CHICAGO PIZZA & BREWERY INC, SB-2/A, 1996-08-01

CHICAGO PIZZA & BREWERY INC
SB-2/A, 1996-08-01
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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 1996

REGISTRATION NO. 333-5182-LA

AMENDMENT NO. 1
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CHICAGO PIZZA & BREWERY, INC.
(Exact name of small business issuer as specified in its charter)

26131 MARGUERITE PARKWAY, SUITE A
MISSION VIEJO, CALIFORNIA 92692
(714) 367-8616
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

CALIFORNIA 5812 33-0485615
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) Number)

PAUL A. MOTENKO
CHIEF EXECUTIVE OFFICER
CHICAGO PIZZA & BREWERY, INC.
26131 MARGUERITE PARKWAY
SUITE A
MISSION VIEJO, CALIFORNIA 92692
(714) 367-8616
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:

STEVEN J. INSEL, Esq. CHANNING D. JOHNSON, Esq.
Jeffer, Mangels, Butler & Marmaro LLP Kaye, Scholer, Fierman, Hays &
2121 Avenue of the Stars Handler, LLP
10th Floor 1999 Avenue of the Stars
Los Angeles, California 90067 Suite 1600
(310) 203-8080 Los Angeles, California 90067
Fax: (310) 203-0567 (310) 788-1000
Fax: (310) 788-1200

------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/

If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
(Continued on next page)

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE OFFERING
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY (1) PRICE (1)
<S> <C> <C> <C>
Common Stock, no par value ("Common Stock")............ 3,491,864 shares (2) $6.00 $20,951,184.00
Common Stock Purchase Warrants (the "Redeemable
Warrants")............................................ 11,739,584 warrants (3) $0.25 $2,934,896.00
Common Stock issuable upon exercise of the Redeemable
Warrants.............................................. 11,739,584 shares (4) $6.60 $77,481,254.00
Representative's Warrants.............................. 1 warrant (5) $50.00 $50.00
Common Stock issuable upon exercise of Representative's
Warrant............................................... 150,000 shares $7.20 $1,080,000.00
Redeemable Warrants issuable upon exercise of the
Representative's Warrants............................. 150,000 warrants $0.30 $45,000.00
Common Stock issuable upon exercise of Redeemable
Warrants issuable upon exercise of the
Representative's Warrants............................. 150,000 shares $6.60 $990,000.00
Total Registration Fee.................................

<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
Common Stock, no par value ("Common Stock")............ $7,224.53
Common Stock Purchase Warrants (the "Redeemable
Warrants")............................................ $1,012.03
Common Stock issuable upon exercise of the Redeemable
Warrants.............................................. $26,717.67
Representative's Warrants.............................. $.02
Common Stock issuable upon exercise of Representative's
Warrant............................................... $372.41
Redeemable Warrants issuable upon exercise of the
Representative's Warrants............................. $15.52
Common Stock issuable upon exercise of Redeemable
Warrants issuable upon exercise of the
Representative's Warrants............................. $341.38
Total Registration Fee................................. $35,683.56
</TABLE>

(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(a) under the Securities Act of 1933.

(2) Includes: (i) 1,500,000 shares of Common Stock registered for the account of
the Registrant, (ii) 1,766,864 shares of Common Stock registered for the
account of certain Selling Security Holders (as hereinafter defined) and
(iii) 225,000 shares of Common Stock which the Underwriters have the option
to purchase to cover over-allotments, if any.

(3) Includes: (i) 1,500,000 redeemable warrants registered for the account of
the Registrant (the "Redeemable Warrants"), (ii) 10,014,584 selling security
holders' Redeemable Warrants (the "Selling Security Redeemable Warrants")
which include 4,700,000 special warrants which convert into Redeemable
Warrants upon sale by the current holders and (iii) 225,000 Redeemable
Warrants which the Underwriters have the option to purchase to cover
over-allotments, if any.

(4) Includes: (i) 1,500,000 shares of Common Stock issuable upon exercise of
Redeemable Warrants registered for the account of the Registrant, (ii)
10,014,584 shares of Common Stock issuable upon exercise of Selling Security
Holder Redeemable Warrants and (iii) 225,000 shares of Common Stock issuable
upon exercise of Redeemable Warrants which the Underwriters have the option
to purchase to cover over-allotments, if any.

(5) To be issued to the Representative of the Underwriters.

Pursuant to Rule 416 under the Securities Act of 1933, there are also being
registered hereby such additional indeterminate number of shares of Common Stock
as may become issuable by reason of stock splits, stock dividends and similar
anti-dilutive adjustments as set forth in the Redeemable Warrants and the
Representative's Warrants.
<PAGE>
EXPLANATORY NOTE

This Registration Statement contains two prospectuses.

The first prospectus forming a part of this Registration Statement is to be
used in connection with the underwritten public offering of: 1,725,000 shares of
the Registrant's Common Stock (including 225,000 shares of Common Stock subject
to the Underwriters' over-allotment option); 1,725,000 of the Registrant's
Redeemable Warrants (including 225,000 Redeemable Warrants subject to the
Underwriters' over-allotment option); 1,725,000 shares of Common Stock issuable
upon exercise of the Registrant's Redeemable Warrants (including 225,000 shares
of Common Stock issuable upon exercise of the Redeemable Warrants subject to the
Underwriters' over-allotment option); 150,000 Representative's Warrants; 150,000
shares of Common Stock issuable upon exercise of the Representative's Warrants;
150,000 Redeemable Warrants issuable upon exercise of the Representative's
Warrants; and 150,000 Shares of Common Stock issuable upon exercise of the
Redeemable Warrants issuable upon exercise of the Representative's Warrants, and
immediately follows.

The second prospectus forming a part of this Registration Statement is to be
used in connection with the sale from time to time by certain nonaffiliated
selling security holders and by one independent director of the Company (the
"Selling Director") (the Selling Director and the nonaffiliated selling security
holders are collectively referred to herein as the "Selling Security Holders")
of in the aggregate: 1,766,864 shares of Common Stock (the "Selling Security
Holders' Shares"); 10,014,584 Selling Security Holders' Redeemable Warrants (the
"Selling Security Holders' Redeemable Warrants") which include 4,700,000 special
warrants which convert into Redeemable Warrants upon sale by current holders;
and 10,014,584 shares of Common Stock issuable by the Company upon exercise of
the Selling Security Holders' Redeemable Warrants. With respect to the Selling
Director, only 39,258 shares of Common Stock which the Selling Director
purchased in a January 1995 private placement by the Company and 300,000
warrants are included in the Selling Security Holders Shares and Selling
Security Holders Redeemable Warrants, respectively. The second prospectus will
consist of (i) the cover page and inside cover page immediately following the
first prospectus, (ii) pages 1 through 67 of the first prospectus (other than
the sections entitled "Resale of Outstanding Securities" and "Underwriting") and
pages F-1 through F-31 of the first prospectus, (iii) pages SS-1 through SS-3
(which will appear in place of the section entitled "Resale of Outstanding
Securities"), (iv) pages SS-3 through SS-4 (which will appear in place of the
section entitled "Underwriting") and (v) the back cover page, which is the last
page of the second prospectus.

<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION, DATED AUGUST 1, 1996

PROSPECTUS

[LOGO]

1,500,000 SHARES OF COMMON STOCK AND
1,500,000 REDEEMABLE WARRANTS
------------------

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") hereby offers
1,500,000 shares (the "Shares") of common stock of the Company, no par value
(the "Common Stock"), and 1,500,000 redeemable warrants of the Company (the
"Redeemable Warrants") (the Shares and the Redeemable Warrants are sometimes
collectively referred to herein as the "Securities"). The Shares and the
Redeemable Warrants will be separately tradeable immediately upon issuance and
may be purchased separately. It is currently anticipated that the initial public
offering price will be between $5.00 and $6.00 per Share and $0.25 per
Redeemable Warrant, respectively. Each Redeemable Warrant entitles the holder
thereof to purchase one share of Common Stock at a purchase price equal to 110
percent of the initial public offering price of the Shares, subject to
adjustment, at any time during the 54-month period commencing one year after the
date of this Prospectus, and is redeemable by the Company at a redemption price
of $.25 per Redeemable Warrant commencing one year after the date of this
Prospectus, provided that the average closing bid price of the Common Stock
equals or exceeds 140 percent of the initial public offering price per share for
any 20 trading days within a period of 30 consecutive trading days ending on the
fifth trading day prior to the date of the notice of redemption. See
"Description of Securities -- Redeemable Warrants."

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION.
SEE "RISK FACTORS" AND "DILUTION" COMMENCING ON PAGES 11 AND 21, RESPECTIVELY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS (1) COMPANY (2)
<S> <C> <C> <C>
Per Share............................... $ $ $
Per Redeemable Warrant.................. $ $ $
Total (3)............................... $ $ $
</TABLE>

(1) Does not include additional compensation to the Representative in the form
of a nonaccountable expense allowance. For indemnification arrangements
with, and additional compensation payable to, the Underwriters, see
"Underwriting."

(2) Before deducting expenses of this Offering payable by the Company, estimated
at approximately $1,058,750 in the aggregate, including the Representative's
nonaccountable expense allowance. See "Underwriting."

(3) For the purpose of covering over-allotments, if any, the Company has granted
to the Underwriters an option, exercisable within 45 days from the date of
this Prospectus, to purchase up to 225,000 additional shares of Common Stock
and/or up to 225,000 additional Redeemable Warrants. If such over-allotment
options are exercised in full, the total Price to Public, Underwriting
Discounts and Commissions, and Proceeds to Company will be $ ,
$ and $ , respectively. See "Underwriting."

The Securities are offered by the Underwriters, when, as and if delivered to
and accepted and subject to their right to withdraw, cancel, or modify this
Offering and to reject any orders in whole or in part. It is expected that
delivery of the Securities will be made on or about , 1996.

------------------------

THE BOSTON GROUP, L.P.

The date of this Prospectus is , 1996
<PAGE>

(THIS IS A NARRATIVE DESCRIPTION OF THE PHOTOS)

[On the front cover will be the logo with pictures of pizza boxes as well as
of a menu cover. On the first inside flap there will be a picture of the
Westwood restaurant. On the further inside flap of the inner flap will be a map
of locations and a picture collage of the Westwood restaurant interior with
photos of the brewmaster looking through a microscope as well as photos of food.
On the other inside front flap there will be a picture of the Brea microbrewery
and a collage with employees pouring beer, photographs of food, the Brea
restaurant exterior and employees in uniform. On the inside back cover will be a
photograph of the bar at Brea with the microbrewery showing in the background.]

Prior to this Offering, there has been no public market for the Securities
and there is no assurance that such a market for the Securities will develop or,
if a market develops, that it will be sustained. The Company has applied for
approval for listing of the Common Stock and Redeemable Warrants on the Nasdaq
Small-Cap Market ("Nasdaq") under the symbols CHGO and CHGOW, respectively. The
initial public offering prices for the Shares and Redeemable Warrants and the
exercise price of the Redeemable Warrants have been determined by negotiation
between the Company and The Boston Group, L.P., as representative of the several
Underwriters (the "Representative"), and are not necessarily related to the
Company's asset value, net worth or other established criteria of value. See
"Risk Factors" and "Underwriting."

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND/OR THE REDEEMABLE WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

The Company intends to furnish its security holders annual reports
containing audited consolidated financial statements with a report thereon by
independent accountants, and such other periodic reports as the Company may
determine to be appropriate or as required by law.
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED
INFORMATION AND COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES
THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") owns eight
restaurants in Southern California (the "California Restaurants") and an
interest in one restaurant in Lahaina, Maui, each of which are currently
operated as either a BJ'S PIZZA, GRILL & BREWERY or a BJ'S PIZZA & GRILL. The
Company recently acquired 19 additional restaurants in Oregon and Washington
(the "Northwest Restaurants") which it plans to convert into BJ's restaurants.
The Company has recently completed a refurbishment program and the expansion of
its menu around its core pizza products in its California Restaurants. In
addition, the Company has introduced handcrafted, micro-brewed beers in its
California Restaurants and has built a micro-brewery in Brea, California. The
Company plans to refurbish the Northwest Restaurants and add its award-winning
pizza products, some or all of the expanded BJ's menu and handcrafted,
micro-brewed beers to the menu offerings at the Northwest Restaurants. If this
plan can be successfully executed, all 28 of the Company's restaurants will fit
into one of the three following BJ's concepts:

- BJ'S PIZZA, GRILL & BREWERY is designed to provide a dining experience in
an operating micro-brewery environment where a variety of proprietary,
hand-crafted beers are produced on-site. The menu features the core pizza
products surrounded by a selection of appetizers, entrees, pastas,
sandwiches, specialty salads and desserts. Currently, the Company operates
one of its California Restaurants as, and plans to convert four of its
Northwest Restaurants into, the BJ'S PIZZA, GRILL & BREWERY concept, as
well as developing a BJ'S PIZZA, GRILL & BREWERY restaurant in Boulder,
Colorado.

- BJ'S PIZZA & GRILL is designed to provide a casual dining experience with
table-service featuring a menu of pizza, pasta, sandwiches, salads and
desserts. Currently, the Company operates seven of its California
Restaurants and the Lahaina, Maui restaurant as, and plans to convert
seven of its Northwest Restaurants into, the BJ'S PIZZA & GRILL concept.

- BJ'S PIZZA is designed to provide an informal dining experience with
counter-service and a menu featuring pizza and a limited selection of
pastas, sandwiches and salads. Currently, the Company plans to operate
none of the California Restaurants as, and plans to convert eight of the
Northwest Restaurants into, the BJ'S PIZZA concept.

Management believes that having three concepts, which can be utilized in
alternative locations, facilities and markets, provides the Company a broader
scope of potential acquisitions and development sites.

According to certain newspaper polls, BJ's pizza is considered among the
best in Orange County, California. It has won numerous awards over the past
years from publications such as the Orange County edition of the Los Angeles
Times, Orange Coast Magazine, Daily Pilot and The Metropolitan, and BJ's pizza
was featured in 1994 on the TV show "Live in LA" as one of the five best pizzas
in the Los Angeles area. Finally, BJ's pizza was voted number one by the readers
of the Orange County Register, a leading Orange County, California-based
newspaper and by the readers of the Maui News.

The Company was formed in 1991 to assume the management of five "BJ's
Chicago Pizzeria" restaurants and to develop additional BJ's restaurants.
Between 1992 and 1995, the Company developed five additional restaurants,
purchased three of those original five restaurants that it managed and
discontinued one of those that it had developed. As a result of these
transactions, at the end of 1995, the Company owned restaurants in California
located in La Jolla Village, Laguna Beach, Belmont Shore, Seal Beach, Huntington
Beach and Balboa in Newport Beach, as well as an interest in a restaurant in
Lahaina, Maui.

3
<PAGE>
Beginning in November 1995, the Company embarked on a campaign to broaden
its customer base by: (i) surrounding its core pizza product with a more
expansive menu including appetizers, grilled sandwiches, specialty salads and
pastas, ii) adding hand-crafted, micro-brewed beers through on-site
micro-breweries in certain locations and the sale of internally-produced beer
through other Company restaurants and iii) differentiating the BJ's identity and
expanding merchandising opportunities through a comprehensive new logo and
identity program, a new interior design concept and redesigned signage.

The Company has also sought to expand through acquisitions and conversions,
such as the acquisition of the Northwest Restaurants and the Brea, California
restaurant. The Company intends to seek other acquisitions if financing is
available.

The first BJ'S PIZZA GRILL & BREWERY opened in Brea, California in April
1996. This 10,000-square-foot restaurant features elaborate brick walls and
archways, high molded tin ceilings, warm lighting and industrial railings. The
on-premises brewing equipment includes a 30-barrel, copper-clad kettle,
60-barrel, stainless steel fermentation tank, kegging equipment and a
40,000-pound-capacity corrugated metal grain silo located at the front entrance
to the restaurant. Management believes the brewery capacity is sufficient to
supply beer for all of the Company's existing Southern California restaurants.
Management believes the low production cost relative to purchased beer and the
premium price often obtained for micro-brewed beer can significantly improve
gross margins.

The Company's current objectives after the closing of this Offering are to
remodel and refurbish each of the Northwest Restaurants into one of the three
BJ's concepts over the next 12 to 18 months while it consolidates the management
of the Northwest Restaurants and the rest of the Company's operations and
attempts to reduce overhead. The Company also plans to acquire and develop
additional BJ's restaurants in order to expand operations to other cities and
towns consistent with the Company's location strategy and market niche. In this
regard, the Company has executed a lease for an approximately 5,500-square-foot
facility in the Pearl Street Mall, a popular, high-traffic pedestrian promenade
in Boulder, Colorado. The Company expects to open a BJ'S PIZZA, GRILL & BREWERY
in this location in Fall of 1996. No assurance can be given that the Company's
objectives can be achieved or that sufficient capital will be available to
finance the Company's business plan. See "Risk Factors."

The Company is organized under the laws of the State of California. The
Company's offices are located at 26131 Marguerite Parkway, Suite A, Mission
Viejo, California 92692. Its telephone number is (714) 367-8616.

4
<PAGE>
THE OFFERING (1)

<TABLE>
<S> <C>
Securities Offered by the Company........ 1,500,000 shares of Common Stock and 1,500,000
Redeemable Warrants. The Common Stock and
Redeemable Warrants can be purchased and will be
tradable separately upon issuance. See
"Description of Securities."
Terms of the Redeemable Warrants......... Each Redeemable Warrant entitles the holder
thereof to purchase one share of Common Stock at
a price equal to 110% of the initial public
offering price of the Shares, subject to
adjustment, during the 54-month period
commencing one year after the date of this
Prospectus.
Redemption of the Redeemable Warrants.... Commencing one year after the date of this
Prospectus, the Redeemable Warrants will be
subject to redemption at the Company's option at
$.25 per Redeemable Warrant if the average
closing bid price of the Common Stock equals or
exceeds 140 percent of the initial public
offering price per Share for any 20 trading days
within a period of 30 consecutive trading days
ending on the fifth trading day prior to the
date of the notice of redemption. In the event
of a proposed redemption by the Company, the
Company will provide the holders with a 30-day
notice, during which period the holders will
have the right to exercise the Redeemable
Warrants in lieu of redemption. See "Description
of Securities -- Redeemable Warrants."
Shares of Common Stock Outstanding:
Before the Offering...................... 4,608,321 shares (1)
After the Offering....................... 6,108,321 shares (1)
Redeemable Warrants Outstanding:
Before the Offering...................... 10,014,584 Redeemable Warrants (1)
After the Offering....................... 11,514,584 Redeemable Warrants (1)
Use of Proceeds.......................... To refurbish certain existing restaurants, to
convert the Northwest Restaurants to one of the
BJ's concepts, to repay certain indebtedness, to
acquire and/or develop additional restaurants
and to use for working capital purposes. See
"Use of Proceeds."
Risk Factors............................. An investment in the Common Stock and Redeemable
Warrants involves a high degree of risk and
immediate substantial dilution. See "Risk
Factors" and "Dilution."
Securities Being Registered for the
Account of the Selling Security
Holders.................................. 1,766,864 shares of Common Stock, 10,014,584
Redeemable Warrants (hereinafter "Selling
Security Holders' Redeemable Warrants") and
10,014,584 shares of Common Stock issuable upon
exercise of such Selling Security Holders'
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
Redeemable Warrants are being registered and may
be sold by the Selling Security Holders. The
Company will not receive any of the proceeds
from sales by the Selling Security Holders,
although it will receive the exercise price if
the Selling Security Holders' Redeemable
Warrants are exercised. The Selling Security
Holders' Shares and the Selling Security
Holders' Redeemable Warrants are not being
underwritten by the Underwriters. See "Resale of
Outstanding Securities" and "Underwriting."
Nasdaq Small-Cap Market Symbols (2):
Common Stock............................. CHGO
Redeemable Warrants...................... CHGOW
</TABLE>

- ------------------------
(1) Unless the context otherwise requires, the term "Company" refers to Chicago
Pizza & Brewery, Inc. and its subsidiaries, Chicago Pizza Northwest,
Inc.("CPNI"), a Washington corporation, and Blue Max, Inc., a Hawaii
corporation, as well as BJ's Lahaina, L.P., a California limited partnership
which owns the Company's Lahaina, Maui restaurant with the Company as
managing general partner and Blue Max, Inc. as the co-general partner.
Unless the context otherwise requires, all share and per-share information
in this Prospectus gives effect to a 19,000-for-one stock split effected in
December 1994 and a .34896-for-one reverse stock split effected in May 1995.
Unless otherwise indicated, such share and per-share information does not
give effect to: (i) the exercise of the Underwriters' over-allotment options
to purchase up to 225,000 Shares; (ii) the issuance of 1,500,000 shares of
Common Stock issuable upon exercise of the Redeemable Warrants being offered
by the Company; (iii) the issuance of 10,014,584 shares of Common Stock
issuable upon exercise of the Selling Security Holders' Redeemable Warrants
(see "Shares Eligible for Future Sale"); (iv) the issuance of 225,000 shares
of Common Stock issuable upon exercise of the Redeemable Warrants included
in the Underwriters' over-allotment option; (v) the issuance upon exercise
of the Representative's Warrants of 150,000 shares of Common Stock; (vi) the
issuance upon exercise of Redeemable Warrants issuable upon exercise of the
Representative's Warrants of 150,000 shares of Common Stock or (vii) 600,000
shares of Common Stock reserved for issuance pursuant to the Company's
proposed 1996 Stock Option Plan.

(2) There is no assurance that the Common Stock or Redeemable Warrants will be
approved for listing in the Nasdaq Small-Cap Market or that a trading public
market will develop, or, if developed, will be sustained. See "Risk Factors
-- Absence of Public Market" and "Lack of Correlation between Offering Price
and Value of Shares or Company."

6
<PAGE>
SUMMARY COMBINED AND CONSOLIDATED FINANCIAL AND RESTAURANT DATA

The following table sets forth summary combined (1994) and consolidated
(1995) financial and restaurant data of Chicago Pizza & Brewery, Inc., excluding
the assets of Chicago Pizza Northwest, Inc. ("CPNI"), the Company's wholly-owned
subsidiary which owns the 26 restaurants acquired from Pietro's Corp., a
Washington corporation. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation -- Pietro's Corp.'s Business Related to
Purchased Assets." Chicago Pizza & Brewery, Inc., excluding CPNI, is referred to
as the "Parent." The 26 acquired restaurants owned by CPNI are referred to as
the "Purchased Assets." The following tables also set forth summary financial
and restaurant operating data for the Parent and the Purchased Assets on a pro
forma combined basis as if the Purchased Assets were acquired on January 1,
1995. The summary financial data in the table are derived from the financial
statements of the Parent and the Purchased Assets and the pro forma financial
statements. The data should be read in conjunction with the financial
statements, related notes and other financial information included elsewhere
herein.

<TABLE>
<CAPTION>
PURCHASED PRO FORMA
ASSETS COMBINED
THE PARENT (1) (2)(5) YEAR YEAR ENDED
YEAR ENDED ENDED DECEMBER
DECEMBER 31, DECEMBER 25, 31,
--------------- ------------ ----------
1994 1995 1995 1995
------ ------- ------------ ----------
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE
AND
RESTAURANT OPERATING DATA)

<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues.................................................... $6,453 $ 6,586 $ 14,634 $ 21,220
Cost of sales............................................... 1,638 1,848 4,277 6,125
------ ------- ------------ ----------
Gross profit................................................ 4,815 4,738 10,357 15,095
Cost and expenses........................................... 5,338 5,789 10,808 16,597
------ ------- ------------ ----------
Loss from operations........................................ (523) (1,051) (451) (1,502)
Net loss.................................................... (550) (1,606) (451) (2,057)
Pro forma net loss (3)...................................... (2,057)
Pro forma net loss per common share (4)..................... (.45)
Pro forma weighted average common shares outstanding (4).... 4,608,321

RESTAURANT OPERATING DATA (5):
Average sales per restaurant open for full period (6)....... $888,000 $854,000 $578,000 $ 616,000
Total number of restaurants open at end of each period...... 10 7 26 33
Average sales per square foot for restaurants open for full
period (7)................................................. $ 332 $ 320 $ 114 $ 130
</TABLE>

<TABLE>
<CAPTION>
PRO FORMA COMBINED
PARENT (1) PURCHASED ASSETS (2) AS OF DECEMBER 31,
AS OF DECEMBER 31, 1995 AS OF DECEMBER 25, 1995 1995
----------------------- ----------------------- ----------------------
<S> <C> <C> <C>
BALANCE SHEET DATA: (1)
Working capital (deficit).................. $ 22 $ (247) $ (225)
Intangible assets, net..................... 5,558 5,558
Total assets............................... 9,943 1,541 11,484
Total long-term debt (including current
portion).................................. 4,127 4,127
Minority interest (8)...................... 253 253
Shareholders' equity....................... 4,023 1,091 5,114
</TABLE>

- ------------------------
(1) Statement of Operations Data includes the operating results for the combined
(1994) and consolidated (1995) information for the Parent and the combined
information for the Purchased Assets. The Balance Sheet Data includes the
consolidated balance sheet information for the Parent and

7
<PAGE>
the combined balance sheet information for the Purchased Assets. The 1994
information for the Parent is presented on a combined basis due to common
ownership and control. The Parent acquired the Purchased Assets on March 29,
1996.

(3) Presented on page 25 of this Prospectus is a more detailed Consolidated Pro
Forma Statement of Operations showing the net loss as if the Parent had
acquired the Purchased Assets as of the beginning of the period (January 1,
1995).

(4) In December 1994, the Parent effected a 19,000-for-one stock split of its
Common Stock. In May, 1995, the Parent effected a .34896-for-one reverse
stock split of its Common Stock. The weighted-average shares outstanding are
based on the pro forma weighted-average shares outstanding of 4,608,321.

(5) Restaurant Operating Data includes the financial results for restaurants
open for the entire comparable period. The following restaurants were opened
or closed during the period and are therefore excluded due to
noncomparability: Huntington Beach; Seal Beach; and Lahaina, Maui. The
Parent managed but did not subsequently purchase the Santa Ana and San Juan
Capistrano restaurants; instead, they were closed in 1995 along with the La
Jolla -- Prospect restaurant. The Purchased Assets include 26 former
Pietro's restaurants, but the Woodstock restaurant, which opened in 1995 is
excluded as noncomparable.

(6) Determined as total sales divided by the number of all restaurants open for
the full period. Restaurants open for the full period in both years
presented totaled four for the Parent and 25 for the Purchased Assets. The
seven restaurants owned and operated by the Parent for all of 1995 averaged
$916,000 in sales for that period.

