Free Motion for Partial Summary Judgment - District Court of Colorado - Colorado


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Case 1:04-cv-00725-RPM

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Filed 07/01/2005

Page 1 of 42

6.

Rice R a e of Shares: Dividends: Stock Repurchases

Our common stock is traded on the Nasdaq SmallCap Market under the symbol "QUIZ." The following table shows high asked, low bid and close price information for each quarter in the last two fiscal years as reported by Prophet Information Services, Inc., a provider of online historical stock price data for aII major U.S. securities markets. Such quotations reflect inter-dealer prices, without retail markups, markdowns or commissions, and may not necessarily represent actual transactions.
Period Ended September 30,1999 (Nine months only) High Low Clase

First Quarter ................................ Second Quarter ............................ Third Quarter...............................

$7.75 7.75 9.50

$6.88 6.50 6.94

$ 6.88

'7.25 7.88

F i t Year Ended September 30,2000 High Low Clcse

First Quarter ................................ Second Quarter ............................ Third Quarter............................... Fourth Quarter .............................

$9.00 7.94 8.00 7.38

$7.25 5.88 5.88 5.88

$ 7.38

7.94 7.00
6.44

F i l Year Ended September 30,2001 Hinh Low Close

First Quarter (through November 9, 2000) .....

$ 7.375

$ 6.25

$ 6.75

There were 154 holders of record (and approximately 800 estimated nonrecord beneficial owners) of our common stock as of October 13. 2000. The first number includes stockholders of record who hold stock for the benefit of others.
On November 9,2000, the last day the Shares were traded prior to the announcement of the Offer, the last reported sales price per Share as reported on Nasdaq was $6.75.

We have not declared or paid any dividends on the Shares since our inception. We do not anticipate paying cash dividends on the Shares in the foreseeable future. We intend to retain future earnings to finance our operations and to fund the growth of the business. Any payment of future dividends will be at the discretion of our Board of Directors and will depend on, among other things, our earnings, financial condition, capital requirements. level of indebtedness, contractual restrictions with respect to the payment of dividends and other factors that our Board of Directors deems relevant. Between October I , 1999 and September 30. 2000, we repurchased approximately 144,005 Shares on the open market. The prices at which Shares were repurchased ranged from $6.03 to $8.875. and the average price per repurchased Share was $8.38.

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7.

Certain Information Concerning the Company

Except as otherwise set forth herein. the information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by us. GENERAL. We are a Colorado corporation with our principal executive offices located at 1415 Larimer Street, Denver, Colorado 80202. Our telephone number is (720) 359-3300. We incorporated in Colorado in January 1991 as D&R, Inc. We changed our name to The Quizno's Franchise Corporation in April 1991 and to The Quizno's Corporation in June 1995. We do business as The Quizno's Corporation and Quizno's. In January 1991, we purchased certain assets of Quizno's America, Inc., which had operated, owned and franchised Qulzno's restaurants (directly and through predecessors and affiliates)under the QUIZNO'S@name since 1981. We operate, and offer franchises to individuals or entities ('Franchisees") to operate, restaurants with canyout facilities that sell submarine and other sandwiches, salads, other food products and beverages, and related services ("Restaurants"). As of September 30,2000, there were 972 Restaurants in operation in the United States and internationally, and agreements were in place for the opening of an additional 669 franchised restaurants in the United States. D u ~ the last two years, we have grown to become the third largest sub g sandwich chain in the United States. Additionally. we offer franchises for area director marketing businesses in which the area director ("Area Director") acts as our sales representative within a defined geographic area to solicit and identify prospective Franchisees, to assist us in locating and securing sites for Restaurants within a territory, and to provide additional support before, during and after the Restaurants open.
-

We also offer master franchise rights for international markets, in which the master Franchisee
has the right to function as a franchiser to offer a d sell Restaurant franchises and area director marketing n agreements using our trademarks and service marks in a defined geographic area (usually a country). We

-

have master franchise agreements in place for Canada, the United Kingdom and other European countries, Japan. Australia. Taiwan, Mexico and multiple Central American countries. The Area Director or master Franchisee is required to open a specified number of Restaurants annually throughout the life of the area director marketing agreement or master franchise agreement.

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RECENT DEVELOPMENTS. On December 3 1,1996, RRGC made a $2 m l i n loan to the ilo Company, a portion of which was convertible into 372,847 shares of our common stock, and with interest accrued at 12.75% per annum. If the loan were repaid before conversion, RRGC would receive a warrant to purchase the same number of shares of our common stock at $3.10 per share. On Ociober 8, 1997, we and RRGC amended the loan agreement to provide for the conversion of $500,000 of the principal amount of the loan into 100,000 shares of our Class B Preferred Stock, reducing the outstanding principal a amount of the loan to $1.5 million The Class B Preferred Stock w s non-voting, with a cumulative dividend of 12.75%. In connection with such amendment, we also issued a warrant to RRGC that granted it the right to purchase up to 42,209 shares of our common stock at $5.00 per share. Such number of shares of common stock is subject to downward adjustment if we meet certain net income and other goals. In no case will the warrant be exercisable for less than 30,041 shares of our common stock. On January 6, 1999, we paid off the loan h m RRGC,issued to RRGC the warrant to purchase 372,847 shares of common stock referred to above and redeemed the Class B Preferred Stock held by RRGC.

On November 6, 2000, RRGC agreed to sell its warrants back to the Company immediately following the expiration of the Offer. The purchase price for the warrants will be $1,953,577 in cash, which represents the product of the total number of sham subject to the warrants multiplied by the excess of the Purchase Price over the exercise price of the warrants. In addition, RRGC agreed to terminate rights it has under a stockholders agreement and investment agreement with the Company for the sum of $5 18,820.
Richard F. Schaden has discussed the possibility with us of selling his Shares in the Company to us after the self tender transaction is complete. These discussions have been p r e h m u y in nature, and we have not reached an agreement concerning any of the terms or conditions of such a sale, nor has Mr. Schaden told us whether he is certain he wishes to sell his Shares to us. We expect to continue these discussions following conclusion of the self tendcr vansactlon and, if our Board so decides, a Second-Step Transaction
On August 25, 2000, we formed a new wholly owned subsidiary named American Food Distributors, Inc., a Colorado corporation primarily engaged in the business of purchasing proprietary products from third-party manufacturers and then reselling those products to a distributor for use in the Restaurants ("AFD). We plan to purchase and resell virtually all our proprietary products through AFD. We anticipate that the organization of AFD may result m certain cost efficiencies and savings that would translate to reduced product p r i m for our Franciusces, increased contributions to our national and regional marketing funds,and increased revenue and e a m g s for us. At this point, it is impossible to predict the extent of those amourus or how they will be allocated

