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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>As filed with the Securities and Exchange Commission on March&nbsp;10, 2014  </B></FONT></P>

<P ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> Registration No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </B></FONT></P>


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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>Washington, D.C. 20549  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>FORM S-1<BR>  </B></FONT><FONT SIZE=2><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF&nbsp;1933  </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>ZOE'S KITCHEN,&nbsp;INC.<BR>  </B></FONT><FONT  style="font-size:8pt;line-height:9pt;">(Exact name of registrant as specified in its charter) </FONT></P>

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<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Delaware</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(State or other jurisdiction of<BR>
incorporation or organization)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 5812</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(Primary Standard Industrial<BR>
Classification Code Number)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B> 51-0653504</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(I.R.S. Employer<BR>
Identification Number)</FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>5700 Granite Parkway<BR>
Granite Park Building #2, Suite&nbsp;455<BR>
Plano, Texas 75024<BR>
(205)&nbsp;414-9920</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) </FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Jason Morgan<BR>
Chief Financial Officer<BR>
5700 Granite Parkway<BR>
Granite Park Building #2, Suite&nbsp;455<BR>
Plano, Texas 75024<BR>
(205)&nbsp;414-9920</B></FONT><FONT  style="font-size:8pt;line-height:9pt;"><BR>
(Name, address, including zip code, and telephone number, including area code, of agent for service) </FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I>Copies of all communications, including communications sent to agent for service, should be sent to:  </I></FONT></P>

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<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Joshua N. Korff, Esq.<BR>
Michael Kim, Esq.<BR>
Kirkland&nbsp;&amp; Ellis&nbsp;LLP<BR>
601 Lexington Avenue<BR>
New York, New York 10022<BR>
(212)&nbsp;446-4800</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Marc Jaffe, Esq.<BR>
Ian Schuman, Esq.<BR>
Latham&nbsp;&amp; Watkins&nbsp;LLP<BR>
885 Third Avenue<BR>
New York, New York 10022<BR>
(212)&nbsp;906-1200</B></FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Approximate date of commencement of proposed sale to the public:<BR>  </B></FONT><FONT  style="font-size:8pt;line-height:9pt;">As soon as practicable after this Registration Statement becomes effective. </FONT></P>

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<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933, check the following
box:&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If this Form is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
"large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule&nbsp;12b-2 of the Exchange Act. (Check one): </FONT></P>
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<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Large&nbsp;accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Non-accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT><BR></FONT> <FONT  style="font-size:8pt;line-height:9pt;">(Do not check if a<BR>
smaller reporting company)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Smaller&nbsp;reporting&nbsp;company&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>CALCULATION OF REGISTRATION FEE  </B></FONT></P>
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<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;"><p style="font-family:arial;margin-left:4pt;text-indent:-4pt;"> &nbsp;</TD>
</TR>
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<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Title of Each Class of Securities<BR>
to be Registered</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Proposed Maximum<BR>
Aggregate Offering<BR>
Price<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)(2)</font></B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount of<BR>
Registration Fee</B></FONT><BR></TH>
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<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:4pt;text-indent:-4pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B> </B></FONT><FONT  style="font-size:8pt;line-height:9pt;">Common Stock, $0.01 par value per share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$80,500,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$10,369</FONT></TD>
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<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Estimated
solely for the purpose of calculating the registration fee pursuant to Rule&nbsp;457(o) under the Securities Act of 1933, as
amended.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
the offering price of any additional shares of common stock that the underwriters have the option to purchase. </FONT></DD></DL>
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<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall
file&nbsp;a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section&nbsp;8(a), may determine.  </B></FONT></P>
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</FONT> <FONT COLOR="#FF1100" SIZE=2>The information in this prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities nor a solicitation of an offer
to buy these securities in any jurisdiction where the offer and sale is not permitted. </FONT></P>

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 </B></FONT><FONT COLOR="#FF1100" SIZE=2>SUBJECT TO COMPLETION DATED MARCH&nbsp;10, 2014 </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>PRELIMINARY PROSPECTUS  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>Zoe's Kitchen,&nbsp;Inc.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are offering&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock. This is our initial public offering and no public market
currently exists for our common stock. We
expect our initial public offering price to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share. We have applied to list our common stock on the New York Stock Exchange under the symbol "ZOES." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B>We are an "emerging growth company" as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. See "Prospectus
Summary&#151;Implications of Being an Emerging Growth Company."</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Investing in our common stock involves a high degree of risk. Please read "Risk Factors" beginning on page&nbsp;18 of this prospectus.</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.</B></FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>PER SHARE </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>TOTAL </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Public Offering Price</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting Discounts<SUP>(1)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds, before expenses, to us</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">We
refer you to "Underwriting" beginning on page&nbsp;120 of this prospectus for additional information regarding total underwriters
compensation. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I>

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<P style="font-family:arial;"><FONT SIZE=2>Delivery of the shares of common stock is expected to be made on or about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2014. We have granted the
underwriters an option for a period of
30&nbsp;days from the date of this prospectus to purchase an additional&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock. If the underwriters
exercise the option in full, the total underwriting discounts
payable by us will be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, and the total proceeds to us, before expenses, will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>
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<TD style="font-family:arial;"><FONT SIZE=4><B>Jefferies</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=4>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>Piper Jaffray</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=4>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=4><B>Baird</B></FONT></TD>
</TR>
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<TD style="font-family:arial;"><BR><FONT SIZE=3><B> William Blair</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=3><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=3><B>Stephens Inc.</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=3><B><BR>&nbsp;</B></FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=3><B>Stifel</B></FONT></TD>
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&nbsp;&nbsp;&nbsp;
</font></p><p align=center style="font-family:arial;"><font> </FONT> <FONT SIZE=2>
Prospectus dated&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2014</FONT></P>

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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="BG17901A_main_toc"></A>

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<P style="font-family:arial;"><FONT SIZE=2><B> TABLE OF CONTENTS  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> <A NAME="BG17901_TOC"></A>  </B></FONT></P>
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<p style="font-family:arial;"></FONT></P>

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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Page </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ca17901_prospectus_summary"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PROSPECTUS SUMMARY</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ca17901_prospectus_summary"><FONT SIZE=2>1</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#RISK"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>RISK FACTORS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#RISK"><FONT SIZE=2>18</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dg17901_forward-looking_statements"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>FORWARD-LOOKING STATEMENTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dg17901_forward-looking_statements"><FONT SIZE=2>43</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dg17901_use_of_proceeds"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>USE OF PROCEEDS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dg17901_use_of_proceeds"><FONT SIZE=2>45</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dg17901_dividend_policy"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DIVIDEND POLICY</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dg17901_dividend_policy"><FONT SIZE=2>46</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#di17901_capitalization"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CAPITALIZATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#di17901_capitalization"><FONT SIZE=2>47</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#di17901_dilution"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DILUTION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#di17901_dilution"><FONT SIZE=2>49</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dk17901_selected_historical_co__dk102289"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dk17901_selected_historical_co__dk102289"><FONT SIZE=2>51</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dm17901_management_s_discussion_and_an__man03466"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dm17901_management_s_discussion_and_an__man03466"><FONT SIZE=2>55</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ds17901_business"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>BUSINESS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ds17901_business"><FONT SIZE=2>76</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#du17901_management"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MANAGEMENT</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#du17901_management"><FONT SIZE=2>91</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dw17901_executive_compensation"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EXECUTIVE COMPENSATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dw17901_executive_compensation"><FONT SIZE=2>97</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#dy17901_principal_stockholders"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>PRINCIPAL STOCKHOLDERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dy17901_principal_stockholders"><FONT SIZE=2>105</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ea17901_certain_relationships_and_related_party_transactions"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ea17901_certain_relationships_and_related_party_transactions"><FONT SIZE=2>107</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ec17901_description_of_capital_stock"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>DESCRIPTION OF CAPITAL STOCK</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ec17901_description_of_capital_stock"><FONT SIZE=2>109</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ee17901_shares_eligible_for_future_sale"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SHARES ELIGIBLE FOR FUTURE SALE</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ee17901_shares_eligible_for_future_sale"><FONT SIZE=2>113</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#eg17901_material_u.s._federal_income_a__mat02919"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S.
HOLDERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#eg17901_material_u.s._federal_income_a__mat02919"><FONT SIZE=2>116</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ei17901_underwriting"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>UNDERWRITING</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ei17901_underwriting"><FONT SIZE=2>120</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ek17901_legal_matters"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>LEGAL MATTERS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ek17901_legal_matters"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ek17901_experts"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EXPERTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ek17901_experts"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#ek17901_where_you_can_find_more_information"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>WHERE YOU CAN FIND MORE INFORMATION</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ek17901_where_you_can_find_more_information"><FONT SIZE=2>127</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#fa17901_index_to_consolidated_financial_statements"><p style="font-family:arial;margin-left:13pt;text-indent:-13pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#fa17901_index_to_consolidated_financial_statements"><FONT SIZE=2>F-1</FONT></A></TD>
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<P style="font-family:arial;"><FONT SIZE=2><B>We have not and the underwriters have not authorized anyone to provide you with any information other than that contained in this prospectus or in any free
writing prospectus prepared by or on behalf of us or to which we have referred you. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where such
offers and sales are permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or the time of any sale of shares
of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.</B></FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="bi17901_market,_ranking_and_other_industry_data"> </A>
<A NAME="toc_bi17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MARKET, RANKING AND OTHER INDUSTRY DATA    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus contains industry and market data, forecasts and projections that are based on internal data and estimates, independent industry
publications, reports by market research firms or other published independent sources. In particular, we have obtained information regarding the restaurant industry, including sales and revenue growth
in the fast casual segment of the restaurant industry, from Technomic&nbsp;Inc. ("Technomic"), a national consulting market research firm. Other industry and market data included in this prospectus
are from internal analyses based upon data available from known sources or other proprietary research and analysis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe these data to be reliable as of the date of this prospectus, but there can be no assurance as to the accuracy or completeness of such information. We have not independently verified the
market and industry data obtained from these third-party sources. Our internal data and estimates are based upon information obtained from trade and business organizations, other contacts in the
markets in which we operate and our management's understanding of industry conditions. Though we believe this information to be true and accurate, such information has not been verified by any
independent sources. You should carefully consider the inherent risks and uncertainties associated with the market and other industry data contained in this prospectus. </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  BASIS OF PRESENTATION    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of
52&nbsp;weeks, with the exception of the fiscal year ended December&nbsp;31, 2012, which consists of 53&nbsp;weeks. Our first fiscal quarter consists of 16&nbsp;weeks and each of our second,
third and fourth fiscal quarters consist of 12&nbsp;weeks, except for a 53-week year when the fourth quarter has 13&nbsp;weeks. We refer to our fiscal years presented in this prospectus as 2013,
2012, 2011, 2010 and 2009. References to periods in this prospectus refer to a four week reporting period, except for the thirteenth period of a 53-week year, which would contain five weeks.
References to comparable restaurant sales in this prospectus refer to comparable restaurant sales in our Company-owned restaurants which have been open for 18 consecutive periods or longer. References
to average unit volumes ("AUVs") in this prospectus refer to average unit volumes at our Company-owned restaurants that have been open for a trailing 52-week period or longer. For purposes of both the
comparable restaurant sales and AUV calculations the fifty-third week in 2012 has been excluded. References to customer traffic in this prospectus refer to non-catering entr&eacute;e counts,
including non-catering menu items intended for consumption by multiple guests, such as the Company's "Dinner for Four" offerings, which are counted as multiple entr&eacute;es. References to
per customer spend in this prospectus refer to total restaurant sales (excluding all catering related sales) divided by total customer traffic. </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  TRADEMARKS, SERVICE MARKS AND TRADE NAMES    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We own the trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate names,
logos and website names. This prospectus may also contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for
convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the <SUP>TM</SUP>, <SUP>SM</SUP>, &copy; and &reg;
symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks, trade names and copyrights. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
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<BR></FONT><FONT SIZE=2><B>  PROSPECTUS SUMMARY    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>The following summary highlights information appearing elsewhere in this prospectus. This summary does not contain all of the
information you should consider before investing in our common stock. You should read this entire prospectus carefully. In particular, you should read the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes relating to those statements included elsewhere in this
prospectus. Some of the statements in this prospectus constitute forward-looking statements. See "Forward-Looking Statements."</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>In this prospectus, unless the context requires otherwise, references to "Zo&euml;s Kitchen," "Zo&euml;s," the "Company," "we," "our," or "us" refer to Zoe's
Kitchen,&nbsp;Inc., the issuer of the common stock offered hereby, and its consolidated subsidiaries.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our Company  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Born in the Mediterranean. Raised in the South. Bringing Mediterranean Mainstream.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Zo&euml;s Kitchen is a fast growing, fast casual restaurant concept serving a distinct menu of fresh, wholesome, Mediterranean-inspired
dishes delivered with Southern hospitality. Founded in 1995 by Zo&euml; and Marcus Cassimus in Birmingham, Alabama, Zo&euml;s Kitchen is a natural extension of Zo&euml;
Cassimus' lifetime passion for cooking Mediterranean meals for family and friends. Since opening our first restaurant, we have never wavered from our commitment to make our food fresh daily and to
serve our customers in a warm and welcoming environment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe our brand delivers on our customers' desire for freshly-prepared food and convenient, unique and high-quality experiences. As a result, we have delivered strong growth in restaurant count,
comparable restaurant sales, AUVs, revenues and Adjusted EBITDA. We have grown from 21 restaurants across seven states, including five franchised locations, in 2008 to 111 restaurants across 15
states, including six&nbsp;franchised locations, as of February&nbsp;24, 2014, representing a compound annual growth rate ("CAGR") of 38.1%. Our Company-owned restaurants have generated 16
consecutive fiscal quarters of positive comparable restaurant sales growth, due primarily to increases in customer traffic, which we believe demonstrates our growing brand equity. We have grown our
Company-owned restaurant AUVs from approximately $1.1&nbsp;million in 2009 to approximately $1.5&nbsp;million in 2013, representing an increase of 32.9% over that time period. From 2009 to 2013,
our total revenue increased from $20.8&nbsp;million to $116.4&nbsp;million and Adjusted EBITDA increased from $0.9&nbsp;million to $10.9&nbsp;million. We generated a net loss of
$2.8&nbsp;million and $3.7&nbsp;million in 2009 and 2013, respectively. For a reconciliation of Adjusted EBITDA, a non-GAAP term, to net income, see "Summary Historical Consolidated Financial and
Other Data." Our growth in comparable restaurant sales since 2009 has allowed us to invest significant amounts of capital to drive growth through the opening of new restaurants and the hiring of
personnel required to support our growth plans. </FONT></P>
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<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total Restaurants at End of Fiscal Year</B></FONT><BR></TH>
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 <P style="font-family:arial;"><FONT SIZE=2><B> Our Concept  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Delivering Goodness in the Communities We Serve.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The word "zo&euml;," which means "life" in Greek, is embraced in every aspect of the Zo&euml;s Kitchen culture and is a key
component of our concept. Our mission is to "deliver goodness to our customers, from the inside out" by: (i)&nbsp;offering a differentiated menu of simple, tasty and fresh Mediterranean cuisine
complemented with several Southern staples; (ii)&nbsp;extending genuine Southern hospitality with personality, including food delivered to your table; (iii)&nbsp;providing an inviting,
cosmopolitan, casual-chic environment in our restaurants; and (iv)&nbsp;delivering an outstanding catering experience for business and social events. Our menu offers high-quality meals made from
scratch generally using produce, proteins and other ingredients that are predominantly preservative- and additive-free, including our appetizers, soups, salads, and kabobs. We believe our team members
are a reflection of our customers-educated, active and passionate-and embrace our culture of providing engaging, attentive service, which we believe helps drive brand advocacy. We believe we deliver a
compelling value proposition by offering flavorful food that our customers feel good about eating and providing friendly customer service in a warm, inviting atmosphere, all for an average per
customer spend of $9.57 for 2013. Our food, including both hot and cold items, is well suited for catering to a variety of business and social occasions, and we believe our strong catering offering is
a significant competitive differentiator that generates consumer trial of our menu and provides additional opportunities for existing customers to enjoy our food off-premise. For 2013, catering
represented approximately 17% of our revenue. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe we provide an emotional connection to our target customer&nbsp;&#151; educated, affluent women and their families&nbsp;&#151; who represent approximately 70% of our
customer visits, based on internal estimates and third-party data. We promote our brand as an extension of our customers' own kitchens by offering high-quality food inspired by family recipes which
reminds them of food they may have prepared at home, while allowing them to spend extra time with family and friends to fuel a balanced and active lifestyle. We believe our menu is appealing during
both lunch and dinner, resulting in a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering) for 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our Industry  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We operate in the fast casual segment of the restaurant industry, which is one of the industry's fastest growing segments. According to Technomic, the
fast casual segment generated $31&nbsp;billion in sales in 2012 and is projected to grow at a CAGR of approximately 10% to $50&nbsp;billion by 2017. The largest 78 fast casual restaurant concepts
grew sales by 13.2% in 2012 to $24.2&nbsp;billion, compared to growth of 4.9% for the 500 overall largest restaurant chains in the United States. We are the largest U.S.-based fast casual restaurant
concept (by number of restaurants) featuring Mediterranean cuisine. Our differentiated menu offering flavorful Mediterranean food delivered to your table at an average per customer spend of $9.57 for
2013 positions us to compete successfully against other fast casual concepts as well as against casual dining restaurants, providing us with a large target market. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Our Strengths  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Love Life, Live Zo&euml;s!  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe the following strengths differentiate us from competitors and serve as the foundation for our continued growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our Food&#151;Simple. Tasty. Fresh!</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe the Zo&euml;s Kitchen experience is driven by providing simple, tasty and fresh Mediterranean food
at a compelling value to our customers. High-quality ingredients serve as the foundation of Zo&euml;s Kitchen. Our food is made from scratch daily, and we still serve some recipes that were
created in the Southern kitchen of our founder, drawing from her Greek heritage. We prepare our food by utilizing traditional Mediterranean preparation methods such as grilling and baking. Our menu is
a reflection of traditional Mediterranean cuisine, offering an abundance of fresh fruits, vegetables and herbs, </FONT></P>
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 <P style="font-family:arial;"><FONT SIZE=2>grains,
olive oil and lean proteins. We believe the variety on our menu allows people with different preferences to enjoy a meal together.  </FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Simple.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our food is simply prepared
and made to order in our scratch kitchens. Our cooking philosophy is rooted in rich traditions that celebrate food, rather than in fads or trends. From our hummus, made fresh daily and served with
warm pita bread, to our flavorful salads and kabobs, we serve real food. By real food, we mean food made from simple ingredients, such as raw vegetables, fruits and legumes. We serve food the way it
was prepared 100 years ago&nbsp;&#151; raw, grilled or baked. Our goodness is created through the careful selection of quality, wholesome ingredients, time-honored preparations inspired by
Mediterranean culinary traditions, family recipes that have been passed down for generations and delivering balanced meals.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Tasty.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;True to our heritage, the
flavors in our menu are born in the Mediterranean and raised in the South. Inspired by family recipes and Zo&euml; Cassimus' simple, fresh-from-the-garden sensibility, our menu features
Mediterranean cuisine complemented with several Southern staples. We offer our customers wholesome, flavorful items such as our Mediterranean Tuna sandwich, as well as entr&eacute;es such as
chicken, steak and salmon kabobs and chicken and spinach roll-ups (tortillas stuffed with feta cheese, grilled chicken, sundried tomatoes and spinach), each of which is served with a choice of a side
item such as braised rosemary white beans, rice pilaf, pasta salad, roasted vegetables or seasonal fruit. Our culinary team delivers flavorful new menu additions with seasonal ingredients allowing our
customers to "Live Mediterranean." One example is our new Mediterranean Quinoa Salad where quinoa is combined with broccoli, tomatoes, onions and feta cheese to deliver a nutritious
entr&eacute;e packed with flavor. Our commitment to fresh food, combined with our traditional Mediterranean cooking philosophy, results in food options that are full of flavor. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Fresh.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We seek to provide customers
with flavorful menu offerings made from high-quality ingredients that align with our customers' lifestyles. Fresh ingredients are delivered to our kitchens, and team members wash, cut and prepare food
from scratch daily. We utilize grilling as the predominant method of cooking our food, and there are no microwaves or fryers in our restaurants. We cater to a variety of dietary needs by offering
vegetarian, vegan, gluten-free and our calorie conscious Simply 500<SUP>TM</SUP> menu selections. We aim to provide food that makes our customers feel good about themselves and their decision to
choose Zo&euml;s Kitchen. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Differentiated Fast Casual Lifestyle Brand with a Desirable and Loyal Customer Base.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe the Zo&euml;s Kitchen brand reflects our customers' desire
for convenient, unique and high-quality experiences and their commitment to family, friends and enjoying every moment. We seek to deliver on these desires and to provide goodness to both the mind and
the body by fueling our customers' active lifestyle with nutritious, high-quality food that makes them feel great from the inside out. We believe we are an aspirational brand with broad appeal that
our customers embrace as a reflection of their desired self-image&nbsp;&#151; active, vibrant, sophisticated, genuine, caring and passionate, which results in customer advocacy and repeat
visits. Based on third-party surveys, we estimate that approximately 94% of our surveyed customers intend to recommend Zo&euml;s Kitchen. We seek to strengthen our brand through grassroots
marketing programs and the use of social media and technology aimed at building long-term relationships with our customers and inspiring lifelong brand advocates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
provide a warm and welcoming environment, attracting customers from a variety of demographic groups. We believe our combination of menu offerings, ambience and location is designed to appeal to
educated and affluent women, who along with their families, represent approximately 70% of our customer visits. Our female customers generally lead active lifestyles, have an average annual household
income of over $100,000 and a majority of them are college educated. We believe this demographic represents a highly-desirable customer base with strong influence on a family's mealtime
decision-making and are strong brand advocates. We also believe they appreciate the authenticity of our brand and the quality of our menu offerings, admire that we are still cooking meals inspired by
family recipes and feel good about the food they provide to themselves and their families when choosing Zo&euml;s Kitchen. Additionally, we believe our </FONT></P>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
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<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">
 <P style="font-family:arial;"><FONT SIZE=2>attractive
demographic mix, high repeat visit rate and our ability to draw an average of approximately 2,500 customers to each of our restaurants per week makes us a desirable tenant to landlords and
developers of lifestyle centers seeking to drive traffic to complementary retail businesses. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Delivering a Contemporary Mediterranean Experience with Southern Hospitality.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We strive to provide an inviting and enjoyable customer experience through the
atmosphere of our restaurants and the friendliness of our team members. Our restaurants, highlighted by our distinct Zo&euml;s Kitchen stripes drawn from the color palette of many seaside
Mediterranean neighborhoods, are designed to be warm, welcoming and full of energy. Each of our restaurants has a unique layout to optimize the available space with consistent design cues that strive
to balance the warmth of dark wood with contemporary, colorful and cosmopolitan casual-chic d&eacute;cor. Our patios, a core feature of our restaurants, are an authentic part of both our
Southern and Mediterranean heritage and we believe they provide a relaxing and welcoming dining environment. We invite the community to be a part of each restaurant by showcasing local items such as
artwork by the children of our customers. Overall, we seek to create a warm, inviting environment that welcomes casual conversations, family moments or quick exchanges as our customers eat and enjoy a
break from their busy schedules. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>True
to our Southern heritage, we aim to deliver warm hospitality and attentive service whether our customers choose to dine-in, take-out or host a catered event. Our team members are a reflection of
our customers&nbsp;&#151; educated, active and passionate. They are the heart and soul of what we call "Southern hospitality with personality"&nbsp;&#151; making sure our customers
feel as welcome as they are well fed. Our team members are trained to deliver personalized service and maintain a clean and inviting atmosphere that fosters a pleasant dining experience. We offer
modified table service where, after ordering at the counter, our customers' food is served at their table on china with silverware. Our team members routinely check on them throughout the meal and
then bus their table, all without the expectation of receiving a tip. We believe the atmosphere of our restaurants and the warmth of our team members encourages repeat visits, inspires advocacy and
drives increased sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Diverse Revenue Mix Provides Multiple Levers for Growth.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe our differentiated menu of both hot and cold food enables our customers to utilize our
restaurant for multiple occasions throughout the day. We had a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering), and our catering business represented approximately
17% of revenue, in each case, for 2013. We view catering as our third day-part, which helps to increase AUVs and brand awareness by introducing our concept to new customers through trial. We believe
we effectively serve both small and large groups in our restaurants, as well as outside of our restaurants with our catering and home meal replacement alternatives, including our Zo&euml;s
Fresh Take<SUP>TM</SUP> grab-and-go coolers and our family dinner options. In addition, we also serve beer and wine in a majority of our restaurants. We believe the breadth of our offerings
provides us multiple levers to continue to drive growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Attractive Unit Economic Model with Proven Portability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our sophisticated, predictive site selection strategy and flexible new restaurant model have resulted in
growth in markets of varying sizes as we have expanded our restaurant base utilizing in-line, end-cap and free-standing restaurant formats. We believe our strong performance across a variety of
geographic areas and steady AUV growth are validation of our concept's portability. For 2013, our top 20 performing restaurants were spread across seven different states. We have experienced
consistent AUV growth across all of our restaurant vintages. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
restaurant model is designed to generate strong cash flow, attractive restaurant-level financial results and high returns on invested capital. We believe our unit economic model provides a return
on investment that is attractive
to investors and supports further use of cash flow to grow our restaurant base. Our new restaurant investment model targets an average cash build-out cost of approximately $750,000, net of tenant
allowances, AUVs of $1.3&nbsp;million and cash-on-cash returns in excess of 30% by the end of the third full year of operation. On average, new restaurants opened since the beginning of 2009 have
exceeded these AUV and cash-on-cash return targets within the third year of operations. Additionally, since the </FONT></P>
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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">
 <P style="font-family:arial;"><FONT SIZE=2>majority
of our restaurant base was built in 2009 or after, we believe our restaurants are well maintained and will likely require minimal additional capital expenditures in the near term, allowing a
majority of our cash flow to be available for investment in new restaurant development and other growth initiatives. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Experienced Management Team.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our strategic vision and results-driven culture are directed by our senior management team under the leadership of Kevin Miles, who
guided the growth of our Company from 22 to 111 restaurants. Mr.&nbsp;Miles joined Zo&euml;s Kitchen in 2009 as Executive Vice President of Operations. In 2011, he was promoted to
President and Chief Operating Officer, and in 2012, he was promoted to Chief Executive Officer. Mr.&nbsp;Miles is a fast casual industry veteran with over 20&nbsp;years of relevant experience
including leadership roles at La Madeleine French Bakery and Caf&eacute;, Baja Fresh Mexican Grill and Pollo Campero. He directs a team of dedicated and progressive leaders who are focused on
executing our business plan and implementing our growth strategy. We believe our experienced management team is a key driver of our restaurant growth and positions us well for long-term growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our Growth Strategies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Bringing Mediterranean Mainstream.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We plan to execute the following strategies to continue to enhance our brand awareness and grow our revenue and profitability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Grow Our Restaurant Base.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have expanded our restaurant base from 21 restaurants in seven states in 2008 to 111 restaurants in 15 states as of February&nbsp;24,
2014. We opened 27 restaurants in 2013, and we plan to open 28 to 30 restaurants in 2014. We believe we are in the early stages of our growth story and estimate a long-term total restaurant potential
in the United States in excess of 1,600 locations. We utilize a sophisticated site selection process using proprietary methods to identify target markets and expansion opportunities within those
markets. Based on this analysis, we believe there is substantial development opportunity in both new and existing markets. We expect to double our restaurant base in approximately four years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increase Comparable Restaurant Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have consistently demonstrated strong comparable restaurant sales growth, and we intend to generate future comparable
restaurant sales growth with an emphasis on the following goals: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Heighten brand awareness to drive new customer
traffic.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We utilize a marketing strategy founded on inspiring brand advocacy rather than simply capturing customers through traditional
tactics such as limited time offers. Our highly-targeted marketing strategy seeks to generate brand loyalty and promote advocacy by appealing to customers' emotional needs: (i)&nbsp;their passion
for wholesome and flavorful food; (ii)&nbsp;their desire for simple solutions to make life more convenient; (iii)&nbsp;their focus on choices as a reflection of self; and (iv)&nbsp;their desire
to be a guest at their own party. We have a long history of generating new traffic growth at our restaurants through the application of targeted advertising messages, local restaurant-level marketing
and the word-of-mouth of our existing customers to build brand recognition in the markets we serve.<BR></FONT>
<BR>

<P style="font-family:arial;"><FONT SIZE=2>We
utilize a variety of channels to communicate brand messaging and build relationships with customers. Our digital strategy includes social media, online influencer programming and blogs hosted on
our website and microsite. Our social community, including Facebook, Pinterest, Instagram and Twitter, includes more than 140,000 users combined. In addition, customers can opt into our e-mail
marketing program or download our custom mobile LIFE app, which consists of 293,000 unique members combined. These programs enable us to segment and target messaging applicable to each of these
members. We also use traditional methods to appeal to customers inside our restaurants, including point of purchase displays and cashier incentive programs. We build brand awareness through
partnerships with schools and community partners, as well as complementary businesses that target our core customers. We will continue to leverage our catering business, promotional events and a
targeted menu sampling strategy as effective means to introduce customers </FONT></P>

</DD></DL>
</UL>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>5</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
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 <UL>
<UL>

<P style="font-family:arial;"><FONT SIZE=2>to
the Zo&euml;s Kitchen brand. We believe the continued implementation of our highly-targeted marketing strategy, combined with the core strengths of our brand, will increase brand
awareness, build long-term customer advocacy and drive incremental sales at our restaurants.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Increase existing customer
frequency.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We believe we will be able to continue to increase customer frequency by consistently providing fresh Mediterranean cuisine at
a compelling value. We intend to explore new menu additions by drawing upon the rich heritage and flavors of 21 Mediterranean countries and family recipes to enhance our offerings and encourage
frequency. We will continue to explore ways to increase the number of occasions (lunch, dinner and catering) and the flexibility of dining options (dine-in, to-go/take home, call-in and online) for
our customers to consume our food. We also plan to capitalize on the increasing demand for convenient, high-quality home meal replacement alternatives by expanding the food options in our
Zo&euml;s Fresh Take<SUP>TM</SUP> grab-and-go coolers and our family dinner menu offerings, which include a salad, entr&eacute;e and side items offered for approximately $30 for a
family of four.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Grow our catering business.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our
management team has developed innovative solutions, loyalty programs and a dedicated team of sales professionals to enhance our catering offering, which represented approximately 17% of our revenue
for 2013. We believe our strong catering offering is a significant competitive differentiator and generates consumer trial of our brand as well as provides our existing customers additional ways to
enjoy our food off-premise. We offer catering solutions for both business and social occasions, and we believe our hot and cold menu offerings differentiate our catering business as our food is
portable and conducive to travel. We are focused on making catering easier for our customers, which we believe helps to promote brand advocacy by allowing customers to be a guest at their own party.
We offer social catering solutions designed for our core customers' life events, including Zo&euml;s Party Packs, which are bundled catering packages for birthday parties, baby and bridal
showers, sporting and outdoor events, girls night out and family gatherings. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Improve Margins and Leverage Infrastructure.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have invested in our business, and we believe our corporate infrastructure can support a restaurant base greater
than our existing footprint. As we continue to grow, we expect to drive greater efficiencies in our supply chain and leverage our technology and existing support infrastructure. Additionally, we
believe we will be able to optimize labor costs at existing restaurants as our restaurant base matures and AUVs increase and leverage corporate costs over time to enhance margins as general and
administrative expenses grow at a slower rate than our restaurant base and revenues. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ca17901_risk_factors"> </A>
<A NAME="toc_ca17901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  RISK FACTORS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>An
investment in our common stock involves a high degree of risk. Any of the factors set forth under "Risk Factors" may limit our ability to successfully execute our business strategy. You should
carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in our
common stock. Below is a summary of some of the principal risks we face:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we may not be able to successfully implement our growth strategy if we are
unable to locate and secure appropriate sites for restaurant locations, obtain favorable lease terms, attract customers to our restaurants or hire and retain personnel; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>challenging economic conditions may affect our business by adversely
impacting numerous items that include, but are not limited to: consumer confidence and discretionary spending, the availability of credit presently arranged from our Credit Facility (as defined
herein), the future cost and availability of credit and the operations of our third-party vendors and other service providers; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>new restaurants may not be profitable, and we may not be able to maintain or
improve levels of our AUVs and comparable restaurant sales; </FONT></DD></DL>
</UL>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>6</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we rely heavily on certain vendors, suppliers and distributors, which could
adversely affect our business; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the restaurant industry is a highly competitive industry with many
well-established competitors; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we may face negative publicity or damage to our reputation, which could
arise from concerns regarding food safety and foodborne illness or other matters; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>legislation and regulations, as well as new information or attitudes
regarding diet and health could result in changes in regulations and consumer consumption habits that could adversely affect our business; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in food and supply costs or failure to receive frequent deliveries
of fresh food ingredients and other supplies could adversely affect our business; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our principal stockholders and their affiliates own a substantial portion of
our outstanding equity, and their interests may not always coincide with the interests of the other stockholders; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we will face increased costs as a result of being a public company. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ca17901_our_corporate_information"> </A>
<A NAME="toc_ca17901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  OUR CORPORATE INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We were incorporated in Delaware in October 2007 and currently exist as a Delaware corporation. Currently, we are a wholly owned subsidiary of Zoe's
Investors,&nbsp;LLC, ("Zoe's Investors"). On October&nbsp;31, 2007 Brentwood Associates and certain of its affiliated entities ("Brentwood") collectively became the majority unitholder of Zoe's
Investors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
connection with this offering, Zoe's Investors will distribute all of our shares of common stock held by it to its existing members in accordance with the units held by each member and pursuant to
the terms of Zoe's Investors' Limited Liability Company Agreement, as amended. The distribution
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock held by Zoe's Investors to its members will be
conducted
in the following manner: (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock to holders of
Class&nbsp;C Units in respect of such holders' unreturned capital investment; (ii)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of our common stock to holders of Class&nbsp;C Units in respect of the unpaid yield on such units; (iii)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock to holders of Class&nbsp;A Units
in respect of such holders' unreturned capital investment; (iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of our common stock to holders of Class&nbsp;A Units in respect of the unpaid yield on such units; and
(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock to holders of Class&nbsp;A Units,
Class&nbsp;B Units and Class&nbsp;C Units on a pro rata basis; provided, however, that pursuant to this
clause&nbsp;(v), the holders of Class&nbsp;B Units will participate only after a total
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock have been distributed to the holders of
Class&nbsp;A Units
and Class&nbsp;C Units pursuant to this clause&nbsp;(v). The foregoing distribution is based upon an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the
midpoint of the
estimated offering price range set forth on the cover page of this prospectus and gives effect to
the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;-for-1 stock split of our common stock, which will be effected prior to the
completion of this offering. The amount of common stock distributed to each member of Zoe's Investors of the
total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock held by Zoe's Investors is subject to
change based on any changes to the initial public offering price and the date of the pricing of this offering. It is currently contemplated that Zoe's Investors will be dissolved shortly following the
distribution and the completion of the offering. The foregoing transactions are herein called the "Distribution Transactions." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
principal executive offices are located at 5700 Granite Parkway, Granite Park Building #2, Suite&nbsp;455, Plano, Texas 75024. Our telephone number is (205)&nbsp;414-9920. The address of our
main website is </FONT><FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2>. The information contained in or that can be accessed through our website does not constitute a part of, and is not
incorporated by reference into, this prospectus. </FONT></P>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>7</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
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<A NAME="toc_ca17901_4"> </A>
<BR></FONT><FONT SIZE=2><B>  ORGANIZATIONAL STRUCTURE    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The chart below illustrates our current basic corporate structure and our basic corporate structure upon completion of this offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>
<IMG SRC="g817053.jpg" ALT="GRAPHIC" WIDTH="403" HEIGHT="150">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ca17901_equity_sponsor"> </A>
<A NAME="toc_ca17901_5"> </A>
<BR></FONT><FONT SIZE=2><B>  EQUITY SPONSOR    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Brentwood is a leading consumer-focused private equity investment firm with over $800&nbsp;million of capital under management as of
December&nbsp;30, 2013 and a 30-year history of investing in leading middle-market growth companies. Brentwood focuses on investments in growing businesses in areas such as: branded consumer
products; consumer services; direct marketing, including direct mail and e-commerce; education; health and wellness; restaurants; and specialty retail. Since 1984, Brentwood's dedicated private equity
team has invested in 43&nbsp;portfolio companies with an aggregate transaction value of over $5&nbsp;billion. Immediately following the consummation of this offering, Brentwood will own
approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common stock, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters' option to purchase additional shares of our common stock is exercised
in full based on an initial public
offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ca17901_implications_of_being_an_emerging_growth_company"> </A>
<A NAME="toc_ca17901_6"> </A>
<BR></FONT><FONT SIZE=2><B>  IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We qualify as an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company
may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions
include:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a requirement to have only two years of audited financial statements and
only two years of related selected financial data and management's discussion and analysis of financial condition and results of operations disclosure; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an exemption from the auditor attestation requirement in the assessment of
our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an exemption from new or revised financial accounting standards until they
would apply to private companies and from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reduced disclosure about the emerging growth company's executive
compensation arrangements; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>no requirement to seek non-binding advisory votes on executive compensation
or golden parachute arrangements. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>The
JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to
"opt out" of this provision, and as a result, we plan to comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period
is irrevocable. </FONT></P>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>8</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
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 <P style="font-family:arial;"><FONT SIZE=2>We
have elected to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of these elections, the information that we provide in this prospectus may
be different than the information you may receive from other public companies in which you hold equity interests. In addition, it is possible that some investors will find our common stock less
attractive as a result of our elections, which may result in a less active trading market for our common stock and more volatility in our stock price. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
may take advantage of these provisions until we are no longer an emerging growth company. We will remain an emerging growth company until the earlier of (1)&nbsp;the last day of the fiscal year
(a)&nbsp;following the fifth anniversary of the completion of this offering, (b)&nbsp;in which we have total annual gross revenue of at least $1.0&nbsp;billion or (c)&nbsp;in which we are
deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700&nbsp;million as of the last business day of our prior second
fiscal quarter, and (2)&nbsp;the date on which we have issued more than $1.0&nbsp;billion in non-convertible debt during the prior three-year period. We may choose to take advantage of some but
not all of these reduced disclosure requirements. </FONT></P>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>9</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="cc17901_the_offering"> </A>
<A NAME="toc_cc17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  THE OFFERING    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Issuer</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Zoe's Kitchen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock offered by us</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriters' option to purchase additional shares</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We have granted the underwriters a 30-day option to purchase up to an
additional&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock to be outstanding immediately after completion of this offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Immediately following the consummation of this offering, we will
have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding,
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares if the underwriters' option to purchase additional shares of our common stock is exercised in
full.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Use of proceeds</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We estimate that the net proceeds to us from this offering, after deducting the underwriting discount and
estimated offering expenses payable by us, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the underwriters' option to purchase additional shares of our common stock is exercised in full, assuming the
shares offered by us are sold for $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on
the cover of this prospectus.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We intend to use the net proceeds from the sale of common stock by us in this offering (i)&nbsp;to repay the
entire amount of the outstanding borrowings under our Credit Facility, (ii)&nbsp;to continue to support our growth, primarily through opening new restaurants, and (iii)&nbsp;for working capital and general corporate purposes. For additional
information, see "Use of Proceeds."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dividend policy</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We currently intend to retain all available funds and any future earnings to fund the development and growth of
our business and to repay indebtedness, and therefore, we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare and pay cash dividends will be at the discretion of our Board of Directors and will
depend on, among other things, our financial condition, results of operations, cash requirements, contractual restrictions and such other factors as our Board of Directors deems relevant. In addition, our Credit Facility restricts our ability to pay
dividends. For additional information, see "Dividend Policy."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Listing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>We have applied to list our common stock on the New York Stock Exchange under the symbol "ZOES."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk factors</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p align=left style="font-family:arial;margin-top:12pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page&nbsp;18 of
this prospectus for a discussion of factors you should carefully consider before investing in our common stock.</FONT></TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">
 <P style="font-family:arial;"><FONT SIZE=2>Unless otherwise indicated, all information in this prospectus assumes or gives effect to:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-for-1 stock split of our common stock, which will be
effected prior to the completion of this offering; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the filing and effectiveness of our amended and restated certificate of
incorporation and amended and restated bylaws, which we will adopt immediately prior to the completion of this offering; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the Distribution Transactions; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the exclusion of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock
issuable upon
the exercise of stock options to be issued to certain officers, directors, employees and consultants with an exercise price equal to the initial public offering price; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>no exercise by the underwriters of their option to purchase up to
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares from us; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the
midpoint of the estimated offering price range set forth on the cover of this prospectus. </FONT></DD></DL>
</UL>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>11</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">
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NAME="ce17901_summary_historical_con__ce102288"> </A>
<A NAME="toc_ce17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents our summary historical consolidated financial data and certain other financial data. The consolidated statement of
operations and consolidated statement of cash flows data for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011 have been derived from our historical
audited consolidated financial statements, which are included in this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
operate on a 52-or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of 52&nbsp;weeks, with the exception of the fiscal year ended
December&nbsp;31, 2012, which consisted of 53&nbsp;weeks. Our first fiscal quarter consists of 16&nbsp;weeks, and each of our second, third and fourth fiscal
quarters consist of 12&nbsp;weeks, except for a 53-week year when the fourth quarter has 13&nbsp;weeks. We refer to our fiscal years as 2013, 2012 and 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
consolidated financial data and other financial data presented below should be read in conjunction with the sections entitled "Selected Historical Consolidated Financial and Other Data,"
"Management's Discussion and Analysis of Financial Condition and Results of Operations," and our audited and unaudited consolidated financial statements and the related notes thereto included
elsewhere in this prospectus. The following table does not give effect to the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-for-1 stock split of our common stock, which will be effected prior to the completion of the offering. Our
historical consolidated financial data may not be indicative of our future performance. </FONT></P>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>12</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> </i></font></p>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands, except per share data)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Consolidated Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Revenue:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Restaurant sales</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">115,748</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78,966</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">49,193</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Franchise and royalty fees</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">637</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">757</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">984</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total revenue</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">116,385</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">79,724</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">50,177</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Operating expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Restaurant operating costs:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cost of sales (excluding depreciation and amortization)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">38,063</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25,845</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,756</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Labor</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">32,810</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21,567</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13,424</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Store operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21,780</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">14,610</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,596</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">General and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13,172</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,969</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,384</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Depreciation</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,862</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,779</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,840</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,601</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,091</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">585</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pre-opening costs</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,938</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">917</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">806</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Loss (gain) from disposal of equipment</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">175</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">240</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">115,401</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">77,018</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">49,387</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">985</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,706</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">790</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Other expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,019</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,337</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,248</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Loss on interest cap</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Bargain purchase gain from acquisitions</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(541</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total other expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,044</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,337</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">707</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Income (loss) before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,059</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">369</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">83</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">656</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">110</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Net loss</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,715</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(253</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(27</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><I>Net loss per share:</I></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(269</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(269</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><I>Weighted average shares outstanding:</I></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><I>Adjusted net income (loss) per common share<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font>:</I></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><I>Adjusted pro forma weighted average number of common shares outstanding<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font>:</I></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Consolidated Statement of Cash Flows Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash provided by operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,924</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,796</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,764</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash used in investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(28,242</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(21,283</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(13,519</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash provided by financing activities</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16,017</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,130</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,600</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>As of December&nbsp;30, 2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Actual </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Pro Forma<BR>
As Adjusted<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Balance Sheet Data:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,149</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Property and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78,629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">119,937</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total debt<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">61,650</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total stockholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">33,579</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Other Operating Data:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Company-owned restaurants at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">94</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Franchise restaurants at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Company-owned:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Average unit volume</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,470</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,421</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,299</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Comparable restaurant sales growth</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11.8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Restaurant contribution<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23,095</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16,966</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,418</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">as a percentage of restaurant sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20.0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(5)</font></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,153</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,440</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">as a percentage of revenue</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10.8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Capital expenditures</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">28,267</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,462</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,959</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted
net income (loss) per common share reflects: (i)&nbsp;the elimination of the fees paid to Brentwood pursuant to the Corporate
Development and Administrative Services Agreement and fees paid to Greg Dollarhyde pursuant to the Consulting Agreement, each as defined herein, (ii)&nbsp;the net decrease in interest expense
resulting from the repayment of the entire amount of the outstanding borrowings under our Credit Facility with the net proceeds from this offering, as described in "Use of Proceeds," and
(iii)&nbsp;increases in income tax expense due to higher income before income taxes resulting from the elimination of the annual management fee and consulting fee as a result of the termination of
the Corporate Development and Administrative Services Agreement and the Consulting Agreement described in (i)&nbsp;above and a decrease in interest expense as a result of repayments of the entire
amount of the outstanding borrowings under our Credit Facility as described in (ii)&nbsp;above as if each of these events had occurred on January&nbsp;1, 2013. Adjusted basic net income (loss) per
common share consists of adjusted net income (loss) divided by the adjusted pro forma basic weighted average common stock outstanding. Adjusted diluted net income (loss) per common share consists of
adjusted net income (loss) divided by the adjusted pro forma diluted weighted average common stock outstanding.  </FONT>
<BR>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted
pro forma per share data gives effect to (i)&nbsp;the Distribution Transactions, as described in "&#151;Our Corporate Information," and (ii)
&nbsp;the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our
common stock issued by us in this offering at an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which represents the midpoint of the estimated offering price
range set forth on the cover
page of this prospectus, as if each of these events had occurred on January&nbsp;1, 2013. </FONT></P>

</DD></DL>
 </DIV>

 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>14</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> </i></font></p>
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<DT style='font-family:arial;margin-bottom:-11pt;'><BR></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">The
following is a reconciliation of historical net loss to adjusted net income (loss) for 2013:

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<DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:159pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(Dollars in thousands, except per share data)

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Year&nbsp;Ended<BR>
December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net loss, as reported</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Management and consulting fees and expenses<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(a)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Decrease in interest expense<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(b)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Increase in income tax expense<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(c)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted net income (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted pro forma weighted average common stock outstanding<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(d)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted Basic net income (loss) per share</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted Diluted net income (loss) per share</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">


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</FONT>
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<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(a)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Management
and consulting fees and expenses represent fees paid to Brentwood pursuant to the Corporate Development and Administrative Services
Agreement and fees paid to Greg Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions&#151;Corporate Development and Administrative Services
Agreement" and "Certain Relationships and Related Party Transactions&#151;Consulting Agreement."
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(b)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Reflects
the adjustment to interest expense resulting from the repayment of the entire amount of the outstanding borrowings under our Credit
Facility with the net proceeds of this offering as if these transactions occurred on January&nbsp;1, 2013 and assumes no borrowings under our Credit Facility during the period presented. This
interest adjustment was calculated by reversing the historical interest expense related to borrowings under our Credit Facility.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(c)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Reflects
no adjustment to income tax expense as a result of the transactions described in (a) and (b) above because as of December&nbsp;30,
2013 we had federal net operating loss carryforwards of $15.9&nbsp;million and state net operating loss carryforwards of $13.5&nbsp;million that would have offset any increase in income tax
expense as a result of the transactions described in (a) and (b)&nbsp;above.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(d)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Reflects
the (i)&nbsp;Distribution Transactions and (ii)&nbsp;issuance of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional
shares of common stock in this
offering, as if all these transactions occurred at January&nbsp;1, 2013 and were outstanding during the entire period presented. Diluted weighted average common stock outstanding reflects the
dilutive effect of our outstanding options and the conversion of our Class&nbsp;B Units using the "if-converted" method except when assumed conversion would be anti-dilutive. </FONT></DD></DL>
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Pro
forma balance sheet data give effect to (i)&nbsp;the Distribution Transactions, (ii)&nbsp;the filing and effectiveness of our amended
and restated certificate of incorporation and amended and restated bylaws, which we will adopt prior to the completion of this offering and (iii)&nbsp;this offering and the use of proceeds therefrom
as described in "Use of Proceeds," assuming the shares offered by us are sold for $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on the cover page of this
prospectus, after deducting the underwriting discounts and estimated offering expenses payable by us.  </FONT>
<BR>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">A
$1.00 increase (decrease) in the assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the estimated offering price range set
forth on the cover page of this
prospectus, would increase (decrease) each of cash and cash equivalents, total assets and total stockholders' equity by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, respectively, assuming
the number of shares offered by us as stated on the cover page of this prospectus remains unchanged and after deducting the estimated underwriting discounts and estimated offering expenses payable by
us. Similarly, a one million share increase (decrease) in the number of shares offered by us, as set
forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, total assets and total stockholders' equity by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, respectively, assuming the assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share (the midpoint of the price range set forth on the cover page of
this prospectus)
remains the same, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us.  </FONT></P>

</DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
interest-bearing debt, residual value obligations and deemed landlord financing.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Restaurant
contribution is defined as restaurant sales less restaurant operating costs, which are cost of sales, labor, and store operating
expenses.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(5)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">EBITDA
is defined as net loss before interest, income taxes and depreciation and amortization. </FONT></DD></DL>
 </DIV>

 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
</DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>15</FONT></P>

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<A NAME="page_ce17901_1_16"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
 <UL>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted
EBITDA is defined as EBITDA plus equity-based compensation expense, bargain purchase gain from acquisitions, management and consulting fees, asset disposals, closure costs, loss on interest
cap and restaurant impairment and pre-opening costs. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, generally
accepted accounting principles in the United States ("GAAP"). We believe that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business
trends relating to our financial condition and operating results. Our management uses EBITDA and Adjusted EBITDA (i)&nbsp;as a factor in evaluating management's performance when determining
incentive compensation and (ii)&nbsp;to evaluate the effectiveness of our business strategies.  </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">We
believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial
measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the
future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not
calculate Adjusted EBITDA in the same fashion. Moreover, our definitions of EBITDA and Adjusted EBITDA as presented throughout this prospectus are not the same as these or similar terms in the
applicable covenants of our Credit Facility.  </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Our
management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted
EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations are: </FONT></P>

</UL>
 </DIV>
 <UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect our cash expenditures, or
future requirements, for capital expenditures or contractual commitments; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect the interest expense, or
the cash requirements necessary to service interest or principal payments, on our debts; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">equity-based compensation expense is and will remain a key
element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect the impact of certain cash
charges resulting from matters we consider not to be indicative of our ongoing operations; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">other companies in our industry may calculate Adjusted
EBITDA differently than we do, limiting its usefulness as a comparative measure.  </FONT>
<BR>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;&nbsp;Because
of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of net loss to EBITDA and Adjusted </FONT></P>

</DD></DL>
</UL>
 <p style="font-family:arial;"><font style="font-size:1pt;line-height:1pt;">&nbsp;</font></p>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>16</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>


<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><I> </i></font></p>
<DIV style="width:100%;border:#000000 solid 1pt;padding-top:12pt;padding-right:12pt;padding-bottom:1pt;padding-left:12pt;">
 <UL>
<UL>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">EBITDA
below and not rely on any single financial measure to evaluate our business. <BR>
The following table reconciles net loss to EBITDA and Adjusted EBITDA for 2013, 2012 and 2011: </FONT></P>

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</UL>
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<p style="font-family:arial;"></FONT></P>

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<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted EBITDA:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net loss, as reported</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,715</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(253</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(27</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,462</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,870</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,426</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,019</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,337</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,248</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">656</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">110</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,422</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,576</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,757</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Asset disposals, closure costs, loss on interest cap and restaurant impairment<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(a)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">200</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">240</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Management and consulting fees<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(b)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">265</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">294</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">232</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Equity-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">73</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">126</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">190</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pre-opening costs<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(c)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,938</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">917</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">806</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Bargain purchase gain from acquisitions<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(d)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(541</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,899</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,153</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,440</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(a)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment, loss on interest cap and
restaurant closure expenses.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(b)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
fees payable to Brentwood pursuant to the Corporate Development and Administrative Services Agreement and fees paid to Greg
Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions&#151;Corporate Development and Administrative Services Agreement" and "Certain
Relationships and Related Party Transactions&#151;Consulting Agreement."
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(c)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
expenses directly associated with the opening of new restaurants that are incurred prior to opening, including pre-opening
rent.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(d)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
the excess of the fair value of net assets acquired over the purchase price related to our acquisitions of the Houston franchise
restaurants. </FONT></DD></DL>
 </DIV>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="RISK"></A> </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  RISK FACTORS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>Investing in our common stock involves a high degree of risk. Before you purchase our common stock, you should carefully
consider the risks described below and the other information contained in this prospectus, including our consolidated financial statements and accompanying notes. If any of the following risks
actually occurs, our business, financial condition, results of operations or cash flows could be materially adversely affected. In any such case, the trading price of our common stock could decline,
and you could lose all or part of your investment.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Risks Related to Our Business and Industry  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our long-term success is highly dependent on our ability to open new restaurants and is subject to many unpredictable factors.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>One of the key means of achieving our growth strategy will be through opening new restaurants and operating those restaurants on a profitable basis.
We expect this to be the case for the foreseeable future. In 2013, we opened 27 restaurants and we plan to open 28 to 30 restaurants in 2014. We may not be able to open new restaurants as quickly as
planned. In the past, we have experienced delays in opening some restaurants, including due to the landlord's failure to turn over the premises to us on a timely basis. Such delays could happen again
in future restaurant openings. Delays or failures in opening new restaurants could materially and adversely affect our growth strategy and our business, financial condition and results of operations.
As we operate more restaurants, our rate of expansion relative to the size of our restaurant base will eventually decline. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, one of our biggest challenges is locating and securing an adequate supply of suitable new restaurant sites in our target markets. Competition for those sites is intense, and other
restaurant and retail concepts that compete for those sites may have unit economic models that permit them to bid more aggressively for those sites than we can. There is no guarantee that a sufficient
number of suitable sites will be available in desirable areas or on terms that are acceptable to us in order to achieve our growth plan. Our ability to open new restaurants also depends on other
factors, including:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>negotiating leases with acceptable terms; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>identifying, hiring and training qualified employees in each local market; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>timely delivery of leased premises to us from our landlords and punctual
commencement of our build-out construction activities; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>managing construction and development costs of new restaurants, particularly
in competitive markets; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>obtaining construction materials and labor at acceptable costs, particularly
in urban markets; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>unforeseen engineering or environmental problems with leased premises; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>generating sufficient funds from operations or obtaining acceptable
financing to support our future development; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>securing required governmental approvals, permits and licenses (including
construction permits and liquor licenses) in a timely manner and responding effectively to any changes in local, state or federal laws and regulations that adversely affect our costs or ability to
open new restaurants; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>avoiding the impact of inclement weather, natural disasters and other
calamities. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>Our
progress in opening new restaurants from quarter to quarter may occur at an uneven rate. If we do not open new restaurants in the future according to our current plans, the delay could materially
adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to develop new restaurants in our existing markets, expand our footprint into adjacent markets and selectively enter into new markets. However, there are numerous factors involved in
identifying and securing an appropriate site, including, but not limited to: identification and availability of suitable </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>18</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>locations
with the appropriate population demographics, traffic patterns, local retail and business attractions and infrastructure that will drive high levels of customer traffic and sales per
restaurant; consumer tastes in new geographic locations and acceptance of our restaurant concept; financial conditions affecting developers and potential landlords, such as the effects of
macro-economic conditions and the credit market, which could lead to
these parties delaying or canceling development projects (or renovations of existing projects), in turn reducing the number of appropriate locations available; developers and potential landlords
obtaining licenses or permits for development projects on a timely basis; anticipated commercial, residential and infrastructure development near our new restaurants; and availability of acceptable
lease arrangements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
may not be able to successfully develop critical market presence for our brand in new geographical markets, as we may be unable to find and secure attractive locations, build name recognition or
attract new customers. If we are unable to fully implement our development plan, our business, financial condition and results of operations could be materially adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our expansion into new markets may present increased risks.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We plan to open restaurants in markets where we have little or no operating experience. Restaurants we open in new markets may take longer to reach
expected sales and profit levels on a consistent basis and may have higher construction, occupancy or operating costs than restaurants we open in existing markets, thereby affecting our overall
profitability. New markets may have competitive conditions, consumer tastes and discretionary spending patterns that are more difficult to predict or satisfy than our existing markets. We may need to
make greater investments than we originally planned in advertising and promotional activity in new markets to build brand awareness. We may find it more difficult in new markets to hire, motivate and
keep qualified employees who share our vision, passion and culture. We may also incur higher costs from entering new markets if, for example, we assign regional managers to manage comparatively fewer
restaurants than in more developed markets. As a result, these new restaurants may be less successful or may achieve target AUVs at a slower rate. If we do not successfully execute our plans to enter
new markets, our business, financial condition and results of operations could be materially adversely affected. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Changes in economic conditions and adverse weather and other unforeseen conditions could materially affect our ability to maintain or increase sales at our restaurants or
open new restaurants.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The restaurant industry depends on consumer discretionary spending. The United States in general or the specific markets in which we operate may
suffer from depressed economic activity, recessionary economic cycles, higher fuel or energy costs, low consumer confidence, high levels of unemployment, reduced home values, increases in home
foreclosures, investment losses, personal bankruptcies, reduced access to credit or other economic factors that may affect consumer discretionary spending. Traffic in our restaurants could decline if
consumers choose to dine out less frequently or reduce the amount they spend on meals while dining out. Negative economic conditions might cause consumers to make long-term changes to their
discretionary spending behavior, including dining out less frequently on a permanent basis. In addition, given our geographic concentrations in the South, South-East and Mid-Atlantic regions of the
United States, economic conditions in those particular areas of the country could have a disproportionate impact on our overall results of operations, and regional occurrences such as local strikes,
terrorist attacks, increases in energy prices, adverse
weather conditions, tornadoes, earthquakes, hurricanes, floods, droughts, fires or other natural or man-made disasters could materially adversely affect our business, financial condition and results
of operations. Adverse weather conditions may also impact customer traffic at our restaurants, and, in more severe cases, cause temporary restaurant closures, sometimes for prolonged periods. All of
our restaurants have outdoor seating, and the effects of adverse weather may impact the use of these areas and may negatively impact our revenues. If restaurant sales decrease, our profitability could
decline as we spread fixed costs across a lower level of sales. Reductions in staff levels, asset impairment charges and potential restaurant closures could result from prolonged negative restaurant
sales, which could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>19</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> New restaurants, once opened, may not be profitable, and the increases in average restaurant sales and comparable restaurant sales that we have experienced in the past may
not be indicative of future results.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Some of our restaurants open with an initial start-up period of higher than normal sales volumes, which subsequently decrease to stabilized levels.
Typically, our new restaurants have stabilized sales after approximately 12 to 24&nbsp;weeks of operation, at which time the restaurant's sales typically begin to grow on a consistent basis.
However, we cannot assure you that this will occur for future restaurant openings. In new markets, the length of time before average sales for new restaurants stabilize is less predictable and can be
longer as a result of our limited knowledge of these markets and consumers' limited awareness of our brand. New restaurants may not be profitable and their sales performance may not follow historical
patterns. In addition, our average restaurant sales and comparable restaurant sales may not increase at the rates achieved over the past several years. Our ability to operate new restaurants
profitably and increase average restaurant sales and comparable restaurant sales will depend on many factors, some of which are beyond our control, including:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>consumer awareness and understanding of our brand; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>general economic conditions, which can affect restaurant traffic, local
labor costs and prices we pay for the food products and other supplies we use; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in consumer preferences and discretionary spending; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>competition, either from our competitors in the restaurant industry or our
own restaurants; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>temporary and permanent site characteristics of new restaurants; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in government regulation; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>other unanticipated increases in costs, any of which could give rise to
delays or cost overruns. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>If
our new restaurants do not perform as planned, our business and future prospects could be harmed. In addition, if we are unable to achieve our expected average restaurant sales, our business,
financial condition and results of operations could be adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our sales growth and ability to achieve profitability could be adversely affected if comparable restaurant sales are less than we expect.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The level of comparable restaurant sales, which represent the change in year-over-year sales for restaurants open for at least 18 full periods, will
affect our sales growth and will continue to be a critical factor affecting our ability to generate profits because the profit margin on comparable restaurant sales is generally higher than the profit
margin on new restaurant sales. Our ability to increase comparable restaurant sales depends in part on our ability to successfully implement our initiatives to build sales. It is possible such
initiatives will not be successful, that we will not achieve our target comparable restaurant sales growth or that the change in comparable restaurant sales could be negative, which may cause a
decrease in sales growth and ability to achieve profitability that would materially adversely affect our business, financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations&#151;Key Measures We Use to Evaluate Our Performance&#151;Comparable Restaurant Sales Growth." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Our failure to manage our growth effectively could harm our business and operating results.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our growth plan includes a significant number of new restaurants. Our existing restaurant management systems, administrative staff, financial and
management controls and information systems may be inadequate to support our planned expansion. Those demands on our infrastructure and resources may also adversely affect our ability to manage our
existing restaurants. Managing our growth effectively will require us to continue to enhance these systems, procedures and controls and to hire, train and retain managers and team members. We may not
respond quickly enough to the changing demands that our expansion will impose on our management, restaurant teams and existing infrastructure which could harm our business, financial condition and
results of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>20</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
believe our culture, from the restaurant-level up through management, is an important contributor to our growth. As we grow, however, we may have difficulty maintaining our culture or adapting it
sufficiently to meet the needs of our operations. Among other important factors, our culture depends on our ability to attract, retain and motivate employees who share our enthusiasm and dedication to
our concept. Historically, qualified individuals have been in short supply and our inability to attract and retain them would limit the success of our new restaurants, as well as our existing
restaurants. Our business, financial condition and results of operations could be materially adversely affected if we do not maintain our infrastructure and culture as we grow. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We have experienced net losses in the past, and we may experience net losses in the future.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We experienced net losses of $3.7&nbsp;million, $0.3&nbsp;million and $0.03&nbsp;million in 2013, 2012 and 2011, respectively. We may experience
net losses in the future, and we cannot assure you that we will achieve profitability in future periods. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of December&nbsp;30, 2013, we had federal net operating loss carryforwards of $15.9&nbsp;million and state net operating loss carryforwards of
$13.5&nbsp;million. Under Sections&nbsp;382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change," the corporation's ability to
use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. In general, an "ownership change" generally occurs if there is
a cumulative change in our ownership by "5-percent shareholders" that exceeds 50&nbsp;percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We may have
experienced an ownership change in the past and may experience ownership changes in the future as a result of this issuance or future transactions in our stock, some of which may be outside our
control. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards, or other pre-change tax attributes, to offset U.S. federal and state taxable
income may be subject to significant limitations. Those net operating loss carryforwards resulted in a deferred tax asset of $6.0&nbsp;million at December&nbsp;30, 2013. A&nbsp;full valuation
allowance of $6.8&nbsp;million is recorded against the net deferred tax assets, exclusive of indefinite-lived intangibles, including these carryforwards. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> The planned rapid increase in the number of our restaurants may make our future results unpredictable.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In 2013, we opened 27 restaurants, and we plan to open 28 to 30 restaurants in 2014. We intend to continue to increase the number of our restaurants
in the next several years. This growth strategy and the substantial investment associated with the development of each new restaurant may cause our operating results to fluctuate and be unpredictable
or adversely affect our profits. Our future results depend on various factors, including successful selection of new markets and restaurant locations, local market acceptance of our restaurants,
consumer recognition of the quality of our food and willingness to pay our prices, the quality of our operations and general economic conditions. In addition, as has happened when other restaurant
concepts have tried to expand, we may find that our concept has limited appeal in new markets or we may experience a decline in the popularity of our concept in the markets in which we operate. Newly
opened restaurants or our future markets and restaurants may not be successful or our system-wide average restaurant sales may not increase at historical rates, which could materially adversely affect
our business, financial condition and results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Opening new restaurants in existing markets may negatively affect sales at our existing restaurants.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The consumer target area of our restaurants varies by location, depending on a number of factors, including population density, other local retail and
business attractions, area demographics and geography. As a result, the opening of a new restaurant in or near markets in which we already have restaurants could adversely affect sales at these
existing restaurants. Existing restaurants could also make it more difficult to build our consumer base for a new restaurant in the same market. Our core business strategy does not </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>21</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>entail
opening new restaurants that we believe will materially affect sales at our existing restaurants, but we may selectively open new restaurants in and around areas of existing restaurants that
are operating at or near capacity to effectively serve our customers. Sales cannibalization between our restaurants may become significant in the future as we continue to expand our operations and
could affect our sales growth, which could, in turn, materially adversely affect our business, financial condition and results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> We face significant competition from other restaurant companies, and our inability to compete effectively may affect our traffic, sales and restaurant contribution.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The restaurant industry is intensely competitive with many well-established companies that compete directly and indirectly with us. We compete in the
restaurant industry with national, regional and locally-owned limited service restaurants and full-service restaurants. We face competition from the casual dining, quick-service and fast casual
segments of the restaurant industry. These segments are highly competitive with respect to, among other things, taste, price, food quality and presentation, service, location and the ambience and
condition of each restaurant. Our competition includes a variety of locally owned restaurants and national and regional chains offering dine-in, carry-out, delivery and catering services. Many of our
competitors have existed longer and have a more established market presence with substantially greater financial, marketing, personnel and other resources than we do. Among our competitors are a
number of multi-unit, multi-market fast casual restaurant concepts, some of which are expanding nationally. As we expand, we will face competition from these concepts as well as new competitors that
strive to compete with our market segments. For example, additional competitive pressures come from the deli sections and in-store caf&eacute;s of grocery store chains, as well as from
convenience stores and online meal preparation sites. These competitors may have, among other things, lower operating costs, better locations, better facilities, better management, more effective
marketing and more efficient operations. Additionally, we face the risk that new or existing competitors will copy our business model, menu options, presentation or ambiance, among other things. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Several
of our competitors compete by offering menu items that are specifically identified as organic, GMO free or healthier for consumers. Many of our quick-service restaurant competitors offer
lower-priced menu options. Any inability to successfully compete with the restaurants in our markets will place downward pressure on our customer traffic and may prevent us from increasing or
sustaining our revenues and profitability. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, number and location of competing restaurants often affect the restaurant
business, and our competitors may react more efficiently and effectively to those conditions. Our sales could decline due to changes in popular tastes, "fad" food regimens, such as low carbohydrate
diets, and media attention on new restaurants. If we are unable to continue to compete effectively, our traffic, sales and restaurant contribution could decline and our business, financial condition
and results of operations would be adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Damage to our reputation could negatively impact our business, financial condition and results of operations.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our growth is dependent in part upon our ability to maintain and enhance the value of our brand, consumers' connection to our brand and positive
relationships with our franchisees. We believe we have built our reputation on the high-quality of our food, service and staff, as well as on our culture and the ambience in our restaurants, and we
must protect and grow the value of our brand to continue to be successful in the future. Any incident that erodes consumer affinity for our brand could significantly reduce its value and damage our
business. For example, our brand value could suffer and our business could be adversely affected if customers perceive a reduction in the quality of our food, service or staff, or an adverse change in
our culture or ambience, or otherwise believe we have failed to deliver a consistently positive experience. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
may be adversely affected by news reports or other negative publicity regardless of their accuracy, regarding food quality issues, public health concerns, illness, safety, injury, customer
complaints or litigation, health inspection scores, integrity of our or our suppliers' food processing, employee relationships </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>or
government or industry findings concerning our restaurants, restaurants operated by other foodservice providers or others across the food industry supply chain. The risks associated with such
negative publicity cannot be completely eliminated or mitigated and may materially harm our results of operations and result in damage to our brand. For multi-location food service businesses such as
ours, the negative impact of adverse publicity relating to one restaurant or a limited number of restaurants may extend far beyond the restaurants or franchises involved to affect some or all of our
other restaurants or franchises. The risk of negative publicity is particularly great with respect to our franchised restaurants because we are limited in the manner in which we can regulate them,
especially on a real-time basis. A similar risk exists with respect to unrelated food service businesses, if consumers associate those businesses with our own operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful termination may also create negative publicity that could
adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. A significant increase in the number of these
claims or an increase in the number of successful claims could materially adversely affect our business, financial condition and results of operations. Consumer demand for our products and our brand's
value could diminish significantly if any such incidents or other matters create negative publicity or otherwise erode consumer confidence in us or our products, which would likely result in lower
sales and could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Also,
there has been a marked increase in the use of social media platforms and similar devices, including weblogs (blogs), social media websites, Twitter and other forms of Internet-based
communications which allow individuals access to a broad audience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate as is its
impact. Many social media platforms immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted. The opportunity for
dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning our company may be posted on such platforms at any time.
Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity
for redress or correction. Such platforms also could be used for dissemination of trade secret information, compromising valuable company assets. In summary, the dissemination of information online
could harm our business, prospects, financial condition and results of operations, regardless of the information's accuracy. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business, financial condition and results of operations.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are subject to various federal, state and local regulations, including those relating to building and zoning requirements and those relating to the
preparation and sale of food. The development and operation of restaurants depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use,
environmental, traffic and other regulations and requirements. Our restaurants are also subject to state and local licensing and regulation by health, alcoholic beverage, sanitation, food and
occupational safety and other agencies. We may experience material difficulties or failures in obtaining the necessary licenses, approvals or permits for our restaurants, which could delay planned
restaurant openings or affect the operations at our existing restaurants. In addition, stringent and varied requirements of local regulators with respect to zoning, land use and environmental factors
could delay or prevent development of new restaurants in particular locations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are subject to the U.S. Americans with Disabilities Act (the "ADA") and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public
accommodations and other areas, including our restaurants. We may in the future have to modify restaurants by adding access ramps or redesigning certain architectural fixtures, for example, to provide
service to or make reasonable accommodations for disabled persons. The expenses associated with these modifications could be material. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Our operations are also subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, the U.S. Fair Labor Standards Act, which governs such
matters as minimum wages and overtime, and a variety of similar federal, state and local laws that govern these and other employment law matters. We and our franchisees may also be subject to lawsuits
from our employees, the U.S. Equal Employment Opportunity Commission or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar
matters, and we have been party to such matters in the past. In addition, federal, state and local proposals related to paid sick leave or similar matters could, if implemented, materially adversely
affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There
is also a potential for increased regulation of certain food establishments in the United States, where compliance with a Hazard Analysis and Critical Control Points ("HACCP") approach would be
required. HACCP refers to a management system in which food safety is addressed through the analysis and control of potential hazards from production, procurement and handling, to manufacturing,
distribution and consumption of the finished product. Many states have required restaurants to develop and implement HACCP Systems, and the United States government continues to expand the sectors of
the food industry that must adopt and implement HACCP programs. For example, the Food Safety Modernization Act (the "FSMA"), signed into law in January 2011, granted the FDA new authority regarding
the safety of the entire food system, including through increased inspections and mandatory food recalls. Although restaurants are specifically exempted from or not directly implicated by some of
these new requirements, we anticipate that the new requirements may impact our industry. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the
availability of certain products, result in adverse publicity or require us to take actions that could be costly for us or otherwise impact our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future
laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and, therefore, have an
adverse effect on our results of operations. Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of
required licenses, administrative enforcement actions, fines and civil and criminal liability. In addition, certain laws, including the ADA, could require us to expend significant funds to make
modifications to our restaurants if we failed to comply with applicable standards. Compliance with the aforementioned laws and regulations can be costly and can increase our exposure to litigation or
governmental investigations or proceedings. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Legislation and regulations requiring the display and provision of nutritional information for our menu offerings, and new information or attitudes regarding diet and health
could result in changes in regulations and consumer consumption habits that could adversely affect our results of operations.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Regulations and consumer eating habits may change as a result of new information or attitudes regarding diet and health or new information regarding
the adverse health effects of consuming certain menu offerings. Such changes may include federal, state and local regulations that impact the ingredients and nutritional content of the food and
beverages we offer. The growth of our restaurant operations is dependent, in part, upon our ability to effectively respond to changes in any consumer health regulations and our ability to adapt our
menu offerings to trends in food consumption. If consumer health regulations or consumer eating habits change significantly, we may choose or be required to modify or delete certain menu items, which
may adversely affect the attractiveness of our restaurants to new or returning customers. We may also experience higher costs associated with the implementation of those changes. To the extent we are
unwilling or unable to respond with appropriate changes to our menu offerings, it could materially affect consumer demand and have an adverse impact on our business, financial condition and results of
operations. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Such
changes have also resulted in, and may continue to result in, laws and regulations requiring us to disclose the nutritional content of our food offerings, and they have resulted, and may continue
to result in, laws and regulations affecting permissible ingredients and menu offerings. For example, a number of states, counties and cities have enacted menu labeling laws requiring multi-unit
restaurant operators to disclose to consumers certain nutritional information, or have enacted legislation restricting the use of certain types of ingredients in restaurants. These requirements may be
different or inconsistent with requirements under the Patient Protection and Affordable Care Act of 2010 (the "PPACA"), which establishes a uniform, federal requirement for certain restaurants to post
nutritional information on their menus. Specifically, the PPACA requires chain restaurants with 20 or more locations operating under the same name and offering substantially the same menus to publish
the total number of calories of standard menu items on menus and menu boards, along with a statement that puts
this calorie information in the context of a total daily calorie intake. While we disclose the nutritional value and calorie count of our menu items on our website and upon request, these
inconsistencies could be challenging for us to comply with in an efficient manner. Additionally, we use Healthy Dining, a third-party nutritional group to evaluate the nutritional value and calorie
count of our menu items. If Healthy Dining's evaluation report is inaccurate or incomplete, we may fail to comply with PPACA or other consumer health regulations. The PPACA also requires covered
restaurants to provide to consumers, upon request, a written summary of detailed nutritional information for each standard menu item, and to provide a statement on menus and menu boards about the
availability of this information upon request. An unfavorable report on, or reaction to, our menu ingredients, the size of our portions or the nutritional content of our menu items could negatively
influence the demand for our offerings. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Compliance
with current and future laws and regulations regarding the ingredients and nutritional content of our menu items may be costly and time-consuming. We cannot predict the impact of the new
nutrition labeling requirements under the PPACA until final regulations are promulgated. The risks and costs associated with nutritional disclosures on our menus could also impact our operations,
particularly given differences among applicable legal requirements and practices within the restaurant industry with respect to testing and disclosure, ordinary variations in food preparation among
our own restaurants, and the need to rely on the accuracy and completeness of nutritional information obtained from third-party suppliers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
may not be able to effectively respond to changes in consumer health perceptions or our ability to successfully implement the nutrient content disclosure requirements and to adapt our menu
offerings to trends in eating habits. The imposition of menu labeling laws could materially adversely affect our business, financial condition and results of operations, as well as our position within
the restaurant industry in general. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Food safety and foodborne illness concerns could have an adverse effect on our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We cannot guarantee that our internal controls and training will be fully effective in preventing all food safety issues at our restaurants, including
any occurrences of foodborne illnesses such as salmonella, E. coli and hepatitis A. Our quality assurance, health and sanitation internal controls and conditions are inspected by a third-party on a
quarterly basis. If the third-party inspector fails to report unsafe or unsanitary conditions or insufficient internal controls, we cannot guarantee that our internal controls will be fully effective
in preventing all food safety issues. In addition, there is no guarantee that our franchise restaurants will maintain the high levels of internal controls and training we require at our Company-owned
restaurants. Furthermore, we and our franchisees rely on third-party vendors, making it difficult to monitor food safety compliance and increasing the risk that foodborne illness would affect multiple
locations rather than a single restaurant. Some foodborne illness incidents could be caused by third-party vendors and transporters outside of our control. New illnesses resistant to our current
precautions may develop in the future, or diseases with long incubation periods could arise, that could give rise to claims or allegations on a retroactive basis. One or more instances of foodborne
illness in any of our restaurants or markets or related to food products we sell could negatively affect our restaurant sales nationwide if highly publicized on national media outlets or through
social media. This risk exists even if it were later determined that the </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>illness
was wrongly attributed to us or one of our restaurants. A number of other restaurant chains have experienced incidents related to foodborne illnesses that have had a material adverse effect on
their operations. The occurrence of a similar incident at one or more of our restaurants, or negative publicity or public speculation about an incident, could materially adversely affect our business,
financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Compliance with environmental laws may negatively affect our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are subject to federal, state and local laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence,
discharge, storage, handling, release and disposal of, and exposure to, hazardous or toxic substances. These environmental laws provide for significant fines and penalties for noncompliance and
liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of hazardous toxic substances. Third
parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such hazardous or toxic
substances at, on or from our restaurants. Environmental conditions relating to releases of hazardous substances at prior, existing or future restaurant sites could materially adversely affect our
business, financial condition and results of operations. Further, environmental laws, and the administration, interpretation and enforcement thereof, are subject to change and may become more
stringent in the future, each of which could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We rely heavily on certain vendors, suppliers and distributors, which could adversely affect our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products
and supplies in sufficient quantities from third-party vendors, suppliers and distributors at a reasonable cost. We use a limited number of suppliers and distributors in various geographical areas,
particularly with respect to our fresh food products. We also rely on Sysco Corporation as one of our primary distributors, who supplied us with approximately 62% of our food supplies in 2013. We do
not control the businesses of our vendors, suppliers and distributors, and our efforts to specify and monitor the standards under which they perform may not be successful. Furthermore, certain food
items are perishable, and we have limited control over whether these items will be delivered to us in appropriate condition for use in our restaurants. If any of our vendors or other suppliers are
unable to fulfill their obligations to our standards, or if we are unable to find replacement providers in the event of a supply or service disruption, we could encounter supply shortages and incur
higher costs to secure adequate supplies, which could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, we use various third-party vendors to provide, support and maintain most of our management information systems. We also outsource certain accounting, payroll and human resource functions
to business process service providers. The failure of such vendors to fulfill their obligations could disrupt our operations. Additionally, any changes we may make to the services we obtain from our
vendors, or new vendors we employ, may disrupt our operations. These disruptions could materially adversely affect our business, financial condition and results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Changes in food and supply costs or failure to receive frequent deliveries of fresh food ingredients and other supplies could adversely affect our business, financial
condition or results of operations.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, and our ability to maintain our menu
depends in part on our ability to acquire ingredients that meet our specifications from reliable suppliers. Our menu offerings rely on local suppliers to provide fresh foods. Shortages or
interruptions in the availability of certain supplies caused by unanticipated demand, problems in production or distribution, food contamination, inclement weather or other conditions could adversely
affect the availability, quality and cost of our ingredients, which could harm our operations. Any increase in the prices of the food products most critical to our menu, such as fresh produce, feta
cheese and chicken, could adversely affect our operating results. Although we try to manage the impact that these fluctuations </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>have
on our operating results, we remain susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather
conditions, demand, food safety concerns, generalized infectious diseases, product recalls and government regulations. For example, higher diesel prices have in some cases resulted in the imposition
of surcharges on the delivery of commodities to our distributors, which they have generally passed on to us to the extent permitted under our arrangements with them. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
any of our distributors or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or
cash flows could be adversely affected. Although we often enter into contracts for the purchase of food products and supplies, we do not have long-term contracts for the purchase of all of such food
products and supplies. As a result, we may not be able to anticipate or react to changing food costs by adjusting our purchasing practices or menu prices, which could cause our operating results to
deteriorate. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other
items at our restaurants, which could cause a restaurant to remove items from its menu. If that were to happen, affected restaurants could experience significant reductions in sales during the
shortage or thereafter, if customers change their dining habits as a result. Our focus on a limited menu would make the consequences of a shortage
of a key ingredient more severe. In addition, because we provide moderately priced food, we may choose not to, or may be unable to, pass along commodity price increases to consumers. These potential
changes in food and supply costs could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly
increase our healthcare costs and negatively impact our financial results.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In 2010, the PPACA was signed into law in the United States to require health care coverage for many uninsured individuals and expand coverage to
those already insured. We currently offer and subsidize a portion of comprehensive healthcare coverage, primarily for our salaried employees. The healthcare reform law will require us to offer
healthcare benefits to all full-time employees (including full-time hourly employees) that meet certain minimum requirements of coverage and affordability, or face penalties. If we elect to offer such
benefits we may incur substantial additional expense. If we fail to offer such benefits, or the benefits we elect to offer do not meet the applicable requirements, we may incur penalties. The
healthcare reform law also requires individuals to obtain coverage or face individual penalties, so employees who are currently eligible but elect not to participate in our healthcare plans may find
it more advantageous to do so when such individual mandates take effect. It is also possible that by making changes or failing to make changes in the healthcare plans offered by us we will become less
competitive in the market for our labor. Finally, implementing the requirements of healthcare reform is likely to impose additional administrative costs. The costs and other effects of these new
healthcare requirements cannot be determined with certainty, but they may significantly increase our healthcare coverage costs and could materially adversely affect our, business, financial condition
and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Changes in employment laws may adversely affect our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Various federal and state labor laws govern the relationship with our employees and affect operating costs. These laws include employee classification
as exempt/non-exempt for overtime and other purposes, minimum wage requirements, unemployment tax rates, workers' compensation rates, immigration status and other wage and benefit requirements.
Significant additional government-imposed increases in the following areas could materially affect our business, financial condition, operating results or cash flow:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>minimum wages; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>mandatory health benefits; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>vacation accruals; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>paid leaves of absence, including paid sick leave; and </FONT></DD></DL>
</UL>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>tax reporting. </FONT></DD></DL>
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<P style="font-family:arial;"><FONT SIZE=2>In
addition, various states in which we operate are considering or have already adopted new immigration laws or enforcement programs, and the U.S. Congress and Department of Homeland Security from
time to time consider and may implement changes to federal immigration laws, regulations or enforcement programs as well. Some of these changes may increase our obligations for compliance and
oversight, which could subject us to additional costs and make our hiring process more cumbersome, or reduce the availability of potential employees. Although we require all workers to provide us with
government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers. We currently participate in the "E-Verify"
program, an Internet-based, free program run by the United States government to verify employment eligibility, in states in which participation is required. However, use of the "E-Verify" program does
not guarantee that we will properly identify all applicants who are ineligible for employment. Unauthorized workers are subject to deportation and may subject us to fines or penalties, and if any of
our workers are found to be unauthorized we could experience adverse publicity that negatively impacts our brand and may make it more difficult to hire and keep qualified employees. Termination of a
significant number of employees who were unauthorized employees may disrupt our operations, cause temporary increases in our labor costs as we train new employees and result in additional adverse
publicity. We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration
compliance laws. These factors could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Unionization activities or labor disputes may disrupt our operations and affect our profitability.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Although none of our employees are currently covered under collective bargaining agreements, our employees may elect to be represented by labor unions
in the future. If a significant number of our employees were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements, it
could adversely affect our business, financial condition and results of operations. In addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations
and reduce our revenues, and resolution of disputes may increase our costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
an employer, we may be subject to various employment-related claims, such as individual or class actions or government enforcement actions relating to alleged employment discrimination, employee
classification and related withholding, wage-hour, labor standards or healthcare and benefit issues. Such actions, if brought against us and successful in whole or in part, may affect our ability to
compete or could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> If we face labor shortages or increased labor costs, our growth and operating results could be adversely affected.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Labor is a primary component in the cost of operating our restaurants. If we face labor shortages or increased labor costs because of increased
competition for employees, higher employee turnover rates, increases in the federal, state or local minimum wage or other employee benefits costs (including costs associated with health insurance
coverage), our operating expenses could increase and our growth could be adversely affected. In addition, our growth depends in part upon our ability to attract, motivate and retain a sufficient
number of well-qualified restaurant operators and management personnel, as well as a sufficient number of other qualified employees, including customer service and kitchen staff, to keep pace with our
expansion schedule. Qualified individuals needed to fill these positions are in short supply in some geographic areas. In addition, restaurants have traditionally experienced relatively high employee
turnover rates. Although we have not yet experienced significant problems in recruiting or retaining employees, our ability to recruit and retain such individuals may delay the planned openings of new
restaurants or result in higher employee turnover in existing restaurants, which could have a material adverse effect on our business, financial condition and results of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>28</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>If
we are unable to continue to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected. Competition for these employees could require us to pay
higher wages, which could result in higher labor costs. In addition, some of our employees are paid at rates related to the U.S. federal minimum wage, and increases in the minimum wage would increase
our labor costs. Further, costs associated with workers' compensation are rising, and these costs may continue to rise in the future. We may be unable to increase our menu prices in order to pass
these increased labor costs on to consumers, in which case our margins would be negatively affected, which could materially adversely affect our business, financial condition and results of
operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We depend on the services of key executives, the loss of which could materially harm our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our senior executives have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key
personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could materially adversely affect our business until a suitable
replacement is found. We believe that these individuals cannot easily be replaced with executives of equal experience and capabilities. We also do not maintain any key man life insurance policies for
any of our employees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Health concerns arising from outbreaks of viruses may have an adverse effect on our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The United States and other countries have experienced, or may experience in the future, outbreaks of neurological diseases or other diseases or
viruses, such as norovirus, influenza and H1N1. If a virus is transmitted by human contact, our employees or customers could become infected, or could choose, or be advised, to avoid gathering in
public places, any one of which could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our indebtedness may limit our ability to invest in the ongoing needs of our business and if we are unable to comply with our financial covenants, our liquidity and results
of operations could be adversely affected.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have an existing credit agreement with a commercial finance company that includes a term loan (the "Term Loan") and line of credit (the "Line of
Credit" and together with the Term Loan, the "Credit Facility"), which are collateralized by a first-priority interest in, among other things, our accounts receivable, general intangibles, inventory,
equipment, furniture and fixtures. As of February&nbsp;24, 2014, we had $46.8&nbsp;million of outstanding indebtedness under our Credit Facility. We intend to use a portion of the net proceeds
from this offering to repay the entire amount of the outstanding borrowings under our Credit Facility. In the future, we may, from time to time, incur additional indebtedness under our Line of Credit.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Liquidity and Capital Resources&#151;Credit Facility." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Credit Facility places certain conditions on us, including that it:</FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>requires us to utilize a substantial portion of our cash flow from
operations after certain capital expenditures to make payments on our indebtedness, reducing the availability of our cash flow to fund working capital, capital expenditures, development activity and
other general corporate purposes; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>increases our vulnerability to adverse general economic or industry
conditions; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>limits our flexibility in planning for, or reacting to, changes in our
business or the industries in which we operate; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>makes us more vulnerable to increases in interest rates, as borrowings under
our Credit Facility are at variable rates; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>limits our ability to obtain additional financing in the future for working
capital or other purposes; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>places us at a competitive disadvantage compared to our competitors that
have less indebtedness. </FONT></DD></DL>
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<P style="font-family:arial;"><FONT SIZE=2>Our
Credit Facility places certain limitations on our ability to incur additional indebtedness. However, subject to the qualifications and exceptions in our Credit Facility, we may incur substantial
additional indebtedness, including under our Line of Credit, and may incur obligations that do not constitute indebtedness under that facility. The Credit Facility also places certain limitations on,
among other things, our ability to enter into certain types of transactions, financing arrangements and investments, to make certain changes to our capital structure and to guarantee certain
indebtedness. The Credit Facility also places certain restrictions on the payment of dividends and distributions and certain management fees. These restrictions limit or prohibit, among other things,
our ability to:</FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>pay dividends on, redeem or repurchase our stock or make other
distributions; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>incur or guarantee additional indebtedness; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sell stock in our subsidiaries; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>create or incur liens; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>make acquisitions or investments; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>transfer or sell certain assets or merge or consolidate with or into other
companies; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>make certain payments or prepayments of indebtedness subordinated to our
obligations under our Credit Facility; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>enter into certain transactions with our affiliates. </FONT></DD></DL>
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<P style="font-family:arial;"><FONT SIZE=2>Failure
to comply with certain covenants or the occurrence of a change of control under our Credit Facility could result in the acceleration of our obligations under the Credit Facility, which would
have an adverse effect on our liquidity, capital resources and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Credit Facility also requires us to comply with certain financial covenants regarding our capital expenditures, fixed charge coverage ratio and effective leverage ratio. Changes with respect to
these financial covenants may increase our interest rate and failure to comply with these covenants could result in a default and an acceleration of our obligations under the Credit Facility, which
would have an adverse effect on our liquidity, capital resources and results of operations. Upon the receipt of funds from this offering, we will be required to apply 50% of the proceeds of the
offering, net of underwriting discounts and costs and expenses incurred in connection with this offering, to repay the Term Loan and Line of Credit. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations&#151;Liquidity and Capital Resources&#151;Credit Facility." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We expect to need capital in the future, and we may not be able to generate sufficient cash flow or raise capital on acceptable terms to meet our needs.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Developing our business will require significant capital in the future. To meet our capital needs, we expect to rely on our cash flow from operations,
the proceeds from this offering, our Line of Credit under our Credit Facility and other third-party financing. Third-party financing in the future may not, however, be available on terms favorable to
us, or at all. Our ability to obtain additional funding will be subject to various factors, including general market conditions, our operating performance, the market's perception of our growth
potential, lender sentiment and our ability to incur additional debt in compliance with other contractual restrictions, such as financial covenants under our Credit Facility or other debt documents. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
our ability to make payments on and to refinance our indebtedness and to fund planned expenditures for our growth plans will depend on our ability to generate cash in the future. If our
business does not achieve the
levels of profitability or generate the amount of cash that we anticipate or if we expand faster than anticipated, we may need to seek additional debt or equity financing to operate and expand our
business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that cash and cash equivalents, expected cash flow from operations and planned borrowing capacity are adequate to fund debt service requirements, operating lease obligations, capital
expenditures and working capital obligations for the next 13 periods. However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to
achieve anticipated levels of </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>revenue
and cash flow from operations and our ability to manage costs and working capital successfully. Additionally, our cash flow generation ability is subject to general economic, financial,
competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to
enable us to fund our liquidity needs. Further, our capital requirements may vary materially from those currently planned if, for example, our revenues do not reach expected levels or we have to incur
unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may seek alternative financing, such as restructuring or refinancing our existing
Credit Facility or selling additional debt or equity securities, and we cannot assure you that we will be able to do so on favorable terms, if at all. Moreover, if we issue new debt securities, the
debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common
stock. If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our common stock. These factors may
make the timing, amount, terms and conditions of additional financings unattractive. Our inability to raise capital could impede our growth or otherwise require us to forego growth opportunities and
could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our marketing programs may not be successful.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe our brand is critical to our business. We incur costs and expend other resources in our marketing efforts to raise brand awareness and
attract and retain customers. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues. Additionally, some of our competitors have greater
financial resources, which enable them to spend significantly more than we are able to on marketing and advertising. Should our competitors increase spending on marketing and advertising or our
marketing funds decrease for any reason, or should our advertising and promotions be less effective than our competitors, there could be a material adverse effect on our results of operations and
financial condition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We have limited control over our franchisees, and our franchisees could take actions that could harm our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Franchisees are independent contractors and are not our employees, and we do not exercise control over their day-to-day operations. We provide
training and support to franchisees, but the quality of franchised restaurant operations may be diminished by any number of factors beyond our control. We cannot be certain that our franchisees will
have the business acumen or financial resources necessary to operate successful franchises in their franchise areas in a manner consistent with our standards and requirements, or that they will hire
and train qualified managers and other restaurant personnel. If franchisees do not meet our standards and requirements, our image and reputation, and the image and reputation of other franchisees, may
suffer materially and system-wide sales could decline significantly. State franchise laws may limit our ability to terminate or modify these franchise arrangements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Franchisees,
as independent business operators, may from time to time disagree with us and our strategies regarding the business or our interpretation of our, and their, rights and obligations under
franchise and development agreements. This may lead to disputes with our franchisees in the future. These disputes may divert the attention of our management and our franchisees from operating our
restaurants and affect our image and reputation and our ability to attract franchisees in the future, which could materially adversely affect our business, financial condition and results of
operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
and our franchisees are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud and any failure or
perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>A franchisee bankruptcy could have a substantial negative impact on our ability to collect payments due under such franchisee's franchise arrangements. In a franchisee
bankruptcy, the bankruptcy trustee may reject its franchise arrangements pursuant to Section&nbsp;365 under the United States bankruptcy code, in which case there would be no further royalty
payments from such franchisee, and there can be no assurance as to the proceeds, if any, that may ultimately be recovered in a bankruptcy proceeding of such franchisee in connection with a damage
claim resulting from such rejection. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We do not own any real property. Payments under our operating leases account for a significant portion of our operating expenses and we expect the new
restaurants we open in the future will similarly be leased. Our leases generally have an initial term of ten years and generally include two five-year renewal options at increased rates. All of our
leases require a fixed annual rent, although some require the payment of additional rent if restaurant sales exceed a negotiated amount. Generally, our leases are "net" leases, which require us to pay
all of the cost of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases. Additional sites that we lease are likely to be subject to similar long-term non-cancelable
leases. If an existing or future restaurant is not profitable, and we decide to close it, we may nonetheless be committed to
perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, as each of our leases expires, we may fail to
negotiate renewals, either on commercially acceptable terms or at all, which could cause us to pay increased occupancy costs or to close restaurants in desirable locations. These potential increased
occupancy costs and closed restaurants could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> The impact of negative economic factors, including the availability of credit, on our landlords and surrounding tenants could negatively affect our financial results.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Negative effects on our existing and potential landlords due to the inaccessibility of credit and other unfavorable economic factors may, in turn,
adversely affect our business and results of operations. If our landlords are unable to obtain financing or remain in good standing under their existing financing arrangements, they may be unable to
provide construction contributions or satisfy other lease covenants to us. In addition, if our landlords are unable to obtain sufficient credit to continue to properly manage their retail sites, we
may experience a drop in the level of quality of such retail centers. Our development of new restaurants may also be adversely affected by the negative financial situations of developers and potential
landlords. Landlords may try to delay or cancel recent development projects (as well as renovations of existing projects) due to the instability in the credit markets and recent declines in consumer
spending, which could reduce the number of appropriate locations available that we would consider for our new restaurants. Furthermore, the failure of landlords to obtain licenses or permits for
development projects on a timely basis, which is beyond our control, may negatively impact our ability to implement our development plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business.  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our intellectual property is material to the conduct of our business. Our ability to implement our business plan successfully depends in part on our
ability to further build brand recognition using our trademarks, service marks, trade dress and other proprietary intellectual property, including our name and logos and the unique ambience of our
restaurants. While it is our policy to protect and defend vigorously our rights to our intellectual property, we cannot predict whether steps taken by us to protect our intellectual property rights
will be adequate to prevent misappropriation of these rights or the use by others of restaurant features based upon, or otherwise similar to, our concept. It may be difficult for us to prevent others
from copying elements of our concept and any litigation to enforce our rights will likely be costly and may not be successful. Although we believe that we have sufficient rights to all of our
trademarks and service marks, </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>we
may face claims of infringement that could interfere with our ability to market our restaurants and promote our brand. Any such litigation may be costly and divert resources from our business.
Moreover, if we are unable to successfully defend against such claims, we may be prevented from using our trademarks or service marks in the future and may be liable for damages, which in turn could
materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
also rely on trade secrets and proprietary know-how to protect our brand. Our methods of safeguarding this information may not be adequate. Moreover, we may face claims of misappropriation or
infringement of third parties' rights that could interfere with our use of this information. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use this
proprietary information in the future and may result in a judgment or monetary damages. We do maintain confidentiality agreements with all of our team members and most of our suppliers. Even with
respect to the confidentiality agreements we have, we cannot assure you that those agreements will not be breached, that they will provide meaningful protection, or that adequate remedies will be
available in the event of an unauthorized use or disclosure of our proprietary information. If competitors independently develop or otherwise obtain access to our trade secrets or proprietary
know-how, the appeal of our restaurants could be reduced and our business could be harmed. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We may incur costs resulting from breaches of security of confidential consumer information related to our electronic processing of credit and debit card transactions.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The majority of our restaurant sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit
and debit card information has been stolen. We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card
information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents. In addition, most states have enacted legislation requiring notification of security
breaches involving personal information, including credit and debit card information. Any such claim or proceeding could cause us to incur significant unplanned expenses, which could have an adverse
impact on our financial condition and results of operations. Further, adverse publicity resulting from these allegations may have a material adverse effect on us and our restaurants. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> We rely heavily on information technology, and any material failure, weakness, interruption or breach of security could prevent us from effectively operating our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We rely heavily on information systems, including point-of-sale processing in our restaurants, for management of our supply chain, payment of
obligations, collection of cash, credit and debit card transactions and other processes and procedures. Our ability to efficiently and effectively manage our business depends significantly on the
reliability and capacity of these systems. Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications
failure or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive problems. The failure of these systems to operate effectively, maintenance
problems, upgrading or transitioning to new platforms, expanding our systems as we grow or a breach in security of these systems could result in delays in customer service and reduce efficiency in our
operations. Remediation of such problems could result in significant, unplanned capital investments. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Changes to estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates at certain restaurant locations may cause
us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and projections with regard to
individual restaurant operations, as well as our overall performance, in connection with our impairment analyses for long-lived assets. When impairment triggers are deemed to exist for any location,
the estimated undiscounted future cash flows are compared to its carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge equal to the difference between the
carrying value and the fair value is recorded. The projections of future cash flows used in these analyses require the use of judgment and a number of estimates and projections of future operating
results. If actual results differ from our estimates, additional charges for asset impairments may be required in the future. If future impairment charges are significant, our reported operating
results would be adversely affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We could be party to litigation that could adversely affect us by distracting management, increasing our expenses or subjecting us to material money damages and other
remedies.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our customers occasionally file complaints or lawsuits against us alleging we caused an illness or injury they suffered at or after a visit to our
restaurants, or that we have problems with food quality or operations. We are also subject to a variety of other claims arising in the ordinary course of our business, including personal injury
claims, contract claims and claims alleging violations of federal and state law regarding workplace and employment matters, equal opportunity, harassment, discrimination and similar matters, and we
could become subject to class action or other lawsuits related to these or different matters in the future. In recent years, a number of restaurant companies have been subject to such claims, and some
of these lawsuits have resulted in the payment of substantial damages by the defendants. Regardless of whether any claims against us are valid, or whether we are ultimately held liable, claims may be
expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment in excess of our insurance coverage for any claims could materially and adversely affect
our financial condition and results of operations. Any adverse publicity resulting from these allegations may also materially and adversely affect our reputation or prospects, which in turn could
materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are subject to state and local "dram shop" statutes, which may subject us to uninsured liabilities. These statutes generally allow a person injured by an intoxicated person to recover damages from
an establishment that wrongfully served alcoholic beverages to the intoxicated person. Because a plaintiff may seek punitive damages, which may not be fully covered by insurance, this type of action
could have an adverse impact on our financial condition and results of operations. A judgment in such an action significantly in excess of, or not covered by, our insurance coverage could adversely
affect our business, financial condition and results of operations. Further, adverse publicity resulting from any such allegations may adversely affect us and our restaurants taken as a whole. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, the restaurant industry has been subject to a growing number of claims based on the nutritional content of food products sold and disclosure and advertising practices. We may also be
subject to this type of proceeding in the future and, even if we are not, publicity about these matters (particularly directed at the quick-service or fast casual segments of the industry) may harm
our reputation and could materially adversely affect our business, financial condition and results of operations. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Our current insurance may not provide adequate levels of coverage against claims.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our current insurance policies may not be adequate to protect us from liabilities that we incur in our business. Additionally, in the future, our
insurance premiums may increase, and we may not be able to obtain similar levels of insurance on reasonable terms, or at all. Any substantial inadequacy of, or inability to obtain insurance coverage
could materially adversely affect our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Furthermore,
there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such losses could have a material adverse effect on our
business and results of operations. As a public company, we intend to enhance our existing directors' and officers' insurance. While we expect to obtain such coverage, we may not be able to obtain
such coverage at all or at a reasonable cost now or in the future. Failure to obtain and maintain adequate directors' and officers' insurance would likely adversely affect our ability to attract and
retain qualified officers and directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of our liquor and food
service licenses and, thereby, harm our business.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food and
alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain these licenses, permits and approvals could adversely affect our operating results.
Typically, licenses must be renewed annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable
regulations. Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening
of new restaurants, which would adversely affect our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Alcoholic
beverage control regulations generally require our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license that must be renewed
annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of
patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and
handling, storage and dispensing of alcoholic beverages. Any future failure to comply with these regulations and obtain or retain licenses could adversely affect our business, financial condition and
results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Failure to establish and maintain effective internal controls in accordance with Section&nbsp;404 of the Sarbanes-Oxley Act could have a material adverse effect on our
business and stock price.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are not currently required to comply with the rules of the SEC implementing Section&nbsp;404 of the Sarbanes-Oxley Act and therefore are not required to make a formal assessment of the
effectiveness of our internal control over financial reporting for that purpose. Upon becoming a publicly traded company, we will be required to comply with the SEC's rules implementing
Section&nbsp;302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management
report on the effectiveness of controls over financial reporting. Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not be
required to make our first annual assessment of our internal control over financial reporting pursuant to Section&nbsp;404 until the year following our first annual report required to be filed with
the SEC. Pursuant to the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until the
later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company, which may be up to five full fiscal years following this
offering. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>To
comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or
internal audit staff. In addition, we may identify material weaknesses in our internal control over financial reporting that we may not be able to remediate in time to meet the applicable deadline
imposed upon us for compliance with the requirements of Section&nbsp;404. In connection with the audit of our financial statements for the year ended December&nbsp;30, 2013, we identified material
weaknesses related to a lack of adequate information technology policies and procedures, sufficient accounting resources and segregation of duties, which we believe we have adequately remediated, and
a lack of adequate accounting policies and procedures, for which we are continuing to take the necessary steps to remediate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
we identify additional weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section&nbsp;404 in a timely manner or to assert that our
internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over
financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become
subject to investigations by the New York Stock Exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Changes to accounting rules or regulations may adversely affect our results of operations.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Changes to existing accounting rules or regulations may impact our future results of operations or cause the perception that we are more highly
leveraged. Other new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. For instance, accounting
regulatory authorities have indicated that they may begin to require lessees to capitalize operating leases in their financial statements in the next few years. If adopted, such change would require
us to record significant capital lease obligations on our balance sheet and make other changes to our financial statements. This and other future changes to accounting rules or regulations could
materially adversely affect our business, financial condition and results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> We spend significant resources in developing new product offerings, some of which may not be successful.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We invest in continually developing new potential product offerings as well as in marketing and advertising our new products. Our new product
offerings may not be well-received by consumers and may not be successful, which could materially adversely affect our results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Risks Related to Ownership of Our Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> There is no existing market for our common stock, and we do not know if one will develop. Even if a market does develop, the stock prices in the market may not exceed the
offering price.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to this offering, there has not been a public market for our common stock or any of our equity interests. We cannot predict the extent to which
investor interest in our company will lead to the development of an active trading market on the New York Stock Exchange, or how liquid that market may become. An active public market for our common
stock may not develop or be sustained after the offering. If an active trading market does not develop or is not sustained, you may have difficulty selling any shares that you buy. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
initial public offering price for the common stock will be determined by negotiations among us and the representatives of the underwriters and may not be indicative of prices that will prevail in
the open market following this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price you pay in this offering. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors,
some of which are beyond our control, resulting in a decline in our stock price.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our quarterly operating results may fluctuate significantly because of several factors, including:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the timing of new restaurant openings and related expenses; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>restaurant operating costs for our newly-opened restaurants, which are often
materially greater during the first several months of operation than thereafter; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>labor availability and costs for hourly and management personnel; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>profitability of our restaurants, especially in new markets; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in interest rates; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>increases and decreases in AUVs and comparable restaurant sales; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>impairment of long-lived assets and any loss on restaurant closures; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>macroeconomic conditions, both nationally and locally; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>negative publicity relating to the consumption of seafood or other products
we serve; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in consumer preferences and competitive conditions; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>expansion to new markets; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>increases in infrastructure costs; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>fluctuations in commodity prices. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>Seasonal
factors and the timing of holidays also cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower in the first and fourth quarters due to reduced
winter and holiday traffic and higher in the second and third quarters. As a result of these factors, our quarterly and annual operating
results and comparable restaurant sales may fluctuate significantly. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any
year and comparable restaurant sales for any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors. In that
event, the price of our common stock would likely decrease. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> The price of our common stock may be volatile and you may lose all or part of your investment.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The market price of our common stock could fluctuate significantly, and you may not be able to resell your shares at or above the offering price.
Those fluctuations could be based on various factors in addition to those otherwise described in this prospectus, including those described under "&#151;Risks Related to Our Business and
Industry" and the following:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our operating performance and the performance of our competitors or
restaurant companies in general; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the public's reaction to our press releases, our other public announcements
and our filings with the SEC; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in earnings estimates or recommendations by research analysts who
follow us or other companies in our industry; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>global, national or local economic, legal and regulatory factors unrelated
to our performance; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the number of shares to be publicly traded after this offering; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>future sales of our common stock by our officers, directors and significant
stockholders; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the arrival or departure of key personnel; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>other developments affecting us, our industry or our competitors. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, in recent years the stock market has experienced significant price and volume fluctuations. These fluctuations may be unrelated to the operating performance of particular companies. These
broad market fluctuations may cause declines in the market price of our common stock. The price of our common </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>stock
could fluctuate based upon factors that have little or nothing to do with our business, financial condition and results of operations, and those fluctuations could materially reduce our common
stock price. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products. In the past, securities class action litigation has often
been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources,
and could also require us to make substantial payments to satisfy judgments or to settle litigation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Future sales of our common stock, or the perception that such sales may occur, could depress our common stock price.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We, our officers, directors and holders of all or substantially all our outstanding capital stock have agreed, subject to specified exceptions, not to
directly or indirectly:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sell, offer, contract or grant any option to sell (including any short
sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule&nbsp;16a-l(h) under the Exchange Act, or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>otherwise dispose of any shares of common stock, options or warrants to
acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock currently or hereafter owned either of record or beneficially, or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>publicly announce an intention to do any of the foregoing for a period of
180&nbsp;days after the date of this prospectus without the prior written consent of Jefferies&nbsp;LLC and Piper Jaffray&nbsp;&amp;&nbsp;Co. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>This
restriction terminates after the close of trading of the common stock on and including the 180<SUP>th</SUP>&nbsp;day after the date of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
amended and restated certificate of incorporation authorizes us to issue up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock, of
which&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares will be outstanding and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares will be issuable upon the exercise of stock options to be issued to certain officers, directors, employees and consultants with an exercise price equal to the initial public offering price. Of
the outstanding shares,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares will be freely tradable after the expiration
date of the lock-up agreements, excluding any shares acquired by persons who may be deemed to be our
affiliates. Shares of our common stock held by our affiliates will continue to be subject to the volume and other restrictions of Rule&nbsp;144 under the Securities Act ("Rule&nbsp;144"), as
amended. Jefferies&nbsp;LLC and Piper Jaffray&nbsp;&amp; Co., on behalf of the underwriters may, in their sole discretion and at any time without notice, release all or any portion of the shares
subject to the lock-up. See "Underwriting." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, immediately following this offering, we intend to file&nbsp;a registration statement registering under the Securities Act the shares of common stock reserved for issuance under our 2014
Omnibus Incentive Plan. See the information under the heading "Shares Eligible for Future Sale" for a more detailed description of the shares that will be available for future sales upon completion of
this offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
the future, we may also issue common stock or other securities if we need to raise additional capital. The number of new shares of our common stock issued in connection with raising additional
capital could constitute a material portion of the then outstanding shares of our common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> If you purchase shares of our common stock sold in this offering, you will incur immediate and substantial dilution.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the amount of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share because the initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, which represents the midpoint of the estimated offering price range set forth on the cover page of this
prospectus, is
substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock. This dilution is due in large part to the fact that our earlier investors paid
substantially less than the initial public offering price when they purchased their shares. In addition, you may also experience </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>additional
dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, and directors under our stock option and equity incentive plans.
See "Dilution." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could
decline.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our
business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our Company, the trading price
for our common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrades our common stock or publishes
inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand
for our common stock could decrease, which could cause our stock prices and trading volume to decline. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our principal stockholders and their affiliates own a substantial portion of our outstanding equity, and their interests may not always coincide with the interests of the
other holders.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Immediately following the consummation of this offering, assuming our initial offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of
the estimated offering price range set forth on the cover page of this prospectus, Brentwood will own approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common stock,
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters'
option to purchase additional shares of our common stock is exercised in full. As a result, Brentwood could potentially have significant influence over all matters presented to our stockholders for
approval, including election and removal of our directors, change in control transactions and the outcome of all actions requiring a majority stockholder approval. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, persons associated with Brentwood currently serve on our Board of Directors. Following this offering, the interests of Brentwood may not always coincide with the interests of the other
holders of our common stock, and the concentration of control in Brentwood will limit other stockholders' ability to influence corporate matters. The concentration of ownership and voting power of
Brentwood may also delay, defer or even prevent an acquisition by a third party or other change of control of our Company and may make some transactions more difficult or impossible without their
support, even if such events are in the best interests of our other stockholders. Therefore, the concentration of voting power among Brentwood may have an adverse effect on the price of our common
stock. Our Company may also take actions that our other stockholders do not view as beneficial, which may adversely affect our results of operations and financial condition and cause the value of your
investment to decline. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We do not intend to pay dividends for the foreseeable future.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the
foreseeable future. Any future determination to declare and pay cash dividends will be at the discretion of our Board of Directors and will depend on, among other things, our financial condition,
results of operations, cash requirements, contractual restrictions and such other factors as our Board of Directors deems relevant. In addition, our Credit Facility restricts our ability to pay
dividends. Our ability to pay dividends may also be limited by covenants of any future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an
investment in our common stock unless you sell our common stock for a price greater than that which you paid for it. See "Dividend Policy." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>39</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party, even if the acquisition would be beneficial to our stockholders,
and could make it more difficult for you to change our management.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation and bylaws that will be in effect immediately prior to the completion of this offering, and
Delaware law, contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our Board of Directors. For example, we will have a
classified Board of Directors with three-year staggered terms, which could delay the ability of stockholders to change membership of a majority of our Board of Directors. These provisions may make it
more difficult or expensive for a third party to acquire a majority of our outstanding equity interests. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy
contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. See "Description of Capital Stock." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We will incur increased costs as a result of being a public company.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As a public company, we expect to incur significant legal, accounting and other expenses that we did not incur as a private company, particularly
after we are no longer an emerging growth company as defined under the JOBS Act. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act and the JOBS
Act, have created uncertainty for public companies and increased costs and time that boards of directors and management must devote to complying with these rules and regulations. The Sarbanes-Oxley
Act and related rules of the SEC and the New York Stock Exchange regulate corporate governance practices of public companies. We expect compliance with these rules and regulations to increase our
legal and financial compliance costs and lead to a diversion of management time and attention from revenue generating activities. For example, we will be required to adopt new internal controls and
disclosure controls and procedures. In addition, we will incur additional expenses associated with our SEC reporting requirements. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>For
as long as we remain an emerging growth company as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not "emerging growth companies." These exceptions provide for, but are not limited to, relief from the auditor attestation requirements of Section&nbsp;404 of the Sarbanes-Oxley
Act, less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on
executive compensation and stockholder approval of any golden parachute payments not previously approved and an extended transition period for complying with new or revised accounting standards. We
may take advantage of these reporting exemptions until we are no longer an "emerging growth company." We will remain an emerging growth company until the earlier of (1)&nbsp;the last day of the
fiscal year (a)&nbsp;following the fifth anniversary of the completion of this offering, (b)&nbsp;in which we have total annual gross revenue of at least $1.0&nbsp;billion or (c)&nbsp;in which
we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700&nbsp;million as of the prior June&nbsp;30th, and
(2)&nbsp;the date
on which we have issued more than $1.0&nbsp;billion in non-convertible debt during the prior three-year period. To the extent we use exemptions from various reporting requirements under the JOBS
Act, we may be unable to realize our anticipated cost savings from those exemptions. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>40</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> We are an emerging growth company and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be
less attractive to investors.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are an emerging growth company, as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting
requirements applicable to other public companies, but not to emerging growth companies, including, but not limited to, an exemption from the auditor attestation requirement of Section&nbsp;404 of
the Sarbanes-Oxley Act, reduced disclosure about executive compensation arrangements pursuant to the rules applicable to smaller reporting companies and no requirement to seek non-binding advisory
votes on executive compensation or golden parachute arrangements. We have elected to adopt these reduced disclosure requirements. We may take advantage of these provisions until we are no longer an
emerging growth company. We will remain an emerging growth company until the earlier of (1)&nbsp;the last day of the fiscal year (a)&nbsp;following the fifth anniversary of the completion of this
offering, (b)&nbsp;in which we have total annual gross revenue of at least $1.0&nbsp;billion or (c)&nbsp;in which we are deemed to be a large accelerated filer, which means the market value of
our common stock that is held by non-affiliates exceeds $700&nbsp;million as of the prior June&nbsp;30th, and (2)&nbsp;the date on which we have issued more than $1.0&nbsp;billion in
non-convertible debt during the prior three-year period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, Section&nbsp;107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section&nbsp;7(a)(2)(B) of the
Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. However, we are choosing to "opt out" of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on
which adoption of such standards is required for non-emerging growth companies. Section&nbsp;107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying
with new or revised accounting standards is irrevocable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions. If some investors find our common stock less attractive as a result
of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of
money available to us.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation and bylaws that will be in effect immediately prior to the completion of this offering provide
that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, we have entered and expect to continue to enter into agreements to
indemnify our directors, executive officers and other employees as determined by our Board of Directors. Upon the consummation of this offering, we will enter into indemnification agreements with our
director nominees and amended indemnification agreements with each of our directors and officers. Under the terms of such indemnification agreements, we are required to indemnify each of our directors
and officers, to the fullest extent permitted by the laws of the state of Delaware, if the basis of the indemnitee's involvement was by reason of the fact that the indemnitee is or was a director or
officer of the Company or any of its subsidiaries or was serving at the Company's request in an official capacity for another entity. We must indemnify our officers and directors against all
reasonable fees, expenses, charges and other costs of any type or nature whatsoever, including any and all expenses and obligations paid or incurred in connection with investigating, defending, being
a witness in, participating in (including on appeal), or preparing to defend, be a witness or participate in any completed, actual, pending or threatened action, suit, claim or proceeding, whether
civil, criminal, administrative or investigative, or establishing or enforcing a right to indemnification under the indemnification agreement. The indemnification agreements also require us, if so
requested, to advance within 30&nbsp;days of such request all reasonable fees, expenses, charges and other costs that such director or officer incurred, provided that such person will return any
such advance if it is ultimately determined that such person is not entitled to indemnification by us. Any </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>41</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>claims
for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Future offerings of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future offerings of equity securities that may be
senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock.  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the future, we may attempt to increase our capital resources by making offerings of debt securities or additional offerings of equity securities.
Upon bankruptcy or liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to
the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both, and may result in future
Section&nbsp;382 limitations that could reduce the rate at which we utilize our NOL carryforwards. Preferred stock, if issued, could have a preference on liquidating distributions or a preference on
dividend payments or both that could limit our ability to make a dividend distribution to the holders of our common stock. Our decision to issue securities in any future offering will depend on market
conditions and other factors beyond our control. As a result, we cannot predict or estimate the amount, timing or nature of our future offerings, and purchasers of our common stock in this offering
bear the risk of our future offerings reducing the market price of our common stock and diluting their ownership interest in our company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> We have broad discretion to use the proceeds from the offering and our investment of those proceeds may not yield favorable returns.  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We intend to use $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the net proceeds from this offering to repay the entire amount of outstanding borrowings under our
Credit Facility. Our management has broad discretion to spend the remainder of the net proceeds from this offering and you may not agree with the way the net proceeds are spent. The failure of our
management to apply these funds effectively could result in unfavorable returns. This could adversely affect our business, causing the price of our common stock to decline. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>42</FONT></P>

