CLARKE INC.

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2020

Halifax, Canada March 2, 2021

CLARKE INC.

Annual Information Form

FORWARD-LOOKING STATEMENTS AND FUTURE ORIENTED FINANCIAL INFORMATION ............................................................................................................................ 1 CORPORATE STRUCTURE ............................................................................................................ 2 Intercorporate Relationships ........................................................................................................... 2 GENERAL DEVELOPMENT OF THE BUSINESS......................................................................... 3 BUSINESS OPERATIONS ................................................................................................................ 5 Description of Reporting Segments................................................................................................ 5 Properties ........................................................................................................................................ 6 Employees ...................................................................................................................................... 6 RISKS AND UNCERTAINTIES ....................................................................................................... 6 Risks Relating to the Investment Segment ..................................................................................... 7 Risks Relating to the Hospitality Segment ..................................................................................... 9 DIVIDENDS..................................................................................................................................... 13 DESCRIPTION OF SHARE CAPITAL .......................................................................................... 13 Stock Option Plan ......................................................................................................................... 14 DESCRIPTION OF CONVERTIBLE DEBENTURES ................................................................... 15 MARKET FOR SECURITIES ......................................................................................................... 15 ESCROWED SECURITIES ............................................................................................................. 16 DIRECTORS AND EXECUTIVE OFFICERS ............................................................................... 16 LEGAL PROCEEDINGS AND REGULATORY ACTION ........................................................... 17 INTEREST OF MANAGEMENT & OTHERS IN MATERIAL TRANSACTIONS ..................... 18 TRANSFER AGENTS AND REGISTRARS .................................................................................. 18 MATERIAL CONTRACTS ............................................................................................................. 18 INTERESTS OF EXPERTS ............................................................................................................. 19 ADDITIONAL INFORMATION..................................................................................................... 19 FORM 52-110F1 – AUDIT COMMITTEE ..................................................................................... 19

Appendix: Audit Committee Charter

FORWARD-LOOKING STATEMENTS AND FUTURE ORIENTED FINANCIAL INFORMATION

Included in this Annual Information Form, and the documents incorporated herein by reference, are forwardlooking statements, including future oriented financial information, with respect to Clarke Inc. ("Clarke" or the "Company"). Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements include, without limitation, those with respect to the potential impact of the COVID-19 pandemic on, among other things, the Company's business and operations, the expectation of the Company to recognize its entire pension plan surplus going forward, the future price of securities held by the Company, changes in these securities holdings, changes in the market price of the Common Shares, changes to the Company's hedging practices, currency fluctuations, requirements for additional capital, the declaration and payment of future dividends, the Company's involvement in future legal proceedings and the intention of Holloway to defend ongoing legal proceedings. Forward-looking statements rely on certain underlying assumptions, which if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements.

Risks and uncertainties include, among others, risks and uncertainties relating to the COVID-19 pandemic, the Company's investment strategy, general market risk, potential lack of diversification in the Company's investments, the sale of Company investments and subsidiaries, commodity market risk, legal and regulatory risks, dividends are not guaranteed, share liquidity, interest rates and foreign currency fluctuations, risks associated with investment in derivative instruments and reliance on key executives. Other risks and uncertainties relating to the hospitality industry include, environmental considerations, uninsured losses, competition, concentration of sales among a small number of customers, the seasonality of hotel operating income, potential labour disruptions and cyber risks. These and other factors are described in "Risks and Uncertainties".

Although the Company has attempted to identify important factors that could cause actual actions, events or results, or cause actions, events or results not to be estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, the Company does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.

All references to "$" or "dollars" are references to Canadian Dollars, unless otherwise specified. In the following discussion, references to "the Company" and to "Clarke" are to Clarke Inc. and its subsidiary companies, and to the companies pre-existing Clarke's incorporation whose business Clarke Inc. has acquired, unless the context requires otherwise.

Information in this document is as at the date of the Company's most recent financial year end, December 31, 2020, unless otherwise stated.

CORPORATE STRUCTURE

Clarke was incorporated as 3442896 Canada Inc. pursuant to the Canada Business Corporations Act (the "CBCA") on December 9, 1997 and changed its name to "Clarke Inc." on January 26, 1998. The Company's registered and head office is located at 145 Hobsons Lake Drive, Suite 106, Halifax, Nova Scotia, B3S 0H9.

Intercorporate Relationships

The following chart represents the Company's summarized organizational structure at December 31, 2020:

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Clarke Inc.
Holloway Lodging
Corporation
( Ontario ) 100%
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*The Company and its subsidiaries operate or have additional interests in other subsidiaries that do not meet the materiality thresholds for disclosure set out in Form 51-102F2 of the Canadian Securities Administrators.

GENERAL DEVELOPMENT OF THE BUSINESS

2018

On January 19, 2018, the Company completed a substantial issuer bid ("SIB") by repurchasing 1,851,579 common shares of the Company (the "Common Shares") for cancellation, representing 12.7% of its outstanding Common Shares as at that date.

On February 27, 2018, the Company received an annual surplus distribution from its Quebec pension plan in the amount of $1.9 million.

On July 9, 2018, the Company refinanced a loan in its ferry operation. The Company increased the principal amount of the loan from $0.9 million to $4.0 million and extended the term of the loan by four years.

On September 1, 2018, the Company amended the surplus policy of one of its pension plans. As a result, there is no longer a cumulative asset ceiling impact, and the Company expects to recognize its entire pension plan surplus going forward.

2019

On January 24, 2019, Holloway Lodging Corporation (“Holloway”) completed an SIB by repurchasing 1,553,755 of its common shares. As a result, Clarke acquired control of Holloway and owned approximately 51% of the common shares on that date. The Company began consolidating Holloway’s results beginning in the first quarter of 2019.

On March 27, 2019, the Company received an annual surplus distribution from its Quebec pension plan in the amount of $1.6 million.

On April 10, 2019, the Company announced that, together with certain parties with whom it was deemed to be a joint actor, it had acquired ownership of, and control over, 29,444,400 common shares of Trican Well Service Ltd. (“Trican”), representing 10% of the outstanding common shares of Trican as at that date. The Company, together with certain parties with whom it is deemed to be a joint actor, currently owns 36,100,000 common shares of Trican, representing 14% of the outstanding Trican shares.

On September 30, 2019, the Company acquired all outstanding common shares of Holloway by way of a statutory plan of arrangement under the Business Corporations Act (Ontario) (the "Arrangement"). In accordance with the terms of the Arrangement, Holloway shareholders, other than the Company, received 0.65 Common Shares for each Holloway common share they owned. The Company completed the Arrangement by issuing 4,799,455 Common Shares at a price of $12.50 per Common Share. In connection with the Arrangement, the Company also assumed Holloway’s $50.9 million of convertible debentures. The Company filed a business acquisition report pursuant to Part 8 of National Instrument 51-102 – Continuous Disclosure Obligations in respect of the Arrangement, which is available under Clarke's issuer profile on SEDAR at www.sedar.com.

In 2019, Holloway sold 13 properties for gross proceeds of $73.7 million. Holloway also acquired three vacant office properties totaling approximately 435,000sf in Houston, TX for an aggregate purchase price of US $13.1 million.

2020

The global pandemic related to the virus know as COVID-19 adversely impacted the Company’s operations in 2020, particularly the hotel and ferry operations. This has resulted in significant economic uncertainty, of which the potential impact on our future financial results is difficult to reliably measure. In response to the pandemic, the Company took immediate and drastic action to safeguard employee and customer safety, ensure financial liquidity, reduce, and/or defer expenses and minimize cash burn.

On March 25, 2020, the Company completed a dividend-in-kind on its Common Shares in the form of a pro rata distribution of the 5,386,440 common shares of TerraVest Industries Inc. ("Terravest") that it owned. Under the dividend, Shareholders of record on March 18, 2020 received approximately 0.33 shares of Terravest for every one Common Share of Clarke held; provided that no fractional shares (or cash in lieu thereof) were paid under the dividend and all fractional interests were rounded down to the nearest whole number of shares of Terravest. The board of directors of the Company (the "Board") determined the fair market value of the dividend to be $3.81 per Common Share when the dividend was announced.

On June 30, 2020, Michael Rapps, former President and Chief Executive Officer of the Company, resigned and George Armoyan, Clarke’s Executive Chairman, was appointed President and Chief Executive Officer.

On August 31, 2020, the Company announced that it had called a special meeting of Clarke’s shareholders for October 15, 2020 (the “Meeting”) to approve a proposed consolidation and subsequent share split of its Common Shares in order to eliminate a large number of small and odd-lot shareholdings (“Share Restructuring Plan”).

