UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA...

UNITED STATES DISTRICT COURTDISTRICT OF MINNESOTA

In re BUCA Inc. Securities Litigation

This Pleading Relates To : All Actions CASE NO. : 05cv1762 DWF/AJB

CONSOLIDATED AMENDEDCOMPLAINT

CLASS ACTION COMPLAINT FOR VIOLATIONSOF THE FEDERAL SECURITIES LAW S

Lead Plaintiffs, West Palm Beach Police Pension Fund, Steven Jones, Charles Booth, an d

James and Bert-Mary Brady ("Plaintiffs"), individually and on behalf of all other persons

similarly situated, by their undersigned attorneys, for their Class Action Complaint, allege th e

following upon personal knowledge as to themselves and their own acts and upon information

and belief as to all other matters based upon the investigation made by and through their

attorneys, which investigation included, among other things, a review of the public document s

and news releases of Buca, Inc., including its press releases and public filings with the Securitie s

and Exchange Commission (the "SEC"), and interviews of former employees of Buca, Inc. and

other persons with knowledge and information concerning the matters alleged herein . Plaintiffs

believe that further evidentiary support for the allegations set forth below will exist after a

reasonable opportunity for discovery .

NATURE OF THE ACTION

1 . Plaintiffs bring this action as a class action on behalf of themselves and all other

persons who purchased shares of common stock of Buca, Inc . ("Buca" or the "Company"), during

the period of February d, 2001 through and including March 11, 2005 (the "Class Period"), t o

recover damages caused by Defendants' violation of the federal secu rities laws.

2. Buca owns and operates over 100 "Buca di Beppo" and "Vinny T's of Boston"

restaurants in 30 states and the District of Columbia, and competes with many establishe d

nationally-owned and locally-owned restaurants . During the Class Period , Buca pursued a rapid

expansion strategy . In December 2000, it owned and operated 51 restaurants, and by December

2004, it owned and operated 107 restaurants .

3 . To meet Wall Street expectations and sustain its growth plans, Buca and th e

Individual Defendants orchestrated and implemented a scheme to fraudulently inflate Buca' s

revenues, reduce its expenses, and conceal a decline in its comparable restaurant sales growth .

Defendants accomplished this by, among other things, fraudulently accounting for meals serve d

to employees by booking them as significant weekly revenue, and improperly accounting for it s

restaurant leases, and improperly capitalizing expenses, all in violation of Generally Accepted

Accounting Principles ("GAAP") .

4. The Individual Defendants were motivated to conduct this fraudulent accountin g

scheme, in part, because their incentive compensation was directly linked to several financia l

indicators which Buca fraudulently inflated in various public filings. For example, the amount of

bonuses for the individuals was tied to certain performance targets including Buca's total sale s

and comparable restaurant sales, which were significantly inflated in public filings because of th e

fraudulent scheme perpetrated by the Defendants but later restated downwards by the Company i n

2005.

5. Defendants' direct and personal involvement in this fraudulent scheme i s

confirmed by the statements of former employees of Buca who have personal knowledge of th e

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misconduct and who have acted as confidential sources to Lead Counsel in the preparation of thi s

Complaint .

6. These knowing or reckless falsi fications of Buca's financial statements were als o

a result of the fact that the Company lacked adequate internal controls in the accounting an d

finance areas - a fact that was directly contrary to Defendants' repeated false representations that

Buca's internal controls were adequate and reliable .

7 . In fact, the Company's internal controls were so deficient that the Individua l

Defendants and other senior Buca managers grossly and fraudulently misused Company assets for

personal gain, including the purchase of a villa in Italy, family vacations , and funding separate

business enterprises in which they had undisclosed financial interests .

8. In 2005, the United States Securities and Exchange Commission ("SEC")

commenced a formal investigation of Buca related to the aforementioned GAAP violations and

internal control abuses . Buca also began an internal investigation that resulted in the terminatio n

of several key financial officers, and also filed a lawsuit against two former officers, including

one of the Individual Defendants, arising from the accounting and management misconduc t

detailed herein .

9. On July 25, 2005, Buca announced that it would restate its annual financia l

statements for fiscal years 2000 through 2003, and its quarterly fi nancial results for the first three

quarters of fiscal year 2004, and thereby admitted that its financial statements during thos e

periods were materially false and misleading at the time they were issued .

10. When the truth about Buca ' s financial statements was revealed in July 2005, the

investing public began to understand the magnitude of the fraud perpetrated by Defendants . At

that time, the Company admitted that it falsely overstated its net income through a series of false

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revenue and earnings figures , by a staggering 121 .08%, 64. 16%, and 47 .77% for fiscal years

2001, 2002, and 2003 respectively.

11 . As a result of the Defendants' fraud, plaintiffs and other investors who acquired

Buca's securities during the Class Period did so at artificially inflated prices, and were damage d

thereby .

JURISDICTION AND VENUE

12. The claims alleged herein arise under Sections 10(b) and 20(a) of the Securitie s

Exchange Act of 1934 (the "Exchange Act"), 15 U .S.C. 5 78j(b) and 78t, and SEC Rule lab-5, 1 7

C.F.R. 5 240 . 1 db-5, promulgated thereunder .

13 . The jurisdiction of this Court is based on Section 27 of the Exchange Act, 1 5

U.S.C. § 78aa and 28 U.S.C. §§ 1331 and 1337 . Venue is proper in this District pursuant t o

Section 27 of the Exchange Act and 28 U.S.C. § 1391(b) . Many of the acts alleged herein ,

including the dissemination to the investing public of the misleading statements and omissions a t

issue, occurred in substantial part in this District. Moreover, Defendants conduct substantia l

business in this District. In connection with the acts, transactions and conduct alleged herein,

Defendants used the means and instrumentalities of interstate commerce, including the Unite d

States mails, interstate telephone communications and the facilities of national securitie s

exchanges and markets .

PARTIES

14. Lead Plaintiff West Palm Beach Police Pension Fund purchased shares of Buca' s

common stock as set forth on the attached certification and was damaged thereby .

15. Lead Plaintiff Steven Jones purchased shares of Buca's common stock as set forth

on the attached certification and was damaged thereby .

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16. Lead Plaintiff Charles Booth purchased shares of Buca's common stock as se t

forth on the attached certi fication and was damaged thereby.

17 . Lead Plaintiffs James and Bert-Mary Brady purchased shares of Buca's commo n

stock as set forth on the attached certification and were damaged thereby .

18 . Defendant Buca, Inc. is incorporated under the laws of Minnesota and maintains

its principal executive offices at 1300 Nicollet Mall, Suite 3043, Minneapolis, Minnesota 55403 .

Buca ' s common stock trades on the NASDAQ under the ticker symbol "BUCA_" Buca owns and

operates 107 full-service restaurants in 30 states and the District of Columbia , including 95 Buca

di Beppo restaurants and 10 Vinny T's of Boston restaurants .

19 . Defendant Joseph Micatrotto {"Micatrottd'} served as Buca's Chairman and Chief

Executive Officer from July 1999 until May 10, 2004, when he resigned from the Company .

Defendant Micatrotto approved Buca's materially false and misleading press releases and signed

the Company's Fiscal Years 2000, 2001, 2002, and 2003 fourth quarter and year-end reports o n

Form 10-K, and the Company's quarterly reports on form 10-Q for the periods ending April 1 ,

2001 through March 28, 2004 . Defendant Micatrotto also falsely certified as to the adequacy an d

reliability of the Company' s internal controls on numerous year-end 10-K's during the Class

Period.

20 . Defendant Pete Mihajlov ("Mihajlov") served as Buca's Executive Chairman an d

Chief Executive Officer from May 10, 2004 until October 15, 2004 . Defendant Mihajlov

approved Buca 's materially false and misleading press releases and signed the Company' s

quarterly reports on Form 14-Q for the periods ending June 27, 2004 and September 26, 2004 . He

also signed the Company's Fiscal Years 2000, 2001, 2002, and 2003 fourth quarter and year- end

reports on Form 10-K as a company director . Defendant Mihajlov also falsely certified as to th e

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adequacy and reliability of the Company's internal controls on numerous 10-Q's during the Class

Period.

21 . Defendant Greg A . Gadel ("Gadel") served as Buca's Executive Vice President,

Chief Financial Officer, Secretary and Treasurer from 2001 until December 2, 2004, when he

announced his resignation from Buca . Defendant Gadel signed the Company's Fiscal Years

2000, 2001, 2002, and 2003 fourth quarter and year-end reports on Form 10-K, and the

Company's quarterly reports on form 10-Q for the periods ending April 1, 2001 through

September 26, 2004 . Defendant Gadel also falsely certified as to the adequacy and reliability of

the Company's internal controls on numerous year-end 14-K's during the Class Period .

22. Defendants Micatrotto, Mihajlov and Gadel are collectively referred to herein as

the "Individual Defendants . "

23 . By reason of their positions with the Company, the Individual Defendants ha d

access to internal documents, reports and other information, including adverse non-public

information concerning the Company's business and financial condition, and attended

management and/or board of director meetings . As a result of the foregoing, they were

responsible for the truthfulness and accuracy of the Company's public reports and releases

described herein .

24. Buca and the Individual Defendants, as officers and directors of a publicly-trade d

Company, had a duty to disseminate truthful and accurate information with respect to the

Company, and to correct any public statements issued by or on behalf of the Company that had

become false and misleading . Each Defendant knew or recklessly disregarded that the misleading

statements and omissions complained of herein would adversely affect the integrity of the market

for the Company's common stock and would cause the price of the Company's common stock to

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become artificially inflated . Each of the Defendants acted knowingly or in such a reckless

manner as to constitute a fraud and deceit upon plaintiffs and the other members of the Class .

Defendants are liable, jointly and severally, as direct participants in and co-conspirators of th e

wrongs complained of herein .

SUBSTANTIVE ALLEGATIONS

A. Background

25 . Buca's accounting function is highly centralized in its Minneapolis headquarters ,

where Company management receive and analyze, on a daily basis, restaurant sales information .

As Buca described in its Annual Report on Form 10-K for each fiscal year during the Class

Period:

All of our restaurants use personal computer systems integratedwith management systems to monitor restaurant sales, product costsand labor costs on a daily basis . Financial controls are maintainedthrough a centralized accounting system, which includes asophisticated theoretical food cost program and a labor schedulingand tracking program. Physical inventories of food and beverageitems are taken on a weekly basis . Daily, weekly and monthlyfinancial information is provided to management for analysis andcomparison to our budget and to comparable restaurants . Weclosely monitor restaurant sales, cost of sales, labor and otherrestaurant trends on a daily, weekly and monthly basis .

26. Every night , restaurant general managers entered sales figures into this accountin g

system. The Individual Defendants, working primarily from Buca's headquarters in Minneapolis ,

extensively used the centralized accounting system to monitor and direct the sales efforts of th e

Buca restaurants .

27 . The Individual Defendants were heavily involved in the daily sales activities of

the Company' s restaurants . As a former Divisional Vice President of Operations from 2003

through June 2005, who also worked as a store General Manager from 1999 until 2003, and a

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former General Manager of a Buca restaurant in California, who was employed by the Compan y

from 1998 through January 2003 ("CS-1" and "CS-2", respectively)' explained, Defendan t

Micatrotto called Buca's restaurant general managers several times each week to review thei r

daily sales as compared to the prior year, and to provide specific sales goals for the following day .

Defendant Micatrotto was, according to CS-1, "extremely involved in the numbers" for every

store, and moreover, "nothing got through without [Micatrotto and Gadel] ordering and approvin g

it ."

28. The Individual Defendants also pressured Company officials to repo rt financia l

numbers in accordance with analyst expectations. For example, according to a forme r

Accounting Manager who worked in Buca's corporate offices from 2000 to 2004 and reported t o

Buca's con troller ("CS-3"), Defendant Gadel pressured the Company's controller to "hit whateve r

earnings had been projected" by Wall Street . Defendant Micatrotto regularly told senio r

Company managers to "do whatever it takes to drive sales ." According to CS-1, "with Gre g

[Gadel] and Joe [Micatrotto], it was all about what's on the Street, boosting comp sales, driving

the stock . "

29. Defendants Micatrotto and Gadel also had significant personal financial

motivation to commit the accounting fraud alleged herein . In their respective Employmen t

Agreements in effect during the Class Period, both Defendants Micatrotto and Gadel were eligibl e

for substantial bonuses, depending upon the Company achieving certain performance targets . The

amount of such bonuses r anged from 35% to in excess of 60% of their base salary, and therefore

represented a significant percentage of their overall compensation. Among such performanc e

targets linked to the receipt and amount of a bonus were the number of new restaurant openings ,

It The designation "CS", as used in the Complaint, refers to certain Confidential Sources who providedinformation in connection with the Plaintiffs' counsels ' investigation of the allegations contained herein .

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total sales, comparable restaurant sales, and general and administrative expenses . These criteria

were directly impacted by Defendants' fraudulent accounting for employee meals and ]cases in a

manner that increased , or had the potential to increase , the Individual Defendants ' incentive

compensation - All of the Individual Defendants also sold substantial amounts of Buca stock

during the Class Period .

B. Defendants' Scheme to Fraudulently Recognize Employee Meals As Revenu e

30. One important measure of growth that the Defendants repeatedly touted in publi c

releases and filings was the comparable restaurant sales from year to year . According to CS-1 ,

Defendant Micatrotto told divisional Vice Presidents during the class period that they needed t o

beat prior year's sales numbers , even if by only one dollar .

31 . Comparable restaurant sales or same store sales is a key indicator of growth in th e

restaurant industry. This was true not only for analysts, but also for Buca's management who

used comparable restaurant sales as a performance indicator to trigger bonuses in their executiv e

compensation packages.

32. In its 1 a-K for fiscal year 2000, Buca reported an increase of 6% for its

comparable restaurant sales, and stated its expectation that comparable restaurant sales would

continue to increase 2% to 4% in fiscal year 2001 . On April 25, 2001, Buca announced it s

revenues for the first quarter of 2001, and Defendant Micatrotto stated that Buca was "pleased t o

have achieved a three percent sales increase in comparable restaurants ."

33 . Notwithstanding these comparable sales figures, Buca's same-store sales began to

drop in 2001 . This was partly due to Buca ' s restaurant concept of serv ing customers very large

portions . Because of the portion size, which was distinctly large in comparison to other

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restaurants , customers tended to order less du ring each subsequent visit to a restaurant, resulting

in lower sales even with flat or increasing customer counts .

34. In order to sustain its comparable sales measure of growth in the face of declining

sales, but in violation of GAAP, Buca began to regularly book as revenue the purpo rted value of

food it provided to its employees at no cost to them . The goal ofrecognizing revenue on

employee meals was, according to a former restaurant General Manager in Arizona , who worked

for Buca from 1999 until March 2005 ("CS-4"), to in flate same -store sales .

35. Beginning in at least 2001 , each Buca di Beppo restaurant made available to its

employees and their families every afternoon a "Family Meal ." Employees were not required to

partake of this meal, nor were they charged in any way for the food .

36. Indeed , because many of the items on the Buca menu needed to be made fresh

everyday, it was difficult for the restaurant managers to predict how many of those items they

would need on any given night . Therefore, the "Family Meal" normally consisted of left-over

food, along with the samples of the specials that would be served that night in the restaurant . The

left-over food was worthless and had no value to the restaurant .

37. According to a former restaurant General Manager in Minneapolis, who served i n

this capacity at several restaurants from 1998 to 2002 ("CS-5"), in early 2001, Defendants

Micatrotto and Gadel directed each Buca di Beppo restaurant to begin to book the "Family

Meals" as though they were sales, thereby boosting the restaurant's sales and revenues figures .

They specifically directed each store to book these "Family Meals" at roughly $100 a night, or

$700 per week, and they were recorded as either a comped meal or rung up as though connected

with coupons or promotions. Defendant Micatrotto reminded restaurant managers of this

accounting directive every few weeks . CS-3 confirmed that the decision to begin booking th e

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employees meals as sales came sometime in early 2001, and that Defendant Gadel was one of the

persons who gave the directive to book the employee meals that way .

38 . CS-1 and CS-4 also confirmed that when their stores opened shortly after

September 11, 2001, they were directed from the start to book the employee meals as sales . They

also confirmed that the directive to book the employee meals as sales came in voicemails from

Gadel and Micatrotto .

39. From April 2001 until Apri12002, CS-5 repeatedly questioned both Defendant s

Micatrotto and Gadel about the booking of the "Family Meals" and why the recognition of this

revenue was not disclosed in the Company's public filings and investor reports . CS-5 specifically

questioned Defendant Gadel about this at least 10 times during this period, and was told by

Defendant Gadel that the failure to disclose this revenue recognition was a result of an "executive

decision" and that he should not worry about it .