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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dg17901_forward-looking_statements"> </A>
<A NAME="toc_dg17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  FORWARD-LOOKING STATEMENTS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical
fact included in this prospectus are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations,
plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may
include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "may," "could," "would," "will,"
"should," "can," "can have," "likely," the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial
performance or other events. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other
things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially from those that we expected, including:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to successfully execute our growth strategy and to maintain
increases in comparable restaurant sales; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to expand into new markets; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in economic conditions, including consumer confidence and spending
patterns; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>damage to our reputation or lack of acceptance of our brand in existing or
new markets; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>ability to rely on key third-party vendors, suppliers and distributors; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>price and availability of key ingredients; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>labor shortages and increases in our labor costs, including as a result of
changes in government regulation; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>change in consumer tastes and the level of acceptance of the company's
restaurant concept; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>increased competition in the restaurant industry; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the success of our marketing programs; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the impact of opening new restaurants in the same markets as our existing
restaurants; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the effect of changes to accounting rules or regulations applicable to us; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the loss of key members of our management team; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in regulatory and healthcare laws; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>consumer reaction to public health issues and perceptions of food safety; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the strain on our infrastructure and resources caused by our growth; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the failure of our information technology systems or the breach of our
network security; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>volatility in the price of our common stock; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>other factors discussed under the headings "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and "Business." </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>While
we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could
affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus. All forward-looking statements are expressly qualified in their entirety by these cautionary statements.
You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or
developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. The
forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new
information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates
with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. </FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dg17901_use_of_proceeds"> </A>
<A NAME="toc_dg17901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  USE OF PROCEEDS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We estimate that the net proceeds to us from this offering, after deducting the underwriting discount and estimated offering expenses payable by us,
will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million if the
underwriters option to purchase additional shares of our common stock is exercised in full, assuming
the shares offered by us are sold for $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to use the net proceeds from the sale of common stock by us in this offering: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(i)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to
repay the entire amount of the outstanding borrowings under our Credit Facility;
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(ii)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to
support our growth, primarily through opening new restaurants; and
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(iii)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>for
working capital and general corporate purposes. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to use approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the net proceeds we receive from this offering to repay the entire amount of the outstanding borrowings under our
Credit Facility,
which has a maturity date of November&nbsp;29, 2017 and had an outstanding balance of $46.8&nbsp;million as of February&nbsp;24, 2014. Borrowings under our Credit Facility in 2013 and 2012 were
primarily made in connection with capital expenditures in connection with opening new restaurants. As of February&nbsp;24, 2014, the balance outstanding under our Term Loan was $38.0&nbsp;million
and the balance under our Line of Credit was $8.8&nbsp;million. Borrowings under our Credit Facility bear interest at our option at either (i)&nbsp;LIBOR plus 3.00% to 4.75%, or (ii)&nbsp;the
highest of the following rates plus 2.00% to 3.75%: (a)&nbsp;the Wall Street Journal prime rate; (b)&nbsp;the federal funds rate plus 0.50% or (c)&nbsp;the one-month LIBOR plus 1.00%. There is a
1.00% LIBOR floor on all borrowings. Our interest rate as of February&nbsp;24, 2014 was 5.25% for each of our Term Loan and our Line of Credit. Affiliates of General Electric Capital Corporation are
lenders under the Credit Facility, and therefore, will receive a portion of the net proceeds of this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to use approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the net proceeds we receive from this offering to support our growth, primarily through opening new restaurants. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Each
$1.00 increase or decrease in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the price range set forth on the cover of this
prospectus, would
increase or decrease the net proceeds we receive from this offering by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the number of shares offered by us, as set forth
on the cover of this
prospectus, remains the same and after deducting the underwriting discounts and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of
shares of common stock offered by us would increase or decrease the net proceeds we receive from this offering by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the
assumed initial public
offering price remains the same and after deducting the underwriting discount and estimated offering expenses payable by us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Pending
use of the net proceeds from this offering as described above, we may invest the net proceeds in short-and intermediate-term interest-bearing obligations, investment-grade instruments,
certificates of deposit or direct or guaranteed obligations of the United States government. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>45</FONT></P>

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<A NAME="page_dg17901_1_46"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dg17901_dividend_policy"> </A>
<A NAME="toc_dg17901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  DIVIDEND POLICY    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay
indebtedness, and therefore we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock will be limited by restrictions on
the ability of our subsidiaries and us to pay dividends or make distributions under the terms of current and any future agreements governing our indebtedness. Any future determination to declare and
pay cash dividends will be at the discretion of our board of directors and will depend on, among other things, our financial condition, results of operations, cash requirements, contractual
restrictions and such other factors as our board of directors deems relevant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, since we are a holding company, substantially all of the assets shown on our consolidated balance sheet are held by our subsidiaries. Accordingly, our earnings, cash flow and ability to
pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends.The ability of our
subsidiaries to pay dividends is currently restricted by the terms of our Credit Facility and may be further restricted by any future indebtedness we or they incur. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Accordingly,
you may need to sell your shares of our common stock to realize a return on your investment, and you may not be able to sell your shares at or above the price you paid for them. See "Risk
Factors&#151;Risks Related to Ownership of our Common Stock&#151;We do not intend to pay dividends for the foreseeable future." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>46</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="di17901_capitalization"> </A>
<A NAME="toc_di17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  CAPITALIZATION    <BR>    </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth our cash and cash equivalents, indebtedness and our capitalization as of December&nbsp;30, 2013
on:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an actual basis; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a pro forma basis to give effect to the Distribution Transactions; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a pro forma as adjusted basis to give effect to (i)&nbsp;the Distribution
Transactions, (ii)&nbsp;the filing and effectiveness of our amended and restated certificate of incorporation and amended and restated bylaws, which we will adopt prior to the completion of this
offering and (iii)&nbsp;this offering and the use of proceeds therefrom as described in "Use of Proceeds," assuming the shares offered by us are sold for $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, which is the
midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>The
pro forma and pro forma as adjusted information below is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual initial public
offering price and other terms of this offering determined at pricing. You should read this information together with our audited and unaudited consolidated financial statements and related notes
included elsewhere in this prospectus and the information set forth under the headings "Use of Proceeds," "Selected Historical Consolidated Financial and Other Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." </FONT></P>

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<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>As of December&nbsp;30, 2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Actual </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Pro Forma </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Pro Forma<BR>
As Adjusted<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,149</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Debt:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Term Loan<SUP>(2)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>38,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Line of Credit<SUP>(3)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,900</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Credit Facility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41,400</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Residual value obligations, net<SUP>(4)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>357</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deemed landlord financing<SUP>(5)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19,893</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>61,650</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Stockholders' Equity:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock, $0.01 par value per share<SUP>(6)</SUP></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.001</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in-capital</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>45,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(11,621</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>33,579</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total capitalization</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>95,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Each
$1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated
offering price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted amounts of cash and cash equivalents, additional paid-in capital, total
stockholders' equity and total capitalization by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the number of shares offered by us, as set forth on the cover of this prospectus,
remains the same and after
deducting the underwriting discounts and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of shares of common stock offered by us
would increase or decrease the amount of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by </FONT></DD></DL>
 </DIV>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>47</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=51,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=978817,FOLIO='47',FILE='DISK134:[13ZDH1.13ZDH17901]DI17901A.;41',USER='LSMITH',CD=';9-MAR-2014;13:10' -->
<A NAME="page_di17901_1_48"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<UL>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the assumed initial public offering price remains the same and after deducting the underwriting discounts and estimated offering
expenses
payable by us.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">We
intend to use approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the net proceeds we receive from this offering to repay the entire amount of
the outstanding borrowings under our Term Loan.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">We
intend to use approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million of the net proceeds we receive from this offering to repay the entire amount of
the outstanding borrowings under our Line of Credit. As of February&nbsp;24, 2014, there was $8.8&nbsp;million drawn under our line of credit.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
residual value obligations associated with vehicles for individual store locations. We pay for each of the vehicles up front and
then amortize them to the guaranteed residual value at the end of the lease term. Each of the assets is recorded at the net present value of the initial payment made plus the residual value guarantee
using a 6.50% discount rate.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(5)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">For
a discussion of deemed landlord financing, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations&#151;Critical Accounting Policies and Estimates&#151;Leases."
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(6)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">The
number of common shares shown as issued and outstanding on a pro forma as adjusted basis in the table above is based on the number of
shares of our common stock outstanding as of December&nbsp;30, 2013. 100&nbsp;shares authorized, 100&nbsp;shares issued and outstanding,
actual;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares authorized,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding, pro forma;
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares authorized,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding, pro forma as adjusted. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>48</FONT></P>

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<A NAME="page_di17901_1_49"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><A
NAME="di17901_dilution"> </A>
<A NAME="toc_di17901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  DILUTION    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the
initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock after this offering. Our historical net tangible book value (deficit) as of
December&nbsp;30, 2013 was $(2.0)&nbsp;million, or $(19,975) per share of common stock. Our historical net tangible book value is the amount of our total tangible assets (which for the purpose of
this calculation excludes capitalized loan costs) less our total liabilities, divided by the number of shares of common stock outstanding as of December&nbsp;30, 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
pro forma net tangible book value as of December&nbsp;30, 2013 was $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock. Pro forma net tangible book value represents
total tangible assets less total liabilities. Pro forma net tangible book value per share represents pro forma net tangible book value divided by the total number of shares outstanding as of
December&nbsp;30, 2013, after giving effect to the Distribution Transactions, which is described more fully under the section of this prospectus entitled "Our Corporate Information." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Pro
forma as adjusted net tangible book value is our pro forma net tangible book value, plus the effect of the sale by us
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock in this offering at an assumed
initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after
deducting underwriting
discounts and estimated offering expenses payable by us, and after giving effect to the application of the net proceeds received from this offering as described under "Use of Proceeds." This amount
represents an immediate increase in pro forma as adjusted net tangible book value of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to our existing stockholders, and an immediate dilution of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to
new investors participating in this offering. We determine dilution per share to new investors by subtracting pro forma as adjusted net tangible book value per share after this offering from the
initial public offering price per share paid by new investors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table illustrates this dilution on a per share basis. </FONT></P>

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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assumed initial public offering price per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net tangible book value (deficit) per share as of</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase per share attributable to new investors</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma as adjusted net tangible book value per share after this offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilution per share to new investors</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2>If the underwriters option to purchase additional shares of our common stock is exercised in full, the pro forma as adjusted net tangible book value will
increase to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, representing an immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share to new investors, assuming that the initial public offering price will be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
$1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on the cover
page of this
prospectus, would increase (decrease) the pro forma as adjusted net tangible book value by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, the pro forma as adjusted net tangible book value per
share by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, and the dilution in pro forma as adjusted net tangible book value per share to investors in this offering by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, assuming that the number of shares offered by
us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and estimated offering expenses payable by us. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>49</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes, as of December&nbsp;30, 2013, on a pro forma as adjusted basis as described above, the differences between the number of shares of common stock purchased from us, the
total consideration paid to us, and the average price per share paid by existing stockholders and by investors purchasing shares of common stock in this offering. The calculation below is based on an
assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus, before
deducting underwriting
discounts and estimated offering expenses payable by us. </FONT></P>

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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="37pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="37pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="47pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Shares Purchased </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total Consideration </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Average<BR>
Price<BR>
Per Share </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percent </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percent </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Existing stockholders</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New investors</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2>The total number of shares reflected in the discussion and tables above is based on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding as of December&nbsp;30,
2013 and the Distribution Transactions. The tables above assume no exercise of options to purchase shares of our common stock outstanding as of December&nbsp;30, 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
the underwriters option to purchase additional shares of our common stock is exercised in full, the number of shares held by new investors will increase
to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of
the total number of shares of common stock outstanding after this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
the extent that any options or other equity incentive grants are issued in the future with an exercise price or purchase price below the initial public offering price, new investors will experience
further dilution. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>50</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dk17901_selected_historical_co__dk102289"> </A>
<A NAME="toc_dk17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents our selected historical consolidated financial data and certain other financial data. The historical consolidated balance
sheet data as of December&nbsp;30, 2013 and December&nbsp;31, 2012 and the consolidated statement of operations and consolidated statement of cash flows data for the years ended
December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011 have been derived from our historical audited consolidated financial statements, which are included in this prospectus.
The consolidated balance sheet data as of December&nbsp;27, 2010 and the consolidated statement of operations and consolidated statement of cash flow data for the year ended December&nbsp;27, 2010
have been derived from our historical audited consolidated financial statements, which are not included in this prospectus. The consolidated balance sheet data as of December&nbsp;28, 2009 and the
consolidated statement of operations and consolidated statement of cash flow data for the year ended December&nbsp;28, 2009 have been derived from our historical unaudited consolidated financial
statements, which are not included in this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
operate on a 52-&nbsp;or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of 52 weeks, with the exception of the fiscal year ended
December&nbsp;31, 2012, which consisted of 53 weeks. Our first fiscal quarter consists of 16&nbsp;weeks, and each of our second, third and fourth
fiscal quarters consists of 12&nbsp;weeks, except for a 53-week year when the fourth quarter has 13&nbsp;weeks. We refer to our fiscal years as 2013, 2012 and 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
consolidated financial data and other financial data presented below should be read in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and our audited and unaudited consolidated financial statements and the related notes thereto included elsewhere in this prospectus. The following table does not give effect to
the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-for-1 stock split of our common stock, which will be effected prior to the completion of the offering. Our historical consolidated financial data may not be indicative of our future
performance. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>51</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;27,<BR>
2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;28,<BR>
2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands, except per share data)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Consolidated Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Revenue:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Restaurant sales</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">115,748</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78,966</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">49,193</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">31,497</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20,138</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Franchise and royalty fees</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">637</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">757</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">984</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">810</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">619</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total revenue</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">116,385</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">79,724</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">50,177</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">32,308</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20,756</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Operating Expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Restaurant Operating Costs:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cost of sales (excluding depreciation and amortization)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">38,063</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25,845</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,756</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,406</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,590</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Labor</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">32,810</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21,567</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13,424</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,587</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,443</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Store operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21,780</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">14,610</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,596</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,975</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,653</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">General and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13,172</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,969</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,384</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,344</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,464</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Depreciation</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,862</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,779</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,840</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,805</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,065</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Amortization</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,601</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,091</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">585</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">557</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">557</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pre-opening costs</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,938</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">917</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">806</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">544</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">551</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Loss (gain) from disposal of equipment</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">175</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">240</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">289</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">147</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">115,401</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">77,018</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">49,387</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">33,507</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">22,470</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> Income (loss) from operations</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">985</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,706</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">790</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,199</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,713</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Other expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,019</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,337</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,248</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">720</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">556</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Loss on interest cap</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Bargain purchase gain from acquisitions</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(541</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:24pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total other expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,044</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,337</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">707</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">720</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">556</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Income (loss) before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,059</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">369</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">83</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,919</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,269</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">656</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">110</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">554</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">546</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Net loss</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,715</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(253</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(27</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,472</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,815</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><I>Net loss per share</I></FONT><FONT  style="font-size:8pt;line-height:9pt;">:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(269</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(24,723</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(28,155</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(269</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(24,723</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(28,155</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><I>Weighted average shares outstanding</I></FONT><FONT  style="font-size:8pt;line-height:9pt;">:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Consolidated Statement of Cash Flows Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash provided by operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,924</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,796</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,764</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,780</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">605</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash used in investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(28,242</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(21,283</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(13,519</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(8,028</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(6,486</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net cash provided by financing activities</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16,017</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,130</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,600</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,468</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,986</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
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<p style="font-family:arial;"></FONT></P>

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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;27,<BR>
2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;28,<BR>
2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Balance Sheet Data:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,149</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,450</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">807</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,962</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,742</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Property and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78,629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">48,215</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">31,472</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">19,937</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">12,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">119,937</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">90,716</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">66,937</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">53,214</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">47,547</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total debt<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">61,650</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">38,201</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">19,028</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,643</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,979</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total stockholder's equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">33,579</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">37,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">37,347</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">37,184</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">39,352</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;27,<BR>
2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;28,<BR>
2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Other Operating Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Company-owned restaurants at end of period</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">94</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">67</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">48</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">32</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Franchise restaurants at end of period</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Company-owned:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Average unit volume</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,470</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,421</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,299</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,209</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,106</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Comparable restaurant sales growth</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6.9</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13.4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11.8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11.9</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Restaurant contribution<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23,095</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16,966</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,418</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,529</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,452</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">as a percentage of restaurant sales</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20.0</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">21.2</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20.7</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">22.1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,899</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,153</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,440</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,411</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">949</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">as a percentage of revenue</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9.4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10.8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4.6</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Capital expenditures</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">28,267</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15,462</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,959</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,028</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">6,499</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
interest-bearing debt, residual value obligations and deemed landlord financing.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Restaurant
contribution is defined as restaurant sales less restaurant operating costs which are cost of sales, labor, and store operating
expenses.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">EBITDA
is defined as net loss before interest, income taxes and depreciation and amortization.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><BR></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted
EBITDA is defined as EBITDA plus equity-based compensation expense, bargain purchase gain from acquisitions, management and consulting
fees, asset disposals, closure costs, loss on interest cap and restaurant impairment and pre-opening costs. Adjusted EBITDA is intended as a supplemental measure of our performance that is not
required by, or presented in accordance with, GAAP. We believe that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends
relating to our financial condition and operating results. Our management uses EBITDA and Adjusted EBITDA (i)&nbsp;as a factor in evaluating management's performance when determining incentive
compensation and (ii)&nbsp;to evaluate the effectiveness of our business strategies. <BR></FONT>
<BR>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">We
believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial
measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the
future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not
calculate Adjusted EBITDA in the same fashion. Moreover, our definitions of EBITDA and Adjusted EBITDA as presented throughout this prospectus are not the same as these or similar terms in the
applicable covenants of our Credit Facility. <BR></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Our
management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted
EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations
are:</FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect our
cash expenditures, or future requirements, for capital expenditures or contractual commitments; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect
changes in, or cash requirements for, our working capital needs; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect the
interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">although depreciation and
amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such
replacements; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">equity-based compensation expense is
and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; </FONT></DD></DL>
</DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>53</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
 <UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA does not reflect the
impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">other companies in our industry may
calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. </FONT></DD></DL>
</UL>
 </DIV>
 <UL>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;&nbsp;Because
of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not
rely on any single financial measure to evaluate our business. <BR>
The following table reconciles net loss to EBITDA and Adjusted EBITDA for 2013, 2012, 2011, 2010 and 2009: </FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;27,<BR>
2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;28,<BR>
2009 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Adjusted EBITDA:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net loss, as reported</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,715</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(253</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(27</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,472</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,815</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,462</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,870</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,426</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,362</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,019</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,337</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,248</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">720</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">556</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">656</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">110</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">554</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">546</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,422</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7,576</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">4,757</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,163</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(91</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Asset disposals, closure costs, loss on interest cap and restaurant impairment<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(a)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">200</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">240</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">289</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">147</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Management and consulting fees<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(b)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">265</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">294</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">232</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">123</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">142</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Equity-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">73</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">126</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">190</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">293</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">201</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pre-opening costs<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(c)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,938</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">917</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">806</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">544</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">551</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Bargain purchase gain from acquisitions<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(d)</font></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(541</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Adjusted EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,899</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,153</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,440</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,411</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">949</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(a)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment, loss on interest cap and
restaurant closure expenses.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(b)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
fees payable to Brentwood pursuant to the Corporate Development and Administrative Services Agreement and fees paid to Greg
Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions&#151;Corporate Development and Administrative Services Agreement" and "Certain
Relationships and Related Party Transactions&#151;Consulting Agreement."
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(c)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
expenses directly associated with the opening of new restaurants that are incurred prior to opening, including pre-opening
rent.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(d)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
the excess of the fair value of net assets acquired over the purchase price related to our acquisitions of the Houston franchise
restaurants. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>54</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dm17901_management_s_discussion_and_an__man03466"> </A>
<A NAME="toc_dm17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND<BR>  RESULTS OF OPERATIONS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition,
liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the "Selected Consolidated Historical Financial and Other
Data" and our audited and unaudited consolidated financial statements and the related notes thereto, included elsewhere in this prospectus.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and
assumptions, such as our plans, objectives, expectations, and intentions set forth under the sections entitled "Risk Factors" and "Forward-Looking Statements." Our actual results and the timing of
events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section entitled "Risk Factors" and elsewhere
in this prospectus.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Zo&euml;s Kitchen is a fast growing, fast casual restaurant concept serving a distinct menu of fresh, wholesome, Mediterranean-inspired
dishes delivered with Southern hospitality. Founded in 1995 by Zo&euml; and Marcus Cassimus in Birmingham, Alabama, Zo&euml;s Kitchen is a natural extension of Zo&euml;
Cassimus' lifetime passion for cooking Mediterranean meals for family and friends. Since opening our first restaurant, we have never wavered from our commitment to make our food fresh daily and to
serve our customers in a warm and welcoming environment. We believe our brand delivers on our customers' desire for freshly-prepared food, convenient, unique and high-quality experiences and their
commitment to family, friends and enjoying every moment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Growth Strategies and Outlook  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We plan to execute the following strategies to continue to enhance our brand awareness and grow our revenue and
profitability:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>grow our restaurant base; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>increase our comparable restaurant sales; and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>improve our margins and leverage infrastructure. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>We
have expanded our restaurant base from 21 restaurants in seven states in 2008 to 111 restaurants in 15 states as of February&nbsp;24, 2014. We opened 27 restaurants in 2013, and we plan to open
28 to 30 restaurants in 2014. We expect to double our restaurant base in the next four years. To increase comparable restaurant sales, we plan to heighten brand awareness to drive new customer
traffic, increase existing customer frequency and grow our catering business. We believe we are well positioned for future growth with a developed infrastructure capable of supporting a restaurant
base that is greater than our existing footprint. Additionally, we believe we have an opportunity to optimize costs and enhance our profitability as we benefit from economies of scale. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Key Events  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Since the beginning of 2009, we have acquired eight franchise restaurants. In November 2011, we acquired three franchise restaurants in Houston,
Texas; in August 2012, we acquired three franchise restaurants in South Carolina, with two restaurants located in Columbia and one restaurant in Greenville; and in January 2014, we acquired two
franchise restaurants, with one located in Mobile, Alabama and one located in Destin, Florida. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>55</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Key Measures We Use to Evaluate Our Performance  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our
business is performing are restaurant sales, comparable restaurant sales growth, AUVs, restaurant contribution, number of new restaurant openings and Adjusted EBITDA. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Restaurant Sales  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Restaurant sales represents sales of food and beverages in Company-owned restaurants. Several factors affect our restaurant sales in any given period
including the number of restaurants in operation and per restaurant sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Comparable Restaurant Sales Growth  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Comparable restaurant sales refers to year-over-year sales comparisons for the comparable Company-owned restaurant base. We define the comparable
restaurant base to include those restaurants open for 18 periods or longer. As of December&nbsp;30, 2013, December&nbsp;31, 2012, December&nbsp;26, 2011 and December&nbsp;27, 2010, there were
55, 40, 27 and 18 restaurants, respectively, in our comparable Company-owned restaurant base. This measure highlights performance of existing restaurants, as the impact of new Company-owned restaurant
openings is excluded. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Comparable
restaurant sales growth is generated by an increase in customer traffic or changes in per customer spend. Per customer spend can be influenced by changes in menu prices and/or the mix and
number of items sold per check. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Measuring
our comparable restaurant sales allows us to evaluate the performance of our existing restaurant base. Various factors impact comparable restaurant sales,
including:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>consumer recognition of our brand and our ability to respond to changing
consumer preferences; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>overall economic trends, particularly those related to consumer spending; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to operate restaurants effectively and efficiently to meet
consumer expectations; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>pricing; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>customer traffic; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>per customer spend and average check amount; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>marketing and promotional efforts; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>local competition; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>trade area dynamics; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>introduction of new menu items; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>opening of new restaurants in the vicinity of existing locations. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>Consistent
with common industry practice, we present comparable restaurant sales on a calendar-adjusted basis that aligns current year sales weeks with comparable periods in the prior year, regardless
of whether they belong to the same fiscal period or not. Since opening new Company-owned restaurants will be a significant component of our revenue growth, comparable restaurant sales is only one
measure of how we evaluate our performance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table shows our quarterly comparable restaurant sales growth since 2010: </FONT></P>
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<TD WIDTH="17pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" style="font-family:arial;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="17pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal 2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal 2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal 2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal 2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q1 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q2 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q3 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q4 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q1 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q2 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q3 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q4 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q1 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q2 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q3 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q4 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q1 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q2 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q3 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Q4 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Comparable Restaurant Sales Growth</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8.0</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13.0</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">14.1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">13.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10.7</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8.1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">11.9</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16.8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">14.1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">15.0</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">12.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">12.1</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10.4</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5.5</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">7.7</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3.8</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:7pt;text-indent:-7pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Comparable Restaurants</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">16</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">18</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">22</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">24</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">25</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">27</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">32</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">34</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">35</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">40</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">43</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">50</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">52</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">55</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Average Unit Volumes (AUVs)  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>AUVs consist of the average sales of all Company-owned restaurants that have been open for a trailing 52-week period or longer. For purposes of AUV
calculations, the fifty-third week in 2012 has been excluded. AUVs allow management to assess changes in consumer traffic and per customer spending patterns at our restaurants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Restaurant Contribution  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Restaurant contribution is defined as restaurant sales less restaurant operating costs, which are cost of sales, labor and store operating expenses.
We expect restaurant contribution to increase in proportion to the number of new Company-owned restaurants we open and our comparable restaurant sales growth. Fluctuations in restaurant contribution
margin can also be attributed to those factors discussed below for the components of restaurant operating costs. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Number of New Restaurant Openings  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The number of Company-owned restaurant openings reflects the number of restaurants opened during a particular reporting period. Before we open new
Company-owned restaurants, we incur pre-opening costs. Some of our restaurants open with an initial start-up period of higher than normal sales volumes, which subsequently decrease to stabilized
levels. Typically, our new restaurants have stabilized sales after approximately 12 to 24&nbsp;weeks of operation, at which time the restaurant's sales typically begin to grow on a consistent basis.
In new markets, the length of time before average sales for new restaurants stabilize is less predictable and can be longer as a result of our limited knowledge of these markets and consumers' limited
awareness of our brand. New restaurants may not be profitable, and their sales performance may not follow historical patterns. The number and timing of restaurant openings has had, and is expected to
continue to have, an impact on our results of operations. The following table shows the growth in our Company-owned and franchise restaurant base for the fiscal years ended December&nbsp;30, 2013,
December&nbsp;31, 2012, December&nbsp;26, 2011 and December&nbsp;27, 2010: </FONT></P>

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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="68pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;27,<BR>
2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Company-Owned Restaurant Base</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Openings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>16</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>13</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchisee Acquisitions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurants at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>94</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Franchise Restaurant Base</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Openings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchisee Acquisitions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurants at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total restaurants</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>102</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>57</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>43</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2><B><I> Key Financial Definitions  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Revenue.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Restaurant sales represent sales of food and beverages in Company-owned restaurants, net of promotional allowances and employee meals. Restaurant sales in
a given period are directly impacted by the number of operating weeks in the period, the number of restaurants we operate and comparable restaurant sales growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Royalty
and Franchise fees represent royalty income from franchisees and initial franchise fees. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>57</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=61,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=146347,FOLIO='57',FILE='DISK134:[13ZDH1.13ZDH17901]DM17901A.;78',USER='WWASSER',CD='10-MAR-2014;12:00' -->
<A NAME="page_dm17901_1_58"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Cost of sales.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales consists primarily of food, beverage and packaging costs. The components of cost of sales are variable in nature, change with sales
volume and are influenced by menu mix and subject to increases or decreases based on fluctuations in commodity costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Labor.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Labor includes all restaurant-level management and hourly labor costs, including salaries, wages, benefits and bonuses, payroll taxes and other indirect
labor costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Store operating expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Store operating expenses include all other restaurant-level operating expenses, such as supplies, utilities, repairs and maintenance,
travel costs, credit card fees, recruiting, delivery service, restaurant-level marketing costs, security and occupancy expenses. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses include expenses associated with corporate and regional functions that support the
development and operations of restaurants, including compensation and benefits, travel expenses, stock compensation costs, legal and professional fees, advertising costs, information systems,
corporate office rent and other related corporate costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Depreciation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation consists of depreciation of fixed assets, including equipment and capitalized leasehold improvements. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Amortization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization consists of amortization of certain intangible assets including franchise agreements, trademarks, reacquired rights and favorable leases. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Pre-opening costs.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Pre-opening costs consist of expenses incurred prior to opening a new restaurant and are made up primarily of manager salaries, relocation costs,
supplies, recruiting expenses, employee payroll and training costs. Pre-opening costs also include occupancy costs recorded during the period between date of possession and the restaurant opening
date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Loss (gain) from disposal of equipment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Loss (gain) from disposal of equipment is composed of the loss on disposal of assets related to retirements and replacements
of leasehold improvements or equipment and impairment charges. These losses are related to normal disposals in the ordinary course of business, along with disposals related to selected restaurant
remodeling activities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Interest expense.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest expense includes cash and imputed non-cash charges related to our deemed landlord financing, non-cash charges related to our residual
value obligations, amortization of debt issue costs as well as cash payments and accrued charges related to our outstanding Credit Facility. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Bargain purchase gain from acquisitions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Bargain purchase gain from acquisitions represents the excess of the fair value assigned to the net assets of the Houston
franchise restaurant acquisition as compared to the consideration paid. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Provision for income taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for income taxes represents federal, state and local current and deferred income tax expense. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>58</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Consolidated Results of Operations  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Fifty-Two Weeks ended December&nbsp;30, 2013 Compared to Fifty-Three Weeks ended December&nbsp;31, 2012  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents selected consolidated comparative results of operations from our audited condensed consolidated financial statements for
the fifty-two weeks ended December&nbsp;30, 2013 compared to the fifty-three weeks ended December&nbsp;31, 2012: </FONT></P>

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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="53pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Increase / (Decrease) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Dollars </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percentage </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Revenue:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>115,748</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78,966</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>36,782</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Royalty fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>637</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>677</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(40</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (5.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchise fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>80</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(80</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenue</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>116,385</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,724</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>36,661</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46.0</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant operating costs:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales (excluding depreciation and amortization)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,063</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,845</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,218</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>47.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Labor</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>32,810</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21,567</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,243</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>52.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Store operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21,780</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,170</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,172</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,969</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,203</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,862</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,779</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,083</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,601</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,091</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>510</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46.7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pre-opening costs</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,938</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>917</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,021</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>111.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss (gain) from disposal of equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>175</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>240</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(65</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (27.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>115,401</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>77,018</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,383</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49.8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>985</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,706</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,721</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (63.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,019</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,682</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>72.0</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss on interest cap</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total other expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,044</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,707</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>73.0</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,059</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>369</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,428</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>656</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>622</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>34</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net loss</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(253</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,462</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,368.4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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</FONT> <FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restaurant sales.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the growth in restaurant sales from 2012 to 2013: </FONT></P>

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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:51pt;"><FONT  style="font-size:8pt;line-height:9pt;">(in thousands)

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</FONT>
</DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales for 2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>78,966</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Incremental restaurant sales increase due to:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Comparable restaurant sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,760</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurants not in Comparable restaurant base</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32,022</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales for 2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>115,748</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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 <P style="font-family:arial;"><FONT SIZE=2>Restaurant sales increased by $36.8&nbsp;million, or 46.6%, in 2013 compared to 2012. Restaurants not in the comparable restaurant base accounted for
$32.0&nbsp;million of this increase. The balance of the growth was due to an increase in comparable restaurant sales of $4.8&nbsp;million, or 6.9%, in 2013, comprised primarily of increased
customer traffic at our comparable restaurants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Royalty fees.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Royalty fees decreased by $0.04&nbsp;million, or 5.9%, in 2013 compared to 2012. The decrease was primarily attributable to the acquisition of the
South Carolina franchise restaurants in August 2012, which resulted in lower royalty fees in 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Franchise fees.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Franchise fees were $0.0 in 2013, a decrease of $0.08&nbsp;million compared to 2012. Two new franchise restaurants opened in 2012 compared to no
new franchise restaurant openings in 2013. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Cost of sales.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales increased $12.2&nbsp;million in 2013 compared to 2012, due primarily to the increase in restaurant sales. As a percentage of
restaurant sales, cost of sales increased from 32.7% in 2012 to 32.9% in
2013. This increase was primarily driven by food cost inflation with higher costs in beef, poultry and produce, partially offset by a minimal price increase. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Labor.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Labor increased by $11.2&nbsp;million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants opening in 2013. As a percentage of
restaurant sales, labor increased from 27.3% in 2012 to 28.3% in 2013. The increase in labor percentage was driven by an increase in average pay rates and staffing and training levels in new
Company-owned restaurant openings in 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Store operating expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Store operating expenses increased by $7.2&nbsp;million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants
opening in 2013. As a percentage of restaurant sales, store operating expense increased from 18.5% in 2012 to 18.8% in 2013. The increase in store operating expenses was primarily attributable to a
programmatic increase in maintenance costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses increased by $4.2&nbsp;million in 2013 compared to 2012, due primarily to costs
associated with supporting an increased number of restaurants. As a percentage of revenue, general and administrative expenses remained flat at 11.3% in 2012 and 2013. General and administrative
expenses includes $0.1&nbsp;million and $0.1&nbsp;million of equity-based compensation expense in 2013 and 2012, respectively, and $0.3&nbsp;million and $0.3&nbsp;million of management and
consulting fees in 2013 and 2012, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Depreciation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation increased by $2.1&nbsp;million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants opening in 2013. As a
percentage of revenue, depreciation increased from 4.7% in 2012 to 5.0% in 2013, due to slightly higher build-out costs. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Amortization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization increased by $0.5&nbsp;million in 2013 compared to 2012, due primarily to the increased amortization of the reacquired rights
intangible asset created by the August 2012 acquisition of the South Carolina franchise stores. In addition we have recognized $0.2&nbsp;million of accelerated amortization of franchise agreement
intangible assets related to executing a letter of intent to purchase two franchise restaurants in Destin, Florida and Mobile, Alabama. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Pre-opening costs.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Pre-opening costs increased by $1.0&nbsp;million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants opening in 2013
compared to 16 new Company-owned restaurants and the acquisition of three franchise restaurants in&nbsp;2012. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>60</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Loss (gain) from disposal of equipment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Loss from disposal of equipment decreased by $0.1&nbsp;million in the 2013 compared to 2012. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Interest expense.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest expense increased by $1.7&nbsp;million in 2013 compared to 2012, due primarily to $0.9&nbsp;million in incremental interest expense
under our Line of Credit and Term Loan to fund our capital expenditures. An increase in deemed landlord financing created an additional $0.8&nbsp;million in interest expense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Provision for income taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for income taxes increased from $0.6&nbsp;million in&nbsp;2012 to $0.7&nbsp;million in&nbsp;2013. Tax expense remains
relatively constant as it primarily reflects the accrual of income tax expense related to a valuation allowance in connection with the tax amortization of the Company's goodwill that was not available
to offset existing deferred tax assets. Due to the uncertain timing of the reversal of this temporary difference, it cannot be considered as a source of future taxable income for purposes of
determining a valuation allowance; therefore the tax liability cannot offset deferred tax assets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Fifty-Three Weeks Ended December&nbsp;31, 2012 Compared to Fifty-Two Weeks Ended December&nbsp;26, 2011  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents selected consolidated comparative results of operations derived from our audited condensed consolidated financial
statements for the fifty-three weeks ended December&nbsp;31, 2012 and the fifty-two weeks ended December&nbsp;26, 2011: </FONT></P>

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<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="51pt" style="font-family:arial;"></TD>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal&nbsp;Year&nbsp;Ended<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Increase&nbsp;/&nbsp;(Decrease) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Dollars </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percentage </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Statement of Operations Data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Revenue:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78,966</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,193</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>29,773</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>60.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Royalty fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>677</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>934</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(257</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2> (27.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchise fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>80</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>30</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>60.0</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenue</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,724</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50,177</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>29,547</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>58.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant operating costs:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales (excluding depreciation and amortization)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,845</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,756</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,089</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>64.0</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Labor</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21,567</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,424</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,143</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>60.7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Store operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,610</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,596</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,014</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>52.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,969</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,384</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,779</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,840</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>939</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,091</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>86.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pre-opening costs</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>917</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>806</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>111</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13.8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss (gain) from disposal of equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>240</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>244</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total costs and expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>77,018</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,387</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>27,631</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>55.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,706</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>790</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,916</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>242.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,248</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,089</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>87.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bargain purchase gain from acquisitions</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(541</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>541</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total other expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>707</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,630</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>230.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>369</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>83</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>286</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>344.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>622</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>110</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>512</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>465.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net loss</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(253</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(27</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(226</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">*</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Not
meaningful.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Our
fiscal year consists of 52 or 53 weeks ending on the last Monday of December. All fiscal years presented are 52&nbsp;weeks, with the
exception of Fiscal 2012 which consisted of 53&nbsp;weeks. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>61</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Restaurant sales.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the growth in restaurant sales from 2011 to 2012: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:51pt;"><FONT  style="font-size:8pt;line-height:9pt;">(in thousands)</FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>

<!-- COMMAND=ADD_SCROPPEDRULE,51pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Net Sales</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales for 2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>49,193</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Incremental restaurant sales increase due to:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Comparable restaurant sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,802</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurants not in comparable restaurant base</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>22,925</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>53rd&nbsp;week of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,046</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales for 2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>78,966</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Restaurant sales increased by $29.8&nbsp;million, or 60.5%, in 2012 compared to 2011. Restaurants not in the comparable restaurant base accounted for
$22.9&nbsp;million of this increase. The impact of 2012 having an additional operating week was approximately $1.0&nbsp;million in additional restaurant sales. The balance of the growth was due to
an increase in comparable restaurant sales of $5.8&nbsp;million, or 13.4%, in 2012, comprised primarily of increases in customer traffic at our comparable restaurants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Royalty fees.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Royalty fees decreased by $0.3&nbsp;million, or 27.5%, in 2012 compared to 2011. The decrease was primarily attributable to the acquisition of the
Houston, Texas and South Carolina franchise restaurants in November 2011 and August 2012, respectively, which resulted in lower royalty fees in 2012. Two franchise restaurants opened in 2012 and
generated $0.02&nbsp;million of incremental royalty fees. The balance of the growth was due to comparable restaurant royalty growth, which increased by $0.11&nbsp;million in 2012 compared to 2011. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Franchise fees.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Franchise fees increased by $0.03&nbsp;million in 2012 compared to 2011, due primarily to two new franchise restaurants opening in 2012 compared
to one new franchise restaurant opening in 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Cost of sales.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Cost of sales increased $10.1&nbsp;million in 2012 compared to 2011, due primarily to the increase in restaurant sales. As a percentage of
restaurant sales, cost of sales increased from 32.0% in 2011 to 32.7% in 2012. This increase was primarily driven by food cost inflation, partially offset by a minimal price increase. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Labor.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Labor increased by $8.1&nbsp;million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants opening and the acquisition of
three&nbsp;franchise restaurants in 2012. As a percentage of restaurant sales, labor remained constant year-over-year at 27.3%. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Store operating expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Store operating expenses increased by $5.0&nbsp;million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants
opening and the acquisition of three&nbsp;franchise restaurants in 2012. As a percentage of restaurant sales, store operating expenses decreased from 19.5% in 2011 to 18.5% in 2012. The decrease in
store operating expenses was primarily attributable to continued leveraging of fixed restaurant costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General and administrative expenses.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;General and administrative expenses increased by $2.6&nbsp;million in 2012 compared to 2011, due primarily to costs
associated with supporting an increased number of restaurants. As a percentage of revenue, general and administrative expense decreased from 12.7% in 2011 to 11.3% in 2012, due to increasing revenue
without proportionate increases in general and administrative expenses or administrative personnel. General and administrative expenses include $0.1&nbsp;million and $0.2&nbsp;million of
equity-based compensation expense in 2012 and 2011, respectively, and $0.3&nbsp;million and $0.2&nbsp;million of management and consulting fees in 2012 and 2011, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Depreciation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Depreciation increased by $0.9&nbsp;million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants opening and the acquisition
of three&nbsp;franchise restaurants in 2012. As a percentage of revenue, depreciation decreased from 5.7% in 2011 to 4.7% in 2012, due to leverage of increased AUVs. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>62</FONT></P>

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<A NAME="page_do17901_1_63"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Amortization.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Amortization increased by $0.5&nbsp;million in 2012 compared to 2011, due primarily to the increased amortization of the reacquired rights
intangible asset created by the 2012 and 2011 acquisitions of the South Carolina and Houston, Texas franchise restaurants, respectively. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Pre-opening costs.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Pre-opening costs increased by $0.1&nbsp;million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants opening in 2012
compared to 13 new Company-owned restaurants in 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Loss (gain) from disposal of equipment.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Loss from disposal of equipment increased by $0.2&nbsp;million in 2012 compared to 2011, due primarily to the remodeling
of the majority of the restaurants built prior to 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Interest expense.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest expense increased by $1.1&nbsp;million in 2012 compared to 2011, due primarily to $0.8&nbsp;million in incremental interest expense
under our Line of Credit and Term Loan to fund our capital expenditures. An increase in deemed landlord financing created an additional $0.3&nbsp;million in interest expense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Bargain purchase gain from acquisitions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Bargain purchase gain from acquisitions decreased by $0.5&nbsp;million in 2012 compared to 2011. The 2011 bargain
purchase gain from acquisitions was incurred in conjunction with the 2011 Houston, Texas franchise restaurant acquisition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Provision for income taxes.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Provision for income taxes increased by $0.5&nbsp;million in 2012 compared to 2011. The increase was due primarily to a reduction in
the 2011 provision related to the Houston, Texas franchise restaurant acquisition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Adjusted EBITDA  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>EBITDA is defined as net loss before interest, income taxes and depreciation and amortization. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Adjusted
EBITDA is defined as EBITDA plus equity-based compensation expense, bargain purchase gain from acquisitions, management and consulting fees, asset disposals, closure costs, loss on interest
cap and restaurant impairment and pre-opening costs. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by, or presented in accordance with GAAP. We believe
that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results. Our
management uses EBITDA and Adjusted EBITDA (i)&nbsp;as a factor in evaluating management's performance when determining incentive compensation and (ii)&nbsp;to evaluate the effectiveness of our
business strategies. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial
measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the
future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not
calculate Adjusted EBITDA in the same fashion. Moreover, our definitions of EBITDA and Adjusted EBITDA as presented throughout this prospectus are not the same as these or similar terms in the
applicable covenants of our Credit Facility. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted
EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations
are:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Adjusted EBITDA does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual commitments; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>63</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Adjusted EBITDA does not reflect changes in, or cash requirements for, our
working capital needs; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Adjusted EBITDA does not reflect the interest expense, or the cash
requirements necessary to service interest or principal payments, on our debts; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>equity-based compensation expense is and will remain a key element of our
overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Adjusted EBITDA does not reflect the impact of certain cash charges
resulting from matters we consider not to be indicative of our ongoing operations; and </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>other companies in our industry may calculate Adjusted EBITDA differently
than we do, limiting its usefulness as a comparative measure. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>Because
of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations
by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single
financial measure to evaluate our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table reconciles net loss to EBITDA and Adjusted EBITDA for 2013, 2012 and 2011: </FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Adjusted EBITDA:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss, as reported</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(253</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(27</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,462</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,870</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,426</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,019</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,248</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>656</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>622</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>110</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,422</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,576</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,757</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Asset disposals, closure costs, loss on interest cap and restaurant impairment<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>240</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management and consulting fees<SUP>(3)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>265</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>294</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>232</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>73</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>126</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>190</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pre-opening costs<SUP>(4)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,938</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>917</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>806</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bargain purchase gain from acquisitions<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(541</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted EBITDA</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,899</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,153</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,440</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Our
fiscal year consists of 52 or 53 weeks ending on the last Monday of December. All fiscal years presented are 52&nbsp;weeks, with the
exception of Fiscal 2012 which consisted of 53&nbsp;weeks.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment, loss on interest cap and
restaurant closure expenses.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
fees payable to Brentwood pursuant to the Corporate Development and Administrative Services Agreement and fees paid to Greg
Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions&#151;Corporate Development and Administrative Services Agreement" and "Certain
Relationships and Related Party Transactions&#151;Consulting Agreement." </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>64</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
expenses directly associated with the opening of new Company-owned restaurants that are incurred prior to
opening.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(5)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represents
the excess of the fair value of net assets acquired over the purchase price related to our acquisitions of the Houston, Texas
franchise restaurants. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><B> Liquidity and Capital Resources  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Potential Impacts of Market Conditions on Capital Resources  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have continued to experience positive trends in consumer traffic and increases in comparable restaurant sales, operating cash flows and restaurant
contribution margin. However, the restaurant industry continues to be challenged, and uncertainty exists as to the sustainability of these favorable trends. We have continued to implement various cost
savings initiatives, including savings in our food costs through waste reduction and efficiency initiatives in our supply chain and labor costs. We have developed new menu items to appeal to consumers
and used marketing campaigns to promote these items. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that cash and cash equivalents, expected cash flow from operations and planned borrowing capacity are adequate to fund debt service requirements, operating lease obligations, capital
expenditures and working capital obligations for the next 13 periods. However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to
achieve anticipated levels of revenue and cash flow from operations and our ability to manage costs and working capital successfully. See "Risk Factors&#151;Risks Related to Our Business and
Industry&#151;We expect to need capital in the
future, and we may not be able to generate sufficient cash flow or raise capital on acceptable terms to meet our needs." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Summary of Cash Flows  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our primary sources of liquidity and cash flows are operating cash flows and borrowings under our revolving Line of Credit. We use this to fund
capital expenditures for new Company-owned restaurant openings, reinvest in our existing restaurants, invest in infrastructure and information technology and maintain working capital. Our working
capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within several days of the related
sale, and we typically have at least 20&nbsp;days to pay our vendors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
material changes in working capital from 2012 to 2013 were comprised of a $0.7&nbsp;million decrease in current assets and a $6.1&nbsp;million increase in current liabilities. The decrease in
current assets was primarily due to less cash on hand at December&nbsp;30, 2013 driven primarily by the timing of the borrowings in relation to construction costs incurred. The increase in current
liabilities was due primarily to an increase in accounts payable of $2.8&nbsp;million and accrued expenses and other of $2.7&nbsp;million, which were both primarily driven by 9 new Company-owned
restaurant openings and the acquisition of two franchise restaurants within the two months after December&nbsp;30, 2013 as compared to only three new restaurant openings within the two months after
December&nbsp;31, 2012. </FONT></P>

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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Consolidated Statement of Cash Flows Data:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,924</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,796</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,764</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(28,242</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(21,283</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(13,519</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>16,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,130</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,600</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Our
fiscal year consists of 52 or 53 weeks ending on the last Monday of December. All fiscal years presented are 52&nbsp;weeks, with the
exception of Fiscal 2012 which consisted of 53&nbsp;weeks. </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>65</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Cash Flows Provided by Operating Activities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net cash provided by operating activities increased from $7.8&nbsp;million in 2012 to $10.9&nbsp;million in 2013. Operating assets and liabilities
increased by $3.8&nbsp;million, primarily due to an increase of $1.0&nbsp;million in accrued expenses and other relating to an increase in the number of restaurants under construction.
Additionally, deferred rent increased $2.1&nbsp;million due to new Company-owned restaurant openings and increased tenant improvement collections in 2013. These increases were offset by a decrease
in restaurant contribution and increased general and administrative expenses. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net
cash provided by operating activities increased from $4.8&nbsp;million in 2011 to $7.8&nbsp;million in 2012. Operating assets and liabilities increased by $0.6&nbsp;million, due primarily to
an increase of $1.1&nbsp;million in accounts payable relating to an increase in the number of restaurants under construction. The remainder of the increase is attributable to an increase in
restaurant contribution driven by 16 new Company-owned restaurant openings in 2012 and the acquisition of the three South Carolina franchise restaurants. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Cash Flows Used in Investing Activities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net cash used in investing activities increased from $21.3&nbsp;million in 2012 to $28.2&nbsp;million in 2013. The increase was primarily due to
construction costs for 27 new Company-owned restaurants opened in 2013 compared to 16 new Company-owned restaurants and the acquisition of three franchise restaurants in 2012, as well as capital
expenditures for future restaurant openings, maintaining our existing restaurants and certain other projects. This increase was offset by the acquisition of the South Carolina franchise restaurants in
2012. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net
cash used in investing activities increased from $13.5&nbsp;million in 2011 to $21.3&nbsp;million in 2012. The increase was due primarily to construction costs for 16 new Company-owned
restaurants opened in 2011 compared to 13 new Company-owned restaurants in 2012, as well as capital expenditures for future restaurant openings, maintaining our existing restaurants and certain other
projects. Additionally, the acquisition cost of the three South Carolina franchise restaurants in 2012 was larger than the acquisition cost of the three Houston, Texas franchise restaurants in 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Cash Flows Provided by Financing Activities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash flows provided by financing activities increased from $15.1&nbsp;million in 2012 to $16.0&nbsp;million in 2013, primarily due to a
$0.6&nbsp;million increase in proceeds from deemed landlord financing due to increased tenant improvement collections related to restaurants that we have been deemed the accounting owner of and an
increase of $0.3&nbsp;million in loan origination costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
flows provided by financing activities increased from $7.6&nbsp;million in 2011 to $15.1&nbsp;million in 2012, due primarily to increased net borrowings of $6.8&nbsp;million under our
Credit Facility. Additionally, proceeds from deemed landlord financing increased $0.9&nbsp;million due to increased tenant improvement collections related to restaurants that we have been deemed the
accounting owner. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Credit Facility  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have an existing credit agreement with a commercial finance company that includes a term loan and line of credit, which are collateralized by a
first-priority interest in, among other things, our accounts receivable, general intangibles, inventory, equipment, furniture and fixtures. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>On
June&nbsp;20, 2012, we signed the Second Amendment to the Credit Facility primarily to accommodate the purchase of the South Carolina franchise restaurants. As part of the Second Amendment, the
Credit Facility increased to $25.0&nbsp;million with incremental commitments of up to $5.0&nbsp;million. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>66</FONT></P>

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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On November&nbsp;30, 2012, we signed the Third Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of the Term Loan,
increasing the total outstanding borrowings under the Term Loan to $25.0&nbsp;million. In addition, the Line of Credit was increased to $20.0&nbsp;million with incremental commitments of up to
$15.0&nbsp;million. Under the Credit Facility, we are required to enter into a rate contract, within 90&nbsp;days of the effective date of the amendment, providing protection against fluctuations
in interest rates with respect to at least 50% of the principal amount of the Term Loan. In February 2013, we entered into an interest rate cap agreement with an initial notional amount of
$12.3&nbsp;million. The notional amount amortizes commensurate with scheduled payments on the Term Loan. The instrument caps the one-month LIBOR rate at 2.0%, which is a component of the total rate
on the Term Loan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
November&nbsp;26, 2013, we signed the Fourth Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of the Term Loan, increasing the total
outstanding borrowings under the Term Loan to $38.5&nbsp;million. In addition, the Line of Credit was increased to $26.5&nbsp;million with incremental commitments of up to $15.0&nbsp;million.
The maturity date for the Term Loan and the Line of Credit is November&nbsp;29, 2017. We are required to make quarterly payments equal to 1.25% of the new term loan commitment amount on the last
business day of each March, June, September and December beginning on December&nbsp;31, 2013. Any remaining balance will be repaid upon maturity. The interest rate for our debt was 5.25% and 6.0% at
December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. The Credit Facility includes customary covenants, including covenants limiting fundamental changes and certain transactions and
payments. In addition, we are required to satisfy three quarterly financial covenants: (1)&nbsp;a consolidated leverage ratio of less than 5.75 to 1.00 through to December&nbsp;31, 2014 and a
consolidated leverage ratio of less than 5.50 to 1.00 thereafter, (2)&nbsp;a
consolidated fixed charge coverage ratio of greater than 1.25 to 1.00, and (3)&nbsp;a capital expenditure incurrence test, which increases every year during the duration of the credit agreement. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
conjunction with amendments to the Credit Facility, we incurred and capitalized $0.3&nbsp;million of loan costs in the fifty-two weeks ended December&nbsp;30, 2013. During the fifty-three weeks
ended December&nbsp;31, 2012, we incurred and capitalized $0.6&nbsp;million of loan costs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
January&nbsp;31, 2014, we signed the Fifth Amendment to the Credit Facility. Under the Fifth Amendment to the Credit Facility, the consolidated leverage ratio which we are required to satisfy was
raised to less than (1)&nbsp;5.85 to 1.00 through to the last day of the second fiscal quarter of&nbsp;2014, (2)&nbsp;5.80 to&nbsp;1.00 through to the third fiscal quarter of&nbsp;2014,
(3)&nbsp;5.75 to&nbsp;1.00 for the period commencing the first day of the fourth fiscal quarter of&nbsp;2014 to the last day of the fourth fiscal quarter of&nbsp;2015, and (4)&nbsp;5.50
to&nbsp;1.00 thereafter. The applicable multiple for determining the maximum loan balance under the Line of Credit was also increased to (a)&nbsp;4.25 for the period through to the second to last
day of the third fiscal quarter of&nbsp;2014, (b)&nbsp;4.15 for the period commencing on the last day of the third fiscal quarter of&nbsp;2014 through to the second to last day of the fourth
fiscal quarter of&nbsp;2014, (c)&nbsp;4.00 for the period commencing on the last day of the fourth fiscal quarter of&nbsp;2014 through to the second to last day of the first fiscal quarter
of&nbsp;2016, and (d)&nbsp;3.75 thereafter. As of February&nbsp;24, 2014, we were in compliance with all of our covenants under the Credit Facility. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of February&nbsp;24, 2014, we had $46.8&nbsp;million outstanding under our $65.0&nbsp;million Credit Facility, including $38.0&nbsp;million under the Term Loan and $8.8&nbsp;million under
the Line of Credit, and $3.0&nbsp;million of additional available borrowing capacity at such date. We intend to use the net proceeds from this offering to repay the entire amount of the outstanding
borrowings under our Credit Facility. After giving effect to this offering and the use of proceeds therefrom, we believe we will have capacity to borrow the full $26.5&nbsp;million amount under the
Line of Credit. See "Use of Proceeds." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>67</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Contractual Obligations  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table presents our commitments and contractual obligations as of December&nbsp;30, 2013, as well as our long-term obligations: </FONT></P>

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<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Payments Due by Period </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Less than<BR>
1&nbsp;year </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Between<BR>
1-3&nbsp;years </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Between<BR>
3-5&nbsp;years </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>More than<BR>
5&nbsp;years </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(Dollars&nbsp;in thousands)</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term debt obligations<SUP>(1)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>41,400</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,925</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,850</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,625</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest payments on long-term debt obligations<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,408</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,528</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,754</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,126</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating lease obligations<SUP>(3)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>132,479</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,030</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,621</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,642</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>96,186</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deemed landlord financing<SUP>(4)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46,992</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,234</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,571</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,805</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,382</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>226,279</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,717</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,796</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56,198</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>131,568</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
aggregate principal payments on the Credit Facility. We expect to use the net proceeds from this offering to repay the entire amount
of the outstanding borrowings under our Credit Facility. See "Use of Proceeds."
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
the interest due on the Term Loan and the Line of Credit at a 5.25% interest rate and a 0.5% interest rate on the unused balance of
the Line of Credit (rates as of December&nbsp;30, 2013). As of December&nbsp;30, 2013, we had $2.9&nbsp;million outstanding under the Line of Credit and an unused balance of
$23.6&nbsp;million. Assumes no new borrowings on the Line of Credit.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
base lease terms and certain optional renewal periods that are included in the lease term in accordance with accounting guidance
related to leases.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
base lease terms and certain optional renewal periods for restaurant locations where we have been deemed to be the accounting owner
of the landlord's shell that are included in the lease term in accordance with accounting guidance related to leases. </FONT></DD></DL>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Off-Balance Sheet Arrangements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>At December&nbsp;30, 2013, we did not have any off-balance sheet arrangements, except for restaurant leases. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Critical Accounting Policies and Estimates  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our discussion and analysis of operating results and financial condition are based upon our financial statements. The preparation of our financial
statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent
assets and liabilities. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Our
critical accounting policies are those that materially affect our financial statements and involve difficult, subjective or complex judgments by management. Although these estimates are based on
management's best knowledge of current events and actions that may impact us in the future, actual results may be materially different from the estimates. We believe the following critical accounting
policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements and that the judgments and estimates are reasonable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Leases  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We lease space for various restaurant locations under long-term non-cancelable operating leases from unrelated third parties. Most of our leases are
classified as operating leases under ASC 840&#151;Leases. Rent expense, including rent-free periods if applicable, is recognized on a straight-line basis over the lease term. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>68</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>The
lease term for all types of leases begins on the date we become legally obligated for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes
cancelable option periods where failure to exercise such options would result in an economic penalty. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
some cases, the asset we will lease requires construction to ready the space for its intended use, and in certain cases, we have involvement with the construction of leased assets. The construction
period begins when we execute our lease agreement with the property owner and continues until the space is substantially complete and ready for its intended use. In accordance with ASC 840-40-55, we
must consider the nature and extent of our involvement during the construction period, and in some cases, our involvement results in us being considered the accounting owner of the construction
project; in such cases, we capitalize the landlord's construction costs, including the value of costs incurred up to the date we execute our lease (e.g., our portion of any costs of the building
"shell") and costs incurred during the remainder of construction period, as such costs are incurred. Additionally, ASC&nbsp;840-40-55 requires us to recognize a financing obligation for construction
costs incurred by the landlord. One example of involvement that results in Zo&euml;s Kitchen being considered the accounting owner is a case where Zo&euml;s Kitchen leases a "cold
shell." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Once
construction is complete, we are required to perform a sale-leaseback analysis pursuant to ASC 840-40 to determine if we can remove the landlord's assets and associated financing obligations from
the consolidated balance sheet. In certain leases, we maintain various forms of "continuing involvement" in the property, thereby precluding us from derecognizing the asset and associated financing
obligations following the construction completion. In those cases, we will continue to account for the asset as if we are the legal owner, and the financing obligation similar to other debt, until the
lease expires or is modified to remove the continuing involvement that prohibits derecognition. Once de-recognition is permitted we would be required to account for the lease as either operating or
capital in accordance with ASC&nbsp;840. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
determined that we were the accounting owner of a total of 18 and 31 leases as a result of the application of build-to-suit lease accounting as of December&nbsp;31, 2012 and December&nbsp;30,
2013, respectively. We had six and three of these buildings under construction as of December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. In order to prevent Zo&euml;s
Kitchen from being deemed the accounting owner for future leases or ensuring that those that do so will qualify for de-recognition once construction is complete, we are taking measures to ensure that
our leases language does not include any forms of continuing involvement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
conjunction with these leases, we also record deemed landlord financing equal to the total construction costs incurred by the landlord prior to turning the property over to us. These building lease
obligations will be settled through a combination of periodic cash rental payments and the return of the leased property at the expiration of the lease. Application of this accounting model means
that, at the end of the expected occupancy period, which may include lease renewal periods, any remaining obligation in excess of the depreciated carrying value of the fixed asset will be recognized
as a non-cash gain on derecognition of the property and extinguishment of the obligation. We do not report rent expense for the properties which are deemed owned for accounting purposes. Rather,
rental payments required under the lease are considered debt service and applied to the deemed landlord financing and interest expense. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Deferred Rent  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain leases contain annual escalation clauses based on fixed escalation terms. The excess of cumulative rent expense (recognized on a straight-line
basis) over cumulative rent payments made on leases with fixed escalation terms is recognized as deferred rent liability in the accompanying balance sheets. Also included in deferred rent are lease
incentives provided by landlords upon entering into leases, often related to landlord payments for tenant improvements that we commonly negotiate when opening new restaurants to help fund the
build-out costs. These costs typically include general construction to alter the layout of the restaurant, leasehold improvements, and other miscellaneous items. We capitalize our leasehold
improvements and record a deferred liability for the amount of cash received from the landlord, which is </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>69</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>amortized
on a straight-line basis over the lease term as defined above. The amortization of the deferred liability related to these tenant improvements is recorded as a reduction of rent expense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
the improvements made to the property are considered landlord assets we do not record either an asset or liability unless the overall arrangement is within the scope of ASC&nbsp;840-40-55 as
discussed under Leases. For leases where we are considered to be the owner of the construction project and receive tenant improvement allowances, we record these amounts received as a borrowing under
the deemed landlord financing liability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Lease
term is determined at lease inception and includes the initial term of the lease plus any renewal periods that are reasonably assured to occur. The lease term begins when we have the right to
control the use of the property. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize
contingent rent expense provided the achievement of that target is considered probable. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Revenue Recognition  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We recognize revenue when food and beverage products are sold. Revenue is reported net of sales and use taxes collected from customers and remitted to
government taxing authorities. We sell gift cards which do not have an expiration date and do not deduct non-usage fees from outstanding gift card balances. Gift card revenue is recognized when the
gift card is redeemed by the customer or when it is determined that the likelihood of the gift card being redeemed is remote and there is no legal obligation to remit the unredeemed gift cards to the
relevant jurisdiction. We recognize gift card breakage as revenue by applying our estimate of the rate of gift card breakage over the period of estimated performance. These estimates are based on
customers' historical redemption rates and patterns. As of December&nbsp;30, 2013, we recognized $0.3&nbsp;million from gift card revenue. We did not recognize any revenue from gift card breakage
for the years ended December&nbsp;31, 2012 and December&nbsp;26, 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Franchise Fee and Royalty Accounting  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We recognize initial franchise fee revenues when substantial performance of all franchisor obligations has been achieved. Substantial performance is
achieved when we have no remaining obligation or intent to refund any cash or to forgive any unpaid notes or receivables from franchisees; has performed substantially all of the initial services
required by the license agreement; and has met all other material conditions or obligations. The commencement of operations by the franchisee indicates substantial performance has occurred. If
substantial performance of our obligations has not been completed, recognition as revenue of such amounts received is deferred until all material services or conditions have been satisfied by us. In
addition, monthly royalties are recognized as revenue when earned. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Valuation of Goodwill, Long-Lived and Other Intangible Assets  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Goodwill represents the excess of the purchase price of the acquired businesses over the fair value of the assets acquired and liabilities assumed
resulting from the acquisition. In accordance with the provisions of ASC 350&#151;Intangibles&#151;Goodwill and Other, goodwill and indefinite lived intangible assets acquired in a
purchase business combination are not amortized, but instead tested for impairment at least annually or more frequently should an event occur or circumstances indicate that the carrying amount may be
impaired. Such events or circumstances may be a significant change in business climate, economic and industry trends, legal factors, negative operating performance indicators, significant competition,
changes in strategy or disposition of a reporting unit or a portion thereof. For purposes of applying ASC 350, we have identified a single reporting unit, as that term is defined in ASC 350, to which
goodwill is attributable. We prepared our annual impairment testing of goodwill on the last day of the fiscal year and determined that the fair value of our reporting unit containing goodwill
substantially exceeded its carrying value as of December&nbsp;30, 2013, the most recent impairment test. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>70</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Goodwill
impairment testing is a two-step test. The first step identifies potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair
value exceeds its carrying amount, goodwill is not considered impaired and the second step of the test is unnecessary. If the carrying amount of a reporting unit's goodwill exceeds its fair value, the
second step measures the impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is
determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
fair value of the reporting unit is estimated using a combination of market earnings multiples and discounted cash flow methodologies. This requires significant judgments including estimation of
future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth of our business, the useful life over which cash flows will occur and determination of our
weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>A
trade name is considered to be an important element associated with the sales appeal of certain products and services. The trade name distinguishes goods and services from competitors, indicates the
source of the goods and services, and serves as an indication of the quality of the product. Our trade name consists of various protected words, symbols, and designs that help identify our products
and services such as the "Zo&euml;s Kitchen" trademark. This capitalized cost is being amortized on a straight-line basis over its estimated useful life of 20&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Changes
in projections or estimates, a deterioration of operating results and the related cash flow effect or a significant increase in the discount rate or decrease in the royalty rate could decrease
the estimated fair value and result in impairments. We assess potential impairments of our long-lived assets in accordance with the provisions of ASC 360&#151;Property, Plant and Equipment. An
impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors considered by us include, but are not limited
to: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall
business; significant negative industry or economic trends. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
recognized no impairment losses during the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011. In 2011, we wrote off the net franchise agreement intangible
asset related to the Houston Shepherd restaurant in the amount of $156,141 as a component of bargain purchase gains from acquisitions associated with such franchise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Equity-Based Compensation Expense  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain of our employees have been granted Class&nbsp;B units in Zoe's Investors, pursuant to its limited liability company agreement. All
equity-based compensation awards granted to our employees prior to fiscal year 2012 contained service conditions only, while all equity-based compensation awards granted to our employees starting in
fiscal year 2012 and for all subsequent periods contain both service and performance conditions. As the performance condition in these equity-based compensation awards is a change in control
provision, we have determined that the performance condition is not probable of being met on the grant date of these awards and accordingly have not yet recorded equity-based compensation for all
awards granted starting in fiscal year 2012. Expense for these awards will be recorded when it is probable that a change in control will occur. As our employees have been granted equity-based awards
in Zoe's Investors, the related compensation expense, if any, has been reflected in our consolidated financial statements, with a corresponding capital contribution from our Zoe's Investors. None of
our employees have been granted equity-based awards in our common stock. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
measure equity-based awards granted to our employees prior to 2012 at fair value on the grant date and recognize the corresponding compensation expense for those awards, net of estimated
forfeitures, over the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>71</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>requisite
service period, which is generally the vesting period of the respective award. The straight-line method is applied to all awards with service conditions, while the graded-vesting method is
applied to all awards with both service and performance conditions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
recognize compensation expense only for the portion of awards that are expected to vest. In developing a forfeiture rate estimate, we have considered our historical experience to estimate
pre-vesting forfeitures for service based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially
different from our estimate, we may be required to record adjustments to equity-based compensation expense in future periods. These assumptions represent our best estimates, but involve inherent
uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, our equity-based compensation expense could be materially
impacted in that period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
all equity-based awards granted in 2012 and subsequent periods, no equity-based compensation expense has been recorded in the consolidated statements of operations. These equity-based awards
require that both service and performance conditions be met prior to the employee vesting. As the performance condition of the awards is accelerated solely by a change in control of our overall
company, we have concluded that it is not probable that
the award will vest until such event occurs. We plan to modify certain of the awards so either the service condition or the performance condition must be met prior to the employee vesting. Upon
completion of this offering, these equity-based awards will be converted to restricted shares, based on a waterfall calculation, at the determined price of the initial public offering. For additional
information on the Distribution Transactions, see "Our Corporate Information." The shares will consist of both vested and unvested shares. The compensation expense on the vested shares will be
recognized immediately at the time of the initial public offering based on the price of our initial public offering, while the compensation expense on the unvested shares will be recognized
straight-line over the remaining vesting period. The amount of compensation expense will be determined after the share conversion and pricing of the initial public offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Valuation of Class&nbsp;B units  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The fair value of the Class&nbsp;B units of Zoe's Investors is determined on each grant date. In the absence of a public trading market for Zoe's
Investors units, the determination of the fair value of Zoe's Investors units was performed using methodologies, approaches and assumptions consistent with the American Institute of Certified Public
Accountants Audit and Accounting Practice Aid Series: Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In addition, Zoe's Investors Board of Directors considered various
objective and subjective factors, along with input from management, to determine its best estimate of the fair value of its Class&nbsp;B units as of each grant date, including the
following:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>peer group trading multiples; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the prices at which Zoe's Investor sold shares of preferred units and the
superior rights and preferences of the preferred units relative to Zoe's Investor's Class&nbsp;B units at the time of each grant; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our historical and forecasted performance and operating results; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our business strategy; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the composition of, and changes to, our management team and Board of
Directors; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the lack of an active public market for our capital units; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the likelihood of achieving a liquidity event such as a sale of Zoe's
Investors or our company or an initial public offering, or IPO, given prevailing market conditions; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>external market conditions affecting the fast casual restaurant industry;
and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>trends within the fast casual restaurant industry. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>At
each grant date, Zoe's Investors management determined the fair value of the Class&nbsp;B units by utilizing the guideline public company method or&nbsp;GPCM. They estimated our Zoe's Investors
enterprise value by comparing it to publicly traded companies in our industry group. The companies used for comparisons </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>72</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>under
the&nbsp;GPCM were selected based on a number of factors, including but not limited to, the similarity of their industry, business model and financial risk to those of our Zoe's Investors. The
valuation considered the average EBITDA trading multiples of the guideline public companies and applied that multiple to our projected EBITDA. The valuation of the Class&nbsp;B units also considered
the priority and preferences associated with our Zoe's Investors Class&nbsp;A and Class&nbsp;C units and the illiquid nature of the Class&nbsp;B units in determining the fair value of the
Class&nbsp;B units. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
valuation of the Class&nbsp;B units at each grant date varied primarily based on changes in the average EBITDA multiples of the guideline public companies due to changes in the market
environment for these companies and our industry and on changes in our projected EBITDA due to changes in budget year over year, including
considering the number of restaurants under development, the funding being used to complete the opening of those restaurants and the expected operating performance of our business. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes by grant date the number of units granted, the related threshold price of the units granted, and the fair value of units on date of grant from January&nbsp;1, 2012
through December&nbsp;30, 2013: </FONT></P>

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<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:38pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Grant Date

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of<BR>
Units Granted </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Per Share<BR>
Threshold<BR>
of Units<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fair Value of<BR>
Units on<BR>
Date of Grant<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font> </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>July&nbsp;30, 2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>140,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><SUP>(2)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>April&nbsp;8, 2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>80,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>December&nbsp;30, 2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>105,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11.88</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11.88</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">The
Per Share Threshold Price of Units represents the determination by our Zoe's Investors' Board of Directors of the market value of our
Parent's Class&nbsp;B units on the date of grant, as determined taking into account our most recently available valuation as well as additional factors, which may have changed since the date of the
most recent valuation through the date of grant.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,000
of such units are no longer outstanding as of December&nbsp;30, 2013 because certain employees are no longer employed by
Zo&euml;s Kitchen.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Fair
value is for reference only. Expense to be recognized will be based on the number of common shares issued as a result of the Distribution
Transactions at the fair value of the Company's initial public offering price. </FONT></DD></DL>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>No compensation expense is recognized for all awards granted in fiscal 2012 and subsequent periods. As such, the fair value of the common units determined by
Zoe's Investors' Board of Directors will be used to determine the number of common stock each employee is entitled to upon a change of control. Upon completion of this offering, the equity-based
compensation expense we would record for each vested award will be equal to the initial public offering price per share of our common stock multiplied by the number of shares of our common stock to
which our employees would be entitled. The remaining unvested shares will be fair valued and expense will be recognized over the remaining service life. See "&#151;Equity-Based Compensation
Expense." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Income Tax  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We recognize deferred tax assets and liabilities for the expected future tax consequences or events that have been included in the financial
statements or tax returns. We are also required to record a valuation allowance against any deferred tax assets, if it is more likely than not that all or some of the deferred tax assets will not be
realized. The determination is based upon our analysis of existing deferred tax assets, expectations of our ability to utilize these tax attributes through a review of historical and projected taxable
income and establishment of tax strategies. If we are not able to implement the necessary tax strategies and our future taxable income is reduced, the amount of tax assets considered realizable could
be reduced in the near term. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>73</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
only record tax benefits for positions that we believe are more likely than not of being sustained under audit examination based solely on the technical merits of the associated tax position. The
amount of tax benefit recognized in the financial statements for any position are measured based on the largest amount of the tax benefit that we believe is greater than fifty percent likelihood of
being realized upon ultimate settlement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Tax
liabilities are adjusted as new, previously unknown information becomes available. Due to the inherent uncertainty involved in estimation of tax liability, actual payment could be materially
different from the estimated liability. These differences will impact the amount of income tax expense recorded in the period in which they are determined. Although we consider tax liabilities
recorded for the years ended December&nbsp;30, 2013 and December&nbsp;31, 2012 to be appropriate, the ultimate resolution of such matters could have a potentially material favorable or unfavorable
impact on our consolidated financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> JOBS Act  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On April&nbsp;5, 2012, the JOBS Act was enacted. Section&nbsp;107 of the JOBS Act provides that an emerging growth company can take advantage of
the extended transition period provided in Section&nbsp;7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay
the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period
and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if
as an emerging growth company we choose to rely on such exemptions, we may not be required to, among other things, (i)&nbsp;provide an auditor's attestation report on our systems of internal
controls over financial reporting pursuant to Section&nbsp;404, (ii)&nbsp;provide all of the compensation disclosure that may be required of non-emerging growth public companies under the
Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii)&nbsp;comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm
rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv)&nbsp;disclose certain
executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee
compensation. These exemptions will apply until we no longer meet the requirements of being an emerging growth company. We will remain an emerging growth company until the earlier of (1)&nbsp;the
last day of the fiscal year (a)&nbsp;following the fifth anniversary of the completion of this offering, (b)&nbsp;in which we have total annual gross revenue of at least $1.0&nbsp;billion or
(c)&nbsp;in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700&nbsp;million as of the last business
day of our prior second fiscal quarter, and (2)&nbsp;the date on which we have issued more than $1.0&nbsp;billion in non-convertible debt during the prior three-year period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Quantitative and Qualitative Disclosures about Market Risk  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest Rate Risk  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are exposed to market risk from changes in interest rates on debt and changes in commodity prices. Our exposure to interest rate fluctuations is
limited to our outstanding indebtedness under our Credit Facility, which bears interest at variable rates. As of December&nbsp;30, 2013, there was $41.4&nbsp;million in outstanding borrowings
under our Credit Facility. A plus or minus 1.0% in the effective interest rate applied on these loans would have resulted in a pre-tax interest expense fluctuation of $0.5&nbsp;million on an
annualized basis. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Commodity Price Risk  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We purchase certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market
conditions and other factors which are not considered predictable or within our control. Although these products are subject to changes in commodity prices, certain purchasing contracts or pricing
arrangements we use contain risk management techniques designed to minimize price volatility. In many cases, we believe we will be able to address material commodity cost increases by adjusting our
menu pricing or changing our product delivery strategy. However, increases in commodity prices, without adjustments to our menu prices, could increase restaurant operating costs as a percentage of
Company-owned restaurant sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Recent Accounting Pronouncements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In July&nbsp;2013, the FASB issued Accounting Standards Update ("ASU") No.&nbsp;2013-11, "Presentation of an Unrecognized Tax Benefit When a Net
Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists," to require that in certain cases, an unrecognized tax benefit, or portion of an unrecognized tax benefit, should
be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the
same taxing jurisdiction. ASU&nbsp;2013-11 is effective as of December&nbsp;14, 2013. We do not believe the adoption of this standard will have a significant impact on our consolidated financial
position or results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Effective
January&nbsp;1, 2013, we adopted ASU No.&nbsp;2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities." The adoption of ASU 2013-01 did not have a
significant impact on our consolidated financial position or results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Effective
December&nbsp;31, 2012, we adopted ASU No.&nbsp;2012-02 "Testing Indefinite-Lived Intangible Assets for Impairment." ASU 2012-02 simplifies how entities test indefinite-lived intangible
assets for impairment and permits an entity to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. The adoption of
ASU 2012-02 did not have a significant impact on our consolidated financial position or results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Effective
January&nbsp;1, 2012, we adopted ASU No.&nbsp;2011-05, "Presentation of Comprehensive Income." The adoption of ASU 2011-05 concerns presentation and disclosure only and did not have an
impact on our consolidated financial position or results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Effective
January&nbsp;1, 2012, we adopted ASU No.&nbsp;2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and International Financial Reporting
Standards." The adoption of ASU 2011-04 did not have a significant impact on our consolidated financial position or results of operations. </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  BUSINESS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our Company  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Born in the Mediterranean. Raised in the South. Bringing Mediterranean Mainstream.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Zo&euml;s Kitchen is a fast growing, fast casual restaurant concept serving a distinct menu of fresh, wholesome, Mediterranean-inspired
dishes delivered with Southern hospitality. Founded in 1995 by Zo&euml; and Marcus Cassimus in Birmingham, Alabama, Zo&euml;s Kitchen is a natural extension of Zo&euml;
Cassimus' lifetime passion for cooking Mediterranean meals for family and friends. Since opening our first restaurant, we have never wavered from our commitment to make our food fresh daily and to
serve our customers in a warm and welcoming environment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe our brand delivers on our customers' desire for freshly-prepared food and convenient, unique and high-quality experiences. As a result, we have delivered strong growth in restaurant count,
comparable restaurant sales, AUVs, revenues and Adjusted EBITDA. We have grown from 21 restaurants across seven states, including five franchised locations, in 2008 to 111 restaurants across 15
states, including six&nbsp;franchised locations, as of February&nbsp;24, 2014, representing a CAGR of 38.1%. Our Company-owned restaurants have generated 16 consecutive fiscal quarters of positive
comparable restaurant sales growth, due primarily to increases in customer traffic, which we believe demonstrates our growing brand equity. We have grown our Company-owned restaurant AUVs from
approximately $1.1&nbsp;million in 2009 to approximately $1.5&nbsp;million in 2013, representing an increase of 32.9% over that time period. From 2009 to 2013, our total revenue increased from
$20.8&nbsp;million to $116.4&nbsp;million and Adjusted EBITDA increased from $0.9&nbsp;million to $10.9&nbsp;million. We generated a net loss of $2.8&nbsp;million and $3.7&nbsp;million in
2009 and 2013, respectively. For a reconciliation of Adjusted EBITDA, a non-GAAP term, to net income, see "Selected Historical Consolidated Financial and Other Data." Our growth in comparable
restaurant sales since 2009 has allowed us to invest significant amounts of capital to drive growth through the opening of new restaurants and the hiring of personnel required to support our growth
plans. </FONT></P>
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<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total Restaurants at End of Fiscal Year</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Comparable&nbsp;Restaurant<BR>
Sales&nbsp;Growth</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Average Unit Volumes<BR>
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<P style="font-family:arial;"><FONT SIZE=2><B> Our Concept  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Delivering Goodness in the Communities We Serve.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The word "zo&euml;," which means "life" in Greek, is embraced in every aspect of the Zo&euml;s Kitchen culture and is a key
component of our concept. Our mission is to "deliver goodness to our customers, from the inside out" by: (i)&nbsp;offering a differentiated menu of simple, tasty and fresh Mediterranean cuisine
complemented with several Southern staples; (ii)&nbsp;extending genuine Southern hospitality with personality, including food delivered to your table; (iii)&nbsp;providing an inviting,
cosmopolitan, casual-chic environment in our restaurants; and (iv)&nbsp;delivering an outstanding catering experience for business and social events. Our menu offers high-quality meals made from
scratch generally using produce, proteins and other ingredients that are predominantly preservative- and additive-free, including our appetizers, soups, salads, and kabobs. We believe our team members
are a reflection of our customers-educated, active and passionate-and embrace </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>our
culture of providing engaging, attentive service, which we believe helps drive brand advocacy. We believe we deliver a compelling value proposition by offering flavorful food that our customers
feel good about eating and providing friendly customer service in a warm, inviting atmosphere, all for an average per customer spend of $9.57 for 2013. Our food, including both hot and cold items, is
well suited for catering to a variety of business and social occasions, and we believe our strong catering offering is a significant competitive differentiator that generates consumer trial of our
menu and provides additional opportunities for existing customers to enjoy our food off-premise. For 2013, catering represented approximately 17% of our revenue. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe we provide an emotional connection to our target customer&nbsp;&#151; educated, affluent women and their families&nbsp;&#151; who represent approximately 70% of our
customer visits, based on internal estimates and third-party data. We promote our brand as an extension of our customers' own kitchens by offering high-quality food inspired by family recipes which
reminds them of food they may have prepared at home, while allowing them to spend extra time with family and friends to fuel a balanced and active lifestyle. We believe our menu is appealing during
both lunch and dinner, resulting in a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering) for 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our Industry  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We operate in the fast casual segment of the restaurant industry, which is one of the industry's fastest growing segments. According to Technomic, the
fast casual segment generated $31&nbsp;billion in sales in 2012 and is projected to grow at a CAGR of approximately 10% to $50&nbsp;billion by 2017. The largest 78 fast casual restaurant concepts
grew sales by 13.2% in 2012 to $24.2&nbsp;billion, compared to growth of 4.9% for the 500 overall largest restaurant chains in the United States. We are the largest U.S.-based fast casual restaurant
concept (by number of restaurants) featuring Mediterranean cuisine. Our differentiated menu offering flavorful Mediterranean food delivered to your table at an average per customer spend of $9.57 for
2013 positions us to compete successfully against other fast casual concepts as well as against casual dining restaurants, providing us with a large target market. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Our Strengths  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Love Life, Live Zo&euml;s!  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe the following strengths differentiate us from competitors and serve as the foundation for our continued growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our Food&#151;Simple. Tasty. Fresh!</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe the Zo&euml;s Kitchen experience is driven by providing simple, tasty and fresh Mediterranean food
at a compelling value to our customers. High-quality ingredients serve as the foundation of Zo&euml;s Kitchen. Our food is made from scratch daily, and we still serve some recipes that were
created in the Southern kitchen of our founder, drawing from her Greek heritage. We prepare our food by utilizing traditional Mediterranean preparation methods such as grilling and baking. Our menu is
a reflection of traditional Mediterranean cuisine, offering an abundance of fresh fruits, vegetables and herbs, grains, olive oil and lean proteins. We believe the variety on our menu allows people
with different preferences to enjoy a meal together.  </FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Simple.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our food is simply prepared
and made to order in our scratch kitchens. Our cooking philosophy is rooted in rich traditions that celebrate food, rather than in fads or trends. From our hummus, made fresh daily and served with
warm pita bread, to our flavorful salads and kabobs, we serve real food. By real food, we mean food made from simple ingredients, such as raw vegetables, fruits and legumes. We serve food the way it
was prepared 100 years ago&nbsp;&#151; raw, grilled or baked. Our goodness is created through the careful selection of quality, wholesome ingredients, time-honored preparations inspired by
Mediterranean culinary traditions, family recipes that have been passed down for generations and delivering balanced meals. </FONT></DD></DL>
</UL>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Tasty.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;True to our heritage, the
flavors in our menu are born in the Mediterranean and raised in the South. Inspired by family recipes and Zo&euml; Cassimus' simple, fresh-from-the-garden sensibility, our menu features
Mediterranean cuisine complemented with several Southern staples. We offer our customers wholesome, flavorful items such as our Mediterranean Tuna sandwich, as well as entr&eacute;es such as
chicken, steak and salmon kabobs and chicken and spinach roll-ups (tortillas stuffed with feta cheese, grilled chicken, sundried tomatoes and spinach), each of which is served with a choice of a side
item such as braised rosemary white beans, rice pilaf, pasta salad, roasted vegetables or seasonal fruit. Our culinary team delivers flavorful new menu additions with seasonal ingredients allowing our
customers to "Live Mediterranean." One example is our new Mediterranean Quinoa Salad where quinoa is combined with broccoli, tomatoes, onions and feta cheese to deliver a nutritious
entr&eacute;e packed with flavor. Our commitment to fresh food, combined with our traditional Mediterranean cooking philosophy, results in food options that are full of flavor. </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Fresh.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We seek to provide customers
with flavorful menu offerings made from high-quality ingredients that align with our customers' lifestyles. Fresh ingredients are delivered to our kitchens, and team members wash, cut and prepare food
from scratch daily. We utilize grilling as the predominant method of cooking our food, and there are no microwaves or fryers in our restaurants. We cater to a variety of dietary needs by offering
vegetarian, vegan, gluten-free and our calorie conscious Simply 500<SUP>TM</SUP> menu selections. We aim to provide food that makes our customers feel good about themselves and their decision to
choose Zo&euml;s Kitchen. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Differentiated Fast Casual Lifestyle Brand with a Desirable and Loyal Customer Base.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe the Zo&euml;s Kitchen brand reflects our customers' desire
for convenient, unique and high-quality experiences and their commitment to family, friends and enjoying every moment. We seek to deliver on these desires and to provide goodness to both the mind and
the body by fueling our customers' active lifestyle with nutritious, high-quality food that makes them feel great from the inside out. We believe we are an aspirational brand with broad appeal that
our customers
embrace as a reflection of their desired self-image&nbsp;&#151; active, vibrant, sophisticated, genuine, caring and passionate, which results in customer advocacy and repeat visits. Based on
third-party surveys, we estimate that approximately 94% of our surveyed customers intend to recommend Zo&euml;s Kitchen. We seek to strengthen our brand through grassroots marketing programs
and the use of social media and technology aimed at building long-term relationships with our customers and inspiring lifelong brand advocates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
provide a warm and welcoming environment, attracting customers from a variety of demographic groups. We believe our combination of menu offerings, ambience and location is designed to appeal to
educated and affluent women, who along with their families, represent approximately 70% of our customer visits. Our female customers generally lead active lifestyles, have an average annual household
income of over $100,000 and a majority of them are college educated. We believe this demographic represents a highly-desirable customer base with strong influence on a family's mealtime
decision-making and are strong brand advocates. We also believe they appreciate the authenticity of our brand and the quality of our menu offerings, admire that we are still cooking meals inspired by
family recipes and feel good about the food they provide to themselves and their families when choosing Zo&euml;s Kitchen. Additionally, we believe our attractive demographic mix, high
repeat visit rate and our ability to draw an average of approximately 2,500 customers to each of our restaurants per week makes us a desirable tenant to landlords and developers of lifestyle centers
seeking to drive traffic to complementary retail businesses. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Delivering a Contemporary Mediterranean Experience with Southern Hospitality.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We strive to provide an inviting and enjoyable customer experience through the
atmosphere of our restaurants and the friendliness of our team members. Our restaurants, highlighted by our distinct Zo&euml;s Kitchen stripes drawn from the color palette of many seaside
Mediterranean neighborhoods, are designed to be warm, welcoming and full of energy. Each of our restaurants has a unique layout to optimize the available space with consistent design cues that strive
to balance the warmth of dark wood with contemporary, colorful and cosmopolitan casual-chic d&eacute;cor. Our patios, a core feature of our restaurants, are an authentic part of both our
Southern </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>and
Mediterranean heritage and we believe they provide a relaxing and welcoming dining environment. We invite the community to be a part of each restaurant by showcasing local items such as artwork by
the children of our customers. Overall, we seek to create a warm, inviting environment that welcomes casual conversations, family moments or quick exchanges as our customers eat and enjoy a break from
their busy schedules. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>True
to our Southern heritage, we aim to deliver warm hospitality and attentive service whether our customers choose to dine-in, take-out or host a catered event. Our team members are a reflection of
our customers&nbsp;&#151; educated, active and passionate. They are the heart and soul of what we call "Southern hospitality with personality"&nbsp;&#151; making sure our customers
feel as welcome as they are well fed. Our team members are trained to deliver personalized service and maintain a clean and inviting atmosphere that fosters a pleasant dining experience. We offer
modified table service where, after ordering at the counter, our
customers' food is served at their table on china with silverware. Our team members routinely check on them throughout the meal and then bus their table, all without the expectation of receiving a
tip. We believe the atmosphere of our restaurants and the warmth of our team members encourages repeat visits, inspires advocacy and drives increased sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Diverse Revenue Mix Provides Multiple Levers for Growth.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe our differentiated menu of both hot and cold food enables our customers to utilize our
restaurant for multiple occasions throughout the day. We had a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering), and our catering business represented approximately
17% of revenue, in each case, for 2013. We view catering as our third day-part, which helps to increase AUVs and brand awareness by introducing our concept to new customers through trial. We believe
we effectively serve both small and large groups in our restaurants, as well as outside of our restaurants with our catering and home meal replacement alternatives, including our Zo&euml;s
Fresh Take<SUP>TM</SUP> grab-and-go coolers and our family dinner options. In addition, we also serve beer and wine in a majority of our restaurants. We believe the breadth of our offerings
provides us multiple levers to continue to drive growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Attractive Unit Economic Model with Proven Portability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our sophisticated, predictive site selection strategy and flexible new restaurant model have resulted in
growth in markets of varying sizes as we have expanded our restaurant base utilizing in-line, end-cap and free-standing restaurant formats. We believe our strong performance across a variety of
geographic areas and steady AUV growth are validation of our concept's portability. For 2013, our top 20 performing restaurants were spread across seven different states. We have experienced
consistent AUV growth across all of our restaurant vintages. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
restaurant model is designed to generate strong cash flow, attractive restaurant-level financial results and high returns on invested capital. We believe our unit economic model provides a return
on investment that is attractive to investors and supports further use of cash flow to grow our restaurant base. Our new restaurant investment model targets an average cash build-out cost of
approximately $750,000, net of tenant allowances, AUVs of $1.3&nbsp;million and cash-on-cash returns in excess of 30% by the end of the third full year of operation. On average, new restaurants
opened since the beginning of 2009 have exceeded these AUV and cash-on-cash return targets within the third year of operations. Additionally, since the majority of our restaurant base was built in
2009 or after, we believe our restaurants are well maintained and will likely require minimal additional capital expenditures in the near term, allowing a majority of our cash flow to be available for
investment in new restaurant development and other growth initiatives. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Experienced Management Team.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our strategic vision and results-driven culture are directed by our senior management team under the leadership of Kevin Miles, who
guided the growth of our Company from 22 to 111 restaurants. Mr.&nbsp;Miles joined Zo&euml;s Kitchen in 2009 as Executive Vice President of Operations. In 2011, he was promoted to
President and Chief Operating Officer, and in 2012, he was promoted to Chief Executive Officer. Mr.&nbsp;Miles is a fast casual industry veteran with over 20&nbsp;years of relevant experience
including leadership roles at La Madeleine French Bakery and Caf&eacute;, Baja Fresh Mexican Grill and Pollo Campero. He directs a team of dedicated and progressive leaders who are focused on
executing our </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>business
plan and implementing our growth strategy. We believe our experienced management team is a key driver of our restaurant growth and positions us well for long-term growth. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Our Growth Strategies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Bringing Mediterranean Mainstream.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We plan to execute the following strategies to continue to enhance our brand awareness and grow our revenue and profitability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Grow Our Restaurant Base.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have expanded our restaurant base from 21 restaurants in seven states in 2008 to 111 restaurants in 15 states as of February&nbsp;24,
2014. We opened 27 restaurants in 2013, and we plan to open 28 to 30 restaurants in 2014. We believe we are in the early stages of our growth story and estimate a long-term total restaurant potential
in the United States in excess of 1,600 locations. We utilize a sophisticated site selection process using proprietary methods to identify target markets and expansion opportunities within those
markets. Based on this analysis, we believe there is substantial development opportunity in both new and existing markets. We expect to double our restaurant base in approximately four years. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Increase Comparable Restaurant Sales.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have consistently demonstrated strong comparable restaurant sales growth, and we intend to generate future comparable
restaurant sales growth with an emphasis on the following goals: </FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Heighten brand awareness to drive new customer
traffic.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We utilize a marketing strategy founded on inspiring brand advocacy rather than simply capturing customers through traditional
tactics such as limited time offers. Our highly-targeted marketing strategy seeks to generate brand loyalty and promote advocacy by appealing to customers' emotional needs: (i)&nbsp;their passion
for wholesome and flavorful food; (ii)&nbsp;their desire for simple solutions to make life more convenient; (iii)&nbsp;their focus on choices as a reflection of self; and (iv)&nbsp;their desire
to be a guest at their own party. We have a long history of generating new traffic growth at our restaurants through the application of targeted advertising messages, local restaurant-level marketing
and the word-of-mouth of our existing customers to build brand recognition in the markets we serve.<BR></FONT>
<BR>