The basis of the proposed consolidation of Common Shares was one post-consolidated Common Share for each 1,000 pre-consolidated Common Shares (the “Consolidation”). Holders of fewer than 1,000 Common Shares who did not increase their holdings to 1,000 or more Common Shares prior to the determination date ceased to hold Common Shares and were entitled to be paid cash consideration equal to that number of preConsolidation Common Shares held by the holder multiplied by an amount equal to the volume weighted average trading price of the Common Shares for the twenty trading days preceding the Consolidation. Immediately following the Consolidation, the remaining Common Shares were split on the basis of 1,000 postsplit Common Shares for each 1 post-Consolidation Common Share. The end result was that those shareholders who held 1,000 or more shares prior to the Share Restructuring Plan retained the same number of shares after the Share Restructuring Plan.

The Share Restructuring Plan was approved at the Meeting, and the Company paid $2.0 million in cash consideration for 363,893 Common Shares, or $5.60 per Common Share.

On October 30, 2020, the Company received an annual surplus distribution from its Quebec pension plan in the amount of $1.2 million.

On November 5, 2020, the Company amended its credit facility with a Canadian chartered bank to combine and replace two existing facilities held by Clarke and Holloway from the same bank. The existing security remains in place as collateral for the amended credit facility. The amendment was made to establish incremental, long-term liquidity for the Company. In conjunction with the amended facility, the Company secured a $12.5 million term loan through the same Canadian chartered bank via the Co-Lending Program within the Business Credit Availability Program.

On December 15, 2020, the Company sold the Best Western[®] hotel in Grande Prairie, AB to a company controlled by the Executive Chairman and his immediate family member for gross proceeds of $11.5 million.

2021 – Year-to-date

On January 21, 2021, the Company announced its intention to commence an SIB pursuant to which the Company will offer to purchase up to 1,150,000 of its outstanding Common Shares at a purchase price of $7.00 per Common Share in cash. The offer will remain open for acceptance until March 5, 2021, unless withdrawn or extended by the Company.

BUSINESS OPERATIONS

Clarke is an investment company. Our objective is to maximize shareholder value. While not the perfect metric, we believe that Clarke’s book value per share, together with the dividends paid to shareholders, is an appropriate measure of our success in maximizing shareholder value over time.

We attempt to maximize shareholder value by allocating capital to investments that we believe will generate high returns and reallocating capital over time as needed. In doing this, Clarke’s goal is to identify investments that are either undervalued or are underperforming and may be in need of positive change. These investments may be companies, securities or other assets such as real estate, and they may be public entities or private entities. We do not believe in limiting ourselves to specific types of investments. Clarke seeks active involvement in the governance and/or management of the company in which it invests. In these cases, Clarke will have acquired the security with a view of changes that could be made to improve the underlying company’s performance and maximize the company’s value. When Clarke believes that an investee company has implemented appropriate changes and/or the value of the investee company has reached or exceeded its intrinsic value, Clarke may sell its investment. Clarke generally invests in industries that have hard assets, including manufacturing, industrial, energy and real estate businesses.

Description of Reporting Segments

The Company operates in two reportable business segments following the Arrangement. The existing Investment segment represents the Company’s marketable securities portfolio, the Company’s ferry business, and the Company’s vacant office properties in Houston, TX. The Hospitality segment consists of the Company’s ownership and operation of hotels. The Other category is not a segment and is disclosed for reconciliation purposes. The Other category consists of our treasury and executive functions, and the results of our pension plans, and the interest payable on our debentures. Revenue from external customers earned in the Other category pertains to management service fees and rental income.

A comparative analysis of revenue and other income by reporting segment is set out in the table below. Intercompany transactions are eliminated separately.

Revenue and Other Income	Year ended		Year ended
Analysis	December 31, 2020		December 31, 2019
(in thousands of dollars)	$	%	$	%
Investment segment	11,843	43.9	61,444	51.0
Hospitality segment	14,512	53.9	74,600	61.9
Other	630	2.3	1,408	1.1
Eliminations	(39)	(0.1)	(16,927)	(14.0)
Total revenue and other income	26,946	100.0	120,525	100.0

Investment Segment

Clarke employs a team of professionals who are dedicated to the selection and review of investment opportunities. These individuals identify businesses with strong underlying fundamentals or strong asset value that are undervalued in the public market or present an opportunity for Clarke to improve shareholder value through strategic, operational and other improvements. Clarke often seeks an active role in the businesses in which it invests, particularly where such involvement could yield greater shareholder value. The Clarke investment team monitors existing and prospective investments and makes regular adjustments to the Company’s investment portfolio with the objective of allocating capital to those investments that are expected to generate the best returns.

Clarke also currently owns three vacant office buildings in Houston, TX with approximately 435,000sf. The properties were acquired far below the cost at which they can be replaced, and the Company is actively working to redevelop and/or lease the properties.

Hospitality Segment

The Hospitality segment is comprised of the operations of Holloway. Holloway owns 17 hotels across Canada of which 13 hotels are limited service properties, three hotels are full service properties and one hotel is leased to a third party. Of the 16 hotels operated by Holloway, 15 hotels are operated under internationally recognized hotel brands and one hotel is independent.

Properties

The following table lists the Company's owned properties at December 31, 2020:

Location	Description	Relevant Operating Entity
Grande Prairie, AB	Holiday Inn hotel	Holloway
Grande Prairie, AB	Quality Inn hotel	Holloway
Grande Prairie, AB	Super 8 hotel	Holloway
Slave Lake, AB	Super 8 hotel	Holloway
Slave Lake, AB	Hotel leased to 3rdparty	Holloway
Whitecourt, AB	Days Inn hotel	Holloway
Whitecourt, AB	Super 8 hotel	Holloway
Drayton Valley, AB	Super 8 hotel	Holloway
Fort Nelson, BC	Super 8 hotel	Holloway
Fort St. John, BC	Super 8 hotel	Holloway
St. John’s, NL	Super 8 hotel	Holloway
Yellowknife, NT	Quality Inn hotel	Holloway
Yellowknife, NT	Super 8 hotel	Holloway
London, ON	DoubleTree hotel	Holloway
Ottawa, ON	Travelodge hotel	Holloway
Whitehorse, YT	Days Inn hotel	Holloway
Whitehorse, YT	Sternwheeler Hotel	Holloway
Houston, TX	Three vacant buildings	Idle
Moncton, NB	Land	Idle
Forestville, QC	Land	Idle
The following table lists the	Company’s leased properties at December 31, 2020:
Location	Description	Relevant Operating Entity
Rivière-du-Loup, Quebec	Land	La-Traverse Rivière-du-Loup –
		St. Siméon ("TRDL"), a division
		of Clarke Inc.
Rivière-du-Loup, Quebec	Office premises	TRDL
St-Siméon, Quebec	Office premises	TRDL
Halifax, Nova Scotia	Office premises	Clarke and Holloway
Toronto, Ontario	Office premises	Clarke

Employees

The Company and its subsidiaries currently employ approximately 500 employees and contractors and approximately one-quarter of these employees are unionized.

RISKS AND UNCERTAINTIES

An investment in the Company's securities involves risks. In addition to the other information contained in this Annual Information Form, the documents incorporated by reference herein and the Company's other publicly filed disclosure documents, investors should give careful consideration to the following factors, which are qualified in their entirety by reference to, and must be read in conjunction with, the detailed information appearing elsewhere in this Annual Information Form. Any of the matters highlighted in these risk factors could have a material adverse effect on Clarke's business, results of operations and financial condition.

COVID-19 pandemic and Other Pandemic or Epidemic Risks

Pandemics, epidemics or outbreaks of an infectious disease could have an adverse impact on Clarke's results, business, financial condition or liquidity. The ongoing COVID-19 pandemic has led to prolonged voluntary and mandatory building closures, business closures, government restrictions on travel, movement and gatherings, quarantines, curfews, self-isolation and physical distancing. The impact of these measures has led to a general shutdown of economic activity and has disrupted workforce and business operations around the world.

The COVID-19 pandemic and its consequences have significantly reduced global travel and demand for hotel rooms and have had a material detrimental impact on global commercial activity across the lodging, hospitality, and travel industries, all of which has had, and is expected to continue to have, an adverse impact on Clarke's business, operations, and financial results.

The global debt and equity markets have experienced, and may continue to experience, significant volatility as a result of the COVID-19 pandemic. The COVID-19 pandemic and the significant uncertainties it has caused for the global economy, business activity, and business confidence have had, and are likely to continue to have, a significant effect on the market price of securities generally, including the Company's securities and the securities held by the Company.

