears.

IndustryCharacteristicsandTrends

Management believes that the healthcare and hospitality segments of the United Kingdom’s linen servicesindustryexhibitthefollowingprimarycharacteristicsandtrends.

StableIndustrywithModerateCyclicality

Thelinenprocessingrequirementsofhealthcareandhospitalityinstitutionsaregenerallystableasthenumberof approved hospital beds in the healthcare system and hotel rooms remains fairly constant. In addition, acharacteristicoftheindustryisthatservicerelationshipsaretypicallyformalizedthroughcontracts,ranginguptotwotofiveyearsinthehospitalitysegment.Ingeneral,customerturnoverratesarelow.Linenprocessingvolumesinthehospitalitysegmentexhibitseasonalitycomparedwiththehealthcaresegmentasusagetypicallyincreasesinthesummermonths.

Fragmentation

MostcitiesintheUnitedKingdomhaveatleastoneandsometimesseveralprivatesectorcompetitorsoperatinginthehealthcareandhospitalitysegmentsofthelaundryandlinenservicesindustry.Managementismonitoringthe impact of itsUK competitors and new initiatives undertakenby such competitors in order to respond asappropriate.Presently, Fishers competeswith its competitors theCompanycompeteswith its competitorsbyprovidingexceptionalcustomerserviceatcompetitiveprices.

Customers

Fishers’ customers include someof the largesthotel chainsoperating inScotland.MostofFishers’hospitalitycustomers(typically250+rooms)generatebetween500,000and3millionpoundsoflinenperyear.

Fishers’ largest customer represents approximately 15% of Fishers’ total fiscal 2018 revenue. Its next ninelargest customers collectively account for approximately 28% of Fishers’ total revenue, the largest of whichaccounts for 5% of Fishers’ total fiscal 2018 revenue. Loss of revenue from these customers could have amaterialeffectonK‐Bro.Seealso“RiskFactors”.Operations

Aspartoftheprovisionoflaundryandlinenservices,Fishershasinvestedinlinen,cartsandequipment.Thesesignificant investments enable Fishers’ to maintain a high level of service over long periods of time for itscustomersfromitshighlyautomatedandefficientplants.ThefollowingsectionofthisAIFdescribesthevariousstepsinvolvedintheprocessingoflinenforFishers’healthcareandhospitalitycustomers.

LinenPurchasesandLinenManagement

Fishers’ is typically responsible forpurchasing linen for its customers. Fishers’ is required to supply linen toquotaand isrequiredtoreplace linenduringthe lifeof thecontract. Linenrequired isreadilyavailable fromnumerousdomestic and foreign sources atpricing that is reflective of a competitive globalmarket for textilesalesaswellasthecommoditypricesofinputs,suchascotton.Linen,onaverageoveralldifferenttypes,hasatwo‐year lifecycle. Managementbelievesthatowningthe linengives itgreatercontrolover linenqualityandquantity, which is important both for customer satisfaction and operating processes (i.e., poor quality linendrawscustomercomplaintsandismoredifficulttoprocess).

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LinenProcessing

Fishers’employeesoritscustomerscollectthesoiledlinenfromcustomersitesandtransportitusingFishers’deliveryfleet.Oncecollected,thesoiledlinenisdeliveredtoFishersfacilitiestobeunloadedandstagedonthewashfloorforprocessing.

ThemajorityofFishers’ laundry isprocessed in tunnelwashers.Tunnelwashers are generallymore efficientthan smaller industrial washers, which reduces Fishers’ natural gas, electricity and water consumption andlabourcosts.Afterthewashingandwaterextractionprocessesarecompleted,linenisautomaticallytransportedinto the dryers. Once thedrying process is completed, linen is discharged and automatically conveyed to thefinishingdepartmentforironinganddryfold.Anylinenrequiringironingisprocessedbyadvancedironersthatemployautomatedfeedersand folderstoensurehighqualityandproductivity. Productthatdoesnotrequireironing (i.e., terry towels) is processed in the dryfold department through automated folding equipment or“smallpiecefolders”.

Following laundering and processing, fully loaded carts are placed onto delivery vehicles for return to thehospitalityfacility.

ManagementandLabourForce

Fishers’ChiefExecutiveOfficerhasbeen in the laundry industry for34yearsandhasbeenwithFishers for18years,servingasitsCEOsince2014.Fishers’employsateamofexperiencedgeneralmanagers,fourofwhichareexperiencedmanagersrecruitedbyFishers’overthepastfiveyears,andonewhowasrecruitedexternallyinthelastyear.

Asofthedatehereof,Fishers’employsapproximately670people,approximately600ofwhomareemployedonan hourly basis, with the balance being salaried plant employees. Fishers’ plant employees are covered by acollectivebargainingagreementwiththeGMBunion,whichrepresentsapproximately20employeesandhasanindefiniteexpirydate.ThebalanceofFishers’workforceisnotunionized.

UtilityCostManagement

As a significant portion of Fishers’ cost structure relates to the consumption of natural gas and electricity,Fishers’hasenteredintofixedpricenaturalgasandelectricitycontractswithfixedtermsbetweenoneandtwoyearstofixthepriceonaportionofitsnaturalgasandelectricityrequirementsoverthistime.Uponexpirationof these contracts, Fishers’ will be subject to prevailing market rates. Fishers’ reviews its natural gas andelectricityrequirementsandtherelatedforwardpricingregularlytodetermineifitisfeasibleanddesirabletolockinadditionalvolumesoryears.

IntellectualProperty

Management believes that several of the identities owned by K‐Bro enjoy significant brand recognition andmarketawarenessthroughouttheUKlaundryandlinenindustry.Asaresult,K‐Brotakesanactiveapproachtoprotecting its identities.K‐Brohas registered trademarks for several of its owned and licensedbrandnames,logosanddesigns,includingthename,designandlogofor“Fishers”.

ChangestoContracts

During2018,FisherslostitscontractwithVURVillageHoldings(UK)Limited,whichwasincludedinitstop10accounts,toacompetitor.Thiscustomeraccountedforapproximately2%ofFishers’annualrevenues.

During2018,Fishersrenewedorextendedcontractswithfourofitstop10customers.ContractswiththreeofFishers’top10customersareduetoberenewedorextendedin2019.

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EnvironmentalProtection

Fishers’ does not use toxicmaterials or produce hazardouswaste in its laundry facilities. All wastewater isdischarged through the municipal sewer system in compliance with applicable environmental laws andregulations and is regularly tested by the relevant authorities to ensure compliance with local by‐laws.Compliancewithenvironmentallawsandregulationshasnotandisnotexpectedtogiverise,intheaggregate,toanymaterialadversefinancialoroperationaleffectsuponFishers’business.Also,suchcompliancehasnotandis not expected to affect Fishers’ competitive position. Environmental laws and regulations and theirinterpretation,however,havechangedrapidlyovertheyearsandmaycontinuetodosointhefuture.

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DIRECTORSANDEXECUTIVEOFFICERS

As at March 13, 2019, the directors and executive officers of the Corporation as a group held, directly orindirectly, in the aggregate, 355,109 Common Shares, representing approximately 3.4% of the issued andoutstandingCommonShares.

Directors

ThefollowingtablesetsouttheCorporation’sdirectorsasatMarch13,2019,theirrespectivemunicipalitiesofresidence,position(s)withtheCorporationandtheirprincipaloccupationsforatleastthelastfiveyears.EachdirectorshallholdofficeuntilthenextannualmeetingoftheCorporation’sShareholdersoruntilsuchperson’ssuccessorisappointedorelected.

ExecutiveOfficers

The following table sets out the Corporation’s executive officers as at March 13, 2019, their respectivemunicipalitiesofresidenceandtheirprincipaloccupationsforatleastthelastfiveyears:

NameandMunicipalityofResidencePositionwiththeCorporation PrincipalOccupation DirectorSince1

RossS.Smith2,3

WestVancouver,BritishColumbia

Chair CorporateDirector December2004

MatthewB.HillsBoston,Massachusetts

Director ManagingDirector,LLMCapitalPartners

December2004

StevenE.Matyas2,3

Toronto,Ontario

Director CorporateDirector December2004

MichaelB.Percy2,3

Edmonton,Alberta

Director Dean,emeritusAlbertaSchoolofBusinessfortheUniversityofAlberta

June2015

LindaJ.McCurdyToronto,Ontario

Director,President&ChiefExecutiveOfficer

President&ChiefExecutiveOfficer,K‐BroLinen

SystemsInc.

December2004

2MemberoftheAuditCommittee3MemberoftheCompensation,NominatingandCorporateGovernanceCommittee

1AllofthedirectorspreviouslyservedastrusteesoftheFund;subsequenttotheConversion,allofthetrusteescontinuedasdirectorsoftheCorporation.Mr.PercyservedontheboardofdirectorsuntilSeptember2014,atwhichpointheresignedtoserveofChiefofStafftothePremierofAlberta.Here‐joinedK‐Bro'sboardofdirectorsinJune2015.

NameandMunicipalityofResidence PositionsHeld From To

LindaJ.McCurdyToronto,Ontario

President&ChiefExecutiveOfficerK‐BroLinenSystemsInc.

2000 Present

SeanP.CurtisSt.Albert,Alberta

SeniorVice‐President&ChiefOperatingOfficerK‐BroLinenSystemsInc.

1999 Present

ChiefFinancialOfficer/InterimChiefFinancialOfficerK‐BroLinenSystemsInc.

2014 Present

DirectorofFinancialPlanningK‐BroLinenSystemsInc.

2007 2014

KristieL.PlaquinSt.Albert,Alberta

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Biographies

SetforthbelowisadescriptionofthebackgroundofthedirectorsandexecutiveofficersoftheCorporation.EachofthedirectorsandexecutiveofficersoftheCorporationhasbeenengagedformorethanfiveyearsinhisorherpresentprincipaloccupationorinothercapacitieswithK‐Bro,exceptassetforthbelow.

Ross Smith,Chair,Director. Mr. Smith is a Fellow of the Institute of Chartered Professional Accountants ofBritish Columbia with extensive experience in accounting and consulting and has served major public andprivatecompaniesfromanauditandsecuritiesperspective.Hehada35‐yearcareeratKPMGLLPwhereheheldvariousroles,includingSeniorPartnerforBritishColumbia,priortohisretirementin1998.In2010,Mr.Smithwas honoured with a Lifetime Achievement Award from the Institute of Chartered Accountants of BritishColumbia.Mr.SmithsitsontheboardofRotherhamHoldingsLtd.HeisalsoaformermemberoftheboardofHSBCBankCanadaandaformerGovernoroftheUniversityofBritishColumbia.

