10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended January 3, 2007

OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to               

Commission File Number:  333-62775

BERTUCCI’S CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	06-1311266
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
155 Otis Street, Northborough, MA	01532
(Address of principal executive offices)	(Zip Code)

(508) 351-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None

Securities registered pursuant to Section 12(g) of the Act:

None

Title of class

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  o  No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes  x  No  o

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x  No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer    o Accelerated filer    o Non-accelerated filer    x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o  No  x

3,008,317 shares of the registrant’s Common Stock, $0.01 par value per share, were outstanding on April 3, 2007.

Documents Incorporated By Reference None

CAUTIONARY STATEMENT FOR THE PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

All statements other than statements of historical facts included in this Annual Report on Form 10-K, including, without limitation, statements set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding Bertucci’s future financial position, business strategy, budgets, projected costs, plans, and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause our or the foodservice industry’s actual results, performance or achievements to be materially different from any expected results, performance or achievements. Forward-looking statements include, but are not limited to statements regarding:

·Our highly competitive business environment;

·Exposure to food prices;

·Risks associated with the foodservice industry such as changes in consumer tastes and adverse publicity resulting from food quality, illness, injury or other health concerns;

·Our ability to retain and attract new employees;

·Government regulations;

·Our high geographic concentration in the Northeast and Mid-Atlantic states;

·The attendant weather patterns in locations in which we operate;

·The number of expected restaurant openings, including the appropriate conditions needed to meet new opening targets;

·Our ability to service our debt and other obligations; and

·Matters relating to litigation.

Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,”  “will,” “expect,” “intend,” “estimate,” “anticipate” or “believe” or the negative thereof or variations thereon or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from any expected results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Although we believe the expectations reflected in such forward-looking statements will prove to be correct, we can give no assurance such expectations will prove to be correct. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Factors causing or contributing to such differences include those discussed in the risk factors set forth in Item 1A below (the “Risk Factors”) as well as those discussed elsewhere herein.

Unless the context indicates otherwise, references herein to “we”, “us”, “our,” “Bertucci’s,” “Vinny Ts of Boston®” or the “Company” refer to Bertucci’s Corporation, its predecessors and its consolidated subsidiaries.

PART I

ITEM 1. BUSINESS

Overview

We are a Delaware corporation which owns and operates two chains of full-service casual dining, Italian-style restaurants under the names (1) Bertucci’s Brick Oven Pizzeria® or Bertucci’s Brick Oven Ristorante®; and (2) Vinny T’s of Boston®.  We incorporated in 1994 as NE Restaurant Company, Inc. (“NERCO”) and formally changed our name to Bertucci’s Corporation on August 16, 2001.  As of January 3, 2007, we operated 92 Bertucci’s restaurants and 11 Vinny T’s of Boston® restaurants located primarily in the northeastern United States

In July 1998, we completed our acquisition of Bertucci’s Restaurant Corp.’s parent entity, Bertucci’s, Inc., for a purchase price, net of cash received, of approximately $89.4 million (the “Bertucci’s Acquisition”). We financed the Bertucci’s Acquisition primarily through the issuance of $100 million of 10¾% senior notes due 2008 (the “Senior Notes”). $85.3 million in principal of the Senior Notes are still outstanding.

On September 25, 2006, we and our newly formed wholly-owned subsidiary, Vinny T’s Acquisition Corporation, (the “Acquisition Sub”), executed a Stock Purchase Agreement (the “Stock Purchase Agreement”) with BUCA, Inc. (“BUCA”) and one of its wholly owned subsidiaries, BUCA Restaurants 3, Inc. (“BUCA 3”).  Pursuant to the Stock Purchase Agreement, the Acquisition Sub acquired all of the outstanding capital stock of BUCA 3, the entity which owns and operates the Vinny T’s of Boston® chain of restaurants.  As a result of this acquisition (referred to in this Form 10-K as the “Vinny T’s Acquisition”),  BUCA 3 is now a wholly-owned subsidiary of the Acquisition Sub and continues to own and operate 11 Vinny T’s of Boston® restaurants in four states.  In connection with the Vinny T’s Acquisition, the Acquisition Sub initially paid BUCA an aggregate purchase price of $6.8 million, of which $3.0 million was paid in cash and $3.8 million was paid through the issuance of a promissory note (the “Original

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Promissory Note”).  The aggregate purchase price for this acquisition was subsequently lowered to $6.66 million on March 29, 2007 when the Acquisition Sub and BUCA amended and restated the Promissory Note to reduce the outstanding principal amount to $3.66 million because of a post-closing adjustment contained in the Stock Purchase Agreement (the “Amended and Restated Promissory Note”).  Hereinafter, the Original Promissory Note and the Amended and Restated Promissory Note are collectively referred to as the “Promissory Note.” The Promissory Note bears interest at 9% and matures on July 15, 2008 or earlier upon the occurrence of certain other events, including if we have a Change in Control (as defined in the Promissory Note), the consummation of an initial public offering by us or the redemption, repurchase, refinancing or payment of our Senior Notes.  In addition, we executed and delivered a Guaranty to BUCA which guarantees the payment of the amounts due and the performance of the obligations of the Acquisition Sub under the Promissory Note and the Stock Purchase Agreement.

Concepts

Our Bertucci’s restaurants are full-service, casual dining restaurants offering high quality, moderately priced Italian food. We are open seven days a week for lunch and dinner, appealing to both families and the adult market. We differentiate ourselves from other restaurants by offering a variety of distinctive and freshly prepared foods using high quality ingredients, brick oven baking techniques and an open-kitchen design. The first Bertucci’s restaurant opened in Somerville, Massachusetts in 1981.

Our Vinny T’s of Boston® restaurants are full service, casual dining restaurants based upon re-creations of the high quality neighborhood Italian eateries prominent in the neighborhoods of lower Manhattan, Brooklyn, the north-end of Boston and South Philadelphia in the 1940s.  These restaurants are open seven days a week for lunch and dinner offering high quality, moderately priced Italian food.  The menu includes both individual and family-sized portions.  The first Vinny T’s restaurant opened in Brookline, Massachusetts in 1993.

Restaurant Overview and Menu

Our Bertucci’s restaurants offer a distinctive menu and a classic Tuscan-style design providing a unique dining experience at a reasonable price. We specialize in a wide assortment of Italian regional pasta, chicken, veal and seafood dishes, salads, and premium brick oven pizzas. Our signature pizzas are prepared in brick ovens baking at unusually high temperatures, enabling the production of a light crust and preservation of natural flavors and moisture of toppings. Natural fresh ingredients are used to ensure high quality and freshness. We make our own dough, sauces and toppings in each restaurant and prepare our menu fresh each day. In addition, our menu features a variety of appetizers, soups, calzones, and desserts. We believe our original recipes and brick oven baking techniques combine to produce superior products difficult to duplicate. Wine and beer are available at all of our locations and full bar service is available at most of our restaurants. The price points generally range from $7.99 to $9.99 for lunch entrees and $10.99 to $19.99 for dinner entrees. Most items on our menu may be purchased for take-out service or delivery, which together accounted for approximately 22.0% of our net sales in fiscal 2006.

Our Vinny T’s of Boston® restaurants offer a diverse menu featuring a wide variety of appetizers, soups and salads, pastas, meats, seafood, parmigianas, pizzas, chicken and veal, and desserts.  We use the freshest ingredients and make everything from scratch on a daily basis including sauces, dough and desserts.  Menu items include Fried Mozzarella, Warm Tomato Salad, Homemade Lasagna, Grilled Pork Chops with Peppers, Linguini with Clam Sauce, Veal Parmigiana, Pepperoni Pizza, Chicken Piccata, and Cannoli.  Wine, beer, and spirits are available at all locations.  The price points generally range from $5.50 to $9.95 for lunch entrees and $8.95 to $22.95 for dinner entrees.  Vinny T’s of Boston® not only offers a la carte service but also offers family-style dining in all eleven units.  Private banquet rooms are available in five locations offering buffet or family-style service.

Restaurant Design

Our Bertucci’s restaurants are freestanding or in-line buildings averaging approximately 6,000 square feet in size with an average seating capacity of approximately 170 people. Each restaurant features a classic Tuscan-style, open-kitchen design centered around brick ovens. Ingredients are displayed and food is prepared on polished granite counters located in front of the brick ovens, in plain view of our guests. We have historically built our restaurants in varying sizes and designs, with no two interiors exactly alike. Because we believe unit economics benefit from a standardized design, in 2000 we developed a prototype design. The first restaurant with this prototypical design opened in January 2001. We have since modified the prototype design which currently envisions approximately 6,500 square feet and 209 seats per location. Key features of the current prototype design are a separate carryout designation, a bar/waiting area and modification of interior elements, including new floor and ceiling materials and new furniture.

Current Vinny T’s locations range in size from 5,900 to approximately 12,000 square feet and include both freestanding restaurants and restaurants within existing buildings. The restaurants have an authentic, unique and festive atmosphere with post-War Italian-American decor including rich woods and decorative tiles, nostalgic photos and artwork on the walls, Big Band music piped through the speakers and black-and-white checkered tablecloths on the tables.

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Restaurant Development

Expansion. We expect to grow through the opening of new Bertucci’s restaurants over the next several years. It is anticipated there will be five Bertucci’s openings in fiscal 2007. No openings of Vinny T’s of Boston restaurants are anticipated in fiscal 2007. We expect to finance the development of Bertucci’s restaurants through a combination of cash on hand and cash from operations. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.

Site Selection and Construction. We devote significant time and resources to identify and analyze potential new restaurant sites, as we believe site selection is crucial to our success. Our site selection strategy focuses on high-density, high-traffic, high-visibility sites which are, for the most part, positioned within existing markets to take advantage of certain operational efficiencies. We seek out sites with a mixture of retail, office, residential and entertainment concentration which promote both lunch and dinner business. In addition, we believe multiple locations in defined geographic areas will result in increased market penetration and brand recognition, and will permit advertising, management, purchasing and administrative efficiencies. The typical time period required to select a site, build and open a full-service restaurant averages 15 to 18 months.

Franchising. We do not currently have any franchisees or plans to develop a franchise program.

Quality Control

Each of our restaurants typically has a general manager and two or three assistant managers who are responsible for assuring compliance with our operating procedures and for the training and supervision of restaurant employees. The general managers report to area directors who oversee, on average, between six and nine of our restaurants. We believe our quality control operations are enhanced by the work of regional chefs who provide support to restaurant management and ensure quality of food preparation.

Training

We place significant emphasis on the proper training of our employees. Training is designed to increase product quality, operational safety, overall productivity and guest satisfaction and to foster the concept of “continuous improvement.”

We require new non-management employees to undergo extensive training administered by restaurant-level managers to improve the confidence, productivity, proficiency, and customer relations skills of such employees.

We also require new managers to complete our Company-developed comprehensive management training program. There are two major components comprising this eight week program. Restaurant specific training is conducted in one of our certified training restaurants and classroom training is conducted at Bertucci’s University located at our corporate office. In the certified training restaurant the new manager spends seven weeks learning detailed, concept-specific food preparation standards and procedures as well as administrative and human resource functions, including sanitation, safety, and hospitality. The program also uses position specific training manuals and other written guides. At the Bertucci’s University component of management training, the new manager spends one week immersed in training at our headquarters where we also teach hospitality, human resource processes, leadership training, computer and information systems, responsible alcohol service and applied foodservice sanitation. At the end of the process, we test our trainee’s skills by a variety of means including a full-day written examination. We believe the rigorous training and testing during these sessions assures graduating managers are better prepared for running our restaurants. This management training program is typically followed up by periodic supplemental training modules such as situational leadership or time management skills.

When we open a new restaurant, we typically staff management positions with personnel who have had previous experience in a management position at another one of our restaurants. In addition, a highly experienced training team assists in opening the restaurant. Prior to opening, this team conducts a week of intensive training with our hourly staff for that specific restaurant.

Advertising and Marketing

Our marketing objective is to increase the frequency of guest visits in primary markets and grow brand awareness in less penetrated markets, thereby increasing revenues, profitability and market share. Key strategies include limited time only seasonal offerings, local store marketing, direct marketing initiatives, frequency driven promotions, and advertising. We have designed our advertising plan to differentiate our brand from our competitors’ and increase our market share through media coverage in key markets. In support of our Bertucci’s restaurants we use radio, which affords continuity at competitive levels, as our primary advertising vehicle in all key markets and intend to continue with television in the important Boston market in 2007. Due to a lack of more efficient media vehicles, we primarily use newspaper inserts and direct mail to support our Vinny T’s of Boston® restaurants.

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Purchasing

We negotiate directly with suppliers of food and beverage products and other restaurant supplies to ensure consistent quality and freshness of products and to obtain competitive prices. Although we believe essential restaurant supplies and products are available on short notice from several sources, we use one full-service distributor for a substantial portion of our restaurant supplies and product requirements, with such distributor charging us fixed mark-ups over prevailing wholesale prices. We have two contracts with our full-service distributor which terminate in the next five years. There are no required quantity purchases under these agreements. We also have arrangements with several smaller regional distributors for the balance of our purchases. These distribution arrangements have allowed us to benefit from economies of scale and have resulted in lower commodity costs. Smaller day-to-day purchasing decisions are made at the individual restaurant level. We have not experienced any significant delays in receiving food and beverage inventories or restaurant supplies.

Information Systems and Restaurant Reporting

Information Systems. Our information systems provide detailed monthly financial statements for each restaurant, bi-monthly restaurant inventories, menu mix, cash management and payroll analysis. Preliminary financial reports are available within two days of the period close and we consolidate our restaurant-level information at our headquarters. Sales, menu mix, cash management and basic operating information are each processed daily and reported in our internal system. As a result, restaurant managers are able to respond to changes in their business daily, weekly or monthly, as necessary.  We consolidate and process our other varying levels of systems data at our headquarters daily, weekly or monthly, as we deem appropriate.

Point of Sale (“POS”). All of our Bertucci’s restaurants use the Micros 3700 POS system, while our Vinny T’s of Boston® restaurant use the Squirrel 1.4 POS system. We believe the consistency and reliability of the POS systems is the backbone of our technical infrastructure. The consistency between restaurants provides us with efficiencies for multi-restaurant operations, training and support. We retrieve our POS data from each restaurant daily and process this data at our headquarters.

Data Warehouse. We manage a data warehouse, tracking information as minute as guest check detail. We believe the data warehouse provides multiple views of operational data which enables us to identify trends, evaluate price sensitivity and track new menu items/combinations.

Trademarks, Service Marks and Other Intellectual Property

We have registered, among others, the names “Bertucci’s®”, “Bertucci’s Brick Oven Pizzeria®”,  “Bertucci’s Brick Oven Ristorante®”, “Come Eat At Our House®”, “Everbody Eats When They Come to Our House®”, “What’s Not to Love? SM”, “Vinny Testa’s®”, “Vinny Testa’s (and design)®”, and “Vinny T’s of Boston®” as service marks and/or trademarks with the United States Patent and Trademark Office.

We are aware of names similar to Bertucci’s used by third parties in certain limited geographical areas. Such third-party use may prevent us from using the Bertucci’s mark for restaurants in such areas. Except for these areas, we are not aware of any infringing uses materially affecting our business.

Competition

Our business, and the restaurant industry in general, is highly competitive and is often affected by changes in consumer tastes and dining preferences, by local and national economic conditions and by population and traffic patterns. We compete directly or indirectly with all restaurants, from national and regional chains to local establishments, as well as with other foodservice providers. Many of our competitors are significantly larger than us and have substantially greater resources.

Employees

At January 3, 2007, we had approximately 2,032 full-time employees (of whom 73 are based at our headquarters) and approximately 5,613 part-time employees. None of our employees are covered by a collective bargaining agreement. We believe our relations with our employees are good.

We anticipate our continued success will depend to a large degree on our ability to attract and retain high quality management employees. While we expect to continually address the high level of employee attrition normal in the food service industry, we have taken steps to attract and keep qualified management personnel through the implementation of a variety of employee benefit plans, including a management incentive plan, a 401(k) plan, and an equity incentive plan under which we grant equity awards to our management employees.

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Government Regulations

Each of our restaurants is subject to licensing and regulation by a number of governmental authorities on matters which include, among other things, health, safety, fire and alcoholic beverage control in the state or municipality in which the restaurant is located. Difficulties or failures in obtaining required licenses or approvals could delay or prevent the opening of a new restaurant in a particular area. In addition, failure to maintain a required license or approval could result in the temporary or permanent closing of an existing restaurant.

Alcoholic beverage control regulations require each of our restaurants to apply to a state authority and, in certain locations, county or municipal authorities for a license or permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, licenses or permits must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations involve numerous aspects of the daily operations of our restaurants, including minimum age of patrons and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage, and dispensing of alcoholic beverages.

We are also subject to various other federal, state and local laws relating to the development and operation of restaurants, including those concerning preparation and sale of food, relationships with employees (including minimum wage requirements, overtime and working conditions and citizenship requirements), land use, zoning and building codes, as well as other health, sanitation, safety and environmental matters.

ITEM 1A. RISK FACTORS

Risk Factors

This Report contains forward-looking statements involving risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this Report should be read as being applicable to all forward-looking statements wherever they appear in this Report. Our actual results could differ materially from those discussed herein. Factors causing or contributing to such differences include those discussed below, as well as those discussed elsewhere in this Report.

Our substantial debt could harm our business.

We are highly leveraged. At the end of fiscal 2006, our aggregate outstanding indebtedness was $95.7 million; total stockholders’ deficit was $14.8 million and we had $1.8 million of working capital.

Our high degree of leverage could have important consequences, including, but not limited to:

·an inability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes;

·a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our debt, which could reduce the funds available to us for our operations and other purposes, including investments in development and capital spending;

·we may be substantially more leveraged than certain of our competitors, which may place us at a competitive disadvantage; and

·a limiting of our flexibility to adjust to changing market conditions, a reduction of our ability to withstand competitive pressures and a vulnerability to a downturn in general economic and industry conditions.

Our ability to service our debt will depend on many factors that are not within our control.

Our ability to repay or to refinance our obligations with respect to our debt will depend on our future financial and operating performance, which, in turn, will be subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors, many of which are beyond our control. These factors could include:

·    operating difficulties;

·    increased operating costs;

·    product pricing pressures;

·    the response of competitors;

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·    regulatory developments; and

·    delays in implementing strategic projects.

Our ability to meet our debt service and other obligations may depend in significant part on the extent to which we can successfully implement our business strategy. There can be no assurance, however, we will be able to implement our strategy fully or that the anticipated results of our strategy will be realized.

If our cash flow and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek to obtain additional equity capital, or to refinance or restructure our debt. There can be no assurance our cash flow and capital resources will be sufficient for payment of principal of, and premium, if any, and interest on, our debt in the future, or any such alternative measures would be successful or would permit us to meet our scheduled debt service obligations.

Covenants in our Senior Notes Indenture currently restrict our discretion in operating our business and failure to comply with these covenants could result in the acceleration of our obligations under the Senior Notes.

Our Indenture for the Senior Notes (the “Senior Notes Indenture”) imposes significant operating and other restrictions on us. Such restrictions will affect, and in many respects significantly limit or prohibit, among other things, our ability to:

·    incur additional debt;

·    pay dividends or make other distributions;

·    make certain investments;

·    create certain liens;

·    sell certain assets;

·    enter into certain transactions with affiliates; and

·    engage in certain mergers or consolidations.

A failure by us to comply with these restrictions could lead to a default under the terms of the Senior Notes Indenture. In the event of a default, all amounts borrowed pursuant thereto could be declared immediately due and payable, together with a premium and accrued and unpaid interest. In such event, there can be no assurance that we would be able to make such payments or borrow sufficient funds from alternative sources to make any such payments. Even if we were able to obtain additional financing, there can be no assurance such financing would be on terms favorable or acceptable to us.

We may not be able to grow at a rate necessary to achieve profitable future operating results.

Our future operating results will depend largely upon our ability to open and operate new restaurants successfully and to manage a growing business profitably. This will depend on a number of factors (some of which are beyond our control), including the:

·    selection and availability of suitable restaurant locations;

·    negotiation of acceptable lease or financing terms;

·    securing of required governmental permits and approvals;

·    timely completion of necessary construction or remodeling of restaurants;

·    hiring and training of skilled management and personnel;

·    successful integration of new or newly acquired restaurants into our existing operations; and

·    recognition and response to regional differences in guest menu and concept preferences.

There can be no assurance that we can achieve our expansion plans on a timely and profitable basis, if at all, that we will be able to achieve results similar to those achieved in existing locations in prior periods, or that such expansion will not result in reduced sales at existing restaurants. Any failure to successfully and profitably execute our expansion plans could have a material adverse effect on us.

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Our business may be harmed by our recently completed Vinny T’s Acquisition.

We recently acquired the Vinny T’s of Boston® restaurant chain consisting of 11 restaurants in four states.  The success of this acquisition will depend on our ability to realize the anticipated benefits from the acquired Vinny T’s of Boston® business. We may fail to realize these anticipated benefits for a number of reasons, including the following:

·problems may arise with our ability to successfully integrate the acquired business, which may result in the combined company not operating as effectively and efficiently as expected, which problems may include:

·diversion of management time, as well as a shift of focus from operating the Bertucci’s and Vinny T’s of Boston® businesses to issues related to integration and administration;

·failure to retain and motivate key employees;

·failure to successfully manage relationships with customers and suppliers;

·failure to effectively coordinate sales and marketing efforts;

·failure to develop new products and/or concepts relating to the acquired business;

·potential difficulties integrating financial reporting systems; and

·potential difficulties in implementing controls, procedures and policies appropriate for a larger company.

·we may not be able to achieve the expected benefits from the acquisition or it may take longer than expected to achieve those benefits; and

·the Vinny T’s Acquisition may involve unexpected costs or liabilities.

Our food costs and supplies could be adversely affected by many factors not under our control.

Our profitability is dependent on, among other things, our continuing ability to offer fresh, high quality food at moderate prices. Various factors beyond our control, such as adverse weather, labor disputes, increased pricing or other unforeseen circumstances, may affect our food costs and supplies. While management has been able to anticipate and react to changing food costs and supplies to date through our purchasing practices and menu price adjustments, there can be no assurance we will be able to do so in the future.

We also obtain approximately 75% to 80% of our supplies through a single vendor pursuant to contracts for delivery and distribution, with the vendor charging fixed mark-ups over prevailing wholesale prices. Although we believe that we would be able to replace any vendor if we were required to do so, any disruption in supply from vendors could result in short-term supply shortages and we could be required to purchase supplies at higher prices until we are able to secure an alternative supply source. Any delay we experience in replacing vendors or distributors on acceptable terms could increase our food costs or, in extreme cases, require us to temporarily remove items from our menus.

Increasing labor costs could adversely affect our profitability.

Our restaurant operations are also subject to federal and state laws governing such matters as wages, hours, working conditions, civil rights and eligibility to work. Some states have set minimum wage requirements higher than the federal level. Significant numbers of hourly personnel at our restaurants are paid at rates related to the federal minimum wage and, accordingly, increases in the minimum wage at a federal and/or state level could increase labor costs at our restaurants. Other governmental initiatives such as mandated health insurance, if implemented, could adversely affect us as well as the restaurant industry in general. We are currently operating under a Tip Rate Alternative Commitment (“TRAC”) agreement with the Internal Revenue Service. Through increased educational and other efforts in the restaurants, the TRAC agreement reduces the likelihood of potential chain-wide employer-only FICA assessments for unreported tips, but we cannot ensure that the implementation of the TRAC agreement will eliminate FICA assessments for unreported tips.