(7) Determined as total sales divided by total square feet for all restaurants
open for the full period. Restaurants open for the full period in both years
presented totaled four for the Parent and 25 for the Purchased Assets. The
seven restaurants owned and operated by the Parent for all of 1995 averaged
sales of $323 per square foot for that period.

(8) The minority interest represents the 46.32% limited partners' share in
equity and the accumulated results from operations for the Lahaina, Maui
restaurant, not owned directly by the Parent.

8
<PAGE>

<TABLE>
<CAPTION>
PURCHASED ASSETS
THE PARENT (1) (2)
THREE-MONTH THREE-MONTH
PERIODS PERIODS PRO FORMA
ENDED MARCH 31, ENDED MARCH 31, COMBINED
---------------- ---------------- MARCH 31,
1995 1996 1995 1996 1996 (3)
------ ------ ------ ------ ----------
(DOLLARS IN THOUSANDS, EXCEPT PER-SHARE AND
RESTAURANT OPERATING DATA)

<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues.................................................... $1,582 $1,768 $3,671 $3,780 $ 5,548
Cost of sales............................................... 433 546 1,121 1,188 1,734
------ ------ ------ ------ ----------
Gross profit................................................ 1,149 1,222 2,550 2,592 3,814
Cost and expenses........................................... 1,305 1,511 2,738 2,758 4,269
------ ------ ------ ------ ----------
Loss from operations........................................ (156) (289) (188) (166) (455 )
Net loss.................................................... (471) (367) (188) (166) (533 )
Pro forma net loss (3)...................................... (533 )
Pro forma net loss per common share (4)..................... (0.12 )
Pro forma weighted average common shares outstanding (4).... 4,608,321

RESTAURANT OPERATING DATA: (5)
Average sales per restaurant open for full period (6)....... $201,000 $245,000 $147,000 $147,000 $ 169,000
Total number of restaurants open at end of each period...... 8 8 25 26 34
Average sales per square foot for restaurants open for full
period (7)................................................. $ 71 $ 86 $ 29 $ 29 $ 37
</TABLE>

<TABLE>
<CAPTION>
PARENT (1) ADJUSTED (8)
AS OF MARCH 31, AS OF MARCH 31,
1996 1996
------------------- -------------------
<S> <C> <C>
BALANCE SHEET DATA: (1)
Working capital (deficit) (9).......................................... $ (4,680) $ 4,634
Intangible assets, net................................................. 6,279 6,279
Total assets........................................................... 15,936 21,443
Total long-term debt (including current portion)....................... 8,616 4,809
Minority interest (10)................................................. 266 266
Shareholders' equity................................................... 3,656 12,970
</TABLE>

- ------------------------
(1) Statement of Operations Data and Balance Sheet Data include the
consolidated operating results and balance sheet information for the Parent
and the combined operating results and balance sheet information for the
Purchased Assets. The Parent acquired the Purchased Assets on March 29,
1996.

(2) The Purchased Assets represent the 26 restaurants acquired from the former
Pietro's. The financial results for the Purchased Assets represent the
Pietro's Corp.'s Business Related to Purchased Assets acquired by the
Parent. On May 15, 1996 the Parent agreed to sell seven of the restaurants
purchased from Pietro's. The sale was completed during the second quarter of
1996. The operating results of those seven restaurants are still included in
the table. The Company will recognize no gain or loss on the sale and will
adjust the goodwill recorded in the acquisition of the Purchased Assets. The
sales for the seven restaurants agreed to be sold totaled approximately
$841,000 and $940,000 for the three-month periods ended March 31, 1996 and
1995, respectively. Operating profit excluding overhead allocation totaled
approximately $31,000 and $95,000 for the three-month periods ended March
31, 1996 and 1995, respectively. Loss after overhead allocation

9
<PAGE>
relating to the seven restaurants totaled approximately $54,000 and $42,000
for the three-month periods ended March 31, 1996 and 1995, respectively. See
the Combined Financial Statements, Pietro's Corp.'s Business Related to
Purchased Assets.

(3) Presented on page 25 of this Prospectus is pro forma net loss as if the
Parent had acquired Purchased Assets as of the beginning of the period
(January 1, 1996).

(4) In December 1994, the Parent effected a 19,000-for-one stock split of its
Common Stock. In May 1995, the Parent effected a .34896-for-one reverse
stock split of its Common Stock. The weighted-average shares outstanding are
based on the pro forma weighed-average shares outstanding.

(5) Restaurant Operating Data includes the financial results for restaurants
open for the entire comparable periods. The Westwood Village in Los Angeles
and La Jolla -- Prospect restaurants opened and closed, respectively, during
the period and therefore are excluded due to noncomparability. With respect
to Purchased Assets, in 1996 the Purchased Assets exclude due to
noncomparability the financial results for the Woodstock, Oregon restaurant,
which opened in June 1995.

(6) Determined as total sales divided by the number of all restaurants open for
the full period. Restaurants open for the full period in both years
presented totaled seven for the Parent and 25 for the Purchased Assets.

(7) Determined as total sales divided by total square feet for all restaurants
open for the full period. Restaurants open for the full period in both years
presented totaled seven for the Parent and 25 for the Purchased Assets.

(8) As adjusted to reflect the issuance and sale of the 1,500,000 shares of
Common Stock at the assumed public offering price of $5.50 per share and
1,500,000 warrants at $0.25 per warrant, net of estimated expenses of the
offering, and the repayment of certain indebtedness with such proceeds. The
as adjusted amounts do not reflect the issuance and sale of up to 225,000
shares of Common Stock by the Company to cover over-allotments, if any, or
the exercise of the Representative's Warrants to purchase up to 150,000
shares of Common Stock. See "Use of Proceeds."

(9) Working capital includes certain Notes Payable to Related Parties resulting
from the Purchased Asset acquisition totaling $3,000,000 which are
convertible at the time of the offering to 750,000 shares and 4,500,000
Special Warrants (as hereinafter defined). These securities are
collateralized by the stock of the Purchased Assets and do not have a stated
interest rate. See the Combined Financial Statements and "Certain
Transactions -- Pietro's Acquisition."

(10) The minority interest represents the 46.32% limited partners' share in the
equity and the accumulated results from operation for the Lahaina, Maui
restaurant, not owned directly by the Parent.

10
<PAGE>
RISK FACTORS

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION. IN ADDITION TO THE OTHER INFORMATION
CONTAINED IN THE PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS BEFORE MAKING AN INVESTMENT.

LIMITED OPERATING HISTORY. The Company was founded in 1991 to assume the
management of five BJ's Chicago Pizzeria restaurants and opened its first new
BJ's restaurant in 1992. Of the seven restaurants developed by the Company, as
opposed to pre-existing restaurants for which the Company assumed management,
one was opened in 1992, one in 1993, three in 1994, and two in 1996. The Company
has also only recently acquired an additional 26 restaurants, 19 of which the
Company currently plans to retain. Development efforts for the retained
restaurants have yet to begin. Accordingly, the Company has a limited operating
history and there can be no assurance that its restaurants, or the Company as a
whole, will be profitable in the future. See "Business."

PAST OPERATING LOSSES. The Company sustained net losses of $550,000 and
$1,606,000 for the years ended December 31, 1994 and 1995, respectively, and a
net loss of $367,000 for the three-month period ended March 31, 1996. See
generally "Management's Discussion and Analysis of Financial Condition and
Results of Operations." In addition, the Pietro's Corp.'s Business Related to
Purchased Assets sustained net losses of $833,000 and $451,000 for the years
ended December 26, 1994 and December 25, 1995, respectively, and a net loss of
$166,000 for the three-month period ended March 29, 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
Company may continue to sustain losses.

IMPACT UPON FUTURE NET INCOME OR LOSS OF THE COMPANY BY CURRENT ACCOUNTING
OF DEBT FINANCING COST. In order to finance the Pietro's Acquisition, the
Company sold certain Convertible Notes (as hereinafter defined) totaling in the
aggregate $3,000,000, which Convertible Notes convert into Shares and warrants
upon the close of this Offering. In connection with this financing, which
financing was obtained through the Representative, the Company paid the
Representative 13% of the total $3,000,000 investment, or $390,000. See "Certain
Transactions -- Pietro's Acquisition." This $390,000 debt financing cost is
currently being amortized; however, upon conversion of the Convertible Notes
simultaneously with the closing of this Offering, the $390,000 debt financing
cost is to be expensed and will significantly impact the net income or loss of
the Company.

LACK OF DIVERSIFICATION. The Company currently intends to operate pizzeria
restaurants and brew-pubs only. As a result, changes in consumer preferences,
including changes in consumer preferences away from restaurants of the type
operated by the Company, may have a disproportionate and materially adverse
impact on the Company's business, operating results and prospects.

IMMEDIATE SUBSTANTIAL DILUTION. The initial public offering price per Share
will exceed the net tangible book value per share of the Common Stock.
Accordingly, the purchasers of the Shares will experience immediate substantial
dilution of $4.46 per share or 81.1% of their investment based upon the pro
forma net tangible book value of the Company at March 31, 1996. In addition, the
purchasers of the Securities offered hereby will bear a disproportionate part of
the financial risk associated with the Company's business while effective
control will remain with the existing shareholders and Management. See
"Dilution."

RECENTLY FORMED REPRESENTATIVE MAY BE UNABLE TO COMPLETE OFFERING OR MAKE A
MARKET. The Representative was formed in March 1995, has acted as the managing
underwriter for three public offerings and has acted as a member of an
underwriting syndicate on three occasions. Nonetheless, due to the
Representative's limited history, there can be no assurance that the Offering
will be completed or, if completed, that an active trading market for the Common
Stock will develop. The Representative is not affiliated with the Company or any
controlling person of the Company. See "Underwriting."

11
<PAGE>
NEED FOR ADDITIONAL FINANCING. Although the Company expects that the net
proceeds of this Offering will be sufficient to fund the Company's cash
requirements for the conversion of the Northwest Restaurants and operation of
its existing restaurants for at least 18 months following the completion of this
Offering, this estimate is based on numerous assumptions regarding the Company's
operations, including certain assumptions as to the Company's revenues, net
income and other factors, and there is no assurance that such assumptions will
prove to be accurate or that unbudgeted costs will not be incurred. Future
events, including the problems, delays, additional expenses and difficulties
frequently encountered in the expansion and conversion of facilities, as well as
changes in economic, regulatory or competitive conditions, may lead to cost
increases that could make the net proceeds of this Offering insufficient to fund
the Company's operations in which case the Company would require additional
financing. There can be no assurance that the Company will be able to obtain
such additional financing, or that such additional financing will be available
on terms acceptable to the Company and at the times required by the Company.
Failure to obtain such financing may adversely impact the growth, development or
general operations of the Company. If, on the other hand, such financing can be
obtained, it may result in additional leverage or dilution of existing
shareholders. See "Management's Discussion and Analysis of Financial Condition
and Results of Operation -- Liquidity and Capital Resources."

UNCERTAIN ABILITY TO MANAGE GROWTH AND CONVERSIONS. A significant element
of the Company's business plan is to expand through acquisitions and
conversions. For example, the Company has recently acquired 26 restaurants
located throughout Washington and Oregon under a plan of reorganization, 19 of
which the Company retained and currently plans to convert into BJ's restaurants.
In addition, the Company only recently opened its Westwood Village (Los Angeles)
and Brea, California restaurants. An additional restaurant is being developed in
Boulder, Colorado. The Company's ability to successfully convert recently
acquired restaurants and to expand will depend on a number of factors, including
the selection and availability of suitable locations, the hiring and training of
sufficiently skilled management and other personnel, the availability of
adequate financing, distributors and suppliers, the obtaining of necessary
governmental permits and authorizations, and contracting with appropriate
development and construction firms, some of which are beyond the control of the
Company. There is no assurance that the Company will be able to successfully
convert recently acquired restaurants or to open any new restaurants and/or
brew-pubs, or that any new restaurants and/or brew-pubs will be opened at
budgeted costs or in a timely manner, or that such restaurants can be operated
profitably.

LIMITATIONS AND VULNERABILITY AS A RESULT OF GEOGRAPHIC CONCENTRATION OF
MANAGEMENT'S EXPERIENCE. Until recently, Management's experience was limited to
operating the restaurants in Southern California and one restaurant in Lahaina,
Maui. Because the Company's Management has limited operating experience outside
of Southern California, there is no assurance that the Company will be
successful in other geographic areas. For example, the Company's experience with
construction and development outside the Southern California area is limited,
which may increase associated risks of development and construction as the
Company expands outside this area. Expansion to other geographic areas may
require substantially more funds for advertising and marketing since the Company
will not initially have name recognition or word of mouth advertising available
to it in areas outside of Southern California. The centralization of the
Company's management in Southern California may be a problem in terms of its
current and future expansion to new geographic areas, because the Company lacks
experience with local distributors, suppliers and consumer factors and other
issues as a result of the distance between the Company's main headquarters and
its restaurant sites. These factors could impede the growth of the Company.

GEOGRAPHIC CONCENTRATION OF COMPANY'S OPERATIONS The Company's operations
are concentrated in Southern California, Lahaina, Maui, Oregon and Washington.
Adverse economic conditions in any of these areas could adversely impact the
Company.

RESTAURANT INDUSTRY COMPETITION. The restaurant industry is intensely
competitive with respect to price, service quality, location, ambiance and food
quality, both within the casual dining field and in

12
<PAGE>
general. As a result, the rate of failure for restaurants is very high, and the
business of owning and operating restaurants involves greater risks than for
businesses generally. There are many competitors of the Company in the casual
dining segment that have substantially greater financial and other resources
than the Company and may be better established in those markets where the
Company has opened or intends to open restaurants. There is no assurance that
the Company will be able to compete successfully with its competitors.

SPECIAL BREWERY BUSINESS CONSIDERATIONS. A key element of the Company's
business plan involves the development and/or acquisition of brew-pub-themed
restaurants which will brew beer on site or offer beer produced in a centralized
micro-brewery or offer a variety of micro-brew beers produced by others that
have limited availability. To the extent that the Company brews its own beer,
its business will be highly dependent upon the suppliers of various raw
ingredients and other materials, delivery service and the Company's ability to
retain or replace its expert brewmaster to oversee the Company's brewing
operations. In addition, to the extent that the Company sells beer produced by
its facility to others, the Company will require independent distributors, the
loss of which could adversely impact the Company. Further, brewery operations
are subject to specific hazards, including contamination of brews by
microorganisms and risks of equipment failure. Although Management has procured
insurance to cover such risks, there can be no assurance that such insurance
coverage will be adequate or will continue to be available on price or other
terms satisfactory to the Company.

UNCERTAINTY WITH RESPECT TO GROWTH OF THE MICRO-BREWING INDUSTRY. The sale
and consumption of micro-brewed beer has increased over the past several years.
There can be no assurance that the demand for micro-brewed beer will continue to
grow at the present rate or at all, or that circumstances could develop to cause
the demand for micro-brewed beer to diminish. To meet the demand for micro-
brewed beer, new breweries are being developed. If the demand for micro-brewed
beer does not keep up with increases in supply, the Company's limited brewery
operations will face heightened competition and may not be able to sell
sufficient quantities of its products to achieve profitability.

SIGNIFICANT IMPACT OF BEER AND LIQUOR REGULATIONS. Currently, the sale of
beer and wine accounts for approximately ten percent of total revenue at the
Southern California restaurants. In light of the Company's current focus upon
the development and/or acquisition of brew-pub-themed restaurants, Management
believes that the sale of beer and other alcoholic beverages will constitute a
greater percentage of sales in the future. The Company is required to operate in
compliance with federal licensing requirements imposed by the Bureau of Alcohol,
Tobacco and Firearms of the United States Department of Treasury, as well as the
licensing requirements of states and municipalities where its restaurants are or
will be located. Failure to comply with federal, state or local regulations
could cause the Company's licenses to be revoked and force it to cease the
brewing and/or sale of alcoholic beverages at its restaurants. Additionally,
state liquor laws may prevent or impede the expansion of the Company's
restaurants into certain markets. The liquor laws of certain states prevent the
Company from selling at wholesale the beer brewed at its restaurants. Any
difficulties, delays or failures in obtaining such licenses, permits or
approvals could delay or prevent the opening of a restaurant in a particular
area.

BEER EXCISE TAX. The federal government currently imposes an excise tax of
$7.00 per barrel on each barrel of beer produced for domestic consumption, up to
60,000 barrels per year. Individual states also impose excise taxes on alcoholic
beverages in varying amounts. In the future the excise tax rate could be
increased by either the federal or state governments, or both. Future increases
in excise taxes on alcoholic beverages could adversely affect the Company.

DEPENDENCE UPON CONSUMER TRENDS. The Company's restaurants are, by their
nature, dependent upon consumer trends with respect to the public's tastes,
eating habits (including increased awareness of nutrition), public perception
toward alcohol consumption and discretionary spending priorities, all of which
can shift rapidly. In general, such trends are significantly affected by many
factors, including the national, regional or local economy, changes in area
demographics, public

13
<PAGE>
perception and attitudes, increases in regional competition, food, liquor and
labor costs, traffic patterns, weather, natural disasters and the availability
and relative cost of automobile fuel. Any negative change in any of the above
factors could negatively affect the Company and its operations.

DEPENDENCE ON KEY PERSONNEL. As of the date of the Prospectus there are
three members of senior Management of the Company: Paul Motenko, who serves as
Chairman of the Board, Chief Executive Officer, Vice President and Secretary of
the Company; Jeremiah J. Hennessy, who serves as President, Chief Operating
Officer and Director of the Company; and Laura Parisi who serves as Chief
Financial Officer and Assistant Secretary of the Company. The Company currently
has employment agreements only with Mr. Motenko and Mr. Hennessy. See
"Management -- Employment Agreements." The Company's success depends to a
significant extent on the performance and continued service of its senior
management and certain key employees. Competition for employees with such
specialized training is intense and there can be no assurance that the Company
will be successful in retaining such personnel. In addition, there can be no
assurance that employees will not leave the Company or compete against the
Company. See "Management." The Company does not currently have any key person
life insurance but has applied for $2,000,000 in key person life insurance for
each of Mr. Motenko and Mr. Hennessy. If the services of any members of
Management become unavailable for any reason, it could affect the Company's
business and prospects adversely.

RISKS ASSOCIATED WITH LEASED PROPERTIES. The Company's 28 restaurants are
all on leased premises. Certain of these leases expire in the near term and
there is no automatic renewal or option to renew. See "Business -- Property and
Leases." No assurance can be given that leases can be renewed, or, if renewed,
rents will not increase substantially, either of which could adversely affect
the Company. Other leases are subject to renewal at fair market value, which
could involve substantial rent increases. In addition, there is a potential
eminent domain proceeding against one of the Company's restaurants in Oregon
which, if completed, could require the Company to close the restaurant and lose
its potential revenues and investment therein.

PIETRO'S ACQUISITION OUT OF BANKRUPTCY. The Company recently acquired 26
restaurants pursuant to a plan of reorganization filed by Pietro's with the U.S.
Bankruptcy Court. The Company has sold 7 of the 26 restaurants. The Company
currently plans to retain the remaining 19 restaurants. Pietro's was unable to
operate its restaurants on a profitable basis, and there is no assurance that
the Company will be able to operate these restaurants on a profitable basis in
the future. See "Certain Transactions -- Sale of Restaurants."

INCREASES IN FOOD COSTS. The Company's gross margins are highly sensitive
to changes in food costs, which sensitivity requires Management to be able to
anticipate and react to such changes. Various factors beyond the Company's
control, including adverse weather, labor strikes and delays in any of the
restaurants' frequent deliveries, may negatively affect food costs, quality and
availability. While in the past, Management has been able to anticipate and
react to increasing food costs through, among other things, purchasing
practices, menu changes and price adjustments, there can be no assurance that it
will be able to do so in the future.

POTENTIAL INCREASE IN MINIMUM WAGE. Efforts have been made in the U.S.
House of Representatives and the U.S. Senate to increase the federal minimum
wage from $4.25 to $5.15 per hour. In addition, the Company may be subject to
various state minimum wage increases. A substantial majority of all employees
working in restaurants operated by the Company receive salaries equal to the
federal minimum wage, and an increase in the federal or state minimum wage would
accordingly increase the operating expenses of the Company.

POTENTIAL UNINSURED LOSSES. The Company has comprehensive insurance,
including general liability, fire and extended coverage, which the Company
considers adequate. However, there are certain types of losses which may be
uninsurable or not economically insurable. Such hazards may include earthquake,
hurricane and flood losses. While the Company currently maintains limited
earthquake coverage, it may not be economically feasible to do so in the future.
If such a loss should occur, the Company would, to the extent that it is not
covered for such loss by insurance, suffer a loss

14
<PAGE>
of the capital invested in, as well as anticipated profits and/or cash flow
from, such damaged or destroyed properties. Punitive damage awards are generally
not covered by insurance; thus, any awards of punitive damages as to which the
Company may be liable could adversely affect the ability of the Company to
continue to conduct its business, to expand its operations or to develop
additional restaurants. There is no assurance that any insurance coverage
maintained by the Company will be adequate, that it can continue to obtain and
maintain such insurance at all or that the premium costs will not rise to an
extent that they adversely affect the Company or the Company's ability to
economically obtain or maintain such insurance. See "Business -- Insurance."

POTENTIAL "DRAM SHOP" LIABILITY. Restaurants in most states, including
those in which the Company operates, are subject to "dram shop" laws, rules and
regulations, which impose liability on licensed alcoholic beverage servers for
injuries or damages caused by their negligent service of alcoholic beverages to
a visibly intoxicated person or to a minor, if such service is the proximate
cause of the injury or damage and such injury or damage is reasonably
foreseeable. While the Company has limited amounts of liquor liability insurance
and intends to maintain liquor liability insurance as part of its comprehensive
general liability insurance which it believes should be adequate to protect
against such liability, there is no assurance that it will not be subject to a
judgment in excess of such insurance coverage or that it will be able to obtain
or continue to maintain such insurance coverage at reasonable costs, or at all.
The imposition of a judgment substantially in excess of the Company's current
insurance coverage would have a materially adverse effect on the Company and its
operations. The failure or inability of the Company to maintain or increase
insurance coverage could materially and adversely affect the Company and its
operations. In addition, punitive damage awards are generally not covered by
such insurance. Thus, any awards of punitive damages as to which the Company may
be liable could adversely affect the ability of the Company to continue to
conduct its business, to expand its operations or to develop additional
restaurants.

TRADEMARK AND SERVICEMARK RISKS. The Company has not had a challenge to its
use of the "BJ's" servicemark as of this time. However, to date, the Company has
used the servicemark only in Southern California and Lahaina, Maui and will only
recently be attempting to use such servicemark in Washington and Oregon. In
addition, the Company has not secured clear rights to the use of the "BJ's"
servicemark or any other name, servicemark or trademark used in the Company's
business operations. Since there are other restaurants using the "BJ's" name
throughout the United States there can be no assurance that the Company will
ever be able to secure any such proprietary rights or that the Company may not
be subject to claims with respect to the Company's use of the "BJ's" name. See
"Business -- Trademarks and Copyrights."

EFFECTS OF COMPLIANCE WITH GOVERNMENT REGULATION. The Company is subject to
various federal, state and local laws, rules and regulations affecting its
businesses and operations. Each of the Company's restaurants is and shall be
subject to licensing regulation and reporting requirements by numerous
governmental authorities which may include alcoholic beverage control, building,
land use, environmental protection, health and safety and fire agencies in the
state or municipality in which the restaurant is located. Difficulties in
obtaining or failures to obtain the necessary licenses or approvals could delay
or prevent the development or operation of a given restaurant or limit, as with
the inability to obtain a liquor or restaurant license, its products and
services available at a given restaurant. Any problems which the Company may
encounter in renewing such licenses in one jurisdiction may adversely affect its
licensing status on a federal, state or municipal level in other relevant
jurisdictions. See "-- Significant Impact of Beer and Liquor Regulation."

HIGHER COSTS ASSOCIATED WITH POTENTIAL HEALTH CARE REFORM. The Company
currently pays full and in some cases a portion of health insurance coverage for
corporate, managerial and certain non-managerial restaurant personnel. Many
proposals being discussed at the state and federal level for universal or
broadened health care coverage could impose costly requirements to provide
additional coverage, which could adversely impact the Company. At the present
time it is unclear what, if any, reforms in health care coverage will be adopted
at the federal or state level.

15
<PAGE>
POTENTIAL IMPACT OF RECENT TAX LAW DEVELOPMENTS. In June 1995 the Internal
Revenue Service announced a new initiative aimed at improving tip reporting in
the restaurant industry, known as the Tip Reporting Alternative Commitment
("TRAC"). TRAC is a voluntary agreement between a restaurant and the IRS under
which the restaurant agrees to educate employees about tip reporting and assume
responsibility for tracking employees' charge-card tips. In return, a restaurant
that signs and complies with a TRAC receives assurance that the IRS will not
bill the restaurant for Federal Insurance Contributions Act ("FICA") taxes on
previously unreported tips unless the IRS has first determined that individual
employees owe FICA taxes. While entering a TRAC may minimize potential exposure
for back FICA taxes on unreported tips, it will increase expenses for training
and recordkeeping, as well as result in a likely increase in FICA payroll taxes
due to an increase in the amount of tips reported, offset by an income tax
credit equal to the full amount of FICA payroll taxes paid to the extent of the
Company's federal income tax liability. Management of the Company has not made a
determination of whether or not to apply to enter into a TRAC.

LIMITED CONTROL AND INFLUENCE ON THE COMPANY BY NEW INVESTORS. Upon the
consummation of this Offering, the officers and directors of the Company will,
in the aggregate, beneficially own approximately 26.2% of the Common Stock
(12.5% assuming exercise in full of the Redeemable Warrants, the Selling
Security Holders' Redeemable Warrants, and all other outstanding warrants and
options). As a result, it is anticipated that these individuals will be in a
position to materially influence, if not control, the outcome of all matters
requiring shareholder or board approval, including the election of directors.
See "Management," "Principal Shareholders" and "Description of Securities --
Common Stock." Such influence and control is likely to continue for the
foreseeable future and significantly diminishes control and influence which
future shareholders may have on the Company.

