EFTA Document EFTA01365813

Amendment No. 3 to Form S-I Table of Contents Our business is subject to extensive regulation and we may incur additional costs or liabilities as a result of government regulation of our restaurants. Our business is subject to extensive federal, state, local and foreign government regulation. including, among others, regulations related to the preparation and sale of food, the sale of alcoholic beverages. zoning and building codes, land use and employee, health, sanitation and safety matters. Typically, our licenses to sell alcoholic beverages must be renewal annually and may be suspended or revoked at any time for cause. Alcoholic beverage control regulations govern various aspects of daily operations of our restaurants. including the minimum age of guests and employees, hours of operation. advertising, wholesale purchasing and inventory control, handling and storage. Any failure by any of our restaurants to obtain and maintain. on a timely basis. liquor or other licenses, permits or approvals required to serve alcoholic beverages or food, as well as any associated negative publicity, could delay or prevent the opening of, or adversely impact the viability of. and could have an adverse effect on. that restaurant and its operating and financial perfonnance. We apply for our liquor licenses with the advice of outside legal counsel and licensing consultants. Because of the many and various state and federal licensing and permitting requirements. there is a significant risk that one or inure regulatory agencies could determine that we have not complied with applicable licensing or permitting regulations or have not maintained the approvals necessary for us to conduct business within its jurisdiction. My changes in the application or interpretation of existing laws may adversely impact our restaurants in that state, and could also cause us to lose, either temporarily or permanently. the licenses, permits and regulations necessary to conduct our restaurant operations, and subject us to fines and penalties. 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 ("idACCP") 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 gates have required restaurants to develop and implement TIACCP Systems, and the United States government continues to expand the maims 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 othenvise impact our business. Our restaurants in the United States am subject to state "dram shop" laws, which generally allow a person to sue us if that person was injured by an intoxicated person who was wrongfully served alcoholic beverages at one of our restaurants. Recent litigation against restaurant chains has resulted in significant judgments, including punitive damages. under dram shop laws. A judgment against us under a dram shop law could exceed our liability insurance coverage policy limits and could result in substantial liability for us and have a material adverse effect on ow results of operations. Our inability to continue to obtain such insurance coverage at reasonable cost also could have a material adverse effect on us. Regardless of whether any claims against us are valid or whether we are liable, we may be adversely affected by publicity resulting from such laws. The costs of operating our restaurants may increase in the event of changes in laws governing minimum hourly wages. working conditions, overtime and tip credits, health care, workers' compensation insurance rates, unemployment tax rates, sales taxes or other laws and regulations, such as those governing access for the disabled (including the Americans with Disabilities Act). If any of these costs were to increase and we were unable or unwilling to pass on such costs to our guests by increasing menu prices or by other means, our business and results of operations could be negatively affected. Failure to comply with federal, state or local regulations could cause our licenses to be revoked and force us to cease the sale of alcoholic beverages at certain restaurants. Any difficulties, delays or failures in obtaining such licenses. permits or approvals could delay or prevent the opening of a restaurant in a particular area or increase the costs associated 25 CRIR06502thathlmf6/17/2015 12:26:00 I'M I CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) CONFIDENTIAL DB-SDNY-0056975 SDNY GM_00203159 EFTA01365813