Increased energy costs may adversely affect our profitability.

Our success depends in part on our ability to absorb increases in energy costs. The northeastern United States has recently experienced significant increases in energy prices. If these increases should recur on a regular basis or become permanent, they may have an adverse effect on our profitability.

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We are vulnerable to fluctuations in economic conditions, particularly those in the New England and Mid-Atlantic regions of the United States.

Our business is sensitive to our guests’ spending patterns, which in turn are subject to prevailing regional and national economic conditions such as unemployment, interest rates, taxation and consumer confidence. In addition, most of our restaurants are located in the northeastern United States, with a large concentration in New England. We also anticipate that substantially all restaurants we open in the future will be in states where we presently have operations or in contiguous states.

Consequently, any adverse changes in economic conditions, particularly in the New England or Mid-Atlantic regions of the country, may have a material adverse effect on us.

We may not be able to compete successfully with other restaurants and other “dining sources”, which could reduce our revenues.

The restaurant industry is intensely competitive with respect to, among other things, price, service, location and food quality. We compete with many well-established national, regional and locally-owned foodservice companies with substantially greater financial and other resources and longer operating histories, which, among other things, may better enable them to react to changes in the restaurant industry. With respect to quality and cost of food, size of food portions, decor and quality service, we compete with casual dining, family-style restaurants offering eat-in and take-out menus, including, but not limited to, Olive Garden, Romano’s Macaroni Grill, Carrabba’s, Applebee’s, TGI Friday’s, Ruby Tuesday, Pizzeria Uno Restaurants and Chili’s. Many of our restaurants are located in areas of high concentration of such restaurants. We also vie with all competitors in attracting guests, in obtaining premium locations for restaurants (including shopping malls and strip shopping centers) and in attracting and retaining employees.

We also face growing competition from the supermarket industry, which now offers “convenient meals” in the form of improved entrees and side dishes from the deli section. We expect intense competition to continue, and possibly increase, in this area.

Regulations affecting the operation of our restaurants, including “dram-shop” statutes could impair our profitability, increase our operating costs and/or restrict our growth.

The restaurant industry is subject to extensive federal, state and local laws and regulations, including those relating to building and zoning requirements and those relating to the preparation and sale of food. The development and operation of restaurants depend to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic and other regulations and requirements. We are also subject to licensing and regulation by state and local authorities relating to health, sanitation, safety and fire standards and liquor licenses, federal and state laws governing our relationships with employees (including the Fair Labor Standards Act and applicable minimum wage requirements, overtime,  family leave, tip credits, working conditions, safety standards and citizenship requirements), federal and state laws which prohibit discrimination and other laws regulating the design and operation of facilities, such as the Americans With Disabilities Act of 1990. In addition, we are subject to a variety of federal, state and local laws and regulations relating to the use, storage, discharge, emission, and disposal of hazardous materials. The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements and the consequences of litigation relating to current or future laws and regulations could increase our compliance and other costs of doing business and therefore have a material adverse effect on our results of operations.

Failure to comply with the laws and regulatory requirements of federal, state and local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.

In addition, we are subject in certain states to “dram-shop” statutes; which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. We carry liquor liability coverage as part of our existing comprehensive general liability insurance. There can be no assurance, however, that this insurance will pay for all liabilities arising from a “dram-shop” lawsuit. We may also, in certain jurisdictions, be required to comply with regulations limiting smoking in restaurants.

Our business may be harmed by highly publicized incidents at one or more of our restaurants.

Multi-unit food service businesses, such as ours, can be materially and adversely harmed by publicity resulting from poor food quality, illness, injury or other health concerns or employee relations or other operating issues stemming from one location or a limited number of locations, whether or not the company is liable, or from consumer concerns with respect to the nutritional value of certain food. In addition, we cannot guarantee that our internal controls and training will be fully effective in preventing all food-borne illnesses. Some food-borne illness incidents could be caused by third party food suppliers and transporters outside of our control. Any outbreak of such illness attributed to one or more of our restaurants or to a similar multi-unit restaurant chain, or the perception of such an outbreak, could harm our business.

9

We may not be able to satisfactorily resolve other litigation matters.

Our business is subject to the risk of litigation by employees, consumers, suppliers, shareholders or others through private actions, class actions, administrative proceedings, regulatory actions or other litigation. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend future litigation may be significant. There may also be adverse publicity associated with litigation that could decrease customer acceptance of our services, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may materially and adversely affect our business, financial condition and results of operations.

Any failure of, or disruption to, our information systems, could adversely affect our operations.

We rely on various information systems to manage our operations and regularly make investments to upgrade, enhance or replace such systems. Any failure of, or disruption to, our information systems could adversely affect our operations and have a material adverse effect on us.

We have previously identified deficiencies in our internal control over financial reporting and disclosure controls and procedures, which, if not properly remediated, could result in misstatements in our financial statements in future periods.

In the first quarter of 2005, we restated our historical financial statements for numerous periods to correct for errors in our lease accounting policies. In addition, during the first quarter of 2006 we restated our historical financial statements again to record an additional aggregate depreciation expense of approximately $3.5 million and adjust our income tax expense. These restatements were the result of material weaknesses in the design or operation of our internal control over financial reporting and indicated our disclosure controls and procedures were not effective. In light of these weaknesses in our internal control over financial reporting and the ineffectiveness of our disclosure controls and procedures, we have instituted improvements we believe will reduce the likelihood of similar errors. If the remedial policies and procedures we have implemented are insufficient to address the material weaknesses in our internal control over financial reporting or the deficiencies in our disclosure controls and procedures or if additional material weaknesses in our internal control over financial reporting or other conditions relating to our disclosure controls and procedures are discovered in the future, we may fail to meet our future reporting obligations, our financial statements may contain misstatements and/or our operating results may be adversely affected. Although we believe we have addressed our weaknesses in internal control over financial reporting and the deficiencies in our disclosure controls and procedures, we cannot guarantee the measures we have taken to date or any future measures will remediate the weaknesses and deficiencies identified or that any additional weaknesses or deficiencies will not arise in the future due to a failure to implement and maintain adequate internal controls over financial reporting or disclosure controls and procedures.

A failure to attract and retain qualified employees may adversely affect us.

Our success and the success of our restaurants depend upon our ability to attract and retain a sufficient number of qualified employees, including skilled management, customer service personnel and wait and kitchen staff. We face significant competition in the recruitment of qualified employees. Our inability to recruit and retain qualified individuals may delay the planned openings of new restaurants, result in higher employee turnover, and affect our ability to provide a high quality customer experience in restaurants or exert pressure on wages or other employee benefits to attract qualified personnel. Any of these consequences could have a material adverse effect on our business and results of operations.

We may not be able to protect our trademarks and other proprietary rights.

We believe our trademarks and other proprietary rights are important to our success and competitive position. Accordingly, we devote substantial resources to the establishment and protection of our trademarks and proprietary rights. The actions we take to protect our intellectual property, however, may be inadequate to prevent imitation of our products and concepts by others, which could be harmful to our business.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

10

ITEM 2. PROPERTIES

Our executive office is located in Northborough, Massachusetts. The office is occupied under the terms of a lease covering approximately 18,155 square feet scheduled to expire in 2011 but has a five-year option to renew at the end of the existing term.  A separate office leased by us in Westborough, Massachusetts is being sub-leased to a third party.

Restaurant Locations

The table below identifies the location of the restaurants operated by us during fiscal 2006.

	Open as of 01/03/2007
State	Bertucci’s (1)	Vinny T’s of Boston (2)	Total
Connecticut	11	1	12
Delaware	2	—	2
District of Columbia	2	—	2
Maine	—	1	1
Maryland	6	—	6
Massachusetts	39	8	47
New Hampshire	3	—	3
New Jersey	6	—	6
New York	3	—	3
North Carolina	2	—	2
Pennsylvania	8	1	9
Rhode Island	2	—	2
Virginia	8	—	8
Total	92	11	103

(1)There were no closings or openings during fiscal 2006.

(2)Acquired from BUCA, Inc. in September 2006.  No further openings or closings took place in fiscal 2006.

We lease all but one of the 103 restaurants operated by us at January 3, 2007. We own one restaurant in fee. Leases for existing restaurants are generally for terms of 15 to 20 years and provide for additional option terms ranging from five to 20 years and a specified annual rental. Most of these leases provide for additional rent based on sales volumes exceeding specified levels. Leases for future restaurants will likely include similar rent provisions. Remaining restaurant lease terms range from less than one year to 22 years.

ITEM 3. LEGAL PROCEEDINGS

We are involved in various legal proceedings from time to time incidental to the conduct of our business. In our opinion, any ultimate liability arising out of any current legal proceedings will not have a material adverse effect on our financial condition or the results of our operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

11

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

As of April 3, 2007, there was no established public trading market for our common equity security.

Record Holders

As of April 3, 2007, we had 102 holders of our Common Stock, $.01 par value per share and we did not have any other class of common equity security issued or outstanding.

Dividends

We have not paid any dividends since 1998. Furthermore, we do not foresee declaring or paying any cash dividends in the immediate future. Moreover, the Senior Notes Indenture significantly limits, and in certain cases prohibits, payment of cash dividends without the Indenture trustee’s approval

Recent Sales of Unregistered Securities

None.

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The data for fiscal years ended 2002 through 2006 are derived from our audited financial statements. Selected consolidated financial data should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and the Notes thereto included elsewhere in this Annual Report on Form 10-K. Historical results are not necessarily indicative of results to be expected in the future. The acquisition of eleven Vinny T’s of Boston® restaurants in September 2006 affects the comparability of fiscal 2006 to prior years.

Statement of Operations Data (in thousands except share and per share amounts)

		Fiscal Year Ended
		January 3,					December 28,					December 29,					December 31,					January 1,
		2007 (a)					2005					2004					2003					2003
Net sales		$	226,444				$	204,784				$	200,408				$	186,172				$	162,319
Cost of sales and expenses
Cost of sales		51,638					47,611					49,231					43,544					35,667
Operating expenses		135,136					123,253					122,056					113,036					96,413
General and administrative expenses		15,044					14,442					13,065					11,320					12,124
Deferred rent, depreciation, amortization and preopening expenses		11,399					11,228					12,657					14,123					12,413
Asset impairment charge		48					982					6,749					3,580					—
Closed restaurants charge		—					—					—					—					236
Cost of sales and expenses		213,265					197,516					203,758					185,603					156,853
Income (loss) from operations		13,179					7,268					(3,350			)		569					5,466
Other (expense) income
Gain on Brinker Sale (c)		—					—					—					650					—
Interest expense, net		(10,143			)		(10,411			)		(10,613			)		(10,133			)		(9,587			)
Other expense		(10,143			)		(10,411			)		(10,613			)		(9,483			)		(9,587			)
Income (loss) before income tax provision		3,036					(3,143			)		(13,963			)		(8,914			)		(4,121			)
Income tax provision		575					—					—					—					4,145
Net income (loss)		$	2,461				$	(3,143		)		$	(13,963		)		$	(8,914		)		$	(8,266		)
Basic income (loss) per share		$	0.82				$	(1.06		)		$	(4.74		)		$	(3.00		)		$	(2.77		)
Weighted average shares outstanding - basic		3,014,363					2,960,025					2,943,841					2,970,403					2,978,955
Diluted income (loss) per share		$	0.80				$	(1.06		)		$	(4.74		)		$	(3.00		)		$	(2.77		)
Weighted average shares outstanding - diluted		3,090,053					2,960,025					2,943,841					2,970,403					2,978,955
Comparable restaurant sales (b)	4.8			%		0.2			%		1.4			%		4.1			%		5.8			%

Balance Sheet Data (in thousands)

	January 3,			December 28,			December 29,			December 31,			January 1,
	2007			2005			2004			2003			2003
Total assets	$	125,197		$	112,545		$	112,221		$	124,416		$	123,121
Long term debt	$	95,706		$	92,179		$	92,307		$	92,981		$	87,167
Total stockholders’ (deficit) equity	$	(14,801	)	$	(17,303	)	$	(14,732	)	$	(490	)	$	8,495

Cash Flow Data (in thousands)

	January 3,			December 28,			December 29,			December 31,			January 1,
	2007			2005			2004			2003			2003
Cash flows provided by operating activities	$	17,479		$	12,927		$	7,881		$	9,071		$	9,169
Cash flows used in investing activities	(10,197		)	(4,108		)	(7,872		)	(9,358		)	(19,271		)
Cash flows (used in) provided by financing activities	(218		)	272			(365		)	(199		)	—
Increase (decrease) in cash	$	7,064		$	9,091		$	(356	)	$	(486	)	$	(10,102	)

(a)Fiscal year 2006 consisted of fifty-three weeks.  All other years presented were fifty-two weeks.

(b)We define comparable restaurant sales as net sales from restaurants open and owned for at least one full fiscal year at the beginning of the year.

(c)In April 2001, the Company completed the sale of a number of non-Bertucci’s brand restaurants (the “Brinker Sale”) and recorded a gain of $36.9 million before income taxes. During 2003 the Company concluded certain liabilities recorded in connection with the Brinker Sale were no longer required as part of the final settlement and accordingly reversed $650,000 of accrued liabilities as an additional gain on the Brinker Sale.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with “Item 1. Business”, “Item 1A. Risk Factors”, “Item 6. Selected Financial Data”, and our Consolidated Financial Statements and Notes thereto.

General

We are a Delaware corporation and the owner and operator of two chains of full-service casual dining, Italian-style restaurants under the names (1) Bertucci’s Brick Oven Pizzeria® or Bertucci’s Brick Oven Ristorante®; and (2) Vinny T’s of Boston®. We incorporated in 1994 as NE Restaurant Company, Inc. and formally changed our name to Bertucci’s Corporation on August 16, 2001. As of January 3, 2007, we operated 92 Bertucci’s restaurants and 11 Vinny T’s of Boston® restaurants located primarily in the northeastern United States.

In July 1998, we completed our acquisition of Bertucci’s Restaurant Corp.’s parent entity, Bertucci’s, Inc., for a purchase price, net of cash received, of approximately $89.4 million (the “Bertucci’s Acquisition”). We financed the Bertucci’s Acquisition primarily through the issuance of $100 million of 10¾% senior notes due 2008 (the “Senior Notes”). As of January 3, 2007, $85.3 million in principal of the Senior Notes are still outstanding.

In September, 2006, the Company executed a Stock Purchase Agreement with BUCA, Inc. and BUCA Restaurants 3, Inc. (“BUCA 3”) the entity which owns and operates Vinny T’s of Boston restaurants (“the Vinny T’s Acquisition”).  As a result of the Vinny T’s Acquisition, BUCA 3 is now a wholly-owned subsidiary of the Company and continues to own and operate 11 Vinny T’s of Boston restaurants in four states. The Company believes the acquisition of the 11 restaurants will increase revenues and income from operations while providing an acceptable return on the investment. The Company paid BUCA an aggregate purchase price of $6.6 million, of which $3.0 million was paid in cash and $3.6 million was paid through the issuance of a Promissory Note. The Promissory Note contains no covenants and bears interest at the rate of 9% payable in two equal installments on September 25, 2007 and July 15, 2008. See Item 1. Business – Overview

Results of Operations

For all our restaurants, net sales consist of food, beverage and alcohol sales. Cost of sales consists of food, beverage and alcohol costs as well as supplies used in carry-out and delivery sales. Total operating expenses consist of five primary categories:  (i) labor expenses; (ii) restaurant operations; (iii) facility costs; (iv) office expenses; and (v) other expenses, which include such items as advertising expenses, rent and insurance. General and administrative expenses include costs associated with our departments assisting in restaurant operations and management of the business, including multi-unit supervision, accounting, management information systems, training, executive management, purchasing and construction.

The following table sets forth the percentage-relationship to net sales, unless otherwise indicated, of certain items included in our consolidated statements of operations, for the periods indicated:

STATEMENT OF OPERATIONS DATA

(Percentage of Net Sales for Fiscal Years Presented)

	January 3,		December 28,		December 29,
	2007		2005		2004
Net sales	100.0		100.0		100.0
Cost of sales and expenses:
Cost of sales	22.8		23.2		24.6
Operating expenses	59.7		60.2		60.9
General and administrative expenses	6.6		7.1		6.5
Deferred rent, depreciation, amortization and preopening expenses	5.0		5.5		6.3
Asset impairment charge	—		0.5		3.4
Total cost of sales and expenses	94.1		96.5		101.7
Income (loss) from operations	5.9		3.5		(1.7	)
Interest expense, net	(4.5	)	(5.0	)	(5.3	)
Income (loss) before income tax provision	1.4		(1.5	)	(7.0	)
Income tax provision	0.3		—		—
Net income (loss)	1.1		(1.5	)	(7.0	)

The results of the eleven Vinny T’s of Boston restaurants are included in fiscal 2006 from their acquisition date.

14

Year Ended January 3, 2007 Compared to Year Ended December 28, 2005

Net Sales. Total net sales increased by approximately $21.6 million, or 10.5%, to $226.4 million during fiscal 2006 from $204.8 million during fiscal 2005. The increase was due to a 4.8% increase in our 91 comparable Bertucci’s restaurants ($9.8 million), $4.3 million resulting from the fifty-third week of Bertucci’s restaurant operations, and $7.6 million from the addition of the 11 Vinny T’s of Boston® restaurants as a result of the Vinny T’s Acquisition. Bertucci’s comparable restaurant dine-in sales increased 5.1% and our comparable restaurant carry-out and delivery sales increased 4.0% in fiscal 2006 as compared to fiscal 2005. The Bertucci’s comparable guest counts, measured on dine-in business only, increased by 1.1% in 2006 versus 2005. The 91 comparable Bertucci’s restaurants’ sales average during 2006 was $2.3 million per restaurant.

Cost of Sales. Cost of sales as a percentage of net sales decreased to 22.8% during fiscal 2006 from 23.2% during fiscal 2005. The decrease (in Bertucci’s restaurants) was primarily attributable to a decrease in certain ingredient costs, primarily cheese and oil, increased inventory controls, as well as a menu mix shift to lower cost items introduced during 2006. Cost of sales in Vinny T’s of Boston® restaurants was 26.1% of sales for the fourteen weeks since the Vinny T’s Acqusition.

Operating Expenses. Operating expenses increased by approximately $11.8 million, or 9.6%, to $135.1 million during fiscal 2006 from $123.3 million during fiscal 2005. Expressed as a percentage of net sales, operating expenses decreased to 59.7% in 2006 from 60.2% in 2005. Nearly half of the dollar increase, $5.2 million, was due to increased operating expenses incurred as a result of the Vinny T’s Acquisition. The remaining dollar increase, $6.5 million, in these expenses is primarily attributable to increased payroll and related benefits ($4.1 million), occupancy and general facility expenses ($1.5 million) and utility costs, primarily natural gas ($1.4 million); partially offset by reduced advertising ($0.2 million), and gift card breakage ($0.2 million).

General and Administrative Expenses. General and administrative expenses increased by $600,000, or 4.2%, to $15.0 million during fiscal 2006 from $14.4 million during fiscal 2005. Expressed as a percentage of net sales, general and administrative expenses decreased to 6.6% in fiscal 2006 from 7.1% during fiscal 2005. The dollar increase was primarily due to higher compensation and group health expenses.

Deferred Rent, Depreciation, Amortization and Preopening Expenses. Deferred rent, depreciation, amortization and preopening expenses increased by approximately $200,000 to $11.4 million during fiscal 2006 from $11.2 million during fiscal 2005. Deferred rent decreased by approximately $330,000 as more leases with step rent provisions now require cash payments in excess of the calculated pro-rata rent expense. Depreciation increased by approximately $700,000 in 2006 as a result of the Vinny T’s Acquisition and remodel capital expenditures in Bertucci’s restaurants the last two fiscal years. Preopening expense decreased approximately $150,000 as no restaurant opened in fiscal 2006.

Asset Impairment Charge. In 2006, we assessed certain non-performing restaurants for recoverability of recorded amounts. As a result of our evaluation, we determined an additional impairment of fixed assets existed at two previously impaired restaurant locations during 2006 due to $48,000 of maintenance capital expended at these locations. We recorded an impairment charge in that amount to reflect the write down of the affected assets to fair value.

Interest Expense, net. Net interest expense decreased by approximately $300,000 to $10.1 million during fiscal 2006 from $10.4 million during fiscal 2005. Interest expense in 2006 was primarily comprised of $9.3 million accrued on the Senior Notes ($180,000 more than fiscal 2005 Senior Notes interest expense due to the 53rd week in fiscal 2006) and $85,000 of interest accrued on the Vinny T’s Acquisition Promissory Note.  Interest income increased by approximately $500,000 million primarily due to increased overnight investment funds resulting from reduced capital expenditures, and higher short term interest rates in 2006.

Income Taxes.We have a history of recurring pre-tax losses. We previously recorded a full valuation allowance for our net deferred tax assets and have also provided a full valuation allowance relating to the tax benefits generated since 2002 (primarily from operating losses). We recorded a provision for income tax of approximately $575,000 in 2006 primarily for estimated state and minimum federal taxes currently payable. FICA Tip Credits of approximately $1.7 million favorably impact the effective federal income tax rate for fiscal 2006. As of January 3, 2007, we had tax credit carryforwards totaling $7.5 million and net operating loss carryforwards of $1.4 million (representing approximately $0.4 million net of tax), including approximately $0.8 million and $1.3 million of tax credit carryforwards and net operating loss carryforwards, respectively, from the Vinny T’s Acquisition.

Year Ended December 28, 2005 Compared to Year Ended December 29, 2004

Net Sales. Total net sales increased by approximately $4.4 million, or 2.2%, to $204.8 million during fiscal 2005 from $200.4 million during fiscal 2004. The increase was due to a 0.2% increase in our 89 comparable Bertucci’s restaurants, the incremental 49 restaurant weeks resulting from full year operations of two new restaurants opened during 2004 and the addition of one new restaurant opening in 2005 (an incremental 47 restaurant weeks). Our comparable restaurant dine-in sales decreased 0.5% while our comparable restaurant carry-out and delivery sales increased 2.9% in fiscal 2005. The comparable guest counts, measured on dine-in business only, were essentially flat in 2005 versus 2004. The 89 comparable restaurants’ sales average during 2005 was $2.2 million per restaurant while the sales average for the two restaurants opened during 2004 was $1.9 million. The average weekly sales for the one restaurant opened during 2005 was $43,500 during the 47 weeks it was opened in 2005.

15

Cost of Sales. Cost of sales as a percentage of net sales decreased to 23.2% during fiscal 2005 from 24.6% during fiscal 2004. The decrease was primarily attributable to a decrease in certain ingredient costs, primarily cheese and oil, increased inventory controls, as well as a menu mix shift to lower cost items introduced during 2005.

Operating Expenses. Operating expenses increased by approximately $1.2 million, or 1.0%, to $123.3 million during fiscal 2005 from $122.1 million during fiscal 2004. Expressed as a percentage of net sales, operating expenses decreased to 60.2% in 2005 from 60.9% in 2004. The key components of operating expenses were payroll (including related employer taxes), utilities, restaurant facilities maintenance, rent and advertising. The dollar increase in these expenses was primarily attributable to increased occupancy and general facility expenses ($1.7 million) and utility costs (primarily natural gas) ($1.4 million); offset by reduced payroll and benefits ($0.8 million), advertising ($0.8 million), and property and liability insurance premiums ($0.3 million).