POSSIBLE ADVERSE IMPACT OF FUTURE SALES OF RESTRICTED SHARES ON MARKET
PRICE. All outstanding shares prior to this Offering are restricted securities
under Rule 144 under the Securities Act of 1933. However, of these restricted
securities the 1,766,864 shares held by the Selling Security Holders may be sold
at any time in the over the counter market and an additional 2,730,052 shares
will be eligible for resale in the near future under Rule 144. 1,317,714 of such
2,730,052 shares include shares held by officers and directors who, with the
exception of the Selling Director's shares and warrants included in the Selling
Securities Holders' Shares and Selling Security Holders' Redeemable Warrants,
have agreed not to sell their shares for one year after the date hereof without
the written consent of the Representative. See "Underwriting." In general, under
Rule 144, a person (or persons whose shares are aggregated) holding restricted
securities who has satisfied a two-year holding period may, commencing 90 days
after the date hereof, under certain circumstances, sell within any three-month
period that number of shares which does not exceed the greater of 1% of the then
outstanding shares of Common Stock or the average weekly reported trading volume
during the four calendar weeks prior to filing a Rule 144 notice. Rule 144 also
permits, under certain circumstances, the sale of shares without any quantity
limitation by a person who has satisfied a three-year holding period and who is
not, and has not been for the preceding three months, an affiliate of the
Company. The Securities and Exchange Commission has proposed to shorten the two
year and three year holding periods of Rule 144 to one year and two years,
respectively. If such holding periods are shortened, the holders of restricted
securities could accelerate the date that they could sell their shares. Future
sales under Rule 144 or by the Selling Security Holders including sales of the
Selling Security Holders' Redeemable Warrants (and the shares issuable upon
exercise of the Selling Security Holders' Redeemable Warrants) may have an
adverse effect on the market price of the shares of Common Stock or Redeemable
Warrants should a public market develop for such Securities.

NO DIVIDENDS. It is the current policy of the Company that it will retain
earnings, if any, for expansion of its operations, remodeling or conversion of
existing restaurants and other corporate purposes and it will not pay any cash
dividends in respect of the Common Stock in the foreseeable future. See
"Dividend Policy."

ABSENCE OF PUBLIC MARKET. Prior to this Offering, there has been no public
market for the Common Stock or the Redeemable Warrants. While the Company has
applied for approval for listing

16
<PAGE>
the Common Stock and Redeemable Warrants on the Nasdaq Small-Cap Market, there
is no assurance that a regular public market for the Common Stock or Redeemable
Warrants will develop as a result of this Offering or, if a regular public
market does develop, that it will continue. In the absence of such a market,
investors may be unable to readily liquidate their investment in the Common
Stock or Redeemable Warrants.

NO ASSURANCE OF CONTINUED NASDAQ INCLUSION. In order to qualify for
continued listing on Nasdaq, a company, among other things, must have $2,000,000
in total assets, $1,000,000 in capital and surplus and a minimum bid price of
$1.00 per share. If the Company is unable to satisfy the maintenance
requirements for quotation on Nasdaq, of which there can be no assurance, it is
anticipated that the Securities would be quoted in the over-the-counter market
National Quotation Bureau ("NQB") "pink sheets" or on the NASD OTC Electronic
Bulletin Board. As a result, an investor may find it more difficult to dispose
of, or obtain accurate quotations as to the market price of the Securities which
may materially adversely affect the liquidity of the market of the Securities.

POSSIBLE ADVERSE IMPACT OF PENNY STOCK REGULATION. If the Securities are
delisted from Nasdaq, they might be subject to the low-priced security or
so-called "penny stock" rules that impose additional sales practice requirements
on broker-dealers who sell such securities. For any transaction involving a
penny stock the rules require, among other things, the delivery, prior to the
transaction, of a disclosure schedule required by the Securities and Exchange
Commission (the "Commission") relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information for the penny stocks held in the customer's account.

Although the Company believes that the Securities are not a penny stock due
to their continued listing on Nasdaq, in the event the Securities subsequently
become characterized as a penny stock, the market liquidity for the Securities
could be severely affected. In such an event, the regulations relating to penny
stocks could limit the ability of broker-dealers to sell the Securities and,
thus, the ability of purchasers in this offering to sell their Securities in the
secondary market.

LACK OF CORRELATION BETWEEN OFFERING PRICE AND VALUE OF SHARES OR
COMPANY. The initial public offering price of the Shares and Redeemable
Warrants will be determined by negotiation between the Company and the
Representative, as representative of the Underwriters, and does not necessarily
bear any relationship to the Company's book value, assets, past operating
results, financial condition or any other established criteria of value. There
is no assurance that the Common Stock or Redeemable Warrants will trade at
market prices in excess of the initial public offering price as prices for the
Common Stock or Redeemable Warrants in any public market which may develop will
be determined in the marketplace and may be influenced by many factors,
including the depth and liquidity of the market for the Common Stock or
Redeemable Warrants, investor perception of the Company and general economic and
market conditions. See "Underwriting" for a discussion of the factors considered
in determining the initial public offering price.

REPRESENTATIVE'S POTENTIAL INFLUENCE ON THE MARKET. Almost all of the
Selling Security Holders are clients of the Representative and are obligated to
sell their respective Securities through the Representative. It is also
anticipated that a significant number of the Securities being offered hereby
will be sold to clients of the Representative. Although the Representative has
advised the Company that it currently intends to make a market in the Securities
following this Offering, it has no legal obligation, contractual or otherwise,
to do so. The Representative, if it becomes a market maker, could be a
significant influence in the market for the Securities, if one develops. The
prices and the liquidity of the Securities may be significantly affected by the
degree, if any, of the Representative's participation in such market. There is
no assurance that any market activities of the Representative, if commenced,
will be continued.

POSSIBLE ADVERSE IMPACT OF SELLING SECURITY HOLDERS' SHARES AND REDEEMABLE
WARRANTS ON MARKET PRICE. As part of the Registration Statement of which this
Prospectus is a part, the Company is

17
<PAGE>

registering 1,766,864 shares of Common Stock, 10,014,584 Selling Security
Holders' Redeemable Warrants owned by the Selling Security Holders, and
10,014,584 shares of Common Stock issuable upon exercise of such Selling
Security Holders' Redeemable Warrants (collectively referred to herein as the
"Selling Security Holders' Securities"). See "Resale of Outstanding Securities."
Concurrently with this Offering, the Selling Security Holders or their
respective transferees, may sell the Selling Security Holders' Securities. The
sale of the Selling Security Holders' Securities may be effected from time to
time in transactions (which may include block transactions by or for the account
of Selling Security Holders) in the over-the-counter market or negotiated
transactions, through the writing of options on the Selling Security Holders'
Securities, through a combination of such methods of sale or otherwise. Sales of
Selling Security Holders' Shares or the shares issuable upon exercise of the
Selling Security Holders' Redeemable Warrants may depress the price of the
Common Stock in any market that may develop for the Common Stock and sales of
the Selling Security Holders' Redeemable Warrants may depress the price of the
Redeemable Warrants in any market that may develop for the Redeemable Warrants.

CURRENT PROSPECTUS AND STATE REGISTRATION TO EXERCISE WARRANTS. The
Redeemable Warrants and the Selling Security Holders' Redeemable Warrants are
not exercisable unless, at the time of the exercise, the Company has a current
prospectus covering the shares of Common Stock issuable upon exercise of the
Redeemable Warrants and the Selling Security Holders' Redeemable Warrants and
such shares have been registered, qualified or deemed to be exempt under the
securities or "blue sky" laws of the jurisdiction of residence of the exercising
holder of the Redeemable Warrants. In addition, in the event that any holder of
the Redeemable Warrants attempts to exercise any Redeemable Warrants at any time
after nine months from the date of this Prospectus, the Company may be required
to file a post-effective amendment and deliver a current prospectus before the
Redeemable Warrants may be exercised. Although the Company has undertaken to use
its best efforts to have all the shares of Common Stock issuable upon exercise
of the Redeemable Warrants registered or qualified on or before the exercise
date and to maintain a current prospectus relating thereto until the expiration
of the Redeemable Warrants, there is no assurance that it will be able to do so.
The value of the Redeemable Warrants may be greatly reduced if a current
prospectus covering the Common Stock issuable upon the exercise of the
Redeemable Warrants is not kept effective or if such Common Stock is not
qualified or exempt from qualification in the jurisdictions in which the holders
of the Redeemable Warrants then reside.

The Redeemable Warrants will be separately tradeable immediately upon
issuance and may be purchased separately from the Shares. Although the
Securities will not knowingly be sold to purchasers in jurisdictions in which
the Securities are not registered or otherwise qualified for sale, investors may
purchase the Redeemable Warrants in the secondary market or may move to
jurisdictions in which the shares underlying the Redeemable Warrants are not
registered or qualified during the period that the Redeemable Warrants are
exercisable. In such event, the Company would be unable to issue shares to those
persons desiring to exercise their Redeemable Warrants unless and until the
shares could be qualified for sale in jurisdictions in which such purchasers
reside, or an exemption from such qualification exists in such jurisdictions,
and holders of the Redeemable Warrants would have no choice but to attempt to
sell the Redeemable Warrants in a jurisdiction where such sale is permissible or
allow them to expire unexercised. See "Description of Securities -- Redeemable
Warrants."

ADVERSE EFFECT TO HOLDERS OF REDEEMABLE WARRANTS AS A RESULT OF POSSIBLE
REDEMPTION OF SUCH WARRANTS. The Redeemable Warrants are subject to redemption
by the Company, at any time, commencing one year after the date of this
Prospectus, at a price of $.25 per Redeemable Warrant if the average closing bid
price for the Common Stock equals or exceeds 140 percent of the initial public
offering price per share for any 20 trading days within a period of 30
consecutive trading days ending on the fifth trading day prior to the date of
the notice of redemption. If, prior to exercise, the Company provides holders of
the Redeemable Warrants with the 30-day notice of redemption and during such
notice period, the Redeemable Warrants are not exercised, the holders thereof
would lose their right to exercise their respective Redeemable Warrants and the
benefit of the difference between the market

18
<PAGE>
price of the underlying Common Stock as of such date and the exercise price of
such Redeemable Warrants, as well as any possible future price appreciation in
the Common Stock. Upon the receipt of a notice of redemption of the Redeemable
Warrants, the holders thereof would be required to: (i) exercise the Redeemable
Warrants and pay the exercise price at a time when it may be disadvantageous for
them to do so; (ii) sell the Redeemable Warrants at the market price, if any,
when they might otherwise wish to hold the Redeemable Warrants; or (iii) accept
the redemption price, which is likely to be substantially less than the market
value of the Redeemable Warrants at the time of redemption. Notwithstanding the
above, 4,700,000 of such Redeemable Warrants ("Special Warrants") are not
redeemable until sold by the current holders or their affiliates. See
"Description of Securities -- Redeemable Warrants" and "Underwriting."

POSSIBLE ADVERSE IMPACT ON POTENTIAL BIDS TO ACQUIRE SHARES DUE TO ISSUANCE
OF PREFERRED OR COMMON STOCK. The Board of Directors of the Company has
authority to issue up to 5,000,000 shares of preferred stock of the Company (the
"Preferred Stock") and to fix the rights, preferences, privileges and
restrictions of such shares without any further vote or action by the
shareholders. In addition, the Company has authorized 60,000,000 shares of
Common Stock. Only 6,108,321 shares of Common Stock will be outstanding
immediately after the completion of this Offering, assuming no exercise of the
Underwriters' over-allotment options and assuming that the Representative's
Warrants and all other stock options and warrants then to be outstanding are not
exercised. An additional 12,864,584 shares of Common Stock are reserved for
issuance pursuant to the Underwriters' over-allotment options, Redeemable
Warrants, the Selling Security Holders' Redeemable Warrants, the
Representative's Warrants, the Redeemable Warrants issuable upon exercise of the
Representative's Warrants and options that may be granted under the 1996 Stock
Option Plan. Thus, an additional 41,027,095 shares of Common Stock remain
available for issuance at the discretion of the Board of Directors. The
potential issuance of authorized and unissued Preferred Stock or Common Stock of
the Company may result in special rights and privileges, including voting
rights, to individuals designated by the Company and have the effect of
delaying, deferring or preventing a change in control of the Company. As a
result, such potential issuance may adversely affect the marketability and
potential market price of the shares, as well as the voting and other rights of
the holders of the Common Stock. The Company currently has no plans to issue
shares of Preferred Stock or additional shares of Common Stock. See "Description
of Securities -- Common Stock."

POSSIBLE DILUTIVE EVENT AS A RESULT OF LACK OF PREEMPTIVE RIGHTS. The
holders of Common Stock do not have any subscription, redemption or conversion
rights, nor do they have any preemptive or other rights to acquire or subscribe
for additional, unissued or treasury shares. Accordingly, if the Company were to
elect to sell additional shares of Common Stock, or securities convertible into
or exercisable to purchase shares of Common Stock, following this Offering,
persons acquiring Common Stock in this Offering would have no right to purchase
additional shares, and as a result, their percentage equity interest in the
Company would be diluted. See "Description of Securities -- Common Stock."

19
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Securities offered
hereby at an assumed offering price of $5.50 per share and $0.25 per warrant,
after deducting underwriting discounts and other estimated expenses of the
Offering, are estimated to be approximately $6,703,750 ($7,829,313 if the
Underwriters' over-allotment options are exercised in full). The Company intends
to apply such proceeds for the general purposes set forth below:

<TABLE>
<CAPTION>
APPROXIMATE PERCENTAGE
APPLICATION OF NET PROCEEDS DOLLAR AMOUNT OF NET PROCEEDS
- ------------------------------------------------------------ ------------- ----------------------
<S> <C> <C>
Conversion of 19 Northwest Restaurants (1).................. $4,500,000 67.1%
Repayment of Debt (2)....................................... 807,000 12.0%
Development of Boulder, Colorado Restaurant (3)............. 800,000 11.9%
Working Capital............................................. 596,750 9.0%
------------- -----
Total..................................................... $6,703,750 100.0%
------------- -----
------------- -----
</TABLE>

- ------------------------
(1) Depending on which of the three BJ's concepts a particular restaurant is
converted to, conversion expenditures are estimated to range from $100,000
for a BJ'S PIZZA restaurant to as high as $500,000 for a full BJ'S PIZZA,
GRILL & BREWERY restaurant.

(2) To repay: (i) $600,000 of the $3,500,000 outstanding note payable to Roman
Systems, which note matures on April 1, 2004 and bears interest at a rate of
7%. See "Certain Transactions -- Acquisition of Restaurants and Intellectual
Property," (ii) a $100,000 note due and payable to Ms. Katherine Anderson, a
limited partner of BJ's Lahaina, L.P., the California limited partnership
which operates the Company's Lahaina, Maui restaurant, which note matures on
September 5, 1996 and bears interest at a rate of 19%, (iii) a $79,000 note
due on demand and payable to Paul Motenko, which note bears interest at a
rate of 6% and (iv) a $28,000 note due and payable to Harold Motenko, which
note matures on March 22, 1998 and bears interest at a rate of 12%. See
"Certain Transactions -- Certain Other Transactions and Conflicts of
Interest."

(3) Represents estimated costs of improvements and equipment purchases for the
Boulder, Colorado restaurant not currently expected to be financed through
loans or other financing, as well as amounts expected to be applied toward,
among other things, advertising, preopening expenses (including hiring and
training of personnel) and related expenses in connection with the Boulder,
Colorado site.

The foregoing represents the Company's best estimate of its use of the net
proceeds of this Offering based upon its present plans, the state of its
business operations and current conditions in the restaurant industry. The
Company reserves the right to change the use of the net proceeds if
unanticipated developments in the Company's business, business opportunities, or
changes in economic, regulatory or competitive conditions make shifts in the
allocation of net proceeds necessary or desirable. The net proceeds from the
exercise of the Representative's Warrants, if any, will be added to the general
funds of the Company and used for working capital and other general corporate
purposes. Amounts received by the Company upon exercise of the Underwriters'
over-allotment options, if any, will be used for working capital and other
general corporate purposes. Pending any uses, the Company will invest the net
proceeds from this Offering in short-term, interest-bearing securities or
accounts.

The Company will not receive any proceeds from the sale of the Selling
Security Holders' Securities, although it will receive the exercise price of the
Selling Security Holders' Redeemable Warrants when and if they are exercised.

DIVIDEND POLICY

The Company has not paid any dividends since its inception. Currently, the
Company does not have any funds available for the payment of dividends. In any
case, it is the current policy of the Company that it will retain earnings, if
any, for expansion of its operations, remodeling of existing

20
<PAGE>

restaurants and other general corporate purposes and that it will not pay any
cash dividends in respect of the shares in the foreseeable future. Should the
Company decide to pay dividends in the future such payments would be at the
discretion of the Board of Directors.

DILUTION

As of March 31, 1996, the Company had a pro forma net tangible deficit book
value of $12,508, or approximately $0.00 per share of Common Stock. The pro
forma net tangible book value assumed the conversion of $3,000,000 of debt
pursuant to the Note Purchase Agreements (as hereinafter defined) by and between
the Company and ASSI, Inc. and the Company and Norton Herrick upon the
consummation of this Offering. (See "Certain Transactions -- Pietro's and Other
Proposed Acquisitions") This pro forma net tangible book value per share of
Common Stock is equal to the net tangible assets of the Company (total assets
less total liabilities and intangible assets), divided by the number of shares
of Common Stock outstanding. After giving effect to the issuance of the
1,500,000 Shares of Common Stock offered hereby (without giving any effect to
the net proceeds from the sale of the Shares and Redeemable Warrants subject to
the underwriters' over-allotment option) at an assumed offering price of $5.50
per share, and after deduction of estimated offering expenses and the
Underwriters' discount, the pro forma net tangible book value of the Company at
March 31, 1996 would have been $6,364,992 or approximately $1.04 per share of
Common Stock, representing an immediate dilution (i.e., the difference between
the purchase price per Share and the pro forma net tangible book value per share
after the Offering) to new investors of $4.46 or 81.1% per share and an
immediate increase in net tangible book value of $1.04 per share to existing
shareholders, as illustrated by the following table:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share of Common
Stock...................................................... $5.50
Pro forma net tangible deficit book value per share after
conversion of debt into Common Stock at March 31, 1996... $0.00
Increase per share of Common Stock attributable to new
investors................................................ 1.04
-----
Pro forma net tangible book value per share of Common Stock
after the Offering......................................... 1.04
-----
Dilution per share of Common Stock to new investors......... $4.46
-----
-----
</TABLE>

If the net proceeds of $326,250 from the sale of the Redeemable Warrants
(after deducting the underwriting discounts and the Representative's
nonaccountable expense allowance, but attributing no other costs of this
Offering to the Redeemable Warrants) had been attributed to the net tangible
book value of the shares of Common Stock after this Offering, the pro forma net
tangible book value after this Offering would increase by approximately $.06 per
share of Common Stock and decrease the dilution to new public investors by
approximately $.06 per share of Common Stock.

In the event that the Underwriters exercise their over-allotment options in
full, the pro forma net tangible book value of the Company after this Offering
(after deducting the Underwriters' discount and the Representative's
nonaccountable expense allowance, but attributing no other costs of this
Offering to the over-allotment shares) would be approximately $7,816,805
(including the net proceeds of $326,250 from the sale of the Redeemable
Warrants) or $1.23 per share of Common Stock, which would result in immediate
dilution in net tangible book value to the public investors of approximately
$4.27 per share of Common Stock.

The following table sets forth the number of shares of Common Stock owned by
the current shareholders of the Company, the number of shares of Common Stock to
be purchased from the

21
<PAGE>
Company by the purchasers of the shares of Common Stock offered hereby and the
respective aggregate consideration paid or to be paid to the Company and the
average price per share of Common Stock.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- --------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ---------- ------- -------------
<S> <C> <C> <C> <C> <C>
Current shareholders........................................ 4,608,321(1) 75.4% $9,229,154 52.8% $2.00
New investors (2)........................................... 1,500,000(2) 24.6%(1) $8,250,000(2) 47.2% $5.50
--------- ------- ---------- -------
Total..................................................... 6,108,321 100.0% $17,479,154 100%
--------- ------- ---------- -------
--------- ------- ---------- -------
</TABLE>

- ------------------------
(1) Includes outstanding Common Stock at March 31, 1996 of 3,788,878 shares,
plus the issuance of Woodbridge Holdings, Inc.'s 69,443 shares and the
assumed conversion of the debt to Common Stock for ASSI, Inc. and Norton
Herrick to 750,000 shares at the IPO date. See "Certain Transactions."

(2) Does not include the issuance and sale of 1,500,000 Redeemable Warrants, or
up to 225,000 additional Shares of Common Stock and Redeemable Warrants
issuable by the Company upon the exercise of the Underwriters'
over-allotment option, which would raise the total shares of Common Stock
purchased by new investors to 1,725,000 (27.2%) and the total consideration
paid to the Company by new investors to $9,918,750 (51.8%).

22
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1996, as adjusted to give effect to the conversion of $3,000,000 of debt to
Common Stock and warrants (see "Certain Transactions --Pietro's Acquisition")
and to the issuance and sale of the 1,500,000 Shares of Common Stock and the
1,500,000 Redeemable Warrants offered hereby by the Company at an assumed
Offering price of $5.50 per share and $0.25 per warrant, after the deduction of
the estimated expenses of the Offering, and the application of the net proceeds
thereof as set forth in "Use of Proceeds." The information set forth below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- The Company Excluding CPNI (the
Parent)" and the financial statements and the related notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------
COMPANY ADJUSTMENTS AS ADJUSTED
--------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt, including current portion and capital leases............. $ 1,518 $ 1,518
(3,000)(2)
Notes payable to related parties......................................... 7,098 (807)(1) 3,291
--------- -----------
Total debt........................................................... 8,616 4,809
Minority interest........................................................ 266 266
Equity:
Preferred stock, no par value, 5,000,000 shares authorized; none issued
and outstanding....................................................... -- --
Common stock, no par value, 60,000,000 shares authorized; 4,608,321 2,775(2)
shares issued, and pro forma 6,108,321 shares to be outstanding (3)... 5,568 6,377(4) 14,720
Capital surplus:
Warrants: 10,014,584 warrants issued; and pro forma 11,514,584 warrants 225(2)
to be outstanding..................................................... 279 327(4) 831
Accumulated deficit.................................................... (2,191) (390)(2) (2,581)
--------- -----------
Total equity......................................................... 3,656 12,970
--------- -----------
Total capitalization............................................... $ 12,538 $ 18,045
--------- -----------
--------- -----------
</TABLE>

- --------------------------

(1) The Company will use a portion of the net proceeds to pay (i) $600,000 of
the $3,500,000 note payable to Roman Systems, Inc., (ii) a $100,000 note
payable to Ms. Katherine Anderson, (iii) a $79,000 note payable to Paul
Motenko and (iv) a $28,000 note payable to Harold Motenko.

(2) Conversion of $3,000,000 debt to 750,000 shares of Common Stock at $3.70 per
share and 4,500,000 warrants at $0.05 per share and the expensing of the
debt issue cost of $390,000 and its related impact on accumulated deficit
which will be charged to operations (Third Quarter of 1996) upon the closing
of the Initial Public Offering.

(3) Excludes (i) 1,500,000 shares of Common Stock issuable by the Company upon
the full exercise of the Redeemable Warrants offered hereby, (ii) 225,000
shares of Common Stock and 225,000 Redeemable Warrants issuable by the
Company upon the full exercise of the Underwriters' over-allotment options,
(iii) 150,000 shares of Common Stock issuable by the Company upon the full
exercise of the Representative's Warrants, (iv) 150,000 shares of Common
Stock issuable by the Company upon the full exercise of the Redeemable
Warrants issuable upon exercise of the Representative's Warrants, (v)
10,014,584 shares of Common Stock issuable by the Company upon the full
exercise of the Selling Security Holders' Redeemable Warrants and (vi)
600,000 shares reserved for issuance under the Company's proposed 1996 Stock
Option Plan. See "Underwriting."

(4) The net proceeds of this Offering which include 1,500,000 Shares of Common
Stock and the issuance and sale of the 1,500,000 Redeemable Warrants offered
hereby.

In December 1994 and May 1995, the Company effected a 19,000-for-one stock
split and a .34896-for-one reverse stock split of its Common Stock,
respectively. Unless the context otherwise requires, all share and per-share
data in this Prospectus have been revised to reflect these stock splits.

23
<PAGE>
SELECTED COMBINED AND CONSOLIDATED FINANCIAL DATA

The selected financial data presented below for, and as of the year ended
December 31, 1995 and the end of, each of the years in the two-year period ended
December 31, 1995, are derived from the combined (1994) and consolidated (1995)
financial statements of the Company and the financial statements of the Pietro's
Corp. Business Related to Purchased Assets ("Purchased Assets"), which financial
statements have been audited by Coopers & Lybrand L.L.P., independent
accountants. The financial statements as of December 31, 1995, and for each of
the years in the two-year period ended December 31, 1995, and the reports
thereon, are included elsewhere in this Prospectus. The combined and
consolidated financial data for the three-month period ended March 31, 1995 and
March 31, 1996, are derived from unaudited consolidated financial statements of
the Company and combined financial statements of the Purchased Assets. All of
the unaudited financial statement data referred to above, in the opinion of the
Company's management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations. The operating results for the three-month periods
ended March 31, 1995 and 1996 are not necessarily indicative of the operating
results for the full year. The selected combined and consolidated financial data
should be read in conjunction with the Company and the Purchased Assets Combined
and Consolidated Financial Statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus. See Note 1 of Notes to
Combined and Consolidated Financial Statements.

CHICAGO PIZZA & BREWERY, INC.