40. In addition to the "Family Meals" at the Company's restaurants being improperl y

booked as revenue, employees at the Company's headquarters office in Minneapolis received

complimentary lunches provided by one of Buca's local restaurants . In 2001, the Company

"paid" itself $1000 per day for these complimentary employee meals . In April or May, 2002, in

order to increase same-store sales, the Company increased the amount it "paid" itself for such

meals to $2000 per day. Defendants Micatrotto and Gadel made this decision to increase the

amount paid for headquarters' lunches to $2000, according to a former Cash Accountant at

Buca's headquarters from October 1998 until October 2002, who also worked on the committee

that was in charge of ordering the headquarters' lunches ("CS-6") .

41 . CS-4, a former General Manager of a restaurant in Arizona, stated that in the first

quarter of 2004 he/she and other General Managers received a voicemail message fro m

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Defendants Micatrotto and Gadel instructing that they were no longer allowed to book th e

"Family Meals" as sales . Notwithstanding this announcement, the Company continued to boo k

employee meals as revenue through the third quarter of 2004, and when the practiced finall y

stopped, Buca did not timely disclose to the public this change in its revenue accounting .

42. A former Chief Operating Officer ("COO") for the Company from October 199 8

through February 2001 ("CS-7"), stated that the increased sales would have a material impact o n

comparable store (stores that have been open more than 18 months) sales . CS-7 stated that "if

you look at four week pe riods , that is $2800 at one restaurant . That's an extra Tuesday night . "

43. A former Senior Vice President of Operations ("CS-8"), who started with Buca i n

1999 and left in April 2005, recalled hearing conversations between Company executives in 200 3

and 2004, including between Defendants Micatrotto and Gadel, about the need to restate th e

revenue booked from the "Family Meals ." Defendants Micatrotto and Gadel not only directed th e

fraudulent recognition of revenue from the "Family Meals," but knew that such accounting wa s

improper as early as 2003, if not before .

C. Defendants' Scheme to Fraudulently Account for Lease s

44. As the Company reported in its 2004 10-K, it leases both the land and the buildin g

at the majority of its restaurant locations . At most of Buca's restaurant locations where it actuall y

owns the building, it still leases the land . Most, if not all, of these leases contain options to rene w

for additional periods of time. This has been the general leasing practice at all times during the

Class Period .

45. Periodically, the Company made leasehold improvements to its restaurants ,

thereby incurring significant expenses . To reduce the expenses it reported in publicly file d

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financial statements during the Class Period, the Company included unexercised renewal optio n

periods for purposes of depreciation and other accounting calculations .

46. The Company similarly accounted for its lease expenses by spreading its lease

expenses for its operating leases over a lease term that included all renewal option periods ,

thereby reducing current expenses and increasing net earnings .

47. Specifically, when accounting for leases with renewal options , the Company

depreciated its buildings, leasehold improvements and other long-lived assets on those properties

over a period that included both the initial lease term and option periods of the lease which, when

combined, generally ranged from 20 to 30 years (or over the useful life of the asset , if shorter) .

The Company deferred its rent costs from the opening date of the restaurant through the initia l

term of the lease, which is the date when the Company became legally obligated to make ren t

payments . The Company restated its financial statements to recognize rent expense on a straight-

line basis over the entire lease term, including cancelable option periods where failure to exercis e

such options would result in an economic penalty- The lease term commences on the date when

the Company becomes legally obligated for the rent payments and not the opening date of th e

restaurant. As a result, the Company reported increased pre-opening and rent expenses in it s

restated financial statements .

48. Furthermore, for 2001, 2002, 2003 and the first three quarters of 2004, the

Company classified all of its leases as operating leases . Because of the elimination of the optio n

periods of the lease, as discussed above, the Company determined that certain of its restaurant

leases should have been recorded as capital leases in accordance with the criteria established i n

Statement of Financial Accounting Standards (SFAS) No. 13, Accounting for Leases. The effec t

of the change in accounting for a lease as capital versus operating would be to recognize the valu e

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of the leased property as an asset, with a corresponding capital lease obligation liability and an

increase in depreciation and interest expenses offset by a reduction in rent expenses .

49. CS-3, a former Accounting Manager who worked in Buca's corporate offices and

reported to Buca's Controller, Dan Skrypek, was responsible for calculating the depreciation of

leasehold improvement. According to CS-3, the Company had a policy which was to "amortize

leasehold improvements over the term of the lease plus two extensions ." Skrypek instructed this

former employee to handle leasehold improvements this way and it was what he did .

50. This method of amortizing leasehold improvements was employed to reduce

current expenses, according to CS-3 . For example, if you had $1 million in leasehol d

improvements with a term of 10 years and two extensions of 5 years each, instead of recognizing

expenses over just the 10 year term and expensing roughly 10% each year, you could spread

expenses over 20 years, and recognize only half as much expense as would be required for a 10

year lease .

D. Insider Sales

51 . As part of their executive compensation packages, Individual Defendants each

received varying amounts of Company stock options . As part of the overall scheme to enrich

themselves, Individual Defendants directed the improper accounting of employee meals and

related to Company leases, as set forth above in paragraphs 30 through 50, in order to artificially

inflate the Company's stock price prior to exercising stock options and selling Company

securities for significant profits .

52 . For example, on May 15, 2002, Buca issued a press release touting its weekly

sales, and Micatrotto was quoted as saying "I am pleased to report comparable restaurant sales fo r

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the Buca di Beppo concept have turned positive, as we projected, and we are confident tha t

comparable restaurant sales for those restaurants will be positive for the second quarter ."

53 . On June 12, 2002, Micatrotto exercised an option to sell 100,000 Buca shares, fo r

which he earned approximately $1,260,000 according to SEC filings . The closing stock price on

the date of his sale was $18 .25 per share. This sale brought Defendant Micatrotto' s holdings in

Buca shares to zero . Defendant Mihajlov also sold 10 ,000 Buca shares on June 4, 2002, for

which he earned $180,000 .

54. On July 17,2002, during its ea rn ings conference call related to the second quarter

of fiscal year 2002, Defendants Micatrotto and Gadel announced that comparable restaurant sale s

at its Buca di Beppo restaurants actually declined 1 .3 percent in the second quarter of fiscal yea r

2002, while comparable restaurant sales at its Vinny T's of Boston restaurants actually declined

6.9 percent in that same period .

55 . In response to that announcement, the Company's stock dropped nearly thirt y

percent in a single day, going from $13 .35 per share on July 16, 2002 to $9 .26 per share on July

17, 2002 .

56 . In addition to the sale mentioned above, Defendant Micatrotto exercised stoc k

options and sold 93,333 shares in 2001, having a market value of $1,168,247, and 76,520 share s

in 2000, having a market value of $759,995 . Defendant Mihajlov, in addition to the sal e

mentioned above, sold 100,000 shares in 2000, having a market value of $1,163,000, 65,500

shares in 2001, having a market value of $1,127,000, and 5,000 shares in 2002, having a marke t

value of $85,000. Defendant Gadel exercised stock options and sold 10,467 shares in 2002 ,

having a market value of $121,214, 23,666 shares in 2001, having a market value of $262,623 ,

and 29,331 shares in 2000 , having a market value of $147,220 .

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E. Buca 's Wholly Deficient Internal Controls Were Well-Known at the Company

57. While the Defendants directed and implemented the accounting of, among othe r

things, employee meals and leases in violation of GAAP, Buca did not employ an inte rnal auditor ,

nor did Buca regularly conduct internal audits of its internal financial controls .

58 . Essentially, the Company had a completely deficient system of internal financial

controls during the entire Class Period, and the absence of any internal audit function contribute d

to the financial abuses and accounting violations set forth herein .

59. Employees in the Company' s accounting department routinely mentioned obvious

internal control deficiencies to certain of the Individual Defendants, only to be rebuffed. For

example, according to CS-3, when he/she questioned Gadel about Buca's lack of interna l

controls, Gadel 's response was to "laugh it off. "

60. A former Senior Financial Manager who worked at Buca's headquarters from

July 2000 until February 2005 ("CS-9") explained that during the Class Period, Defendant s

Micatrotto and Gadel often requested company checks for large sums of money without providin g

any supporting documentation or invoice . Several times, according to CS-9, Defendant Gadel

asked for blank checks, again without providing any supporting documentation or invoice . When

CS-9 protested to Defendant Gadel about this practice, he responded that it was not his/he r

concern .

61 . CS-9 also described Defendant Micatrotto requesting and obtaining Buca checks

for non-company transactions, such as personal home improvements and family gifts-

62 . Examples of this gross deficiency in internal controls include Defendan t

Micatrotto's purchase, using company funds, of a villa in Italy, and Defendant Gadel's use o f

company funds to support an independent business in which he had a financial interest .

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63 . In 2002, Defendant Micatrotto authorized Buca's purchase of a villa in Italy ,

known as Villa Serrnenino, for which the Company paid $279,000 . Defendant Micatrotto further

authorized Buca to spend several hundred thousand dollars to renovate Villa Serrnenino .

Notwithstanding Buca's purchase and investment in the property, Defendant Micatrotto title d

Villa Sermenino in his and his wife's names .

64. It was not until the second quarter of fiscal year 2004 that the Company's Audi t

Committee authorized an independent investigation pertaining to Defendant Micatrotto' s

purchase of Villa Sermenino. As a result of this investigation, the Company's Audit Committee

concluded that Defendant Micatrotto used Company funds for personal purposes without

authority to do so . However, there was no contemporaneous disclosure of this conclusion .

65 . According to the Company's year-end 2005 10-K, Micatrotto agreed to repay

$582,000 in Buca funds he used to renovate the villa, and to transfer the property' s title to Buca,

which had been purchased with Company funds .

66. Another key example of Buca's utter lack of effective inte rn al financial control s

relates to Defendant Gadel's approval of payment of invoices fraudulently submitted by a Buc a

vendor. As part of its means of integrating information technology at its various restaurant an d

office locations, Buca contracted with EDP Computer Systems ("EDP") to provide it wit h

computer hardware and computer-related services between 1998 and 2003 .

67 . Defendant Gadel was responsible for all invoices paid to EDP . He also had an

undisclosed, material financial interest in EDP, and received secret cash payments and gifts fro m

EDP. Specifically, Defendant Gadel authorized Buca to enter into financially unfavorabl e

contracts and transactions with EDP, grossly overpaying for certain computer-related equipmen t

and services in exchange for kickbacks to Gadel from EDP .

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68_ Defendant Gadel and John Motschenbacher, a former Buca Senior Vice Presiden t

and Chief Information Officer, also started a computer services company called High Wire

Networks ("High Wire"), that provided certain computer-related services to Buca's competitors i n

the restaurant industry.

69. High Wire's principal place of business was initially located in the same buildin g

as Buca's corporate office space in Minneapolis, Minnesota . The cost to build-out High Wire' s

office space was $98,000 , which Buca paid as a result of deceptive billing by EDP and authorized

by Defendant Gadel .

70. From approximately the fall of 2000 until the fall of 2001, the salaries of

approximately 10 High Wire employees were included in EDP's invoices to Buca . Defendant

Gadel and Motschenbacher autho rized Buca to pay for the salaries of these High Wire employees

because of their ownership interest in High Wire .

71 . For example, according to CS-9, Motschenbacher frequently requested an d

received checks from Buca made out to EDP or High Wire in amounts up to $190,000 withou t

any supporting documentation or invoice . Also, according to CS-5, one employee of High Wir e

told CS-5 that he was actually being paid by Buca .

72 . After Buca became aware of certain of the aforementioned actions of Gadel an d

Motschenbacher, it conducted an internal investigation . ' In connection with this interna l

investigation , Defendant Gadel provided false information to Buca about EDP, High Wire, and

his relationships with each entity.

73. On December 2, 2004, the Company issued a press release announcing the

resignation of Defendant Gadel from his position as Chief Financial Officer, indicating only tha t

he was departing to pursue other opportunities elsewhere . There was no public disclosure at tha t

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time regarding EDP, High Wire, or Defendant Gadel's use of Company funds to pay for work

done for those entities , or how his resignation related to the Company' s internal investigation of

these abuses .

74. On July 25, 2005 , Buca filed a civil lawsuit against Defendant Gadel and

Motschenbacher in the District Court in Hennepin County, Minnesota , in which the Company

asserted the allegations set forth in paragraphs 66 through 70 above. This was, in fact, the first

public disclosure of these events.

75. Item 308 of Regulation S-K requires, among other things, that managem ent asses s

the effectiveness of the company's internal controls and identify whether any material weaknesses

exist, and also that management disclose to the company's auditors any significant deficiencies i n

the company' s internal controls .

76. Item 404 of Regulation S-K requires, among other things, that Buca disclose any

transactions to which it was a party where the amount of the transaction exceeds $60,000, an d

where any Company director or executive officer had a direct or indirect material interest in such

transaction .

77. In spite of Buca's lack of internal controls, of which all Defendants were aware ,

Individual Defendants repeatedly and falsely certified in financial reports filed with the SE C

during the Class Period that Buca had no significant deficiencies or material weaknesses in it s

internal controls. Buca also failed to identify numerous transactions in which it was a party and

in which the Individual Defendants had a direct material interest, including those transaction s

further described above in paragraphs 63 through 71 .

-19-

MATERIALLY FALSE AND MISLEADING STATEMENT S

78. On February 6, 2001, Buca issued a press release announcing the Company' s

financial results for the reporting period ending December 31, 2000 ('February 6, 2001 Pres s

Release"). The February 6, 2001 Press released stated that :

Buca, Inc. (Nasdaq: BUCA) today announced revenues of$129,790,000 for the 53 weeks ended December 31, 2000, anincrease of 81 percent from sales of $71,528,000 in the 52 weeksended December 26. 1999. After adjusting for the extra week infiscal 2000, sales would have increased by 78 percent over fiscal1999. The company reported net incomes of $ 7,284,000 or 54 centsper share fully diluted in fiscal 2000, compared to net income of$1,424,000 or 16 cents per share in 1999 . Weighted average fullydiluted shares outstanding reached 13,575,762 for fiscal 2000,compared to 8,654,536 for 1999 .

For the 14 weeks ended December 31, 2000, Buca reported revenuesof $39,831,000, an increase of 74 percent over the 13 weeks endedDecember 26, 1999 . After adjusting for the extra week in the fourthquarter of fiscal 2000, sales would have increased by 62 percentover the fourth quarter of fiscal 1999 . Net income for the fourthquarter of 2000 was $3,351,000, or 23 cents per share compared topre-tax income of $1,252,000, or 11 cents per share in the fourthquarter of fiscal 1999 . The fourth quarter of fiscal 1999 included aone-time reduction in income taxes in the amount of $2,424,000 as aresult of net operating losses in previous years . Weighted averagefully diluted shares outstanding for the fourth quarter of 2000increased to 14,672,252 from 11,262,603 in the fourth quarter offiscal 1999 .

79. On March 30, 2001, Buca filed its annual report on Form 10-K with the SE C

announcing its financial results for the year ended December 31, 2000. The Form 10-K repeated

the same materially false and misleading financial information that was contained in the February

6th Press Release. The Form I O-K for the year 2000 stated that :

Use of Estimates--The preparation of financial statements inconformity with accounting principles generally accepted in theUnited States of America (generally accepted accounting principles)requires management to make estimates and assumptions that affectthe reported amounts of assets and liabilities . Actual results could

-20-

differ from those estimates .

80. The statements contained in the Company's February 6, 2001 press release and

March 30, 2001 10-K, were materially false and misleading when made for the following reasons :

(a) The year-end 2000 results set forth in such statements were not accurate orreliable and were not presented in accordance with GAAP ;

(b) The year-end 2000 results set forth in such statements materially overstatedBuca 's revenues by including, as sales, amounts attributed to "Family Meals" inviolation of GAAP ;

(c) The year-end 2000 results set forth in such statements materially overstatedBuca's net income by understating its corresponding expenses . Specifically, Bucaimproperly capitalized and deferred certain lease costs, and also understated itsinsurance reserves .

81 . On April 25, 2001, Buca issued a press release announcing the Company' s

financial results for period ending April 1, 2001 ("April 25, 2001 Press Release" ) . The April 25 ,

2001 Press Release stated that :

Buca, Inc. (Nasdaq: BUCA) today announced revenues of$39,490,000 for the 13 weeks ended April 1, 2001, an increase of 47percent from sales of $26,924,000 in the 13 weeks ended March 26,2000. The company reported net income of $1,640,000 or 11 centsper share fully diluted for the quarter, compared to net income of$878,000 or 8 cents per share in the same period of the prior year .Weighted average fully diluted shares outstanding reached15,559,532 for the 2001 quarter, compared to 11,371,770 for thefirst quarter of 2000 .