General and Administrative Expenses. General and administrative expenses increased by approximately $1.3 million, or 9.9%, to $14.4 million during fiscal 2005 from $13.1 million during fiscal 2004. Expressed as a percentage of net sales, general and administrative expenses increased to 7.1% in fiscal 2005 from 6.5% during fiscal 2004. The dollar and percentage increases were primarily due to higher incentive compensation expense ($1.5 million) as our internal earnings target was achieved and this triggered additional compensation obligations.

Deferred Rent, Depreciation, Amortization and Preopening Expenses. Deferred rent, depreciation, amortization and preopening expenses decreased by approximately $1.5 million, or 11.8%, to $11.2 million during fiscal 2005 from $12.7 million during fiscal 2004. As we only opened one restaurant in 2005, preopening expenses totaled only $185,000, a $300,000 decrease from 2004 during which there were two restaurant openings. Deferred rent decreased by approximately $500,000 as many leases with step rent provisions now require cash payments in excess of the calculated pro-rata rent expense. Depreciation decreased by approximately $800,000 in 2005 as prior period impairment charges reduced the cost basis of certain assets and the associated depreciation expense. Additionally, equipment acquired in the Bertucci’s Acquisition became fully depreciated during 2005. These items more than offset incremental depreciation from fiscal 2005 and 2004 restaurant openings of approximately $273,000.

Asset Impairment Charge. In 2005, we assessed certain non-performing restaurants for recoverability of recorded amounts. As a result of our evaluation, we determined an impairment of fixed assets existed at six restaurant locations during 2005. We estimated the fair value of these assets based on the net present value of the expected cash flows from the restaurants and determined the carrying amount of the assets exceeded their fair value by approximately $982,000. We recorded an impairment charge in that amount to reflect the write down of the affected assets to fair value.

Interest Expense, net. Interest expense decreased by approximately $200,000 to $10.4 million during fiscal 2005 from $10.6 million during fiscal 2004. Interest expense in 2005 was primarily comprised of $9.2 million paid on the Senior Notes in semi-annual installments and was consistent with interest expense recorded in fiscal 2004. Interest income increased by $232,000 primarily due to increased overnight investment funds resulting from reduced capital expenditures and higher short term interest rates in 2005. A reduction in interest capitalized of $60,000 partially offset the increased interest income.

Income Taxes. We have an historical trend of recurring pre-tax losses. We previously recorded a full valuation allowance for our net deferred tax asset. We also provided a full valuation allowance relating to the tax benefits generated since 2002 (primarily from our operating losses). As of December 28, 2005, we had net operating loss and tax credit carryforwards totaling $13.1 million.

Liquidity and Capital Resources

	2006			2005			2004
Cash flows provided by operating activities	$	17,479		$	12,927		$	7,881
Cash flows used in investing activities	(10,197		)	(4,108		)	(7,872		)
Cash flows (used in) provided by financing activities	(218		)	272			(365		)
Net increase (decrease) in cash	$	7,064		$	9,091		$	(356	)

We have historically met our capital expenditures and working capital needs through a combination of operating cash flow, bank and mortgage borrowings, the sale of the Senior Notes, the sale of Common Stock, and sale-leaseback transactions. We expect our future capital and working capital needs will be funded from operating cash flow and cash on hand.

Net cash flows from operating activities were $17.5 million for fiscal 2006 as compared to $12.9 million for fiscal 2005. Our fiscal 2006 net income increased by $5.6 million to $2.5 million from a loss of $3.1 million in fiscal 2005.  Included in the net income for fiscal 2006 is a fifty-third week. As of January 3, 2007, we had $28.4 million in cash and cash equivalents.

16

Our capital expenditures were $6.6 million, $4.3 million, and $8.6 million, for fiscal 2006, 2005, and 2004, respectively. In fiscal 2006, $5.6 million of our capital spending was attributable to remodeling and upgrading facilities in our existing restaurants and $1.0 million was used for new restaurant development. We anticipate fiscal 2007 capital expenditures will be approximately $18.2 million as we plan to open five Bertucci’s restaurants.

As of January 3, 2007, we had $95.7 million in consolidated indebtedness, $85.3 million pursuant to the Senior Notes, $6.0 million of capital lease obligations, and $4.4 million of promissory notes. The Senior Notes contain no financial covenants and we are in compliance with or have obtained waivers for all non-financial covenants as of April 3, 2007. The Senior Notes bear interest at the rate of 10 ¾% per annum, payable semi-annually on January 15 and July 15. The Senior Notes are due in full on July 15, 2008 and may be redeemed at face value prior to maturity.  Additionally, under certain circumstances, including a change of control or following certain asset sales, the holders of the Senior Notes may require us to repurchase the Senior Notes at a redemption price of 101% of face value. See Note 5 of Notes to Consolidated Financial Statements.  The Promissory Note, the principal balance of which was $3.66 million as of January 3, 2007, contains no covenants and bears interest at the rate of 9% payable in two equal installments on September 25, 2007 and July 15, 2008. The Promissory Note is due in full on July 15, 2008 or earlier upon the occurrence of certain other events, including if we have a Change in Control (as defined in the Promissory Note), the consummation of an initial public offering by us or the redemption, repurchase, refinancing or payment of our Senior Notes.

We are operating without a line of credit and are funding all of our growth, debt reductions and operating needs out of cash flows from operations and cash on hand.

We have established a $4.0 million (maximum) letter of credit facility (expiring in December 2007) as collateral with third party administrators for self insurance reserves. As of January 3, 2007, this facility was collateralized with $2.2 million of cash restricted from general use. Letters of Credit totaling $2.2 million were outstanding on January 3, 2007 and December 28, 2005.

Our future operating performance and ability to service or refinance the Senior Notes will be subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. Significant liquidity demands will arise from our obligation to pay the outstanding principal and accrued interest on the Senior Notes due on July 15, 2008.

The table below depicts our future contractual obligations committed as of January 3, 2007:

	Payments Due by Fiscal Year
	(Dollars in Thousands)
	Total		2007		2008- 2009		2010 - 2011		After 2011
Contractual Obligations:
Operating leases (a)	$	117,017	$	18,511	$	32,840	$	26,924	$	38,742
Capital leases (a)	12,056		704		1,440		1,389		8,523
Senior notes (b)	103,651		9,171		94,480		—		—
Promissory notes (c)	4,970		426		4,209		223		112
Utility purchase commitments (d)	5,176		2,363		2,813		—		—
Capital expenditures (e)	2,200		2,200		—		—		—
Closed restaurants reserve, net of sublease income	286		207		79		—		—
Total contractual obligations	$	245,356	$	33,582	$	135,861	$	28,536	$	47,377

(a) - - See Note 6 of Notes to Consolidated Financial Statements

(b) - - Including interest at 10 ¾% per annum to maturity in July 2008.

(c) - - Including interest at a weighted average rate of 8.7% per annum.

(d) - The Company has executed contracts to provide electricity to thirty-nine restaurants at a fixed rate per kilowatt through 2009. The Company believes these contracts qualify for the “normal purchases” exception as defined by SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Therefore, the contracts are not required to be marked to market through the consolidated statement of operations. In addition, the Company executed contracts to provide natural gas to eighty-two restaurants at a fixed price per therm through May 2007. These contracts do not qualify for the “Normal Purchase” exception, and are not considered hedges. These contracts have been recorded on the balance sheet at fair value with adjustments to fair value being recognized in operating expenses in the consolidated statement of operations when they occur. The purchase commitments represent an estimate of minimum usage per year multiplied by the contracted rates.

(e) - We had one restaurant under construction at year end and had various purchase commitments related to remodeling projects at selected restaurants.

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We believe the cash flow generated from our operations and cash on hand should be sufficient to fund our debt service requirements, lease obligations, expected capital expenditures and other operating expenses through 2007. Beyond 2007 and up to the July 15, 2008 maturity of our Senior Notes, we expect to be able to service our debt, but the lack of short term borrowing availability may impede our growth. We are evaluating various refinancing alternatives for our Senior Notes upon their maturity on July 15, 2008.

Impact of Inflation

Inflationary factors such as increases in labor, food or other operating costs could adversely affect our operations. We do not believe inflation has had a material impact on our financial position or results of operations for the periods discussed above. We believe through the proper leveraging of purchasing size, labor scheduling, and restaurant development analysis, inflation will not have a material adverse effect on our income during the foreseeable future. There can be no assurance inflation will not materially adversely affect us.

Seasonality

Our quarterly results of operations have fluctuated and are expected to continue to fluctuate depending on a variety of factors, including the timing of new restaurant openings and related preopening and other startup expenses, net sales contributed by new restaurants, increases or decreases in comparable restaurant sales, competition and overall economic conditions. Our business is also subject to seasonal influences of consumer spending, dining out patterns and weather. As is the case with many restaurant companies, we typically experience lower net sales and net income during the first and fourth fiscal quarters. The current year fourth quarter is not comparable with the prior year or other quarters in 2006 because it comprised fourteen weeks and the Vinny T’s Acquisition. Because of these fluctuations in net sales and net loss, the results of operations of any quarter are not necessarily indicative of the results that will be achieved for the full year or any future quarter.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments affecting the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, estimates are evaluated, including those related to the impairment of long-lived assets, income tax valuation allowances, self-insurance, closed restaurants reserve and gift cards. Estimates are based on historical experience and on various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect the more significant judgments and estimates used in our preparation of our consolidated financial statements.

Impairment of Long-Lived Assets

We evaluate property and equipment held and used in the business for impairment whenever events or changes in circumstances indicate the carrying amount of a restaurant’s assets may not be recoverable. An impairment is determined to exist if the estimated undiscounted future operating cash flows (which we estimate using historical cash flows and other relevant facts and circumstances) for a restaurant exceeds the carrying amount of its assets. If an impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated discounted future operating cash flows of the asset and the expected proceeds upon sale of the asset. The estimates and assumptions used during this process are subject to a high degree of judgment.

During each of the fiscal years 2006, 2005, and 2004 we assessed certain non-performing restaurants for recoverability of recorded amounts and determined an impairment of fixed assets existed at two restaurant locations in 2006, six restaurant locations in 2005 and 12 restaurant locations in 2004. We estimated the fair value of these assets based on the net present value of the expected cash flows from the restaurants and determined the carrying amount of the assets exceeded their fair value by approximately $48,000, $982,000, and $6.7 million, respectively. We recorded impairment charges in those amounts to reflect the write down of the affected assets to fair value.

In addition, at least annually, we assess the recoverability of goodwill and other intangible assets related to our restaurant concept. These impairment tests require us to estimate fair values of our restaurant concept by making assumptions regarding future cash flows and other factors. If these assumptions change in the future, we may be required to record impairment charges for these assets. To date, such analysis has indicated no impairment of goodwill and other intangible assets has occurred.

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Income Tax Valuation Allowances

The future tax benefits which give rise to the deferred tax asset remain statutorily available to us. We consider both negative and positive evidence in determining if a valuation allowance is appropriate. As of January 3, 2007, we had tax credit carryforwards totaling $7.5 million and net operating loss carryforwards of $1.4 million (representing approximately $0.4 million net of tax), including approximately $0.8 million and $1.3 million of tax credit carryforwards and net operating loss carryforwards, respectively, from the Vinny T’s Acquisition, which expire at various dates through 2026. We have an historical trend of recurring pre-tax losses. Based on the historical trend of losses, we concluded a valuation allowance for the net deferred tax asset remains appropriate. Actual amounts realized will be dependent on generating future taxable income.

Self-Insurance

We are self-insured for certain losses related to general liability, group health insurance, and workers’ compensation. We maintain stop loss coverage with third party insurers to limit our total exposure. The self-insurance liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. The estimated liability is not discounted and is established based upon analysis of historical data and estimates of the ultimate costs of claims incurred, and are reviewed by us on a quarterly basis to ensure the liability is appropriate. If actual trends, including the severity or frequency of claims, differ from our estimates, our financial results could be impacted. To date we are not aware of any activity requiring significant adjustments to these reserves.

Closed Restaurants Reserve

We remain primarily liable on leases for nine closed locations whose terms expire at various dates through 2017. We review the specifics of each site on a quarterly basis to estimate our net remaining liability over the remaining lease term. Certain locations have subtenants in place while others remain vacant. Estimates must be made of future sublease income or lease assignment possibilities. If subtenants default on their subleases or projected future subtenants are not obtained, actual results could differ from our estimates, thereby impacting our financial results. All sublease and assignment activity in fiscal 2004 through 2006 has been consistent with reserves and no additional increases in the reserve were necessary.

Gift cards

We record a liability in the period in which a gift card is issued and proceeds are received. As gift cards are redeemed, this liability is reduced and revenue is recognized. We recognize gift card breakage income (“breakage”) when the likelihood of the redemption of the card becomes remote.

Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), an interpretation of Statement of Financial Accounting Standards (“SFAS”) No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in tax positions and requires that the impact of tax positions be recorded in the financial statements if it is more likely than not that such position will be sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006.  We do not expect the adoption of FIN 48 to have a material effect on our consolidated financial position or results of operations

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. We are evaluating the expected impact the adoption of SFAS No. 157 will have on our consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities (“SFAS No. 159”).  SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. If the fair value option is elected, unrealized gains and losses will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are evaluating the impact SFAS No. 159 may have on our consolidated financial position and results of operations.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.

In order to limit any possible exposure to market risk from changes in the price of natural gas used in the operations of our restaurants, we have contracted for minimum purchase quantities at fixed prices in selected restaurants through May 2007. Based upon sensitivity analysis as of January 3, 2007, a 10% change in the price of natural gas would cause the fair value of these contracts to increase /decrease by approximately $90,000. In addition, we do not have operations outside of the United States of America which expose us to foreign currency risk and substantially all of our outstanding debt has fixed interest rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data are listed under Part IV, Item 15 in this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. We maintain disclosure controls and procedures designed to ensure information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and such information is accumulated and communicated to management, including our Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognized controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and we necessarily were required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

During the fourth quarter of fiscal 2006, we performed an evaluation under the supervision and with the participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our CEO and CFO concluded our disclosure controls and procedures were effective as of January 3, 2007.

Changes in Internal Control over Financial Reporting.  There were no significant changes to our internal control over financial reporting occurring during our last fiscal quarter materially affecting, or reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERANCE

The following table sets forth certain information with respect to our executive officers and directors at the time of this filing:

Name	Age	Position
Stephen V. Clark	53	Vice Chairman of the Board of Directors, Chief Executive Officer
David G. Lloyd	43	President, Chief Financial Officer and Director
Benjamin R. Jacobson	62	Chairman of the Board of Directors and Treasurer
Sally M. Dungan	53	Director * ø
James J. Morgan	64	Director #
James N. Moriarty	40	Director * ø
James R. Parish	60	Director ø
Heywood Wilansky	59	Director * # ø

*   Member of Audit Committee

#  Member of Compensation Committee

Ø  Independent Director

Stephen V. Clark. Mr. Clark became Chief Executive Officer in August 2004 and was named Vice Chairman of the Board of Directors in August 2005. He was President from October 2004 through August 2005, and has served as a director since April 2002. Mr. Clark was the President and Chief Executive Officer of Taco Bueno, a quick service Mexican restaurant chain of over 120 stores, from June 2001 through August 2005 (during which time he was also our Chief Executive Officer beginning in August 2004 and our President beginning in October 2004). He previously served as Taco Cabana Inc.’s Chief Executive Officer from November 1996 through April 2001 and was previously the President, Chief Operating Officer, and Director at Taco Cabana from April 1995 through November 1996. Prior to that, Mr. Clark held various positions with Church’s Chicken, a division of America’s Favorite Chicken, over seventeen years, the last having been Senior Vice President and Concept General Manager.

David G. Lloyd. Mr. Lloyd became our Chief Financial Officer in November 2004, assumed the role of President in August 2005 and became a director in September 2005. Mr. Lloyd was the Chief Financial Officer of Taco Bueno, a quick service Mexican restaurant chain of over 120 stores, from June 2001 through August 2005 (during which time he was also our Chief Financial Officer beginning in November 2004). He previously served as Taco Cabana Inc.’s Chief Financial Officer from November 1994 through February 2001. Prior to that, Mr. Lloyd, a Certified Public Accountant, was with Deloitte & Touche LLP from 1985 through 1994.

Benjamin R. Jacobson. Mr. Jacobson has been Chairman of the Board of Directors since 1991 and was our Chief Executive Officer from October 1999 until August 2004. Since 1989, Mr. Jacobson has served as the Managing General Partner of Jacobson Partners, which specializes in direct equity investments. Mr. Jacobson is a director of a number of other privately-held corporations.

Sally M. Dungan. Ms. Dungan became a director and member of our audit committee in February 2004. She is the Chief Investment Officer (“CIO”) of Tufts University where she is responsible for the investment policy and total fund structure of Tufts’ $1.0 billion in endowment and long term funds portfolio. Prior to assuming the CIO position in September of 2002, Ms. Dungan was the Director of Pension Fund Management for Siemens Corporation. Ms. Dungan is a Chartered Financial Analyst.

James J. Morgan. Mr. Morgan became a director in December 1997. From 1963 until his retirement in 1997, Mr. Morgan was employed by Philip Morris U.S.A. where he served as President and Chief Executive Officer from 1994 until his retirement in 1997. Prior to 1994, Mr. Morgan served in various capacities at Philip Morris including Senior Vice President of Marketing, and Corporate Vice President of Marketing Planning of the Philip Morris Companies Inc. Mr. Morgan also serves on the board of directors of Megadata Corporation. Mr. Morgan is a Partner in Jacobson Partners.

James N. Moriarty. Mr. Moriarty became a director and chairman of our audit committee in February 2004. He has been a partner in the accounting firm of Vitale, Caturano & Company, P.C., a full service CPA and business advisory firm, since 2002. He is head of the firm’s restaurant practice. Prior to that, Mr. Moriarty was with Arthur Andersen LLP for 14 years, the last four years as a partner in that firm. He is a member of the AICPA and the Massachusetts Society of CPA’s.

James R. Parish. Mr. Parish was named a director in September 2005. He has been a principal of Parish Partners, Inc., an investment, advisory and consulting firm, since 1991. Parish Partners, Inc. provides executive-level strategic advice and counseling to a wide range of restaurant industry executive teams. Mr. Parish also serves on the board of directors of Spirit Finance Corporation and as a member of their audit committee. Mr. Parish previously served on our Board of Directors from July 1998 through August 2003.

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Heywood Wilansky. Mr. Wilansky became a director and member of our audit committee in May 2004. He became a member of the compensation committee in November 2004. Mr. Wilansky has been the President and Chief Executive Officer of Retail Ventures, Inc. (“RVI”) since November 2004, and was named a director of DSW Shoe Warehouse (“DSW”) in March, 2005. RVI owns a controlling interest in DSW. From February 2003 through November 2004, he was the President and Chief Executive Officer of Filene’s Basement, Inc. Prior to that, he was a Professor at the University of Maryland, Smith School of Business from August 2002 through January 2003. He was the President and CEO of Strategic Management Resources, LLC, a management consulting service, from July 2000 through January 2003 and was the President and CEO of Bon-Ton Stores, Inc. from 1995 through 2000.

Term of Directors

Our directors serve in such capacity until the next annual meeting of our shareholders or until their successors are duly elected and qualified.

Director Nominations

We do not maintain a formal policy with respect to the review of potential nominees to our Board of Directors. All of the members of our Board of Directors participate in the review of potential nominees to our Board of Directors. The Board of Directors has determined that, given the size of the Board of Directors and the importance of the director nomination process, the entire Board of Directors should participate in the evaluation of potential directors.

Director Independence

Our Board of Directors consists of eight directors.  Of these eight directors, the Board of Directors has reviewed the qualifications of Ms. Dungan, Mr. Moriatry, Mr. Parish and Mr. Wilansky and has determined they are “independent” under the applicable definition contained in Rule 4200(a)(15) of the NASD’s listing standards. Mr. Moriarty was formerly a partner with Arthur Andersen LLP which audited our financial statements prior to fiscal 2002 and he was involved in the audit of those financial statements. Mr. Moriarty has no relationship with Deloitte & Touche LLP, our current auditor.

Audit Committee

We have an Audit Committee, which consists of Sally M. Dungan, Heywood Wilansky, and James N. Moriarty (Chairman). The Board of Directors has reviewed the qualifications of Ms. Dungan, Mr. Wilansky and Mr. Moriarty and have determined they are “independent” under the applicable definition contained in Rule 4200(a)(15) of the NASD’s listing standards. The Board of Directors appointed Mr. Moriarty to the Audit Committee because of his auditing and accounting expertise. Our Board of Directors has determined Mr. Moriarty qualifies as an Audit Committee Financial Expert, as defined in Item 407(d)(5) of Regulation S-K.

Code of Ethics

We have adopted a Code of Ethics for Senior Financial Officers including our principal executive officer, principal financial officer, principal accounting officer and controller, and other persons performing similar functions. If we make any substantive amendments to the Code of Ethics or grant any waivers, including any implicit waiver, from a provision of the Code of Ethics to any of our principal executive officer, principal financial officer, principal accounting officer, controller or other persons performing similar functions, we must disclose the nature of such amendment or waiver, the name of the person to whom the waiver was granted and the date of the amendment or waiver. A copy of our Code of Ethics for Senior Financial Officers is filed as Exhibit 14.1 to our Annual Report for the fiscal year ended December 31, 2003. In addition, we will provide any person, without charge, a copy of the Code of Ethics for Senior Financial Officers, if such person delivers a written request to us at Bertucci’s Corporation, 155 Otis Street, Northborough, MA 01532, Attn: Compliance Officer.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCLOSURE AND ANALYSIS

Overview of Compensation Program

The Chairman of our Board of Directors, Benjamin R. Jacobson (the “Chairman”), the Compensation Committee of the Board of Directors (the “Compensation Committee”) and all other members of our Board of Directors, (collectively, the “Compensation Group”), has the responsibility for establishing, implementing and monitoring the Company’s executive compensation programs.  The Compensation Group is responsible for ensuring that total compensation paid to our executives is competitive, reasonable, fair and adheres to the Company’s compensation philosophy and objectives.

Throughout this Compensation Disclosure and Analysis (“CD&A”), the individuals who served as our Chief Executive Officer and our President and Chief Financial Officer during fiscal 2006 are referred to as the “Named Executive Officers.”

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Compensation Philosophy and Objectives

The Compensation Group is committed to implementing executive compensation programs that support our business objectives, including growing revenues and earnings by building on and reinforcing the Bertucci’s and Vinny T’s of Boston brands.  Our executive compensation programs are intended to accomplish the following objectives:

·Strengthen the relationship between pay and performance by emphasizing variable, at-risk compensation that is dependent on the achievement of corporate performance goals.

·Align executives’ interests with those of shareholders by rewarding the achievement of specific annual strategic goals, with the ultimate objective of improving shareholder value.

·Attract, retain and motivate qualified executives capable of creating shareholder value.

·Generally mirror those compensation programs offered by comparable organizations within the restaurant industry.