<P style="font-family:arial;"><FONT SIZE=2>We
utilize a variety of channels to communicate brand messaging and build relationships with customers. Our digital strategy includes social media, online influencer programming and blogs hosted on
our website and microsite. Our social community, including Facebook, Pinterest, Instagram and Twitter, includes more than 140,000 users combined. In addition, customers can opt into our e-mail
marketing program or download our custom mobile LIFE app, which consists of 293,000 unique members combined. These programs enable us to segment and target messaging applicable to each of these
members. We also use traditional methods to appeal to customers inside our restaurants, including point of purchase displays and cashier incentive programs. We build brand awareness through
partnerships with schools and community partners, as well as complementary businesses that target our core customers. We will continue to leverage our catering business, promotional events and a
targeted menu sampling strategy as effective means to introduce customers to the Zo&euml;s Kitchen brand. We believe the continued implementation of our highly-targeted marketing strategy,
combined with the core strengths of our brand, will increase brand awareness, build long-term customer advocacy and drive incremental sales at our restaurants.  </FONT></P>

</DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Increase existing customer
frequency.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We believe we will be able to continue to increase customer frequency by consistently providing fresh Mediterranean cuisine at
a compelling value. We intend to explore new menu additions by drawing upon the rich heritage and flavors of 21 Mediterranean countries and family recipes to enhance our offerings and encourage
frequency. We will continue to explore ways to increase the number of occasions (lunch, dinner and catering) and the flexibility of dining options (dine-in, to-go/take home, call-in and online) for
our customers to consume our food. We also plan to capitalize on the increasing demand for convenient, high-quality home meal </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>80</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<UL>
<UL>

<P style="font-family:arial;"><FONT SIZE=2>replacement
alternatives by expanding the food options in our Zo&euml;s Fresh Take<SUP>TM</SUP> grab-and-go coolers and our family dinner menu offerings, which include a salad,
entr&eacute;e and side items offered for approximately $30 for a family of four.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Grow our catering business.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;Our
management team has developed innovative solutions, loyalty programs and a dedicated team of sales professionals to enhance our catering offering, which represented approximately 17% of our revenue
for 2013. We believe our strong catering offering is a significant competitive differentiator and generates consumer trial of our brand as well as provides our existing customers additional ways to
enjoy our food off-premise. We offer catering solutions for both business and social occasions, and we believe our hot and cold menu offerings differentiate our catering business as our food is
portable and conducive to travel. We are focused on making catering easier for our customers, which we believe helps to promote brand advocacy by allowing customers to be a guest at their own party.
We offer social catering solutions designed for our core customers' life events, including Zo&euml;s Party Packs, which are bundled catering packages for birthday parties, baby and bridal
showers, sporting and outdoor events, girls night out and family gatherings. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Improve Margins and Leverage Infrastructure.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have invested in our business, and we believe our corporate infrastructure can support a restaurant base greater
than our existing footprint. As we continue to grow, we expect to drive greater efficiencies in our supply chain and leverage our technology and existing support infrastructure. Additionally, we
believe we will be able to optimize labor costs at existing restaurants as our restaurant base matures and AUVs increase and leverage corporate costs over time to enhance margins as general and
administrative expenses grow at a slower rate than our restaurant base and revenues. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Properties  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of February&nbsp;24, 2014, we and our franchisees operated 111 restaurants in 15 states. We operate a variety of restaurant formats, including
in-line, end-cap and free-standing restaurants located in markets of varying sizes. Our restaurants are on average approximately 2,750 square feet. We lease the property for our corporate headquarters
and all of the properties on which we operate restaurants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
map and chart below show the locations of our restaurants as of February&nbsp;24, 2014. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>
<IMG SRC="g996059.jpg" ALT="GRAPHIC" WIDTH="675" HEIGHT="345">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>81</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="26pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:19pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>State

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Company-Owned </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Franchise </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Alabama</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Arizona</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Florida</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Georgia</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>13</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>13</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kentucky</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Louisiana</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Maryland</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New Jersey</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>North Carolina</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Oklahoma</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pennsylvania</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>South Carolina</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tennessee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Texas</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>29</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>29</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Virginia</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>105</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>111</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2>We are obligated under non-cancellable leases for our restaurants and our corporate headquarters. Our restaurant leases generally have an initial term of ten
years and include two five-year renewal options at increased rates. Our restaurant leases generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance
charges and other operating costs. Some restaurant leases provide for contingent rental payments based on sales thresholds, although we generally do not expect to pay significant contingent rent on
these properties based on the thresholds in those leases. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
2012, we opened 16 Company-owned restaurants, and in 2013, we opened 27 Company-owned restaurants. In 2014, we plan to open 28 to 30 Company-owned restaurants and expect to double our restaurant
base in the next four years. We believe our concept has resonated with consumers, which has facilitated strong restaurant growth over the past several years, and since 2008, we have not moved or
closed a single restaurant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
cannot provide assurance that we will be able to double our restaurant base over any specific period of time or that we will be able to open any specific number of restaurants in any year. See
"Risk Factors&#151;Risks Related to our Business and Industry&#151;Our long-term success is highly dependent on our ability to open new restaurants and is subject to many unpredictable
factors." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>82</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=7,SEQ=86,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=121487,FOLIO='82',FILE='DISK134:[13ZDH1.13ZDH17901]DS17901A.;83',USER='LSMITH',CD=';9-MAR-2014;13:10' -->
<A NAME="page_ds17901_1_83"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table shows the growth in our Company-owned and franchise restaurant base for the fiscal years ended December&nbsp;30, 2013, December&nbsp;31, 2012, December&nbsp;26, 2011 and
December&nbsp;27, 2010: </FONT></P>

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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;30,<BR>
2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;31,<BR>
2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;26,<BR>
2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>December&nbsp;27,<BR>
2010 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Company-Owned Restaurant Base</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Openings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>16</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>13</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchisee acquisitions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurants at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>94</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>67</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Franchise Restaurant Base</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Openings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchisee acquisitions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurants at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total restaurants</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>102</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>57</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>43</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Site Development and Expansion  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Site Selection Process  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We consider site selection and real estate development to be critical to our long-term success and devote significant resources to create predictable
and successful new restaurant results. We have developed a targeted site evaluation and acquisition process incorporating management's experience as well as comprehensive data collection, analysis and
interpretation. Our in-house real estate team has over 50&nbsp;years of combined experience with brands such as Chipotle, Panera, Potbelly, Pei Wei, Starbucks and P.F.&nbsp;Chang's. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>When
making site selection decisions we use sophisticated analytical tools designed to uncover key demographic and psychographic characteristics in addition to site specific characteristics, such as
visibility, access, signage and traffic patterns, which we believe drive successful restaurant placement. We also consider factors, including daytime population characteristics and residential
density, which impact our catering and dine-in businesses. On the ground research is also an important part of the site evaluation process. This includes evaluation of customer traffic patterns,
future development in the market, retail synergy and the competitive restaurant landscape. We believe our disciplined process and in-depth analysis, coupled with the development experience of our
management team, has contributed to our growth in opening 81 restaurants over the last five years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
sophisticated, predictive site selection strategy and flexible new restaurant model have resulted in growth in markets of varying sizes as we have expanded our restaurant base. We are able to
utilize in-line, end-cap and free-standing restaurant formats to penetrate markets with a combination of suburban and urban restaurant locations. Additionally, we believe our target demographic and
high repeat visit rate makes us a desirable tenant for landlords and developers seeking to attract consumers to their developments. We believe these factors provide our concept a great deal of
flexibility in securing optimal real estate locations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
real estate process is governed by our internal Development Committee, which is composed of senior management, members of the real estate team and two board members. The Development Committee
meets periodically to review new site opportunities and to approve new locations. New sites are identified by our real estate team interfacing with local broker networks in each market. Once a
location has been approved </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>83</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>by
our Development Committee, we begin a design process to align the characteristics and feel of the location to the trade area. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Expansion Strategy  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>While we continue to be positioned for additional restaurant growth in existing markets, expansion into new territories will be vital to executing our
growth strategy. We employ a hub and spoke method to expansion whereby certain markets are denoted as hubs based on total market potential and geographic spacing. Surrounding spoke markets are
subsequently developed as hub markets are penetrated and have reached sufficient brand awareness. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Expansion
into new markets is triggered through the ongoing evaluation of existing market penetration with a goal of maintaining a deep pipeline of top-tier development opportunities. Our approach to
identifying new markets for development is robust and systematic, providing an objective review of each market under consideration. Criteria for evaluating market expansion opportunities includes
depth of target customer, geographic positioning relative to current restaurant base, estimated restaurant potential, projected unit economics, availability of premier site locations and competition
penetration, among other things. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Restaurant Design  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Restaurant design is handled by our in-house construction executives interfacing with outsourced vendor relationships. This approach permits us to
maintain control over our design process without adding unnecessary headcount. Each of our restaurants has modern features and cosmopolitan casual-chic d&eacute;cor, accented with our distinct
stripes, designed to combine the comforts of home and the sophistication of the Mediterranean. Each of our restaurants has a unique layout to optimize the available space with consistent design cues
that contribute to our customer experience. Our restaurant size averages approximately 2,750 square feet. The dining area of a typical restaurant can seat approximately 80 people, with patios that
seat approximately 30 people. We believe the atmosphere of our restaurants creates a warm, inviting environment where friends and family can gather for occasions of all types, encourages repeat
visits, inspires brand advocacy and drives increased sales across day-parts. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Construction  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Construction of a new restaurant takes approximately 11&nbsp;weeks. Each new restaurant typically requires an annual cash build-out cost of
approximately $750,000, net of tenant allowances, but this figure could be materially higher or lower depending on the market, restaurant size and condition of the premises upon landlord delivery. We
generally construct restaurants in third-party leased retail space but also construct free-standing buildings on leased properties. In the future, we intend to continue converting existing third-party
leased retail space or constructing new restaurants in the majority of circumstances. For additional information regarding our leases, see "&#151;Properties." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Restaurant Management and Operations  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We refer to our approach to management and operations as "progressive and aggressive," and endeavor to run our company to create a superior customer
experience by putting people first (both employees and customers). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Talent Acquisition and Training.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our ability to grow our restaurant base depends on hiring and investing in the growth of great talent, and acquiring and training
our team members effectively is a significant focus for our company. We aim to hire people with a high desire to serve and please, that embrace the Zo&euml;s Kitchen culture and are a
reflection of our customers: active, passionate and full of life. We employ an extensive screening process for our managers, including both behavioral and working interviews. Once hired, employees
participate in a six&nbsp;week in-restaurant management training program, and all of our incumbent managers have been through this process. Each quarter we have approximately 30 new
manager-in-training candidates at one of our 11 training restaurants, which are located across various geographic regions. This pipeline assures us that future growth can be supported and that every
new Zo&euml;s Kitchen location is staffed with managers that are trained in both our brand and our standards. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>84</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
embrace technology and use it extensively to communicate with our employees. Our proprietary Lifeworks platform is designed to engage employees and create real connections, allowing both hourly and
salaried employees to learn, connect and collaborate. Specific techniques like "gamification" and community generated content keep employees engaged. Our entire training process is now paperless, with
online videos replacing traditional operating manuals. Lifeworks encourages interaction between employees across markets, helping to preserve culture, develop connections and share knowledge as we
continue to grow. Lifeworks also includes a learning methodology that embraces community generated content, allowing employees to make a tangible impact on the business, which we believe ultimately
empowers them to deliver a superior customer experience. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restaurant Management and Employees.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Each restaurant typically is staffed with a restaurant manager, an assistant manager and as many as 20 to 30 team members. We
cross-train our employees in an effort to create a
depth of competency in our critical restaurant functions. Consistent with our emphasis on customer interaction, we encourage our restaurant managers and team members to welcome and interact with
customers throughout the day. To lead our restaurant management teams, we have Regional Operators (each of whom is responsible for between two and twelve restaurants), as well as Market Operators
(each of whom is responsible for between seven and nine regions). To prepare for our restaurant growth and staffing needs, we train approximately 30 managers per quarter. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Food Preparation and Quality.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We operate scratch kitchens, where food is prepared and cooked on site. We do not utilize pre-cooked proteins in our restaurants and
do not use microwaves or fryers. We are committed to the hand-preparation of our food, including details like cutting fruit and vegetables in store and hand-crumbling feta cheese each morning because
we believe that customers can taste the difference. We believe adhering to these standards is a competitive advantage for our Company and we have developed processes and procedures to train our
employees on the techniques required to effectively operate a scratch kitchen. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Food
safety is a top priority and we dedicate substantial resources, including our supply chain team and quality assurance teams, to help ensure that our customers enjoy safe, quality food products.
We have taken various steps to mitigate food quality and safety risks, including having personnel focused on this goal together with our supply chain team. Our restaurants undergo third-party food
safety reviews, internal safety audits and routine health inspections. We also consider food safety and quality assurance when selecting our distributors and suppliers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Restaurant Marketing  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our marketing efforts seek to build brand awareness and increase sales through a variety of customer interactions and marketing initiatives. We focus
our marketing strategy on highlighting our ability to provide customers with real food, which we believe directly impacts their psyche and delivers positive long-term emotional connections. By real
food, we mean food made from simple ingredients like raw vegetables, fruits and legumes. We serve food the way it was prepared 100 years ago&#151;raw, grilled, or baked. We utilize
community-based restaurant marketing, as well as digital, social and traditional media tools, to highlight our competitive strengths, including our varied and healthful menu offerings and the value we
offer our customers.  </FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Shared, Earned, Owned.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We believe
our approach to social marketing is unique in that we seek to develop a relationship with each community member online, a reflection of our approach inside our restaurants. Across our social channels,
including Facebook, Pinterest, Instagram and Twitter, we reach more than 140,000 users combined, which allows us to connect directly to our customers and to keep them informed about new menu
offerings, promotions and events and build online relationships. In addition, customers can opt into our e-mail marketing program or download our custom mobile LIFE app, which combined consists of
approximately 293,000 unique members. Our mobile app includes customer engagement, customer satisfaction measurement and mobile ordering capabilities. Integrating these solutions has enabled us to
reach a significant number of people in a </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>85</FONT></P>

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<UL>
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<P style="font-family:arial;"><FONT SIZE=2>timely
and targeted fashion at a fraction of the cost of traditional media. We believe that our customers are experienced internet users and will use social media to make dining decisions, share
meaningful content or advocate for brands they enjoy. Our media tools also include advertising in local and regional print media, targeted direct mail aimed at delivering trial in new markets and
highly targeted cross promotions with like-minded brands.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Local Restaurant Marketing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We
believe we differentiate our business through a strategic, community-based approach to building brand awareness and customer loyalty. We refer to this internally as "Delivering Goodness." We use a
wide range of local marketing initiatives to increase the frequency of and occasions for visits, and to encourage people to "Live Mediterranean." We empower our restaurant managers to selectively
organize events to bring new customers into our restaurants. Additionally, we engage in a variety of promotional activities, such as contributing food, time and money to charitable, civic and cultural
programs, in order to give back to the communities we serve and increase public awareness and appreciation of our restaurants and our employees. For example, in May 2013 we launched a campaign
sponsoring Zoe Romano to run the Tour de France, to drive awareness and raise funds for the World Pediatric Project. Additionally, since our founding in 1995, our restaurants have partnered with local
schools and children's groups to display children's art at our restaurants as part of our Zo&euml;s Kitchen Celebrates Children! Artwork Program. The art is available for sale to the public
as a donation, with proceeds from sales going directly to the participating school or organization.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>New Menu Introductions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We focus
efforts on new menu offerings to broaden our appeal to customers and further substantiate our position as a leading brand in Mediterranean cuisine. We believe these additions deliver prompt consumer
action, resulting in more immediate increases in customer traffic. We also recently launched a Runners' Menu that features dishes geared towards pre- and post-workouts to appeal to the active
lifestyle we believe our customers aspire to live.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Creating New Dining
Opportunities.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We focus on ways we can serve customers at different times and in new places. Our "Dinners for Four" have been a popular
item allowing customers to quickly feed their family a balanced meal at a great value. In addition, we offer group options like Zo&euml;s Party Packs for eight to ten where customers can
enjoy bundled items designed for birthday parties, baby and bridal showers, sporting and outdoor events, girls' nights and family gatherings. We market this new offering in a variety of ways,
including in-restaurant posters, integrated social media campaigns and direct marketing to current catering customers.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Internal Marketing.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;We believe our
employees are one of our best marketing assets. We invest time, energy and resources towards education on our brand and developing long-term brand advocates from each employee. These employees help
propagate the mission of "Delivering Goodness" and promote key points of differentiation. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B> Suppliers  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Maintaining a high degree of quality in our restaurants depends in part on our ability to acquire fresh ingredients and other necessary supplies that
meet our specifications from reliable suppliers. We carefully select suppliers based on quality and their understanding of our brand, and we seek to develop mutually beneficial long-term relationships
with them. We work closely with our suppliers and use a mix of forward, fixed and formula pricing protocols. We have tried to increase, in some cases, the number of suppliers for our ingredients,
which we believe can help mitigate pricing volatility, and we monitor industry news, trade issues, weather, crises and other world events that may affect supply prices. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
contract with Sysco Corporation, the largest distributor of food and related products to the U.S. food service industry. In 2013, our Sysco spend was approximately 62% of our cost of sales. Our
distributor relationship with Sysco has been in place since May 2011. Our remaining food supplies are distributed by other distributors under separate contracts. Our distributors deliver supplies to
our restaurants approximately two to four times per week. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>86</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
negotiate pricing and volume terms directly with certain suppliers, distributors and Sysco. Poultry represented approximately 16% of our total cost of sales for 2013. We are subject to weekly
market fluctuations under our current pricing agreements, with respect to poultry. Beef represented approximately 7% of our total costs of sales for 2013. We have pricing agreements in place through
the end of March 2014, with respect to beef. Feta cheese represented approximately 4% of our total cost of sales for 2013. We have pricing agreements that reset monthly, with respect to feta cheese.
We have identified secondary suppliers for many of our significant products, and we believe we would be able to source our product requirements from different suppliers if necessary. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Competition  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We compete in the restaurant industry, primarily in the fast casual segment but also with restaurants in other segments. We face significant
competition from a wide variety of restaurants, convenience stores, grocery stores and other outlets on a national, regional and local level. We believe that we compete primarily based on product
quality, restaurant concept, ambience, service, location, convenience, value perception and price. Our competition continues to intensify as competitors increase the breadth and depth of their product
offerings and open new restaurants. Additionally, we compete with local and national fast casual restaurant concepts, specialty restaurants and other retail concepts for prime restaurant locations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Seasonality  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter. Our sales per restaurant is typically lower in the
first and fourth quarters due to reduced winter and holiday traffic and higher in the second and third quarters. Adverse weather conditions during our most favorable months or periods may also affect
customer traffic. In addition, we have outdoor seating at all of our restaurants, and the effects of adverse weather may impact the use of these areas and may negatively impact our revenues. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Intellectual Property and Trademarks  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We own a number of trademarks and service marks registered or pending with the U.S. Patent and Trademark Office ("PTO"). We have registered the
following marks with the PTO: Zo&euml;s Kitchen; Zoe's Kitchen; Simple. Tasty. Fresh!; Zo&euml;s Fresh Take; and Simply 500. We also have certain trademarks pending in certain
foreign countries. In addition, we have registered the Internet domain name </FONT><FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2>. The information on, or that can be accessed through, our
website is not part of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
license the use of our registered trademarks to franchisees through franchise arrangements. The franchise arrangements restrict franchisees' activities with respect to the use of our trademarks and
impose quality control standards in connection with goods and services offered in connection with the trademarks. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>An
important part of our intellectual property strategy is the monitoring and enforcement of our rights in markets in which our restaurants currently exist or markets which we intend to enter in the
future. We also monitor trademark registers to oppose the applications to register confusingly similar trademarks or to limit the expansion of the scope of goods and services covered by existing
similar trademarks. We enforce our rights through a number of methods, including the issuance of cease-and-desist letters or making infringement claims in federal court. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that our trademarks, service marks and other intellectual property rights have significant value and are important to the marketing of our brand, and it is our policy to protect and defend
vigorously our rights to such intellectual property. However, we cannot predict whether steps taken to protect such rights will be adequate. See "Risk Factors&#151;Risks Related to Our Business
and Industry&#151;We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>87</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Governmental Regulation and Environmental Matters  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We and our franchisees are subject to extensive and varied federal, state and local government regulation, including regulations relating to public
and occupational health and safety, sanitation and fire prevention. We operate each of our restaurants in accordance with standards and procedures designed to comply with applicable codes and
regulations. However, an inability to obtain or retain health department or other licenses would adversely affect our operations. Although we have not experienced, and do not anticipate, any
significant difficulties, delays or failures in obtaining required licenses, permits or approvals, any such problem could delay or prevent the opening of, or adversely impact the viability of, a
particular restaurant or group of restaurants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, in order to develop and construct restaurants, we must comply with applicable zoning, land use and environmental regulations. Such regulations have not had a material effect on our
operations to date, but more stringent and varied requirements of local governmental bodies could delay or even prevent construction and increase development costs for new restaurants. We are also
required to comply with the accessibility standards mandated by the ADA, which generally prohibits discrimination in accommodation or employment based on
disability. We may in the future have to modify restaurants, by adding access ramps or redesigning certain architectural fixtures for example, to provide service to or make reasonable accommodations
for disabled persons. While these expenses could be material, our current expectation is that any such actions will not require us to expend substantial funds. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
small amount of our revenues is attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain
locations, county or municipal authorities for a license that must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous
aspects of daily operations of our restaurants, including the minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with
alcohol manufacturers, wholesalers and distributors, inventory control and handling, storage and dispensing of alcoholic beverages. We are also subject in certain states to "dram shop" statutes, which
generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor
liability coverage as part of our existing comprehensive general liability insurance. Approximately one-third of our restaurants do not have liquor licenses, typically because of the high cost of a
liquor license in jurisdictions having liquor license quotas. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, we are subject to the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act and various other federal and state laws
governing similar matters including minimum wages, overtime, workplace safety and other working conditions. We and our franchisees may also be subject to lawsuits from our employees, the U.S. Equal
Employment Opportunity Commission or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters, and we have been party to such
matters in the past. We are also subject to various laws and regulations relating to our current and any future franchise operations. See "Risk Factors&#151;Risks Related to Our Business and
Industry&#151;Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business, financial condition and results of operations." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>PPACA,
enacted in March 2010, requires chain restaurants with 20 or more locations in the United States operating under the same name and offering substantially the same menus to publish the total
number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake. A number of states,
counties and cities have also enacted menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers, or have enacted legislation restricting the
use of certain types of ingredients in restaurants. Many of these requirements are inconsistent or are interpreted differently from one jurisdiction to another. While our ability to adapt to consumer
preferences is a strength of our concepts, the effect of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>88</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>such
labeling requirements on consumer choices, if any, is unclear at this time. See "Risk Factors&#151;Risks Related to Our Business and Industry&#151;Legislation and regulations
requiring the display and provision of nutritional information for our menu offerings, and new information or
attitudes regarding diet and health could result in changes in regulations and consumer consumption habits that could adversely affect our results of operations." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There
is also a potential for increased regulation of certain food establishments in the United States, where compliance with a HACCP approach may now be required. HACCP refers to a management system
in which food safety is addressed through the analysis and control of potential hazards from production, procurement and handling, to manufacturing, distribution and consumption of the finished
product. Many states have required restaurants to develop and implement HACCP Systems and the United States government continues to expand the sectors of the food industry that must adopt and
implement HACCP programs. For example, the FSMA, signed into law in January 2011, granted the FDA new authority regarding the safety of the entire food system, including through increased inspections
and mandatory food recalls. Although our current restaurants are specifically exempted from or not directly implicated by some of these new requirements, we anticipate that the new requirements may
impact our industry. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the availability of certain products, result in adverse publicity or require us to
take actions that could be costly for us or otherwise harm our business. See "Risk Factors&#151;Risks Related to Our Business and Industry&#151;Governmental regulation may adversely
affect our ability to open new restaurants or otherwise adversely affect our business, financial condition and results of operations." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
and our franchisees are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud, and any failure or
perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
are subject to federal, state and local environmental laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling,
release and disposal of, or exposure to, hazardous or toxic substances ("environmental laws"). These environmental laws can provide for significant fines and penalties for non-compliance and
liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances.
Third-parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances.
We are not aware of any environmental laws that will materially affect our earnings or competitive position, or result in material capital expenditures relating to our restaurants. However, we cannot
predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered, interpreted or enforced, or the amount of future expenditures that we may
need to make to comply with, or to satisfy claims relating to, environmental laws. It is possible that we will become subject to environmental liabilities at our properties, and any such liabilities
could materially affect our business, financial condition or results of operations. See "Risk Factors&#151;Risks Related to Our Business and Industry&#151;Compliance with environmental
laws may negatively affect our business." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Management Information Systems  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>All of our restaurants use computerized point-of-sale and back-office systems created by NCR Corporation, which we believe are scalable to support our
future growth plans. These point-of-sale computers are designed specifically for the restaurant industry. The system provides a touch screen interface, a graphical order confirmation display and
integrated, high-speed credit card and gift card processing. The point-of-sale system is used to collect daily transaction data, which generates information about daily sales, product mix and average
check that we actively analyze. All products sold and prices at our restaurants are programmed into the system from our home office. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>89</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Our
in-restaurant back office computer system is designed to assist in the management of our restaurants and provide labor and food cost management tools. These tools provide home office and
restaurant operations management quick access to detailed business data and reduces restaurant managers' time spent on administrative needs. The system provides our restaurant managers the ability to
submit orders electronically with our distribution network. The system also supplies sales, bank deposit and variance data to our accounting department on a daily basis. We use this data to generate
daily sales information and weekly consolidated reports regarding sales and other key measures, as well as preliminary weekly detailed profit and loss statements for each location with final reports
following the end of each period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Employees  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of February&nbsp;24, 2014, we had 2,760 employees, including 82 home office and regional personnel, 219 restaurant level managers and assistant
managers and 2,459&nbsp;hourly employees. None of our employees are unionized or covered by a collective bargaining agreement, and we consider our current employee relations to be good. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Franchising  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of February&nbsp;24, 2014, we had six franchised restaurants in two states. Our franchise arrangements grant third-parties a license to establish
and operate a restaurant using our systems and our trademarks in a given area. The franchisee pays us for the ideas, strategy, marketing, operating system, training, purchasing power and brand
recognition. Franchised restaurants must be operated in compliance with our methods, standards and specifications, regarding menu items, ingredients, materials, supplies, services, fixtures,
furnishings, d&eacute;cor and signs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Legal Proceedings  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are currently involved in various claims and legal actions that arise in the ordinary course of our business, including claims resulting from
employment related matters. None of these claims, most of which are covered by insurance, has had a material effect on us, and as of the date of this prospectus, we are not party to any material
pending legal proceedings and are not aware of any claims that could have a material adverse effect on our business, financial condition, results of operations or cash flows. However, a significant
increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations or cash
flows. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>90</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  MANAGEMENT    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Set forth below is the name, age (as of February&nbsp;24, 2014), position and a description of the business experience of each of our executive
officers, directors and other key employees: </FONT></P>

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<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Position(s) </B></FONT></TH>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kevin Miles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director, President and Chief Executive Officer</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jason Morgan</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>44</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chief Financial Officer</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jeremy Hartley</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chief Operating Officer</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Allyn Taylor</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>51</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice President of Development</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rachel Phillips-Luther</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice President of Marketing</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>James Besch</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Controller</FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Greg Dollarhyde</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>62</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chairman of the Board of Directors</FONT></TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>William Barnum, Jr.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>59</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Anthony Choe</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rahul Aggarwal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>39</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thomas Baldwin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sue Collyns</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>47</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
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 <P style="font-family:arial;"><FONT SIZE=2><B> Background of Executive Officers and Directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Kevin Miles</B></FONT><FONT SIZE=2> has served as our President and Chief Executive Officer since October 2012, was appointed
Director in December 2013 and served as President and Chief Operating Officer since February 2011. Mr.&nbsp;Miles joined Zo&euml;s Kitchen in 2009 as Executive Vice President of
Operations. From 2008 to 2009, Mr.&nbsp;Miles was Executive Vice President of Operations of Pollo Campero. His leadership has led to recognition in both Nation's Restaurant News and Fast Casual
magazine highlighting him as "Top 10 Executives to Watch" and "Top Movers and Shakers," respectively. Mr.&nbsp;Miles received his Bachelor's Degree in 1989 from Texas A&amp;M University. He brings to
our Board of Directors leadership skills, strategic guidance and operational vision from prior experience in the industry. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Jason Morgan</B></FONT><FONT SIZE=2> has served as our Chief Financial Officer since April 2008. Since joining the Zo&euml;s Kitchen team, Mr.&nbsp;Morgan has played
a significant role in the growth of the company, from opening new restaurants across the country, to acquiring new accounting and point-of-sale systems, and implementing a business intelligence
solution. Prior to assuming his role at Zo&euml;s Kitchen, Mr.&nbsp;Morgan was the Chief Financial Officer of Simplex Diabetic Supply,&nbsp;Inc., a private equity backed healthcare
start-up. He previously served as the first Chief Financial Officer of Video Gaming Technologies,&nbsp;Inc., a technology business. Mr.&nbsp;Morgan has also held executive positions at Gaylord
Entertainment&nbsp;Co. and Harrah's Entertainment including strategic planning, investor relations and treasury. Mr.&nbsp;Morgan received his Master's Degree in 1995 from the Owen Graduate School
of Management at Vanderbilt University and his Bachelor's Degree in 1991 from Vanderbilt University. He is a Certified Public Accountant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Jeremy Hartley</B></FONT><FONT SIZE=2> has served as our Chief Operating Officer since October 2013. From May 2012 to October 2013, Mr. Hartley was pursuing personal interests.
From October 2001 to May 2012, Mr.&nbsp;Hartley led regional operations for Mimi's Caf&eacute;, and prior to that he served as Chief Operating Officer for Caf&eacute; Patrique and La
Madeleine French Bakery and Caf&eacute;. Mr.&nbsp;Hartley received his Bachelor's Degree in 1981 from University of Aston in Birmingham, UK. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Allyn Taylor</B></FONT><FONT SIZE=2> has served as our Vice President of Development since October 2011. From April 2007 to January 2011, Mr.&nbsp;Taylor served as Senior
Manager of Real Estate for Panera Bread and Vice President of </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Real
Estate for P.F. Chang's and Pei Wei. Mr.&nbsp;Taylor received his Bachelor's Degree in 1986 from the University of Texas at Austin. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Rachel Phillips-Luther</B></FONT><FONT SIZE=2> has served as our Vice President of Marketing since December 2011. Prior to joining the Zo&euml;s Kitchen team,
Ms.&nbsp;Phillips-Luther served as Vice President of Kona Grill from December 2009 to April 2011, and as Vice President of Marketing for FHRG,&nbsp;Inc./Champps Entertainment,&nbsp;Inc. from
2006 to 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>James Besch</B></FONT><FONT SIZE=2> has served as our Controller since January 2013. Prior to joining Zo&euml;s Kitchen, Mr.&nbsp;Besch served as Regional Controller
and Director of SEC reporting for Club Corp,&nbsp;Inc. from November 2003 to December 2012. Mr.&nbsp;Besch began his career with Arthur Andersen in 1996. Mr.&nbsp;Besch received his Master's
Degree in 1996 from the University of Texas. He is a Certified Public Accountant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Greg Dollarhyde</B></FONT><FONT SIZE=2> has served as Chairman of our Board of Directors since October 2007. He is a 40&nbsp;year veteran of the restaurant industry, having
been Chairman or Chief Executive Officer of eight separate companies and Chief Financial Officer of two publicly-held restaurant companies, among other responsibilities. He is currently the Chief
Energizing Officer and Director of Veggie Grill, a west-coast based concept serving 100% plant-based food. He served as Chief Executive Officer of Zo&euml;s Kitchen from October 2008 through
March 2011. Mr.&nbsp;Dollarhyde received his Bachelor's Degree in 1980 from the School of Hotel Administration at Cornell University and his Master's Degree in Business Administration in 1981 from
the Johnson School of Business at Cornell University. Mr.&nbsp;Dollarhyde was selected to join our board because of his extensive experience in the restaurant industry and his years of experience as
a director and our executive officer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>William Barnum, Jr.</B></FONT><FONT SIZE=2> has served on our Board of Directors since October 2007. Since 1984, Mr.&nbsp;Barnum has been with Brentwood, our sponsor, where he
co-founded the firm's private equity effort and is currently a General Partner. Prior to joining Brentwood, Mr.&nbsp;Barnum worked at Morgan Stanley&nbsp;&amp;&nbsp;Co. in the investment banking
division, where he served as Assistant to the President and also provided investment banking advisory services. Mr.&nbsp;Barnum received his Bachelor's Degree in 1976 from Stanford University, his
Juris Doctor in 1980 from Stanford Law
School and his Master's Degree in Business Administration in 1980 from Stanford Graduate School of Business. Presently, Mr.&nbsp;Barnum is a director of K-Mac Holdings, Lazy Dog Restaurants,
Sundance, The Teaching Company, Veggie Grill and Quiksilver. Due to Mr.&nbsp;Barnum's extensive experience in private equity, he provides valuable perspective to our board discussions on financial
and capital markets issues. Additionally, his experience in the consumer and restaurant industries and his board service at other companies provides important insight to our board. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B>Anthony Choe</B></FONT><FONT SIZE=2> has served on our Board of Directors since October 2007. Mr.&nbsp;Choe joined Brentwood, our sponsor, in 1996 and is currently a General
Partner. Prior to joining Brentwood, Mr.&nbsp;Choe worked at Donaldson, Lufkin&nbsp;&amp; Jenrette, where he focused on mergers and acquisitions, corporate finance and leveraged buyouts.
Mr.&nbsp;Choe received his Bachelor's Degree from Harvard University in 1994. Presently, Mr.&nbsp;Choe is a director of K-Mac Holdings, Lazy Dog Restaurants, Sundance, The Teaching Company and
CoachArt. Due to Mr.&nbsp;Choe's extensive experience in private equity, he provides valuable perspective to our board discussions on financial and capital markets issues. Additionally, his
experience in the consumer and restaurant industries and his board service at other companies provides important insight to our board. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B>Rahul Aggarwal</B></FONT><FONT SIZE=2> has served on our Board of Directors since October 2007. Mr.&nbsp;Aggarwal joined Brentwood, our sponsor, in 1999 and is currently a
Managing Director. Presently, Mr.&nbsp;Aggarwal serves as a Director of K-Mac Holdings, Lazy Dog Restaurants, Spectrum Clubs and Veggie Grill. Prior to joining Brentwood, Mr.&nbsp;Aggarwal worked
at Donaldson, Lufkin&nbsp;&amp; Jenrette, where he focused on high-yield financings and leveraged buyouts. Mr.&nbsp;Aggarwal received his Bachelor's Degrees in 1997 from the Wharton School of Business
and the College of Arts and Sciences at the University of Pennsylvania. Due to Mr.&nbsp;Aggarwal's extensive experience in private equity, he provides valuable perspective to our board discussions
on financial </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>and
capital markets issues. Additionally, his experience in the consumer and restaurant industries and his board service at other companies provides important insight to our board. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Thomas Baldwin</B></FONT><FONT SIZE=2> has served on our Board of Directors since February 2014. Mr.&nbsp;Baldwin has also served as the Chairman of the Board of Directors and
Chief Executive Officer of ROI Acquisition Corp. since July 2013. Prior to that, Mr.&nbsp;Baldwin served as the Vice Chairman of the Board of Directors of EveryWare Global,&nbsp;Inc., which merged
with ROI in May 2013, since September 2011. From February 2010 through September 2011, Mr.&nbsp;Baldwin was a private investor. Mr.&nbsp;Baldwin served as Chairman, Chief Executive Officer and
President of Morton's Restaurant Group,&nbsp;Inc. from December 2005 through February 2010. Mr.&nbsp;Baldwin is also a private investor and a Managing Director of the Clinton Group and serves on
the board of directors of Bravo Brio Restaurant Group,&nbsp;Inc., Firebirds Wood Fired Grill Restaurants and Benihana Restaurants. Earlier in his career, Mr.&nbsp;Baldwin also served as Chief
Financial Officer for Le Peep Restaurants, as Vice President for Strategic Planning at Citigroup and held various positions at General Foods Corp., now part of Kraft Foods. Mr.&nbsp;Baldwin received
his Bachelor's Degree in Accounting in 1978 and his Master's Degree in Business Administration in 1984 from Iona College. Mr.&nbsp;Baldwin brings his comprehensive experience in brand positioning
and brand management, general management, global strategy, operations and marketing and sales to our Board. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Sue Collyns</B></FONT><FONT SIZE=2> has served on our Board of Directors since February 2014. Ms.&nbsp;Collyns is currently the Chief Financial Officer of Dun and Bradstreet
Credibility Corp., a technology based subscription company offering web solutions for businesses seeking advice on strengthening their credit score and business reputation. Ms.&nbsp;Collyns joined
Dun and Bradstreet Credibility Corp. in July 2012. Between December 2011 and June 2012, Ms.&nbsp;Collyns was a consultant to various companies in the technology and restaurant industries. From
September 2001 to November 2011, Ms.&nbsp;Collyns was the Chief Financial Officer, the Chief Operating Officer and Company Secretary of California Pizza Kitchen. Prior to 2001, Ms.&nbsp;Collyns
held various finance, strategic planning and auditing roles with Sony/BMG Entertainment, Lion/Pepsi, GlaxoSmithkline Pharmaceuticals and PricewaterhouseCoopers. Ms.&nbsp;Collyns holds a Bachelor of
Economics and Finance Degree from Macquarie University, Australia and a postgraduate CPA from Deakin University in Melbourne, Australia. In 2011, Ms.&nbsp;Collyns won the Los Angeles Business
Journal's (LABJ's) "Executive of the Year" award and in 2013 won the LABJ's "CFO of the Year" award. Ms.&nbsp;Collyns was selected to join our board because of her exceptional technical expertise in
finance, operations, franchising, strategy, technology and extensive experience and knowledge of the consumer products and restaurant industry. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Family Relationships  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There are no family relationships among any of our directors or executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Corporate Governance and Board Structure  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our board of directors currently consists of seven members. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
accordance with the amended and restated certificate of incorporation and the amended and restated bylaws that will become effective upon consummation of this offering, our Board of Directors will
consist of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;members and will be divided into three classes with staggered three-year terms. At each annual general meeting of stockholders, the successors to directors whose terms then
expire will be elected to serve from the time of election and qualification until the third annual meeting following election. The authorized number of directors may be changed by resolution of the
Board of Directors. Vacancies on the Board of Directors can be filled by resolution of the Board of Directors. Greg Dollarhyde serves as the Chairman of our Board of Directors. We believe that of the
following directors are independent as required by the rules of the New York Stock
Exchange:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Thomas Baldwin and Sue Collyns are the Class&nbsp;I
directors and their terms will expire in 2015. Greg Dollarhyde, William Barnum,&nbsp;Jr. and Anthony Choe are the Class&nbsp;II directors and their terms will expire in 2016. Kevin Miles and Rahul
Aggarwal are the Class&nbsp;III directors and their terms will expire in 2017. The division of our Board </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>of
Directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Board Committees  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon completion of this offering, our Board of Directors will have three standing committees: an Audit Committee, a Nominating and Corporate
Governance Committee and a Compensation Committee. Each of the committees will report to the Board of Directors as they deem appropriate, and as the Board of Directors may request. The expected
composition, duties and responsibilities of these committees are set forth below. In the future, our Board of Directors may establish other committees, as it deems appropriate, to assist it with its
responsibilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Audit Committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Audit Committee is responsible for, among other matters: (1)&nbsp;appointing, compensating, retaining, evaluating, terminating and overseeing
our independent registered public accounting firm; (2)&nbsp;discussing with our independent registered public accounting firm their independence from management; (3)&nbsp;reviewing with our
independent registered public accounting firm the scope and results of their audit and the audit fee; (4)&nbsp;approving all audit and permissible non-audit services to be performed by our
independent registered public accounting firm, including taking into consideration whether the independent auditor's provision of any non-audit services to us is compatible with maintaining the
independent auditor's independence; (5)&nbsp;overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual
consolidated financial statements that we file with the SEC; (6)&nbsp;reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with
legal and regulatory requirements; (7)&nbsp;establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters;
(8)&nbsp;reviewing and approving related person transactions; (9)&nbsp;annually reviewing the Audit Committee charter and the committee's performance; and (10)&nbsp;handling such other matters
that are specifically delegated to the Audit Committee by our Board of Directors from time to time. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, our Audit Committee will consist of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The SEC rules and the New York Stock Exchange rules require us to have one
independent Audit Committee member upon the listing of our common stock on the New York Stock Exchange, a majority of independent directors on the Audit Committee within 90&nbsp;days of the date of
the completion of this offering and all independent Audit Committee members within one year of the date of the completion of this offering. Our Board of Directors has affirmatively determined that
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;meet the definition of "independent directors" for purposes of serving on
an Audit Committee under applicable SEC and New York Stock Exchange rules, and we intend to comply with
these independence requirements within the time periods specified. In addition,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will qualify as our "audit committee financial expert," as such term is
defined in Item&nbsp;407 of
Regulation&nbsp;S-K. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Board of Directors will adopt a new written charter for the Audit Committee, which will be available on our corporate website at </FONT><FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2>
upon the completion of this offering. Our website is not part of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Nominating and Corporate Governance Committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The nominating and corporate governance committee will be responsible for developing and recommending to the board of directors criteria for
identifying and evaluating candidates for directorships and making recommendations to the board of directors regarding candidates for election or reelection to the board of directors at each annual
stockholders' meeting. In addition, the nominating and corporate governance committee will be responsible for overseeing our corporate governance guidelines and reporting and making recommendations to
the board of directors concerning corporate governance matters. The nominating and corporate governance committee will be also responsible for making recommendations to the board of directors
concerning the structure, composition and function of the board of directors and its committees. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, our Nominating and Corporate Governance Committee will consist
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The SEC rules and the New York Stock Exchange
rules require us to have one independent Nominating and Corporate Governance Committee member upon the listing of our common stock on the New York Stock Exchange, a majority of independent directors
on the Nominating and Corporate Governance Committee within 90&nbsp;days of the date of the completion of this offering and all independent Nominating and Corporate Governance Committee members
within one year of the date of the completion of this offering. Our Board of Directors has affirmatively determined
that&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;meet the definition of "independent
directors" for purposes of serving on a Nominating and Corporate Governance Committee under applicable SEC and New York Stock Exchange rules, and we intend to comply with these independence
requirements within the time periods specified. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Board of Directors will adopt a new written charter for the Nominating and Corporate Governance Committee, which will be available on our corporate website at </FONT> <FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2> upon the completion of
this offering. The information contained on our website does not constitute a part of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Compensation Committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be responsible for, among other matters: (1)&nbsp;reviewing key employee compensation goals, policies, plans and
programs; (2)&nbsp;reviewing and approving the compensation of our directors, chief executive officer and other executive officers; (3)&nbsp;reviewing and approving employment agreements and other
similar arrangements between us and our executive officers; and (4)&nbsp;administering our stock plans and other incentive compensation plans. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, our Compensation Committee will consist of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. The SEC rules and the New York Stock Exchange rules require us to
have one independent Compensation Committee member upon the listing of our common stock on the New York Stock Exchange, a majority of independent directors on the Compensation Committee within
90&nbsp;days of the date of the completion of this offering and all independent Compensation Committee members within one year of the date of the completion of this offering. Our Board of Directors
has affirmatively determined
that&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;meet the definition of "independent directors" for purposes of serving on a Compensation Committee under applicable SEC and New
York Stock Exchange rules, and we intend to comply with these independence requirements within the time periods specified. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Board of Directors will adopt a new written charter for the Compensation Committee, which will be available on our corporate website at </FONT> <FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2> upon the completion of this offering. The
information contained on our website does not constitute a part of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Risk Oversight  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our Board of Directors is currently responsible for overseeing our risk management process. The Board of Directors focuses on our general risk
management strategy and the most significant risks facing us and ensures that appropriate risk mitigation strategies are implemented by management. The Board of Directors is also apprised of
particular risk management matters in connection with its general oversight and approval of corporate matters and significant transactions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, our Board of Directors will not have a standing risk management committee, but rather will administer this oversight function directly through our Board of Directors
as a whole, as well as through various standing committees of our Board of Directors that address risks inherent in their respective areas of oversight. In particular, our Board of Directors will be
responsible for monitoring and assessing strategic risk exposure, our Audit Committee will be responsible for overseeing our major financial risk exposures and the steps our management has taken to
monitor and control these exposures and our Compensation Committee will assess and monitor whether any of our compensation policies and programs has the potential to encourage unnecessary risk-taking.
In addition, upon completion of this </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>offering,
our Audit Committee will oversee the performance of our internal audit function and consider and approve or disapprove any related-party transactions. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our
management is responsible for day-to-day risk management. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial,
operational, compliance and reporting levels. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Risk and Compensation Policies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to the completion of this offering, we intend to analyze our compensation programs and policies to determine whether those programs and policies
are reasonably likely to have a material adverse effect on us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Leadership Structure of the Board of Directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The positions of Chairman of the Board and Chief Executive Officer are presently separated. We believe that separating these positions allows our
Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board of Directors in its fundamental role of providing advice to and independent
oversight of management. Our Board of Directors recognizes the time, effort and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as
well as the commitment required to serve as our Chairman, particularly as the Board of Directors' oversight responsibilities continue to grow. While our bylaws and corporate governance guidelines do
not require that our Chairman and Chief Executive Officer positions be separate, our Board of Directors believes that having separate positions is the appropriate leadership structure for us at this
time and demonstrates our commitment to good corporate governance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Compensation Committee Interlocks and Insider Participation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or Compensation Committee of
any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Code of Ethics  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We will adopt a written General Code of Ethics ("General Code") which applies to all of our directors, officers and other employees, including our
principal executive officer, principal financial officer and controller. In addition, we will adopt a written Code of Ethics for Executive Officers and Principal Accounting Personnel ("Code of
Ethics") which applies to our principal executive officer, principal financial officer, controller and other designated members of our management. Copies of each code will be available on our
corporate website </FONT><FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2> upon completion of this offering. The information contained on our website does not constitute a part of this
prospectus. We will provide any person, without charge, upon request, a copy of our General Code or Code of Ethics. Such requests should be made in writing to the attention of our Corporate Counsel at
the following address: Zoe's Kitchen,&nbsp;Inc., 5700 Granite Parkway, Granite Park Building #2, Suite&nbsp;455, Plano, Texas 75024. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Director Compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the year ended December&nbsp;30, 2013, none of our directors, other than our Chairman, Greg Dollarhyde, received compensation for their services
on our Board of Directors. Mr.&nbsp;Dollarhyde, received an annual fee of $100,000 pursuant to a consulting agreement entered into with us on March&nbsp;22, 2011 under which he shall serve as the
Chairman of the Board of Directors of Zoe's Kitchen,&nbsp;Inc., as well as provide assistance and advice to Zoe's Kitchen,&nbsp;Inc. See "Certain Relationships and Related Party
Transactions&#151;Consulting Agreement." </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  EXECUTIVE COMPENSATION    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following sets forth all plan and non-plan compensation awarded to our Named Executive Officers (the "NEOs"). </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Summary Compensation Table  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth the total compensation that was paid or accrued for the NEOs for the 2013 fiscal year. The NEOs are Kevin Miles, our
Chief Executive Officer, Jason Morgan, our Chief Financial Officer and Allyn Taylor, our Vice President of Development. </FONT></P>


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<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:100pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name and principal position

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<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Year </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Salary </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Bonus </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Unit Awards </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>All Other<BR>
Compensation </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
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<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kevin Miles<BR></FONT> <FONT SIZE=2><I>President&nbsp;&amp; Chief Executive Officer</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2013</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>259,222</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>162,014</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>0</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><SUP>(1)</SUP></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>421,236</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jason Morgan<BR></FONT> <FONT SIZE=2><I>Chief Financial Officer</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
2013</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
229,222</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
114,611</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
86,062</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR><SUP>(2)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
429,895</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Allyn Taylor<BR></FONT> <FONT SIZE=2><I>Vice President of Development</I></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
2013</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
169,696</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
42,180</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><BR>
211,876</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">The
amount reported in the Unit Awards column represents the grant date fair value of 20,000 Class&nbsp;B Units (defined below) that were
granted to Mr.&nbsp;Miles on April&nbsp;8, 2013. The assumptions used in calculating the issuance date fair value of the Class&nbsp;B Units are discussed in Note&nbsp;10 to the Audited
Financials.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">All
other compensation for Mr.&nbsp;Morgan is based on payments received under his relocation agreement with the Company, dated
November&nbsp;30, 2012, regarding the Company's relocation from Birmingham, AL to Dallas, TX which occurred in June, 2013, with (i)&nbsp;$21,836 being paid directly to the moving company, United
Van Lines; (ii)&nbsp;$36,316 being paid directly to Mr.&nbsp;Morgan and related to various costs associated with the move; and $27,910 being paid to Mr.&nbsp;Morgan in the form of a "gross-up"
amount with respect to taxes incurred by him with respect to the payments described in (ii). If Mr.&nbsp;Morgan resigns within the 24-month period, he must repay 50% of all such costs to the
Company. </FONT></DD></DL>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> Narrative Disclosure to Summary Compensation Table  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Offer Letters  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We do not currently have employment agreements with any of our NEOs, but the Company has provided offer letters to Mssrs. Miles, Morgan and Taylor
(collectively, the "Offer Letters") dated April&nbsp;27, 2009, April&nbsp;7, 2008, and July&nbsp;19, 2011, respectively. The Offer Letters provide for an initial base salary of, for
Mr.&nbsp;Miles, $190,000, for Mr.&nbsp;Morgan, $200,000, and for Mr.&nbsp;Taylor, $145,000, which amounts are reviewed for modification annually, and which numbers have been raised to $259,222,
$229,222, and $169,696, respectively. As can be seen above, the Offer Letters also provide Mssrs. Miles and Morgan with an annual bonus opportunity of, for Mssrs. Miles and Morgan, up to 40% of base
salary, and for Mr.&nbsp;Taylor, 20% of his base salary, which amounts are paid upon the achievement of growth and operating performance objectives to be determined by the Company in its sole
discretion (Mr.&nbsp;Miles' target bonus has since been raised to 50%). The Offer Letters describe the basic terms of the Class&nbsp;B Unit grant agreements (described below), and provide for
initial grants of 75,000 Class&nbsp;B Units for Mr.&nbsp;Miles, 85,802 Class&nbsp;B Units for Mr.&nbsp;Morgan, and 25,000 Class&nbsp;B Units for Mr.&nbsp;Taylor. The Offer Letters provide
each of Mr.&nbsp;Miles and Mr.&nbsp;Morgan six (6)&nbsp;months' severance pay for a termination without "cause" (as defined therein), provided that the payments will stop if the relevant
executive obtains alternative employment. The Offer Letters further provide that no bonus payments will be made for the year of any such termination. No severance arrangement is provided for in
Mr.&nbsp;Taylor's Offer Letter. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
anticipate that upon the offering, we will replace the Offer Letters with employment agreements for Mssrs. Miles and Morgan, though we have not yet determined the specific terms. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Incentive Unit Agreements  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each of our NEOs has been granted Series&nbsp;1 Class&nbsp;B Units of Zoe's Investors,&nbsp;LLC ("Zoe's Investors"). While Class&nbsp;B Units
represent equity holdings, they are intended to be treated as "profits interests" for purposes of IRS Revenue Procedure 93-27 and IRS Revenue Procedure 2001-43 and have a certain "threshold amount"
that, similar to an option exercise price, limits participants' participation in the equity to the appreciation value that accrues following the grant date. Each NEO is required to file&nbsp;a
timely 83(b) election with respect to his respective Class&nbsp;B Units. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
April&nbsp;8, 2013, Mr.&nbsp;Miles was granted 20,000 Class&nbsp;B Units with a threshold amount of $7.00. Mr.&nbsp;Miles's Class&nbsp;B Units vest on time-based conditions, with 20% of
the Class&nbsp;B Units vesting upon the first anniversary of
the grant date, and the remainder vesting pro rata on a daily basis (0.0548% per day) until the fifth anniversary of the grant date. If Mr.&nbsp;Miles is terminated for any reason, the
Class&nbsp;B Units (whether or not vested) are immediately forfeited to Zoe's Investors for no consideration and canceled. However, upon a change of control of Zoe's Investors, and provided that
Mr.&nbsp;Miles remains employed through such change in control, any unvested Class&nbsp;B Units would vest upon the earlier to occur between the one (1)-year anniversary of such change in control
and a termination of Mr.&nbsp;Miles's employment without cause (as such term is defined in the grant agreement). Upon a termination for cause prior to the one (1)-year anniversary of such change of
control, Class&nbsp;B Units (whether or not vested) are immediately forfeited to Zoe's Investors for no consideration and canceled. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, the vested Class&nbsp;B Units will be converted into shares of our common stock and the unvested Class&nbsp;B Units will be converted into restricted stock,
subject to a vesting schedule substantially similar to the vesting schedule under which such Class&nbsp;B Units vest prior to the offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Outstanding Equity Awards at Fiscal Year-End  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth certain information with respect to outstanding equity awards of our named executive officers as of December&nbsp;30,
2013 with respect to the named executive officer. The market value of the shares in the following table is the fair value of such shares at December&nbsp;30, 2013. </FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Stock Awards </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:21pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name


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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of Shares<BR>
or Units of Stock<BR>
That Have Not<BR>
Vested (#) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Market Value of<BR>
Shares or Units<BR>
of Stock That<BR>
Have Not Vested<BR>
($) (1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of Shares<BR>
or Units of<BR>
Stock That Have<BR>
Vested (#) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Equity Incentive<BR>
Plan Awards:<BR>
Market or Payout<BR>
Value of Unearned<BR>
Shares or Other<BR>
Rights That Have<BR>
Vested ($) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Kevin Miles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><SUP>(2)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,357</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>69,499</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>825,643</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>30,531</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><SUP>(3)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>362,712</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>44,469</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>528,288</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


</FONT>
</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>20,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><SUP>(4)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>97,600</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jason Morgan</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
85,802</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
1,019,324</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,329</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><SUP>(5)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>62,527</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,671</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>36,273</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Allyn Taylor</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
15,821</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR><SUP>(6)</SUP></FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
156,316</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
9,179</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
90,684</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
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<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="LEFT" >
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>98</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=102,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=772782,FOLIO='98',FILE='DISK134:[13ZDH1.13ZDH17901]DW17901A.;43',USER='WWASSER',CD='10-MAR-2014;12:06' -->
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Market
value of unvested units is based on management's retrospective determination of the fair market value of such units as of
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2013.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represent
Class&nbsp;B Units, as described above, which have a threshold amount $0.00 and which vest as follows: 20% of the original grant
of 75,000 (approximately 41.1 Class&nbsp;B Units) vested on May&nbsp;14, 2010 and then 0.0548% per day through May&nbsp;14, 2014.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represent
Class&nbsp;B Units, as described above, which have a threshold amount of $0.00, and which vest as follows: 20% of the original
grant of 75,000 (approximately 41.1 Class&nbsp;B Units) vested on January&nbsp;13, 2012 and then 0.0548% per day through January&nbsp;13, 2016.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represent
Class&nbsp;B Units, as described above, which have a threshold amount of $7.00, and which vest as follows: 20% of the original
grant of 20,000 (approximately 10.96 Class&nbsp;B Units) vests on April&nbsp;8, 2014 and then 0.0548% per day through April&nbsp;8, 2018.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(5)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represent
Class&nbsp;B Units, as described above, which have a threshold amount of $2.00, and which vest as follows: 20% of the original
grant of 10,000 (approximately 5.48 Class&nbsp;B Units) vested on February&nbsp;28, 2013 and then 0.0548% per day through February&nbsp;28, 2017.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(6)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Represent
Class&nbsp;B Units, as described above, which have a threshold amount of $2.00, and which vest as follows: 0.0548% of the original
grant of 25,000 (approximately 13.7 Class&nbsp;B Units) per day through February&nbsp;28, 2017. </FONT></DD></DL>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B> 2014 Omnibus Incentive Plan  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In connection with this offering, we intend to adopt the 2014 Omnibus Incentive Plan (the "2014 Incentive Plan"). The 2014 Incentive Plan will provide
for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and other employees of us and our subsidiaries, as
well as others performing consulting or advisory services for us, will be eligible for grants under the 2014 Incentive Plan. The purpose of the 2014 Incentive Plan is to provide incentives that will
attract, retain and motivate high performing officers, directors, employees and consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our
long-term success or compensation based on their performance in fulfilling their personal responsibilities. Set forth below is a summary of the material terms of the 2014 Incentive Plan. For further
information about the 2014 Incentive Plan, we refer you to the complete copy of the 2014 Incentive Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Administration  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The 2014 Incentive Plan will be administered by the Compensation Committee of our Board of Directors. Among the Compensation Committee's powers will
be to determine the form, amount and other terms and conditions of awards; clarify, construe or resolve any ambiguity in any provision of the 2014 Incentive Plan or any award agreement; amend the
terms of outstanding awards; and adopt such rules, forms, instruments and guidelines for administering the 2014 Incentive Plan as it deems necessary or proper. The Compensation Committee will have the
authority to administer and interpret the 2014 Incentive Plan, to grant discretionary awards under the 2014 Incentive Plan, to determine the persons to whom awards will be granted, to determine the
types of awards to be granted, to determine the terms and conditions of each award, to determine the number of shares of common stock to be covered by each award, to make all other determinations in
connection with the 2014 Incentive Plan and the awards thereunder as the Compensation Committee deems necessary or desirable and to delegate authority under the 2014 Incentive Plan to our executive
officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Available Shares  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The aggregate number of shares of common stock which may be issued or used for reference purposes under the 2014 Incentive Plan or with respect to
which awards may be granted may not exceed&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares. The number of shares that will be available for issuance under the 2014 Incentive Plan may be subject to
adjustment in the event of a
reorganization, stock split, merger or similar change in the corporate structure or the outstanding shares of common stock. In the event of any of these occurrences, we may make any adjustments we
consider appropriate to, among other things, the number and kind of shares, options or other property available for issuance under the plan or covered by grants previously made under </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>99</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>the
plan. The shares that will be available for issuance under the plan may be, in whole or in part, either authorized and unissued shares of our common stock or shares of common stock held in or
acquired for our treasury. In general, if awards under the 2014 Incentive Plan are for any reason cancelled, or expire or terminate unexercised, the shares covered by such awards may again be
available for the grant of awards under the 2014 Incentive Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
maximum number of shares of our common stock with respect to which any stock option, stock appreciation right, shares of restricted stock or other stock-based awards that will be subject to the
attainment of specified performance goals and intended to satisfy Section&nbsp;162(m) of the U.S. Internal Revenue Code of 1986, as
amended (the "Code") and may be granted under the 2014 Incentive Plan during any fiscal year to any eligible individual will be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares (per type of award). The
total number of shares
of our common stock with respect to all awards that may be granted under the 2014 Incentive Plan during any fiscal year to any eligible individual will
be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares. There are no annual
limits on the number of shares of our common stock with respect to an award of restricted stock that are not subject to the attainment of specified performance goals to eligible individuals. The
maximum number of shares of our common stock subject to any performance award which may be granted under the 2014 Incentive Plan during any fiscal year to any eligible individual will be
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares. The maximum value of a cash payment made under a performance award which may be granted under the 2014 Incentive Plan during any fiscal year to any
eligible individual will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Eligibility for Participation  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Members of our Board of Directors, as well as employees of, and consultants to, us or any of our subsidiaries and affiliates will be eligible to
receive awards under the 2014 Incentive Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Award Agreement  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Awards granted under the 2014 Incentive Plan will be evidenced by award agreements, which need not be identical, that provide additional terms,
conditions, restrictions and/or limitations covering the grant of the award, including, without limitation, additional terms providing for the acceleration of exercisability or vesting of awards in
the event of a change of control or conditions regarding the participant's employment, as determined by the Compensation Committee. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Stock Options  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to grant nonqualified stock options to any eligible individual. The Compensation Committee will also be able
to grant incentive stock options, but only to eligible employees. The Compensation Committee will determine the number of shares of our common stock subject to each option, the term of each option,
which may not exceed ten years, or five years in the case of an incentive stock option granted to a ten percent stockholder, the exercise price, the vesting schedule, if any, and the other material
terms of each option. No incentive stock option or nonqualified stock option may have an exercise price less than the fair market value of a share of our common stock at the time of grant or, in the
case of an incentive stock option granted to a ten percent stockholder, 110% of such share's fair market value. Options will be exercisable at such time or times and subject to such terms and
conditions as determined by the Compensation Committee at grant and the exercisability of such options may be accelerated by the Compensation Committee. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Stock Appreciation Rights  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to grant stock appreciation rights, which we refer to as SARs, either with a stock option, which may be
exercised only at such times and to the extent the related option is exercisable, which we refer to as a Tandem SAR, or independent of a stock option, which we refer to as a Non-Tandem SAR. A SAR is a
right to receive a payment in shares of our common stock or cash, as determined by the Compensation Committee, equal in value to the excess of the fair market value of one share of our common stock on
the date of exercise over the exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by a SAR
will be the exercise price per share of the related option in the case of a </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>100</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>Tandem
SAR and will be the fair market value of our common stock on the date of grant in the case of a Non-Tandem SAR. The Compensation Committee will also be able to grant limited SARs, either as
Tandem SARs or Non-Tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the 2014 Incentive Plan, or such other event as the Compensation Committee
may designate at the time of grant or thereafter. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Restricted Stock  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to award shares of restricted stock. Except as otherwise provided by the Compensation Committee upon the award
of restricted stock, the recipient will generally have the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted
stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such shares, subject to the conditions and restrictions generally applicable to restricted stock or
specifically set forth in the recipient's restricted stock agreement. The Compensation Committee will be able to determine at the time of award that the payment of dividends, if any, will be deferred
until the expiration of the applicable restriction period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Recipients
of restricted stock will be required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of
pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
the grant of restricted stock or the lapse of the relevant restrictions is based on the attainment of performance goals, the Compensation Committee will establish for each recipient the applicable
performance goals, formulae or standards and the applicable vesting percentages with reference to the attainment of such goals or satisfaction of such formulae or standards while the outcome of the
performance goals are substantially uncertain. Such performance goals may incorporate provisions for disregarding, or adjusting for, changes in accounting methods, corporate transactions, including,
without limitation, dispositions and acquisitions, and other similar events or circumstances. Section&nbsp;162(m) of the Code requires that performance awards be based upon objective performance
measures. The performance goals for performance-based restricted stock will be based on one or more of the objective criteria set forth on Exhibit&nbsp;A to the 2014 Incentive Plan and are discussed
in general below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Other Stock-Based Awards  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to, subject to limitations under applicable law, make a grant of such other stock-based awards, including,
without limitation, shares of common stock awarded purely as a bonus and not subject to restrictions or conditions, shares of common stock in payment of the amounts due under an incentive or
performance plan sponsored or maintained by the company or an affiliate, stock equivalent units, restricted stock units, and Awards valued by reference to book value of shares of common stock under
the 2014 Incentive Plan that are payable in cash or denominated or payable in or valued by shares of our common stock or factors that influence the value of such shares. The Compensation Committee
will be able to determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals for purposes of compliance with
Section&nbsp;162(m) of the Code and/or a minimum vesting period. The performance goals for performance-based other stock-based awards will be based on one or more of the objective criteria set forth
on Exhibit&nbsp;A to the 2014 Incentive Plan and discussed in general below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Other Cash-Based Awards  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as
the Compensation Committee will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or
conditions. If a cash-based award is subject to vesting conditions, the Compensation Committee will be able to accelerate the vesting of such award in its discretion. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>101</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><I> Performance Awards  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to grant a performance award to a participant payable upon the attainment of specific performance goals. The
Compensation Committee will be able to grant performance awards that are intended to qualify as performance-based compensation under Section&nbsp;162(m) of the Code as well as performance awards
that are not intended to qualify as performance-based compensation under Section&nbsp;162(m) of the Code. If the performance award is payable in cash, it may be paid upon the attainment of the
relevant performance goals either in cash or in shares of restricted stock, based on the then current fair market value of such shares, as determined by the Compensation Committee. Based on service,
performance and/or other factors or criteria, the Compensation Committee will be able to, at or after grant, accelerate the vesting of all or any part of any performance award. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Performance Goals  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The Compensation Committee will be able to grant awards of restricted stock, performance awards, and other stock-based awards that are intended to
qualify as performance-based compensation for purposes of Section&nbsp;162(m) of the Code. These awards may be granted, vest and be paid based on attainment of specified performance goals
established by the committee. These performance goals may be based on the attainment of a certain target level of, or a specified increase or decrease in, one or more of the following measures
selected by the committee: (1)&nbsp;income per share; (2)&nbsp;operating income; (3)&nbsp;gross income; (4)&nbsp;net income, before or after taxes; (5)&nbsp;cash flow; (6)&nbsp;gross
profit; (7)&nbsp;gross profit return on investment; (8)&nbsp;gross margin return on investment; (9)&nbsp;gross margin; (10)&nbsp;operating margin; (11)&nbsp;working capital;
(12)&nbsp;income before interest and taxes; (13)&nbsp;income before interest, tax, depreciation and amortization; (14)&nbsp;return on equity; (15)&nbsp;return on assets; (16)&nbsp;return on
capital; (17)&nbsp;return on invested capital; (18)&nbsp;net revenues; (19)&nbsp;gross revenues; (20)&nbsp;revenue growth; (21)&nbsp;annual recurring revenues; (22)&nbsp;recurring
revenues; (23)&nbsp;license revenues; (24)&nbsp;sales or market share; (25)&nbsp;total stockholder return; (26)&nbsp;economic value added; (27)&nbsp;specified objectives with regard to
limiting the level of increase in all or a portion of our bank debt or other long-term or short-term public or private debt or other similar financial obligations, which may be calculated net of cash
balances and other offsets and adjustments as may be established by the Compensation Committee; (28)&nbsp;the fair market value of a share of our common stock; (29)&nbsp;the growth in the value of
an investment in our common stock assuming the reinvestment of dividends; or (30)&nbsp;reduction in operating expenses. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
the extent permitted by law, the Compensation Committee will also be able to exclude the impact of an event or occurrence which the Compensation Committee determines should be appropriately
excluded, such as (1)&nbsp;restructurings, discontinued operations, extraordinary items and other unusual or non-recurring charges; (2)&nbsp;an event either not directly related to our operations
or not within the reasonable control of management; or (3)&nbsp;a change in accounting standards required by generally accepted accounting principles. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Performance
goals may also be based on an individual participant's performance goals, as determined by the Compensation Committee. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, all performance goals may be based upon the attainment of specified levels of our performance, or the performance of a subsidiary, division or other operational unit, under one or more of
the measures described above relative to the performance of other corporations. The Compensation Committee will be able to designate additional business criteria on which the performance goals may be
based or adjust, modify or amend those criteria. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Change in Control  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In connection with a change in control, as defined in the 2014 Incentive Plan, the Compensation Committee will be able to accelerate vesting of
outstanding awards under the 2014 Incentive Plan. In addition, such awards may be, in the discretion of the committee, (1)&nbsp;assumed and continued or substituted in accordance with applicable
law; (2)&nbsp;purchased by us for an amount equal to the excess of the price of a share of our common stock paid in a change in control over the exercise price of the awards; or (3)&nbsp;cancelled
if the price of a share of our common stock paid in a change in control is less than the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>102</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>exercise
price of the award. The Compensation Committee will also be able to provide for accelerated vesting or lapse of restrictions of an award at any time. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Stockholder Rights  </I></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant will have no rights as
a stockholder with respect to shares of our common stock covered by any award until the participant becomes the record holder of such shares. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Amendment and Termination  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Notwithstanding any other provision of the 2014 Incentive Plan, our Board of Directors will be able to, at any time, amend any or all of the
provisions of the 2014 Incentive Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval in certain instances; provided, however, that, unless otherwise
required by law or specifically provided in the 2014 Incentive Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely
affected without the consent of such participant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Transferability  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Awards granted under the 2014 Incentive Plan generally will be nontransferable, other than by will or the laws of descent and distribution, except
that the Compensation Committee will be able to provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Recoupment of Awards  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The 2014 Incentive Plan will provide that awards granted under the 2014 Incentive Plan are subject to any recoupment policy that we may have in place
or any obligation that we may have regarding the clawback of "incentive-based compensation" under the Exchange Act or under any applicable rules and regulations promulgated by the SEC. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Effective Date; Term  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The 2014 Incentive Plan was adopted by the Board of Directors
on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and approved
by stockholders on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. No award will be granted under the 2014 Incentive Plan on or
after&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Any
award outstanding under the 2014 Incentive Plan at the time of termination
will remain in effect until such award is exercised or has expired in accordance with its terms. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Additional Narrative Description  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Retirement Benefits  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We do not provide any plans that would provide the NEOs with any payment of retirement benefits, or benefits that will be paid primarily following
retirement (whether through tax-qualified plans or otherwise), including but not limited to tax-qualified defined benefit plans and supplemental executive retirement plans. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Change in Control and/or Termination Payments  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Aside from the severance pay payable to Mssrs. Miles and Morgan pursuant to the terms of their respective Offer Letters and the accelerated vesting of
Class&nbsp;B Units that would occur under certain circumstances described above, we do not provide payments to our NEOs upon a change in control of the Company, upon a change in the NEOs'
responsibilities following any such change in control, or, more generally, upon an NEO's resignation, retirement or other termination. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>103</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><B> Compensation of Directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The table below summarizes the compensation paid to Mssrs.&nbsp;Dollarhyde, Barnum, Jr., Choe, Aggarwal, Miles, Baldwin and Collyns during fiscal
year 2013: </FONT></P>

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<BR></FONT><FONT SIZE=2><B>  Director Compensation Table    <BR>    </B></FONT></P>

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<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Fees<BR>
Earned<BR>
or Paid<BR>
in Cash<BR>
($) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total<BR>
($) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Greg Dollarhyde</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>William Barnum, Jr.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Anthony Choe</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rahul Aggarwal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kevin Miles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thomas Baldwin</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sue Collyns</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<P style="font-family:arial;"><FONT SIZE=2><B> Narrative Disclosure to Director Compensation Table  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Consulting Agreement  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Mr.&nbsp;Dollarhyde and the Company are parties to a consulting agreement, dated March&nbsp;22, 2011 (the "Consulting Agreement"), pursuant to
which he was paid $100,000 in consulting costs for his role as Executive Chairman in 2013. Such consulting costs are paid on a quarterly basis, and the agreement may be terminated by either party at
any time upon 30&nbsp;days' notice, at which point Mr.&nbsp;Dollarhyde would be removed as Chairman and as a member of the Board of Directors. If the Company initiates such termination,
Mr.&nbsp;Dollarhyde would receive a pro rata portion of the quarterly fees incurred as of the date of termination. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>None
of the other directors received fees or are party to a similar consulting agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Post Offering Director Compensation Plans  </I></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>It is anticipated that the Consulting Agreement will be terminated upon the offering. Going forward, we have not yet determined our compensation
policies for directors, but we anticipate compensating our directors with a combination of cash and stock awards. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>104</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dy17901_principal_stockholders"> </A>
<A NAME="toc_dy17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PRINCIPAL STOCKHOLDERS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table shows information about the beneficial ownership of our common stock, as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2013,
by:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each person known by us to beneficially own 5% or more of our outstanding
common stock; </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each of our directors and executive officers; and </FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>all of our directors and executive officers as a group.
</FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>For
further information regarding material transactions between us and certain of our stockholders, see "Certain Relationships and Related Party Transactions." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
numbers listed below are based on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock outstanding as
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2013, after giving effect to the Distribution Transactions. The Distribution
Transactions are based upon an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the estimated offering price range set forth on the cover
page of this prospectus
and gives effect to the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;-for-1 stock split of our common stock, which will be effected prior to the completion of this
offering. The amount of common stock distributed to each member of
Zoe's Investors of the total&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock held by Zoe's Investors is subject to change based on any changes to the initial public offering price
and the date of the
pricing of this offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Upon
the completion of this offering, Brentwood will own approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our common stock, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% if the underwriters' option to
purchase additional shares of our common
stock is exercised in full. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Unless
otherwise indicated, the address of each individual listed in this table is c/o Zoe's Kitchen, Inc., 5700 Granite Parkway, Granite Park Building #2, Suite&nbsp;455, Plano, Texas 75024. </FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Common stock owned<BR>
before the offering </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Common stock owned<BR>
after the offering<BR>
(no option exercise) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Common stock owned<BR>
after the offering<BR>
(full option exercise) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:139pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Name and Address of Beneficial Owner<font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font>

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percentage </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percentage </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Percentage </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Greater than 5%:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Brentwood Associates and related funds<SUP>(2)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Greg Dollarhyde and related entities<SUP>(3)</SUP></FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jemison Investment Company<SUP>(4)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John Cassimus<SUP>(5)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Executive Officers and Directors:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kevin Miles<SUP>(6)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jason Morgan<SUP>(7)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jeremy Hartley<SUP>(8)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Allyn Taylor<SUP>(9)</SUP></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rachel Phillips-Luther<SUP>(10)</SUP></FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>James Besch<SUP>(11)</SUP></FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Greg Dollarhyde<SUP>(3)</SUP></FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>William Barnum, Jr.&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Anthony Choe</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rahul Aggarwal</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thomas Baldwin</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sue Collyns</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Executive Officers and Directors as a Group (12&nbsp;persons)<SUP>(12)</SUP></FONT></TD>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">*</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Less
than 1% </FONT></DD></DL>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>105</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=109,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=501040,FOLIO='105',FILE='DISK134:[13ZDH1.13ZDH17901]DY17901A.;33',USER='LSMITH',CD=';9-MAR-2014;13:10' -->
<A NAME="page_dy17901_1_106"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:0%;">
 <DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(1)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">A
"beneficial owner" of a security is determined in accordance with Rule&nbsp;13d-3 under the Exchange Act and generally means any person
who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares:</FONT><FONT SIZE=2>
<BR><BR></FONT>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">voting power which includes the power
to vote, or to direct the voting of, such security; and/or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">investment power which includes the
power to dispose, or to direct the disposition of, such security.  </FONT>
<BR>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Unless
otherwise indicated, each person named in the table above has sole voting and investment power, or shares voting and investment power with his spouse (as applicable), with respect to all shares
of stock listed as owned by that person. Shares issuable upon the exercise of options exercisable on,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2013 or within
60&nbsp;days thereafter are considered outstanding and to be
beneficially owned by the person holding such options for the purpose of computing such person's percentage beneficial ownership, but are not deemed outstanding for the purposes of computing the
percentage of beneficial ownership of any other person. The address of our executive officers is 5700 Granite Parkway, Granite Park Building #2, Suite&nbsp;455, Plano, Texas 75024. </FONT></P>

</DD></DL>
</DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(2)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
held by Brentwood Associates Private Equity IV,&nbsp;L.P., an owner of membership interests in Zoe's
Investors,&nbsp;LLC, our sole shareholder. Brentwood Associates Private Equity IV,&nbsp;L.P. is controlled by its general partner, Brentwood Private Equity IV,&nbsp;L.P., which is in turn
controlled by its general partner, Brentwood Private Equity IV,&nbsp;LLC, which is in turn controlled by its five managing members, namely William Barnum, Jr., Anthony Choe, Roger Goddu, Steven W.
Moore and Eric G. Reiter. No individual holds a majority of the voting power in either of the general partners. The address of Brentwood Associates Private Equity IV,&nbsp;L.P. is 11150 Santa Monica
Boulevard, Suite&nbsp;1200, Los Angeles, California&nbsp;90025.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(3)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock held by Greg Dollarhyde and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock held by
Dollarhyde Investment Group&nbsp;I,&nbsp;LLC&nbsp;c/o Greg Dollarhyde, 27955 West Winding Way, Malibu, CA 90265.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(4)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock held by Jem-ZK,&nbsp;LLC. Jemison Investment Co., Inc. is the sole manager and
controlling member of Jem-ZK,&nbsp;LLC. The address of Jem-ZK,&nbsp;LLC is 2001 Park Place, Suite 320, Birmingham, AL 35203.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(5)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock held by John Cassimus and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock held by John
S.&nbsp;Fischer, as trustee of the Cassimus Family Trust&nbsp;c/o John Cassimus, 321 Greenwood Street, Birmingham, AL 35209.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(6)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock that can be acquired upon the exercise of outstanding options.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(7)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock that can be acquired upon the exercise of outstanding options.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(8)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock that can be acquired upon the exercise of outstanding options.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(9)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock that can be acquired upon the exercise of outstanding options.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(10)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock that can be acquired upon the exercise of outstanding options.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(11)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock that can be acquired upon the exercise of outstanding options.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;"><font
style="font-size:6pt;position:relative;top:-2pt;add_sup:2pt;">(12)</font></FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Includes
our current directors (7 persons) and our current executive officers (6 persons). </FONT></DD></DL>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>106</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Corporate Development and Administrative Services Agreement  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On October&nbsp;31, 2007, Zoe's Investors,&nbsp;LLC entered into a Corporate Development and Administrative Services Agreement with Brentwood
Private Equity IV,&nbsp;LLC, an owner of membership interests in Zoe's Investors,&nbsp;LLC, our sole shareholder. Under the terms of the agreement, Brentwood provides assistance in the corporate
development activities and our business growth efforts. As consideration for services provided, we will provide reimbursement for business expenses related to performance of this agreement and an
annual consulting fee, capped at $300,000, based on Adjusted EBITDA as defined in the agreement. During the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011,
we expensed $165,142, $193,850 and $155,000, respectively, related to this agreement. The agreement is expected to be terminated before completion of this offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Consulting Agreement  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On March&nbsp;22, 2011, Zoe's Kitchen,&nbsp;Inc. entered into the Second Amended and Restated Consulting Agreement with Greg Dollarhyde. Under the
terms of the agreement, Mr.&nbsp;Dollarhyde shall serve as the Chairman of the Board of Directors of Zoe's Kitchen,&nbsp;Inc., as well as provide assistance and advice to Zoe's
Kitchen,&nbsp;Inc. for a minimum of five business days per quarter per year for a fee of $100,000 per year, payable quarterly, plus all reasonable and necessary travel and related expenses. The
agreement is expected to be terminated before completion of this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Registration Rights Agreement  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Pursuant to the terms of a Registration Rights Agreement among ourselves, Zoe's Investors,&nbsp;LLC (our sole shareholder) and certain holders of
stock in Zoe's Investors,&nbsp;LLC, including Brentwood, certain holders of our stock are entitled to demand and piggyback rights in relation to their holdings of our shares. The stockholders who
are a party to the Registration Rights Agreement will hold an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;%, of our equity
interests upon completion of this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Demand Registrations  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Under the Registration Rights Agreement, Brentwood is able to require us to use our best efforts to file&nbsp;a registration statement under the
Securities Act ("Demand Registration"), and we are required to notify holders of such registrable securities in the event of such request (a "Demand Registration Request"). Brentwood can issue
unlimited Demand Registration Requests. All eligible holders will be entitled to participate in any Demand Registration upon proper notice to us. We have certain limited rights to delay or postpone
such registration. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Piggyback Registrations  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Under the Registration Rights Agreement, if at any time we propose or are required to register any of our equity securities under the Securities Act
(other than a Demand Registration, a merger or acquisition or pursuant to an employee benefit or dividend reinvestment plan), we will be required to notify each eligible holder of its right to
participate in such registration (a "Piggyback Registration"). We have the right to terminate or postpone any registration statement in which eligible holders have elected to exercise Piggyback
Registration rights. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Expenses of Registration  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are required to bear the registration expenses (other than underwriting discounts) incident to any registration in accordance with the Registration
Rights Agreement, including the reasonable fees of counsel chosen by Brentwood (if Brentwood holds any registrable securities included in the registration) or by the holders of a majority of the
registrable securities included in the registration. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>107</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> Indemnification  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Under the Registration Rights Agreement, we must, subject to certain limitations, indemnify each holder of our registrable securities and its
officers, managers, managing members and directors, and each person controlling such holder against all losses, claims, actions, damages, liabilities and expenses in certain circumstances and to pay
any expenses reasonably incurred in connection with investigating and defending such losses, claims, actions, damages, liabilities and expenses, except insofar as the same are caused by or contained
in any information furnished in writing to us by such holder expressly for use therein. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Indemnification Agreements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We expect to enter into indemnification agreements with each of our directors and executive officers. Each indemnification agreement will provide
that, subject to limited exceptions, and among other things, we will indemnify the director or executive officer to the fullest extent permitted by law for claims arising in his or her capacity as our
director or officer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Procedures for Approval of Related Party Transactions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We do not currently have a formal written policy or procedures for the review and approval of related party transactions. However, all related party
transactions are currently reviewed and approved by a disinterested majority of our Board of Directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
Board of Directors will adopt a written related person transaction policy, effective upon the closing of this offering, which sets forth the policies and procedures for the review and approval or
ratification of related party transactions. This policy will be administrated by our Audit Committee. These policies will provide that, in determining whether or not to recommend the initial approval
or ratification of a related party transaction, the relevant facts and circumstances available shall be considered, including, among other factors it deems appropriate, whether the interested
transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party's interest in the
transaction. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>108</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  DESCRIPTION OF CAPITAL STOCK    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following summary of certain provisions of our capital stock does not purport to be complete and is subject to our amended and restated
certificate of incorporation, our amended and restated bylaws and the provisions of applicable law. Copies of our amended and restated certificate of incorporation and amended and restated bylaws will
be filed as exhibits to the registration statement, of which this prospectus is a part. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Authorized Capitalization  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> General  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon the closing of this offering, the total amount of our authorized capital stock will consist of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock, par value
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of undesignated preferred stock. As of
December&nbsp;30, 2013, we had 100 shares of common stock, par value $0.01, outstanding. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
giving effect to this offering, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and no shares of preferred stock outstanding. The following
summary describes all material provisions of our
capital stock. We urge you to read our amended and restated certificate of incorporation and our amended and restated bylaws, which are included as exhibits to the registration statement of which this
prospectus forms&nbsp;a part. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Common Stock  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of December&nbsp;30, 2013, there was one stockholder of record of our common stock, Zoe's Investors. Our common stock is not entitled to
preemptive or other similar subscription rights to purchase any of our securities. Our common stock is neither convertible nor redeemable. Unless our Board of Directors determines otherwise, we will
issue all of our capital stock in uncertificated form. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Preferred Stock  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We do not have any shares of preferred stock outstanding. Our Board of Directors has the authority to issue shares of preferred stock from time to
time on terms it may determine, to divide shares of preferred stock into one or more series and to fix the designations, preferences, privileges, and restrictions of preferred stock, including
dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of any series to
the fullest extent permitted by the General Corporation Law of the State of Delaware (the "DGCL"). The issuance of our preferred stock could have the effect of decreasing the trading
price of our common stock, restricting dividends on our capital stock, diluting the voting power of our common stock, impairing the liquidation rights of our capital stock, or delaying or preventing a
change in control of our Company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Voting Rights  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each holder of our common stock is entitled to one vote per share on each matter submitted to a vote of stockholders. Our amended and restated bylaws
provide that the presence, in person or by proxy, of holders of shares representing a majority of the outstanding shares of capital stock entitled to vote at a stockholders' meeting shall constitute a
quorum. When a quorum is present, the affirmative vote of a majority of the votes cast is required to take action, unless otherwise specified by law or our amended and restated certificate of
incorporation, and except for the election of directors, which is determined by a plurality vote. There are no cumulative voting rights. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Dividend Rights  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each holder of shares of our capital stock will be entitled to receive such dividends and other distributions in cash, stock or property as may be
declared by our Board of Directors from time to time out of our assets or funds legally available for dividends or other distributions. See "Dividend Policy." These rights are subject to the
preferential rights of the holders of our preferred stock, if any, and any contractual limitations on our ability to declare and pay dividends. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>109</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Other Rights  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Each holder of common stock is subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock that we may
designate and issue in the future. This offering is not subject to pre-emptive rights. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Liquidation Rights  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If our company is involved in a consolidation, merger, recapitalization, reorganization, voluntary or involuntary liquidation, dissolution or winding
up of our affairs, or similar event, each holder of common stock will participate pro rata in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred
stock, if any, then outstanding. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Anti-takeover Effects of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation and our amended and restated bylaws will contain provisions that may delay, defer or discourage
another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are
also designed to encourage persons seeking to acquire control of us to first negotiate with the Board of Directors, which we believe may result in an improvement of the terms of any such acquisition
in favor of our stockholders. However, they also give the Board of Directors the power to discourage acquisitions that some stockholders may favor. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Action by Written Consent, Special Meeting of Stockholders and Advance Notice Requirements for Stockholder Proposals  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation will provide that stockholder action can be taken only at an annual or special meeting of
stockholders and cannot be taken by written consent in lieu of a meeting. Our amended and restated certificate of incorporation and bylaws will also provide that, except as otherwise required by law,
special meetings of the stockholders can be called only pursuant to a resolution adopted by a majority of the total number of directors that we would have if there were no vacancies. Except as
described above, stockholders will not be permitted to call a special meeting or to require the Board of Directors to call a special meeting. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, our amended and restated bylaws require advance notice procedures for stockholder proposals to be brought before an annual meeting of the stockholders, including the nomination of
directors. Stockholders at an annual meeting may only consider the proposals specified in the notice of meeting or brought before the meeting by or at the direction of the Board of Directors, or by a
stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered a timely written notice in proper form to our secretary, of the stockholder's
intention to bring such business before the meeting. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>These
provisions could have the effect of delaying until the next stockholder meeting any stockholder actions, even if they are favored by the holders of a majority of our outstanding voting
securities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Classified Board  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation will provide that our Board of Directors will be divided into three classes of directors, with
the classes as nearly equal in number as possible. As a result, approximately one-third of our Board of Directors will be elected each year. The classification of directors will have the effect of
making it more difficult for stockholders to change the composition of our board. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Removal of Directors  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation will provide that directors may only be removed from office only for cause and only upon the
affirmative vote of at least 75% of the voting power of our outstanding shares of common stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>110</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Amendment to Certificate of Incorporation and Bylaws  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The DGCL provides generally that the affirmative vote of a majority of the outstanding stock entitled to vote on amendments to a corporation's
certificate of incorporation or bylaws is required to approve such amendment, unless a corporation's certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our
amended and restated bylaws may be further amended, altered, changed or repealed by a majority vote of our Board of Directors, provided that, in addition to any other vote otherwise required by law,
the affirmative vote of at least 75% of the voting power of our outstanding shares of common stock will be required to amend, alter, change or repeal our amended and restated bylaws. Additionally, the
affirmative vote of at least 75% of the voting power of the outstanding shares of capital stock entitled to vote on the adoption, alteration, amendment or repeal of our amended and restated
certificate of incorporation, voting as a single class, will be required to amend or repeal or to adopt any provision inconsistent with specified
provisions of our amended and restated certificate of incorporation. This requirement of a supermajority vote to approve amendments to our amended and restated certificate of incorporation and amended
and restated bylaws could enable a minority of our stockholders to exercise veto power over any such amendments. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Delaware Anti-Takeover Statute  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Section&nbsp;203 of the DGCL provides that if a person acquires 15% or more of the voting stock of a Delaware corporation, such person becomes an
"interested stockholder" and may not engage in certain "business combinations" with the corporation for a period of three years from the time such person acquired 15% or more of the corporation's
voting stock, unless: (1)&nbsp;the Board of Directors approves the acquisition of stock or the merger transaction before the time that the person becomes an interested stockholder, (2)&nbsp;the
interested stockholder owns at least 85% of the outstanding voting stock of the corporation at the time the merger transaction commences (excluding voting stock owned by directors who are also
officers and certain employee stock plans), or (3)&nbsp;the merger transaction is approved by the Board of Directors and by the affirmative vote at a meeting, not by written consent, of stockholders
of 2/3 of the holders of the outstanding voting stock which is not owned by the interested stockholder. A Delaware corporation may elect in its certificate of incorporation or bylaws not to be
governed by this particular Delaware law. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Under
our amended and restated certificate of incorporation, we will opt out of Section&nbsp;203 of the DGCL and will therefore not be subject to Section&nbsp;203. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Corporate Opportunity  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation provides that we renounce any interest or expectancy in, or in being offered an opportunity to
participate in, any business opportunity that may from time to time be presented to Brentwood or any of its officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries
(other than us and our subsidiaries) and that may be a business opportunity for Brentwood, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue
if granted the opportunity to do so. No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person,
acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information
regarding any such business opportunity, to us unless, in the case of any such person who is our director or officer, any such business opportunity is expressly offered to such director or officer
solely in his or her capacity as our director or officer. Neither Brentwood, nor any of its representatives has any duty to refrain from engaging directly or indirectly in the same or similar business
activities or lines of business as us or any of our subsidiaries. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>111</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B> Limitations on Liability and Indemnification of Officers and Directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation will limit the liability of our directors to the fullest extent permitted by the DGCL, and our
amended and restated bylaws will provide that we will indemnify them to the fullest extent permitted by such law. We expect to enter into indemnification agreements with our current directors and
executive officers prior to the completion of this offering and expect to enter into a similar agreement with any new directors or executive officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Exclusive Jurisdiction of Certain Actions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law that derivative actions brought in the name of
the Company, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware. Although we
believe this provision benefits the Company by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of
discouraging lawsuits against our directors and officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Registration Rights  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>See "Certain Relationships and Related Party Transactions&#151;Registration Rights Agreement." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Transfer Agent and Registrar  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The transfer agent and registrar for our common stock will be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. Its address
is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Listing  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have applied to have our common stock listed on the New York Stock Exchange under the trading symbol "ZOES." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>112</FONT></P>