MatthewHills,Director.Mr.HillsisaManagingDirectorofLLMCapitalPartners,aprivateequityfirm.HewastheseniorpartneratBGAffiliates,theprivateequitygroupthatacquiredtheCorporationin1997.Mr.HillshasalsoheldpositionsatSignatureCapital,LEKPartnership,DrexelBurnhamLambertandBain&Company. Mr.Hills provides advisory consulting services to the Corporation. He received anMBA fromHarvardBusinessSchool and a BA (Economics and Politics) from Brandeis University. Mr. Hills is a director for hedge fundsmanagedbyBassoCapitalManagement.

StevenMatyas,Director.Mr.MatyasmostrecentlyservedastheChiefExecutiveOfficerforStaplesRetailInc.,where he has held several positions of increased responsibility since 1991.Mr. Matyas previously served asExecutive Vice‐President and Chief Operating Officer at Flertom Investments Inc., a chain of card, gift, andstationarystores.HeheldthesamepositionatSuperPharmLtd.,achainoffranchisedpharmacies.Mr.MatyasisadirectorofBaycrestHospitalFoundation,aswellasadirectorofKalTire.Mr.MatyasreceivedaBSc(Genetics)fromtheUniversityofToronto.MichaelPercy,Director. Mr.Percymost recently servedas theChiefof Staff toPremierPrenticeofAlberta;prior to this, Dr. Percy was a Professor of Strategic Management at the Alberta School of Business at theUniversityofAlbertaandservedasDeanattheAlbertaSchoolofBusinessforthreeconsecutiveterms.Mr.PercyreceivedaBA(Honours) fromtheUniversityofVictoria,andanMA(Economics)andaPhD(Economics) fromQueen’sUniversity. Mr.PercypreviouslyservedasadirectorforATBFinancial,EpcorUtilities Inc.,Matrikon,Sawridge,andTimberHoldings.

LindaMcCurdy,Director,President&ChiefExecutiveOfficer.Ms.McCurdyjoinedK‐BroinMay1998asChiefFinancialOfficerandbecamePresident&ChiefExecutiveOfficerinJanuary2000.PriortojoiningK‐Bro,shewasChief Financial Officer of Canadian Inovotech Inc., a biochemical products processor. Ms. McCurdy’s priorexperiencealsoincludessixyearsattheOverwaiteaFoodGroup,wheresheheldanumberoffinancialpositions.Ms.McCurdyisaCharteredProfessionalAccountantandhasanMBAfromtheUniversityofWesternOntario.

SeanCurtis,SeniorVice‐President&ChiefOperatingOfficer.Mr.CurtisjoinedK‐Broin1984andhasover33years of experience in the laundry and linen services industry. As Senior Vice President, Mr. Curtis worksdirectly with K‐Bro’s President & CEO in the areas of plant expansions, capital equipment installations andbusinessdevelopmentintonewmarkets.

KristiePlaquin,ChiefFinancialOfficer.Ms.PlaquinhasbeenwiththeCorporationsince2001andhasbeenitsChiefFinancialOfficerfromJanuary2004throughMay2005,duringwhichtimetheCorporationcompleteditsinitialpublicofferingandsubsequentdebtfinancings.AfteratemporaryabsencefromK‐Brofrom2005to2006,Ms.PlaquinservedasK‐Bro’sDirectorofFinancialPlanningfrom2007to2014,duringwhichtimesheplayedaleadroleinK‐Bro'sgrowthandfinancinginitiativesuntilassuminghercurrentroleasK‐Bro’sCFO.Ms.PlaquinjoinedK‐BrofromPricewaterhouseCoopersLLPandholdsaBachelorofCommercedegreefromtheUniversityofAlbertaandaCharteredProfessionalAccountantdesignation.

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CeaseTradeOrders,Bankruptcies,PenaltiesorSanctions

TotheknowledgeoftheCorporation:

(a)nodirectororexecutiveofficeroftheCorporationis,orhasbeeninthelasttenyears,adirector,chiefexecutive officer or chief financial officer of any company that, while that personwas acting in thatcapacity,(a)wasthesubjectofaceasetradeorderorsimilarorder,oranorderthatdeniedtherelevantcompanyaccesstoanyexemptionsundersecuritieslegislation,foraperiodofmorethan30consecutivedays;or(b)wassubjecttoaneventthatresulted,afterthatpersonceasedtobeadirectororexecutiveofficer, in the relevant company being the subject of a cease trade or similar order, or an order thatdeniedtherelevantcompanyaccesstoanyexemptionundersecuritieslegislation,foraperiodofmorethan30consecutivedays;and

(b) nodirector,executiveofficerorshareholderholdingasufficientnumberofsecuritiestomateriallyaffectcontroloftheCorporation(a)isorhasbeeninthelasttenyearsadirectororexecutiveofficerofanycompanythat,whilethatpersonwasactinginthatcapacity,orwithinayearofthatpersonceasingtoactinthatcapacity,becamebankrupt,madeaproposalunderanylegislationrelatingtobankruptcyorinsolvencyorwassubjecttoorinstitutedanyproceedings,arrangementorcompromisewithcreditorsorhadareceiver,receivermanagerortrusteeappointedtoholditsassetsor(b)haswithinthelasttenyearsmadeaproposalunderanylegislationrelatingtobankruptcyorinsolvency,orbecomesubjecttoor institutedanyproceedings,arrangementor compromisewithcreditors,orhada receiver, receivermanagerortrusteeappointedtoholdtheassetsofthedirector,executiveofficerorshareholder.

DESCRIPTIONOFCAPITALSTRUCTURE

TheauthorizedcapitaloftheCorporationconsistsofanunlimitednumberofCommonSharesandsuchnumberofsharesofoneclassdesignatedaspreferredshareswhichnumbershallnotexceed,asatthedateofissuance,1/3of theCommonShares issuedandoutstandingasat such time.The following is a summaryof the rights,privileges, restrictions and conditions which will attach to the Common Shares and preferred shares of theCorporation.

CommonShares

EachCommonSharewillentitletheholderthereoftoreceivenoticeof,toattend,andtoonevoteat,allmeetingsof the Shareholders of the Corporation. The holders of the Common Shares will be entitled to receive anydividendsif,asandwhendeclaredbytheCorporation’sboardofdirectors(the“Board”).TheholdersofCommonShareswillalsobeentitledtoshareequally,share‐for‐share,inanydistributionoftheassetsoftheCorporationupontheliquidation,dissolutionorwinding‐upoftheCorporationorotherdistributionofitsassetsamongitsShareholdersforthepurposeofwinding‐upitsaffairs.

PreferredShares

ThedirectorsoftheCorporationmay,priortotheissuanceofpreferredshares,determinetheseriesdesignation,rights,privileges,restrictionsandconditionsattachingtothepreferredsharesofeachseriesincluding,withoutlimiting the generality of the foregoing: (i) the rate, amount of method of calculation of any dividends; (ii)redemption and/or purchase rights; (iii) voting rights, and (iv) conversion rights, all subject to the filing ofArticlesofAmendmentinaccordancewiththeABCAtodesignateeachseriesofpreferredshares.AsofMarch13,2019,therewerenopreferredsharesissuedoroutstanding.

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MARKETFORSECURITIES

TheCommonSharesarelistedontheTorontoStockExchange(the“TSX”)underthetradingsymbol“KBL”.ThefollowingtablesetsoutthemarketpricerangesandtradingvolumesfortheCommonSharesontheTSXforeachmonthduringfiscal2018.

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DIVIDENDINFORMATION

TheBoardhas adopted adividendpolicywith the intent to pay amonthly dividendof $0.1000perCommonShare. The Board periodically reviews the Corporation’s dividend policy in the context of the Corporation’soverallprofitability,freecashflow,capitalrequirementsandotherbusinessneeds.

Todate,theCorporationhasdeclaredthreemonthlydividendsof$0.1000perCommonShareinrespectoffiscal2019, payable on February 15,March 15, andApril 15 to Shareholders of record at the close of business onJanuary31,February28,andMarch31,respectively.

The Corporation’s dividend policy is at the discretion of the Board. There can be no guarantee that theCorporationwillmaintainitsdividendpolicy.

ThefollowingtablesetsforththemonthlycashdividendperCommonSharepaidbytheCorporationforeachofitsthreemostrecentlycompletedfinancialyears:

Period RecordDate PaymentDate PerShare($) TotalDividend

January January31,2018 February15,2018 0.10000$ 1,050,850$February February28,2018 March15,2018 0.10000$ 1,050,850$March March31,2018 April13,2018 0.10000$ 1,050,850$

Q1,2018 0.30000$ 3,152,551$

April April30,2018 May15,2018 0.10000$ 1,050,850$May May31,2018 June15,2018 0.10000$ 1,055,994$June June30,2018 July13,2018 0.10000$ 1,055,994$

Q2,2018 0.30000$ 3,162,837$

July July31,2018 August15,2018 0.10000$ 1,055,994$August August31,2018 September14,2018 0.10000$ 1,055,994$

September September30,2018 October13,2018 0.10000$ 1,055,994$Q3,2018 0.30000$ 3,167,982$

October October31,2018 November15,2018 0.10000$ 1,055,994$November November30,2018 December14,2018 0.10000$ 1,055,994$December December31,2018 January15,2019 0.10000$ 1,055,994$Q4,2018 0.30000$ 3,167,982$

Total,2018 1.20$ 12,651,353$

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Period RecordDate PaymentDate PerShare($) TotalDividend

January January31,2017 February15,2017 0.10000$ 802,348$February February28,2017 March15,2017 0.10000$ 802,348$March March31,2017 April14,2017 0.10000$ 802,348$

Q1,2017 0.30000$ 2,407,044$

April April30,2017 May15,2017 0.10000$ 954,148$May May31,2017 June15,2017 0.10000$ 958,390$June June30,2017 July14,2017 0.10000$ 958,390$

Q2,2017 0.30000$ 2,870,928$

July July31,2017 August15,2017 0.10000$ 958,390$August August31,2017 September15,2017 0.10000$ 958,390$