Robert Elliott has entercd m o an employment agreement with us that terminates on January 16,2003. His contrad pmvides that hc will scrvc as au Exaxtive V~ce President for Marketmg. Mr. Elot will devote lit his fl time to company m m . HIS annual base salary is $180,000 in 2000, $200,000 in 2001, and $220,000 ul for the mnamkr of the term. Such amount may be adJusttd fnxn time to time by mutual agreement between Mr. Elliott and the Company. The agmmmf provides a $25,000 signing bonus payable on his nine month anniversary, and a second year s i p 8 of 5 10,000due on his second year anniversary date. The agreement pruvides an anrrual puformaryx bonus equal to a maximum of 20% of Mr. Won's base salary, as weU as an autrmobile allowance of $650.00 per month The agreement provides that Mr. Elliott will receive o tm to purchase 20.000 shares of the Capany's stock He may receive addihonal ophons or be entitled to pi

-

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@~@ate in other'employee benefit or compensation programs as provided by us frantime to time. Either
party may terminatethe agreement with 30 days' norice. I we terminate the apxmmt without cause, we are f

obligated to pay Mr. Elliott a severance payment equal to 6 monrhs base salary. DufingDuring tern of the v e n t and for 6 months after it terminates, Mr. Elliott agrees not U,work for any cwpetitor.
On November 12,2000, the Board approved new employment agreements with Richard E. Schaden and Richard F. Schaden. The agreement with Richard E. Schaden has a three-year term and provides for an annual salary of $48 1,000. Under the agreement, Richard E. Schaden will be entitled to an annual bonus equal to four percent of the Company's earnings before interest, taxes, depreciation and amortization ('EBITDA") up to the amount of EBITDA projected in the annual budget approved by the Company's Board of Directors for that calendar year. To the extent actual EBIlDA exceeds budgeted EBITDA for that calendar year, Richard E. Schaden will be entitled to an annual bonus of twelve percent of the amount of such excess EBITDA. In the event Richard E. Schaden is terminated by the Company without cause or his employment agreement IS not renewed under terms at least as favorable as exists as of the expiration date of the employment agreement, he would be entitled to termination payments equal to three years' base salary plus bonus (which bonus payment will not be less than $400,000 for each year in which the severance payment is due). Either party may terminate the agreement with 30 days' notice. The agreement with Richard F. Schaden has a three-year term and provides for an annual salary of $100,000.Under the agreement, Richard F. Schaden wl be entitled to an annual bonus equal to two il percent of the Company's EBITDA up to the amount of EBITDA projected in the annual budget approved by the Company's Board of Directors for that calendar year. To the extent actual EBITDA exceeds budgeted EBITDA for that calendar year. Richard F. Schaden will be entitled to a annual bonus of eight n percent of the amount of such excess EBITDA In the event hchard F. Schaden is terminated by the Company without cause or his employment agreement is not renewed under terms at least as favorable as exists as of the expiration date of the employment agreement. he would be entitled to termination payments equal to three years' base salary plus bonus (which bonus payment will not be less than $400,000 for each year in which the severance payment is due). Either party may terminate the agreement wth 30 days' notice.

On November 13. the Company entered into a credit facility with Levine Leichtman that provides for, among other things. the issuance of a warrant to purchase up to 14% of the Company's stock on a fully diluted basis. See "The Tender Offer--Financing of the Offer."
Tucker Anthony, our investment banker and financial advisor, has agreed to make a personal loan to Richard E. Schaden, in the approximate amount of $2,100,000to be secured by Mr. Schaden's shares of common stock m The Quizno's Corporation. Mr. Schaden currently has a loan with Ferns Baker Watts, hc., which is secured by his common stock. That loan is subject to regulatory requirements with respect to margin stock We anticipate that the Offer could result in the loan no longer complymg with the margin agreement requirements and the potential loss of the collateral. The Tucker Anthony loan will replace the Ferris Baker Watts loan. and. in additron to his shares of common stock, will be secured by Mr. Schaden's personal assets. personal guaranty. and a panial guaranty by Mr. Schaden's father. Richard F. Schaden In order to protect against the potential loss of Mr. Schaden's stock as a result of this transaction (and the potential negative effects to the Company), our Board of Directors beheves it to be in the best interests of our Company to authonze a guaranty from the Company by which we assure Tucker Anthony that upon an event of a default m Mr. Schaden's loan, the Company will be responsible for the principal and interest on the loan. The guaranty would supplement the collateral and other

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guaranties. We will enter into a reimbursement agreement with Mr. Schaden which will require Mr. Schaden to reimburse us for any expenses or losses suffered by us in connection with the guaranty. We do not expect to incur any such expenses or losses. as the guaranty would only be drawn against by Tucker Anthony if (a) Mr. Schaden's shares of common stock became insufficientcollateral (in combination with Mr. Schaden's other collateral and the guaranties described above) and (b) Mr. Schaden defaulted on his payment obligations under the loan. This transaction is a conflicting interest transaction under Section 7-108-501 of the CBCA. That statute requires that the Board of Directors provide 10 days written notice of such a proposed authorization of such a loan or guaranty by the Corporation of any obligation of a director of the Corporation. The Board of Directors has provided such written notice contemporaneously with the delivery of the Offer to Purchase. This written Notice states that the Board of Directors will consider the authorization of such a guaranty eleven days after the date of the Notice. The Board of Directors is expected to approve the transaction. If the transaction is approved, the Company will be obligated on a guaranty addressed to Tucker Anthony.