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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ee17901_shares_eligible_for_future_sale"> </A>
<A NAME="toc_ee17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SHARES ELIGIBLE FOR FUTURE SALE    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to this offering, there has been no public market for our common stock and a liquid trading market for our common stock may not develop or be
sustained after this offering. Future sales of substantial amounts of our common stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market
price of our common stock and impair our ability to raise equity capital in the future. No prediction can be made as to the effect, if any, future sales of shares, or the availability of shares for
future sales, will have on the market price of our common stock prevailing from time to time. As described below, only a limited number of shares of our common stock will be available for sale in the
public market for a period of several months after consummation of this offering due to contractual and legal restrictions on resale described below. Future sales of our common stock in the public
market either before (to the extent permitted) or after restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such
time and our ability to raise equity capital at a time and price we deem appropriate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Sale of Restricted Shares  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon completion of this offering, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of
common stock outstanding. Of these shares of common stock, the
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock being sold in this offering, plus any shares sold
upon exercise of the underwriters' option to purchase additional shares, will be freely tradable without
restriction under the Securities Act, except for any such shares which may be acquired by an "affiliate" of ours, as that term is defined in Rule&nbsp;144, which shares will be subject to the volume
limitations and other restrictions of Rule&nbsp;144 described below. The
remaining&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock held by our existing stockholders upon
completion of this offering will be
"restricted securities," as that term is defined in Rule&nbsp;144, and may be resold only after registration under the Securities Act or pursuant to an exemption from such registration, including,
among others, the exemptions provided by Rule&nbsp;144 and Rule&nbsp;701 under the Securities Act, which rules are summarized below. These remaining shares of common stock held by our existing
stockholders upon completion of this offering will be available for sale in the public market (after the expiration of the lock-up agreements described below) only if registered or if they qualify for
an exemption from registration under Rule&nbsp;144 or Rule&nbsp;701 under the Securities Act, as described below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
a result of the lock-up agreements described below and the provisions of Rules&nbsp;144 and Rule&nbsp;701 promulgated under the Securities Act, the shares of our common stock (excluding the
shares sold in this offering) will be available for sale in the public market as follows:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>no shares will be eligible for sale on the date of this prospectus;
and</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>shares will be eligible for sale upon the expiration of the lock-up
agreements, as more particularly described below, beginning 180&nbsp;days after the date of this prospectus, subject to certain exceptions. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B> Rule&nbsp;144  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In general, under Rule&nbsp;144, as currently in effect, persons who are not one of our affiliates at any time during the three months preceding a
sale may sell shares of our common stock beneficially held upon the earlier of (1)&nbsp;the expiration of a six-month holding period, if we have been subject to the reporting requirements of the
Exchange Act and have filed all required reports for at least 90&nbsp;days prior to the date of the sale, or (2)&nbsp;a one-year holding period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>At
the expiration of the six-month holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of
shares of our common stock provided current public information about us is available, and a person who was one of our affiliates at any time during the three months preceding a sale would be entitled
to sell within any three- </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>113</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>month
period a number of shares of common stock that does not exceed the greater of either of the following:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>1% of the number of shares of our common stock then outstanding, which will
equal approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares immediately after this offering, based on the
number of shares of our common stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;;
or</FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the average weekly trading volume of our common stock on the New York Stock
Exchange during the four calendar weeks preceding the filing of a notice on Form&nbsp;144 with respect to the sale. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>At
the expiration of the one-year holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of
shares of our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remain subject to the volume restrictions described
above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Sales
under Rule&nbsp;144 by our affiliates are also subject to manner of sale provisions, notice requirements and to the availability of current public information about us. Notwithstanding the
availability of Rule&nbsp;144, the holders of substantially all of our" restricted securities" have entered into lock-up agreements as referenced above and their "restricted securities" will become
eligible for sale (subject to the above limitations under Rule&nbsp;144) upon the expiration of the restrictions set forth in those agreements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Rule&nbsp;701  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In general, and subject to expiration of the applicable lock-up restrictions, under Rule&nbsp;701 promulgated under the Securities Act, any of our
employees, directors or officers who purchased shares from us in connection with a qualified compensatory stock or option plan or other written agreement before the effective date of this offering, or
who purchased shares from us after that date upon the exercise of options granted before that date (subject to the lock-up agreements referred to below, as applicable), are eligible to resell such
shares in reliance upon Rule&nbsp;144 beginning 90&nbsp;days after the date of this prospectus. If such person is not an affiliate, the sale may be made under Rule&nbsp;144 without compliance
with the holding periods of Rule&nbsp;144 and subject only to the manner-of-sale restrictions of Rule&nbsp;144. If such a person is an affiliate, the sale may be made under Rule&nbsp;144 without
compliance with its one-year minimum holding period, but subject to the other Rule&nbsp;144 restrictions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Stock Plans  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We intend to file one or more registration statements on Form&nbsp;S-8 under the Securities Act to register shares of our common stock issued or
reserved for issuance under our existing option plan and the new equity incentive plan we intend to adopt in connection with this offering. The first such registration statement is expected to be
filed soon after the date of this prospectus and will automatically become effective upon filing with the SEC. Accordingly, shares registered under such registration statement will be available for
sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule&nbsp;144 restrictions applicable to our affiliates or the lock-up
restrictions described below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Lock-Up Agreements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We, our officers, directors and holders of all or substantially all our outstanding capital stock have agreed, subject to specified exceptions, not to
directly or indirectly:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sell, offer, contract or grant any option to sell (including any short
sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule&nbsp;16a-l(h) under the Exchange Act; or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>otherwise dispose of any shares of common stock, options or warrants to
acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock currently or hereafter owned either of record or beneficially; or </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>114</FONT></P>

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<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>publicly announce an intention to do any of the foregoing for a period of
180&nbsp;days after the date of this prospectus without the prior written consent of Jefferies&nbsp;LLC and Piper Jaffray&nbsp;&amp;&nbsp;Co. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>This
restriction terminates after the close of trading of the common stock on and including the 180<SUP>th</SUP>&nbsp;day after the date of this prospectus. For additional information, see
"Underwriting." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Registration Rights  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon completion of this offering, the holders of an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock, or their transferees, will be entitled to
certain rights with respect to the registration of their shares under the Securities Act. Except for shares purchased by affiliates, registration of their shares under the Securities Act would result
in these shares becoming freely tradable without restriction under the Securities Act immediately upon effectiveness of the registration, subject to the expiration of the lock-up period, with respect
to certain of the shares, described under "Underwriting" in this prospectus, and to the extent such shares have been released from any repurchase option that we may hold. See "Certain Relationships
and Related Party Transactions&#151;Registration Rights Agreement" for more information. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>115</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=2><B>  MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR<BR>  NON-U.S. HOLDERS    <BR>    </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of material U.S. federal income and estate tax consequences to non-U.S. holders, as defined below, of the ownership and
disposition of shares of our common stock. This summary deals only with shares of common stock purchased in this offering that are held as capital assets (generally, property held for investment) by a
non-U.S. holder. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
purposes of this discussion, a "non-U.S. holder" means a beneficial owner of shares of our common stock that, for U.S. federal income tax purposes, is not any of the
following:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an individual who is a citizen or resident of the United States; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a corporation (or any other entity treated as a corporation for U.S. federal
income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>any entity or arrangement treated as a partnership for U.S. federal income
tax purposes; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a trust if it (1)&nbsp;is subject to the primary supervision of a court
within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2)&nbsp;has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person for U.S. federal income tax purposes. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>If
any entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a partner in such partnership generally will depend
upon the status of the partner and the activities of the partner and the partnership. If you are a partner of a partnership considering an investment in shares of our common stock, you should consult
your own tax advisors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
summary is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), applicable U.S. Treasury regulations, rulings and other administrative pronouncements and
judicial decisions, all as of the date hereof. Those authorities are subject to different interpretations and may be changed, perhaps retroactively, so as to result in U.S. federal income and estate
tax consequences different from those summarized below. We cannot assure you that a change in law will not alter significantly the tax consequences described in this summary. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
summary does not address all aspects of U.S. federal income and estate taxation, does not address any aspects of the unearned income Medicare contribution tax pursuant to the Health Care and
Education Reconciliation Act of 2010 and does not deal with the alternative minimum tax or other federal taxes (such as gift tax) or with foreign, state or local tax considerations that may be
relevant to non-U.S. holders in light of their particular circumstances. In addition, this summary does not describe the U.S. federal income tax consequences applicable to you if you are subject to
special treatment under U.S. federal income tax laws (including if you are a U.S. expatriate or U.S. expatriated entity, a financial institution, an insurance company, a tax-exempt organization, a
trader, broker or dealer in securities or currencies, a "controlled foreign corporation," a "passive foreign investment company," an entity treated as a partnership or other pass-through entity for
U.S. federal income tax purposes (or an investor in such a pass-through entity), a person who acquired shares of our common stock as compensation or otherwise in connection with the performance of
services, or a person who has acquired shares of our common stock as part of a straddle, hedge, conversion transaction or other integrated investment). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have not sought and do not expect to seek any rulings from the U.S. Internal Revenue Service (the "IRS") regarding the matters discussed below. There can be no assurance that the IRS will not take </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>116</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>positions
concerning the tax consequences of the ownership or disposition of shares of our common stock that differ from those discussed below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>If you are considering the purchase of shares of our common stock, you should consult your own tax advisors concerning the particular U.S. federal income and estate tax
consequences to you of the ownership and disposition of shares of our common stock, as well as the consequences to you arising under other U.S. federal tax laws and the laws of any other applicable
taxing jurisdiction in light of your particular circumstances.</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Dividends  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In general, cash distributions on shares of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from
our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent any such distributions exceed both our current and our accumulated earnings and
profits, they will first be treated as a return of capital reducing your tax basis in our common stock (determined on a share by share basis), but not below zero, and then will be treated as gain from
the sale of stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
discussed under "Dividend Policy" above, we do not currently expect to pay dividends. In the event that we do pay dividends, dividends paid to a non-U.S. holder generally will be subject to a U.S.
federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or
business within the United States by a non-U.S. holder generally will not be subject to such withholding tax, provided certain certification and disclosure requirements are satisfied (including the
provision of a properly completed IRS Form&nbsp;W-8 ECI or other applicable form). Instead, unless an applicable income tax treaty provides otherwise, such dividends will be subject to U.S. federal
income tax on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. person. A corporate non-U.S. holder may be subject to an additional "branch profits tax" on its
earnings and profits (subject to adjustments) that are effectively connected with its conduct of a U.S. trade or business (unless an applicable income tax treaty provides otherwise). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
non-U.S. holder of shares of our common stock who wishes to claim the benefit of an applicable income tax treaty rate for dividends will be required (a)&nbsp;to complete IRS Form&nbsp;W-8BEN (or
other applicable form) and certify under penalty of perjury that such holder is not a U.S. person and is eligible for treaty benefits of a reduction in the rate of, or exemption from, withholding on
dividends, or (b)&nbsp;if shares of our common stock are held through certain foreign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury regulations. This
certification must be provided to the applicable withholding agent prior to the payment of dividends and may be required to be updated periodically. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by
timely filing an appropriate claim for refund with the IRS. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Gain on Disposition of Shares of Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Subject to the discussions below of backup withholding and the FATCA legislation, any gain realized by a non-U.S. holder on the sale or other
disposition of shares of our common stock generally will not be subject to U.S. federal income tax unless:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the gain is effectively connected with a trade or business of the non-U.S.
holder conducted in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or a fixed base of the non-U.S. holder); </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the non-U.S. holder is an individual who is present in the United States for
183&nbsp;days or more in the taxable year of that disposition, and certain other conditions are met; or </FONT></DD></DL>
</UL>
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<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>we are or have been a U.S. real property holding corporation (a "USRPHC")
for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the disposition or the period that the non-U.S. holder held shares of our common stock
(the "applicable period"). </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>In
the case of a non-U.S. holder described in the first bullet point above, any gain will be subject to U.S. federal income tax on a net income basis generally in the same manner as if the non-U.S.
holder were a U.S. person (unless an applicable income tax treaty provides otherwise), and a non-U.S. holder that is a foreign corporation may also be subject to a branch profits tax at a rate of 30%
on its effectively connected earnings and profits (subject to adjustments), unless an applicable income tax treaty provides otherwise. Except as otherwise provided by an applicable income tax treaty,
an individual non-U.S. holder described in the second bullet point above will be subject to a 30% tax on any gain derived from the sale or other taxable disposition, which may be offset by certain
U.S. source capital losses, even though the individual is not considered a resident of the United States. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>With
respect to the third bullet point above, we believe we are not and do not anticipate becoming a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market
value of our U.S. real property interests relative to the fair market value of our other business assets, there can be no assurance that we are not currently or will not become a USRPHC in the future.
Even if we are or become a USRPHC, so long as our common stock is regularly traded on an established securities market, a non-U.S. holder will be subject to U.S. federal income tax on any gain only if
such non-U.S. holder actually or constructively owned more than five percent of our outstanding common stock at some time during the applicable period. You should consult your own tax advisor about
the consequences that could result if we are, or become, a USRPHC. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Information Reporting and Backup Withholding  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The amount of dividends paid to each non-U.S. holder and any tax withheld with respect to such dividends will be reported annually to the IRS and to
each such holder, regardless of whether withholding was reduced or eliminated by an applicable income tax treaty. Copies of the information returns reporting such dividends and withholding may also be
made available to the tax authorities in the country in which the non-U.S. holder resides or is established under the provisions of an applicable income tax treaty or agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
non-U.S. holder generally will be subject to backup withholding with respect to dividends paid to such holder unless such holder certifies under penalty of perjury that it is not a U.S. person (and
the payor does not have actual knowledge or reason to know that such holder is a U.S. person), or such holder otherwise establishes an exemption. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Information
reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition by a non-U.S. holder of shares of our common stock within the
United States or conducted through certain U.S.-related financial intermediaries unless such non-U.S. holder certifies under penalty of perjury that it is not a U.S. person (and the payor does not
have actual knowledge or reason to know that the non-U.S. holder is a U.S. person), or such non-U.S. holder otherwise establishes an exemption. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax
liability provided the required information is timely furnished to the IRS. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>118</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Legislation Affecting Taxation of Common Stock Held by or Through Foreign Entities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Legislation enacted in 2010, known as the "FATCA" legislation, generally will impose a withholding tax of 30% on dividend income from our common stock
and on the gross proceeds of a sale or other disposition of our common stock paid to a "foreign financial institution" (as specifically defined for this purpose), unless such institution enters into
an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity
and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise qualifies for an exemption. Absent any applicable exception, this
legislation also generally will impose a withholding tax of 30% on dividend income from our common stock and the gross proceeds of a sale or other disposition of our common stock paid to a foreign
entity that is not a foreign financial institution unless such entity provides the applicable withholding agent or, in the case of substantial U.S. owners, also the U.S. tax authorities either with
(i)&nbsp;a certification identifying any substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity (or more than
zero percent in the case of some entities) or (ii)&nbsp;a certification that the entity does not have any substantial U.S. owners. The United States and other governments may enter into
intergovernmental agreements that modify or supplement these rules. Under final Treasury regulations and related guidance, this withholding tax only applies to payments of dividends made after
June&nbsp;30, 2014 and payments of gross proceeds made after December&nbsp;31, 2016. Under certain circumstances, a non-U.S. holder of our common stock might be eligible for refunds or credits of
such withholding taxes, and a non-U.S. holder might be required to file&nbsp;a U.S. federal income
tax return to claim such refunds or credits. Non-U.S. holders should consult their own tax advisors regarding the implications of this legislation on their investment in our common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> U.S. Federal Estate Tax  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Shares of our common stock that are owned (or deemed to be owned) at the time of death by a non-U.S. holder who is an individual will be includable in
such non-U.S. holder's taxable estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B>THE SUMMARY ABOVE IS A SUMMARY OF MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS. POTENTIAL PURCHASERS OF OUR COMMON STOCK ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS OF OWNING AND DISPOSING OF OUR COMMON STOCK.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>119</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ei17901_underwriting"> </A>
<A NAME="toc_ei17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  UNDERWRITING    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Subject to the terms and conditions set forth in the underwriting agreement,
dated&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2014, among us, Jefferies&nbsp;LLC and Piper
Jaffray&nbsp;&amp;&nbsp;Co., as the representatives of the underwriters named below and the joint book-running managers of this offering, we have agreed to sell to the underwriters, and each of the
underwriters has agreed, severally and not jointly, to purchase from us, the respective number of shares of common stock shown opposite its name below: </FONT></P>

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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:45pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Underwriters

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number<BR>
of Shares </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jefferies&nbsp;LLC</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Piper Jaffray&nbsp;&amp;&nbsp;Co.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert W. Baird&nbsp;&amp;&nbsp;Co. Incorporated</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>William Blair&nbsp;&amp; Company, L.L.C.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stephens Inc.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stifel, Nicolaus&nbsp;&amp; Company, Incorporated</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The underwriting agreement provides that the obligations of the several underwriters are subject to certain conditions precedent such as the receipt by the
underwriters of officers' certificates and legal opinions and approval of certain legal matters by their counsel. The underwriting agreement provides that the underwriters will purchase all of the
shares of common stock if any of them are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be
increased or the underwriting agreement may be terminated. We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities
under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of those liabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriters have advised us that, following the completion of this offering, they currently intend to make a market in the common stock as permitted by applicable laws and regulations. However,
the underwriters are not obligated to do so, and the underwriters may discontinue any market-making activities at any time without notice in their sole discretion. Accordingly, no assurance can be
given as to the liquidity of the trading market for the common stock, that you will be able to sell any of the common stock held by you at a particular time or that the prices that you receive when
you sell will be favorable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriters are offering the shares of common stock subject to their acceptance of the shares of common stock from us and subject to prior sale. The underwriters reserve the right to withdraw,
cancel or modify offers to the public and to reject orders in whole or in part. In addition, the underwriters have advised us that they do not intend to confirm sales to any account over which they
exercise discretionary authority. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Commission and Expenses  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The underwriters have advised us that they propose to offer the shares of common stock to the public at the initial public offering price set forth on
the cover page of this prospectus and to certain dealers, which may include the underwriters, at that price less a concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of
common stock. The
underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock to certain brokers and
dealers. After the offering,
the initial public offering price, concession and reallowance to dealers may be reduced by the representatives. No </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>120</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>such
reduction will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table shows the public offering price, the underwriting discounts that we are to pay the underwriters and the proceeds, before expenses, to us in connection with this offering. Such
amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of our common stock. </FONT></P>

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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Per Share </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Without<BR>
Option to<BR>
Purchase<BR>
Additional<BR>
Shares </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>With<BR>
Option to<BR>
Purchase<BR>
Additional<BR>
Shares </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Without<BR>
Option to<BR>
Purchase<BR>
Additional<BR>
Shares </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>With<BR>
Option to<BR>
Purchase<BR>
Additional<BR>
Shares </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Public offering price</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting discounts paid by us</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds to us, before expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>We estimate expenses payable by us in connection with this offering, other than the underwriting discounts referred to above, will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. We have also agreed to reimburse the underwriters for certain of their expenses, in an amount of up to
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, incurred in connection with review by the Financial Industry
Regulatory Authority,&nbsp;Inc. of the terms of this offering, as set forth in the underwriting agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Determination of Offering Price  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to this offering, there has not been a public market for our common stock. Consequently, the initial public offering price for our common stock
will be determined by negotiations between us and the representatives. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market
valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
offer no assurances that the initial public offering price will correspond to the price at which the common stock will trade in the public market subsequent to the offering or that an active
trading market for the common stock will develop and continue after the offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Listing  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have applied to have our common stock listed on the New York Stock Exchange under the trading symbol "ZOES." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Stamp Taxes  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and
practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>121</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><B> Option to Purchase Additional Shares  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have granted to the underwriters an option, exercisable for 30&nbsp;days from the date of this prospectus, to purchase, from time to time, in
whole or in part, up to an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares from us at the public offering
price set forth on the cover page of this prospectus, less underwriting discounts. If the underwriters
exercise this option, each underwriter will be obligated, subject to specified conditions, to purchase a number of additional shares proportionate to that underwriter's initial purchase commitment as
indicated in the table above. This option may be exercised only if the underwriters sell more shares than the total number set forth on the cover page of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> No Sales of Similar Securities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We, our officers, directors and holders of all or substantially all our outstanding capital stock have agreed, subject to specified exceptions, not to
directly or indirectly:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sell, offer, contract or grant any option to sell (including any short
sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule&nbsp;16a-l(h) under the Exchange Act; or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>otherwise dispose of any shares of common stock, options or warrants to
acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock currently or hereafter owned either of record or beneficially; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>publicly announce an intention to do any of the foregoing for a period of
180&nbsp;days after the date of this prospectus without the prior written consent of Jefferies&nbsp;LLC and Piper Jaffray&nbsp;&amp;&nbsp;Co. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>This
restriction terminates after the close of trading of the common stock on and including the 180<SUP>th</SUP>&nbsp;day after the date of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Jefferies&nbsp;LLC
and Piper Jaffray&nbsp;&amp; Co. may, in their sole discretion and at any time or from time to time before the termination of the 180-day period, release all or any portion of the
securities subject to lock-up agreements. There are no existing agreements between the underwriters and any of our stockholders who will execute a lock-up agreement, providing consent to the sale of
shares prior to the expiration of the lock-up period. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Stabilization  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The underwriters have advised us that they, pursuant to Regulation&nbsp;M under the Exchange Act, certain persons participating in the offering may
engage in short sale transactions, stabilizing transactions, syndicate covering transactions or the imposition of penalty bids in connection with this offering. These activities may have the effect of
stabilizing or maintaining the market price of the common stock at a level above that which might otherwise prevail in the open market. Establishing short sales positions may involve either "covered"
short sales or "naked" short sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>"Covered"
short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares of our common stock in this offering. The underwriters may close out any
covered short position by either exercising their option to purchase additional shares of our common stock or purchasing shares of our common stock in the open market. In determining the source of
shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they
may purchase shares through the option to purchase additional shares. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>"Naked"
short sales are sales in excess of the option to purchase additional shares of our common stock. The underwriters must close out any naked short position by purchasing shares in the open
market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on
the price of the shares of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>122</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>A
stabilizing bid is a bid for the purchase of shares of common stock on behalf of the underwriters for the purpose of fixing or maintaining the price of the common stock. A syndicate covering
transaction is the bid for or the purchase of shares of common stock on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with the offering. Similar to
other purchase transactions, the underwriter's purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or
retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. A penalty bid is an
arrangement permitting the underwriters to reclaim the selling concession otherwise accruing to a syndicate member in connection with the offering if the common stock originally sold by such syndicate
member are purchased in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Neither
we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common
stock. The underwriters are not obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> Electronic Distribution  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A prospectus in electronic format may be made available by e-mail or on the web sites or through online services maintained by one or more of the
underwriters or their affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with us to allocate a
specific number of common stock for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations.
Other than the prospectus in electronic format, the information on the underwriters' web sites and any information contained in any other web site maintained by any of the underwriters is not part of
this prospectus, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Other Activities and Relationships  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities
trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and
certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for
which they received or will receive customary fees and expenses. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve securities and/or instruments issued by us and our affiliates. If the underwriters or their respective affiliates have a lending relationship with us, they routinely hedge their
credit exposure to us consistent with their customary risk management policies. The underwriters and their respective affiliates may hedge such exposure by entering into transactions which consist of
either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the common stock offered hereby. Any such
short positions could adversely affect future trading prices of the common stock offered hereby. The underwriters and certain of their respective affiliates may also communicate independent investment
recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that
they acquire, long and/or short positions in such securities and instruments. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>123</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2><B> Selling Restrictions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction
(i)&nbsp;in which such an offer or solicitation is not authorized, (ii)&nbsp;in which any person making such offer or solicitation is not qualified to do so or (iii)&nbsp;in which any such offer
or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the shares of common stock or possession or distribution of this
prospectus or any other offering or publicity material relating to the shares of common stock in any country or jurisdiction (other than the United States) where any such action for that purpose is
required. Accordingly, each underwriter has undertaken that it will not, directly or indirectly, offer or sell any shares of common stock or have in its possession, distribute or publish any
prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in
compliance
with any applicable laws and regulations and all offers and sales of the shares of common stock by it will be made on the same terms. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> European Economic Area  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), an
offer to the public of any common shares which are the subject of the offering contemplated by this prospectus supplement and the accompanying prospectus may not be made in that Relevant Member State
except that an offer to the public in that Relevant Member State of any common shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been
implemented in that Relevant Member State:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to any legal entity which is a "qualified investor" as defined in the
Prospectus Directive; to legal entities which are qualified investors as defined under the Prospectus Directive; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to fewer than 100 or, if the Relevant Member State has implemented the
relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the underwriters or the underwriters nominated by us for any such offer; or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>in any other circumstances falling within Article&nbsp;3(2) of the
Prospectus Directive, </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>provided
that no such offer of common shares shall require us or any of the underwriters to publish a prospectus pursuant to Article&nbsp;3 of the Prospectus Directive or supplement a prospectus
pursuant to Article&nbsp;16 of the Prospectus Directive. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
the purposes of this provision, the expression an "offer common shares to the public" in relation to the common shares in any Relevant Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the common shares to be offered so as to enable an investor to decide to purchase or subscribe to the common shares, as the same may be
varied in that Relevant Member
State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending
Directive" means Directive 2010/73/EU. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> United Kingdom  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning
of Article&nbsp;2(1)(e) of the Prospectus Directive that are also (i)&nbsp;investment professionals falling within Article&nbsp;19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order") and/or (ii)&nbsp;high net worth entities falling within Article&nbsp;49(2)(a) to (d)&nbsp;of the Order and other persons to whom it may lawfully
be communicated (each such person being referred to as a "relevant person"). </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>124</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>This
prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom.
Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Hong Kong  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>No securities have been offered or sold, and no securities may be offered or sold, in Hong Kong, by means of any document, other than to persons whose
ordinary business is to buy or sell shares or debentures, whether as principal or agent; or to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong
("SFO") and any rules made under that Ordinance; or in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32)&nbsp;of Hong Kong
("CO") or which do not constitute an offer or invitation to the public for the purpose of the CO or the SFO. No document, invitation or advertisement relating to the securities has been issued or may
be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed
or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons
outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under that Ordinance. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>This
prospectus has not been registered with the Registrar of Companies in Hong Kong. Accordingly, this prospectus may not be issued, circulated or distributed in Hong Kong, and the securities may not
be offered for subscription to members of the public in Hong Kong. Each person acquiring the securities will be required, and is deemed by the acquisition of the securities, to confirm that he is
aware of the restriction on offers of the securities described in this prospectus and the relevant offering documents and that he is not acquiring, and has not been offered any securities in
circumstances that contravene any such restrictions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Singapore  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this
prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares
be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i)&nbsp;to an institutional investor
under Section&nbsp;274 of the Securities and Futures Act, Chapter&nbsp;289 of Singapore (the "SFA"), (ii)&nbsp;to a relevant person pursuant to Section&nbsp;275(1), or any person pursuant to
Section&nbsp;275(1A), and in accordance with the conditions specified in Section&nbsp;275, of the SFA, or (iii)&nbsp;otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Where
the shares are subscribed or purchased under Section&nbsp;275 of the SFA by a relevant person which is:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a corporation (which is not an accredited investor (as defined in
Section&nbsp;4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a trust (where the trustee is not an accredited investor) whose sole purpose
is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>securities
(as defined in Section&nbsp;239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the shares pursuant to an offer made under Section&nbsp;275 of the SFA except:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to an institutional investor or to a relevant person defined in
Section&nbsp;275(2) of the SFA, or to any person arising from an offer referred to in Section&nbsp;275(1A) or Section&nbsp;276(4)(i)(B) of the SFA; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>where no consideration is or will be given for the transfer; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>where the transfer is by operation of law; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>125</FONT></P>

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<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>as specified in Section&nbsp;276(7) of the SFA; or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>as specified in Regulation&nbsp;32 of the Securities and Futures (Offers
of Investments) (Shares and Debentures) Regulations&nbsp;2005 of Singapore. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Japan  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The offering has not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No.&nbsp;25 of 1948 of Japan, as
amended), or FIEL, and the Initial Purchaser will not offer or sell any shares, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means
any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other applicable laws, regulations and
ministerial guidelines of Japan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Switzerland  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or
regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of
Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in
Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in
Switzerland. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Neither
this prospectus nor any other offering or marketing material relating to the offering, the Company or the shares have been or will be filed with or approved by any Swiss regulatory authority.
In particular, this prospectus will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been
and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the
CISA does not extend to acquirers of shares. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Australia  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus is not a disclosure document for the purposes of Australia's Corporations Act 2001 (Cth) of Australia, or Corporations Act, has not
been lodged with the Australian Securities&nbsp;&amp; Investments Commission and is only directed to the categories of exempt persons set out below. Accordingly, if you receive this prospectus in
Australia: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You
confirm and warrant that you are either:</FONT></P>

<UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a "sophisticated investor" under section&nbsp;708(8)(a) or (b)&nbsp;of
the Corporations Act; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a "sophisticated investor" under section&nbsp;708(8)(c) or (d)&nbsp;of
the Corporations Act and that you have provided an accountant's certificate to the Company which complies with the requirements of section&nbsp;708(8)(c)(i) or (ii)&nbsp;of the Corporations Act
and related regulations before the offer has been made; </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a person associated with the Company under section&nbsp;708(12) of the
Corporations Act; or </FONT><FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=3>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a "professional investor" within the meaning of section&nbsp;708(11)(a) or
(b)&nbsp;of the Corporations Act. </FONT></DD></DL>
</UL>

<P style="font-family:arial;"><FONT SIZE=2>To
the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under
this prospectus is void and incapable of acceptance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You
warrant and agree that you will not offer any of the shares issued to you pursuant to this prospectus for resale in Australia within 12&nbsp;months of those shares being issued unless any such
resale offer is exempt from the requirement to issue a disclosure document under section&nbsp;708 of the Corporations Act. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>126</FONT></P>

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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ek17901_legal_matters"> </A>
<A NAME="toc_ek17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  LEGAL MATTERS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Kirkland&nbsp;&amp; Ellis&nbsp;LLP, New York, New York will pass upon the validity of the common stock offered hereby on our behalf. Certain legal
matters in connection with this offering will be passed upon for the underwriters by Latham&nbsp;&amp; Watkins&nbsp;LLP, New York, New York. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ek17901_experts"> </A>
<A NAME="toc_ek17901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  EXPERTS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The financial statements as of December&nbsp;30, 2013 and for each of the three years in the period ended December&nbsp;30, 2013 included in this
prospectus have been so included in reliance on the report of PricewaterhouseCoopers&nbsp;LLP, an independent registered public accounting firm, given on the authority of said firm as experts in
auditing and accounting. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ek17901_where_you_can_find_more_information"> </A>
<A NAME="toc_ek17901_3"> </A>
<BR></FONT><FONT SIZE=2><B>  WHERE YOU CAN FIND MORE INFORMATION    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have filed with the SEC a registration statement on Form&nbsp;S-1, including exhibits and schedules, under the Securities Act with respect to the
shares of our common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or
the exhibits and schedules filed therewith. For further information with respect to us and the common stock offered hereby, reference is made to the registration statement and the exhibits and
schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not
necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, we will become subject to the information and periodic and current reporting requirements of the Exchange Act, and, in accordance therewith, will file periodic and
current reports, proxy statements and other information with the SEC. Such periodic and current reports, proxy statements and other information will be available to the public on the SEC's website at </FONT> <FONT
SIZE=2><I>www.sec.gov</I></FONT><FONT SIZE=2> and free of charge through our website at </FONT><FONT SIZE=2><I>www.zoeskitchen.com</I></FONT><FONT SIZE=2>. To receive copies of public
records not posted to the SEC's website at prescribed rates, you may complete an online form at </FONT><FONT SIZE=2><I>www.sec.gov</I></FONT><FONT SIZE=2>, send a fax to (202)&nbsp;772-9337 or submit
a written request to the SEC, Office of FOIA/PA Operations, 100&nbsp;F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. Please note that our
website address is provided as an inactive textual reference only. The information contained on, or accessible through, our website is not part of this prospectus and is therefore not incorporated by
reference. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>127</FONT></P>

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<BR></FONT><FONT SIZE=2><B>  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">
<A NAME="FA17901_TOC"></A> </FONT></P>
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<p style="font-family:arial;"></FONT></P>

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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Page </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Audited Consolidated Financial Statements</B></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#RPT1"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Report of Independent Registered Public Accounting Firm</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#RPT1"><FONT SIZE=2>F-2</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#BAL1"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Balance Sheets as of December&nbsp;30, 2013 and December&nbsp;31, 2012</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#BAL1"><FONT SIZE=2>F-3</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#SOP1"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Statements of Operations for the fiscal years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and
December&nbsp;26, 2011</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#SOP1"><FONT SIZE=2>F-4</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#EQUITY1"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Statements of Stockholder's Equity for the fiscal years ended December&nbsp;30, 2013, December&nbsp;31, 2012
and December&nbsp;26, 2011</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#EQUITY1"><FONT SIZE=2>F-5</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#FLOW1"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated Statements of Cash Flows for the fiscal years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and
December&nbsp;26, 2011</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#FLOW1"><FONT SIZE=2>F-6</FONT></A></TD>
</TR>
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<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#NOTE1"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to Consolidated Financial Statements for the fiscal years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and
December&nbsp;26, 2011</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#NOTE1"><FONT SIZE=2>F-7</FONT></A></TD>
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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="RPT1"></A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> Report of Independent Registered Public Accounting Firm  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
the Stockholder of<BR>
Zoe's Kitchen,&nbsp;Inc.: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholder's equity, and of cash flows present fairly, in all material respects,
the financial position of Zoe's Kitchen,&nbsp;Inc. and its subsidiaries at December&nbsp;30, 2013 and December&nbsp;31, 2012 and the results of their operations and their cash flows for each of
the three years in the period ended December&nbsp;30, 2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>/s/
PricewaterhouseCoopers LLP </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Dallas,
Texas<BR>
March&nbsp;10, 2014 </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-2</FONT></P>

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NAME="BAL1"></A> </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><A
NAME="fg17901_zoe_s_kitchen,_inc._and_subsid__zoe03124"> </A>
<A NAME="toc_fg17901_1"> </A></FONT> <FONT SIZE=2><B><BR>  ZOE's KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>  CONSOLIDATED BALANCE SHEETS<BR>  DECEMBER&nbsp;30, 2013 AND DECEMBER&nbsp;31, 2012    <BR>    </B></FONT></P>
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<TD WIDTH="100pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="77pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Unaudited Pro forma<BR>
Stockholder's equity at<BR>
December&nbsp;30, 2013<BR>
(Note&nbsp;1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,149,470</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,450,026</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trade accounts receivable, net of allowance for doubtful accounts of $12,732 and $8,586 at December&nbsp;30, 2013 and December&nbsp;31, 2012,
respectively</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>582,655</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>394,834</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other accounts receivable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,187,424</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,057,617</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>913,381</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>655,904</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses and other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>617,928</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>612,848</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,450,858</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,171,229</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78,629,369</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>48,214,939</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,334,129</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23,334,129</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangibles, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,207,013</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,807,427</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loan costs, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,034,891</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>955,941</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deposits</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>246,844</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>232,564</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other long-term assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,033,531</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total long-term assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>115,485,777</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>85,545,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>119,936,635</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>90,716,229</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities and Stockholder's Equity</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current maturities of long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,925,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,250,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,671,701</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,893,707</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued expenses and other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,422,738</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,742,910</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unearned franchise start-up fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,059,439</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,926,617</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>39,475,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,437,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deemed landlord financing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,893,309</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,186,674</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred rent</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,155,795</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,768,512</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,397,025</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,837,394</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Residual value obligations, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>356,539</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>326,724</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other long-term liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21,022</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,641</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total long-term liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>71,298,690</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>44,569,445</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>86,358,129</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>53,496,062</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commitments and Contingencies (Note&nbsp;12)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Stockholder's equity:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock, $0.01 par value, 100 shares authorized, issued, and outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,199,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,126,071</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:16pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(11,621,001</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,905,905</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total stockholder's equity</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33,578,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37,220,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:25pt;text-indent:-8pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities and stockholder's equity</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>119,936,635</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>90,716,229</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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&nbsp;&nbsp;&nbsp;
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The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-3</FONT></P>

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<!-- ZEQ.=1,SEQ=134,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=841540,FOLIO='F-3',FILE='DISK134:[13ZDH1.13ZDH17901]FG17901A.;9',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

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NAME="SOP1"></A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="fi17901_zoe_s_kitchen,_inc._and_subsid__zoe04339"> </A>
<A NAME="toc_fi17901_1"> </A></FONT> <FONT SIZE=2><B><BR>  ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>  CONSOLIDATED STATEMENTS OF OPERATIONS<BR>  YEARS ENDED DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011    <BR>
</B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="84pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Revenue:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restaurant sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>115,747,989</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78,966,267</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,193,143</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Royalty fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>637,285</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>677,309</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>933,626</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchise fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>80,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total revenue</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>116,385,274</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,723,576</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50,176,769</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Restaurant operating costs:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales (excluding depreciation and amortization)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,062,951</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,845,024</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,755,615</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Labor</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>32,810,499</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21,566,822</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,423,612</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Store operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21,779,688</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,609,542</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,595,941</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>General and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,171,577</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,969,017</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,383,884</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,861,752</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,779,363</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,840,418</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,600,651</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,091,123</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>585,495</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pre-opening costs</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,938,266</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>916,718</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>805,514</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss (gain) from disposal of equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>175,199</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>240,006</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,695</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>115,400,583</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>77,017,615</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49,386,784</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income from operations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>984,691</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,705,961</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>789,985</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other expenses:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,019,174</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337,116</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,247,799</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bargain purchase gain from acquisition, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(541,206</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss on interest cap</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,854</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total other expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,044,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,337,116</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>706,593</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income (loss) before provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,059,337</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>368,845</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>83,392</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Provision for income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>655,759</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>621,740</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>110,317</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss per share, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
(269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares outstanding, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Unaudited pro forma net loss per share (Note&nbsp;14):</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss per share, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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&nbsp;&nbsp;&nbsp;
</font></p><p align=center style="font-family:arial;"><font> </FONT> <FONT SIZE=2>
The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-4</FONT></P>

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<!-- ZEQ.=1,SEQ=135,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=204582,FOLIO='F-4',FILE='DISK134:[13ZDH1.13ZDH17901]FI17901A.;9',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="EQUITY1"></A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="fk17901_zoe_s_kitchen,_inc._and_subsid__zoe04761"> </A>
<A NAME="toc_fk17901_1"> </A></FONT> <FONT SIZE=2><B><BR>  ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>  CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY<BR>  YEARS ENDED DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011
<BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="42pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Common<BR>
Stock </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Additional<BR>
Paid-in<BR>
Capital </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Accumulated<BR>
Deficit </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total<BR>
Stockholder's<BR>
Equity </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balances at December&nbsp;27, 2010</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>44,810,420</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(7,626,085</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>37,184,336</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>189,962</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>189,962</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balances at December&nbsp;26, 2011</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>45,000,382</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(7,653,010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>37,347,373</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>125,689</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>125,689</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balances at December&nbsp;31, 2012</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>45,126,071</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(7,905,905</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>37,220,167</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>73,435</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>73,435</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balances at December&nbsp;30, 2013</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>45,199,506</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(11,621,001</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>33,578,506</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
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&nbsp;&nbsp;&nbsp;
</font></p><p align=center style="font-family:arial;"><font> </FONT> <FONT SIZE=2>
The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-5</FONT></P>

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<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

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NAME="fm17901_zoe_s_kitchen,_inc._and_subsid__zoe04901"> </A>
<A NAME="toc_fm17901_1"> </A></FONT> <FONT SIZE=2><B><BR>  ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>  CONSOLIDATED STATEMENTS OF STATEMENTS OF CASH FLOWS<BR>  YEARS ENDED DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="77pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="77pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="77pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from operating activities:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile net loss to net cash provided by operating activities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,861,752</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,779,363</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,840,418</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization of intangible assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,600,651</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,091,123</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>585,495</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>73,435</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>125,689</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>189,962</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>593,879</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>546,740</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>89,317</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization of loan costs</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>204,845</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>120,278</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>104,448</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bad debt expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,041</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>12,539</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,616</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss (gain) from disposal of equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>175,199</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>240,006</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,695</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bargain purchase gain from acquisition</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(541,206</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accretion of deemed landlord financing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>261,653</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>114,154</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>120,042</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Changes&nbsp;in&nbsp;operating&nbsp;assets&nbsp;and&nbsp;liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trade accounts receivable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(198,862</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>66,142</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(296,249</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other accounts receivable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(129,807</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(677,700</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(367,931</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(257,477</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(179,326</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(150,220</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid expenses and other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(62,929</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(120,580</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(291,406</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,307,429</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,032,983</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(65,572</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued expenses and other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,810,789</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>844,125</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,033,996</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred rent</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,387,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,243,292</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,513,946</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:27pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unearned franchise start-up fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(190,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:36pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by operating
activities&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,923,785</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,795,933</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,764,036</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from investing activities:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Purchase of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(28,267,305</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(15,462,285</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,958,842</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Acquisition purchase price, net of cash acquired</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(5,834,238</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,574,481</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from sale of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>25,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,356</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,640</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:36pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(28,241,799</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(21,283,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(13,518,683</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flows from financing activities:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from line of credit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,650,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,373,267</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,900,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payments on long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(937,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(685,767</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from deemed landlord financing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,594,982</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,018,520</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,615</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payment of loan acquisition fees</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(283,795</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(575,794</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(397,933</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payment of costs associated with initial public offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(6,229</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:36pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by financing
activities&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,017,458</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,130,226</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,599,682</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:36pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net change in cash and cash
equivalents&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,300,556</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,642,992</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,154,965</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:10pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash and cash equivalents</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning of year</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,450,026</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>807,034</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,961,999</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>End of year</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,149,470</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,450,026</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>807,034</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Supplemental disclosure of cash flow information</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid for interest related to long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,039,283</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,228,554</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>400,775</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid for interest related to deemed landlord financing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,668,437</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>980,930</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>645,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash residual value lease obligations</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>106,513</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>102,663</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>67,507</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash deemed landlord financing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,850,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,250,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,200,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash purchases of property and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,322,992</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,242,569</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>139,148</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash costs associated with initial public offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,018,219</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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 <p style="font-family:arial;line-height:1pt;margin-left:18pt;"> <FONT SIZE=2>
<!-- BLANK LINE TO FORCE PARA -->
&nbsp;&nbsp;&nbsp;
</font></p><p align=center style="font-family:arial;"><font> </FONT> <FONT SIZE=2>
The accompanying notes are an integral part of these consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-6</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=137,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=180010,FOLIO='F-6',FILE='DISK134:[13ZDH1.13ZDH17901]FM17901A.;21',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
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NAME="page_fo17901_1_7"> </A>


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</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="NOTE1"></A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="fo17901_zoe_s_kitchen,_inc._and_subsid__zoe04047"> </A>
<A NAME="toc_fo17901_1"> </A></FONT> <FONT SIZE=2><B><BR>  ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>  DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011    <BR>
</B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Nature of Operations  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Zoe's Kitchen,&nbsp;Inc. ("the Company"), incorporated in the State of Delaware on October&nbsp;24, 2007, entered into a Membership Interest
Purchase Agreement with the members of Zoe's Kitchen USA,&nbsp;LLC (the "Acquired Company"), on October&nbsp;31, 2007, to acquire 100% of the issued and outstanding membership interests of the
Acquired Company (the "2007 Purchase"). Currently, the Company is a wholly owned subsidiary of Zoe's Investors,&nbsp;LLC ("Zoe's Investors"). In connection with the application of purchase
accounting, the Company recorded goodwill on our financial statements of approximately $21.2&nbsp;million and other identifiable intangibles of approximately $10.9&nbsp;million at the date of the
acquisition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Company primarily develops and operates fast-casual restaurants through our subsidiaries. As of December&nbsp;30, 2013 and December&nbsp;31, 2012 we operated 94 and 67 Company-owned
restaurants, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition to our Company-owned restaurants, we grant licenses (franchises) to qualified franchisees to construct and operate Zo&euml;s Kitchen restaurants within specified protected areas
throughout the United States. As of December&nbsp;30, 2013 and December&nbsp;31, 2012, there were eight franchised restaurants. The licensing agreements grant franchisees the right to use the
Zo&euml;s Kitchen service mark and our comprehensive system ("the System") for the development and operation of Zo&euml;s Kitchen. The System includes our trade name, building
design and layouts, equipment, ingredients, recipes and other specifications for authorized food products, methods of control, and
certain operational and business standards and policies pursuant to the franchise agreement. In consideration for the granting of these licenses, we receive initial franchise fees for each
Zo&euml;s Kitchen location opened and, in addition, receive monthly royalties based on the gross revenues generated per restaurant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Principles of Consolidation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Zoe's Kitchen USA,&nbsp;LLC and Soho
Franchising,&nbsp;LLC. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements presented herein reflect our financial position,
results of operations, cash flows and changes in equity in conformity with accounting principles generally accepted in the United States or "GAAP". Certain amounts in 2012 have been reclassified to
conform to 2013 presentation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Revision  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In 2013, we identified an adjustment to the December&nbsp;31, 2012 balance sheet relating to our asset retirement obligation. To correct for this we
have revised the December&nbsp;31, 2012 balance sheet to move $0.01&nbsp;million from accrued expenses and other to other long-term liabilities. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Use of Estimates  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, such as valuation of
long-lived, definite and indefinite-lived assets, estimated useful lives of assets, the reasonably assured lease terms of operating leases, the construction costs of leases where the Company is
considered the owner during and after the construction period, allowance for doubtful accounts, the fair value of equity-based compensation, and deferred tax valuation allowances, that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-7</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_fo17901_1_8"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Fiscal Year  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We operate on a 52 or 53&nbsp;week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of
52&nbsp;weeks, with the exception of the fiscal year ended December&nbsp;31, 2012, which consists of 53&nbsp;weeks. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Unaudited Pro Forma Balance Sheet Information  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In December 2013, the Company's board of directors authorized the management of the Company to file&nbsp;a registration statement with the
Securities and Exchange Commission ("SEC") for the Company to sell shares of its common stock to the public. If the contemplated offering is completed, we will distribute all of our shares of our
common stock held by our parent, Zoe's Investors&nbsp;LLC, to its existing members in accordance with the units held by each member and pursuant to the terms of Zoe's Investors'&nbsp;LLC
Agreement. The distribution of shares of our common stock held by Zoes Investors to its members will be conducted in the following manner: (i)&nbsp;shares of our common stock to holders of
Class&nbsp;C Units in respect of such holders' unreturned capital investment; (ii)&nbsp;shares of our common stock to holders of Class&nbsp;C Units in respect of the unpaid yield on such units;
(iii)&nbsp;shares of our common stock to holders of Class&nbsp;A Units in respect of such holders' unreturned capital investment; (iv)&nbsp;shares of our common stock to holders of
Class&nbsp;A Units in respect of the unpaid yield on such units; and (v)&nbsp;shares of our common stock to holders of Class&nbsp;A Units, Class&nbsp;B Units and Class&nbsp;C Units on a pro
rata basis; provided, however, that pursuant to this clause&nbsp;(v), the holders of Class&nbsp;B Units will participate only after a total of shares of our common stock have been distributed to
the holders of Class&nbsp;A Units and Class&nbsp;C Units pursuant to this clause&nbsp;(v); the foregoing distribution is, based upon an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
per share (the mid-point of the initial public offering range); the actual number of shares of common stock to be issued to each holder of units of Zoe's Investors&nbsp;LLC in such distribution is
subject to change based on any changes to the initial public offering price and the date of the pricing of this offering. Pro forma adjustments have been made to stockholders' equity to reflect this
distribution. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Net Loss per Share and Unaudited Pro Forma Net Loss per Share  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Basic net loss per share is calculated by dividing net loss by the weighted average shares outstanding during the period, without consideration of
common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period,
determined using the treasury-stock method. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
calculations for the unaudited pro forma basic and diluted net loss per share gives effect to the distribution of all of our shares of our common stock held by Zoe's Investors'&nbsp;LLC to its
existing members in accordance with the units held by each member and pursuant to the terms of the Zoe's Investors'&nbsp;LLC Agreement, as described above, upon the closing of a qualified initial
public offering, as if the distribution had occurred at the beginning of the period or issuance date, if later. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Segment Information  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have determined that we have one operating segment, and therefore one reportable segment. Our chief operating decision maker ("CODM") is our Chief
Executive Officer; our CODM reviews financial performance and allocates resources at a consolidated level on a recurring basis. All of our revenues are derived in the United States of America. All of
our assets are located in the United States of America. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Revenue Recognition&nbsp;&#151; Restaurant Sales  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We recognize restaurant sales when food and beverage products are sold. Restaurant sales are reported net of sales tax collected from customers. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-8</FONT></P>

<HR NOSHADE>
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<A NAME="page_fo17901_1_9"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Gift Cards  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Revenues from the sale of gift cards are deferred and recognized when redeemed. Deferred gift card revenue is included in accrued liabilities in our
consolidated balance sheets. Our gift cards do not have an expiration date and we do not deduct non-usage fees from outstanding gift card balances. We recognize gift card breakage revenue by applying
our estimate of the rate of gift card breakage over the estimated period of redemption. These estimates are based on our historical redemptions. We recognize breakage revenues exclusive of amounts
subject to state unclaimed property laws. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior
to the fourth quarter 2013, we were subject to future escheat exposures and we had not accumulated enough historical redemption data to make an estimate for gift card breakage. We did not
recognize any revenue from gift card breakage during the years ended December&nbsp;31, 2012 and December&nbsp;26, 2011. We recorded $0.3&nbsp;million of gift card breakage revenue in restaurant
sales in the fourth quarter of 2013 which includes breakage income related to gift cards sold since 2008. Fees paid to a third party administering our gift card program were $0.2&nbsp;million during
2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Franchise Fee and Royalty Accounting  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We recognize franchise fee revenues when substantial performance of all franchisor obligations has been achieved. Substantial performance is achieved
when the following conditions have been met: 1)&nbsp;we have no remaining obligation or intent to refund any cash or to forgive any unpaid notes or receivables from franchisees; 2)&nbsp;we have
performed substantially all of the initial services required by the license agreement; and 3)&nbsp;we have met all other material conditions or obligations. The commencement of operations by the
franchisee indicates substantial performance has occurred. If substantial performance of our obligations has not been completed, recognition as revenue of such amounts received is deferred until all
material services or conditions have been satisfied by us. In addition, monthly royalties are recognized as revenue when earned. As of December&nbsp;30, 2013 and December&nbsp;31, 2012, accounts
receivable included approximately $0.06&nbsp;million and $0.09&nbsp;million, respectively, of amounts due from franchisees for monthly royalties. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Cash and Cash Equivalents  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the year, cash balances may exceed the federally insured limits at the banks where we maintain our deposits. We do not believe we are exposed to any significant credit risk on cash and cash
equivalents. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Accounts Receivable  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Trade accounts receivable, net of allowance for doubtful accounts consists primarily of receivables from catering on-account sales, credit card sales
receivables and royalty fee receivables. Other accounts receivable consists primarily of tenant allowances due from landlords. Management determines the allowance for doubtful accounts based on
historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written
off either against an existing allowance account or as a direct charge to </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-9</FONT></P>

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<A NAME="page_fo17901_1_10"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>the
consolidated statement of operations. The table below shows the changes in our allowance for doubtful accounts balance: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,586</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>974</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,170</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bad debt expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,041</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,539</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,616</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Write offs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(6,895</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(4,927</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(5,812</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">



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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ending allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,732</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,586</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>974</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
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<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
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<TR bgcolor="#FFFFFF"  VALIGN="TOP">
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<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2><B><I> Inventory  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Inventory consists primarily of food, beverage, and paper products. All inventories are recorded at the lower of cost, as determined on a first-in,
first-out (FIFO) method, or market. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Property and Equipment  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Property and equipment are stated at cost, less accumulated depreciation. Expenditures for improvements and renewals that extend the useful lives are
capitalized. Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the
disposition is included in our consolidated statement of operations. Maintenance and repair costs are expensed as incurred. Depreciation is calculated using the straight-line method based on the
following estimated lives: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="69pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Building under deemed landlord financing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>39&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold Improvements</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>7&nbsp;-&nbsp;20&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Furniture and Fixtures</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>7&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Automotive Equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>4&nbsp;-&nbsp;5&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computer Equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>3&nbsp;-&nbsp;5&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Machinery and Equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>5&nbsp;years</FONT></TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2>Leasehold
improvements are depreciated over the shorter of the lease term, of the respective leases, or the estimated useful life of the asset. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Goodwill  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Goodwill represents the excess of the cost of the business acquired over the fair value of its net assets at the date of acquisition. We account for
goodwill under Accounting Standards Codification ("ASC") 350, </FONT><FONT SIZE=2><I>Intangibles&nbsp;&#151; Goodwill and Other</I></FONT><FONT SIZE=2>, which requires that goodwill and
indefinite lived intangible assets are not amortized but tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. For
purposes of applying ASC 350, we have identified a single reporting unit, as that term is defined in ASC 350, to which goodwill is attributable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
performed our annual impairment testing of goodwill as of the last day of the fiscal year. The fair value of our reporting unit was estimated primarily using the expected present value of future
cash flows, using estimates, judgments and assumptions that management believes were appropriate in the circumstances. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-10</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=141,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=668889,FOLIO='F-10',FILE='DISK134:[13ZDH1.13ZDH17901]FO17901A.;19',USER='LSMITH',CD=';9-MAR-2014;12:38' -->
<A NAME="page_fo17901_1_11"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Trade Name  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A trade name is considered to be an important element associated with the sales appeal of certain products and services. The trade name distinguishes
goods and services from competitors, indicates the source of the goods and services, and serves as an indication of the quality of the product. Our trade name consists of various protected words,
symbols, and designs that help identify our products and services such as the "Zo&euml;s Kitchen" trademark capitalized in connection with the 2007 Purchase. This capitalized cost is being
amortized on a straight-line basis over an estimated useful life of 20&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Franchise Agreements  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The fair value of the then existing franchise agreements was capitalized in connection with the 2007 Purchase. The capitalized amount is amortized on
a straight-line basis over the estimated useful life of 19&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
November&nbsp;1, 2013, we executed a letter of intent to purchase two franchise restaurants in Mobile, Alabama and Destin, Florida from one of our franchisees. As a result, we recognized
$0.2&nbsp;million of accelerated amortization expense as of December&nbsp;30, 2013 due to a shorter remaining expected useful life of these franchise agreements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
acquired three restaurants in Houston, Texas from one of our franchisees in December 2011. A franchise agreement intangible asset had been recorded in connection with the 2007 Purchase for one of
the restaurants. We wrote off the franchise agreement intangible asset related to the restaurant in the amount of $0.2&nbsp;million as a component of the bargain purchase gain associated with the
franchise acquisition. See Notes&nbsp;2 and 5. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Favorable Leases  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A leasehold interest represents the future lease obligations under the in-place contractual lease terms that are either above or below market value.
The value of acquired leases that were determined to be favorable to market rents as of the 2007 Purchase was capitalized and is being amortized on a straight-line basis over the remaining lease term
from the date of acquisition, approximately seven years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Reacquired Rights  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Reacquired rights intangible assets arise from our 2012 acquisition of three South Carolina franchise restaurants and our 2011 acquisition of three
Houston, Texas franchise restaurants. We are amortizing these reacquired rights on a straight-line basis over the remaining terms of the original franchise agreements, which ranged from five to nine
years for the South Carolina franchise restaurants and five to seven years for the Houston franchise restaurants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Impairment of Long-Lived Assets  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We evaluate impairment of long-lived assets whenever events or changes in circumstances indicate that the net carrying amounts may not be recoverable.
We compare estimated undiscounted cash flows from operating activities to the carrying value of related assets for the individual restaurants. If the sum of the estimated undiscounted cash flows is
less than the carrying value, an impairment loss would be recognized for the difference between the carrying value and the estimated fair value of the assets
based on the discounted future cash flows of the assets using a rate that approximates our weighted average cost of capital. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
recognized no impairment losses during the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-11</FONT></P>

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<!-- ZEQ.=5,SEQ=142,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=383615,FOLIO='F-11',FILE='DISK134:[13ZDH1.13ZDH17901]FO17901A.;19',USER='LSMITH',CD=';9-MAR-2014;12:38' -->
<A NAME="page_fo17901_1_12"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Deferred Initial Public Offering Costs  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Deferred initial public offering costs, which primarily consist of direct, incremental legal and accounting fees relating to the initial public
offering ("IPO"), are capitalized within other long-term assets. The deferred issuance costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is
terminated, deferred offering costs will be expensed. We have incurred $1.0&nbsp;million in IPO costs as of December&nbsp;30, 2013. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Unearned Franchise Fees  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Amounts received from the sales of franchise licenses are deferred until all material contractual services or conditions relating to the sale of the
franchise licenses have been substantially performed by us. The commencement of operations by the franchisee is presumed to be the earliest point at which substantial performance has occurred, unless
it can be demonstrated that substantial performance of all franchisor obligations has occurred before that time. Unearned franchise fee activity consisted of the following: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>December&nbsp;26, 2011</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>230,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fees Collected</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fees Earned</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(80,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fees Repaid (See Note&nbsp;2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(150,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>December&nbsp;31, 2012</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fees Collected</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fees Earned</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>December&nbsp;30, 2013</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


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 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2><B><I> Loan Costs  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Loan costs are amortized on a straight-line basis over the remaining life of the debt as a component of interest expense. GAAP requires that the
effective yield method be used to amortize loan financing costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under
the effective yield method. At December&nbsp;30, 2013 and December&nbsp;31, 2012 loan costs were $1.0&nbsp;million and $1.0&nbsp;million, net of accumulated amortization of
$0.7&nbsp;million, and $0.5&nbsp;million, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Sales Taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Sales taxes are imposed by state, county, and city governmental authorities, collected from customers and remitted to the appropriate governmental
agency. Our accounting policy is to record the sales taxes collected as a liability on our books and then remove the liability when the sales tax is remitted. There is no impact on the consolidated
statement of operations as restaurant sales are recorded net of sales tax. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Deferred Rent  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain leases contain annual escalation clauses based on fixed escalation terms. The excess of cumulative rent expense (recognized on the
straight-line basis) over cumulative rent payments made on leases with fixed escalation terms is recognized as deferred rent liability in the accompanying balance sheets. Also included in deferred
rent are tenant improvements that we commonly negotiate when opening new restaurants to help fund build-out costs. These costs typically include general construction to alter the layout of the
restaurant and leasehold improvements. When we are the beneficiary of each of the improvements, we capitalize the assets and record a deferred liability for the amount of cash received from </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-12</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=143,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=534494,FOLIO='F-12',FILE='DISK134:[13ZDH1.13ZDH17901]FO17901A.;19',USER='LSMITH',CD=';9-MAR-2014;12:38' -->
<A NAME="page_fo17901_1_13"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>the
landlord, which is amortized on a straight-line basis over the lease term as defined below. If the landlord is deemed to be the owner of leasehold improvements purchased with such allowances,
neither an asset nor a liability is recorded by us. The amortization of the deferred liability related to these tenant improvements is recorded as a reduction of rent expense. Tenant improvement
allowances, net of amortization, totaled $4.0&nbsp;million and $2.1&nbsp;million as of December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. For leases where we are considered to be
the owner of the construction project and receive tenant improvement allowances, we record these amounts received as a component of the deemed landlord financing liability. See Note&nbsp;10. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Lease
term is determined at lease inception and includes the initial term of the lease plus any renewal periods that are reasonably assured to occur. The lease term begins when we have the right to
control the use of the property. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Additionally,
certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize
contingent rent expense provided the achievement of that target is considered probable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Advertising Costs  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Advertising costs are expensed as incurred and are included in general and administrative and store operating expenses on the consolidated statement
of operations. Advertising costs for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011 were $0.04&nbsp;million, $0.01&nbsp;million and
$0.03&nbsp;million, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Pre-opening Costs  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Pre-opening costs primarily consist of new employee training, initial print materials, marketing, payroll expenses and rent incurred in connection
with new restaurant openings and are expensed as incurred. For the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011, pre-opening costs were
$1.9&nbsp;million, $0.9&nbsp;million and $0.8&nbsp;million, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Vacation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the fourth quarter 2013, we changed our policy for employee vacation. This change in policy resulted in a one time $0.3&nbsp;million reduction in
operating expenses. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Fair Value of Financial Instruments  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The carrying amounts of our financial instruments, which include accounts receivable, accounts payable, and other accrued expenses, approximate their
fair values due to their short maturities. The carrying amount of our long-term debt approximates its fair value due to the recent timing of our refinancing of this debt (see Note&nbsp;7) and the
variable component of the interest rate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Income Taxes  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We use the liability method of accounting for income taxes in accordance with Financial Accounting Standards Board ("FASB") ASC 740, </FONT> <FONT SIZE=2><I>Income Taxes</I></FONT><FONT SIZE=2>. Under this method, a deferred tax asset
or liability is recognized for the estimated future tax effects attributable to temporary
differences between the financial statement basis and the tax basis of assets and liabilities as well as tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in the period of the change. We and our subsidiaries file&nbsp;a consolidated federal income tax return. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-13</FONT></P>

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<A NAME="page_fo17901_1_14"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 1. Nature of Operations and Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Significant
judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We assess the income tax position and record the liabilities for all years
subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Comprehensive Income (Loss)  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. Comprehensive loss is the same as net loss for all periods presented. Therefore, a separate statement of comprehensive loss is not included in the accompanying
consolidated financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Variable Interest Entities  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In accordance with ASC 810, </FONT><FONT SIZE=2><I>Consolidation</I></FONT><FONT SIZE=2>, we apply the guidance related to variable interest entities
("VIE"), which defines the process for how an enterprise determines which party consolidates a VIE as primarily a qualitative analysis. The enterprise that consolidates the VIE (the primary
beneficiary) is defined as the enterprise with (1)&nbsp;the power to direct activities of the VIE that most significantly affect the VIE's economic performance and (2)&nbsp;the obligation to
absorb losses of the VIE or the right to receive benefits from the VIE. We do not possess any ownership interests in franchise entities or other affiliates. The franchise agreements are designed to
provide the franchisee with key decision-making ability to enable it to oversee its operations and to have a significant impact on the success of the franchise, while our decision-making rights are
related to protecting our brand. Based upon our analysis of all the relevant facts and considerations of the franchise entities and other affiliates, we have concluded that these entities are not
variable interest entities and they have not been consolidated as of the fiscal year ended December&nbsp;30, 2013 or fiscal year ended December&nbsp;31, 2012. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Recently Issued Accounting Standards  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In July 2013, the FASB issued Accounting Standards Update ("ASU") No.&nbsp;2013-11, "Presentation of an Unrecognized Tax Benefit When a Net
Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists", to require that in certain cases, an unrecognized tax benefit, or portion of an unrecognized tax benefit, should
be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the
same taxing jurisdiction. ASU 2013-11 is effective as of December&nbsp;15, 2013 and the adoption of this standard had no significant impact on our consolidated financial position or results of
operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
January 2013, we adopted ASU No.&nbsp;2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities." The adoption of ASU 2013-01 did not have a significant impact on our
consolidated financial position or results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 2. Business Combination  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
On August&nbsp;6, 2012, we acquired three South Carolina franchise restaurants for $5.8&nbsp;million in cash. Simultaneous to the acquisition, we repaid $0.2&nbsp;million to the South Carolina
franchisee, which resulted in a decrease of our unearned franchise fees. As a result of this acquisition, we gained control of the three restaurants and expanded our Company-owned operations into
South Carolina. The acquired restaurants contributed revenues of approximately $1.9&nbsp;million from the date of acquisition to December&nbsp;31, 2012. The pro forma impact of the acquisition is
not presented, as it is not considered material to our consolidated financial statements. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-14</FONT></P>

<HR NOSHADE>
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<A NAME="page_fo17901_1_15"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 2. Business Combination (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Goodwill
recorded in connection to the acquisition was attributable to synergies expected to arise from cost saving opportunities as well as future expected cash flows. The allocation of the purchase
price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows: </FONT></P>

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 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,400</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deposits</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,010</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts Receivable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,937</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>38,306</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>752,553</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prepaid rent</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,438</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reacquired rights</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,868,514</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,183,585</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(12,400</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Royalties payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(27,705</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total purchase price</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,836,638</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2>On
November&nbsp;30, 2011, we acquired three Houston franchise restaurants for $2.6&nbsp;million in cash. Through the acquisition, we gained control of the three restaurants and we were able to
expand our operations in the Houston market. The acquired restaurants contributed revenues of approximately $0.2&nbsp;million from acquisition until December&nbsp;26, 2011. The pro forma impact of
the acquisition is not presented, as it is not considered material to our consolidated financial statements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,400</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deposits</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,293</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>28,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,044,200</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reacquired rights</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,626,497</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Royalties payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(19,612</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax liability</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(436,550</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net assets acquired</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,274,228</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bargain purchase gain</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(697,347</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total purchase price</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,576,881</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
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<P style="font-family:arial;"><FONT SIZE=2>Since
the fair value assigned to the net assets acquired exceeded the consideration paid, we recorded a $0.7&nbsp;million bargain purchase gain. Also, in connection with the transaction, we wrote
off the net franchise agreement intangible asset related to the purchase in the amount of $0.2&nbsp;million, which created a net bargain purchase gain from acquisition of $0.5&nbsp;million for the
year ended December&nbsp;26, 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-15</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=9,SEQ=146,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=844818,FOLIO='F-15',FILE='DISK134:[13ZDH1.13ZDH17901]FO17901A.;19',USER='LSMITH',CD=';9-MAR-2014;12:38' -->
<A NAME="page_fo17901_1_16"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 3. Property and Equipment  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>
Property and equipment consists of the following at December&nbsp;30, 2013 and December&nbsp;31, 2012: </FONT></P>

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 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Buildings under deemed landlord financing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>16,150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,300,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>50,586,657</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>31,704,258</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Machinery and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,399,544</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,259,508</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Furniture and fixtures</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,669,189</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,127,642</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Automobiles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,281,816</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,684,047</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computer equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,395,473</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,430,521</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,256,571</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,641,429</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Property and equipment, gross</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>93,739,250</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58,147,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: Accumulated depreciation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(15,109,881</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(9,932,466</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Property and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>78,629,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48,214,939</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >


<P style="font-family:arial;"><FONT SIZE=2>Depreciation
expense was $5.9&nbsp;million, $3.8&nbsp;million and $2.8&nbsp;million for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011,
respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
a result of the application of build-to-suit lease guidance contained in ASC 840, </FONT><FONT SIZE=2><I>Leases</I></FONT><FONT SIZE=2>, we have determined that we are the accounting owner of a
total of 31 and 18 landlord shell buildings under deemed landlord financing as of December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. There are six and three of these buildings under
construction as of December&nbsp;30, 2013 and December&nbsp;31, 2012. We have recorded these as buildings under deemed landlord financing in the table above. We capitalize the landlord's estimated
construction costs of the shell building. See Note&nbsp;10 for additional information. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
capitalize internal payroll and payroll related costs directly related to the successful development, design and construction of our new restaurants. Capitalized internal payroll costs were
$0.2&nbsp;million, $0.06&nbsp;million and $0.07&nbsp;million for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011, respectively. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
capitalize interest incurred on funds used to construct Company-owned restaurants. We amortize over the estimated useful life of the related assets. Capitalized interest totaled
$0.2&nbsp;million, $0.09&nbsp;million and $0.08&nbsp;million for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 4. Goodwill  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
The following is a reconciliation of the beginning and ending balances of the Company's goodwill at December&nbsp;30, 2013 and December&nbsp;31, 2012: </FONT></P>

<!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Beginning Balance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,334,129</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,150,544</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Acquisition of South Carolina Franchise</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,183,585</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Ending Balance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,334,129</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,334,129</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
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<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<P style="font-family:arial;"><FONT SIZE=2>We
recorded no impairment charges during the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 or December&nbsp;26, 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-16</FONT></P>

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<!-- ZEQ.=10,SEQ=147,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=759866,FOLIO='F-16',FILE='DISK134:[13ZDH1.13ZDH17901]FO17901A.;19',USER='LSMITH',CD=';9-MAR-2014;12:38' -->
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</FONT> <FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued)  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 5. Intangible Assets  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
Other intangible assets were acquired in connection with the 2007 Purchase discussed in Note&nbsp;1 and Note&nbsp;2. These assets are summarized in the following table as of December&nbsp;30,
2013 and December&nbsp;31, 2012: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Gross<BR>
Carrying<BR>
Amount </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Accumulated<BR>
Amortization </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Net </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trade name</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,083,333</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,916,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchise agreements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>643,859</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(470,890</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>172,969</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Favorable leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>108,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(91,269</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17,440</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reacquired rights</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,495,012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,395,075</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,099,937</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>16,247,580</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(5,040,567</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,207,013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
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<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
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<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
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<p style="font-family:arial;"></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Gross<BR>
Carrying<BR>
Amount </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Accumulated<BR>
Amortization </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Net </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trade name</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,583,333</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,416,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Franchise agreements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>643,859</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(206,987</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>436,872</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Favorable leases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>108,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(76,469</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32,240</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reacquired rights</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,495,012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(573,364</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,921,648</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>16,247,580</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,440,153</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,807,427</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >


<P style="font-family:arial;"><FONT SIZE=2>Estimated
amortization expense for the five succeeding years and the aggregate thereafter is: </FONT></P>

<!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Trade<BR>
name </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Franchise<BR>
Agreements </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Favorable<BR>
Leases </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Reacquired<BR>
Rights </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Total </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT
SIZE=2>2014&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>500,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>48,380</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>14,800</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>821,712</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,384,892</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>500,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,517</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,640</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>821,712</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,334,869</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2016</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>500,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,517</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>821,712</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,332,229</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2017</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>500,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,517</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>791,057</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,301,574</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2018</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>500,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,517</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>438,878</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>949,395</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thereafter</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,416,667</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>82,521</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>404,866</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,904,054</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,916,667</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>172,969</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,440</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,099,937</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>11,207,013</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-17</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=148,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=773740,FOLIO='F-17',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
<A NAME="page_fq17901_1_18"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> 6. Accrued Expenses and Other  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
Accrued expenses consisted of the following: </FONT></P>

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 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued payroll and payroll taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,416,680</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,352,365</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued capital purchases</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,185,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>620,862</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales tax payable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>805,177</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>552,147</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gift certificate payable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>600,059</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>598,131</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other accrued expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,415,641</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>619,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total accrued expenses and other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,422,738</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,742,910</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2><B> 7. Bank Line of Credit and Term Loan  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
We have an existing credit agreement with a commercial finance company that includes a term loan and line of credit ("the Credit Facility"), which are collateralized by a first-priority interest in,
among other things, our accounts receivable, general intangibles, inventory, equipment, and furniture and fixtures. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>On
June&nbsp;20, 2012, we signed the Second Amendment to the Credit Facility which was primarily executed to accommodate the purchase of the South Carolina franchise restaurants. As part of the
Second Amendment, the existing Credit Facility increased to $25.0&nbsp;million with incremental commitments of up to $5.0&nbsp;million. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
November&nbsp;30, 2012, we signed the Third Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of a term loan. In addition, the revolving
line of credit was increased to $20.0&nbsp;million with incremental commitments of up to $15.0&nbsp;million. Under the Third Amendment, we were required to enter into a rate contract, within
90&nbsp;days of the effective date of the amendment, providing protection against fluctuation in interest rates with respect to at least 50% of the principal amount of the term loan. In February
2013, in accordance with the Third Amendment, we entered into an interest rate cap agreement with an initial notional amount of $12.3&nbsp;million. The notional amount amortizes commensurate with
scheduled payments on the term loan. This instrument caps the one-month LIBOR rate at 2%, which is a component of the total rate on the term loan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
November&nbsp;26, 2013, we signed the Fourth Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of the term loan and the total term loan
balance increased to $38.5&nbsp;million. In addition, the revolving line of credit was increased to $26.5&nbsp;million with incremental commitments of up to $15.0&nbsp;million. The remaining
borrowing capacity under the line of credit was $0.1&nbsp;million as of December&nbsp;30, 2013. The maturity date for the term loan and the line of credit is November&nbsp;29, 2017. We are
required to make quarterly payments equal to 1.25% of the new term loan commitment amount on the last business day of each March, June, September and December. The remaining balance will be repaid
upon maturity. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of December&nbsp;30, 2013, our interest rate for the term loan and line of credit is calculated based on the 1-month LIBOR (with a floor of 1.0%) plus 4.25%. As of December&nbsp;31, 2012, our
interest rate for the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-18</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=149,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=417400,FOLIO='F-18',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
<A NAME="page_fq17901_1_19"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 7. Bank Line of Credit and Term Loan (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>term
loan and line of credit is calculated based on the 1-month LIBOR (with a floor of 1.0%) plus 5.0%. The interest rate for our debt was 5.25% and 6.0% at December&nbsp;30, 2013 and
December&nbsp;31, 2012. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
Credit Facility and subsequent amendments include customary covenants, including covenants limiting fundamental changes and certain transactions and payments. In addition, we are required to
satisfy three quarterly financial covenants: (1)&nbsp;a consolidated leverage ratio of less than 5.75 to 1.00 through to December&nbsp;31, 2014 and a consolidated leverage ratio of less than 5.50
to 1.00 thereafter, (2)&nbsp;a consolidated fixed charge coverage ratio of greater than 1.25 to 1.00, and (3)&nbsp;a capital expenditure incurrence test, which increases every year during the
duration of the credit agreement. We are in compliance with these financial covenants as of December&nbsp;30, 2013 and December&nbsp;31, 2012; however, one of the other covenants in our Credit
Facility required delivery of the 2012 audited financial statements by April&nbsp;30, 2013. We did not meet this requirement and have obtained a waiver from our lender for this covenant as it
relates to the 2012 financial statements. As such, we have classified our debt as noncurrent at December&nbsp;31, 2012. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, the ability of our subsidiaries to pay dividends is currently restricted by the terms of our Credit Facility. See Note&nbsp;15 for additional information. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
conjunction with the Credit Facility, we incurred and capitalized $0.3&nbsp;million and $0.6&nbsp;million of loan costs in the years ended December&nbsp;30, 2013 and December&nbsp;31, 2012. </FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="37pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="73pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="40pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Interest<BR>
Rate </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Interest<BR>
Rate </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Maturity </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Term Loan</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>38,500,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5.25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24,687,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revolving line of credit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,900,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5.25</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6.00</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0pt;font-family:arial;">


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<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Total</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41,400,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>26,687,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less curent portion</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,925,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,250,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Long-term debt</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>39,475,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>25,437,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >


<P style="font-family:arial;"><FONT SIZE=2>The
principal amounts of our long-term debt are scheduled to be paid in installments on the dates below: </FONT></P>

<!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:59pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Date of payment

<!-- COMMAND=ADD_SCROPPEDRULE,59pt -->

 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,925,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2015</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,925,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2016</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,925,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>35,625,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Payments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41,400,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-19</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=150,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=267502,FOLIO='F-19',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
<A NAME="page_fq17901_1_20"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 8. Residual Value Obligations  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
We have residual value obligations associated with leased vehicles for individual restaurant locations. We have pre-paid for each of the vehicles. We then amortize the residual value obligation to the
assets residual value by the end of the lease term. Each of the assets is recorded at the net present value of the initial payment made plus the assets residual value using a 6.50% discount rate. The
residual value obligations recorded as capital leases were $0.4&nbsp;million and $0.3&nbsp;million for the years ended December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 9. Income Taxes  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>
Our income tax provision for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011 consists of the following: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Current</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>61,880</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Subtotal Current</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>61,880</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Deferred</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>544,463</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>510,496</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>96,649</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>49,416</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>36,244</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(7,332</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Subtotal Deferred</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>593,879</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>546,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>89,317</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total income tax provision</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>655,759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>621,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>110,317</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2>Total
income tax expense differed from the amount which would have been provided by applying the statutory federal income tax rate of 35% to earnings before taxes as follows: </FONT></P>

<!-- COMMAND=ADD_LINERULETXT,NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" -->
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 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="59pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense (benefit) at federal statutory rate</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,070,769</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>129,094</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19,151</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(120,231</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>86,717</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,535</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase in valuation allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,624,967</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>283,805</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>247,457</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity-based compensation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>25,702</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>47,983</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>72,847</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(758,016</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>56,749</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,464</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Meals and entertainment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>25,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17,392</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,283</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other permanent items</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(71,139</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bargain purchase gain</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(267,420</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total income tax provision</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>655,759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>621,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>110,317</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-20</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=4,SEQ=151,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=548750,FOLIO='F-20',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
<A NAME="page_fq17901_1_21"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 9. Income Taxes (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Significant
components of our deferred tax assets and liabilities at December&nbsp;30, 2013 and December&nbsp;31, 2012 are as follows: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Current:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Allowance for doubtful accounts</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,861</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,278</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued vacation payable and other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>66,544</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Valuation allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,426</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(30,218</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:37pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net deferred tax assets, current</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,435</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>39,604</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Non-current:</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,990,797</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,310,335</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Charitable contributions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>74,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>54,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deemed landlord financing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,594,440</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,270,694</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest rate cap</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9,512</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Valuation allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(6,822,798</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(4,170,039</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,394,589</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,797,790</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other identifiable intangibles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>246,106</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>502,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,955,156</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,914,118</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:28pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred rent</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>647,637</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,088,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:37pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net deferred tax liabilities, non-current</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,397,025</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,837,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:37pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total net deferred tax liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,394,590</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,797,790</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD VALIGN="BOTTOM" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="TOP">
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
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<P style="font-family:arial;"><FONT SIZE=2>We
have classified the current net deferred tax asset as a component of prepaid expenses and other in our Consolidated Balance Sheets. ASC 740 requires that we reduce our deferred income tax assets by
a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The ultimate realization of
deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences are deductible. We have established a valuation allowance of $6.8&nbsp;million and $4.2&nbsp;million as
of December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively, against our net deferred tax assets due to the fact that it is not more likely than not that there will be sufficient taxable
income in the future when the temporary differences are deductible. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-21</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=5,SEQ=152,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=629974,FOLIO='F-21',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
<A NAME="page_fq17901_1_22"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> 9. Income Taxes (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
rollforward of activity in the valuation allowances follows: </FONT></P>

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<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balance at December&nbsp;27, 2010</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,668,995</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Addition to valuation allowance</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>247,457</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deductions</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balance at December&nbsp;26, 2011</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,916,452</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Addition to valuation allowance</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>283,805</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deductions</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balance at December&nbsp;31, 2012</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,200,257</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Addition to valuation allowance</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,624,967</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deductions</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balance at December&nbsp;30, 2013</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>6,825,224</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2>We
have recorded a full valuation allowance for the net amount of the deferred tax assets which are in excess of the indefinite-lived intangible asset deferred tax liabilities. The indefinite-lived
intangible asset deferred tax liability in the amount of $3.4&nbsp;million and $2.8&nbsp;million as of December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively, related to the book-tax
basis difference in goodwill has not been netted against the deferred tax assets due to the uncertainty inherent in the reversal of this deferred tax liability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>At
December&nbsp;30, 2013, we have unused federal and state net operating loss carryforwards of $15.9&nbsp;million and $13.5&nbsp;million, respectively. Such losses expire in various amounts at
varying times through 2033. These NOL carryforwards result in a deferred tax asset $6.0&nbsp;million and $5.3&nbsp;million at December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. A
valuation allowance is recorded against the net deferred tax assets, exclusive of indefinite-lived intangibles discussed above, including these carryforwards. We file income tax returns, which can be
periodically audited by various federal and state jurisdictions. We are generally no longer subject to federal or state income examinations for years prior to fiscal year 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 10. Leases  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
We lease space for various restaurant locations under long-term non-cancelable operating leases from unrelated third parties. Most of our leases are classified as operating leases under ASC 840. Rent
expense, including rent-free periods if applicable, is recognized on a straight-line basis over the lease term. The lease term for all types of leases begins on the date we become legally obligated
for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in an
economic penalty. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
some cases, the asset we will lease requires construction to ready the space for its intended use, and in certain cases, we have involvement with the construction of leased assets. The construction
period begins when we execute our lease agreement with the property owner and continues until the space is substantially complete and ready for its intended use. In accordance with ASC 840-40-55, we
must consider the nature and extent of our involvement during the construction period, and in some cases, our involvement results in us being considered the accounting owner of the construction
project. One example of involvement that results in the Company being considered the accounting owner is a case where we lease a "cold shell." By </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-22</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=6,SEQ=153,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=580062,FOLIO='F-22',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
<A NAME="page_fq17901_1_23"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> 10. Leases (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>adding
an HVAC unit, we are deemed to have participated in the construction of the landlord asset. In such cases, we capitalize the landlord's construction costs, including the value of costs incurred
up to the date we execute our lease (e.g.,&nbsp;the building "shell") and costs incurred during the remainder of construction period, as such costs are incurred. Additionally, ASC 840-40-55 requires
us to recognize a financing obligation for construction costs incurred by the landlord. Once construction is complete, we are required to perform a sale-leaseback analysis pursuant to ASC 840-40 to
determine if we can remove the landlord's assets and associated financing obligations from the consolidated balance sheet. In certain leases, we maintain various forms of "continuing involvement" in
the property, thereby precluding us from derecognizing the asset and associated financing obligations following the construction completion. In those cases, we will continue to account for the
landlord's asset as if we are the legal owner, and the financing obligation, similar to other debt, until the lease
expires or is modified to remove the continuing involvement that prohibits de-recognition. Once de-recognition is permitted we would be required to account for the lease as either operating or capital
in accordance with ASC 840. As of December&nbsp;30, 2013 and December&nbsp;31, 2012 we have not derecognized any landlord assets or associated financing obligations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
determined that we were the accounting owner of a total of 31 and 18 leased buildings as a result of the application of build-to-suit lease application as of December&nbsp;30, 2013 and
December&nbsp;31, 2012, respectively. There were six and three of these buildings under construction as of December&nbsp;30, 2013 and December&nbsp;31, 2012. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
future minimum rental payments required under these leases, including those accounted for as deemed landlord financing, during the next five years and thereafter in the aggregate, are as follows: </FONT></P>

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<HR NOSHADE  COLOR="#000000" SIZE="1.0PT" WIDTH="100%" ALIGN="CENTER" >
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="79pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="84pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Deemed landlord<BR>
financing </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Operating<BR>
leases </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT
SIZE=2>2014&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,233,988</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,030,372</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,263,413</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,228,654</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2016</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,307,293</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,392,253</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2017</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,359,342</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,354,890</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>2018</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,445,385</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,287,302</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Thereafter</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,382,388</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>96,185,295</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>46,991,809</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>132,478,766</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2>Rent
expense charged to operations under our operating leases on a straight-line basis was $6.9&nbsp;million, $4.4&nbsp;million and $3.0&nbsp;million for the years ended December&nbsp;30,
2013, December&nbsp;31, 2012 and December&nbsp;26, 2011, respectively. Rent expense incurred prior to restaurant openings is included in pre-opening costs on the consolidated statement of
operations in the amount of $0.6&nbsp;million, $0.3&nbsp;million and $0.3&nbsp;million for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011,
respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Deemed
landlord financing obligations totaled $19.9&nbsp;million and $11.2&nbsp;million for the years ended December&nbsp;30, 2013 and December&nbsp;31, 2012, respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-23</FONT></P>

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<!-- ZEQ.=7,SEQ=154,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=801813,FOLIO='F-23',FILE='DISK134:[13ZDH1.13ZDH17901]FQ17901A.;15',USER='JMAHER',CD=';9-MAR-2014;01:00' -->
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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="page_fs17901_1_24"> </A>


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 </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued)  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 11. Related Party Transactions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Corporate Development and Administrative Services Agreement  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Zoe's Investors entered into a Corporate Development and Administrative Services Agreement with Brentwood Private Equity IV,&nbsp;LLC ("Brentwood"),
an owner of membership interests in Zoe's Investors, our sole shareholder. Under the terms of the agreement, Brentwood provides assistance in the corporate development activities and our business
growth efforts. As consideration for services provided, we provide reimbursement for business expenses related to performance of this agreement and an annual consulting fee based on Adjusted EBITDA as
defined in the agreement. During the years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011, we expensed approximately $0.2&nbsp;million, $0.2&nbsp;million and
$0.2&nbsp;million respectively, related to this agreement. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, the persons associated with Brentwood currently serve on our Board of Directors. Currently, Brentwood controls the Company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 12. Commitments and Contingencies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Franchise Agreement  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our franchise agreement, which requires the franchisees to remit continuing royalty fees at a specified percentage of the franchisee's gross sales
revenue, provides that we as franchisor, or its authorized representative, will: (a)&nbsp;provide franchisee with written schedules of all foods, food products, beverages, and other items for sale,
and the furniture, fixtures, supplies and equipment necessary and required for the operation of the restaurant; (b)&nbsp;provide franchisee with a list of approved suppliers for the products and
services
necessary and required for the restaurant; (c)&nbsp;upon the reasonable written request of franchisee, render reasonable advisory services by telephone or in writing pertaining to the operation of
the restaurant; (d)&nbsp;provide franchisee with a sample of the standard Zo&euml;s Kitchen menu, and any modifications to the menu; (e)&nbsp;loan franchisee a copy of the System's
operating manual and any supplements to the manual that may be published by us; and, (f)&nbsp;provide franchisee the opportunity to participate in group purchasing programs that we may use, develop,
sponsor or provide on terms and conditions determined solely by us. In addition, as a condition to the commencement of business by the franchisee, the franchisee must attend and successfully complete
our training program. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Litigation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are involved in certain litigation and claims arising in the normal course of business. In the opinion of management, the resolution of these
matters will not have a material adverse effect on the financial position or results of our operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 13. Equity-based Compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
Certain of our employees have been granted Class&nbsp;B units in the Company's parent, Zoe's Investors, pursuant to that entity's limited liability company agreement. As these awards have been
granted to employees of the Company, which is a consolidated subsidiary of Zoe's Investors, the related compensation expense has been reflected in our consolidated financial statements. Awards granted
during 2012 and 2013 are identical to those granted in and prior to 2011 with the exception of a provision that the employee forfeits the 2012 and 2013 awards, vested or unvested, if they terminate
their employment with the Company for any reason. These awards are discussed separately below. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-24</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_fs17901_1_25"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 13. Equity-based Compensation (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> 2011 and Prior Awards  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The awards typically vest over a five-year service period, with 20% vesting on the first anniversary of the grant date and the remainder vesting
ratably by day over the remaining four years. We record compensation expense based on the awards' estimated grant-date fair value over the requisite service (vesting) period, with an offsetting credit
to additional paid-in-capital, as this is considered a capital contribution from Zoe's Investors. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>A
summary of 2011 and prior awards activity is presented below: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Number of<BR>
Units </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Weighted-average<BR>
fair value </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;27,
2010&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>158,497</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2.29</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>75,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.35</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(71,441</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2.41</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(5,369</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2.61</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;26, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>156,697</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.78</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(74,840</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.92</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;31, 2012</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>81,857</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.65</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Granted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vested</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(40,846</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.80</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Forfeited</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Outstanding at December&nbsp;30, 2013</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>41,011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.50</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2>We
recognized as a component of general and administrative expenses $0.07&nbsp;million, $0.1&nbsp;million and $0.2&nbsp;million of equity-based compensation expense related to these awards in
years ended December&nbsp;30, 2013, December&nbsp;31, 2012 and December&nbsp;26, 2011, respectively. As of December&nbsp;30, 2013, total unrecognized compensation expense related to non-vested
stock awards, including an estimate for pre-vesting forfeitures, was $0.06&nbsp;million, which is expected to be recognized over a weighted-average period of 1.7&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> 2012 and 2013 awards  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As noted above, the 2012 and 2013 awards are identical to those issued in 2011 and prior, but contain a provision whereby if the employee terminates
employment prior to a sale of the Company, the awards are forfeited, regardless of whether the employee has completed the requisite service period (i.e.,&nbsp;vested). As the employee recipients of
these awards cannot realize any benefit from vested awards until a sale or change-in-control, the sale represents a performance condition that is outside the Company's control. Thus, as we cannot
determine the probability of such a sale transaction, we have not recognized any compensation expense in the 2012 or 2013 consolidated statement of operations for these awards. In the event of a sale
transaction, we will recognize compensation expense for vested awards at that time. As of December&nbsp;30, 2013, we had 315,000 of these grants outstanding. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-25</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=2,SEQ=156,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=736139,FOLIO='F-25',FILE='DISK134:[13ZDH1.13ZDH17901]FS17901A.;10',USER='NLUCCA',CD='10-MAR-2014;10:33' -->
<A NAME="page_fs17901_1_26"> </A>


<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 14. Net Loss per Share  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
Basic net loss per share is calculated by dividing net loss by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share
is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
following table presents the computation of basic and diluted net loss per share for the period indicated: </FONT></P>

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<p style="font-family:arial;"></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="53pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Historical net loss per share:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares outstanding, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss per share, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Pro forma net loss per share (unaudited):</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss used to compute pro forma net loss per share, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average number of shares outstanding, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Add: Share issued to members of Zoe's Investors (see Note&nbsp;1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average shares used in computing pro forma net loss per share, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net loss per share, basic and diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<P style="font-family:arial;"><FONT SIZE=2><B> 15. Condensed Financial Information of Parent Company  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
The Company has no material assets or standalone operations other than its ownership in Zoe's Kitchen USA,&nbsp;LLC and its subsidiaries, and Soho Franchising,&nbsp;LLC. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>There
are significant restrictions on the Zoe's Kitchen,&nbsp;Inc. parent company's ability to obtain funds from any of its subsidiaries through dividends, loans or advances. Accordingly, this
condensed financial information has been presented on a "Parent-only" basis. Under a Parent-only presentation, the Company's investments in its consolidated subsidiaries are presented under the equity
method of accounting. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following tables present the financial position of the Company as of December&nbsp;30, 2013 and December&nbsp;31, 2012 and the results of its operations for the years-ended December&nbsp;30,
2013, December&nbsp;31, 2012, and December&nbsp;26, 2011. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-26</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
<!-- ZEQ.=3,SEQ=157,EFW="2218563",CP="ZOES KITCHEN, INC.",DN="1",CHK=565059,FOLIO='F-26',FILE='DISK134:[13ZDH1.13ZDH17901]FS17901A.;10',USER='NLUCCA',CD='10-MAR-2014;10:33' -->
<A NAME="page_fs17901_1_27"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> 15. Condensed Financial Information of Parent Company (Continued) </B></FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fs17901_zoe_s_kitchen,_inc._condensed_balance_sheet"> </A>
<A NAME="toc_fs17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Zoe's Kitchen,&nbsp;Inc.<BR>  Condensed Balance Sheet    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="78pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Investments in Zoe's Kitchen USA,&nbsp;LLC and its subsidiaries, and Soho Franchising,&nbsp;LLC</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33,578,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37,220,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Total assets</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33,578,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37,220,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Stockholder's Equity</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common stock, $0.01 par value, 100 shares authorized, issued, and outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,199,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>45,126,071</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(11,621,001</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(7,905,905</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->





<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Total stockholder's equity</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33,578,506</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>37,220,167</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.75pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="fs17901_zoe_s_kitchen,_inc_con__fs102167"> </A>
<A NAME="toc_fs17901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Zoe's Kitchen, Inc<BR>  Condensed Statements of Operations    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="63pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2013 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2012 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in net loss of Zoe's Kitchen USA,&nbsp;LLC and its subsidiaries, and Soho Franchising,&nbsp;LLC</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Net and comprehensive loss</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,715,096</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(252,895</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(26,925</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0pt;" -->


&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#FFFFFF" -->




<!-- COMMAND=ADD_GUTTERGRID,"line-height:0.1pt;" -->


 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2>


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 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.75pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">



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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic and diluted net loss per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(37,151</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,529</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(269</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


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 </font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic and diluted weighted average shares outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0pt;font-family:arial;">


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&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" style="line-height:0pt;font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="line-height:0pt;font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#FFFFFF"  VALIGN="BOTTOM">
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2>


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 </font>&#8203;</TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD ALIGN="RIGHT" style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
<TD style="line-height:0.1pt;font-family:arial;"><FONT SIZE=2></font>&#8203;<font></FONT></TD>
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<P style="font-family:arial;"><FONT SIZE=2>A
statement of cash flows has not been presented as the Zoe's Kitchen,&nbsp;Inc. parent company did not have any cash as of or for the years ended December&nbsp;30, 2013, December&nbsp;31, 2012,
or December&nbsp;26, 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 16. Subsequent Events  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
We have evaluated subsequent events through March&nbsp;10, 2014, the date the financial statements were available to be issued. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
January&nbsp;31, 2014, we signed the Fifth Amendment to the Credit Facility. Under the Fifth Amendment to the Credit Facility, the consolidated leverage ratio, which we are required to satisfy,
was raised to less than (1)&nbsp;5.85 to 1.00 through to the last day of the second fiscal quarter of 2014, (2)&nbsp;5.80 to 1.00 through to the third fiscal quarter of 2014, (3)&nbsp;5.75 to
1.00 for the period commencing the first day of the fourth fiscal quarter of 2014 to the last day of the fourth quarter of 2015, and (4)&nbsp;5.50 to 1.00 thereafter. The </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-27</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><BR>
ZOE'S KITCHEN,&nbsp;INC. AND SUBSIDIARIES<BR>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS<BR>
DECEMBER&nbsp;30, 2013, DECEMBER&nbsp;31, 2012 AND DECEMBER&nbsp;26, 2011 (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B> 16. Subsequent Events (Continued) </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>applicable
multiple for determining the maximum loan balance under the line of credit was also increased to (a)&nbsp;4.25 for the period through to the second to last day of the third fiscal quarter
of 2014, (b)&nbsp;4.15 for the period commencing on the last day of the third fiscal quarter of 2014 through to the second to last day of the fourth fiscal quarter of 2014, (c)&nbsp;4.00 for the
period commencing on the last day of the fourth fiscal quarter of 2014 through to the second to last day of the first fiscal quarter of 2016, and (d)&nbsp;3.75 thereafter. During January and
February 2014, we had draws of $5.9&nbsp;million from our line of credit to fund capital projects. As of March&nbsp;7, 2014, we had $46.8&nbsp;million outstanding under our $65.0&nbsp;million
Credit Facility, including $38.0&nbsp;million under the term loan and $8.8&nbsp;million under the line of credit, and $1.0&nbsp;million of additional available borrowing capacity at such date. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>On
January&nbsp;8, 2014, we purchased two franchise restaurants in Mobile, Alabama and Destin, Florida from one of our franchisees which will allow for us to expand our Company-owned operations to
these markets. The purchase price for the acquisition was $1.2&nbsp;million subject to purchase price adjustments. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-28</FONT></P>

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</FONT> <FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><div
style="width:100%;border-top:solid #000000 3.0pt;padding:0in 0in 0in 0in;font-size:3.0pt;"></div>
<div style="width:100%;border-top:solid #000000 1.0pt;padding:0in 0in 0in 0in;font-size:4.0pt;"></div> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>Zoe's Kitchen,&nbsp;Inc.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>Common Stock  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=3><B>

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  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=3><B>PRELIMINARY PROSPECTUS  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=3><B>

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  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>Jefferies  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Piper Jaffray  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Baird  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> William Blair  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Stephens Inc.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Stifel  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Until&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2014 (the 25th&nbsp;day after the date of this
prospectus), all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2014 </FONT></P>
 <p style="font-family:arial;line-height:1pt;margin-left:18pt;"><font> </FONT> <FONT SIZE=2>
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&nbsp;&nbsp;&nbsp;
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 <P style="font-family:arial;"><FONT SIZE=2><div
style="width:100%;border-top:solid #000000 1.0pt;padding:0in 0in 0in 0in;font-size:3.0pt;"></div>
<div style="width:100%;border-top:solid #000000 3.0pt;padding:0in 0in 0in 0in;font-size:4.0pt;"></div> </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ja17901_part_ii_#151;information_not_required_in_prospectus"> </A>
<A NAME="toc_ja17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  PART&nbsp;II&#151;INFORMATION NOT REQUIRED IN PROSPECTUS    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja17901_item_13._other_expense__ja101991"> </A>
<A NAME="toc_ja17901_2"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and Distribution.    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth all costs and expenses, other than the underwriting discounts payable by us, in connection with the offer and sale of
the common stock being registered. All amounts shown are estimates except for the Securities and Exchange Commission ("SEC") registration fee and the Financial Industry Regulatory
Authority,&nbsp;Inc. ("FINRA") filing fee. </FONT></P>