September September30,2017 October13,2017 0.10000$ 958,390$Q3,2017 0.30000$ 2,875,172$

October October31,2017 November15,2017 0.10000$ 958,390$November November30,2017 December15,2017 0.10000$ 958,390$December December31,2017 January15,2018 0.10000$ 1,050,850$Q4,2017 0.30000$ 2,967,632$

Total,2017 1.20$ 11,120,777$

Period RecordDate PaymentDate PerShare($) TotalDividend

January January31,2016 February12,2016 0.10000$ 798,571$February February29,2016 March15,2016 0.10000$ 798,571$March March31,2016 April15,2016 0.10000$ 798,571$

Q1,2016 0.30000$ 2,395,714$

April April30,2016 May13,2016 0.10000$ 798,571$May May31,2016 June15,2016 0.10000$ 802,348$June June30,2016 July15,2016 0.10000$ 802,348$

Q2,2016 0.30000$ 2,403,267$

July July31,2016 August15,2016 0.10000$ 802,348$August August31,2016 September15,2016 0.10000$ 802,348$

September September30,2016 October14,2016 0.10000$ 802,348$Q3,2016 0.30000$ 2,407,045$

October October31,2016 November15,2016 0.10000$ 802,348$November November30,2016 December15,2016 0.10000$ 802,348$December December31,2016 January13,2017 0.10000$ 802,348$Q4,2016 0.30000$ 2,407,045$

Total,2016 1.20$ 9,613,072$

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AUDITCOMMITTEEINFORMATION

TheAuditCommitteeoftheBoardoperatesunderawrittenmandateandtermsofreferencethatsetsout,amongotherthings,itsresponsibilitiesandcompositionrequirements.AcopyofAuditCommittee’smandateandtermsofreferenceisattachedtothisAIFasAppendixA.Asatthedatehereof,themembersoftheAuditCommitteeareRossSmith(Chair),StevenMatyasandMichaelPercy.Inadditiontoeachmember’sgeneralbusinessexperience,the education and experience of each Audit Committee member that is relevant to the performance of hisresponsibilitiesasanAuditCommitteememberisasnotedunder“DirectorsandOfficers”.

TheAuditCommitteemandateandtermsofreferencerequiresallmemberstobe“financiallyliterate”,assuchtermisdefinedunderapplicablesecuritieslaw.“Financiallyliterate”meanstheabilitytoreadandunderstandfinancial statements that present a breadth and level of complexity of accounting issues that are generallycomparable to the breadth and complexity of the issues that can reasonably be expected to be found in theCorporation’s consolidated financial statements. Based on an assessment of the employment experience oreducationofthecurrentmembersoftheAuditCommittee,asdescribedabove,theDirectorsbelievethatallofthecurrentmembersoftheAuditCommitteearefinanciallyliterate.Inaddition,theAuditCommitteemandateand terms of reference contains independence requirements applicable to each member and each membercurrentlymeetsthoserequirements.TheAuditCommitteehasadoptedpoliciesandprocedureswithrespecttothepre‐approvalofauditandpermittednon‐auditservicestobeprovidedbytheCorporation’sauditor,whichiscurrently PricewaterhouseCoopers LLP. Any such services must be permitted services and must be pre‐approvedbytheAuditCommitteepursuanttothispolicy.TheAuditCommitteemustalsopre‐approvetheauditservicesandassociatedauditfeestobepaid.Pre‐approvalpoliciesinrespectofnon‐auditservicesaredescribedinourAuditCommitteemandateandtermsofreferenceattachedheretoasAppendixA.

Thefollowingtabledisclosesfeesbilledtousbyourauditor,PricewaterhouseCoopersLLP,forservicesrenderedduringfiscal2018and2017:

Service 2018 2017

Auditfees(1) 441,110$ 708,236$

Taxfees(2) 271,973$ 585,598$Allotherfees(3) 2,410$ 2,360$

(2)Includesfeesfortaxadvice,taxplanningandreviewofcompliancereturns(3)Includesfeesforadvisoryservices

(1)IncludesfeesforquarterlyinterimreviewsandprofessionaladvisoryservicesrelatedtoequityofferingsandtheacquisitionofFishers

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RISKFACTORS

The following are certain risk factors relating to the Corporation and the business of K‐Bro,which investorsshould carefully consider before making an investment decision with respect to the Corporation’s CommonShares.Theseriskfactorsareasummaryofcertainriskfactorsandarequalifiedintheirentiretybyreferenceto,andmustbereadinconjunctionwith,thedetailedinformationappearingelsewhereinthisAIF.Theserisksanduncertaintiesarenottheonlyones facingK‐Bro.AdditionalrisksanduncertaintiesnotpresentlyknowntoK‐Bro,orthattheCorporationcurrentlydeemsimmaterial,mayalsoimpairtheoperationsoftheCorporation.Ifanysuchrisksactuallymaterialize,thebusiness,financialcondition,liquidityandresultsofoperationsofK‐BrocouldbemateriallyadverselyaffectedandtheabilityoftheCorporationtopaydividendsontheCommonSharescouldbeadverselyaffected.

RisksRelatedtoK‐BroandtheLaundryandLinenServicesIndustry

ForadditionalinformationregardingchangestotheCorporation’sbusinessexpectedin2019andknowntrends,commitments, events or uncertainties, see K‐Bro’s “2018 Management’s Discussion and Analysis”, and inparticular, the “Outlook” and “Critical Risks and Uncertainties” sections thereof, which are incorporated byreferenceherein.

AbilitytoMaintainProfitabilityandManageGrowth

TherecanbenoassurancethatK‐Bro’sbusinessandgrowthstrategywillenableK‐Brotosustainprofitabilityinfuture periods. K‐Bro’s future operating results will depend on a number of factors, including its ability tocontinuetosuccessfullyexecuteitsstrategicinitiatives.TherecanbenoassurancethatK‐Browillbesuccessfulin achieving its strategic plan or that this strategic planwill enable K‐Bro tomaintain its historical revenuegrowthratesortosustainprofitability.FailuretosuccessfullyexecuteanymaterialpartofK‐Bro’sstrategicplancouldhaveamaterialadverseeffectonK‐Bro’sbusiness,financialcondition,liquidityandoperatingresults.

Historically,aportionofourgrowthhascomefromacquisitions.K‐BrocontinuestoevaluateopportunitiesforacquiringbusinessesthatmaysupplementtheCorporation’sgrowth.However,therecanbenoassurancethatwewillbeabletolocateandpurchasesuitableacquisitions.Inaddition,thesuccessofanyacquisitiondependsinpartonourabilitytointegratetheacquiredcompanywiththeCorporation’sexistingoperations.Theprocessof integrating acquired businesses may involve unforeseen difficulties and may require a disproportionateamountofManagement's attentionandour financial andother resources.Although theCorporationconductsdue diligence investigations prior to each acquisition, there can be no assurance that we will discover oradequatelyprotectagainstallmaterialliabilitiesofanacquiredbusinessforwhichwemayberesponsibleasasuccessorowneroroperator.Thefailuretosuccessfullyintegratetheseacquiredbusinessesortodiscoversuchliabilitiescouldadverselyaffectourconsolidatedresultsofoperations.

AbilitytoOpenNew,CostEffectiveProcessingPlants

Weplan toexpandourpresence inexistingmarketsandenternewmarkets. Theopeningofnewprocessingplantsisnecessarytogainthecapacityrequiredforthisexpansion.Ourabilitytoopennewoperatingfacilitiesdepends on our ability to identify attractive locations, attract suitable staff, negotiate leases or real estatepurchaseagreementsonacceptable terms, identifyandobtainadequateutilityandwatersourcesandcomplywithenvironmentalregulations,zoning lawsandothersimilar factors.Any inability toeffectively identifyandmanagetheseitemsmayadverselyaffectourexpansionefforts,and,consequently,adverselyaffectourfinancialperformance.

GlobalEconomicFactors

Negativeeconomicconditions,inCanada,theUKandelsewheremayadverselyaffectourfinancialperformance.Thelevelofunemployment,inflation,taxratesandotherchangesintaxlawsandothereconomicfactorscouldadverselyaffect thedemandforK‐Bro’sservices. Increases in laborcosts, includinghealthcareand insurancecosts, laborshortagesorshortagesofskilledlabor,highermaterialcostsfor itemssuchasfabricsandtextiles,

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higherinterestrates,inflation,foreignexchangerates,highertaxratesandotherchangesintaxlawsandothereconomic factors could increaseour costs of linens andancillaryproducts andother services and selling andadministrativeexpenses. Asaresult, thesefactorscouldadverselyaffectoursalesandconsolidatedresultsofoperation.

RelianceonKeyPersonnel

The success of K‐Bro’s business depends on the abilities, experience and personal efforts of Management,includingtheirabilitytoretainandattractskilledemployeesandlocalmanagers.Thelossoftheservicesofsuchkeypersonnelcouldhaveamaterialadverseeffectonthebusiness,financialconditionorfutureprospectsoftheCorporation.

We believe that a key component of our success is our corporate culture which has been imparted byManagementthroughoutourcorporateorganization. Thisfactor,alongwithourentireoperation,dependsonour ability to attract and retain key employees. Competitive pressureswithin and outside our industrymaymakeitmoredifficultandexpensiveforustoattractandretainkeyemployeeswhichcouldadverselyaffectourbusiness.

IncreasedCompetition

K‐Brooperatesinacompetitiveindustryandcompeteswithnational,regionalandlocalproviders.Service,price,quality, and convenience to the customer are the competitive elements in this industry. If existing or futurecompetitors seek to gain or retainmarket share by reducing prices, K‐Bromay be required to lower prices,whichwould hurt its results of operation. The Corporation’s competitorsmay also compete with K‐Bro foracquisition candidates, which can increase the price for acquisitions and reduce the number of availableacquisition candidates. In addition, our customers and prospects may decide to perform certain services in‐houseinsteadofoutsourcingtheseservicestous.Thesecompetitivepressurescouldadverselyaffectoursalesandconsolidatedresultsofoperation.

Inadditiontocompetitionprovidedbyitslaundryprocessorcompetitors,K‐Broalsocompetesagainstsuppliersofsingle‐use disposable linens, particularly in its K‐Bro Operating Room (“KOR”) business of providing reusablesurgical packs. Management estimates that suppliers of disposable packs currently control 80% of the overalloperatingroomlinenmarketinCanada.