82. On May 15, 2001, Buca filed its quarterly report on Form 10-Q with the SEC

announcing its financial results for the first quarter and three months ended April 1, 2001 ("Firs t

Quarter 2001 10-Q") . The First Quarter 2001 10-Q repeated the same materially false an d

misleading financial information that was contained in the April 25 Press Release . The Firs t

Quarter 2001 10-Q further stated that :

The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normal

-21-

recurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods . The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) .

83 . The statements contained in the Company's March 25, 2001 press release and

May 15, 2001 10-Q, were materially false and misleading when made for the following reasons :

(a) The First Quarter 2001 results set forth in such statements were not accurate orreliable and were not presented in accord ance with GAAP ;

(b) The First Quarter 2001 results set forth in such statements materiallyoverstated Buca's revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP;

(c) The First Quarter 2001 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves .

84. On July 24, 2001, Buca issued a press release announcing the Company' s

financial results for the reporting period ending July 1, 2001 ("July 24, 2001 Press Release") . The

July 24, 2001 Press Release stated :

Buca, Inc. (Nasdaq : BUCA) today announced revenues of$43,677,000 for the 13 weeks ended July 1, 2001, an increase of 48percent from sales of $29,598,000 in the 13 weeks ended June 25,2000. The company reported net income of $2,469,000 or 15 centsper share fully diluted for the quarter, an increase of 80 percentcompared to net income of $1,373,000 or 10 cents per share fullydiluted in the same period of the prior year. Weighted average fullydiluted shares outstanding reached 16,962,276 for the quarter,compared to 13,663,407 for the second quarter of 2000 .

For the six months ended July 1, 2001, Buca, Inc. reported sales of$83,166,000, an increase of 47 percent from sales of $56,522,000reported for the same period in 2000_ Net income for the first sixmonths of 2001 was $4,109,000 or 25 cents per share fully diluted ,

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compared to net income of $2,251,000 or 18 cents per share fullydiluted in the first half of 2000 .

85. On August 8, 2001, Buca filed its quarterly report on Form 10-Q with the SEC

announcing its financial results for the second quarter and three months ended July 1, 200 1

("Second Quarter 2001 10-Q") . The Second Quarter 2001 10-Q repeated the same materiall y

false and misleading financial information that was contained in the July 24, 2001 Press Release.

The Second Quarter 2001 10-Q further stated that :

The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods . The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) .

86. The statements contained in the Company's July 24, 2001 press release and

August 8, 2001 10-Q, were materially false and misleading when made for the following reasons :

(a) The Second Quarter 2001 results set forth in such statements were not accurateor reliable and were not presented in accordance with GAAP;

(b) The Second Quarter 2001 results set fo rth in such statements materiallyoverstated Buca's revenues by including , as sales , amounts attributed to "FamilyMeals" in violation of GAAP . In addition , Buca 's reported increase in quarterlysales compared to the prior year ' s second quarter was false and misleading becauseDefendants Micatrotto and Gadel directed Buca to begin , in fiscal year 2001, toimproperly recognize as revenue such amounts a ttributed to "Family Meals";

(c) The Second Quarter 2001 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves .

87. On October 23, 2001, Buca issued a press release announcing the Company' s

financial results for the reporting period ending September 30, 2001 ("October 23, 2001 Pres s

- 23 -

Release") . The October 23, 2001 Press Release stated :

Buca , Inc. (Nasdaq : BUCA) today reported sales of $44,156,000 forthe thi rteen weeks ended Sept. 30 , 2001, an increase of 32 percentfrom sales of $33,438,000 in the third quarter of fiscal 2000 . Thirdquarter earnings were 9 cents per share fully diluted before specialone-time charges of $2,147,000, or 8 cents per share fully diluted .Net income for the quarter was $103 ,000, or 1 cent per share fullydiluted, compared to net income of $1,682 ,000, or 12 cents per sharefully diluted, in the same period the year prior . Weighted averagefully diluted shares outstanding reached 16 ,700,274 for the quarter,compared to 14,595,619 for the third qua rter of 2000 .

88. On November 13, 2001, Buca filed its quarterly report on Form 10-Q with th e

SEC announcing its financial results for the third quarter and three months ended September 30 ,

2001 ("Third Quarter 2001 10-Q") . The Third Quarter 2001 10-Q repeated the same mate rially

false and misleading financial information that was contained in the October 23, 2001 Pres s

Release . The Third Quarter 2001 10-Q further states that :


89 . The statements contained in the Company's October 23, 2001 press release and

November 13, 2001 I0-Q, were materially false and misleading when made for the following

reasons :

(a) The Third Quarter 2001 results set forth in such statements were not accurateor reliable and were not presented in accordance with GAAP ;

(b) The Third Quarter 2001 results set forth in such statements materiallyoverstated Buca ' s revenues by including , as sales , amounts attributed to "FamilyMeals" in violation of GAAP . In addition, Buca's reported increase in qua rterlysales compared to the prior year's third quarter was false and misleading becaus e

-24-

Defendants Micatrotto and Gadel directed Buca to begin, in fiscal year 2001, toimproperly recognize as revenue such amounts attri buted to "Family Meals" ;

(c) The Third Quarter 2001 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves.

90. On January 28, 2002, Buca issued a press release announcing record sales for the

fourth quarter and year-end Fiscal Year 2001 ("January 28, 2002 Press Release") . Specifically ,

the Company reported sales of $39,831,000 in the fourth quarter of Fiscal Year 2001, an increas e

of 30 percent over the fourth quarter 2000 . The January 28 Press Release stated :

BUCA, Inc. (Nasdaq: BUCA) today announced revenues of$175,635,000 for the 52 weeks ended Dec. 30, 2001, an increase of35 percent from sales of $129,790,000 for the 53 weeks ended Dec.31, 2000. After adjusting for the extra week in fiscal 2000, saleswould have increased 38 percent in fiscal 2001 . The companyreported net income of 50 cents per share fully diluted before specialcharges in fiscal 2001, compared to net income of 54 cents per sharein fiscal 2000. Fiscal 2001 net income after special charges, taken inthe third quarter, was $6,818,00, or 41 cents per fully diluted sharecompared to $7,284,000 in fiscal 2000 . Weighted average fullydiluted shares outstanding reached 16,456,433 for fiscal 2001,compared to 13,575,762 for fiscal 2000 .

For the 13 weeks ended Dec. 30, 2001, BUCA, Inc. reportedrevenues of $48,312,000, an increase of 21 percent from sales of$39,83 1,000 in the 14 weeks ended Dec . 3 1, 2000. After adjustingfor the extra week in the fourth quarter of fiscal 2000, sales in thefourth quarter of 2001 would have increased by 30 percent . Netincome for the fourth quarter of fiscal 2001 was $2,606,000, or 16cents per share fully diluted, compared to net income of $3,351,000,or 23 cents per share fully diluted in the fourth quarter of fiscal2000. weighted average fully diluted shares outstanding for thefourth quarter of fiscal 2001 increased to 16,603,650 from14,672,252 in the fourth quarter of fiscal 2000 .

91 . On April 15, 2002, Buca filed with the SEC its Annual Report on Form 10-K for

the fiscal year ended December 30, 2001 (the "2001 10-K") . The 2001 10-K repeated the same

-25-

materially false and misleading financial information that was contained in the January 28th Pres s

Release. The 2001 10-K further stated that :

Our consolidated financial statements include accounts of BUCA,Inc. and all of our wholly owned subsidiaries . The preparation offinancial statements in conformity with accoun ting principlesgenerally accepted in the United States requires management tomake estimates and assumptions in certain circumst ances that affectamounts reported in the accompanying consolidated financialstatements and related notes . In preparing these financialstatements , we have used our best estimates and judgements ofcertain amounts included in the financial statements, giving dueconsideration to mate riality .

92. The statements contained in the Company's January 28, 2002 press release and

April 15, 2002 10-K, were materially false and misleading when made for the following reasons :

(a) The Fou rth Quarter 2001 and Year-End 2002 results set forth in suchstatements were not accurate or reliable and were not presented in accordance withGAAP ;

(b) The Fourth Quarter 2001 and Year-End 2002 results set forth in suchstatements materially overstated Buca's revenues by including, as sales , amountsattributed to "Family Meals" in violation of GAAP . In addition, Buca's reportedincrease in quarterly and annual sales compared to the prior year's fourth quarterand entire fiscal year was false and misleading because Defendants Micatrotto andGadel directed Buca to begin, in fiscal year 2001, to improperly recognize asrevenue such amounts attributed to "Family Meals";

(c) The Fourth Quarter 2001 and Year-End 2002 results set forth in suchstatements materially overstated Buca's net income by understating itscorresponding expenses . Specifically, Buca improperly capitalized and deferredcertain lease costs, and also understated its insurance reserves .

93 . On April 25, 2002, Buca filed a press release announcing a first quarter profit of

13 cents per share that exceeded consensus estimates for the reporting period ended March 31 ,

2002 ("April 25,2002 Press Release") . Specifically, the Company stated :

BUCA, Inc. (Nasdaq : BUCA) today announced sales of $56 ,312,000for the thi rteen weeks ended March 31, 2002 , an increase of 43percent from sales of $39 ,490,000 reported for the same peri od in2001 . The Company reported net income for the first thirteen week s

-26-

of 2002 of $2,141,000, or 13 cents per share fully diluted on a muchhigher share base, compared to net income of $1,640,000, or 11cents per share fully diluted, in the same period of the prior year .Net income increased 31 percent for the 13 weeks ended March 31,2002 compared with the same period last year. Weighted averagefully diluted shares outstanding reached 16,971,889 for the quarter,compared to 15,559,532 for the first quarter of 2001 .

94 . ❑n May 14, 2002, Buca filed its quarterly report on Form 10-Q with the SE C

announcing its fin ancial results for the first quarter and three months ended March 31, 2002. The

First Quarter 2002 10-Q repeated the same materially false and misleading financial informatio n

that was contained in the April 25, 2002 Press Release . The First Quarter 2002 10-Q further stated

that :

The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods . The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) .

95. The statements contained in the Company's April 25, 2002 press release and May

14, 2002 10-Q, were materially false and misleading when made for the following reasons :

(a) The First Quarter 2002 results set forth in such statements were not accurate orreliable and were not presented in accordance with GAAP ;

(b) The First Quarter 2002 results set forth in such statements materially overstatedBuca's revenues by including, as sales, amounts att ributed to "Family Meals" inviolation of GAAP ;

(c) The First Quarter 2002 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves .

-27-

96. On July 16, 2002, Buca filed a press release announcing record sales for the

reporting period ending June 30, 2002 . Specifically, the Company stated that :

BUCA, Inc. (Nasdaq: BUCA) today announced sales of $60,914,000for the 13 weeks ended June 30, 2002, an increase of 40 percentfrom sales of $43,677,000 reported for the same period in 2001 .The company reported net income for the second 13 weeks of 2002of $2,846,000, or 17 cents per share fully diluted, compared to netincome of $2,469,000, or 15 cents per share fully diluted, in thesame period of the prior year. Net income increased 15 percent forthe second quarter of 2002 compared with the same period the yearprior . Weighted average fully diluted shares outstanding reached17,067,934 for the quarter compared to 16,962,276 for the secondquarter of 2001 .

For the six months ended June 30, 2002, the company reported salesof $1 17,226,000, an increase of 41 percent from sales of$83,166,000 for the same period in fiscal 2001 . Net income for thesix months was $4,987,000, or 29 cents per share fully dilutedcompared to net income of $4,109,000, or 25 cents per share fullydiluted, in the same period of the prior year .

97. On August 14, 2002, Buca filed its quarterly report on Form 10-Q with the SE C

announcing its financial results for the second quarter and three months ended June 30, 2002 .

The Second Quarter 2002 14-Q repeated the same materially false and misleading financial

information that was contained in the July 16, 2002 Press Release . The Second Quarter 2002 10-

Q further stated that :


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98. The statements contained in the Company's July 16, 2002 press release an d

August 14, 2002 10-Q, were materially false and misleading when made for the followin g

reasons :


(b) The Second Quarter 2002 results set forth in such statements materiallyoverstated Buca's revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP ;

(c) The Second Quarter 2002 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves .

99. On October 24, 2002, Buca filed a press release announcing that the Company

had closed on a new credit facility and reporting financial results for the period ending September

29, 2002 ("October 24, 2002 Press Release") . Specifically, the Company stated that :

BUCA, Inc. (Nasdaq : BUCA) today announced that it has closed onits new credit facility with a maximum capacity of $60 million . Thetransaction , led by Fleet Bank with a syndicate including Suntrust,Wells Fargo and US Bank closed on Friday , Oct. 11, as previouslyanticipated .

The company also reported third quarter results for the thirteenweeks ended Sept. 29 with sales of $59,515,000, an increase of 35percent from sales of $44,156,000 in the same period last year. Thecompany reported net income of $1 .2 million, or 7 cents per share anincrease from $103,000, or I cent per share in the same period lastyear. The reported net income in both periods includes one-time,non-cash charges . Weighted average, fully-diluted sharesoutstanding were 16,734,889 this year compared to 16,700,724 lastyear .

100. On November 13, 2002, Buca filed its quarterly report on Form I0-Q with th e


2002 . The Third Quarter 2002 10-Q repeated the same mate rially false and misleading financia l

-29-

information that was contained in the October 24, 2002 Press Release. The Third Quarter 200 2

IO-Q further stated that :


101 . Defendants Micatrotto and Gadel also issued the following certification as part of

the Third Quarter 2002 10-Q :

1 . I have reviewed this quarterly report on Form IO-Q of BU CA, Inc. ;

2. Based on my knowledge, this quarterly report does not contain any untruestatement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered bythis quarterly report ;

3. Based on my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report ;

4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have :

a) designed such disclosure controls and procedures to ensure thatmaterial information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterlyreport is being prepared ;

-30-

b) evaluated the effectiveness of the registrant's disclosure controlsand procedures as of a date within 90 days prior to the filing date ofthis quarterly report (the "Evaluation Date") ; and

c) presented in this quarterly report our conclusions about theeffectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date ;

5 . The registrant ' s other certifying officer and I have disclosed , based on ourmost recent evaluation, to the registrant's auditors and the audit committeeof regis trant 's board of directors (or persons performing the equivalentfunction) :

a) all significant deficiencies in the design or operation of internalcontrols which could adversely affect the registrant's ability torecord, process, summarize and report financial data and haveidentified for the registrant's auditors any material weaknesses ininternal controls; and

b) any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant'sinternal controls; and

6 . The registrant's other certifying officer and I have indicated in thisquarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses .

102. The statements contained in the Company's October 24, 2002 press release an d

November 13, 2002 10-Q, were materially false and misleading when made for the followin g

reasons :

(a) The Third Quarter 2002 results set forth in such statements were not accurateor reliable and were not presented in accordance with GAAP;

(b) The Third Quarter 2002 results set forth in such statements materiallyoverstated Buca ' s revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP ;

-31-

(c) The Third Quarter 2002 results set forth in such statements materiallyoverstated Buca 's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs , and alsounderstated its insurance reserves

(d) Defendants Micatrotto and Gadel falsely certified that the 10-Q did not containuntrue statements of material fact and that they had evaluated the effectiveness ofthe Company's disclosure controls and disclosed to the Company's independentauditors all significant deficiencies in the design or operation of Buca's internalcontrols . Defendants Micatrotto and Gadel knew, or were reckless in not knowing,that the 10-Q contained false results of operations, and that Buca lacked adequateinternal controls .

103. On February 13, 2003, Buca issued a press release announcing financial result s

for the fourth quarter and fiscal year 2002 ending December 29, 2002. Specifically, the Company

stated that :

BUCA, Inc . (Nasdaq: BUCA) today announced total sales of $63 .5million for the thirteen weeks ended Dec . 29 , 2002, an increase of31 percent as compared to sales of $48 . 3 million in the same periodof fiscal 2001 . The company reported net income of $1,791,000, or11 cents per share fully diluted , for the fourth quarter of fiscal 2002,including charges of $775,000 for the early extinguishment of debtrelating to the company 's new credit facility and the write-off ofdevelopment costs . Prior to such charges, the company would havereported earnings of 14 cents per share fully diluted . In the fourthquarter of fiscal 2001 , the company repo rted net income of$2,606,000, or 16 cents per share fully diluted . Fully diluted sharesincreased to 16,743,908 for the thirteen weeks ended Dec . 29: 2002,an increase from 16,603,650 in the same pe riod of fiscal 2001 .

For the 52 weeks ended Dec . 29, 2002, the company reported salesof $240.3 million, an increase of 37 percent from sales of $175 .6million in the same period of fiscal 2001 . For the year, the companyreported net income of $7,996,000, or 47 cents per share fullydiluted, as compared with net income of $6,818,000, or 41 cents pershare in fiscal 2001 . In fiscal 2002, fully diluted shares increased to16,879,655 from 16,456,433 in fiscal 2001 .