The above policies guide the Compensation Group in assessing and evaluating the appropriate allocation between long-term compensation, current cash compensation and annual bonus compensation.  The Compensation Group also considers our business objectives, our fiduciary and corporate responsibilities, competitive practices and trends and regulatory requirements.

The Board of Directors elects our Named Executive Officers and such officers serve at the discretion of the Board of Directors.  We have not entered into any: (1)  employment agreements; (2) termination agreements or arrangements (including severance or retirement agreements or arrangements); or (3) change of control agreements or arrangements, except as discussed below under the heading “Stock Options and Change of Control” below in this CD&A, with any of our Named Executive Officers.

Role of Executive Officers in Compensation Decisions

Generally, annual salaries for Named Executive Officers are determined by the Chairman of the Board and are submitted to the Compensation Committee for approval.  The Compensation Committee consists of two directors:  James J. Morgan and Heywood Wilansky.  The Board of Directors has determined that Mr. Wilansky is “independent” under the applicable definition contained in Rule 4200(a)(15) of the NASD’s listing standards.

In addition, under our Pay for Performance Plan for Executive Officers (the “PFP”) our Named Executive Officers are eligible to receive annual non-equity incentive cash bonuses.  The amount of these bonuses, if any, is measured by: (1) our financial performance for the year in question (measured by a target that is closely related to EBITDA (the “EBITDA Target”)); and (2) a matrix of percentages (the “Percentage Matrix”) which determines what percentage of a Named Executive Officer’s base salary will be awarded as a cash bonus.   Our Named Executive Officers (in addition to other members of management), recommend the yearly EBITDA Target to our Board of Directors which must approve such target.  The Chairman and the Compensation Committee determine the Percentage Matrix for the applicable year.

Our Board of Directors administers our Amended and Restated 1997 Equity Incentive Plan (the “Equity Incentive Plan”) under which we are able to issue options and other equity based awards.  Although our Named Executive Officers are members of the Board of Directors, they do not participate in any deliberations or decisions concerning the awards that may be made to them under the Equity Incentive Plan.

Setting Executive Compensation

Based on our philosophy and objectives, the Compensation Group has designed our compensation programs to motivate and reward executives for achieving business goals.

The Company competes with many larger companies for top executive-level talent. As such, the Compensation Group generally sets total compensation for the Named Executive Officers competitive with total compensation paid to similarly situated executives of similarly situated companies.  Variations to this objective may occur as dictated by the experience level of the individual and market factors.

The Compensation Group’s policy for allocating between current and long-term compensation is to ensure adequate base compensation to attract and retain qualified personnel, while providing incentives to maximize long-term value for the Company and its shareholders.  The Company provides current compensation in the form of: (1) base salary to provide fixed compensation based on competitive market practice and to reward good performance on an annual basis; and (2) non-equity incentive cash bonus compensation under the PFP to reward superior performance against specific short-term goals.  The Company also provides long-term incentive compensation through the award of stock options.

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Base salary for the Company’s Named Executive Officers is reviewed and set annually as described above by the Chairman and the Compensation Committee.  The Chairman and the Compensation Committee also annually review the results from the prior year to determine whether prior year corporate and individual performance goals have been achieved.

With regard to the PFP, upon the recommendation of management, including the Named Executive Officers, the Board of Directors establishes the EBITDA Target and the Compensation Committee, upon the recommendation of the Chairman, establishes the Percentage Matrix.  For purposes of setting the Company’s performance-based compensation factor under the PFP, the primary factor considered by the Board of Directors is a Company-defined profitability target, closely related to EBITDA. The Board of Directors believes this is generally the “common denominator” in valuing non-publicly traded restaurant companies and this performance measure is an appropriate benchmark to assess how well the Company is performing from a financial standpoint.

In making its compensation decisions, the Compensation Group reviews and considers the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), which provides that we may not deduct compensation of more than $1 million that is paid to our Chief Executive Officer and President and Chief Financial Officer (who are our only Named Executive Officers).  We believe that compensation paid under our incentive plans are generally fully deductible for federal income tax purposes. However, in certain situations, the Compensation Group may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation for our executive officers.

Executive Compensation Components

For the fiscal year ended January 3, 2007, the principal components of compensation for the Named Executive Officers were:

·Base salary;

·PFP; and

·Perquisites and other personal benefits.

Base Salaries

Base salaries are targeted to be competitive with similarly situated executives at similar situated companies with adjustments above or below market to recognize varying levels of responsibility, prior experience, breadth of knowledge and internal equity issues. The Chairman and the Compensation Committee determine whether to make a merit increase to base salaries based on their review of the performance of the Company and the individual.

Annual Non-Equity Incentives

Each year, upon the recommendation of management, the Board of Directors approves the PFP which is designed to provide a variable pay opportunity to our Named Executive Officers based on our performance.  In connection with the PFP, the Board of Directors establishes the EBITDA Target and the Chairman and the Compensation Committee establish the Percentage Matrix.  During the past three fiscal years we have not amended or adjusted our EBITDA Target or the Percentage Matrix once they have been established.

Under the PFP, we typically provide our Named Executive Officers with cash awards, ranging from 25% to 100% of their base salaries, depending on achievement of a minimum of 95% of the EBITDA Target to a maximum of 110% of the EBITDA Target.  PFP awards are paid annually once the Company’s fiscal year results are finalized.

Perquisites and Other Personal Benefits

We also provide Named Executive Officers with perquisites and other benefits that we and our Board of Directors believe to be reasonable and necessary to attract and retain employees in critical management positions.  The Named Executive Officers are provided with either a car allowance or a Company car, and in the case of Mr. Clark only, rent, utilities and a tax “gross up” for an apartment in Massachusetts. These benefits are described below in the “Summary Compensation Table,” except where not required by the rules and regulations promulgated by the SEC.

We maintain the Bertucci’s 401(k) Plan, a defined contribution plan (the “401(k) Plan”). Under the 401(k) Plan, substantially all of our exempt and non-exempt corporate office employees may defer a portion of their current salary, on a pretax basis, to the 401(k) Plan. We make matching contributions to the 401(k) Plan. These matching contributions are allocated to the participants based on a formula as defined in the 401(k) Plan. Matching contributions made by us under the 401(k) Plan for the fiscal years 2006, 2005, and 2004 were approximately $149,000, $130,000, and $98,000, respectively.

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As a result of discrimination requirements imposed on defined contribution plans under the Code, such as the 401(k) Plan, we have determined that Named Executive Officers cannot participate in the 401(k) Plan.

In 1999, we established the Bertucci’s Corporation Executive Savings and Investment Plan, a non-qualified compensation plan, to which our highly compensated executives, including the Named Executive Officers, may elect to defer a portion of their salary and/or earned bonus (including bonuses awarded pursuant to the PFP).  We contribute matching funds to the Executive Savings and Investment Plan up to specified limits.

We replaced the original trustee of the Executive Savings and Investment Plan, Scudder Kemper Investments (“Scudder”), in December 2004 with Reliance Trust Company (“Reliance”) pursuant to a new Trust Agreement.  The Trust Agreement between us and Reliance is for the purpose of paying benefits under Executive Savings and Investment Plan and its terms are substantially similar to the trust agreement the Company entered into with Scudder in 1999. We have established an irrevocable grantor trust under the Trust Agreement and we are the grantor.

The trust assets are held separately from our other funds, but remain subject to claims of our general creditors in the event of our insolvency. As of January 3, 2007, there were 19 participants in the plan with assets in the trust having an aggregate market value of approximately $734,000.

The Named Executive Officers are eligible to participate in the Executive Savings and Investment Plan.  None of our Named Executive Officers, however, participates in this plan at the current time although they remain eligible to do so, subject to an annual election.

Stock Options and Change of Control

Our Equity Incentive Plan provides for the issuance of nonqualified stock options, among other kinds of awards, and allows us to provide equity incentives to our Named Executive Officers, key employees and directors. On September 27, 2005, the Company’s Board of Directors approved the amendment and restatement of this plan which increased the number of shares of Common Stock that are available for issuance under the plan from 750,000 to 1,100,000. The Board of Directors administers the Equity Incentive Plan and may modify or amend it in any respect.

 In general, if stock options are granted to a Named Executive Officer or another member of management, they are granted at times determined in the sole discretion of the Board of Directors.  The number of stock options awarded under Equity Incentive Plan is determined by the Board of Directors in its discretion.  In addition, stock options are occasionally issued to newly hired executive officers on the date of hire.

Stock options issued under the Equity Incentive Plan are generally: (1) granted at or above the fair value of a share of the Company’s Common Stock on the date of grant, as determined by the Board of Directors; and (2) exercisable either (a) cumulatively at the rate of 25% on or after each of the second, third, fourth and fifth anniversaries of the date of grant; or (b) only upon the fifth anniversary of the date of grant.  They typically expire 90 days following the tenth anniversary of the date of the grant.

In addition, such options, including the options held by the Named Executive Officers, generally provide that unvested options vest immediately and in full upon a transaction constituting a “Change of Control” of the Company.  With regard to the options held by the Named Executive Officers, a “Change of Control” occurs if: (1) any individual, entity or group acquires beneficial ownership of 50% or more of the outstanding Common Stock of the Company (subject to standard exceptions); (2) the Company consummates a reorganization, merger or consolidation with respect to which all or substantially all of the individuals and entities who were the beneficial owners of the Company’s Common Stock immediately prior to such transaction do not own more than 50% of the outstanding shares of the common stock of the entity resulting from such transaction; or (3) there is a sale or other disposition of all or substantially all of the assets of the Company (excluding a sale or disposition to a subsidiary of the Company).

In fiscal 2006, we did not award any stock options to the Named Executive Officers.  Assuming that a “Change of Control” of the Company occurred on January 3, 2007 the accelerated vesting of Mr. Clark’s and Mr. Lloyd’s stock options to purchase 170,000 shares each of our Common Stock would have resulted in a benefit to each of Mr. Clark and Mr. Lloyd of $1,076,000.

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The following table summarizes stock option activity for all Company optionees during the period of September 15, 1997 through January 3, 2007:

Year of Original Issue	Average Original Issue Price		Originally Granted	Since Forfeited		Exercised		Outstanding at January 3, 2007
1997	$	11.63	331,123	(245,692	)	(11,020	)	74,411
1998	$	17.51	58,429	(58,429	)	—		—
1999	$	15.00	23,541	(15,541	)	—		8,000
2000	$	13.37	199,750	(86,750	)	(1,125	)	111,875
2001	$	17.51	332,500	(299,656	)	—		32,844
2002	$	17.51	26,000	(22,000	)	—		4,000
2003	$	14.48	40,079	(3,636	)	—		36,443
2004	$	17.51	111,000	(27,000	)	—		84,000
2005	$	17.51	602,500	(52,750	)	—		549,750
2006	$	17.62	69,000	(1,000	)	—		68,000
			1,793,922	(812,454	)	(12,145	)	969,323

On January 3, 2007, 130,677 shares of Common Stock were available for grants under the Equity Incentive Plan.

The following table summarizes the compensation for the Named Executive Officers during 2006:

Summary Compensation Table

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation (a)($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings($)	All Other Compensation (b) ($)	Total ($)
Stephen V. Clark	2006	356,731	—	—	—	249,712	—	36,000	642,443
Chief Executive Officer, Vice Chairman of the Board of Directors
David G. Lloyd	2006	356,731	—	—	—	249,712	—	—	606,443
Chief Financial Officer, President

(a) These awards were paid pursuant to the PFP.

(b)  This compensation consisted of: (i) use of a rental apartment by Mr. Clark at a cost of $22,000 during fiscal 2006; and (ii) a “gross-up” payment to Mr. Clark of $14,000 to reimburse him for taxes owed in connection with the use of the rental apartment.

The following table shows all plan-based awards granted to the Named Executive Officers during fiscal 2006.

GRANTS OF PLAN BASED AWARDS - All awards reflected in this table were granted pursuant to the PFP.

		Estimated Future Payouts Under Non-Equity Incentive  Plan Awards			Estimated Future Payouts Under Equity Incentive Plan Awards			All Other  Stock Awards: Number of Shares of Stock or Units (#)	All Other  Stock Awards: Number of Securities Under-lying Options (#)	Exercise of Base Price of Option Awards ($/sh)	Grant Date Fair Value of Stock and Options Awards
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)
Stephen V. Clark	12/13/2005	87,500	175,000	350,000	—	—	—	—	—	—	—
Chief Executive Officer, Vice Chairman of the Board of Directors
David G. Lloyd	12/13/2005	87,500	175,000	350,000	—	—	—	—	—	—	—
Chief Financial Officer, President

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The following table shows all outstanding equity awards held by the Named Executive Officers at the end of fiscal 2006:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

	Option Awards			Stock Awards
	Number of securities Underlying Unexercised Options		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised  Unearned Options  (#)	Option Exercise Price   ($)		Option Expiration Date	Number of Shares or Units of  Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested   (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested   ($)
Name	# Exercisable	# Unexercisable
Stephen V. Clark	—	170,000	—	$	17.51	09/27/2015	—	—	—	—
David G. Lloyd	—	170,000	—	$	17.51	09/27/2015	—	—	—	—

There were no exercise of options by Named Executive Officers during fiscal 2006 and no shares of common stock currently owned by Named Executive Officers (see Item 12 – “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters”) are subject to any vesting requirements.

Compensation of Directors

The following table summarizes certain information regarding compensation earned or paid to the Company’s directors during fiscal 2006:

We reimburse our directors for any expenses incurred by them in connection with their attendance at meetings of the Board of Directors, or any committee thereof. In addition, all directors are eligible to receive options under our equity incentive plans.

DIRECTOR COMPENSATION

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards  ($)	Non-Equity Incentive Plan Compensation ($)	Change in Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation (a) ($)	Total ($)
Benjamin R. Jacobson	—	—	—	—	—	15,728	15,728
James J. Morgan	—	—	—	—	—	11,460	11,460
Sally M. Dungan	22,500	—	—	—	—	—	22,500
James N. Moriarty	27,500	—	—	—	—	—	27,500
James R. Parish	17,500	—	—	—	—	—	17,500
Heywood Wilanksy	22,500	—	—	—	—	—	22,500

(a)– Mr. Jacobson and Mr. Morgan have automobile leases paid on their behalf by the Company.

Independent directors are paid: (1) a quarterly stipend of $2,500 for serving on the Board of Directors; (2) a payment of $2,500 for each Board of Directors meeting they attend (either in person or telephonically); and (3) if they are a member of the Audit Committee, a payment of $1,000 for each Audit Committee meeting they attend (either in person or telephonically).

We reimburse our directors for any expenses incurred by them in connection with their attendance at meetings of the Board of Directors, or any committee thereof.  In addition, all directors are eligible to receive options under our Equity Incentive Plan.

Directors receive no other compensation from us for serving on the Board of Directors or a committee of the Board of Directors.

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Compensation Committee Report

The Compensation Committee reviewed and discussed the above CD&A with the Company’s management.  Based on the review and discussions, the Compensation Committee recommended to the Company’s Board of Directors that the CD&A be included in this Annual Report on Form 10-K.

Compensation Committee

James J. Morgan

Heywood Wilansky

Compensation Committee Interlocks and Insider Participation

Effective as of January 1, 1998, the Board of Directors appointed a Compensation Committee. During fiscal 2006, Mr. Morgan and Mr. Wilansky were the only members of the Compensation Committee. Mr. Morgan has been a Partner with Jacobson Partners since 2001. We entered into a financial advisory services agreement with Jacobson Partners in 1998 pursuant to which we have been paying Jacobson Partners consulting fees and reimbursing Jacobson Partners for certain travel and other incidental expenses. We paid Jacobson Partners $386,000 in fiscal 2006 (including $136,000 in connection with the Vinny T’s Acquisition) and $250,000 in fiscal 2005 for its services under this agreement. See “Item 13. Certain Relationships and Related Transactions.”

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table provides information at April 3, 2007, with respect to ownership of our Common Stock, $0.01 par value per share, by (i) each beneficial owner of five percent or more of our Common Stock, (ii) each of our directors who beneficially owns shares of Common Stock, (iii) each of the Named Executive Officers and (iv) all directors and executive officers as a group. For the purpose of computing the percentage of the shares of Common Stock owned by each person or group listed in this table, shares which are subject to options exercisable within 60 days after April 3, 2007 have been deemed to be outstanding and owned by such person or group, but have not been deemed to be outstanding for the purpose of computing the percentage of the shares of Common Stock owned by any other person. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them.

	Shares
	Beneficially	Percent
Name and Address of Beneficial Owner	Owned	of Class
Benjamin R. Jacobson (1)	986,201	31.2	%
595 Madison Avenue
New York, New York 10022
Thomas R. Devlin (2)	316,660	10.3	%
1313 North Webb Road
P.O. Box 782170
Wichita, Kansas 67206
Dennis D. Pedra (3)	230,605	7.7	%
James J. Morgan (4)	51,833	1.7	%
Stephen V. Clark	46,192	1.5	%
David G. Lloyd	39,716	1.3	%
James R. Parish	18,422	*
Sally M. Dungan	4,000	*
Heywood Wilansky	5,000	*
James N. Moriarty	3,500	*
All directors and executive officers as a group (8 persons) (5)	1,154,804	36.9	%

* Less than 1%

(1)Includes (a) 613,273 shares of Company Common Stock held by J.P. Acquisition Fund II, L.P., a Delaware limited partnership (“JPAF II”), (b) 149,599 shares of Company Common Stock issuable upon exercise of outstanding stock options within the parameters described above, and (c) 21,217 shares of Company Common Stock held by trusts for the benefit of Mr. Jacobson’s children, with respect to which a third party is trustee and has voting control. JPAF, Limited Partnership, a Delaware limited partnership (“JPAF LP”) is the General Partner of JPAF II. The General Partner of JPAF LP is JPAF, Inc., a Delaware corporation. Mr. Jacobson is the president and majority shareholder of JPAF, Inc. Mr. Jacobson disclaims beneficial ownership of the shares described (i) in clause (a) above, except to the extent of his general partnership interest in JPAF II, and (ii) in clause (c) above.

(2)Includes (a) 67,834 shares of Company Common Stock held by JPAF II, representing Mr. Devlin’s pro rata interest as a limited partner of JPAF II; and (b) 4,000 shares of Company Common Stock issuable upon exercise of outstanding stock options within the parameters described above.

(3)Includes 33,000 shares of Company Common Stock held by trusts for the benefit of Mr. Pedra’s children, with respect to which Mr. Pedra’s sister is trustee and has sole voting control.

(4)Includes (a) 8,482 shares of Company Common Stock held by JPAF II, representing Mr. Morgan’s pro rata interest as a limited partner of JPAF II; and (b) 6,000 shares of Company Common Stock issuable upon exercise of outstanding stock options within the parameters described above.

(5)Includes (a) 161,599 shares of Company Common Stock issuable upon exercise of outstanding stock options within the parameters described above; and (b) the 8,482 shares described in (4) above.

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Shareholders Agreement

We are a party to a shareholder agreement with our current shareholders (collectively, the “Shareholder Agreement”).  The Shareholder Agreement provides, among other things, that (i) a shareholder may not transfer his or its shares in the Company, whether voluntarily or by operation of law, other than in certain limited circumstances specified therein, including transfers through a right of first refusal procedure, distributions by certain legal entities to the constituents of such entities (i.e. a partnership to its partners), transfers by will or intestate succession, transfers approved by the Board of Directors to an affiliate of a shareholder or to another shareholder, transfers to family members or trusts for their benefit, and any transfer unanimously approved by the Board of Directors, (ii) we have the option to purchase the shares of any shareholder who is an employee of ours following the termination of such shareholder’s employment with us for any reason at a purchase price equal to the fair value or original purchase price (plus accrued interest in certain circumstances) depending upon the reason for such termination, (iii) we have the option to purchase the shares of any shareholder who is an employee of ours following certain transfer events, including such shareholders’ bankruptcy or a court-ordered transfer of such shareholder’s stock, (iv) if we fail to exercise our option to purchase as described in the immediately preceding clause (iii), the remaining shareholders have the option to purchase the applicable shares, (v) in the event an employee shareholder leaves our employment due to death, disability or hardship or, with respect to certain shares, is terminated by us without cause, such shareholder has a one-time option to require us to purchase such shareholder’s shares at the greater of fair value or the original purchase price, subject to certain approval by the Board of Directors, excluding effected employees, (vi) no transfer of shares may occur unless the transferee thereof agrees to be bound by the terms of the Shareholders Agreement and (vii) all share certificates must bear customary legends and all share transfers must be in compliance with applicable securities laws.

Equity Compensation Plan Information

We maintain equity compensation plans for employees, officers, directors and others whose efforts contribute to our success. The table below sets forth certain information as of our fiscal year ended January 3, 2007 regarding shares of our Common Stock available for grant or granted under the equity compensation plans (i) approved by our stockholders; and (ii)  not approved by our stockholders.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders	680,394	$	16.51	69,606
Equity compensation plans not approved by security holders	288,929	$	17.55	61,071
Total	969,323	$	16.82	130,677

In 1997, the Board of Directors adopted the Equity Incentive Plan, pursuant to which we authorized 750,000 shares of Common Stock for issuance in connection with equity incentive awards. Our shareholders originally approved the Equity Incentive Plan in 1997. In 2005, however, the Board of Directors amended and restated the Equity Incentive Plan (the “Amended and Restated Equity Incentive Plan”) to, among other things, increase the total number of shares of Common Stock authorized for issuance under the plan to 1,100,000 shares without seeking additional shareholder approval. Accordingly, in the foregoing chart, shares of Common Stock subject to awards under the Amended and Restated Equity Incentive Plan are included in columns (a) and (c) under both the “approved by security holders” and “not approved by security holders” categories. Shares of Common Stock covered by awards that expire or otherwise terminate will again become available for grant.  A copy of the Amended and Restated Equity Incentive Plan is attached as Exhibit 10.22 to our Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on October 3, 2005.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Disclosure of Related-Party Transactions

Benjamin R. Jacobson, our Chairman of the Board of Directors and Treasurer, is the Managing Partner of Jacobson Partners. In addition, James Morgan, one of our directors and a member of our compensation committee, is a Partner of Jacobson Partners. In connection with the Bertucci’s Acquisition, in 1998 we entered into a financial advisory services agreement with Jacobson Partners. Under this agreement (a) Jacobson Partners provides various financial advisory services to us, including, among other things, assistance in preparing internal budgets, performing cash management activities, maintaining and improving accounting and other management information systems, negotiating financing arrangements, complying with public reporting and disclosure requirements and communicating with creditors and investors, and (b) we pay Jacobson Partners consulting fees and reimburse Jacobson Partners for certain travel and other incidental expenses. We paid Jacobson Partners $386,000 in fiscal 2006 (including $136,000 in connection with the Vinny T’s Acquisition) and $250,000 in fiscal 2005 for its services under this agreement. We believe the financial advisory services agreement was made on terms no less favorable to us than those obtainable from an unrelated party.

30

During 1999, we established the Bertucci’s Corporation Executive Savings and Investment Plan to which our highly compensated executives may elect to defer a portion of their salary and (or) earned bonus. In connection with this plan, we maintain an irrevocable grantor trust which has been established by us, as grantor, pursuant to a Trust Agreement with Reliance Trust Company, dated December 2004. The agreement is between us and Reliance Trust Company, as trustee, and is for the purpose of paying benefits under the Executive Savings and Investment Plan to certain members of management. The trust assets are held separately from our other funds, but remain subject to claims of our general creditors in the event of our insolvency. As of January 3, 2007, there were 19 participants in the plan with assets in the trust with an aggregate market value of approximately $734,000.