The impact of the COVID-19 pandemic is continuously evolving, and the continuation of the pandemic, any additional resurgence, or COVID-19 variants could precipitate or aggravate the other risk factors included in this Annual Information Form, which in turn could further materially adversely affect Clarke's business, financial condition, liquidity, results of operations, and profitability, including in ways that are not currently known to us or that we do not currently consider to present significant risks. The duration and impact of the ongoing COVID-19 pandemic is unknown at this time, as is the efficacy of the government and central bank interventions. The pace of recovery following such occurrences cannot be accurately predicted, nor can the impact on Clarke's business and operations, real estate valuations, securities, cash flows, results of operations and Clarke's ability to obtain additional financing or re-financing and ability to pay dividends to its shareholders.

Risks Relating to the Investment Segment

Investment Strategy

Clarke often seeks to invest in under-performing businesses with the objective of implementing operational and other changes that are intended to improve operating and financial performance. The failure by Clarke to effect positive change in one or more of the businesses in which it invests could result in the loss of some or all of its investment, which could have a material adverse effect on Clarke's business, results of operations and financial condition.

General Market Risk

General market risk is the risk that securities markets generally will decline in value and may decline in value sharply and unpredictably. There is the potential for securities owned by Clarke to vary in value based on the trading in securities markets generally and not based on the fundamentals of the company underlying the relevant security. Several factors can influence market trends, such as economic developments, changes in interest rates, political changes, tax changes and catastrophic events. In addition, Clarke has investments in small and mid-sized companies. The share prices of smaller companies can be more volatile than those of larger, more established companies. Smaller companies may have limited resources or funds, unproven management, untested products, and less liquidity, which can affect share price.

Potential Lack of Diversification

At any particular time, Clarke may have a significant portion of its assets invested in a single or small number of investments. In the event that such investments are unsuccessful, Clarke could incur significant losses which could, in turn, have a material adverse effect on Clarke's business, results of operations and financial condition.

The Sale of Company Investments

From time to time, the Company may sell certain investments and these dispositions may result in significant financial gains or losses. Due to the one-time nature of these transactions, the Company ' s financial results at any particular time may not be indicative of future results. Furthermore, sale agreements may provide for certain post-closing adjustments and indemnities, which may require Clarke to make payments in future periods. Clarke cannot accurately predict all future payments that may be required as a result of these transactions.

Commodity Market Risk

Certain of the Company's investee companies are dependent on commodities which are subject to price fluctuations, which may lead to volatility in the price of such investments or changes in the value of such investments.

Dividends are not Guaranteed

The Board determined in fiscal 2016 that it would be in the best interest of the Company to cease paying a regular dividend and has since declared and paid two special cash dividends and one dividend-in-kind to holders of its Common Shares. Any future dividends are not guaranteed and will only be paid if, as and when declared by the Board. Even if the dividend policy is reinstated, the amount of any regular dividend is not guaranteed and may fluctuate from time to time. The Company depends on cash on hand and cash flow generated and distributed by its subsidiaries and investee companies to pay dividends. There can be no assurance regarding the amount of cash flow generated or distributed by these companies or whether the amount of cash flow distributed by these companies will be sufficient to fund any dividend by the Company. If the Board determines that it would be in the best interest of the Company, it may not declare a dividend to shareholders or may reduce or suspend any regular dividend then paid by the Company, which could cause the market price of the Common Shares to fall.

Share Liquidity Risk

The Common Shares of the Company are relatively illiquid. Such illiquidity may limit an investor's ability to buy or sell the Common Shares at any point in time. If a holder of Common Shares needed to liquidate such Common Shares, the proceeds on the sale might be significantly less than the market price of the Common Shares at that time.

Interest Rate and Foreign Currency

From time to time, Clarke may invest in interest bearing and/or foreign currency denominated securities. These investments expose Clarke to interest rate and/or currency risks in that the value of the interest rate or Canadian dollar compared to the interest rate and/or foreign currency of the underlying security may change during the period in which the investment is held. The principal lever for managing interest rate and currency risk is investment in derivative instruments, such as futures, forward contracts, options and/or swaps. Clarke may attempt to limit extreme volatility from such interest rate and currency fluctuations using derivative instruments, but does not expect to eliminate all volatility.

Derivative Risk

A derivative is an instrument whose value is derived from the performance of other investments, securities or economic factors such as the movement of interest rates, exchange rates or market indices. Typically derivatives take the form of a contract to buy or sell a specific commodity, currency, stock or market index, such as futures, forward contracts, an option or a swap. Derivatives can be used for hedging purposes – such as to hedge exposure to interest rates or exchange rates, or for non-hedging purposes – where there may be opportunities for investing directly in the derivative with a view to generating investment gains. Clarke may invest in derivatives for hedging purposes, to manage its exposure to changes in interest rates and currency rates. There are various risks in connection with derivatives, which may include limiting potential gains, settlement risk, higher volatility than the underlying instrument, difficulty in unwinding or closing the contract and limited liquidity.

Reliance on Key Executives

Clarke is dependent on certain key executives for the successful operation of its business. The departure of one or more of these key executives could have a material adverse effect on Clarke's business, results of operations and financial condition.

Principal Shareholder

Mr. Armoyan exercises control or direction over 10,399,101 Common Shares, which represents 69% of the issued and outstanding Common Shares. Since Mr. Armoyan acts as Clarke’s Executive Chairman, President and Chief Executive Officer, he is in a position to exert significant influence on the corporate actions that Clarke takes, particularly when shareholder approval is required. Mr. Armoyan is entitled to vote his shares in his own interests, which may not always be in the interests of shareholders generally.

Risks Relating to the Hospitality Segment

General

Holloway owns hotels and, therefore, is subject to risks generally incident to the ownership of real property and hotels particularly. The underlying value of the properties and Holloway’s income depends on its ability to generate income in excess of operating expenses. Income from the properties may be adversely affected by changes in national or local economic conditions, changes in interest rates and in the availability, cost and terms of mortgage financing, the impact of present or future environmental legislation and compliance with environmental laws, the ongoing need for capital improvements, particularly in older structures, changes in real estate assessed values and property taxes payable on such values and other operating expenses, changes in governmental laws, regulations, rules and fiscal policies, changes in zoning laws, civil unrest, acts of God, including earthquakes and other natural disasters and acts of terrorism or war (which may result in uninsured losses). When interest rates increase, the cost of acquiring, developing, expanding or renovating real property increases and real property values may decrease as the number of potential buyers decreases. Similarly, as financing becomes less available, it becomes more difficult to both acquire and sell real property. Finally, governments can, under eminent domain laws, expropriate or take real property for less compensation than an owner believes the property is worth. Many of these factors are beyond Holloway’s control.

Liquidity

Real estate investments are relatively illiquid, with the degree of liquidity generally fluctuating in relation to demand for and the perceived desirability of such investments. Such illiquidity may limit Holloway’s ability to vary its portfolio promptly in response to changing economic or investment conditions. If Holloway were to need to liquidate a property, the proceeds on the sale might be significantly less than the aggregate carrying value of such property. In addition, by concentrating primarily on hotel properties, Holloway is exposed to the adverse effects on that segment of the real estate market and does not benefit from a diversification of its portfolio by property type.

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Environmental Matters

Holloway and the hotel properties are subject to various federal, state, provincial and municipal laws relating to environmental matters. These laws provide that Holloway could be liable for the costs of removal of certain hazardous, toxic or regulated substances released on or in the properties or disposed of at other locations sometimes regardless of whether Holloway knew of or was responsible for their presence. The failure to remove, remediate or otherwise address such substances or locations, if any, could adversely affect Holloway’s ability to sell such real estate or to borrow using such real estate as collateral and could potentially also result in claims against Holloway by private plaintiffs. In addition, environmental laws and regulations may change in the future and Holloway may become subject to more stringent environmental laws and regulations. Compliance with more stringent environmental laws and regulations could have a material adverse effect on Holloway’s business, financing condition or results of operations.

Uninsured Losses

Holloway obtains and maintains insurance coverage in respect of its potential liabilities and the accidental loss of value of its assets from risks, in amounts, with such insurers, and on such terms as Holloway considers appropriate, taking into account all relevant factors. There are, however, certain types of risks, generally of a catastrophic nature, such as wars or environmental contamination, which are either uninsurable or not insurable on an economically viable basis. Should an uninsured or under-insured loss occur, Holloway could lose its investment in, and anticipated profits and cash flows from, the affected hotel property, but Holloway would continue to be obliged to repay any recourse mortgage indebtedness on such property. There can be no assurance that a claim in excess of the insurance coverage or claims not covered by insurance coverage will not arise or that the liability coverage will continue to be available on acceptable terms. A successful claim against Holloway not covered by, or in excess of, the insurance coverage could have a material adverse effect on Holloway’s business, financing condition and results of operations.