Theserisksaremanagedprimarilybyenteringintolong‐termcontactswherepossible,providingacomprehensiveprogramofservices,adheringtothehighestpossiblequalityandservicestandardsandprovidingacost‐effectiveservice through the economies of large scale processing plants and purchasing. However, there can be noassurancethatcontractrenewalsorextensionswillbeachievedgiventhecompetitiveenvironmentfacedbytheCorporation.

FuelandEnergyCosts

Thepriceoffuelandenergyneededtooperateourdeliveryvehiclesandprocessingequipmentisunpredictableand fluctuatesbasedoneventsoutside theCorporation’s control, including geopolitical developments, supplyanddemandforoilandgas,actionsbyOPECandotheroilandgasproducers,warandunrestinoilproducingcountries, regional production patterns, limits on refining capacities, natural disasters and environmentalconcerns. Increases in fuel and energy costs could adversely affect our consolidated financial condition andconsolidatedresultsofoperation.

IfK‐Broengagesinactivitiestomanageitscommoditypriceexposure,itmayforegothebenefitsitwouldotherwiseexperience if commoditypriceswere todecrease.Noalternativesarepresentlyavailable toK‐Brotomanage itsexposuretochangesinthepriceofwater.Inaddition,commodityderivativecontractsactivitiescouldexposeK‐Brotolosses.TotheextentthatK‐Broengagesinriskmanagementactivitiesrelatedtocommodityprices,itwillbesubjecttocreditrisksassociatedwithcounterpartieswithwhichitcontracts.

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TextileDemand

The Corporation is a significant buyer of linens, themajority of which are constructed from cotton or cotton‐blendedtextiles.VariationsinglobaldemandcouldresultinanincreasetocottonfuturespricingandconsequentlytheamountcostofthelinenstoK‐Bro.

There‐useablelinenproductsweusearesourcedfromawidevarietyofsuppliers,eachofwhichhaveinternationalexposure.Werequireallofoursupplierstocomplywithapplicablelaws,includinglabourandenvironmentallaws,andotherwisecommittoourrequiredsupplierstandardsofconduct. Ourabilitytofindqualifiedsupplierswhomeetourstandards,andtoaccessproducts ina timelyandefficientmanner isasignificantchallenge,especiallywith respect to suppliers located and goods sourced outside Canada. Political and economic stability in thecountriesinwhichforeignsuppliersarelocated,thefinancialstabilityofsuppliers,suppliers'failuretomeetoursupplierstandards,thecostandavailabilityofrawmaterialstosuppliersandtransportavailabilityarebeyondourcontrol.Inaddition,CanadianandUKforeigntradepolicies,tariffsandotherimpositionsonimportedgoodsandtrade sanctions imposed on certain countries are beyond our control. These and other factors affecting oursuppliersandouraccesstoproductscouldadverselyaffectourresultsofoperations.

Significantincreasesinthepriceofcottonandothermaterialscouldresultinhigherlinencostsand,consequently,have an adverse effect on K‐Bro’s earnings if K‐Bro is not successful in offsetting such increases through costreductionefforts.

CustomerConcentration

AlargeportionofK‐Bro’srevenuesareconcentratedinarelativelysmallnumberofcustomers.Revenuesfromcustomersthathaveaccountedforsignificantsalesinthepast,eitherindividuallyorasagroup,maynotreachorexceed historical levels in any future period. Customer concentration increases credit risk and other risksassociatedwithparticularcustomersandparticularproducts,includingrisksrelatedtomarketdemandforourservicesandregulatoryandotheroperatingrisks.DependenceonthePublicSector

AsignificantportionofK‐Bro’srevenueisderivedfromcontractswithvarioushospitalandhealthcareinstitutionswhich are government owned and funded. Consequently, any reduction in demand for K‐Bro’s services by thepublic sector, whether due to funding constraints, changing capital spending plans orwillingness to outsource,wouldlikelyhaveanadverseeffectonK‐Broifthatbusinessisnotreplacedfromwithintheprivatesector. Thecurrent trend inhealthcare is tooutsourcecertainservicesandredeploy internalcapitalandresources towardscorehealthcareinitiatives;however,individualinstitutionsandregionalauthoritiescontinuallyassessandreviewtheir outsourcing strategy, the outcome of which could have an adverse effect on K‐Bro. In addition, certaincontracts contain “no‐fault” termination rights in favour of the hospital or health authority. In the event anyhospitalorhealthauthorityexercisesthisterminationright,suchhospitalorhealthauthoritywouldbeobligatedtopaytheCompanycertaincontractualterminationpayments.

ChangesinLaws

Changestoanyofthelaws,rules,regulationsorpoliciestowhichK‐BroissubjectcouldhaveasignificantimpactonK‐Bro’sbusiness.TherecanbenoassurancethatK‐Browillbeable tocomplywithany future laws, rules,regulationsandpolicies.FailurebyK‐Brotocomplywithappropriatelaws,rules,regulationsandpoliciesmaysubject it tocivilorregulatoryproceedings, includingfinesor injunctions,whichmayhaveamaterialadverseimpactonK‐Bro’sbusiness,financialcondition,liquidityandresultsofoperations.Inaddition,compliancewithanyfuturelaws,rules,regulationsandpoliciescouldnegativelyimpactK‐Bro’sprofitabilityandhaveamaterialadverseeffectonitsbusiness,financialcondition,liquidityandresultsofoperations.

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EnvironmentalMatters

K‐Bro's facilities are subject to stringent federal, provincial andmunicipal laws and regulations relating to theprotectionof theenvironmentandhealthandsafetymatters, includingthosegoverningwastewaterdischarges,management, recycling and disposal of hazardous materials and waste, cleanup of contamination, and workerexposure to hazardous materials. The operation of our business entails risks under environmental laws andregulations. We could incur significant costs, including, without limitation, clean‐up costs, fines, sanctions andclaimsbyregulatorsorthirdpartiesforpropertydamageandpersonalinjuryasaresultofviolationsorliabilitiesundertheselawsandregulations.Asaresultofviolationsoftheselawsandregulations,amongotherthings,wecouldberequiredtoreduceorceaseuseofcertainequipmentand/orlimitorstopproductionatcertainfacilities.Theseconsequencescouldhaveamaterialadverseeffectonourresultsofoperationsandfinancialconditionanddisruptcustomerrelationships.

Underenvironmental laws,anowneroroperatorofrealestatemayberequiredtopaythecostsofremovingorremediatinghazardousmaterials locatedonoremanatingfromproperty,whetherornottheowneroroperatorknew of or was responsible for the presence of such hazardous materials. While we regularly engage inenvironmental duediligence in connectionwith acquisitions,we can giveno assurance that locations that havebeenacquiredorleasedhavebeenoperatedincompliancewithenvironmentallawsandregulationsduringpriorperiodsorthatfutureusesorconditionswillnotmakeusliableundertheselawsorexposeustoregulatororthird‐partylegalaction.

Additionally,wemustmaintaincompliancewithvariouspermitsandlicensesissuedtousinconnectionwithouroperations. Any failure on our part tomaintain such compliance or to apply for and receive such permits andlicensescouldhaveamaterialadverseeffectonourabilitytocontinueoperationsataparticularlocation.

EmployeeRelationsandCollectiveAgreements

Significantportionsofourlabourforce(approximately35%)areunionizedandaresubjecttocollectivebargainingagreementswithourproductionemployees. Whilewebelieve thatouremployeerelationsaresatisfactory,anyworkstoppageresultingfromastrikeorlockoutcouldhaveamaterialadverseeffectonK‐Bro’sbusiness,financialconditionandresultsofoperations,includingincreasedlabourcostsandservicedisruptions.Inaddition,significantunionrepresentationwouldrequireustonegotiatewithmanyofouremployeescollectivelyandcouldadverselyaffectourresultsbyrestrictingourabilitytomaximizetheefficiencyofouroperations.

There canbenoassurance that anyof theCorporation’s collectiveagreementswillbe successfully renegotiatedupontheirexpiration.Furthermore,theremaybeasignificanteffectontheoperationsofK‐Brointheeventthatthenegotiationsareunsuccessful.

Unionizationcampaignscouldbemateriallydisruptivetoourbusinessandcouldadverselyaffectourconsolidatedresultsofoperations.

Inaddition,K‐Bro’sclientsemployworkersgovernedundercollectiveagreements.AnyworkstoppageorlabourdisruptionexperiencedbyK‐Bro’sclientscouldaffecttheamountandtimingofK‐Broservicesrequired.

LabourShortagesandIncreasedLabourCosts

Our success depends in part on our ability to attract employeeswith needed skills in the regions inwhichweoperate. Our ability tomeet labour needswhile controlling associated costs is subject to a number of externalfactors, including employment levels, employee‐turnover rates, changing demographics, prevailing wage rates,minimumwagelegislation,healthandotherinsurancecosts,governmentallabourandemploymentrequirementsor increasedcompetition foremployees. Ifwearenotable toattractskilledemployeesor face increased labourcosts as a result of any of such factors it may impact our operational capacity or associated costs and have amaterialadverseeffectonourresultsofoperation,businessandfinancialposition.

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UnexpectedEvents

Unexpected events, including,without limitation, fires at facilities, natural disasters, public health emergencies,unplanned utility outages, supply disruptions, failure of equipment or systems or changes in laws and/orregulations impacting our business, could adversely affect our operating results. These events could result indisruptionofcustomerservice,physicaldamageortemporaryclosureofoneormorekeyoperatingfacilities,orthetemporarydisruptionofinformationsystems.

CreditFacilityandDebtService

Changes in current market conditions, deterioration in our business performance, or adverse changes in theeconomycouldlimitouraccesstocapitalmarkets.

Financialmarkets have experienceddisruptions in thepast, including, amongother things, volatility in securityprices, diminished liquidity and credit availability, rating downgrades and declining valuations of certaininvestments.Therecanbenoassurancethatthefinancialmarketswillnotexperiencedisruptionsinthefuture,orthat futuredisruptionsmaybemore severe than thosepreviously experienced.Thesedisruptions could lead tochallengesinourbusinessandnegatively impactourfinancialresults.Atighteningofcredit infinancialmarketscouldadverselyaffecttheabilityofourcustomersandsupplierstoobtainfinancingforsignificantpurchasesandoperationsandcouldresultinadecreasedspendingforourservices.