<TABLE>
<CAPTION>
THREE-MONTH
PERIODS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------ ------------------------
1994 1995 1995 1996
---------- ------------ ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues................................................................. $ 6,453 $ 6,586 $ 1,582 $ 1,768
Cost of sales............................................................ 1,638 1,848 433 546
---------- ------------ ---------- ------------
Gross profit............................................................. 4,815 4,738 1,149 1,222
---------- ------------ ---------- ------------
Costs and expenses:
Labor.................................................................. 2,706 2,647 635 749
Occupancy.............................................................. 654 654 152 125
Operating expenses..................................................... 1,331 1,250 279 300
General & administrative............................................... 474 879 146 227
Depreciation & amortization............................................ 173 359 93 110
---------- ------------ ---------- ------------
Total costs and expenses........................................... 5,338 5,789 1,305 1,511
---------- ------------ ---------- ------------
Loss from operations..................................................... (523) (1,051) (156) (289)
Other income (expense):
Interest expense, net.................................................. (119) (472) (331) (63)
Other.................................................................. (34) (104) 0 2
---------- ------------ ---------- ------------
Total other expense................................................ (153) (576) (331) (61)
---------- ------------ ---------- ------------
Loss before minority interest and taxes.................................. (676) (1,627) (487) (350)
Minority interest in partnerships........................................ 132 27 17 (13)
---------- ------------ ---------- ------------
Loss before taxes.................................................. (544) (1,600) (470) (363)
Income tax expense....................................................... (6) (6) (1) (4)
---------- ------------ ---------- ------------
Net loss........................................................... $ (550) $ (1,606) $ (471) $ (367)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------

BALANCE SHEET DATA (END OF PERIOD): (1)
Working capital (deficit)................................................ $ 22 $ (4,680)
Intangible assets, net................................................... 5,558 6,279
Total assets............................................................. 9,943 15,936
Total long-term debt (including current portion)......................... 4,127 8,616
Minority interest (3).................................................... 253 266
Shareholders' equity..................................................... 4,023 3,656
</TABLE>

24
<PAGE>
PURCHASED ASSETS (2)

<TABLE>
<CAPTION>
THREE-MONTH THREE-MONTH
YEAR ENDED DECEMBER YEAR ENDED DECEMBER PERIOD ENDED PERIOD ENDED
26, 1994 25, 1995 MARCH 27, 1995 MARCH 29, 1996
------------------- ------------------- ---------------------- ----------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA: (1)
Revenues................................. $ 14,609 $ 14,634 $ 3,671 $ 3,780
Cost of sales............................ 4,403 4,277 1,121 1,188
---------- ------------------- ---------- -----------
Gross profit............................. 10,206 10,357 2,550 2,592
---------- ------------------- ---------- -----------
Costs and expenses:
Labor.................................. 4,755 4,836 1,201 1,290
Occupancy.............................. 1,402 1,434 350 352
Operating expenses..................... 2,276 2,361 644 620
General & administrative............... 1,944 1,596 403 382
Depreciation & amortization............ 662 581 140 114
---------- ------------------- ---------- -----------
Total costs and expenses........... 11,039 10,808 2,738 2,758
---------- ------------------- ---------- -----------
Net loss........................... $ (833) $ (451) $ (188) $ (166)
---------- ------------------- ---------- -----------
---------- ------------------- ---------- -----------

BALANCE SHEET DATA (END OF PERIOD): (1)
Working capital (deficit)................ $ (247) $ (105)
Total assets............................. 1,541 1,463
Equity................................... 1,091 1,125
</TABLE>

- --------------------------
(1) Statement of Operations Data includes the operating results for the combined
(1994) and consolidated (1995) information for the Parent and the combined
information for the Purchased Assets. The Balance Sheet Data includes the
consolidated balance sheet information for the Parent and the combined
balance sheet information for the Purchased Assets. The 1994 information for
the Parent is presented on a combined basis due to common ownership and
control. The Parent acquired the Purchased Assets on March 29, 1996.

(2) The Purchased Assets represent the 26 restaurants acquired (the "Pietro's
Acquisition") from the former Pietro's Corp., a Washington corporation
("Pietro's"). The financial results for the Purchased Assets represent the
Pietro's Corp.'s Business Related to Purchased Assets acquired by the
Parent. On May 15, 1996 the Parent agreed to sell seven of the restaurants
purchased from Pietro's. The sale was completed during the second quarter of
1996. The operating results of those seven restaurants are still included in
the table. The Company will recognize no gain or loss on the sale and will
adjust the goodwill recorded in the acquisition of the Purchased Assets. The
sales for the seven restaurants which the Company has agreed to sell totaled
approximately $3,492,000 and $3,683,000 for the years ended December 25,
1995 and December 26, 1994, respectively. Operating profit excluding
overhead allocation totaled approximately $268,000 and $313,000 for the
years ended December 25, 1995 and December 26, 1994, respectively. Loss
after overhead allocation relating to the seven restaurants totaled
approximately $327,000 and $454,000 for the years ended December 25, 1995
and December 26, 1994, respectively. See the Combined Financial Statements,
Pietro's Corp.'s Business Related to Purchased Assets. The sales for the
seven restaurants agreed to be sold totaled approximately $841,000 and
$940,000 for the three-month periods ended March 31, 1996 and 1995,
respectively. Operating profit excluding overhead allocation totaled
approximately $31,000 and $95,000 for the three-month periods ended March
31, 1996 and 1995, respectively. Loss after overhead allocation relating to
the seven restaurants totaled approximately $54,000 and $42,000 for the
three-month periods ended March 31, 1996 and 1995, respectively. See the
Combined Financial Statements, Pietro's Corp.'s Business Related to
Purchased Assets.

(3) The minority interest represents the 46.32% limited partners' share in
equity and the accumulated results from operations for the Lahaina, Maui
restaurant, not owned directly by the Parent.

25
<PAGE>
PRO FORMA COMBINED FINANCIAL DATA FOR THE COMPANY

The following unaudited pro forma combined financial information reflects
the acquisition of the Purchased Assets by the Company. The pro forma statement
of operations for the three-month period ended March 31, 1996 and the year ended
December 31, 1995 assumes the transaction occurred January 1, 1995.

The historical financial information of the Company for the three-month
period ended March 31, 1996 and the year ended December 31, 1995 has been
derived from the consolidated and combined financial statements included
elsewhere in this Prospectus. The pro forma financial information should be read
in conjunction with the accompanying notes thereto and with the financial
statements of the Company and the Purchased Assets included elsewhere in this
Prospectus. The pro forma combined financial information does not purport to be
indicative of operating results which would have been achieved had the
acquisition of the Purchased Assets occurred as of the dates indicated and
should not be construed as representative of future operating results. In the
opinion of Management, all adjustments have been made to reflect the effects of
the acquisition.

COMBINED PRO FORMA STATEMENT OF OPERATIONS
(IN THOUSANDS)

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
HISTORICAL PRO FORMA PRO FORMA THREE-MONTH PRO FORMA THREE-MONTH
YEAR ENDED ADJUSTMENTS YEAR ENDED PERIOD ENDED ADJUSTMENTS PERIOD ENDED
DECEMBER 31, PURCHASED DECEMBER 31, MARCH 31, PURCHASED MARCH 31,
1995 ASSETS (1) 1995 (5) 1996 ASSETS (2) 1996 (5)
------------ --------------- ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues............................ $ 6,586 $14,634 $21,220 $ 1,768 $ 3,780 $ 5,548
Cost of sales....................... 1,848 4,277 6,125 546 1,188 1,734
------------ --------------- ------------ ------------ --------------- ------------
Gross profit...................... 4,738 10,357 15,095 1,222 2,592 3,814
Costs and expenses:
Labor............................. 2,647 4,836 7,483 749 1,290 2,039
Occupancy......................... 654 1,434 2,088 125 352 477
Operating expenses................ 1,250 2,361 3,611 300 620 920
General & administrative.......... 879 1,596(4) 2,475 227 382(4) 609
Depreciation & amortization....... 359 581 940 110 114 224
------------ --------------- ------------ ------------ --------------- ------------
Total costs and expenses........ 5,789 10,808 16,597 1,511 2,758 4,269
Loss from operations................ (1,051) (451) (1,502) (289) (166) (455)
Minority interest in partnership.... 27 0 27 (13) 0 (13)
Other income (expense):............. 0
Interest expense, net............. (472) 0 (472) (63) 0 (63)
Other............................. (104) 0 (104) 2 0 2
------------ --------------- ------------ ------------ --------------- ------------
Loss before taxes................. (1,600) (451) (2,051) (363) (166) $ (529)
Provision for taxes (3)............. (6) 0 (6) (4) 0 (4)
------------ --------------- ------------ ------------ --------------- ------------
Net loss........................ $(1,606) $ (451) $(2,057) $ (367) $ (166) $ (533)
------------ --------------- ------------ ------------ --------------- ------------
------------ --------------- ------------ ------------ --------------- ------------
</TABLE>

- --------------------------
(1) To adjust operating results for the year ended December 31, 1995 to include
Pietro's Corp.'s business related to the Purchased Assets described further
elsewhere in this document.

(2) Reflects the results of the operations of the Purchased Assets for the
three-month period ended March 29, 1996.

(3) No income tax benefit has been provided for the results of the operations of
the Company and the Purchased Assets as it is more likely than not that the
deferred tax assets originated in the net operating losses will not be
realized.

(4) Reflects overhead allocation from Pietro's Corp.

(5) On May 15, 1996 the Parent agreed to sell seven of the restaurants purchased
from Pietro's Corp. The Company will recognize no gain or loss on the sale
of these restaurants and will adjust the goodwill related to the acquisition
of the Purchased Assets. The sales for the seven restaurants agreed to be
sold totaled approximately $3,492,000 and $841,000 for the year ended
December 31, 1995 and the three-month period ended March 29, 1996,
respectively. Operating profit before allocation of overhead for the
locations to be sold total $268,000 and $31,000 for the year ended December
31, 1995 and the three-month period ended March 29, 1996, respectively.
Losses after allocation of overhead for the locations to be sold totaled
$327,000 and $54,000 for the year ended December 31, 1995 and the
three-month period ended March 29, 1996, respectively.

26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY EXCLUDING CPNI
(THE PARENT)

The following discussion and analysis of the Company's financial condition
and results of operations, for the years ended December 31, 1994 and 1995 and
the three-month periods ended March 31, 1995 and 1996 concern the Company
excluding the assets of CPNI. The Company excluding the assets of CPNI is
referred to as the "Parent." This discussion and analysis should be read in
conjunction with the Parent's combined financial statements and related notes
thereto included elsewhere in this Prospectus.

GENERAL
Chicago Pizza & Brewery, Inc. (the "Company") was formed in 1991 by Mr.
Jeremiah Hennessy and Mr. Paul Motenko (the "Owners") to operate and manage five
existing restaurants that operated as BJ's Chicago Pizzeria restaurants (now all
operated as BJ'S PIZZA & GRILL restaurants) in Southern California. These five
restaurants were owned by Roman Systems, Inc. ("Roman Systems"). The Company
began managing these five restaurants in 1991 pursuant to a Management Agreement
(the "Management Agreement") with Roman Systems. Pursuant to the Management
Agreement, the Company had the right to open, operate and manage BJ's
restaurants. In 1992, the Owners formed CPA-BG, Inc. ("CPA-BG") and opened two
restaurants with CPA-BG as the general partner of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P. in 1992 and 1993, respectively. In 1994, the Company opened
BJ's restaurants in Huntington Beach and Seal Beach, California. Additionally in
1994, the Company, through a limited partnership interest in BJ's Lahaina, L.P.,
opened a BJ's restaurant in Lahaina, Maui. The general partners of BJ's Lahaina,
L.P. were CPA010, Inc. ("CPA010"), owned by Messrs. Motenko and Hennessy, and
Blue Max, Inc. ("Blue Max"). In addition to its limited partnership interest,
the Company managed the Lahaina, Maui restaurant.

Effective January 1, 1995, pursuant to the Asset Purchase Agreement between
the Company and Roman Systems (the "Asset Purchase Agreement"), the Company
purchased three of the existing BJ's restaurants operated and managed under the
Management Agreement (Balboa in Newport Beach, La Jolla Village and Laguna
Beach, California) and terminated the Management Agreement. As part of the Asset
Purchase Agreement, the Company assumed responsibility for closing the other two
Roman Systems BJ's restaurants in Santa Ana and San Juan Capistrano, California
and assumed certain liabilities related thereto. The Santa Ana and San Juan
Capistrano, California restaurants were closed in 1995.

Effective January 1, 1995, the Company purchased the limited partnership
interests of BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P. The general
partnership interests of CPA-BG were transferred to the Company for no
consideration prior to the acquisition of the limited partnership interests. The
stock of the corporate general partners of BJ's Lahaina, L.P., CPA010 and Blue
Max, was also transferred to the Company for no consideration. Additionally, in
1995 the Company closed the BJ's restaurant located on Prospect Street in La
Jolla, California ("La Jolla -- Prospect"). As of December 31, 1995, the Company
owned seven BJ's restaurants, all in Southern California and a 53.68% interest
in the BJ's restaurant in Lahaina, Maui. The Company subsequently opened BJ's
restaurants in Westwood Village in Los Angeles, California in March 1996, and
Brea, California in April 1996.

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for Pietro's Plan of Reorganization, dated
February 29, 1996, as modified (the "Debtor's Plan") and thereby acquired all of
the stock in the reorganized entity known as Chicago Pizza Northwest, Inc. The
Debtor's Plan was confirmed by an order of the Bankruptcy Court on March 18,
1996 and the Company funded the Debtor's Plan on March 29, 1996. The Company's
consolidated balance sheet as of March 31, 1996 includes CPNI; however, the
Statement of Operations for the three-month period ended March 31, 1996 does not
include the results of operations for CPNI for the period from March 29, 1996
through March 31, 1996.

27
<PAGE>
As a result of these transactions the Company owned the following
restaurants during 1995 and 1996, except for the Lahaina, Maui restaurant in
which the Company owned an interest:

<TABLE>
<CAPTION>
LOCATION ACQUIRED FROM DATE ACQUIRED
- ----------------------------------------------------------- ----------------------------- ----------------------
<S> <C> <C>
Seal Beach, California..................................... N.A. (3) February 22, 1994
Lahaina, Maui.............................................. N.A. (3) June 22, 1994
Huntington Beach, California............................... N.A. (3) August 30, 1994
Balboa in Newport Beach, California........................ Roman Systems January 1, 1995
Laguna Beach, California................................... Roman Systems January 1, 1995
La Jolla Village, La Jolla, California..................... Roman Systems January 1, 1995
Belmont Shore, California.................................. BJ's Belmont Shore, L.P. January 1, 1995
La Jolla -- Prospect, California (1)....................... BJ's La Jolla, L.P. January 1, 1995
Westwood Village in Los Angeles, California................ N.A. (3) March 15, 1996
Brea, California........................................... N.A. (3) March 29, 1996
Milwaukie, Oregon.......................................... Pietro's Corp. March 29, 1996
Salem, Oregon.............................................. Pietro's Corp. March 29, 1996
Eugene, Oregon............................................. Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Eugene, Oregon............................................. Pietro's Corp. March 29, 1996
Salem, Oregon.............................................. Pietro's Corp. March 29, 1996
Gresham, Oregon............................................ Pietro's Corp. March 29, 1996
Eugene, Oregon............................................. Pietro's Corp. March 29, 1996
Woodstock, Oregon.......................................... Pietro's Corp. March 29, 1996
Jantzen Beach, Oregon...................................... Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Portland, Oregon........................................... Pietro's Corp. March 29, 1996
Hood River, Oregon......................................... Pietro's Corp. March 29, 1996
The Dalles, Oregon......................................... Pietro's Corp. March 29, 1996
Aloha, Oregon.............................................. Pietro's Corp. March 29, 1996
North Bend, Oregon......................................... Pietro's Corp. March 29, 1996
McMinnville, Oregon........................................ Pietro's Corp. March 29, 1996
Redmond, Oregon (2)........................................ Pietro's Corp. March 29, 1996
Albany, Oregon (2)......................................... Pietro's Corp. March 29, 1996
Madras, Oregon (2)......................................... Pietro's Corp. March 29, 1996
Bend, Oregon (2)........................................... Pietro's Corp. March 29, 1996
Richland, Washington (2)................................... Pietro's Corp. March 29, 1996
Kennewick, Washington (2).................................. Pietro's Corp. March 29, 1996
Longview, Washington....................................... Pietro's Corp. March 29, 1996
Yakima, Washington (2)..................................... Pietro's Corp. March 29, 1996
</TABLE>

- ------------------------
(1) Closed June 1995.

(2) In May of 1996, the Company entered into an agreement to sell these
restaurants. The sale of these restaurants was completed during the second
quarter of 1996. See "Certain Transactions -- Sale of Restaurants."

(3) These restaurants were developed by the Company rather than purchased.

The above list does not include the Boulder, Colorado restaurant, which the
Company is currently developing and expects to open in Fall of 1996.

28
<PAGE>
The Parent's revenues are derived primarily from food and beverage sales at
its restaurants. The Parent's expenses consist primarily of food and beverage
costs, labor costs (consisting of wages and benefits), operating expenses
(consisting of marketing costs, repairs and maintenance, supplies, utilities and
other operating expenses), occupancy costs, general and administrative expenses
and depreciation and amortization expenses.

Certain preopening costs, including direct and incremental costs associated
with the opening of a new restaurant, are amortized over a period of one year
from the opening date of such restaurant. These costs include primarily those
incurred to train a new restaurant management team, food, beverage and supply
costs incurred to test all equipment and systems, and any rent or operating
expenses incurred prior to opening. As of March 31, 1996, approximately $303,000
of preopening costs had been incurred in connection with the opening of the
restaurants in Westwood Village in Los Angeles, California; Brea, California;
and Boulder, Colorado. Construction costs, including leasehold capital
improvements are amortized over the remaining useful life of the related asset,
or, for leasehold improvements, over the initial term, if less.

The Company's conversion of five of its restaurants from "BJ's Chicago
Pizzerias" to BJ'S PIZZA & GRILL restaurants resulted in above-normal food and
labor costs in late 1995, and the first quarter of 1996 -- results which are
similar to that normally experienced in the opening of a new restaurant.
Management believes that the conversions were a significant contributing factor
to substantial comparable store sales increases experienced by the affected
restaurants during the first quarter of 1996. The Parent utilizes a calendar
year-end for financial reporting purposes.

RESULTS OF OPERATIONS

THREE-MONTH PERIOD ENDED MARCH 31, 1996 COMPARED TO THREE-MONTH PERIOD ENDED
MARCH 31, 1995

REVENUES. Total revenues for the three-month period ended March 31, 1996
increased to
$1,768,000, from $1,582,000 for the comparable period in 1995, an increase of
$186,000 or 11.8%. The increase was achieved despite the La Jolla -- Prospect
restaurant being closed during 1996, the impact of which was lessened by the
opening of the new restaurant in Westwood Village, Los Angeles California,
during March 1996. Revenues for the seven stores open the entire comparable
period increased from $1,410,000 to $1,716,000, or 21.7%. Management primarily
attributes the increase in revenues during the three-month period ended March
31, 1996 as compared to the three-month period ended March 31, 1995 to the
following in order of their significance: (i) the winter storms experienced
during the first quarter in 1995 which resulted in reduced customer counts
during that period, (ii) the introduction of the new BJ's menu and concept, and
(iii) the refurbishment of the La Jolla Village restaurant in November 1995.

COST OF SALES. Cost of food, beverages and paper (cost of sales) for the
restaurants increased to $546,000 for the three months ended March 31, 1996,
from $433,000 for the comparable period in 1995, an increase of $113,000 or
26.1%. As a percentage of revenues, cost of sales increased to 30.9% for the
period ended March 31, 1996, from 27.4% for the comparable period in 1995. The
$113,000 aggregate increase in cost of sales was due equally to (i) increased
revenue and (ii) higher food cost as a percentage of sales. Management believes
that food cost as a percentage of sales increased primarily due to costs
incurred, as anticipated, during the testing and initial implementation phase of
the menu expansion and special promotional pricing of certain of the new menu
items through May, 1996. While the Company will continue to test and implement
new menu items, as of May, 1996 it has substantially completed the major menu
expansion. As a result, Management anticipates that the impact of the menu
testing and implementation upon cost of sales as a percentage of revenue will
decline. However, a portion of the increased food cost percentage is associated
with higher relative costs of certain of the new menu items, which will have an
ongoing impact on cost of sales.

LABOR. Labor costs for the restaurants increased to $749,000 for the
three-month period ended March 31, 1996, from $635,000 for the comparable period
in 1995. The $114,000 or 18.0% increase resulted primarily from increased
customer counts. As a percentage of revenues, labor costs increased

29
<PAGE>
to 42.4% for the period ended March 31, 1996, from 40.1% for the comparable
period in 1995. This increase resulted from the implementation of the new menu
and expanded concepts which required the re-training of every employee in the
restaurants. In addition, the Company temporarily increased the number of staff
members per shift in both the kitchen and dining room in order to maintain a
high level of service during the transition period. As of June 1996, labor costs
have been reduced to levels which Management believes are more representative of
ongoing staffing requirements.

OCCUPANCY. Occupancy costs decreased to $125,000 for the three-month period
ended March 31, 1996, from $152,000 for the comparable period in 1995. The
$27,000 or 17.8% decrease was primarily due to the Company's discontinuation of
the La Jolla -- Prospect restaurant in 1995. As a percentage of revenue,
occupancy costs decreased to 7.1% for the three months ended March 31, 1996,
from 9.6% for the comparable period in 1995. This decrease was due to a
combination of the decrease in occupancy costs due to the closing of the La
Jolla -- Prospect restaurant and increased revenues.

OPERATING EXPENSES. Operating expenses increased to $300,000 for the
three-month period ended March 31, 1996, from $279,000 for the comparable period
in 1995. The $21,000 or 7.5% increase resulted primarily from supply expenses
related to higher customer counts. Operating expenses include restaurant-level
operating costs, the major components of which include marketing, repairs and
maintenance, supplies and utilities. As a percentage of revenue, operating
expenses decreased to 17.0% for the period ended March 31, 1996, from 17.6% for
the comparable period in 1995.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $227,000 for the three-month period ended March 31, 1996, from
$147,000 for the comparable period in 1995, an $80,000 or 54.5% increase. As a
percentage of revenue, the general and administrative expenses increased to
12.8% for the three-month period ended March 31, 1996, from 9.3% for the
comparable period in 1995. The increase resulted from administrative expenses
related to the increased company size in preparation for substantial growth and
the IPO, including the hiring of several key employees.

With the opening of the Westwood Village and Brea restaurants in California,
and the anticipated elimination of duplicate overhead between the Southern
California and Northwest locations, Management believes that general and
administrative expenses as a percentage of sales will be lower.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$110,000 for the three-month period ended March 31, 1996 from $93,000 for the
comparable period in 1995. The $17,000 or 18.3% increase was primarily due to
the depreciation related to the remodeling of the La Jolla Village restaurant.

INTEREST EXPENSE. Interest expense decreased to $63,000 for the three-month
period ended March 31, 1996 from $331,000 for the comparable period in 1995.
During 1995 the Company issued 222,462 shares of stock as additional interest
valued at $.75 per share in conjunction with a January 1995 debt private
placement. For accounting purposes the value of these shares was treated as an
interest expense. The debt was fully paid during 1995.

MINORITY INTEREST. Minority interest decreased to $(13,000) for the
three-month period ended March 31, 1996 from $17,000 in 1995 due to the
operating profit generated by the Lahaina, Maui restaurant. Minority interest
represents the interest of the limited partners.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

REVENUES. Revenues for the year ended December 31, 1995 increased to
$6,586,000, from $6,453,000 for the comparable period in 1994, an increase of
$133,000 or 2.1%. The increase resulted from the opening of the Seal Beach,
California, Lahaina, Maui and Huntington Beach, California restaurants in
February, June and August, 1994, respectively, and was partially offset by the
closure of the Santa Ana, San Juan Capistrano and La Jolla -- Prospect,
California restaurants in 1995. The

30
<PAGE>
operations of the Santa Ana and San Juan Capistrano restaurants were reserved as
of January 1, 1995 as part of the purchase price of the Roman Systems
acquisition. Revenues for the year ended December 31, 1994 include revenues
derived from these three restaurants closed in 1995.

Sales at the four restaurants (Balboa in Newport Beach, La Jolla Village,
Laguna Beach and Belmont Shore, California) open during the entire period
decreased to $3,415,000 in 1995 from $3,553,000 in 1994, a decrease of 3.9%.
This decrease was due to the following factors in order of their significance:

(i) The harsh winter of 1995 depressed sales, particularly at the beach
restaurants (Laguna Beach and Balboa in Newport Beach, California). Sales at
these restaurants decreased 4.3% from 1994 to 1995.

(ii) Several competitive restaurants opened in the Fall of 1994 in the
area surrounding the La Jolla Village restaurant, impacting its 1995 sales
prior to the remodeling in November 1995. Sales at La Jolla Village during
1995 prior to and during the remodeling decreased 16.7% from the comparable
period in 1994. A portion of this decrease was due to the closure of La
Jolla Village for two weeks during the remodeling. Sales during December
1995, immediately subsequent to the remodeling of the restaurant and
introduction of the new menu, increased 37.5% from December 1994.

COST OF SALES. Cost of food and beverages (cost of sales) increased to
$1,848,000 for the year ended December 31, 1995, from $1,638,000 for the
comparable period in 1994, an increase of $210,000 or 12.8%. As a percentage of
revenues, cost of sales increased to 28.1% for the fiscal year ended December
31, 1995, from 25.4% for the comparable period in 1994. Management believes that
this increase is primarily due to the new menu development and implemenation
during the latter part of 1995. Additionally, extraordinarily high produce costs
resulting from flooding in California during the winter of 1995 contributed to
the increase.

LABOR. Labor costs for the restaurants decreased to $2,647,000 for the year
ended December 31, 1995, from $2,706,000 for the comparable period in 1994 a
decrease of $59,000 or 2.2%. As a percentage of revenues, labor costs decreased
to 40.2% for the year ended December 31, 1995, from 41.9% for the comparable
period in 1994. This decrease resulted from the closure of the Santa Ana, San
Juan Capistrano and La Jolla -- Prospect, California restaurants in 1995. The
cost of closing the restaurants as well as the loss from operations for Santa
Ana and San Juan Capistrano restaurants were reserved as part of the purchase
price for the Roman Systems acquisition. In 1994, these restaurants were
included in results from operations. In addition to the reduction of the
Company's labor force due to the Company's discontinuation of these restaurants,
such restaurants had relatively low sales volumes which resulted in higher labor
costs as a percentage of sales.

OCCUPANCY. Occupancy costs remained constant at $654,000 for the year ended
December 31, 1995 and the comparable period in 1994 due to the following
offsetting factors: (i) an increase in occupancy due to a full year of
operations for the Seal Beach and Huntington Beach, California restaurants, as
well as the Lahaina, Maui restaurant and (ii) a decrease in occupancy due to the
closure of the Santa Ana and San Juan Capistrano, California restaurants as
discussed above as well as the Company's closure of the La Jolla -- Prospect,
California restaurant in 1995. As a percentage of revenues, occupancy costs
decreased to 9.9% for the year ended December 31, 1995, from 10.1% for the
comparable period in 1994.