Review, Approval or Ratification of Transactions with Related Persons

Our Board of Directors is responsible for reviewing and approving related-party transactions, as defined by the SEC, for potential conflict of interest situations on an ongoing basis, unless such duty has been delegated to another committee of the Board of Directors.  Management reports any related-party transactions under consideration at each Board of Directors meeting and, after review, the Board of Directors approves or disapproves such transactions, provided that any director who has an interest in such related-party transaction recuses himself from participating in the review and vote concerning the related-party transaction.  If advanced approval of a related-party transaction is not feasible, then the related-party transaction is considered, and, if the Board of Directors determines it to be appropriate, ratified at the next Board of Directors meeting.

In reviewing, approving or ratifying related-party transactions, the Board of Directors is responsible for obtaining the material facts of the related-party transaction, reviewing whether the related-party transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, and considering such factors as it deems appropriate.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of the fees billed to us by Deloitte & Touche LLP (“Deloitte”) for professional services rendered for the fiscal years 2006 and 2005:

Fee Category	2006		2005
Audit Fees	$	253,825	$	236,700
Tax Fees	50,100		51,000
All Other Fees	21,168		99,007
Total Fees	$	325,093	$	386,707

Audit Fees. The Audit Fees consist of aggregate fees incurred for professional services rendered for the audit of our annual consolidated financial statements and review of our interim consolidated financial statements included in quarterly reports.

Audit-Related Fees. We did not incur any Audit-Related Fees in fiscal 2006 or 2005.

Tax Fees. The Tax Fees consist of aggregate fees incurred for professional services for tax compliance, tax advice and tax planning. These services included assistance regarding federal and state tax compliance.

All Other Fees. Fees incurred for professional services rendered in connection with the Vinny T’s Acquisition (2006) and the restatements of our financial statements (2005) are included in All Other Fees.

Audit Pre-Approval of Policies and Procedures

The Audit Committee’s policy, since its formation in February 2004, has been to pre-approve all audit and permissible non-audit services provided by our independent auditors. These services may include audit services, audit-related services, tax services and other services. The Audit Committee may also pre-approve particular services on a case-by-case basis.

Audit Committee Approval of Fees

Our Audit Committee approved all Audit-Related Fees, Tax Fees and All Other Fees listed above and provided by Deloitte to us during fiscal 2006.

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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)	The following documents are filed as part of this report:
	(1)	Financial Statements:
		Report of Independent Registered Public Accounting Firm
		Consolidated Balance Sheets as of January 3, 2007 and December 28, 2005
		Consolidated Statements of Operations for each of the years ended January 3, 2007, December 28, 2005, and December 29, 2004
		Consolidated Statements of changes in Stockholders’ Deficit for each of the years ended January 3, 2007, December 28, 2005, and December 29, 2004
		Consolidated Statements of Cash Flow for each of the years January 3, 2007, December 28, 2005, and December 29, 2004
		Notes to Consolidated Financial Statements
	(2)	Exhibit Index

32

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BERTUCCI’S CORPORATION
By:	/s/ Stephen V. Clark
	Stephen V. Clark, Chief Executive Officer and Director
Date: April 3, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Benjamin R. Jacobson	Chairman of the Board of Directors	April 3, 2007
Benjamin R. Jacobson
/s/ Stephen V. Clark	Vice Chairman of the Board of Directors, Chief	April 3, 2007
Stephen V. Clark	Executive Officer and Director (Principal Executive
	Officer)
/s/ David G. Lloyd	President, Chief Financial Officer and Director	April 3, 2007
David G. Lloyd	(Principal Financial and Accounting Officer)
/s/ Sally M. Dungan	Director	April 3, 2007
Sally M. Dungan
/s/ James J. Morgan	Director	April 3, 2007
James J. Morgan
/s/ James N. Moriarty	Director	April 3, 2007
James N. Moriaty
/s/ James R. Parish	Director	April 3, 2007
James R. Parish
/s/ Heywood Wilansky	Director	April 3, 2007
Heywood Wilansky

33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Bertucci’s Corporation

Northborough, Massachusetts

We have audited the accompanying consolidated balance sheets of Bertucci’s Corporation and subsidiaries (the “Company”) as of January 3, 2007 and December 28, 2005, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for each of the years ended January 3, 2007, December 28, 2005 and December 29, 2004. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 3, 2007 and December 28, 2005, and the results of its operations and its cash flows for each of the years ended January 3, 2007, December 28, 2005 and December 29, 2004, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the Company adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share-Based Payment, effective December 29, 2005.

/s/ DELOITTE & TOUCHE LLP

Boston, Massachusetts

April 3, 2007

34

BERTUCCI’S CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands except share data)

	January 3,			December 28,
	2007			2005
ASSETS
Current Assets:
Cash and cash equivalents	$	28,446		$	21,382
Restricted cash	2,185			2,187
Accounts receivable	1,143			771
Inventories	1,698			1,534
Prepaid expenses and other current assets	2,618			897
Total current assets	36,090			26,771
Property and Equipment, at cost:
Land	259			259
Buildings	697			697
Capital leases - land and buildings	5,764			5,764
Leasehold improvements	77,554			68,433
Furniture and equipment	52,000			46,787
	136,274			121,940
Less - accumulated depreciation and amortization	(79,033		)	(67,509		)
	57,241			54,431
Construction work in process	999			—
Net property and equipment	58,240			54,431
Goodwill	26,127			26,127
Deferred finance costs, net	1,469			2,165
Liquor licenses, net	2,301			2,358
Other assets	970			693
TOTAL ASSETS	$	125,197		$	112,545
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Promissory notes - current portion	$	43		$	42
Capital lease obligations - current portion	126			107
Accounts payable	12,033			8,603
Accrued expenses	22,078			19,129
Total current liabilities	34,280			27,881
Promissory notes, net of current portion	4,356			738
Captial lease obligations, net of current portion	5,871			5,982
Senior Notes	85,310			85,310
Deferred gain on sale leaseback transaction	1,782			1,892
Deferred rent and other long-term liabilities	8,399			8,045
Total liabilities	139,998			129,848
Commitments and Contingencies
Stockholders’ Deficit:
Common stock, $.01 par value
Authorized - 8,000,000 shares
Issued - 3,767,995 and 3,764,995 shares, respectively;
Outstanding - 3,008,317 and 3,012,982 shares, respectively	38			38
Less 759,678 and 752,013 treasury shares, respectively, at cost	(8,603		)	(8,480		)
Additional paid-in capital	29,781			29,617
Accumulated deficit	(36,017		)	(38,478		)
Total stockholders’ deficit	(14,801		)	(17,303		)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	125,197		$	112,545

The accompanying notes are an integral part of these consolidated financial statements.

35

BERTUCCI'S CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except share and per share data)

	January 3,			December 28,			December 29,
	2007			2005			2004
Net sales	$	226,444		$	204,784		$	200,408
Cost of sales and expenses:
Cost of sales	51,638			47,611			49,231
Operating expenses	135,136			123,253			122,056
General and administrative expenses	15,044			14,442			13,065
Deferred rent, depreciation, amortization and preopening expenses	11,399			11,228			12,657
Asset impairment charge	48			982			6,749
Total cost of sales and expenses	213,265			197,516			203,758
Income (loss) from operations	13,179			7,268			(3,350		)
Interest expense, net	(10,143		)	(10,411		)	(10,613		)
Income (loss) before income tax provision	3,036			(3,143		)	(13,963		)
Income tax provision	575			—			—
Net income (loss)	$	2,461		$	(3,143	)	$	(13,963	)
Basic income (loss) per share	$	0.82		$	(1.06	)	$	(4.74	)
Basic weighted average shares outstanding	3,014,363			2,960,025			2,943,841
Diluted income (loss) per share	$	0.80		$	(1.06	)	$	(4.74	)
Diluted weighted average shares outstanding	3,090,053			2,960,025			2,943,841

The accompanying notes are an integral part of these consolidated financial statements.

36

BERTUCCI'S CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

(In thousands except share data)

	Common Stock			Treasury Stock										Total
	Number of			Number of					Additional Paid		Accumulated			Stockholders'
	Shares	Amount		Shares		Amount			In Capital		Deficit			Deficit
Balance December 31, 2003	3,666,370	$	37	(704,818	)	$	(8,190	)	$	29,035	$	(21,372	)	$	(490	)
Net loss	—	—		—		—			—		(13,963		)	(13,963		)
Sale of common stock from exercise of options	1,125	—		—		—			11		—			11
Purchase of common stock for treasury	—	—		(47,195	)	(290		)	—		—			(290		)
Balance December 29, 2004	3,667,495	$	37	(752,013	)	$	(8,480	)	$	29,046	$	(35,335	)	$	(14,732	)
Net loss	—	—		—		—			—		(3,143		)	(3,143		)
Issuance of common stock	37,500	—		—		—			172		—			172
Sale of common stock	60,000	1		—		—			399		—			400
Balance December 28, 2005	3,764,995	$	38	(752,013	)	$	(8,480	)	$	29,617	$	(38,478	)	$	(17,303	)
Net income	—	—		—		—			—		2,461			2,461
Sale of common stock	3,000	—		—		—			39		—			39
Purchase of common stock for treasury	—	—		(7,665	)	(123		)	—		—			(123		)
Stock compensation expense	—	—		—		—			125		—			125
Balance January 3, 2007	3,767,995	$	38	(759,678	)	$	(8,603	)	$	29,781	$	(36,017	)	$	(14,801	)

The accompanying notes are an integral part of these consolidated financial statements.

37

BERTUCCI'S CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands)

	January 3, 2007			December 28, 2005			December 29, 2004
Cash flows from operating activities
Net income (loss)	$	2,461		$	(3,143	)	$	(13,963	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Stock compensation expense	125			172			—
Loss on equipment disposals	72			170			—
Asset impairment charge	48			982			6,749
Deferred rent, depreciation, and amortization	11,977			11,568			12,863
Changes in operating assets and liabilities
Inventories	114			(146		)	(120		)
Prepaid expenses and receivables	(1,666		)	200			643
Other accrued expenses	1,753			2,270			2,186
Income taxes payable	372			—			(413		)
Accounts payable	2,435			784			(607		)
Tenant allowances received	—			250			577
Other operating assets and liabilities	(212		)	(180		)	(34		)
Total adjustments	15,018			16,070			21,844
Net cash provided by operating activities	17,479			12,927			7,881
Cash flows from investing activities
Acquistion of business	(3,643		)	—			—
Additions to property and equipment	(6,556		)	(4,324		)	(8,598		)
Decrease in restricted cash	2			216			726
Net cash used in investing activities	(10,197		)	(4,108		)	(7,872		)
Cash flows from financing activities
Sale of common stock	39			400			11
Purchase of treasury shares	(123		)	—			(290		)
Payment on promissory notes	(42		)	(40		)	(39		)
Principal payments under capital lease obligations	(92		)	(88		)	(47		)
Net cash (used in) provided by financing activities	(218		)	272			(365		)
Net incease (decrease) in cash and cash equivalents	7,064			9,091			(356		)
Cash and cash equivalents, beginning of year	21,382			12,291			12,647
Cash and cash equivalents, end of year	$	28,446		$	21,382		$	12,291
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	10,079		$	10,096		$	10,090
Cash paid for income taxes	$	203		$	—		$	377
Promissory note issued in acquisition of business	$	3,661		$	—		$	-
Capital leases entered into during period	$	—		$	—		$	175

38

BERTUCCI’S CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 3, 2007

(1)ORGANIZATION AND OPERATIONS

Bertucci’s Corporation, a Delaware corporation (the “Company”), owns and operates two chains of full-service casual dining, Italian-style restaurants under the names (1) Bertucci’s Brick Oven Pizzeria® or Bertucci’s Brick Oven Ristorante®; and (2) Vinny T’s of Boston®. The Company was incorporated in 1994 as NE Restaurant Company, Inc. and formally changed its name to Bertucci’s Corporation on August 16, 2001. As of January 3, 2007, the Company operated 92 Bertucci’s restaurants and 11 Vinny T’s of Boston® restaurants located primarily in the northeast United States.

In July 1998, the Company completed its acquisition of Bertucci’s Restaurant Corp.’s parent entity, Bertucci’s, Inc., for a purchase price, net of cash received, of approximately $89.4 million (the “Bertucci’s Acquisition”). The Company financed the Bertucci’s Acquisition primarily through the issuance of $100 million of 10¾% senior notes due 2008 (the “Senior Notes”). $85.3 million in principal of the Senior Notes are still outstanding.

Fiscal Year End

The Company’s fiscal year is the 52 or 53-week period ending on the Wednesday closest to December 31st. Fiscal year 2006 consisted of 53 weeks. All other fiscal years presented herein were 52 weeks.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

(2)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company records revenue from the sale of food, beverage and alcohol when sales occur. When a gift card is issued and proceeds are received, a liability is recorded. As gift cards are redeemed, this liability is reduced and revenue is recognized. Gift card breakage income (“breakage”) is recognized when the likelihood of the redemption of the card becomes remote. Gift card breakage of $262,000 was recorded as a reduction of operating expenses in fiscal 2006.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of institutional money market accounts, demand and interest bearing accounts with original maturities of no more than sixty days. These money market accounts allow daily settlement without penalty. The Company typically invests on an overnight basis and considers such amounts to be cash equivalents. The Company utilizes zero balance disbursement accounts for cash management purposes and maintains a cash balance sufficient to cover disbursements from these accounts when checks are presented for payment. Outstanding checks written against the disbursement accounts of $2.9 million and $0.9 million at January 3, 2007 and December 28, 2005, respectively, are included in accounts payable in the accompanying consolidated balance sheets. The carrying value of these instruments approximates market value due to their short term nature.

Restricted Cash

The Company is required to maintain cash as collateral for outstanding letters of credit under its letter of credit facility.

Concentrations of Credit Risk

Financial instruments potentially exposing the Company to concentrations of credit risk consist mainly of cash and cash equivalents. The Company maintains its cash and cash equivalents in financial institutions of high credit standing.  The Company believes no significant credit risk exists as of January 3, 2007 and December 28, 2005.

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Inventories

Inventories are carried at the lower of cost (first-in, first-out) or market value, and consist of the following (dollars in thousands):

	2006		2005
Food	$	904	$	847
Liquor	686		578
Supplies	108		109
Total inventory	$	1,698	$	1,534

Property and Equipment

Property and equipment are carried at cost. The Company provides for depreciation and amortization using the straight-line method to charge the cost of property and equipment to expense over the estimated useful lives of the assets. The lives used are as follows:

Asset Classification	Estimated Useful Life
Buildings	20 years
Leasehold improvements	Shorter of term of the lease (ranging between 10-20 years), or life of asset
Furniture and equipment	3-7 years

Depreciation expense was $11.8 million, $10.8 million, and $11.5 million in fiscal 2006, 2005, and 2004, respectively.

The Company evaluates property and equipment held and used in the business for impairment whenever events or changes in circumstances indicate the carrying amount of a restaurant’s assets may not be recoverable. An impairment is determined by comparing estimated undiscounted future operating cash flows for a restaurant to the carrying amount of its assets. If an impairment exists, the amount of impairment is measured as the excess of the carrying amount over the estimated discounted future operating cash flows of the asset and the expected proceeds upon sale of the asset.

The Company regularly assesses its restaurants’ performance for recoverability to determine if an impairment of fixed assets exists at any location. The Company estimates the fair value of assets based on the net present value of the expected cash flows for each restaurant. If the carrying amount of the assets (including any non-transferable liquor licenses) exceeds the fair value of the assets, the Company records an impairment charge to reflect the write down of the affected assets to fair value. Impairment charges recorded were $48,000, $1.0 million, and $6.7 million in fiscal 2006, 2005, and 2004, respectively. Impairment charges recorded in fiscal 2006 represent maintenance capital in two previously fully impaired restaurants.

Interest

Total interest costs incurred, interest income realized and amounts capitalized are as follows (dollars in thousands):

	2006			2005			2004
Interest expense	$	11,048		$	10,766		$	10,799
Interest income	(885		)	(341		)	(109		)
Interest capitalized	(20		)	(14			(77		)
Interest expense, net	$	10,143		$	10,411		$	10,613

The Company capitalizes interest expense into leasehold improvements based on the costs incurred to construct new restaurants.

Self-Insurance

The Company is self-insured for certain losses related to general liability, group health insurance, and workers’ compensation. The Company maintains stop loss coverage with third party insurers to limit its total exposure. The self-insurance liability is not discounted and represents an estimate of the ultimate cost of claims incurred as of the balance sheet date based upon analysis of historical data and estimates.

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Accrued Expenses

Accrued expenses consisted of the following as of January 3, 2007 and December 28, 2005 (dollars in thousands):

	2006		2005
Accrued payroll and related benefits	$	7,125	$	5,994
Unredeemed gift cards	5,142		4,392
Accrued interest	4,500		4,228
Other accrued liabilities	3,022		2,669
Deferred rent and other occupancy costs	2,289		1,846
TOTAL	$	22,078	$	19,129

Goodwill

The Company tests goodwill for impairment annually on the first day after the fiscal year end. This same impairment test is performed at other times during the course of the year should an event occur indicating goodwill may be impaired. There was no impairment of goodwill at January 3, 2007 or December 28, 2005.

Deferred Finance Costs

Underwriting, legal and other direct costs incurred in connection with the issuance of the Senior Notes and the completion of the sale-leaseback transactions discussed in Note 6 have been capitalized and are being amortized into interest expense over the life of the related borrowings and underlying leases, respectively.

Liquor Licenses

Transferable liquor licenses are accounted for at the lower of cost or market and are not amortized. Annual renewal fees are expensed as incurred. Non-transferable liquor licenses are amortized on a straight-line basis over the contractual life of the license. The carrying value of transferable liquor licenses was $2.0 million at each of January 3, 2007 and December 28, 2005. Amortization expense for non-transferable liquor licenses was $56,000, $56,000, and $82,000 in fiscal 2006, 2005, and 2004, respectively. For existing licenses, amortization expense is expected to be $56,000 per year for each of the next five fiscal years.

Fair Value of Financial Instruments

The Company’s financial instruments mainly consist of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, utility purchase contracts, and long-term debt. The carrying amounts of the Company’s cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s long term debt, consisting of the Senior Notes and promissory notes, is based on the present value of remaining principal and interest payments discounted at a comparable borrowing rate each fiscal year and approximates fair value.

Comprehensive Income

Comprehensive income is equal to net income as reported for all three fiscal years reported herein.

Preopening Expenses

Preopening costs are expensed as incurred. These costs include the training of new restaurant management teams; travel and lodging for both the training and opening unit management teams; and the food, beverage and supplies costs incurred to perform the training and testing of all equipment, concept systems and recipes.

Advertising

Advertising costs are expensed as incurred. Advertising costs were $5.8 million in fiscal 2006 and 2005, and $6.6 million in fiscal 2004, and are included in operating expenses in the consolidated statements of operations.

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Utility Purchase Commitments

The Company has executed contracts to provide electricity to thirty-nine restaurants at a fixed rate per kilowatt through 2009. The Company believes these contracts qualify for the “normal purchases” exception as defined by Statement of Financial Accounting Standards (“SFAS”) No. 133, Accounting for Derivative Instruments and Hedging Activities. Therefore, the contracts are not required to be marked to market through the Consolidated Statement of Operations. The purchase commitments below represent an estimate of the minimum usage per year multiplied by the contracted rates (dollars in thousands):

Year
2007	$	1,468
2008	1,468
2009	1,345
	$	4,281

In addition, the Company  executed contracts to provide natural gas to eighty-two restaurants at a fixed price per therm through May 2007. These contracts do not qualify for the “Normal Purchase” exception, and are not considered hedges.  The Company has recorded a $181,000 unrealized loss in operating expenses in the consolidated statement of operations in order to mark these contracts to market as of January 3, 2007. The purchase commitment through the remaining contract period is $900,000.

Earnings Per Share

Basic income or loss per share is computed by dividing net income or loss by the weighted average number of common shares outstanding for the reporting period. Diluted income per share reflects the potential dilution that could occur if options or other contracts to issue common stock were exercised or converted into common stock. Dilutive shares added to the weighted average number of common shares outstanding for the fiscal year 2006 for this calculation were 75,691. Dilutive shares were determined using the treasury stock method for in-the-money stock options as of January 3, 2007. For the fiscal years ended December 28, 2005 and December 29, 2004 options representing 970,929 and 548,171 shares of common stock, respectively, were excluded from the calculation of diluted loss per share because of their anti-dilutive effect.

Stock-Based Compensation

Effective December 29, 2005, the Company adopted the provisions of SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123R”), and Staff Accounting Bulletin No. 107 (“SAB 107”) using the modified prospective method. Under the modified prospective provisions of SFAS No. 123R, compensation expense is recorded for the unvested portion of previously granted awards that were outstanding on December 29, 2005 and all subsequent awards. SFAS No. 123R requires that all stock-based compensation expense be recognized in the financial statements based on the fair value of the awards. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. The Company calculates the fair value of stock options using the Black-Scholes option-pricing model. SFAS No. 123R also amends SFAS No. 95, “Statement of Cash Flows”, to require that excess tax benefits related to stock-based compensation be reflected as cash flows from financing activities rather than cash flows from operating activities.

Segment Reporting

The Company’s operations have been aggregated into one single reporting segment, as permitted by SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, since its operations have similar economic characteristics, products, production processes, types of customers and distribution methods.

Use of Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the reserve for closed restaurant locations, impairment analysis on long-lived assets, and self-insurance reserves. Actual results could differ from those estimates.

42

Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), an interpretation of SFAS No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty in tax positions and requires that the impact of tax positions be recorded in the financial statements if it is more likely than not that such position will be sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The Company does not expect the adoption of FIN 48 to have a material effect on its consolidated financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS No. 157”), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles. The provisions of SFAS No. 157 are effective for fiscal years beginning after November 15, 2007. The Company is evaluating the expected impact that the adoption of SFAS No. 157 will have on its consolidated financial position and results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. If the fair value option is elected, unrealized gains and losses will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company is evaluating the impact SFAS No. 159 may have on its consolidated financial position and results of operations.

(3)CLOSED RESTAURANT RESERVE

The Company has recorded reserves relating to lease commitments at certain closed locations, including other exit costs for which the Company is still primarily liable. It was originally expected the Company would be able to exit these locations, sublease the locations or otherwise be released from the related leases. However, due to market conditions, the Company was unable to sell, sublease or exit certain of these leases as originally anticipated.

Activity within the Company’s closed restaurants reserve was as follows (dollars in thousands):

	2006			2005			2004
Balance, beginning of year	$	372		$	659		$	1,449
Lease and related costs charged to reserve	(86		)	(287		)	(790		)
Balance, end of year	$	286		$	372		$	659
Current portion	$	207		$	270		$	484
Noncurrent portion	79			102			175
	$	286		$	372		$	659

The closed restaurant reserve was calculated net of sublease income at nine locations partially or fully subleased as of January 3, 2007. The Company remains primarily liable for the remaining lease obligations should the sublessee default. Total sublease income excluded from the reserve is approximately $5.0 million for subleases expiring at various dates through 2017. One tenant has defaulted under the terms of the Company’s sublease but the net exposure to the Company has been provided for in the reserves above.