104. On March 17, 2003, Buca filed with the SEC its Annual Report on Form 10-K fo r

the fiscal year ended December 29, 2002 . The 2002 10-K repeated the same materially false and

-32-

misleading financial information that was contained in the February 13th Press Release .

Specifically, the 2002 10-K stated that :

❑ur consolidated financial statements include accounts of BUCA,Inc_ and all of our wholly owned subsidiaries . The preparation offinancial statements in conformity with accounting p rinciplesgenerally accepted in the United States of America requiresmanagement to make estimates and assumptions in certaincircumstances that affect amounts reported in the accompanyingconsolidated financial statements and related notes . In prepa ringthese financial statements, we have used our best estimates andjudgments of certain amounts included in the financial statements,giving due consideration to materiality . We do not believe there is agreat likelihood that materially different amounts would be reportedrelated to the accounting policy described below. However,application of this accounting policy involves the exercise ofjudgment and use of assumptions as to future uncertainties and, as aresult, actual results could differ from these estimates .

(a) Evaluation of Disclosure Controls and Procedure s

Under the supervision and with the participation of our management,including our Chief Executive Officer and Chief Financial Officer,we conducted an evaluation of the effectiveness of the design andoperation of our disclosure controls and procedures, as defined inRules 13a- 14(c) and 15d- 14(c) under the Securities Exchange Actof 1934, within 90 days of the filing date of this report (the"Evaluation Date") . Based on this evaluation, our Chief ExecutiveOfficer and Chief Financial Officer concluded as of the EvaluationDate that our disclosure controls and procedures were effective suchthat the material information required to be included in our SECreports is recorded, processed, summarized and reported within thetime periods specified in SEC rules and forms relating to us,including our consolidated subsidiaries and was made known tothem by others within those entities, particularly during the periodwhen this report was being prepared .

(b) Changes in Internal Control sThere were no significant changes in our internal controls or in otherfactors that could significantly affect these controls subsequent tothe Evaluation Date . We have not identified any significantdeficiencies or material weaknesses in our internal controls, andtherefore there were no corrective actions taken .

-33-

105. Defendants Micatrotto and Gadel also issued the following certification as part of

the 2002 10-K :

I have reviewed this annual report on Form 1 0-K of BUCA, Inc . ;

2 . Based on my knowledge, this annual report does not contain any untruestatement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered bythis annual report ;

3. Based on my knowledge, the financial statements, and other financialinformation included in this annual report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this annual report ;

4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules l 3a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure thatmaterial information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this annualreport is being prepared ;

b) evaluated the effectiveness of the registrant's disclosure controlsand procedures as of a date within 90 days prior to the filing date ofthis annual report (the "Evaluation Date") ; and

c) presented in this annual report our conclusions about theeffectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date ;

5. The registran t 's other certifying officer and I have disclosed , based on ourmost recent evaluation, to the regis trant ' s auditors and the audit committeeof registrant's board of directors (or persons performing the equivalentfunction) :


-34-

b) any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant'sinternal controls ; and

6 . The registrant's other cert ifying o fficer and I have indicated in this annualreport whether or not there were significant changes in inte rnal controls orin other factors that could signific antly affect internal controls subsequentto the date of our most recent evaluation , including any corrective actionswi th regard to significant deficiencies and material weaknesses .

106. The statements contained in the Company's February 13, 2003 press release and


(a) The Fourth Quarter and Year-End 2002 results set forth in such statementswere not accurate or reliable and were not presented in accordance with GAAP;

(b) The Fourth Quarter and Year-End 2002 results set forth in such statementsmaterially overstated Buca's revenues by including, as sales, amounts attributed to"Family Meals" in violation of GAAP ;

(c) The Fourth Quarter and Year-End 2002 results set forth in such statementsmaterially overstated Buca's net income by understating its correspondingexpenses. Specifically, Buca improperly capitalized and deferred certain leasecosts, and also understated its insurance reserve s

(d) Defendants Micatrotto and Gadel falsely certified that the 10-K did not containuntrue statements of material fact and that they had evaluated the effectiveness ofthe Company's disclosure controls and disclosed to the Company's independentauditors all significant deficiencies in the design or operation of Buca's internalcontrols- Defendants Micatrotto and Gadel knew, or were reckless in not knowing,that the 10-K contained untrue statements of material fact, and that Buca lackedadequate internal controls .

107. On April 22, 2003, Buca issued a press release announcing financial results for

the first quarter ending March 3 0, 2003. Specifically, the Company stated that :

BUCA, Inc. (Nasdaq : BUCA) today announced total sales of $62 .3million for the thi rteen weeks ended March 30, 2003, an increase ofI 1 percent as compared to sales of $56 .3 million in the same periodof fiscal 2002 . The company reported net income of $1,098,000, orseven cents per share fully diluted for the first qua rter of fiscal 2003 .In the first quarter of fiscal 2002 , the company reported net incomeof $2,141,000, or 13 cents per share fully diluted . Fully dilutedshares decreased to 16,655,110 for the 13 weeks ended March 30 ,

-35-

2003 from 16,971,889 in the same pe ri od of fiscal 2002 .

108. On May 12, 2003, Buca filed its quarterly report on Form 10-Q with the SE C

announcing its fin ancial results for the first quarter and three months ended March 30, 2003_ The

First Quarter 2003 10-Q repeated the same materially false and misleading financial informatio n

that was contained in the April 22, 2003 Press Release . The First Quarter 2003 1 O-Q further stated

that :

The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods . The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) . Certain information and footnotedisclosures, normally included in financial statements prepared inaccordance with generally accepted accounting principles, have beencondensed or omitted pursuant to such SEC rules and regulations .Operating results for the thirteen weeks ended March 30, 2003 arenot necessarily indicative of the results that may be expected for theyear ending December 28, 2003 .

(a) Evaluation of Disclosure Controls and Procedure s

Under the supervision of and with the participation of ourmanagement, including our Chief Executive Officer and ChiefFinancial Officer, we conducted an evaluation of the effectiveness ofthe design and operation of our disclosure controls and procedures,as defined in Rules 13a-14(c) and 15-d-14(c) under the SecuritiesExchange Act of 1934, within 90 days of the filing date of thisreport (the "Evaluation Date") . Based upon this evaluation, ourChief Executive Officer and Chief Financial Officer concluded as ofthe Evaluation Date that our disclosure controls and procedures wereeffective such that the material information required to be includedin our SEC reports is recorded, processed, summarized and reportedwithin the time periods specified in SEC rules and forms relating tous, including our consolidated subsidiaries and was made known tothem by others within those entities, particularly during the periodwhen this report was being prepared .

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(b) Changes in Internal Controls

There were no significant changes in our internal controls or in otherfactors that could significantly affect these controls subsequent tothe Evaluation Date . We have not identified and significantdeficiencies or material weaknesses in our internal controls, andtherefore there were no corrective actions taken .

109. Defendants Micatrotto and Gadel also issued the following certification as part o f

the First Quarter 2003 14-Q :

I have reviewed this qua rterly repo rt on Form 10-Q of BUCA, Inc . ;

2. Based on my knowledge, this quarterly report does not contain any untruestatement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered bythis quarterly report ;

3 . Based on my knowledge, the financial statements, and other financialinformation included in this quarterly report, fairly present in all materialrespects the financial condition, results of operations and cash flows of theregistrant as of, and for, the periods presented in this quarterly report ;

4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have :

a) designed such disclosure controls and procedures to ensure thatmaterial information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterlyreport is being prepared ;

b) evaluated the effectiveness of the registrant's disclosure controlsand procedures as of a date within 90 days prior to the filing date ofthis quarterly report (the "Evaluation Date") ; and

c) presented in this quarterly report our conclusions about theeffectiveness of the disclosure controls and procedures based on ourevaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on ourmost recent evaluation, to the registrant's auditors and the audit committe e

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of registrant's board of directors (or persons performing the equivalentfunction) :


b) any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant'sinternal controls; and

6. The registrant's other certifying officer and I have indicated in thisquarterly report whether or not there were significant changes in internalcontrols or in other factors that could significantly affect internal controlssubsequent to the date of our most recent evaluation, including anycorrective actions with regard to significant deficiencies and materialweaknesses .

110. The statements contained in the Company's April 22, 2003 press release and Ma y

12, 2003 1 a-Q, were materially false and misleading when made for the following reasons :

(a) The First Quarter 2003 results set forth in such statements were not accurate orreliable and were not presented in accordance with GAAP;

(b) The First Quarter 2003 results set forth in such statements mate rially overstatedBuca's revenues by including, as sales, amounts att ributed to "Family Meals" inviolation of GAAP;

(c) The First Quarter 2003 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves

(d) Defendants Micatrotto and Gadel falsely certified that the 10-Q did not containuntrue statements of material fact and that they had evaluated the effectiveness ofthe Company's disclosure controls and disclosed to the Company's independentauditors all significant deficiencies in the design or operation of Buca's internalcontrols . Defendants Micatrotto and Gadel knew, or were reckless in not knowing,that the 10-Q contained untrue statements of material fact, and that Buca lackedadequate internal controls .

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111 . On July 24, 2003, Buca issued a press release announcing financial results for the

second quarter ending June 29, 2003 . Specifically, the Company stated that :

BUCA, Inc. (Nasdaq : BUCA) today announced total sales of $65 .0million for the thirteen weeks ended June 29, 2003, an increase of 7percent, as compared to sales of $60.9 million in the same period offiscal 2002 . The company reported net income of $427,000 or threecents per share fully diluted, for the second quarter of fiscal 2003 .In the second quarter of fiscal 2002, the company reported netincome of $2,846,000, or 17 cents per share fully diluted . Fullydiluted shares decreased to 16,731,309 for the thirteen weeks endedJune 29, 2003 from 17,067,934 in the same period of fiscal 2002 .


announcing its financial results for the second quarter and three months ended June 29, 2003 .

The Second Quarter 2003 10-Q repeated the same materially false and misleading financia l

information that was contained in the July 24, 2003 Press Release. The Second Quarter 2003 10-


The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods. The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) . Certain information and footnotedisclosures, normally included in financial statements prepared inaccordance with generally accepted accounting principles, have beencondensed or omitted pursuant to such SEC rules and regulations .Operating results for the thirteen and twenty- six weeks ended June29, 2003 are not necessarily indicative of the results that may beexpected for the year ending December 28, 2003.

As of the end of the period covered by this report, we conducted anevaluation, under the supervision and with the participation of theprincipal executive officer and principal financial officer, of ourdisclosure controls and procedures (as defined in Rules 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934 (the"Exchange Act") . Based on this evaluation, the principal executiv e

-39-

officer and principal financial officer concluded that our disclosurecontrols and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms- There was no change in our internalcontrol over financial reporting during our most recently completedfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting .


the Second Quarter 2003 14-Q :

1 . I have reviewed this quarterly report on Form 10-Q of BUCA, Inc . ;

2. Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a materi al fact necessary to make thestatements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by thisreport ;

3. Based on my knowledge, the financial statements, and other financialinformation included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this report ;

4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and wehave :

a) designed such disclosure controls and procedures, or caused suchdisclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period inwhich this report is being prepared ;

b) evaluated the effectiveness of the registrant's disclosure controlsand procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of theend of the period covered by this report based on such evaluation ;and

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c) disclosed in this report any change in the registrant's internalcontrol over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the caseof an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control overfinancial reporting.

5. The regis trant ' s other certifying o fficer and I have disclosed , based on ourmost recent evaluation of internal control over financial reporting, to theregis trant's auditors and the audit committee of the registrant ' s board ofdirectors (or persons performing the equivalent functions) :

a) all significant deficiencies and material weaknesses in the design oroperation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability toretard, process, summarize and report financial information ; and

b) any fraud, whether or not mate rial, that involves management orother employees who have a significant role in the registrant'sinternal control over financial reporting.

114. The statements contained in the Company's July 24, 2003 press release and August

8, 2003 1 O-Q, were materially false and misleading when made for the following reasons :


(b) The Second Quarter 2003 results set forth in such statements materiallyoverstated Buca's revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP;

(c) The Second Quarter 2003 results set forth in such statements materiallyoverstated Buca's net income by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserve s


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115_ On October 22, 2003, Buca issued a press release announcing financial results fo r

the third quarter ending September 28, 2003 . Specifically, the Company stated that :

restaurant sales for the third quarter of fiscal 2003 and net loss pershare for the same period were in line with previous expectationsreleased on September 18, 2003 . Comparable restaurant sales atboth Buca di Beppo and Vinny T's of Boston were downapproximately 9% for the quarter . For the 13 weeks endedSeptember 28, 2003, the company generated sales of $62,110,000 anincrease of 4% over sales of $59,515,000 for the 13 weeks endedSeptember 29, 2002. During the third quarter this year, the companyreported a net loss of $2,091,000 or 12 cents per share, comparedwith a net profit of $1,2 16,000 or seven cents per share, fullydiluted, in the same period last year. Shares outstanding in the thirdquarter this year were 16,760,163 compared with 16,734,889 fullydiluted, in the same period last year .

For the 39 weeks ended September 28, 2003, the company generatedsales of $189,426,000, an increase of 7% over sales of $176,741,000in the same period last year. For the first nine months, the companyreported a net loss of $566,000 or three cents per share, comparedwith a net profit of $6,205,000 or 37 cents per share, fully diluted,last year. Comparable restaurant sales at Buca di Beppo were down6.9% for the first nine months of 2003 and comparable restaurantsales at Vinny T's of Boston were down 8 .9% for the same period.

116. On November 12, 2003, Buca filed its quarterly report on Form 10-Q with the


2003 . The Third Quarter 2003 10-Q repeated the same materially false and misleading financia l

information that was contained in the October 22, 2003 Press Release. The Third Quarter 200 3

1 d-Q further stated that :

The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods . The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC). Certain information and footnote

-42-

disclosures, normally included in financial statements prepared inaccordance with generally accepted accounting principles, have beencondensed or omitted pursuant to such SEC rules and regulations .Operating results for the thirteen and thirty- nine weeks endedSeptember 28, 2003 are not necessarily indicative of the results thatmay be expected for the year ending December 28, 2003 .

As of the end of the period covered by this report, we conducted anevaluation, under the supervision and with the participation of theprincipal executive officer and principal financial officer, of ourdisclosure controls and procedures (as defined in Rules 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934 (the"Exchange Act") . Based on this evaluation, the principal executiveofficer and principal financial officer concluded that our disclosurecontrols and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms. There was no change in our internalcontrol over financial reporting during our most recently completedfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting .

117. Defendants Micatrotto and Gadel also issued the following certification as part of

the Third Quarter 2003 l 4-Q :

I have reviewed this quarterly repo rt on Form I O-Q of BUCA, Inc. ;

2. Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by thisreport ;


4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and wehave:

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c) disclosed in this report any change in the registrant's internalcontrol over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f)) that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the caseof an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control overfinancial reporting .

5. The registrant's other certifying officer and I have disclosed, based on ourmost recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board ofdirectors (or persons performing the equivalent functions) :

a) all significant deficiencies and material weaknesses in the design oroperation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability torecord, process, summarize and report financial information ; and

b) any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant'sinternal control over financial reporting .

118. The statements contained in the Company's October 22, 2003 press release an d

November 22, 2003 1O-Q, were materially false and misleading when made for the followin g

reasons :

(a) The Third Quarter 2003 results set forth in such statements were not accurateor reliable and were not presented in accordance with GAAP;

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(b) The Third Quarter 2003 results set forth in such statements materiallyoverstated Buca ' s revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP;

(c) The Third Quarter 2003 results set forth in such statements materiallyunderstated Buca's net loss by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves


119. On February 9, 2004, Buca issued a press release announcing financial results fo r

the fourth quarter and fiscal year 2003 ending December 28, 2003 . Specifically, the Company

stated that :

BUCA, Inc. (Nasdaq : BUCA) today announced that comparablerestaurant sales for the thirteen weeks ended December 28, 2003declined approximately 7% at Buca di Beppo and declinedapproximately 4% at Vinny T's of Boston, compared with the sameperiod last year . The net lass for the thirteen weeks endedDecember 28, 2003 was $11,734,000, or 70 cents per share,including the effects of a $ 12,247,000 tax effected, non-cash, assetimpairment charge . Net income for the thirteen weeks endedDecember 30, 2002 was $ 1,793,000, or eleven cents per share .Total sales for the thirteen weeks ended December 28, 2003increased 6 .5% to $67,617, 000 from $63,518,000 in the same periodlast year .