K‐Bro currently has a $100million financial covenant‐based credit facility (the “Credit Facility”) with a singleCanadian bank which expires on July 31, 2021. In the event that the facility is not renewed or extended,indebtedness under the facilitywill become repayable. There is also a risk that the Credit Facilitywill not berenewedforthesameamountoronthesameterms.AnyoftheseeventscouldaffectK‐Bro’sabilitytofundongoingoperationsandmakefuturedividendpayments.

The Credit Facility is subject to floating interest rates and, therefore, is subject to fluctuations in interest rates.Interest rate fluctuationsarebeyond theCorporation’s control and there canbenoassurance that interest ratefluctuationswillnothaveamaterialadverseeffectontheCorporation’searningsandinturnreducecashavailableforfuturecashdividendstoShareholders.

CovenantsintheCreditFacilityinclude,amongothers,covenantsthatlimittheabilityofK‐Brotoincuradditionaldebt,make liens,disposeofassets,consolidate,mergeoracquireotherbusinesses,paydividendsormakeotherdistributionsandamendmaterialcontracts.ThesecovenantsrestrictnumerousaspectsofthebusinessofK‐Bro.

K‐BroisrequiredtocomplywithcovenantsundertheCreditFacility.ThefailuretocomplywiththetermsoftheCredit Facilitywould, after the expiration of available cure periods, entitle the lender to accelerate all amountsoutstanding under the Credit Facility, and upon such acceleration, the lender would be entitled to beginenforcementproceduresagainsttheassetsoftheCorporation.

K‐Bro’sabilitytosatisfytherestrictivecovenantsundertheCreditFacilitymaybeaffectedbyeventsbeyonditscontrol.K‐Broroutinelyreviewssuchcovenantsbasedonactualandforecastresultsandhastheabilitytomakechangestoitsdevelopmentplansand/ordividendpolicytocomplysuchcovenantsundertheCreditFacility.IfK‐Brobecomesunabletopayitsdebtservicechargesorotherwisecommitsaneventofdefaultsuchasbankruptcy,thelendermayforecloseonsuchassetsofK‐BroorsellworkinginterestsinK‐Bro.K‐BrohasincurrednoeventsofdefaultunderthetermsoftheCreditFacility.

TransactionProcessingSystems

Ourbusinessreliesonourcomputersystemstoprovidecustomerinformation,processcustomertransactionsandprovideothergeneralinformationnecessarytomanageourbusinesses.Wehaveanactivedisasterrecoveryplaninplacethatisfrequentlyreviewedandtested.However,ourcomputersystemsaresubjecttodamageorinterruptiondue to system conversions, power outages, computer or telecommunication failures, computer viruses, securitybreaches,catastrophiceventsandusageerrorsbyouremployees.Ifourcomputersystemsaredamagedorceaseto

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function properly, we may have to make a significant investment to fix or replace them, and we may haveinterruptionsinourabilitytoserviceourcustomers.Thisdisruptioncausedbytheunavailabilityofourcomputersystemscouldadverselyaffectoursalesandconsolidatedresultsofoperation.

InformationSecurity

TheefficientoperationoftheK‐Bro’sbusinessisdependentoncomputerhardwareandsoftwaresystems.Intheordinary course of K‐Bro’s business, K‐Bro collects and stores sensitive data, including intellectual property,proprietary business information and identifiable personal information of its employees and customers. TheCorporation’s information technology and infrastructure may be vulnerable to attacks by hackers andcyberterroristsmotivatedby,amongothers,geopolitical,financialoractivistreasons,orbreachedduetoemployeeerror,malfeasanceorotherdisruptions.AnysuchattackorbreachcouldcompromiseK‐Bro’snetworksand theinformation K‐Bro stores could be accessed, publicly disclosed, lost, stolen or compromised. Any such attack,breach,access,disclosureorlossofinformationcouldresultinlegalclaimsorproceedings,liabilityunderlawsthatprotect the privacy of personal information, regulatory penalties, disruptions to K‐Bro’s operations, decreasedperformance,increasedcostsanddamagetoK‐Bro’sreputation,whichcouldhaveamaterialadverseeffectonitsbusiness, financialcondition,resultsofoperationsandcash flow. Tomitigate thisrisk,K‐Brohas implementedsecuritymeasures, including employee training,monitoring and testing,maintenance of protective systems andcontingencyplans,toprotectandtopreventunauthorizedaccessandtoreducethelikelihoodofdisruptionstoitsITsystems.TheCorporationalsohassecurityprocesses,protocolsandstandardsthatareapplicableto itsthird‐partyserviceproviders.Despitethesemeasures,alloftheCorporation’sinformationsystems,includingitsback‐upsystems and any third party service provider systems that it employs, are vulnerable to damage, interruption,disabilityorfailuresduetoavarietyofreasons,includingphysicaltheft,electronictheft,fire,powerloss,computerand telecommunication failures or other catastrophic events, as well as from internal and external securitybreaches, denial of service attacks, viruses, worms and other known or unknown disruptive events. TheCorporation or its third party service providers may be unable to anticipate, timely identify or appropriatelyrespondtooneormoreoftherapidlyevolvingandincreasinglysophisticatedmeansbywhichcomputerhackers,cyberterroristsandothersmayattempttobreachtheCorporation’ssecuritymeasuresorthoseofourthirdpartyserviceproviders’informationsystems. ForeignExchangeRiskCurrencyfluctuationsmayaffecttheCorporation’sfinancialperformance.TheCorporation’sprimaryfunctionalcurrency is the Canadian dollar. The Corporation’s currency exposure primarily relates to purchases ofequipment incurred in connection with the commissioning of new facilities, the costs of which are typicallydenominatedinU.S.dollars.Additionally,aportionoftheCorporation’sbusinessisconductedanddenominatedinpoundssterlingasaresultoftheAcquisition.AnyfluctuationsinthevalueofthepoundsterlingrelativetotheCanadiandollarmay,therefore,resultinvariationsinthecomprehensiveincomeoftheCorporation.Fromtimeto time, the Corporation may use a limited number of derivate financial instruments to manage its foreigncurrencyexposure.

RisksRelatingtotheBusinessofFishers

TheriskfactorssetforthinthisAIFandnotedabovefortheCanadianoperationsandindocumentsincorporatedhereinby reference relating to theCorporation’sbusinessapplyequally in respectofFishers’business in theUnitedKingdom.

SeasonalityoftheHospitalityIndustry

Fishersishighlydependentonthehospitalityindustry.TheseasonalityofthehospitalityindustrycouldhaveamaterialadverseeffectonFishersandtheCorporation.Thehospitalityindustryisseasonalinnature,whichcanbeexpected tocause fluctuations in revenues,operatingexpensesandcash flows.TheCorporation’searningsmaybeadverselyaffectedbyfactorsoutsidetheCorporation’scontrol, includingweatherconditionsandpooreconomicfactorsincertainmarketsinwhichFishersoperates.TheCorporationcanprovidenoassurancesthatcashflowswillbesufficienttooffsetanyshortfallsthatoccurasaresultoftheseseasonalfluctuations.

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BusinessImpactandRiskFactorsRegardingBrexitOnJune23,2016,amajorityofvotersintheUnitedKingdomelectedtowithdrawfromtheEuropeanUnion(the“EU”)inanationalreferendum(“Brexit”).AproposedagreementbetweentheUnitedKingdomandtheEUonthetermsof thewithdrawalandthe futurerelationshipbetweentheUnitedKingdomandtheEUwasdefeated inJanuary 2019 in the UK Parliament and the likelihood of the execution of an alternative agreement remainsunclear.Accordingly, thereexists theriskofa “no‐dealBrexit”,whichcouldhaveamaterialadverseeffectonglobal economic conditions and the stability of global financialmarkets, and could significantly reduce globalmarket liquidity and restrict the ability of key market participants to operate in certain financial markets,including in Europe in particular. The Corporation cannot be sure that its business, financial condition, andresults of operationswill not bematerially adversely affectedby the effects of increasedmarket volatility onassetvaluations,currencyexchangeratesandcreditratings.

The Corporationmay incur additional costs and expenses as it adapts to potential divergences in the UnitedKingdom’sregulatoryandtaxationregimesasaresultofBrexit.AlthoughthemarketreactiontotheBrexitshockwas reassuringly orderly, the ultimate impact remains very unclear, as the fate of institutional and tradearrangementsbetweentheUnitedKingdomandtheEUisuncertain.Thelong‐termshapeofrelationsbetweentheUnitedKingdomandtheEU,andtheextenttowhichtheirmutualtradeandfinancialflowswillbecurtailed,will likely become clear only after several years. Adding to the uncertainty is the impact of the referendumresults on political sentiment in other EUmembers, aswell as on global pressure to adopt populist, inward‐lookingpolicies.

PossibilityofScottishIndependence

A largemajorityof thepopulationofScotlandwanted to remain in theEU, andoneof thekeyarguments forScotlandremaining in theUnitedKingdomin its2014 independencereferendumwasEUmembership.UnitedKingdomPrimeMinisterTheresaMayhasrejectedasecondScottishindependencereferendumwhileBrexitisbeingnegotiatedwiththeEU.ThismeansthatwhileasecondScottishindependencereferendumisamaterialpossibility,suchaneventisunlikelytooccurbeforethecompletionofBrexit.

Should Scotland vote to leave theUnitedKingdom, the details of any changes are impossible to predictwithcertainty at present andwill depend on post‐referendum negotiations and agreements between the Scottishgovernment andotherorganizations atUKandEU levels. Independence could result in, interalia,changes inScotland’smonetary system, currency, taxation, regulatory and legal framework, andmembership of the EU.SomepossibleoutcomesofindependencecouldhaveanadverseeffectontheCorporation’sbusiness,financialconditionandresultsofoperationsinthefuture.

PotentialIncreaseinNationalLivingWage

TheCorporation’soperationsintheUnitedKingdomaresubjecttolegislationgoverningsuchmattersaswagerates,overtime,workingconditionsandcitizenshiprequirements.Thereareproposalsunderconsideration intheUnitedKingdomfromtimetotimetoincreasethenationallivingwage,includinganincreasefrom £7.83to£8.21 that isplanned to takeeffect inApril2019. Increases in thenational livingwage couldhaveamaterialadverseeffectontheCorporation’sbusiness,financialconditionandresultsofoperationsinthefuture,aslabourconstitutesasignificantportionofFishers’coststructure,andportionsofitsoperationsintheUnitedKingdomarereliantuponminimumwagelabour.