FINANCIAL INFORMATION.Set forth below is certain summary financial information relating to us for the periods indicated In late 1999, we changed our fiscal year from December 31 to September 30;. therefore, all references m the year or period ended September 30 relate to the nine months ended September 30, 1999. The summary financial information (other than the ratio of earnings to fixed charges and book value per share) set forth for the years ended December 31, 1998 and September 30, 1999 has been excerpted or &rived from the audited financial statements contained in our Annual Report on Form 10-KSB for the year ended September 30, 1999 (the "Form 10-KSB"). The summary financial information (other than the ratio of caminis to fixed charges and book value per share) set forth below for the nine months ended June 30. 1999 and June 30.2000 has been excerpted or derived from the unaudited financial statements set forth in our Quarterly Repon on Form 10-QSB for the quarter ended June 30, 2000 (the "Form 10-QSB"). The financial information for the nine months ended June 30, 1999 and June 30. 2000 has not been audited and. in the opinion of management, reflects all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of such information. Results for the nine-month periods are not necessarily indicative of results for the full year. More comprehensive financial information is included in the Form 10-KSB. the Form 10-QSB and other documents filed by us

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with the Commission. The financial information that follows is qualified in its entirety by reference to such reports and other documents, which are incorporated herein by reference, including the financial statements and related notes contained therein. Our Form 10-KSB. Form 10-QSB and other documents may be examined and copies may be obtained from the offices of the Commission in the manner set forth below under "Available Information. "

SUMMARY FINANCIAL INFORMATION
As and for the 12 Months 9 Months Ended Ended December 31, September 30,
Title
1998 1999

As and for the 9 Months Ended June 30,
1999

2000

(Dollars in thousands, except per share data) Earnings Statement Data: Total revenue ................................................. Income from franchise operations ................... Income from Company store operations .......... Other income (expense)................................ Earnings before income taxes ......................... Eammgs before cumulative effect of changed accountmg principle .................. Net earnings (loss).......................................... Earnings per share: Basic, before cumulative effect of change m accounting principle ........... Bas~c, after cumulative effect of change in accounting principle ............ Dilu~ed, before cumulat~ve effect of change in accounmg prmclple ............ Diluted. after cumulative effect of change m accounting principle ............ Balance Sheet Data: Working capital .............................................. Total assets..................................................... Long-term and subordinated debt ................... Deferred revenue ............................................ Stockholders' equlty........................................ Other Data: Baok value per common share ........................ Ratlo of earnmgs to fixed charges...................

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SUMMARY UNAUDITED PRO FORMA CONDENSED FINANCIAL, INFORMATION. The following unaudited pro foma condenied financial information and explanatory notes give effect to the Offer and are based on the estimates and assumptions set forth in the notes to such statements. This pro foma information has been prepared using the historical financial statements of the Company and should be read in conjunction with the historical financial statements and notes thereto included in the Form 10-KSB and the Form 10-QSB. The pro forma condensed balance sheet information gives effect to the Offer as if it had occurred on September 30,2000. The pro forma condensed statement of earnings for the year ended December 3 1, 1999 and for the nine months ended September 30,2000gives effect to the Offer as if it had occurred on December 3 1, 1999 and September 30,2000, respectively. The pro foma condensed financial data may not be indicative of actual results that would have been achieved if the Offer had occurred on the dates indicated or the results that may be realized in the future.
Nine Months Ended September 30,1999 Pro Forma Nine Months Ended June 30,2000 Pro Forma. Adjmments ProFarma Hie&al AdjlsbImts PrOFoma 0 1 1 a r s in thousands, except per share data)
-

Hisdolical
Pro Forma Condensed Statement of Earnings. rm Income f o franchise operations ............ Income from Company store operattons ........................................... Interest expense ..................................... Depreciation and arnort~zation ................. Other Income (expense) .......................... Eamlngs before income taxes .................. I n m e taxes ......................................... Earnmgs before preferred dtvidends and cumulative effect of changes in acuxlntlng pnnaple ........................ Referred stock d ~ v ~ d e n........................ ds Earnings before cumulattve effect of changes in accounting principle .......... Cumulattve effect of changes In . accounting principle ........................ Net earnings (loss) appltcable to .common stockholders ........................ Weighted average shares outstandma:

S

2.350 535 (241) (921) 365 2.088 (722)

S

-(1.396) (210) (1.m) 556

1,366 (124) 1,242 (2,770)

(1.050) 124 (926)

-5
(926)

S (1.528)

Earnmgs per share Bas~c. before cumulat~ve effect of change ln accounttng pnnaple ........ Bas~c. after cumulattve effect of change In a u ~ u n t ~ pnnciple.. .... ng D~luted, befae curnulattve effect of change tn accounting pnnaple. .... Diluted. after cumulattve effect of change in accounting prtnaple ...... Ratlo of earmnps to fixed charges (5) .

S
S
5
5

0 40
(0.50) 0 35 (0.55) 97

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September 30,1999

Pro Forma

June 30,2000 Pro Fwma

(Dollars in thousands, except per share data)
pro Forma Condensed Balance Sheet at June 30.2000: Assets . Cment Assets: cash and short-term investments ............ Accounts & current portion of notes receivable .............................. Other current assets ............................ Total current assets............................. Property and equipment, net .................. Intangible and deferred assets ................ Deferred tax asset .................................... Other assets............................................. Total assets ............................................. Lab~lit~es Stockholders' Equity and Current Liabilities: .............................. Accounts payable and accrued habihties ........................................ Current portion of long-term obligations ..................................... Total current habilitles ...................... Lme of credit ........................................... Long-term obllgatlons.............................. Subordinated debt .............................. Deferred revenue ............................... Total Ilabil~t~es ........................................ Stockholders' Equity ................................ Total liabil~ties stockholders' equ~ty and ..
-

S

4,891

S (6300)

3

%

(1,309) 1,567 1.585 1,843

S

5,902 2,975 644 9521

% (6200)
-

3

5 (298)
2.975
644

1.567 1,585 8,043 4,804 3,389 3.507 2,031 S 21,774

-(6.200)

(6,200) 1,m

3.321

---

S (4,800)

5

2,615 556 3,171

$

. .

-

12.000

1269 1.499 13.722 19,661 2,113 f 21.774

--

12,000 (16,800) S (4,800)

1.2

13.722 31,661 (14.687)

JdffLu

14,699 35.313 2,569 S 37,882

12,000 (16,800) S (4.800) 3
1,2

141699 47,313 (14,231) $33,082

Worlung capital ....................................... Total debt. ............................................ Book value per mmrnon share (6). ..........