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 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"></FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SEC registration fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>FINRA filing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,575</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Listing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Printing expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounting fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Blue Sky fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transfer Agent and Registrar fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Miscellaneous expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:18pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">*</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">To
be provided by amendment. </FONT></DD></DL>
 </DIV>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><A
NAME="ja17901_item_14._indemnification_of_officers_and_directors."> </A>
<A NAME="toc_ja17901_3"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Officers and Directors.    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Section&nbsp;102(b)(7) of the DGCL allows a corporation to provide in its certificate of incorporation that a director of the corporation shall not
be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in
good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an
improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation of liability. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Section&nbsp;145
of the DGCL ("Section&nbsp;145"), provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is
or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. Where an officer or director is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Section&nbsp;145
further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-1</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>liability
asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him
under Section&nbsp;145. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
amended and restated certificate of incorporation will provide that we must indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in
defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined
ultimately that such person is not entitled to be indemnified under this section or otherwise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to enter into indemnification agreements with each of our current directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted
under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be
indemnified. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our amended and restated
certificate of incorporation, our amended and restated bylaws, agreement, vote of stockholders or disinterested directors or otherwise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
maintain standard policies of insurance that provide coverage (1)&nbsp;to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and
(2)&nbsp;to us with respect to indemnification payments that we may make to such directors and officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
proposed form of underwriting agreement to be filed as Exhibit&nbsp;1.1 to this Registration Statement provides for indemnification to our directors and officers by the underwriters against
certain liabilities.  </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja17901_item_15._recent_sales_of_unregistered_securities"> </A>
<A NAME="toc_ja17901_4"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent Sales of Unregistered Securities    <BR>    </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>None.  </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja17901_item_16._exhibits"> </A>
<A NAME="toc_ja17901_5"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits    <BR>    </B></FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2><I>(1)</I></FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Exhibits</I></FONT><FONT SIZE=2>: </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
exhibit index attached hereto is incorporated herein by reference.  </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2><I>(2)</I></FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Financial Statement Schedules</I></FONT><FONT SIZE=2>: </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>No
financial statement schedules are provided because the information called for is not required or is shown in the financial statements or the notes thereto.  </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja17901_item_17._undertakings"> </A>
<A NAME="toc_ja17901_6"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings    <BR>    </B></FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>The
undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(b)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-2</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<UL>

<P style="font-family:arial;"><FONT SIZE=2>unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.  </FONT></P>

</UL>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(c)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>The
undersigned Registrant hereby undertakes that:
<BR><BR></FONT>
<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule&nbsp;430A and contained in a form of prospectus filed by the Registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act shall be
deemed to be a part of this registration statement as of the time it was declared effective.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>For
purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial </FONT><FONT SIZE=2><I>bona
fide</I></FONT><FONT SIZE=2> offering thereof. </FONT></DD></DL>
</DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-3</FONT></P>

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<UL>
</UL>
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="jc17901_signatures"> </A>
<A NAME="toc_jc17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  SIGNATURES    <BR>    </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Plano, State of Texas, on March&nbsp;10, 2014. </FONT></P>
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<TD WIDTH="20pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="46%" style="font-family:arial;"></TD>
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<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:arial;"><FONT SIZE=2><B> ZOE'S KITCHEN,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>By:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;KEVIN MILES&nbsp;&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Name:&nbsp;&nbsp;Kevin Miles<BR>
Title:&nbsp;&nbsp;&nbsp;&nbsp;Director, President and Chief Executive Officer<BR></FONT>
</TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>*&nbsp;&nbsp;*&nbsp;&nbsp;*&nbsp;&nbsp;* </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-4</FONT></P>

<HR NOSHADE>
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<A NAME="page_jc17901_1_5"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="jc17901_power_of_attorney"> </A>
<A NAME="toc_jc17901_2"> </A>
<BR></FONT><FONT SIZE=2><B>  POWER OF ATTORNEY    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each person whose signature appears below constitutes and appoints Jason Morgan, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all (i)&nbsp;amendments (including post-effective
amendments) and additions to this registration statement and (ii)&nbsp;any and all additional registration statements pursuant to Rule&nbsp;462(b) of the Securities Act of 1933, as amended, and to
file the same,
with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agents full power and authority to do
and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or their or his or her substitute or substitutes may lawfully do
or cause to be done by virtue hereof. </FONT></P>
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<TD WIDTH="88pt" style="font-family:arial;"></TD>
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<TH NOWRAP  ALIGN="CENTER" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:34pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Signature

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="CENTER" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:16pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Title

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 </B></FONT></DIV></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH NOWRAP  ALIGN="CENTER" style="font-family:arial;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:17pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Date


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 </B></FONT></DIV></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>/s/&nbsp;KEVIN MILES<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Kevin Miles</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Director, President and<BR>
Chief Executive Officer<BR>
(Principal Executive Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;JASON MORGAN<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Jason Morgan</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Chief Financial Officer<BR>
(Principal Financial Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;JAMES BESCH<BR>


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</FONT> <FONT SIZE=2> James Besch</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Controller<BR>
(Principal Accounting Officer)</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;RAHUL AGGARWAL<BR>


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</FONT> <FONT SIZE=2> Rahul Aggarwal</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;WILLIAM M. BARNUM, JR.<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> William M. Barnum, Jr.</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;ANTHONY U. CHOE<BR>



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</FONT> <FONT SIZE=2> Anthony U. Choe</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;THOMAS BALDWIN<BR>


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</FONT> <FONT SIZE=2> Thomas Baldwin</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;SUE COLLYNS<BR>


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</FONT> <FONT SIZE=2> Sue Collyns</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;GREG DOLLARHYDE<BR>


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</FONT> <FONT SIZE=2> Greg Dollarhyde</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Chairman</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>March&nbsp;10, 2014</FONT></TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg17901a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ka17901_exhibit_index"> </A>
<A NAME="toc_ka17901_1"> </A>
<BR></FONT><FONT SIZE=2><B>  EXHIBIT INDEX    <BR>    </B></FONT></P>

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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Exhibit No. </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Description </B></FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Underwriting Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Amended and Restated Certificate of Incorporation of Zoe's Kitchen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Amended and Restated Bylaws of Zoe's Kitchen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Certificate of Incorporation of Zoe's Kitchen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Bylaws of Zoe's Kitchen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Opinion of Kirkland&nbsp;&amp; Ellis&nbsp;LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Zoe's Kitchen, Inc. 2014 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Amended and Restated Credit Agreement dated September&nbsp;23, 2011 by and among Zoe's Kitchen USA,&nbsp;LLC, the other persons party to the Amended and Restated Credit Agreement which are designated as a "Credit Party,"
General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>First Amendment to the Amended and Restated Credit Agreement dated February&nbsp;22, 2012 by and among Zoe's Kitchen USA,&nbsp;LLC, the other persons party to the Amended and Restated Credit Agreement which are designated
as a "Credit Party" which are also party to the First Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement which are also party to the First
Amendment</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Second Amendment and Consent to the Amended and Restated Credit Agreement dated June&nbsp;20, 2012 by and among Zoe's Kitchen USA,&nbsp;LLC, the other persons party to the Amended and Restated Credit Agreement which are
designated as a "Credit Party" which are also party to the Second Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement which are also party to the
Second Amendment</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Third Amendment to the Amended and Restated Credit Agreement and Reaffirmation of Loan Documents dated November&nbsp;30, 2012 by and among Zoe's Kitchen USA,&nbsp;LLC, the other persons party to the Amended and Restated
Credit Agreement which are designated as a "Credit Party" which are also party to the Third Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement
which are also party to the Third Amendment</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Fourth Amendment to the Amended and Restated Credit Agreement and Reaffirmation of Loan Documents dated November&nbsp;26, 2013 by and among Zoe's Kitchen USA,&nbsp;LLC, the other persons party to the Amended and Restated
Credit Agreement which are designated as a "Credit Party" which are also party to the Fourth Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement
which are also party to the Fourth Amendment</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Fifth Amendment to Credit Agreement dated January&nbsp;31, 2014 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated Credit Agreement which are designated as a "Credit Party" which are
also party to the Fourth Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement which are also party to the Fourth Amendment.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Master Reaffirmation Agreement dated September&nbsp;23, 2011 by and among Zoe's Kitchen USA,&nbsp;LLC, each of the other Credit Parties signatory to the Master Reaffirmation Agreement and General Electric Capital
Corporation</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Area Development Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Franchise Agreement</FONT></TD>
</TR>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg17901a_main_toc">Table of Contents</A></FONT></P>
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<p style="font-family:arial;"></FONT></P>

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<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Exhibit No. </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Description </B></FONT></TH>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.11</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Registration Rights Agreement, dated as of October&nbsp;31, 2007, by and among Zoe's Investors,&nbsp;LLC, Zoe's Kitchen,&nbsp;Inc., Zoe's Kitchen USA,&nbsp;LLC, Brentwood Associates Private Equity IV,&nbsp;L.P. and
certain of its other stockholders</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.12</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Indemnification Agreement between Zoe's Kitchen,&nbsp;Inc. and each of its directors and executive officers</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.13</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Offer of Employment Letter to Mr.&nbsp;Allyn&nbsp;F. Taylor, dated as of July&nbsp;19, 2011</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.14</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Employment Agreement between Kevin Miles and Zoe's Kitchen USA,&nbsp;LLC</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.15</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Employment Agreement between Jason Morgan and Zoe's Kitchen USA,&nbsp;LLC</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.16</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Zoe's Kitchen,&nbsp;Inc. Non-Employee Director Compensation Policy</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.17</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Form of Restricted Stock Unit Agreement Pursuant to the Zoe's Kitchen,&nbsp;Inc. 2014 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.18</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Nonqualified Stock Option Agreement Pursuant to the Zoe's Kitchen,&nbsp;Inc. 2014 Omnibus Incentive Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.19</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Zoe's Kitchen,&nbsp;Inc. Stockholders Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>List of Subsidiaries of Zoe's Kitchen,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Consent of PricewaterhouseCoopers&nbsp;LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Consent of Kirkland&nbsp;&amp; Ellis&nbsp;LLP (included in Exhibit&nbsp;5.1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>23.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Consent of Technomic, Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Power of Attorney (included on the signature page of this Registration Statement)</FONT></TD>
</TR>
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<DT style='font-family:arial;margin-bottom:-9pt;'><FONT  style="font-size:8pt;line-height:9pt;">*</FONT></DT><DD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">To
be filed by amendment. </FONT></DD></DL>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-7</FONT></P>

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Table of Contents
As filed with the Securities and Exchange Commission on March 10, 2014
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ZOE'S KITCHEN, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
5812
(Primary Standard Industrial
Classification Code Number)
51-0653504
(I.R.S. Employer
Identification Number)
5700 Granite Parkway
Granite Park Building #2, Suite 455
Plano, Texas 75024
(205) 414-9920
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Jason Morgan
Chief Financial Officer
5700 Granite Parkway
Granite Park Building #2, Suite 455
Plano, Texas 75024
(205) 414-9920
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Joshua N. Korff, Esq.
Michael Kim, Esq.
Kirkland & Ellis LLP
601 Lexington Avenue
New York, New York 10022
(212) 446-4800
Marc Jaffe, Esq.
Ian Schuman, Esq.
Latham & Watkins LLP
885 Third Avenue
New York, New York 10022
(212) 906-1200
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box:
o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
"large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
ý
(Do not check if a
smaller reporting company)
Smaller reporting company
o
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities
to be Registered
Proposed Maximum
Aggregate Offering
Price
(1)(2)
Amount of
Registration Fee
Common Stock, $0.01 par value per share
$80,500,000
$10,369
(1)
Estimated
solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as
amended.
(2)
Includes
the offering price of any additional shares of common stock that the underwriters have the option to purchase.
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
Table of Contents
The information in this prospectus is not complete and may be changed. We may not sell
these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities nor a solicitation of an offer
to buy these securities in any jurisdiction where the offer and sale is not permitted.
SUBJECT TO COMPLETION DATED MARCH 10, 2014
PRELIMINARY PROSPECTUS
Shares
Zoe's Kitchen, Inc.
Common Stock
We are offering                      shares of our common stock. This is our initial public offering and no public market
currently exists for our common stock. We
expect our initial public offering price to be between $               and $               per
share. We have applied to list our common stock on the New York Stock Exchange under the symbol "ZOES."
We are an "emerging growth company" as defined under the federal securities laws and, as such, will be subject to reduced public company reporting requirements. See "Prospectus
Summary—Implications of Being an Emerging Growth Company."
Investing in our common stock involves a high degree of risk. Please read "Risk Factors" beginning on page 18 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal offense.
PER SHARE
TOTAL
Public Offering Price
$
$
Underwriting Discounts
(1)
$
$
Proceeds, before expenses, to us
$
$
(1)
We
refer you to "Underwriting" beginning on page 120 of this prospectus for additional information regarding total underwriters
compensation.
Delivery of the shares of common stock is expected to be made on or about                      , 2014. We have granted the
underwriters an option for a period of
30 days from the date of this prospectus to purchase an additional                      shares of our common stock. If the underwriters
exercise the option in full, the total underwriting discounts
payable by us will be $               , and the total proceeds to us, before expenses, will be
$               .
Jefferies
Piper Jaffray
Baird
William Blair
Stephens Inc.
Stifel
Prospectus dated                      , 2014
Table of Contents
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY
1
RISK FACTORS
18
FORWARD-LOOKING STATEMENTS
43
USE OF PROCEEDS
45
DIVIDEND POLICY
46
CAPITALIZATION
47
DILUTION
49
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
51
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
55
BUSINESS
76
MANAGEMENT
91
EXECUTIVE COMPENSATION
97
PRINCIPAL STOCKHOLDERS
105
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
107
DESCRIPTION OF CAPITAL STOCK
109
SHARES ELIGIBLE FOR FUTURE SALE
113
MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR NON-U.S.
HOLDERS
116
UNDERWRITING
120
LEGAL MATTERS
127
EXPERTS
127
WHERE YOU CAN FIND MORE INFORMATION
127
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
We have not and the underwriters have not authorized anyone to provide you with any information other than that contained in this prospectus or in any free
writing prospectus prepared by or on behalf of us or to which we have referred you. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where such
offers and sales are permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or the time of any sale of shares
of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.
Table of Contents
MARKET, RANKING AND OTHER INDUSTRY DATA
This prospectus contains industry and market data, forecasts and projections that are based on internal data and estimates, independent industry
publications, reports by market research firms or other published independent sources. In particular, we have obtained information regarding the restaurant industry, including sales and revenue growth
in the fast casual segment of the restaurant industry, from Technomic Inc. ("Technomic"), a national consulting market research firm. Other industry and market data included in this prospectus
are from internal analyses based upon data available from known sources or other proprietary research and analysis.
We
believe these data to be reliable as of the date of this prospectus, but there can be no assurance as to the accuracy or completeness of such information. We have not independently verified the
market and industry data obtained from these third-party sources. Our internal data and estimates are based upon information obtained from trade and business organizations, other contacts in the
markets in which we operate and our management's understanding of industry conditions. Though we believe this information to be true and accurate, such information has not been verified by any
independent sources. You should carefully consider the inherent risks and uncertainties associated with the market and other industry data contained in this prospectus.
BASIS OF PRESENTATION
We operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of
52 weeks, with the exception of the fiscal year ended December 31, 2012, which consists of 53 weeks. Our first fiscal quarter consists of 16 weeks and each of our second,
third and fourth fiscal quarters consist of 12 weeks, except for a 53-week year when the fourth quarter has 13 weeks. We refer to our fiscal years presented in this prospectus as 2013,
2012, 2011, 2010 and 2009. References to periods in this prospectus refer to a four week reporting period, except for the thirteenth period of a 53-week year, which would contain five weeks.
References to comparable restaurant sales in this prospectus refer to comparable restaurant sales in our Company-owned restaurants which have been open for 18 consecutive periods or longer. References
to average unit volumes ("AUVs") in this prospectus refer to average unit volumes at our Company-owned restaurants that have been open for a trailing 52-week period or longer. For purposes of both the
comparable restaurant sales and AUV calculations the fifty-third week in 2012 has been excluded. References to customer traffic in this prospectus refer to non-catering entrée counts,
including non-catering menu items intended for consumption by multiple guests, such as the Company's "Dinner for Four" offerings, which are counted as multiple entrées. References to
per customer spend in this prospectus refer to total restaurant sales (excluding all catering related sales) divided by total customer traffic.
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
We own the trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate names,
logos and website names. This prospectus may also contain trademarks, service marks, trade names and copyrights of other companies, which are the property of their respective owners. Solely for
convenience, the trademarks, service marks, trade names and copyrights referred to in this prospectus are listed without the
TM
,
SM
, © and ®
symbols, but we will assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors, if any, to these trademarks, service marks, trade names and copyrights.
ii
Table of Contents
PROSPECTUS SUMMARY
The following summary highlights information appearing elsewhere in this prospectus. This summary does not contain all of the
information you should consider before investing in our common stock. You should read this entire prospectus carefully. In particular, you should read the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the notes relating to those statements included elsewhere in this
prospectus. Some of the statements in this prospectus constitute forward-looking statements. See "Forward-Looking Statements."
In this prospectus, unless the context requires otherwise, references to "Zoës Kitchen," "Zoës," the "Company," "we," "our," or "us" refer to Zoe's
Kitchen, Inc., the issuer of the common stock offered hereby, and its consolidated subsidiaries.
Our Company
Born in the Mediterranean. Raised in the South. Bringing Mediterranean Mainstream.
Zoës Kitchen is a fast growing, fast casual restaurant concept serving a distinct menu of fresh, wholesome, Mediterranean-inspired
dishes delivered with Southern hospitality. Founded in 1995 by Zoë and Marcus Cassimus in Birmingham, Alabama, Zoës Kitchen is a natural extension of Zoë
Cassimus' lifetime passion for cooking Mediterranean meals for family and friends. Since opening our first restaurant, we have never wavered from our commitment to make our food fresh daily and to
serve our customers in a warm and welcoming environment.
We
believe our brand delivers on our customers' desire for freshly-prepared food and convenient, unique and high-quality experiences. As a result, we have delivered strong growth in restaurant count,
comparable restaurant sales, AUVs, revenues and Adjusted EBITDA. We have grown from 21 restaurants across seven states, including five franchised locations, in 2008 to 111 restaurants across 15
states, including six franchised locations, as of February 24, 2014, representing a compound annual growth rate ("CAGR") of 38.1%. Our Company-owned restaurants have generated 16
consecutive fiscal quarters of positive comparable restaurant sales growth, due primarily to increases in customer traffic, which we believe demonstrates our growing brand equity. We have grown our
Company-owned restaurant AUVs from approximately $1.1 million in 2009 to approximately $1.5 million in 2013, representing an increase of 32.9% over that time period. From 2009 to 2013,
our total revenue increased from $20.8 million to $116.4 million and Adjusted EBITDA increased from $0.9 million to $10.9 million. We generated a net loss of
$2.8 million and $3.7 million in 2009 and 2013, respectively. For a reconciliation of Adjusted EBITDA, a non-GAAP term, to net income, see "Summary Historical Consolidated Financial and
Other Data." Our growth in comparable restaurant sales since 2009 has allowed us to invest significant amounts of capital to drive growth through the opening of new restaurants and the hiring of
personnel required to support our growth plans.
Total Restaurants at End of Fiscal Year
Comparable Restaurant
Sales Growth
Average Unit Volumes
(Dollars in thousands)
1
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Our Concept
Delivering Goodness in the Communities We Serve.
The word "zoë," which means "life" in Greek, is embraced in every aspect of the Zoës Kitchen culture and is a key
component of our concept. Our mission is to "deliver goodness to our customers, from the inside out" by: (i) offering a differentiated menu of simple, tasty and fresh Mediterranean cuisine
complemented with several Southern staples; (ii) extending genuine Southern hospitality with personality, including food delivered to your table; (iii) providing an inviting,
cosmopolitan, casual-chic environment in our restaurants; and (iv) delivering an outstanding catering experience for business and social events. Our menu offers high-quality meals made from
scratch generally using produce, proteins and other ingredients that are predominantly preservative- and additive-free, including our appetizers, soups, salads, and kabobs. We believe our team members
are a reflection of our customers-educated, active and passionate-and embrace our culture of providing engaging, attentive service, which we believe helps drive brand advocacy. We believe we deliver a
compelling value proposition by offering flavorful food that our customers feel good about eating and providing friendly customer service in a warm, inviting atmosphere, all for an average per
customer spend of $9.57 for 2013. Our food, including both hot and cold items, is well suited for catering to a variety of business and social occasions, and we believe our strong catering offering is
a significant competitive differentiator that generates consumer trial of our menu and provides additional opportunities for existing customers to enjoy our food off-premise. For 2013, catering
represented approximately 17% of our revenue.
We
believe we provide an emotional connection to our target customer — educated, affluent women and their families — who represent approximately 70% of our
customer visits, based on internal estimates and third-party data. We promote our brand as an extension of our customers' own kitchens by offering high-quality food inspired by family recipes which
reminds them of food they may have prepared at home, while allowing them to spend extra time with family and friends to fuel a balanced and active lifestyle. We believe our menu is appealing during
both lunch and dinner, resulting in a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering) for 2013.
Our Industry
We operate in the fast casual segment of the restaurant industry, which is one of the industry's fastest growing segments. According to Technomic, the
fast casual segment generated $31 billion in sales in 2012 and is projected to grow at a CAGR of approximately 10% to $50 billion by 2017. The largest 78 fast casual restaurant concepts
grew sales by 13.2% in 2012 to $24.2 billion, compared to growth of 4.9% for the 500 overall largest restaurant chains in the United States. We are the largest U.S.-based fast casual restaurant
concept (by number of restaurants) featuring Mediterranean cuisine. Our differentiated menu offering flavorful Mediterranean food delivered to your table at an average per customer spend of $9.57 for
2013 positions us to compete successfully against other fast casual concepts as well as against casual dining restaurants, providing us with a large target market.
Our Strengths
Love Life, Live Zoës!
We believe the following strengths differentiate us from competitors and serve as the foundation for our continued growth.
Our Food—Simple. Tasty. Fresh!
We believe the Zoës Kitchen experience is driven by providing simple, tasty and fresh Mediterranean food
at a compelling value to our customers. High-quality ingredients serve as the foundation of Zoës Kitchen. Our food is made from scratch daily, and we still serve some recipes that were
created in the Southern kitchen of our founder, drawing from her Greek heritage. We prepare our food by utilizing traditional Mediterranean preparation methods such as grilling and baking. Our menu is
a reflection of traditional Mediterranean cuisine, offering an abundance of fresh fruits, vegetables and herbs,
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grains,
olive oil and lean proteins. We believe the variety on our menu allows people with different preferences to enjoy a meal together.
•
Simple.
Our food is simply prepared
and made to order in our scratch kitchens. Our cooking philosophy is rooted in rich traditions that celebrate food, rather than in fads or trends. From our hummus, made fresh daily and served with
warm pita bread, to our flavorful salads and kabobs, we serve real food. By real food, we mean food made from simple ingredients, such as raw vegetables, fruits and legumes. We serve food the way it
was prepared 100 years ago — raw, grilled or baked. Our goodness is created through the careful selection of quality, wholesome ingredients, time-honored preparations inspired by
Mediterranean culinary traditions, family recipes that have been passed down for generations and delivering balanced meals.
•
Tasty.
True to our heritage, the
flavors in our menu are born in the Mediterranean and raised in the South. Inspired by family recipes and Zoë Cassimus' simple, fresh-from-the-garden sensibility, our menu features
Mediterranean cuisine complemented with several Southern staples. We offer our customers wholesome, flavorful items such as our Mediterranean Tuna sandwich, as well as entrées such as
chicken, steak and salmon kabobs and chicken and spinach roll-ups (tortillas stuffed with feta cheese, grilled chicken, sundried tomatoes and spinach), each of which is served with a choice of a side
item such as braised rosemary white beans, rice pilaf, pasta salad, roasted vegetables or seasonal fruit. Our culinary team delivers flavorful new menu additions with seasonal ingredients allowing our
customers to "Live Mediterranean." One example is our new Mediterranean Quinoa Salad where quinoa is combined with broccoli, tomatoes, onions and feta cheese to deliver a nutritious
entrée packed with flavor. Our commitment to fresh food, combined with our traditional Mediterranean cooking philosophy, results in food options that are full of flavor.
•
Fresh.
We seek to provide customers
with flavorful menu offerings made from high-quality ingredients that align with our customers' lifestyles. Fresh ingredients are delivered to our kitchens, and team members wash, cut and prepare food
from scratch daily. We utilize grilling as the predominant method of cooking our food, and there are no microwaves or fryers in our restaurants. We cater to a variety of dietary needs by offering
vegetarian, vegan, gluten-free and our calorie conscious Simply 500
TM
menu selections. We aim to provide food that makes our customers feel good about themselves and their decision to
choose Zoës Kitchen.
Differentiated Fast Casual Lifestyle Brand with a Desirable and Loyal Customer Base.
We believe the Zoës Kitchen brand reflects our customers' desire
for convenient, unique and high-quality experiences and their commitment to family, friends and enjoying every moment. We seek to deliver on these desires and to provide goodness to both the mind and
the body by fueling our customers' active lifestyle with nutritious, high-quality food that makes them feel great from the inside out. We believe we are an aspirational brand with broad appeal that
our customers embrace as a reflection of their desired self-image — active, vibrant, sophisticated, genuine, caring and passionate, which results in customer advocacy and repeat
visits. Based on third-party surveys, we estimate that approximately 94% of our surveyed customers intend to recommend Zoës Kitchen. We seek to strengthen our brand through grassroots
marketing programs and the use of social media and technology aimed at building long-term relationships with our customers and inspiring lifelong brand advocates.
We
provide a warm and welcoming environment, attracting customers from a variety of demographic groups. We believe our combination of menu offerings, ambience and location is designed to appeal to
educated and affluent women, who along with their families, represent approximately 70% of our customer visits. Our female customers generally lead active lifestyles, have an average annual household
income of over $100,000 and a majority of them are college educated. We believe this demographic represents a highly-desirable customer base with strong influence on a family's mealtime
decision-making and are strong brand advocates. We also believe they appreciate the authenticity of our brand and the quality of our menu offerings, admire that we are still cooking meals inspired by
family recipes and feel good about the food they provide to themselves and their families when choosing Zoës Kitchen. Additionally, we believe our
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attractive
demographic mix, high repeat visit rate and our ability to draw an average of approximately 2,500 customers to each of our restaurants per week makes us a desirable tenant to landlords and
developers of lifestyle centers seeking to drive traffic to complementary retail businesses.
Delivering a Contemporary Mediterranean Experience with Southern Hospitality.
We strive to provide an inviting and enjoyable customer experience through the
atmosphere of our restaurants and the friendliness of our team members. Our restaurants, highlighted by our distinct Zoës Kitchen stripes drawn from the color palette of many seaside
Mediterranean neighborhoods, are designed to be warm, welcoming and full of energy. Each of our restaurants has a unique layout to optimize the available space with consistent design cues that strive
to balance the warmth of dark wood with contemporary, colorful and cosmopolitan casual-chic décor. Our patios, a core feature of our restaurants, are an authentic part of both our
Southern and Mediterranean heritage and we believe they provide a relaxing and welcoming dining environment. We invite the community to be a part of each restaurant by showcasing local items such as
artwork by the children of our customers. Overall, we seek to create a warm, inviting environment that welcomes casual conversations, family moments or quick exchanges as our customers eat and enjoy a
break from their busy schedules.
True
to our Southern heritage, we aim to deliver warm hospitality and attentive service whether our customers choose to dine-in, take-out or host a catered event. Our team members are a reflection of
our customers — educated, active and passionate. They are the heart and soul of what we call "Southern hospitality with personality" — making sure our customers
feel as welcome as they are well fed. Our team members are trained to deliver personalized service and maintain a clean and inviting atmosphere that fosters a pleasant dining experience. We offer
modified table service where, after ordering at the counter, our customers' food is served at their table on china with silverware. Our team members routinely check on them throughout the meal and
then bus their table, all without the expectation of receiving a tip. We believe the atmosphere of our restaurants and the warmth of our team members encourages repeat visits, inspires advocacy and
drives increased sales.
Diverse Revenue Mix Provides Multiple Levers for Growth.
We believe our differentiated menu of both hot and cold food enables our customers to utilize our
restaurant for multiple occasions throughout the day. We had a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering), and our catering business represented approximately
17% of revenue, in each case, for 2013. We view catering as our third day-part, which helps to increase AUVs and brand awareness by introducing our concept to new customers through trial. We believe
we effectively serve both small and large groups in our restaurants, as well as outside of our restaurants with our catering and home meal replacement alternatives, including our Zoës
Fresh Take
TM
grab-and-go coolers and our family dinner options. In addition, we also serve beer and wine in a majority of our restaurants. We believe the breadth of our offerings
provides us multiple levers to continue to drive growth.
Attractive Unit Economic Model with Proven Portability.
Our sophisticated, predictive site selection strategy and flexible new restaurant model have resulted in
growth in markets of varying sizes as we have expanded our restaurant base utilizing in-line, end-cap and free-standing restaurant formats. We believe our strong performance across a variety of
geographic areas and steady AUV growth are validation of our concept's portability. For 2013, our top 20 performing restaurants were spread across seven different states. We have experienced
consistent AUV growth across all of our restaurant vintages.
Our
restaurant model is designed to generate strong cash flow, attractive restaurant-level financial results and high returns on invested capital. We believe our unit economic model provides a return
on investment that is attractive
to investors and supports further use of cash flow to grow our restaurant base. Our new restaurant investment model targets an average cash build-out cost of approximately $750,000, net of tenant
allowances, AUVs of $1.3 million and cash-on-cash returns in excess of 30% by the end of the third full year of operation. On average, new restaurants opened since the beginning of 2009 have
exceeded these AUV and cash-on-cash return targets within the third year of operations. Additionally, since the
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majority
of our restaurant base was built in 2009 or after, we believe our restaurants are well maintained and will likely require minimal additional capital expenditures in the near term, allowing a
majority of our cash flow to be available for investment in new restaurant development and other growth initiatives.
Experienced Management Team.
Our strategic vision and results-driven culture are directed by our senior management team under the leadership of Kevin Miles, who
guided the growth of our Company from 22 to 111 restaurants. Mr. Miles joined Zoës Kitchen in 2009 as Executive Vice President of Operations. In 2011, he was promoted to
President and Chief Operating Officer, and in 2012, he was promoted to Chief Executive Officer. Mr. Miles is a fast casual industry veteran with over 20 years of relevant experience
including leadership roles at La Madeleine French Bakery and Café, Baja Fresh Mexican Grill and Pollo Campero. He directs a team of dedicated and progressive leaders who are focused on
executing our business plan and implementing our growth strategy. We believe our experienced management team is a key driver of our restaurant growth and positions us well for long-term growth.
Our Growth Strategies
Bringing Mediterranean Mainstream.
We plan to execute the following strategies to continue to enhance our brand awareness and grow our revenue and profitability.
Grow Our Restaurant Base.
We have expanded our restaurant base from 21 restaurants in seven states in 2008 to 111 restaurants in 15 states as of February 24,
2014. We opened 27 restaurants in 2013, and we plan to open 28 to 30 restaurants in 2014. We believe we are in the early stages of our growth story and estimate a long-term total restaurant potential
in the United States in excess of 1,600 locations. We utilize a sophisticated site selection process using proprietary methods to identify target markets and expansion opportunities within those
markets. Based on this analysis, we believe there is substantial development opportunity in both new and existing markets. We expect to double our restaurant base in approximately four years.
Increase Comparable Restaurant Sales.
We have consistently demonstrated strong comparable restaurant sales growth, and we intend to generate future comparable
restaurant sales growth with an emphasis on the following goals:
•
Heighten brand awareness to drive new customer
traffic.
We utilize a marketing strategy founded on inspiring brand advocacy rather than simply capturing customers through traditional
tactics such as limited time offers. Our highly-targeted marketing strategy seeks to generate brand loyalty and promote advocacy by appealing to customers' emotional needs: (i) their passion
for wholesome and flavorful food; (ii) their desire for simple solutions to make life more convenient; (iii) their focus on choices as a reflection of self; and (iv) their desire
to be a guest at their own party. We have a long history of generating new traffic growth at our restaurants through the application of targeted advertising messages, local restaurant-level marketing
and the word-of-mouth of our existing customers to build brand recognition in the markets we serve.
We
utilize a variety of channels to communicate brand messaging and build relationships with customers. Our digital strategy includes social media, online influencer programming and blogs hosted on
our website and microsite. Our social community, including Facebook, Pinterest, Instagram and Twitter, includes more than 140,000 users combined. In addition, customers can opt into our e-mail
marketing program or download our custom mobile LIFE app, which consists of 293,000 unique members combined. These programs enable us to segment and target messaging applicable to each of these
members. We also use traditional methods to appeal to customers inside our restaurants, including point of purchase displays and cashier incentive programs. We build brand awareness through
partnerships with schools and community partners, as well as complementary businesses that target our core customers. We will continue to leverage our catering business, promotional events and a
targeted menu sampling strategy as effective means to introduce customers
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to
the Zoës Kitchen brand. We believe the continued implementation of our highly-targeted marketing strategy, combined with the core strengths of our brand, will increase brand
awareness, build long-term customer advocacy and drive incremental sales at our restaurants.
•
Increase existing customer
frequency.
We believe we will be able to continue to increase customer frequency by consistently providing fresh Mediterranean cuisine at
a compelling value. We intend to explore new menu additions by drawing upon the rich heritage and flavors of 21 Mediterranean countries and family recipes to enhance our offerings and encourage
frequency. We will continue to explore ways to increase the number of occasions (lunch, dinner and catering) and the flexibility of dining options (dine-in, to-go/take home, call-in and online) for
our customers to consume our food. We also plan to capitalize on the increasing demand for convenient, high-quality home meal replacement alternatives by expanding the food options in our
Zoës Fresh Take
TM
grab-and-go coolers and our family dinner menu offerings, which include a salad, entrée and side items offered for approximately $30 for a
family of four.
•
Grow our catering business.
Our
management team has developed innovative solutions, loyalty programs and a dedicated team of sales professionals to enhance our catering offering, which represented approximately 17% of our revenue
for 2013. We believe our strong catering offering is a significant competitive differentiator and generates consumer trial of our brand as well as provides our existing customers additional ways to
enjoy our food off-premise. We offer catering solutions for both business and social occasions, and we believe our hot and cold menu offerings differentiate our catering business as our food is
portable and conducive to travel. We are focused on making catering easier for our customers, which we believe helps to promote brand advocacy by allowing customers to be a guest at their own party.
We offer social catering solutions designed for our core customers' life events, including Zoës Party Packs, which are bundled catering packages for birthday parties, baby and bridal
showers, sporting and outdoor events, girls night out and family gatherings.
Improve Margins and Leverage Infrastructure.
We have invested in our business, and we believe our corporate infrastructure can support a restaurant base greater
than our existing footprint. As we continue to grow, we expect to drive greater efficiencies in our supply chain and leverage our technology and existing support infrastructure. Additionally, we
believe we will be able to optimize labor costs at existing restaurants as our restaurant base matures and AUVs increase and leverage corporate costs over time to enhance margins as general and
administrative expenses grow at a slower rate than our restaurant base and revenues.
RISK FACTORS
An
investment in our common stock involves a high degree of risk. Any of the factors set forth under "Risk Factors" may limit our ability to successfully execute our business strategy. You should
carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in our
common stock. Below is a summary of some of the principal risks we face:
•
we may not be able to successfully implement our growth strategy if we are
unable to locate and secure appropriate sites for restaurant locations, obtain favorable lease terms, attract customers to our restaurants or hire and retain personnel;
•
challenging economic conditions may affect our business by adversely
impacting numerous items that include, but are not limited to: consumer confidence and discretionary spending, the availability of credit presently arranged from our Credit Facility (as defined
herein), the future cost and availability of credit and the operations of our third-party vendors and other service providers;
•
new restaurants may not be profitable, and we may not be able to maintain or
improve levels of our AUVs and comparable restaurant sales;
6
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•
we rely heavily on certain vendors, suppliers and distributors, which could
adversely affect our business;
•
the restaurant industry is a highly competitive industry with many
well-established competitors;
•
we may face negative publicity or damage to our reputation, which could
arise from concerns regarding food safety and foodborne illness or other matters;
•
legislation and regulations, as well as new information or attitudes
regarding diet and health could result in changes in regulations and consumer consumption habits that could adversely affect our business;
•
changes in food and supply costs or failure to receive frequent deliveries
of fresh food ingredients and other supplies could adversely affect our business;
•
our principal stockholders and their affiliates own a substantial portion of
our outstanding equity, and their interests may not always coincide with the interests of the other stockholders; and
•
we will face increased costs as a result of being a public company.
OUR CORPORATE INFORMATION
We were incorporated in Delaware in October 2007 and currently exist as a Delaware corporation. Currently, we are a wholly owned subsidiary of Zoe's
Investors, LLC, ("Zoe's Investors"). On October 31, 2007 Brentwood Associates and certain of its affiliated entities ("Brentwood") collectively became the majority unitholder of Zoe's
Investors.
In
connection with this offering, Zoe's Investors will distribute all of our shares of common stock held by it to its existing members in accordance with the units held by each member and pursuant to
the terms of Zoe's Investors' Limited Liability Company Agreement, as amended. The distribution
of                             shares of our common stock held by Zoe's Investors to its members will be
conducted
in the following manner: (i)                              shares of our common stock to holders of
Class C Units in respect of such holders' unreturned capital investment; (ii)
                              