RisksInherentinanInvestmentinCommonShares

UnpredictabilityandVolatilityofMarketPrice

Shares of a publicly traded company do not necessarily trade at values determined by reference to theunderlyingvalueof itsbusiness.Thepricesatwhich theCommonShareswill trade cannotbepredicted.Themarket price of the Common Shares could be subject to significant fluctuations in response to variations inquarterlyoperating results, distributions andother factors.Themarketprice for theCommonSharesmaybeadversely affected by changes in general market conditions, fluctuations in the market for equity or debt

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securitiesandnumerousotherfactorsbeyondthecontroloftheCorporation.TheannualyieldontheCommonShares as compared to the annual yield on other financial instruments may also influence the price of theCommonSharesinthepublictradingmarkets. Inaddition,thesecuritiesmarketshaveexperiencedsignificantprice and volume fluctuations from time to time that often have been unrelated or disproportionate to theoperatingperformanceofparticularissuers.ThesebroadfluctuationsmayadverselyaffectthemarketpriceoftheCommonShares.

PaymentofDividends

K‐Bro’sdividendpolicyisatthediscretionofitslenderandtheBoard.Futuredividends,ifany,willdependonresults of operations, cash requirements, financial condition, contractual restrictions, business opportunities,provisionsofapplicable lawandother factorsthattheBoardmaydeemrelevant.Accordingly, thepaymentofdividendsbyK‐Broandthelevelthereofisuncertain.

DilutionandSaleofCommonShares

Pursuanttoitsarticlesofincorporation,theCorporationisauthorizedtoissueanunlimitednumberofCommonShares for the consideration and on those terms and conditions as are established by theBoardwithout theapprovalofanyShareholders.AnyfurtherissuanceofCommonShares,includingissuanceundertheprovisionsof K‐Bro’s long‐term incentive plan, may dilute the interests of existing Shareholders. Furthermore, theCorporationmaymakefutureacquisitionsorenterintofinancingsorothertransactionsinvolvingtheissuanceofsecuritiesoftheCorporationwhichmaybedilutive.

SalesofasubstantialnumberofCommonSharesbyasignificantShareholderinthepublicmarketorotherwisecouldadverselyaffect theprevailingmarketpricesof theCommonSharesandcould impair theCorporation’sability to raise additional capital through an offering of Common Shares. The possible perception among thepublicthatthesesaleswilloccurcouldalsoproducethesameeffect.

DividendsDependonPerformanceofSubsidiaries

AlthoughtheCorporationintendstopaydividendsonitsCommonShares,therecanbenoassuranceregardingtheamountsofincometobegeneratedbytheoperatingsubsidiariesoftheCorporationorultimatelydistributedtotheCorporationfromtheseoperatingsubsidiaries.TheabilityoftheCorporationtomakedividendpayments,andtheactualamountpaid,iscurrentlyentirelydependentontheoperationsandassetsofitssubsidiaries,andis subject to various factors including their respective financial performances, obligations under the CreditFacility, fluctuations inworking capital, the sustainability ofK‐Bro’s profitmargin and its capital expenditurerequirements. Dividends are not guaranteed andmay fluctuatewith the performance of K‐Bro’s subsidiaries.TherecanbenoassuranceregardingtheactuallevelsofdividendsbytheCorporation.ThemarketvalueoftheCommonSharesmaydeteriorateiftheCorporationisunabletomeetitsdividendtargetsinthefuture,andsuchdeteriorationmaybematerial.

CapitalInvestment

The timing and amount of capital expenditures by the Corporation will directly affect the amount of cashavailablefordistributionbythesubsidiariestotheCorporation.Dividendsmaybereduced,oreveneliminated,attimeswhentheBoarddeemsitnecessarytomakesignificantcapitalorotherexpenditures.

Tax‐RelatedRisks

TheincomeoftheCorporationanditsrelatedentitiesmustbecomputedinaccordancewithjurisdictionaltaxlaws, all of whichmay be changed in amanner that could adversely affect the amount of cash available fordistribution to Shareholders. There can be no assurance that Canadian or UK federal income tax laws andadministrative policies respecting the treatment of corporations will not be changed in a manner whichadverselyaffectsShareholders.

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TherecanbenoassurancethattaxationauthoritieswillnotseektochallengecertaintaxpositionstakenbytheFund, theCorporationor related entities. Such a challenge, if successful, couldmaterially adversely affect theamountoffreecashavailablefordistribution.

Inthefuture,incometaxlawsorotherlawsmaybechangedorinterpretedinamannerthatadverselyaffectsK‐BrooritsShareholders.TaxauthoritieshavingjurisdictionoverK‐BrooritsShareholdersmaydisagreewithhowK‐BrocalculatesitsincomefortaxpurposestothedetrimentofK‐BroanditsShareholders.

EffectiveInternalControls

Effectiveinternalcontrolsarenecessaryforustoprovidereliablefinancialreports.Allinternalcontrolsystems,nomatterhowwelldesigned,haveinherentlimitations.Therefore,eventhosesystemsdeterminedtobeeffectivecanprovide only reasonable assurancewith respect to financial statement preparation and presentation.Whilewecontinuetoevaluateourinternalcontrols,wecannotbecertainthatthesemeasureswillensurethatweimplementandmaintainadequatecontrolsoverourfinancialprocessesandreportinginthefuture.Ifwefailtomaintaintheadequacyof our internal controls or ifweorour auditorwere todiscovermaterialweaknesses inour internalcontrols,wemaynotbeabletoensurethatwecanconcludeonanongoingbasisthatwehaveeffectiveinternalcontrolover financial reporting.Failure toachieveandmaintainaneffective internalcontrolenvironmentcouldcauseus tobeunable toproducereliable financialreportsor toprevent fraud.Thismaycause investors to loseconfidenceinourreportedfinancialinformation,whichcouldhaveamaterialadverseeffectonthemarketpriceoftheCommonShares.

LEGALPROCEEDINGS

To the knowledge of the Corporation, there are no legal proceedings which the Corporation or any of itssubsidiaries is a party to or of which any of their property is subject to which would be material to theCorporationoranyofitssubsidiariesnoristheCorporationawareofanyproceedingsthatwouldbematerialtotheCorporationoritssubsidiarieswhicharecontemplatedorpending.

REGULATORYACTIONS

K‐Brohasnotbeenthesubjectof:

(a) any penalties or sanctions imposed against the Corporation by a court relating to securitieslegislationorbyasecuritiesregulatoryauthorityduringitsmostrecentlycompletedfinancialyear;

(b) anyotherpenaltiesorsanctionsimposedbyacourtorregulatorybodyagainsttheCorporationthatwould likely be considered important to a reasonable investor inmaking an investmentdecisionduringitsmostrecentlycompletedfinancialyear;or

(c) settlementagreementswhichtheCorporationenteredintobeforeacourtrelatingtosecuritieslegislationorwithasecuritiesregulatoryauthorityduringitsmostrecentlycompletedfinancialyear.

CONFLICTSOFINTEREST

As at the date hereof, the Corporation is not aware of any existing or potentialmaterial conflicts of interestbetweentheCorporationoritssubsidiariesorK‐Bro’sdirectorsorexecutiveofficers.

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INTERESTOFMANAGEMENTANDOTHERSINMATERIALTRANSACTIONS

Therearenomaterialinterests,directorindirect,ofourdirectorsorexecutiveofficersoranyShareholderswhobeneficiallyownmorethan10%ofanyclassofoutstandingvotingsecuritiesoftheCorporation,oranyknownassociatesor affiliatesof suchpersons, in any transactionwithin the threemost recently completed financialyearsexceptasnotedbelow.

K‐BrohasincurredexpensesinthenormalcourseofbusinessforadvisoryconsultingservicesprovidedbyMr.MatthewHills,adirector,primarilyrelatingtoacquisitions.Theamountschargedarerecordedattheirexchangeamounts and are subject to normal trade terms. For the year ended December 31, 2018, the Corporationincurredsuchfeestotalling$137,500(December31,2017–$137,500).

AUDITORS,TRANSFERAGENTANDREGISTRAR

TheCorporation’sauditorsarePricewaterhouseCoopersLLP,StantecTower,10220103AvenueNW,Edmonton,Alberta,T5J0K4.

AST Trust Company (Canada) acts as both transfer agent and registrar for the Corporation. Registers oftransfersofsecuritiesaremaintainedinCalgary,Alberta.

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MATERIALCONTRACTS

Except for thosecontractsentered into in theordinarycourseofbusiness,K‐Brohasentered into the followingmaterialcontracts:

CreditFacility

K‐BroenteredintoanagreementwithaCanadiancharteredbank(the“Bank”)fortheprovisionofarevolvingcredit facility to accommodate the Corporation’s working capital requirements and for general corporatepurposesincludingongoingassetacquisitions.

The Credit Facility is a senior secured revolving credit facility in the principal amount of $100million. TheamountdrawnandoutstandingatDecember31,2018was$71.4million,includingoutstandinglettersofcredit.During fiscal 2017, the Bank reviewed the Corporation’s performance and opted to renew the Credit FacilitythroughtoJuly31,2021aswellasincreasetheamountavailablefrom$85millionto$100million.LoansundertheCreditFacilityarerepayablewithoutanyprepaymentpenalties,andbearinterestatafloatingratebasedontheCanadiandollarprimerateorontheapplicablebankers’acceptanceratesplus, ineachcase,anapplicablemargintothoserates.