S 4,872 S 3,324
$

0.69

(I)

Reflects the purchase of 2.3 m l i n common shares,options, warrants and preferred shares for ilo $8 each. less $2.8 million proceeds from the exercise price of options and warrants, and the payment of f 520.000 for the cancellation of a warrant put option. Reflects transaction costs incurred in connection with the Offer of $2,100,000, of which $700,000 relates to the cost of the shares purchased and $1,400,000 relates to the financing.

(2)

(3)

The cost of the sham and the transaction costs are assumed to be financed with $12,000,000 in new subordinated debt at 13.258, and $6,200,000 from available cash

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(4)
(5)

are The transaction costs associated with the -financing--$1,400,000-- recorded as deferred financing costs under "Intangible and deferred assets" and are being amortized over 60 months.
For purposes of calculation, the ratio of earnings to fixed charges--"earnings"--consists of earnings before income taxes, preferred stock dividends, cumulative effect of changes in accounting principle and interest expense. "Fixed charges" consist of interest expense. Book value per share is calculated as total stockholders' equity divided by the number of shares outstanding at the end of the period, giving effect in the case of the pro forma amounts to the shares repurchased as contemplated herein. The pro forma adjustment for income taxes represents federal and state income taxes at a combined effective tax rate of 34.6% for the nine months ended September 30, 1999 and 37.0% for the nine months ended June 30, 2000.

(6)

(7)

AVAILABLE INFORMATION. We are subject to the informational filing requirements of the Exchange Act and, in accordance therewith, are required to file periodic reports, proxy statements and other information with the Commission relating to our business, financial condition and other matters. Information as of particular dates concerning our directors and officers, their remuneration, stock options granted to them. the principal holders of our securities and any material interest of such persons in transactions with us is rcquired to be disclosed in proxy statements distributed to our stockholders and Ned with the Commission. Such reports, proxy statements and other information should be available for inspectlon at the public reference facilities maintained by the Commission at Room 1024.450 Fifth Sueet, N.W., Washington. D.C. 20549, and also should be available for inspection at the Commission's regional offices located at Seven World Trade Center, 13'~loor, New York, New York 10048, and the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 6066 1. Copies of such materials may also be obtained by mail, upon payment of the Commission's customary fees. by writing to its principal office at 450 Fifth Street, N. W., Washington, D.C. 20549. These materials filed by us with the Commission are also available at the website of the Commission at http://www.sec.gov.
CERTAIN ESTIMATES PREPARED BY US. In October, 2000. our management provided the Schaden Stockholders and Tucker Anthony with ceRain information about the Company that is not publicly available. The information provided included financial projections that contain, among other things, the financial information set forth below. We do not, as a matter of course, publicly disclose forward-looking information (such as the financial projections referred to above) as to future revenues, earnings or other financial dormation. Projections of this type are based on estimates and assumptions that are inherently sub* to significant economic, industry and competitive uncertainties and contingencies, all of which arc difficult to predict and many of which are beyond our control. Accordingly, there can be no assurance that the projected results would be realized or that actual results would not be s~pficantly higher or lower than those projected. In addition, these projections were prepared by us solely for internal use and not for publication or with a view to complying with the published guidelines of the Comrmssion regarding projections or with guidelines established by the American Institute of Certified Public Accountants for prospective financial statements and are included in this Offer to Purchase only because they were furnished to the Schaden Stockholders and Tucker Anthony. The financial projcctions necessarily make numerous assumptions with respect to Industry performance. general busmess and economic conditions, access to markets and distribution

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channels, avkilabiility and pricing of raw materials and other matters, all of which are inherently subject to sigmficant uncertainties and contingencies and many of which are beyond our control. One cannot predict whether the assumptions made in preparing the financial projections will be accurate, and actual results may be materially higher or lower than those contained in the projections. The inclusion of this forward-looking information should not be regarded as fact or an indication that we, the Schaden Stockholders or anyone who received this information considered it a reliable predictor of future results, and this information should not be relied on as such Neither our independent auditors nor any other independent accountants or financial advisors have compiled, examined or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the projected financial information.
Projected Year Ended: September 30,
2000

December 31,
2000

September 30,
2001

September 30,
2002

September 30,
2003

Franchise Operations
Total Revenue from Franch~se Operations Income From Franchise Operat~ons
$26559,075 $28,848.215 $34,283,648 $41,095,010 $48,197,525

$6,093,198

$6.617.181

$9.240.242

$12,713,976

$16.147.712

Company Store Operations
Total Revenues f o Company rm Owned Stores Income from Company Owned Stores
S14.533.587 S15.616.759 S15.536.724 516,008,095 $16,493,768

S1.117.405

$1.126.810

$1.205.098

51280.647

5 1.38 1,584

Net Income Before Taxes: Net Income Preferred Stock Dividends Net Income Applicable to Common Stockhdders Diluted Net Income per Common Share

52,601,239 51.673.305 (5171,075) 51.502230

52,939,267 51.955.295 (S17 1 .OX) 51.784.220

$4.674.801 53.028.692 (5157,140) $2.871.552

S7.994.083 $5,007.875 ($157.140) 54,850,735

$11.215.525 $7.068.884 ($157.140) 56,911,744

50.41

S0.50

S 78 O

$ 1.27

$1.78

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS. This Offer to Purchase conlains certain forward-loolung statements and information relating lo us that are based on the hehefs of management as well as assumptions made by and information currently available to management. Such forward-lookmg statements include, without hmtatlon. our expectation and estimates as to the operating results for the fiscal year ended

