No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This prospectus constitutes a public offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. These securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the ‘‘U.S. Securities Act’’), or the securities laws of any state of the United States and may not be offered, sold or delivered, directly or indirectly, in the United States (as such term is defined in Regulation S under the U.S. Securities Act) (the ‘‘United States’’) or to, or for the account or benefit of, U.S. Persons (as defined in the U.S. Securities Act), except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This prospectus does not constitute an offer to sell or solicitation of an offer to buy any of these securities in the United States. See ‘‘Plan of Distribution’’. PROSPECTUS Initial Public Offering March 31, 2015 9FEB201513083562 CARA OPERATIONS LIMITED $200,100,000 (8,700,000 Subordinate Voting Shares) This prospectus qualifies the distribution to the public (the ‘‘Offering’’) of an aggregate of 8,700,000 subordinate voting shares (‘‘Subordinate Voting Shares’’) of Cara Operations Limited (the ‘‘Company’’ or ‘‘Cara’’), a company incorporated under, and governed by, the laws of Ontario, at a price of $23.00 per Subordinate Voting Share (the ‘‘Offering Price’’). The Subordinate Voting Shares are ‘‘restricted securities’’ within the meaning of such term under applicable Canadian securities laws. The Company is exempt from the requirements of Section 12.3 of National Instrument 41-101 — General Prospectus Requirements on the basis that the Company was a private issuer immediately before filing the prospectus. Cara is Canada’s largest full-service restaurant company and third largest restaurant operator based on 2013 sales. As at December 30, 2014, Cara had 10 brands and 837 restaurants across Canada, 89% of which are operated by franchisees. Cara’s restaurant network includes iconic brands that resonate with Canadians, such as Swiss Chalet and Harvey’s. Under the leadership of Cara’s new management team, Cara’s financial performance has strengthened significantly. From Fiscal 2013 to Fiscal 2014, System Sales(1) increased 23.6%, Total gross revenue from continuing operations increased 4.1%, SRS Growth(1) was 2.6%, and Operating EBITDA(1) increased 74.4%. See ‘‘Non-IFRS Measures’’. For a reconciliation of net earnings (loss) from continuing operations to Operating EBITDA, see ‘‘Selected Consolidated Financial Information’’. Upon completion of the Offering, the Company will have two classes of issued and outstanding shares: Subordinate Voting Shares and multiple voting shares (‘‘Multiple Voting Shares’’, and together with the Subordinate Voting Shares, the ‘‘Shares’’). The Multiple Voting Shares will be held by Fairfax Financial Holdings Limited and its affiliates (‘‘Fairfax’’) and the Phelan family through Cara Holdings Limited and its affiliates (‘‘Cara Holdings’’, and together with Fairfax, the ‘‘Principal Shareholders’’), either directly or indirectly. The Subordinate Voting Shares and the Multiple Voting Shares are substantially identical with the exception of the voting, pre-emptive and conversion rights attached to the Multiple Voting Shares. Each Subordinate Voting Share is entitled to one vote and each Multiple Voting Share is entitled to 25 votes on all matters. The Multiple Voting Shares are convertible into Subordinate Voting Shares on a one-for-one basis at any time at the option of the holders thereof and automatically in certain other circumstances. The holders of Subordinate Voting Shares benefit from ‘‘coattail’’ provisions that give them certain rights in the event of a take-over bid for the Multiple Voting Shares. Upon completion of the Offering and assuming no exercise of the Over-Allotment Option, the Company will have 10,237,871 Subordinate Voting Shares and 37,396,284 Multiple Voting Shares issued and outstanding. See ‘‘Principal Shareholders’’ and ‘‘Description of Share Capital’’. Upon completion of the Offering, the Principal Shareholders will collectively hold 100% of the Company’s issued and outstanding Multiple Voting Shares. After giving effect to the Offering, the Principal Shareholders will hold approximately 79% of the Company’s total issued and outstanding Shares and will hold approximately 99% of the voting power attached to all of the Shares (approximately 76% and 99%, respectively, if the Over-Allotment Option is exercised in full). As a result, the Principal Shareholders will have a significant influence on the Company. See ‘‘Principal Shareholders’’ and ‘‘Risk Factors’’. All