PursuanttotheCreditFacility,theBankmaintainsitssecurityoversubstantiallyalloftheassetsofK‐Broanditssubsidiaries.Inaddition,theCorporationhasprovidedanunlimitedguaranteeinrespectofallobligationsofK‐BrototheBank,securedby,amongotherthings,ageneralsecurityinterestoveralloftheCorporation’sassets.CovenantsintheCreditFacilityinclude,amongothers,covenantsthatlimittheabilityoftheCorporationtoincuradditionaldebt,makeliens,disposeofassets,consolidate,mergeoracquireotherbusinesses,paydividendsormake other distributions, and amend material contracts. These covenants restrict numerous aspects of thebusinessoftheCorporation.Moreover, financialperformancecovenantsrequireK‐Bro,amongotherthings,tomaintainuptoamaximumtotaldebt‐to‐EBITDAratioanduptoamaximumtotal fixedchargecoverageratio.ThefailurebyK‐Brotorectifyanynon‐compliancewithanyofitscovenantsorobligationswithinanappropriatecureperiodwouldconstituteaneventofdefaultandwouldentitlethelendertoaccelerateallamountsoutstandingundertheCreditFacility,anduponsuchacceleration,theBankwouldbeentitledtobeginenforcementproceduresagainst the assets of K‐Bro Linen Systems Inc. or the Corporation, including accounts receivable, inventory andequipment. The Bank would then be repaid from the proceeds of such enforcement proceedings, using allavailable assets. Only after such repayment and the payment of any other secured and unsecured creditorswouldtheShareholdersoftheCorporationreceiveanyproceedsfromtheliquidationofK‐Bro’sassets.

The Credit Facility could in certain circumstances restrict K‐Bro’s ability tomake payments in respect of theCommon Shares, including limiting distributions, unless sufficient funds are available for the repayments ofindebtednessandthepaymentofinterestexpensesandtaxes.AcopyoftheCorporation’samendedandrestatedcreditagreementcanbeaccessedthroughK‐Bro’sprofileontheSEDARwebsiteatwww.sedar.com.

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INTERESTSOFEXPERTS

There is no person or company whose profession or business gives authority to a statement made by suchpersonorcompanyandwhoisnamedashavingpreparedorcertifiedastatement,report,opinionorvaluationdescribedor includedinafiling,orreferredtoinafiling,madeunderNationalInstrument51‐102ContinuousDisclosureObligationsbytheCorporationduring,orrelatedto,ourmostrecentlycompletedfinancialyear.

PricewaterhouseCoopersLLP,ourauditor, is independentof theCorporation inaccordancewith theauditor’srulesofprofessionalconductintheProvinceofAlbertaandtheRulesofprofessionalconductaspertheUnitedKingdomFinancialReportingCouncil’sEthicalStandardforintegrity,objectivityandindependence.

ADDITIONALINFORMATION

AdditionalinformationrelatingtoK‐Brocanbefoundatwww.sedar.comorourwebsiteatwww.k‐brolinen.com.Additional information, includingdirectors’ andofficers’ remuneration and indebtedness, principal holdersofthe Corporation’s securities and securities authorized for issuance under equity compensation plans, will becontainedintheCorporation’smanagementinformationcircularrelatedtotheannualmeetingofShareholdersto be held on June 6, 2019. Additional financial information is contained in the Corporation’s auditedconsolidated financial statements for the years ended December 31, 2018 and 2017, and the annualmanagement’sdiscussionandanalysisoffinancialconditionandresultsofoperationsforfiscal2018.

Vous pouvez obtenir des renseignements supplémentaires sur la Société, y compris les documents déposésauprès des autorités de réglementation, sur notre site Web, au www.k‐brolinen.com et sur le site Web desautorités canadiennes en valeurs mobilières au www.sedar.com, le site Web du Système électronique dedonnées,d’analyseetderecherche(«SEDAR»).

APPENDIXA

K‐BROLINENINC.

AUDITCOMMITTEECHARTER(the“Charter”)

1. Purpose

TheAuditCommittee(the“Committee”)isappointedbytheboardofdirectors(the“Board”)ofK‐BroLinenInc.(the“Corporation”)toassistintheoversightandevaluationof:

• thequalityandintegrityofthefinancialstatementsoftheCorporation;

• theinternalcontrolandfinancialreportingsystemsoftheCorporation;

• the compliance by theCorporationwith legal and regulatory requirements in respect offinancialdisclosure;

• the qualification, independence and performance of the Corporation’s independentauditors;

• theperformanceoftheCorporation’sChiefFinancialOfficer;and

• anyadditionaldutiessetout in thisCharterorotherwisedelegated to theCommitteebytheBoard.

Inaddition, theCommitteeprovidesanavenue forcommunicationbetweenthe independentauditor,management,otheremployeesandtheBoardconcerningaccounting,financialreportingandauditingmatters.

The Committee is directly responsible for the appointment, compensation, retention (andtermination) and oversight of the work of the independent auditor (including oversight of theresolution of any disagreements between management and the independent auditor regardingfinancial reporting) for thepurposeofpreparingaudit reportsorperformingotheraudit, revieworattestservicesfortheCorporation.

While the Committee has the responsibilities and powers set forth in this Charter, theCommitteeisnotresponsiblefor:

• planningorconductingaudits,

• certifying or determining the completeness or accuracy of the Corporation’s financialstatements or that those financial statements are in accordancewith generally acceptedaccountingprinciples,or

• guaranteeingthereportoftheCorporation’sindependentauditor.

ThefundamentalresponsibilityfortheCorporation’sfinancialstatementsanddisclosurerestswith management and the independent auditors are responsible for auditing those financialstatements. It is not the duty of the Committee to conduct investigations, to itself resolve

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disagreements (if any)betweenmanagement and the independent auditor or to ensure compliancewithapplicablelegalandregulatoryrequirementsonadaytodaybasis.

2. Reports

TheCommitteeshallreporttotheBoardonaregularbasisand,inanyevent,beforethepublicdisclosure by the Corporation of its quarterly and annual financial results. The reports of theCommitteeshallincludeanyissuesofwhichtheCommitteeisawarewithrespectto:

• thequalityorintegrityoftheCorporation’sfinancialstatements;

• compliancebytheCorporationwithlegalorregulatoryrequirementsinrespectoffinancialmattersanddisclosure;

• theperformanceandindependenceoftheCorporation’sindependentauditor;

• theadequacyandeffectivenessoftheCorporation’ssystemsofinternalcontrol(includingrisk management) established by management to safeguard the assets (real andintangible)oftheCorporation;and

• thepropermaintenanceofaccountingandotherrecords.

TheCommitteeshallalsoprepare,asrequiredbyapplicable law,anyauditcommitteereportrequiredforinclusionintheCorporation’spubliclyfileddocuments.

3. Composition

ThemembersoftheCommitteeshallbethreeormoreindividualswhoareappointedbytheBoard.Themembersof theCommitteewillbeappointedtoholdofficeuntil thenextannualgeneralmeetingoftheCorporationoruntiltheirsuccessorsareappointed.TheBoardmayremoveamemberoftheCommitteeatanytimeandmayfillanyvacancyoccurringontheCommittee.AmemberoftheCommitteemayresignatanytimeandwillceasetobeamemberoftheCommitteeuponceasingtobeadirectoroftheCorporation.

EachofthemembersoftheCommitteeshallmeetthestandardsforindependencerequiredbyapplicableregulatory,stockexchangeandsecuritieslawrequirementsand,withoutlimitation,shallbefinancially literate (or acquire that familiarity within a reasonable period after appointment). Thisshall, at a minimum, include the ability to read and understand a set of financial statements thatpresentabreadthand levelof complexityofaccounting issues thataregenerallycomparable to thebreadthand complexity that can reasonablybeexpected tobe raisedby theCorporation’s financialstatements.NomemberoftheCommitteeshallaccept(directlyorindirectly)anyconsulting,advisoryor other compensatory fee from the Corporation (other than remuneration for acting in his or hercapacityasadirector)orbean“affiliatedentity”oftheCorporationoranyofitssubsidiaries.(Forthispurpose,apersonisan“affiliatedentity”ofanother if (i) thatperson,directlyor indirectly, throughoneormore intermediaries, controls,or is controlledby,or isundercommoncontrolwith the firstperson,or(ii)thatpersonisanindividualwhois(x)bothadirectorandanemployeeofanaffiliatedentity,or(y)anexecutiveofficer,generalpartnerormanagingmemberofanaffiliatedentity.)Withoutthe approval of the Board, no member of the Committee shall concurrently serve on the auditcommitteeofacompetitororclient.

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4. Responsibilities

Itisrecognizedthat,infulfillingtheirresponsibilities,membersoftheCommitteearenotfull‐timeemployeesoftheCorporation.Assuch,itisnotthedutyorresponsibilityoftheCommitteeoritsmemberstoconduct“fieldwork”orothertypesofauditingoraccountingreviewsorproceduresortodeterminethattheCorporation’sfinancialstatementsarecompleteandaccurate.EachmemberoftheCommitteeshallbeentitledtorelyon(i)theintegrityofthosepersonsandorganizationswithinandoutsidetheCorporationfromwhichitreceivesinformation,and(ii)theaccuracyofthefinancialandother information provided to the Committee by such persons or organizations absent actualknowledgetothecontrary(whichshallbepromptlyreportedtotheBoard).

TheCommitteeshallhaveauthorityover,andshallbe responsible for, the following specificmatters:

4.1. IndependentAuditors

TheCommitteeshall:

• RecommendtotheBoarda firmofexternalauditorsfornominationastheCorporation’sindependent auditor for the purpose of preparing or issuing an auditor’s report orperformingotheraudit,revieworattestationservicesfortheCorporation.

• EstablishandrecommendtotheBoardthecompensationoftheindependentauditor.

• Obtain confirmation from the independent auditor that it ultimately is accountable, andwillreportdirectly,totheCommitteeandtheBoard.

• Oversee the independent auditor and, in the context thereof, require the independentauditor to report directly to the Committee, including, among other things, anydisagreement between management and the independent auditor regarding financialreportingandtheresolutionofeachsuchdisagreement.

• Adoptpoliciesandprocedures for thepre‐approvalof the retentionof theCorporation’sindependentauditor forallauditandpermittednon‐auditservices tobeprovided to theCorporationoranyofitssubsidiaries(subjecttoanyrestrictionsonsuchservicesimposedbyapplicable legislation), includingproceduresforthedelegationofauthoritytoprovidesuchapprovaltooneormoremembersoftheCommittee.

• At least annually, review the qualifications, performance and independence of theindependent auditor. In doing so, the Committee should, among other things, undertakethemeasuressetforthinAppendix“A”tothisCharter.