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September 30,2000 and our business operations, including the introduction of new products, future financial performance, including net sales and earnings, cash flows from operations and capital expenditures. In addition, in this and other portions of this Offer to Purchase, the words "anticipates," "believes," "estimates," "expects," "plans," "intends" and similar expressions, as they &tte to us or our management, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. In addition to factors that may be described in this Offer to Purchase, the following factors, among others, could cause the actual results to differ materially from those expressed in any forward-looking statements made by us: the effect of national and regional economic and market conditions in the United States and the other countries in which we franchise Restaurants, costs of labor and employee benefits, costs of marketing, the success or failure of marketing efforts, costs of food and non-food items used in the operation of the Restaurants, intensity of competition for locations and Fmhisees as well as customers, perception of food safety, spending patterns and demographic ucnds,legal claims t and litigation, the availability of financing for us and our Franchisees a reasonable interest rates, the availability and cost of land and construction, legislation and governmental regulations, and accounting policies and practices. The principal sources of our income are continuing fees, initial franchise fees and, historically, area director marketing fees. These sources are subject to a variety of factors that could adversely impact our profitability in the future, including those mentioned in the preceding paragraph The continued strength of the U.S. economy is a key factor to the restaurant business because consumers tend to immediately reduce their discretionary purchases in economically difficult times. An economic downturn would adversely affect all three of the income sources identified above. Because o w franchises are still concentrated in certain regions of the United States, regional economic factors could adversely affect our profitability. Weather. particularly severe winter weather, will adversely affect royalty income a d could affect the other sources cited above. Culinary fashions among Americans n and peopIe in other countries in which we franchise the Restaurants will also impact our profitability. As eating habits change and types of cuisine move in and out of fashion, our challenge will be to formulate a menu within the Company's distinctive c u h u y style that appeals to an increasing market share. Finally, the intense competition in the restaurant industry continues to challenge participants in all segments of this industry.
As our revenues from foreign operations become more significant, our profitability could be adversely impacted by international business risks and political or economic instability in foreign markets. While international operations involve risks that do not exist in domestic operations, such as adverse fluctuation in foreign exchange rates. rnmtary exchange controls, foreign government regulation of business relationships and unccnamty of intellectual property protection, we believe that the potential rewards of expanding the market for our services to selected foreign countries far outweigh such risks.

Should one or more of these nsks or uncertarnties materialize, or should underlying assumptions prove incorrect. actual results may vary materially from those described herein as anticipated, believed. estimated or expected. We do not intend to update these forward-looking statements.

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8.

Financing of the Offer

The total amount of funds required by us to consummate the Offer (and to pay related fees and ,qenses estimated to be approximately $2,100,000), assuming that 1,456,248 Shares are validly tendered and not withdrawn and all public stock options, and warrants exercisable for Shares at a price below the Offer Price are exercised and all preferred shares are converted, is $18.2 million. We plan to rm finance the Offer using available cash of $6.2 million and through borrowings f o Levine Leichtman under a new $12.0 million credit Facility (the "Levine Facility"). The borrowers under the Levine Facility are the Company and its subsidiaries (other than Quizno's Franchise Company, which will be a guarantor) (collectively, the "Borrowers"). The Borrowers plan to repay the Levine Facility when due through internally generated funds. The Levine Facility provides that Levine Leichman will loan the Company $12 million to finance the Offer at an interest rate of $13.25%, with the first 12 months prepaid in the amount of $1,862,259.84 of additional principal. The loan has a maturity date that is 60 months following the completion of the Offer. The Company is required to pay interest only u t l the maturity date of the ni loan. The Company may prepay up to $5 million of the loan without penalty during the first 9 months ni of the term of the loan Thereafter, the Company cannot prepay u t l 24 months after the issue date. Between months 24 and 35 of the term of the loan the Company may prepay the loan, but shall incur prepayment penalties. The Company is required to meet specified financial covenants for minimum EBITDA, minimum fixed charge coverage ratio. maximum net debt (net of cash) to EBITDA, maximum capital expenditures and liquidity. The Company will also be subject to standard negative covenants. Levine Leichtman will have a first priority hen in any assets of the Company not presently collateralized. The Company can acquire new senior debt or refinance existing senior debt as long as it uses best efforts to obtain a junior hen for Lcvlne Leichtman on collateralized assets (and so long as such new or refinanced debt doe. not result in a covenant violation). If the Company is unable to grant a junior lien to Levine Leichman in conncctmn with any refinanced senior indebtedness, the interest rate on the Levine Facility will increase by 1%.

In connection with the execution of the Levine Facility, the Company agreed to issue to Levine Leichunan warrants to purchase up to 14%of each class of the Company's capital stock on a fully diluted basis as of the closing of thc Offer. subject 10 certain adjustments for issuances, exchanges or repurchases of capital stock by the Company. at an exercise price of $0.01 per share. In addition, Levine Leichtman will be entitled to receive divldcnds or other distributions made to other shareholders of capital stock in accordance with i ~ kncficial ownership represented by the warrants. At any time s after the maturity of the loan or the cady payment of the principal balance of the loan, Levine Leichunan can cause the Company to repurchase the warrant or the shares issued upon the exercise of the warrant for a pnce equal to thc falr market value of the shares on the date Levine Leichtman exercises this right plus 14% (suhject oc adjustment) of the amount of any indebtedness issued by the Company to repurchase shares fmm Richard F. Schaden and 14% (subject to adjustment) of any interest paid to Richard F. Schaden (mrcased by a 5% per annurn growth factor), less the exercise price. Levine Leichtman will have thc nght to require the Company to register the shares issuable upon

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the exercise of the warrant with the Commission in the event the Company effects a Second-Step Transaction and thereafter completes an initial public offering. Levine Leichtman has the right to participate pro raka in any sale of shares by Richard E. S c W n and Richard F. Schaden In addition, Levine Leichman, at its option, wiU have the right to appoint a representative of Levine Leichanan to the Board as a director of the Company following the completion of the Offer. The material documents comprising the Levine Facility have been filed with the Commission as exhibits to the Company's Tender Offer Statement on Schedule TO, of which this Offer to Purchase is a part. Copies of the Schedule TO may be obtained in the manner set forth in the Section entitled "The Tender Offer - Certain Information Concerning the Company - Available Information."

9.

Dividends and Distributions

If, on or after November 13,2000,we should declare or pay any dividend on the Shares or make any other distribution (including the issuance of additional shares of capital stock pursuant to a stock dividend or stock split, the issuance of other securities or the issuance of rights for the purchase of any securities) with respect to the Shares that is payable or distributable to stockholders of record on a date prior to the transfer to our name on our stock transfer records of the Shares purchased pursuant to the Offer, then, without prejudice to our rights under "The Tender Offer--Certain Conditions of the Offer," (i) the Purchase Price payable by us pursuant to the Offer will be reduced to the exrent any such dividend or distribution is payable in cash; and (ii) any noncash dividend, distribution or right shall be received and held by the tendemg stockholder for our account and will be required to be promptly remitted and transferred by each tendering stockholder to the Depositary for our account, accompanied by appropriate documentation of transfer.

10.