120. On March 12, 2004, Buca filed with the Securities and Exchange Commission it s

Annual Report on Form 10-K for the fiscal year ended December 28, 2003. The 2003 10-K

repeated the same materially false and misleading financial information that was contained in th e

February 9th Press Release. Specifically, the 2003 10-K stated that :

Our consolidated financial statements include accounts of BUCA ,

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Inc. and all of our wholly owned subsidiaries . The preparation offinancial statements in conformity with accounting principlesgenerally accepted in the United States of America requiresmanagement to make judgments, assumptions and estimates thataffect amounts reported in the consolidated financial statements andaccompanying notes .

As of the end of the period covered by this report, we conducted anevaluation, under the supervision and with the participation of theprincipal executive officer and principal financial officer, of ourdisclosure controls and procedures (as defined in Rules 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934 (the"Exchange Act")) . Based on this evaluation, the principal executiveofficer and principal financial officer concluded that our disclosurecontrols and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms. There was no change in our internalcontrol over financial reporting during our most recently completedfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting .


the 2003 10-K :



3 . Based on my knowledge, the financial statements , and other financialinformation included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this report ;


a) designed such disclosure controls and procedures, or caused suchdisclosure controls and procedures to be designed under ou r

-46-

supervision, to ensure that material information relating to theregistrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period inwhich this report is being prepared ;



5. The registrant's other certifying officer and I have disclosed, based on ourmost recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board ofdirectors (or persons performing the equivalent functions) :


b) any fraud, whether or not material, that involves management orother employees who have a significant role in the registrant'sinternal control over financial reporting.

122 . The statements contained in the Company's February 9, 2004 press release and


(a) The Fourth Quarter and Year-End 2003 results set forth in such statementswere not accurate or reliable and were not presented in accordance with GAAP;

(b) The Fourth Quarter and Year-End 2003 results set forth in such statementsmaterially overstated Buca's revenues by including, as sales, amounts attributed to"Family Meals" in violation of GAAP ;

(c) The Fourth Quarter and Year-End 2002 results set forth in such statementsmaterially understated Buca ' s net loss by understating its corresponding expenses .

-47-

Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves

(d) Defendants Micatrotto and Gadel falsely certified that the 10-Q did not containuntrue statements of material fact and that they had evaluated the effectiveness ofthe Company's disclosure controls and disclosed to the Company's independentauditors all significant deficiencies in the design or operation of Buca's internalcontrols . Defendants Micatrotto and Gadel knew, or were reckless in not knowing,that the l O-Q contained untrue statements of material fact, and that Buca lackedadequate internal controls .

123 . On May 11, 2004, Buca issued a press release announcing financial results for th e

first quarter ending March 28, 2004 ("May 11, 2003 Press Release") . Specifically, the Company

stated that :

BUCA, Inc . (Nasdaq : BUCA) reported a net loss of $ 1 .5 million, or$0.08 per share, for the thirteen weeks ended March 28, 2004_ Theloss for the quarter compares to net income of $I . I million, or $0.07cents per share , in the same period of fiscal 2003. During the firstquarter total sales were $ 66.5 million, an increase of 6.6 percentover sales of $62 .3 million in 2003 . Weighted average commonshares outstanding were 17,940,135 for the thirteen weeks endedMarch 28, 2004 compared with fully diluted shares outstanding of16,655,110 in the same period of 2003 .

124. On May 7, 2004, Buca filed its quarterly report on Form 10-Q with the SE C

announcing its financial results for the first quarter and three months ended March 28, 2004 . The

First Quarter 2004 1 O-Q repeated the same materially false and misleading financial information

that was contained in the May 11, 2004 Press Release . The First Quarter 2004 IO-Q further stated

that :

The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods. The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC). Certain information and footnote

-48-

disclosures, normally included in financial statements prepared inaccordance with generally accepted accounting principles, have beencondensed or omitted pursuant to such SEC rules and regulations .Operating results for the thirteen weeks ended March 28, 2004 arenot necessarily indicative of the results that may be expected for theyear ending December 26,2004 .

As of the end of the period covered by this report, we conducted anevaluation, under the supervision and with the participation of theprincipal executive officer and principal financial officer, of ourdisclosure controls and procedures (as defined in Rules 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934 (the"Exchange Act") . Based on this evaluation, the principal executiveofficer and principal financial officer concluded that our disclosurecontrols and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms . There was no change in our internalcontrol over financial reporting during our most recently completedfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting .

125 . Defendants Micatrotto and Gadel also issued the following certification as part of

the First Quarter 2004 1 d-Q :

1 . I have reviewed this quarterly report on Form I0-Q of BUCA, Inc . ;

2 . Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by thisreport ;

3. Based on my knowledge, the financial statements, and other financialinformation included in this repo rt, fairly present in all material respects thefinancial condition , results of operations and cash flows of the regis trant asof, and for, the periods presented in this repo rt ;


-49-




5 . The registrant's other certifying officer and I have disclosed, based on ourmost recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board ofdirectors (or persons performing the equivalent functions) :



126. On May 10, 2004, Buca issued a press release announcing the resignation o f

Chairman and Chief Executive Officer, Joe Micatrotto . Specifically, the Company stated that :

BUCA, Inc . (Nasdaq: BUCA) announced today that the company'sboard of directors has accepted the resignation of Chairman andChief Executive Officer Joe Micatrotto effective immediately.Interim CEO Mihajlov stated, "The board and Joe are in agreementthat it's time for a management change . "

-50-

127. The statements contained in the Company's May 10 and May 11, 2004 press releases

and May 7, 2004 10-Q, were materially false and misleading when made for the followin g

reasons :

(a) The First Quarter 2004 results set forth in such statements were not accurate orreliable and were not presented in accordance with GAAP ;

(b) The First Quarter 2004 results set forth in such statements mate rially overstatedBuca ' s revenues by including , as sales, amounts attributed to "Family Meals" inviolation of GAAP;

(c) The First Quarter 2004 results set forth in such statements materiallyunderstated Buca's net loss by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves


(e) The Defendants knew, at the time the Company announced DefendantMicatrotto's resignation, that it was sought and given as a direct result of theCompany's Audit Committee findings that Defendant Micatrotto had usedsubstantial Company funds for unauthorized personal use, namely for the purchaseand renovation of an Italian villa known as Villa Sermenino .

128. On July 15, 2004, Buca issued a press release announcing financial results for th e

second quarter ending June 27, 2004. Specifically, the Company stated that :

BUCA, Inc . (Nasdaq : BUCA) today announced total sales of $65 .2million for the thirteen weeks ended June 27, 2004, an increase of0.4% as compared to sales of $65 million in the same pe riod offiscal 2003. The company reported a net loss of $3,907,000 . or 19cents per share , for the second quarter of fiscal 2004 . Included in thenet loss for the second qua rter of fiscal 2004 was approximately $1 .2million of costs associated with the company 's lease terminationactivities and approximately $0.8 million of costs related to adverseinsurance claim development and insurance rese rve increases . In the

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second quarter of fiscal 2003, the company reported net income of$427,000, or three cents per share fully diluted . Weighted averagecommon shares outstanding for the quarter ended June 27, 2004were 20,146,232 as compared with fully diluted shares outstandingfor the quarter ended June 29, 2003 of 16,731,309 .


announcing its financial results for the second qua rter and three months ended June 27, 2004 .

The Second Quarter 2004 10-Q repeated the same materially false and misleading financial

information that was contained in the July 15, 2004 Press Release . The Second Quarter 2004 10-


The accompanying financial statements have been prepared by uswithout audit and reflect all adjustments, consisting of normalrecurring adjustments, which are, in the opinion of management,necessary for a fair statement of financial position and the results ofoperations for the interim periods . The statements have beenprepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) . Certain information and footnotedisclosures, normally included in financial statements prepared inaccordance with generally accepted accounting principles, have beencondensed or omitted pursuant to such SEC rules and regulations .Operating results for the thirteen and twenty-six weeks ended June27, 2004 are not necessarily indicative of the results that may beexpected for the year ending December 26, 2004 .

As of the end of the period covered by this report, we conducted anevaluation, under the supervision and with the participation of theprincipal executive officer and principal financial officer, of ourdisclosure controls and procedures (as defined in Rules 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934 (the"Exchange Act")) . Based on this evaluation, the principal executiveofficer and principal financial officer concluded that our disclosurecontrols and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms. There was no change in our internalcontrol over financial reporting during our most recently completedfiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting .

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130 . Defendants Mihajlov and Gadel also issued the following certification as part o f

the Second Quarter 2004 10-Q :


2 . Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by thisreport ;


4. The registrant ' s other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a -15(e) and 15d-15( e)) for the registrant and wehave :



c) disclosed in this report any change in the registrant's internalcontrol over financial reporting (as defined in Exchange Act RulesI3a-15(1) and 15d-15(f)) that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the caseof an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control overfinancial reporting .

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5_ The registrant's other ce rtifying officer and I have disclosed, based on ourmost recent evaluation of internal control over financial reporting, to theregistrant ' s auditors and the audit committee of the registrant 's board ofdirectors (or persons performing the equivalent functions) :



131 . The statements contained in the Company's July 15, 2004 press release and Augus t

6, 2004 10-Q, were materially false and misleading when made for the following reasons :

(a) The Second Quarter 2004 results set forth in such statements were not accurateor reliable and were not presented in accord ance with GAAP;

(b) The Second Quarter 2004 results set forth in such statements materiallyoverstated Buca's revenues by including , as sales, amounts attributed to "FamilyMeals" in violation of GAAP ;

(e) The Second Quarter 2004 results set forth in such statements materiallyunderstated Buca's net loss by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs, and alsounderstated its insurance reserves(d) Defendants Mihajlov and Gadel falsely certified that the 10-Q did not containuntrue statements of material fact and that they had evaluated the effectiveness ofthe Company's disclosure controls and disclosed to the Company's independentauditors all significant deficiencies in the design or operation of Buca's internalcontrols . Defendants Mihajlov and Gadel knew, or were reckless in not knowing,that the 10-Q contained untrue statements of material fact, and that Buca lackedadequate internal controls .

132. On October 15, 2004, Buca issued a press release announcing financial results for

the third quarter ending September 26, 2004 . The Press Release specifically stated that :

BUCA, Inc . (Nasdaq: BUCA) today announced that comparablerestaurant sales for the 13 weeks ended September 26, 2004 declined1 .1% at Buca di Beppo and declined 4 .8% at Vinny T's of Boston,compared with the same period last year. The net loss for the 1 3

-54-

weeks ended September 26, 2004 was $14,574,000, or 72 cents pershare, including the effects of a $10,194,000 non-cash, assetimpairment charge. The net loss for the 13 weeks ended September28, 2003 was $2,091,000, or 12 cents per share. Total sales for the13 weeks ended September 26, 2004 increased 0 .7% to $62,531,000from $62,110,000 in the same period last year .

133_ On November 5, 2004, Buca filed its quarterly report on Form l0-Q with the SEC

announcing its financial results for the third quarter and three months ended September 26, 2004 .

The Third Quarter 2004 10-Q repeated the same materially false and misleading financial

information that was contained in the October 15, 2004 Press Release. The Third Quarter 2004

I 0-Q further stated that :

The accompanying consolidated financial statements have beenprepared by us without audit and reflect all adjustments, consistingof normal recurring adjustments, which are : in the opinion ofmanagement, necessary for a fair statement of financial position andthe results of operations for the interim periods . The statements havebeen prepared in accordance with accounting principles generallyaccepted in the United States of America (generally acceptedaccounting principles) and with the regulations of the Securities andExchange Commission (SEC) . Certain information and footnotedisclosures, normally included in financial statements prepared inaccordance with generally accepted accounting principles, have beencondensed or omitted pursuant to such SEC rules and regulations .Operating results for the thirteen and thirty-nine weeks endedSeptember 26, 2004 are not necessarily indicative of the results thatmay be expected for the year ending December 26, 2004 .

As of the end of the period covered by this report, we conducted anevaluation, under the supervision and with the participation of theprincipal executive officer and principal financial officer, of ourdisclosure controls and procedures (as defined in Rules 13a-14(c)and 15d-14(c) under the Securities Exchange Act of 1934 (the"Exchange Act")). Based on this evaluation, the principal executiveofficer and principal financial officer concluded that our disclosurecontrols and procedures are effective to ensure that informationrequired to be disclosed by us in reports that we file or submit underthe Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in Securities and ExchangeCommission rules and forms. There was no change in our internalcontrol over financial reporting during our most recently completed

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fiscal quarter that has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting .

134. Defendants Mihajlov and Gadel also issued the following certification as part o f

the Third Quarter 2004 10-Q :

1. I have reviewed this qua rterly report on Form 10-Q of BUCA, Inc. ;



4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and wehave :


b) evaluated the effectiveness of the registr an t' s disclosure controlsand procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures , as of theend of the period covered by this report based on such evaluation ;and

c) disclosed in this report any change in the registrant's internalcontrol over financial reporting (as defined in Exchange Act Rules13a-15(f) and 15d-15(f) that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the caseof an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control overfinancial reporting .

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5 . The registrant 's other certifying officer and I have disclosed , based on ourmost recent evaluation of internal control over financial reporting, to theregistrant ' s auditors and the audit committee of the registrant' s board ofdirectors (or persons performing the equivalent functions) :



135 . The statements contained in the Company's October 15, 2004 press release an d

November 5, 2005 10-Q, were materially false and misleading when made for the following

reasons :

(a) The Third Quarter 2004 results set forth in such statements were not accurateor reliable and were not presented in accordance with GAAP ;

(b) The Third Quarter 2004 results set forth in such statements materiallyoverstated Buca 's revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP;

(c) The Third Quarter 2004 results set forth in such statements materiallyunderstated Buca's net loss by understating its corresponding expenses .Specifically, Buca improperly capitalized and deferred certain lease costs , and alsounderstated its insurance reserves

(d) Defendants Mihajlov and Gadel falsely certified that the 10-Q did not containuntrue statements of material fact and that they had evaluated the effectiveness ofthe Company's disclosure controls and disclosed to the Company's independentauditors all significant deficiencies in the design or operation of Buca's internalcontrols . Defendants Mihajlov and Gadel knew, or were reckless in not knowing,that the 10-Q contained untrue statements of material fact, and that Buca lackedadequate internal controls .

136. In addition to the aforementioned certifications, Defendants Micatrotto and Gadel

also issued the following certification as part of the Company's quarterly 10-Q reports for the

Second Quarter and Third Quarter of 2002, the First Quarter, Second Quarter and Third Quarter

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of 2003, the First Quarter of 2004, and the Company's annual 10-K reports for fiscal years 200 2

and 2003 :

CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO 18U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 200 2

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, the undersigned certifies that this periodic report fullycomplies with the requirements of Section 13(a) or 15 (d) of the Securities Exchange Actof 1934 and that information contained in this periodic report fairly presents, in allmaterial respects, the financial condition and results of operations of BUCA, Inc.

Isl JOSEPH P. MICATROTTO

Joseph P. MicatrottoChairman , President and ChiefExecutiveOfficer

CERTIFICATION BY CHIEF FINANCIAL OFFICER PURSUANT TO 18U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OFTHE SARBANES-OXLEY ACT OF 200 2

Pursuant to I8 U.S .C. Section 1350, as adopted pursuant to Section 906 of theSarbanes -Oxley Act of 2002, the undersigned certi fies that this periodic report fullycomplies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Actof 1934 and that information contained in this pe riodic report fairly presents, in allmaterial respects , the financial condition and results of operations of BUCA, Inc .

Is/ Greg A. Gadel

Greg A. GadelExecutive Vice President ,Chief Financial Officer, Secretary andTreasurer

137. Defendants Mihajlov and Gadel also issued the following certification as part o f

the Company's quarterly 1 Q-Q reports for the Second and Third Quarters of 2004 :

CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEFFINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS

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ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002

Pursuant to 18 U.S .C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, each of the undersigned certifies that this periodic reportfully complies with the requirements of Section 13(a) or 15(d) of the Securities ExchangeAct of 1934 and that information contained in this periodic report fairly presents, in allmaterial respects, the financial condition and results of operations of BUCA, Inc .