4.2. TheAuditProcess,FinancialStatementsandRelatedDisclosure

TheCommitteeshall,asitdeterminestobeappropriate:

• Reviewwithmanagementandtheindependentauditor:

• before public disclosure, the Corporation’s annual audited financial statements andquarterly unaudited financial statements, theCorporation’s accompanyingdisclosureof management’s discussion and analysis of financial condition and results of

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operations(“MD&A”)andearningspressreleasesandmakerecommendationstotheBoardastotheapprovalanddisseminationofthosestatementsanddisclosure;

• beforepublicdisclosure, financial informationcontained in anyprospectuses, annualinformation forms, annual report to shareholders, management information circularandsimilardisclosuredocumentsandmakerecommendationstotheBoardasto theapprovalanddisseminationofsuchfinancialinformation;

• the adequacy of the procedures which have been established for the review of theCorporation’spublicdisclosureoffinancial informationextractedorderivedfromtheCorporation’s financialstatements,otherthanthepublicdisclosurereferredto intheimmediately preceding paragraphs and periodically assess the adequacy of thoseprocedures and consider whether they are complete and consistent with theinformationknowntoCommitteemembers;

• theproposedauditplanandscopeofreviewbytheindependentauditorandconsiderthe extent the planned scope can be relied upon to detect weaknesses in internalcontrols,fraudorotherillegalacts;

• financial information and any earnings guidance provided to analysts and ratingagencies, recognizing that this review and discussion may be done generally(consistingofadiscussionofthetypesofinformationtobedisclosedandthetypesofpresentationstobemade)andneednottakeplaceinadvanceofthedisclosureofeachreleaseorprovisionofguidance;

• anysignificant financial reporting issuesand judgmentsmade inconnectionwith thepreparationoftheCorporation’sfinancialstatements,includinganysignificantchangesin the selection or application of accounting principles, any major issues regardingauditing principles and practices, and the adequacy of internal controls that couldsignificantlyaffecttheCorporation’sfinancialstatements;

• allcriticalaccountingpoliciesandpracticesused;

• all alternative treatments of financial information within International FinancialReporting Standards (“IFRS”) that have been discussed with management,ramifications of the use of such alternative disclosures and treatments, and thetreatmentpreferredbytheindependentauditor;

• theuseof“proforma”or“adjusted”non‐IFRSinformation;

• the effect of regulatory and accounting initiatives, as well as any off‐balance sheetstructures, transactions, arrangements and obligations (contingent or otherwise), ontheCorporation’sfinancialstatements;

• any disclosures concerning any weaknesses or any deficiencies in the design oroperation of internal controls or disclosure controls made to the Committee by theChiefExecutiveOfficerandtheChiefFinancialOfficerduringtheircertificationprocessindocumentsfiledwithapplicablesecuritiesregulators;

• the adequacy of the Corporation’s internal accounting controls and managementinformation systems and its financial, auditing and accounting organizations and

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personnelandanyspecial stepsadopted in lightofanymaterial controldeficiencies;and

• the establishment, and periodic review, of procedures for the review of financialinformation extracted or derived from the Corporation’s consolidated financialstatements.

• Reviewwithmanagement the Corporation’s guidelines and policieswith respect to riskassessment and the Corporation’s major financial and business risk exposures and thestepsmanagementhastakentomonitorandcontrolsuchexposures.

• Reviewwiththeindependentauditor:

• theresultsoftheexternalauditandthereportthereon;

• the quality as well as the acceptability of the accounting principles that have beenapplied;

• anyproblemsordifficultiestheindependentauditormayhaveencounteredduringtheprovision of its audit‐related services, including any restrictions on the scope ofactivities or access to requested information and any significant disagreementswithmanagement, anymanagement letter provided by the independent auditor or othermaterial communication (including any schedules of unadjusted differences) tomanagementandtheCorporation’sresponsetothatletterorcommunication;and

• any changes to the Corporation’s significant accounting principles and practicessuggestedbytheindependentauditorandmembersofmanagement.

• Reviewwithmanagement all relatedparty transactions and thedevelopmentof policiesandproceduresrelatedtothosetransactions.

• Following completion of the annual audit, review with each of management and theindependent auditors any significant issues, concerns or difficulties encountered duringthecourseoftheauditincluding:

• restrictionsonthescopeofworkoronaccesstorequiredorrequestedinformation;

• issues or concerns that arose during the course of the audit concerning theCorporation’s internal accounting controls, or the fair presentation, completeness oraccuracyofthefinancialstatements;and

• analyses prepared by management or the auditors setting forth significant financialreporting issuesand judgmentsmade inconnectionwithpreparationof the financialstatements(includinganalysisoftheeffectsofalternativetreatmentsundergenerallyacceptedaccountingprinciples).

• Periodically review reports on the Corporation’s information technology systems thatsupportthefinancialreportingprocess.

• Receive and review reports from other Board committees with regard to matters thatcouldaffecttheauditorresultsofoperations.

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• Oversee appropriate disclosure of the Charter, and other information required to bedisclosed by applicable legislation in the Corporation’s public disclosure documents,including any management information circular distributed in connection with thesolicitationofproxiesfromtheCorporation’ssecurityholders.

4.3. Compliance

TheCommitteeshall,asitdeterminesappropriate:

• ReviewwiththeCorporation’sChiefFinancialOfficer,othermembersofmanagementandthe independent auditor any correspondence with regulators or governmental agenciesandanyemployeecomplaintsorpublishedreports,whichraisematerialissuesregardingtheCorporation’sfinancialstatementsoraccountingpolicies.

• Review with the Corporation’s external legal counsel legal matters that may have amaterialimpactonthefinancialstatementsoraccountingpolicies.

• Establishproceduresfor:

• the receipt, retention and treatment of complaints regarding accounting, internalaccountingcontrolsorauditingmatters;and

• the confidential, anonymous submission by employees of the Corporation withconcernsregardinganyaccountingorauditingmatters.

• Review independent financial analyst commentary concerning the Corporation and itsfinancialreporting.

4.4. Delegation

To avoid any confusion, the Committee responsibilities identified above are the soleresponsibilityoftheCommitteeandmaynotbedelegatedtoadifferentcommittee.

5. Meetings

TheChairoftheCommitteeshallbeselectedbytheBoard.IftheChairoftheCommitteeisnotpresent,themembersoftheCommitteemaydesignateaChairforthemeetingbymajorityvoteofthemembersoftheCommitteepresent.

The Committee shall meet in accordance with a schedule established each year by theCommittee, and at other times that the Committeemay determine. Notice of the time and place ofeverymeetingmaybegivenorally,inwritingorbyelectroniccommunicationtoeachmemberoftheCommitteeandwillbeprovidedatleast48hourspriortothetimefixedforsuchmeeting.Amemberof the Committee may, in any manner, waive notice of the meeting. Attendance of a Committeemember at the meeting shall constitute waiver of notice of the meeting, except where a memberattends a meeting for the express purpose of objecting to the transaction of any business on thegroundsthatthemeetingwasnotlawfullycalled.

QuorumforallmeetingsshallbeamajorityoftheCommitteemembers.Meetingsmaybeheldinperson,byvideo‐conference,bytelephoneorbyanycombinationoftheforegoing.MinutesshallbemaintainedofallmeetingsoftheCommitteeandcopiesoftheminutesshallbemadeavailabletoallmembersoftheBoard.

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The Committee shall meet periodically with the Chief Financial Officer, the independentauditors and external legal counsel in separate sessions to discuss anymatters that the Committeebelieves should be discussed privately. Meeting agendas shall be developed by the Chair of theCommittee in consultation with the Corporation’s management and the independent auditor.Committee members may propose agenda items through communication with the Chair of theCommitteeortheChiefFinancialOfficer.Agendas,togetherwithappropriatebriefingmaterials,shallbecirculatedtoCommitteememberspriortomeetings.AtthediscretionoftheCommittee,membersofmanagementandothersmayattendCommitteemeetingsotherthantheseparatesessionswiththeindependentauditors,theChiefFinancialOfficerandtheexternallegalcounsel.

6. ResourcesandAuthority

The Committee shall have the resources and the authority appropriate to discharge itsresponsibilities,includingtheauthoritytoengageandestablishthecompensationof,attheexpenseoftheCorporation,outsideadvisorsincludingexpertsinparticularareasofaccounting,legalcounselandother experts or consultants as it determines necessary to carry out its duties, without seekingapprovaloftheBoardormanagement.TheCommitteewilladvisetheBoardofanysuchactiontaken.

TheCommitteemayrequireanyoftheCorporation’sofficersandemployeestoproducesuchinformationandreportsastheCommitteemaydeemappropriateinorderforittofulfillitsduties.TheCommittee has the authority to conduct any investigation as it determines necessary to fulfill itsresponsibilities,andhastheauthoritytocommunicatedirectlywiththeindependentauditoraswellasanyoneintheCorporation.

7. AnnualEvaluation

Atleastannually,theCommitteeshall,inamanneritdeterminestobeappropriate:

• Performareviewandevaluationof theperformanceof theCommitteeand itsmembers,includingthecomplianceoftheCommitteewiththisCharter.

• Reviewandassess theadequacyof itsCharter (includingwithrespect to theproceduresregarding the review of the Corporation’s public disclosure of financial informationextractedorderived fromtheCorporation’s financialstatements)andrecommendto theBoardanyimprovementstothisCharterthattheCommitteedeterminestobeappropriate.

APPROVEDbytheBoardofDirectorsofK‐BroLinenInc.onthe14thdayofMarch,2018

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Appendix“A”

Qualifications,PerformanceandIndependenceofIndependentAuditor

• Review the experience and qualifications of the senior members of the independent auditor’steam.

• Confirmwiththeindependentauditorthatitisincompliancewithapplicablelegal,regulatoryandprofessionalstandardsrelatingtoauditorindependence.

• ReviewandapproveclearpoliciesforthehiringbytheCorporationofemployeesorpartnersorformeremployeesorformerpartnersofthecurrentandformerindependentauditor.

• Review annual reports from the independent auditor regarding its independence and considerwhether there are any non‐audit services or relationships that may affect the objectivity andindependenceoftheindependentauditorand, ifso,recommendthattheBoardtakeappropriateactiontosatisfyitselfoftheindependenceoftheindependentauditor.

• Obtainandreviewsuchreport(s)fromtheindependentauditorasmayberequiredbyapplicablelegalandregulatoryrequirements.

• Conduct an evaluation (taking into account the opinions of management) of the independentauditor’squalifications,performanceandindependenceandpresenttotheBoardtheCommittee’sconclusioninsuchregard.

• Review,asrequired,theindependentauditor’splanswithrespecttothepartnerrotation.

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