shares of our common stock to holders of Class C Units in respect of the unpaid yield on such units; (iii)
                              shares of our common stock to holders of Class A Units
in respect of such holders' unreturned capital investment; (iv)                              shares
of our common stock to holders of Class A Units in respect of the unpaid yield on such units; and
(v)                              shares of our common stock to holders of Class A Units,
Class B Units and Class C Units on a pro rata basis; provided, however, that pursuant to this
clause (v), the holders of Class B Units will participate only after a total
of                             shares of our common stock have been distributed to the holders of
Class A Units
and Class C Units pursuant to this clause (v). The foregoing distribution is based upon an initial public offering price of $               per share, which is the
midpoint of the
estimated offering price range set forth on the cover page of this prospectus and gives effect to
the                                         
   -for-1 stock split of our common stock, which will be effected prior to the
completion of this offering. The amount of common stock distributed to each member of Zoe's Investors of the
total                             shares of our common stock held by Zoe's Investors is subject to
change based on any changes to the initial public offering price and the date of the pricing of this offering. It is currently contemplated that Zoe's Investors will be dissolved shortly following the
distribution and the completion of the offering. The foregoing transactions are herein called the "Distribution Transactions."
Our
principal executive offices are located at 5700 Granite Parkway, Granite Park Building #2, Suite 455, Plano, Texas 75024. Our telephone number is (205) 414-9920. The address of our
main website is
www.zoeskitchen.com
. The information contained in or that can be accessed through our website does not constitute a part of, and is not
incorporated by reference into, this prospectus.
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ORGANIZATIONAL STRUCTURE
The chart below illustrates our current basic corporate structure and our basic corporate structure upon completion of this offering.
EQUITY SPONSOR
Brentwood is a leading consumer-focused private equity investment firm with over $800 million of capital under management as of
December 30, 2013 and a 30-year history of investing in leading middle-market growth companies. Brentwood focuses on investments in growing businesses in areas such as: branded consumer
products; consumer services; direct marketing, including direct mail and e-commerce; education; health and wellness; restaurants; and specialty retail. Since 1984, Brentwood's dedicated private equity
team has invested in 43 portfolio companies with an aggregate transaction value of over $5 billion. Immediately following the consummation of this offering, Brentwood will own
approximately          % of our common stock, or          % if the underwriters' option to purchase additional shares of our common stock is exercised
in full based on an initial public
offering price of $               per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus.
IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY
We qualify as an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012 (the "JOBS Act"). An emerging growth company
may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions
include:
•
a requirement to have only two years of audited financial statements and
only two years of related selected financial data and management's discussion and analysis of financial condition and results of operations disclosure;
•
an exemption from the auditor attestation requirement in the assessment of
our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act");
•
an exemption from new or revised financial accounting standards until they
would apply to private companies and from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation;
•
reduced disclosure about the emerging growth company's executive
compensation arrangements; and
•
no requirement to seek non-binding advisory votes on executive compensation
or golden parachute arrangements.
The
JOBS Act permits emerging growth companies to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to
"opt out" of this provision, and as a result, we plan to comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period
is irrevocable.
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We
have elected to adopt certain of the reduced disclosure requirements available to emerging growth companies. As a result of these elections, the information that we provide in this prospectus may
be different than the information you may receive from other public companies in which you hold equity interests. In addition, it is possible that some investors will find our common stock less
attractive as a result of our elections, which may result in a less active trading market for our common stock and more volatility in our stock price.
We
may take advantage of these provisions until we are no longer an emerging growth company. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year
(a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which we are
deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our prior second
fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We may choose to take advantage of some but
not all of these reduced disclosure requirements.
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THE OFFERING
Issuer
Zoe's Kitchen, Inc.
Common stock offered by us
shares.
Underwriters' option to purchase additional shares
We have granted the underwriters a 30-day option to purchase up to an
additional                       shares of our common stock.
Common stock to be outstanding immediately after completion of this offering
Immediately following the consummation of this offering, we will
have                       shares of common stock outstanding,
or                       shares if the underwriters' option to purchase additional shares of our common stock is exercised in
full.
Use of proceeds
We estimate that the net proceeds to us from this offering, after deducting the underwriting discount and
estimated offering expenses payable by us, will be approximately $                       million, or
$                      if the underwriters' option to purchase additional shares of our common stock is exercised in full, assuming the
shares offered by us are sold for $                       per share, the midpoint of the estimated offering price range set forth on
the cover of this prospectus.
We intend to use the net proceeds from the sale of common stock by us in this offering (i) to repay the
entire amount of the outstanding borrowings under our Credit Facility, (ii) to continue to support our growth, primarily through opening new restaurants, and (iii) for working capital and general corporate purposes. For additional
information, see "Use of Proceeds."
Dividend policy
We currently intend to retain all available funds and any future earnings to fund the development and growth of
our business and to repay indebtedness, and therefore, we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to declare and pay cash dividends will be at the discretion of our Board of Directors and will
depend on, among other things, our financial condition, results of operations, cash requirements, contractual restrictions and such other factors as our Board of Directors deems relevant. In addition, our Credit Facility restricts our ability to pay
dividends. For additional information, see "Dividend Policy."
Listing
We have applied to list our common stock on the New York Stock Exchange under the symbol "ZOES."
Risk factors
Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 18 of
this prospectus for a discussion of factors you should carefully consider before investing in our common stock.
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Unless otherwise indicated, all information in this prospectus assumes or gives effect to:
•
the               -for-1 stock split of our common stock, which will be
effected prior to the completion of this offering;
•
the filing and effectiveness of our amended and restated certificate of
incorporation and amended and restated bylaws, which we will adopt immediately prior to the completion of this offering;
•
the Distribution Transactions;
•
the exclusion of                       shares of common stock
issuable upon
the exercise of stock options to be issued to certain officers, directors, employees and consultants with an exercise price equal to the initial public offering price;
•
no exercise by the underwriters of their option to purchase up to
                              additional shares from us; and
•
an initial public offering price of $                per share, the
midpoint of the estimated offering price range set forth on the cover of this prospectus.
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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table presents our summary historical consolidated financial data and certain other financial data. The consolidated statement of
operations and consolidated statement of cash flows data for the years ended December 30, 2013, December 31, 2012 and December 26, 2011 have been derived from our historical
audited consolidated financial statements, which are included in this prospectus.
We
operate on a 52-or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of 52 weeks, with the exception of the fiscal year ended
December 31, 2012, which consisted of 53 weeks. Our first fiscal quarter consists of 16 weeks, and each of our second, third and fourth fiscal
quarters consist of 12 weeks, except for a 53-week year when the fourth quarter has 13 weeks. We refer to our fiscal years as 2013, 2012 and 2011.
The
consolidated financial data and other financial data presented below should be read in conjunction with the sections entitled "Selected Historical Consolidated Financial and Other Data,"
"Management's Discussion and Analysis of Financial Condition and Results of Operations," and our audited and unaudited consolidated financial statements and the related notes thereto included
elsewhere in this prospectus. The following table does not give effect to the          -for-1 stock split of our common stock, which will be effected prior to the completion of the offering. Our
historical consolidated financial data may not be indicative of our future performance.
12
Table of Contents
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
(Dollars in thousands, except per share data)
Consolidated Statement of Operations Data:
Revenue:
Restaurant sales
$
115,748
$
78,966
$
49,193
Franchise and royalty fees
637
757
984
Total revenue
116,385
79,724
50,177
Operating expenses:
Restaurant operating costs:
Cost of sales (excluding depreciation and amortization)
38,063
25,845
15,756
Labor
32,810
21,567
13,424
Store operating expenses
21,780
14,610
9,596
General and administrative expenses
13,172
8,969
6,384
Depreciation
5,862
3,779
2,840
Amortization
1,601
1,091
585
Pre-opening costs
1,938
917
806
Loss (gain) from disposal of equipment
175
240
(4
)
Total operating expenses
115,401
77,018
49,387
Income (loss) from operations
985
2,706
790
Other expenses:
Interest expense
4,019
2,337
1,248
Loss on interest cap
25
—
—
Bargain purchase gain from acquisitions
—
—
(541
)
Total other expenses
4,044
2,337
707
Income (loss) before provision for income taxes
(3,059
)
369
83
Provision for income taxes
656
622
110
Net loss
$
(3,715
)
$
(253
)
$
(27
)
Net loss per share:
Basic
$
(37,151
)
$
(2,529
)
$
(269
)
Diluted
$
(37,151
)
$
(2,529
)
$
(269
)
Weighted average shares outstanding:
Basic
100
100
100
Diluted
100
100
100
Adjusted net income (loss) per common share
(1)
:
Basic
Diluted
Adjusted pro forma weighted average number of common shares outstanding
(1)
:
Basic
Diluted
Consolidated Statement of Cash Flows Data:
Net cash provided by operating activities
$
10,924
$
7,796
$
4,764
Net cash used in investing activities
(28,242
)
(21,283
)
(13,519
)
Net cash provided by financing activities
16,017
15,130
7,600
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As of December 30, 2013
Actual
Pro Forma
As Adjusted
(2)
(Dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents
$
1,149
$
Property and equipment, net
78,629
Total assets
119,937
Total debt
(3)
61,650
Total stockholders' equity
33,579
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
(Dollars in thousands)
Other Operating Data:
Company-owned restaurants at end of period
94
67
48
Franchise restaurants at end of period
8
8
9
Company-owned:
Average unit volume
$
1,470
$
1,421
$
1,299
Comparable restaurant sales growth
6.9
%
13.4
%
11.8
%
Restaurant contribution
(4)
$
23,095
$
16,966
$
10,418
as a percentage of restaurant sales
20.0
%
21.5
%
21.2
%
Adjusted EBITDA
(5)
$
10,899
$
9,153
$
5,440
as a percentage of revenue
9.4
%
11.5
%
10.8
%
Capital expenditures
$
28,267
$
15,462
$
10,959
(1)
Adjusted
net income (loss) per common share reflects: (i) the elimination of the fees paid to Brentwood pursuant to the Corporate
Development and Administrative Services Agreement and fees paid to Greg Dollarhyde pursuant to the Consulting Agreement, each as defined herein, (ii) the net decrease in interest expense
resulting from the repayment of the entire amount of the outstanding borrowings under our Credit Facility with the net proceeds from this offering, as described in "Use of Proceeds," and
(iii) increases in income tax expense due to higher income before income taxes resulting from the elimination of the annual management fee and consulting fee as a result of the termination of
the Corporate Development and Administrative Services Agreement and the Consulting Agreement described in (i) above and a decrease in interest expense as a result of repayments of the entire
amount of the outstanding borrowings under our Credit Facility as described in (ii) above as if each of these events had occurred on January 1, 2013. Adjusted basic net income (loss) per
common share consists of adjusted net income (loss) divided by the adjusted pro forma basic weighted average common stock outstanding. Adjusted diluted net income (loss) per common share consists of
adjusted net income (loss) divided by the adjusted pro forma diluted weighted average common stock outstanding.
Adjusted
pro forma per share data gives effect to (i) the Distribution Transactions, as described in "—Our Corporate Information," and (ii)
 the                             shares of our
common stock issued by us in this offering at an initial public offering price of $               per share, which represents the midpoint of the estimated offering price
range set forth on the cover
page of this prospectus, as if each of these events had occurred on January 1, 2013.
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The
following is a reconciliation of historical net loss to adjusted net income (loss) for 2013:
(Dollars in thousands, except per share data)
Year Ended
December 30,
2013
Net loss, as reported
$
Management and consulting fees and expenses
(a)
Decrease in interest expense
(b)
Increase in income tax expense
(c)
Adjusted net income (loss)
$
Adjusted pro forma weighted average common stock outstanding
(d)
Basic
Diluted
Adjusted Basic net income (loss) per share
$
Adjusted Diluted net income (loss) per share
$
(a)
Management
and consulting fees and expenses represent fees paid to Brentwood pursuant to the Corporate Development and Administrative Services
Agreement and fees paid to Greg Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions—Corporate Development and Administrative Services
Agreement" and "Certain Relationships and Related Party Transactions—Consulting Agreement."
(b)
Reflects
the adjustment to interest expense resulting from the repayment of the entire amount of the outstanding borrowings under our Credit
Facility with the net proceeds of this offering as if these transactions occurred on January 1, 2013 and assumes no borrowings under our Credit Facility during the period presented. This
interest adjustment was calculated by reversing the historical interest expense related to borrowings under our Credit Facility.
(c)
Reflects
no adjustment to income tax expense as a result of the transactions described in (a) and (b) above because as of December 30,
2013 we had federal net operating loss carryforwards of $15.9 million and state net operating loss carryforwards of $13.5 million that would have offset any increase in income tax
expense as a result of the transactions described in (a) and (b) above.
(d)
Reflects
the (i) Distribution Transactions and (ii) issuance of                             additional
shares of common stock in this
offering, as if all these transactions occurred at January 1, 2013 and were outstanding during the entire period presented. Diluted weighted average common stock outstanding reflects the
dilutive effect of our outstanding options and the conversion of our Class B Units using the "if-converted" method except when assumed conversion would be anti-dilutive.
(2)
Pro
forma balance sheet data give effect to (i) the Distribution Transactions, (ii) the filing and effectiveness of our amended
and restated certificate of incorporation and amended and restated bylaws, which we will adopt prior to the completion of this offering and (iii) this offering and the use of proceeds therefrom
as described in "Use of Proceeds," assuming the shares offered by us are sold for $       per share, the midpoint of the estimated offering price range set forth on the cover page of this
prospectus, after deducting the underwriting discounts and estimated offering expenses payable by us.
A
$1.00 increase (decrease) in the assumed initial public offering price of
$                             per share, which is the midpoint of the estimated offering price range set
forth on the cover page of this
prospectus, would increase (decrease) each of cash and cash equivalents, total assets and total stockholders' equity by
$                             ,
$                             and
$                             , respectively, assuming
the number of shares offered by us as stated on the cover page of this prospectus remains unchanged and after deducting the estimated underwriting discounts and estimated offering expenses payable by
us. Similarly, a one million share increase (decrease) in the number of shares offered by us, as set
forth on the cover page of this prospectus, would increase (decrease) each of cash and cash equivalents, total assets and total stockholders' equity by
$                             ,
$                             and
$                             , respectively, assuming the assumed initial public offering price of
$                             per share (the midpoint of the price range set forth on the cover page of
this prospectus)
remains the same, and after deducting the estimated underwriting discounts and estimated offering expenses payable by us.
(3)
Includes
interest-bearing debt, residual value obligations and deemed landlord financing.
(4)
Restaurant
contribution is defined as restaurant sales less restaurant operating costs, which are cost of sales, labor, and store operating
expenses.
(5)
EBITDA
is defined as net loss before interest, income taxes and depreciation and amortization.
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Adjusted
EBITDA is defined as EBITDA plus equity-based compensation expense, bargain purchase gain from acquisitions, management and consulting fees, asset disposals, closure costs, loss on interest
cap and restaurant impairment and pre-opening costs. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by, or presented in accordance with, generally
accepted accounting principles in the United States ("GAAP"). We believe that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business
trends relating to our financial condition and operating results. Our management uses EBITDA and Adjusted EBITDA (i) as a factor in evaluating management's performance when determining
incentive compensation and (ii) to evaluate the effectiveness of our business strategies.
We
believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial
measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the
future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not
calculate Adjusted EBITDA in the same fashion. Moreover, our definitions of EBITDA and Adjusted EBITDA as presented throughout this prospectus are not the same as these or similar terms in the
applicable covenants of our Credit Facility.
Our
management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted
EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations are:
•
Adjusted EBITDA does not reflect our cash expenditures, or
future requirements, for capital expenditures or contractual commitments;
•
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
•
Adjusted EBITDA does not reflect the interest expense, or
the cash requirements necessary to service interest or principal payments, on our debts;
•
although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
•
equity-based compensation expense is and will remain a key
element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
•
Adjusted EBITDA does not reflect the impact of certain cash
charges resulting from matters we consider not to be indicative of our ongoing operations; and
•
other companies in our industry may calculate Adjusted
EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because
of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of net loss to EBITDA and Adjusted
16
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EBITDA
below and not rely on any single financial measure to evaluate our business.
The following table reconciles net loss to EBITDA and Adjusted EBITDA for 2013, 2012 and 2011:
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
(Dollars in thousands)
Adjusted EBITDA:
Net loss, as reported
$
(3,715
)
$
(253
)
$
(27
)
Depreciation and amortization
7,462
4,870
3,426
Interest expense
4,019
2,337
1,248
Provision for income taxes
656
622
110
EBITDA
8,422
7,576
4,757
Asset disposals, closure costs, loss on interest cap and restaurant impairment
(a)
200
240
(4
)
Management and consulting fees
(b)
265
294
232
Equity-based compensation expense
73
126
190
Pre-opening costs
(c)
1,938
917
806
Bargain purchase gain from acquisitions
(d)
—
—
(541
)
Adjusted EBITDA
$
10,899
$
9,153
$
5,440
(a)
Represents
costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment, loss on interest cap and
restaurant closure expenses.
(b)
Represents
fees payable to Brentwood pursuant to the Corporate Development and Administrative Services Agreement and fees paid to Greg
Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions—Corporate Development and Administrative Services Agreement" and "Certain
Relationships and Related Party Transactions—Consulting Agreement."
(c)
Represents
expenses directly associated with the opening of new restaurants that are incurred prior to opening, including pre-opening
rent.
(d)
Represents
the excess of the fair value of net assets acquired over the purchase price related to our acquisitions of the Houston franchise
restaurants.
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RISK FACTORS
Investing in our common stock involves a high degree of risk. Before you purchase our common stock, you should carefully
consider the risks described below and the other information contained in this prospectus, including our consolidated financial statements and accompanying notes. If any of the following risks
actually occurs, our business, financial condition, results of operations or cash flows could be materially adversely affected. In any such case, the trading price of our common stock could decline,
and you could lose all or part of your investment.
Risks Related to Our Business and Industry
Our long-term success is highly dependent on our ability to open new restaurants and is subject to many unpredictable factors.
One of the key means of achieving our growth strategy will be through opening new restaurants and operating those restaurants on a profitable basis.
We expect this to be the case for the foreseeable future. In 2013, we opened 27 restaurants and we plan to open 28 to 30 restaurants in 2014. We may not be able to open new restaurants as quickly as
planned. In the past, we have experienced delays in opening some restaurants, including due to the landlord's failure to turn over the premises to us on a timely basis. Such delays could happen again
in future restaurant openings. Delays or failures in opening new restaurants could materially and adversely affect our growth strategy and our business, financial condition and results of operations.
As we operate more restaurants, our rate of expansion relative to the size of our restaurant base will eventually decline.
In
addition, one of our biggest challenges is locating and securing an adequate supply of suitable new restaurant sites in our target markets. Competition for those sites is intense, and other
restaurant and retail concepts that compete for those sites may have unit economic models that permit them to bid more aggressively for those sites than we can. There is no guarantee that a sufficient
number of suitable sites will be available in desirable areas or on terms that are acceptable to us in order to achieve our growth plan. Our ability to open new restaurants also depends on other
factors, including:
•
negotiating leases with acceptable terms;
•
identifying, hiring and training qualified employees in each local market;
•
timely delivery of leased premises to us from our landlords and punctual
commencement of our build-out construction activities;
•
managing construction and development costs of new restaurants, particularly
in competitive markets;
•
obtaining construction materials and labor at acceptable costs, particularly
in urban markets;
•
unforeseen engineering or environmental problems with leased premises;
•
generating sufficient funds from operations or obtaining acceptable
financing to support our future development;
•
securing required governmental approvals, permits and licenses (including
construction permits and liquor licenses) in a timely manner and responding effectively to any changes in local, state or federal laws and regulations that adversely affect our costs or ability to
open new restaurants; and
•
avoiding the impact of inclement weather, natural disasters and other
calamities.
Our
progress in opening new restaurants from quarter to quarter may occur at an uneven rate. If we do not open new restaurants in the future according to our current plans, the delay could materially
adversely affect our business, financial condition and results of operations.
We
intend to develop new restaurants in our existing markets, expand our footprint into adjacent markets and selectively enter into new markets. However, there are numerous factors involved in
identifying and securing an appropriate site, including, but not limited to: identification and availability of suitable
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locations
with the appropriate population demographics, traffic patterns, local retail and business attractions and infrastructure that will drive high levels of customer traffic and sales per
restaurant; consumer tastes in new geographic locations and acceptance of our restaurant concept; financial conditions affecting developers and potential landlords, such as the effects of
macro-economic conditions and the credit market, which could lead to
these parties delaying or canceling development projects (or renovations of existing projects), in turn reducing the number of appropriate locations available; developers and potential landlords
obtaining licenses or permits for development projects on a timely basis; anticipated commercial, residential and infrastructure development near our new restaurants; and availability of acceptable
lease arrangements.
We
may not be able to successfully develop critical market presence for our brand in new geographical markets, as we may be unable to find and secure attractive locations, build name recognition or
attract new customers. If we are unable to fully implement our development plan, our business, financial condition and results of operations could be materially adversely affected.
Our expansion into new markets may present increased risks.
We plan to open restaurants in markets where we have little or no operating experience. Restaurants we open in new markets may take longer to reach
expected sales and profit levels on a consistent basis and may have higher construction, occupancy or operating costs than restaurants we open in existing markets, thereby affecting our overall
profitability. New markets may have competitive conditions, consumer tastes and discretionary spending patterns that are more difficult to predict or satisfy than our existing markets. We may need to
make greater investments than we originally planned in advertising and promotional activity in new markets to build brand awareness. We may find it more difficult in new markets to hire, motivate and
keep qualified employees who share our vision, passion and culture. We may also incur higher costs from entering new markets if, for example, we assign regional managers to manage comparatively fewer
restaurants than in more developed markets. As a result, these new restaurants may be less successful or may achieve target AUVs at a slower rate. If we do not successfully execute our plans to enter
new markets, our business, financial condition and results of operations could be materially adversely affected.
Changes in economic conditions and adverse weather and other unforeseen conditions could materially affect our ability to maintain or increase sales at our restaurants or
open new restaurants.
The restaurant industry depends on consumer discretionary spending. The United States in general or the specific markets in which we operate may
suffer from depressed economic activity, recessionary economic cycles, higher fuel or energy costs, low consumer confidence, high levels of unemployment, reduced home values, increases in home
foreclosures, investment losses, personal bankruptcies, reduced access to credit or other economic factors that may affect consumer discretionary spending. Traffic in our restaurants could decline if
consumers choose to dine out less frequently or reduce the amount they spend on meals while dining out. Negative economic conditions might cause consumers to make long-term changes to their
discretionary spending behavior, including dining out less frequently on a permanent basis. In addition, given our geographic concentrations in the South, South-East and Mid-Atlantic regions of the
United States, economic conditions in those particular areas of the country could have a disproportionate impact on our overall results of operations, and regional occurrences such as local strikes,
terrorist attacks, increases in energy prices, adverse
weather conditions, tornadoes, earthquakes, hurricanes, floods, droughts, fires or other natural or man-made disasters could materially adversely affect our business, financial condition and results
of operations. Adverse weather conditions may also impact customer traffic at our restaurants, and, in more severe cases, cause temporary restaurant closures, sometimes for prolonged periods. All of
our restaurants have outdoor seating, and the effects of adverse weather may impact the use of these areas and may negatively impact our revenues. If restaurant sales decrease, our profitability could
decline as we spread fixed costs across a lower level of sales. Reductions in staff levels, asset impairment charges and potential restaurant closures could result from prolonged negative restaurant
sales, which could materially adversely affect our business, financial condition and results of operations.
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New restaurants, once opened, may not be profitable, and the increases in average restaurant sales and comparable restaurant sales that we have experienced in the past may
not be indicative of future results.
Some of our restaurants open with an initial start-up period of higher than normal sales volumes, which subsequently decrease to stabilized levels.
Typically, our new restaurants have stabilized sales after approximately 12 to 24 weeks of operation, at which time the restaurant's sales typically begin to grow on a consistent basis.
However, we cannot assure you that this will occur for future restaurant openings. In new markets, the length of time before average sales for new restaurants stabilize is less predictable and can be
longer as a result of our limited knowledge of these markets and consumers' limited awareness of our brand. New restaurants may not be profitable and their sales performance may not follow historical
patterns. In addition, our average restaurant sales and comparable restaurant sales may not increase at the rates achieved over the past several years. Our ability to operate new restaurants
profitably and increase average restaurant sales and comparable restaurant sales will depend on many factors, some of which are beyond our control, including:
•
consumer awareness and understanding of our brand;
•
general economic conditions, which can affect restaurant traffic, local
labor costs and prices we pay for the food products and other supplies we use;
•
changes in consumer preferences and discretionary spending;
•
competition, either from our competitors in the restaurant industry or our
own restaurants;
•
temporary and permanent site characteristics of new restaurants;
•
changes in government regulation; and
•
other unanticipated increases in costs, any of which could give rise to
delays or cost overruns.
If
our new restaurants do not perform as planned, our business and future prospects could be harmed. In addition, if we are unable to achieve our expected average restaurant sales, our business,
financial condition and results of operations could be adversely affected.
Our sales growth and ability to achieve profitability could be adversely affected if comparable restaurant sales are less than we expect.
The level of comparable restaurant sales, which represent the change in year-over-year sales for restaurants open for at least 18 full periods, will
affect our sales growth and will continue to be a critical factor affecting our ability to generate profits because the profit margin on comparable restaurant sales is generally higher than the profit
margin on new restaurant sales. Our ability to increase comparable restaurant sales depends in part on our ability to successfully implement our initiatives to build sales. It is possible such
initiatives will not be successful, that we will not achieve our target comparable restaurant sales growth or that the change in comparable restaurant sales could be negative, which may cause a
decrease in sales growth and ability to achieve profitability that would materially adversely affect our business, financial condition and results of operations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations—Key Measures We Use to Evaluate Our Performance—Comparable Restaurant Sales Growth."
Our failure to manage our growth effectively could harm our business and operating results.
Our growth plan includes a significant number of new restaurants. Our existing restaurant management systems, administrative staff, financial and
management controls and information systems may be inadequate to support our planned expansion. Those demands on our infrastructure and resources may also adversely affect our ability to manage our
existing restaurants. Managing our growth effectively will require us to continue to enhance these systems, procedures and controls and to hire, train and retain managers and team members. We may not
respond quickly enough to the changing demands that our expansion will impose on our management, restaurant teams and existing infrastructure which could harm our business, financial condition and
results of operations.
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We
believe our culture, from the restaurant-level up through management, is an important contributor to our growth. As we grow, however, we may have difficulty maintaining our culture or adapting it
sufficiently to meet the needs of our operations. Among other important factors, our culture depends on our ability to attract, retain and motivate employees who share our enthusiasm and dedication to
our concept. Historically, qualified individuals have been in short supply and our inability to attract and retain them would limit the success of our new restaurants, as well as our existing
restaurants. Our business, financial condition and results of operations could be materially adversely affected if we do not maintain our infrastructure and culture as we grow.
We have experienced net losses in the past, and we may experience net losses in the future.
We experienced net losses of $3.7 million, $0.3 million and $0.03 million in 2013, 2012 and 2011, respectively. We may experience
net losses in the future, and we cannot assure you that we will achieve profitability in future periods.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
As of December 30, 2013, we had federal net operating loss carryforwards of $15.9 million and state net operating loss carryforwards of
$13.5 million. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change," the corporation's ability to
use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. In general, an "ownership change" generally occurs if there is
a cumulative change in our ownership by "5-percent shareholders" that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. We may have
experienced an ownership change in the past and may experience ownership changes in the future as a result of this issuance or future transactions in our stock, some of which may be outside our
control. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards, or other pre-change tax attributes, to offset U.S. federal and state taxable
income may be subject to significant limitations. Those net operating loss carryforwards resulted in a deferred tax asset of $6.0 million at December 30, 2013. A full valuation
allowance of $6.8 million is recorded against the net deferred tax assets, exclusive of indefinite-lived intangibles, including these carryforwards.
The planned rapid increase in the number of our restaurants may make our future results unpredictable.
In 2013, we opened 27 restaurants, and we plan to open 28 to 30 restaurants in 2014. We intend to continue to increase the number of our restaurants
in the next several years. This growth strategy and the substantial investment associated with the development of each new restaurant may cause our operating results to fluctuate and be unpredictable
or adversely affect our profits. Our future results depend on various factors, including successful selection of new markets and restaurant locations, local market acceptance of our restaurants,
consumer recognition of the quality of our food and willingness to pay our prices, the quality of our operations and general economic conditions. In addition, as has happened when other restaurant
concepts have tried to expand, we may find that our concept has limited appeal in new markets or we may experience a decline in the popularity of our concept in the markets in which we operate. Newly
opened restaurants or our future markets and restaurants may not be successful or our system-wide average restaurant sales may not increase at historical rates, which could materially adversely affect
our business, financial condition and results of operations.
Opening new restaurants in existing markets may negatively affect sales at our existing restaurants.
The consumer target area of our restaurants varies by location, depending on a number of factors, including population density, other local retail and
business attractions, area demographics and geography. As a result, the opening of a new restaurant in or near markets in which we already have restaurants could adversely affect sales at these
existing restaurants. Existing restaurants could also make it more difficult to build our consumer base for a new restaurant in the same market. Our core business strategy does not
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entail
opening new restaurants that we believe will materially affect sales at our existing restaurants, but we may selectively open new restaurants in and around areas of existing restaurants that
are operating at or near capacity to effectively serve our customers. Sales cannibalization between our restaurants may become significant in the future as we continue to expand our operations and
could affect our sales growth, which could, in turn, materially adversely affect our business, financial condition and results of operations.
We face significant competition from other restaurant companies, and our inability to compete effectively may affect our traffic, sales and restaurant contribution.
The restaurant industry is intensely competitive with many well-established companies that compete directly and indirectly with us. We compete in the
restaurant industry with national, regional and locally-owned limited service restaurants and full-service restaurants. We face competition from the casual dining, quick-service and fast casual
segments of the restaurant industry. These segments are highly competitive with respect to, among other things, taste, price, food quality and presentation, service, location and the ambience and
condition of each restaurant. Our competition includes a variety of locally owned restaurants and national and regional chains offering dine-in, carry-out, delivery and catering services. Many of our
competitors have existed longer and have a more established market presence with substantially greater financial, marketing, personnel and other resources than we do. Among our competitors are a
number of multi-unit, multi-market fast casual restaurant concepts, some of which are expanding nationally. As we expand, we will face competition from these concepts as well as new competitors that
strive to compete with our market segments. For example, additional competitive pressures come from the deli sections and in-store cafés of grocery store chains, as well as from
convenience stores and online meal preparation sites. These competitors may have, among other things, lower operating costs, better locations, better facilities, better management, more effective
marketing and more efficient operations. Additionally, we face the risk that new or existing competitors will copy our business model, menu options, presentation or ambiance, among other things.
Several
of our competitors compete by offering menu items that are specifically identified as organic, GMO free or healthier for consumers. Many of our quick-service restaurant competitors offer
lower-priced menu options. Any inability to successfully compete with the restaurants in our markets will place downward pressure on our customer traffic and may prevent us from increasing or
sustaining our revenues and profitability. Consumer tastes, nutritional and dietary trends, traffic patterns and the type, number and location of competing restaurants often affect the restaurant
business, and our competitors may react more efficiently and effectively to those conditions. Our sales could decline due to changes in popular tastes, "fad" food regimens, such as low carbohydrate
diets, and media attention on new restaurants. If we are unable to continue to compete effectively, our traffic, sales and restaurant contribution could decline and our business, financial condition
and results of operations would be adversely affected.
Damage to our reputation could negatively impact our business, financial condition and results of operations.
Our growth is dependent in part upon our ability to maintain and enhance the value of our brand, consumers' connection to our brand and positive
relationships with our franchisees. We believe we have built our reputation on the high-quality of our food, service and staff, as well as on our culture and the ambience in our restaurants, and we
must protect and grow the value of our brand to continue to be successful in the future. Any incident that erodes consumer affinity for our brand could significantly reduce its value and damage our
business. For example, our brand value could suffer and our business could be adversely affected if customers perceive a reduction in the quality of our food, service or staff, or an adverse change in
our culture or ambience, or otherwise believe we have failed to deliver a consistently positive experience.
We
may be adversely affected by news reports or other negative publicity regardless of their accuracy, regarding food quality issues, public health concerns, illness, safety, injury, customer
complaints or litigation, health inspection scores, integrity of our or our suppliers' food processing, employee relationships
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or
government or industry findings concerning our restaurants, restaurants operated by other foodservice providers or others across the food industry supply chain. The risks associated with such
negative publicity cannot be completely eliminated or mitigated and may materially harm our results of operations and result in damage to our brand. For multi-location food service businesses such as
ours, the negative impact of adverse publicity relating to one restaurant or a limited number of restaurants may extend far beyond the restaurants or franchises involved to affect some or all of our
other restaurants or franchises. The risk of negative publicity is particularly great with respect to our franchised restaurants because we are limited in the manner in which we can regulate them,
especially on a real-time basis. A similar risk exists with respect to unrelated food service businesses, if consumers associate those businesses with our own operations.
Additionally,
employee claims against us based on, among other things, wage and hour violations, discrimination, harassment or wrongful termination may also create negative publicity that could
adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. A significant increase in the number of these
claims or an increase in the number of successful claims could materially adversely affect our business, financial condition and results of operations. Consumer demand for our products and our brand's
value could diminish significantly if any such incidents or other matters create negative publicity or otherwise erode consumer confidence in us or our products, which would likely result in lower
sales and could materially adversely affect our business, financial condition and results of operations.
Also,
there has been a marked increase in the use of social media platforms and similar devices, including weblogs (blogs), social media websites, Twitter and other forms of Internet-based
communications which allow individuals access to a broad audience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate as is its
impact. Many social media platforms immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted. The opportunity for
dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning our company may be posted on such platforms at any time.
Information posted may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects or business. The harm may be immediate without affording us an opportunity
for redress or correction. Such platforms also could be used for dissemination of trade secret information, compromising valuable company assets. In summary, the dissemination of information online
could harm our business, prospects, financial condition and results of operations, regardless of the information's accuracy.
Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business, financial condition and results of operations.
We are subject to various federal, state and local regulations, including those relating to building and zoning requirements and those relating to the
preparation and sale of food. The development and operation of restaurants depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use,
environmental, traffic and other regulations and requirements. Our restaurants are also subject to state and local licensing and regulation by health, alcoholic beverage, sanitation, food and
occupational safety and other agencies. We may experience material difficulties or failures in obtaining the necessary licenses, approvals or permits for our restaurants, which could delay planned
restaurant openings or affect the operations at our existing restaurants. In addition, stringent and varied requirements of local regulators with respect to zoning, land use and environmental factors
could delay or prevent development of new restaurants in particular locations.
We
are subject to the U.S. Americans with Disabilities Act (the "ADA") and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public
accommodations and other areas, including our restaurants. We may in the future have to modify restaurants by adding access ramps or redesigning certain architectural fixtures, for example, to provide
service to or make reasonable accommodations for disabled persons. The expenses associated with these modifications could be material.
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Our operations are also subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, the U.S. Fair Labor Standards Act, which governs such
matters as minimum wages and overtime, and a variety of similar federal, state and local laws that govern these and other employment law matters. We and our franchisees may also be subject to lawsuits
from our employees, the U.S. Equal Employment Opportunity Commission or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar
matters, and we have been party to such matters in the past. In addition, federal, state and local proposals related to paid sick leave or similar matters could, if implemented, materially adversely
affect our business, financial condition and results of operations.
There
is also a potential for increased regulation of certain food establishments in the United States, where compliance with a Hazard Analysis and Critical Control Points ("HACCP") approach would be
required. HACCP refers to a management system in which food safety is addressed through the analysis and control of potential hazards from production, procurement and handling, to manufacturing,
distribution and consumption of the finished product. Many states have required restaurants to develop and implement HACCP Systems, and the United States government continues to expand the sectors of
the food industry that must adopt and implement HACCP programs. For example, the Food Safety Modernization Act (the "FSMA"), signed into law in January 2011, granted the FDA new authority regarding
the safety of the entire food system, including through increased inspections and mandatory food recalls. Although restaurants are specifically exempted from or not directly implicated by some of
these new requirements, we anticipate that the new requirements may impact our industry. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the
availability of certain products, result in adverse publicity or require us to take actions that could be costly for us or otherwise impact our business.
The
impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future
laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and, therefore, have an
adverse effect on our results of operations. Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of
required licenses, administrative enforcement actions, fines and civil and criminal liability. In addition, certain laws, including the ADA, could require us to expend significant funds to make
modifications to our restaurants if we failed to comply with applicable standards. Compliance with the aforementioned laws and regulations can be costly and can increase our exposure to litigation or
governmental investigations or proceedings.
Legislation and regulations requiring the display and provision of nutritional information for our menu offerings, and new information or attitudes regarding diet and health
could result in changes in regulations and consumer consumption habits that could adversely affect our results of operations.
Regulations and consumer eating habits may change as a result of new information or attitudes regarding diet and health or new information regarding
the adverse health effects of consuming certain menu offerings. Such changes may include federal, state and local regulations that impact the ingredients and nutritional content of the food and
beverages we offer. The growth of our restaurant operations is dependent, in part, upon our ability to effectively respond to changes in any consumer health regulations and our ability to adapt our
menu offerings to trends in food consumption. If consumer health regulations or consumer eating habits change significantly, we may choose or be required to modify or delete certain menu items, which
may adversely affect the attractiveness of our restaurants to new or returning customers. We may also experience higher costs associated with the implementation of those changes. To the extent we are
unwilling or unable to respond with appropriate changes to our menu offerings, it could materially affect consumer demand and have an adverse impact on our business, financial condition and results of
operations.
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Such
changes have also resulted in, and may continue to result in, laws and regulations requiring us to disclose the nutritional content of our food offerings, and they have resulted, and may continue
to result in, laws and regulations affecting permissible ingredients and menu offerings. For example, a number of states, counties and cities have enacted menu labeling laws requiring multi-unit
restaurant operators to disclose to consumers certain nutritional information, or have enacted legislation restricting the use of certain types of ingredients in restaurants. These requirements may be
different or inconsistent with requirements under the Patient Protection and Affordable Care Act of 2010 (the "PPACA"), which establishes a uniform, federal requirement for certain restaurants to post
nutritional information on their menus. Specifically, the PPACA requires chain restaurants with 20 or more locations operating under the same name and offering substantially the same menus to publish
the total number of calories of standard menu items on menus and menu boards, along with a statement that puts
this calorie information in the context of a total daily calorie intake. While we disclose the nutritional value and calorie count of our menu items on our website and upon request, these
inconsistencies could be challenging for us to comply with in an efficient manner. Additionally, we use Healthy Dining, a third-party nutritional group to evaluate the nutritional value and calorie
count of our menu items. If Healthy Dining's evaluation report is inaccurate or incomplete, we may fail to comply with PPACA or other consumer health regulations. The PPACA also requires covered
restaurants to provide to consumers, upon request, a written summary of detailed nutritional information for each standard menu item, and to provide a statement on menus and menu boards about the
availability of this information upon request. An unfavorable report on, or reaction to, our menu ingredients, the size of our portions or the nutritional content of our menu items could negatively
influence the demand for our offerings.
Compliance
with current and future laws and regulations regarding the ingredients and nutritional content of our menu items may be costly and time-consuming. We cannot predict the impact of the new
nutrition labeling requirements under the PPACA until final regulations are promulgated. The risks and costs associated with nutritional disclosures on our menus could also impact our operations,
particularly given differences among applicable legal requirements and practices within the restaurant industry with respect to testing and disclosure, ordinary variations in food preparation among
our own restaurants, and the need to rely on the accuracy and completeness of nutritional information obtained from third-party suppliers.
We
may not be able to effectively respond to changes in consumer health perceptions or our ability to successfully implement the nutrient content disclosure requirements and to adapt our menu
offerings to trends in eating habits. The imposition of menu labeling laws could materially adversely affect our business, financial condition and results of operations, as well as our position within
the restaurant industry in general.
Food safety and foodborne illness concerns could have an adverse effect on our business.
We cannot guarantee that our internal controls and training will be fully effective in preventing all food safety issues at our restaurants, including
any occurrences of foodborne illnesses such as salmonella, E. coli and hepatitis A. Our quality assurance, health and sanitation internal controls and conditions are inspected by a third-party on a
quarterly basis. If the third-party inspector fails to report unsafe or unsanitary conditions or insufficient internal controls, we cannot guarantee that our internal controls will be fully effective
in preventing all food safety issues. In addition, there is no guarantee that our franchise restaurants will maintain the high levels of internal controls and training we require at our Company-owned
restaurants. Furthermore, we and our franchisees rely on third-party vendors, making it difficult to monitor food safety compliance and increasing the risk that foodborne illness would affect multiple
locations rather than a single restaurant. Some foodborne illness incidents could be caused by third-party vendors and transporters outside of our control. New illnesses resistant to our current
precautions may develop in the future, or diseases with long incubation periods could arise, that could give rise to claims or allegations on a retroactive basis. One or more instances of foodborne
illness in any of our restaurants or markets or related to food products we sell could negatively affect our restaurant sales nationwide if highly publicized on national media outlets or through
social media. This risk exists even if it were later determined that the
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illness
was wrongly attributed to us or one of our restaurants. A number of other restaurant chains have experienced incidents related to foodborne illnesses that have had a material adverse effect on
their operations. The occurrence of a similar incident at one or more of our restaurants, or negative publicity or public speculation about an incident, could materially adversely affect our business,
financial condition and results of operations.
Compliance with environmental laws may negatively affect our business.
We are subject to federal, state and local laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence,
discharge, storage, handling, release and disposal of, and exposure to, hazardous or toxic substances. These environmental laws provide for significant fines and penalties for noncompliance and
liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of hazardous toxic substances. Third
parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such hazardous or toxic
substances at, on or from our restaurants. Environmental conditions relating to releases of hazardous substances at prior, existing or future restaurant sites could materially adversely affect our
business, financial condition and results of operations. Further, environmental laws, and the administration, interpretation and enforcement thereof, are subject to change and may become more
stringent in the future, each of which could materially adversely affect our business, financial condition and results of operations.
We rely heavily on certain vendors, suppliers and distributors, which could adversely affect our business.
Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products
and supplies in sufficient quantities from third-party vendors, suppliers and distributors at a reasonable cost. We use a limited number of suppliers and distributors in various geographical areas,
particularly with respect to our fresh food products. We also rely on Sysco Corporation as one of our primary distributors, who supplied us with approximately 62% of our food supplies in 2013. We do
not control the businesses of our vendors, suppliers and distributors, and our efforts to specify and monitor the standards under which they perform may not be successful. Furthermore, certain food
items are perishable, and we have limited control over whether these items will be delivered to us in appropriate condition for use in our restaurants. If any of our vendors or other suppliers are
unable to fulfill their obligations to our standards, or if we are unable to find replacement providers in the event of a supply or service disruption, we could encounter supply shortages and incur
higher costs to secure adequate supplies, which could materially adversely affect our business, financial condition and results of operations.
In
addition, we use various third-party vendors to provide, support and maintain most of our management information systems. We also outsource certain accounting, payroll and human resource functions
to business process service providers. The failure of such vendors to fulfill their obligations could disrupt our operations. Additionally, any changes we may make to the services we obtain from our
vendors, or new vendors we employ, may disrupt our operations. These disruptions could materially adversely affect our business, financial condition and results of operations.
Changes in food and supply costs or failure to receive frequent deliveries of fresh food ingredients and other supplies could adversely affect our business, financial
condition or results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, and our ability to maintain our menu
depends in part on our ability to acquire ingredients that meet our specifications from reliable suppliers. Our menu offerings rely on local suppliers to provide fresh foods. Shortages or
interruptions in the availability of certain supplies caused by unanticipated demand, problems in production or distribution, food contamination, inclement weather or other conditions could adversely
affect the availability, quality and cost of our ingredients, which could harm our operations. Any increase in the prices of the food products most critical to our menu, such as fresh produce, feta
cheese and chicken, could adversely affect our operating results. Although we try to manage the impact that these fluctuations
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have
on our operating results, we remain susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather
conditions, demand, food safety concerns, generalized infectious diseases, product recalls and government regulations. For example, higher diesel prices have in some cases resulted in the imposition
of surcharges on the delivery of commodities to our distributors, which they have generally passed on to us to the extent permitted under our arrangements with them.
If
any of our distributors or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or
cash flows could be adversely affected. Although we often enter into contracts for the purchase of food products and supplies, we do not have long-term contracts for the purchase of all of such food
products and supplies. As a result, we may not be able to anticipate or react to changing food costs by adjusting our purchasing practices or menu prices, which could cause our operating results to
deteriorate. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other
items at our restaurants, which could cause a restaurant to remove items from its menu. If that were to happen, affected restaurants could experience significant reductions in sales during the
shortage or thereafter, if customers change their dining habits as a result. Our focus on a limited menu would make the consequences of a shortage
of a key ingredient more severe. In addition, because we provide moderately priced food, we may choose not to, or may be unable to, pass along commodity price increases to consumers. These potential
changes in food and supply costs could materially adversely affect our business, financial condition and results of operations.
The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly
increase our healthcare costs and negatively impact our financial results.
In 2010, the PPACA was signed into law in the United States to require health care coverage for many uninsured individuals and expand coverage to
those already insured. We currently offer and subsidize a portion of comprehensive healthcare coverage, primarily for our salaried employees. The healthcare reform law will require us to offer
healthcare benefits to all full-time employees (including full-time hourly employees) that meet certain minimum requirements of coverage and affordability, or face penalties. If we elect to offer such
benefits we may incur substantial additional expense. If we fail to offer such benefits, or the benefits we elect to offer do not meet the applicable requirements, we may incur penalties. The
healthcare reform law also requires individuals to obtain coverage or face individual penalties, so employees who are currently eligible but elect not to participate in our healthcare plans may find
it more advantageous to do so when such individual mandates take effect. It is also possible that by making changes or failing to make changes in the healthcare plans offered by us we will become less
competitive in the market for our labor. Finally, implementing the requirements of healthcare reform is likely to impose additional administrative costs. The costs and other effects of these new
healthcare requirements cannot be determined with certainty, but they may significantly increase our healthcare coverage costs and could materially adversely affect our, business, financial condition
and results of operations.
Changes in employment laws may adversely affect our business.
Various federal and state labor laws govern the relationship with our employees and affect operating costs. These laws include employee classification
as exempt/non-exempt for overtime and other purposes, minimum wage requirements, unemployment tax rates, workers' compensation rates, immigration status and other wage and benefit requirements.
Significant additional government-imposed increases in the following areas could materially affect our business, financial condition, operating results or cash flow:
•
minimum wages;
•
mandatory health benefits;
•
vacation accruals;
•
paid leaves of absence, including paid sick leave; and
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•
tax reporting.
In
addition, various states in which we operate are considering or have already adopted new immigration laws or enforcement programs, and the U.S. Congress and Department of Homeland Security from
time to time consider and may implement changes to federal immigration laws, regulations or enforcement programs as well. Some of these changes may increase our obligations for compliance and
oversight, which could subject us to additional costs and make our hiring process more cumbersome, or reduce the availability of potential employees. Although we require all workers to provide us with
government-specified documentation evidencing their employment eligibility, some of our employees may, without our knowledge, be unauthorized workers. We currently participate in the "E-Verify"
program, an Internet-based, free program run by the United States government to verify employment eligibility, in states in which participation is required. However, use of the "E-Verify" program does
not guarantee that we will properly identify all applicants who are ineligible for employment. Unauthorized workers are subject to deportation and may subject us to fines or penalties, and if any of
our workers are found to be unauthorized we could experience adverse publicity that negatively impacts our brand and may make it more difficult to hire and keep qualified employees. Termination of a
significant number of employees who were unauthorized employees may disrupt our operations, cause temporary increases in our labor costs as we train new employees and result in additional adverse
publicity. We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration
compliance laws. These factors could materially adversely affect our business, financial condition and results of operations.
Unionization activities or labor disputes may disrupt our operations and affect our profitability.
Although none of our employees are currently covered under collective bargaining agreements, our employees may elect to be represented by labor unions
in the future. If a significant number of our employees were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements, it
could adversely affect our business, financial condition and results of operations. In addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations
and reduce our revenues, and resolution of disputes may increase our costs.
As
an employer, we may be subject to various employment-related claims, such as individual or class actions or government enforcement actions relating to alleged employment discrimination, employee
classification and related withholding, wage-hour, labor standards or healthcare and benefit issues. Such actions, if brought against us and successful in whole or in part, may affect our ability to
compete or could materially adversely affect our business, financial condition and results of operations.
If we face labor shortages or increased labor costs, our growth and operating results could be adversely affected.
Labor is a primary component in the cost of operating our restaurants. If we face labor shortages or increased labor costs because of increased
competition for employees, higher employee turnover rates, increases in the federal, state or local minimum wage or other employee benefits costs (including costs associated with health insurance
coverage), our operating expenses could increase and our growth could be adversely affected. In addition, our growth depends in part upon our ability to attract, motivate and retain a sufficient
number of well-qualified restaurant operators and management personnel, as well as a sufficient number of other qualified employees, including customer service and kitchen staff, to keep pace with our
expansion schedule. Qualified individuals needed to fill these positions are in short supply in some geographic areas. In addition, restaurants have traditionally experienced relatively high employee
turnover rates. Although we have not yet experienced significant problems in recruiting or retaining employees, our ability to recruit and retain such individuals may delay the planned openings of new
restaurants or result in higher employee turnover in existing restaurants, which could have a material adverse effect on our business, financial condition and results of operations.
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If
we are unable to continue to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected. Competition for these employees could require us to pay
higher wages, which could result in higher labor costs. In addition, some of our employees are paid at rates related to the U.S. federal minimum wage, and increases in the minimum wage would increase
our labor costs. Further, costs associated with workers' compensation are rising, and these costs may continue to rise in the future. We may be unable to increase our menu prices in order to pass
these increased labor costs on to consumers, in which case our margins would be negatively affected, which could materially adversely affect our business, financial condition and results of
operations.
We depend on the services of key executives, the loss of which could materially harm our business.
Our senior executives have been instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key
personnel, identifying expansion opportunities and arranging necessary financing. Losing the services of any of these individuals could materially adversely affect our business until a suitable
replacement is found. We believe that these individuals cannot easily be replaced with executives of equal experience and capabilities. We also do not maintain any key man life insurance policies for
any of our employees.
Health concerns arising from outbreaks of viruses may have an adverse effect on our business.
The United States and other countries have experienced, or may experience in the future, outbreaks of neurological diseases or other diseases or
viruses, such as norovirus, influenza and H1N1. If a virus is transmitted by human contact, our employees or customers could become infected, or could choose, or be advised, to avoid gathering in
public places, any one of which could materially adversely affect our business, financial condition and results of operations.
Our indebtedness may limit our ability to invest in the ongoing needs of our business and if we are unable to comply with our financial covenants, our liquidity and results
of operations could be adversely affected.
We have an existing credit agreement with a commercial finance company that includes a term loan (the "Term Loan") and line of credit (the "Line of
Credit" and together with the Term Loan, the "Credit Facility"), which are collateralized by a first-priority interest in, among other things, our accounts receivable, general intangibles, inventory,
equipment, furniture and fixtures. As of February 24, 2014, we had $46.8 million of outstanding indebtedness under our Credit Facility. We intend to use a portion of the net proceeds
from this offering to repay the entire amount of the outstanding borrowings under our Credit Facility. In the future, we may, from time to time, incur additional indebtedness under our Line of Credit.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility."
Our
Credit Facility places certain conditions on us, including that it:
•
requires us to utilize a substantial portion of our cash flow from
operations after certain capital expenditures to make payments on our indebtedness, reducing the availability of our cash flow to fund working capital, capital expenditures, development activity and
other general corporate purposes;
•
increases our vulnerability to adverse general economic or industry
conditions;
•
limits our flexibility in planning for, or reacting to, changes in our
business or the industries in which we operate;
•
makes us more vulnerable to increases in interest rates, as borrowings under
our Credit Facility are at variable rates;
•
limits our ability to obtain additional financing in the future for working
capital or other purposes; and
•
places us at a competitive disadvantage compared to our competitors that
have less indebtedness.
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Our
Credit Facility places certain limitations on our ability to incur additional indebtedness. However, subject to the qualifications and exceptions in our Credit Facility, we may incur substantial
additional indebtedness, including under our Line of Credit, and may incur obligations that do not constitute indebtedness under that facility. The Credit Facility also places certain limitations on,
among other things, our ability to enter into certain types of transactions, financing arrangements and investments, to make certain changes to our capital structure and to guarantee certain
indebtedness. The Credit Facility also places certain restrictions on the payment of dividends and distributions and certain management fees. These restrictions limit or prohibit, among other things,
our ability to:
•
pay dividends on, redeem or repurchase our stock or make other
distributions;
•
incur or guarantee additional indebtedness;
•
sell stock in our subsidiaries;
•
create or incur liens;
•
make acquisitions or investments;
•
transfer or sell certain assets or merge or consolidate with or into other
companies;
•
make certain payments or prepayments of indebtedness subordinated to our
obligations under our Credit Facility; and
•
enter into certain transactions with our affiliates.
Failure
to comply with certain covenants or the occurrence of a change of control under our Credit Facility could result in the acceleration of our obligations under the Credit Facility, which would
have an adverse effect on our liquidity, capital resources and results of operations.
Our
Credit Facility also requires us to comply with certain financial covenants regarding our capital expenditures, fixed charge coverage ratio and effective leverage ratio. Changes with respect to
these financial covenants may increase our interest rate and failure to comply with these covenants could result in a default and an acceleration of our obligations under the Credit Facility, which
would have an adverse effect on our liquidity, capital resources and results of operations. Upon the receipt of funds from this offering, we will be required to apply 50% of the proceeds of the
offering, net of underwriting discounts and costs and expenses incurred in connection with this offering, to repay the Term Loan and Line of Credit. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facility."
We expect to need capital in the future, and we may not be able to generate sufficient cash flow or raise capital on acceptable terms to meet our needs.
Developing our business will require significant capital in the future. To meet our capital needs, we expect to rely on our cash flow from operations,
the proceeds from this offering, our Line of Credit under our Credit Facility and other third-party financing. Third-party financing in the future may not, however, be available on terms favorable to
us, or at all. Our ability to obtain additional funding will be subject to various factors, including general market conditions, our operating performance, the market's perception of our growth
potential, lender sentiment and our ability to incur additional debt in compliance with other contractual restrictions, such as financial covenants under our Credit Facility or other debt documents.
Additionally,
our ability to make payments on and to refinance our indebtedness and to fund planned expenditures for our growth plans will depend on our ability to generate cash in the future. If our
business does not achieve the
levels of profitability or generate the amount of cash that we anticipate or if we expand faster than anticipated, we may need to seek additional debt or equity financing to operate and expand our
business.
We
believe that cash and cash equivalents, expected cash flow from operations and planned borrowing capacity are adequate to fund debt service requirements, operating lease obligations, capital
expenditures and working capital obligations for the next 13 periods. However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to
achieve anticipated levels of
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revenue
and cash flow from operations and our ability to manage costs and working capital successfully. Additionally, our cash flow generation ability is subject to general economic, financial,
competitive, legislative and regulatory factors and other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations in an amount sufficient to
enable us to fund our liquidity needs. Further, our capital requirements may vary materially from those currently planned if, for example, our revenues do not reach expected levels or we have to incur
unforeseen capital expenditures and make investments to maintain our competitive position. If this is the case, we may seek alternative financing, such as restructuring or refinancing our existing
Credit Facility or selling additional debt or equity securities, and we cannot assure you that we will be able to do so on favorable terms, if at all. Moreover, if we issue new debt securities, the
debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common
stock. If we issue additional equity securities, existing stockholders may experience dilution, and the new equity securities could have rights senior to those of our common stock. These factors may
make the timing, amount, terms and conditions of additional financings unattractive. Our inability to raise capital could impede our growth or otherwise require us to forego growth opportunities and
could materially adversely affect our business, financial condition and results of operations.
Our marketing programs may not be successful.
We believe our brand is critical to our business. We incur costs and expend other resources in our marketing efforts to raise brand awareness and
attract and retain customers. These initiatives may not be successful, resulting in expenses incurred without the benefit of higher revenues. Additionally, some of our competitors have greater
financial resources, which enable them to spend significantly more than we are able to on marketing and advertising. Should our competitors increase spending on marketing and advertising or our
marketing funds decrease for any reason, or should our advertising and promotions be less effective than our competitors, there could be a material adverse effect on our results of operations and
financial condition.
We have limited control over our franchisees, and our franchisees could take actions that could harm our business.
Franchisees are independent contractors and are not our employees, and we do not exercise control over their day-to-day operations. We provide
training and support to franchisees, but the quality of franchised restaurant operations may be diminished by any number of factors beyond our control. We cannot be certain that our franchisees will
have the business acumen or financial resources necessary to operate successful franchises in their franchise areas in a manner consistent with our standards and requirements, or that they will hire
and train qualified managers and other restaurant personnel. If franchisees do not meet our standards and requirements, our image and reputation, and the image and reputation of other franchisees, may
suffer materially and system-wide sales could decline significantly. State franchise laws may limit our ability to terminate or modify these franchise arrangements.
Franchisees,
as independent business operators, may from time to time disagree with us and our strategies regarding the business or our interpretation of our, and their, rights and obligations under
franchise and development agreements. This may lead to disputes with our franchisees in the future. These disputes may divert the attention of our management and our franchisees from operating our
restaurants and affect our image and reputation and our ability to attract franchisees in the future, which could materially adversely affect our business, financial condition and results of
operations.
We
and our franchisees are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud and any failure or
perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition.
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A franchisee bankruptcy could have a substantial negative impact on our ability to collect payments due under such franchisee's franchise arrangements. In a franchisee
bankruptcy, the bankruptcy trustee may reject its franchise arrangements pursuant to Section 365 under the United States bankruptcy code, in which case there would be no further royalty
payments from such franchisee, and there can be no assurance as to the proceeds, if any, that may ultimately be recovered in a bankruptcy proceeding of such franchisee in connection with a damage
claim resulting from such rejection.
We are subject to all of the risks associated with leasing space subject to long-term non-cancelable leases.
We do not own any real property. Payments under our operating leases account for a significant portion of our operating expenses and we expect the new
restaurants we open in the future will similarly be leased. Our leases generally have an initial term of ten years and generally include two five-year renewal options at increased rates. All of our
leases require a fixed annual rent, although some require the payment of additional rent if restaurant sales exceed a negotiated amount. Generally, our leases are "net" leases, which require us to pay
all of the cost of insurance, taxes, maintenance and utilities. We generally cannot cancel these leases. Additional sites that we lease are likely to be subject to similar long-term non-cancelable
leases. If an existing or future restaurant is not profitable, and we decide to close it, we may nonetheless be committed to
perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, as each of our leases expires, we may fail to
negotiate renewals, either on commercially acceptable terms or at all, which could cause us to pay increased occupancy costs or to close restaurants in desirable locations. These potential increased
occupancy costs and closed restaurants could materially adversely affect our business, financial condition and results of operations.
The impact of negative economic factors, including the availability of credit, on our landlords and surrounding tenants could negatively affect our financial results.
Negative effects on our existing and potential landlords due to the inaccessibility of credit and other unfavorable economic factors may, in turn,
adversely affect our business and results of operations. If our landlords are unable to obtain financing or remain in good standing under their existing financing arrangements, they may be unable to
provide construction contributions or satisfy other lease covenants to us. In addition, if our landlords are unable to obtain sufficient credit to continue to properly manage their retail sites, we
may experience a drop in the level of quality of such retail centers. Our development of new restaurants may also be adversely affected by the negative financial situations of developers and potential
landlords. Landlords may try to delay or cancel recent development projects (as well as renovations of existing projects) due to the instability in the credit markets and recent declines in consumer
spending, which could reduce the number of appropriate locations available that we would consider for our new restaurants. Furthermore, the failure of landlords to obtain licenses or permits for
development projects on a timely basis, which is beyond our control, may negatively impact our ability to implement our development plan.
We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business.
Our intellectual property is material to the conduct of our business. Our ability to implement our business plan successfully depends in part on our
ability to further build brand recognition using our trademarks, service marks, trade dress and other proprietary intellectual property, including our name and logos and the unique ambience of our
restaurants. While it is our policy to protect and defend vigorously our rights to our intellectual property, we cannot predict whether steps taken by us to protect our intellectual property rights
will be adequate to prevent misappropriation of these rights or the use by others of restaurant features based upon, or otherwise similar to, our concept. It may be difficult for us to prevent others
from copying elements of our concept and any litigation to enforce our rights will likely be costly and may not be successful. Although we believe that we have sufficient rights to all of our
trademarks and service marks,
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we
may face claims of infringement that could interfere with our ability to market our restaurants and promote our brand. Any such litigation may be costly and divert resources from our business.
Moreover, if we are unable to successfully defend against such claims, we may be prevented from using our trademarks or service marks in the future and may be liable for damages, which in turn could
materially adversely affect our business, financial condition and results of operations.
We
also rely on trade secrets and proprietary know-how to protect our brand. Our methods of safeguarding this information may not be adequate. Moreover, we may face claims of misappropriation or
infringement of third parties' rights that could interfere with our use of this information. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use this
proprietary information in the future and may result in a judgment or monetary damages. We do maintain confidentiality agreements with all of our team members and most of our suppliers. Even with
respect to the confidentiality agreements we have, we cannot assure you that those agreements will not be breached, that they will provide meaningful protection, or that adequate remedies will be
available in the event of an unauthorized use or disclosure of our proprietary information. If competitors independently develop or otherwise obtain access to our trade secrets or proprietary
know-how, the appeal of our restaurants could be reduced and our business could be harmed.
We may incur costs resulting from breaches of security of confidential consumer information related to our electronic processing of credit and debit card transactions.
The majority of our restaurant sales are by credit or debit cards. Other restaurants and retailers have experienced security breaches in which credit
and debit card information has been stolen. We may in the future become subject to claims for purportedly fraudulent transactions arising out of the actual or alleged theft of credit or debit card
information, and we may also be subject to lawsuits or other proceedings relating to these types of incidents. In addition, most states have enacted legislation requiring notification of security
breaches involving personal information, including credit and debit card information. Any such claim or proceeding could cause us to incur significant unplanned expenses, which could have an adverse
impact on our financial condition and results of operations. Further, adverse publicity resulting from these allegations may have a material adverse effect on us and our restaurants.
We rely heavily on information technology, and any material failure, weakness, interruption or breach of security could prevent us from effectively operating our business.
We rely heavily on information systems, including point-of-sale processing in our restaurants, for management of our supply chain, payment of
obligations, collection of cash, credit and debit card transactions and other processes and procedures. Our ability to efficiently and effectively manage our business depends significantly on the
reliability and capacity of these systems. Our operations depend upon our ability to protect our computer equipment and systems against damage from physical theft, fire, power loss, telecommunications
failure or other catastrophic events, as well as from internal and external security breaches, viruses and other disruptive problems. The failure of these systems to operate effectively, maintenance
problems, upgrading or transitioning to new platforms, expanding our systems as we grow or a breach in security of these systems could result in delays in customer service and reduce efficiency in our
operations. Remediation of such problems could result in significant, unplanned capital investments.
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Changes to estimates related to our property, fixtures and equipment or operating results that are lower than our current estimates at certain restaurant locations may cause
us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations.
In accordance with accounting guidance as it relates to the impairment of long-lived assets, we make certain estimates and projections with regard to
individual restaurant operations, as well as our overall performance, in connection with our impairment analyses for long-lived assets. When impairment triggers are deemed to exist for any location,
the estimated undiscounted future cash flows are compared to its carrying value. If the carrying value exceeds the undiscounted cash flows, an impairment charge equal to the difference between the
carrying value and the fair value is recorded. The projections of future cash flows used in these analyses require the use of judgment and a number of estimates and projections of future operating
results. If actual results differ from our estimates, additional charges for asset impairments may be required in the future. If future impairment charges are significant, our reported operating
results would be adversely affected.
We could be party to litigation that could adversely affect us by distracting management, increasing our expenses or subjecting us to material money damages and other
remedies.
Our customers occasionally file complaints or lawsuits against us alleging we caused an illness or injury they suffered at or after a visit to our
restaurants, or that we have problems with food quality or operations. We are also subject to a variety of other claims arising in the ordinary course of our business, including personal injury
claims, contract claims and claims alleging violations of federal and state law regarding workplace and employment matters, equal opportunity, harassment, discrimination and similar matters, and we
could become subject to class action or other lawsuits related to these or different matters in the future. In recent years, a number of restaurant companies have been subject to such claims, and some
of these lawsuits have resulted in the payment of substantial damages by the defendants. Regardless of whether any claims against us are valid, or whether we are ultimately held liable, claims may be
expensive to defend and may divert time and money away from our operations and hurt our performance. A judgment in excess of our insurance coverage for any claims could materially and adversely affect
our financial condition and results of operations. Any adverse publicity resulting from these allegations may also materially and adversely affect our reputation or prospects, which in turn could
materially adversely affect our business, financial condition and results of operations.
We
are subject to state and local "dram shop" statutes, which may subject us to uninsured liabilities. These statutes generally allow a person injured by an intoxicated person to recover damages from
an establishment that wrongfully served alcoholic beverages to the intoxicated person. Because a plaintiff may seek punitive damages, which may not be fully covered by insurance, this type of action
could have an adverse impact on our financial condition and results of operations. A judgment in such an action significantly in excess of, or not covered by, our insurance coverage could adversely
affect our business, financial condition and results of operations. Further, adverse publicity resulting from any such allegations may adversely affect us and our restaurants taken as a whole.
In
addition, the restaurant industry has been subject to a growing number of claims based on the nutritional content of food products sold and disclosure and advertising practices. We may also be
subject to this type of proceeding in the future and, even if we are not, publicity about these matters (particularly directed at the quick-service or fast casual segments of the industry) may harm
our reputation and could materially adversely affect our business, financial condition and results of operations.
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Our current insurance may not provide adequate levels of coverage against claims.
Our current insurance policies may not be adequate to protect us from liabilities that we incur in our business. Additionally, in the future, our
insurance premiums may increase, and we may not be able to obtain similar levels of insurance on reasonable terms, or at all. Any substantial inadequacy of, or inability to obtain insurance coverage
could materially adversely affect our business, financial condition and results of operations.
Furthermore,
there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such losses could have a material adverse effect on our
business and results of operations. As a public company, we intend to enhance our existing directors' and officers' insurance. While we expect to obtain such coverage, we may not be able to obtain
such coverage at all or at a reasonable cost now or in the future. Failure to obtain and maintain adequate directors' and officers' insurance would likely adversely affect our ability to attract and
retain qualified officers and directors.
Failure to obtain and maintain required licenses and permits or to comply with alcoholic beverage or food control regulations could lead to the loss of our liquor and food
service licenses and, thereby, harm our business.
The restaurant industry is subject to various federal, state and local government regulations, including those relating to the sale of food and
alcoholic beverages. Such regulations are subject to change from time to time. The failure to obtain and maintain these licenses, permits and approvals could adversely affect our operating results.
Typically, licenses must be renewed annually and may be revoked, suspended or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable
regulations. Difficulties or failure to maintain or obtain the required licenses and approvals could adversely affect our existing restaurants and delay or result in our decision to cancel the opening
of new restaurants, which would adversely affect our business.
Alcoholic
beverage control regulations generally require our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license that must be renewed
annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of daily operations of our restaurants, including minimum age of
patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with alcohol manufacturers, wholesalers and distributors, inventory control and
handling, storage and dispensing of alcoholic beverages. Any future failure to comply with these regulations and obtain or retain licenses could adversely affect our business, financial condition and
results of operations.
Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our
business and stock price.
We
are not currently required to comply with the rules of the SEC implementing Section 404 of the Sarbanes-Oxley Act and therefore are not required to make a formal assessment of the
effectiveness of our internal control over financial reporting for that purpose. Upon becoming a publicly traded company, we will be required to comply with the SEC's rules implementing
Section 302 and 404 of the Sarbanes-Oxley Act, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management
report on the effectiveness of controls over financial reporting. Though we will be required to disclose changes made in our internal controls and procedures on a quarterly basis, we will not be
required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the year following our first annual report required to be filed with
the SEC. Pursuant to the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until the
later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company, which may be up to five full fiscal years following this
offering.
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To
comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring additional accounting or
internal audit staff. In addition, we may identify material weaknesses in our internal control over financial reporting that we may not be able to remediate in time to meet the applicable deadline
imposed upon us for compliance with the requirements of Section 404. In connection with the audit of our financial statements for the year ended December 30, 2013, we identified material
weaknesses related to a lack of adequate information technology policies and procedures, sufficient accounting resources and segregation of duties, which we believe we have adequately remediated, and
a lack of adequate accounting policies and procedures, for which we are continuing to take the necessary steps to remediate.
If
we identify additional weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 in a timely manner or to assert that our
internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over
financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become
subject to investigations by the New York Stock Exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
Changes to accounting rules or regulations may adversely affect our results of operations.
Changes to existing accounting rules or regulations may impact our future results of operations or cause the perception that we are more highly
leveraged. Other new accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. For instance, accounting
regulatory authorities have indicated that they may begin to require lessees to capitalize operating leases in their financial statements in the next few years. If adopted, such change would require
us to record significant capital lease obligations on our balance sheet and make other changes to our financial statements. This and other future changes to accounting rules or regulations could
materially adversely affect our business, financial condition and results of operations.
We spend significant resources in developing new product offerings, some of which may not be successful.
We invest in continually developing new potential product offerings as well as in marketing and advertising our new products. Our new product
offerings may not be well-received by consumers and may not be successful, which could materially adversely affect our results of operations.
Risks Related to Ownership of Our Common Stock
There is no existing market for our common stock, and we do not know if one will develop. Even if a market does develop, the stock prices in the market may not exceed the
offering price.
Prior to this offering, there has not been a public market for our common stock or any of our equity interests. We cannot predict the extent to which
investor interest in our company will lead to the development of an active trading market on the New York Stock Exchange, or how liquid that market may become. An active public market for our common
stock may not develop or be sustained after the offering. If an active trading market does not develop or is not sustained, you may have difficulty selling any shares that you buy.
The
initial public offering price for the common stock will be determined by negotiations among us and the representatives of the underwriters and may not be indicative of prices that will prevail in
the open market following this offering. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price you pay in this offering.
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Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors,
some of which are beyond our control, resulting in a decline in our stock price.
Our quarterly operating results may fluctuate significantly because of several factors, including:
•
the timing of new restaurant openings and related expenses;
•
restaurant operating costs for our newly-opened restaurants, which are often
materially greater during the first several months of operation than thereafter;
•
labor availability and costs for hourly and management personnel;
•
profitability of our restaurants, especially in new markets;
•
changes in interest rates;
•
increases and decreases in AUVs and comparable restaurant sales;
•
impairment of long-lived assets and any loss on restaurant closures;
•
macroeconomic conditions, both nationally and locally;
•
negative publicity relating to the consumption of seafood or other products
we serve;
•
changes in consumer preferences and competitive conditions;
•
expansion to new markets;
•
increases in infrastructure costs; and
•
fluctuations in commodity prices.
Seasonal
factors and the timing of holidays also cause our revenue to fluctuate from quarter to quarter. Our revenue per restaurant is typically lower in the first and fourth quarters due to reduced
winter and holiday traffic and higher in the second and third quarters. As a result of these factors, our quarterly and annual operating
results and comparable restaurant sales may fluctuate significantly. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any
year and comparable restaurant sales for any particular future period may decrease. In the future, operating results may fall below the expectations of securities analysts and investors. In that
event, the price of our common stock would likely decrease.
The price of our common stock may be volatile and you may lose all or part of your investment.
The market price of our common stock could fluctuate significantly, and you may not be able to resell your shares at or above the offering price.
Those fluctuations could be based on various factors in addition to those otherwise described in this prospectus, including those described under "—Risks Related to Our Business and
Industry" and the following:
•
our operating performance and the performance of our competitors or
restaurant companies in general;
•
the public's reaction to our press releases, our other public announcements
and our filings with the SEC;
•
changes in earnings estimates or recommendations by research analysts who
follow us or other companies in our industry;
•
global, national or local economic, legal and regulatory factors unrelated
to our performance;
•
the number of shares to be publicly traded after this offering;
•
future sales of our common stock by our officers, directors and significant
stockholders;
•
the arrival or departure of key personnel; and
•
other developments affecting us, our industry or our competitors.
In
addition, in recent years the stock market has experienced significant price and volume fluctuations. These fluctuations may be unrelated to the operating performance of particular companies. These
broad market fluctuations may cause declines in the market price of our common stock. The price of our common
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stock
could fluctuate based upon factors that have little or nothing to do with our business, financial condition and results of operations, and those fluctuations could materially reduce our common
stock price.
As
we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products. In the past, securities class action litigation has often
been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources,
and could also require us to make substantial payments to satisfy judgments or to settle litigation.
Future sales of our common stock, or the perception that such sales may occur, could depress our common stock price.
We, our officers, directors and holders of all or substantially all our outstanding capital stock have agreed, subject to specified exceptions, not to
directly or indirectly:
•
sell, offer, contract or grant any option to sell (including any short
sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-l(h) under the Exchange Act, or
•
otherwise dispose of any shares of common stock, options or warrants to
acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock currently or hereafter owned either of record or beneficially, or
•
publicly announce an intention to do any of the foregoing for a period of
180 days after the date of this prospectus without the prior written consent of Jefferies LLC and Piper Jaffray & Co.
This
restriction terminates after the close of trading of the common stock on and including the 180
th
day after the date of this prospectus.
Our
amended and restated certificate of incorporation authorizes us to issue up to               shares of common stock, of
which               shares will be outstanding and               
shares will be issuable upon the exercise of stock options to be issued to certain officers, directors, employees and consultants with an exercise price equal to the initial public offering price. Of
the outstanding shares,                             shares will be freely tradable after the expiration
date of the lock-up agreements, excluding any shares acquired by persons who may be deemed to be our
affiliates. Shares of our common stock held by our affiliates will continue to be subject to the volume and other restrictions of Rule 144 under the Securities Act ("Rule 144"), as
amended. Jefferies LLC and Piper Jaffray & Co., on behalf of the underwriters may, in their sole discretion and at any time without notice, release all or any portion of the shares
subject to the lock-up. See "Underwriting."
In
addition, immediately following this offering, we intend to file a registration statement registering under the Securities Act the shares of common stock reserved for issuance under our 2014
Omnibus Incentive Plan. See the information under the heading "Shares Eligible for Future Sale" for a more detailed description of the shares that will be available for future sales upon completion of
this offering.
In
the future, we may also issue common stock or other securities if we need to raise additional capital. The number of new shares of our common stock issued in connection with raising additional
capital could constitute a material portion of the then outstanding shares of our common stock.
If you purchase shares of our common stock sold in this offering, you will incur immediate and substantial dilution.
If you purchase shares of our common stock in this offering, you will incur immediate and substantial dilution in the amount of $               per
share because the initial public offering price of $               , which represents the midpoint of the estimated offering price range set forth on the cover page of this
prospectus, is
substantially higher than the pro forma as adjusted net tangible book value per share of our outstanding common stock. This dilution is due in large part to the fact that our earlier investors paid
substantially less than the initial public offering price when they purchased their shares. In addition, you may also experience
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additional
dilution upon future equity issuances or the exercise of stock options to purchase common stock granted to our employees, and directors under our stock option and equity incentive plans.
See "Dilution."
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could
decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our
business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our Company, the trading price
for our common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrades our common stock or publishes
inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand
for our common stock could decrease, which could cause our stock prices and trading volume to decline.
Our principal stockholders and their affiliates own a substantial portion of our outstanding equity, and their interests may not always coincide with the interests of the
other holders.
Immediately following the consummation of this offering, assuming our initial offering price of $          per share, which is the midpoint of
the estimated offering price range set forth on the cover page of this prospectus, Brentwood will own approximately          % of our common stock,
or          % if the underwriters'
option to purchase additional shares of our common stock is exercised in full. As a result, Brentwood could potentially have significant influence over all matters presented to our stockholders for
approval, including election and removal of our directors, change in control transactions and the outcome of all actions requiring a majority stockholder approval.
In
addition, persons associated with Brentwood currently serve on our Board of Directors. Following this offering, the interests of Brentwood may not always coincide with the interests of the other
holders of our common stock, and the concentration of control in Brentwood will limit other stockholders' ability to influence corporate matters. The concentration of ownership and voting power of
Brentwood may also delay, defer or even prevent an acquisition by a third party or other change of control of our Company and may make some transactions more difficult or impossible without their
support, even if such events are in the best interests of our other stockholders. Therefore, the concentration of voting power among Brentwood may have an adverse effect on the price of our common
stock. Our Company may also take actions that our other stockholders do not view as beneficial, which may adversely affect our results of operations and financial condition and cause the value of your
investment to decline.
We do not intend to pay dividends for the foreseeable future.
We may retain future earnings, if any, for future operations, expansion and debt repayment and have no current plans to pay any cash dividends for the
foreseeable future. Any future determination to declare and pay cash dividends will be at the discretion of our Board of Directors and will depend on, among other things, our financial condition,
results of operations, cash requirements, contractual restrictions and such other factors as our Board of Directors deems relevant. In addition, our Credit Facility restricts our ability to pay
dividends. Our ability to pay dividends may also be limited by covenants of any future outstanding indebtedness we or our subsidiaries incur. As a result, you may not receive any return on an
investment in our common stock unless you sell our common stock for a price greater than that which you paid for it. See "Dividend Policy."
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Provisions in our charter documents and Delaware law may delay or prevent our acquisition by a third party, even if the acquisition would be beneficial to our stockholders,
and could make it more difficult for you to change our management.
Our amended and restated certificate of incorporation and bylaws that will be in effect immediately prior to the completion of this offering, and
Delaware law, contain several provisions that may make it more difficult for a third party to acquire control of us without the approval of our Board of Directors. For example, we will have a
classified Board of Directors with three-year staggered terms, which could delay the ability of stockholders to change membership of a majority of our Board of Directors. These provisions may make it
more difficult or expensive for a third party to acquire a majority of our outstanding equity interests. These provisions also may delay, prevent or deter a merger, acquisition, tender offer, proxy
contest or other transaction that might otherwise result in our stockholders receiving a premium over the market price for their common stock. See "Description of Capital Stock."
We will incur increased costs as a result of being a public company.
As a public company, we expect to incur significant legal, accounting and other expenses that we did not incur as a private company, particularly
after we are no longer an emerging growth company as defined under the JOBS Act. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure,
including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated and to be promulgated thereunder, as well as under the Sarbanes-Oxley Act and the JOBS
Act, have created uncertainty for public companies and increased costs and time that boards of directors and management must devote to complying with these rules and regulations. The Sarbanes-Oxley
Act and related rules of the SEC and the New York Stock Exchange regulate corporate governance practices of public companies. We expect compliance with these rules and regulations to increase our
legal and financial compliance costs and lead to a diversion of management time and attention from revenue generating activities. For example, we will be required to adopt new internal controls and
disclosure controls and procedures. In addition, we will incur additional expenses associated with our SEC reporting requirements.
For
as long as we remain an emerging growth company as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not "emerging growth companies." These exceptions provide for, but are not limited to, relief from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, less extensive disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements to hold a nonbinding advisory vote on
executive compensation and stockholder approval of any golden parachute payments not previously approved and an extended transition period for complying with new or revised accounting standards. We
may take advantage of these reporting exemptions until we are no longer an "emerging growth company." We will remain an emerging growth company until the earlier of (1) the last day of the
fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and
(2) the date
on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. To the extent we use exemptions from various reporting requirements under the JOBS
Act, we may be unable to realize our anticipated cost savings from those exemptions.
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We are an emerging growth company and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be
less attractive to investors.
We are an emerging growth company, as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting
requirements applicable to other public companies, but not to emerging growth companies, including, but not limited to, an exemption from the auditor attestation requirement of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure about executive compensation arrangements pursuant to the rules applicable to smaller reporting companies and no requirement to seek non-binding advisory
votes on executive compensation or golden parachute arrangements. We have elected to adopt these reduced disclosure requirements. We may take advantage of these provisions until we are no longer an
emerging growth company. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this
offering, (b) in which we have total annual gross revenue of at least $1.0 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of
our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in
non-convertible debt during the prior three-year period.
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the
Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. However, we are choosing to "opt out" of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on
which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying
with new or revised accounting standards is irrevocable.
We
cannot predict if investors will find our common stock less attractive as a result of our taking advantage of these exemptions. If some investors find our common stock less attractive as a result
of our choices, there may be a less active trading market for our common stock and our stock price may be more volatile.
Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of
money available to us.
Our amended and restated certificate of incorporation and bylaws that will be in effect immediately prior to the completion of this offering provide
that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, we have entered and expect to continue to enter into agreements to
indemnify our directors, executive officers and other employees as determined by our Board of Directors. Upon the consummation of this offering, we will enter into indemnification agreements with our
director nominees and amended indemnification agreements with each of our directors and officers. Under the terms of such indemnification agreements, we are required to indemnify each of our directors
and officers, to the fullest extent permitted by the laws of the state of Delaware, if the basis of the indemnitee's involvement was by reason of the fact that the indemnitee is or was a director or
officer of the Company or any of its subsidiaries or was serving at the Company's request in an official capacity for another entity. We must indemnify our officers and directors against all
reasonable fees, expenses, charges and other costs of any type or nature whatsoever, including any and all expenses and obligations paid or incurred in connection with investigating, defending, being
a witness in, participating in (including on appeal), or preparing to defend, be a witness or participate in any completed, actual, pending or threatened action, suit, claim or proceeding, whether
civil, criminal, administrative or investigative, or establishing or enforcing a right to indemnification under the indemnification agreement. The indemnification agreements also require us, if so
requested, to advance within 30 days of such request all reasonable fees, expenses, charges and other costs that such director or officer incurred, provided that such person will return any
such advance if it is ultimately determined that such person is not entitled to indemnification by us. Any
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claims
for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.
Future offerings of debt securities, which would rank senior to our common stock upon our bankruptcy or liquidation, and future offerings of equity securities that may be
senior to our common stock for the purposes of dividend and liquidating distributions, may adversely affect the market price of our common stock.
In the future, we may attempt to increase our capital resources by making offerings of debt securities or additional offerings of equity securities.
Upon bankruptcy or liquidation, holders of our debt securities and shares of preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to
the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common stock, or both, and may result in future
Section 382 limitations that could reduce the rate at which we utilize our NOL carryforwards. Preferred stock, if issued, could have a preference on liquidating distributions or a preference on
dividend payments or both that could limit our ability to make a dividend distribution to the holders of our common stock. Our decision to issue securities in any future offering will depend on market
conditions and other factors beyond our control. As a result, we cannot predict or estimate the amount, timing or nature of our future offerings, and purchasers of our common stock in this offering
bear the risk of our future offerings reducing the market price of our common stock and diluting their ownership interest in our company.
We have broad discretion to use the proceeds from the offering and our investment of those proceeds may not yield favorable returns.
We intend to use $                million of the net proceeds from this offering to repay the entire amount of outstanding borrowings under our
Credit Facility. Our management has broad discretion to spend the remainder of the net proceeds from this offering and you may not agree with the way the net proceeds are spent. The failure of our
management to apply these funds effectively could result in unfavorable returns. This could adversely affect our business, causing the price of our common stock to decline.
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical
fact included in this prospectus are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations,
plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may
include words such as "aim," "anticipate," "believe," "estimate," "expect," "forecast," "outlook," "potential," "project," "projection," "plan," "intend," "seek," "may," "could," "would," "will,"
"should," "can," "can have," "likely," the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial
performance or other events. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other
things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and
uncertainties that may cause actual results to differ materially from those that we expected, including:
•
our ability to successfully execute our growth strategy and to maintain
increases in comparable restaurant sales;
•
our ability to expand into new markets;
•
changes in economic conditions, including consumer confidence and spending
patterns;
•
damage to our reputation or lack of acceptance of our brand in existing or
new markets;
•
ability to rely on key third-party vendors, suppliers and distributors;
•
price and availability of key ingredients;
•
labor shortages and increases in our labor costs, including as a result of
changes in government regulation;
•
change in consumer tastes and the level of acceptance of the company's
restaurant concept;
•
increased competition in the restaurant industry;
•
the success of our marketing programs;
•
the impact of opening new restaurants in the same markets as our existing
restaurants;
•
the effect of changes to accounting rules or regulations applicable to us;
•
the loss of key members of our management team;
•
changes in regulatory and healthcare laws;
•
consumer reaction to public health issues and perceptions of food safety;
•
the strain on our infrastructure and resources caused by our growth;
•
the failure of our information technology systems or the breach of our
network security;
•
volatility in the price of our common stock; and
•
other factors discussed under the headings "Risk Factors," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and "Business."
While
we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could
affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in this prospectus. All forward-looking statements are expressly qualified in their entirety by these cautionary statements.
You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.
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We
caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or
developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the way we expect. The
forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new
information, future events or otherwise, except as otherwise required by law. If we do update one or more forward-looking statements, no inference should be made that we will make additional updates
with respect to those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
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USE OF PROCEEDS
We estimate that the net proceeds to us from this offering, after deducting the underwriting discount and estimated offering expenses payable by us,
will be approximately $                million, or $                million if the
underwriters option to purchase additional shares of our common stock is exercised in full, assuming
the shares offered by us are sold for $               per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus.
We
intend to use the net proceeds from the sale of common stock by us in this offering:
(i)
to
repay the entire amount of the outstanding borrowings under our Credit Facility;
(ii)
to
support our growth, primarily through opening new restaurants; and
(iii)
for
working capital and general corporate purposes.
We
intend to use approximately $                million of the net proceeds we receive from this offering to repay the entire amount of the outstanding borrowings under our
Credit Facility,
which has a maturity date of November 29, 2017 and had an outstanding balance of $46.8 million as of February 24, 2014. Borrowings under our Credit Facility in 2013 and 2012 were
primarily made in connection with capital expenditures in connection with opening new restaurants. As of February 24, 2014, the balance outstanding under our Term Loan was $38.0 million
and the balance under our Line of Credit was $8.8 million. Borrowings under our Credit Facility bear interest at our option at either (i) LIBOR plus 3.00% to 4.75%, or (ii) the
highest of the following rates plus 2.00% to 3.75%: (a) the Wall Street Journal prime rate; (b) the federal funds rate plus 0.50% or (c) the one-month LIBOR plus 1.00%. There is a
1.00% LIBOR floor on all borrowings. Our interest rate as of February 24, 2014 was 5.25% for each of our Term Loan and our Line of Credit. Affiliates of General Electric Capital Corporation are
lenders under the Credit Facility, and therefore, will receive a portion of the net proceeds of this offering.
We
intend to use approximately $        million of the net proceeds we receive from this offering to support our growth, primarily through opening new restaurants.
Each
$1.00 increase or decrease in the assumed initial public offering price of $               per share, which is the midpoint of the price range set forth on the cover of this
prospectus, would
increase or decrease the net proceeds we receive from this offering by approximately $                million, assuming the number of shares offered by us, as set forth
on the cover of this
prospectus, remains the same and after deducting the underwriting discounts and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of
shares of common stock offered by us would increase or decrease the net proceeds we receive from this offering by approximately $                million, assuming the
assumed initial public
offering price remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.
Pending
use of the net proceeds from this offering as described above, we may invest the net proceeds in short-and intermediate-term interest-bearing obligations, investment-grade instruments,
certificates of deposit or direct or guaranteed obligations of the United States government.
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DIVIDEND POLICY
We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay
indebtedness, and therefore we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our common stock will be limited by restrictions on
the ability of our subsidiaries and us to pay dividends or make distributions under the terms of current and any future agreements governing our indebtedness. Any future determination to declare and
pay cash dividends will be at the discretion of our board of directors and will depend on, among other things, our financial condition, results of operations, cash requirements, contractual
restrictions and such other factors as our board of directors deems relevant.
In
addition, since we are a holding company, substantially all of the assets shown on our consolidated balance sheet are held by our subsidiaries. Accordingly, our earnings, cash flow and ability to
pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends.The ability of our
subsidiaries to pay dividends is currently restricted by the terms of our Credit Facility and may be further restricted by any future indebtedness we or they incur.
Accordingly,
you may need to sell your shares of our common stock to realize a return on your investment, and you may not be able to sell your shares at or above the price you paid for them. See "Risk
Factors—Risks Related to Ownership of our Common Stock—We do not intend to pay dividends for the foreseeable future."
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CAPITALIZATION
The following table sets forth our cash and cash equivalents, indebtedness and our capitalization as of December 30, 2013
on:
•
an actual basis;
•
a pro forma basis to give effect to the Distribution Transactions; and
•
a pro forma as adjusted basis to give effect to (i) the Distribution
Transactions, (ii) the filing and effectiveness of our amended and restated certificate of incorporation and amended and restated bylaws, which we will adopt prior to the completion of this
offering and (iii) this offering and the use of proceeds therefrom as described in "Use of Proceeds," assuming the shares offered by us are sold for $               per
share, which is the
midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us.
The
pro forma and pro forma as adjusted information below is illustrative only, and our capitalization following the closing of this offering will be adjusted based on the actual initial public
offering price and other terms of this offering determined at pricing. You should read this information together with our audited and unaudited consolidated financial statements and related notes
included elsewhere in this prospectus and the information set forth under the headings "Use of Proceeds," "Selected Historical Consolidated Financial and Other Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
As of December 30, 2013
Actual
Pro Forma
Pro Forma
As Adjusted
(1)
(Dollars in thousands)
Cash and cash equivalents
$
1,149
Debt:
Term Loan
(2)
38,500
Line of Credit
(3)
2,900
Total Credit Facility
41,400
Residual value obligations, net
(4)
357
Deemed landlord financing
(5)
19,893
Total debt
61,650
Stockholders' Equity:
Common stock, $0.01 par value per share
(6)
0.001
Additional paid-in-capital
45,200
Accumulated deficit
(11,621
)
Total stockholders' equity
33,579
Total capitalization
$
95,228
(1)
Each
$1.00 increase (decrease) in the assumed initial public offering price of $               per share, the midpoint of the estimated
offering price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted amounts of cash and cash equivalents, additional paid-in capital, total
stockholders' equity and total capitalization by $                million, assuming the number of shares offered by us, as set forth on the cover of this prospectus,
remains the same and after
deducting the underwriting discounts and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of shares of common stock offered by us
would increase or decrease the amount of cash and cash equivalents, additional paid-in capital, total stockholders' equity and total capitalization by
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approximately
$                million, assuming the assumed initial public offering price remains the same and after deducting the underwriting discounts and estimated offering
expenses
payable by us.
(2)
We
intend to use approximately $                million of the net proceeds we receive from this offering to repay the entire amount of
the outstanding borrowings under our Term Loan.
(3)
We
intend to use approximately $                million of the net proceeds we receive from this offering to repay the entire amount of
the outstanding borrowings under our Line of Credit. As of February 24, 2014, there was $8.8 million drawn under our line of credit.
(4)
Represents
residual value obligations associated with vehicles for individual store locations. We pay for each of the vehicles up front and
then amortize them to the guaranteed residual value at the end of the lease term. Each of the assets is recorded at the net present value of the initial payment made plus the residual value guarantee
using a 6.50% discount rate.
(5)
For
a discussion of deemed landlord financing, see "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Critical Accounting Policies and Estimates—Leases."
(6)
The
number of common shares shown as issued and outstanding on a pro forma as adjusted basis in the table above is based on the number of
shares of our common stock outstanding as of December 30, 2013. 100 shares authorized, 100 shares issued and outstanding,
actual;                             shares authorized,
                              shares issued and outstanding, pro forma;
and                             shares authorized,
                             shares issued and outstanding, pro forma as adjusted.
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DILUTION
If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the
initial public offering price per share and the pro forma as adjusted net tangible book value per share of our common stock after this offering. Our historical net tangible book value (deficit) as of
December 30, 2013 was $(2.0) million, or $(19,975) per share of common stock. Our historical net tangible book value is the amount of our total tangible assets (which for the purpose of
this calculation excludes capitalized loan costs) less our total liabilities, divided by the number of shares of common stock outstanding as of December 30, 2013.
Our
pro forma net tangible book value as of December 30, 2013 was $                million, or
$               per share of common stock. Pro forma net tangible book value represents
total tangible assets less total liabilities. Pro forma net tangible book value per share represents pro forma net tangible book value divided by the total number of shares outstanding as of
December 30, 2013, after giving effect to the Distribution Transactions, which is described more fully under the section of this prospectus entitled "Our Corporate Information."
Pro
forma as adjusted net tangible book value is our pro forma net tangible book value, plus the effect of the sale by us
of                             shares of our common stock in this offering at an assumed
initial public offering price of $               per share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after
deducting underwriting
discounts and estimated offering expenses payable by us, and after giving effect to the application of the net proceeds received from this offering as described under "Use of Proceeds." This amount
represents an immediate increase in pro forma as adjusted net tangible book value of $               per share to our existing stockholders, and an immediate dilution of
$               per share to
new investors participating in this offering. We determine dilution per share to new investors by subtracting pro forma as adjusted net tangible book value per share after this offering from the
initial public offering price per share paid by new investors.
The
following table illustrates this dilution on a per share basis.
Assumed initial public offering price per share
$
Pro forma net tangible book value (deficit) per share as of
$
Increase per share attributable to new investors
Pro forma as adjusted net tangible book value per share after this offering
Dilution per share to new investors
$
If the underwriters option to purchase additional shares of our common stock is exercised in full, the pro forma as adjusted net tangible book value will
increase to $               per share, representing an immediate dilution of $               per
share to new investors, assuming that the initial public offering price will be $               per
share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus.
A
$1.00 increase (decrease) in the assumed initial public offering price of $               per share, the midpoint of the estimated offering price range set forth on the cover
page of this
prospectus, would increase (decrease) the pro forma as adjusted net tangible book value by $                million, the pro forma as adjusted net tangible book value per
share by
$               per share, and the dilution in pro forma as adjusted net tangible book value per share to investors in this offering by
$               , assuming that the number of shares offered by
us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and estimated offering expenses payable by us.
49
Table of Contents
The
following table summarizes, as of December 30, 2013, on a pro forma as adjusted basis as described above, the differences between the number of shares of common stock purchased from us, the
total consideration paid to us, and the average price per share paid by existing stockholders and by investors purchasing shares of common stock in this offering. The calculation below is based on an
assumed initial public offering price of $               per share, the midpoint of the estimated offering price range set forth on the cover of this prospectus, before
deducting underwriting
discounts and estimated offering expenses payable by us.
Shares Purchased
Total Consideration
Average
Price
Per Share
Number
Percent
Amount
Percent
Existing stockholders
%
$
%
$
New investors
Total
100
%
$
100
%
The total number of shares reflected in the discussion and tables above is based on               shares of common stock outstanding as of December 30,
2013 and the Distribution Transactions. The tables above assume no exercise of options to purchase shares of our common stock outstanding as of December 30, 2013.
If
the underwriters option to purchase additional shares of our common stock is exercised in full, the number of shares held by new investors will increase
to                             , or          % of
the total number of shares of common stock outstanding after this offering.
To
the extent that any options or other equity incentive grants are issued in the future with an exercise price or purchase price below the initial public offering price, new investors will experience
further dilution.
50
Table of Contents
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA
The following table presents our selected historical consolidated financial data and certain other financial data. The historical consolidated balance
sheet data as of December 30, 2013 and December 31, 2012 and the consolidated statement of operations and consolidated statement of cash flows data for the years ended
December 30, 2013, December 31, 2012 and December 26, 2011 have been derived from our historical audited consolidated financial statements, which are included in this prospectus.
The consolidated balance sheet data as of December 27, 2010 and the consolidated statement of operations and consolidated statement of cash flow data for the year ended December 27, 2010
have been derived from our historical audited consolidated financial statements, which are not included in this prospectus. The consolidated balance sheet data as of December 28, 2009 and the
consolidated statement of operations and consolidated statement of cash flow data for the year ended December 28, 2009 have been derived from our historical unaudited consolidated financial
statements, which are not included in this prospectus.
We
operate on a 52- or 53-week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of 52 weeks, with the exception of the fiscal year ended
December 31, 2012, which consisted of 53 weeks. Our first fiscal quarter consists of 16 weeks, and each of our second, third and fourth
fiscal quarters consists of 12 weeks, except for a 53-week year when the fourth quarter has 13 weeks. We refer to our fiscal years as 2013, 2012 and 2011.
The
consolidated financial data and other financial data presented below should be read in conjunction with the section entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and our audited and unaudited consolidated financial statements and the related notes thereto included elsewhere in this prospectus. The following table does not give effect to
the     -for-1 stock split of our common stock, which will be effected prior to the completion of the offering. Our historical consolidated financial data may not be indicative of our future
performance.
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Table of Contents
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
December 27,
2010
December 28,
2009
(Dollars in thousands, except per share data)
Consolidated Statement of Operations Data:
Revenue:
Restaurant sales
$
115,748
$
78,966
$
49,193
$
31,497
$
20,138
Franchise and royalty fees
637
757
984
810
619
Total revenue
116,385
79,724
50,177
32,308
20,756
Operating Expenses:
Restaurant Operating Costs:
Cost of sales (excluding depreciation and amortization)
38,063
25,845
15,756
10,406
6,590
Labor
32,810
21,567
13,424
8,587
5,443
Store operating expenses
21,780
14,610
9,596
5,975
3,653
General and administrative expenses
13,172
8,969
6,384
5,344
4,464
Depreciation
5,862
3,779
2,840
1,805
1,065
Amortization
1,601
1,091
585
557
557
Pre-opening costs
1,938
917
806
544
551
Loss (gain) from disposal of equipment
175
240
(4
)
289
147
Total operating expenses
115,401
77,018
49,387
33,507
22,470
Income (loss) from operations
985
2,706
790
(1,199
)
(1,713
)
Other expenses:
Interest expense
4,019
2,337
1,248
720
556
Loss on interest cap
25
—
—
—
—
Bargain purchase gain from acquisitions
—
—
(541
)
—
—
Total other expenses
4,044
2,337
707
720
556
Income (loss) before provision for income taxes
(3,059
)
369
83
(1,919
)
(2,269
)
Provision for income taxes
656
622
110
554
546
Net loss
$
(3,715
)
$
(253
)
$
(27
)
$
(2,472
)
$
(2,815
)
Net loss per share
:
Basic
$
(37,151
)
$
(2,529
)
$
(269
)
$
(24,723
)
$
(28,155
)
Diluted
$
(37,151
)
$
(2,529
)
$
(269
)
$
(24,723
)
$
(28,155
)
Weighted average shares outstanding
:
Basic
100
100
100
100
100
Diluted
100
100
100
100
100
Consolidated Statement of Cash Flows Data:
Net cash provided by operating activities
$
10,924
$
7,796
$
4,764
$
3,780
$
605
Net cash used in investing activities
(28,242
)
(21,283
)
(13,519
)
(8,028
)
(6,486
)
Net cash provided by financing activities
16,017
15,130
7,600
3,468
6,986
December 30,
2013
December 31,
2012
December 26,
2011
December 27,
2010
December 28,
2009
(Dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents
$
1,149
$
2,450
$
807
$
1,962
$
2,742
Property and equipment, net
78,629
48,215
31,472
19,937
12,568
Total assets
119,937
90,716
66,937
53,214
47,547
Total debt
(1)
61,650
38,201
19,028
8,643
3,979
Total stockholder's equity
33,579
37,220
37,347
37,184
39,352
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Table of Contents
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
December 27,
2010
December 28,
2009
(Dollars in thousands)
Other Operating Data:
Company-owned restaurants at end of period
94
67
48
32
23
Franchise restaurants at end of period
8
8
9
11
8
Company-owned:
Average unit volume
$
1,470
$
1,421
$
1,299
$
1,209
$
1,106
Comparable restaurant sales growth
6.9
%
13.4
%
11.8
%
11.9
%
(2.5
%)
Restaurant contribution
(2)
$
23,095
$
16,966
$
10,418
$
6,529
$
4,452
as a percentage of restaurant sales
20.0
%
21.5
%
21.2
%
20.7
%
22.1
%
Adjusted EBITDA
(3)
$
10,899
$
9,153
$
5,440
$
2,411
$
949
as a percentage of revenue
9.4
%
11.5
%
10.8
%
7.5
%
4.6
%
Capital expenditures
$
28,267
$
15,462
$
10,959
$
8,028
$
6,499
(1)
Includes
interest-bearing debt, residual value obligations and deemed landlord financing.
(2)
Restaurant
contribution is defined as restaurant sales less restaurant operating costs which are cost of sales, labor, and store operating
expenses.
(3)
EBITDA