General Economic Environment

As with any commercial enterprise, the Company is subject to risks associated with general economic conditions. These risks include the degree to which the overall economy is expanding or contracting, rate of inflation, unemployment rate, level of consumer confidence, and the effects of government initiatives. Any deterioration of the general economic conditions may adversely affect business levels of the Company.

Hotel Industry

Holloway, directly or indirectly, owns and operates hotels. As a result, Holloway is subject to the operating risks inherent in the hotel industry. In addition to the specific conditions discussed in more detail below, these risks include:

changes in general and local economic conditions;
changes in the level of business and commercial travel and tourism;
increases in the supply of accommodations in local markets;
the recurring need for renovation, refurbishment and improvement of hotel properties;
changes in operating costs (whether due to inflation or otherwise), including wages, prices of supplies, energy costs, property taxes and construction and maintenance costs that may result from inflation, government regulations, changes in interest rates or currency fluctuations;
availability of financing for operating or capital requirements;
seasonal fluctuations in hotel operating income produced throughout the year; and
other factors, including acts of terrorism, natural disasters, extreme weather conditions and labour shortages, work stoppages or disputes.
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Competition

The hotel industry is highly competitive. Holloway’s properties face significant local competition from other hotels and independent hosts such as Airbnb. Some of the competitors of Holloway’s hotels may have greater marketing and financial resources than Holloway. The number of competitive hotel properties in a particular area, especially due to new competitors entering the markets, could have a material adverse effect on the occupancy rates and average daily rate of properties in that particular area.

Customer Concentration

In some of the markets in which Holloway operates, the customer base may be concentrated due to the types of industries established in those markets. The business levels achieved by Holloway in these markets rely on the ongoing presence and financial stability of these customers. If these customers withdrew from these markets, Holloway could experience a decline in revenue. In particular, a number of Holloway’s hotels are situated in markets that rely on oil and natural gas development and servicing, and the presence or absence of such development influences the level of business in these markets.

Franchised Hotels

All but one of the hotel properties that Holloway operates are subject to a franchise agreement. The continuation of the hotel franchise agreements is subject to compliance with specified operating standards and other terms and conditions. Such standards are subject to change over time, in some cases at the discretion of the franchisor, and may restrict a franchisee’s ability to make improvements or modifications to a hotel property without the consent of the franchisor. Franchisors periodically inspect licensed properties to confirm adherence to such operating standards. The failure of a hotel property to conform to such standards or of Holloway to maintain such standards or adhere to such other terms and conditions could result in the loss or cancellation of the franchise agreement and potential liquidated damages. It is possible that a franchisor could condition the continuation of a franchise agreement on the completion of capital improvements which Holloway determines are too expensive or otherwise unwarranted in light of general economic conditions or the operating results or prospects of the affected hotel property. In that event, Holloway may elect to allow the franchise agreement to lapse. If a franchise were terminated, Holloway may seek to obtain a suitable replacement franchise for the hotel property. However, there can be no assurance that Holloway would be able to obtain a suitable replacement franchise on acceptable terms or at all. The loss of a franchise agreement could have a material adverse effect upon the operations or the underlying value of the hotel property covered by the franchise because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor.

Potential Labour Disruptions

Two of Holloway’s hotels and the Company’s ferry operations are subject to collective bargaining agreements. The Company’s relations with its employees could deteriorate due to disputes related to, among other things, wage or benefit levels or the Company’s response to changes in government regulation of workers in the workplace.

Due to the fluctuating level of economic activity in certain markets in which the Company operates, particularly Holloway’s significant operations in Northern Alberta and British Columbia, in periods of high economic activity it can be difficult to attract and retain staff. In such a period, Holloway may seek to hire individuals from foreign countries under applicable government programs in response to labour shortages. Any labour shortage or stoppage caused by disagreements with employees, including unionized employees, or due to market or other conditions could adversely affect the ability of the hotel properties to operate and could result in the temporary closure of particular hotel properties, the reduction of occupancy and room revenue or damage to Holloway’s reputation. Any such labour difficulties could have a material adverse effect on Holloway’s results of operations, business and financial condition.

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Laws Concerning Employees

The operations of Holloway’s hotels are subject to employment and labour laws governing matters such as minimum wage, working conditions, and overtime. Certain provinces in which Holloway operates have recently increased the minimum wage in those provinces. A significant proportion of Holloway's personnel are paid at rates related to the minimum wage and, accordingly, existing and further increases in the minimum wage will increase Holloway’s labour costs and could have an impact on Holloway's operating results.

Potential Conflicts of Interest

Holloway is subject to various conflicts of interest with its shareholder and associates, including Directors of Clarke, who are engaged in a wide range of business activities including hotel management, acquisition and ownership. In particular, a Director of Clarke, Mr. Staniloff is a member of the board of two entities that own the development and/or master franchise rights for Super 8, Travelodge and Thriftlodge hotels in Canada. Holloway may also become involved in other transactions which conflict with the interests of the foregoing. The Directors of Clarke and associates or affiliates may from time to time deal with persons, firms, institutions or corporations with which Holloway may be dealing, or which may be seeking investments similar to those desired by it. The interests of these persons could conflict with those of Holloway.

Availability of Additional Capital

The acquisition of hotels, as well as ongoing renovations, refurbishment and improvements required to maintain and operate hotels, are capital intensive. Holloway maintains availability on its two secured credit facilities which can be used to manage working capital fluctuations, the seasonal effects of the hospitality industry as well as to provide short-term financing in the event of hotel acquisitions or renovations.

If Holloway is unable to secure additional capital for acquisitions, required improvements or, if necessary, working capital, it would be required to curtail these activities, which could have a material adverse effect on its results of operations and financial condition.

Debt Financing

Holloway incurred debt in connection with the acquisition of its hotel properties, including mortgage financing and other borrowings. Therefore, Holloway is subject to the risks associated with debt financing, including the risks that cash flow from operations will be insufficient to meet required payments of principal and interest, the risk that existing debt will not be able to be refinanced or that the terms of any such refinancing will not be as favourable to Holloway and the risk that necessary capital expenditures for such purposes as renovations and other improvements will not be able to be financed on favourable terms or at all. In such circumstances, if Holloway were in need of capital to repay indebtedness, it could be required to dispose of one or more of its hotel properties at times which may not permit realization of the maximum return on such investments, or could be required to agree to additional financing on unfavourable terms. Holloway’s financing arrangements contain covenants that could restrict its ability to operate its business. If Holloway fails to comply with the restrictions in its financing arrangements, its lenders may be able to accelerate payment of the related debt. In connection with its financing arrangements, Holloway has granted security interests over all but one of its hotel properties as at the date hereof. If Holloway is not able to meet its debt service obligations, it risks the loss of some or all of its assets to foreclosure or sale.

Acquisitions

Holloway may acquire additional hotel properties that meet certain investment criteria. Acquisitions entail risks. Holloway may not be able to successfully integrate, finance or operate an acquired property and the financial and operational results of an acquired property may not be consistent with, or may be worse than the results anticipated by Holloway. If an acquired property does not perform consistently with Holloway’s expectations, Holloway may be required to invest additional funds in the property to improve its results or may

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also breach certain covenants that may be contained in the financing arrangements for the property. Either result could have a material adverse effect on Holloway’s financial condition and results of operations.

Cyber Risks

The Company relies on its information technology systems, including its networks, equipment, hardware, software, telecommunications, and other information technology (collectively, “IT systems”), and the IT systems of its third-party service providers such as the hotel franchisors, to operate its business. IT systems are subject to an increasing threat of continually evolving cybersecurity risks including computer viruses, security breaches, and cyberattacks. In addition, the Company is subject to the risk of unauthorized access to its IT systems or its information through fraud or other means. The Company’s operations also depend on the timely maintenance, upgrade and replacement of its IT systems, as well as pre-emptive expenses to mitigate cybersecurity risks and other IT systems disruptions.

Any cybersecurity incidents or other IT systems disruption could result in a detriment to operations, destruction or corruption of data, security breaches, financial losses from remedial actions, the theft or other compromise of confidential or otherwise protected information, fines and lawsuits, or damage to the Company’s reputation. Any such occurrence could have an adverse impact on the Company’s financial condition and results of operations.