OPERATING EXPENSES. Operating expenses decreased to $1,250,000 for the year
ended December 31, 1995, from $1,331,000 for the comparable period in 1994, a
decrease of $81,000 or 6.1%. As a percentage of revenues, operating expenses
decreased to 19.0% for the fiscal year ended December 31,1995, from 20.6% for
the comparable period in 1994. Management believes that the decrease was
primarily attributable to the closure of the Santa Ana and San Juan Capistrano,
California restaurants as discussed above, the closure of the La Jolla --
Prospect, California restaurant in mid-1995 and preopening costs of $112,000
incurred during 1994 relating to the Lahaina, Maui, and Seal Beach and
Huntington Beach, California restaurants. Operating expenses include restaurant-
level operating costs, the major components of which are marketing, repairs and
maintenance, supplies and utilities.

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<PAGE>
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
to $879,000 for the fiscal year ended December 31, 1995, from $474,000 for the
comparable period in 1994, an increase of $405,000 or 85.4%. As a percentage of
revenues, general and administrative expenses increased to 13.3% for the year
ended December 31, 1995, from 7.3% in 1994. The increase resulted from
administrative expenses related to the increased company size in preparation for
substantial growth and the IPO, including the hiring of several key employees.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased to $359,000 for the year ended December 31, 1995, from $173,000 for
the comparable period in 1994, an increase of $186,000. The increase resulted
from the amortization of goodwill resulting from the January 1, 1995 acquisition
of Roman Systems, BJ's Belmont Shore, L.P., and BJ's La Jolla, L.P.

INTEREST EXPENSE. Interest expense increased to $472,000 for the year ended
December 31, 1995 from $119,000 in 1994. The $353,000 increase resulted from
interest debt incurred for the Roman Systems acquisition. See the Consolidated
Financial Statements and "Certain Transactions -- Private Placements."

MINORITY INTEREST. The combined net loss related to restaurants owned by
limited partnerships decreased to $27,000 for the year ended December 31, 1995,
from $132,000 in 1994, due to the acquisition of BJ's Belmont, L.P. and BJ's La
Jolla, L.P., eliminating the minority interest. Additionally, the net loss in
BJ's Lahaina, L.P. decreased to $35,000 for the year ended 1995, from $141,000
in 1994.

LIQUIDITY AND CAPITAL RESOURCES

The Company historically has operated without working capital, but it does
not have significant inventory or trade receivables and customarily receives
several weeks of credit in purchasing food and supplies. The Company's working
capital deficit is primarily due to its operating losses, acquisition costs and
restaurant development costs. Net cash used in operating activities was $257,000
for the year ended December 31, 1994 and $973,000 for the year ended December
31, 1995, and net cash flow provided by operating activities was $249,000 for
the three-month period ended March 31, 1996.

To date the Company has primarily financed its operations, acquisitions,
development and expansion from private placements completed in January, March
and September 1995, and convertible notes issued in March 1996 (See "Certain
Transactions"). These funds have been used primarily for acquiring and/or
developing the Roman Systems restaurants, the Brea restaurant, the Northwest
Restaurants, menu and restaurant development costs, restaurant refurbishment,
and working capital. Capital expenditures for the year ended December 31, 1994
and December 31, 1995 and the three-month period ended March 31, 1996 were
approximately $997,000, $5,132,000 and $4,486,000, respectively.

In connection with the development of the Huntington Beach restaurant in
1994, the Company issued a demand note payable to a related party in the amount
of $350,000 with interest accruing at a rate of 6%. This demand note is
collateralized by the Huntington Beach restaurant and equipment. $150,000 of
this demand note was repaid in the second quarter of 1996.

In connection with the 1995 Roman Systems acquisition, the Company, in
addition to a $550,000 cash down payment and assumption of certain liabilities,
issued a note in favor of the sellers in the amount of $3,700,000, which note
accrues interest at a rate of 7% per annum and matures on April 1, 2004. This
note is payable in monthly principal and interest installments of $38,195. Under
this note the Company is also required to make additional payments of $25,000
per month toward the total outstanding principal until an aggregate of $875,000
in additional principal payments under the note have been made. The Company
intends to use $600,000 of proceeds derived from this Offering to pay the
remaining portion of this $875,000 principal obligation. See "Use of Proceeds."
This note is collateralized by the restaurants in Balboa in Newport Beach, La
Jolla Village and Laguna Beach, California.

In connection with the 1996 Brea acquisition, the Company issued a note in
favor of the seller in the amount of $228,000 and assumed a bank note payable in
the amount of $751,000, payable

32
<PAGE>
monthly, and collateralized by a $200,000 certificate of deposit maturing March
1, 1998. During April 1996 the $228,000 note was repaid. The $751,000 is payable
in monthly principal installments of $12,513 plus interest accrued at the bank's
reference rate plus 2% and matures March 1, 2001.

In connection with the Pietro's Acquisition, the Company funded the Debtor's
Plan of Reorganization in the amount of $2,350,000 and assumed notes payable to
federal and state taxing authorities in the aggregate amount of $506,000. The
Company is required to pay these notes in the following principal installments:
(i) $32,670 per quarter from July 1, 1996 until April 1, 1997, (ii) $20,071 per
quarter from July 1, 1997 until June 30, 2001, and (iii) varying payments
totaling $34,122 from October 1, 2001 until April 1, 2002. In addition, the
Company is required to make interest payments at the rate of 8.25%.

Also in connection with the Pietro's Acquisition, the Company sold an
aggregate of $3,000,000 in Convertible Notes. Upon the closing of this Offering,
the entire principal and interest of the Convertible Notes convert into Shares
and Warrants. See "Certain Transactions -- Pietro's and Other Proposed
Acquisitions."

With respect to the leases for the La Jolla -- Prospect, California and the
Richland, Washington restaurants, which restaurants were closed and sold by the
Company, respectively, the Company remains liable in the event of default by the
current lessees. Contingent liability for the full remaining term of the leases
is estimated at $716,000 and $466,000 for the La Jolla -- Prospect and Richland
locations, respectively. The Company may also be liable for additional expenses,
such as, insurance, real estate taxes, utilities and maintenance and repairs.
Management currently has no reason to believe that such expenses, if incurred,
will be significant.

With respect to the La Jolla -- Prospect property, the tenant has paid all
rents for a year and Management currently has no reason to believe that the
tenant will not continue to pay rent as due in the future.

With respect to the Richland, Washington site, Abby's Inc. ("Abby's"), an
affiliate of A-II, L.L.C., an Arizona LLC, which is the purchaser (the
"Purchaser") of the site has agreed to guarantee payment under the lease. Both
Abby's and the Purchaser have agreed to indemnify the Company with respect to
such related liabilities. Finally, in the event of a default, the landlord of
the Richland site has agreed to exhaust all remedies against the Purchaser and
Abby's prior to pursuing any remedies against the Company. Management currently
has no reason to believe that the Purchaser and/or Abby's is not capable of
performing under the lease.

During 1995 and early 1996 the Company developed and implemented its
extended menu, restaurant concept change and brewery concept for the BJ'S PIZZA,
GRILL & BREWERY and BJ'S PIZZA & GRILL restaurants. Expenditures for the new
menu items included food development costs, menu development costs, menu design
and printing, management and staff training and new kitchen equipment to
facilitate new menu items. Expenditures for the BJ'S PIZZA, GRILL & BREWERY and
BJ'S PIZZA & GRILL restaurant concepts included new interior design, logo
design, signage design and uniform design. Expenditures for the brewery concept
included the hiring of a director of brewing operations, beer menu development
costs and brewery design. Management believes it has completed the menu
development and restaurant concept development phase of its business plan and
that the costs associated with many of these changes are non-recurring.

Management believes the Company can be profitable through increased sales
relating to its extended menu, reduced costs associated with Company produced
beer and vendor volume purchasing associated with the recent Northwest
Restaurant acquisition, its recent restaurant openings in Westwood Village, Los
Angeles and Brea, California, the future opening of the restaurant in Boulder,
Colorado, the reduction of overhead through consolidation of the general and
administrative expenses of the Company's Southern California operations and its
Northwest operations and the conversion and refurbishment of the Northwest
Restaurants.

The Company currently intends to utilize capital primarily for the
conversion and refurbishment of restaurants in the Northwest, development of the
restaurant in Boulder, Colorado, repayment of certain debts and for working
capital purposes. Management currently anticipates a total of $5,300,000 in
additional capital expenditure requirements, including approximately $4,500,000
for

33
<PAGE>
the Northwest Restaurant conversions and $800,000 for the Boulder, Colorado
restaurant development. Management believes the proceeds from this Offering will
be sufficient for the Company to meet its business plan over the next 18 months.

IMPACT OF INFLATION

Impact of inflation on food, labor and occupancy costs can significantly
affect the Parent's operations. Many of the Parent's employees are paid hourly
rates related to the federal minimum wage, which has been increased numerous
times and remains subject to increase. Management believes that food costs,
which increased in the first quarter due to the expanded menu, will stabilize
and efficiencies may be obtained in purchasing and brew-pub operations.

SEASONALITY AND ADVERSE WEATHER

The Parent's results of operations have historically been impacted by
seasonality, which directly impacts tourism at the Parent's coastal locations.
Further, Management believes that adverse weather impacted the 1995 first
quarter operating results, causing a significant decrease in the Parent's
revenues. For those locations open during the entire years 1994 and 1995 (Balboa
in Newport Beach and La Jolla Village, Laguna and Belmont Shore, California),
the sales for the first quarter of 1995 decreased by approximately $87,000 or
10.5%, compared with the same period in 1994. Management believes that improved
weather conditions during the first quarter of 1996 partially contributed to the
increase in sales of 24.4% for the first quarter of 1996, compared with the same
period in 1995 for the same four restaurants.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

RECENTLY ISSUED ACCOUNTING STANDARDS. In March 1995, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("SFAS No. 121"). SFAS No. 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used, and for long-lived assets and
certain identifiable intangibles to be disposed of. The Company is required to
adopt the provisions of SFAS No. 121 for 1996, and currently believes that upon
its adoption there should be no impact on the Company's result of operations.

In November 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 establishes new
accounting standards for the measurement and recognition of stock-based awards.
SFAS No. 123 permits entities to continue to use the traditional accounting for
stock-based awards prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees" however, under this option, the Company will be required to
disclose the pro forma effect of stock-based awards on net income and earnings
per share as if SFAS No. 123 had been adopted. SFAS No. 123 is effective for
1996. The Company intends to continue to use the provisions of APB Opinion No.
25 in accounting for stock-based awards. As such, SFAS No. 123 will have no
impact on the Company's results of operations.

Other recently issued standards of the FASB are not expected to affect the
Company as conditions to which those standards apply are absent.

34
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

The following discussion and analysis of Pietro Corp.'s Business Related to
Purchased Assets' combined financial condition and results of operations for the
three months ended March 29, 1996 and March 27, 1995, and the fiscal years ended
December 25, 1995 and December 26, 1994 should be read in conjunction with the
Purchased Assets' combined financial statements and related notes thereto
included elsewhere in this Prospectus.

GENERAL

Pietro's Corp., a Washington State corporation ("Debtor" or "Pietro's")
filed a petition for reorganization in the United States Bankruptcy Court for
the Western District of Washington at Seattle under Chapter 11 of title 11 of
the United States Code on September 26, 1995 (the "Petition Date"). The Company
provided the funding for the "Debtor's Plan of Reorganization, Dated February
29, 1996" as modified (the "Plan") and thereby acquired all of the stock in the
reorganized entity known as Chicago Pizza Northwest, Inc. ("CPNI"), a Washington
corporation and defined in the Plan as the "Reorganized Debtor." The Plan was
confirmed by an order of the Bankruptcy Court entered on March 18, 1996.

During the course of the bankruptcy case, the Debtor disposed of some
assets, rejected certain store leases, satisfied certain liabilities and
substantially reduced its operations. For example, although as of the Petition
Date the Debtor consisted of 46 stores and a distribution center, the
Reorganized Debtor consisted of only 26 stores. To the extent the store closings
resulted in claims against the Debtor, such claims became general unsecured
claims against the Debtor only and will be satisfied pursuant to the terms of
the Plan. The Plan also specifies the treatment for the claims of secured
creditors, unsecured creditors, and creditors holding claims relating to the
administration and operation of the Debtor's business and the bankruptcy case.
Except for certain causes of action and other assets which are specified in the
Plan, all of the remaining property of the Debtor's bankruptcy estate vests in
CPNI as Reorganized Debtor. The assets vest in CPNI free and clear of all of the
Debtor's pre-confirmation liabilities except that CPNI is liable to pay the
Debtor's ordinary course post-petition operation expenses outstanding on the
Effective Date (hereinafter defined) and to fund approximately $506,000 in Plan
payments relating to the Debtor's pre-petition tax liability.

The Plan provided that the Company invest $2,850,000 to fund the Plan. The
aggregate funding amount consists of approximately $2,350,000 which was
deposited into a "Reorganization Fund" and of $456,000 and $50,000 to be paid
over six years and one year, respectively, with respect to certain prepetition
priority tax debts of Debtor. The Reorganization Fund will be used to pay the
Debtor's administrative (post-petition), priority and lease cure claims in full
and the balance will be distributed to the Debtor's unsecured creditors on a pro
rata basis. Holders of common stock of the Debtor will receive nothing.

Through the deposit of funds and assumption of tax liabilities, the Company
funded the Plan as described above on March 29, 1996 (the "Effective Date"). On
the Effective Date, the outstanding common stock of the Debtor was cancelled and
common stock in CPNI as the Reorganized Debtor, and a wholly-owned subsidiary of
the Company, was issued.

The financial statements of the Pietro's Corp.'s Business Related to the
Purchased Assets includes 26 pizza restaurants located throughout the States of
Oregon and Washington. Pietro's owned and operated these and other restaurants.
The combined financial statements include the accounts of the Purchased Assets,
including allocations of overhead from Pietro's, for accounting, legal,
information processing, administrative, financing and marketing services. Such
allocation is computed based on the net sales related to the Purchased Assets as
a percentage of the Company's total restaurant net sales. Management believes
such allocation is reasonable as each individual restaurant will incur a

35
<PAGE>
portion of cost relative to its sales volume. The Purchased Assets, as a
combined entity, have no separate legal status. All significant inter-company
transactions and balances have been eliminated in combination.

On May 15, 1996, CPNI agreed to sell seven of the restaurants purchased from
Pietro's Corp. for approximately $1,000,000. The sales transactions were
completed during the second quarter of 1996. The operating results of those
seven restaurants are also included in the Selected Combined Financial and
Restaurant Data.

CPNI's revenues are derived exclusively from food and beverage sales at its
26 restaurants. The expenses consist primarily of food and beverage costs, labor
costs, operating costs (consisting of marketing costs, repairs and maintenance,
supplies, utilities and other operating expenses) occupancy costs, general and
administrative expenses and depreciation and amortization expenses related to
the acquired operation. There were no pre-opening costs incurred in the periods
presented for CPNI.

CPNI's balance sheet and related statistical data have been presented as
Pietro Corp.'s Business Related to Purchased Assets as defined in its Combined
Financial Statements included in this Prospectus.

Several important factors to consider in evaluating the results of
operations of CPNI are (i) 1995 and 1994 restaurant operations reflect the
Pietro's concept, (ii) Management intends to use a portion of the proceeds from
this Offering to convert each restaurant acquired from what Management believes
is an outdated Pietro's concept to a BJ'S PIZZA, GRILL & BREWERY, a BJ'S PIZZA &
GRILL or a BJ'S PIZZA restaurant over the next 18 months, (iii) Management
believes that conversion of the current BJ's restaurants to one of the three
BJ's concepts may increase sales based on higher present sales volumes and (iv)
the Company has recently agreed to or has already sold 7 of the 26 restaurants
acquired under the Plan.

The sales for the seven restaurants sold totaled approximately $3,492,000
and $3,683,000 for the years ended December 25, 1995 and December 26, 1994,
respectively. Operating profit excluding overhead allocation totaled
approximately $268,000 and $313,000 for the years ended December 25, 1995 and
December 26, 1994, respectively. Loss after overhead allocation relating to the
seven restaurants totaled approximately $327,000 and $454,000 for the years
ended December 25, 1995 and December 26, 1994, respectively.

RESULTS OF OPERATIONS

THREE-MONTH PERIOD ENDED MARCH 27, 1996 COMPARED TO THREE-MONTH PERIOD ENDED
MARCH 29, 1995

REVENUES. Revenues for the three months ended March 29, 1996 increased to
$3,780,000 from $3,671,000 for the comparable period of 1995, an increase of
$109,000 or 3.0%. This increase is primarily due to the opening of the
Woodstock, Oregon restaurant in June 1995.

COSTS OF SALES. Cost of food, beverages and paper supplies (cost of sales)
increased to $1,188,000 for the three months ended March 31, 1996, from
$1,121,000 for the comparable period in 1995, an increase of $67,000 or 6.0%. As
a percentage of revenues, cost of sales increased to 31.4% for the period ended
March 29, 1996, from 30.5% for the comparable period in 1995. This increase is
due to conversion to a third-party distributor from an internal distribution
system in which the operating expenses were treated as part of corporate
overhead.

LABOR. Restaurant labor and benefits expense increased to $1,290,000 for
the three-month period ended March 27, 1996, from $1,201,000 for the comparable
period to 1995, an increase of $89,000 or 7.4%. As a percentage of revenues,
restaurant labor and benefits increased to 34.1%, for the period ended March 29,
1996, from 32.7% for the comparable period in 1995. This increase is principally
due to the labor required to convert from a central commissary to dough
preparation in stores and labor costs associated with the Woodstock, Oregon
restaurant opened in June 1995.

36
<PAGE>
OCCUPANCY. Occupancy costs remained relatively constant for the three-month
period ended March 31, 1996, as compared to the same period for the prior year
1995, at approximately $350,000.

OPERATING EXPENSES. Operating expenses, including marketing and
advertising, decreased to $620,000 for the three-month period ended March 29,
1996, from $644,000 for the comparable period in 1995, a decrease of $24,000 or
3.7%. Management believes this decrease is principally due to a change in
marketing strategy that relies less on coupon distribution, which was reduced
significantly over the prior period. As a percentage of revenues, operating
expenses decreased to 16.4%, for the period ended March 29, 1996, from 17.5% for
the comparable period in 1995.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased to $114,000 for the three-month period ended March 27, 1996, from
$140,000 for the comparable period in 1995. The $26,000 or 18.6% decrease
resulted from certain assets which became fully depreciated.

YEAR ENDED DECEMBER 25, 1995 COMPARED TO YEAR ENDED DECEMBER 26, 1994

REVENUES. Revenues for the year ended December 25, 1995 increased to
$14,634,000 from $14,609,000 for the comparable period of 1994, an increase of
$25,000 or 0.2%. An increase of $183,000 resulted from the opening of the
Woodstock, Oregon delivery only restaurant, in June 1995, partially offset by a
decrease in comparable store sales of $158,000 or 1.1% due to an increase in the
amount of discount coupons redeemed.

COST OF SALES. Cost of food, beverages and paper supplies (cost of sales)
for the restaurants decreased to $4,277,000 for the year ended December 25,
1995, from $4,403,000 for the comparable period in 1994, a decrease of $126,000
or 2.9%. As a percentage of revenues, cost of sales decreased to 29.2% for the
fiscal year ended December 25, 1995, from 30.1% for the comparable period in
1994. Management believes that price increases on the salad bar and pan pizza
partially offset by an increase in discount coupon redemption was mainly
responsible for this percentage decrease.

LABOR. Labor for the year ended December 25, 1995 increased to $4,836,000
from $4,755,000 for the comparable period in 1994, an increase of $81,000 or
1.7%. As a percentage of revenue, labor increased to 33%, from 32.5% for the
comparable period in 1994, due primarily to the opening of a restaurant in
Woodstock, Oregon in 1995. As a percentage of revenue the Woodstock, Oregon
restaurant's labor cost was 38.6% in 1995, 5.5 percentage points higher than the
Purchased Assets average of 33.1%. This increase was due to training costs
incurred after the opening of the restaurant.

OCCUPANCY. Occupancy costs increased to $1,434,000 for the year ended
December 31, 1995, from $1,402,000 in the comparable period in 1994. The $32,000
or 2.3% increase resulted from scheduled lease increases totaling $25,000 and
the addition of the Woodstock, Oregon restaurant.

OPERATING EXPENSES. Operating expenses, increased to $2,361,000 for the
year ended December 25, 1995, from $2,276,000 for the comparable period in 1994.
The $85,000 or 3.7% increase was due primarily to increased marketing costs
relating to coupon distribution and the opening of the Woodstock, Oregon
restaurant in June 1995. As a percentage of revenues, operating expenses
increased to 16.1%, from 15.6% for the comparable period in 1994.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
decreased to $581,000 for the year ended December 25, 1995, from $662,000 for
the comparable period in 1994. The $81,000 or 12.2% decrease resulted from
certain assets which became fully depreciated.

37
<PAGE>
THE COMPANY

HISTORY AND BACKGROUND

Chicago Pizza & Brewery, Inc. (the "Company") was formed in 1991 by Mr.
Jeremiah Hennessy and Mr. Paul Motenko (the "Owners") to operate and manage five
existing restaurants that operated as BJ's Chicago Pizzeria restaurants (now all
operated as BJ'S PIZZA & GRILL restaurants) in Southern California. These five
restaurants were owned by Roman Systems, Inc. ("Roman Systems"). The Company
began managing these five restaurants in 1991 pursuant to a Management Agreement
(the "Management Agreement") with Roman Systems. Pursuant to the Management
Agreement, the Company had the right to open, operate and manage BJ's
restaurants. In 1992, the Owners formed CPA-BG, Inc. ("CPA-BG") and opened two
restaurants with CPA-BG as the general partner of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P. in 1992 and 1993, respectively. In 1994, the Company opened
BJ's restaurants in Huntington Beach and Seal Beach, California. Additionally in
1994, the Company, through a limited partnership interest in BJ's Lahaina, L.P.,
opened a BJ's restaurant in Lahaina, Maui. The general partners of BJ's Lahaina,
L.P. were CPA010, Inc. ("CPA010"), owned by Messrs. Motenko and Hennessy, and
Blue Max, Inc. ("Blue Max"). In addition to its limited partnership interest,
the Company managed the Lahaina, Maui restaurant.

Effective January 1, 1995, pursuant to the Asset Purchase Agreement between
the Company and Roman Systems (the "Asset Purchase Agreement"), the Company
purchased three of the existing BJ's restaurants operated and managed under the
Management Agreement (Balboa in Newport Beach, La Jolla Village, and Laguna
Beach, California) and terminated the Management Agreement. As part of the Asset
Purchase Agreement, the Company assumed responsibility for closing the other two
Roman Systems BJ's restaurants in Santa Ana and San Juan Capistrano, California
and assumed certain liabilities related thereto. The Santa Ana and San Juan
Capistrano, California restaurants were closed in 1995.

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for Pietro's Plan of Reorganization, dated
February 29, 1996, as modified (the "Debtor's Plan") and thereby acquired all of
the stock in the reorganized entity known as Chicago Pizza Northwest, Inc. The
Debtor's Plan was confirmed by an order of the Bankruptcy Court on March 18,
1996 and the Company funded the Debtor's Plan on March 29, 1996. In May, 1996
the Company agreed to sell seven of the 26 restaurants acquired from Pietro's.
The sale is expected to be completed during the second quarter of 1996.

As a result of these transactions the Company owns eight restaurants in
Southern California and an interest in one restaurant in Lahaina, Maui, all
operated as BJ's restaurants, and 19 restaurants in

38
<PAGE>
Oregon and Washington, which restaurants will continue to operate under the
"Pietro's" name awaiting conversion to either the BJ'S PIZZA, GRILL & BREWERY,
BJ'S PIZZA & GRILL or BJ'S PIZZA concept.

<TABLE>
<CAPTION>
CURRENTLY PLANNED TO
DATE OPERATES AS OPERATE AS
ACQUIRED (5) (5)
----------- -------------- -------------
<S> <C> <C> <C>
CALIFORNIA (1)
Balboa in Newport Beach................................................ 1/95 Grill Grill
La Jolla Village....................................................... 1/95 Grill Grill
Laguna Beach........................................................... 1/95 Grill Grill
Belmont Shore.......................................................... 1/95 Grill Grill
Seal Beach............................................................. 2/94 (6) Grill Grill
Huntington Beach....................................................... 8/94 (6) Grill Grill
Westwood Village, Los Angeles.......................................... 3/96 (6) Grill Grill
Brea................................................................... 3/96 (6) Brewery Brewery
HAWAII
Lahaina, Maui.......................................................... 6/94 (6) Grill Grill
OREGON (2)
Hood River............................................................. 3/96 Pietro's Brewery
Gresham................................................................ 3/96 Pietro's Brewery
Eugene I (3)........................................................... 3/96 Pietro's Brewery
Milwaukie.............................................................. 3/96 Pietro's Brewery
Salem I................................................................ 3/96 Pietro's Grill
Jantzen Beach (4)...................................................... 3/96 Pietro's Grill
The Dalles............................................................. 3/96 Pietro's Grill
Eugene II.............................................................. 3/96 Pietro's Grill
Eugene III............................................................. 3/96 Pietro's Grill
Salem II............................................................... 3/96 Pietro's Pizza
Portland (Stark)....................................................... 3/96 Pietro's Grill
Portland (Lloyd Center)................................................ 3/96 Pietro's Pizza
Portland (Burnside).................................................... 3/96 Pietro's Pizza
Portland (Lombard)..................................................... 3/96 Pietro's Pizza
Aloha.................................................................. 3/96 Pietro's Pizza
North Bend............................................................. 3/96 Pietro's Pizza
McMinnville............................................................ 3/96 Pietro's Pizza
Woodstock.............................................................. 3/96 Pietro's Pizza
WASHINGTON (2)
Longview............................................................... 3/96 Pietro's Grill
</TABLE>

- ------------------------

(1) Does not include the La Jolla -- Prospect restaurant which was closed in
1995. Also does not include the Roman Systems restaurants located in Santa
Ana and San Juan Capistrano, California, which restaurants were closed in
1995.

(2) Does not include restaurants which were purchased in March 1996 and which
the Company sold during the second quarter of 1996. (Oregon -- Bend, Albany,
Redmond and Madras; Washington -- Richland, Kennewick and Yakima). See
"Certain Transactions -- Sale of Restaurants."

(3) May require an extension of lease from landlord in order to justify the
expense of conversion to a BJ'S PIZZA, GRILL & BREWERY. In the event an
extension is not granted, the Company will convert the site to a BJ'S PIZZA
& GRILL.

(4) May be taken by government under power of eminent domain.

(5) "Grill" means the BJ'S PIZZA & GRILL concept. "Brewery" means the BJ'S
PIZZA, GRILL & BREWERY concept. "Pizza" means the BJ'S PIZZA concept. See
"Business -- Business and Strategy."