is defined as net loss before interest, income taxes and depreciation and amortization.
Adjusted
EBITDA is defined as EBITDA plus equity-based compensation expense, bargain purchase gain from acquisitions, management and consulting
fees, asset disposals, closure costs, loss on interest cap and restaurant impairment and pre-opening costs. Adjusted EBITDA is intended as a supplemental measure of our performance that is not
required by, or presented in accordance with, GAAP. We believe that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends
relating to our financial condition and operating results. Our management uses EBITDA and Adjusted EBITDA (i) as a factor in evaluating management's performance when determining incentive
compensation and (ii) to evaluate the effectiveness of our business strategies.
We
believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial
measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the
future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not
calculate Adjusted EBITDA in the same fashion. Moreover, our definitions of EBITDA and Adjusted EBITDA as presented throughout this prospectus are not the same as these or similar terms in the
applicable covenants of our Credit Facility.
Our
management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted
EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations
are:
•
Adjusted EBITDA does not reflect our
cash expenditures, or future requirements, for capital expenditures or contractual commitments;
•
Adjusted EBITDA does not reflect
changes in, or cash requirements for, our working capital needs;
•
Adjusted EBITDA does not reflect the
interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;
•
although depreciation and
amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such
replacements;
•
equity-based compensation expense is
and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
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Table of Contents
•
Adjusted EBITDA does not reflect the
impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and
•
other companies in our industry may
calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
Because
of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for
these limitations by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not
rely on any single financial measure to evaluate our business.
The following table reconciles net loss to EBITDA and Adjusted EBITDA for 2013, 2012, 2011, 2010 and 2009:
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
December 27,
2010
December 28,
2009
(Dollars in thousands)
Adjusted EBITDA:
Net loss, as reported
$
(3,715
)
$
(253
)
$
(27
)
$
(2,472
)
$
(2,815
)
Depreciation and amortization
7,462
4,870
3,426
2,362
1,622
Interest expense
4,019
2,337
1,248
720
556
Provision for income taxes
656
622
110
554
546
EBITDA
8,422
7,576
4,757
1,163
(91
)
Asset disposals, closure costs, loss on interest cap and restaurant impairment
(a)
200
240
(4
)
289
147
Management and consulting fees
(b)
265
294
232
123
142
Equity-based compensation expense
73
126
190
293
201
Pre-opening costs
(c)
1,938
917
806
544
551
Bargain purchase gain from acquisitions
(d)
—
—
(541
)
—
—
Adjusted EBITDA
$
10,899
$
9,153
$
5,440
$
2,411
$
949
(a)
Represents
costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment, loss on interest cap and
restaurant closure expenses.
(b)
Represents
fees payable to Brentwood pursuant to the Corporate Development and Administrative Services Agreement and fees paid to Greg
Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions—Corporate Development and Administrative Services Agreement" and "Certain
Relationships and Related Party Transactions—Consulting Agreement."
(c)
Represents
expenses directly associated with the opening of new restaurants that are incurred prior to opening, including pre-opening
rent.
(d)
Represents
the excess of the fair value of net assets acquired over the purchase price related to our acquisitions of the Houston franchise
restaurants.
54
Table of Contents
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition,
liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with the "Selected Consolidated Historical Financial and Other
Data" and our audited and unaudited consolidated financial statements and the related notes thereto, included elsewhere in this prospectus.
In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and
assumptions, such as our plans, objectives, expectations, and intentions set forth under the sections entitled "Risk Factors" and "Forward-Looking Statements." Our actual results and the timing of
events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section entitled "Risk Factors" and elsewhere
in this prospectus.
Overview
Zoës Kitchen is a fast growing, fast casual restaurant concept serving a distinct menu of fresh, wholesome, Mediterranean-inspired
dishes delivered with Southern hospitality. Founded in 1995 by Zoë and Marcus Cassimus in Birmingham, Alabama, Zoës Kitchen is a natural extension of Zoë
Cassimus' lifetime passion for cooking Mediterranean meals for family and friends. Since opening our first restaurant, we have never wavered from our commitment to make our food fresh daily and to
serve our customers in a warm and welcoming environment. We believe our brand delivers on our customers' desire for freshly-prepared food, convenient, unique and high-quality experiences and their
commitment to family, friends and enjoying every moment.
Growth Strategies and Outlook
We plan to execute the following strategies to continue to enhance our brand awareness and grow our revenue and
profitability:
•
grow our restaurant base;
•
increase our comparable restaurant sales; and
•
improve our margins and leverage infrastructure.
We
have expanded our restaurant base from 21 restaurants in seven states in 2008 to 111 restaurants in 15 states as of February 24, 2014. We opened 27 restaurants in 2013, and we plan to open
28 to 30 restaurants in 2014. We expect to double our restaurant base in the next four years. To increase comparable restaurant sales, we plan to heighten brand awareness to drive new customer
traffic, increase existing customer frequency and grow our catering business. We believe we are well positioned for future growth with a developed infrastructure capable of supporting a restaurant
base that is greater than our existing footprint. Additionally, we believe we have an opportunity to optimize costs and enhance our profitability as we benefit from economies of scale.
Key Events
Since the beginning of 2009, we have acquired eight franchise restaurants. In November 2011, we acquired three franchise restaurants in Houston,
Texas; in August 2012, we acquired three franchise restaurants in South Carolina, with two restaurants located in Columbia and one restaurant in Greenville; and in January 2014, we acquired two
franchise restaurants, with one located in Mobile, Alabama and one located in Destin, Florida.
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Table of Contents
Key Measures We Use to Evaluate Our Performance
In assessing the performance of our business, we consider a variety of performance and financial measures. The key measures for determining how our
business is performing are restaurant sales, comparable restaurant sales growth, AUVs, restaurant contribution, number of new restaurant openings and Adjusted EBITDA.
Restaurant Sales
Restaurant sales represents sales of food and beverages in Company-owned restaurants. Several factors affect our restaurant sales in any given period
including the number of restaurants in operation and per restaurant sales.
Comparable Restaurant Sales Growth
Comparable restaurant sales refers to year-over-year sales comparisons for the comparable Company-owned restaurant base. We define the comparable
restaurant base to include those restaurants open for 18 periods or longer. As of December 30, 2013, December 31, 2012, December 26, 2011 and December 27, 2010, there were
55, 40, 27 and 18 restaurants, respectively, in our comparable Company-owned restaurant base. This measure highlights performance of existing restaurants, as the impact of new Company-owned restaurant
openings is excluded.
Comparable
restaurant sales growth is generated by an increase in customer traffic or changes in per customer spend. Per customer spend can be influenced by changes in menu prices and/or the mix and
number of items sold per check.
Measuring
our comparable restaurant sales allows us to evaluate the performance of our existing restaurant base. Various factors impact comparable restaurant sales,
including:
•
consumer recognition of our brand and our ability to respond to changing
consumer preferences;
•
overall economic trends, particularly those related to consumer spending;
•
our ability to operate restaurants effectively and efficiently to meet
consumer expectations;
•
pricing;
•
customer traffic;
•
per customer spend and average check amount;
•
marketing and promotional efforts;
•
local competition;
•
trade area dynamics;
•
introduction of new menu items; and
•
opening of new restaurants in the vicinity of existing locations.
Consistent
with common industry practice, we present comparable restaurant sales on a calendar-adjusted basis that aligns current year sales weeks with comparable periods in the prior year, regardless
of whether they belong to the same fiscal period or not. Since opening new Company-owned restaurants will be a significant component of our revenue growth, comparable restaurant sales is only one
measure of how we evaluate our performance.
The
following table shows our quarterly comparable restaurant sales growth since 2010:
Fiscal 2010
Fiscal 2011
Fiscal 2012
Fiscal 2013
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Comparable Restaurant Sales Growth
8.0
%
13.0
%
14.1
%
13.5
%
10.7
%
8.1
%
11.9
%
16.8
%
14.1
%
15.0
%
12.5
%
12.1
%
10.4
%
5.5
%
7.7
%
3.8
%
Comparable Restaurants
16
16
17
18
22
24
25
27
32
34
35
40
43
50
52
55
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Table of Contents
Average Unit Volumes (AUVs)
AUVs consist of the average sales of all Company-owned restaurants that have been open for a trailing 52-week period or longer. For purposes of AUV
calculations, the fifty-third week in 2012 has been excluded. AUVs allow management to assess changes in consumer traffic and per customer spending patterns at our restaurants.
Restaurant Contribution
Restaurant contribution is defined as restaurant sales less restaurant operating costs, which are cost of sales, labor and store operating expenses.
We expect restaurant contribution to increase in proportion to the number of new Company-owned restaurants we open and our comparable restaurant sales growth. Fluctuations in restaurant contribution
margin can also be attributed to those factors discussed below for the components of restaurant operating costs.
Number of New Restaurant Openings
The number of Company-owned restaurant openings reflects the number of restaurants opened during a particular reporting period. Before we open new
Company-owned restaurants, we incur pre-opening costs. Some of our restaurants open with an initial start-up period of higher than normal sales volumes, which subsequently decrease to stabilized
levels. Typically, our new restaurants have stabilized sales after approximately 12 to 24 weeks of operation, at which time the restaurant's sales typically begin to grow on a consistent basis.
In new markets, the length of time before average sales for new restaurants stabilize is less predictable and can be longer as a result of our limited knowledge of these markets and consumers' limited
awareness of our brand. New restaurants may not be profitable, and their sales performance may not follow historical patterns. The number and timing of restaurant openings has had, and is expected to
continue to have, an impact on our results of operations. The following table shows the growth in our Company-owned and franchise restaurant base for the fiscal years ended December 30, 2013,
December 31, 2012, December 26, 2011 and December 27, 2010:
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
December 27,
2010
Company-Owned Restaurant Base
Beginning of period
67
48
32
23
Openings
27
16
13
9
Franchisee Acquisitions
0
3
3
0
Restaurants at end of period
94
67
48
32
Franchise Restaurant Base
Beginning of period
8
9
11
8
Openings
0
2
1
3
Franchisee Acquisitions
0
(3
)
(3
)
0
Restaurants at end of period
8
8
9
11
Total restaurants
102
75
57
43
Key Financial Definitions
Revenue.
Restaurant sales represent sales of food and beverages in Company-owned restaurants, net of promotional allowances and employee meals. Restaurant sales in
a given period are directly impacted by the number of operating weeks in the period, the number of restaurants we operate and comparable restaurant sales growth.
Royalty
and Franchise fees represent royalty income from franchisees and initial franchise fees.
57
Table of Contents
Cost of sales.
Cost of sales consists primarily of food, beverage and packaging costs. The components of cost of sales are variable in nature, change with sales
volume and are influenced by menu mix and subject to increases or decreases based on fluctuations in commodity costs.
Labor.
Labor includes all restaurant-level management and hourly labor costs, including salaries, wages, benefits and bonuses, payroll taxes and other indirect
labor costs.
Store operating expenses.
Store operating expenses include all other restaurant-level operating expenses, such as supplies, utilities, repairs and maintenance,
travel costs, credit card fees, recruiting, delivery service, restaurant-level marketing costs, security and occupancy expenses.
General and administrative expenses.
General and administrative expenses include expenses associated with corporate and regional functions that support the
development and operations of restaurants, including compensation and benefits, travel expenses, stock compensation costs, legal and professional fees, advertising costs, information systems,
corporate office rent and other related corporate costs.
Depreciation.
Depreciation consists of depreciation of fixed assets, including equipment and capitalized leasehold improvements.
Amortization.
Amortization consists of amortization of certain intangible assets including franchise agreements, trademarks, reacquired rights and favorable leases.
Pre-opening costs.
Pre-opening costs consist of expenses incurred prior to opening a new restaurant and are made up primarily of manager salaries, relocation costs,
supplies, recruiting expenses, employee payroll and training costs. Pre-opening costs also include occupancy costs recorded during the period between date of possession and the restaurant opening
date.
Loss (gain) from disposal of equipment.
Loss (gain) from disposal of equipment is composed of the loss on disposal of assets related to retirements and replacements
of leasehold improvements or equipment and impairment charges. These losses are related to normal disposals in the ordinary course of business, along with disposals related to selected restaurant
remodeling activities.
Interest expense.
Interest expense includes cash and imputed non-cash charges related to our deemed landlord financing, non-cash charges related to our residual
value obligations, amortization of debt issue costs as well as cash payments and accrued charges related to our outstanding Credit Facility.
Bargain purchase gain from acquisitions.
Bargain purchase gain from acquisitions represents the excess of the fair value assigned to the net assets of the Houston
franchise restaurant acquisition as compared to the consideration paid.
Provision for income taxes.
Provision for income taxes represents federal, state and local current and deferred income tax expense.
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Table of Contents
Consolidated Results of Operations
Fifty-Two Weeks ended December 30, 2013 Compared to Fifty-Three Weeks ended December 31, 2012
The following table presents selected consolidated comparative results of operations from our audited condensed consolidated financial statements for
the fifty-two weeks ended December 30, 2013 compared to the fifty-three weeks ended December 31, 2012:
Fiscal Year Ended
Increase / (Decrease)
December 30,
2013
December 31,
2012
Dollars
Percentage
(Dollars in thousands)
Consolidated Statement of Operations Data:
Revenue:
Restaurant sales
$
115,748
$
78,966
$
36,782
46.6
%
Royalty fees
637
677
(40
)
(5.9
)%
Franchise fees
—
80
(80
)
*
Total revenue
116,385
79,724
36,661
46.0
%
Operating expenses:
Restaurant operating costs:
Cost of sales (excluding depreciation and amortization)
38,063
25,845
12,218
47.3
%
Labor
32,810
21,567
11,243
52.1
%
Store operating expenses
21,780
14,610
7,170
49.1
%
General and administrative expenses
13,172
8,969
4,203
46.9
%
Depreciation
5,862
3,779
2,083
55.1
%
Amortization
1,601
1,091
510
46.7
%
Pre-opening costs
1,938
917
1,021
111.3
%
Loss (gain) from disposal of equipment
175
240
(65
)
(27.1
)%
Total operating expenses
115,401
77,018
38,383
49.8
%
Income from operations
985
2,706
(1,721
)
(63.6
)%
Other expenses:
Interest expense
4,019
2,337
1,682
72.0
%
Loss on interest cap
25
—
25
*
Total other expenses
4,044
2,337
1,707
73.0
%
Income (loss) before provision for income taxes
(3,059
)
369
(3,428
)
*
Provision for income taxes
656
622
34
5.5
%
Net loss
$
(3,715
)
$
(253
)
$
(3,462
)
1,368.4
%
*
Not
meaningful.
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Table of Contents
Restaurant sales.
The following table summarizes the growth in restaurant sales from 2012 to 2013:
(in thousands)
Restaurant sales for 2012
$
78,966
Incremental restaurant sales increase due to:
Comparable restaurant sales
4,760
Restaurants not in Comparable restaurant base
32,022
Restaurant sales for 2013
$
115,748
Restaurant sales increased by $36.8 million, or 46.6%, in 2013 compared to 2012. Restaurants not in the comparable restaurant base accounted for
$32.0 million of this increase. The balance of the growth was due to an increase in comparable restaurant sales of $4.8 million, or 6.9%, in 2013, comprised primarily of increased
customer traffic at our comparable restaurants.
Royalty fees.
Royalty fees decreased by $0.04 million, or 5.9%, in 2013 compared to 2012. The decrease was primarily attributable to the acquisition of the
South Carolina franchise restaurants in August 2012, which resulted in lower royalty fees in 2013.
Franchise fees.
Franchise fees were $0.0 in 2013, a decrease of $0.08 million compared to 2012. Two new franchise restaurants opened in 2012 compared to no
new franchise restaurant openings in 2013.
Cost of sales.
Cost of sales increased $12.2 million in 2013 compared to 2012, due primarily to the increase in restaurant sales. As a percentage of
restaurant sales, cost of sales increased from 32.7% in 2012 to 32.9% in
2013. This increase was primarily driven by food cost inflation with higher costs in beef, poultry and produce, partially offset by a minimal price increase.
Labor.
Labor increased by $11.2 million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants opening in 2013. As a percentage of
restaurant sales, labor increased from 27.3% in 2012 to 28.3% in 2013. The increase in labor percentage was driven by an increase in average pay rates and staffing and training levels in new
Company-owned restaurant openings in 2013.
Store operating expenses.
Store operating expenses increased by $7.2 million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants
opening in 2013. As a percentage of restaurant sales, store operating expense increased from 18.5% in 2012 to 18.8% in 2013. The increase in store operating expenses was primarily attributable to a
programmatic increase in maintenance costs.
General and administrative expenses.
General and administrative expenses increased by $4.2 million in 2013 compared to 2012, due primarily to costs
associated with supporting an increased number of restaurants. As a percentage of revenue, general and administrative expenses remained flat at 11.3% in 2012 and 2013. General and administrative
expenses includes $0.1 million and $0.1 million of equity-based compensation expense in 2013 and 2012, respectively, and $0.3 million and $0.3 million of management and
consulting fees in 2013 and 2012, respectively.
Depreciation.
Depreciation increased by $2.1 million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants opening in 2013. As a
percentage of revenue, depreciation increased from 4.7% in 2012 to 5.0% in 2013, due to slightly higher build-out costs.
Amortization.
Amortization increased by $0.5 million in 2013 compared to 2012, due primarily to the increased amortization of the reacquired rights
intangible asset created by the August 2012 acquisition of the South Carolina franchise stores. In addition we have recognized $0.2 million of accelerated amortization of franchise agreement
intangible assets related to executing a letter of intent to purchase two franchise restaurants in Destin, Florida and Mobile, Alabama.
Pre-opening costs.
Pre-opening costs increased by $1.0 million in 2013 compared to 2012, due primarily to 27 new Company-owned restaurants opening in 2013
compared to 16 new Company-owned restaurants and the acquisition of three franchise restaurants in 2012.
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Loss (gain) from disposal of equipment.
Loss from disposal of equipment decreased by $0.1 million in the 2013 compared to 2012.
Interest expense.
Interest expense increased by $1.7 million in 2013 compared to 2012, due primarily to $0.9 million in incremental interest expense
under our Line of Credit and Term Loan to fund our capital expenditures. An increase in deemed landlord financing created an additional $0.8 million in interest expense.
Provision for income taxes.
Provision for income taxes increased from $0.6 million in 2012 to $0.7 million in 2013. Tax expense remains
relatively constant as it primarily reflects the accrual of income tax expense related to a valuation allowance in connection with the tax amortization of the Company's goodwill that was not available
to offset existing deferred tax assets. Due to the uncertain timing of the reversal of this temporary difference, it cannot be considered as a source of future taxable income for purposes of
determining a valuation allowance; therefore the tax liability cannot offset deferred tax assets.
Fifty-Three Weeks Ended December 31, 2012 Compared to Fifty-Two Weeks Ended December 26, 2011
The following table presents selected consolidated comparative results of operations derived from our audited condensed consolidated financial
statements for the fifty-three weeks ended December 31, 2012 and the fifty-two weeks ended December 26, 2011:
Fiscal Year Ended
(1)
Increase / (Decrease)
December 31,
2012
December 26,
2011
Dollars
Percentage
(Dollars in thousands)
Consolidated Statement of Operations Data:
Revenue:
Restaurant sales
$
78,966
$
49,193
$
29,773
60.5
%
Royalty fees
677
934
(257
)
(27.5
)%
Franchise fees
80
50
30
60.0
%
Total revenue
79,724
50,177
29,547
58.9
%
Operating expenses:
Restaurant operating costs:
Cost of sales (excluding depreciation and amortization)
25,845
15,756
10,089
64.0
%
Labor
21,567
13,424
8,143
60.7
%
Store operating expenses
14,610
9,596
5,014
52.3
%
General and administrative expenses
8,969
6,384
2,585
40.5
%
Depreciation
3,779
2,840
939
33.1
%
Amortization
1,091
585
506
86.5
%
Pre-opening costs
917
806
111
13.8
%
Loss (gain) from disposal of equipment
240
(4
)
244
*
Total costs and expenses
77,018
49,387
27,631
55.9
%
Income from operations
2,706
790
1,916
242.5
%
Other expenses:
Interest expense
2,337
1,248
1,089
87.3
%
Bargain purchase gain from acquisitions
—
(541
)
541
*
Total other expenses
2,337
707
1,630
230.6
%
Income before provision for income taxes
369
83
286
344.6
%
Provision for income taxes
622
110
512
465.5
%
Net loss
$
(253
)
$
(27
)
$
(226
)
*
*
Not
meaningful.
(1)
Our
fiscal year consists of 52 or 53 weeks ending on the last Monday of December. All fiscal years presented are 52 weeks, with the
exception of Fiscal 2012 which consisted of 53 weeks.
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Restaurant sales.
The following table summarizes the growth in restaurant sales from 2011 to 2012:
(in thousands)
Net Sales
Restaurant sales for 2011
$
49,193
Incremental restaurant sales increase due to:
Comparable restaurant sales
5,802
Restaurants not in comparable restaurant base
22,925
53rd week of sales
1,046
Restaurant sales for 2012
$
78,966
Restaurant sales increased by $29.8 million, or 60.5%, in 2012 compared to 2011. Restaurants not in the comparable restaurant base accounted for
$22.9 million of this increase. The impact of 2012 having an additional operating week was approximately $1.0 million in additional restaurant sales. The balance of the growth was due to
an increase in comparable restaurant sales of $5.8 million, or 13.4%, in 2012, comprised primarily of increases in customer traffic at our comparable restaurants.
Royalty fees.
Royalty fees decreased by $0.3 million, or 27.5%, in 2012 compared to 2011. The decrease was primarily attributable to the acquisition of the
Houston, Texas and South Carolina franchise restaurants in November 2011 and August 2012, respectively, which resulted in lower royalty fees in 2012. Two franchise restaurants opened in 2012 and
generated $0.02 million of incremental royalty fees. The balance of the growth was due to comparable restaurant royalty growth, which increased by $0.11 million in 2012 compared to 2011.
Franchise fees.
Franchise fees increased by $0.03 million in 2012 compared to 2011, due primarily to two new franchise restaurants opening in 2012 compared
to one new franchise restaurant opening in 2011.
Cost of sales.
Cost of sales increased $10.1 million in 2012 compared to 2011, due primarily to the increase in restaurant sales. As a percentage of
restaurant sales, cost of sales increased from 32.0% in 2011 to 32.7% in 2012. This increase was primarily driven by food cost inflation, partially offset by a minimal price increase.
Labor.
Labor increased by $8.1 million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants opening and the acquisition of
three franchise restaurants in 2012. As a percentage of restaurant sales, labor remained constant year-over-year at 27.3%.
Store operating expenses.
Store operating expenses increased by $5.0 million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants
opening and the acquisition of three franchise restaurants in 2012. As a percentage of restaurant sales, store operating expenses decreased from 19.5% in 2011 to 18.5% in 2012. The decrease in
store operating expenses was primarily attributable to continued leveraging of fixed restaurant costs.
General and administrative expenses.
General and administrative expenses increased by $2.6 million in 2012 compared to 2011, due primarily to costs
associated with supporting an increased number of restaurants. As a percentage of revenue, general and administrative expense decreased from 12.7% in 2011 to 11.3% in 2012, due to increasing revenue
without proportionate increases in general and administrative expenses or administrative personnel. General and administrative expenses include $0.1 million and $0.2 million of
equity-based compensation expense in 2012 and 2011, respectively, and $0.3 million and $0.2 million of management and consulting fees in 2012 and 2011, respectively.
Depreciation.
Depreciation increased by $0.9 million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants opening and the acquisition
of three franchise restaurants in 2012. As a percentage of revenue, depreciation decreased from 5.7% in 2011 to 4.7% in 2012, due to leverage of increased AUVs.
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Amortization.
Amortization increased by $0.5 million in 2012 compared to 2011, due primarily to the increased amortization of the reacquired rights
intangible asset created by the 2012 and 2011 acquisitions of the South Carolina and Houston, Texas franchise restaurants, respectively.
Pre-opening costs.
Pre-opening costs increased by $0.1 million in 2012 compared to 2011, due primarily to 16 new Company-owned restaurants opening in 2012
compared to 13 new Company-owned restaurants in 2011.
Loss (gain) from disposal of equipment.
Loss from disposal of equipment increased by $0.2 million in 2012 compared to 2011, due primarily to the remodeling
of the majority of the restaurants built prior to 2009.
Interest expense.
Interest expense increased by $1.1 million in 2012 compared to 2011, due primarily to $0.8 million in incremental interest expense
under our Line of Credit and Term Loan to fund our capital expenditures. An increase in deemed landlord financing created an additional $0.3 million in interest expense.
Bargain purchase gain from acquisitions.
Bargain purchase gain from acquisitions decreased by $0.5 million in 2012 compared to 2011. The 2011 bargain
purchase gain from acquisitions was incurred in conjunction with the 2011 Houston, Texas franchise restaurant acquisition.
Provision for income taxes.
Provision for income taxes increased by $0.5 million in 2012 compared to 2011. The increase was due primarily to a reduction in
the 2011 provision related to the Houston, Texas franchise restaurant acquisition.
Adjusted EBITDA
EBITDA is defined as net loss before interest, income taxes and depreciation and amortization.
Adjusted
EBITDA is defined as EBITDA plus equity-based compensation expense, bargain purchase gain from acquisitions, management and consulting fees, asset disposals, closure costs, loss on interest
cap and restaurant impairment and pre-opening costs. Adjusted EBITDA is intended as a supplemental measure of our performance that is not required by, or presented in accordance with GAAP. We believe
that EBITDA and Adjusted EBITDA provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and operating results. Our
management uses EBITDA and Adjusted EBITDA (i) as a factor in evaluating management's performance when determining incentive compensation and (ii) to evaluate the effectiveness of our
business strategies.
We
believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company's financial
measures with other fast casual restaurants, which may present similar non-GAAP financial measures to investors. In addition, you should be aware when evaluating EBITDA and Adjusted EBITDA that in the
future we may incur expenses similar to those excluded when calculating these measures. Our presentation of these measures should not be construed as an inference that our future results will be
unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies do not
calculate Adjusted EBITDA in the same fashion. Moreover, our definitions of EBITDA and Adjusted EBITDA as presented throughout this prospectus are not the same as these or similar terms in the
applicable covenants of our Credit Facility.
Our
management does not consider EBITDA or Adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of EBITDA and Adjusted
EBITDA is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. Some of these limitations
are:
•
Adjusted EBITDA does not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
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•
Adjusted EBITDA does not reflect changes in, or cash requirements for, our
working capital needs;
•
Adjusted EBITDA does not reflect the interest expense, or the cash
requirements necessary to service interest or principal payments, on our debts;
•
although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;
•
equity-based compensation expense is and will remain a key element of our
overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;
•
Adjusted EBITDA does not reflect the impact of certain cash charges
resulting from matters we consider not to be indicative of our ongoing operations; and
•
other companies in our industry may calculate Adjusted EBITDA differently
than we do, limiting its usefulness as a comparative measure.
Because
of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations
by relying primarily on our GAAP results and using Adjusted EBITDA only supplementally. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single
financial measure to evaluate our business.
The
following table reconciles net loss to EBITDA and Adjusted EBITDA for 2013, 2012 and 2011:
Fiscal Year Ended
(1)
December 31,
2013
December 31,
2012
December 26,
2011
(Dollars in thousands)
Adjusted EBITDA:
Net loss, as reported
$
(3,715
)
$
(253
)
$
(27
)
Depreciation and amortization
7,462
4,870
3,426
Interest expense
4,019
2,337
1,248
Provision for income taxes
656
622
110
EBITDA
8,422
7,576
4,757
Asset disposals, closure costs, loss on interest cap and restaurant impairment
(2)
200
240
(4
)
Management and consulting fees
(3)
265
294
232
Equity-based compensation expense
73
126
190
Pre-opening costs
(4)
1,938
917
806
Bargain purchase gain from acquisitions
(5)
—
—
(541
)
Adjusted EBITDA
$
10,899
$
9,153
$
5,440
(1)
Our
fiscal year consists of 52 or 53 weeks ending on the last Monday of December. All fiscal years presented are 52 weeks, with the
exception of Fiscal 2012 which consisted of 53 weeks.
(2)
Represents
costs related to impairment of long-lived assets, gain or loss on disposal of property and equipment, loss on interest cap and
restaurant closure expenses.
(3)
Represents
fees payable to Brentwood pursuant to the Corporate Development and Administrative Services Agreement and fees paid to Greg
Dollarhyde pursuant to the Consulting Agreement. See "Certain Relationships and Related Party Transactions—Corporate Development and Administrative Services Agreement" and "Certain
Relationships and Related Party Transactions—Consulting Agreement."
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(4)
Represents
expenses directly associated with the opening of new Company-owned restaurants that are incurred prior to
opening.
(5)
Represents
the excess of the fair value of net assets acquired over the purchase price related to our acquisitions of the Houston, Texas
franchise restaurants.
Liquidity and Capital Resources
Potential Impacts of Market Conditions on Capital Resources
We have continued to experience positive trends in consumer traffic and increases in comparable restaurant sales, operating cash flows and restaurant
contribution margin. However, the restaurant industry continues to be challenged, and uncertainty exists as to the sustainability of these favorable trends. We have continued to implement various cost
savings initiatives, including savings in our food costs through waste reduction and efficiency initiatives in our supply chain and labor costs. We have developed new menu items to appeal to consumers
and used marketing campaigns to promote these items.
We
believe that cash and cash equivalents, expected cash flow from operations and planned borrowing capacity are adequate to fund debt service requirements, operating lease obligations, capital
expenditures and working capital obligations for the next 13 periods. However, our ability to continue to meet these requirements and obligations will depend on, among other things, our ability to
achieve anticipated levels of revenue and cash flow from operations and our ability to manage costs and working capital successfully. See "Risk Factors—Risks Related to Our Business and
Industry—We expect to need capital in the
future, and we may not be able to generate sufficient cash flow or raise capital on acceptable terms to meet our needs."
Summary of Cash Flows
Our primary sources of liquidity and cash flows are operating cash flows and borrowings under our revolving Line of Credit. We use this to fund
capital expenditures for new Company-owned restaurant openings, reinvest in our existing restaurants, invest in infrastructure and information technology and maintain working capital. Our working
capital position benefits from the fact that we generally collect cash from sales to customers the same day, or in the case of credit or debit card transactions, within several days of the related
sale, and we typically have at least 20 days to pay our vendors.
The
material changes in working capital from 2012 to 2013 were comprised of a $0.7 million decrease in current assets and a $6.1 million increase in current liabilities. The decrease in
current assets was primarily due to less cash on hand at December 30, 2013 driven primarily by the timing of the borrowings in relation to construction costs incurred. The increase in current
liabilities was due primarily to an increase in accounts payable of $2.8 million and accrued expenses and other of $2.7 million, which were both primarily driven by 9 new Company-owned
restaurant openings and the acquisition of two franchise restaurants within the two months after December 30, 2013 as compared to only three new restaurant openings within the two months after
December 31, 2012.
Fiscal Year Ended
(1)
December 30,
2013
December 31,
2012
December 26,
2011
(Dollars in thousands)
Consolidated Statement of Cash Flows Data:
Net cash provided by operating activities
$
10,924
$
7,796
$
4,764
Net cash used in investing activities
(28,242
)
(21,283
)
(13,519
)
Net cash provided by financing activities
16,017
15,130
7,600
(1)
Our
fiscal year consists of 52 or 53 weeks ending on the last Monday of December. All fiscal years presented are 52 weeks, with the
exception of Fiscal 2012 which consisted of 53 weeks.
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Cash Flows Provided by Operating Activities
Net cash provided by operating activities increased from $7.8 million in 2012 to $10.9 million in 2013. Operating assets and liabilities
increased by $3.8 million, primarily due to an increase of $1.0 million in accrued expenses and other relating to an increase in the number of restaurants under construction.
Additionally, deferred rent increased $2.1 million due to new Company-owned restaurant openings and increased tenant improvement collections in 2013. These increases were offset by a decrease
in restaurant contribution and increased general and administrative expenses.
Net
cash provided by operating activities increased from $4.8 million in 2011 to $7.8 million in 2012. Operating assets and liabilities increased by $0.6 million, due primarily to
an increase of $1.1 million in accounts payable relating to an increase in the number of restaurants under construction. The remainder of the increase is attributable to an increase in
restaurant contribution driven by 16 new Company-owned restaurant openings in 2012 and the acquisition of the three South Carolina franchise restaurants.
Cash Flows Used in Investing Activities
Net cash used in investing activities increased from $21.3 million in 2012 to $28.2 million in 2013. The increase was primarily due to
construction costs for 27 new Company-owned restaurants opened in 2013 compared to 16 new Company-owned restaurants and the acquisition of three franchise restaurants in 2012, as well as capital
expenditures for future restaurant openings, maintaining our existing restaurants and certain other projects. This increase was offset by the acquisition of the South Carolina franchise restaurants in
2012.
Net
cash used in investing activities increased from $13.5 million in 2011 to $21.3 million in 2012. The increase was due primarily to construction costs for 16 new Company-owned
restaurants opened in 2011 compared to 13 new Company-owned restaurants in 2012, as well as capital expenditures for future restaurant openings, maintaining our existing restaurants and certain other
projects. Additionally, the acquisition cost of the three South Carolina franchise restaurants in 2012 was larger than the acquisition cost of the three Houston, Texas franchise restaurants in 2011.
Cash Flows Provided by Financing Activities
Cash flows provided by financing activities increased from $15.1 million in 2012 to $16.0 million in 2013, primarily due to a
$0.6 million increase in proceeds from deemed landlord financing due to increased tenant improvement collections related to restaurants that we have been deemed the accounting owner of and an
increase of $0.3 million in loan origination costs.
Cash
flows provided by financing activities increased from $7.6 million in 2011 to $15.1 million in 2012, due primarily to increased net borrowings of $6.8 million under our
Credit Facility. Additionally, proceeds from deemed landlord financing increased $0.9 million due to increased tenant improvement collections related to restaurants that we have been deemed the
accounting owner.
Credit Facility
We have an existing credit agreement with a commercial finance company that includes a term loan and line of credit, which are collateralized by a
first-priority interest in, among other things, our accounts receivable, general intangibles, inventory, equipment, furniture and fixtures.
On
June 20, 2012, we signed the Second Amendment to the Credit Facility primarily to accommodate the purchase of the South Carolina franchise restaurants. As part of the Second Amendment, the
Credit Facility increased to $25.0 million with incremental commitments of up to $5.0 million.
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On November 30, 2012, we signed the Third Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of the Term Loan,
increasing the total outstanding borrowings under the Term Loan to $25.0 million. In addition, the Line of Credit was increased to $20.0 million with incremental commitments of up to
$15.0 million. Under the Credit Facility, we are required to enter into a rate contract, within 90 days of the effective date of the amendment, providing protection against fluctuations
in interest rates with respect to at least 50% of the principal amount of the Term Loan. In February 2013, we entered into an interest rate cap agreement with an initial notional amount of
$12.3 million. The notional amount amortizes commensurate with scheduled payments on the Term Loan. The instrument caps the one-month LIBOR rate at 2.0%, which is a component of the total rate
on the Term Loan.
On
November 26, 2013, we signed the Fourth Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of the Term Loan, increasing the total
outstanding borrowings under the Term Loan to $38.5 million. In addition, the Line of Credit was increased to $26.5 million with incremental commitments of up to $15.0 million.
The maturity date for the Term Loan and the Line of Credit is November 29, 2017. We are required to make quarterly payments equal to 1.25% of the new term loan commitment amount on the last
business day of each March, June, September and December beginning on December 31, 2013. Any remaining balance will be repaid upon maturity. The interest rate for our debt was 5.25% and 6.0% at
December 30, 2013 and December 31, 2012, respectively. The Credit Facility includes customary covenants, including covenants limiting fundamental changes and certain transactions and
payments. In addition, we are required to satisfy three quarterly financial covenants: (1) a consolidated leverage ratio of less than 5.75 to 1.00 through to December 31, 2014 and a
consolidated leverage ratio of less than 5.50 to 1.00 thereafter, (2) a
consolidated fixed charge coverage ratio of greater than 1.25 to 1.00, and (3) a capital expenditure incurrence test, which increases every year during the duration of the credit agreement.
In
conjunction with amendments to the Credit Facility, we incurred and capitalized $0.3 million of loan costs in the fifty-two weeks ended December 30, 2013. During the fifty-three weeks
ended December 31, 2012, we incurred and capitalized $0.6 million of loan costs.
On
January 31, 2014, we signed the Fifth Amendment to the Credit Facility. Under the Fifth Amendment to the Credit Facility, the consolidated leverage ratio which we are required to satisfy was
raised to less than (1) 5.85 to 1.00 through to the last day of the second fiscal quarter of 2014, (2) 5.80 to 1.00 through to the third fiscal quarter of 2014,
(3) 5.75 to 1.00 for the period commencing the first day of the fourth fiscal quarter of 2014 to the last day of the fourth fiscal quarter of 2015, and (4) 5.50
to 1.00 thereafter. The applicable multiple for determining the maximum loan balance under the Line of Credit was also increased to (a) 4.25 for the period through to the second to last
day of the third fiscal quarter of 2014, (b) 4.15 for the period commencing on the last day of the third fiscal quarter of 2014 through to the second to last day of the fourth
fiscal quarter of 2014, (c) 4.00 for the period commencing on the last day of the fourth fiscal quarter of 2014 through to the second to last day of the first fiscal quarter
of 2016, and (d) 3.75 thereafter. As of February 24, 2014, we were in compliance with all of our covenants under the Credit Facility.
As
of February 24, 2014, we had $46.8 million outstanding under our $65.0 million Credit Facility, including $38.0 million under the Term Loan and $8.8 million under
the Line of Credit, and $3.0 million of additional available borrowing capacity at such date. We intend to use the net proceeds from this offering to repay the entire amount of the outstanding
borrowings under our Credit Facility. After giving effect to this offering and the use of proceeds therefrom, we believe we will have capacity to borrow the full $26.5 million amount under the
Line of Credit. See "Use of Proceeds."
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Table of Contents
Contractual Obligations
The following table presents our commitments and contractual obligations as of December 30, 2013, as well as our long-term obligations:
Payments Due by Period
Total
Less than
1 year
Between
1-3 years
Between
3-5 years
More than
5 years
(Dollars in thousands)
Long-term debt obligations
(1)
$
41,400
$
1,925
$
3,850
$
35,625
—
Interest payments on long-term debt obligations
(2)
5,408
1,528
2,754
1,126
—
Operating lease obligations
(3)
132,479
7,030
14,621
14,642
96,186
Deemed landlord financing
(4)
46,992
2,234
4,571
4,805
35,382
Total
$
226,279
$
12,717
$
25,796
$
56,198
$
131,568
(1)
Includes
aggregate principal payments on the Credit Facility. We expect to use the net proceeds from this offering to repay the entire amount
of the outstanding borrowings under our Credit Facility. See "Use of Proceeds."
(2)
Includes
the interest due on the Term Loan and the Line of Credit at a 5.25% interest rate and a 0.5% interest rate on the unused balance of
the Line of Credit (rates as of December 30, 2013). As of December 30, 2013, we had $2.9 million outstanding under the Line of Credit and an unused balance of
$23.6 million. Assumes no new borrowings on the Line of Credit.
(3)
Includes
base lease terms and certain optional renewal periods that are included in the lease term in accordance with accounting guidance
related to leases.
(4)
Includes
base lease terms and certain optional renewal periods for restaurant locations where we have been deemed to be the accounting owner
of the landlord's shell that are included in the lease term in accordance with accounting guidance related to leases.
Off-Balance Sheet Arrangements
At December 30, 2013, we did not have any off-balance sheet arrangements, except for restaurant leases.
Critical Accounting Policies and Estimates
Our discussion and analysis of operating results and financial condition are based upon our financial statements. The preparation of our financial
statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures of contingent
assets and liabilities. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Our
critical accounting policies are those that materially affect our financial statements and involve difficult, subjective or complex judgments by management. Although these estimates are based on
management's best knowledge of current events and actions that may impact us in the future, actual results may be materially different from the estimates. We believe the following critical accounting
policies are affected by significant judgments and estimates used in the preparation of our consolidated financial statements and that the judgments and estimates are reasonable.
Leases
We lease space for various restaurant locations under long-term non-cancelable operating leases from unrelated third parties. Most of our leases are
classified as operating leases under ASC 840—Leases. Rent expense, including rent-free periods if applicable, is recognized on a straight-line basis over the lease term.
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The
lease term for all types of leases begins on the date we become legally obligated for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes
cancelable option periods where failure to exercise such options would result in an economic penalty.
In
some cases, the asset we will lease requires construction to ready the space for its intended use, and in certain cases, we have involvement with the construction of leased assets. The construction
period begins when we execute our lease agreement with the property owner and continues until the space is substantially complete and ready for its intended use. In accordance with ASC 840-40-55, we
must consider the nature and extent of our involvement during the construction period, and in some cases, our involvement results in us being considered the accounting owner of the construction
project; in such cases, we capitalize the landlord's construction costs, including the value of costs incurred up to the date we execute our lease (e.g., our portion of any costs of the building
"shell") and costs incurred during the remainder of construction period, as such costs are incurred. Additionally, ASC 840-40-55 requires us to recognize a financing obligation for construction
costs incurred by the landlord. One example of involvement that results in Zoës Kitchen being considered the accounting owner is a case where Zoës Kitchen leases a "cold
shell."
Once
construction is complete, we are required to perform a sale-leaseback analysis pursuant to ASC 840-40 to determine if we can remove the landlord's assets and associated financing obligations from
the consolidated balance sheet. In certain leases, we maintain various forms of "continuing involvement" in the property, thereby precluding us from derecognizing the asset and associated financing
obligations following the construction completion. In those cases, we will continue to account for the asset as if we are the legal owner, and the financing obligation similar to other debt, until the
lease expires or is modified to remove the continuing involvement that prohibits derecognition. Once de-recognition is permitted we would be required to account for the lease as either operating or
capital in accordance with ASC 840.
We
determined that we were the accounting owner of a total of 18 and 31 leases as a result of the application of build-to-suit lease accounting as of December 31, 2012 and December 30,
2013, respectively. We had six and three of these buildings under construction as of December 30, 2013 and December 31, 2012, respectively. In order to prevent Zoës
Kitchen from being deemed the accounting owner for future leases or ensuring that those that do so will qualify for de-recognition once construction is complete, we are taking measures to ensure that
our leases language does not include any forms of continuing involvement.
In
conjunction with these leases, we also record deemed landlord financing equal to the total construction costs incurred by the landlord prior to turning the property over to us. These building lease
obligations will be settled through a combination of periodic cash rental payments and the return of the leased property at the expiration of the lease. Application of this accounting model means
that, at the end of the expected occupancy period, which may include lease renewal periods, any remaining obligation in excess of the depreciated carrying value of the fixed asset will be recognized
as a non-cash gain on derecognition of the property and extinguishment of the obligation. We do not report rent expense for the properties which are deemed owned for accounting purposes. Rather,
rental payments required under the lease are considered debt service and applied to the deemed landlord financing and interest expense.
Deferred Rent
Certain leases contain annual escalation clauses based on fixed escalation terms. The excess of cumulative rent expense (recognized on a straight-line
basis) over cumulative rent payments made on leases with fixed escalation terms is recognized as deferred rent liability in the accompanying balance sheets. Also included in deferred rent are lease
incentives provided by landlords upon entering into leases, often related to landlord payments for tenant improvements that we commonly negotiate when opening new restaurants to help fund the
build-out costs. These costs typically include general construction to alter the layout of the restaurant, leasehold improvements, and other miscellaneous items. We capitalize our leasehold
improvements and record a deferred liability for the amount of cash received from the landlord, which is
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amortized
on a straight-line basis over the lease term as defined above. The amortization of the deferred liability related to these tenant improvements is recorded as a reduction of rent expense.
If
the improvements made to the property are considered landlord assets we do not record either an asset or liability unless the overall arrangement is within the scope of ASC 840-40-55 as
discussed under Leases. For leases where we are considered to be the owner of the construction project and receive tenant improvement allowances, we record these amounts received as a borrowing under
the deemed landlord financing liability.
Lease
term is determined at lease inception and includes the initial term of the lease plus any renewal periods that are reasonably assured to occur. The lease term begins when we have the right to
control the use of the property.
Additionally,
certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize
contingent rent expense provided the achievement of that target is considered probable.
Revenue Recognition
We recognize revenue when food and beverage products are sold. Revenue is reported net of sales and use taxes collected from customers and remitted to
government taxing authorities. We sell gift cards which do not have an expiration date and do not deduct non-usage fees from outstanding gift card balances. Gift card revenue is recognized when the
gift card is redeemed by the customer or when it is determined that the likelihood of the gift card being redeemed is remote and there is no legal obligation to remit the unredeemed gift cards to the
relevant jurisdiction. We recognize gift card breakage as revenue by applying our estimate of the rate of gift card breakage over the period of estimated performance. These estimates are based on
customers' historical redemption rates and patterns. As of December 30, 2013, we recognized $0.3 million from gift card revenue. We did not recognize any revenue from gift card breakage
for the years ended December 31, 2012 and December 26, 2011.
Franchise Fee and Royalty Accounting
We recognize initial franchise fee revenues when substantial performance of all franchisor obligations has been achieved. Substantial performance is
achieved when we have no remaining obligation or intent to refund any cash or to forgive any unpaid notes or receivables from franchisees; has performed substantially all of the initial services
required by the license agreement; and has met all other material conditions or obligations. The commencement of operations by the franchisee indicates substantial performance has occurred. If
substantial performance of our obligations has not been completed, recognition as revenue of such amounts received is deferred until all material services or conditions have been satisfied by us. In
addition, monthly royalties are recognized as revenue when earned.
Valuation of Goodwill, Long-Lived and Other Intangible Assets
Goodwill represents the excess of the purchase price of the acquired businesses over the fair value of the assets acquired and liabilities assumed
resulting from the acquisition. In accordance with the provisions of ASC 350—Intangibles—Goodwill and Other, goodwill and indefinite lived intangible assets acquired in a
purchase business combination are not amortized, but instead tested for impairment at least annually or more frequently should an event occur or circumstances indicate that the carrying amount may be
impaired. Such events or circumstances may be a significant change in business climate, economic and industry trends, legal factors, negative operating performance indicators, significant competition,
changes in strategy or disposition of a reporting unit or a portion thereof. For purposes of applying ASC 350, we have identified a single reporting unit, as that term is defined in ASC 350, to which
goodwill is attributable. We prepared our annual impairment testing of goodwill on the last day of the fiscal year and determined that the fair value of our reporting unit containing goodwill
substantially exceeded its carrying value as of December 30, 2013, the most recent impairment test.
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Goodwill
impairment testing is a two-step test. The first step identifies potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair
value exceeds its carrying amount, goodwill is not considered impaired and the second step of the test is unnecessary. If the carrying amount of a reporting unit's goodwill exceeds its fair value, the
second step measures the impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying amount of that goodwill. The implied fair value of goodwill is
determined in the same manner as the amount of goodwill recognized in a business combination. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess.
The
fair value of the reporting unit is estimated using a combination of market earnings multiples and discounted cash flow methodologies. This requires significant judgments including estimation of
future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth of our business, the useful life over which cash flows will occur and determination of our
weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.
A
trade name is considered to be an important element associated with the sales appeal of certain products and services. The trade name distinguishes goods and services from competitors, indicates the
source of the goods and services, and serves as an indication of the quality of the product. Our trade name consists of various protected words, symbols, and designs that help identify our products
and services such as the "Zoës Kitchen" trademark. This capitalized cost is being amortized on a straight-line basis over its estimated useful life of 20 years.
Changes
in projections or estimates, a deterioration of operating results and the related cash flow effect or a significant increase in the discount rate or decrease in the royalty rate could decrease
the estimated fair value and result in impairments. We assess potential impairments of our long-lived assets in accordance with the provisions of ASC 360—Property, Plant and Equipment. An
impairment review is performed whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors considered by us include, but are not limited
to: significant underperformance relative to expected historical or projected future operating results; significant changes in the manner of use of the acquired assets or the strategy for the overall
business; significant negative industry or economic trends.
We
recognized no impairment losses during the years ended December 30, 2013, December 31, 2012 and December 26, 2011. In 2011, we wrote off the net franchise agreement intangible
asset related to the Houston Shepherd restaurant in the amount of $156,141 as a component of bargain purchase gains from acquisitions associated with such franchise.
Equity-Based Compensation Expense
Certain of our employees have been granted Class B units in Zoe's Investors, pursuant to its limited liability company agreement. All
equity-based compensation awards granted to our employees prior to fiscal year 2012 contained service conditions only, while all equity-based compensation awards granted to our employees starting in
fiscal year 2012 and for all subsequent periods contain both service and performance conditions. As the performance condition in these equity-based compensation awards is a change in control
provision, we have determined that the performance condition is not probable of being met on the grant date of these awards and accordingly have not yet recorded equity-based compensation for all
awards granted starting in fiscal year 2012. Expense for these awards will be recorded when it is probable that a change in control will occur. As our employees have been granted equity-based awards
in Zoe's Investors, the related compensation expense, if any, has been reflected in our consolidated financial statements, with a corresponding capital contribution from our Zoe's Investors. None of
our employees have been granted equity-based awards in our common stock.
We
measure equity-based awards granted to our employees prior to 2012 at fair value on the grant date and recognize the corresponding compensation expense for those awards, net of estimated
forfeitures, over the
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requisite
service period, which is generally the vesting period of the respective award. The straight-line method is applied to all awards with service conditions, while the graded-vesting method is
applied to all awards with both service and performance conditions.
We
recognize compensation expense only for the portion of awards that are expected to vest. In developing a forfeiture rate estimate, we have considered our historical experience to estimate
pre-vesting forfeitures for service based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially
different from our estimate, we may be required to record adjustments to equity-based compensation expense in future periods. These assumptions represent our best estimates, but involve inherent
uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates, our equity-based compensation expense could be materially
impacted in that period.
For
all equity-based awards granted in 2012 and subsequent periods, no equity-based compensation expense has been recorded in the consolidated statements of operations. These equity-based awards
require that both service and performance conditions be met prior to the employee vesting. As the performance condition of the awards is accelerated solely by a change in control of our overall
company, we have concluded that it is not probable that
the award will vest until such event occurs. We plan to modify certain of the awards so either the service condition or the performance condition must be met prior to the employee vesting. Upon
completion of this offering, these equity-based awards will be converted to restricted shares, based on a waterfall calculation, at the determined price of the initial public offering. For additional
information on the Distribution Transactions, see "Our Corporate Information." The shares will consist of both vested and unvested shares. The compensation expense on the vested shares will be
recognized immediately at the time of the initial public offering based on the price of our initial public offering, while the compensation expense on the unvested shares will be recognized
straight-line over the remaining vesting period. The amount of compensation expense will be determined after the share conversion and pricing of the initial public offering.
Valuation of Class B units
The fair value of the Class B units of Zoe's Investors is determined on each grant date. In the absence of a public trading market for Zoe's
Investors units, the determination of the fair value of Zoe's Investors units was performed using methodologies, approaches and assumptions consistent with the American Institute of Certified Public
Accountants Audit and Accounting Practice Aid Series: Valuation of Privately-Held-Company Equity Securities Issued as Compensation. In addition, Zoe's Investors Board of Directors considered various
objective and subjective factors, along with input from management, to determine its best estimate of the fair value of its Class B units as of each grant date, including the
following:
•
peer group trading multiples;
•
the prices at which Zoe's Investor sold shares of preferred units and the
superior rights and preferences of the preferred units relative to Zoe's Investor's Class B units at the time of each grant;
•
our historical and forecasted performance and operating results;
•
our business strategy;
•
the composition of, and changes to, our management team and Board of
Directors;
•
the lack of an active public market for our capital units;
•
the likelihood of achieving a liquidity event such as a sale of Zoe's
Investors or our company or an initial public offering, or IPO, given prevailing market conditions;
•
external market conditions affecting the fast casual restaurant industry;
and
•
trends within the fast casual restaurant industry.
At
each grant date, Zoe's Investors management determined the fair value of the Class B units by utilizing the guideline public company method or GPCM. They estimated our Zoe's Investors
enterprise value by comparing it to publicly traded companies in our industry group. The companies used for comparisons
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under
the GPCM were selected based on a number of factors, including but not limited to, the similarity of their industry, business model and financial risk to those of our Zoe's Investors. The
valuation considered the average EBITDA trading multiples of the guideline public companies and applied that multiple to our projected EBITDA. The valuation of the Class B units also considered
the priority and preferences associated with our Zoe's Investors Class A and Class C units and the illiquid nature of the Class B units in determining the fair value of the
Class B units.
The
valuation of the Class B units at each grant date varied primarily based on changes in the average EBITDA multiples of the guideline public companies due to changes in the market
environment for these companies and our industry and on changes in our projected EBITDA due to changes in budget year over year, including
considering the number of restaurants under development, the funding being used to complete the opening of those restaurants and the expected operating performance of our business.
The
following table summarizes by grant date the number of units granted, the related threshold price of the units granted, and the fair value of units on date of grant from January 1, 2012
through December 30, 2013:
Grant Date
Number of
Units Granted
Per Share
Threshold
of Units
(1)
Fair Value of
Units on
Date of Grant
(3)
July 30, 2012
140,000
(2)
$
2.00
$
2.00
April 8, 2013
80,000
$
7.00
$
7.00
December 30, 2013
105,000
$
11.88
$
11.88
(1)
The
Per Share Threshold Price of Units represents the determination by our Zoe's Investors' Board of Directors of the market value of our
Parent's Class B units on the date of grant, as determined taking into account our most recently available valuation as well as additional factors, which may have changed since the date of the
most recent valuation through the date of grant.
(2)
10,000
of such units are no longer outstanding as of December 30, 2013 because certain employees are no longer employed by
Zoës Kitchen.
(3)
Fair
value is for reference only. Expense to be recognized will be based on the number of common shares issued as a result of the Distribution
Transactions at the fair value of the Company's initial public offering price.
No compensation expense is recognized for all awards granted in fiscal 2012 and subsequent periods. As such, the fair value of the common units determined by
Zoe's Investors' Board of Directors will be used to determine the number of common stock each employee is entitled to upon a change of control. Upon completion of this offering, the equity-based
compensation expense we would record for each vested award will be equal to the initial public offering price per share of our common stock multiplied by the number of shares of our common stock to
which our employees would be entitled. The remaining unvested shares will be fair valued and expense will be recognized over the remaining service life. See "—Equity-Based Compensation
Expense."
Income Tax
We recognize deferred tax assets and liabilities for the expected future tax consequences or events that have been included in the financial
statements or tax returns. We are also required to record a valuation allowance against any deferred tax assets, if it is more likely than not that all or some of the deferred tax assets will not be
realized. The determination is based upon our analysis of existing deferred tax assets, expectations of our ability to utilize these tax attributes through a review of historical and projected taxable
income and establishment of tax strategies. If we are not able to implement the necessary tax strategies and our future taxable income is reduced, the amount of tax assets considered realizable could
be reduced in the near term.
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We
only record tax benefits for positions that we believe are more likely than not of being sustained under audit examination based solely on the technical merits of the associated tax position. The
amount of tax benefit recognized in the financial statements for any position are measured based on the largest amount of the tax benefit that we believe is greater than fifty percent likelihood of
being realized upon ultimate settlement.
Tax
liabilities are adjusted as new, previously unknown information becomes available. Due to the inherent uncertainty involved in estimation of tax liability, actual payment could be materially
different from the estimated liability. These differences will impact the amount of income tax expense recorded in the period in which they are determined. Although we consider tax liabilities
recorded for the years ended December 30, 2013 and December 31, 2012 to be appropriate, the ultimate resolution of such matters could have a potentially material favorable or unfavorable
impact on our consolidated financial statements.
JOBS Act
On April 5, 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of
the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay
the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period
and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
We
are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if
as an emerging growth company we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor's attestation report on our systems of internal
controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the
Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm
rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain
executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer's compensation to median employee
compensation. These exemptions will apply until we no longer meet the requirements of being an emerging growth company. We will remain an emerging growth company until the earlier of (1) the
last day of the fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenue of at least $1.0 billion or
(c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business
day of our prior second fiscal quarter, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are exposed to market risk from changes in interest rates on debt and changes in commodity prices. Our exposure to interest rate fluctuations is
limited to our outstanding indebtedness under our Credit Facility, which bears interest at variable rates. As of December 30, 2013, there was $41.4 million in outstanding borrowings
under our Credit Facility. A plus or minus 1.0% in the effective interest rate applied on these loans would have resulted in a pre-tax interest expense fluctuation of $0.5 million on an
annualized basis.
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Commodity Price Risk
We purchase certain products that are affected by commodity prices and are, therefore, subject to price volatility caused by weather, market
conditions and other factors which are not considered predictable or within our control. Although these products are subject to changes in commodity prices, certain purchasing contracts or pricing
arrangements we use contain risk management techniques designed to minimize price volatility. In many cases, we believe we will be able to address material commodity cost increases by adjusting our
menu pricing or changing our product delivery strategy. However, increases in commodity prices, without adjustments to our menu prices, could increase restaurant operating costs as a percentage of
Company-owned restaurant sales.
Recent Accounting Pronouncements
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net
Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists," to require that in certain cases, an unrecognized tax benefit, or portion of an unrecognized tax benefit, should
be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the
same taxing jurisdiction. ASU 2013-11 is effective as of December 14, 2013. We do not believe the adoption of this standard will have a significant impact on our consolidated financial
position or results of operations.
Effective
January 1, 2013, we adopted ASU No. 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities." The adoption of ASU 2013-01 did not have a
significant impact on our consolidated financial position or results of operations.
Effective
December 31, 2012, we adopted ASU No. 2012-02 "Testing Indefinite-Lived Intangible Assets for Impairment." ASU 2012-02 simplifies how entities test indefinite-lived intangible
assets for impairment and permits an entity to first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. The adoption of
ASU 2012-02 did not have a significant impact on our consolidated financial position or results of operations.
Effective
January 1, 2012, we adopted ASU No. 2011-05, "Presentation of Comprehensive Income." The adoption of ASU 2011-05 concerns presentation and disclosure only and did not have an
impact on our consolidated financial position or results of operations.
Effective
January 1, 2012, we adopted ASU No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and International Financial Reporting
Standards." The adoption of ASU 2011-04 did not have a significant impact on our consolidated financial position or results of operations.
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BUSINESS
Our Company
Born in the Mediterranean. Raised in the South. Bringing Mediterranean Mainstream.
Zoës Kitchen is a fast growing, fast casual restaurant concept serving a distinct menu of fresh, wholesome, Mediterranean-inspired
dishes delivered with Southern hospitality. Founded in 1995 by Zoë and Marcus Cassimus in Birmingham, Alabama, Zoës Kitchen is a natural extension of Zoë
Cassimus' lifetime passion for cooking Mediterranean meals for family and friends. Since opening our first restaurant, we have never wavered from our commitment to make our food fresh daily and to
serve our customers in a warm and welcoming environment.
We
believe our brand delivers on our customers' desire for freshly-prepared food and convenient, unique and high-quality experiences. As a result, we have delivered strong growth in restaurant count,
comparable restaurant sales, AUVs, revenues and Adjusted EBITDA. We have grown from 21 restaurants across seven states, including five franchised locations, in 2008 to 111 restaurants across 15
states, including six franchised locations, as of February 24, 2014, representing a CAGR of 38.1%. Our Company-owned restaurants have generated 16 consecutive fiscal quarters of positive
comparable restaurant sales growth, due primarily to increases in customer traffic, which we believe demonstrates our growing brand equity. We have grown our Company-owned restaurant AUVs from
approximately $1.1 million in 2009 to approximately $1.5 million in 2013, representing an increase of 32.9% over that time period. From 2009 to 2013, our total revenue increased from
$20.8 million to $116.4 million and Adjusted EBITDA increased from $0.9 million to $10.9 million. We generated a net loss of $2.8 million and $3.7 million in
2009 and 2013, respectively. For a reconciliation of Adjusted EBITDA, a non-GAAP term, to net income, see "Selected Historical Consolidated Financial and Other Data." Our growth in comparable
restaurant sales since 2009 has allowed us to invest significant amounts of capital to drive growth through the opening of new restaurants and the hiring of personnel required to support our growth
plans.
Total Restaurants at End of Fiscal Year
Comparable Restaurant
Sales Growth
Average Unit Volumes
(Dollars in thousands)
Our Concept
Delivering Goodness in the Communities We Serve.
The word "zoë," which means "life" in Greek, is embraced in every aspect of the Zoës Kitchen culture and is a key
component of our concept. Our mission is to "deliver goodness to our customers, from the inside out" by: (i) offering a differentiated menu of simple, tasty and fresh Mediterranean cuisine
complemented with several Southern staples; (ii) extending genuine Southern hospitality with personality, including food delivered to your table; (iii) providing an inviting,
cosmopolitan, casual-chic environment in our restaurants; and (iv) delivering an outstanding catering experience for business and social events. Our menu offers high-quality meals made from
scratch generally using produce, proteins and other ingredients that are predominantly preservative- and additive-free, including our appetizers, soups, salads, and kabobs. We believe our team members
are a reflection of our customers-educated, active and passionate-and embrace
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our
culture of providing engaging, attentive service, which we believe helps drive brand advocacy. We believe we deliver a compelling value proposition by offering flavorful food that our customers
feel good about eating and providing friendly customer service in a warm, inviting atmosphere, all for an average per customer spend of $9.57 for 2013. Our food, including both hot and cold items, is
well suited for catering to a variety of business and social occasions, and we believe our strong catering offering is a significant competitive differentiator that generates consumer trial of our
menu and provides additional opportunities for existing customers to enjoy our food off-premise. For 2013, catering represented approximately 17% of our revenue.
We
believe we provide an emotional connection to our target customer — educated, affluent women and their families — who represent approximately 70% of our
customer visits, based on internal estimates and third-party data. We promote our brand as an extension of our customers' own kitchens by offering high-quality food inspired by family recipes which
reminds them of food they may have prepared at home, while allowing them to spend extra time with family and friends to fuel a balanced and active lifestyle. We believe our menu is appealing during
both lunch and dinner, resulting in a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering) for 2013.
Our Industry
We operate in the fast casual segment of the restaurant industry, which is one of the industry's fastest growing segments. According to Technomic, the
fast casual segment generated $31 billion in sales in 2012 and is projected to grow at a CAGR of approximately 10% to $50 billion by 2017. The largest 78 fast casual restaurant concepts
grew sales by 13.2% in 2012 to $24.2 billion, compared to growth of 4.9% for the 500 overall largest restaurant chains in the United States. We are the largest U.S.-based fast casual restaurant
concept (by number of restaurants) featuring Mediterranean cuisine. Our differentiated menu offering flavorful Mediterranean food delivered to your table at an average per customer spend of $9.57 for
2013 positions us to compete successfully against other fast casual concepts as well as against casual dining restaurants, providing us with a large target market.
Our Strengths
Love Life, Live Zoës!
We believe the following strengths differentiate us from competitors and serve as the foundation for our continued growth.
Our Food—Simple. Tasty. Fresh!
We believe the Zoës Kitchen experience is driven by providing simple, tasty and fresh Mediterranean food
at a compelling value to our customers. High-quality ingredients serve as the foundation of Zoës Kitchen. Our food is made from scratch daily, and we still serve some recipes that were
created in the Southern kitchen of our founder, drawing from her Greek heritage. We prepare our food by utilizing traditional Mediterranean preparation methods such as grilling and baking. Our menu is
a reflection of traditional Mediterranean cuisine, offering an abundance of fresh fruits, vegetables and herbs, grains, olive oil and lean proteins. We believe the variety on our menu allows people
with different preferences to enjoy a meal together.
•
Simple.
Our food is simply prepared
and made to order in our scratch kitchens. Our cooking philosophy is rooted in rich traditions that celebrate food, rather than in fads or trends. From our hummus, made fresh daily and served with
warm pita bread, to our flavorful salads and kabobs, we serve real food. By real food, we mean food made from simple ingredients, such as raw vegetables, fruits and legumes. We serve food the way it
was prepared 100 years ago — raw, grilled or baked. Our goodness is created through the careful selection of quality, wholesome ingredients, time-honored preparations inspired by
Mediterranean culinary traditions, family recipes that have been passed down for generations and delivering balanced meals.
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•
Tasty.
True to our heritage, the
flavors in our menu are born in the Mediterranean and raised in the South. Inspired by family recipes and Zoë Cassimus' simple, fresh-from-the-garden sensibility, our menu features
Mediterranean cuisine complemented with several Southern staples. We offer our customers wholesome, flavorful items such as our Mediterranean Tuna sandwich, as well as entrées such as
chicken, steak and salmon kabobs and chicken and spinach roll-ups (tortillas stuffed with feta cheese, grilled chicken, sundried tomatoes and spinach), each of which is served with a choice of a side
item such as braised rosemary white beans, rice pilaf, pasta salad, roasted vegetables or seasonal fruit. Our culinary team delivers flavorful new menu additions with seasonal ingredients allowing our
customers to "Live Mediterranean." One example is our new Mediterranean Quinoa Salad where quinoa is combined with broccoli, tomatoes, onions and feta cheese to deliver a nutritious
entrée packed with flavor. Our commitment to fresh food, combined with our traditional Mediterranean cooking philosophy, results in food options that are full of flavor.
•
Fresh.
We seek to provide customers
with flavorful menu offerings made from high-quality ingredients that align with our customers' lifestyles. Fresh ingredients are delivered to our kitchens, and team members wash, cut and prepare food
from scratch daily. We utilize grilling as the predominant method of cooking our food, and there are no microwaves or fryers in our restaurants. We cater to a variety of dietary needs by offering
vegetarian, vegan, gluten-free and our calorie conscious Simply 500
TM
menu selections. We aim to provide food that makes our customers feel good about themselves and their decision to
choose Zoës Kitchen.
Differentiated Fast Casual Lifestyle Brand with a Desirable and Loyal Customer Base.
We believe the Zoës Kitchen brand reflects our customers' desire
for convenient, unique and high-quality experiences and their commitment to family, friends and enjoying every moment. We seek to deliver on these desires and to provide goodness to both the mind and
the body by fueling our customers' active lifestyle with nutritious, high-quality food that makes them feel great from the inside out. We believe we are an aspirational brand with broad appeal that
our customers
embrace as a reflection of their desired self-image — active, vibrant, sophisticated, genuine, caring and passionate, which results in customer advocacy and repeat visits. Based on
third-party surveys, we estimate that approximately 94% of our surveyed customers intend to recommend Zoës Kitchen. We seek to strengthen our brand through grassroots marketing programs
and the use of social media and technology aimed at building long-term relationships with our customers and inspiring lifelong brand advocates.
We
provide a warm and welcoming environment, attracting customers from a variety of demographic groups. We believe our combination of menu offerings, ambience and location is designed to appeal to
educated and affluent women, who along with their families, represent approximately 70% of our customer visits. Our female customers generally lead active lifestyles, have an average annual household
income of over $100,000 and a majority of them are college educated. We believe this demographic represents a highly-desirable customer base with strong influence on a family's mealtime
decision-making and are strong brand advocates. We also believe they appreciate the authenticity of our brand and the quality of our menu offerings, admire that we are still cooking meals inspired by
family recipes and feel good about the food they provide to themselves and their families when choosing Zoës Kitchen. Additionally, we believe our attractive demographic mix, high
repeat visit rate and our ability to draw an average of approximately 2,500 customers to each of our restaurants per week makes us a desirable tenant to landlords and developers of lifestyle centers
seeking to drive traffic to complementary retail businesses.
Delivering a Contemporary Mediterranean Experience with Southern Hospitality.
We strive to provide an inviting and enjoyable customer experience through the
atmosphere of our restaurants and the friendliness of our team members. Our restaurants, highlighted by our distinct Zoës Kitchen stripes drawn from the color palette of many seaside
Mediterranean neighborhoods, are designed to be warm, welcoming and full of energy. Each of our restaurants has a unique layout to optimize the available space with consistent design cues that strive
to balance the warmth of dark wood with contemporary, colorful and cosmopolitan casual-chic décor. Our patios, a core feature of our restaurants, are an authentic part of both our
Southern
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and
Mediterranean heritage and we believe they provide a relaxing and welcoming dining environment. We invite the community to be a part of each restaurant by showcasing local items such as artwork by
the children of our customers. Overall, we seek to create a warm, inviting environment that welcomes casual conversations, family moments or quick exchanges as our customers eat and enjoy a break from
their busy schedules.
True
to our Southern heritage, we aim to deliver warm hospitality and attentive service whether our customers choose to dine-in, take-out or host a catered event. Our team members are a reflection of
our customers — educated, active and passionate. They are the heart and soul of what we call "Southern hospitality with personality" — making sure our customers
feel as welcome as they are well fed. Our team members are trained to deliver personalized service and maintain a clean and inviting atmosphere that fosters a pleasant dining experience. We offer
modified table service where, after ordering at the counter, our
customers' food is served at their table on china with silverware. Our team members routinely check on them throughout the meal and then bus their table, all without the expectation of receiving a
tip. We believe the atmosphere of our restaurants and the warmth of our team members encourages repeat visits, inspires advocacy and drives increased sales.
Diverse Revenue Mix Provides Multiple Levers for Growth.
We believe our differentiated menu of both hot and cold food enables our customers to utilize our
restaurant for multiple occasions throughout the day. We had a balanced day-part mix of approximately 60% lunch and 40% dinner (excluding catering), and our catering business represented approximately
17% of revenue, in each case, for 2013. We view catering as our third day-part, which helps to increase AUVs and brand awareness by introducing our concept to new customers through trial. We believe
we effectively serve both small and large groups in our restaurants, as well as outside of our restaurants with our catering and home meal replacement alternatives, including our Zoës
Fresh Take
TM
grab-and-go coolers and our family dinner options. In addition, we also serve beer and wine in a majority of our restaurants. We believe the breadth of our offerings
provides us multiple levers to continue to drive growth.
Attractive Unit Economic Model with Proven Portability.
Our sophisticated, predictive site selection strategy and flexible new restaurant model have resulted in
growth in markets of varying sizes as we have expanded our restaurant base utilizing in-line, end-cap and free-standing restaurant formats. We believe our strong performance across a variety of
geographic areas and steady AUV growth are validation of our concept's portability. For 2013, our top 20 performing restaurants were spread across seven different states. We have experienced
consistent AUV growth across all of our restaurant vintages.
Our
restaurant model is designed to generate strong cash flow, attractive restaurant-level financial results and high returns on invested capital. We believe our unit economic model provides a return
on investment that is attractive to investors and supports further use of cash flow to grow our restaurant base. Our new restaurant investment model targets an average cash build-out cost of
approximately $750,000, net of tenant allowances, AUVs of $1.3 million and cash-on-cash returns in excess of 30% by the end of the third full year of operation. On average, new restaurants
opened since the beginning of 2009 have exceeded these AUV and cash-on-cash return targets within the third year of operations. Additionally, since the majority of our restaurant base was built in
2009 or after, we believe our restaurants are well maintained and will likely require minimal additional capital expenditures in the near term, allowing a majority of our cash flow to be available for
investment in new restaurant development and other growth initiatives.
Experienced Management Team.
Our strategic vision and results-driven culture are directed by our senior management team under the leadership of Kevin Miles, who
guided the growth of our Company from 22 to 111 restaurants. Mr. Miles joined Zoës Kitchen in 2009 as Executive Vice President of Operations. In 2011, he was promoted to
President and Chief Operating Officer, and in 2012, he was promoted to Chief Executive Officer. Mr. Miles is a fast casual industry veteran with over 20 years of relevant experience
including leadership roles at La Madeleine French Bakery and Café, Baja Fresh Mexican Grill and Pollo Campero. He directs a team of dedicated and progressive leaders who are focused on
executing our
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business
plan and implementing our growth strategy. We believe our experienced management team is a key driver of our restaurant growth and positions us well for long-term growth.
Our Growth Strategies
Bringing Mediterranean Mainstream.
We plan to execute the following strategies to continue to enhance our brand awareness and grow our revenue and profitability.
Grow Our Restaurant Base.
We have expanded our restaurant base from 21 restaurants in seven states in 2008 to 111 restaurants in 15 states as of February 24,
2014. We opened 27 restaurants in 2013, and we plan to open 28 to 30 restaurants in 2014. We believe we are in the early stages of our growth story and estimate a long-term total restaurant potential
in the United States in excess of 1,600 locations. We utilize a sophisticated site selection process using proprietary methods to identify target markets and expansion opportunities within those
markets. Based on this analysis, we believe there is substantial development opportunity in both new and existing markets. We expect to double our restaurant base in approximately four years.
Increase Comparable Restaurant Sales.
We have consistently demonstrated strong comparable restaurant sales growth, and we intend to generate future comparable
restaurant sales growth with an emphasis on the following goals:
•
Heighten brand awareness to drive new customer
traffic.
We utilize a marketing strategy founded on inspiring brand advocacy rather than simply capturing customers through traditional
tactics such as limited time offers. Our highly-targeted marketing strategy seeks to generate brand loyalty and promote advocacy by appealing to customers' emotional needs: (i) their passion
for wholesome and flavorful food; (ii) their desire for simple solutions to make life more convenient; (iii) their focus on choices as a reflection of self; and (iv) their desire
to be a guest at their own party. We have a long history of generating new traffic growth at our restaurants through the application of targeted advertising messages, local restaurant-level marketing
and the word-of-mouth of our existing customers to build brand recognition in the markets we serve.
We
utilize a variety of channels to communicate brand messaging and build relationships with customers. Our digital strategy includes social media, online influencer programming and blogs hosted on
our website and microsite. Our social community, including Facebook, Pinterest, Instagram and Twitter, includes more than 140,000 users combined. In addition, customers can opt into our e-mail
marketing program or download our custom mobile LIFE app, which consists of 293,000 unique members combined. These programs enable us to segment and target messaging applicable to each of these
members. We also use traditional methods to appeal to customers inside our restaurants, including point of purchase displays and cashier incentive programs. We build brand awareness through
partnerships with schools and community partners, as well as complementary businesses that target our core customers. We will continue to leverage our catering business, promotional events and a
targeted menu sampling strategy as effective means to introduce customers to the Zoës Kitchen brand. We believe the continued implementation of our highly-targeted marketing strategy,
combined with the core strengths of our brand, will increase brand awareness, build long-term customer advocacy and drive incremental sales at our restaurants.
•
Increase existing customer
frequency.
We believe we will be able to continue to increase customer frequency by consistently providing fresh Mediterranean cuisine at
a compelling value. We intend to explore new menu additions by drawing upon the rich heritage and flavors of 21 Mediterranean countries and family recipes to enhance our offerings and encourage
frequency. We will continue to explore ways to increase the number of occasions (lunch, dinner and catering) and the flexibility of dining options (dine-in, to-go/take home, call-in and online) for
our customers to consume our food. We also plan to capitalize on the increasing demand for convenient, high-quality home meal
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replacement
alternatives by expanding the food options in our Zoës Fresh Take
TM
grab-and-go coolers and our family dinner menu offerings, which include a salad,
entrée and side items offered for approximately $30 for a family of four.
•
Grow our catering business.
Our
management team has developed innovative solutions, loyalty programs and a dedicated team of sales professionals to enhance our catering offering, which represented approximately 17% of our revenue
for 2013. We believe our strong catering offering is a significant competitive differentiator and generates consumer trial of our brand as well as provides our existing customers additional ways to
enjoy our food off-premise. We offer catering solutions for both business and social occasions, and we believe our hot and cold menu offerings differentiate our catering business as our food is
portable and conducive to travel. We are focused on making catering easier for our customers, which we believe helps to promote brand advocacy by allowing customers to be a guest at their own party.
We offer social catering solutions designed for our core customers' life events, including Zoës Party Packs, which are bundled catering packages for birthday parties, baby and bridal
showers, sporting and outdoor events, girls night out and family gatherings.
Improve Margins and Leverage Infrastructure.
We have invested in our business, and we believe our corporate infrastructure can support a restaurant base greater
than our existing footprint. As we continue to grow, we expect to drive greater efficiencies in our supply chain and leverage our technology and existing support infrastructure. Additionally, we
believe we will be able to optimize labor costs at existing restaurants as our restaurant base matures and AUVs increase and leverage corporate costs over time to enhance margins as general and
administrative expenses grow at a slower rate than our restaurant base and revenues.
Properties
As of February 24, 2014, we and our franchisees operated 111 restaurants in 15 states. We operate a variety of restaurant formats, including
in-line, end-cap and free-standing restaurants located in markets of varying sizes. Our restaurants are on average approximately 2,750 square feet. We lease the property for our corporate headquarters
and all of the properties on which we operate restaurants.
The
map and chart below show the locations of our restaurants as of February 24, 2014.
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State
Company-Owned
Franchise
Total
Alabama
14
0
14
Arizona
3
0
3
Florida
5
0
5
Georgia
13
0
13
Kentucky
0
3
3
Louisiana
2
3
5
Maryland
3
0
3
New Jersey
1
0
1
North Carolina
11
0
11
Oklahoma
3
0
3
Pennsylvania
3
0
3
South Carolina
7
0
7
Tennessee
4
0
4
Texas
29
0
29
Virginia
7
0
7
Total
105
6
111
We are obligated under non-cancellable leases for our restaurants and our corporate headquarters. Our restaurant leases generally have an initial term of ten
years and include two five-year renewal options at increased rates. Our restaurant leases generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance
charges and other operating costs. Some restaurant leases provide for contingent rental payments based on sales thresholds, although we generally do not expect to pay significant contingent rent on
these properties based on the thresholds in those leases.
In
2012, we opened 16 Company-owned restaurants, and in 2013, we opened 27 Company-owned restaurants. In 2014, we plan to open 28 to 30 Company-owned restaurants and expect to double our restaurant
base in the next four years. We believe our concept has resonated with consumers, which has facilitated strong restaurant growth over the past several years, and since 2008, we have not moved or
closed a single restaurant.
We
cannot provide assurance that we will be able to double our restaurant base over any specific period of time or that we will be able to open any specific number of restaurants in any year. See
"Risk Factors—Risks Related to our Business and Industry—Our long-term success is highly dependent on our ability to open new restaurants and is subject to many unpredictable
factors."
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The
following table shows the growth in our Company-owned and franchise restaurant base for the fiscal years ended December 30, 2013, December 31, 2012, December 26, 2011 and
December 27, 2010:
Fiscal Year Ended
December 30,
2013
December 31,
2012
December 26,
2011
December 27,
2010
Company-Owned Restaurant Base
Beginning of period
67
48
32
23
Openings
27
16
13
9
Franchisee acquisitions
0
3
3
0
Restaurants at end of period
94
67
48
32
Franchise Restaurant Base
Beginning of period
8
9
11
8
Openings
0
2
1
3
Franchisee acquisitions
0
(3
)
(3
)
0
Restaurants at end of period
8
8
9
11
Total restaurants
102
75
57
43
Site Development and Expansion
Site Selection Process
We consider site selection and real estate development to be critical to our long-term success and devote significant resources to create predictable
and successful new restaurant results. We have developed a targeted site evaluation and acquisition process incorporating management's experience as well as comprehensive data collection, analysis and
interpretation. Our in-house real estate team has over 50 years of combined experience with brands such as Chipotle, Panera, Potbelly, Pei Wei, Starbucks and P.F. Chang's.
When
making site selection decisions we use sophisticated analytical tools designed to uncover key demographic and psychographic characteristics in addition to site specific characteristics, such as
visibility, access, signage and traffic patterns, which we believe drive successful restaurant placement. We also consider factors, including daytime population characteristics and residential
density, which impact our catering and dine-in businesses. On the ground research is also an important part of the site evaluation process. This includes evaluation of customer traffic patterns,
future development in the market, retail synergy and the competitive restaurant landscape. We believe our disciplined process and in-depth analysis, coupled with the development experience of our
management team, has contributed to our growth in opening 81 restaurants over the last five years.
Our
sophisticated, predictive site selection strategy and flexible new restaurant model have resulted in growth in markets of varying sizes as we have expanded our restaurant base. We are able to
utilize in-line, end-cap and free-standing restaurant formats to penetrate markets with a combination of suburban and urban restaurant locations. Additionally, we believe our target demographic and
high repeat visit rate makes us a desirable tenant for landlords and developers seeking to attract consumers to their developments. We believe these factors provide our concept a great deal of
flexibility in securing optimal real estate locations.
Our
real estate process is governed by our internal Development Committee, which is composed of senior management, members of the real estate team and two board members. The Development Committee
meets periodically to review new site opportunities and to approve new locations. New sites are identified by our real estate team interfacing with local broker networks in each market. Once a
location has been approved
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by
our Development Committee, we begin a design process to align the characteristics and feel of the location to the trade area.
Expansion Strategy
While we continue to be positioned for additional restaurant growth in existing markets, expansion into new territories will be vital to executing our
growth strategy. We employ a hub and spoke method to expansion whereby certain markets are denoted as hubs based on total market potential and geographic spacing. Surrounding spoke markets are
subsequently developed as hub markets are penetrated and have reached sufficient brand awareness.
Expansion
into new markets is triggered through the ongoing evaluation of existing market penetration with a goal of maintaining a deep pipeline of top-tier development opportunities. Our approach to
identifying new markets for development is robust and systematic, providing an objective review of each market under consideration. Criteria for evaluating market expansion opportunities includes
depth of target customer, geographic positioning relative to current restaurant base, estimated restaurant potential, projected unit economics, availability of premier site locations and competition
penetration, among other things.
Restaurant Design
Restaurant design is handled by our in-house construction executives interfacing with outsourced vendor relationships. This approach permits us to
maintain control over our design process without adding unnecessary headcount. Each of our restaurants has modern features and cosmopolitan casual-chic décor, accented with our distinct
stripes, designed to combine the comforts of home and the sophistication of the Mediterranean. Each of our restaurants has a unique layout to optimize the available space with consistent design cues
that contribute to our customer experience. Our restaurant size averages approximately 2,750 square feet. The dining area of a typical restaurant can seat approximately 80 people, with patios that
seat approximately 30 people. We believe the atmosphere of our restaurants creates a warm, inviting environment where friends and family can gather for occasions of all types, encourages repeat
visits, inspires brand advocacy and drives increased sales across day-parts.
Construction
Construction of a new restaurant takes approximately 11 weeks. Each new restaurant typically requires an annual cash build-out cost of
approximately $750,000, net of tenant allowances, but this figure could be materially higher or lower depending on the market, restaurant size and condition of the premises upon landlord delivery. We
generally construct restaurants in third-party leased retail space but also construct free-standing buildings on leased properties. In the future, we intend to continue converting existing third-party
leased retail space or constructing new restaurants in the majority of circumstances. For additional information regarding our leases, see "—Properties."
Restaurant Management and Operations
We refer to our approach to management and operations as "progressive and aggressive," and endeavor to run our company to create a superior customer
experience by putting people first (both employees and customers).
Talent Acquisition and Training.
Our ability to grow our restaurant base depends on hiring and investing in the growth of great talent, and acquiring and training
our team members effectively is a significant focus for our company. We aim to hire people with a high desire to serve and please, that embrace the Zoës Kitchen culture and are a
reflection of our customers: active, passionate and full of life. We employ an extensive screening process for our managers, including both behavioral and working interviews. Once hired, employees
participate in a six week in-restaurant management training program, and all of our incumbent managers have been through this process. Each quarter we have approximately 30 new
manager-in-training candidates at one of our 11 training restaurants, which are located across various geographic regions. This pipeline assures us that future growth can be supported and that every
new Zoës Kitchen location is staffed with managers that are trained in both our brand and our standards.
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We
embrace technology and use it extensively to communicate with our employees. Our proprietary Lifeworks platform is designed to engage employees and create real connections, allowing both hourly and
salaried employees to learn, connect and collaborate. Specific techniques like "gamification" and community generated content keep employees engaged. Our entire training process is now paperless, with
online videos replacing traditional operating manuals. Lifeworks encourages interaction between employees across markets, helping to preserve culture, develop connections and share knowledge as we
continue to grow. Lifeworks also includes a learning methodology that embraces community generated content, allowing employees to make a tangible impact on the business, which we believe ultimately
empowers them to deliver a superior customer experience.
Restaurant Management and Employees.
Each restaurant typically is staffed with a restaurant manager, an assistant manager and as many as 20 to 30 team members. We
cross-train our employees in an effort to create a
depth of competency in our critical restaurant functions. Consistent with our emphasis on customer interaction, we encourage our restaurant managers and team members to welcome and interact with
customers throughout the day. To lead our restaurant management teams, we have Regional Operators (each of whom is responsible for between two and twelve restaurants), as well as Market Operators
(each of whom is responsible for between seven and nine regions). To prepare for our restaurant growth and staffing needs, we train approximately 30 managers per quarter.
Food Preparation and Quality.
We operate scratch kitchens, where food is prepared and cooked on site. We do not utilize pre-cooked proteins in our restaurants and
do not use microwaves or fryers. We are committed to the hand-preparation of our food, including details like cutting fruit and vegetables in store and hand-crumbling feta cheese each morning because
we believe that customers can taste the difference. We believe adhering to these standards is a competitive advantage for our Company and we have developed processes and procedures to train our
employees on the techniques required to effectively operate a scratch kitchen.
Food
safety is a top priority and we dedicate substantial resources, including our supply chain team and quality assurance teams, to help ensure that our customers enjoy safe, quality food products.
We have taken various steps to mitigate food quality and safety risks, including having personnel focused on this goal together with our supply chain team. Our restaurants undergo third-party food
safety reviews, internal safety audits and routine health inspections. We also consider food safety and quality assurance when selecting our distributors and suppliers.
Restaurant Marketing
Our marketing efforts seek to build brand awareness and increase sales through a variety of customer interactions and marketing initiatives. We focus
our marketing strategy on highlighting our ability to provide customers with real food, which we believe directly impacts their psyche and delivers positive long-term emotional connections. By real
food, we mean food made from simple ingredients like raw vegetables, fruits and legumes. We serve food the way it was prepared 100 years ago—raw, grilled, or baked. We utilize
community-based restaurant marketing, as well as digital, social and traditional media tools, to highlight our competitive strengths, including our varied and healthful menu offerings and the value we
offer our customers.
•
Shared, Earned, Owned.
We believe
our approach to social marketing is unique in that we seek to develop a relationship with each community member online, a reflection of our approach inside our restaurants. Across our social channels,
including Facebook, Pinterest, Instagram and Twitter, we reach more than 140,000 users combined, which allows us to connect directly to our customers and to keep them informed about new menu
offerings, promotions and events and build online relationships. In addition, customers can opt into our e-mail marketing program or download our custom mobile LIFE app, which combined consists of
approximately 293,000 unique members. Our mobile app includes customer engagement, customer satisfaction measurement and mobile ordering capabilities. Integrating these solutions has enabled us to
reach a significant number of people in a
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timely
and targeted fashion at a fraction of the cost of traditional media. We believe that our customers are experienced internet users and will use social media to make dining decisions, share
meaningful content or advocate for brands they enjoy. Our media tools also include advertising in local and regional print media, targeted direct mail aimed at delivering trial in new markets and
highly targeted cross promotions with like-minded brands.
•
Local Restaurant Marketing.
We
believe we differentiate our business through a strategic, community-based approach to building brand awareness and customer loyalty. We refer to this internally as "Delivering Goodness." We use a
wide range of local marketing initiatives to increase the frequency of and occasions for visits, and to encourage people to "Live Mediterranean." We empower our restaurant managers to selectively
organize events to bring new customers into our restaurants. Additionally, we engage in a variety of promotional activities, such as contributing food, time and money to charitable, civic and cultural
programs, in order to give back to the communities we serve and increase public awareness and appreciation of our restaurants and our employees. For example, in May 2013 we launched a campaign
sponsoring Zoe Romano to run the Tour de France, to drive awareness and raise funds for the World Pediatric Project. Additionally, since our founding in 1995, our restaurants have partnered with local
schools and children's groups to display children's art at our restaurants as part of our Zoës Kitchen Celebrates Children! Artwork Program. The art is available for sale to the public
as a donation, with proceeds from sales going directly to the participating school or organization.
•
New Menu Introductions.
We focus
efforts on new menu offerings to broaden our appeal to customers and further substantiate our position as a leading brand in Mediterranean cuisine. We believe these additions deliver prompt consumer
action, resulting in more immediate increases in customer traffic. We also recently launched a Runners' Menu that features dishes geared towards pre- and post-workouts to appeal to the active
lifestyle we believe our customers aspire to live.
•
Creating New Dining
Opportunities.
We focus on ways we can serve customers at different times and in new places. Our "Dinners for Four" have been a popular
item allowing customers to quickly feed their family a balanced meal at a great value. In addition, we offer group options like Zoës Party Packs for eight to ten where customers can
enjoy bundled items designed for birthday parties, baby and bridal showers, sporting and outdoor events, girls' nights and family gatherings. We market this new offering in a variety of ways,
including in-restaurant posters, integrated social media campaigns and direct marketing to current catering customers.
•
Internal Marketing.
We believe our
employees are one of our best marketing assets. We invest time, energy and resources towards education on our brand and developing long-term brand advocates from each employee. These employees help
propagate the mission of "Delivering Goodness" and promote key points of differentiation.
Suppliers
Maintaining a high degree of quality in our restaurants depends in part on our ability to acquire fresh ingredients and other necessary supplies that
meet our specifications from reliable suppliers. We carefully select suppliers based on quality and their understanding of our brand, and we seek to develop mutually beneficial long-term relationships
with them. We work closely with our suppliers and use a mix of forward, fixed and formula pricing protocols. We have tried to increase, in some cases, the number of suppliers for our ingredients,
which we believe can help mitigate pricing volatility, and we monitor industry news, trade issues, weather, crises and other world events that may affect supply prices.
We
contract with Sysco Corporation, the largest distributor of food and related products to the U.S. food service industry. In 2013, our Sysco spend was approximately 62% of our cost of sales. Our
distributor relationship with Sysco has been in place since May 2011. Our remaining food supplies are distributed by other distributors under separate contracts. Our distributors deliver supplies to
our restaurants approximately two to four times per week.
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We
negotiate pricing and volume terms directly with certain suppliers, distributors and Sysco. Poultry represented approximately 16% of our total cost of sales for 2013. We are subject to weekly
market fluctuations under our current pricing agreements, with respect to poultry. Beef represented approximately 7% of our total costs of sales for 2013. We have pricing agreements in place through
the end of March 2014, with respect to beef. Feta cheese represented approximately 4% of our total cost of sales for 2013. We have pricing agreements that reset monthly, with respect to feta cheese.
We have identified secondary suppliers for many of our significant products, and we believe we would be able to source our product requirements from different suppliers if necessary.
Competition
We compete in the restaurant industry, primarily in the fast casual segment but also with restaurants in other segments. We face significant
competition from a wide variety of restaurants, convenience stores, grocery stores and other outlets on a national, regional and local level. We believe that we compete primarily based on product
quality, restaurant concept, ambience, service, location, convenience, value perception and price. Our competition continues to intensify as competitors increase the breadth and depth of their product
offerings and open new restaurants. Additionally, we compete with local and national fast casual restaurant concepts, specialty restaurants and other retail concepts for prime restaurant locations.
Seasonality
Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter. Our sales per restaurant is typically lower in the
first and fourth quarters due to reduced winter and holiday traffic and higher in the second and third quarters. Adverse weather conditions during our most favorable months or periods may also affect
customer traffic. In addition, we have outdoor seating at all of our restaurants, and the effects of adverse weather may impact the use of these areas and may negatively impact our revenues.
Intellectual Property and Trademarks
We own a number of trademarks and service marks registered or pending with the U.S. Patent and Trademark Office ("PTO"). We have registered the
following marks with the PTO: Zoës Kitchen; Zoe's Kitchen; Simple. Tasty. Fresh!; Zoës Fresh Take; and Simply 500. We also have certain trademarks pending in certain
foreign countries. In addition, we have registered the Internet domain name
www.zoeskitchen.com
. The information on, or that can be accessed through, our
website is not part of this prospectus.
We
license the use of our registered trademarks to franchisees through franchise arrangements. The franchise arrangements restrict franchisees' activities with respect to the use of our trademarks and
impose quality control standards in connection with goods and services offered in connection with the trademarks.
An
important part of our intellectual property strategy is the monitoring and enforcement of our rights in markets in which our restaurants currently exist or markets which we intend to enter in the
future. We also monitor trademark registers to oppose the applications to register confusingly similar trademarks or to limit the expansion of the scope of goods and services covered by existing
similar trademarks. We enforce our rights through a number of methods, including the issuance of cease-and-desist letters or making infringement claims in federal court.
We
believe that our trademarks, service marks and other intellectual property rights have significant value and are important to the marketing of our brand, and it is our policy to protect and defend
vigorously our rights to such intellectual property. However, we cannot predict whether steps taken to protect such rights will be adequate. See "Risk Factors—Risks Related to Our Business
and Industry—We may not be able to adequately protect our intellectual property, which could harm the value of our brand and adversely affect our business."
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Governmental Regulation and Environmental Matters
We and our franchisees are subject to extensive and varied federal, state and local government regulation, including regulations relating to public
and occupational health and safety, sanitation and fire prevention. We operate each of our restaurants in accordance with standards and procedures designed to comply with applicable codes and
regulations. However, an inability to obtain or retain health department or other licenses would adversely affect our operations. Although we have not experienced, and do not anticipate, any
significant difficulties, delays or failures in obtaining required licenses, permits or approvals, any such problem could delay or prevent the opening of, or adversely impact the viability of, a
particular restaurant or group of restaurants.
In
addition, in order to develop and construct restaurants, we must comply with applicable zoning, land use and environmental regulations. Such regulations have not had a material effect on our
operations to date, but more stringent and varied requirements of local governmental bodies could delay or even prevent construction and increase development costs for new restaurants. We are also
required to comply with the accessibility standards mandated by the ADA, which generally prohibits discrimination in accommodation or employment based on
disability. We may in the future have to modify restaurants, by adding access ramps or redesigning certain architectural fixtures for example, to provide service to or make reasonable accommodations
for disabled persons. While these expenses could be material, our current expectation is that any such actions will not require us to expend substantial funds.
A
small amount of our revenues is attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain
locations, county or municipal authorities for a license that must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous
aspects of daily operations of our restaurants, including the minimum age of patrons and employees, hours of operation, advertising, trade practices, wholesale purchasing, other relationships with
alcohol manufacturers, wholesalers and distributors, inventory control and handling, storage and dispensing of alcoholic beverages. We are also subject in certain states to "dram shop" statutes, which
generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor
liability coverage as part of our existing comprehensive general liability insurance. Approximately one-third of our restaurants do not have liquor licenses, typically because of the high cost of a
liquor license in jurisdictions having liquor license quotas.
In
addition, we are subject to the U.S. Fair Labor Standards Act, the U.S. Immigration Reform and Control Act of 1986, the Occupational Safety and Health Act and various other federal and state laws
governing similar matters including minimum wages, overtime, workplace safety and other working conditions. We and our franchisees may also be subject to lawsuits from our employees, the U.S. Equal
Employment Opportunity Commission or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters, and we have been party to such
matters in the past. We are also subject to various laws and regulations relating to our current and any future franchise operations. See "Risk Factors—Risks Related to Our Business and
Industry—Governmental regulation may adversely affect our ability to open new restaurants or otherwise adversely affect our business, financial condition and results of operations."
PPACA,
enacted in March 2010, requires chain restaurants with 20 or more locations in the United States operating under the same name and offering substantially the same menus to publish the total
number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake. A number of states,
counties and cities have also enacted menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers, or have enacted legislation restricting the
use of certain types of ingredients in restaurants. Many of these requirements are inconsistent or are interpreted differently from one jurisdiction to another. While our ability to adapt to consumer
preferences is a strength of our concepts, the effect of
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such
labeling requirements on consumer choices, if any, is unclear at this time. See "Risk Factors—Risks Related to Our Business and Industry—Legislation and regulations
requiring the display and provision of nutritional information for our menu offerings, and new information or
attitudes regarding diet and health could result in changes in regulations and consumer consumption habits that could adversely affect our results of operations."
There
is also a potential for increased regulation of certain food establishments in the United States, where compliance with a HACCP approach may now be required. HACCP refers to a management system
in which food safety is addressed through the analysis and control of potential hazards from production, procurement and handling, to manufacturing, distribution and consumption of the finished
product. Many states have required restaurants to develop and implement HACCP Systems and the United States government continues to expand the sectors of the food industry that must adopt and
implement HACCP programs. For example, the FSMA, signed into law in January 2011, granted the FDA new authority regarding the safety of the entire food system, including through increased inspections
and mandatory food recalls. Although our current restaurants are specifically exempted from or not directly implicated by some of these new requirements, we anticipate that the new requirements may
impact our industry. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the availability of certain products, result in adverse publicity or require us to
take actions that could be costly for us or otherwise harm our business. See "Risk Factors—Risks Related to Our Business and Industry—Governmental regulation may adversely
affect our ability to open new restaurants or otherwise adversely affect our business, financial condition and results of operations."
We
and our franchisees are also subject to laws and regulations relating to information security, privacy, cashless payments, gift cards and consumer credit, protection and fraud, and any failure or
perceived failure to comply with these laws and regulations could harm our reputation or lead to litigation, which could adversely affect our financial condition.
We
are subject to federal, state and local environmental laws and regulations concerning waste disposal, pollution, protection of the environment, and the presence, discharge, storage, handling,
release and disposal of, or exposure to, hazardous or toxic substances ("environmental laws"). These environmental laws can provide for significant fines and penalties for non-compliance and
liabilities for remediation, sometimes without regard to whether the owner or operator of the property knew of, or was responsible for, the release or presence of the hazardous or toxic substances.
Third-parties may also make claims against owners or operators of properties for personal injuries and property damage associated with releases of, or actual or alleged exposure to, such substances.
We are not aware of any environmental laws that will materially affect our earnings or competitive position, or result in material capital expenditures relating to our restaurants. However, we cannot
predict what environmental laws will be enacted in the future, how existing or future environmental laws will be administered, interpreted or enforced, or the amount of future expenditures that we may
need to make to comply with, or to satisfy claims relating to, environmental laws. It is possible that we will become subject to environmental liabilities at our properties, and any such liabilities
could materially affect our business, financial condition or results of operations. See "Risk Factors—Risks Related to Our Business and Industry—Compliance with environmental
laws may negatively affect our business."
Management Information Systems
All of our restaurants use computerized point-of-sale and back-office systems created by NCR Corporation, which we believe are scalable to support our
future growth plans. These point-of-sale computers are designed specifically for the restaurant industry. The system provides a touch screen interface, a graphical order confirmation display and
integrated, high-speed credit card and gift card processing. The point-of-sale system is used to collect daily transaction data, which generates information about daily sales, product mix and average
check that we actively analyze. All products sold and prices at our restaurants are programmed into the system from our home office.
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Our
in-restaurant back office computer system is designed to assist in the management of our restaurants and provide labor and food cost management tools. These tools provide home office and
restaurant operations management quick access to detailed business data and reduces restaurant managers' time spent on administrative needs. The system provides our restaurant managers the ability to
submit orders electronically with our distribution network. The system also supplies sales, bank deposit and variance data to our accounting department on a daily basis. We use this data to generate
daily sales information and weekly consolidated reports regarding sales and other key measures, as well as preliminary weekly detailed profit and loss statements for each location with final reports
following the end of each period.
Employees
As of February 24, 2014, we had 2,760 employees, including 82 home office and regional personnel, 219 restaurant level managers and assistant
managers and 2,459 hourly employees. None of our employees are unionized or covered by a collective bargaining agreement, and we consider our current employee relations to be good.
Franchising
As of February 24, 2014, we had six franchised restaurants in two states. Our franchise arrangements grant third-parties a license to establish
and operate a restaurant using our systems and our trademarks in a given area. The franchisee pays us for the ideas, strategy, marketing, operating system, training, purchasing power and brand
recognition. Franchised restaurants must be operated in compliance with our methods, standards and specifications, regarding menu items, ingredients, materials, supplies, services, fixtures,
furnishings, décor and signs.
Legal Proceedings
We are currently involved in various claims and legal actions that arise in the ordinary course of our business, including claims resulting from
employment related matters. None of these claims, most of which are covered by insurance, has had a material effect on us, and as of the date of this prospectus, we are not party to any material
pending legal proceedings and are not aware of any claims that could have a material adverse effect on our business, financial condition, results of operations or cash flows. However, a significant
increase in the number of these claims or an increase in amounts owing under successful claims could materially and adversely affect our business, financial condition, results of operations or cash
flows.
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MANAGEMENT
Set forth below is the name, age (as of February 24, 2014), position and a description of the business experience of each of our executive
officers, directors and other key employees:
Name
Age
Position(s)
Kevin Miles
48
Director, President and Chief Executive Officer
Jason Morgan
44
Chief Financial Officer
Jeremy Hartley
54
Chief Operating Officer
Allyn Taylor
51
Vice President of Development
Rachel Phillips-Luther
34
Vice President of Marketing
James Besch
41
Controller
Greg Dollarhyde
62
Chairman of the Board of Directors
William Barnum, Jr.
59
Director
Anthony Choe
41
Director
Rahul Aggarwal
39
Director
Thomas Baldwin
58
Director
Sue Collyns
47
Director
Background of Executive Officers and Directors
Kevin Miles
has served as our President and Chief Executive Officer since October 2012, was appointed
Director in December 2013 and served as President and Chief Operating Officer since February 2011. Mr. Miles joined Zoës Kitchen in 2009 as Executive Vice President of
Operations. From 2008 to 2009, Mr. Miles was Executive Vice President of Operations of Pollo Campero. His leadership has led to recognition in both Nation's Restaurant News and Fast Casual
magazine highlighting him as "Top 10 Executives to Watch" and "Top Movers and Shakers," respectively. Mr. Miles received his Bachelor's Degree in 1989 from Texas A&M University. He brings to
our Board of Directors leadership skills, strategic guidance and operational vision from prior experience in the industry.
Jason Morgan
has served as our Chief Financial Officer since April 2008. Since joining the Zoës Kitchen team, Mr. Morgan has played
a significant role in the growth of the company, from opening new restaurants across the country, to acquiring new accounting and point-of-sale systems, and implementing a business intelligence
solution. Prior to assuming his role at Zoës Kitchen, Mr. Morgan was the Chief Financial Officer of Simplex Diabetic Supply, Inc., a private equity backed healthcare
start-up. He previously served as the first Chief Financial Officer of Video Gaming Technologies, Inc., a technology business. Mr. Morgan has also held executive positions at Gaylord
Entertainment Co. and Harrah's Entertainment including strategic planning, investor relations and treasury. Mr. Morgan received his Master's Degree in 1995 from the Owen Graduate School
of Management at Vanderbilt University and his Bachelor's Degree in 1991 from Vanderbilt University. He is a Certified Public Accountant.
Jeremy Hartley
has served as our Chief Operating Officer since October 2013. From May 2012 to October 2013, Mr. Hartley was pursuing personal interests.
From October 2001 to May 2012, Mr. Hartley led regional operations for Mimi's Café, and prior to that he served as Chief Operating Officer for Café Patrique and La
Madeleine French Bakery and Café. Mr. Hartley received his Bachelor's Degree in 1981 from University of Aston in Birmingham, UK.
Allyn Taylor
has served as our Vice President of Development since October 2011. From April 2007 to January 2011, Mr. Taylor served as Senior
Manager of Real Estate for Panera Bread and Vice President of
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Real
Estate for P.F. Chang's and Pei Wei. Mr. Taylor received his Bachelor's Degree in 1986 from the University of Texas at Austin.
Rachel Phillips-Luther
has served as our Vice President of Marketing since December 2011. Prior to joining the Zoës Kitchen team,
Ms. Phillips-Luther served as Vice President of Kona Grill from December 2009 to April 2011, and as Vice President of Marketing for FHRG, Inc./Champps Entertainment, Inc. from
2006 to 2009.
James Besch
has served as our Controller since January 2013. Prior to joining Zoës Kitchen, Mr. Besch served as Regional Controller
and Director of SEC reporting for Club Corp, Inc. from November 2003 to December 2012. Mr. Besch began his career with Arthur Andersen in 1996. Mr. Besch received his Master's
Degree in 1996 from the University of Texas. He is a Certified Public Accountant.
Greg Dollarhyde
has served as Chairman of our Board of Directors since October 2007. He is a 40 year veteran of the restaurant industry, having
been Chairman or Chief Executive Officer of eight separate companies and Chief Financial Officer of two publicly-held restaurant companies, among other responsibilities. He is currently the Chief
Energizing Officer and Director of Veggie Grill, a west-coast based concept serving 100% plant-based food. He served as Chief Executive Officer of Zoës Kitchen from October 2008 through
March 2011. Mr. Dollarhyde received his Bachelor's Degree in 1980 from the School of Hotel Administration at Cornell University and his Master's Degree in Business Administration in 1981 from
the Johnson School of Business at Cornell University. Mr. Dollarhyde was selected to join our board because of his extensive experience in the restaurant industry and his years of experience as
a director and our executive officer.
William Barnum, Jr.
has served on our Board of Directors since October 2007. Since 1984, Mr. Barnum has been with Brentwood, our sponsor, where he
co-founded the firm's private equity effort and is currently a General Partner. Prior to joining Brentwood, Mr. Barnum worked at Morgan Stanley & Co. in the investment banking
division, where he served as Assistant to the President and also provided investment banking advisory services. Mr. Barnum received his Bachelor's Degree in 1976 from Stanford University, his
Juris Doctor in 1980 from Stanford Law
School and his Master's Degree in Business Administration in 1980 from Stanford Graduate School of Business. Presently, Mr. Barnum is a director of K-Mac Holdings, Lazy Dog Restaurants,
Sundance, The Teaching Company, Veggie Grill and Quiksilver. Due to Mr. Barnum's extensive experience in private equity, he provides valuable perspective to our board discussions on financial
and capital markets issues. Additionally, his experience in the consumer and restaurant industries and his board service at other companies provides important insight to our board.
Anthony Choe
has served on our Board of Directors since October 2007. Mr. Choe joined Brentwood, our sponsor, in 1996 and is currently a General
Partner. Prior to joining Brentwood, Mr. Choe worked at Donaldson, Lufkin & Jenrette, where he focused on mergers and acquisitions, corporate finance and leveraged buyouts.
Mr. Choe received his Bachelor's Degree from Harvard University in 1994. Presently, Mr. Choe is a director of K-Mac Holdings, Lazy Dog Restaurants, Sundance, The Teaching Company and
CoachArt. Due to Mr. Choe's extensive experience in private equity, he provides valuable perspective to our board discussions on financial and capital markets issues. Additionally, his
experience in the consumer and restaurant industries and his board service at other companies provides important insight to our board.
Rahul Aggarwal
has served on our Board of Directors since October 2007. Mr. Aggarwal joined Brentwood, our sponsor, in 1999 and is currently a
Managing Director. Presently, Mr. Aggarwal serves as a Director of K-Mac Holdings, Lazy Dog Restaurants, Spectrum Clubs and Veggie Grill. Prior to joining Brentwood, Mr. Aggarwal worked
at Donaldson, Lufkin & Jenrette, where he focused on high-yield financings and leveraged buyouts. Mr. Aggarwal received his Bachelor's Degrees in 1997 from the Wharton School of Business
and the College of Arts and Sciences at the University of Pennsylvania. Due to Mr. Aggarwal's extensive experience in private equity, he provides valuable perspective to our board discussions
on financial
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and
capital markets issues. Additionally, his experience in the consumer and restaurant industries and his board service at other companies provides important insight to our board.
Thomas Baldwin
has served on our Board of Directors since February 2014. Mr. Baldwin has also served as the Chairman of the Board of Directors and
Chief Executive Officer of ROI Acquisition Corp. since July 2013. Prior to that, Mr. Baldwin served as the Vice Chairman of the Board of Directors of EveryWare Global, Inc., which merged
with ROI in May 2013, since September 2011. From February 2010 through September 2011, Mr. Baldwin was a private investor. Mr. Baldwin served as Chairman, Chief Executive Officer and
President of Morton's Restaurant Group, Inc. from December 2005 through February 2010. Mr. Baldwin is also a private investor and a Managing Director of the Clinton Group and serves on
the board of directors of Bravo Brio Restaurant Group, Inc., Firebirds Wood Fired Grill Restaurants and Benihana Restaurants. Earlier in his career, Mr. Baldwin also served as Chief
Financial Officer for Le Peep Restaurants, as Vice President for Strategic Planning at Citigroup and held various positions at General Foods Corp., now part of Kraft Foods. Mr. Baldwin received
his Bachelor's Degree in Accounting in 1978 and his Master's Degree in Business Administration in 1984 from Iona College. Mr. Baldwin brings his comprehensive experience in brand positioning
and brand management, general management, global strategy, operations and marketing and sales to our Board.
Sue Collyns
has served on our Board of Directors since February 2014. Ms. Collyns is currently the Chief Financial Officer of Dun and Bradstreet
Credibility Corp., a technology based subscription company offering web solutions for businesses seeking advice on strengthening their credit score and business reputation. Ms. Collyns joined
Dun and Bradstreet Credibility Corp. in July 2012. Between December 2011 and June 2012, Ms. Collyns was a consultant to various companies in the technology and restaurant industries. From
September 2001 to November 2011, Ms. Collyns was the Chief Financial Officer, the Chief Operating Officer and Company Secretary of California Pizza Kitchen. Prior to 2001, Ms. Collyns
held various finance, strategic planning and auditing roles with Sony/BMG Entertainment, Lion/Pepsi, GlaxoSmithkline Pharmaceuticals and PricewaterhouseCoopers. Ms. Collyns holds a Bachelor of
Economics and Finance Degree from Macquarie University, Australia and a postgraduate CPA from Deakin University in Melbourne, Australia. In 2011, Ms. Collyns won the Los Angeles Business
Journal's (LABJ's) "Executive of the Year" award and in 2013 won the LABJ's "CFO of the Year" award. Ms. Collyns was selected to join our board because of her exceptional technical expertise in
finance, operations, franchising, strategy, technology and extensive experience and knowledge of the consumer products and restaurant industry.
Family Relationships
There are no family relationships among any of our directors or executive officers.
Corporate Governance and Board Structure
Our board of directors currently consists of seven members.
In
accordance with the amended and restated certificate of incorporation and the amended and restated bylaws that will become effective upon consummation of this offering, our Board of Directors will
consist of          members and will be divided into three classes with staggered three-year terms. At each annual general meeting of stockholders, the successors to directors whose terms then
expire will be elected to serve from the time of election and qualification until the third annual meeting following election. The authorized number of directors may be changed by resolution of the
Board of Directors. Vacancies on the Board of Directors can be filled by resolution of the Board of Directors. Greg Dollarhyde serves as the Chairman of our Board of Directors. We believe that of the
following directors are independent as required by the rules of the New York Stock
Exchange:                             ,
                             and            
                 . Thomas Baldwin and Sue Collyns are the Class I
directors and their terms will expire in 2015. Greg Dollarhyde, William Barnum, Jr. and Anthony Choe are the Class II directors and their terms will expire in 2016. Kevin Miles and Rahul
Aggarwal are the Class III directors and their terms will expire in 2017. The division of our Board
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of
Directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.
Board Committees
Upon completion of this offering, our Board of Directors will have three standing committees: an Audit Committee, a Nominating and Corporate
Governance Committee and a Compensation Committee. Each of the committees will report to the Board of Directors as they deem appropriate, and as the Board of Directors may request. The expected
composition, duties and responsibilities of these committees are set forth below. In the future, our Board of Directors may establish other committees, as it deems appropriate, to assist it with its
responsibilities.
Audit Committee
The Audit Committee is responsible for, among other matters: (1) appointing, compensating, retaining, evaluating, terminating and overseeing
our independent registered public accounting firm; (2) discussing with our independent registered public accounting firm their independence from management; (3) reviewing with our
independent registered public accounting firm the scope and results of their audit and the audit fee; (4) approving all audit and permissible non-audit services to be performed by our
independent registered public accounting firm, including taking into consideration whether the independent auditor's provision of any non-audit services to us is compatible with maintaining the
independent auditor's independence; (5) overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual
consolidated financial statements that we file with the SEC; (6) reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls and compliance with
legal and regulatory requirements; (7) establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters;
(8) reviewing and approving related person transactions; (9) annually reviewing the Audit Committee charter and the committee's performance; and (10) handling such other matters
that are specifically delegated to the Audit Committee by our Board of Directors from time to time.
Upon
completion of this offering, our Audit Committee will consist of                             ,
                             and            
                 . The SEC rules and the New York Stock Exchange rules require us to have one
independent Audit Committee member upon the listing of our common stock on the New York Stock Exchange, a majority of independent directors on the Audit Committee within 90 days of the date of
the completion of this offering and all independent Audit Committee members within one year of the date of the completion of this offering. Our Board of Directors has affirmatively determined that
                             