DIVIDENDS

The declaration and payment of dividends is at the discretion of the Board and subject to compliance with certain requirements of the Company's lending agreements..

During 2016, the Board decided to cease the Company’s regular dividend. The Board decided to cease paying a regular dividend because the Company’s internally generated cash flow had been insufficient to fully finance the then regular dividend payments, as a result of various investments the Company had made that do not generate recurring cash flows. From time to time, the Company has paid special dividends on its Common Shares. Any future dividends are not guaranteed and will only be paid if, as and when declared by the Board. Even if the Company reinstates a regular dividend policy, the amount of any regular dividend is not guaranteed and may fluctuate from time to time.

During the three most recently completed financial years, the Company has not declared or paid dividends to its shareholders other than the following:

On March 25, 2020, the Company completed a dividend-in-kind on its Common Shares in the form of a pro rata distribution of the 5,386,440 common shares of Terravest that it owned. Under the dividend, Shareholders of record on March 18, 2020 received approximately 0.33 shares of Terravest for every one Common Share of Clarke held; provided that no fractional shares (or cash in lieu thereof) were paid under the dividend and all fractional interests were rounded down to the nearest whole number of shares of Terravest. The Board determined the fair market value of the dividend to be $3.81 per Common Share when the dividend was announced.

DESCRIPTION OF SHARE CAPITAL

The Company has an unlimited number of Common Shares authorized, of which 15,049,792 were issued and outstanding at March 2, 2021. Clarke also has an unlimited number of first and second preferred shares authorized, of which none were issued and outstanding as at March 2, 2021.

Holders of Common Shares are entitled to receive notice of and to attend and vote at all meetings of shareholders of the Company, except meetings of holders of another class of shares. Each Common Share entitles the holder thereof to one vote. Holders of Common Shares are entitled to receive, subject to the preferences accorded to holders of first and second preferred shares, or any other shares of the Company ranking senior to the Common Shares, dividends, if, as and when declared by the Board from time to time. In

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the event of the voluntary or involuntary liquidation, dissolution or winding-up of the Company's affairs (a "Distribution"), holders of Common Shares are entitled, subject to the preferences accorded to holders of first and second preferred shares or any other shares of the Company ranking senior to the Common Shares from time to time, to share equally, share for share, in the remaining property of the Company.

Subject to the filing of articles of amendment in accordance with the CBCA, the Board may at any time issue first or second preferred shares, in one or more series. The Board may fix the designation, rights, privileges, restrictions and conditions attaching to each series, including the amount, if any, specified as being payable preferentially to such series on a Distribution, voting rights, if any, and dividend rights, if any.

The Company periodically files normal course issuer bids to purchase its securities. The Board and senior management are of the opinion that, from time to time, the purchase of Common Shares at the prevailing market price may be a worthwhile use of funds and in the best interest of the Company and its shareholders.

Repurchases under the Company's normal course issuer bids and SIBs for the years ended December 31, 2018, 2019 and 2020 and 2021 year-to-date, are as follows:

Bid Date	Expiry	Type	Maximum #	Repurchased#
June 2, 2017	June 1, 2018	NCIB	742,243	443,000
Dec 7, 2017	Jan 19, 2018	SIB	n/a	1,851,579
June 8, 2018	June 7, 2019	NCIB	627,514	508,859
June 27, 2019	June 26, 2020	NCIB	810,774	810,774
June 29,2020	June 28,2021	NCIB	795,024	437,925

Stock Option Plan

At the Company’s Annual General and Special Meeting held on May 7, 2015, the Company’s shareholders approved a stock option plan previously adopted by the Board on August 7, 2014 for directors, officers, employees and consultants (the "Stock Option Plan"). The purpose of the Stock Option Plan is (a) to enable the Company to attract and retain qualified officers, employees, directors and consultants; (b) to promote a proprietary interest in the Company on the part of officers, directors and employees of the Company and consultants to the Company, by providing such persons with the opportunity to acquire an equity interest in the Company or augment their equity interest in the Company, as the case may be; (c) to provide an additional incentive to officers, employees, directors and service providers in their efforts on behalf of the Company; and (d) to promote the profitability of the Company.

The maximum number of Common Shares reserved for issuance under the Stock Option Plan and all other security-based compensation arrangements of the Company, at any time, shall not exceed 7.5% of the total issued and outstanding Common Shares. Unless otherwise provided in the applicable option agreements, all options granted under the Stock Option Plan ("Options") shall vest and become exercisable as follows: (a) one third of the Options shall vest on the first anniversary of the date of grant; (b) an additional third of the Options shall vest on the second anniversary of the date of grant; and (c) the final third of the Options shall vest on the third anniversary of the date of grant.

Pursuant to the Stock Option Plan, at December 31, 2020, there were outstanding Options to acquire an aggregate of 150,000 Common Shares, 50,000 of which are vested and exercisable. Reference is made to the employee stock option plan disclosure in note 16 to the consolidated financial statements of the Company for the years ended December 31, 2020 and 2019 and incorporated by reference herein.

The Stock Option Plan is administered by the Company upon the recommendation of the Board, which establishes exercise prices at not less than market price on the date of grant.

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DESCRIPTION OF CONVERTIBLE DEBENTURES

The Company has one series of convertible debentures issued and outstanding as at December 31, 2020, the Series B Convertible Debentures (the “Debentures”). The Debentures were assumed by Clarke from Holloway as part of the Arrangement. As of March 2, 2021, the Debentures had an aggregate principal amount outstanding of $50,754,000. The Debentures bear interest at 6.25% payable semi-annually on April 30 and October 31, mature on February 28, 2023, and are convertible into 72.78 Common Shares per $1,000 principal amount of the Debentures. The Company has the option to repay the principal amount of the Debentures at maturity or redeem the Debentures, in whole or in part, in cash or by issuing Common Shares.

The Debentures are direct obligations of the Company and are not secured by any mortgage, pledge, hypothec or other charge. They are subordinated to other liabilities of the Company, including its short-term indebtedness and long-term debt.

The Company repurchased $112,000 principal amount of its Debentures under the normal course issuer bid during the year ended December 31, 2020. The NCIB allows for a maximum of $4,814,000 principal amount to be repurchased and expires March 12, 2021.

MARKET FOR SECURITIES

The Common Shares and Debentures are listed and posted for trading on the Toronto Stock Exchange under the symbols "CKI" and "CKI.DB", respectively. The monthly price ranges and total volumes traded for the Common Shares for the most recent fiscal year ended December 31, 2020, are as follows:

Month January 2020 February 2020 March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020 October 2020 November 2020 December 2020	Common Share Price High $ Low $ Close $ Volume # 13.44 12.48 13.29 228,801 13.55 12.50 13.07 113,220 13.75 3.75 5.25 1,188,787 5.97 5.00 5.45 198,707 5.45 4.70 5.03 187,071 5.48 4.70 5.25 136,305 6.00 5.22 5.45 116,006 5.98 5.07 5.50 93,993 6.69 5.26 5.81 148,443 6.99 5.51 5.99 122,578 7.37 5.75 6.74 43,225 6.75 6.20 6.68 102,736

The monthly price ranges and total volumes traded for the Debentures for the most recent fiscal year ended December 31, 2020, are as follows:

Month January 2020 February 2020 March 2020 April 2020 May 2020 June 2020 July 2020 August 2020	Debenture Price High $ Low $ Close $ Volume # 102.00 101.03 101.47 3,300 101.98 99.50 100.00 5,450 100.53 85.01 86.50 31,240 96.01 88.00 96.00 8,630 95.99 92.11 94.00 6,400 95.99 93.00 95.99 4,200 95.99 90.00 90.00 2,860 94.77 90.00 93.00 2,530

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Month September 2020 October 2020 November 2020 December 2020	Debenture Price High $ Low $ Close $ Volume # 96.80 91.00 94.16 5,348 96.75 92.00 92.00 3,280 96.25 90.50 96.25 4,830 98.00 95.25 98.00 6,280

ESCROWED SECURITIES

To the Company's knowledge, no securities of Clarke are held in escrow or subject to a contractual restriction on transfer.

