Cara Operations Limited ANNUAL INFORMATION FORM March 24, 2017 TABLE OF CONTENTS Page CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS ......................................... 2 GENERAL .................................................................................................................................................... 3 NON-IFRS MEASURES ............................................................................................................................... 3 CORPORATE STRUCTURE ....................................................................................................................... 5 DEVELOPMENT OF THE BUSINESS ........................................................................................................ 5 DESCRIPTION OF THE BUSINESS ........................................................................................................... 6 DESCRIPTION OF CAPITAL STRUCTURE ............................................................................................. 18 RISK FACTORS ......................................................................................................................................... 21 DIVIDENDS AND DISTRIBUTIONS .......................................................................................................... 33 PRICE RANGE AND TRADING VOLUME OF SUBORDINATE VOTING SHARES ................................ 34 PRIOR SALES ........................................................................................................................................... 34 DIRECTORS, OFFICERS AND SENIOR MANAGEMENT ....................................................................... 35 AUDIT COMMITTEE .................................................................................................................................. 37 LEGAL PROCEEDINGS AND REGULATORY ACTIONS ........................................................................ 38 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ................................ 39 ADDITIONAL INFORMATION ................................................................................................................... 39 TRANSFER AGENT AND REGISTRAR .................................................................................................... 40 MATERIAL CONTRACTS .......................................................................................................................... 40 EXPERTS................................................................................................................................................... 40 APPENDIX A: AUDIT COMMITTEE CHARTER...................................................................................... A-1 - i - CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS All forward-looking statements in this Annual Information Form (”AIF”) are made as of March 24, 2017 and are qualified by these cautionary statements. This AIF contains “forward-looking information” within the meaning of applicable securities laws. Forward-looking information may relate to the Company’s future outlook and anticipated events or results and may include information regarding the financial position, business strategy, growth strategy, budgets, operations, financial results, taxes, dividends, plans and objectives of the Company. Particularly, information regarding future results, performance, achievements, prospects or opportunities of the Company or the Canadian market is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. Discussions containing forward-looking information may be found, among other places, under the headings “Description of the Business”, “Development of the Business” and “Risk Factors”. These forward-looking statements include, among other things, statements relating to: the Company’s expectations regarding its revenue, expenses and operations; the Company’s future growth plans, including expansion of Cara’s current brands and acquisitions; the Company’s expectations with respect to advancement in its technologies; the Company’s expectations with respect to retail sales; the Company’s expectations with respect to growth resulting from its off-premise sales initiatives; the Company’s expectations with respect to SRS Growth (as defined herein) and to growth of System Sales (as defined herein) and Operating EBITDA (as defined herein); the Company’s expectations with respect to restaurant closures and new restaurant openings; the Company’s intention to declare dividends; the Company’s expectations with respect to strategic partnerships; the Company’s expectations with respect to its ability to leverage its scale to reduce costs; the Company’s expectations with respect to savings realized as a result of implementing improved scheduling practices; anticipated trends and challenges in the Company’s business and the market in which it operates; and the market price for the Company’s subordinate voting Shares (the “Subordinate Voting Shares”). 2 These statements and other forward-looking information are based on opinions, assumptions and estimates made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking information is necessarily based on a number of the opinions, assumptions and estimates that, while considered reasonable by the Company as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the following factors described in greater detail in “Risk Factors”: potential volatility of Subordinate Voting Share price; payment of dividends; forward-looking information; significant ownership by the Principal Shareholders (as defined herein); future sales of Shares by the Principal Shareholders; dilution; limited voting rights of the Subordinate Voting Shares; quarterly operating results may fluctuate; securities analysts’ research or reports could impact the price of Subordinate Voting Shares; restaurant industry; competition with other franchisors; quality control and health concerns; food safety; security breaches of confidential guest information; public safety issues; damage to the Company’s reputation; availability and quality of raw materials; reliance on suppliers; growth of the Company; franchisees; franchise fees and other revenue; franchisee relations; revenue reporting risks; opening new restaurants; potential inability to consummate acquisitions; integration of acquisitions and brand expansion; achieving expected synergies from acquisitions; retail licensing opportunities; seasonality and weather; regulations governing alcoholic beverages; laws concerning employees; dependence on key personnel; attracting and retaining quality employees; unionization activities may disrupt Company operations; reliance on information technology; intellectual property; lawsuits; regulation; and Company’s insurance may not provide adequate levels of coverage. These factors and assumptions are not intended to represent a complete list of the factors and assumptions that could affect the Company. These factors and assumptions, however, should be considered carefully. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information contained herein, except as required by applicable securities laws. GENERAL In this AIF, unless the context requires otherwise, references to the “Company” or “Cara” means Cara Operations Limited. Unless otherwise indicated, all information in this AIF is provided as at December 25, 2016. Financial data is prepared in accordance with IFRS and unless otherwise noted, these non-IFRS measures are defined below. All currency amounts are presented in Canadian dollars, unless otherwise noted. NON-IFRS MEASURES This AIF makes reference to certain non-IFRS measures. These measures are not recognized measures under International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other