Is! Peter J . Mihajlo v

Peter J. MihajlovExecutive Chairman and Interim ChiefExecutive Officer

Isl Greg A . Gade l

Greg A. GadelExecutive Vice President, ChiefFinancial Officer, Secretary andTreasurer

138_ The aforementioned certifications identified in paragraphs 135 and 136 abov e

were materially false and misleading when made because :

(a) The quarterly and year-end results applicable to such statements were notaccurate or reliable and were not presented in accordance with GAAP;

(b) The quarterly and year-end results applicable to such statements mate riallyoverstated Buca 's revenues by including, as sales, amounts attributed to "FamilyMeals" in violation of GAAP;

(c) The quarterly and year-end results applicable to such statements materiallyoverstated Buca's net income or understated Buca's net loss by understating itscorresponding expenses . Specifically , Buca improperly capitalized and deferredcertain lease costs, and also understated its insurance rese rves

(d) Defend ants Micatrotto, Gadel , and Mihajlov, falsely certi fied that the 1 d-Q'sor 10-K ' s fairly represented the financial condition and results of Buca'soperations when , in fact , they knew, or were reckless in not knowing , that suchstatements were not accurate or reliable and were not presented in accordance withGAAP, and that the Company lacked adequate internal financial controls .

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THE TRUTH BEGINS TO EMERGE

139. On May 10, 2004, Buca issued a press release announcing that the Company' s

Board of Directors accepted Defendant Micatrotto's resignation as Chairman and Chie f

Executive Officer . The Company did not elaborate on the reason(s) for the resignation except t o

state that the Board and Defendant Micatrotto agreed that it was time for a management change.

While forcing Micatrotto's resignation was the first step the Company's Board took to repair th e

damage resulting from Buca's deficient internal controls, as evidenced by the Villa Sermenino

incident, there was no public disclosure of either the cause of the resignation, or the lack of

internal controls .

140. This press release, and Defendant Micatrotto's resignation, occurred after th e

Company's Audit Committee concluded that Buca's system of internal controls was deficien t

and failed to adequately detect or prevent Defendant Micatrotto's use of Company funds t o

purchase Villa Sermenino, as set forth in more detail in paragraphs 63 to 65 .

141 . As the market began to question the reasons behind the mysterious removal of

Micatrotto , Buca 's shares fell from its May 7, 2004 closing p rice of $6.38 per share to $5 .24 per

share on May 13, 2004, a decline of 17.8% .

142. On February 7, 2005, the Company issued a press release announcing that the

SEC had issued a formal order of investigation to determine whether or not there have been

violations of the federal secu rities laws. The Company stated its belief that the SEC investigation

was initiated in response to the resignation of Defendant Micatrotto, and that it also relates to

Buca's internal controls and compliance with GAAP and applicable reporting requirements . This

press release was the first public statement by the Company or any of its representatives tha t

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officially linked Defendant Micatrotto 's resignation to any wrongdoing, as uncovered by Buca' s

Audit Committee .

143_ Upon this news, shares of the Company's stock fell from its February 7, 200 5

closing price of $6 .91 per share to a closing price of $6 .75 per share on February 8, 2005, a

decline of approximately 2 .3% .

144. On February 11, 2005, Buca fi led a Form 8-K with the SEC disclosing, among

other things, that :

In light of other restaurant company restatements, the Company isconducting a review of its accounting policies applicable to leases,leasehold improvements, rent commencement, deferred rent, andother items. Although the analysis is not yet complete, theCompany has determined that it has incorrectly applied theaccounting rules with respect to certain operating lease transactions .As a result of this determination, the Board of Directors and AuditCommittee concluded on February 7, 2005 that it will restate itspreviously filed financial statements for the fiscal years ended 1999through 2003 and for the first three quarters of fiscal 2004 to correctfor errors in the application of existing generally acceptedaccounting principles . As a result, the annual financial statementsfor the years ended December 29, 1999, December 31, 2000,December 30, 2001, December 29, 2002 and December 28, 2003contained in the Company's annual reports on Form 10-K andrelated reports of its independent registered accounting firm, andinterim financial statements contained in the Company's quarterlyreports on Form 10-Q for the periods ended March 28, 2004, June27, 2004 and September 26 , 2004 should no longer be relied upon .

145. On March 11, 2005, after the close of the market, the Company issued a pres s

release announcing that it would file a notification with the SEC on Form 12b-25 concerning th e

Company's need to delay the filing of its annual report on Form 10-K for the year ended

December 26, 2004. The delay was to enable the Company to complete work on previousl y

announced restatements for fiscal years 2000-2003 . The Company also disclosed that the

Company's Vice President, Controller and Interim Chief Financial Officer, Dan Skrypek, an d

d1 -

Senior Vice President and Chief Information Officer, John Motschenbacher, had been placed o n

leave and were currently under review for potential termination.

146. Upon this news, shares of the Company's stock fell from its March 11, 200 5

closing price of $7 .00 per share to a closing price of $6 .50 per share on March 14, 2005, a declin e

of approximately 7.1 %, on unusually heavy volume.

147. On March 14, 2005, the Company filed a notification of late filing on Form 12b-

25 with the SEC . In the filing, the Company stated :

As described in the Current Report on Form 8-K of BUCA, Inc. (the"Company") filed with the Securities and Exchange Commission onFebruary 11, 2005, in light of other restaurant compan yrestatements, the Company is conducting a review of its accountingpolicies applicable to leases, leasehold improvements, rentcommencement, deferred rent, and other items. Although theanalysis is not yet complete, the Company has determined that it hasincorrectly applied the accounting rules with respect to certainoperating lease transactions . As a result of this determination, theCompany's Board of Directors and Audit Committee concluded onFebruary 7, 2005 that it will restate its previously filed financialstatements for the fiscal years ended 2000 through 2003 and for thefirst three quarters of fiscal 2004 to correct for errors in theapplication of existing generally accepted accounting principles .The financial statements for the affected periods and the relatedreports of the Company's independent registered public accountingfirm should no longer be relied upon .

The Company expects that the restated financial statements wi linclude adjustments to lease expenses, repair and maintenanceexpenses, insurance reserves, complimentary meal revenues andexpenses, restaurant pre-opening expenses, decor warehouseexpenses, utility expenses, stock option expenses, consulting fees,and depreciation expenses . The Company has discussed thesematters with its independent registered public accounting firm,Deloitte & Touche, LLP .

In addition, the Audit Committee of the Company has engagedcounsel to conduct an internal investigation of matters relating to theCompany's recent suspension of two executive officers .

As a result of the restatements, the Company's ongoing review of it s

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financial reporting policies and procedures, the Company's and itsindependent registered public accounting firm's ongoing efforts incompleting the Company's fiscal 2004 audit and their review of theCompany's internal controls in compliance with Section 404 of theSarbanes-Oxley Act of 2002 and the SEC rules promulgate dthereunder, and the Company's internal investigation, the Companywill be unable to file its Form 10-K for the year ended December 26,2004 within the prescribed period without unreasonable effort orexpense. The Company expects that it will be unable to file itsForm 10-K within the 15-day period .

As discussed in Part 111 above, the Company is restating itspreviously filed financial statements for the fiscal years ended 2000through 2003 and for the first three quarters of fiscal 2004 . TheCompany and its independent registered public accounting firm alsoare in the process of completing the Company's fiscal 2004 auditand continuing their review of the Company's financial reportingpolicies and procedures and internal controls . In addition, the AuditCommittee of the Company has engaged counsel to conduct aninternal investigation of matters relating to the Company's recentsuspension of two executive officers .

Based on preliminary financial results, the Company expects amodest increase in revenues in fiscal 2004 as compared to fiscal2003 (as restated), and a significant increase in net loss in fiscal2004 as compared to fiscal 2003 (as restated), including a significan tasset impairment charge for reduction in the value of goodwillrelated to the Company's Vinny T's of Boston operations . Therecan be no assurance that the anticipated financial results will notchange upon completion of the financial statement restatements, thefiscal 2004 audit, the review of the Company's financial reportingpolicies and procedures and internal controls, and the internalinvestigation .

148 . On March 16, 2005, the Company issued a press release announcing that the

Company had terminated the employment of Skrypek and Motschenbacher effective March 14 ,

2005 and March 15, 2005, respectively.

149 . On March 31, 2005, Buca issued a press release announcing that it had received a

notice from the staff of the NASDAQ Stock Market indicating that the Company is subject to a

potential delisting from the NASDAQ exchange for failure to comply with NASDAQ's

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requirement that its members file their Form 10-K for the fiscal year in a timely fashion . The

notice is not an immediate delisting, but as of the opening of business on April 1, 2005, an "E "

was appended to the end of the Company's trading symbol . The stock began trading under the

symbol "BUCAE . "

150. As a result of this news, shares of the Company's stock fell from its March 31 ,

2005 closing price of $6 .25 per share to a closing price of $5 .74 per share on April 7, 2005, a

decline of approximately 8 .1 % .

151 . On July 25, 2005, the Company issued its 10-K for fiscal year 2004, in which it

restated its financials for fiscal years 2000 through 2003 and for the first three quarters of fisca l

year 2004. As a result of the restatement, Buca's after-tax income cumulatively declined more

than $20 million .

152. The Company reported in its fiscal year 2004 10-K that it identified numerou s

material weaknesses related to its internal controls and management :

Deficiencies Related to the Design and Operation of Company-Level Controls as a Result of Tone Set by Senior Management . Ourcompany lacked an appropriate tone and demonstrable commitmentby former senior executives to set high standards of ethics,integrity, accounting and corporate governance. These conditionsresulted in a control environment that permitted the followingdeficiencies :

• inadequate policies and procedures to prevent seniorexecutives from overriding existing controls andaccounting systems ,

inadequate procedures for proper corporateauthorizations for certain expenditures andtransactions, inadequate approval procedures andpoor documentation ,

■ lack of safeguarding of the Company's assets ,

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• inadequate related party and vendor proceduresgoverning relationships, transactions and relateddisclosures,

• accounting practices that were not in accordancewith GAAP,

lack of company policy to update accountingpersonnel position descriptions for properqualifications based upon position responsibilities,and

■ lack of company policy to review trainingrequirements for accounting personnel on a periodicbasis .

Our current management believes that an environment supportingstrong systems of internal controls and disclosure controls andprocedures was not established nor were such policies andprocedures communicated to employees . Additionally, theassessment of financial reporting risks and monitoring of internalcontrol did not operate effectively. Our current managementbelieves that this situation represents a material weakness and hasled to the other material weaknesses reported by the company aswell as the need to restate our financial statements .

153 . The Company further identified in its fiscal year 2004 10-K deficiencies related to

its application of GAAP:

Deficiencies Related to Design and Operation of AccountingProcedures and Application of GAAP_ Du ring management'sreview of our internal controls, we determined that certain of ouraccounting con trol procedures, policies and documentation were notsufficient to ensure that our financial statements were presented inaccordance with GAAP. Deficiencies related to the following wereidentified :

• lack of formal application of accounting policies andprocedures ,

■ lack of capitalization policy for fixed assets ,

■ insufficient documentation to enable properidentification of certain of our disposed fixed assets,

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• lack of adequate procedures and oversight forappropriately assessing and applying criticalaccounting policies, estimates for insurance reservesand income taxes,

• limited monito ring of changes to GAAP,

■ inadequate approval procedures and documentation,and

• lack of company policy to ensure significant eventsand transactions were brought to the attention of theaccounting department for their review, and, ifapplicable, the approval of the accounting treatment .

Even in cases where we had adequate policies in place, we hadinadequate supervisory oversight to ensure proper application of thepolicies . In certain cases, employees were not trained to understandand apply the policies appropriately.

The material weaknesses in internal control over financial reportingdescribed in this report resulted in the restatements of our currentand previous financial statements- To correct these errors inaccounting, we restated our annual and interim financial statementsfor fiscal years ended 2000 through 2003 and for the first threequarters of fiscal 2004 .

154. On July 25, 2005, after the market closed , the Company issued a press release

announcing the results of the Company's restatement and the institution of a civil action agains t

two of the Company's former executives . The press release stated :

Minneapolis -July 25, 2005 -BUCA, Inc. (NASDAQ : BUCAE)today repo rted financial results for the full year and fourth quarter offiscal 2004 and for the first quarter of fiscal 2005 .

As a result of its previously announced review of accountingpolicies related to leases and other matters as well as its recentinternal investigation , the Company has restated its results for fiscal2000 through 2003 and for the first three quarters of fiscal year2004. The effects of the restatements are set forth in more detail in

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the Company's Annual Report on Form 10-K for the fiscal yearended December 26, 2004 and in its Form 10-Q for the first quarterof fiscal 2005 ended March 27,2005 .

The Company also identified certain material weaknesses in itssystem of internal control over financial reporting as more fullydisclosed in its Annual Report on Form 10-K for the fiscal yearended December 26, 2004 . The Company is taking remedialmeasures to correct these control deficiencies. In addition, theCompany has devoted significant resources to document, test,monitor, and improve these controls and will continue to do so .

The Company also announced that it has filed a civil action againsttwo of its former officers, Greg Gadel and John Motschenbacher .Gadel was the Company's Chief Financial Officer until hisresignation in February 2005 and Motschenbacher was an officer ofthe Company since 1999, and served as the Company's Senior VicePresident and Chief Information Officer from February 2004 untilhis termination in March 2005 .

155. On July 25, 2005, the Company also filed a Form 10-K with the SEC which

restated the Company's earnings for the fiscal years 2000 through 2003 in the followin g

amounts :

Net Income (Loss )(in thousands)

Reported ($12,300)

FY 2003 Restated ($23,549)

% Difference (47.77%)

FY 2002 Reported $7,996

Restated $4,87 1


FY 2001 Reported $6,81 8

Restated $3,084

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% Difference (121 .08%)

FY 2000 Reported $7,284

Restated $4,775


The Company did not formally restate its financial reports for the interim quarters .

VIOLATIONS OF GAAP

A. LEASE ACCOUNTING

156. On February 11, 2005, Buca filed a Form 8-K ("February 11 Form 8-K") with th e

SEC, and admitted that it had incorrectly applied the accounting rules with respect to operating

lease accounting transactions .

157. In the February 11, 2005 Form 8-K, Buca stated that "the Board of Directors and

Audit Committee concluded on February 7, 2005 that it will restate its previously filed financial

statements for the fiscal years ended 1999 through 2003 and for the first three quarters of fiscal

2004 to correct for errors in the application of existing generally accepted accounting principles . "

158. As a result, the Company stated that the annual financial statements for the years

ended December 29, 1999, December 31, 2000, December 30, 2001, December 29, 2002 an d

December 28, 2003 contained in the Company' s annual reports on Form 10-K and related reports

of its independent registered accounting firm, and interim financial statements contained in th e

Company's quarterly reports on Form 10-Q for the periods ended March 28, 2004, June 27, 2004

and September 26, 2004 should no longer be relied upon .

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159. GAAP standards for Lease Accounting require that in the amortization o f

leasehold improvements , an operating lease should be amo rtized by the lessee over the sho rter of

their economic lives or the lease term, as defined in p aragraph 5(1) of FASB Statement 13 ("SFAS

13"), Accounting for Leases , as amended .

160 . Statement of Financial Accounting Standard ("SFAS") 13 sets forth the rule s

accountants must follow under Generally Accepted Accounting Principles ("GAAP") i n

accounting for leases .

161 . Under Statement of Financial Accounting Standards ("SFAS") 13, Accounting for

Leases and FASB Technical Bulletin ("FTB") 85-3, Accounting for Operating Leases with

Scheduled Rent Increases, "[t]he effects of those scheduled rent increases, which are included in

minimum lease payments under Statement 13, should be recognized . . -on a straight-line basis over

the lease term unless another systematic and rational allocation basis is more representative of the

time pattern in which the leased property is physically employed . Using factors such as the time

value of money, anticipated inflation, or expected future revenues to allocate scheduled rent

increases is inappropriate because these factors do not relate to the time pattern of the physica l

usage of the leased property ." See FTB 85-3, ¶ 2 .

162. The Company has admitted that it did not account for its lease expense i n

accordance with SFAS No . 13, and that it was required to adjust its lease expense and related

deferred lease liability . The failure to recognize the lease costs ratably resulted in an

understatement of expense in the early years and an overstatement of expense in the later years .

Defendants ' fraudulent accounting practice constituted a material breach of GAAP and/or SEC

regulations .

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B. ACCOUNTING FOR CERTAIN PROPERTY , EQUIPMENT ANDLEASEHOLD IMPROVEMENTS

163 . GAAP standards for the capitalization of expenditures require that in order for an

expenditure to be capitalized over time, an expenditure must have a future economic benefit o r

service potential. FASB Concepts Statement No_ 6 ("CON 6") specifically allows for the

capitalization of an expenditure, only if that expenditure will eventually result in a net cash inflo w

to the enterp rise. Buca violated this provision of GAAP from 2000 through the first nine month s

of 2004, when it capitalized expenses that pro vided the Company with no future economic benefi t

or service potential .

164. In its July 25, 2005 Form 10-K filed with the SEC, Buca announced that it

determined that its policies and practices regarding the capitalization of certain expenditures ha d

not been properly applied in the areas of pre-opening expenses, decor warehouse expense an d

repairs and maintenance expenses, certain consulting fees, certain contributions to the annua l

Paisano Partner conference, construction management expense, capitalized interest, and

insufficient documentation to support fixed asset additions and dispositions. The restatement of

these accounting practices resulted in a reduction of income of $11 .9 million from 2000 through

2003 and the first nine months of 2004 .