DIRECTORS AND EXECUTIVE OFFICERS

Information on the directors and certain officers of the Company, including their municipalities of residence, principal occupations and term as a director of the Company as at December 31, 2020 is as follows:

Name and Municipality of Residence GEORGEARMOYAN ........................................................ Halifax, NS, Canada BLAIRCOOK(1) ........................................................ St. John’s, NL, Canada CHARLESPELLERIN(1) ........................................................ Victoriaville, PQ, Canada MARCSTANILOFF(1) (2) ........................................................ Calgary, AB, Canada PAOLACALCE ........................................................ Toronto, ON, Canada STEPHENCYR ........................................................ Halifax, NS, Canada	Position with the Company Executive Chairman, President & Chief Executive Officer Director Director Director Vice President & General Counsel Vice President & Chief Financial Officer	Director Since 2014 2012 2010 2019 ⎯ ⎯	Principal Positions in Past Five Years
			Executive Chairman, G2S2 Capital Inc. Officer of the Company (2012) Partner, Executive Finance Partners CFO, Mara Renewable Corporation, CFO, Horizon Maritime Services Ltd. President, Pellerin Potvin Gagnon S.E.N.C.R.L. President & CEO, Superior Lodging Corp. Corporate Secretary & General Counsel, Holloway Officer of the Company (2019) Officer of the Company (2017) Corporate Controller of the Company (2012)

(1) Member of the Audit Committee.

(2) Marc Staniloff was appointed to the Audit Committee on January 12, 2021.

The term of office of each director will expire at the subsequent annual meeting of shareholders or at the time at which his or her successor is elected or appointed, or earlier if any director otherwise dies, resigns, is removed or is disqualified.

As of the date hereof, the directors and executive officers of the Company, as a group, held or controlled 10,427,126 Common Shares, representing approximately 69% of the issued and outstanding Common Shares.

No director or executive officer of the Company is, as at the date of this Annual Information Form, or was, within 10 years before the date of this Annual Information Form, a director, chief executive officer or chief financial officer of any company (including a personal holding company), that:

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was subject to an order (as defined in Form 51-102F2 of National Instrument 51-102 – Continuous Disclosure Obligations ) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or
was subject to an order (as defined in Form 51-102F2 of National Instrument 51-102 – Continuous Disclosure Obligations ) that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

No director, executive officer or shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, or a personal holding company thereof,

is, as at the date of this Annual Information Form, or was, within 10 years before the date of this Annual Information Form, a director or executive officer of any company, including Clarke, that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
has, within 10 years before the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder; or
has been subject to:
(a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, except as follows;
- (i) on October 9, 2009, the Nova Scotia Securities Commission (the "Commission") approved a settlement agreement (the "Settlement") between Clarke and Geosam Investments Limited ("Geosam Investments") and staff of the Commission. The Settlement related to the Commission's investigation of a 2005 trade by Clarke and Geosam Investments in the securities of Advanced Fiber Technologies Income Fund ("AFT") that was initially announced by Clarke in February 2008. In the Settlement, Clarke and Geosam Investments acknowledged that they acted contrary to the public interest in failing to exercise sufficient due diligence relating to information concerning AFT. The Settlement acknowledged that Clarke, between 2005 and 2008, approved new internal policies and procedures and that Clarke and Geosam Investments co-operated with the Commission in its investigation. Under the Settlement, Clarke and Geosam Investments paid an administrative penalty of $400,000 (of which Clarke paid $300,000) and $15,000 each toward costs of the investigation. A special committee of the Board oversaw the Settlement on behalf of Clarke; or
(b) any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable investor making an investment decision.

LEGAL PROCEEDINGS AND REGULATORY ACTION

From time to time, Clarke is involved in various claims and litigation arising in the normal course of business. There are currently no material proceedings or pending legal proceedings to which the Company is or is likely to become a party, except as follows:

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In September 2015, Holloway was served with a personal injury claim in the Alberta Court of Queen’s Bench seeking over $10 million in damages. Holloway believes that there is a valid defence or that the outcome will not have a material impact on the company. Holloway intends to vigorously defend itself in this matter.

There have been no penalties or sanctions imposed against the Company by a court relating to securities legislation or by a securities regulatory authority during the financial year ended December 31, 2020. No penalties or sanctions have been imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision. Except as disclosed elsewhere in this Annual Information Form, the Company has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority.

INTEREST OF MANAGEMENT & OTHERS IN MATERIAL TRANSACTIONS

During 2020, the Company entered into a number of related party transactions in the normal course of operations and measured at fair value. The parties and value of the transaction are fully disclosed in note 15 of the Company's consolidated financial statements for the year ended December 31, 2020. The document is incorporated by reference herein and available on SEDAR at www.sedar.com under Clarke's issuer profile.

During 2020, the Company, through its wholly-owned subsidiary, Holloway, sold the Best Western in Grande Prairie, Alberta to a company controlled by Clarke’s Executive Chairman and his immediate family member (the “Purchasing Company”) for consideration of $11.5 million. The transaction constituted a "related party transaction" pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company was exempt from the requirements to obtain a formal valuation and minority shareholder approval in connection with the sale in reliance on the exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, as the fair market value of the transaction did not exceed 25% of the Company’s market capitalization. The transaction was reviewed and approved by the Board, excluding Mr. George Armoyan, the Executive Chairman of the Purchasing Company, who abstained from voting on the matter.

TRANSFER AGENTS AND REGISTRARS

The transfer agent of the Company is:

Computershare Investor Services Inc. 1500 Robert-Bourassa Blvd, 7[th] Floor Montreal, QC H3A 3S8

MATERIAL CONTRACTS

The fourth amended and restated trust indenture dated September 30, 2019 between the Company and Computershare Trust Company of Canada (as Trustee) (the "Indenture") makes certain amendments which resulted in, among other things, the assumption by Clarke of all of the obligations, liabilities and covenants under the Debentures. Details of the Debentures are included in the section titled ‘Description of Convertible Debentures’. Further details of the Indenture are set out in Holloway’s management information circular dated August 23, 2019, which is incorporated herein by reference and is available on SEDAR at www.sedar.com under Holloway’s profile.

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INTERESTS OF EXPERTS

The independent auditors of the Company are:

PricewaterhouseCoopers LLP 2000 Barrington Street, Suite 1101 Halifax, NS B3J 3K1

The consulting actuaries of the Company are:

Eckler Ltd. 1801 McGill College Avenue Suite 1460 Montreal, QC H3A 2N4

Trimaven Capital Advisors prepared an opinion included in a filing made under National Instrument 51-102 – Continuous Disclosure Obligations by the Company during its most recently completed financial year.

None of the experts have an interest in any class of securities of the Company that exceeds one percent of the outstanding securities of such class. PricewaterhouseCoopers LLP is independent of the Company based on the Rules of Professional Conduct of the Chartered Professional Accountants of Canada.

ADDITIONAL INFORMATION

Additional information relating to Clarke may be accessed through the SEDAR website at www.sedar.com. Additional information, including directors’ and officers’ remuneration, principal holders of Clarke’s securities and securities authorized for issuance under equity compensation plans, if applicable, is contained in Clarke’s information circular for the most recent annual meeting of shareholders that involved the election of directors. Additional financial information is provided in Clarke’s financial statements and management discussion and analysis for the year ended December 31, 2020. Requests for copies of any filed documents may also be sent to the Corporate Secretary of Clarke, at 3400 One First Canadian Place, P.O. Box 130, Toronto, Ontario, M5X 1A4.

FORM 52-110F1 – AUDIT COMMITTEE

Audit Committee Charter

The Audit Committee charter is attached as an appendix to this form.

Composition of the Audit Committee

The Audit Committee of the Company consists of Blair Cook (Chair), Charles Pellerin and Marc Staniloff. During the year ended December 30, 2020, Brian Luborsky served as a member of the Audit Committee until his resignation as a director on December 21, 2020. Marc Staniloff was appointed to the Audit Committee to fill the vacancy created by Mr. Luborsky's resignation. The Board has determined that Mr. Cook, Mr. Pellerin and Mr. Staniloff are independent. The Board has determined that all members of the Audit Committee are financially literate as defined under National Instrument 52-110 – Audit Committees. In considering the criteria for financial literacy, the Board looks at the ability of a director to read and understand a statement of financial position, a statement of earnings and a cash flow statement of a wide range of industries, as the Company operates as a diversified investment company.