and                             meet the definition of "independent directors" for purposes of serving on
an Audit Committee under applicable SEC and New York Stock Exchange rules, and we intend to comply with
these independence requirements within the time periods specified. In addition,
                             will qualify as our "audit committee financial expert," as such term is
defined in Item 407 of
Regulation S-K.
Our
Board of Directors will adopt a new written charter for the Audit Committee, which will be available on our corporate website at
www.zoeskitchen.com
upon the completion of this offering. Our website is not part of this prospectus.
Nominating and Corporate Governance Committee
The nominating and corporate governance committee will be responsible for developing and recommending to the board of directors criteria for
identifying and evaluating candidates for directorships and making recommendations to the board of directors regarding candidates for election or reelection to the board of directors at each annual
stockholders' meeting. In addition, the nominating and corporate governance committee will be responsible for overseeing our corporate governance guidelines and reporting and making recommendations to
the board of directors concerning corporate governance matters. The nominating and corporate governance committee will be also responsible for making recommendations to the board of directors
concerning the structure, composition and function of the board of directors and its committees.
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Upon
completion of this offering, our Nominating and Corporate Governance Committee will consist
of                             ,
                             and            
                 . The SEC rules and the New York Stock Exchange
rules require us to have one independent Nominating and Corporate Governance Committee member upon the listing of our common stock on the New York Stock Exchange, a majority of independent directors
on the Nominating and Corporate Governance Committee within 90 days of the date of the completion of this offering and all independent Nominating and Corporate Governance Committee members
within one year of the date of the completion of this offering. Our Board of Directors has affirmatively determined
that                             and           
                  meet the definition of "independent
directors" for purposes of serving on a Nominating and Corporate Governance Committee under applicable SEC and New York Stock Exchange rules, and we intend to comply with these independence
requirements within the time periods specified.
Our
Board of Directors will adopt a new written charter for the Nominating and Corporate Governance Committee, which will be available on our corporate website at
www.zoeskitchen.com
upon the completion of
this offering. The information contained on our website does not constitute a part of this prospectus.
Compensation Committee
The Compensation Committee will be responsible for, among other matters: (1) reviewing key employee compensation goals, policies, plans and
programs; (2) reviewing and approving the compensation of our directors, chief executive officer and other executive officers; (3) reviewing and approving employment agreements and other
similar arrangements between us and our executive officers; and (4) administering our stock plans and other incentive compensation plans.
Upon
completion of this offering, our Compensation Committee will consist of                             ,
                             and            
                 . The SEC rules and the New York Stock Exchange rules require us to
have one independent Compensation Committee member upon the listing of our common stock on the New York Stock Exchange, a majority of independent directors on the Compensation Committee within
90 days of the date of the completion of this offering and all independent Compensation Committee members within one year of the date of the completion of this offering. Our Board of Directors
has affirmatively determined
that                             and           
                  meet the definition of "independent directors" for purposes of serving on a Compensation Committee under applicable SEC and New
York Stock Exchange rules, and we intend to comply with these independence requirements within the time periods specified.
Our
Board of Directors will adopt a new written charter for the Compensation Committee, which will be available on our corporate website at
www.zoeskitchen.com
upon the completion of this offering. The
information contained on our website does not constitute a part of this prospectus.
Risk Oversight
Our Board of Directors is currently responsible for overseeing our risk management process. The Board of Directors focuses on our general risk
management strategy and the most significant risks facing us and ensures that appropriate risk mitigation strategies are implemented by management. The Board of Directors is also apprised of
particular risk management matters in connection with its general oversight and approval of corporate matters and significant transactions.
Upon
completion of this offering, our Board of Directors will not have a standing risk management committee, but rather will administer this oversight function directly through our Board of Directors
as a whole, as well as through various standing committees of our Board of Directors that address risks inherent in their respective areas of oversight. In particular, our Board of Directors will be
responsible for monitoring and assessing strategic risk exposure, our Audit Committee will be responsible for overseeing our major financial risk exposures and the steps our management has taken to
monitor and control these exposures and our Compensation Committee will assess and monitor whether any of our compensation policies and programs has the potential to encourage unnecessary risk-taking.
In addition, upon completion of this
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offering,
our Audit Committee will oversee the performance of our internal audit function and consider and approve or disapprove any related-party transactions.
Our
management is responsible for day-to-day risk management. This oversight includes identifying, evaluating, and addressing potential risks that may exist at the enterprise, strategic, financial,
operational, compliance and reporting levels.
Risk and Compensation Policies
Prior to the completion of this offering, we intend to analyze our compensation programs and policies to determine whether those programs and policies
are reasonably likely to have a material adverse effect on us.
Leadership Structure of the Board of Directors
The positions of Chairman of the Board and Chief Executive Officer are presently separated. We believe that separating these positions allows our
Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman of the Board to lead the Board of Directors in its fundamental role of providing advice to and independent
oversight of management. Our Board of Directors recognizes the time, effort and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as
well as the commitment required to serve as our Chairman, particularly as the Board of Directors' oversight responsibilities continue to grow. While our bylaws and corporate governance guidelines do
not require that our Chairman and Chief Executive Officer positions be separate, our Board of Directors believes that having separate positions is the appropriate leadership structure for us at this
time and demonstrates our commitment to good corporate governance.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or Compensation Committee of
any entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
Code of Ethics
We will adopt a written General Code of Ethics ("General Code") which applies to all of our directors, officers and other employees, including our
principal executive officer, principal financial officer and controller. In addition, we will adopt a written Code of Ethics for Executive Officers and Principal Accounting Personnel ("Code of
Ethics") which applies to our principal executive officer, principal financial officer, controller and other designated members of our management. Copies of each code will be available on our
corporate website
www.zoeskitchen.com
upon completion of this offering. The information contained on our website does not constitute a part of this
prospectus. We will provide any person, without charge, upon request, a copy of our General Code or Code of Ethics. Such requests should be made in writing to the attention of our Corporate Counsel at
the following address: Zoe's Kitchen, Inc., 5700 Granite Parkway, Granite Park Building #2, Suite 455, Plano, Texas 75024.
Director Compensation
In the year ended December 30, 2013, none of our directors, other than our Chairman, Greg Dollarhyde, received compensation for their services
on our Board of Directors. Mr. Dollarhyde, received an annual fee of $100,000 pursuant to a consulting agreement entered into with us on March 22, 2011 under which he shall serve as the
Chairman of the Board of Directors of Zoe's Kitchen, Inc., as well as provide assistance and advice to Zoe's Kitchen, Inc. See "Certain Relationships and Related Party
Transactions—Consulting Agreement."
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EXECUTIVE COMPENSATION
The following sets forth all plan and non-plan compensation awarded to our Named Executive Officers (the "NEOs").
Summary Compensation Table
The following table sets forth the total compensation that was paid or accrued for the NEOs for the 2013 fiscal year. The NEOs are Kevin Miles, our
Chief Executive Officer, Jason Morgan, our Chief Financial Officer and Allyn Taylor, our Vice President of Development.
Name and principal position
Year
Salary
Bonus
Unit Awards
All Other
Compensation
Total
Kevin Miles
President & Chief Executive Officer
2013
$
259,222
$
162,014
$
0
(1)
—
$
421,236
Jason Morgan
Chief Financial Officer
2013
$
229,222
$
114,611
—
$
86,062
(2)
$
429,895
Allyn Taylor
Vice President of Development
2013
$
169,696
$
42,180
—
—
$
211,876
(1)
The
amount reported in the Unit Awards column represents the grant date fair value of 20,000 Class B Units (defined below) that were
granted to Mr. Miles on April 8, 2013. The assumptions used in calculating the issuance date fair value of the Class B Units are discussed in Note 10 to the Audited
Financials.
(2)
All
other compensation for Mr. Morgan is based on payments received under his relocation agreement with the Company, dated
November 30, 2012, regarding the Company's relocation from Birmingham, AL to Dallas, TX which occurred in June, 2013, with (i) $21,836 being paid directly to the moving company, United
Van Lines; (ii) $36,316 being paid directly to Mr. Morgan and related to various costs associated with the move; and $27,910 being paid to Mr. Morgan in the form of a "gross-up"
amount with respect to taxes incurred by him with respect to the payments described in (ii). If Mr. Morgan resigns within the 24-month period, he must repay 50% of all such costs to the
Company.
Narrative Disclosure to Summary Compensation Table
Offer Letters
We do not currently have employment agreements with any of our NEOs, but the Company has provided offer letters to Mssrs. Miles, Morgan and Taylor
(collectively, the "Offer Letters") dated April 27, 2009, April 7, 2008, and July 19, 2011, respectively. The Offer Letters provide for an initial base salary of, for
Mr. Miles, $190,000, for Mr. Morgan, $200,000, and for Mr. Taylor, $145,000, which amounts are reviewed for modification annually, and which numbers have been raised to $259,222,
$229,222, and $169,696, respectively. As can be seen above, the Offer Letters also provide Mssrs. Miles and Morgan with an annual bonus opportunity of, for Mssrs. Miles and Morgan, up to 40% of base
salary, and for Mr. Taylor, 20% of his base salary, which amounts are paid upon the achievement of growth and operating performance objectives to be determined by the Company in its sole
discretion (Mr. Miles' target bonus has since been raised to 50%). The Offer Letters describe the basic terms of the Class B Unit grant agreements (described below), and provide for
initial grants of 75,000 Class B Units for Mr. Miles, 85,802 Class B Units for Mr. Morgan, and 25,000 Class B Units for Mr. Taylor. The Offer Letters provide
each of Mr. Miles and Mr. Morgan six (6) months' severance pay for a termination without "cause" (as defined therein), provided that the payments will stop if the relevant
executive obtains alternative employment. The Offer Letters further provide that no bonus payments will be made for the year of any such termination. No severance arrangement is provided for in
Mr. Taylor's Offer Letter.
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We
anticipate that upon the offering, we will replace the Offer Letters with employment agreements for Mssrs. Miles and Morgan, though we have not yet determined the specific terms.
Incentive Unit Agreements
Each of our NEOs has been granted Series 1 Class B Units of Zoe's Investors, LLC ("Zoe's Investors"). While Class B Units
represent equity holdings, they are intended to be treated as "profits interests" for purposes of IRS Revenue Procedure 93-27 and IRS Revenue Procedure 2001-43 and have a certain "threshold amount"
that, similar to an option exercise price, limits participants' participation in the equity to the appreciation value that accrues following the grant date. Each NEO is required to file a
timely 83(b) election with respect to his respective Class B Units.
On
April 8, 2013, Mr. Miles was granted 20,000 Class B Units with a threshold amount of $7.00. Mr. Miles's Class B Units vest on time-based conditions, with 20% of
the Class B Units vesting upon the first anniversary of
the grant date, and the remainder vesting pro rata on a daily basis (0.0548% per day) until the fifth anniversary of the grant date. If Mr. Miles is terminated for any reason, the
Class B Units (whether or not vested) are immediately forfeited to Zoe's Investors for no consideration and canceled. However, upon a change of control of Zoe's Investors, and provided that
Mr. Miles remains employed through such change in control, any unvested Class B Units would vest upon the earlier to occur between the one (1)-year anniversary of such change in control
and a termination of Mr. Miles's employment without cause (as such term is defined in the grant agreement). Upon a termination for cause prior to the one (1)-year anniversary of such change of
control, Class B Units (whether or not vested) are immediately forfeited to Zoe's Investors for no consideration and canceled.
Upon
completion of this offering, the vested Class B Units will be converted into shares of our common stock and the unvested Class B Units will be converted into restricted stock,
subject to a vesting schedule substantially similar to the vesting schedule under which such Class B Units vest prior to the offering.
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information with respect to outstanding equity awards of our named executive officers as of December 30,
2013 with respect to the named executive officer. The market value of the shares in the following table is the fair value of such shares at December 30, 2013.
Stock Awards
Name
Number of Shares
or Units of Stock
That Have Not
Vested (#)
Market Value of
Shares or Units
of Stock That
Have Not Vested
($) (1)
Number of Shares
or Units of
Stock That Have
Vested (#)
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares or Other
Rights That Have
Vested ($)
Kevin Miles
5,501
(2)
$
65,357
69,499
$
825,643
30,531
(3)
$
362,712
44,469
$
528,288
20,000
(4)
$
97,600
—
—
Jason Morgan
—
—
85,802
$
1,019,324
6,329
(5)
$
62,527
3,671
$
36,273
Allyn Taylor
15,821
(6)
$
156,316
9,179
$
90,684
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(1)
Market
value of unvested units is based on management's retrospective determination of the fair market value of such units as of
                         , 2013.
(2)
Represent
Class B Units, as described above, which have a threshold amount $0.00 and which vest as follows: 20% of the original grant
of 75,000 (approximately 41.1 Class B Units) vested on May 14, 2010 and then 0.0548% per day through May 14, 2014.
(3)
Represent
Class B Units, as described above, which have a threshold amount of $0.00, and which vest as follows: 20% of the original
grant of 75,000 (approximately 41.1 Class B Units) vested on January 13, 2012 and then 0.0548% per day through January 13, 2016.
(4)
Represent
Class B Units, as described above, which have a threshold amount of $7.00, and which vest as follows: 20% of the original
grant of 20,000 (approximately 10.96 Class B Units) vests on April 8, 2014 and then 0.0548% per day through April 8, 2018.
(5)
Represent
Class B Units, as described above, which have a threshold amount of $2.00, and which vest as follows: 20% of the original
grant of 10,000 (approximately 5.48 Class B Units) vested on February 28, 2013 and then 0.0548% per day through February 28, 2017.
(6)
Represent
Class B Units, as described above, which have a threshold amount of $2.00, and which vest as follows: 0.0548% of the original
grant of 25,000 (approximately 13.7 Class B Units) per day through February 28, 2017.
2014 Omnibus Incentive Plan
In connection with this offering, we intend to adopt the 2014 Omnibus Incentive Plan (the "2014 Incentive Plan"). The 2014 Incentive Plan will provide
for grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and other employees of us and our subsidiaries, as
well as others performing consulting or advisory services for us, will be eligible for grants under the 2014 Incentive Plan. The purpose of the 2014 Incentive Plan is to provide incentives that will
attract, retain and motivate high performing officers, directors, employees and consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our
long-term success or compensation based on their performance in fulfilling their personal responsibilities. Set forth below is a summary of the material terms of the 2014 Incentive Plan. For further
information about the 2014 Incentive Plan, we refer you to the complete copy of the 2014 Incentive Plan.
Administration
The 2014 Incentive Plan will be administered by the Compensation Committee of our Board of Directors. Among the Compensation Committee's powers will
be to determine the form, amount and other terms and conditions of awards; clarify, construe or resolve any ambiguity in any provision of the 2014 Incentive Plan or any award agreement; amend the
terms of outstanding awards; and adopt such rules, forms, instruments and guidelines for administering the 2014 Incentive Plan as it deems necessary or proper. The Compensation Committee will have the
authority to administer and interpret the 2014 Incentive Plan, to grant discretionary awards under the 2014 Incentive Plan, to determine the persons to whom awards will be granted, to determine the
types of awards to be granted, to determine the terms and conditions of each award, to determine the number of shares of common stock to be covered by each award, to make all other determinations in
connection with the 2014 Incentive Plan and the awards thereunder as the Compensation Committee deems necessary or desirable and to delegate authority under the 2014 Incentive Plan to our executive
officers.
Available Shares
The aggregate number of shares of common stock which may be issued or used for reference purposes under the 2014 Incentive Plan or with respect to
which awards may be granted may not exceed               shares. The number of shares that will be available for issuance under the 2014 Incentive Plan may be subject to
adjustment in the event of a
reorganization, stock split, merger or similar change in the corporate structure or the outstanding shares of common stock. In the event of any of these occurrences, we may make any adjustments we
consider appropriate to, among other things, the number and kind of shares, options or other property available for issuance under the plan or covered by grants previously made under
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the
plan. The shares that will be available for issuance under the plan may be, in whole or in part, either authorized and unissued shares of our common stock or shares of common stock held in or
acquired for our treasury. In general, if awards under the 2014 Incentive Plan are for any reason cancelled, or expire or terminate unexercised, the shares covered by such awards may again be
available for the grant of awards under the 2014 Incentive Plan.
The
maximum number of shares of our common stock with respect to which any stock option, stock appreciation right, shares of restricted stock or other stock-based awards that will be subject to the
attainment of specified performance goals and intended to satisfy Section 162(m) of the U.S. Internal Revenue Code of 1986, as
amended (the "Code") and may be granted under the 2014 Incentive Plan during any fiscal year to any eligible individual will be               shares (per type of award). The
total number of shares
of our common stock with respect to all awards that may be granted under the 2014 Incentive Plan during any fiscal year to any eligible individual will
be               shares. There are no annual
limits on the number of shares of our common stock with respect to an award of restricted stock that are not subject to the attainment of specified performance goals to eligible individuals. The
maximum number of shares of our common stock subject to any performance award which may be granted under the 2014 Incentive Plan during any fiscal year to any eligible individual will be
               shares. The maximum value of a cash payment made under a performance award which may be granted under the 2014 Incentive Plan during any fiscal year to any
eligible individual will be
$               .
Eligibility for Participation
Members of our Board of Directors, as well as employees of, and consultants to, us or any of our subsidiaries and affiliates will be eligible to
receive awards under the 2014 Incentive Plan.
Award Agreement
Awards granted under the 2014 Incentive Plan will be evidenced by award agreements, which need not be identical, that provide additional terms,
conditions, restrictions and/or limitations covering the grant of the award, including, without limitation, additional terms providing for the acceleration of exercisability or vesting of awards in
the event of a change of control or conditions regarding the participant's employment, as determined by the Compensation Committee.
Stock Options
The Compensation Committee will be able to grant nonqualified stock options to any eligible individual. The Compensation Committee will also be able
to grant incentive stock options, but only to eligible employees. The Compensation Committee will determine the number of shares of our common stock subject to each option, the term of each option,
which may not exceed ten years, or five years in the case of an incentive stock option granted to a ten percent stockholder, the exercise price, the vesting schedule, if any, and the other material
terms of each option. No incentive stock option or nonqualified stock option may have an exercise price less than the fair market value of a share of our common stock at the time of grant or, in the
case of an incentive stock option granted to a ten percent stockholder, 110% of such share's fair market value. Options will be exercisable at such time or times and subject to such terms and
conditions as determined by the Compensation Committee at grant and the exercisability of such options may be accelerated by the Compensation Committee.
Stock Appreciation Rights
The Compensation Committee will be able to grant stock appreciation rights, which we refer to as SARs, either with a stock option, which may be
exercised only at such times and to the extent the related option is exercisable, which we refer to as a Tandem SAR, or independent of a stock option, which we refer to as a Non-Tandem SAR. A SAR is a
right to receive a payment in shares of our common stock or cash, as determined by the Compensation Committee, equal in value to the excess of the fair market value of one share of our common stock on
the date of exercise over the exercise price per share established in connection with the grant of the SAR. The term of each SAR may not exceed ten years. The exercise price per share covered by a SAR
will be the exercise price per share of the related option in the case of a
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Tandem
SAR and will be the fair market value of our common stock on the date of grant in the case of a Non-Tandem SAR. The Compensation Committee will also be able to grant limited SARs, either as
Tandem SARs or Non-Tandem SARs, which may become exercisable only upon the occurrence of a change in control, as defined in the 2014 Incentive Plan, or such other event as the Compensation Committee
may designate at the time of grant or thereafter.
Restricted Stock
The Compensation Committee will be able to award shares of restricted stock. Except as otherwise provided by the Compensation Committee upon the award
of restricted stock, the recipient will generally have the rights of a stockholder with respect to the shares, including the right to receive dividends, the right to vote the shares of restricted
stock and, conditioned upon full vesting of shares of restricted stock, the right to tender such shares, subject to the conditions and restrictions generally applicable to restricted stock or
specifically set forth in the recipient's restricted stock agreement. The Compensation Committee will be able to determine at the time of award that the payment of dividends, if any, will be deferred
until the expiration of the applicable restriction period.
Recipients
of restricted stock will be required to enter into a restricted stock agreement with us that states the restrictions to which the shares are subject, which may include satisfaction of
pre-established performance goals, and the criteria or date or dates on which such restrictions will lapse.
If
the grant of restricted stock or the lapse of the relevant restrictions is based on the attainment of performance goals, the Compensation Committee will establish for each recipient the applicable
performance goals, formulae or standards and the applicable vesting percentages with reference to the attainment of such goals or satisfaction of such formulae or standards while the outcome of the
performance goals are substantially uncertain. Such performance goals may incorporate provisions for disregarding, or adjusting for, changes in accounting methods, corporate transactions, including,
without limitation, dispositions and acquisitions, and other similar events or circumstances. Section 162(m) of the Code requires that performance awards be based upon objective performance
measures. The performance goals for performance-based restricted stock will be based on one or more of the objective criteria set forth on Exhibit A to the 2014 Incentive Plan and are discussed
in general below.
Other Stock-Based Awards
The Compensation Committee will be able to, subject to limitations under applicable law, make a grant of such other stock-based awards, including,
without limitation, shares of common stock awarded purely as a bonus and not subject to restrictions or conditions, shares of common stock in payment of the amounts due under an incentive or
performance plan sponsored or maintained by the company or an affiliate, stock equivalent units, restricted stock units, and Awards valued by reference to book value of shares of common stock under
the 2014 Incentive Plan that are payable in cash or denominated or payable in or valued by shares of our common stock or factors that influence the value of such shares. The Compensation Committee
will be able to determine the terms and conditions of any such other awards, which may include the achievement of certain minimum performance goals for purposes of compliance with
Section 162(m) of the Code and/or a minimum vesting period. The performance goals for performance-based other stock-based awards will be based on one or more of the objective criteria set forth
on Exhibit A to the 2014 Incentive Plan and discussed in general below.
Other Cash-Based Awards
The Compensation Committee will be able to grant awards payable in cash. Cash-based awards will be in such form, and dependent on such conditions, as
the Compensation Committee will determine, including, without limitation, being subject to the satisfaction of vesting conditions or awarded purely as a bonus and not subject to restrictions or
conditions. If a cash-based award is subject to vesting conditions, the Compensation Committee will be able to accelerate the vesting of such award in its discretion.
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Performance Awards
The Compensation Committee will be able to grant a performance award to a participant payable upon the attainment of specific performance goals. The
Compensation Committee will be able to grant performance awards that are intended to qualify as performance-based compensation under Section 162(m) of the Code as well as performance awards
that are not intended to qualify as performance-based compensation under Section 162(m) of the Code. If the performance award is payable in cash, it may be paid upon the attainment of the
relevant performance goals either in cash or in shares of restricted stock, based on the then current fair market value of such shares, as determined by the Compensation Committee. Based on service,
performance and/or other factors or criteria, the Compensation Committee will be able to, at or after grant, accelerate the vesting of all or any part of any performance award.
Performance Goals
The Compensation Committee will be able to grant awards of restricted stock, performance awards, and other stock-based awards that are intended to
qualify as performance-based compensation for purposes of Section 162(m) of the Code. These awards may be granted, vest and be paid based on attainment of specified performance goals
established by the committee. These performance goals may be based on the attainment of a certain target level of, or a specified increase or decrease in, one or more of the following measures
selected by the committee: (1) income per share; (2) operating income; (3) gross income; (4) net income, before or after taxes; (5) cash flow; (6) gross
profit; (7) gross profit return on investment; (8) gross margin return on investment; (9) gross margin; (10) operating margin; (11) working capital;
(12) income before interest and taxes; (13) income before interest, tax, depreciation and amortization; (14) return on equity; (15) return on assets; (16) return on
capital; (17) return on invested capital; (18) net revenues; (19) gross revenues; (20) revenue growth; (21) annual recurring revenues; (22) recurring
revenues; (23) license revenues; (24) sales or market share; (25) total stockholder return; (26) economic value added; (27) specified objectives with regard to
limiting the level of increase in all or a portion of our bank debt or other long-term or short-term public or private debt or other similar financial obligations, which may be calculated net of cash
balances and other offsets and adjustments as may be established by the Compensation Committee; (28) the fair market value of a share of our common stock; (29) the growth in the value of
an investment in our common stock assuming the reinvestment of dividends; or (30) reduction in operating expenses.
To
the extent permitted by law, the Compensation Committee will also be able to exclude the impact of an event or occurrence which the Compensation Committee determines should be appropriately
excluded, such as (1) restructurings, discontinued operations, extraordinary items and other unusual or non-recurring charges; (2) an event either not directly related to our operations
or not within the reasonable control of management; or (3) a change in accounting standards required by generally accepted accounting principles.
Performance
goals may also be based on an individual participant's performance goals, as determined by the Compensation Committee.
In
addition, all performance goals may be based upon the attainment of specified levels of our performance, or the performance of a subsidiary, division or other operational unit, under one or more of
the measures described above relative to the performance of other corporations. The Compensation Committee will be able to designate additional business criteria on which the performance goals may be
based or adjust, modify or amend those criteria.
Change in Control
In connection with a change in control, as defined in the 2014 Incentive Plan, the Compensation Committee will be able to accelerate vesting of
outstanding awards under the 2014 Incentive Plan. In addition, such awards may be, in the discretion of the committee, (1) assumed and continued or substituted in accordance with applicable
law; (2) purchased by us for an amount equal to the excess of the price of a share of our common stock paid in a change in control over the exercise price of the awards; or (3) cancelled
if the price of a share of our common stock paid in a change in control is less than the
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exercise
price of the award. The Compensation Committee will also be able to provide for accelerated vesting or lapse of restrictions of an award at any time.
Stockholder Rights
Except as otherwise provided in the applicable award agreement, and with respect to an award of restricted stock, a participant will have no rights as
a stockholder with respect to shares of our common stock covered by any award until the participant becomes the record holder of such shares.
Amendment and Termination
Notwithstanding any other provision of the 2014 Incentive Plan, our Board of Directors will be able to, at any time, amend any or all of the
provisions of the 2014 Incentive Plan, or suspend or terminate it entirely, retroactively or otherwise, subject to stockholder approval in certain instances; provided, however, that, unless otherwise
required by law or specifically provided in the 2014 Incentive Plan, the rights of a participant with respect to awards granted prior to such amendment, suspension or termination may not be adversely
affected without the consent of such participant.
Transferability
Awards granted under the 2014 Incentive Plan generally will be nontransferable, other than by will or the laws of descent and distribution, except
that the Compensation Committee will be able to provide for the transferability of nonqualified stock options at the time of grant or thereafter to certain family members.
Recoupment of Awards
The 2014 Incentive Plan will provide that awards granted under the 2014 Incentive Plan are subject to any recoupment policy that we may have in place
or any obligation that we may have regarding the clawback of "incentive-based compensation" under the Exchange Act or under any applicable rules and regulations promulgated by the SEC.
Effective Date; Term
The 2014 Incentive Plan was adopted by the Board of Directors
on                             ,          and approved
by stockholders on                             ,
          . No award will be granted under the 2014 Incentive Plan on or
after                             ,          . Any
award outstanding under the 2014 Incentive Plan at the time of termination
will remain in effect until such award is exercised or has expired in accordance with its terms.
Additional Narrative Description
Retirement Benefits
We do not provide any plans that would provide the NEOs with any payment of retirement benefits, or benefits that will be paid primarily following
retirement (whether through tax-qualified plans or otherwise), including but not limited to tax-qualified defined benefit plans and supplemental executive retirement plans.
Change in Control and/or Termination Payments
Aside from the severance pay payable to Mssrs. Miles and Morgan pursuant to the terms of their respective Offer Letters and the accelerated vesting of
Class B Units that would occur under certain circumstances described above, we do not provide payments to our NEOs upon a change in control of the Company, upon a change in the NEOs'
responsibilities following any such change in control, or, more generally, upon an NEO's resignation, retirement or other termination.
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Compensation of Directors
The table below summarizes the compensation paid to Mssrs. Dollarhyde, Barnum, Jr., Choe, Aggarwal, Miles, Baldwin and Collyns during fiscal
year 2013:
Director Compensation Table
Name
Fees
Earned
or Paid
in Cash
($)
Total
($)
Greg Dollarhyde
$
100,000
$
100,000
William Barnum, Jr.
—
—
Anthony Choe
—
—
Rahul Aggarwal
—
—
Kevin Miles
—
—
Thomas Baldwin
—
—
Sue Collyns
—
—
Narrative Disclosure to Director Compensation Table
Consulting Agreement
Mr. Dollarhyde and the Company are parties to a consulting agreement, dated March 22, 2011 (the "Consulting Agreement"), pursuant to
which he was paid $100,000 in consulting costs for his role as Executive Chairman in 2013. Such consulting costs are paid on a quarterly basis, and the agreement may be terminated by either party at
any time upon 30 days' notice, at which point Mr. Dollarhyde would be removed as Chairman and as a member of the Board of Directors. If the Company initiates such termination,
Mr. Dollarhyde would receive a pro rata portion of the quarterly fees incurred as of the date of termination.
None
of the other directors received fees or are party to a similar consulting agreement.
Post Offering Director Compensation Plans
It is anticipated that the Consulting Agreement will be terminated upon the offering. Going forward, we have not yet determined our compensation
policies for directors, but we anticipate compensating our directors with a combination of cash and stock awards.
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PRINCIPAL STOCKHOLDERS
The following table shows information about the beneficial ownership of our common stock, as of               , 2013,
by:
•
each person known by us to beneficially own 5% or more of our outstanding
common stock;
•
each of our directors and executive officers; and
•
all of our directors and executive officers as a group.
For
further information regarding material transactions between us and certain of our stockholders, see "Certain Relationships and Related Party Transactions."
The
numbers listed below are based on               shares of our common stock outstanding as
of                      , 2013, after giving effect to the Distribution Transactions. The Distribution
Transactions are based upon an initial public offering price of $               per share, which is the midpoint of the estimated offering price range set forth on the cover
page of this prospectus
and gives effect to the                      -for-1 stock split of our common stock, which will be effected prior to the completion of this
offering. The amount of common stock distributed to each member of
Zoe's Investors of the total               shares of our common stock held by Zoe's Investors is subject to change based on any changes to the initial public offering price
and the date of the
pricing of this offering.
Upon
the completion of this offering, Brentwood will own approximately          % of our common stock, or          % if the underwriters' option to
purchase additional shares of our common
stock is exercised in full.
Unless
otherwise indicated, the address of each individual listed in this table is c/o Zoe's Kitchen, Inc., 5700 Granite Parkway, Granite Park Building #2, Suite 455, Plano, Texas 75024.
Common stock owned
before the offering
Common stock owned
after the offering
(no option exercise)
Common stock owned
after the offering
(full option exercise)
Name and Address of Beneficial Owner
(1)
Number
Percentage
Number
Percentage
Number
Percentage
Greater than 5%:
Brentwood Associates and related funds
(2)
Greg Dollarhyde and related entities
(3)
Jemison Investment Company
(4)
John Cassimus
(5)
Executive Officers and Directors:
Kevin Miles
(6)
Jason Morgan
(7)
Jeremy Hartley
(8)
Allyn Taylor
(9)
Rachel Phillips-Luther
(10)
James Besch
(11)
Greg Dollarhyde
(3)
William Barnum, Jr.
Anthony Choe
Rahul Aggarwal
Thomas Baldwin
Sue Collyns
Executive Officers and Directors as a Group (12 persons)
(12)
*
Less
than 1%
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(1)
A
"beneficial owner" of a security is determined in accordance with Rule 13d-3 under the Exchange Act and generally means any person
who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares:
•
voting power which includes the power
to vote, or to direct the voting of, such security; and/or
•
investment power which includes the
power to dispose, or to direct the disposition of, such security.
Unless
otherwise indicated, each person named in the table above has sole voting and investment power, or shares voting and investment power with his spouse (as applicable), with respect to all shares
of stock listed as owned by that person. Shares issuable upon the exercise of options exercisable on,                      2013 or within
60 days thereafter are considered outstanding and to be
beneficially owned by the person holding such options for the purpose of computing such person's percentage beneficial ownership, but are not deemed outstanding for the purposes of computing the
percentage of beneficial ownership of any other person. The address of our executive officers is 5700 Granite Parkway, Granite Park Building #2, Suite 455, Plano, Texas 75024.
(2)
Includes                shares
held by Brentwood Associates Private Equity IV, L.P., an owner of membership interests in Zoe's
Investors, LLC, our sole shareholder. Brentwood Associates Private Equity IV, L.P. is controlled by its general partner, Brentwood Private Equity IV, L.P., which is in turn
controlled by its general partner, Brentwood Private Equity IV, LLC, which is in turn controlled by its five managing members, namely William Barnum, Jr., Anthony Choe, Roger Goddu, Steven W.
Moore and Eric G. Reiter. No individual holds a majority of the voting power in either of the general partners. The address of Brentwood Associates Private Equity IV, L.P. is 11150 Santa Monica
Boulevard, Suite 1200, Los Angeles, California 90025.
(3)
Includes                shares
of common stock held by Greg Dollarhyde and                shares of common stock held by
Dollarhyde Investment Group I, LLC c/o Greg Dollarhyde, 27955 West Winding Way, Malibu, CA 90265.
(4)
Includes                shares
of common stock held by Jem-ZK, LLC. Jemison Investment Co., Inc. is the sole manager and
controlling member of Jem-ZK, LLC. The address of Jem-ZK, LLC is 2001 Park Place, Suite 320, Birmingham, AL 35203.
(5)
Includes                shares
of common stock held by John Cassimus and                shares of common stock held by John
S. Fischer, as trustee of the Cassimus Family Trust c/o John Cassimus, 321 Greenwood Street, Birmingham, AL 35209.
(6)
Includes               shares
of common stock that can be acquired upon the exercise of outstanding options.
(7)
Includes               shares
of common stock that can be acquired upon the exercise of outstanding options.
(8)
Includes               shares
of common stock that can be acquired upon the exercise of outstanding options.
(9)
Includes               shares
of common stock that can be acquired upon the exercise of outstanding options.
(10)
Includes               shares
of common stock that can be acquired upon the exercise of outstanding options.
(11)
Includes               shares
of common stock that can be acquired upon the exercise of outstanding options.
(12)
Includes
our current directors (7 persons) and our current executive officers (6 persons).
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Corporate Development and Administrative Services Agreement
On October 31, 2007, Zoe's Investors, LLC entered into a Corporate Development and Administrative Services Agreement with Brentwood
Private Equity IV, LLC, an owner of membership interests in Zoe's Investors, LLC, our sole shareholder. Under the terms of the agreement, Brentwood provides assistance in the corporate
development activities and our business growth efforts. As consideration for services provided, we will provide reimbursement for business expenses related to performance of this agreement and an
annual consulting fee, capped at $300,000, based on Adjusted EBITDA as defined in the agreement. During the years ended December 30, 2013, December 31, 2012 and December 26, 2011,
we expensed $165,142, $193,850 and $155,000, respectively, related to this agreement. The agreement is expected to be terminated before completion of this offering.
Consulting Agreement
On March 22, 2011, Zoe's Kitchen, Inc. entered into the Second Amended and Restated Consulting Agreement with Greg Dollarhyde. Under the
terms of the agreement, Mr. Dollarhyde shall serve as the Chairman of the Board of Directors of Zoe's Kitchen, Inc., as well as provide assistance and advice to Zoe's
Kitchen, Inc. for a minimum of five business days per quarter per year for a fee of $100,000 per year, payable quarterly, plus all reasonable and necessary travel and related expenses. The
agreement is expected to be terminated before completion of this offering.
Registration Rights Agreement
Pursuant to the terms of a Registration Rights Agreement among ourselves, Zoe's Investors, LLC (our sole shareholder) and certain holders of
stock in Zoe's Investors, LLC, including Brentwood, certain holders of our stock are entitled to demand and piggyback rights in relation to their holdings of our shares. The stockholders who
are a party to the Registration Rights Agreement will hold an aggregate of               shares, or          %, of our equity
interests upon completion of this offering.
Demand Registrations
Under the Registration Rights Agreement, Brentwood is able to require us to use our best efforts to file a registration statement under the
Securities Act ("Demand Registration"), and we are required to notify holders of such registrable securities in the event of such request (a "Demand Registration Request"). Brentwood can issue
unlimited Demand Registration Requests. All eligible holders will be entitled to participate in any Demand Registration upon proper notice to us. We have certain limited rights to delay or postpone
such registration.
Piggyback Registrations
Under the Registration Rights Agreement, if at any time we propose or are required to register any of our equity securities under the Securities Act
(other than a Demand Registration, a merger or acquisition or pursuant to an employee benefit or dividend reinvestment plan), we will be required to notify each eligible holder of its right to
participate in such registration (a "Piggyback Registration"). We have the right to terminate or postpone any registration statement in which eligible holders have elected to exercise Piggyback
Registration rights.
Expenses of Registration
We are required to bear the registration expenses (other than underwriting discounts) incident to any registration in accordance with the Registration
Rights Agreement, including the reasonable fees of counsel chosen by Brentwood (if Brentwood holds any registrable securities included in the registration) or by the holders of a majority of the
registrable securities included in the registration.
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Indemnification
Under the Registration Rights Agreement, we must, subject to certain limitations, indemnify each holder of our registrable securities and its
officers, managers, managing members and directors, and each person controlling such holder against all losses, claims, actions, damages, liabilities and expenses in certain circumstances and to pay
any expenses reasonably incurred in connection with investigating and defending such losses, claims, actions, damages, liabilities and expenses, except insofar as the same are caused by or contained
in any information furnished in writing to us by such holder expressly for use therein.
Indemnification Agreements
We expect to enter into indemnification agreements with each of our directors and executive officers. Each indemnification agreement will provide
that, subject to limited exceptions, and among other things, we will indemnify the director or executive officer to the fullest extent permitted by law for claims arising in his or her capacity as our
director or officer.
Procedures for Approval of Related Party Transactions
We do not currently have a formal written policy or procedures for the review and approval of related party transactions. However, all related party
transactions are currently reviewed and approved by a disinterested majority of our Board of Directors.
Our
Board of Directors will adopt a written related person transaction policy, effective upon the closing of this offering, which sets forth the policies and procedures for the review and approval or
ratification of related party transactions. This policy will be administrated by our Audit Committee. These policies will provide that, in determining whether or not to recommend the initial approval
or ratification of a related party transaction, the relevant facts and circumstances available shall be considered, including, among other factors it deems appropriate, whether the interested
transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party's interest in the
transaction.
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DESCRIPTION OF CAPITAL STOCK
The following summary of certain provisions of our capital stock does not purport to be complete and is subject to our amended and restated
certificate of incorporation, our amended and restated bylaws and the provisions of applicable law. Copies of our amended and restated certificate of incorporation and amended and restated bylaws will
be filed as exhibits to the registration statement, of which this prospectus is a part.
Authorized Capitalization
General
Upon the closing of this offering, the total amount of our authorized capital stock will consist of               shares of common stock, par value
$               per share and               shares of undesignated preferred stock. As of
December 30, 2013, we had 100 shares of common stock, par value $0.01, outstanding.
After
giving effect to this offering, we will have                    shares of common stock and no shares of preferred stock outstanding. The following
summary describes all material provisions of our
capital stock. We urge you to read our amended and restated certificate of incorporation and our amended and restated bylaws, which are included as exhibits to the registration statement of which this
prospectus forms a part.
Common Stock
As of December 30, 2013, there was one stockholder of record of our common stock, Zoe's Investors. Our common stock is not entitled to
preemptive or other similar subscription rights to purchase any of our securities. Our common stock is neither convertible nor redeemable. Unless our Board of Directors determines otherwise, we will
issue all of our capital stock in uncertificated form.
Preferred Stock
We do not have any shares of preferred stock outstanding. Our Board of Directors has the authority to issue shares of preferred stock from time to
time on terms it may determine, to divide shares of preferred stock into one or more series and to fix the designations, preferences, privileges, and restrictions of preferred stock, including
dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, sinking fund terms, and the number of shares constituting any series or the designation of any series to
the fullest extent permitted by the General Corporation Law of the State of Delaware (the "DGCL"). The issuance of our preferred stock could have the effect of decreasing the trading
price of our common stock, restricting dividends on our capital stock, diluting the voting power of our common stock, impairing the liquidation rights of our capital stock, or delaying or preventing a
change in control of our Company.
Voting Rights
Each holder of our common stock is entitled to one vote per share on each matter submitted to a vote of stockholders. Our amended and restated bylaws
provide that the presence, in person or by proxy, of holders of shares representing a majority of the outstanding shares of capital stock entitled to vote at a stockholders' meeting shall constitute a
quorum. When a quorum is present, the affirmative vote of a majority of the votes cast is required to take action, unless otherwise specified by law or our amended and restated certificate of
incorporation, and except for the election of directors, which is determined by a plurality vote. There are no cumulative voting rights.
Dividend Rights
Each holder of shares of our capital stock will be entitled to receive such dividends and other distributions in cash, stock or property as may be
declared by our Board of Directors from time to time out of our assets or funds legally available for dividends or other distributions. See "Dividend Policy." These rights are subject to the
preferential rights of the holders of our preferred stock, if any, and any contractual limitations on our ability to declare and pay dividends.
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Other Rights
Each holder of common stock is subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock that we may
designate and issue in the future. This offering is not subject to pre-emptive rights.
Liquidation Rights
If our company is involved in a consolidation, merger, recapitalization, reorganization, voluntary or involuntary liquidation, dissolution or winding
up of our affairs, or similar event, each holder of common stock will participate pro rata in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred
stock, if any, then outstanding.
Anti-takeover Effects of our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws
Our amended and restated certificate of incorporation and our amended and restated bylaws will contain provisions that may delay, defer or discourage
another party from acquiring control of us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are
also designed to encourage persons seeking to acquire control of us to first negotiate with the Board of Directors, which we believe may result in an improvement of the terms of any such acquisition
in favor of our stockholders. However, they also give the Board of Directors the power to discourage acquisitions that some stockholders may favor.
Action by Written Consent, Special Meeting of Stockholders and Advance Notice Requirements for Stockholder Proposals
Our amended and restated certificate of incorporation will provide that stockholder action can be taken only at an annual or special meeting of
stockholders and cannot be taken by written consent in lieu of a meeting. Our amended and restated certificate of incorporation and bylaws will also provide that, except as otherwise required by law,
special meetings of the stockholders can be called only pursuant to a resolution adopted by a majority of the total number of directors that we would have if there were no vacancies. Except as
described above, stockholders will not be permitted to call a special meeting or to require the Board of Directors to call a special meeting.
In
addition, our amended and restated bylaws require advance notice procedures for stockholder proposals to be brought before an annual meeting of the stockholders, including the nomination of
directors. Stockholders at an annual meeting may only consider the proposals specified in the notice of meeting or brought before the meeting by or at the direction of the Board of Directors, or by a
stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered a timely written notice in proper form to our secretary, of the stockholder's
intention to bring such business before the meeting.
These
provisions could have the effect of delaying until the next stockholder meeting any stockholder actions, even if they are favored by the holders of a majority of our outstanding voting
securities.
Classified Board
Our amended and restated certificate of incorporation will provide that our Board of Directors will be divided into three classes of directors, with
the classes as nearly equal in number as possible. As a result, approximately one-third of our Board of Directors will be elected each year. The classification of directors will have the effect of
making it more difficult for stockholders to change the composition of our board.
Removal of Directors
Our amended and restated certificate of incorporation will provide that directors may only be removed from office only for cause and only upon the
affirmative vote of at least 75% of the voting power of our outstanding shares of common stock.
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Amendment to Certificate of Incorporation and Bylaws
The DGCL provides generally that the affirmative vote of a majority of the outstanding stock entitled to vote on amendments to a corporation's
certificate of incorporation or bylaws is required to approve such amendment, unless a corporation's certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our
amended and restated bylaws may be further amended, altered, changed or repealed by a majority vote of our Board of Directors, provided that, in addition to any other vote otherwise required by law,
the affirmative vote of at least 75% of the voting power of our outstanding shares of common stock will be required to amend, alter, change or repeal our amended and restated bylaws. Additionally, the
affirmative vote of at least 75% of the voting power of the outstanding shares of capital stock entitled to vote on the adoption, alteration, amendment or repeal of our amended and restated
certificate of incorporation, voting as a single class, will be required to amend or repeal or to adopt any provision inconsistent with specified
provisions of our amended and restated certificate of incorporation. This requirement of a supermajority vote to approve amendments to our amended and restated certificate of incorporation and amended
and restated bylaws could enable a minority of our stockholders to exercise veto power over any such amendments.
Delaware Anti-Takeover Statute
Section 203 of the DGCL provides that if a person acquires 15% or more of the voting stock of a Delaware corporation, such person becomes an
"interested stockholder" and may not engage in certain "business combinations" with the corporation for a period of three years from the time such person acquired 15% or more of the corporation's
voting stock, unless: (1) the Board of Directors approves the acquisition of stock or the merger transaction before the time that the person becomes an interested stockholder, (2) the
interested stockholder owns at least 85% of the outstanding voting stock of the corporation at the time the merger transaction commences (excluding voting stock owned by directors who are also
officers and certain employee stock plans), or (3) the merger transaction is approved by the Board of Directors and by the affirmative vote at a meeting, not by written consent, of stockholders
of 2/3 of the holders of the outstanding voting stock which is not owned by the interested stockholder. A Delaware corporation may elect in its certificate of incorporation or bylaws not to be
governed by this particular Delaware law.
Under
our amended and restated certificate of incorporation, we will opt out of Section 203 of the DGCL and will therefore not be subject to Section 203.
Corporate Opportunity
Our amended and restated certificate of incorporation provides that we renounce any interest or expectancy in, or in being offered an opportunity to
participate in, any business opportunity that may from time to time be presented to Brentwood or any of its officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries
(other than us and our subsidiaries) and that may be a business opportunity for Brentwood, even if the opportunity is one that we might reasonably have pursued or had the ability or desire to pursue
if granted the opportunity to do so. No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person,
acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information
regarding any such business opportunity, to us unless, in the case of any such person who is our director or officer, any such business opportunity is expressly offered to such director or officer
solely in his or her capacity as our director or officer. Neither Brentwood, nor any of its representatives has any duty to refrain from engaging directly or indirectly in the same or similar business
activities or lines of business as us or any of our subsidiaries.
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Limitations on Liability and Indemnification of Officers and Directors
Our amended and restated certificate of incorporation will limit the liability of our directors to the fullest extent permitted by the DGCL, and our
amended and restated bylaws will provide that we will indemnify them to the fullest extent permitted by such law. We expect to enter into indemnification agreements with our current directors and
executive officers prior to the completion of this offering and expect to enter into a similar agreement with any new directors or executive officers.
Exclusive Jurisdiction of Certain Actions
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law that derivative actions brought in the name of
the Company, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware. Although we
believe this provision benefits the Company by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of
discouraging lawsuits against our directors and officers.
Registration Rights
See "Certain Relationships and Related Party Transactions—Registration Rights Agreement."
Transfer Agent and Registrar
The transfer agent and registrar for our common stock will be               . Its address
is               .
Listing
We have applied to have our common stock listed on the New York Stock Exchange under the trading symbol "ZOES."
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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock and a liquid trading market for our common stock may not develop or be
sustained after this offering. Future sales of substantial amounts of our common stock in the public market, or the perception that such sales may occur, could adversely affect the prevailing market
price of our common stock and impair our ability to raise equity capital in the future. No prediction can be made as to the effect, if any, future sales of shares, or the availability of shares for
future sales, will have on the market price of our common stock prevailing from time to time. As described below, only a limited number of shares of our common stock will be available for sale in the
public market for a period of several months after consummation of this offering due to contractual and legal restrictions on resale described below. Future sales of our common stock in the public
market either before (to the extent permitted) or after restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such
time and our ability to raise equity capital at a time and price we deem appropriate.
Sale of Restricted Shares
Upon completion of this offering, we will have                             shares of
common stock outstanding. Of these shares of common stock, the
                             shares of common stock being sold in this offering, plus any shares sold
upon exercise of the underwriters' option to purchase additional shares, will be freely tradable without
restriction under the Securities Act, except for any such shares which may be acquired by an "affiliate" of ours, as that term is defined in Rule 144, which shares will be subject to the volume
limitations and other restrictions of Rule 144 described below. The
remaining                             shares of common stock held by our existing stockholders upon
completion of this offering will be
"restricted securities," as that term is defined in Rule 144, and may be resold only after registration under the Securities Act or pursuant to an exemption from such registration, including,
among others, the exemptions provided by Rule 144 and Rule 701 under the Securities Act, which rules are summarized below. These remaining shares of common stock held by our existing
stockholders upon completion of this offering will be available for sale in the public market (after the expiration of the lock-up agreements described below) only if registered or if they qualify for
an exemption from registration under Rule 144 or Rule 701 under the Securities Act, as described below.
As
a result of the lock-up agreements described below and the provisions of Rules 144 and Rule 701 promulgated under the Securities Act, the shares of our common stock (excluding the
shares sold in this offering) will be available for sale in the public market as follows:
•
no shares will be eligible for sale on the date of this prospectus;
and
•
shares will be eligible for sale upon the expiration of the lock-up
agreements, as more particularly described below, beginning 180 days after the date of this prospectus, subject to certain exceptions.
Rule 144
In general, under Rule 144, as currently in effect, persons who are not one of our affiliates at any time during the three months preceding a
sale may sell shares of our common stock beneficially held upon the earlier of (1) the expiration of a six-month holding period, if we have been subject to the reporting requirements of the
Exchange Act and have filed all required reports for at least 90 days prior to the date of the sale, or (2) a one-year holding period.
At
the expiration of the six-month holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of
shares of our common stock provided current public information about us is available, and a person who was one of our affiliates at any time during the three months preceding a sale would be entitled
to sell within any three-
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month
period a number of shares of common stock that does not exceed the greater of either of the following:
•
1% of the number of shares of our common stock then outstanding, which will
equal approximately                             shares immediately after this offering, based on the
number of shares of our common stock outstanding as of               ;
or
•
the average weekly trading volume of our common stock on the New York Stock
Exchange during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
At
the expiration of the one-year holding period, a person who was not one of our affiliates at any time during the three months preceding a sale would be entitled to sell an unlimited number of
shares of our common stock without restriction. A person who was one of our affiliates at any time during the three months preceding a sale would remain subject to the volume restrictions described
above.
Sales
under Rule 144 by our affiliates are also subject to manner of sale provisions, notice requirements and to the availability of current public information about us. Notwithstanding the
availability of Rule 144, the holders of substantially all of our" restricted securities" have entered into lock-up agreements as referenced above and their "restricted securities" will become
eligible for sale (subject to the above limitations under Rule 144) upon the expiration of the restrictions set forth in those agreements.
Rule 701
In general, and subject to expiration of the applicable lock-up restrictions, under Rule 701 promulgated under the Securities Act, any of our
employees, directors or officers who purchased shares from us in connection with a qualified compensatory stock or option plan or other written agreement before the effective date of this offering, or
who purchased shares from us after that date upon the exercise of options granted before that date (subject to the lock-up agreements referred to below, as applicable), are eligible to resell such
shares in reliance upon Rule 144 beginning 90 days after the date of this prospectus. If such person is not an affiliate, the sale may be made under Rule 144 without compliance
with the holding periods of Rule 144 and subject only to the manner-of-sale restrictions of Rule 144. If such a person is an affiliate, the sale may be made under Rule 144 without
compliance with its one-year minimum holding period, but subject to the other Rule 144 restrictions.
Stock Plans
We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock issued or
reserved for issuance under our existing option plan and the new equity incentive plan we intend to adopt in connection with this offering. The first such registration statement is expected to be
filed soon after the date of this prospectus and will automatically become effective upon filing with the SEC. Accordingly, shares registered under such registration statement will be available for
sale in the open market following the effective date, unless such shares are subject to vesting restrictions with us, Rule 144 restrictions applicable to our affiliates or the lock-up
restrictions described below.
Lock-Up Agreements
We, our officers, directors and holders of all or substantially all our outstanding capital stock have agreed, subject to specified exceptions, not to
directly or indirectly:
•
sell, offer, contract or grant any option to sell (including any short
sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-l(h) under the Exchange Act; or
•
otherwise dispose of any shares of common stock, options or warrants to
acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock currently or hereafter owned either of record or beneficially; or
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•
publicly announce an intention to do any of the foregoing for a period of
180 days after the date of this prospectus without the prior written consent of Jefferies LLC and Piper Jaffray & Co.
This
restriction terminates after the close of trading of the common stock on and including the 180
th
day after the date of this prospectus. For additional information, see
"Underwriting."
Registration Rights
Upon completion of this offering, the holders of an aggregate of               shares of our common stock, or their transferees, will be entitled to
certain rights with respect to the registration of their shares under the Securities Act. Except for shares purchased by affiliates, registration of their shares under the Securities Act would result
in these shares becoming freely tradable without restriction under the Securities Act immediately upon effectiveness of the registration, subject to the expiration of the lock-up period, with respect
to certain of the shares, described under "Underwriting" in this prospectus, and to the extent such shares have been released from any repurchase option that we may hold. See "Certain Relationships
and Related Party Transactions—Registration Rights Agreement" for more information.
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MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS
Overview
The following is a summary of material U.S. federal income and estate tax consequences to non-U.S. holders, as defined below, of the ownership and
disposition of shares of our common stock. This summary deals only with shares of common stock purchased in this offering that are held as capital assets (generally, property held for investment) by a
non-U.S. holder.
For
purposes of this discussion, a "non-U.S. holder" means a beneficial owner of shares of our common stock that, for U.S. federal income tax purposes, is not any of the
following:
•
an individual who is a citizen or resident of the United States;
•
a corporation (or any other entity treated as a corporation for U.S. federal
income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•
any entity or arrangement treated as a partnership for U.S. federal income
tax purposes;
•
an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or
•
a trust if it (1) is subject to the primary supervision of a court
within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury
regulations to be treated as a U.S. person for U.S. federal income tax purposes.
If
any entity or arrangement treated as a partnership for U.S. federal income tax purposes holds shares of our common stock, the tax treatment of a partner in such partnership generally will depend
upon the status of the partner and the activities of the partner and the partnership. If you are a partner of a partnership considering an investment in shares of our common stock, you should consult
your own tax advisors.
This
summary is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), applicable U.S. Treasury regulations, rulings and other administrative pronouncements and
judicial decisions, all as of the date hereof. Those authorities are subject to different interpretations and may be changed, perhaps retroactively, so as to result in U.S. federal income and estate
tax consequences different from those summarized below. We cannot assure you that a change in law will not alter significantly the tax consequences described in this summary.
This
summary does not address all aspects of U.S. federal income and estate taxation, does not address any aspects of the unearned income Medicare contribution tax pursuant to the Health Care and
Education Reconciliation Act of 2010 and does not deal with the alternative minimum tax or other federal taxes (such as gift tax) or with foreign, state or local tax considerations that may be
relevant to non-U.S. holders in light of their particular circumstances. In addition, this summary does not describe the U.S. federal income tax consequences applicable to you if you are subject to
special treatment under U.S. federal income tax laws (including if you are a U.S. expatriate or U.S. expatriated entity, a financial institution, an insurance company, a tax-exempt organization, a
trader, broker or dealer in securities or currencies, a "controlled foreign corporation," a "passive foreign investment company," an entity treated as a partnership or other pass-through entity for
U.S. federal income tax purposes (or an investor in such a pass-through entity), a person who acquired shares of our common stock as compensation or otherwise in connection with the performance of
services, or a person who has acquired shares of our common stock as part of a straddle, hedge, conversion transaction or other integrated investment).
We
have not sought and do not expect to seek any rulings from the U.S. Internal Revenue Service (the "IRS") regarding the matters discussed below. There can be no assurance that the IRS will not take
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positions
concerning the tax consequences of the ownership or disposition of shares of our common stock that differ from those discussed below.
If you are considering the purchase of shares of our common stock, you should consult your own tax advisors concerning the particular U.S. federal income and estate tax
consequences to you of the ownership and disposition of shares of our common stock, as well as the consequences to you arising under other U.S. federal tax laws and the laws of any other applicable
taxing jurisdiction in light of your particular circumstances.
Dividends
In general, cash distributions on shares of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from
our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent any such distributions exceed both our current and our accumulated earnings and
profits, they will first be treated as a return of capital reducing your tax basis in our common stock (determined on a share by share basis), but not below zero, and then will be treated as gain from
the sale of stock.
As
discussed under "Dividend Policy" above, we do not currently expect to pay dividends. In the event that we do pay dividends, dividends paid to a non-U.S. holder generally will be subject to a U.S.
federal withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or
business within the United States by a non-U.S. holder generally will not be subject to such withholding tax, provided certain certification and disclosure requirements are satisfied (including the
provision of a properly completed IRS Form W-8 ECI or other applicable form). Instead, unless an applicable income tax treaty provides otherwise, such dividends will be subject to U.S. federal
income tax on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. person. A corporate non-U.S. holder may be subject to an additional "branch profits tax" on its
earnings and profits (subject to adjustments) that are effectively connected with its conduct of a U.S. trade or business (unless an applicable income tax treaty provides otherwise).
A
non-U.S. holder of shares of our common stock who wishes to claim the benefit of an applicable income tax treaty rate for dividends will be required (a) to complete IRS Form W-8BEN (or
other applicable form) and certify under penalty of perjury that such holder is not a U.S. person and is eligible for treaty benefits of a reduction in the rate of, or exemption from, withholding on
dividends, or (b) if shares of our common stock are held through certain foreign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury regulations. This
certification must be provided to the applicable withholding agent prior to the payment of dividends and may be required to be updated periodically.
A
non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by
timely filing an appropriate claim for refund with the IRS.
Gain on Disposition of Shares of Common Stock
Subject to the discussions below of backup withholding and the FATCA legislation, any gain realized by a non-U.S. holder on the sale or other
disposition of shares of our common stock generally will not be subject to U.S. federal income tax unless:
•
the gain is effectively connected with a trade or business of the non-U.S.
holder conducted in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment or a fixed base of the non-U.S. holder);
•
the non-U.S. holder is an individual who is present in the United States for
183 days or more in the taxable year of that disposition, and certain other conditions are met; or
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•
we are or have been a U.S. real property holding corporation (a "USRPHC")
for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of the disposition or the period that the non-U.S. holder held shares of our common stock
(the "applicable period").
In
the case of a non-U.S. holder described in the first bullet point above, any gain will be subject to U.S. federal income tax on a net income basis generally in the same manner as if the non-U.S.
holder were a U.S. person (unless an applicable income tax treaty provides otherwise), and a non-U.S. holder that is a foreign corporation may also be subject to a branch profits tax at a rate of 30%
on its effectively connected earnings and profits (subject to adjustments), unless an applicable income tax treaty provides otherwise. Except as otherwise provided by an applicable income tax treaty,
an individual non-U.S. holder described in the second bullet point above will be subject to a 30% tax on any gain derived from the sale or other taxable disposition, which may be offset by certain
U.S. source capital losses, even though the individual is not considered a resident of the United States.
With
respect to the third bullet point above, we believe we are not and do not anticipate becoming a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market
value of our U.S. real property interests relative to the fair market value of our other business assets, there can be no assurance that we are not currently or will not become a USRPHC in the future.
Even if we are or become a USRPHC, so long as our common stock is regularly traded on an established securities market, a non-U.S. holder will be subject to U.S. federal income tax on any gain only if
such non-U.S. holder actually or constructively owned more than five percent of our outstanding common stock at some time during the applicable period. You should consult your own tax advisor about
the consequences that could result if we are, or become, a USRPHC.
Information Reporting and Backup Withholding
The amount of dividends paid to each non-U.S. holder and any tax withheld with respect to such dividends will be reported annually to the IRS and to
each such holder, regardless of whether withholding was reduced or eliminated by an applicable income tax treaty. Copies of the information returns reporting such dividends and withholding may also be
made available to the tax authorities in the country in which the non-U.S. holder resides or is established under the provisions of an applicable income tax treaty or agreement.
A
non-U.S. holder generally will be subject to backup withholding with respect to dividends paid to such holder unless such holder certifies under penalty of perjury that it is not a U.S. person (and
the payor does not have actual knowledge or reason to know that such holder is a U.S. person), or such holder otherwise establishes an exemption.
Information
reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition by a non-U.S. holder of shares of our common stock within the
United States or conducted through certain U.S.-related financial intermediaries unless such non-U.S. holder certifies under penalty of perjury that it is not a U.S. person (and the payor does not
have actual knowledge or reason to know that the non-U.S. holder is a U.S. person), or such non-U.S. holder otherwise establishes an exemption.
Backup
withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's U.S. federal income tax
liability provided the required information is timely furnished to the IRS.
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Legislation Affecting Taxation of Common Stock Held by or Through Foreign Entities
Legislation enacted in 2010, known as the "FATCA" legislation, generally will impose a withholding tax of 30% on dividend income from our common stock
and on the gross proceeds of a sale or other disposition of our common stock paid to a "foreign financial institution" (as specifically defined for this purpose), unless such institution enters into
an agreement with the U.S. government to collect and provide to the U.S. tax authorities substantial information regarding U.S. account holders of such institution (which would include certain equity
and debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners) or otherwise qualifies for an exemption. Absent any applicable exception, this
legislation also generally will impose a withholding tax of 30% on dividend income from our common stock and the gross proceeds of a sale or other disposition of our common stock paid to a foreign
entity that is not a foreign financial institution unless such entity provides the applicable withholding agent or, in the case of substantial U.S. owners, also the U.S. tax authorities either with
(i) a certification identifying any substantial U.S. owners of the entity, which generally includes any U.S. person who directly or indirectly owns more than 10% of the entity (or more than
zero percent in the case of some entities) or (ii) a certification that the entity does not have any substantial U.S. owners. The United States and other governments may enter into
intergovernmental agreements that modify or supplement these rules. Under final Treasury regulations and related guidance, this withholding tax only applies to payments of dividends made after
June 30, 2014 and payments of gross proceeds made after December 31, 2016. Under certain circumstances, a non-U.S. holder of our common stock might be eligible for refunds or credits of
such withholding taxes, and a non-U.S. holder might be required to file a U.S. federal income
tax return to claim such refunds or credits. Non-U.S. holders should consult their own tax advisors regarding the implications of this legislation on their investment in our common stock.
U.S. Federal Estate Tax
Shares of our common stock that are owned (or deemed to be owned) at the time of death by a non-U.S. holder who is an individual will be includable in
such non-U.S. holder's taxable estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.
THE SUMMARY ABOVE IS A SUMMARY OF MATERIAL U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS. POTENTIAL PURCHASERS OF OUR COMMON STOCK ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS TO DETERMINE THE U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. INCOME, ESTATE AND OTHER TAX CONSIDERATIONS OF OWNING AND DISPOSING OF OUR COMMON STOCK.
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UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement,
dated                             , 2014, among us, Jefferies LLC and Piper
Jaffray & Co., as the representatives of the underwriters named below and the joint book-running managers of this offering, we have agreed to sell to the underwriters, and each of the
underwriters has agreed, severally and not jointly, to purchase from us, the respective number of shares of common stock shown opposite its name below:
Underwriters
Number
of Shares
Jefferies LLC
Piper Jaffray & Co.
Robert W. Baird & Co. Incorporated
William Blair & Company, L.L.C.
Stephens Inc.
Stifel, Nicolaus & Company, Incorporated
Total
The underwriting agreement provides that the obligations of the several underwriters are subject to certain conditions precedent such as the receipt by the
underwriters of officers' certificates and legal opinions and approval of certain legal matters by their counsel. The underwriting agreement provides that the underwriters will purchase all of the
shares of common stock if any of them are purchased. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be
increased or the underwriting agreement may be terminated. We have agreed to indemnify the underwriters and certain of their controlling persons against certain liabilities, including liabilities
under the Securities Act, and to contribute to payments that the underwriters may be required to make in respect of those liabilities.
The
underwriters have advised us that, following the completion of this offering, they currently intend to make a market in the common stock as permitted by applicable laws and regulations. However,
the underwriters are not obligated to do so, and the underwriters may discontinue any market-making activities at any time without notice in their sole discretion. Accordingly, no assurance can be
given as to the liquidity of the trading market for the common stock, that you will be able to sell any of the common stock held by you at a particular time or that the prices that you receive when
you sell will be favorable.
The
underwriters are offering the shares of common stock subject to their acceptance of the shares of common stock from us and subject to prior sale. The underwriters reserve the right to withdraw,
cancel or modify offers to the public and to reject orders in whole or in part. In addition, the underwriters have advised us that they do not intend to confirm sales to any account over which they
exercise discretionary authority.
Commission and Expenses
The underwriters have advised us that they propose to offer the shares of common stock to the public at the initial public offering price set forth on
the cover page of this prospectus and to certain dealers, which may include the underwriters, at that price less a concession not in excess of $               per share of
common stock. The
underwriters may allow, and certain dealers may reallow, a discount from the concession not in excess of $               per share of common stock to certain brokers and
dealers. After the offering,
the initial public offering price, concession and reallowance to dealers may be reduced by the representatives. No
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such
reduction will change the amount of proceeds to be received by us as set forth on the cover page of this prospectus.
The
following table shows the public offering price, the underwriting discounts that we are to pay the underwriters and the proceeds, before expenses, to us in connection with this offering. Such
amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares of our common stock.
Per Share
Total
Without
Option to
Purchase
Additional
Shares
With
Option to
Purchase
Additional
Shares
Without
Option to
Purchase
Additional
Shares
With
Option to
Purchase
Additional
Shares
Public offering price
$
$
$
$
Underwriting discounts paid by us
$
$
$
$
Proceeds to us, before expenses
$
$
$
$
We estimate expenses payable by us in connection with this offering, other than the underwriting discounts referred to above, will be approximately
$               . We have also agreed to reimburse the underwriters for certain of their expenses, in an amount of up to
$               , incurred in connection with review by the Financial Industry
Regulatory Authority, Inc. of the terms of this offering, as set forth in the underwriting agreement.
Determination of Offering Price
Prior to this offering, there has not been a public market for our common stock. Consequently, the initial public offering price for our common stock
will be determined by negotiations between us and the representatives. Among the factors to be considered in these negotiations will be prevailing market conditions, our financial information, market
valuations of other companies that we and the underwriters believe to be comparable to us, estimates of our business potential, the present state of our development and other factors deemed relevant.
We
offer no assurances that the initial public offering price will correspond to the price at which the common stock will trade in the public market subsequent to the offering or that an active
trading market for the common stock will develop and continue after the offering.
Listing
We have applied to have our common stock listed on the New York Stock Exchange under the trading symbol "ZOES."
Stamp Taxes
If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and
practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.
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Option to Purchase Additional Shares
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase, from time to time, in
whole or in part, up to an aggregate of                             shares from us at the public offering
price set forth on the cover page of this prospectus, less underwriting discounts. If the underwriters
exercise this option, each underwriter will be obligated, subject to specified conditions, to purchase a number of additional shares proportionate to that underwriter's initial purchase commitment as
indicated in the table above. This option may be exercised only if the underwriters sell more shares than the total number set forth on the cover page of this prospectus.
No Sales of Similar Securities
We, our officers, directors and holders of all or substantially all our outstanding capital stock have agreed, subject to specified exceptions, not to
directly or indirectly:
•
sell, offer, contract or grant any option to sell (including any short
sale), pledge, transfer, establish an open "put equivalent position" within the meaning of Rule 16a-l(h) under the Exchange Act; or
•
otherwise dispose of any shares of common stock, options or warrants to
acquire shares of common stock, or securities exchangeable or exercisable for or convertible into shares of common stock currently or hereafter owned either of record or beneficially; or
•
publicly announce an intention to do any of the foregoing for a period of
180 days after the date of this prospectus without the prior written consent of Jefferies LLC and Piper Jaffray & Co.
This
restriction terminates after the close of trading of the common stock on and including the 180
th
day after the date of this prospectus.
Jefferies LLC
and Piper Jaffray & Co. may, in their sole discretion and at any time or from time to time before the termination of the 180-day period, release all or any portion of the
securities subject to lock-up agreements. There are no existing agreements between the underwriters and any of our stockholders who will execute a lock-up agreement, providing consent to the sale of
shares prior to the expiration of the lock-up period.
Stabilization
The underwriters have advised us that they, pursuant to Regulation M under the Exchange Act, certain persons participating in the offering may
engage in short sale transactions, stabilizing transactions, syndicate covering transactions or the imposition of penalty bids in connection with this offering. These activities may have the effect of
stabilizing or maintaining the market price of the common stock at a level above that which might otherwise prevail in the open market. Establishing short sales positions may involve either "covered"
short sales or "naked" short sales.
"Covered"
short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares of our common stock in this offering. The underwriters may close out any
covered short position by either exercising their option to purchase additional shares of our common stock or purchasing shares of our common stock in the open market. In determining the source of
shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they
may purchase shares through the option to purchase additional shares.
"Naked"
short sales are sales in excess of the option to purchase additional shares of our common stock. The underwriters must close out any naked short position by purchasing shares in the open
market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on
the price of the shares of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering.
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A
stabilizing bid is a bid for the purchase of shares of common stock on behalf of the underwriters for the purpose of fixing or maintaining the price of the common stock. A syndicate covering
transaction is the bid for or the purchase of shares of common stock on behalf of the underwriters to reduce a short position incurred by the underwriters in connection with the offering. Similar to
other purchase transactions, the underwriter's purchases to cover the syndicate short sales may have the effect of raising or maintaining the market price of our common stock or preventing or
retarding a decline in the market price of our common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. A penalty bid is an
arrangement permitting the underwriters to reclaim the selling concession otherwise accruing to a syndicate member in connection with the offering if the common stock originally sold by such syndicate
member are purchased in a syndicate covering transaction and therefore have not been effectively placed by such syndicate member.
Neither
we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our common
stock. The underwriters are not obligated to engage in these activities and, if commenced, any of the activities may be discontinued at any time.
Electronic Distribution
A prospectus in electronic format may be made available by e-mail or on the web sites or through online services maintained by one or more of the
underwriters or their affiliates. In those cases, prospective investors may view offering terms online and may be allowed to place orders online. The underwriters may agree with us to allocate a
specific number of common stock for sale to online brokerage account holders. Any such allocation for online distributions will be made by the underwriters on the same basis as other allocations.
Other than the prospectus in electronic format, the information on the underwriters' web sites and any information contained in any other web site maintained by any of the underwriters is not part of
this prospectus, has not been approved and/or endorsed by us or the underwriters and should not be relied upon by investors.
Other Activities and Relationships
The underwriters and certain of their affiliates are full service financial institutions engaged in various activities, which may include securities
trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The underwriters and
certain of their affiliates have, from time to time, performed, and may in the future perform, various commercial and investment banking and financial advisory services for us and our affiliates, for
which they received or will receive customary fees and expenses.
In
the ordinary course of their various business activities, the underwriters and certain of their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities
activities may involve securities and/or instruments issued by us and our affiliates. If the underwriters or their respective affiliates have a lending relationship with us, they routinely hedge their
credit exposure to us consistent with their customary risk management policies. The underwriters and their respective affiliates may hedge such exposure by entering into transactions which consist of
either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the common stock offered hereby. Any such
short positions could adversely affect future trading prices of the common stock offered hereby. The underwriters and certain of their respective affiliates may also communicate independent investment
recommendations, market color or trading ideas and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that
they acquire, long and/or short positions in such securities and instruments.
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Selling Restrictions
This prospectus does not constitute an offer to sell to, or a solicitation of an offer to buy from, anyone in any country or jurisdiction
(i) in which such an offer or solicitation is not authorized, (ii) in which any person making such offer or solicitation is not qualified to do so or (iii) in which any such offer
or solicitation would otherwise be unlawful. No action has been taken that would, or is intended to, permit a public offer of the shares of common stock or possession or distribution of this
prospectus or any other offering or publicity material relating to the shares of common stock in any country or jurisdiction (other than the United States) where any such action for that purpose is
required. Accordingly, each underwriter has undertaken that it will not, directly or indirectly, offer or sell any shares of common stock or have in its possession, distribute or publish any
prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in
compliance
with any applicable laws and regulations and all offers and sales of the shares of common stock by it will be made on the same terms.
European Economic Area
In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), an
offer to the public of any common shares which are the subject of the offering contemplated by this prospectus supplement and the accompanying prospectus may not be made in that Relevant Member State
except that an offer to the public in that Relevant Member State of any common shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been
implemented in that Relevant Member State:
•
to any legal entity which is a "qualified investor" as defined in the
Prospectus Directive; to legal entities which are qualified investors as defined under the Prospectus Directive;
•
to fewer than 100 or, if the Relevant Member State has implemented the
relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus
Directive, subject to obtaining the prior consent of the underwriters or the underwriters nominated by us for any such offer; or
•
in any other circumstances falling within Article 3(2) of the
Prospectus Directive,
provided
that no such offer of common shares shall require us or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus
pursuant to Article 16 of the Prospectus Directive.
For
the purposes of this provision, the expression an "offer common shares to the public" in relation to the common shares in any Relevant Member State means the communication in any form and by any
means of sufficient information on the terms of the offer and the common shares to be offered so as to enable an investor to decide to purchase or subscribe to the common shares, as the same may be
varied in that Relevant Member
State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending
Directive" means Directive 2010/73/EU.
United Kingdom
This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning
of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the "Order") and/or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order and other persons to whom it may lawfully
be communicated (each such person being referred to as a "relevant person").
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This
prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom.
Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.
Hong Kong
No securities have been offered or sold, and no securities may be offered or sold, in Hong Kong, by means of any document, other than to persons whose
ordinary business is to buy or sell shares or debentures, whether as principal or agent; or to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong
("SFO") and any rules made under that Ordinance; or in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong
("CO") or which do not constitute an offer or invitation to the public for the purpose of the CO or the SFO. No document, invitation or advertisement relating to the securities has been issued or may
be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed
or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons
outside Hong Kong or only to "professional investors" as defined in the SFO and any rules made under that Ordinance.
This
prospectus has not been registered with the Registrar of Companies in Hong Kong. Accordingly, this prospectus may not be issued, circulated or distributed in Hong Kong, and the securities may not
be offered for subscription to members of the public in Hong Kong. Each person acquiring the securities will be required, and is deemed by the acquisition of the securities, to confirm that he is
aware of the restriction on offers of the securities described in this prospectus and the relevant offering documents and that he is not acquiring, and has not been offered any securities in
circumstances that contravene any such restrictions.
Singapore
This prospectus has not been and will not be lodged or registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this
prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares
be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor
under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to
Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Where
the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
•
a corporation (which is not an accredited investor (as defined in
Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
•
a trust (where the trustee is not an accredited investor) whose sole purpose
is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,
securities
(as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months
after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:
•
to an institutional investor or to a relevant person defined in
Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
•
where no consideration is or will be given for the transfer;
•
where the transfer is by operation of law;
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•
as specified in Section 276(7) of the SFA; or
•
as specified in Regulation 32 of the Securities and Futures (Offers
of Investments) (Shares and Debentures) Regulations 2005 of Singapore.
Japan
The offering has not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948 of Japan, as
amended), or FIEL, and the Initial Purchaser will not offer or sell any shares, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means
any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to, or for the
benefit of, any resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the FIEL and any other applicable laws, regulations and
ministerial guidelines of Japan.
Switzerland
The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or
regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of
Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in
Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in
Switzerland.
Neither
this prospectus nor any other offering or marketing material relating to the offering, the Company or the shares have been or will be filed with or approved by any Swiss regulatory authority.
In particular, this prospectus will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority FINMA, and the offer of shares has not been
and will not be authorized under the Swiss Federal Act on Collective Investment Schemes ("CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the
CISA does not extend to acquirers of shares.
Australia
This prospectus is not a disclosure document for the purposes of Australia's Corporations Act 2001 (Cth) of Australia, or Corporations Act, has not
been lodged with the Australian Securities & Investments Commission and is only directed to the categories of exempt persons set out below. Accordingly, if you receive this prospectus in
Australia:
You
confirm and warrant that you are either:
•
a "sophisticated investor" under section 708(8)(a) or (b) of
the Corporations Act;
•
a "sophisticated investor" under section 708(8)(c) or (d) of
the Corporations Act and that you have provided an accountant's certificate to the Company which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act
and related regulations before the offer has been made;
•
a person associated with the Company under section 708(12) of the
Corporations Act; or
•
a "professional investor" within the meaning of section 708(11)(a) or
(b) of the Corporations Act.
To
the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under
this prospectus is void and incapable of acceptance.
You
warrant and agree that you will not offer any of the shares issued to you pursuant to this prospectus for resale in Australia within 12 months of those shares being issued unless any such
resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.
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LEGAL MATTERS
Kirkland & Ellis LLP, New York, New York will pass upon the validity of the common stock offered hereby on our behalf. Certain legal
matters in connection with this offering will be passed upon for the underwriters by Latham & Watkins LLP, New York, New York.
EXPERTS
The financial statements as of December 30, 2013 and for each of the three years in the period ended December 30, 2013 included in this
prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act with respect to the
shares of our common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or
the exhibits and schedules filed therewith. For further information with respect to us and the common stock offered hereby, reference is made to the registration statement and the exhibits and
schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not
necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement.
Upon
completion of this offering, we will become subject to the information and periodic and current reporting requirements of the Exchange Act, and, in accordance therewith, will file periodic and
current reports, proxy statements and other information with the SEC. Such periodic and current reports, proxy statements and other information will be available to the public on the SEC's website at
www.sec.gov
and free of charge through our website at
www.zoeskitchen.com
. To receive copies of public
records not posted to the SEC's website at prescribed rates, you may complete an online form at
www.sec.gov
, send a fax to (202) 772-9337 or submit
a written request to the SEC, Office of FOIA/PA Operations, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information. Please note that our
website address is provided as an inactive textual reference only. The information contained on, or accessible through, our website is not part of this prospectus and is therefore not incorporated by
reference.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Audited Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Balance Sheets as of December 30, 2013 and December 31, 2012
F-3
Consolidated Statements of Operations for the fiscal years ended December 30, 2013, December 31, 2012 and
December 26, 2011
F-4
Consolidated Statements of Stockholder's Equity for the fiscal years ended December 30, 2013, December 31, 2012
and December 26, 2011
F-5
Consolidated Statements of Cash Flows for the fiscal years ended December 30, 2013, December 31, 2012 and
December 26, 2011
F-6
Notes to Consolidated Financial Statements for the fiscal years ended December 30, 2013, December 31, 2012 and
December 26, 2011
F-7
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To
the Stockholder of
Zoe's Kitchen, Inc.:
In
our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholder's equity, and of cash flows present fairly, in all material respects,
the financial position of Zoe's Kitchen, Inc. and its subsidiaries at December 30, 2013 and December 31, 2012 and the results of their operations and their cash flows for each of
the three years in the period ended December 30, 2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
/s/
PricewaterhouseCoopers LLP
Dallas,
Texas
March 10, 2014
F-2
Table of Contents
ZOE's KITCHEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 30, 2013 AND DECEMBER 31, 2012
Unaudited Pro forma
Stockholder's equity at
December 30, 2013
(Note 1)
2013
2012
Assets
Current assets:
Cash and cash equivalents
$
1,149,470
$
2,450,026
Trade accounts receivable, net of allowance for doubtful accounts of $12,732 and $8,586 at December 30, 2013 and December 31, 2012,
respectively
582,655
394,834
Other accounts receivable
1,187,424
1,057,617
Inventory
913,381
655,904
Prepaid expenses and other
617,928
612,848
​
​
​
​
​
​
​
​
​
​
​
Total current assets
4,450,858
5,171,229
​
​
​
​
​
​
​
​
​
​
​
Property and equipment, net
78,629,369
48,214,939
Goodwill
23,334,129
23,334,129
Intangibles, net
11,207,013
12,807,427
Loan costs, net
1,034,891
955,941
Deposits
246,844
232,564
Other long-term assets
1,033,531
—
​
​
​
​
​
​
​
​
​
​
​
Total long-term assets
115,485,777
85,545,000
​
​
​
​
​
​
​
​
​
​
​
Total assets
$
119,936,635
$
90,716,229
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Liabilities and Stockholder's Equity
Current liabilities:
Current maturities of long-term debt
$
1,925,000
$
1,250,000
Accounts payable
6,671,701
3,893,707
Accrued expenses and other
6,422,738
3,742,910
Unearned franchise start-up fees
40,000
40,000
​
​
​
​
​
​
​
​
​
​
​
Total current liabilities
15,059,439
8,926,617
​
​
​
​
​
​
​
​
​
​
​
Long-term liabilities:
Long-term debt
39,475,000
25,437,500
Deemed landlord financing
19,893,309
11,186,674
Deferred rent
8,155,795
4,768,512
Deferred income taxes
3,397,025
2,837,394
Residual value obligations, net
356,539
326,724
Other long-term liabilities
21,022
12,641
​
​
​
​
​
​
​
​
​
​
​
Total long-term liabilities
71,298,690
44,569,445
​
​
​
​
​
​
​
​
​
​
​
Total liabilities
86,358,129
53,496,062
​
​
​
​
​
​
​
​
​
​
​
Commitments and Contingencies (Note 12)
Stockholder's equity:
Common stock, $0.01 par value, 100 shares authorized, issued, and outstanding
1
1
Additional paid-in capital
45,199,506
45,126,071
Accumulated deficit
(11,621,001
)
(7,905,905
)
​
​
​
​
​
​
​
​
​
​
​
Total stockholder's equity
33,578,506
37,220,167
​
​
​
​
​
​
​
​
​
​
​
Total liabilities and stockholder's equity
$
119,936,635
$
90,716,229
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
The accompanying notes are an integral part of these consolidated financial statements.
F-3
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011
2013
2012
2011
Revenue:
Restaurant sales
$
115,747,989
$
78,966,267
$
49,193,143
Royalty fees
637,285
677,309
933,626
Franchise fees
—
80,000
50,000
​
​
​
​
​
​
​
​
​
​
​
Total revenue
116,385,274
79,723,576
50,176,769
​
​
​
​
​
​
​
​
​
​
​
Restaurant operating costs:
Cost of sales (excluding depreciation and amortization)
38,062,951
25,845,024
15,755,615
Labor
32,810,499
21,566,822
13,423,612
Store operating expenses
21,779,688
14,609,542
9,595,941
General and administrative expenses
13,171,577
8,969,017
6,383,884
Depreciation
5,861,752
3,779,363
2,840,418
Amortization
1,600,651
1,091,123
585,495
Pre-opening costs
1,938,266
916,718
805,514
Loss (gain) from disposal of equipment
175,199
240,006
(3,695
)
​
​
​
​
​
​
​
​
​
​
​
Total operating expenses
115,400,583
77,017,615
49,386,784
​
​
​
​
​
​
​
​
​
​
​
Income from operations
984,691
2,705,961
789,985
Other expenses:
Interest expense
4,019,174
2,337,116
1,247,799
Bargain purchase gain from acquisition, net
—
—
(541,206
)
Loss on interest cap
24,854
—
—
​
​
​
​
​
​
​
​
​
​
​
Total other expenses
4,044,028
2,337,116
706,593
​
​
​
​
​
​
​
​
​
​
​
Income (loss) before provision for income taxes
(3,059,337
)
368,845
83,392
Provision for income taxes
655,759
621,740
110,317
​
​
​
​
​
​
​
​
​
​
​
Net loss
$
(3,715,096
)
$
(252,895
)
$
(26,925
)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Net loss per share, basic and diluted
$
(37,151
)
$
(2,529
)
$
(269
)
Weighted average shares outstanding, basic and diluted
100
100
100
Unaudited pro forma net loss per share (Note 14):
Net loss per share, basic and diluted
$
Weighted average shares, basic and diluted
The accompanying notes are an integral part of these consolidated financial statements.
F-4
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
YEARS ENDED DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011
Common
Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total
Stockholder's
Equity
Balances at December 27, 2010
$
1
$
44,810,420
$
(7,626,085
)
$
37,184,336
Equity-based compensation
—
189,962
—
189,962
Net loss
—
—
(26,925
)
(26,925
)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Balances at December 26, 2011
1
45,000,382
(7,653,010
)
37,347,373
Equity-based compensation
—
125,689
—
125,689
Net loss
—
—
(252,895
)
(252,895
)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Balances at December 31, 2012
1
45,126,071
(7,905,905
)
37,220,167
Equity-based compensation
—
73,435
—
73,435
Net loss
—
—
(3,715,096
)
(3,715,096
)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Balances at December 30, 2013
$
1
$
45,199,506
$
(11,621,001
)
$
33,578,506
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011
2013
2012
2011
Cash flows from operating activities:
Net loss
$
(3,715,096
)
$
(252,895
)
$
(26,925
)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation
5,861,752
3,779,363
2,840,418
Amortization of intangible assets
1,600,651
1,091,123
585,495
Equity-based compensation
73,435
125,689
189,962
Deferred income taxes
593,879
546,740
89,317
Amortization of loan costs
204,845
120,278
104,448
Bad debt expense
11,041
12,539
4,616
Loss (gain) from disposal of equipment
175,199
240,006
(3,695
)
Bargain purchase gain from acquisition
—
—
(541,206
)
Accretion of deemed landlord financing
261,653
114,154
120,042
Changes in operating assets and liabilities:
Trade accounts receivable
(198,862
)
66,142
(296,249
)
Other accounts receivable
(129,807
)
(677,700
)
(367,931
)
Inventory
(257,477
)
(179,326
)
(150,220
)
Prepaid expenses and other
(62,929
)
(120,580
)
(291,406
)
Accounts payable
1,307,429
1,032,983
(65,572
)
Accrued expenses and other
1,810,789
844,125
1,033,996
Deferred rent
3,387,283
1,243,292
1,513,946
Unearned franchise start-up fees
—
(190,000
)
25,000
​
​
​
​
​
​
​
​
​
​
​
Net cash provided by operating
activities
10,923,785
7,795,933
4,764,036
​
​
​
​
​
​
​
​
​
​
​
Cash flows from investing activities:
Purchase of property and equipment
(28,267,305
)
(15,462,285
)
(10,958,842
)
Acquisition purchase price, net of cash acquired
—
(5,834,238
)
(2,574,481
)
Proceeds from sale of property and equipment
25,506
13,356
14,640
​
​
​
​
​
​
​
​
​
​
​
Net cash used in investing activities
(28,241,799
)
(21,283,167
)
(13,518,683
)
​
​
​
​
​
​
​
​
​
​
​
Cash flows from financing activities:
Proceeds from line of credit
15,650,000
15,373,267
7,900,000
Payments on long-term debt
(937,500
)
(685,767
)
—
Proceeds from deemed landlord financing
1,594,982
1,018,520
97,615
Payment of loan acquisition fees
(283,795
)
(575,794
)
(397,933
)
Payment of costs associated with initial public offering
(6,229
)
—
—
​
​
​
​
​
​
​
​
​
​
​
Net cash provided by financing
activities
16,017,458
15,130,226
7,599,682
​
​
​
​
​
​
​
​
​
​
​
Net change in cash and cash
equivalents
(1,300,556
)
1,642,992
(1,154,965
)
Cash and cash equivalents
Beginning of year
2,450,026
807,034
1,961,999
​
​
​
​
​
​
​
​
​
​
​
End of year
$
1,149,470
$
2,450,026
$
807,034
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Supplemental disclosure of cash flow information
Cash paid for interest related to long-term debt
$
2,039,283
$
1,228,554
$
400,775
Cash paid for interest related to deemed landlord financing
1,668,437
980,930
645,054
Non-cash residual value lease obligations
106,513
102,663
67,507
Non-cash deemed landlord financing
6,850,000
3,250,000
2,200,000
Non-cash purchases of property and equipment
1,322,992
1,242,569
139,148
Non-cash costs associated with initial public offering
1,018,219
—
—
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
Zoe's Kitchen, Inc. ("the Company"), incorporated in the State of Delaware on October 24, 2007, entered into a Membership Interest
Purchase Agreement with the members of Zoe's Kitchen USA, LLC (the "Acquired Company"), on October 31, 2007, to acquire 100% of the issued and outstanding membership interests of the
Acquired Company (the "2007 Purchase"). Currently, the Company is a wholly owned subsidiary of Zoe's Investors, LLC ("Zoe's Investors"). In connection with the application of purchase
accounting, the Company recorded goodwill on our financial statements of approximately $21.2 million and other identifiable intangibles of approximately $10.9 million at the date of the
acquisition.
The
Company primarily develops and operates fast-casual restaurants through our subsidiaries. As of December 30, 2013 and December 31, 2012 we operated 94 and 67 Company-owned
restaurants, respectively.
In
addition to our Company-owned restaurants, we grant licenses (franchises) to qualified franchisees to construct and operate Zoës Kitchen restaurants within specified protected areas
throughout the United States. As of December 30, 2013 and December 31, 2012, there were eight franchised restaurants. The licensing agreements grant franchisees the right to use the
Zoës Kitchen service mark and our comprehensive system ("the System") for the development and operation of Zoës Kitchen. The System includes our trade name, building
design and layouts, equipment, ingredients, recipes and other specifications for authorized food products, methods of control, and
certain operational and business standards and policies pursuant to the franchise agreement. In consideration for the granting of these licenses, we receive initial franchise fees for each
Zoës Kitchen location opened and, in addition, receive monthly royalties based on the gross revenues generated per restaurant.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Zoe's Kitchen USA, LLC and Soho
Franchising, LLC. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements presented herein reflect our financial position,
results of operations, cash flows and changes in equity in conformity with accounting principles generally accepted in the United States or "GAAP". Certain amounts in 2012 have been reclassified to
conform to 2013 presentation.
Revision
In 2013, we identified an adjustment to the December 31, 2012 balance sheet relating to our asset retirement obligation. To correct for this we
have revised the December 31, 2012 balance sheet to move $0.01 million from accrued expenses and other to other long-term liabilities.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions, such as valuation of
long-lived, definite and indefinite-lived assets, estimated useful lives of assets, the reasonably assured lease terms of operating leases, the construction costs of leases where the Company is
considered the owner during and after the construction period, allowance for doubtful accounts, the fair value of equity-based compensation, and deferred tax valuation allowances, that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-7
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
Fiscal Year
We operate on a 52 or 53 week fiscal year that ends on the last Monday of the calendar year. All fiscal years presented herein consist of
52 weeks, with the exception of the fiscal year ended December 31, 2012, which consists of 53 weeks.
Unaudited Pro Forma Balance Sheet Information
In December 2013, the Company's board of directors authorized the management of the Company to file a registration statement with the
Securities and Exchange Commission ("SEC") for the Company to sell shares of its common stock to the public. If the contemplated offering is completed, we will distribute all of our shares of our
common stock held by our parent, Zoe's Investors LLC, to its existing members in accordance with the units held by each member and pursuant to the terms of Zoe's Investors' LLC
Agreement. The distribution of shares of our common stock held by Zoes Investors to its members will be conducted in the following manner: (i) shares of our common stock to holders of
Class C Units in respect of such holders' unreturned capital investment; (ii) shares of our common stock to holders of Class C Units in respect of the unpaid yield on such units;
(iii) shares of our common stock to holders of Class A Units in respect of such holders' unreturned capital investment; (iv) shares of our common stock to holders of
Class A Units in respect of the unpaid yield on such units; and (v) shares of our common stock to holders of Class A Units, Class B Units and Class C Units on a pro
rata basis; provided, however, that pursuant to this clause (v), the holders of Class B Units will participate only after a total of shares of our common stock have been distributed to
the holders of Class A Units and Class C Units pursuant to this clause (v); the foregoing distribution is, based upon an assumed initial public offering price of $          
per share (the mid-point of the initial public offering range); the actual number of shares of common stock to be issued to each holder of units of Zoe's Investors LLC in such distribution is
subject to change based on any changes to the initial public offering price and the date of the pricing of this offering. Pro forma adjustments have been made to stockholders' equity to reflect this
distribution.
Net Loss per Share and Unaudited Pro Forma Net Loss per Share
Basic net loss per share is calculated by dividing net loss by the weighted average shares outstanding during the period, without consideration of
common stock equivalents. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period,
determined using the treasury-stock method.
The
calculations for the unaudited pro forma basic and diluted net loss per share gives effect to the distribution of all of our shares of our common stock held by Zoe's Investors' LLC to its
existing members in accordance with the units held by each member and pursuant to the terms of the Zoe's Investors' LLC Agreement, as described above, upon the closing of a qualified initial
public offering, as if the distribution had occurred at the beginning of the period or issuance date, if later.
Segment Information
We have determined that we have one operating segment, and therefore one reportable segment. Our chief operating decision maker ("CODM") is our Chief
Executive Officer; our CODM reviews financial performance and allocates resources at a consolidated level on a recurring basis. All of our revenues are derived in the United States of America. All of
our assets are located in the United States of America.
Revenue Recognition — Restaurant Sales
We recognize restaurant sales when food and beverage products are sold. Restaurant sales are reported net of sales tax collected from customers.
F-8
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
Gift Cards
Revenues from the sale of gift cards are deferred and recognized when redeemed. Deferred gift card revenue is included in accrued liabilities in our
consolidated balance sheets. Our gift cards do not have an expiration date and we do not deduct non-usage fees from outstanding gift card balances. We recognize gift card breakage revenue by applying
our estimate of the rate of gift card breakage over the estimated period of redemption. These estimates are based on our historical redemptions. We recognize breakage revenues exclusive of amounts
subject to state unclaimed property laws.
Prior
to the fourth quarter 2013, we were subject to future escheat exposures and we had not accumulated enough historical redemption data to make an estimate for gift card breakage. We did not
recognize any revenue from gift card breakage during the years ended December 31, 2012 and December 26, 2011. We recorded $0.3 million of gift card breakage revenue in restaurant
sales in the fourth quarter of 2013 which includes breakage income related to gift cards sold since 2008. Fees paid to a third party administering our gift card program were $0.2 million during
2013.
Franchise Fee and Royalty Accounting
We recognize franchise fee revenues when substantial performance of all franchisor obligations has been achieved. Substantial performance is achieved
when the following conditions have been met: 1) we have no remaining obligation or intent to refund any cash or to forgive any unpaid notes or receivables from franchisees; 2) we have
performed substantially all of the initial services required by the license agreement; and 3) we have met all other material conditions or obligations. The commencement of operations by the
franchisee indicates substantial performance has occurred. If substantial performance of our obligations has not been completed, recognition as revenue of such amounts received is deferred until all
material services or conditions have been satisfied by us. In addition, monthly royalties are recognized as revenue when earned. As of December 30, 2013 and December 31, 2012, accounts
receivable included approximately $0.06 million and $0.09 million, respectively, of amounts due from franchisees for monthly royalties.
Cash and Cash Equivalents
We consider all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
During
the year, cash balances may exceed the federally insured limits at the banks where we maintain our deposits. We do not believe we are exposed to any significant credit risk on cash and cash
equivalents.
Accounts Receivable
Trade accounts receivable, net of allowance for doubtful accounts consists primarily of receivables from catering on-account sales, credit card sales
receivables and royalty fee receivables. Other accounts receivable consists primarily of tenant allowances due from landlords. Management determines the allowance for doubtful accounts based on
historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written
off either against an existing allowance account or as a direct charge to
F-9
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
the
consolidated statement of operations. The table below shows the changes in our allowance for doubtful accounts balance:
2013
2012
2011
Beginning allowance
$
8,586
$
974
$
2,170
Bad debt expense
11,041
12,539
4,616
Write offs
(6,895
)
(4,927
)
(5,812
)
​
​
​
​
​
​
​
​
​
​
​
Ending allowance
$
12,732
$
8,586
$
974
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Inventory
Inventory consists primarily of food, beverage, and paper products. All inventories are recorded at the lower of cost, as determined on a first-in,
first-out (FIFO) method, or market.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Expenditures for improvements and renewals that extend the useful lives are
capitalized. Upon sale, retirement, or other disposition of these assets, the costs and related accumulated depreciation are removed from the respective accounts and any gain or loss on the
disposition is included in our consolidated statement of operations. Maintenance and repair costs are expensed as incurred. Depreciation is calculated using the straight-line method based on the
following estimated lives:
Building under deemed landlord financing
39 years
Leasehold Improvements
7 - 20 years
Furniture and Fixtures
7 years
Automotive Equipment
4 - 5 years
Computer Equipment
3 - 5 years
Machinery and Equipment
5 years
Leasehold
improvements are depreciated over the shorter of the lease term, of the respective leases, or the estimated useful life of the asset.
Goodwill
Goodwill represents the excess of the cost of the business acquired over the fair value of its net assets at the date of acquisition. We account for
goodwill under Accounting Standards Codification ("ASC") 350,
Intangibles — Goodwill and Other
, which requires that goodwill and
indefinite lived intangible assets are not amortized but tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. For
purposes of applying ASC 350, we have identified a single reporting unit, as that term is defined in ASC 350, to which goodwill is attributable.
We
performed our annual impairment testing of goodwill as of the last day of the fiscal year. The fair value of our reporting unit was estimated primarily using the expected present value of future
cash flows, using estimates, judgments and assumptions that management believes were appropriate in the circumstances.
F-10
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
Trade Name
A trade name is considered to be an important element associated with the sales appeal of certain products and services. The trade name distinguishes
goods and services from competitors, indicates the source of the goods and services, and serves as an indication of the quality of the product. Our trade name consists of various protected words,
symbols, and designs that help identify our products and services such as the "Zoës Kitchen" trademark capitalized in connection with the 2007 Purchase. This capitalized cost is being
amortized on a straight-line basis over an estimated useful life of 20 years.
Franchise Agreements
The fair value of the then existing franchise agreements was capitalized in connection with the 2007 Purchase. The capitalized amount is amortized on
a straight-line basis over the estimated useful life of 19 years.
On
November 1, 2013, we executed a letter of intent to purchase two franchise restaurants in Mobile, Alabama and Destin, Florida from one of our franchisees. As a result, we recognized
$0.2 million of accelerated amortization expense as of December 30, 2013 due to a shorter remaining expected useful life of these franchise agreements.
We
acquired three restaurants in Houston, Texas from one of our franchisees in December 2011. A franchise agreement intangible asset had been recorded in connection with the 2007 Purchase for one of
the restaurants. We wrote off the franchise agreement intangible asset related to the restaurant in the amount of $0.2 million as a component of the bargain purchase gain associated with the
franchise acquisition. See Notes 2 and 5.
Favorable Leases
A leasehold interest represents the future lease obligations under the in-place contractual lease terms that are either above or below market value.
The value of acquired leases that were determined to be favorable to market rents as of the 2007 Purchase was capitalized and is being amortized on a straight-line basis over the remaining lease term
from the date of acquisition, approximately seven years.
Reacquired Rights
Reacquired rights intangible assets arise from our 2012 acquisition of three South Carolina franchise restaurants and our 2011 acquisition of three
Houston, Texas franchise restaurants. We are amortizing these reacquired rights on a straight-line basis over the remaining terms of the original franchise agreements, which ranged from five to nine
years for the South Carolina franchise restaurants and five to seven years for the Houston franchise restaurants.
Impairment of Long-Lived Assets
We evaluate impairment of long-lived assets whenever events or changes in circumstances indicate that the net carrying amounts may not be recoverable.
We compare estimated undiscounted cash flows from operating activities to the carrying value of related assets for the individual restaurants. If the sum of the estimated undiscounted cash flows is
less than the carrying value, an impairment loss would be recognized for the difference between the carrying value and the estimated fair value of the assets
based on the discounted future cash flows of the assets using a rate that approximates our weighted average cost of capital.
We
recognized no impairment losses during the years ended December 30, 2013, December 31, 2012 and December 26, 2011.
F-11
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
Deferred Initial Public Offering Costs
Deferred initial public offering costs, which primarily consist of direct, incremental legal and accounting fees relating to the initial public
offering ("IPO"), are capitalized within other long-term assets. The deferred issuance costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is
terminated, deferred offering costs will be expensed. We have incurred $1.0 million in IPO costs as of December 30, 2013.
Unearned Franchise Fees
Amounts received from the sales of franchise licenses are deferred until all material contractual services or conditions relating to the sale of the
franchise licenses have been substantially performed by us. The commencement of operations by the franchisee is presumed to be the earliest point at which substantial performance has occurred, unless
it can be demonstrated that substantial performance of all franchisor obligations has occurred before that time. Unearned franchise fee activity consisted of the following:
December 26, 2011
$
230,000
Fees Collected
40,000
Fees Earned
(80,000
)
Fees Repaid (See Note 2)
(150,000
)
​
​
​
​
​
December 31, 2012
$
40,000
Fees Collected
—
Fees Earned
—
​
​
​
​
​
December 30, 2013
$
40,000
​
​
​
​
​
​
​
​
​
​
Loan Costs
Loan costs are amortized on a straight-line basis over the remaining life of the debt as a component of interest expense. GAAP requires that the
effective yield method be used to amortize loan financing costs; however, the effect of using the straight-line method is not materially different from the results that would have been obtained under
the effective yield method. At December 30, 2013 and December 31, 2012 loan costs were $1.0 million and $1.0 million, net of accumulated amortization of
$0.7 million, and $0.5 million, respectively.
Sales Taxes
Sales taxes are imposed by state, county, and city governmental authorities, collected from customers and remitted to the appropriate governmental
agency. Our accounting policy is to record the sales taxes collected as a liability on our books and then remove the liability when the sales tax is remitted. There is no impact on the consolidated
statement of operations as restaurant sales are recorded net of sales tax.
Deferred Rent
Certain leases contain annual escalation clauses based on fixed escalation terms. The excess of cumulative rent expense (recognized on the
straight-line basis) over cumulative rent payments made on leases with fixed escalation terms is recognized as deferred rent liability in the accompanying balance sheets. Also included in deferred
rent are tenant improvements that we commonly negotiate when opening new restaurants to help fund build-out costs. These costs typically include general construction to alter the layout of the
restaurant and leasehold improvements. When we are the beneficiary of each of the improvements, we capitalize the assets and record a deferred liability for the amount of cash received from
F-12
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
the
landlord, which is amortized on a straight-line basis over the lease term as defined below. If the landlord is deemed to be the owner of leasehold improvements purchased with such allowances,
neither an asset nor a liability is recorded by us. The amortization of the deferred liability related to these tenant improvements is recorded as a reduction of rent expense. Tenant improvement
allowances, net of amortization, totaled $4.0 million and $2.1 million as of December 30, 2013 and December 31, 2012, respectively. For leases where we are considered to be
the owner of the construction project and receive tenant improvement allowances, we record these amounts received as a component of the deemed landlord financing liability. See Note 10.
Lease
term is determined at lease inception and includes the initial term of the lease plus any renewal periods that are reasonably assured to occur. The lease term begins when we have the right to
control the use of the property.
Additionally,
certain of our operating leases contain clauses that provide additional contingent rent based on a percentage of sales greater than certain specified target amounts. We recognize
contingent rent expense provided the achievement of that target is considered probable.
Advertising Costs
Advertising costs are expensed as incurred and are included in general and administrative and store operating expenses on the consolidated statement
of operations. Advertising costs for the years ended December 30, 2013, December 31, 2012 and December 26, 2011 were $0.04 million, $0.01 million and
$0.03 million, respectively.
Pre-opening Costs
Pre-opening costs primarily consist of new employee training, initial print materials, marketing, payroll expenses and rent incurred in connection
with new restaurant openings and are expensed as incurred. For the years ended December 30, 2013, December 31, 2012 and December 26, 2011, pre-opening costs were
$1.9 million, $0.9 million and $0.8 million, respectively.
Vacation
In the fourth quarter 2013, we changed our policy for employee vacation. This change in policy resulted in a one time $0.3 million reduction in
operating expenses.
Fair Value of Financial Instruments
The carrying amounts of our financial instruments, which include accounts receivable, accounts payable, and other accrued expenses, approximate their
fair values due to their short maturities. The carrying amount of our long-term debt approximates its fair value due to the recent timing of our refinancing of this debt (see Note 7) and the
variable component of the interest rate.
Income Taxes
We use the liability method of accounting for income taxes in accordance with Financial Accounting Standards Board ("FASB") ASC 740,
Income Taxes
. Under this method, a deferred tax asset
or liability is recognized for the estimated future tax effects attributable to temporary
differences between the financial statement basis and the tax basis of assets and liabilities as well as tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in the period of the change. We and our subsidiaries file a consolidated federal income tax return.
F-13
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
1. Nature of Operations and Summary of Significant Accounting Policies (Continued)
Significant
judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We assess the income tax position and record the liabilities for all years
subject to examination based upon management's evaluation of the facts, circumstances, and information available at the reporting date.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and
circumstances from non-owner sources. Comprehensive loss is the same as net loss for all periods presented. Therefore, a separate statement of comprehensive loss is not included in the accompanying
consolidated financial statements.
Variable Interest Entities
In accordance with ASC 810,
Consolidation
, we apply the guidance related to variable interest entities
("VIE"), which defines the process for how an enterprise determines which party consolidates a VIE as primarily a qualitative analysis. The enterprise that consolidates the VIE (the primary
beneficiary) is defined as the enterprise with (1) the power to direct activities of the VIE that most significantly affect the VIE's economic performance and (2) the obligation to
absorb losses of the VIE or the right to receive benefits from the VIE. We do not possess any ownership interests in franchise entities or other affiliates. The franchise agreements are designed to
provide the franchisee with key decision-making ability to enable it to oversee its operations and to have a significant impact on the success of the franchise, while our decision-making rights are
related to protecting our brand. Based upon our analysis of all the relevant facts and considerations of the franchise entities and other affiliates, we have concluded that these entities are not
variable interest entities and they have not been consolidated as of the fiscal year ended December 30, 2013 or fiscal year ended December 31, 2012.
Recently Issued Accounting Standards
In July 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net
Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists", to require that in certain cases, an unrecognized tax benefit, or portion of an unrecognized tax benefit, should
be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward when such items exist in the
same taxing jurisdiction. ASU 2013-11 is effective as of December 15, 2013 and the adoption of this standard had no significant impact on our consolidated financial position or results of
operations.
In
January 2013, we adopted ASU No. 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities." The adoption of ASU 2013-01 did not have a significant impact on our
consolidated financial position or results of operations.
2. Business Combination
On August 6, 2012, we acquired three South Carolina franchise restaurants for $5.8 million in cash. Simultaneous to the acquisition, we repaid $0.2 million to the South Carolina
franchisee, which resulted in a decrease of our unearned franchise fees. As a result of this acquisition, we gained control of the three restaurants and expanded our Company-owned operations into
South Carolina. The acquired restaurants contributed revenues of approximately $1.9 million from the date of acquisition to December 31, 2012. The pro forma impact of the acquisition is
not presented, as it is not considered material to our consolidated financial statements.
F-14
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
2. Business Combination (Continued)
Goodwill
recorded in connection to the acquisition was attributable to synergies expected to arise from cost saving opportunities as well as future expected cash flows. The allocation of the purchase
price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:
Cash
$
2,400
Deposits
11,010
Accounts Receivable
4,937
Inventory
38,306
Property, plant and equipment
752,553
Prepaid rent
15,438
Reacquired rights
2,868,514
Goodwill
2,183,585
Accounts payable
(12,400
)
Royalties payable
(27,705
)
​
​
​
​
​
Total purchase price
$
5,836,638
​
​
​
​
​
​
​
​
​
​
On
November 30, 2011, we acquired three Houston franchise restaurants for $2.6 million in cash. Through the acquisition, we gained control of the three restaurants and we were able to
expand our operations in the Houston market. The acquired restaurants contributed revenues of approximately $0.2 million from acquisition until December 26, 2011. The pro forma impact of
the acquisition is not presented, as it is not considered material to our consolidated financial statements.
The
allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:
Cash
$
2,400
Deposits
31,293
Inventory
28,500
Property, plant and equipment
1,044,200
Reacquired rights
2,626,497
Accounts payable
(2,500
)
Royalties payable
(19,612
)
Deferred tax liability
(436,550
)
​
​
​
​
​
Net assets acquired
3,274,228
Bargain purchase gain
(697,347
)
​
​
​
​
​
Total purchase price
$
2,576,881
​
​
​
​
​
​
​
​
​
​
Since
the fair value assigned to the net assets acquired exceeded the consideration paid, we recorded a $0.7 million bargain purchase gain. Also, in connection with the transaction, we wrote
off the net franchise agreement intangible asset related to the purchase in the amount of $0.2 million, which created a net bargain purchase gain from acquisition of $0.5 million for the
year ended December 26, 2011.
F-15
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
3. Property and Equipment
Property and equipment consists of the following at December 30, 2013 and December 31, 2012:
2013
2012
Buildings under deemed landlord financing
$
16,150,000
$
9,300,000
Leasehold improvements
50,586,657
31,704,258
Machinery and equipment
12,399,544
8,259,508
Furniture and fixtures
2,669,189
2,127,642
Automobiles
2,281,816
1,684,047
Computer equipment
3,395,473
2,430,521
Construction in progress
6,256,571
2,641,429
​
​
​
​
​
​
​
​
Total Property and equipment, gross
93,739,250
58,147,405
Less: Accumulated depreciation
(15,109,881
)
(9,932,466
)
​
​
​
​
​
​
​
​
Total Property and equipment, net
$
78,629,369
$
48,214,939
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Depreciation
expense was $5.9 million, $3.8 million and $2.8 million for the years ended December 30, 2013, December 31, 2012 and December 26, 2011,
respectively.
As
a result of the application of build-to-suit lease guidance contained in ASC 840,
Leases
, we have determined that we are the accounting owner of a
total of 31 and 18 landlord shell buildings under deemed landlord financing as of December 30, 2013 and December 31, 2012, respectively. There are six and three of these buildings under
construction as of December 30, 2013 and December 31, 2012. We have recorded these as buildings under deemed landlord financing in the table above. We capitalize the landlord's estimated
construction costs of the shell building. See Note 10 for additional information.
We
capitalize internal payroll and payroll related costs directly related to the successful development, design and construction of our new restaurants. Capitalized internal payroll costs were
$0.2 million, $0.06 million and $0.07 million for the years ended December 30, 2013, December 31, 2012 and December 26, 2011, respectively.
We
capitalize interest incurred on funds used to construct Company-owned restaurants. We amortize over the estimated useful life of the related assets. Capitalized interest totaled
$0.2 million, $0.09 million and $0.08 million for the years ended December 30, 2013, December 31, 2012 and December 26, 2011, respectively.
4. Goodwill
The following is a reconciliation of the beginning and ending balances of the Company's goodwill at December 30, 2013 and December 31, 2012:
2013
2012
Beginning Balance
$
23,334,129
$
21,150,544
Acquisition of South Carolina Franchise
—
2,183,585
​
​
​
​
​
​
​
​
Ending Balance
$
23,334,129
$
23,334,129
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
We
recorded no impairment charges during the years ended December 30, 2013, December 31, 2012 or December 26, 2011.
F-16
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
5. Intangible Assets
Other intangible assets were acquired in connection with the 2007 Purchase discussed in Note 1 and Note 2. These assets are summarized in the following table as of December 30,
2013 and December 31, 2012:
2013
Gross
Carrying
Amount
Accumulated
Amortization
Net
Trade name
$
10,000,000
$
(3,083,333
)
$
6,916,667
Franchise agreements
643,859
(470,890
)
172,969
Favorable leases
108,709
(91,269
)
17,440
Reacquired rights
5,495,012
(1,395,075
)
4,099,937
​
​
​
​
​
​
​
​
​
​
​
Total intangible assets
$
16,247,580
$
(5,040,567
)
$
11,207,013
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
2012
Gross
Carrying
Amount
Accumulated
Amortization
Net
Trade name
$
10,000,000
$
(2,583,333
)
$
7,416,667
Franchise agreements
643,859
(206,987
)
436,872
Favorable leases
108,709
(76,469
)
32,240
Reacquired rights
5,495,012
(573,364
)
4,921,648
​
​
​
​
​
​
​
​
​
​
​
Total intangible assets
$
16,247,580
$
(3,440,153
)
$
12,807,427
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Estimated
amortization expense for the five succeeding years and the aggregate thereafter is:
Trade
name
Franchise
Agreements
Favorable
Leases
Reacquired
Rights
Total
2014
$
500,000
$
48,380
$
14,800
821,712
$
1,384,892
2015
500,000
10,517
2,640
821,712
1,334,869
2016
500,000
10,517
—
821,712
1,332,229
2017
500,000
10,517
—
791,057
1,301,574
2018
500,000
10,517
—
438,878
949,395
Thereafter
4,416,667
82,521
—
404,866
4,904,054
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Total
$
6,916,667
$
172,969
$
17,440
$
4,099,937
$
11,207,013
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
F-17
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
6. Accrued Expenses and Other
Accrued expenses consisted of the following:
2013
2012
Accrued payroll and payroll taxes
$
2,416,680
$
1,352,365
Accrued capital purchases
1,185,181
620,862
Sales tax payable
805,177
552,147
Gift certificate payable
600,059
598,131
Other accrued expenses
1,415,641
619,405
​
​
​
​
​
​
​
​
Total accrued expenses and other
$
6,422,738
$
3,742,910
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
7. Bank Line of Credit and Term Loan
We have an existing credit agreement with a commercial finance company that includes a term loan and line of credit ("the Credit Facility"), which are collateralized by a first-priority interest in,
among other things, our accounts receivable, general intangibles, inventory, equipment, and furniture and fixtures.
On
June 20, 2012, we signed the Second Amendment to the Credit Facility which was primarily executed to accommodate the purchase of the South Carolina franchise restaurants. As part of the
Second Amendment, the existing Credit Facility increased to $25.0 million with incremental commitments of up to $5.0 million.
On
November 30, 2012, we signed the Third Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of a term loan. In addition, the revolving
line of credit was increased to $20.0 million with incremental commitments of up to $15.0 million. Under the Third Amendment, we were required to enter into a rate contract, within
90 days of the effective date of the amendment, providing protection against fluctuation in interest rates with respect to at least 50% of the principal amount of the term loan. In February
2013, in accordance with the Third Amendment, we entered into an interest rate cap agreement with an initial notional amount of $12.3 million. The notional amount amortizes commensurate with
scheduled payments on the term loan. This instrument caps the one-month LIBOR rate at 2%, which is a component of the total rate on the term loan.
On
November 26, 2013, we signed the Fourth Amendment to the Credit Facility. The outstanding line of credit at the time of the amendment became part of the term loan and the total term loan
balance increased to $38.5 million. In addition, the revolving line of credit was increased to $26.5 million with incremental commitments of up to $15.0 million. The remaining
borrowing capacity under the line of credit was $0.1 million as of December 30, 2013. The maturity date for the term loan and the line of credit is November 29, 2017. We are
required to make quarterly payments equal to 1.25% of the new term loan commitment amount on the last business day of each March, June, September and December. The remaining balance will be repaid
upon maturity.
As
of December 30, 2013, our interest rate for the term loan and line of credit is calculated based on the 1-month LIBOR (with a floor of 1.0%) plus 4.25%. As of December 31, 2012, our
interest rate for the
F-18
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
7. Bank Line of Credit and Term Loan (Continued)
term
loan and line of credit is calculated based on the 1-month LIBOR (with a floor of 1.0%) plus 5.0%. The interest rate for our debt was 5.25% and 6.0% at December 30, 2013 and
December 31, 2012.
The
Credit Facility and subsequent amendments include customary covenants, including covenants limiting fundamental changes and certain transactions and payments. In addition, we are required to
satisfy three quarterly financial covenants: (1) a consolidated leverage ratio of less than 5.75 to 1.00 through to December 31, 2014 and a consolidated leverage ratio of less than 5.50
to 1.00 thereafter, (2) a consolidated fixed charge coverage ratio of greater than 1.25 to 1.00, and (3) a capital expenditure incurrence test, which increases every year during the
duration of the credit agreement. We are in compliance with these financial covenants as of December 30, 2013 and December 31, 2012; however, one of the other covenants in our Credit
Facility required delivery of the 2012 audited financial statements by April 30, 2013. We did not meet this requirement and have obtained a waiver from our lender for this covenant as it
relates to the 2012 financial statements. As such, we have classified our debt as noncurrent at December 31, 2012.
In
addition, the ability of our subsidiaries to pay dividends is currently restricted by the terms of our Credit Facility. See Note 15 for additional information.
In
conjunction with the Credit Facility, we incurred and capitalized $0.3 million and $0.6 million of loan costs in the years ended December 30, 2013 and December 31, 2012.
2013
2012
Carrying
Value
Interest
Rate
Carrying
Value
Interest
Rate
Maturity
Term Loan
$
38,500,000
5.25
%
$
24,687,500
6.00
%
2017
Revolving line of credit
2,900,000
5.25
%
2,000,000
6.00
%
2017
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Total
41,400,000
26,687,500
Less curent portion
(1,925,000
)
(1,250,000
)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Long-term debt
$
39,475,000
$
25,437,500
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
The
principal amounts of our long-term debt are scheduled to be paid in installments on the dates below:
Date of payment
Amount
2014
$
1,925,000
2015
1,925,000
2016
1,925,000
2017
35,625,000
​
​
​
​
​
Total Payments
$
41,400,000
​
​
​
​
​
​
​
​
​
​
F-19
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
8. Residual Value Obligations
We have residual value obligations associated with leased vehicles for individual restaurant locations. We have pre-paid for each of the vehicles. We then amortize the residual value obligation to the
assets residual value by the end of the lease term. Each of the assets is recorded at the net present value of the initial payment made plus the assets residual value using a 6.50% discount rate. The
residual value obligations recorded as capital leases were $0.4 million and $0.3 million for the years ended December 30, 2013 and December 31, 2012, respectively.
9. Income Taxes
Our income tax provision for the years ended December 30, 2013, December 31, 2012 and December 26, 2011 consists of the following:
2013
2012
2011
Current
Federal
$
—
$
—
$
—
State
61,880
75,000
21,000
​
​
​
​
​
​
​
​
​
​
​
Subtotal Current
61,880
75,000
21,000
Deferred
Federal
544,463
510,496
96,649
State
49,416
36,244
(7,332
)
​
​
​
​
​
​
​
​
​
​
​
Subtotal Deferred
593,879
546,740
89,317
​
​
​
​
​
​
​
​
​
​
​
Total income tax provision
$
655,759
$
621,740
$
110,317
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Total
income tax expense differed from the amount which would have been provided by applying the statutory federal income tax rate of 35% to earnings before taxes as follows:
2013
2012
2011
Income tax expense (benefit) at federal statutory rate
$
(1,070,769
)
$
129,094
$
19,151
State income taxes
(120,231
)
86,717
23,535
Increase in valuation allowance
2,624,967
283,805
247,457
Equity-based compensation
25,702
47,983
72,847
Deferred taxes
(758,016
)
56,749
2,464
Meals and entertainment
25,245
17,392
12,283
Other permanent items
(71,139
)
—
—
Bargain purchase gain
—
—
(267,420
)
​
​
​
​
​
​
​
​
​
​
​
Total income tax provision
$
655,759
$
621,740
$
110,317
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
F-20
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
9. Income Taxes (Continued)
Significant
components of our deferred tax assets and liabilities at December 30, 2013 and December 31, 2012 are as follows:
2013
2012
Current:
Deferred tax assets:
Allowance for doubtful accounts
$
4,861
$
3,278
Accrued vacation payable and other
—
66,544
Valuation allowance
(2,426
)
(30,218
)
​
​
​
​
​
​
​
​
Net deferred tax assets, current
2,435
39,604
​
​
​
​
​
​
​
​
Non-current:
Deferred tax assets:
Net operating loss
$
5,990,797
$
5,310,335
Charitable contributions
74,512
54,200
Deemed landlord financing
7,594,440
4,270,694
Interest rate cap
9,512
—
Valuation allowance
(6,822,798
)
(4,170,039
)
Deferred tax liabilities:
Goodwill
3,394,589
2,797,790
Other identifiable intangibles
246,106
502,300
Property and equipment
5,955,156
3,914,118
Deferred rent
647,637
1,088,376
​
​
​
​
​
​
​
​
Net deferred tax liabilities, non-current
3,397,025
2,837,394
​
​
​
​
​
​
​
​
Total net deferred tax liabilities
$
3,394,590
$
2,797,790
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
We
have classified the current net deferred tax asset as a component of prepaid expenses and other in our Consolidated Balance Sheets. ASC 740 requires that we reduce our deferred income tax assets by
a valuation allowance if, based on the weight of the available evidence, it is more likely than not that all or a portion of a deferred tax asset will not be realized. The ultimate realization of
deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary differences are deductible. We have established a valuation allowance of $6.8 million and $4.2 million as
of December 30, 2013 and December 31, 2012, respectively, against our net deferred tax assets due to the fact that it is not more likely than not that there will be sufficient taxable
income in the future when the temporary differences are deductible.
F-21
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
9. Income Taxes (Continued)
A
rollforward of activity in the valuation allowances follows:
Balance at December 27, 2010
$
3,668,995
Addition to valuation allowance
247,457
Deductions
—
​
​
​
​
​
Balance at December 26, 2011
3,916,452
Addition to valuation allowance
283,805
Deductions
—
​
​
​
​
​
Balance at December 31, 2012
4,200,257
Addition to valuation allowance
2,624,967
Deductions
—
​
​
​
​
​
Balance at December 30, 2013
6,825,224
​
​
​
​
​
​
​
​
​
​
We
have recorded a full valuation allowance for the net amount of the deferred tax assets which are in excess of the indefinite-lived intangible asset deferred tax liabilities. The indefinite-lived
intangible asset deferred tax liability in the amount of $3.4 million and $2.8 million as of December 30, 2013 and December 31, 2012, respectively, related to the book-tax
basis difference in goodwill has not been netted against the deferred tax assets due to the uncertainty inherent in the reversal of this deferred tax liability.
At
December 30, 2013, we have unused federal and state net operating loss carryforwards of $15.9 million and $13.5 million, respectively. Such losses expire in various amounts at
varying times through 2033. These NOL carryforwards result in a deferred tax asset $6.0 million and $5.3 million at December 30, 2013 and December 31, 2012, respectively. A
valuation allowance is recorded against the net deferred tax assets, exclusive of indefinite-lived intangibles discussed above, including these carryforwards. We file income tax returns, which can be
periodically audited by various federal and state jurisdictions. We are generally no longer subject to federal or state income examinations for years prior to fiscal year 2009.
10. Leases
We lease space for various restaurant locations under long-term non-cancelable operating leases from unrelated third parties. Most of our leases are classified as operating leases under ASC 840. Rent
expense, including rent-free periods if applicable, is recognized on a straight-line basis over the lease term. The lease term for all types of leases begins on the date we become legally obligated
for the rent payments or we take possession of the building or land, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in an
economic penalty.
In
some cases, the asset we will lease requires construction to ready the space for its intended use, and in certain cases, we have involvement with the construction of leased assets. The construction
period begins when we execute our lease agreement with the property owner and continues until the space is substantially complete and ready for its intended use. In accordance with ASC 840-40-55, we
must consider the nature and extent of our involvement during the construction period, and in some cases, our involvement results in us being considered the accounting owner of the construction
project. One example of involvement that results in the Company being considered the accounting owner is a case where we lease a "cold shell." By
F-22
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
10. Leases (Continued)
adding
an HVAC unit, we are deemed to have participated in the construction of the landlord asset. In such cases, we capitalize the landlord's construction costs, including the value of costs incurred
up to the date we execute our lease (e.g., the building "shell") and costs incurred during the remainder of construction period, as such costs are incurred. Additionally, ASC 840-40-55 requires
us to recognize a financing obligation for construction costs incurred by the landlord. Once construction is complete, we are required to perform a sale-leaseback analysis pursuant to ASC 840-40 to
determine if we can remove the landlord's assets and associated financing obligations from the consolidated balance sheet. In certain leases, we maintain various forms of "continuing involvement" in
the property, thereby precluding us from derecognizing the asset and associated financing obligations following the construction completion. In those cases, we will continue to account for the
landlord's asset as if we are the legal owner, and the financing obligation, similar to other debt, until the lease
expires or is modified to remove the continuing involvement that prohibits de-recognition. Once de-recognition is permitted we would be required to account for the lease as either operating or capital
in accordance with ASC 840. As of December 30, 2013 and December 31, 2012 we have not derecognized any landlord assets or associated financing obligations.
We
determined that we were the accounting owner of a total of 31 and 18 leased buildings as a result of the application of build-to-suit lease application as of December 30, 2013 and
December 31, 2012, respectively. There were six and three of these buildings under construction as of December 30, 2013 and December 31, 2012.
The
future minimum rental payments required under these leases, including those accounted for as deemed landlord financing, during the next five years and thereafter in the aggregate, are as follows:
Deemed landlord
financing
Operating
leases
2014
$
2,233,988
$
7,030,372
2015
2,263,413
7,228,654
2016
2,307,293
7,392,253
2017
2,359,342
7,354,890
2018
2,445,385
7,287,302
Thereafter
35,382,388
96,185,295
​
​
​
​
​
​
​
​
Total
$
46,991,809
$
132,478,766
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Rent
expense charged to operations under our operating leases on a straight-line basis was $6.9 million, $4.4 million and $3.0 million for the years ended December 30,
2013, December 31, 2012 and December 26, 2011, respectively. Rent expense incurred prior to restaurant openings is included in pre-opening costs on the consolidated statement of
operations in the amount of $0.6 million, $0.3 million and $0.3 million for the years ended December 30, 2013, December 31, 2012 and December 26, 2011,
respectively.
Deemed
landlord financing obligations totaled $19.9 million and $11.2 million for the years ended December 30, 2013 and December 31, 2012, respectively.
F-23
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
11. Related Party Transactions
Corporate Development and Administrative Services Agreement
Zoe's Investors entered into a Corporate Development and Administrative Services Agreement with Brentwood Private Equity IV, LLC ("Brentwood"),
an owner of membership interests in Zoe's Investors, our sole shareholder. Under the terms of the agreement, Brentwood provides assistance in the corporate development activities and our business
growth efforts. As consideration for services provided, we provide reimbursement for business expenses related to performance of this agreement and an annual consulting fee based on Adjusted EBITDA as
defined in the agreement. During the years ended December 30, 2013, December 31, 2012 and December 26, 2011, we expensed approximately $0.2 million, $0.2 million and
$0.2 million respectively, related to this agreement.
In
addition, the persons associated with Brentwood currently serve on our Board of Directors. Currently, Brentwood controls the Company.
12. Commitments and Contingencies
Franchise Agreement
Our franchise agreement, which requires the franchisees to remit continuing royalty fees at a specified percentage of the franchisee's gross sales
revenue, provides that we as franchisor, or its authorized representative, will: (a) provide franchisee with written schedules of all foods, food products, beverages, and other items for sale,
and the furniture, fixtures, supplies and equipment necessary and required for the operation of the restaurant; (b) provide franchisee with a list of approved suppliers for the products and
services
necessary and required for the restaurant; (c) upon the reasonable written request of franchisee, render reasonable advisory services by telephone or in writing pertaining to the operation of
the restaurant; (d) provide franchisee with a sample of the standard Zoës Kitchen menu, and any modifications to the menu; (e) loan franchisee a copy of the System's
operating manual and any supplements to the manual that may be published by us; and, (f) provide franchisee the opportunity to participate in group purchasing programs that we may use, develop,
sponsor or provide on terms and conditions determined solely by us. In addition, as a condition to the commencement of business by the franchisee, the franchisee must attend and successfully complete
our training program.
Litigation
We are involved in certain litigation and claims arising in the normal course of business. In the opinion of management, the resolution of these
matters will not have a material adverse effect on the financial position or results of our operations.
13. Equity-based Compensation
Certain of our employees have been granted Class B units in the Company's parent, Zoe's Investors, pursuant to that entity's limited liability company agreement. As these awards have been
granted to employees of the Company, which is a consolidated subsidiary of Zoe's Investors, the related compensation expense has been reflected in our consolidated financial statements. Awards granted
during 2012 and 2013 are identical to those granted in and prior to 2011 with the exception of a provision that the employee forfeits the 2012 and 2013 awards, vested or unvested, if they terminate
their employment with the Company for any reason. These awards are discussed separately below.
F-24
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
13. Equity-based Compensation (Continued)
2011 and Prior Awards
The awards typically vest over a five-year service period, with 20% vesting on the first anniversary of the grant date and the remainder vesting
ratably by day over the remaining four years. We record compensation expense based on the awards' estimated grant-date fair value over the requisite service (vesting) period, with an offsetting credit
to additional paid-in-capital, as this is considered a capital contribution from Zoe's Investors.
A
summary of 2011 and prior awards activity is presented below:
Number of
Units
Weighted-average
fair value
Outstanding at December 27,
2010
158,497
$
2.29
Granted
75,000
1.35
Vested
(71,441
)
2.41
Forfeited
(5,369
)
2.61
​
​
​
​
​
​
​
​
Outstanding at December 26, 2011
156,697
$
1.78
​
​
​
​
​
​
​
​
Granted
—
—
Vested
(74,840
)
1.92
Forfeited
—
—
​
​
​
​
​
​
​
​
Outstanding at December 31, 2012
81,857
$
1.65
​
​
​
​
​
​
​
​
Granted
—
—
Vested
(40,846
)
1.80
Forfeited
—
—
​
​
​
​
​
​
​
​
Outstanding at December 30, 2013
41,011
$
1.50
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
We
recognized as a component of general and administrative expenses $0.07 million, $0.1 million and $0.2 million of equity-based compensation expense related to these awards in
years ended December 30, 2013, December 31, 2012 and December 26, 2011, respectively. As of December 30, 2013, total unrecognized compensation expense related to non-vested
stock awards, including an estimate for pre-vesting forfeitures, was $0.06 million, which is expected to be recognized over a weighted-average period of 1.7 years.
2012 and 2013 awards
As noted above, the 2012 and 2013 awards are identical to those issued in 2011 and prior, but contain a provision whereby if the employee terminates
employment prior to a sale of the Company, the awards are forfeited, regardless of whether the employee has completed the requisite service period (i.e., vested). As the employee recipients of
these awards cannot realize any benefit from vested awards until a sale or change-in-control, the sale represents a performance condition that is outside the Company's control. Thus, as we cannot
determine the probability of such a sale transaction, we have not recognized any compensation expense in the 2012 or 2013 consolidated statement of operations for these awards. In the event of a sale
transaction, we will recognize compensation expense for vested awards at that time. As of December 30, 2013, we had 315,000 of these grants outstanding.
F-25
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
14. Net Loss per Share
Basic net loss per share is calculated by dividing net loss by the weighted average shares outstanding during the period, without consideration of common stock equivalents. Diluted net loss per share
is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.
The
following table presents the computation of basic and diluted net loss per share for the period indicated:
2013
2012
2011
Historical net loss per share:
Net loss
$
(3,715,096
)
$
(252,895
)
$
(26,925
)
Weighted average shares outstanding, basic and diluted
100
100
100
​
​
​
​
​
​
​
​
​
​
​
Net loss per share, basic and diluted
$
(37,151
)
$
(2,529
)
$
(269
)
Pro forma net loss per share (unaudited):
Net loss used to compute pro forma net loss per share, basic and diluted
$
—
Weighted average number of shares outstanding, basic and diluted
—
Add: Share issued to members of Zoe's Investors (see Note 1)
—
​
​
​
​
​
​
​
​
​
​
​
Weighted average shares used in computing pro forma net loss per share, basic and diluted
—
Pro forma net loss per share, basic and diluted
$
—
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
15. Condensed Financial Information of Parent Company
The Company has no material assets or standalone operations other than its ownership in Zoe's Kitchen USA, LLC and its subsidiaries, and Soho Franchising, LLC.
There
are significant restrictions on the Zoe's Kitchen, Inc. parent company's ability to obtain funds from any of its subsidiaries through dividends, loans or advances. Accordingly, this
condensed financial information has been presented on a "Parent-only" basis. Under a Parent-only presentation, the Company's investments in its consolidated subsidiaries are presented under the equity
method of accounting.
The
following tables present the financial position of the Company as of December 30, 2013 and December 31, 2012 and the results of its operations for the years-ended December 30,
2013, December 31, 2012, and December 26, 2011.
F-26
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
15. Condensed Financial Information of Parent Company (Continued)
Zoe's Kitchen, Inc.
Condensed Balance Sheet
2013
2012
Assets
Investments in Zoe's Kitchen USA, LLC and its subsidiaries, and Soho Franchising, LLC
$
33,578,506
$
37,220,167
​
​
​
​
​
​
​
​
Total assets
$
33,578,506
$
37,220,167
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Stockholder's Equity
Common stock, $0.01 par value, 100 shares authorized, issued, and outstanding
$
1
$
1
Additional paid-in capital
45,199,506
45,126,071
Accumulated deficit
(11,621,001
)
(7,905,905
)
​
​
​
​
​
​
​
​
Total stockholder's equity
$
33,578,506
$
37,220,167
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Zoe's Kitchen, Inc
Condensed Statements of Operations
2013
2012
2011
Equity in net loss of Zoe's Kitchen USA, LLC and its subsidiaries, and Soho Franchising, LLC
$
(3,715,096
)
$
(252,895
)
$
(26,925
)
​
​
​
​
​
​
​
​
​
​
​
Net and comprehensive loss
$
(3,715,096
)
$
(252,895
)
$
(26,925
)
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
Basic and diluted net loss per share
$
(37,151
)
$
(2,529
)
$
(269
)
​
​
​
​
​
​
​
​
​
​
​
Basic and diluted weighted average shares outstanding
100
100
100
​
​
​
​
​
​
​
​
​
​
​
A
statement of cash flows has not been presented as the Zoe's Kitchen, Inc. parent company did not have any cash as of or for the years ended December 30, 2013, December 31, 2012,
or December 26, 2011.
16. Subsequent Events
We have evaluated subsequent events through March 10, 2014, the date the financial statements were available to be issued.
On
January 31, 2014, we signed the Fifth Amendment to the Credit Facility. Under the Fifth Amendment to the Credit Facility, the consolidated leverage ratio, which we are required to satisfy,
was raised to less than (1) 5.85 to 1.00 through to the last day of the second fiscal quarter of 2014, (2) 5.80 to 1.00 through to the third fiscal quarter of 2014, (3) 5.75 to
1.00 for the period commencing the first day of the fourth fiscal quarter of 2014 to the last day of the fourth quarter of 2015, and (4) 5.50 to 1.00 thereafter. The
F-27
Table of Contents
ZOE'S KITCHEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 30, 2013, DECEMBER 31, 2012 AND DECEMBER 26, 2011 (Continued)
16. Subsequent Events (Continued)
applicable
multiple for determining the maximum loan balance under the line of credit was also increased to (a) 4.25 for the period through to the second to last day of the third fiscal quarter
of 2014, (b) 4.15 for the period commencing on the last day of the third fiscal quarter of 2014 through to the second to last day of the fourth fiscal quarter of 2014, (c) 4.00 for the
period commencing on the last day of the fourth fiscal quarter of 2014 through to the second to last day of the first fiscal quarter of 2016, and (d) 3.75 thereafter. During January and
February 2014, we had draws of $5.9 million from our line of credit to fund capital projects. As of March 7, 2014, we had $46.8 million outstanding under our $65.0 million
Credit Facility, including $38.0 million under the term loan and $8.8 million under the line of credit, and $1.0 million of additional available borrowing capacity at such date.
On
January 8, 2014, we purchased two franchise restaurants in Mobile, Alabama and Destin, Florida from one of our franchisees which will allow for us to expand our Company-owned operations to
these markets. The purchase price for the acquisition was $1.2 million subject to purchase price adjustments.
F-28
Table of Contents
Shares
Zoe's Kitchen, Inc.
Common Stock
PRELIMINARY PROSPECTUS
Jefferies
Piper Jaffray
Baird
William Blair
Stephens Inc.
Stifel
Until                             , 2014 (the 25th day after the date of this
prospectus), all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters
and with respect to their unsold allotments or subscriptions.
, 2014
Table of Contents
PART II—INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13.    Other Expenses of Issuance and Distribution.
The following table sets forth all costs and expenses, other than the underwriting discounts payable by us, in connection with the offer and sale of
the common stock being registered. All amounts shown are estimates except for the Securities and Exchange Commission ("SEC") registration fee and the Financial Industry Regulatory
Authority, Inc. ("FINRA") filing fee.
Amount
SEC registration fee
$
10,369
FINRA filing fee
12,575
Listing fee
*
Printing expenses
*
Accounting fees and expenses
*
Legal fees and expenses
*
Blue Sky fees and expenses
*
Transfer Agent and Registrar fees and expenses
*
Miscellaneous expenses
*
Total
$
*
*
To
be provided by amendment.
Item 14.    Indemnification of Officers and Directors.
Section 102(b)(7) of the DGCL allows a corporation to provide in its certificate of incorporation that a director of the corporation shall not
be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in
good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an
improper personal benefit. Our amended and restated certificate of incorporation will provide for this limitation of liability.
Section 145
of the DGCL ("Section 145"), provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation), by reason of the fact that such person is
or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such
action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. Where an officer or director is successful on the merits or otherwise in the defense of any
action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.
Section 145
further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any
II-1
Table of Contents
liability
asserted against him and incurred by him in any such capacity, or arising out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him
under Section 145.
Our
amended and restated certificate of incorporation will provide that we must indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in
defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined
ultimately that such person is not entitled to be indemnified under this section or otherwise.
We
intend to enter into indemnification agreements with each of our current directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted
under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be
indemnified.
The
indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our amended and restated
certificate of incorporation, our amended and restated bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
We
maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made by reason of breach of duty or other wrongful act and
(2) to us with respect to indemnification payments that we may make to such directors and officers.
The
proposed form of underwriting agreement to be filed as Exhibit 1.1 to this Registration Statement provides for indemnification to our directors and officers by the underwriters against
certain liabilities.
Item 15.    Recent Sales of Unregistered Securities
None.
Item 16.    Exhibits
(1)
Exhibits
:
The
exhibit index attached hereto is incorporated herein by reference.
(2)
Financial Statement Schedules
:
No
financial statement schedules are provided because the information called for is not required or is shown in the financial statements or the notes thereto.
Item 17.    Undertakings
(a)
The
undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
(b)
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will,
II-2
Table of Contents
unless
in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(c)
The
undersigned Registrant hereby undertakes that:
(1)
For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be a part of this registration statement as of the time it was declared effective.
(2)
For
purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona
fide
offering thereof.
II-3
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Plano, State of Texas, on March 10, 2014.
ZOE'S KITCHEN, INC.
By:
/s/ KEVIN MILES
Name:  Kevin Miles
Title:    Director, President and Chief Executive Officer
*  *  *  *
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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Jason Morgan, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all (i) amendments (including post-effective
amendments) and additions to this registration statement and (ii) any and all additional registration statements pursuant to Rule 462(b) of the Securities Act of 1933, as amended, and to
file the same,
with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agents full power and authority to do
and perform each and every act in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or either of them or their or his or her substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
Signature
Title
Date
/s/ KEVIN MILES
Kevin Miles
Director, President and
Chief Executive Officer
(Principal Executive Officer)
March 10, 2014
/s/ JASON MORGAN
Jason Morgan
Chief Financial Officer
(Principal Financial Officer)
March 10, 2014
/s/ JAMES BESCH
James Besch
Controller
(Principal Accounting Officer)
March 10, 2014
/s/ RAHUL AGGARWAL
Rahul Aggarwal
Director
March 10, 2014
/s/ WILLIAM M. BARNUM, JR.
William M. Barnum, Jr.
Director
March 10, 2014
/s/ ANTHONY U. CHOE
Anthony U. Choe
Director
March 10, 2014
/s/ THOMAS BALDWIN
Thomas Baldwin
Director
March 10, 2014
/s/ SUE COLLYNS
Sue Collyns
Director
March 10, 2014
/s/ GREG DOLLARHYDE
Greg Dollarhyde
Chairman
March 10, 2014
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EXHIBIT INDEX
Exhibit No.
Description
1.1
*
Form of Underwriting Agreement
3.1
*
Form of Amended and Restated Certificate of Incorporation of Zoe's Kitchen, Inc.
3.2
*
Form of Amended and Restated Bylaws of Zoe's Kitchen, Inc.
3.3
*
Certificate of Incorporation of Zoe's Kitchen, Inc.
3.4
*
Bylaws of Zoe's Kitchen, Inc.
5.1
*
Opinion of Kirkland & Ellis LLP
10.1
*
Zoe's Kitchen, Inc. 2014 Omnibus Incentive Plan
10.2
Amended and Restated Credit Agreement dated September 23, 2011 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated Credit Agreement which are designated as a "Credit Party,"
General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement
10.3
First Amendment to the Amended and Restated Credit Agreement dated February 22, 2012 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated Credit Agreement which are designated
as a "Credit Party" which are also party to the First Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement which are also party to the First
Amendment
10.4
Second Amendment and Consent to the Amended and Restated Credit Agreement dated June 20, 2012 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated Credit Agreement which are
designated as a "Credit Party" which are also party to the Second Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement which are also party to the
Second Amendment
10.5
Third Amendment to the Amended and Restated Credit Agreement and Reaffirmation of Loan Documents dated November 30, 2012 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated
Credit Agreement which are designated as a "Credit Party" which are also party to the Third Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement
which are also party to the Third Amendment
10.6
Fourth Amendment to the Amended and Restated Credit Agreement and Reaffirmation of Loan Documents dated November 26, 2013 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated
Credit Agreement which are designated as a "Credit Party" which are also party to the Fourth Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement
which are also party to the Fourth Amendment
10.7
Fifth Amendment to Credit Agreement dated January 31, 2014 by and among Zoe's Kitchen USA, LLC, the other persons party to the Amended and Restated Credit Agreement which are designated as a "Credit Party" which are
also party to the Fourth Amendment, General Electric Capital Corporation, and the several financial institutions from time to time party to the Amended and Restated Credit Agreement which are also party to the Fourth Amendment.
10.8
Master Reaffirmation Agreement dated September 23, 2011 by and among Zoe's Kitchen USA, LLC, each of the other Credit Parties signatory to the Master Reaffirmation Agreement and General Electric Capital
Corporation
10.9
Form of Area Development Agreement
10.10
Form of Franchise Agreement
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Exhibit No.
Description
10.11
Registration Rights Agreement, dated as of October 31, 2007, by and among Zoe's Investors, LLC, Zoe's Kitchen, Inc., Zoe's Kitchen USA, LLC, Brentwood Associates Private Equity IV, L.P. and
certain of its other stockholders
10.12
*
Form of Indemnification Agreement between Zoe's Kitchen, Inc. and each of its directors and executive officers
10.13
Offer of Employment Letter to Mr. Allyn F. Taylor, dated as of July 19, 2011
10.14
*
Employment Agreement between Kevin Miles and Zoe's Kitchen USA, LLC
10.15
*
Employment Agreement between Jason Morgan and Zoe's Kitchen USA, LLC
10.16
*
Zoe's Kitchen, Inc. Non-Employee Director Compensation Policy
10.17
*
Form of Restricted Stock Unit Agreement Pursuant to the Zoe's Kitchen, Inc. 2014 Omnibus Incentive Plan
10.18
*
Nonqualified Stock Option Agreement Pursuant to the Zoe's Kitchen, Inc. 2014 Omnibus Incentive Plan
10.19
*
Zoe's Kitchen, Inc. Stockholders Agreement
21.1
List of Subsidiaries of Zoe's Kitchen, Inc.
23.1
Consent of PricewaterhouseCoopers LLP
23.2
*
Consent of Kirkland & Ellis LLP (included in Exhibit 5.1)
23.3
Consent of Technomic, Inc.
24.1
Power of Attorney (included on the signature page of this Registration Statement)
*
To
be filed by amendment.
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