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(4)INCOME TAXES

The components of the provision for income taxes for the fiscal years 2006, 2005, and 2004, respectively, are as follows (dollars in thousands):

	2006			2005			2004
Current:
Federal	$	315		$	—		$	—
State	260			—			—
	575			—			—
Deferred:
Federal	(2,491		)	(1,473		)	(5,669		)
State	(266		)	(95		)	(413		)
	(2,757		)	(1,568		)	(6,082		)
Valuation allowance	2,757			1,568			6,082
Total provision for income taxes	$	575		$	—		$	—

A reconciliation of the amount computed by applying the statutory federal income tax rate of 35% to the income (loss) before income tax provision for the fiscal years 2006, 2005, and 2004, respectively, is as follows (dollars in thousands):

	2006			2005			2004
Income tax expense (benefit) computed at federal statutory rate	$	1,063		$	(1,100	)	$	(4,887	)
State taxes, net of federal benefit	138			(95		)	(413		)
Employment related tax credits and other, net	(2,985		)	(983		)	(782		)
Other	(398		)	610			—
Valuation allowance	2,757			1,568			6,082
Income tax provision	$	575		$	—		$	—

Significant items giving rise to deferred tax assets and deferred tax liabilities at January 3, 2007 and December 28, 2005 are as follows (dollars in thousands):

	2006			2005
Deferred tax assets–
Property and equipment, including impairment charges	$	9,398		$	5,931
Net operating loss and tax credit carryforwards	7,909			6,418
Goodwill and other intangible assets	3,215			—
Deferred rent	3,041			3,226
All other deferred tax assets	3,390			2,505
	26,953			18,080
Deferred tax liabilities–
Liquor licenses	(532		)	(234		)
	(532		)	(234		)
Total net deferred tax assets	26,421			17,846		)
Valuation allowance	(26,421		)	(17,846		)
Carrying value of net deferred tax assets	$	—		$	—

The Company acquired approximately $5.8 million of future income tax benefits statutorily available to the Company through the Vinny T’s Acquisition. Because of the history of tax losses of the Company and Vinny T’s, the Company concluded a valuation allowance for the amount of the net future tax benefits was appropriate.

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The future tax benefits which give rise to the deferred tax asset remain statutorily available to the Company. The Company considers both negative and positive evidence in determining if a valuation allowance is appropriate. The Company had tax credit carryforwards of $7.5 million and net operating loss carryforwards of $1.4 million (representing $0.4 million net of tax) as of January 3, 2007 which expire at various dates through 2026. The Company has an historical trend of recurring pre-tax losses. Based on the historical trend of losses, the Company concluded a valuation allowance for the net deferred tax asset remains appropriate. Actual amounts realized will be dependent on generating future taxable income.

(5)SENIOR NOTES AND PROMISSORY NOTES PAYABLE

The Company has outstanding 10¾% Senior Notes with a current face value of $85.3 million due 2008 (the “Senior Notes”). Interest on the Senior Notes is payable semi-annually on January 15 and July 15. Through maturity in 2008, the Company may, at its option, redeem any or all of the Senior Notes at face value. Under certain circumstances, including a change of control or following certain asset sales, the holders of the Senior Notes may require the Company to repurchase the Senior Notes, at a redemption price of 101%. The Senior Notes are fully and unconditionally guaranteed, on a joint and several basis, on an unsecured senior basis, by all of the Company’s subsidiaries. The Senior Notes contain no financial covenants and the Company is in compliance with or has obtained waivers for all non-financial covenants as of January 3, 2007.

In connection with the Vinny T’s Acquisition, the Company issued a Promissory Note to BUCA. The principal balance of the Promissory Note was $3.6 million as of January 3, 2007. The Promissory Note contains no covenants and bears interest at the rate of 9% payable in two equal installments on September 25, 2007 and July 15, 2008. The Promissory Note is due in full on July 15, 2008 or earlier upon the occurrence of certain other events, including if the Company has a change in control (as defined in the Promissory Note), the consummation of an initial public offering, or the redemption, repurchase, refinancing or payment of the Company’s Senior Notes.

 (6)COMMITMENTS AND CONTINGENCIES

Letter of Credit Facility

The Company has a $4.0 million (maximum) letter of credit facility as collateral with third party administrators for self insurance reserves. As of January 3, 2007, this facility was collateralized with $2.2 million of cash restricted from general use. Letters of credit totaling $2.2 million were outstanding pursuant to this facility as of January 3, 2007 and December 28, 2005 and expire in December 2007.

Operating Leases

The Company has entered into numerous lease arrangements, primarily for restaurant land, equipment and buildings, which are non-cancelable and expire on various dates through 2027.

Some operating leases contain rent escalation clauses whereby the rent payments increase over the term of the lease. Rent expense includes base rent amounts, percentage rent payable periodically, as defined in each lease, and rent expense accrued to recognize lease escalation provisions on a straight-line basis over the lease term. Cash rent expense recognized in operating expenses in the accompanying consolidated statements of income was approximately $17.0 million, $15.5 million, and $14.8 million for the fiscal years 2006, 2005, and 2004, respectively. The annual difference of accrued rent versus amounts paid is classified as deferred rent in the accompanying consolidated statements of operations and the cumulative difference is included in other long-term liabilities in the accompanying consolidated balance sheets. Certain leases require the payment of an additional amount, calculated as a percentage of annual sales, as defined in the lease agreement, which exceeds annual minimum rentals. Such percentage rent expense was $273,000, $200,000, and $154,000 for fiscal 2006, 2005, and 2004, respectively.

Future minimum rental payments due under non-cancelable operating leases as of January 3, 2007 for operating locations were as follows (dollars in thousands):

Year
2007	$	18,511
2008	17,097
2009	15,743
2010	14,029
2011	12,895
Thereafter	38,742
	$	117,017

In addition to the leases summarized above, the Company is primarily liable on nine locations for approximately $5.3 million in gross lease commitments over the remaining terms of the leases. The locations are subleased to tenants under sublease obligations aggregating $5.0 million. The difference of $0.3 million represents the Company’s closed restaurant reserve at January 3, 2007.

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Capital Leases

The Company previously completed two sale-leaseback transactions on four restaurant properties. The Company agreed to lease back the properties for a 20-year period. Both leases include two five-year renewal terms, which the Company may exercise at its option. The Company is required to maintain the properties for the term of the leases and to pay all taxes, insurance, utilities and other costs associated with those properties. Under the leases, the Company agreed to customary indemnities and, in the event the Company defaults on any lease, the landlord may terminate the lease, accelerate rental payments and collect liquidated damages.

Payments under capital lease commitments for these restaurants are as follows (dollars in thousands):

Year
2007	$	704
2008	715
2009	725
2010	691
2011	698
Thereafter	8,523
	12,056
Less amount representing interest	6,059
Present value of minimum payments	$	5,997
Current portion	126
Long-term portion	5,871
	$	5,997

Contingencies

The Company is subject to various legal proceedings arising in the ordinary course of business. Management believes the amount of ultimate liability with respect to these actions will not be material to the financial position, cash flows or results of operations of the Company.

(7)RELATED PARTIES

The stockholders have consented to the payment of an ongoing financial consulting fee to Jacobson Partners, a stockholder of the Company. Fees of $250,000 were paid to Jacobson Partners for each of the fiscal years ended January 3, 2007, December 28, 2005, and December 29, 2004. The Board of Directors approved an additional fee of $136,000 paid in fiscal 2006 in connection with the Vinny T’s Acquisition and an additional fee of $175,000 in fiscal 2004. Fees are included in general and administrative expenses in the accompanying consolidated statements of operations, except for the fee paid in in connection with the Vinny T’s Acquisition which is capitalized in the purchase price.

Benjamin R. Jacobson, Chairman of the Company, is the Managing General Partner of Jacobson Partners. Jacobson Partners, through its various subsidiaries and investments, owns a controlling interest in the Company. Jacobson Partners also previously held a controlling interest in Taco Bueno. Stephen V. Clark, Vice Chairman of the Board of Directors and Chief Executive Officer of the Company, and David G. Lloyd, President and Chief Financial Officer of the Company, held senior management positions with Taco Bueno until August 2005, when Jacobson Partners sold its interest in Taco Bueno.

(8)401(k) PROFIT SHARING PLAN AND DEFERRED COMPENSATION PLAN

The Company maintains a defined contribution plan known as the Bertucci’s 401(k) Plan. Under the Bertucci’s 401(k) Plan, substantially all salaried employees of the Company may defer a portion of their current salary, on a pretax basis. The Company makes a matching contribution to the Bertucci’s 401(k) Plan allocated, based on a formula as defined by the Bertucci’s 401(k) Plan, to Plan participants. Matching contributions made by the Company for the fiscal years 2006, 2005, and 2004 were approximately $149,000, $130,000, $98,000, respectively.

In 1999, the Company established the Bertucci’s Corporation Executive Savings and Investment Plan, a non-qualified compensation plan, to which highly compensated executives of the Company may elect to defer a portion of their salary and/or earned bonus. The assets of the plan are held separately from other funds of the Company, but remain subject to claims of the Company’s general creditors in the event of the Company’s insolvency. As of January 3, 2007, there were 19 participants in the plan with assets with an aggregate market value of approximately $734,000. The assets are included in other long-term assets in the consolidated balance sheet and a corresponding liability is included in other long term liabilities.

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(9)STOCK BASED COMPENSATION AND EQUITY INCENTIVE PLAN

Effective December 29, 2005, the Company adopted the provisions of SFAS No. 123R and SAB 107 using the modified prospective method. Under the modified prospective provisions of SFAS No. 123R, compensation expense is recorded for the unvested portion of previously granted awards that were outstanding on December 29, 2005 and all subsequent awards. SFAS No. 123R requires that all stock-based compensation expense be recognized in the financial statements based on the fair value of the awards. Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. As required under the new standards, compensation expense is based on the number of options expected to vest. Forfeitures estimated when recognizing compensation expense are adjusted when actual forfeitures differ from the estimate. The impact of the adoption of SFAS No. 123R and SAB No. 107 resulted in a compensation charge of $125,000 in fiscal 2006, which is included in general and administrative expenses in the Consolidated Statement of Operations.

The Company grants stock options under its Amended and Restated 1997 Equity Incentive Plan (the “Equity Incentive Plan”), which provides for the issuance of nonqualified stock options and allows the Company to provide equity incentives to its key employees and directors. On September 27, 2005, the Company’s Board of Directors approved an amendment of the plan which increased the number of shares of Common Stock available for issuance under the Equity Incentive Plan from 750,000 to 1,100,000. The Board of Directors administers the Equity Incentive Plan and may modify or amend it in any respect. As of January 3, 2007 there were 130,677 authorized shares of Common Stock remaining for issuance under the Equity Incentive Plan.

Stock options issued under the Equity Incentive Plan are: (1) issued with an exercise price at or above the fair value of the underlying stock on the date of the grant; (2) are exercisable either (a) cumulatively at the rate of 25% on or after each of the second, third, fourth and fifth anniversaries of the date of grant or (b) only upon the fifth anniversary of the date of grant; and (c) typically expire 90 days following the tenth anniversary of the date of the grant. In addition, such options generally provide unvested options vest immediately and in full upon a transaction constituting a “change of control” of the Company.

The grant date fair value is calculated using the Black-Scholes option valuation model. The fair value of options granted during fiscal 2006, 2005, and 2004, were calculated using the following estimated weighted average assumptions:

	2006			2005			2004
Options granted	69,000			602,500			111,000
Weighted-average exercise price	$	17.69		$	17.51		$	17.51
Weighted-average grant date fair value	$	4.12		—			—
Assumptions:
Risk free interest rate	4.69		%	3.99		%	3.53		%
Expected life (in years)	5			5			5
Expected volatility	20		%	—			—
Expected dividend yield	—			—			—

Expected volatility — The Company is responsible for estimating volatility and has used 0% volatility historically to estimate the grant-date fair value of stock options as its common stock is not publicly traded. Effective December 29, 2005, management considered the guidance in SFAS No. 123R and now estimates expected volatility at 20%.

Expected life — The Company uses the full vesting period to estimate the expected life assumption for the Black-Scholes grant-date valuation. The Company believes this is the best estimate of the expected life of a new option.

Risk-free interest rate — The market yield on U.S. Treasury securities at a 5-year constant maturity, quoted on investment basis, is used as the risk-free interest rate.

Expected dividend yield — The Company has not paid any dividends in the last five years and intends to retain any earnings to finance future growth and, therefore, does not anticipate paying any cash dividends on its common stock in the foreseeable future.

47

A summary of the Amended and Restated Equity Incentive Plan activity for fiscal 2006 is presented below.

	Shares		Weighted  Average Exercise Price			Weighted Average Remaining Contractural Term	Aggregate Intrinsic Value (thousands)
Outstanding at beginning of year	970,929		$	16.77
Granted	69,000		$	17.69
Forfeited	(70,606	)	$	(16.93	)
Outstanding at end of year	969,323		$	16.82		6.8	$	3,300
Fully vested and exercisable at end of year	265,573		$	14.96		2.4	$	1,100

As of January 3, 2007 there was $288,000 of unrecognized compensation cost related to unvested stock options. That cost is expected to be recognized over a weighted average period of 1.9 years.

Prior to December 29, 2005, in accordance with SFAS No. 123, Accounting for Stock-Based Compensation (which has been replaced by SFAS No. 123R and supersedes Accounting Principles Board Opinion No. 25 (“APB Opinion No. 25”)), the Company accounted for stock-based compensation under the intrinsic value method with disclosure of the effects of fair value accounting on net loss and loss per share on a pro forma basis. The Company had accounted for the Equity Incentive Plan under the recognition and measurement principles of APB Opinion No. 25 and related interpretations. In 2005, stock based employee compensation expense resulted from the granting of shares of the Company’s common stock to key employees and independent directors. All shares and options were granted at prices equal to, or in excess of, the fair value of the underlying common stock on the date of grant. The following table illustrates the effect on net loss and loss per share for fiscal 2005 and fiscal 2004, respectively, as if the Company had applied the fair value recognition provisions of SFAS No. 123 (in thousands, except per share data):

	2005			2004
Net loss, as reported	$	(3,143	)	$	(13,963	)
Add: Stock-based employee compensation expense included in reported net loss.	172			—
Deduct: Net stock-based employee compensation expense determined under fair value based method for all awards.	(116		)	(77		)
Pro forma net loss	$	(3,087	)	$	(14,040	)
Basic and diluted loss per share
As reported	$	(1.06	)	$	(4.74	)
Pro forma	$	(1.04	)	$	(4.77	)

48

The Company’s shareholders are parties to a shareholder agreement (the “Shareholder Agreement”) which restricts their ability to transfer their shares without the approval of the Company’s Board of Directors. The Shareholder Agreement provides, among other things, that (i) a shareholder may not transfer his or its shares in the Company, whether voluntarily or by operation of law, other than in certain limited circumstances specified therein, including transfers through a right of first refusal procedure, distributions by certain legal entities to the constituents of such entities (i.e. a partnership to its partners), transfers by will or intestate succession, transfers approved by the Board of Directors to an affiliate of a shareholder or to another shareholder, transfers to family members or trusts for their benefit, and any transfer unanimously approved by the Board of Directors, (ii) the Company has the option to purchase the shares of any shareholder who is an employee of the Company following the termination of such shareholder’s employment with the Company for any reason at a purchase price equal to the fair market value or original purchase price (plus accrued interest in certain circumstances) depending upon the reason for such termination, (iii) the Company has the option to purchase the shares of any shareholder who is an employee of the Company following certain transfer events, including such shareholders’ bankruptcy or a court-ordered transfer of such shareholder’s stock, (iv) if the Company fails to exercise its option to purchase as described in the immediately preceding clause (iii), the remaining shareholders have the option to purchase the applicable shares, (v) in the event an employee shareholder leaves the Company due to death, disability or hardship or, with respect to certain shares, is terminated by the Company without cause, such shareholder has a one-time option to require the Company to purchase such shareholder’s shares at the greater of fair value or the original purchase price, subject to approval by the Board of Directors, excluding effected employees, (vi) no transfer of shares may occur unless the transferee thereof agrees to be bound by the terms of the Shareholder Agreement, and (vii) all share certificates must bear customary legends and all share transfers must be in compliance with applicable securities laws. At January 3, 2007, 150,149 options are subject to the provisions of (ii) and (v) above.

(10)ACQUISITION

In September, 2006, the Company executed a Stock Purchase Agreement with BUCA, Inc. and BUCA Restaurants 3, Inc. (“BUCA 3”) the entity which owns and operates Vinny T’s of Boston restaurants (“the Vinny T’s Acquisition”). As a result of the Vinny T’s Acquisition, BUCA 3 is now a wholly-owned subsidiary of the Company and continues to own and operate 11 Vinny T’s of Boston restaurants in four states. The Company believes the acquisition of the 11 restaurants will increase revenues and income from operations while providing an acceptable return on the investment. The Company paid BUCA an aggregate purchase price of $6.6 million, of which $3.0 million was paid in cash and $3.6 million was paid through the issuance of a Promissory Note. The Promissory Note contains no covenants and bears interest at the rate of 9% per annum payable in two equal installments on September 25, 2007 and July 15, 2008.

The Vinny T’s Acquisition was accounted for by the Company under the purchase method of accounting in accordance with SFAS No. 141, Business Combinations. Accordingly, the results of the Vinny T’s of Boston operations have been included in the Company’s consolidated statements of operations from September 28, 2006.

The cash paid at closing was funded by available cash on hand. The purchase price has been allocated based on the Company’s estimate of the fair value of the assets acquired and liabilities assumed at the date of acquisition in the table below. Included in the purchase price are direct acquisition costs of $645,000. The preliminary purchase price allocation for assets acquired and liabilities assumed is subject to adjustment upon finalization of the valuation of property and equipment by the Company (dollars in thousands).

Assets acquired:
Receivables	$	283
Inventory	278
Prepaid Expenses	144
Property	9,186
Other noncurrent assets	65
Less liabilities assumed:
Accounts payable	(995		)
Accrued expenses	(1,657		)
Net purchase price	$	7,304

The Company has also acquired approximately $5.8 million of future income tax benefits statutorily available to the Company through the Vinny T’s Acquisition. Because of the history of tax losses of the Company and Vinny T’s, the Company concluded a valuation allowance for the amount of the net future tax benefits was appropriate.

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The following pro forma financial information presents the results of operations for each of the fiscal years 2006 and 2005, as though the Vinny T’s Acquisition occurred at the beginning of the periods presented. The pro forma financial information is not intended to be indicative of the operating results that actually would have occurred if the Vinny T’s Acquisition had been consummated at the beginning of the periods presented, nor is the information intended to be indicative of future operating results. The pro forma financial information reflects adjustments for (1) additional general and administrative expenses for direct field supervision; (2) additional depreciation to more closely reflect allocated values at the Vinny T’s Acquisition; and (3) additional interest expense on the Promissory Note (dollars in thousands, except per share amounts).

	2006		2005
Net Sales	$	249,393	$	236,856
Net income (loss)	$	2,102	$	(3,423	)
Basic income (loss) per share	$	0.70	$	(1.16	)
Diluted income (loss) per share	$	0.68	$	(1.16	)

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(11)UNAUDITED QUARTERLY RESULTS

The unaudited quarterly information depicted below details results of operations for each of the fiscal quarters of 2006 and 2005.

	Quarter 1			Quarter 2			Quarter 3			Quarter 4			Year
	March 29,			June 28,			September 27,			January 3,			January 3,
	2006			2006			2006			2007 (1)			2007
Net sales	$	52,684		$	55,031		$	51,969		$	66,760		$	226,444
Cost of sales and expenses:
Cost of sales	11,942			12,490			11,762			15,444			51,638
Operating expenses	31,305			32,896			31,856			39,079			135,136
General and administrative expenses	3,553			3,748			3,705			4,038			15,044
Deferred rent, depreciation, amortization and preopening expenses	2,721			2,766			2,696			3,216			11,399
Asset impairment charge	—			—			—			48			48
Total cost of sales and expenses	49,521			51,900			50,019			61,825			213,265
Income from operations	3,163			3,131			1,950			4,935			13,179
Other expense:
Interest expense, net	(2,500		)	(2,488		)	(2,438		)	(2,717		)	(10,143		)
Other expense	(2,500		)	(2,488		)	(2,438		)	(2,717		)	(10,143		)
Loss before income tax provision	663			643			(488		)	2,218			3,036
Income tax provision	—			—			31			544			575
Net loss	$	663		$	643		$	(519	)	$	1,674		$	2,461
Basic income per share	$	0.22		$	0.21		$	(0.17	)	$	0.56		$	0.82
Basic weighted average shares outstanding	3,012,982			3,015,817			3,014,968			3,009,146			3,014,363
Diluted income per share	$	0.22		$	0.21		$	(0.17	)	$	0.53		$	0.80
Diluted weighted average shares outstanding	3,034,435			3,057,108			3,014,968			3,138,685			3,090,053

(1) Includes results for the 11 Vinny T’s of Boston restaurants acquired in September 2006, and the 53rd week.

	Quarter 1			Quarter 2			Quarter 3			Quarter 4			Year
	March 30,			June 29,			September 28,			December 28,			December 28,
	2005			2005			2005			2005			2005
Net sales	$	49,952		$	52,580		$	49,654		$	52,598		$	204,784
Cost of sales and expenses:
Cost of sales	11,860			12,322			11,316			12,113			47,611
Operating expenses	30,454			31,391			30,051			31,357			123,253
General and administrative expenses	3,499			3,283			3,740			3,920			14,442
Deferred rent, depreciation, amortization and preopening expenses	3,142			3,029			2,601			2,456			11,228
Asset impairment charge	—			907			—			75			982
Total cost of sales and expenses	48,955			50,932			47,708			49,921			197,516
Income from operations	997			1,648			1,946			2,677			7,268
Other expense:
Interest expense, net	(2,650		)	(2,621		)	(2,613		)	(2,527		)	(10,411		)
Other expense	(2,650		)	(2,621		)	(2,613		)	(2,527		)	(10,411		)
Net loss	$	(1,653	)	$	(973	)	$	(667	)	$	150		$	(3,143	)
Basic and diluted loss per share	$	(0.57	)	$	(0.33	)	$	(0.23	)	$	0.05		$	(1.06	)
Weighted average shares outstanding - basic and diluted	2,925,520			2,947,691			2,953,864			3,012,982			2,960,025

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(12)SUBSEQUENT EVENTS

In the first quarter of fiscal 2007, the Company closed three restaurant locations as they were not meeting Company sales and profit expectations. Net Sales from these locations totaled $3.5 million in fiscal 2006. One location was closed in conjunction with a lease termination agreement while the other two locations have continuing lease obligations totaling $2.4 million through 2013. The Company anticipates being able to sublease the properties or negotiate lease termination agreements, but estimates it will incur net costs (rental costs net of sublease income, as well as legal, brokerage and other fees) of approximately $400,000 on these two locations and anticipates recording a closed restaurant charge in that amount in the first quarter of fiscal 2007.