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Relevant Education and Experience of Audit Committee Members

In addition to each member's general business experience, the education and experience of each Audit Committee member that is relevant to the performance of his responsibilities as an Audit Committee member is as follows:

Mr. Cook is a Partner at Executive Finance Partners and CFO of Mara Renewable Corporation. Mr. Cook is Chairman of and was appointed to the Audit Committee following his appointment to the Board in 2012. Mr. Cook also serves as a corporate director for Terravest. Mr. Cook was previously the Chief Financial Officer of Clarke. Mr. Cook holds a Bachelor of Business Administration from Acadia University, a Masters of Business Administration from St. Mary’s University and obtained his Chartered Professional Accountant’s designation in 1995.
Mr. Pellerin is the Principal Partner and President of one of the largest independent accounting firms in Quebec, Pellerin Potvin Gagnon S.E.N.C.R.L. and was appointed to the Audit Committee in 2014. Mr. Pellerin also serves as the Executive Chairman of Terravest. Mr. Pellerin holds a Bachelor degree in accounting from Ottawa University, and a post graduate diploma in accounting from University of Trois-Rivieres, Quebec. He has been a member of the Quebec Order of the Chartered Accountants since 2000.
Mr. Staniloff is the President and CEO, and the founding Partner, of Superior Lodging Corp., a privately owned, vertically integrated hotel company, focused on the development, investment, and management of nationally franchised, limited service hotels in Canada. Mr. Staniloff was appointed to the Board in 2019 and appointed to the Audit Committee in 2021. Mr. Staniloff was previously a director of Holloway Lodging Corporation and brings significant hotel industry experience to the Company. Mr. Staniloff received his Bachelor of Commerce degree from the University of Calgary.

Pre-Approval Policies and Procedures

The Audit Committee has approved a pre-approval policies and procedures policy which it uses to evaluate auditor independence and appropriate audit and non-audit services. The policies are included in the Audit Committee charter attached as an appendix to this Annual Information Form.

Audit Fees

PricewaterhouseCoopers LLP was reappointed as the Company's independent auditor during the year ended December 31, 2020. Fees billed by PricewaterhouseCoopers LLP for the years ended December 31, 2020 and 2019 are detailed below:

	2020	2019
	$	$
Audit fees	126,000	180,000
Audit-related fees	59,000	127,000
Tax fees	13,375	13,375
Total	198,375	320,375

The nature of each category of fees is described below.

Audit Fees

Audit fees were paid for professional services rendered by the auditor for the audit of the annual financial statements of the Company, and for services provided in connection with statutory and regulatory filings or engagements.

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Audit-related fees

Audit-related fees were paid for assurance and related services that are reasonably related to the performance of the audit or review of the annual financial statements, and are not reported under the audit fees caption above. Certain services consist of assurance and related services for specific investment and other transactions and new developments both in Company policies and accounting standards. Other services consist of review of interim financial statements for the three, six and nine months ended March 31, June 30 and September 30.

Tax fees

Tax fees were paid for tax compliance services.

APPENDIX: AUDIT COMMITTEE CHARTER

1. COMMITTEE ROLE

1.1 Overseeing Role

The committee's role is to act on behalf of the Board of Directors and oversee all material aspects of the Company's financial reporting, control, and audit functions, except those specifically related to the responsibilities of another standing committee of the Board. The audit committee shall monitor the qualitative aspect of financial reporting to shareholders and on Company processes for the management of financial risk and for compliance with significant applicable legal and regulatory requirements in respect of the financial affairs of the Company.

1.2 Coordination and Relationships

The role also includes coordination with other Board committees and the maintenance of strong, positive working relationships with management, auditors, counsel, and other committee advisers.

2. COMMITTEE MEMBERSHIP, PROCEDURES AND ORGANIZATION

2.1 Committee Members

The committee shall consist of at least three independent directors. Only independent directors shall serve on the committee except as otherwise permitted by securities law rules relating to composition of audit committees. A member of an audit committee is independent if the member has no direct or indirect material relationship with the Company. For this purpose, a material relationship means a relationship which could, in the view of the Company's Board of Directors, reasonably interfere with the exercise of a member's independent judgment, subject to certain relationships being deemed to be material by securities law rules relating to composition of audit committees.

Every audit committee member must be financially literate except as otherwise permitted by securities law rules relating to composition of audit committees. For the purposes of this mandate, an individual is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company's financial statements.

The committee shall have access to its own counsel and other advisers at the committee's sole discretion.

2.2 Annual Appointments, Chairmanship, Vacancies

Committee appointments shall be approved annually by the Board, and the Board shall designate the chairperson of the committee. The Board may at any time remove or replace any member of the committee and may fill any vacancy in the committee. Any member of the committee ceasing to be a director shall cease to be a member of the committee.

2.3 Secretary

The Secretary of the Company shall be the Secretary of the committee, unless otherwise determined by the committee.

2.4 Quorum and Method of Meeting

The quorum for meetings shall be the majority of the members of the committee, present in person or by telephone or other telecommunication device that permits all persons participating in the meeting to speak and to hear each other.

2.5 Conduct of Meetings

Meetings of the committee shall be conducted as follows:

the committee shall meet, on a regular basis, at such times and at such locations as the chair of the committee shall determine;
notice of every meeting shall be given to the external auditors, who shall be entitled to attend and be heard thereat;
the external auditors or any member of the committee may call a meeting of the committee;
the external auditors and members of management shall, when required by the committee, attend any meeting of the committee.

3. COMMITTEE OPERATING PRINCIPLES

3.1 Overriding Principles of Operation

The committee shall fulfill its responsibilities within the context of the following overriding principles:

(a) Communications - The chairperson and others on the committee shall, to the extent appropriate, have contact throughout the year with senior management, other committee chairpersons, and other key committee advisers, external auditors, internal auditors (if any), all as applicable to strengthen the committee's knowledge of current and prospective issues relevant to the committee.
(b) Annual Plan - The committee shall develop an annual plan responsive to the primary committee responsibilities detailed herein. The annual plan shall be reviewed and approved by the Board.
(c) Meeting Agenda - Committee meeting agendas shall be the responsibility of the committee chairperson, with input from committee members and the Chief Financial Officer. It is expected that the chairperson would also ask for management, the auditors and other key committee advisers, and perhaps others, to participate in this process.
(d) Committee Expectations and Information Needs - The committee shall communicate committee expectations and the nature, timing, and extent of committee information needs to management in general, those responsible for internal audit, and external parties, including external auditors. Written materials required shall be received from management, auditors, and others at least one week in advance of meeting dates. Meeting conduct will assume Board members have reviewed written materials in sufficient depth to participate in committee/Board dialogue.
(e) External Resources - The committee is authorized to access internal and external resources, as the committee requires, to carry out its responsibilities and to determine the compensation to be paid to such external resources, including independent counsel.
(f) Committee Meeting Attendees - The committee shall request members of management, external auditors and legal counsel, as applicable, to participate in committee meetings, as necessary, to carry out the committee responsibilities. Periodically and at least annually, the committee shall meet in private session with only the committee members. It shall be understood that external auditors, the Chief Financial Officer, or legal counsel may, at any time, request a meeting with the audit committee or committee chairperson with or without management or any other management attendance. In any case, the committee shall meet in executive session separately with external auditors, at least annually.
(g) Reporting to the Board of Directors - The committee, through the committee chairperson, shall report periodically, as deemed necessary, but at least semi-annually, to the Board. In addition, summarized minutes from committee meetings shall, in a timely manner, be available to each Board member.
(h) Committee Self-Assessment - The committee shall review, discuss, and assess its own performance as well as the committee role and responsibilities and the committee's compliance with codes of conduct; and seek input from senior management, the Board, and others on the foregoing. Changes in roles and/or responsibilities, if any, shall be recommended to the Board for approval.

4. COMMITTEE'S RELATIONSHIP WITH EXTERNAL AUDITORS

4.1 External Auditors' Report to Board and Audit Committee

The external auditors, in their capacity as independent public accountants, shall be responsible to the Board and the audit committee as representatives of the shareholders.

4.2 Reporting Matters

As the external auditors review financial reports, they shall report thereon to the committee and the Board; and, in particular, shall do so on all material relevant issues of importance to the committee; and, in particular, without limitation, those issues that are reasonably considered to be of importance to the committee, based on its mandate as described herein, and those issues that may be responsive to requests of the committee. The Board or committee shall review such reports in their overseeing capacity.

4.3 Annual Review of Auditors

The committee shall annually review the performance (effectiveness, objectivity, and independence) of the external auditors. The committee shall require a formal written statement from the external auditors as to their independence. Additionally, the committee shall discuss with the external auditors relationships or services that may affect auditors' objectivity or independence. If the committee is not satisfied with the auditors' assurances of independence, it shall take or recommend to the full Board appropriate action in connection therewith.

4.4 Significant Issues

If the external auditors identify significant issues relative to the overall Board responsibility that have been communicated to management but, in their judgment, have not been adequately addressed, they should communicate these issues to the committee chairperson.

4.5 Annual Review

The committee shall annually review financial management with the auditors, and shall review with the auditors and management, together and separately, any new appointment of a Chief Financial Officer or any key financial executives.