(6) Developed by the Company.

The above list does not include the Boulder, Colorado restaurant which the
Company is currently developing and expects to open in the Fall of 1996.

39
<PAGE>
BUSINESS

BUSINESS AND STRATEGY

- BJ'S PIZZA & GRILL is designed to provide a casual, dining experience with
table service featuring a menu of pizza, pasta, sandwiches, salads and
desserts. Currently, the Company operates seven of its California
Restaurants and the Lahaina, Maui restaurant as, and plans to convert
seven of its Northwest Restaurants into, the BJ'S PIZZA & GRILL concept.

The Company was formed in 1991 to assume the management of five "BJ's
Chicago Pizzeria" restaurants and to develop additional BJ's restaurants.
Between 1992 and 1995, the Company developed five additional restaurants,
purchased three of those original five restaurants that it managed and
discontinued one of those that it had developed. As a result of these
transactions, at the end of 1995 the Company owned restaurants in California
located in La Jolla Village, Laguna Beach, Belmont Shore, Seal Beach, Huntington
Beach, and Balboa in Newport Beach, as well as a 53.68% interest in a restaurant
in Lahaina, Maui.

The Company has embarked on a campaign to broaden its customer base by: i)
surrounding its core pizza product with a more expansive menu including
appetizers, grilled sandwiches, specialty salads and pastas, ii) adding
hand-crafted, micro-brewed beers through on-site micro-breweries in certain
locations and the sale of internally-produced beer through other Company
restaurants and

40
<PAGE>
iii) differentiating the BJ's identity and expanding merchandising opportunities
through a comprehensive new logo and identity program, new uniforms a new
interior design concept and redesigned signage.

During late 1995 and early 1996, the Company converted the restaurants in
Balboa in Newport Beach, La Jolla Village, Laguna Beach, Belmont Shore, Seal
Beach and Huntington Beach, California to the BJ'S PIZZA & GRILL concept and
opened a new BJ'S PIZZA & GRILL restaurant in Westwood Village in Los Angeles,
California. Management believes that customer frequency and sales volumes at the
converted restaurants have been significantly enhanced in the comparable period
of 1995 to 1996, primarily due to the conversion to this expanded concept. The
four California Restaurants open for the entire first quarter of 1994, 1995 and
1996 (Balboa in Newport Beach, California, La Jolla Village, Laguna Beach and
Belmont Shore, California) had a decrease of sales of 10.5% in the first quarter
of 1995 compared to 1994. Management believes this was primarily due to rains
and flooding in the first quarter of 1995. However, with the introduction of the
new menu and the refurbishment of the La Jolla Village restaurant at year end
1995, same store sales in these four restaurants increased 24% from the first
quarter of 1996 compared to the first quarter of 1995. Same store sales volumes
at the seven restaurants operating during the entire first quarter of 1995 and
1996 were up 21.7% in 1996 over the prior year. The La Jolla Village restaurant,
which had the most significant physical upgrade, experienced sales increases of
49.9% in the comparable periods.

The first BJ'S PIZZA GRILL & BREWERY opened in Brea, California in April
1996. This 10,000-square-foot restaurant features elaborate brick walls and
archways, high molded tin ceilings, warm lighting and industrial railings. The
on-premises brewing equipment includes a 30-barrel, copper-clad kettle,
60-barrel, stainless steel fermentation tanks, kegging equipment, and a
40,000-pound-capacity corrugated metal grain silo located at the front entrance
to the restaurant. Management believes the brewery capacity is sufficient to
supply beer for all of the Company's existing Southern California restaurants.
Management believes the relatively low production cost and high premium pricing
associated with micro-brewed beer can significantly improve margins.

The March, 1996 multi-unit Pietro's Acquisition was a key step in the
strategy to quickly develop a market presence for the thick crust, Chicago style
pizza and micro-brewery concept. Management believes that the Company will
significantly benefit from the Pietro's Acquisition as 19 restaurants in the
Northwest market will provide the Company with an immediate and significant
presence in that market area, without the more cumbersome and time-consuming
licensing and permitting issues which would be involved in the development of
individual restaurants. These 19 restaurants will continue to operate under the
"Pietro's" name awaiting conversion to either BJ'S PIZZA, GRILL & BREWERY, BJ'S
PIZZA & GRILL or BJ'S PIZZA concept. Management believes that it can
significantly capitalize on the Pietro's Acquisition based upon the following
factors:

1. ESTABLISHED CUSTOMER BASE. Each of the restaurants purchased already
has a customer base which Management feels can be expanded with the
renovation and introduction of the BJ's menu and concept.

2. REDUCTION OR ELIMINATION OF DISCOUNTING. Pietro's relied heavily on
discounting to maintain its share of the pizza market. Discounts were as
high as 25% of total sales. BJ's does very little discounting, relying
instead on the quality of its product and service to compete in the
marketplace. As Pietro's restaurants are converted to BJ's restaurants,
Management intends to reduce or eliminate the use of discounting, which
Management believes will have a positive effect on gross profit margins.

3. POSITIVE IMPACT UPON MARKETING COSTS AS A RESULT OF REDUCED
DISCOUNTING. Due to its widespread use of discount coupons, Pietro's
marketing costs, consisting mainly of printing and

41
<PAGE>
distribution, have been extremely high. Marketing costs averaged 7.5% of
sales. BJ's marketing costs average under 2% of sales. Management believes
that the anticipated reduction in discounting upon conversion of the units
to BJ's restaurants will also significantly reduce marketing costs.

4. CAPITALIZATION UPON INCREASED PURCHASING VOLUMES. Management will
attempt, and believes that it can achieve, significant cost reductions from
capitalizing on the increased purchasing volumes resulting from the
operation of the 19 additional restaurants.

5. ELIMINATION OF DUPLICATE OVERHEAD. Management intends to eliminate
duplicate overhead currently being experienced in accounting, finance and
purchasing departments as a result of operating Pietro's and BJ's as
separate operations. Such reductions should reduce overhead in total and as
a percentage of sales.

6. ECONOMIC BENEFITS OF INTERNALLY PRODUCED BEER. The installation of
micro-breweries in several of the converted Pietro's restaurants should
provide the economic benefits of internally produced beer, not only to those
restaurants but to other converted restaurants as well. Management intends
to distribute the beer produced at BJ's micro-breweries, subject to local
regulations, to as many of the other converted restaurants as possible.

7. INCREASED SALES THROUGH RENOVATION AND CONVERSION. Annual sales at
BJ's seven Southern California and one Lahaina, Maui unit open during 1995
averaged $323 per square foot while sales at the Pietro's restaurants
acquired by the Company averaged $114 per square foot. Management believes
that through renovation and conversion of the acquired restaurants to BJ's
restaurants, the sales volumes could increase to be more consistent with the
volumes of the other BJ's restaurants.

The Company's current objectives after the closing of this Offering are to
remodel and refurbish those restaurants acquired from Pietro's to one of the
three "BJ's" concepts over the next 12 to 18 months. The Company has designated
approximately $4.5 million of the net proceeds of this Offering for use in
refurbishment and redesign of these restaurants. The Company also plans to
acquire and develop additional "BJ's" restaurants in order to expand operations
to other cities and towns consistent with the Company's location strategy and
market niche. In this regard, the Company has executed a lease for an
approximately 5,500-square-foot facility in the Pearl Street Mall, a popular,
high-traffic pedestrian promenade in Boulder, Colorado. The Company expects to
open this BJ'S PIZZA, GRILL & BREWERY in Fall of 1996. No assurance can be given
that the Company's objectives can be achieved or that sufficient capital will be
available to finance the Company's business plan. See "Risk Factors."

The BJ's menu has been developed on a foundation of excellence. BJ's core
product, its deep-dish, Chicago-style pizza, has been highly acclaimed since it
was originally developed in 1978. This unique version of Chicago-style pizza is
unusually light, with a crispy, flavorful crust. Management believes BJ's
lighter crust helps give it a broader appeal than some other versions of
deep-dish pizza. The pizza is topped with high-quality meats, fresh vegetables
and whole-milk mozzarella cheese. BJ's pizza consistently has been awarded "best
pizza" honors by restaurant critics and public opinion polls in Orange County,
California. In addition, BJ's recently won the award for "best pizza on Maui" in
a poll conducted by the Maui News.

Management's objective in developing BJ's expanded menu was to ensure that
all items on the menu maintained and enhanced BJ's reputation for quality. BJ's
pasta sauces, soups and salad dressings are made fresh in each restaurant.
Sandwiches are made from freshly grilled chicken and turkey roasted in BJ's
ovens. BJ's developed a dessert several years ago which has become another
signature item. The "Pizookie" is a freshly baked-to-order cookie, served hot
out of the oven in a deep-dish pizza pan, topped with gourmet vanilla bean ice
cream. Since its introduction in 1992, the Pizookie has become extremely popular
and brings people back to BJ's for a whole meal or just for the dessert itself.

42
<PAGE>
Many of BJ's food portions have been increased in conjunction with the new
menu, creating a real value orientation. Because of the relatively low food cost
associated with pizza, BJ's highest volume item, Management believes it will
still be able to maintain favorable gross profit margins while providing a value
to the consumer. When the new menu items were first developed in late 1995 and
early 1996, they were introduced at promotional prices. Management believes this
artificially low pricing contributed to the higher food cost percentage incurred
during that time period. Prices on most of the new items were increased
effective May 1996. While the menu is still very value-oriented, the new pricing
is more consistent with Management's gross profit margin objectives.

BJ's restaurants provide a constantly evolving selection of domestic,
imported and micro-brewed beers. In addition, subject to local regulations and
the capacity of the restaurants, BJ's restaurants will feature a selection of
beers brewed at one or more of BJ's micro-breweries. Management believes that
this will provide two major benefits:

1. The quality and freshness of the BJ's brewed beers will be under the
constant supervision of the Company's Director of Brewing Operations. This
should have a positive impact on both the actual quality and the perceived
quality of the beer.

2. Management believes that the production costs of the internally
brewed beer will be significantly less than purchased beer. The relatively
low production costs and premium pricing often associated with micro-brewed
beers should have a significant, positive impact on gross profit margins.

MARKETING

To date, the majority of marketing has been accomplished through
community-based promotions and customer referrals. Management's philosophy has
been to "spend its marketing dollars on the plate," or use funds that would
typically be allocated to marketing to provide a better product and value to its
existing guests. Management believes this will result in increased frequency of
visits and greater customer referrals. During the roll-out of the new menu,
however, the Company has utilized more media advertising than usual in order to
gain increased awareness of the significant changes on the menu and in the
restaurants. BJ's expenditures on advertising and marketing are typically 1% to
1.5% of sales.

BJ's is very much involved in the local community and charitable causes,
providing food and resources for many worthwhile events. Management feels very
strongly about its commitment to helping others, and this philosophy has
benefited the Company in its relations with its surrounding communities.

The Company distributes very few coupons and does not try to compete with
other pizza chains that rely on heavy discounting. This philosophy has enabled
BJ's to maintain its quality image and its gross profit margins through a period
of "price wars" which have plagued the pizza industry.

Pietro's had traditionally marketed itself through the widespread use of
discount coupons. Expenditures for advertising were approximately 7.5% of sales
and discounted items accounted for 25% of sales. The resulting reductions in
margins forced Pietro's management to reduce the quality of its product in order
to maintain a reasonable food cost. Management believes that these pizza "price
wars" ultimately resulted in reduced value perceptions among Pietro's clientele,
and Pietro's lacked the financial resources to strategically overcome this
obstacle. Through the refurbishment of the Northwest Restaurants, and the
introduction of BJ's quality food and service, Management believes that
discounting will be reduced or eliminated, and expenditures on marketing should
fall to a range more typical for a BJ's operation. This could have a substantial
positive impact on the Company's profitability.

43
<PAGE>
OPERATIONS

The Company's policy is to staff the restaurants with enthusiastic people,
who can be an integral part of BJ's fun, casual atmosphere. Prior experience in
the industry, is only one of the qualities Management looks for in its
employees. Enthusiasm, motivation and the ability to interact well with the
Company's clientele are the most important qualities for BJ's management and
staff.

Both management and staff undergo thorough formal training prior to assuming
their positions at the restaurants. Management has designated certain managers,
servers and cooks as "trainers," who are responsible for properly training and
monitoring all new employees. In addition, the Company's Director of Operations,
Director of Food and Beverage, and Director of Service supervise the training
functions in their particular areas.

A typical BJ's restaurant is staffed with a general manager, two assistant
managers, between 15 and 25 servers and drivers, 7 to 10 cooks and 5 to 10
support staff. The staffing levels at BJ'S PIZZA, GRILL & BREWERY in Brea,
California are much more substantial, with a general manager, three assistant
managers, a kitchen manager, 65 servers and drivers, 23 cooks, 23 support staff,
and 15 bar staff.

Staffing at Pietro's typically consisted of a general manager, two to three
assistant or shift managers, five drivers and 10 to 15 service/kitchen
personnel. Management believes that as the Pietro's restaurants are converted
into BJ's restaurants, they will be staffed in a manner similar to the current
BJ's restaurants. Staffing levels at each restaurant will be dependent upon the
variation of the BJ's concept to which that particular restaurant is converted.

The Company purchases its food product from several key suppliers. A
majority of food and operating supplies for the California restaurants is
purchased from Jacmar Sales, with which the Company has had a long-term,
valuable relationship. A majority of food and operating supplies for the
Northwest Restaurants is purchased from McDonald Wholesale Company. Product
specifications are very strict, because the Company insists on using fresh,
high-quality ingredients.

Pietro's formerly operated a commissary and distribution center which, as
its number of units was reduced, became an economic and operational burden. In
January 1996, Pietro's discontinued the commissary and distribution center and
contracted with an outside distributor to provide and distribute product to its
restaurants and, as a result, direct food costs have increased. The reduction in
overhead, however, has effectively offset this increase.

As the Pietro's restaurants are converted into BJ's restaurants, the Company
hopes to capitalize on the reduced costs usually associated with higher
purchasing volumes.

COMPETITION

The restaurant industry is highly competitive. A great number of restaurants
and other food and beverage service operations compete both directly and
indirectly with the Company in many areas including: food quality and service,
the price-value relationship, beer quality and selection, and atmosphere, among
other factors. Many competitors who use concepts similiar to that of the Company
are well-established, and often have substantially greater resources.

Because the restaurant industry can be significantly affected by changes in
consumer tastes, national, regional or local economic conditions, demographic
trends, traffic patterns, weather and the type and number of competing
restaurants, any changes in these factors could adversely affect the Company. In
addition, factors such as inflation and increased food, liquor, labor and other
employee compensation costs could also adversely affect the Company. The Company
believes, however, that its ability to offer high-quality food at moderate
prices with superior service in a distinctive dining environment, will be the
key to overcoming these obstacles.

GOVERNMENT REGULATIONS

The Company is subject to various federal, state and local laws, rules and
regulations that affect its business. Each of the Company's restaurants is
subject to licensing and regulation by a number of

44
<PAGE>
governmental authorities, which may include alcoholic beverage control,
building, land use, health, safety and fire agencies in the state or
municipality in which the restaurant is located. Difficulties obtaining the
required licenses or approvals could delay or prevent the development of a new
restaurant in a particular area or could adversely affect the operation of an
existing restaurant. Similar difficulties, such as the inability to obtain a
liquor, restaurant license or a given restaurant's products and services could
also limit restaurant development and/or profitability. Management believes,
however, that the Company is in compliance in all material respects with all
relevant laws, rules, and regulations. Furthermore, the Company has never
experienced abnormal difficulties or delays in obtaining the required licenses
or approvals required to open a new restaurant or continue the operation of its
existing restaurants. Additionally, Management is not aware of any environmental
regulations that have had or that it believes will have a materially adverse
effect upon the operations of the Company.

Alcoholic beverage control regulations require each of the Company's
restaurants to apply to a federal and state authority and, in certain locations,
municipal authorities for a license and permit to sell alcoholic beverages on
the premises. Typically, licenses must be renewed annually and may be revoked or
suspended for cause by such authority at any time. Alcoholic beverage control
regulations relate to numerous aspects of the daily operations of the Company's
restaurants, including minimum age of patrons and employees, hours of operation,
advertising, wholesale purchasing, inventory control and handling, and storage
and dispensing of alcoholic beverages. The Company has not encountered any
material problems relating to alcoholic beverage licenses or permits to date and
does not expect to encounter any material problems going forward. The failure to
receive or retain, or a delay in obtaining, a liquor license in a particular
location could adversely affect the Company's ability to obtain such a license
elsewhere.

The Company is subject to "dram-shop" statutes in California and other
states in which it operates. Those statutes generally provide a person who has
been injured by an intoxicated person, the right to recover damages from an
establishment that has wrongfully served alcoholic beverages to such person. The
Company carries liquor liability coverage as part of its existing comprehensive
general liability insurance which it believes is consistent with coverage
carried by other entities in the restaurant industry and will protect the
Company from possible claims. Even though the Company carries liquor liability
insurance, a judgment against the Company under a dram-shop statute in excess of
the Company's liability coverage could have a materially adverse effect on the
Company. To date, the Company has never been the subject of a "dram-shop" claim.

Various federal and state labor laws, rules and regulations govern the
Company's relationship with its employees, including such matters as minimum
wage requirements, overtime and working conditions. Significant additional,
governmental mandates such as an increased minimum wage, an increase in paid
leaves of absence, extensions in health benefits or increased tax reporting and
payment requirements for employees who receive gratuities, could negatively
impact the Company's restaurants.

EMPLOYEES

As of March 31, 1996, the Company employed 283 employees at its seven
California Restaurants and one Hawaii restaurant. The Company employs
approximately 650 additional employees at its recently acquired restaurants in
Washington and Oregon. The Company also employs nine administrative and field
supervisory personnel at its corporate offices. Historically, the Company has
experienced relatively little turnover of key management employees. The Company
believes that it maintains favorable relations with its employees, and currently
no unions or collective bargaining arrangements exist.

INSURANCE

The Company maintains worker's compensation insurance and general liability
coverage which it believes will be adequate to protect the Company, its
business, its assets and its operations. There is no assurance that any
insurance coverage maintained by the Company will be adequate, that it can

45
<PAGE>
continue to obtain and maintain such insurance at all or that the premium costs
will not rise to an extent that they adversely affect the Company or the
Company's ability to economically obtain or maintain such insurance. The Company
does not currently have any key person life insurance but has applied for
$2,000,000 in key person life insurance for each of Mr. Motenko and Mr.
Hennessy.

TRADEMARKS AND COPYRIGHTS

The Company has not secured any rights in connection with its trademarks,
servicemarks or any other proprietary rights related to the use of the BJ'S
PIZZA, GRILL & BREWERY, BJ'S PIZZA & GRILL and BJ'S PIZZA names. There are other
restaurants using the BJ's name throughout the United States, thus, no assurance
can be given that the Company will be able to secure any such rights in the
future or that the use of the BJ's name may not be subject to claims by third
parties.

PROPERTY AND LEASES

The Company's corporate headquarters in California are located in a
2,219-square-foot leased facility in Mission Viejo, California. The initial term
of the lease expires on December 31, 1998. Chicago Pizza Northwest, Inc., the
Company's subsidiary in Washington has headquarters in a 5,337-square-foot
leased facility in Bothell, Washington. This lease expires on April 30, 1999 and
is currently being renegotiated.

All of the Company's 28 restaurants, and the Colorado restaurant to be
opened in September 1996, are on leased premises and are subject to varying
lease-specific arrangements. For example, some of the leases require a flat
rent, subject to regional cost-of-living increases, while others additionally
include a percentage of gross sales. In addition, certain of these leases expire
in the near future, and there is no automatic renewal or option to renew. No
assurance can be given that leases can be renewed, or, if renewed, that rents
will not increase substantially, both of which would adversely affect the
Company. Other leases are subject to renewal at fair market value, which could
involve substantial increases.

With respect to future restaurant sites, the Company believes the locations
of its restaurants are important to its long-term success and will devote
significant time and resources to analyzing prospective sites. The Company's
strategy is to open its restaurants in high-profile locations with strong
customer traffic during day, evening and weekend hours. The Company has
developed specific criteria for evaluating prospective sites, including
demographic information, visibility and traffic patterns. In connection with a
potential brew-pub joint venture the Company is consulting with ASSI, Inc., a
Nevada corporation with experience in the hospitality industry as well as direct
experience in real estate, construction and development in Las Vegas, Nevada.
See "Certain Transactions."

LEGAL PROCEEDINGS

Restaurants such as those operated by the Company are subject to a
continuous stream of litigation in the ordinary course of business, most of
which the Company expects to be covered by its general liability insurance.
Punitive damages awards, however, are not covered by general liability
insurance. To date, the Company has not paid punitive damages in respect of any
claims, but there can be no assurance that punitive damages will not be given
with respect to any of such claims or in any other actions which may arise in
any future action.

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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the Company's
directors and/or executive officers.

<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------- --- ----------------------------------------------------------
<S> <C> <C>
Paul A. Motenko 41 Chairman of the Board, Chief Executive Officer, Vice
President and Secretary

Jeremiah J. Hennessy 37 President, Chief Operating Officer and Director

Laura Parisi 37 Chief Financial Officer, Assistant Secretary

Alexander M. Puchner 35 Director of Brewing Operations and Director

Barry J. Grumman 45 Director

Stanley B. Schneider (1) 60 Director Nominee

Stephen P. Monticelli (1) 41 Director Nominee

Steven F. Mayer (1) 36 Director Nominee
</TABLE>

- ------------------------

(1) Messrs. Schneider, Monticelli and Mayer are currently nominees to the Board
and are expected to be elected to the Board prior to the close of this
Offering. Mr. Schneider has been nominated by Messrs. Motenko and Hennessy.
Mr. Monticelli was nominated by ASSI, Inc. and Mr. Mayer was nominated by
Mr. Herrick, both pursuant to the Note Purchase Agreements. See "Certain
Transactions -- Pietro's Acquisition."

The directors serve until the next annual meeting of shareholders and the
election and qualification of their successors. The officers are elected by the
directors and serve at the discretion of the Board of Directors. The Company has
agreed to grant to the Representative, effective upon the closing of this
Offering, the right to nominate from time to time one individual to be a
director of the Company or to have an individual selected by the Representative
attend all meetings of the Board of Directors of the Company as a non-voting
advisor. At this time the Representative has waived its right to nominate a
director. See "Underwriting."

PAUL A. MOTENKO. Mr. Motenko has been the Chief Executive Officer, Chairman
of the Board, Vice President and Secretary of the Company since its inception in
1991. He is also Chairman of the Board and Secretary of CPNI. He is a certified
public accountant and was a founding partner in the firm Motenko, Bachtelle &
Hennessy from 1980 to 1991. In this capacity, Mr. Motenko provided accounting
and consulting services to several restaurant companies, including BJ's Chicago
Pizzeria. From 1976 to 1980, Mr. Motenko was employed as an accountant and
consultant for several accounting firms, including Kenneth Leventhal and Company
and Peat, Marwick, Main. Mr. Motenko graduated with high honors from the
University of Illinois in 1976 with a Bachelor of Science in accounting.

JEREMIAH J. HENNESSY. Mr. Hennessy has been the President, Chief Operating
Officer and a Director of the Company since its inception in 1991. He is also
Chief Executive Officer and a Director of CPNI. Mr. Hennessy is a certified
public accountant and was a partner in the firm Motenko, Bachtelle & Hennessy
from 1988 to 1991. His public accounting practice involved extensive work for
food service and restaurant clientele. He served as a controller for a large
Southern California construction company and has extensive background in
construction and development. Mr. Hennessy has also worked in various aspects of
the restaurant industry for Marie Callendar's and Knott's Berry Farm. Mr.
Hennessy graduated Magna Cum Laude from National University in 1983 with a
Bachelor of Science in accounting.

LAURA PARISI. Ms. Parisi has been the Chief Financial Officer and Assistant
Secretary of the Company, having served in such capacity since December 1995.
She is also Treasurer and a Director of

47
<PAGE>
CPNI. Previously, Ms. Parisi was Vice President of Finance for Ruby's Diner,
Inc. from 1994 to 1995, and before that served as Corporate Accounting
Controller and in other senior-level positions for Restaurant Enterprises Group,
Inc. from 1985 to 1994. Ms. Parisi received degrees in accounting and business
administration from Illinois State University in 1980. Ms. Parisi is a certified
public accountant.

BARRY J. GRUMMAN. Mr. Grumman has been the Senior Partner in the Law
Offices of Grumman & Rockett, a Los Angeles law firm specializing in civil
litigation, since 1977. Mr. Grumman is a principal of FM Records, Inc., a Los
Angeles record company. Mr. Grumman also has extensive experience as an investor
in private companies and has invested in companies which have gone public. Mr.
Grumman was named a Director of the Company in November 1994.

ALEXANDER M. PUCHNER. Mr. Puchner is Director of Brewing Operations for the
Company, having been appointed to such position in January 1996. From 1994 to
1995, Mr. Puchner served as brew master for Laguna Beach Brewing Co. and from
1993 to 1994 as brewmaster for the Huntington Beach Beer Co. from 1988 to 1993,
Mr. Puchner served as Product Manager for Aviva Sports/Mattel Inc. and Marketing
Research Manager for Mattel Inc. Mr. Puchner was awarded a silver medal in the
American pale ale category at the 1994 Great American Beer Festival. Mr. Puchner
has also earned over 40 awards as a homebrewer, including in the 1991 and 1992
National Homebrew Competition. Mr. Puchner received a Bachelor of Arts from
Cornell University in 1983 and a Master of Business Administration degree from
the University of Chicago in June 1986.

STANLEY B. SCHNEIDER. Mr. Schneider was nominated by Messrs. Motenko and
Hennessy and is to be elected to the Board of Directors by the close of this
Offering. He is a certified public accountant and founding member and the
managing partner of Gursey, Schneider & Co., an independent public accounting
firm founded in 1964 that specializes in general accounting services, litigation
support, audits, tax consulting and compliance as well as business management
and management advisory services. Mr. Schneider serves as a director of
Perceptronics, Inc., a Woodland Hills based high-tech defense firm; American
Recreation Centers Co., the largest publicly-owned bowling center company in the
United States; Jerry's Famous Deli, Inc., a Los Angeles-based restaurant
company; Golden West Baseball Co., the corporate co-owner of the California
Angels; Golden West Broadcasters, Inc., a broadcast media holding company; The
Autry Museum of Western Heritage and P.A.T.H., an organization dedicated to
helping the homeless in Los Angeles. Mr. Schneider obtained a Bachelor of
Science in accounting from the University of California at Los Angeles in 1958.