Effect of the Offer on the Market for the Shares; Nasdaq Listing and Exchange Act Registration

Our purchase of Shares pursuant to the Offer wl reduce the number of Shares that might il otherwise trade publicly and will reduce the number of holders of Shares, whch could adversely affect the liquidity and market value of the remaining Shares held by the public. In the event the Offer is consummated and followed by a Second-Step Transaction. we will seek to cause the Shares not to be listed for tradmg on the Nasdaq and to terminate the regismtion of the Shares under the Exchange Act. The Shares are currently h s t d for trading on the Nasdaq. In the event the Offer followed by a Second-Step Transamon is consummated, the Shares will be delisted from the Nasdaq and deregistered under the Exchange Act. As of June 30.2000, there were 3,007,921 Shares issued and outstanding and approximately 150 holders of record of the outstanding Shares. In addition, under Section 12(g) of the Exchange Act, registration under the Exchange Act may be terminated by the issuer if there are fewer than 300 holders of record of a class of security. In the event the Shares were no longer hsted on the Nasdaq. price quotations might still be available from other sources. The extent of the public market for the Shares and the availability of such quotations would however, depend on the number of holders of Shares remaining at such [me, the Interest in maintahng a market in the Shares on the part of securities firms, thc tenninarion of repstratlon under the Exchange Act as described below and other factors.

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If more than approximately 180,000 shares are tendered, we believe that we would no longer meet the net tangible asset requirement for continued listing on the Nasdaq SmallCap Market, and would, in that event, be traded on the National Association of Securities Dealers, Inc. Electronic Bulletin Board (the "Over-thecounter Market"). We believe that the Over-the-counter Market will provide less Liquidity for our shares than the Nasdaq. Pursuant to the Nasdaq's publisfted guidelines, shares of common stock are not eligible to be included for listing if, among other things, the number of shares publicly held falls below 500,000, the number of record and beneficial holders of shares falls below 300 or the aggregate market value of such publicly held shares is less than $1 million. We currently have a very small stockholder base for an exchange-traded public company as indicated by our stockholders of record, a number substantially below the minimum that triggers the obligation to file periodic financial reports and other information pursuant to the Exchange Act. Even if we do not enter into a Second-Step Transaction or complete the Offer, we may seek to terminate our registration under the Exchange Act and delist our securities from the Nas&q SmallCap Market. The Shares are currently "margin securities" under the rules of the Board of Governors of the , Federal Reserve System (the "Federal Reserve Board"). Among other things, this has the effect of allowing brokers to extend credit on the col~ateral such Shares. Depending on factors similar to of those described above regarding listing and market quotations, following the tender and purchase of the Shares pursuant to the Offer, the Shares may no longer constitute "margin securities" for purposes of the Federal Reserve Board's margin fcg'dations. In such event, Shares could no longer be used as collateral for margin loans made by brokers.
The Shares are currently registered under the Exchange Act, which requires, among other dungs, that we furnish certain information to our stockholders and to the Commission and comply with the Comssion's proxy rules in connection with meetings of our stockholders. Registration of the Shares under the Exchange Act may be terminated upon our application to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 holders of record of the Shares.

The termination of the registration of the Shares under the Exchange Act would substantially h reduce t e information required to be furnished by us to you and to the Commission and would render inapplicable certain provisions of the Exchange Act. including requirements that we file periodic reports (including financial statements), the requircmcnts of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, requirements that our officers, directors and -10% stockholders file certain reports concerning ownership of our equity securities and provisions that any profit by such officers, directors and stockholders nalized thrwgh purchases and sales of our equity securities within any six-month period may be recaptured by the Company. I addition, the ability of our "affiliates" n and other persons to dispose of Sham ta are "restricted securities" under Rule 144 under the ht Securities Act of 1933, as amended may be impaired or eliminated. If registration of the Shares under the Exchange Act were tefininated, the Shares would no longer be "margin securities" or ehgible for listing on the Nasdaq or other similar exchanges. Except as disclosed in this Section 10 and elsewhere in this Offer to Purchase, we have no other present plans or proposals that relate to or would result in (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company. (ii) any extraordinary corporate transaction, such as a merger, reorganization, hquidatlon, or sale or transfer of a material amount of assets, involving the Company. (iii) any material change in the present dividend policy or indebtedness or capitalization of the Company. (iv) any other

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material change in our corporate structure or business, or (v) any change in our Charter, bylaws or instruments corresponding thereto or any other actions that may impede the acquisition of control of the Company by any person. We anticipate that following the Offer the Schaden Stockholders wiU not cause the Company to change the composition of our Board of Directors. The persons who are presently our officers wl il continue in their same positions following consummation of the Offer.

11.

Certain Conditions of the Offer

Notwithstanding any provision of the Offer, in addition to the conditions that the M n m m iiu Condition has been satisfied, we shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and may terminate or amend the Offer and may postpone the acceptance for payment of, and payment for, Shares tendered, if prior to the acceptance for payment of Shares, any of the following conditions exist: there shall have been instituted or pending any material action or proceeding by any (aj government or governmental, regulatory or administrative agency, authority or tribunal or any other person, domestic or foreign, before any court, authority, agency or tribunal that directly or indirectly (i) challenges the making of the Offer, the acquisition of some or all of the Shares pursuimt to the Offer or otherwise relates in any manner to the Offer, or (ii) in our reasonable judgment, could materially and adversely affect our business, condition (financial or other), income, operations or prospects and our subsidiaries, taken as a whole. or otherwise materially impair in any way our contemplated future conduct of our buslness or any of our subsidiaries or materially impair the contemplated benefits of the Offer to us; any actiun redken. or approval withheld, or any statute, rule, regulation, judgment, (b) order or injunction sought, promulgated. enacted, entered, amended, enforced or deemed to be applicable to the Offer or us or any of our subsidiaries, by any m n or any authority, agency or tribunal that. m our reasonable judgment. would or might directly or indirectly (i) make the acceptance for payment of. or payment for. same or all of the Shares illegal or otherwise restrict or prohibit consummation of the Offer. (ii) delay or restrict the ability of the Company, or render us unable to accept for payment or pay for sane or all of the Shares, (iii) materially impair the contemplated benefits of the Offer to us. or (IV) materially and adversely affect our business, condition (financial or other), income. operations or our prospects and the prospects of our subsidiaries, taken as a whole, or otherwise materially Impair m any way the contemplated future conduct of our business or any of our subsidianes; a tender or exchange offer for any or all of the Shares (other than the Offer), or any (c) merger. business combination or other srmilar transaction with or involving us or any subsidiary. shall have been propmed. announced or ma& by any person; our Board of Directors shall have concluded the exercise of the directors' fiduciary (d) that duties requ~ns we temunatc the Offer, wth such conclusions based on the advice of outside legal and financial advisors as appropriate; or (e)
the Offer.