4.6 Internal Controls over Financial Reporting ("ICFR")

The committee shall require that management, through the officer or manager responsible for ICFR, annually review with the committee the performance and effectiveness of the ICFR framework and certification process.

4.7 Duties of Committee Relating to External Auditors

The duties of the committee, as they relate to the external auditors, shall include:

(a) the review of management's recommendations for the appointment of the external auditors and to recommend to the Board a firm of external auditors to be engaged;
(b) if there is a proposed change of external auditors, the review of all issues related to such proposed change, including the information to be included in the notice of change of auditors called for in continuous disclosure rules under applicable securities laws, including National Instrument 51-102 of the Canadian Securities Administrators, and the planned steps for an orderly transition;
(c) the review of all reportable events, including disagreements, unresolved issues and consultations, as defined in National Instrument 51-102 of the Canadian Securities Administrators, on a routine basis, whether or not there is to be a change of external auditors;
(d) the review of the engagement letter of the external auditors;
(e) the review of the performance, including the fee, scope and timing of the audit and other related services, of the external auditors and the recommendation to the Board the compensation of the external auditor;
(f) the review of the audit plans of the external auditors, as well as inquiry into the extent to which the planned audit scope can be relied upon to detect weaknesses in internal control or fraud or other illegal acts;
(g) the review and pre-approval of the nature of and fees for any non-audit services performed for the Company by the external auditors and considering whether the nature and extent of such services could detract from the auditors' independence in carrying out the audit function;
(h) the oversight and review, separately with the auditors and with management, upon the completion of the audit, or prior thereto where appropriate, of:
(i) the contents of the auditors' report;
(ii) the scope and quality of the audit work performed;
(iii) the adequacy of the Company's financial and auditing personnel;
(iv) the co-operation received from the Company's personnel during the audit and any problems encountered by the external auditors and any restrictions on the auditors' work;
(v) the internal resources used;
(vi) the evaluation of internal controls with the external auditors, together with management's response to recommendations of the external auditors, including in respect of subsequent follow-ups or any identified weaknesses in the Company's system of internal control for detecting accounting and reporting financial errors, fraud and defalcations, unethical acts or omissions, legal violations, and noncompliance with the Company's code of conduct;
(vii) the terms of reference of the internal auditor (if any);
(viii) any proposed changes in accounting policies, any presentation of the impact of significant risks and uncertainties, and any estimates, accruals, provisions and judgments of management that may in such cases be material to financial reporting; as well as other sensitive matters such as measurement and disclosure of related party transactions;
(ix) the appropriateness of management's annual and quarterly discussion and analysis of operations for the annual and quarterly report and its consistency with financial statements;
(x) any report or opinion proposed to be rendered in connection with the year-end consolidated financial statements;
(xi) any significant transactions which were not a normal part of the Company's business;
(xii) the nature and substance of material accruals, reserves and other estimates; and
(xiii) the financial statements included in the annual report with management and external auditors to determine that the external auditors are satisfied with the disclosure and content of the financial statements to be presented to shareholders.
(i) the provision to the external auditors of quarterly financials and releases and management's discussion and analysis, for its records,
(j) the monitoring of financial statement issues and risks, their impact or potential effect on reported financial information, the processes used by management to address such matters, related views of the external auditors thereon, and the basis for audit conclusions and

important conclusions on interim and/or year-end audit work, all in advance of the public release of financial information,

(k) the approval of the Company's annual audited financial statements, in conjunction with the report of the external auditors thereon and those of its subsidiaries, and
(l) the oversight and providing of assistance in resolving disagreements between management and the external auditors regarding financial reporting.

5. SPECIFIC DUTIES OF THE AUDIT COMMITTEE

5.1 Accounting, Disclosure, Practices and Governance

The duties of the committee as they relate to overseeing accounting and disclosure policies and practices and other significant and related corporate governance matters are as follows:

(a) the review of changes to accounting principles of the Canadian Institute of Chartered Accountants which would have a material impact on the Company's financial reporting as reported to the audit committee by management or external auditors;
(b) the review of the appropriateness of the accounting policies used in the preparation of the Company's financial statements and consideration of recommendations for any material changes to such policies;
(c) the review of the status of material contingent liabilities as reported to the committee by management;
(d) the review of the status of income tax returns and potentially material tax matters as reported to the committee by management;
(e) the review of any material errors or omissions in the current or prior year's financial statements;
(f) the review of policies and practices of officers' expenses and benefits, including the use of Company assets and of inquiries on results of examinations done through internal control or the external auditors;
(g) overseeing the establishment of adequate procedures for the review of public disclosure that includes financial information extracted from the Company's financial statements, and the periodic assessment of the adequacy of such procedures;
(h) the review with the Board, before their release to the public, of all public disclosure documents containing audited or unaudited financial information, including any prospectus, the annual report to shareholders, annual and quarterly financial statements and, management's discussion & analysis, press releases, and such other items that require the approval of the Board; and
(i) the review of any other disclosure required in respect of the audit committee and its activities, including any disclosure required in the Company's annual information form and management information circular.

5.2 Other Specific Duties

Other specific duties of the committee shall be:

(a) the production of a calendar of activities to be undertaken by the committee for each year and submitting of the calendar in an appropriate format to the Board within a reasonable period of time following each annual meeting of shareholders;
(b) the review of and report to the Board on any difficulties and problems that may arise with regulatory agencies which are likely to have a material financial impact;
(c) the establishment of procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; and
(d) the review and approval of the Company's hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Company.

6. MATTERS THAT ARE NOT THE RESPONSIBILITY OF THE AUDIT COMMITTEE

The following matters are, among others, matters which are not the responsibility of the committee:

(a) conducting audits or determining that financial statements are complete and accurate and are in accordance with generally accepted accounting principles;
(b) being responsible for overseeing compliance by others under codes of conduct of the Company; and
(c) being responsible for overseeing risk management other than financial risk management.

AI assistant

Clarke Inc. — Annual Report 2020

44592_rns_2021-03-02_011b9b4b-1f4c-4e0f-8924-d7be9eb6d588.pdf

CLARKE INC.

ANNUAL INFORMATION FORM

CLARKE INC.

Annual Information Form

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS AND FUTURE ORIENTED FINANCIAL INFORMATION

CORPORATE STRUCTURE

Intercorporate Relationships

GENERAL DEVELOPMENT OF THE BUSINESS

2018

2019

2020

2021 – Year-to-date

BUSINESS OPERATIONS

Description of Reporting Segments

Investment Segment

Hospitality Segment

Properties

Employees

RISKS AND UNCERTAINTIES

COVID-19 pandemic and Other Pandemic or Epidemic Risks

Risks Relating to the Investment Segment

Investment Strategy

General Market Risk

Potential Lack of Diversification

The Sale of Company Investments

Commodity Market Risk

Dividends are not Guaranteed

Share Liquidity Risk

Interest Rate and Foreign Currency

Derivative Risk

Reliance on Key Executives

Principal Shareholder

Risks Relating to the Hospitality Segment

General

Liquidity

Environmental Matters

Uninsured Losses

General Economic Environment

Hotel Industry

Competition

Customer Concentration

Franchised Hotels

Potential Labour Disruptions

Laws Concerning Employees

Potential Conflicts of Interest

Availability of Additional Capital

Debt Financing

Acquisitions

Cyber Risks

DIVIDENDS

DESCRIPTION OF SHARE CAPITAL

Stock Option Plan

DESCRIPTION OF CONVERTIBLE DEBENTURES

MARKET FOR SECURITIES

ESCROWED SECURITIES

DIRECTORS AND EXECUTIVE OFFICERS

LEGAL PROCEEDINGS AND REGULATORY ACTION

INTEREST OF MANAGEMENT & OTHERS IN MATERIAL TRANSACTIONS

TRANSFER AGENTS AND REGISTRARS

MATERIAL CONTRACTS

INTERESTS OF EXPERTS

ADDITIONAL INFORMATION

FORM 52-110F1 – AUDIT COMMITTEE

Audit Committee Charter

Composition of the Audit Committee

Relevant Education and Experience of Audit Committee Members

Pre-Approval Policies and Procedures

Audit Fees

Audit Fees

Audit-related fees

Tax fees

APPENDIX: AUDIT COMMITTEE CHARTER

1. COMMITTEE ROLE

1.1 Overseeing Role

1.2 Coordination and Relationships

2. COMMITTEE MEMBERSHIP, PROCEDURES AND ORGANIZATION

Clarke Inc. Annual Report 2020