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EXHIBIT LISTING AND INDEX

Exhibit No.	Description
2.1 (a)	Agreement and Plan of Merger, dated as of May 13, 1998 among Bertucci’s, Inc., NE Restaurant Company, Inc. (“NERCO”) and NERC Acquisition Corp.
3.1 (a)	Certificate of Incorporation of NERCO.
3.2 (a)	Certificate of Amendment of Certificate of Incorporation of NERCO, dated August 1, 1998.
3.3 (a)	Certificate of Amendment of Certificate of Incorporation of NERCO, dated August 20, 1998.
3.4 (a)	By-laws of NERCO.
3.25 (d)	Certificate of Amendment of Certificate of Incorporation of NERCO, dated August 16, 2001.
4.1 (a)	Indenture, dated July 20, 1998 between NERCO and United States Trust Company of New York (“U.S. Trust”) as Trustee (including the form of 10 ¾% Senior Note due July 15, 2008).
4.2 (a)	Supplemental Indenture, dated as of July 21, 1998 by and among Bertucci’s, Inc., Bertucci’s Restaurant Corp., Bertucci’s Securities Corporation, Berestco, Inc., Sal & Vinnie’s Sicilian Steakhouse, Inc., Bertucci’s of Anne Arundel County, Inc., Bertucci’s of Columbia, Inc., Bertucci’s of Baltimore County, Inc., Bertucci’s of Bel Air, Inc. and Bertucci’s of White Marsh, Inc. (collectively, the “Guarantors”), NERCO and U.S. Trust
4.3 (a)	Purchase Agreement, dated July 13, 1998 by and among NERCO, Chase Securities Inc. and BancBoston Securities Inc.
4.4 (a)	Amendment No. 1 to the Purchase Agreement, dated July 21, 1998 by and among NERCO, Chase Securities Inc., BancBoston Securities Inc. and the Guarantors
4.5 (a)	Exchange and Registration Rights Agreement, dated July 20, 1998 by and among NERCO, Chase Securities Inc. and BancBoston Securities Inc.
4.6 (a)	Amendment No. 1 to Exchange and Registration Rights Agreement, dated July 21, 1998 by and among NERCO, Chase Securities Inc., BancBoston Securities Inc. and the Guarantors.
4.9 (d)	Form of Stockholders Agreement, dated March 14, 2000 by and among certain stockholders of NERCO and NERCO.
4.10 (i)	Supplemental Indenture, dated as of September 22, 2006 among Vinny T’s Acquisition Corporation, Bertucci’s Corporation and The Bank of New York Trust Company, N.A. (“BONY”) (as successor Trustee to U.S. Trust).
4.11 (i)	Supplemental Indenture, dated as of October 5, 2006, among BUCA Restaurants 3, Inc., Bertucci’s Corporation, and BONY (as successor trustee to U.S. Trust.
10.1 (f)	The Company’s Amended and Restated 1997 Equity Incentive Plan for certain key employees and directors of the Company.*
10.21 (a)	Financial Advisory Services Agreement, dated July 21, 1998 by and between the Company and Jacobson Partners.
10.32 (b)	Primary Distribution Agreement dated as of May 13, 1999 by and between Maines Paper & Food Service, Inc. and Bertucci’s Corporation.
10.33 (g)	Bertucci’s Corporation Savings and Investment Plan amended as of December 15, 2004.*
10.34 (g)	Bertucci’s Corporation Executive Savings and Investment Plan amended as of December 15, 2004.*
10.35 (g)	Stock Purchase Agreement among BUCA, Inc., BUCA Restaurants 3, Inc., the Company, and Vinny T’s Acquisition Corporation dated as of September 25, 2006.
10.36 (i)	Amended and Restated Promissory Note dated as of September 25, 2006 in the face principal amount of $3,661,293.00 issued by Vinny T’s Acquisition Corporation to BUCA, Inc.
10.37 (h)	Guaranty dated as of September 25, 2006 by the Company, in favor and for the benefit of BUCA, Inc.
10.38 (i)	Amendment No. 1 to Guaranty dated as of March 29, 2007 by and between the Company and BUCA, Inc.
10.39 (i)	Corporate Pay for Performance Plan for Executive Officers.*
14.1 (e)	Code of Ethics for Senior Financial Officers.
21.1 (i)	Subsidiaries of Registrant.
31.1 (i)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by Stephen V. Clark.
31.2 (i)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by David G. Lloyd.
99-1 (c)	Asset Purchase and Sales Agreement dated November 20, 2000 and fully executed on April 12, 2001.

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(a)	Filed as an Exhibit, with the same Exhibit number, to Amendment No. 3 to the Company’s registration statement on Form S-4 filed with the Securities and Exchange Commission on November 12, 1998.
(b)	Filed as an Exhibit, with the same Exhibit number, to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 15, 2000.
(c)	Filed as an Exhibit, with the same Exhibit number, to the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 18, 2001.
(d)	Filed as an Exhibit, with the same Exhibit number, to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2002.
(e)	Filed as an Exhibit, with the same Exhibit number, to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2004.
(f)	Filed as Exhibit 10.22 to the Company’s current report on Form 8-K filed with the Securities and Exchange Commission on October 3, 2005.
(g)	Filed as Exhibit, with the same Exhibit number Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2006.
(h)	Filed as Exhibit, with the same Exhibit number, to the Company’s Form 8-K filed with the Securities and Exchange Commission on September 25, 2006.
(i)	Filed herewith.
*	Management compensation plan or arrangement.

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EX-4.10

Exhibit 4.10

SUPPLEMENTAL INDENTURE

This Supplemental Indenture, dated as of September 22, 2006 (this “Supplemental Indenture” or “Subsidiary Guarantee”), among Vinny T’s Acquisition Corporation, a Delaware corporation (the “Subsidiary Guarantor”), Bertucci’s Corporation, a Delaware corporation f/k/a NE Restaurant Company (together with its successors and assigns, the “Company”), and The Bank of New York Trust Company, N.A. (as successor trustee to United States Trust Company of New York), as Trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture, dated as of July 20, 1998 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of an aggregate principal amount of $100.0 million of 10¾% Senior Notes due 2008 of the Company (the “Securities”);

WHEREAS, Section 3.12 of the Indenture provides that the Company is required to cause each Restricted Subsidiary created or acquired by the Company to execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which such Subsidiary Guarantor will unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any and interest on the Securities and all other payment obligations under the Indenture on a senior unsecured basis; and

WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Security holder.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Subsidiary Guarantor, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows:

ARTICLE I

Definitions

SECTION 1.1  Defined Terms.  As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “Holders” in this Supplemental Indenture shall refer to the term “Holders” as defined in the Indenture and the Trustee acting on behalf or for the benefit of such holders.  The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

Guarantee

SECTION 2.1  Guarantee.  The Subsidiary Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, jointly and severally with each other Subsidiary Guarantor, to each Holder of the Securities and to the Trustee the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Securities and all other amounts payable under the Indenture (all the foregoing being hereinafter collectively called the “Obligations”).  The Subsidiary Guarantor further agrees (to the extent permitted by law) that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article II notwithstanding any extensions or renewal of any Obligation.

The Subsidiary Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment.  The Subsidiary Guarantor waives notice of any default under the Securities or the Obligations.  The obligations of the Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Subsidiary Guarantor; or (f) any change in the ownership of the Company.

The Subsidiary Guarantor further agrees that its Subsidiary Guarantee constitutes a guarantee of payment when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Obligations.

The obligations of the Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Obligations in full), including any claim or waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations of the Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder to assert any claim or demand or to enforce any remedy under the Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Subsidiary Guarantor or would otherwise operate as a discharge of the Subsidiary Guarantor as a matter of law or equity.

The Subsidiary Guarantor further agrees that its Subsidiary Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any of the Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against the Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay any of the Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, the Subsidiary Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such Obligations then due and owing and (ii) accrued and unpaid interest on such Obligations then due and owing (but only to the extent not prohibited by law).

The Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in the Indenture for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Obligations, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purposes of its Subsidiary Guarantee.

The Subsidiary Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Section.

SECTION 2.2  Limitation on Liability; Termination, Release and Discharge.  The obligations of the Subsidiary Guarantor hereunder will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of the Subsidiary Guarantor (including, without limitation, any guarantees under the Senior Credit Agreement) and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its contribution obligations under the Indenture or as set forth below, result in the

obligations of the Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer under federal or state law.

The Subsidiary Guarantor may consolidate with or merge into or sell its assets to the Company or another Subsidiary Guarantor without limitation.  The Subsidiary Guarantor may consolidate with or merge into or sell all or substantially all its assets to a corporation, partnership or trust other than the Company or another Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor).  Upon the sale or disposition of the Subsidiary Guarantor (by merger, consolidation, the sale of all or substantially all of its assets) to a Person (whether or not an Affiliate of the Subsidiary Guarantor) which is not a Subsidiary of the Company, which sale or disposition is otherwise in compliance with the Indenture (including Section 3.7), the Subsidiary Guarantor shall be deemed released from all its obligations under the Indenture and its Subsidiary Guarantee and this Subsidiary Guarantee shall terminate; provided, however, that any such termination shall occur only to the extent that all obligations of the Subsidiary Guarantor under all of its guarantees of, and under all of its pledges of assets or other security interests which secure, any other Indebtedness of the Company shall also terminate upon such release, sale or transfer.

SECTION 2.3  Right of Contribution.  The Subsidiary Guarantor hereby agrees that to the extent that any Subsidiary Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against the Company or any other Subsidiary Guarantor who has not paid its proportionate share of such payment.  Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 3.5 of the Indenture.  The provisions of this Section 2.3 shall in no respect limit the obligations and liabilities of the Subsidiary Guarantor to the Trustee and the Holders and the Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by the Subsidiary Guarantor hereunder.

SECTION 2.4  No Subrogation.  Notwithstanding any payment or payments made by the Subsidiary Guarantor hereunder, the Subsidiary Guarantor shall not be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Subsidiary Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations, nor shall the Subsidiary Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Subsidiary Guarantor in respect of payments made by the Subsidiary Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Obligations are paid in full.  If any amount shall be paid to the Subsidiary Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Subsidiary Guarantor, and shall, forthwith upon receipt by the Subsidiary Guarantor, be turned over to the Trustee in the exact form received by the Subsidiary Guarantor (duly indorsed by the Subsidiary Guarantor to the Trustee, if required), to be applied against the Obligations.

SECTION 2.5  Execution and Delivery of Subsidiary Guarantee.  To further evidence the Subsidiary Guarantees set forth in Section 2.1, each Subsidiary Guarantor hereby agrees that a notation of its Subsidiary Guarantee, substantially in the form of Exhibit D to the Indenture, shall be endorsed on each Security authenticated and delivered by the Trustee.  The Subsidiary Guarantee of any Subsidiary Guarantor shall be executed on behalf of such Subsidiary Guarantor by either manual or facsimile signature of an Officer of such Subsidiary Guarantor who shall have been duly authorized to so execute by all requisite corporate action.  The validity and enforceability of any Subsidiary Guarantee shall not be affected by the fact that it is not affixed to any particular Security.

Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 2.1 shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Subsidiary Guarantee.

If the Officer of a Subsidiary Guarantor whose signature is on this Supplemental Indenture or a Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Security on which such Subsidiary Guarantee is endorsed or any time thereafter, such Subsidiary Guarantor’s Subsidiary Guarantee of such Security shall nevertheless be valid.

The delivery of any Security by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of any Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of each Subsidiary Guarantor.

ARTICLE III

Miscellaneous

SECTION 3.1  Notices.  All notices and other communications pertaining to this Guarantee or any Security shall be in writing and shall be deemed to have been duly given upon the receipt thereof.  Such notices shall be delivered by hand, or mailed, certified or registered mail with postage prepaid (a) if to the Subsidiary Guarantor, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company, and (b) if to the Holders or the Trustee, as provided in the Indenture.  The Subsidiary Guarantor by notice to the Trustee may designate additional or different addresses for subsequent notices to or communications with the Subsidiary Guarantor.

SECTION 3.2  Parties.  Nothing expressed or mentioned in this Guarantee is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee and the holders of any Subsidiary Guarantor Senior Indebtedness, any legal or equitable right, remedy or claim under or in respect of this Guarantee or any provisions herein contained.

SECTION 3.3  GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE AND THE SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

SECTION 3.4  Severability Clause.  In case any provision in this Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.5  Waivers and Remedies.  Neither a failure nor a delay on the part of the Holders or the Trustee in exercising any right, power or privilege under this Guarantee shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other of further exercise of any right, power or privilege.  The rights, remedies and benefits of the Holders and the Trustee herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Guarantee or at law, in equity, by statute or otherwise.

SECTION 3.6  Successors and Assigns.  Subject to Section 2.2 hereof, (a) this Guarantee shall be binding upon and inure to the benefit of the Subsidiary Guarantor, the Trustee, any other parties hereto, the Holders and their respective successors and assigns and (b) in the event of any transfer or assignment of rights by any Holder, the rights and privileges conferred upon that party in this Guarantee and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Guarantee and the Indenture.

SECTION 3.7  Modification, etc.  Subject to the provisions of, and except as otherwise provided in, Article IX of the Indenture (including without limitation Sections 9.1 and 9.2 thereof), no modification, amendment or waiver of any provision of this Guarantee, nor the consent to any departure by the Subsidiary Guarantor therefrom, shall in any event be effective unless the same shall be in writing and consented to by the Trustee (with the consent of the Holders of at least a majority of the then outstanding Securities if required by Section 9.2 of the indenture) and then such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given.  No notice to or demand on the Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor or any other guarantor to any other or further notice or demand in the same, similar or other circumstances.

SECTION 3.8  Entire Agreement.  This Guarantee is intended by the parties to be a final expression of their agreement in respect of the subject matter contained herein and, together with the Indenture, supersedes all prior agreements and understandings between the parties with respect to such subject matter.

SECTION 3.9  Ratification of Indenture; Supplemental Indentures Part of Indenture.  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture.  Furthermore, each Subsidiary Guarantor that is a party hereto hereby assumes any and all obligations of a Subsidiary Guarantor set forth in the Indenture, whether or not such obligations are expressly specified in this Supplemental Indenture.

SECTION 3.10  Counterparts.  The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

SECTION 3.11  Headings.  The headings of the Articles and the sections in this Guarantee are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

SECTION 3.12  The Trustee.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Guarantee or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Subsidiary Guarantor.

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

BERTUCCI’S CORPORATION
By:	/s/ Stephen V. Clark
	Stephen V. Clark
	Chief Executive Officer
VINNY T’S ACQUISITION CORPORATION
By:	/s/ Stephen V. Clark
	Stephen V. Clark
	President
	Address: 155 Otis Street
	Northborough, MA 01532
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee
By:	/s/ Peter M. Murphy
	Peter M. Murphy
	Vice President

EX-4.11

Exhibit 4.11

SUPPLEMENTAL INDENTURE

This Supplemental Indenture, dated as of October 5, 2006 (this “Supplemental Indenture” or “Subsidiary Guarantee”), among BUCA Restaurants 3, Inc., a Minnesota corporation (the “Subsidiary Guarantor”), Bertucci’s Corporation, a Delaware corporation f/k/a NE Restaurant Company (together with its successors and assigns, the “Company”), and The Bank of New York Trust Company, N.A. (as successor trustee to United States Trust Company of New York), as Trustee under the Indenture referred to below (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Company and the Trustee have heretofore executed and delivered an Indenture, dated as of July 20, 1998 (as amended, supplemented, waived or otherwise modified, the “Indenture”), providing for the issuance of an aggregate principal amount of $100.0 million of 10¾% Senior Notes due 2008 of the Company (the “Securities”);

WHEREAS, Section 3.12 of the Indenture provides that the Company is required to cause each Restricted Subsidiary created or acquired by the Company to execute and deliver to the Trustee a Subsidiary Guarantee pursuant to which such Subsidiary Guarantor will unconditionally Guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any and interest on the Securities and all other payment obligations under the Indenture on a senior unsecured basis; and

WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee and the Company are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Security holder.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Subsidiary Guarantor, the Company and the Trustee mutually covenant and agree for the equal and ratable benefit of the holders of the Securities as follows:

ARTICLE I

Definitions

SECTION 1.1  Defined Terms.  As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term “Holders” in this Supplemental Indenture shall refer to the term “Holders” as defined in the Indenture and the Trustee acting on behalf or for the benefit of such holders.  The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof.

ARTICLE II

Guarantee

SECTION 2.1  Guarantee.  The Subsidiary Guarantor hereby fully, unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, jointly and severally with each other Subsidiary Guarantor, to each Holder of the Securities and to the Trustee the full and punctual payment when due, whether at maturity, by acceleration, by redemption or otherwise, of the principal of, premium, if any, and interest on the Securities and all other amounts payable under the Indenture (all the foregoing being hereinafter collectively called the “Obligations”).  The Subsidiary Guarantor further agrees (to the extent permitted by law) that the Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound under this Article II notwithstanding any extensions or renewal of any Obligation.

The Subsidiary Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Obligations and also waives notice of protest for nonpayment.  The Subsidiary Guarantor waives notice of any default under the Securities or the Obligations.  The obligations of the Subsidiary Guarantor hereunder shall not be affected by (a) the failure of any Holder to assert any claim or demand or to enforce any right or remedy against the Company or any other person under the Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of the Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Obligations or any of them; (e) the failure of any Holder to exercise any right or remedy against any other Subsidiary Guarantor; or (f) any change in the ownership of the Company.

The Subsidiary Guarantor further agrees that its Subsidiary Guarantee constitutes a guarantee of payment when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder to any security held for payment of the Obligations.

The obligations of the Subsidiary Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than payment of the Obligations in full), including any claim or waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise.  Without limiting the generality of the foregoing, the obligations of the Subsidiary Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder to assert any claim or demand or to enforce any remedy under the Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of the Subsidiary Guarantor or would otherwise operate as a discharge of the Subsidiary Guarantor as a matter of law or equity.

The Subsidiary Guarantor further agrees that its Subsidiary Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any of the Obligations is rescinded or must otherwise be restored by any Holder upon the bankruptcy or reorganization of the Company or otherwise.

In furtherance of the foregoing and not in limitation of any other right which any Holder has at law or in equity against the Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay any of the Obligations when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise, the Subsidiary Guarantor hereby promises to and will, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders an amount equal to the sum of (i) the unpaid amount of such Obligations then due and owing and (ii) accrued and unpaid interest on such Obligations then due and owing (but only to the extent not prohibited by law).

The Subsidiary Guarantor further agrees that, as between the Subsidiary Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in the Indenture for the purposes of its Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby and (y) in the event of any such declaration of acceleration of such Obligations, such Obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantor for the purposes of its Subsidiary Guarantee.

The Subsidiary Guarantor also agrees to pay any and all reasonable costs and expenses (including reasonable attorneys’ fees) incurred by the Trustee or the Holders in enforcing any rights under this Section.

SECTION 2.2  Limitation on Liability; Termination, Release and Discharge.  The obligations of the Subsidiary Guarantor hereunder will be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of the Subsidiary Guarantor (including, without limitation, any guarantees under the Senior Credit Agreement) and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its contribution obligations under the Indenture or as set forth below, result in the

obligations of the Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent transfer under federal or state law.

The Subsidiary Guarantor may consolidate with or merge into or sell its assets to the Company or another Subsidiary Guarantor without limitation.  The Subsidiary Guarantor may consolidate with or merge into or sell all or substantially all its assets to a corporation, partnership or trust other than the Company or another Subsidiary Guarantor (whether or not affiliated with the Subsidiary Guarantor).  Upon the sale or disposition of the Subsidiary Guarantor (by merger, consolidation, the sale of all or substantially all of its assets) to a Person (whether or not an Affiliate of the Subsidiary Guarantor) which is not a Subsidiary of the Company, which sale or disposition is otherwise in compliance with the Indenture (including Section 3.7), the Subsidiary Guarantor shall be deemed released from all its obligations under the Indenture and its Subsidiary Guarantee and this Subsidiary Guarantee shall terminate; provided, however, that any such termination shall occur only to the extent that all obligations of the Subsidiary Guarantor under all of its guarantees of, and under all of its pledges of assets or other security interests which secure, any other Indebtedness of the Company shall also terminate upon such release, sale or transfer.

SECTION 2.3  Right of Contribution.  The Subsidiary Guarantor hereby agrees that to the extent that any Subsidiary Guarantor shall have paid more than its proportionate share of any payment made on the obligations under the Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek and receive contribution from and against the Company or any other Subsidiary Guarantor who has not paid its proportionate share of such payment.  Each Subsidiary Guarantor’s right of contribution shall be subject to the terms and conditions of Section 3.5 of the Indenture.  The provisions of this Section 2.3 shall in no respect limit the obligations and liabilities of the Subsidiary Guarantor to the Trustee and the Holders and the Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the full amount guaranteed by the Subsidiary Guarantor hereunder.

SECTION 2.4  No Subrogation.  Notwithstanding any payment or payments made by the Subsidiary Guarantor hereunder, the Subsidiary Guarantor shall not be entitled to be subrogated to any of the rights of the Trustee or any Holder against the Company or any other Subsidiary Guarantor or any collateral security or guarantee or right of offset held by the Trustee or any Holder for the payment of the Obligations, nor shall the Subsidiary Guarantor seek or be entitled to seek any contribution or reimbursement from the Company or any other Subsidiary Guarantor in respect of payments made by the Subsidiary Guarantor hereunder, until all amounts owing to the Trustee and the Holders by the Company on account of the Obligations are paid in full.  If any amount shall be paid to the Subsidiary Guarantor on account of such subrogation rights at any time when all of the Obligations shall not have been paid in full, such amount shall be held by the Subsidiary Guarantor, and shall, forthwith upon receipt by the Subsidiary Guarantor, be turned over to the Trustee in the exact form received by the Subsidiary Guarantor (duly indorsed by the Subsidiary Guarantor to the Trustee, if required), to be applied against the Obligations.

SECTION 2.5  Execution and Delivery of Subsidiary Guarantee.  To further evidence the Subsidiary Guarantees set forth in Section 2.1, each Subsidiary Guarantor hereby agrees that a notation of its Subsidiary Guarantee, substantially in the form of Exhibit D to the Indenture, shall be endorsed on each Security authenticated and delivered by the Trustee.  The Subsidiary Guarantee of any Subsidiary Guarantor shall be executed on behalf of such Subsidiary Guarantor by either manual or facsimile signature of an Officer of such Subsidiary Guarantor who shall have been duly authorized to so execute by all requisite corporate action.  The validity and enforceability of any Subsidiary Guarantee shall not be affected by the fact that it is not affixed to any particular Security.

Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 2.1 shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Subsidiary Guarantee.

If the Officer of a Subsidiary Guarantor whose signature is on this Supplemental Indenture or a Subsidiary Guarantee no longer holds that office at the time the Trustee authenticates the Security on which such Subsidiary Guarantee is endorsed or any time thereafter, such Subsidiary Guarantor’s Subsidiary Guarantee of such Security shall nevertheless be valid.

The delivery of any Security by the Trustee, after the authentication thereof under the Indenture, shall constitute due delivery of any Subsidiary Guarantee set forth in this Supplemental Indenture on behalf of each Subsidiary Guarantor.

ARTICLE III

Miscellaneous

SECTION 3.1  Notices.  All notices and other communications pertaining to this Guarantee or any Security shall be in writing and shall be deemed to have been duly given upon the receipt thereof.  Such notices shall be delivered by hand, or mailed, certified or registered mail with postage prepaid (a) if to the Subsidiary Guarantor, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company, and (b) if to the Holders or the Trustee, as provided in the Indenture.  The Subsidiary Guarantor by notice to the Trustee may designate additional or different addresses for subsequent notices to or communications with the Subsidiary Guarantor.