165 . With regard to pre-opening expenses , the Company admitted that it should have

recognized certain expenditures during the pre-opening period when they were actually incurred .

The expenses included utility costs, property tax payments and consulting fees .

166. Buca also improperly capitalized amounts believed to extend the life of assets ,

which should have been treated as decor warehouse expenses or repair and maintenance expenses .

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167. Historically, Buca also capitalized as fixed assets or as leasehold improvements

certain expenses related to consulting arrangements with individuals for services in connectio n

with the opening of new restaurants . These expenses should have been recognized prior to

restaurant openings when the consulting expenses actually occurred .

168 . Buca also funded its annual Paisano Partners conference with contributions fro m

its vendors . Buca incorrectly recorded these contributions as credits to general and administrativ e

expenses , rather than properly recognizing them as a reduction in the cost of goods or services

supplied by the vendor.

169. Buca also admitted that the Company had improperly capitalized the expenses o f

its employees who were managing the construction of their new restaurants . The amounts

capitalized exceeded the expenses that were actually incurred by these employees .

170. The Company also identi fied instances in which they had improperly capitalized

interest on restaurants constructed after the related assets had been placed in service .

171 . Buca also admitted that they had insufficient documentation to support fixed asset

additions and dispositions . The Company had incorrectly capitalized the cost of technology

services, equipment and maintenance services .

172. These improper capitalizations had a material impact on Buca ' s net income. By

restating the previously capitalized property, equipment and leasehold improvement transactions ,

Buca made the following material increase to its costs and expenses :

Fiscal Year Ended(number-s in thousands)

First Nine December 29, December 28, December 27, December 26 ,Months of 2004 2003 2002 2001 2000

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(S800) 1 $3,828 $2,796 $3,934 $2,106

In 2002, the added costs and expenses had the effect of decreasing net income per share fro m

$0.48 to $0.30 per share . When costs and expenses were properly accounted for in 2003, Buca' s

loss per share increased from $0 .73 to $1 .41 .

C. EMPLOYEE MEAL S

173 . In the February 11, 2005 Form 8-K, the Company announced that the Company' s

prior practice of including revenue from its employee meals was improper and all such revenue

would need to be removed from its consolidated financial statements .

174. On July 25, 2005, Buca restated its financial results for the years endin g

December 26, 2000, December 27, 2001, December 28, 2002, December 29, 2003 and it s

quarterly reports for the periods ended March 28, 2004, June 27, 2004 and September 26, 2004.

By removing the value of employees meals from their sales, Buca reduced their total revenue b y

the following material amounts :

Fiscal Year Ended(numbers in thousands)

First NineMonths of 2004

December 29 ,2003

December 28 ,2002

December 27,2001

December 26,2000

($5,040) $7,418 ($6,871) ($4,349) ($2,023)

175 . The increased sales had a material impact on Buca's financial statements by

increasing the Company's reported revenue and same store sales for 2000 through 2003 and th e

first nine months of 2004. The employee meals represented more than 2% of the total sales for

the Company for each year. Put into perspective, the employee meals would have the effect o f

adding more than 10 days of sales each year for every Buca restaurant .

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176. In Buca' s Restatement filed with the SEC on Form 10-K on July 25, 2005, i n

which the Company removed the revenue from the employee meals, the Company stated that wit h

regard to the employee meals, "[w]e had been properly accounting for the costs of the product and

labor required to provide the meals in our restaurant costs . This error in accounting for employe e

and promotional meals had no impact on our net income (loss) ."

177 . The material impact of booking the employee meals was not on the Company' s

income, instead it had the effect of boosting the Company's revenues . It allowed each store to

appear to have increased sales of at least $700 per week when compared with same store sales fo r

the same week the year prior. The same store sales were an important indicator of growth used b y

analysts who cover the restaurant industry . The "Family Meals" resulted in the appearance o f

increased sales of between $2 and $7 .4 million per year between 2000 and 2003, and more tha n

$5 million in the first nine months of 2004 .

178. The increased sales had the greatest impact during the first year, from the firs t

quarter of 2001 to the first quarter of 2002 . During that twelve month period, same store sale s

appeared to be increasing. At the same time, Buca's stock price climbed to more than $25 pe r

share. The booking of the employee meals as sales also allowed the stock price to remain

relatively level during the period after September 11, 2001, when the restaurant industry as a

whole was seeing declining numbers from people not going out to eat . After that first year, the

booking of the employee meals was needed to keep same store sales at least level with the yea r

prior .

179. In booking the employee meals as sales , Buca violated GAAP standards for

revenue recognition. Statement of Financial Accounting Concepts No . 5, Recognition and

Measurement in Financial Statements of Business Enterprises states in paragraph 83a "Revenues

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and gains generally are not recognized until realized or realizable . Revenues and gains are

realized when products (goods or services), merchandise, or other assets are exchanged for cash

or claims to cash." The Buca employee meals were a cashless benefit to employees and no t

transactions with `third party' outsiders . Under GAAP standards for revenue recogn ition these di d

not meet the criteria for revenue and therefore, should not have been recognized as such .

180. The Company's financial statements filed during the Class Period were false b y

failing to comply with the basic GAAP standards for revenue recognition .

181 . As fully alleged herein , Defendants acted with scienter in that they knew that the

statements issued or disseminated in the name of the Company were materially false an d

misleading; knew that such statements or documents would be issued or disseminated to th e

investing public; and knowingly and substantially participated in or acquiesced to the issuance o r

dissemination of such statements or documents as p rimary violations of the federal securities

laws . As set forth herein in detail, Defendants Micatrotto and Gadel knowingly ordere d

restaurant General Managers to book "Family Meals" as sales even though they knew doing s o

was in violation of GAAP. Defendant Gadel also specifically directed Buca 's accounting

department to improperly account for lease agreements in violation of GAAP . The Individual

Defendants knowingly or recklessly directed numerous property, equipment and leasehol d

improvements be capitalized rather than expensed as is required by GAAP .

182. Pursuant to Employment Agreements in effect during the Class Period ,

Defendants Micatrotto and Gadel were eligible for substantial bonuses, depending upon th e

Company achieving certain performance targets . Among such performance targets were the

number of new restaurant openings, total sales, comparable restaurant sales, and general an d

administrative expenses . Defendant Gadel's Employment Agreement specifically used a 2 %

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increase in comparable restaurant sales as a performance benchmark . The booking of employe e

meals as revenue had the effect of increasing same store sales by more than 2% every year.

These bonus criteria were directly impacted by Defendants' fraudulent accounting for employe e

meals and leases in a manner that increased, or had the potential to increase, the Individua l

Defendants' incentive compensation .

183. In addition, Defendants were motivated to commit the fraud alleged herein to

increase the value of stock options or common stock owned by them, and to obtain significant

bonus compensation . During the Class Period, each Individual Defendant sold substantia l

amounts of Buca stock for significant personal gain .

FRAUD-ON-THE-MARKET PRESUMPTIO N

184. Plaintiffs will rely, in part, upon the presumption of reliance established by th e

fraud-on-the-market doctrine, in that :

a) Defendants made public misrepresentations or failed to disclose material fact s

regarding Buca's business and financial condition during the Class Period ;

b) The omissions and misrepresentations were material ;

c) The Company' s common stock is traded on NASDAQ, an efficient and open

market ;

d) The misrepresentations and omissions alleged would tend to induce a

reasonable investor to misjudge the value of the Company's common stock;

e) Plaintiffs and the members of the Class purchased their common stock betwee n

the time defendants failed to disclose or misrepresented material facts and th e

time the true facts were disclosed ; without knowledge of the misrepresente d

facts; and

-75-

f} Buca is followed by various analysts and news media . At all relevant times ,

the price of Buca's common stock reflected the effect of news disseminated i n

the market .

185. Based on the foregoing, Plaintiffs and the members of the Class are entitled to th e

presumption of reliance upon the integrity of the market .

CLASS ACTION ALLEGATIONS

186. Plaintiffs bring this action as a class action pursuant to Federal Rules of Civi l

Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons who purchased the

common stock of Buca during the period February 6, 2001 through and including March 11 ,

2005, and who suffered damages thereby (the "Class") . Excluded from the Class are the

Defendants, members of the Defendants' families, any entity in which any Defendant has a

con trolling interest of, is a parent or subsidiary of, or is controlled by the Company, and the

officers, directors, employees, affiliates, legal representatives, heirs, predecessors, successors, an d

assigns of any of the Defendants .

187. The members of the Class are so numerous that joinder of all members i s

impracticable . While the exact number of Class members is unknown to the Plaintiffs at this tim e

and can only be ascertained through appropriate discovery, Plaintiffs believe there are, at a

minimum, hundreds of members of the Class who traded during the Class Period . Buca had in

excess of 20,168,268 shares of its common stock outstanding as of November 1, 2004 .

Throughout the Class Period, Buca's common stock actively traded on NASDAQ under the ticker

symbol "BUCA."

-76-

188 . Plaintiffs' claims are typical of the claims of the members of the Class as al l

members of the Class are similarly affected by Defendants' wrongful conduct in violation o f

federal law that is complained of herein .

189. Plaintiffs will fairly and adequately protect the interests of the members of th e

Class and have retained counsel competent and experienced in class and securities litigation .

Common questions of law and fact exist as to all members of the Class and predominate over an y

questions solely affecting individual members of the Class . Among the questions of law and fac t

common to the Class are :

whether the federal securities laws were violated by Defendants' actsalleged herein ; whether statements made by Defendants to the investingpublic during the Class Period misrepresented material facts about thebusiness, operations, financial statements of Buca ; and to what extent themembers of the Class have sustained damages and the proper measure ofdamages.

190. A class action is superior to all other available methods for the fair and efficien t

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual l itigation make it impossible for members of the Class to individually redress

the wrongs done to them . There will be no difficulty in the management of this action as a clas s

action.

NO SAFE HARBOR

191 . The statutory safe harbor provided for forward-looking statements under certai n

circumstances does not apply to any of the allegedly false statements pleaded in this complaint.

The specific statements pleaded herein were not identified as "forward-looking statements" whe n

made. To the extent there were any forward-looking statements, there were no meaningful

cautionary statements identifying important factors that could cause actual results to diffe r

-77-

materially from those in the purportedly forward-looking statements pleaded herein, defendant s

are liable for those false forward-looking statements because at the time each of those forward-

looking statements was made the particular speaker knew that the particular forward-looking

statement was false, and/or the forward- looking statement was autho rized and/or approved by a n

executive officer of Buca who knew that those statements were false when made .

LOSS CAUSATION 1 ECONOMIC LOS S

192. During the Class Period, as detailed herein, Defendants engaged in a scheme to

deceive the market and a course of conduct that artificially inflated Buca's common stock pric e

and operated as a fraud or deceit on purchasers of Buca 's common stock by: continually

reporting materially overstated income and understated expenses by improper capitalizing lease

expenses over extension periods and improperly capitalizing ordinary and routine repairs an d

maintenance, and by understating its insurance reserves ; materially overstating its revenues b y

improperly including in revenues the value of meals provided to employees and provided fo r

promotional purposes ; failing to disclose that the Company lacked adequate internal controls and

was therefore unable to ascertain and present the true financial condition of the Company, as wel l

as prevent improper use of Company funds ; and that contrary to Defendants' representations, the

Company's financial statements were not prepared in accordance with GAAP . When Defendant' s

prior misrepresentations and omissions were gradually disclosed through a series of partia l

disclosures beginning with Micatrotto's resignation, Buca's common stock declined as the prio r

artificial inflation came out of the Company's common stock price . As a result of their purchases

of Buca common stock during the Class Period, Plaintiffs and other members of the Clas s

suffered economic loss, i .e., damages under the federal securities laws .

-78-

193 . Defendants' false and misleading statements had the intended effect and cause d

Buca's common stock to trade at artificially inflated levels throughout the Class Period, reachin g

a high of $25 .15 per share on May 30, 2001 .

194. As a result of Buca's partial disclosure of inte rnal control issues and the

resignation of Micatrotto on May 10, 2004, the Company's stock price fell $1 .14 per share, or

17 .8% from its closing price of $6 .38 on May 7, 2004 to $5 .24 on May 13, 2005 . This drop

removed some of the inflation from Buca's common stock price, but failed to fully disclose it s

internal control issues or that the Company was still improperly accounting for its leases an d

employee meals.

195 . As a direct result of the public revelations on March 11, 2005 regarding the Buca's

accounting issues, the Company' s common stock price fell from its closing of $7.00 on March 11 ,

2005 to $6.50 on March 14, 2005 . This drop began a slide that finally removed the total in flation

related to the accounting issues, causing real economic loss to investors who had purchased the

Company's common stock during the Class Period . Buca's common stock price continued t o

slide before bottoming at $4 .83 on Ap ri l 22, 2005 .

196. The decline in Buca 's common stock p rice at the end of the Class Period was a

direct result of the nature and extent of Defendants' fraud finally being revealed to investors an d

the market. The timing and magnitude of Buca's common stock price decline negates an y

inference that the loss suffered by Plaintiff and other members of the Class was cause by changed

market conditions, macroeconomic or industry factors or Company-specific facts unrelated to th e

Defendants' fraudulent conduct. The economic loss, i . e., damages, suffered by the Plaintiff and

other Class members was a direct result of Defendants' fraudulent scheme to artificially inflat e

Buca's common stock price and the subsequent significant decline in the value of l3uca' s

-79-

common stock when Defendants' prior misrepresentations and other fraudulent conduct was

revealed .

COUNT I

VIOLATIONS OF SECTION 10(b) OFTHE EXCHANGE ACT AND SEC RULE 1OB-5

197. Plaintiffs repeat and reallege each and every allegation contained in the foregoing

paragraphs as iffully set forth herein.

198. This Count is asserted against all Defendants and is based upon Section 10(b) o f

the 1934 Act, 15 U.S.C. § 78j(b), and SEC Rule IOb-5 promulgated thereunder .

199. During the Class Period, Defendants, singly and in concert, directly engaged in a

common plan, scheme , and unlawful course of conduct , pursuant to which they knowingl y

recklessly engaged in acts, transactions , practices, and course of business which operated as fraud

and deceit upon Plaintiffs and the other members of the Class, and failed to disclose material

information in order to make the statements made, in light of the circumstances under which they

were made, not misleading to Plaintiffs and the other members of the Class . The purpose and

effect of said scheme, plan, and unlawful course of conduct was, among other things, to induc e

Plaintiffs and the other members of the Class to purchase Buca's common stock during the Clas s

Period at artificially in flated prices.

200. Throughout the Class Period , Buca acted through the Individual Defendants ,

whom it portrayed and represented to the financial press and public as its valid representatives .

The willfulness, motive, knowledge, and recklessness of the Individual Defendants are therefor e

imputed to Buca, which is primarily liable for the securities law violations of the Individua l

Defendants .

-80-

201 . As a result of the failure to disclose material facts , the information Defendants

disseminated to the investing public was materially false and misleading as set forth above, an d

the market price of Buca's common stock was artificially inflated during the Class Period . In

ignorance of the duty to disclose the false and misleading nature of the statements described

above and the deceptive and manipulative devices and contrivances employed by said

Defendants, Plaintiffs and other members of the Class relied, to their detriment, on the integrity o f

the market price of the Company's common stock in purchasing shares of Buca . Had Plaintiffs

and the other members of the Class known the truth, they would not have purchased said shares o r

would not have purchased them at the inflated prices that were paid .

202. Plaintiffs and the other members of the Class have suffered substantial damages a s

a result of the wrongs herein alleged in an amount to be proved at trial .

203 . By reason of the foregoing, Defendants directly violated Section 10(b) of th e

Exchange Act and SEC Rule lOb-5 promulgated thereunder in that they : (a) employed devices ,

schemes, and artifices to defraud; (b) failed to disclose material information ; or (c) engaged in

acts; practices, and a course of business which operated as a fraud and deceit upon Plaintiffs an d

the other members of the Class in connection with their purchases of Buca's common stoc k

during the Class Period .

COUNT I I

VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE ACT

204. Plaintiffs repeat and reallege each and every allegation contained in each of the

foregoing paragraphs as if set forth fully herein .

205. The Individual Defendants, by virtue of their positions , stock ownership and/or

specific acts described above, were, at the time of the wrongs alleged herein, controlling person s

within the meaning of Section 20(a) of the Exchange Act .

-81-

206. The Individual Defendants had the power and influence and exercised the same t o

cause Buca to engage in the illegal conduct and practices complained of herein.