STEPHEN P. MONTICELLI. Mr. Monticelli was nominated by ASSI, Inc. as
provided in the Note Purchase Agreement and is to be elected to the Board of
Directors by the close of this Offering. See "Certain Transactions -- Pietro's
and Other Proposed Acquisitions." Mr. Monticelli is the President of Mosaic
Ventures, LLC, a venture capital firm based in San Francisco and currently
serves on the Board of Directors of Meris Laboratories, Inc., a publicly-traded
clinical laboratory company listed on Nasdaq and of Vestro Natural Foods, Inc.,
a publicly-traded natural foods company, also listed on Nasdaq. From 1991 to
1995, Mr. Monticelli was a Managing Director of Baccharis Capital, Inc., a
venture capital and buyout firm located in Menlo Park, California. From 1987 to
1991, Mr. Monticelli was a Principal in the private ventures group of The
Fremont Group (formerly known as Bechtel Investments, Inc.), a private family
investment firm. Prior to 1987, he was a management consultant with Marakon
Associates and a certified public accountant with Deloitte & Touche. He received
a Bachelor of Science and a Master of Business Administration degree from the
Haas School of Business at the University of California at Berkeley.

STEVEN F. MAYER. Mr. Mayer was nominated by Mr. Herrick as provided in the
Note Purchase Agreement and is to be elected to the Board of Directors by the
close of this Offering. See "Certain Transactions -- Pietro's and Other Proposed
Acquisitions." Mr. Mayer is currently the president and managing director of
Aries Capital Group, L.L.C., a private investment firm. From April 1992 until
June 1994, when he left to co-found Aries Capital Group, Mr. Mayer was an
investment banker with Apollo Advisors, L.P. ("Apollo") and Lion Advisors, L.P.
("Lion"), affiliated private investment firms,

48
<PAGE>
Prior to that time, Mr. Mayer was a lawyer with Sullivan & Cromwell specializing
in mergers, acquisitions, divestitures, leveraged buyouts and corporate finance.
While at Apollo and Lion, Mr. Mayer was responsible for equity and debt
investments in a wide range of industries, including the aluminum, apparel,
automobile parts manufacturing, bedding, cable television, cosmetics,
environmental services, furniture distribution, homebuilding, hotel, plastics,
radio, real estate, retail and textile industries. Mr. Mayer is a current or
former member of the Boards of Directors of Mednet, MPC Corporation, a publicly
traded managed prescription care company, BDK Holdings, Inc., a textile
manufacturer, Roland International Corporation, a real estate holding company
and The Greater LA Fund, a non-profit investment group affiliated with Rebuild
LA. In addition, Mr. Mayer has served as the chairman or a member of numerous
creditors' committees. Mr. Mayer is a graduate of Princeton University and
Harvard Law School.

SIGNIFICANT EMPLOYEES

The following table sets forth certain information concerning certain
significant employees of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- --- ------------------------------------------------------------
<S> <C> <C>
Robert B. DeLiema 47 Director of Marketing and Southern California Regional
Operations

Salvador A. Navarro 41 Director of Food and Beverage

Stephen White 42 Director of Operations
</TABLE>

ROBERT B. DELIEMA. Mr. DeLiema has been the Director of Marketing and
Southern California Regional Operations for the Company since February 1996.
Previously, Mr. Deliema owned and operated a graphic design, advertising and
marketing firm from 1981 to 1996. From 1970-1981, Mr. DeLiema was a principal
and Vice President of Operations for Meyerhof's, a restaurant holding company,
where Mr. DeLiema concentrated on the Back Bay Rowing and Running Club
restaurants. Mr. DeLiema received a Bachelor of Arts in 1970 from the University
of California at Santa Barbara.

SALVADOR A. NAVARRO. Mr. Navarro has served as the Director of Food and
Beverage for the Company since 1995. Previously, Mr. Navarro was Central
Operations Manager for Knott's Berry Farms in Buena Park, California and served
as the Director of Food and Beverages for Southwest Foods, Inc.'s Claim Jumper
Restaurants from 1978 to 1994.

STEPHEN WHITE. Mr. White has been the Director of Operations of the Company
since July 1994. Mr. White has been in the restaurant business his entire
working life. From 1992 until joining the Company, Mr. White was an independent
consultant to the restaurant industry. From 1980 to 1992, Mr. White was employed
with Southwest Foods, Inc.'s Claim Jumper Restaurants in Irvine, California as
Corporate General Manager and Vice President of Operations. At Claim Jumper, Mr.
White designed and implemented new menus, quality assurance procedures,
personnel training, purchasing and operations protocols.

COMPENSATION OF BOARD OF DIRECTORS

Directors previously have received no cash compensation for serving on the
Board of Directors. Beginning in August 1996, the Company will pay fees to its
non-employee directors for serving on the Board of Directors and for their
attendance at Board and committee meetings. The Company pays each non-employee
director an annual fee of $1,000, plus $750 per board meeting attended in
person, $400 per telephonic board meeting over 30 minutes, $200 per telephonic
board meeting under 30 minutes, $500 per committee meeting in person, $300 per
telephonic committee meeting over 30 minutes, and $100 per telephonic committee
meeting under 30 minutes.

EXECUTIVE COMPENSATION

The following table sets forth information concerning compensation of the
Chief Executive Officer and each other executive officer who received annual
compensation in excess of $100,000 for the fiscal year ended December 31, 1995:

49
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ----------------------------
NAME AND -------------------- STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION (1) YEAR SALARY BONUS (SHARES) COMPENSATION
- ------------------------------------------------------------ ---- -------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Paul A. Motenko............................................. 1995 $101,289 $ 50,000(2) -0- $8,858(3)
Chief Executive Officer
Jeremiah J. Hennessy........................................ 1995 $101,289 $ 50,000(2) -0- $8,417(4)
Chief Operating Officer
</TABLE>

- ------------------------
(1) No other executive officer received salary and bonuses in excess of $100,000
in respect of the year ended December 31, 1995.

(2) Paid in respect of the acquisition from Roman Systems, Inc. See "Certain
Transactions -- Acquisition of Restaurants and Intellectual Property."

(3) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $7,757) and
life insurance (approximately $1,101).

(4) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $7,316), and
life insurance (approximately $1,101).

EMPLOYMENT AGREEMENTS

The terms summarized below are qualified in their entirety by the respective
employment agreements filed as exhibits to the registration statement of which
this Prospectus is a part.

The Company has entered into identical eight-year term employment agreements
with Paul Motenko and Jeremiah J. Hennessy (sometimes referred to herein as the
"Executives"), effective as of March 25, 1996. Pursuant to such agreements,
Messrs. Motenko and Hennessy are each to receive annual cash compensation of
$135,000, subject to escalation annually in accordance with the Consumer Price
Index (the "CPI"). In addition, Messrs. Motenko and Hennessy's employment
agreements entitle each of them to receive two annual bonuses based on the
Company's financial performance, one for attainment of specified earnings before
interest, amortization, depreciation and income taxes ("EBITDA"), and one for
attainment of specified pre-tax income.

The EBITDA bonus would entitle Messrs. Motenko and Hennessy each to receive
the following amounts if the following EBITDA amounts are attained for each
fiscal year during the term of their respective employment agreements:

<TABLE>
<CAPTION>
EBITDA CUMULATIVE CASH BONUS
---------- ---------------------
<S> <C>
$2,000,000 $ 25,000
$3,000,000 $ 35,000
$6,000,000 $ 80,000
$9,000,000 $150,000
</TABLE>

The pre-tax income bonus would entitle each of Messrs. Motenko and Hennessy
to receive the following amounts if the following pre-tax income amounts (as
determined by the Company's independent public accountants in accordance with
GAAP) are attained for each fiscal year during the term of their respective
employment agreements, commencing with the fiscal year ending December 31, 1997:

<TABLE>
<CAPTION>
PRE-TAX
INCOME CUMULATIVE CASH BONUS
---------- ---------------------
<S> <C>
$2,000,000 $ 25,000
$4,000,000 $ 75,000
$8,000,000 $150,000
</TABLE>

The pre-tax income levels required to receive each bonus level for each
fiscal year following the 1997 fiscal year will be increased by 20% per year.

50
<PAGE>
Pursuant to their respective employment agreements, Messrs. Motenko and
Hennessy are each entitled to certain other fringe benefits including use of a
Company automobile or automobile allowance, life insurance coverage, disability
insurance, family health insurance and the right to participate in the Company's
customary executive benefit plans. Messrs. Motenko and Hennessy's employment
agreements further provide that following the voluntary or involuntary
termination of their employment by the Company, each of them is entitled to two
demand registration rights with respect to the Common Stock held by or issuable
to him. Upon the occurrence of any Termination Event (as hereinafter defined),
the Company may terminate the employment agreements. If such termination occurs,
Mr. Motenko or Mr. Hennessy, as the case may be, will be entitled to receive all
amounts payable by the Company under his respective employment agreement to the
date of termination. If the Company terminates the employment agreement for a
reason other than the occurrence of a Termination Event or if Mr. Motenko or Mr.
Hennessy terminates the employment agreement because of a breach by the Company
of its obligations thereunder or for Good Reason (as hereinafter defined), Mr.
Motenko or Mr. Hennessy, as the case may be, will be entitled to receive any and
all payments and benefits which would have been due to him by the Company up to
and including March 24, 2004 or any extension thereof had he not been terminated
and any and all damages resulting therefrom.

"Termination Event" means any of the following: (i) the willful and
continued failure by the Executive to substantially perform his duties under the
Employment Agreement (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness) after demand for substantial
performance is delivered by the Company specifically identifying the manner in
which the Company believes the Executive has not substantially performed his
duties; (ii) the Executive being convicted of a crime constituting a felony;
(iii) the Executive intentionally committing acts or failing to act, either of
which involves willful malfeasance with the intent to maliciously harm the
business of the Company; (iv) the Executive's willful violation of the
confidentiality provisions under the Employment Agreement; or (v) death or
physical or mental disability which results in the inability of the Executive to
perform the required services for an aggregate of 180 calendar days during any
period of 12 consecutive months. No act, or failure to act, on the Executive's
part shall be considered "willful" unless intentionally done, or intentionally
omitted to be done, by him not in good faith and without reasonable belief that
his action or omission was in the best interest of the Company. Notwithstanding
the foregoing, a Termination Event shall not have been deemed to have occurred
unless and until there shall have been delivered to the Executive a copy of a
resolution, duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice to the Executive and an opportunity for
him, together with his counsel, to be heard before the Board), finding that, in
the good faith opinion of the Board, the Executive conducted, or failed to
conduct, himself in a manner set forth above in clauses (i)-(iv), and specifying
the particulars thereof in detail.

For purposes of the Employment Agreement, "Good Reason" shall mean (i) any
removal of the Executive from, or any failure to re-elect the Executive to his
current office except in connection with termination of the Executive's
employment for disability; provided, however, that any removal of the Executive
from, or any failure to re-elect the Executive to his current office (except in
connection with termination of the Executive's employment for disability) shall
not diminish or reduce the obligations of the Company to the Executive under the
employment agreement; (ii) a reduction of ten percent (10%) or more in the
Executive's then current base salary; (iii) any failure by the Company to comply
with any of its obligations to the Executive under the employment agreement;
(iv) for any reason within 120 days following a Change of Control (as defined in
the employment agreement); or (v) the failure of the Company to obtain the
assumption of the employment agreement by any successor to the Company, as
provided in the employment agreement.

OPTIONS

There are currently no arrangements to issue options other than the
Company's 1996 Stock Option Plan.

51
<PAGE>
1996 STOCK OPTION PLAN

The Company plans to amend its current stock option plan and to adopt the
Company's currently proposed 1996 Stock Option plan. The following summary of
the Company's currently proposed 1996 proposed form of Stock Option Plan is
qualified in its entirety by the proposed form of Stock Option Plan filed as an
exhibit to the Registration Statement of which this Prospectus is a part.

1996 STOCK OPTION PLAN. The 1996 Chicago Pizza & Brewery, Inc. Stock Option
Plan (the "1996 Plan") is designed to promote and advance the interests of the
Company and its stockholders by (1) enabling the Company to attract, retain and
reward managerial and other key employees and non-employee directors and (2)
strengthening the mutuality of interests between participants in the 1996 Plan
and the stockholders of the Company in its long-term growth, profitability and
financial success by offering stock options.

SUMMARY OF THE 1996 PLAN. The 1996 Plan empowers the Company to award or
grant from time to time until May 31, 2006, to officers, directors, outside
consultants and employees of the Company and its subsidiaries, Incentive and
Non-Qualified Stock Options ("Options") authorized by the Stock Option Committee
of the Board of Directors (the "Committee") which will administer the 1996 Plan.

ADMINISTRATION. The 1996 Plan will be administered by the Committee. The
1996 Plan provides that the Committee must consist of at least two directors of
the Company who are "disinterested directors" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee has the sole authority to construe and interpret the 1996 Plan, to
make rules and procedures relating to the implementation of the 1996 Plan, to
select participants, to establish the terms and conditions of Options and to
grant Options, with broad authority to delegate its responsibilities to others,
except with respect to the selection for participation of, and the granting of
Options to, persons subject to Sections 16(a) and 16(b) of the Exchange Act.
Members of the Committee will not be eligible to receive discretionary Options
under the 1996 Plan.

ELIGIBILITY CONDITIONS. All employees (including officers) of the Company,
its subsidiaries, non-employee directors and outside consultants will be
eligible to receive Options under the 1996 Plan. Non-employee directors and
outside consultants are only eligible to receive Non-Qualified Stock Options
under the 1996 Plan. Except for Non-Qualified Stock Options granted to
non-employee directors, the selection of recipients of, and the nature and size
of, Options granted under the 1996 Plan will be wholly within the discretion of
the Committee. Subject to specific formula provisions relating to the grant of
options to non-employee directors and except with respect to the exercisability
of Incentive Stock Options and the total shares available for option grants
under the 1996 Plan, there is no limit on the number of shares of Common Stock
or type of option in respect of which Options may be granted to or exercised by
any person.

SHARES SUBJECT TO 1996 PLAN. The maximum number of shares of Common Stock
in respect of which Options may be granted under the 1996 Plan (the "Plan
Maximum") is 600,000. However, options for no more than 250,000 shares may be
issued to any optionee in any calendar year. For the purpose of computing the
total number of shares of Common Stock available for Options under the 1996
Plan, the above limitations shall be reduced by the number of shares of Common
Stock subject to issuance upon exercise or settlement of Options previously
granted, determined at the date of the grant of such Options. However, if any
Options previously granted are forfeited, terminated, settled in cash or
exchanged for other Options or expire unexercised, the shares of Common Stock
previously subject to such Options shall again be available for further grants
under the 1996 Plan. The shares of Common Stock which may be issued to
participants in the 1996 Plan upon exercise of an Option may be either
authorized and unissued Common Stock or issued Common Stock reacquired by the
Company. No fractional shares may be issued under the 1996 Plan.

52
<PAGE>
The maximum numbers of shares of Common Stock issuable upon the exercise of
Options granted under the 1996 Plan are subject to appropriate equitable
adjustment in the event of a reorganization, stock split, stock dividend,
combination of shares, merger, consolidation or other recapitalization of the
Company.

TRANSFERABILITY. No Option granted under the 1996 Plan, and no right or
interest therein shall be assignable or transferable by a participant except by
will or the laws of descent and distribution.

TERM, AMENDMENT AND TERMINATION. The 1996 Plan will terminate on May 31,
2006, except with respect to Options then outstanding. The Board of Directors of
the Company may amend or terminate the 1996 Plan at any time, except that, to
the extent restricted by Rule 16b-3 promulgated under the Exchange Act, as
amended and in effect from time to time (or any successor rule), the Board of
Directors may not, without approval of the Stockholders of the Company, make any
amendment that would increase the total number of shares covered by the 1996
Plan, change the class of persons eligible to receive Options granted under the
1996 Plan, reduce the exercise price of Options granted under the 1996 Plan or
extend the latest date upon which Options may be exercised.

INCENTIVE STOCK OPTIONS. Options designated as Incentive Stock Options,
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), in an amount up to the Plan Maximum may be granted under
the 1996 Plan. The number of shares of Common Stock in respect of which
Incentive Stock Options are first exercisable by any participant in the 1996
Plan during any calendar year shall not have a fair market value (determined at
the date of grant) in excess of $100,000 (or such other limit as may be imposed
by the Code). To the extent the fair market value of the shares for which
options are designated as Incentive Stock Options that are first exercisable by
any optionee during any calendar year exceed $100,000, the excess amount shall
be treated as Non-Qualified Stock Options. Incentive Stock Options shall be
exercisable for such period or periods, not in excess of ten years after the
date of grant, as shall be determined by the Committee.

NON-QUALIFIED STOCK OPTIONS. Non-Qualified Stock Options may be granted for
such number of shares of Common Stock and will be exercisable for such period or
periods as the Committee shall determine.

OPTIONS TO NON-EMPLOYEE DIRECTORS. The 1996 Plan also provides for the
grant of Options to non-employee directors of the Company without any action on
the part of the Board or the Committee, only upon the terms and conditions set
forth in the 1996 Plan. Each non-employee director shall automatically receive
Non-Qualified Options to acquire 25,000 shares of Common Stock upon appointment,
and shall receive Options to acquire an additional 10,000 shares of Common Stock
for each additional year that the non-employee director continues to serve on
the Board of Directors. Each Option shall become exercisable as to 50% of the
shares of Common Stock subject to the Option on the first anniversary date of
the grant and 50% on the second anniversary date of the grant, and will expire
on the earlier of ten years from the date the Option was granted, upon
expiration of the 1996 Plan or three months after the optionee ceases to be a
director of the Company (one year if due to the director's death or disability).
The exercise price of such Options shall be equal to 100% of the fair market
value of the Common Stock subject to the Option on the date on which such
Options are granted. Each Option shall be subject to the other provisions of the
1996 Plan.

OPTION EXERCISE PRICES. The exercise price of any Option granted under the
1996 Plan shall be at least 85% of the fair market value of the Common Stock on
the date of grant, except that the exercise price of any Option granted to any
participant in the 1996 Plan who owns in excess of 10% of the outstanding voting
stock of the Company shall be 110% of the fair market value of the Common Stock
on the date of grant. The exercise price of any Incentive Stock Options shall be
at least 100% of the fair market value on the date of grant. Fair market value
per share of Common Stock shall be determined as the closing price per share on
the last trading day if the Common Stock is listed on an established stock
exchange, or as the average of the closing bid and asked prices per share if the
Common Stock is quoted by the Nasdaq National Market, or as the amount
determined in good faith by the Committee

53
<PAGE>
if the Common Stock is neither listed for trading on an exchange or quoted by
the Nasdaq National Market. Options granted effective as of the closing date of
this Offering will have an exercise price equal to the initial public offering
price per share.

EXERCISE OF OPTIONS. Each option shall become exercisable according to the
terms specified in the Option Agreement. No Option may be exercised, except as
provided below, unless the holder thereof remains in the continuous employ or
service of the Company. No Options shall be exercisable after the earlier of ten
years from grant or three months after employment or service as a director of
the Company or its subsidiary terminates (one year if such termination is due to
the participant's death or disability). Options shall be exercisable upon the
payment in full of the applicable option exercise price in cash or, if approved
by the Committee, by instruction to a broker directing the broker to sell the
Common Stock for which such Option is exercised and remit to the Company the
aggregate exercise price of the Option or, in the discretion of the Plan
Administrator, upon such terms as the Committee shall approve, in shares of the
Common Stock then owned by the optionee (at the fair market value thereof at
exercise date). The Plan Administrator also has discretion to extend or arrange
for the extension of credit to the optionee to finance the purchase of shares on
exercise.

GRANT OF OPTIONS. In addition to the Options for 25,000 shares of Common
Stock each granted to the Company's four non-employee directors, the Company has
granted Options to certain executive officers of the Company, effective as of
the closing date of this Offering, at an exercise price based upon the initial
public offering price per share. The exercise price of such Options shall be
equal to 100% of the fair market value of the Common Stock subject to the Option
on the date on which such Options are granted. No more than 250,000 shares may
be granted to any optionee under any option in any calendar year. Each Option
shall become exercisable according to the terms specified in the individual
Option Agreement.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF DIRECTORS

Pursuant to provisions of the California General Corporation Law, the
Articles of Incorporation of the Company, as amended, include a provision which
eliminates the personal liability of its directors to the Company and its
shareholders for monetary damage to the fullest extent permissible under
California law. This limitation has no effect on a director's liability (i) for
acts or omissions that involve intentional misconduct or a knowing and culpable
violation of law, (ii) for acts or omissions that a director believes to be
contrary to the best interests of the Company or its shareholders or that
involve the absence of good faith on the part of the director, (iii) for any
transaction from which a director derived an improper personal benefit, (iv) for
acts or omissions that show a reckless disregard for the director's duty to the
Company or its shareholders in circumstances in which the director was aware, or
should have been aware, in the ordinary course of performing his or her duties,
of a risk of a serious injury to the Company or its shareholders, (v) for acts
or omissions that constitute an unexcused pattern of inattention that amounts to
an abdication of the director's duty to the Company or its shareholders, (vi)
under Section 310 of the California General Corporation Law (concerning
contracts or transactions between the Company and a director) or (vii) under
Section 316 of the California General Corporation Law (concerning directors'
liability for improper dividends, loans and guarantees). The provision does not
eliminate or limit the liability of an officer for any act or omission as an
officer, notwithstanding that the officer is also a director or that his
actions, if negligent or improper, have been ratified by the Board of Directors
of the Company. Further, the provision has no effect on claims arising under
federal or state securities or blue sky laws and does not affect the
availability of injunctions and other equitable remedies available to the
Company's shareholders for any violation of a director's fiduciary duty to the
Company or its shareholders.

The Company's Articles of Incorporation authorize the Company to indemnify
its officers, directors and other agents to the fullest extent permitted by
California law. The Company's Articles of Incorporation also authorize the
Company to indemnify its officers, directors and agents for breach of duty to
the corporation and its shareholders through bylaw provisions, agreements or
both, in excess of the indemnification otherwise provided under California law,
subject to certain limitations. The

54
<PAGE>
Company has entered into indemnification agreements with its non-employee
directors whereby the Company will indemnify each such person (an "indemnitee")
against certain claims arising out of certain past, present or future acts,
omissions or breaches of duty committed by an indemnitee while serving in his
employment capacity. Such indemnification does not apply to acts or omissions
which are knowingly fraudulent, deliberately dishonest or arise from willful
misconduct. Indemnification will only be provided to the extent that the
indemnitee has not already received payments in respect of a claim from the
Company or from an insurance company. Under certain circumstances, such
indemnification (including reimbursement of expenses incurred) will be allowed
for liability arising under the Securities Act.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.

The Company intends to purchase a directors' and officers' liability policy
insuring directors and officers of the Company effective upon the closing of
this Offering.

55
<PAGE>
PRINCIPAL SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1996 as to (a) each
director, (b) each executive officer identified in the Summary Compensation
Table, (c) all officers and directors of the Company as a group and (d) each
person who beneficially owns 5% or more of the outstanding shares of Common
Stock.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
-------------------------------------------------
PERCENT PERCENT
NUMBER OWNED PRIOR OWNED AFTER
NAME AND ADDRESS (2) OF SHARES TO THE OFFERING (3) THE OFFERING (3)
- ------------------------------------------------------------ --------- ------------------- ----------------
<S> <C> <C> <C>
Paul Motenko................................................ 658,857(4) 14.30% 10.79%
Jeremiah Hennessy........................................... 658,857(4) 14.30% 10.79%
Louis Habash................................................ 526,172(5) 11.42% 8.61%
ASSI, Inc................................................... 500,000(6) 10.85% 8.19%
Norton Herrick.............................................. 250,000 5.42% 4.09%
Barry Grumman............................................... 285,579(7) 6.20% 4.68%
Laura Parisi................................................ 0(8) 0% 0%
Alexander M. Puchner........................................ 0(8) 0% 0%
Stanley B. Schneider........................................ 0(8) 0% 0%
Stephen P. Monticelli....................................... 0(8) 0% 0%
Steven Mayer................................................ 0(8) 0% 0%
All directors and executive officers as a group (8
persons)................................................... 1,603,293 34.79% 26.25%
</TABLE>

- ------------------------
(1) The persons named in the table, to the Company's knowledge, have sole voting
and sole investment power with respect to all shares of Common Stock shown
as beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes hereunder. For
purposes of this table, information as to shares of Common Stock assumes
that the Underwriters' over-allotment options are not exercised and that the
Representative's Warrants are not exercised.

(2) The address of the aforementioned individuals is at the Company's principal
executive offices at 26131 Marguerite Parkway, Suite A, Mission Viejo,
California 92692.

(3) Shares of Common Stock which a person had the right to acquire within 60
days are deemed outstanding in calculating the percentage ownership of the
person, but not deemed outstanding as to any other person. The Percent Owned
Prior to the Offering is calculated based on 4,608,321 shares of Common
Stock outstanding as of the date hereof, which amount includes: (i) 500,000
shares of Common Stock to be issued to ASSI, Inc. and (ii) 250,000 shares of
Common Stock to be issued to Mr. Norton Herrick, all of which are to be
issued upon the completion of this Offering in connection with the financing
of the Pietro's Acquisition. See "Certain Transactions -- Pietro's
Acquisition." The Percent Owned After the Offering is calculated based upon
6,108,321 shares of Common Stock outstanding, assuming the issuance and sale
of all of the 1,500,000 Company Shares by the Company and no exercise of the
Underwriters' over-allotment options or the Representative's Warrants, and
does not include shares issuable upon exercise of any warrants issued by the
Company.

(4) Certain of the shares beneficially owned by Messrs. Motenko and Hennessy
have been pledged to the Sellers in the Roman Systems, Inc. acquisition. See
"Certain Transactions -- Acquisition of Restaurants and Intellectual
Property."

(5) Includes 26,172 shares held by Mr. Habash personally and 500,000 shares to
be issued to ASSI, Inc., a Nevada corporation controlled by Mr. Habash. (See
Footnote 3 above.)

56
<PAGE>
(6) ASSI, Inc. is controlled by Louis Habash, and its shares are also included
in Mr. Habash's beneficial ownership.

(7) Includes 184,862 shares of Common Stock which were issued to and retained by
Mr. Grumman upon completion of the Company's acquisition of certain
partnership interests owned by Mr. Grumman, 10,000 of which are held in a
Professional Corporation Money Purchase Plan of which Mr. Grumman is the
beneficiary. Does not include warrants to acquire up to 300,000 shares of
Common Stock issued to Mr. Grumman in May 1995 which are not currently
exercisable but are included in the Selling Security Holders' Redeemable
Warrants. See "Certain Transactions -- Private Placements."