~f we shall no longer continue to have sufficient financing to enable us to consummate

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The foregoing conditions are for our sole benefit and may be asserted by us in the exercise of reasonable judgement regardless of the circumstances @vingrise to any such condition or may be waived by us in whole or in part at any time and from time to time in our sole discretion Our failure at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time.

12.

Certain Legal Matters and Regulatory Approvals

GENERAL. We are not aware of any license or other regulatory permit that appears to be material to our business that might be adversely affected by the acquisition of Shares by us pursuant to the Offer or of any approval or other action by any domestic (federal or state) or foreign governmental. iidministrative or regulatory authority or agency that would be r e q d prior to our acquisition of Shares pursuant to the Offer. Should any such approval or other action be required, it is our present intention to seek such approval or action. We do not currently intend, however, to delay the purchase of Shares tendered pursuant to the Offer pending the outcome of any such action or the receipt of any such approval (subject to our right to decline to purchase Shares if any of the conditions in "The Tender Offer--Certain Conditions of the Offer" shall have occurred). There can be no assurance that my such approval or other action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to our business, or that certain parts of our businesses might not have to be disposed of or held separate or other substantial conditions comphed with in order to obtain such approval or other action or in the event that such approval was not obtained or such other action was not taken Our obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal maners discussed in this Section 12. See "The Tender Offer--Certain Conditions of the Offer."
FRANCHISE. We are subject to Federal Trade Commission ("FTC) regulation and several state laws that regulate the offer and sale of franchises. We are also subject to a number of state laws that regulate substantive aspects of the franchiser-franchisee relationship. The FTC's Trade Regulation Rule on Franchising (the ' R C Rule") requires us to furnish to prospective Franchisees a franchise offemg circular containing information prescribed by the FTC Rule.

-

n Laws that regulate the offer a d sale of franchises and the franchiser-franchiseerelationship presently exist in a substantial number of states. State laws that regulate the offer and sale of h franchises generally require registration of the franchise offering with state authorities. T e repurchase of Sham pursuant to the self tender transaction could result in our company having significant negative net worth (or negative stockholders' equity) under generally accepted accounting principles. There are certain franchise registration states that would require a franchser with negative equity to adopt franchise fee deferral or escrow procedures. which could have a negative effect on our cash flow and ability to sell franchises. In order to address this issue, we plan on f o m g a new subsidiary that will have positwe equity, as will be shown on independently audited financial statements for that suhs~dary. will act as the franchiser if the self tender transaction results in negative equity at the that parent company level. We beheve this procedure is acceptable in all franchse registration states and under the FTC regulations.

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We are not aware of any other probable pending franchise legislation that in our view is likely to affect our ability to repurchase the Shares.

LITIGATION. To the best of our knowledge, no lawsuits have been filed relating to the Offer.
13.

Fees and Expenses

Except as set forth below, we will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer. We have retained Tucker Anthony to act as our financial advisor, as well as the Dealer Manager, in connection with the Offer. The engagement letter between us and Tucker Anthony provides that we will pay Tucker Anthony a fee of $200,000 upgn delivery of the preliminary Tucker Anthony Opinion, a fee of $200,000 due upon the delivery by Tucker Anthony to our Board of Directors of the final Tucker Anthony Opinion, and an advisory fee of $400,000 upon the closing of the Offer. In addition, the engagement letter between us and Tucker Anthony provides that we wiU reimburse Tucker Anthony for certain of its out-of-pocket expenses and will indemnify Tucker Anthony and certain related persons against certain liabilities, including liabilities under securities laws, arising out of its ehgagement. Tucker Anthony has not previously had a material relationship in which it provided or agreed to provide investment banking or other advisory services to us in the past, but it may render such services to us in the future. We have retained MacKenzie Partners, Inc. to act as Information Agent and Hams Trust Company of New Yo* to act as Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telegraph and personal interviews and may request brokers, dealers and other nominte stockholders to forward materials relating to the Offer to beneficial owners. The Information Agent and the Depositary will each receive reasonable and customary compensation for their respective services, will be reimbursed by us for certain reasonable out-ofpocket expenses and will be lndannified against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws.
,

No fees or commissions will be payable by us to brokers, dealers or other persons (other than fees to the Dealer Manager and the Information Agent as described above) for soliciting tenders of Shares pursuant to the Offer. Stockholders holding Shares through brokers or banks are urged to consult the brokers or b& to determine whether transaction costs are applicable if stockholders tender Shares through such brokers or banks and not directly to the Depositary. We, however, upon request, will reimburse brokers, dealers and commercial banks for customary mailing and handling expenses incurred by them in forwarding the Offer and related materials to the beneficial owners of Shares held by them as a nominee or in a fiduciary capacity. No broker, dealer, commercial bank or trust company has bcen authorized to act as our agent. the Dealer Manager, the Information Agent or the Depositary for purposes of the Offer. We will pay or cause to be paid all stock transfer taxes, if any, on our purchase of Sham except as otherwise provided in lnsuuction 6 of the Letter of Transmittal.

We arc not aware of any prisdxtion in which the making of the Offer is prohibited by any administrat~ve judicial action pursuant to any valid state statute. If we become aware of any valid or

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state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, we will make a good faith effort to comply with any such state statute. If, after such good faith effort. we cannot comply with any such state statute, the Offer win not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of us by the Dealer Manager or one or more registered brokers or dealen licensed under the laws of such jurisdiction NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON OUR BEHALF OR THE DEALER MANAGER NOT CONTAINED IN THIS OFFER TO PURCHASE OR IN THE LETIER OF TRANSMITTAL, AND, IF G M i N OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY US OR THE DEALER MANAGER. Pursuant to Rule 13e-3 and Rule 13e-4 of the General Rules and Regulations under the Exchange Act, we have filed with the Commission the Schedule 13E-3 and the Schedule 13E4, together with exhibits, furnishing additional information with respect to the Offer and may file amendments thereto. Such statements, including exhibits and any amendments thereto, which furnish certain additional infomation with respect to the Offer, may be inspected at, and copies may be obtained from, the same places and in t e same manner as set forth in 'The Tender Offer--Certain h hformation Concerning the Company" (except that they will not be available at the regional offices of the Commission).