of the Multiple Voting Shares held after completion of the Offering by the Principal Shareholders will be subject to contractual lock-up agreements with the Underwriters. See ‘‘Plan of Distribution — Lock-Up Arrangements’’. (1) System Sales, SRS Growth and Operating EBITDA are non-IFRS measures. See ‘‘Non-IFRS Measures’’ on page 1. (continued on next page) Canada’s Largest Attractive Full-Service Restaurant Franchised Operator with Focused Business Iconic Brands Model Successful Multiple Brand Transformation Strategy Provides Positions Cara Significant Competitive for Success Advantages Significant Fairfax is a Opportunities Strategic for Growth Over Long-Term Next 5 to 7 Years Shareholder Canada’s Largest Full-Service Restaurant Operator with Iconic Brands Successful Transformation positions Cara for success Cara’s financial performance has strengthened significantly in Fiscal 2014 • System Sales(1) increased 23.6% • SRS Growth(1) was 2.6% • Operating EBITDA(1) increased 74.4% Targeting significant opportunities for growth over the next 5 – 7 years • System Sales(1) of $2.5 - $3.0 billion • SRS Growth(1) of 2.5% - 4.0% per year • Operating EBITDA(1) of 7.0% - 8.0% of System Sales • Add 30 to 50 new restaurants per year (after 2015) (1) System Sales, SRS Growth and Operating EBITDA are non-IFRS measures. See “Non-IFRS Measures” on page 1. (continued from cover) Price: $23.00 per Subordinate Voting Share Price to the Underwriters’ Net Proceeds Public(1) Fee to the Company(2) Per Subordinate Voting Share ................................. $23.00 $1.15 $21.85 Total Offering(3) .......................................... $200,100,000 $10,005,000 $190,095,000 Notes (1) The price of the Subordinate Voting Shares has been determined by negotiation between the Company and the Underwriters. (2) Before deducting the Company’s expenses of the Offering, estimated to be $5 million, which will be paid from the proceeds of the Offering. (3) The Company has granted the Underwriters an option (the ‘‘Over-Allotment Option’’), exercisable in whole or in part at any time for a period of 30 days after the Closing Date (as defined below), to purchase up to an additional 15% of the aggregate number of Subordinate Voting Shares issued under the Offering on the same terms as set forth above solely to cover over-allotments, if any, and for market stabilization purposes. If the Over-Allotment Option is exercised in full, the total ‘‘Price to the Public’’, ‘‘Underwriters’ Fee’’ and ‘‘Net Proceeds to the Company’’ will be $230,115,000, $11,505,750 and $218,609,250, respectively. This prospectus also qualifies the grant of the Over-Allotment Option and distribution of the Subordinate Voting Shares issuable upon the exercise of the Over-Allotment Option. A purchaser who acquires Subordinate Voting Shares forming part of the Underwriters’ over-allocation position acquires such Subordinate Voting Shares under this prospectus, regardless of whether the Underwriters’ over-allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. See ‘‘Plan of Distribution’’. The following table sets out the number of Subordinate Voting Shares that may be issued by the Company to the Underwriters pursuant to the Over-Allotment Option: Maximum Size or Number of Securities Underwriters’ Position Available Exercise Period Exercise Price Over-Allotment Option ......... Up to an additional 15% of the For a period of 30 days $23.00 per Subordinate aggregate number of Subordinate after the Closing Date Voting Share Voting Shares issued under the Offering, being 1,305,000 Subordinate Voting Shares Scotia Capital Inc. (‘‘Scotia’’), BMO Nesbitt Burns Inc. (‘‘BMO’’), RBC Dominion Securities Inc. (‘‘RBC’’), CIBC World Markets Inc. (‘‘CIBC’’), TD Securities Inc. (‘‘TD’’), National Bank Financial Inc., Canaccord Genuity Corp., GMP Securities L.P., Raymond James Ltd., Cormark Securities Inc. and Laurentian Bank Securities Inc. (collectively, the ‘‘Underwriters’’), as principals, conditionally offer the Subordinate Voting Shares qualified under this prospectus, subject to prior sale, if, as and when issued by the Company and accepted by the Underwriters in accordance with the conditions contained in the underwriting agreement between the Company and the Underwriters referred to under ‘‘Plan of Distribution’’ and subject to the approval of certain legal matters on behalf of the Company by Torys LLP and on behalf of the Underwriters by Osler, Hoskin & Harcourt LLP. In connection with this distribution, the Underwriters have been granted the Over-Allotment Option and may, subject to applicable law,