207 . By reason of the conduct alleged in Count I of the Complaint, the Individual

Defendants are liable jointly and severally and to the same extent as the Company for the

aforesaid wrongful conduct, and are liable to Plaintiffs and to the other members of the Class fo r

the substantial damages which they suffered in connection with their purchases of Buca commo n

stock during the Class Period

208 . WHEREFORE, Plaintiffs, on their own behalf and on behalf of the Class, pray fo r

judgment as follows:

A. Declaring this action to be a proper class action and certifying Plaintiffs a s

class representatives under Rule 23 of the Federal Rules of Civil Procedure ;

B . Awarding compensatory damages in favor of Plaintiffs and the othe r

members of the Class against all Defendants, jointly and severally, for the damage s

sustained as a result of the wrongdoings of Defendants, together with interest

thereon;

C. Awarding Plaintiffs the fees and expenses incurred in this action, includin g

reasonable allowance of fees for Plaintiffs' attorneys, and experts ;

D. Granting extraordinary equitable and/or injunctive relief as permitted b y

law, equity, and federal and state statutory provisions sued on hereunder ; and

E. Granting such other and further relief as the Court may deem just and

proper.

JURY TRIAL DEMAN D

Plaintiffs demand a jury trial of all issues so triable .

-82-

Date: January 11, 2006 Respectfully submitted ,

HEINS MILLS & OLSON, P.L.C.

sl Bryan L. CrawfordStacey L . Mills (Bar No . 226373)Bryan L. Crawford (Bar No. 0166819)Muria J. Kruger (Bar No. 0326987)3550 IDS Center80 South Eighth StreetMinneapolis, Minnesota 55402Tel: (612) 338-460 5Fax: (612)338-4692

Cohen, Milstein , Hausfeld & Toll, P .L.L.C.Steven J . Tol lDaniel S. SommersAvi Samuel GarbowMatthew B. Kaplan1100 New York Ave . NWSuite 500, West TowerWashington, D .C. 20005Tel : (202)408-4600Fax: (202)408-469 9

BERMAN DeVALERIO PEASE TABACCOBURT & PUCILLOMichael J . PucilloFlorida Bar No . 261033Jay W.EngFlorida Bar No. 0146676Esperant6 Building, Suite 900222 Lakeview AvenueWest Palm Beach, FL 33401Tel: 561/835-9400Fax : 561/835-0322E-mail : LawF1a(a)bermanesq.com

COUNSEL FOR PLAINTIFFS

- 83 -

PLAINTIFF'S CERTIFICATION OF SECURITIESFRAUD CLASS ACTION COMPLAIN T

1, Ed Mitchell, hereby certify that the following is true and correct to the best of my/ourknowledge, information and belief-

L I am the Chairman and the authorized agent of the West Palm Beach Police

Pension Fund ("WPB Police") . I have reviewed the allegations made against Buca, Inc . ("Buca"or the "Company"), that give rise to the claimed violations of the federal securities laws .

2. WPB Police did not purchase the securities that are the subject of this action at thedirection of counsel, Berman, DeValerio Pease Tabacco Burt & Pucillo, or in order to participatein any private action arising under the Securities Exchange Act of 1934 .

3. WPB Police is willing to serve as a representative party on behalf of the class,including providing testimony at deposition and trial, if necessary. WPB Police fullyunderstands the duties and responsibilities of the lead plaintiff under the Private SecuritiesLitigation Reform Act regarding the prosecution of the action for the class . WPB Police isprepared to work closely with its counsel to achieve a favorable result for the class of investorsin Buca common stock in this action .

4. WPB Police's transactions in and losses from its purchase in Buca's commonstock are set forth in the chart attached hereto . The losses are calculated under the FIFO method .

5. During the three years prior to the date of this Certification, NVPB Police hassought to serve as a representative party on behalf of a class in the following actions filed underthe federal securities laws: Sekuk Global Enterprises Y . KVH Industries, Inc., Case No. 04-CV-00306 (D. R.I . July 27, 2004) ; and PL,4, LLC v. Advanced Neuirornodulation Systems Inc., CaseNo. 05-CV-78 (E.D. Tex. Mar . 1, 2005) .

6 . WPB Police will not accept any payment for serving as a representative party onbehalf of the Class beyond its pro rata share of any possible recovery, except for an award, asordered or approved by the court, for reasonable costs and expenses (including lost wages)directly relating to its representation of the Class .

I declare under penalty of perjury that the foregoing is true and correct .

Executed this 4 day of August 2005 .

7

Ed MitchellChairmanWest Palm Beach Police Pension Fund

q % ] r

Case 0:05-cv-01762-DWF-AJB Document 1-1 Filed 08/10/2005 Page 41 of 4 2

Class Pcriod : 216101-3/11105Shareholder : West Palm Police

Buca Inc., Shareholder Losses

Trade DateTransaction

Type # Shares Bought # Shares Sold# Shares

Remaining Price/ Shares (Cost /Proceeds

06107/02 B 5,570 5,570 18 .1050 (5100,844.8500)09/12/02 S (467) 5,103 8 .7750 $4.097.925009!24102 S (611) 4,492 7 .9850 S4,879-83 5 001/03/03 S 1,232 3,260 7 .0008 58,624 .985601/03/03 S (985) 2,275 7.1795 $7,071 .8075

01/06/03 S (238) 2,037 7 .0713 S1,682 .969401/07/03 S (275) 1,762 6.9558 $1 912.8450

01 108/03 S (1 .762) 0 6 .8107 5 12,000 .4534

Subtotals : 5 ,570 (5,570) 564 575 .029 1# Shares Remainia : 0Total Losses : $60,575 .03 )

PLAINTIFF'S CERTIFICATION OF SECURITIESFRAUD CLASS ACTION COMPLAIN T

IfWe, ~C,j E e~ C[7 Fj C Fs hereby

certify that the following is true and correct to the best of my/our knowledge ,

information and belief:

L IIWe have reviewed the complaint filed against Buca , Inc., et al .

(the "Complaint"), that gave rise to the claimed violations of the federal securitie s

laws, and retain Berman, DeValerio Pease Tabacco Burt & Pucillo as counsel in

this action .

2. IIWe am/are willing to serve as a representative party on behalf of

the class (the "Class") as defined in the Complaint, including providing testimon y

at deposition and trial, if necessary.

3_ My/Our transaction(s) in Buca , Inc. [Nasdaq : BUCA ) common

stock du ring the Class Period , February 6, 2001 through and including March 11 ,

2005, are as follows:

Trade Number of Price

Date Shares Purchased Per Share

(e 0 -2- r

3 TO -70

I ry a.. • 3

Trade Number of PriceDate Shares Sold Per Share

4. I/We did not purchase these securities at the direction of my/our

counsel, or in order to participate in any private action arising under the Securitie s

Exchange Act of 1934 .

5. During the three year period preceding the date of my/our signing

this Certification, Tiwe have not sought to serve , nor have Uwe served, as a

representative to any party on behalf of a class in any private action arising under

the Securities Exchange Act of 1934.

6. UVde will not accept any payment for serving as a representative

party on behalf of the Class beyond my/our pro rata share of any possibl e

recovery, except for an award, as ordered or approved by the court, for reasonabl e

costs and expenses (including lost wages) directly relating to my/our

representation of the Class .

Signed under the penalties of perjury this 1-7 day of , 206"

CERTIFICATION Of PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAWS

►''! • /g [: ,- ("Plaintiff') declare, as to the claims asserted unde rthe federal secu rities laws, that :

1 . I have reviewed the class action complaint asserting secu rities claims against HUCA, Inc.(Nasdaq NM: BUCA) and wish to join as a plaintiff, retaining Cohen, Milstein, Hausfeld & Toll,P.L.L.C. as my counsel .

2. Plaintiff did not purchase the security that is the subject of this action at the direction ofplaintiffs counsel or in order to participate in this private action.

3. Plaintiff is willing to serve as a representative party on behalf of the class, includingproviding testimony at deposition and trial, if necessary .

4 . My transactions in BUCA during the Class Period (February 6, 2001 and March 11, 2005)were as follows :

DATE TRANSACTION (buyiseli ) NO . OF SHARES PRICE PER SHARE

O o 13 y I

5'/13G 1 ►J ~'~ L'

1QiL) U

/000

15-C. 0

,zsz o$0 0

i Y.1'7

13 l%

17: 012

5 . During the three years prior to the date of this Certificate, Plaintiff has not sought to serveor served as a representative party for a class in the following actions under the federal securities lawsexcept as follows :

6- Plaintiff will not accept any payment for serving as a representative party on behalf of theclass beyond plaintiff's pro rata share of any recovery, except such reasonable costs and expenses(including lost wages) directly relating to the representation of the class as ordered or approved by thecourt .

I declare under penalty of perjury that the foregoing true and correct .

Executed this Day of , 2005.

Ir ~ I~ !p

a 2M 7 .1 • It[f.IANAGEy -cucA Cciirctii w Funn Signature

CERTIFICATION OF PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAW S

1, ' 1f11,ZLL- c7 c?'N ("Plaintiff') declare, as to the claims asserted underthe federal securities laws . that:

1 . 1 have reviewed the class action complaint asserting secu rities claims against BUCA, Inc .

[Nasdaq NM : BUCA) and wish to join as a plaintiff, retaining Cohen, Milstein , Hausfeld & Toll,P.L.L .C_ as my counsel-

P laintiff did not purchase the security that is the subject of this action at the direction of

plaintitTs counsel or in order to par ticipate in this private action.

3_ Plaintiff is willing to serve as a representa tive party on behalf of the class, includingproviding testimony at deposition and trial , if necessa ry .

4. My transactions in BUCA during the Class Period (February 6, 2001 and March 11, 2005)were as follows :

DATE TRANSACTION (buylsell NO . OF SHARES PRICE PER SHAR E

6LO "LO -- -~ o /,V, 0 0 ~L3

5_ During the three years prior to the date of this Certificate, Plaintiff has not sought to serveor served as a representative party for a class in the following actions under the federal securities lawsexcept as follows :

6 . Plaintiff will not accept any payment for serving as a representative party on behalf of the

class beyond plaintiffs pro rata share of any recovery, except such reasonable costs and expenses(including lost wages) directly relating to the representation of the class as ordered or approved by thecourt.

I declare under penalty of perjury that the foregoing true and correct-

executed this -Sf Day oF1'] 2005 .

2nr7.1v{ c{~.7 .ll: R(if•: .rnpcACcrar-a-n fnm- Signature


I, Bert-Mary C . Brady IR A ~"plaintiff") declare, as to the claims asserted underthe federal securities laws, tliat :

1 . I have reviewed the class action complaint asserting securities claims against BUCA, Inc.(Nasdaq NM: BUCA) and wish to join as a plaintiff, retaining Cohen, Milstein, Hausfeld & Toll,P .L.L.C. as my counsel .

2 . Plaintiffdid not purchase the security that is the subject of this action at the direction ofplaintiff's counse l or in order to participate in this p rivate action .

3. Plaintiff is willing to se rve as a representative party on behalf of the class , includingproviding testimony at deposition and trial, if necessa ry .

4. My transactions in BUCA during the Class Period (February 6, 2001 and March 11, 2005)were as follows: -

DATE TRANSACTION (buylsell] NO- OF SHARES PRICE PER SHARE

0 4/30/200 2 Buy 400 $ 17 .6 5

0 5/01/200 2 B uy 500 17 .5 0

0 6/21/200 2 Buy 100 18 .02 9

01 /0 8 /2 003 Sell 1000 7 .01 7

5 . During the three years prior to the date of this Certificate, Plaintiff has not sought to serveor served as a representative party for a class in the following actions under the federal securities lawsexcept as follows :

6 . Plaintiff will not accept any payment for serving as a representative party on behalf of theclass beyond plaintiffs pro rata share of any recovery, except such reasonable costs and expenses(including lost wages) directly relating to the representation of the class as ordered or approved by thecourt. -


Executed this 2 Day of_ S e p t . . 2005.

d222574vI c11AfAGE7 . 9UCA Canirimdom Form S at=

Bert-Mary C . Brady IRA


we 4, James A Brady & B e r t -Mary Brady C«plaintiTP declare, as to the claims asserted underthe federal securities laws, that: J T W R 0 S

I . I have reviewed the class action complaint asserting securities claims against BUCA, Inc.

(Nasdaq NM: BUCA) and wish to join as a plaintiff, retaining Cohen , Milstein, Hausfeld & Toll,

P.L.L.C. as my counsel .

2. Plaintiff did not purchase the security that is the subject of this action at the direction ofplaintiff's counsel or in order to participate in this private action .

3. Plaintiff is willing to serve as a representative party on behalf of the class, includingproviding testimony at deposition and trial, if-necessary. -

4. My transactions in BUCA during the Class Pe riod (February 6, 2001 and March 11, 2005)were as follows: -

DATE TRANSACTION {hulsell] ]CIO . OF SHARES PRICE PER SHARE

05 10112002 Buy 300 $ 17 .2 0

05 / 02 /2002 Buy 500 17 .0 6

05 /03/2002 Buy 300 17 .0 6

051 14/2002 Buy 300 16 .63 9

07/09/20 02 Buy 300 15 .5 0

5. During me three years prior to the date of this Certificate, Plaintiff has not sought to serveor served as a representative party for a class in the following actions under the federal securities lawsexcept as follows :

6 . Plaintiff will not accept any payment for serving as a representative party on behalf of theclass beyond plaintiffs pro rata share of any recovery, except such reasonable costs and expenses(including lost wages) directly relating to the representation of the class as ordered or approved by thecourt .


Executed this 21 Day of Sept . 2005 .

IT W Ras

"22574v1<MAKP.ca -sucA c~ncjv~F Signature

James A . Brady & Bert-Mary Brady JTWRDS

REDACTED )

DATE TRANSACTION NO . OF SHARES PRICE PER SHAR E

07/15/2002 Buy 300 $ 14 .78 9

o]/08/2003 Sell 1100 7 .03

02/25/2003 Sell 600 5 .80

02/25/2003 - Sell 300 5 .80

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

}In re BUCA, Inc. Securities Litigation } Case No. 05-CV-01762This Paper Or Pleading Relates To: }

}All Actions }

}

CERTIFICATE OF SERVIC E

I hereby certify that on January 11, 2006 I caused a copy of the following documents :

Consolidated Amended Class Action Complaint for Violations of the FederalSecurities Laws ;

to be filed electronically, and that ECF will send an e-notice of the electronic filing to thefollowing :

Wendy J . Wildung wwildung@faegre .com, tstorlien@faegre .com

I further certify that I caused a copy of the forgoing documents and the notice ofelectronic filing to be served via hand delivery or FedEx to the following Non-ECF participants :

VIA HAND DELIVERYMonica DaviesLEONARD, STREET AND DEINARDFifth Street Towers, Suite 230 0150 South Fifth StreetMinneapolis , MN 5540 2

Counsel for Defendant Greg A. Gadel

VIA FEDI X

Joseph Micatrotto1625 Paci fic Tide PlaceLas Vegas , NV 89144-6847

Pro Se

VIA U.S. MAILCarolyn G. AndersonRobert C. MoilanenZIMMERMAN REED PLLP651 Nicollet Mall, Suite 501Minneapolis , MN 55402

VIA U.S. MAILStephen A . WeissEric T. ChaffinSEEGER WEISS LLPOne William StreetNew York, NY 10004

VIA U.S. MAILLAW OFFICES OF CHARLES J . PIVEN, P .A.The World Trade Center-Baltimore401 East Pratt Street, Suite 2525Baltimore, MD 21202

Counsel for Plaintiff David R. Mueller

Dated: January 11, 2006 HE INS MILLS & OLSON, P .L.C.

By : s/ Bryan L . CrawfordStacey L. Mills (Bar No. 226373)Bryan L . Crawford (Bar No. 0166819)Muria J . Kruger (Bar No . 0326987)3550 IDS Center80 South Eighth StreetMinneapolis, MN 55402Tel: 612/338-4605Fax: 612/338-4692Plaintiffs' Liaison Counsel

COHEN , MILSTEIN , HAUSFELD &TOLL, P.L.L.C.Steven J . TollDaniel S . SommersMathew B. Kaplan1100 New York Ave . NW, Ste 500West TowerWashington, D .C . 20005Tel : (202) 408-4600Fax: (202) 408-4699

55030.1

BERMAN DeVALERIO PEASE TABACCOBURT & PUCILLO

Michael J . PucilloFlorida Bar No . 261033Jay W. EngFlorida Bar No. 0146676Esperanto Building, Suite 900222 Lakeview AvenueWest Palm Beach , FL 33401Tel : 561/835-9400Fax: 561/835-0322E-mail : LawFla@bcrmanesg .comPlaintiffs ' Co-Lead Counsel

55930.1

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