SECTION 3.2  Parties.  Nothing expressed or mentioned in this Guarantee is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee and the holders of any Subsidiary Guarantor Senior Indebtedness, any legal or equitable right, remedy or claim under or in respect of this Guarantee or any provisions herein contained.

SECTION 3.3  GOVERNING LAW.  THIS SUPPLEMENTAL INDENTURE AND THE SUBSIDIARY GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

SECTION 3.4  Severability Clause.  In case any provision in this Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.

SECTION 3.5  Waivers and Remedies.  Neither a failure nor a delay on the part of the Holders or the Trustee in exercising any right, power or privilege under this Guarantee shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other of further exercise of any right, power or privilege.  The rights, remedies and benefits of the Holders and the Trustee herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Guarantee or at law, in equity, by statute or otherwise.

SECTION 3.6  Successors and Assigns.  Subject to Section 2.2 hereof, (a) this Guarantee shall be binding upon and inure to the benefit of the Subsidiary Guarantor, the Trustee, any other parties hereto, the Holders and their respective successors and assigns and (b) in the event of any transfer or assignment of rights by any Holder, the rights and privileges conferred upon that party in this Guarantee and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Guarantee and the Indenture.

SECTION 3.7  Modification, etc.  Subject to the provisions of, and except as otherwise provided in, Article IX of the Indenture (including without limitation Sections 9.1 and 9.2 thereof), no modification, amendment or waiver of any provision of this Guarantee, nor the consent to any departure by the Subsidiary Guarantor therefrom, shall in any event be effective unless the same shall be in writing and consented to by the Trustee (with the consent of the Holders of at least a majority of the then outstanding Securities if required by Section 9.2 of the indenture) and then such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given.  No notice to or demand on the Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor or any other guarantor to any other or further notice or demand in the same, similar or other circumstances.

SECTION 3.8  Entire Agreement.  This Guarantee is intended by the parties to be a final expression of their agreement in respect of the subject matter contained herein and, together with the Indenture, supersedes all prior agreements and understandings between the parties with respect to such subject matter.

SECTION 3.9  Ratification of Indenture; Supplemental Indentures Part of Indenture.  Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect.  This Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered shall be bound hereby.  The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture.  Furthermore, each Subsidiary Guarantor that is a party hereto hereby assumes any and all obligations of a Subsidiary Guarantor set forth in the Indenture, whether or not such obligations are expressly specified in this Supplemental Indenture.

SECTION 3.10  Counterparts.  The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement.

SECTION 3.11  Headings.  The headings of the Articles and the sections in this Guarantee are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.

SECTION 3.12  The Trustee.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Guarantee or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Subsidiary Guarantor.

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.

BERTUCCI’S CORPORATION
By:	/s/ Stephen V. Clark
	Stephen V. Clark
	Chief Executive Officer
BUCA RESTAURANTS 3, INC.
By:	/s/ Stephen V. Clark
	Stephen V. Clark
	Chief Executive Officer
	Address: 155 Otis Street
	Northborough, MA 01532
THE BANK OF NEW YORK TRUST COMPANY, N.A., as Trustee
By:	/s/ Peter M. Murphy
	Peter M. Murphy
	Vice President

EX-10.36

Exhibit 10.36

AMENDED AND RESTATED PROMISSORY NOTE

$3,661,293.00	As of September 25, 2006
	Boston, Massachusetts

WHEREAS, pursuant to that certain Stock Purchase Agreement by and among Vinny T’s Acquisition Corporation (the “Maker”), Bertucci’s Corporation (the “Parent”), BUCA, Inc. (the “Holder”) and BUCA Restaurants 3, Inc. (the “Company”) dated as of September 25, 2006, as the same may be amended from time to time (the “Stock Purchase Agreement”), on September 25, 2006, the Maker issued a Promissory Note to the Holder in the face principal amount of $3,800,000.00 (the “Original Promissory Note”);

WHEREAS, in January 2007 and pursuant to the procedures set forth in Section 2.1 of the Stock Purchase Agreement, the Maker and the Holder have agreed that the Original Promissory Note should be amended and restated to reflect that: (1) the original principal amount of the Original Promissory Note should be reduced by $138,707 so that the total principal amount as of September 25, 2006 was $3,661,293 (the “New Principal Amount”); and (2) all interest accrued under the Original Promissory Note and accruing under this Amended and Restated Promissory Note should be calculated as of September 25, 2006 based on the New Principal Amount; and

WHEREAS, pursuant to Section 3 and 6(b) of the Original Promissory Note and Section 2.2 of the Stock Purchase Agreement, the Maker and the Holder are agreeing to amend and restate the Original Promissory Note as set forth herein.

NOW THEREFORE, FOR VALUE RECEIVED, the Maker hereby unconditionally promises to pay to the Holder the principal amount of THREE MILLION SIX HUNDRED SIXTY ONE THOUSAND TWO HUNDRED NINETY THREE DOLLARS ($3,661,293.00) (the “Principal Amount”), together with accrued and unpaid interest thereon (as provided below).  This Amended and Restated Promissory Note is being issued pursuant to the Stock Purchase Agreement.  All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Stock Purchase Agreement.

1.             Interest Rate.  The Principal Amount outstanding under this Amended and Restated Promissory Note shall accrue interest on each day, from September 25, 2006 until all such Principal Amount shall have been paid in full, at a rate equal to nine percent (9%) per annum; provided, however, that upon an Event of Default (as defined below) interest shall accrue at a rate equal to twelve percent (12%) per annum from the date of the occurrence of the Event of Default until the Event of Default is cured (if it is capable of being cured).  Interest shall be calculated on the basis of a 365-day year for the actual number of days elapsed.  Interest shall be paid in accordance with Section 2 below.  For purposes of clarification, the Maker and the Holder understand and agree that: (a) interest shall only accrue on the Principal Amount of $3,661,293.00 beginning on September 25, 2006 and not on the principal amount reflected in the Original Promissory Note of $3,800,000.00; and (b) interest shall have never accrued on the $138,707 by which the principal amount reflected in the Original Promissory Note is being reduced by this Amended and Restated Promissory Note.

In no event shall the amount of interest due or payable under this Amended and Restated Promissory Note exceed the maximum rate of interest allowed by applicable law and, in the event any such payment is inadvertently paid by the Maker or inadvertently received by the Holder, then such excess sum shall be credited as a payment of the Principal Amount.  It is the express intent of the parties hereto that the Maker not pay and the Holder not receive, directly or indirectly, in any manner whatsoever, interest in excess of that which may be lawfully paid by the Maker under applicable law.

2.         Payment and Maturity Date. All accrued, but unpaid, interest under this Amended and Restated Promissory Note then-outstanding shall be due and payable on September 25, 2007 and July 15, 2008.  The

outstanding Principal Amount and all accrued, but unpaid, interest shall be due and payable on the earlier of (the “Maturity Date”): (a) July 15, 2008; (b) the occurrence of an Event of Default; (c) the consummation of a Change of Control (as defined below); (d) the consummation of an IPO (as defined below); or (e) the same time as the 10 ¾% Senior Notes due 2008 issued by Parent are redeemed, repurchased, refinanced or otherwise paid (with regard to principal owed thereunder).  As used herein, the term: (i) “Change of Control” means (x) a consolidation or merger of Parent into or with any other entity or entities (except one in which the holders of capital stock of Parent immediately prior to such consolidation or merger hold at least 50% by voting power of the capital stock of the surviving or resulting entity immediately after such consolidation or merger), (y) the sale of all or substantially all of the assets of Parent, or (z) the sale, exchange or transfer by the stockholders of Parent, in a single transaction or series of related transactions, of capital stock representing more than 50% of the voting power of the capital stock of Parent; and (ii) “IPO” means the first underwritten public offering of Common Stock of Parent for the account of Parent registered under the Securities Act of 1933, as amended.  Once repaid, amounts borrowed hereunder may not be reborrowed.  All amounts due under this Amended and Restated Promissory Note may be prepaid, whether by acceleration or otherwise, in whole or in part, without premium or penalty, at any time.  The Maker shall make all payments in respect of this Amended and Restated Promissory Note by wire transfer of United States funds in accordance with directions the Holder may provide from time to time in writing.

3.           Intentionally Omitted.

4.           Guaranty.             All amounts due and obligations of the Maker under this Amended and Restated Promissory Note have been guaranteed by the Parent pursuant to that certain Guaranty executed and delivered by the Parent to the Holder dated as of September 25, 2006, as the same may be amended and/or restated from time to time (the “Guaranty”).

5.           Events of Default; Remedies.

(a)  Events of Default.  Each of the following events shall constitute an “Event of Default” under this Amended and Restated Promissory Note:

(i) failure of the Maker to comply in any way with the terms, covenants or conditions contained in this Amended and Restated Promissory Note, and such non-compliance is not cured by the Maker within 30 days after receiving written notice from the Holder demanding compliance;

(ii) any material representation or warranty made by the Maker or the Parent in: (A) this Amended and Restated Promissory Note, the Stock Purchase Agreement or the Guaranty shall prove to have been untrue or incorrect or misleading in any material respect when made; or (B) any other agreement, document, or instrument executed and delivered in connection therewith or in any certificate or report furnished in connection therewith shall prove to have been untrue or incorrect in any material respect when made, and the effect of such breach is not cured within 30 days after the Maker receives written notice from the Holder of such breach;

(iii) the Maker or the Parent shall: (A) voluntarily dissolve, liquidate or terminate operations or apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of the Maker or the Parent of all or of a substantial part of the Maker’s or the Parent’s assets; (B) admit in writing its inability, or be generally unable, to pay its debts as the debts become due; (C) make a general assignment for the benefit of its creditors; (D) commence a voluntary case under the federal Bankruptcy Code (as now or hereafter in effect); (E) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts; or (F) take any corporate action for the purpose of effecting any of the foregoing;

(iv)an involuntary petition or complaint shall be filed against the Maker or the Parent seeking bankruptcy relief or reorganization or the appointment of a receiver, custodian, trustee, intervenor or liquidator of the Maker or the Parent of all or substantially all of its assets, and such petition or complaint shall not have been dismissed within ninety (90) days of the filing thereof; or an order, order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving or ordering any of the foregoing actions; or

(v)the Parent terminates or attempts to terminate the Guaranty or makes any written statement repudiating or contesting the validity of the Guaranty.

(b)  Remedies.     Upon the occurrence of an Event of Default, at the option of the Holder, and without demand or notice of any kind (except as otherwise provided in this Amended and Restated Promissory Note), the Holder may: (i) declare this Amended and Restated Promissory Note immediately due and payable without presentment, demand, protest or any other action or obligation of the Holder, whereupon all of the outstanding Principal Amount and all accrued interest and all other obligations due hereunder shall become immediately due and payable (provided that, upon the occurrences of an Event of Default specified in Section 5(a)(iii) or (iv), all of the outstanding Principal Amount and all accrued interest and all other obligations due hereunder shall automatically become due and payable without presentment, demand, protest or other action or obligation of the Holder); and (ii) exercise any and all rights and remedies available to it at law, in equity or otherwise.

(c)  Costs of Collection.   If the Holder incurs any costs, expenses and/or attorneys’ fees to enforce this Amended and Restated Promissory Note against the Maker and the Holder is successful in enforcing this Amended and Restated Promissory Note against the Maker, the Maker shall pay all reasonable costs, expenses and attorneys’ fees incurred by the Holder in the enforcement of this Amended and Restated Promissory Note.

6.           Miscellaneous.

(a)  Waivers.

(i)  Trial by Jury.  THE MAKER AND THE HOLDER EACH ACKNOWLEDGE THAT ANY DISPUTE OR CONTROVERSY BETWEEN THE MAKER AND THE HOLDER WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT.  ACCORDINGLY, THE MAKER AND THE HOLDER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING THAT MAY BE COMMENCED BY OR AGAINST THE MAKER OR THE HOLDER ARISING OUT OF THIS AMENDED AND RESTATED PROMISSORY NOTE.

(ii)  Jurisdiction and Venue.  THE MAKER AND THE HOLDER HEREBY AGREE THAT ANY FEDERAL COURT IN THE STATE OF MINNESOTA OR ANY STATE COURT LOCATED IN HENNEPIN COUNTY IN THE STATE OF MINNESOTA SHALL HAVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE MAKER AND THE HOLDER PERTAINING DIRECTLY OR INDIRECTLY TO THIS AMENDED AND RESTATED PROMISSORY NOTE.  THE MAKER AND THE HOLDER EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH COURTS.  FURTHER, THE MAKER AND THE HOLDER HEREBY WAIVE THE RIGHT TO ASSERT THE DEFENSE OF FORUM NON CONVENIENS AND THE RIGHT TO CHALLENGE THE VENUE OF ANY COURT PROCEEDING.

THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF.

(iii) Standard Waivers.  Except as otherwise expressly provided herein, demand, presentment, notice, notice of demand, notice for payment, protest and notice of dishonor are hereby waived by the Maker.  The Holder shall not be deemed to waive any of its rights hereunder unless such waiver be in writing and signed by the Holder.  Any failure on the part of the Holder at any time to require the performance by the Maker of any of the terms or provisions hereof, even if known, shall in no way affect the right thereafter to enforce the same, nor shall any failure of the Holder to insist on strict compliance with the terms and conditions hereof be taken or held to be a waiver of any succeeding breach or of the right of the Holder to insist on the strict compliance with the terms and conditions hereof.

(b)   Amendments.  The Maker and the Holder understand that this Amended and Restated Promissory Note amends and restates the Original Promissory Note in its entirety and that no further modification or waiver of any provision of this Amended and Restated Promissory Note or consent to departure therefrom shall be effective unless in writing and signed by the Maker and the Holder.

(c)           Binding Agreement; Assignment.  The terms and conditions of this Amended and Restated Promissory Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.  This Amended and Restated Promissory Note may not be assigned by any party hereto without the prior written consent of the other party hereto; provided, however, that the Holder may, without the consent of the Maker: (i) assign this Amended and Restated Promissory Note to any one of its Affiliates; or (ii) collaterally assign this Amended and Restated Promissory Note to Wells Fargo Foothill, Inc. (“WFF”) in connection with that certain Credit Agreement dated as of November 15, 2004, by and among BUCA, Inc., each of its subsidiaries that are signatories thereto, the Lenders that are signatories thereto, and WFF, as the Arranger and the Administrative Agent, as amended (the “WFF Credit Agreement”), or to any financial institution which refinances the credit facility evidenced by the WFF Credit Agreement (and assign the Amended and Restated Promissory Note to any such lenders or financial institutions or to any third party in connection with the enforcement of remedies in respect of any such collateral assignment).

(d)           Governing Law. This Amended and Restated Promissory Note shall be governed by, and construed in accordance with, the laws of the State of Minnesota, without regard to the conflicts of law principles thereof.

(e)           Titles and Subtitles.  The titles and subtitles used in this Amended and Restated Promissory Note are used for convenience only and are not to be considered in construing or interpreting this Amended and Restated Promissory Note.

(f)            Notices.  Any notice to be given hereunder shall be in writing and shall be sent to the Holder or the Maker, as the case may be, as provided in Section 11.13 of the Stock Purchase Agreement.

(g)           Severability.  It is the desire and intent of the parties that the provisions of this Amended and Restated Promissory Note be enforced to the fullest extent permissible under applicable law and public policy.  Accordingly, in the event that any provision of this Amended and Restated Promissory Note is held to be invalid, prohibited or unenforceable for any reason, such provision shall be ineffective, without invalidating the remaining provisions of this Amended and Restated Promissory Note.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable, it shall be so narrowly drawn, without invalidating the remaining provisions of this Amended and Restated Promissory Note.

(h)           Entire Agreement and Conflicts.  This Amended and Restated Promissory Note, the Stock Purchase Agreement and the Guaranty contain the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters.  In the event of any conflict between the provisions of this Amended and Restated Promissory Note, the Stock Purchase Agreement and the Guaranty, the provisions of this Amended and Restated Promissory Note shall govern.

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IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Promissory Note as of the date last written below.

MAKER:

VINNY T’S ACQUISITION CORPORATION

By:	/s/ David G. Lloyd
	David G. Lloyd
	President
Dated: March 29, 2007
HOLDER:
BUCA, INC.
By:	/s/ Wallace B. Doolin
	Wallace B. Doolin
	Chairman, President and Chief Executive Officer
Dated: March 29, 2007

EX-10.38

Exhibit 10.38

AMENDMENT NO. 1 TO GUARANTY

This Amendment No. 1 to Guaranty dated as of March 29, 2007 (the “Amendment”) amends that certain Guaranty (the “Guaranty”) dated as of September 25, 2006 and issued by Bertucci’s Corporation (the “Guarantor”) in favor and for the benefit of BUCA, Inc. (the “Creditor”).

WHEREAS, the Creditor, BUCA Restaurants 3, Inc. (the “Company”), Vinny T’s Acquisition Corporation (the “Debtor”) and the Guarantor entered into that certain Stock Purchase Agreement dated as of September 25, 2006 (the “Stock Purchase Agreement”) whereby the Debtor acquired all of the issued and outstanding capital stock of the Company from the Creditor (the “Transaction”);

WHEREAS, pursuant to the terms of the Stock Purchase Agreement on September 25, 2006, the Debtor issued to the Creditor a Promissory Note in the original principal amount of $3,800,000.00 (the “Original Promissory Note”);

WHEREAS, as a condition to the consummation of the Transaction, the Creditor  required that the Guarantor execute and deliver the Guaranty to the Creditor;

WHEREAS, on the date hereof the Debtor and the Creditor have amended and restated the Original Promissory Note to, among other things, reduce the principal amount owed under the Original Promissory Note from $3,800,000.00 to $3,661,293.00 (the “Promissory Note Amendment”);

WHEREAS, in connection with the Promissory Note Amendment the Guarantor and the Creditor desire to amend the Guaranty to reflect that the Original Promissory Note has been replaced by the Amended and Restated Promissory Note;

WHEREAS, pursuant to Section 11(g) of the Guaranty, the Guaranty may be modified by a writing signed by the Guarantor and the Creditor; and

WHEREAS, the Guarantor and the Creditor have both executed this Amendment No. 1 to Guaranty.

NOW THEREFORE, in consideration of the Promissory Note Amendment, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

1.            The following Section 11(n) shall be added to the Guaranty immediately after Section 11(m) thereof:

“(n)         The Guarantor and the Creditor understand and agree that: (i) on March 29, 2007 the Guarantor and the Creditor amended and restated the Promissory Note by executing and delivering an Amended and Restated Promissory Note in the face principal amount of $3,661,293.00, a copy of which is attached hereto as Exhibit 1 (the “Amended and Restated Promissory Note”); and (ii) notwithstanding anything in the Guaranty to the contrary, all references in the Guaranty to the Promissory Note shall now refer to the Amended and Restated Promissory Note.”

2.            Exhibit 1 attached hereto shall be attached to the Guaranty as Exhibit 1 after the signature pages to the Guaranty.

3.            Except as amended and/or changed hereby, the Guaranty shall remain in full force and effect in accordance with its original terms.

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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Guaranty as of the date first above written.

BERTUCCI’S CORPORATION
By:	/s/ David G. Lloyd
	David G. Lloyd
	President and Chief Financial Officer
	BUCA, INC.
By:	/s/ Wallace B. Doolin
	Wallace B. Doolin
	Chairman, President and Chief Executive Officer

EX-10.39

Exhibit 10.39

Bertucci’s Corporation

Corporate Pay for Performance Plan – Executive Officers

Our Pay for Performance Plan (PFP Plan) is designed to motivate Corporate Team Members to participate and support Operations in achieving and exceeding EBITDA targets.  In the PFP Plan, rewards increase with improved EBITDA performance, and include a bonus option in the event the EBITDA goal is not achieved at 100%.  The following bonus percentages are based on a percentage of the employee’s base salary.  The bonus is earned and distributed on an annual basis.

At Plan Performance
EBITDA %	Bonus % of Base Salary
100.00%	50.00	%

Above Plan Performance
EBITDA %	Bonus % of Base Salary
102.00%	60.00	%
104.00%	70.00	%
106.00%	80.00	%
108.00%	90.00	%
110.00%	100.00	%

Below Plan Performance
EBITDA %	Bonus % of Base Salary
97.50%	37.50	%
95.00%	25.00	%
94.00%	0.00	%

Corporate Pay for Performance Plan Eligibility and Terms

Eligibility

1.Eligibility commences the first day of employment for the Corporate Team Member, if hired on or before September 30th.  If hired on or after October 1st you are not eligible due to the limited impact, if any on EBITDA for the year.  Such employees become eligible for the PFP plan on January 1st of the next year.

2.To be eligible to receive any bonus the Corporate Employee must be continuously employed by Bertucci’s until and at the time the bonus payments are distributed by the Company.  This PFP Plan is designed to offer financial rewards for achieving certain objectives and to encourage long-term employment with the Company.

Terms

1.The Company’s calculation and determination of any bonus shall be final and binding.  The Company in its sole judgment shall decide all questions which may arise under the PFP Plan and shall interpret the provisions of the Plan.  The Company’s interpretation and decision on such questions shall be final and binding.

2.This plan is only applicable for the current fiscal year.  The company reserves the right to alter this plan as it deems necessary during the fiscal year.

3.This PFP Plan does not create a contract, implied or expressed, with employees of the Company.  Employment is terminable at will by the Company for any reason, with or without cause.

Payment of Bonus

The bonus will be calculated based on Year End results.  If any errors are discovered after the Year End payment, adjustments will be made in a subsequent bonus payment.

EX-21.1

Exhibit 21.1

SUBSIDIARIES OF REGISTRANT

	Name of Entity	Jurisdiction of Incorporation
	Bertucci’s, Inc.		Massachusetts
	Vinny T’s Acquisition Corporation		Delaware
	BUCA Restaurants 3, Inc.	1	Minnesota
	Bertucci’s Restaurant Corp.	2	Massachusetts
	Bertucci’s Franchise Corp.		Delaware
	Bertucci’s of Anne Arundel County, Inc.	3	Maryland
	Bertucci’s of Columbia, Inc.	3	Maryland
	Bertucci’s of Baltimore County, Inc.	3	Maryland
	Bertucci’s of Bel Air, Inc.	3	Maryland
	Bertucci’s of White Marsh, Inc.	3	Maryland
	Bertucci’s of Montgomery County, Inc.	3	Maryland
	Bertucci’s of Cherry Hill LLC		New Jersey
	Dedham K&L, Inc.	4	Massachusetts
1	Subsidiary of Vinny T’s Acquisition Corporation
2	Subsidiary of Bertucci’s, Inc.
3	Subsidiary of Bertucci’s Restaurant Corp.
4	Subsidiary of BUCA Restaurants 3, Inc.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Stephen V. Clark, certify that:

1.I have reviewed this annual report on Form 10-K of Bertucci’s Corporation;

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

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

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted] for the Registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.[omitted]

c.evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: April 3, 2007	By:	/s/ Stephen V. Clark
		Stephen V. Clark
		Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, David G. Lloyd, certify that:

1.I have reviewed this annual report on Form 10-K of Bertucci’s Corporation;

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

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

4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) [omitted] for the Registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.[omitted]

c.evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors:

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: April 3, 2007	By:	/s/ David G. Lloyd
		David G. Lloyd
		President, Chief Financial Officer and Director