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SCHEDULE I
Directors and Executive Officers of the Company The following table sets forth the names and ages of the members of our Board of Directors as of October 23,2000 and the year in which they were first elected our directors. All of our directors ni ni hold office utl the next Annual Meting of the Stockholders and utl the election and qualification of their successors. Each of our executive officers is listed in the subsequent table, and each was elected at the annual meeting of the Board of Directors, held on August 8, 2000, to serve for one year or, if ni earlier or later, utl the next annual meeting of the Board of Directors. Each individual listed below is a citizen of the United States. Director Director Richard E. Schaden Richard F. Schaden Frederick H. Schaden
J. Eric Lawrence

Age
36 62

Position(s) With Company President, Chief Executive Officer and Chairman of the Board of Directors Vice President, Secretary and Director Director Director Director Director Director

Since
1991 1991 1993 1997 1997 1999
2000

53 33
49

Mark L. Bromberg Brad k Griffin John J. Todd

50
40

Biographical Information of Directors
Mr. Richard E. Schxkn has been President and a director of the Company since its inception on January 7, 1991. Mr. Schaden had been a principal and the chief operatmg officer of Schaden & Schaden. Lnc., a company that owned and operated the Company's franchised restaurants from 1987 to 1994 when it was sold to the Company. Mr. Schaden graduated magna cum laude from the University of Colorado with a degree in Busmess Management and Finance.
Mr. Richard F. Schaden has been a Vice President, Secretary and a director of the Company since its inception on January 7. 199 1. Mr. Schaden had been a principal of Schaden & Schaden, Inc., a company that owned and operated the Company's franchised restaurants from 1987 to 1994 when it was sold to the Company. Mr. Schaden is the founding partner of the law firm of Schaden, Katzrnan & Lampen with offices m BlOOmf~eld Hills, M~chgan, Broomfield, Colorado. and Mr. Schaden graduated from the Umversity of Detroit with a B.S. in Aeronautical Engineering, Law School and is an internationally known, wellreceived his J.D. from the University of Detro~t published attorney. speciahzmg in aviatm law. Pnor to entering the legal profession, Mr. Schaden

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was an aeronautical engineer for The Boeing Company and Continental Aviation and Engineering. Mr. Schaden has been on the board of numerous private companies.

Mr. Frederick H. Schaden is an Executive Vice President of the Automotive Consulting Group of Aon Consulting, Inc. Aon Consulting, Inc. is a subsidiary of Aon Corporation, a publicly held company with annual revenues of over $7 billion. He has been employed by Aon for over 25 years and has served as a senior officer of its affiliates since 1981. Mr. Schaden earned a B.S. in Business Administration from Xavier University in Cincinnati, Ohio.
Mr. 3. Eric Lawrence has been the General Partner of Retail & Restaurant Growth Capital, L.P.("RRGC"), a $60 million investment fund focused on providing growth and expansion capital to small businesses in the retail and restaurant industries, since December 1995. RRGC is a Small Business Investment Company, federally licensed by the Small Business Administration RRGC loaned $2 million to the Company in 1996, which has been paid in full, and Mr. Lawrence serves on our Board pursuant to a contractual arrangement between the Company and RRGC. Mr. Lawrence has been extensively involved in the analysis of the financial, operational and managerial aspects of retail and restaurant companies throughout his career. Prior to RRGC,he served as Vice President of Strategic Retail Ventures, Inc., a boutique financial consulting and private investment firm focusing on the needs of specialty retail and restaurant companies ("SRV"), from March 1993 to December 1995. Prior to SRV, Mr. Lawrence was a Senior Consultant with Arthur Andersen, in Dallas, Texas. Mr. Lawrence is a licensed C.P.A. and is a graduate of Southern Methodist University with a B.B.A in Accounting and Minor in Economics, w-hjch included study abroad at Oxford University, Oxford, England. Mr. Mark L. Bromberg 1s the President of- Foodservice of the viaLink Company, a public company providmg synchrmed database management services to a wide range of retail clients since May 2000. From November I997 to- May 2000. he served as President of Pinnacle Restaurant Group. a privately held company that owns and operates casual dining restaurants in the southwestern United States. Mr. Bromberg previously served as a self-employed management consultant providing strategic p l m g , positioning and senior management consulting services to the hospitality industry. He is the former President and C.E.O. of East Side Mario's Restaurants, Inc.. formerly the Dallasbased subsidiary of PepsiCo. which he grew from one restaurant in 1988 to 30 in 1993 when it w s a sold to PepsiCo. Mr. Brornherg has been the founder and President of Prime and President, which was sold to PepsiCo. Mr. B m b e r g has been the founder and President of a number of casual dining restaurant chains including Mr. GreenJeans, Ginsberg. & Wong and Lime Rickey's and served as President of m e Restaurant Group. the largest privately held casual restaurant chain in Canada. He holds a B.S. and an M.B.A. from Cornell University and remains highly involved in food service education as a cumculum advisor and a pest lecturer. He is a past chairman of the Canadian Restaurant and Foodservice Assaciatmn and is a past director of the National Restaurant Association of the U.S. Mr. Bromberg was elected to the Board of Directors pursuant to a contractual arrangement with RRGC that required the election of an additional Board member acceptable to RRGC. Mr. Brad A. Griffin has heen the managing director of GriffCo Development, which develops, builds, leases and manages commercial and retail real estate, since 1994. He is aLso the managing &rector of Oasis Investment. a company that manages investment assets and trades Nasdaq and exchange-hsted s t o c k and options.

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Mr. John J. Todd was elected to the Board of Directors on September 26, 2000. Mr. Todd is the Senior Vice President and Chief Financial Officer of Gateway Inc., a position he has held since October 1998. Before joining Gateway, he had held financial positions with the Allied Signal companies from 1997 to 1998, with Boston Market from 1996 to 1997 and with PepsiCo from 1988 to 1996. He received his bachelor's depee from Longwood College and his M.B.A. from William and Mary.

Executive Officers
The following table sets forth (i) the names of our current executive officers, (ii) their ages, and (iii) the capacities in which they serve the Company:

Name
Richard E. Schaden Steven B. Shaffer Robert W. Scanlon Sue A