(8) Does not include shares of Common Stock purchasable upon exercise of options
which may be granted to these individuals.

As a result of their share ownership and positions with the Company, Messrs.
Hennessy and Motenko may be deemed "parents" of the Company as defined pursuant
to the rules and regulations of the Securities and Exchange Commission. However,
in connection with the Pietro's Acquisition and certain consulting arrangements,
the Company has issued a significant percentage of shares and warrants which may
result in a change of control. See "Certain Transactions."

RESALE OF OUTSTANDING SECURITIES

This Prospectus relates to the sale by the Company of 1,500,000 shares of
Common Stock and 1,500,000 Redeemable Warrants for aggregate gross consideration
of $8,625,000 assuming an Offering price of $5.50 per Share and $0.25 per
Redeemable Warrant. A separate Prospectus is being filed with the Registration
Statement of which this Prospectus is a part, which relates in part to the sale
by the Selling Security Holders of 1,766,864 shares of Common Stock, 10,014,584
Selling Security Holders' Redeemable Warrants, and 10,014,584 shares of Common
Stock issuable upon exercise of the Selling Security Holders' Redeemable
Warrants. None of the Selling Security Holders' Shares, Selling Security
Holders' Redeemable Warrants, or shares issuable upon exercise of the Selling
Security Holders' Redeemable Warrants are being underwritten by the
Underwriters.

The Company will not receive any of the proceeds of the sale of the Selling
Security Holder's Shares, Selling Security Holders' Redeemable Warrants or
shares issuable upon exercise of the Selling Security Holders' Redeemable
Warrants, although it will receive the exercise price of such Selling Security
Holders' Redeemable Warrants when and if they are exercised. Except as described
in "Certain Transactions," none of the Selling Security Holders had any
position, office or material relationship with the Company or its affiliates
during the last three years. Of the Selling Security Holders, Mr. Barry Grumman
has been an independent director of the Company since 1994 and Mr. Stanley
Schneider is a current nominee to the Company's board of directors.

Prior to this offering, the Selling Security Holders collectively held
1,766,864 shares of Common Stock of the Company and warrants to purchase
10,014,584 shares of Common Stock of the Company. Assuming the sale of all such
Selling Security Holders' Shares and Selling Security Holders' Redeemable
Warrants which the respective Selling Security Holders are registering pursuant
to the separate Prospectus referred to above, the Selling Security Holders will
own approximately 1,008,820 shares of Common Stock of the Company after the
completion of such offering.

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CERTAIN TRANSACTIONS

ACQUISITION OF RESTAURANTS AND INTELLECTUAL PROPERTY

"BJ's Chicago Pizzeria" restaurants, as the Company's restaurants were
originally known, were established in Southern California in 1978 by entities
controlled by Michael L. Phillips ("Phillips") and William A. Cunningham, Jr.
("Cunningham"). Phillips and Cunningham built the chain to five locations in
Southern California by 1991.

The Company was formed in October 1991 by Paul Motenko ("Motenko") and Jerry
Hennessy ("Hennessy") to assume the management of the five existing "BJ's
Chicago Pizzeria" restaurants. In addition, the Company obtained the right to
use the trademarks, servicemarks, recipes and other intellectual property ("BJ's
Intellectual Property") from the owners of the five restaurants for use in the
development of additional "BJ's Chicago Pizzeria" restaurants. This arrangement
was pursuant to a management agreement ("Management Agreement") which gave the
Cunningham and Phillips entities certain guaranteed payments and rights in newly
developed BJ's restaurants. From the date of the Management Agreement through
December 1994, the Company opened five additional restaurants, the first in July
1992 followed by one more in 1993 and three in 1994. As discussed in detail
below, in January 1995 the Management Agreement was terminated in connection
with the closing of the Company's acquisition of the BJ's Intellectual Property
and three of the restaurants managed by the Company for the prior owners (the
"Acquisition").

Pursuant to the terms of an Asset Purchase Agreement, dated as of November
7, 1994 (the "Acquisition Agreement"), Roman Systems, Inc., a California
corporation, Bristol Restaurants, a California general partnership, William A.
Cunningham, Jr. and Michael L. Phillips (collectively, "Sellers") transferred to
the Company the three BJ's Chicago Pizzeria Restaurants located in Balboa in
Newport Beach, California, La Jolla and Laguna Beach, California, and all of the
right, title and interest of the Sellers in trademarks, trademark registrations,
servicemarks, menus, recipes, trade secrets and other know-how or intangible
property utilized in the operation of the BJ's Chicago Pizzeria Restaurants that
Sellers may own (the "BJ's Intellectual Property"). Two other restaurants,
located in Santa Ana and San Juan Capistrano, California, owned by Sellers were
not transferred. The Santa Ana and San Juan, Capistrano restaurants were
operated by the Company until such restaurants were sold in 1995.

Pursuant to the terms of the Acquisition Agreement, the payment by the
Company for the Acquisition was scheduled to occur in three parts: (i) a
$550,000 payment was made to Sellers by the Company simultaneously with the
closing of the Acquisition; (ii) a payment to Sellers of $38,195 per month for
108 consecutive months starting April 30, 1995, for a total of $4,125,060; and
(iii) a total of $875,000 was payable by the Company to Sellers from 15% of
adjusted net proceeds of additional equity offerings of the Company, provided
that any amounts which were not paid from a percentage of offerings by July 11,
1995 were to be paid at the rate of $25,000 per month until the payments to
Sellers from 15% of adjusted net equity offering proceeds plus the monthly
$25,000 payments totaled the $875,000 owed by the Company to Sellers. In
addition to the aforementioned consideration for the Acquisition, simultaneously
with the closing of the Acquisition the Company also issued 500,000 shares of
Common Stock of the Company to each of Mr. Cunningham and Mr. Phillips, which as
a result of the May 1995 stock split are currently equivalent to 174,480 shares
of Common Stock of the Company outstanding to each of Mr. Phillips and Mr.
Cunningham. The Company also assumed certain liabilities of the Sellers,
including approximately $873,000 in loans, accrued salaries, certain accounts
payable, sales tax payable and accrued operating expenses of the purchased
restaurants.

In regard to the Acquisition, the Company has granted Phillips a limited
license to operate up to four pizzeria restaurants in areas outside of
California and Hawaii or other areas where they may compete with the Company's
restaurants. These restaurants operated by Phillips or his family may use the
intellectual property associated with the operation of BJ's Chicago Pizzeria
restaurants, except for the name "BJ's" or any name so similar as to confuse the
public. The Company has been granted a right of first refusal to purchase the
restaurants of Phillips or his family if they are sold. A similar license has
been given to Cunningham for up to two restaurants. Pursuant to the Acquisition,

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the Company is obligated to provide Phillips and Cunningham, and their
respective spouses, with health insurance, or reimburse them for the cost of
mutually satisfactory arrangements regarding health insurance coverage, until
they each turn 65 years of age.

The Company assumed responsibility for the operation and divestment costs of
restaurants excluded from the purchase (Santa Ana and San Juan Capistrano,
California). At the time of purchase, January 1, 1995, a reserve for restaurant
closure totaling $157,000 was established for the operating and divestment costs
incurred by the restaurants excluded from the sale.

In connection with the Acquisition, Motenko and Hennessy have pledged all of
their stock for the benefit of Sellers. In the event of default, Sellers have
the right and ability to vote all of the stock so pledged by Motenko and
Hennessy. In addition, in event of a default, Sellers have the right to
foreclose upon and cause to be sold for their benefit half of the stock of
Motenko and Hennessy so pledged. An event of default will occur if, on four
occasions in any one calendar year, the Company shall fail to make a scheduled
payment due to Sellers which failure remains uncured for 30 days after the
Company's receipt of written notice of the failure until such time as Sellers
have received the $875,000 payment noted above. After such time, a default shall
be considered to have occurred under the Note if the Company shall fail to make
a scheduled payment under the Note which remains uncured for six months after
the debt is received after written notice of such failure. All payments have
been timely. The pledge shall remain in force and effect until the earlier of
the date upon which all amounts owed to Sellers in respect to the Acquisition
have been fully paid or both of the following have occurred: (i) the Company has
made the $875,000 payment to Sellers as specified above, and (ii) the Company
has registered its stock pursuant to the Securities Exchange Act of 1934 and its
Common Stock is listed or reported by a national/regional securities exchange or
market quotation system.

In addition, each of the three restaurants obtained by the Company pursuant
to the Acquisition have been pledged to Sellers to secure the payments owed to
Sellers.

As of March 31, 1996 the principal amount outstanding under the Acquisition
Agreement is $3,409,000. After the completion of this Offering and the
application of proceeds as set forth in "Use of Proceeds," the outstanding
principal amount under the Acquisition Agreement will be $2,783,000.

ACQUISITION AND SALE OF LIMITED PARTNERSHIP INTERESTS

The Company owned and/or operated restaurants in addition to those purchased
under the Acquisition Agreement through the acquisition and sale of limited
partnership interests. Restaurants in Belmont Shore and La Jolla -- Prospect
were both owned by limited partnerships, BJ's Belmont Shore, L.P. and BJ's La
Jolla, L.P., respectively. The general partner of each of these partnerships was
CPA-BG, Inc., a wholly-owned subsidiary of the Company that was transferred to
the Company for no consideration by Motenko and Hennessy prior to the closing of
the acquisition of the partnership interests.

Prior to the acquisition of the partnership interests, the sole limited
partner of BJ's Belmont Shore, L.P. was Barry Grumman ("Grumman"). The sole
limited partner of BJ's La Jolla, L.P. was BJ's La Jolla, Ltd., a limited
partnership of which Grumman was the sole general partner. In addition, pursuant
to an agreement dated November 14, 1994, Grumman and BJ's La Jolla, Ltd. agreed
to transfer all of their right, title and interest in BJ's Belmont Shore, L.P.
and BJ's La Jolla, L.P., respectively, for an aggregate of 226,824 shares of
Common Stock in the Company, which shares are valued at $.75 per share or
$170,118. The aggregate amount of liabilities assumed in the acquisition of the
limited partnership interests totaled $277,000, including $70,000 in acquisition
costs and $207,000 in assumed liabilities. $55,000 of the latter assumed
liabilities included capitalized equipment leases, sales tax payable and accrued
operating expenses of the purchased restaurants. Following the acquisition of
the partnership interests, both BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P.
were terminated, and CPA-BG, Inc. was merged into the Company.

The BJ's in Lahaina, Maui will continue to be owned by BJ's Lahaina, L.P., a
limited partnership. The two general partners of BJ's Lahaina, L.P. were CPA010,
Inc. and Blue Max, Inc. Blue Max, Inc. was wholly-owned by CPA010, Inc., which
was formerly owned by Motenko and Hennessy. Motenko

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and Hennessy transferred their ownership of such corporation to the Company for
nominal consideration prior to the closing of the acquisition of the partnership
interests. CPA010, Inc. has recently been merged into the Company. As a result,
the Company is currently the managing general partner of BJ's Lahaina, L.P. and
owns an approximately 54% interest in the partnership. The Company purchased the
54% interest for approximately $114,000, which interest consists of a 40%
general partnership interest and an approximately 14% limited partnership
interest.

CONSULTING AGREEMENT

On November 1, 1994 the Company entered into an agreement with Woodbridge
Holdings, Inc. ("WHI"), a consulting firm in Newport Beach, California. The
agreement was for services related to selection of professional advisers and
general corporate development. WHI was to assist the Company in the selection of
legal counsel and accountants, in designing public relations materials and
printed materials, in formulating a description of the Company's business plan,
in designing a stock compensation plan and negotiating for printing services.
The contract expired on May 1, 1995 and was not renewed. Actual services
provided by WHI were limited to logo printing design, printing arrangements and
selection of professionals. For its services in that period, WHI received
$60,000, from which WHI was required to pay for printing expenses. In addition,
for services rendered during that period, WHI received 69,792 shares of Common
Stock which were earned and issuable on May 1, 1995 and the right to receive an
additional 69,443 shares of Common Stock ("Additional Shares") issuable after
completion of an initial public offering, such as this Offering, by the Company.
The value attributed to the 69,792 shares earned and issuable to WHI as of May
1, 1995 is $0.75 per share or $52,344 and the value currently attributed to the
69,443 shares to be issued is $6.00 or $416,658. On August , 1996, on the
assumption that this Offering would close, the Company issued WHI the Additional
Shares. WHI has the right to have its shares registered by the Company at WHI's
cost.

PRIVATE PLACEMENTS

In January 1995, the Company raised $850,000 through a private placement of
17 Units at $50,000 per Unit, consisting of (i) a Series A Promissory Note in
the principal amount of $50,000 and due December 31, 1995 and (ii) 13,086 shares
of Common Stock. The Series A Promissory Notes bear interest, payable quarterly,
at a rate of 10% until June 30, 1995 and 13.5% thereafter. The proceeds of the
January 1995 private placement were used to close the Acquisition and for
working capital. The Series A Promissory Notes were repaid in the third quarter
of 1995 with proceeds from the September 1995 placement described below. The
shares issued in this placement are being registered concurrently with this
Offering and are included as Selling Security Holder Shares which may be sold by
the holders or respective transferees commencing on the date of this Prospectus.

In March 1995, the Company raised $400,000 through a private placement of
four Units at $100,000 per Unit, consisting of (i) a $98,000 promissory note
bearing interest at a rate of 10% per annum (the "Promissory Notes") with
interest and principal due upon the earlier of completion of an initial public
offering of the Company's Common Stock, or 18 months from the date of issuance
and (ii) warrants to purchase 34,896 shares of Common Stock at a price of $2.87
per share. The proceeds of the private placement were used for working capital.
The Promissory Notes were repaid in the third quarter of 1995 with proceeds from
the September 1995 private placement described below. Upon effectiveness of the
Registration Statement of which this Prospectus is a part, the warrants issued
in this placement convert into a like number of Redeemable Warrants which are
being registered concurrently with this Offering as Selling Security Holders'
Redeemable Warrants. The Selling Security Holders' Redeemable Warrants and all
of the shares issuable upon exercise of such Selling Security Holders'
Redeemable Warrants may be sold by the holders or respective transferees
commencing on the date of this Prospectus.

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Prospectus is a part, the warrants issued in this placement convert into a like
number of Redeemable Warrants which are being registered concurrently with this
Offering as Selling Security Holders' Redeemable Warrants. The Selling Security
Holders' Redeemable Warrants and all of the shares issuable upon exercise of
such Selling Security Holders' Redeemable Warrants may be sold by the holders or
respective transferees commencing on the date of this Prospectus.

In September 1995, the Company completed an offering of $6,100,000 in Units,
each consisting of 25,000 shares of Common Stock at a price of $3.85 per share
and 75,000 warrants at a price of $0.05 per warrant. Half of the shares issued
in this placement are being registered concurrently with this Offering and are
included in the Selling Security Holders' Shares. Upon effectiveness of the
Registration Statement of which this Prospectus is a part, all of the warrants
issued in this placement convert into a like number of Redeemable Warrants which
are also being registered concurrently with this Offering and are included in
the Selling Security Holders' Redeemable Warrants. As a result, half of the
shares, the Selling Security Holders' Redeemable Warrants and all of the shares
issuable upon exercise of such Selling Security Holders' Redeemable Warrants may
be sold by the holders or respective transferees commencing on the date of this
Prospectus.

In March 1996, there was a private placement of convertible debt to ASSI,
Inc. and Norton Herrick. See "-- Pietro's Acquisition."

Almost all of the Selling Security Holders are clients of the Representative
and are obligated to sell their respective Securities through the
Representative.

CERTAIN OTHER TRANSACTIONS AND CONFLICTS OF INTEREST

Paul Motenko and Jeremiah Hennessy advanced $204,028 to the Company in the
form of deferred salary ($125,000) and direct loans ($79,028). Messrs. Motenko
and Hennessy agreed to defer repayment of the loans without interest until all
of the Company's Series A Promissory Notes (the "Notes") issued in connection
with the January 1995 private placement were repaid. The direct loans to Messrs.
Motenko and Hennessy have not been paid; however, the Notes and deferred
salaries were repaid in 1995.

Pursuant to the terms of the Acquisition, Messrs. Motenko and Hennessy
pledged their ownership interest in the Company to Sellers. As a result, a
conflict of interest may exist between Messrs. Motenko and Hennessy and the
Company with respect to the determination of which obligations will be paid out
of the proceeds of this Offering or the Company's operating cash flow and when
such payments will be made. The Company also had notes payable to Sydney Feldman
in the amount of $40,000, which note accrued interest at a rate of 12%. This
note was repaid in 1995.

In addition, the Company currently has the following debt outstanding with
related parties: (i) a $100,000 note due and payable to Ms. Katherine Anderson,
a limited partner of BJ's Lahaina, L.P., the California limited partnership
which operates the Company's Lahaina, Maui restaurant, which note matures on
September 5, 1996 and bears interest at a rate of 19%, (ii) a $79,000 note due
on demand and payable to Paul Motenko, which note bears interest at a rate of 6%
and is referenced above in connection with certain advances by Mr. Motenko and
Mr. Hennessy and (iii) a $28,000 note due and payable to Harold Motenko, which
note matures on March 22, 1998 and bears interest at a rate of 12%. The Company
plans to pay the foregoing debt with proceeds from the sale of the Securities
offered hereby. See "Use of Proceeds."

Finally, in May 1995 the Company issued warrants to purchase up to 300,000
shares of Common Stock. The shares issuable upon exercise of the warrants are
currently valued at $21,000. Mr. Grumman's liability for payment of the warrants
was extinguished in consideration for past services as a director of the Company
which were not previously compensated.

Management believes that the transactions with the officers and/or
shareholders of the Company and their affiliates were made in terms no less
favorable than would have occurred with unaffiliated third parties. The Company
has adopted a policy not to engage in transactions with officers, directors,

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principal shareholders or affiliates of any of them unless such actions have
been approved by a majority of the disinterested directors and are upon terms no
less favorable to the Company than could be obtained from an unaffiliated third
party in an arms length transaction.

PIETRO'S ACQUISITION

In order to finance the Pietro's Acquisition, on February 20, 1996, the
Company sold to ASSI, Inc. and to Mr. Norton Herrick for $2,000,000 and
$1,000,000, respectively, certain convertible notes (the "Convertible Notes")
pursuant to certain note purchase agreements (the "Note Purchase Agreements")
with substantially similar terms. Under the Note Purchase Agreements, the
Company issued to each of ASSI, Inc. and to Mr. Herrick, Convertible Notes in
the principal amounts of $2,000,000 and $1,000,000, respectively, which
Convertible Notes both convert simultaneously with the closing of this Offering.
The Convertible Note issued to ASSI, Inc. converts into 500,000 shares of Common
Stock and into Special Warrants to purchase 3,000,000 shares of Common Stock.
See "Description of Securities -- Redeemable Warrants." The Convertible Note
issued to Mr. Herrick converts into 250,000 shares of Common Stock and into
Special Warrants to purchase 1,500,000 shares of Common Stock. The 4,700,000
Redeemable Warrants into which the 4,700,000 Special Warrants convert upon sale
of the Special Warrants by the current holders or their affiliates are included
in the Selling Security Holders' Redeemable Warrants. In addition, in connection
with the above financing, the Company has agreed subject to the terms of the
Note Purchase Agreements, to use its best reasonable efforts to cause one
individual designated by each of ASSI, Inc. and Mr. Norton Herrick to be elected
to the Board of Directors of the Company or to have such selected individuals
attend all meetings of the Board of Directors as non-voting advisors. ASSI,
Inc's current nominee to the Board of Directors of the Company is Mr. Stephen
Monticelli. Mr. Herrick's current nominee to the Board of Directors is Mr.
Steven Mayer. See "Principal Shareholders."

In connection with the Pietro's Acquisition, the Company has also assumed
liability to Edward Peabody and Christopher Wheeler in the amount of $25,000 in
exchange for which Messrs. Peabody and Wheeler agreed to release the Company and
its subsidiary, Chicago Pizza Northwest, Inc., for any and all other finder's
fees related to the Pietro's Acquisition.

On February 20, 1996, the Company entered into a consulting agreement with
ASSI, Inc. regarding the Pietro's Acquisition (the "Pietro's Consulting
Agreement"). Under this Agreement, ASSI, Inc. agrees to advise the Company in
connection with the reconstruction, expansion, marketing and strategic
development of the restaurants acquired from Pietro's. In consideration for such
services, the Company shall pay to ASSI, Inc. an annual fee equal to 5% of Net
Profits (as hereinafter defined) of the restaurants acquired under the plan of
reorganization and retained by the Company. As additional consideration for the
consulting services, the Company has issued to ASSI, Inc. an additional
aggregate of 100,000 Special Warrants to purchase shares of common stock of the
Company. These Special Warrants convert into Redeemable Warrants upon their sale
by the current holders or their affiliates and such Redeemable Warrants are also
included in the Selling Security Holders' Redeemable Warrants. See "Description
of Securities -- Redeemable Warrants." The Pietro's Consulting Agreement
terminates on December 31, 2000.

For purposes of the Vegas Consulting Agreements (as hereinafter defined) and
the Pietro's Consulting Agreement, "Net Profits" shall mean net profits of the
respective operations as determined under generally accepted accounting
principles ("GAAP") before payment of the Annual Fee, less income, franchise and
like taxes. In addition, GAAP is to be applied as if the acquired operations
were owned in a stand-alone, separate legal entity and without regard to: (i)
parent company overhead which is not directly attributable to the acquired
operations and (ii) any amortization of goodwill related to the acquisition of
the respective acquired operations.

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OTHER CONSULTING ARRANGEMENTS

On February 20, 1996, the Company entered into a consulting agreement with
ASSI, Inc. (the "Vegas Consulting Agreement") pursuant to which ASSI, Inc.
agrees to advise the Company with site selection and marketing and development
strategy for penetrating the Las Vegas, Nevada market. In consideration for such
services, the Company shall pay to ASSI, Inc. an annual fee (the "Annual Fee")
equal to 10% of Net Profits (as hereinafter defined) of the acquired Las Vegas
restaurants. As additional consideration for the consulting services, the
Company has issued to ASSI, Inc. an aggregate of 100,000 Special Warrants. The
Vegas Consulting Agreement terminates on December 31, 2000. These Special
Warrants convert into Redeemable Warrants upon their sale by the current holders
or their affiliates and such Redeemable Warrants are included in the Selling
Security Holders' Redeemable Warrants. See "Description of Securities --
Redeemable Warrants."

In summary, under the Pietro's Consulting Agreement, ASSI, Inc. will be
entitled to a total consideration of 5% of Net Profits of the Pietro's
Restaurants acquired and retained by the Company plus 100,000 Special Warrants
to purchase shares of Common Stock of the Company. Under the Vegas Consulting
Agreement ASSI, Inc. will be entitled to a total consideration of 10% of Net
Profits of restaurants acquired in Las Vegas plus 100,000 Special Warrants to
purchase shares of Common Stock of the Company. Finally, pursuant to the
financing of the Pietro's Acquisition, ASSI, Inc. will be entitled to 500,000
shares of Common Stock of the Company and 3,000,000 Special Warrants to purchase
shares of Common Stock of the Company. See "-- Pietro's Acquisition." All of the
Special Warrants to which ASSI, Inc. is entitled convert into Redeemable
Warrants upon their sale by the current holders or their affiliates and such
Redeemable Warrants are included in the Selling Security Holders' Redeemable
Warrants.

SALE OF RESTAURANTS

The Company and CPNI entered into an Asset Purchase Agreement (the "Abby's
Purchase Agreement") dated May 15, 1996 with A-II L.L.C. ("A-II") and Abby's,
Inc., pursuant to which CPNI agreed to sell to A-II substantially all of the
assets and liabilities of seven of the restaurants acquired from Pietro's. All
of the sales transactions were completed during the second quarter of 1996. The
restaurants sold were located in Richland, Kennewick and Yakima, Washington, and
in Albany, Madras, Redmond, and Bend, Oregon. Under the terms of the Abby's
Purchase Agreement, Abby's agreed to pay total consideration of $1,000,000, to
be adjusted for certain deposits, liabilities assumed and inventory levels. The
Abby's Purchase Agreement further provided that $400,000 of the consideration
was to be paid on May 31, 1996, concurrent with the closing of the sale of the
Bend and Albany restaurants, with the remainder payable on July 1, 1996. The
sale of the Albany and Bend restaurants was consummated on May 31, 1996, and the
$400,000 of consideration, plus an aggregate of $150,000 as an earnest money
deposit for purchase of the balance of the seven restaurants was paid. $100,000
of the $150,000 earnest money deposit was paid directly to CPNI as of that date
and the remaining $50,000 was held in a trust account. Under the Abby's Purchase
Agreement, the Company and CPNI also agreed to not become affiliated with any
pizza-style restaurant or any restaurant with a menu substantially similar to
those restaurants operated by CPNI in any of the cities of Yakima, Kennewick,
and Richland, Washington, or Albany, Madras, Redmond and Bend, Oregon, for a
period of three years from the date of the Abby's Purchase Agreement. Finally,
under the Abby's Purchase Agreement, the Company has granted A-II the right to
use trademarks associated with Pietro's for a period of four months in the case
of the Albany restaurant and a period of one year in the case of the other six
restaurants to be sold by the Company.

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DESCRIPTION OF SECURITIES

The Company's authorized capital stock consists of 60,000,000 shares of
Common Stock, no par value, and 5,000,000 shares of Preferred Stock, no par
value. As of the date hereof, there were 4,608,321 shares of Common Stock
outstanding, held by 104 persons or entities, and no shares of Preferred Stock
outstanding.

COMMON STOCK

The holders of outstanding Common Stock are entitled to receive dividends
out of assets legally available therefor at such times and in such amounts as
the Board of Directors may from time to time determine. The Company has no
present intention of paying dividends on its Common Stock. See "Dividend
Policy." Upon liquidation, dissolution or winding up of the Company, and subject
to the priority of any outstanding Preferred Stock, the assets legally available
for distribution to shareholders are distributable ratably among the holders of
the Common Stock at the time outstanding.

No holder of shares of Common Stock has a preemptive right to subscribe to
future issuances of securities by the Company. Accordingly, all investors in
this Offering will suffer dilution of their percentage interest in the Company
upon future sales of Common Stock or securities convertible into Common Stock.

Holders of Common Stock are entitled to cast one vote for each share held of
record on all matters presented to shareholders, other than with respect to the
election of directors, for which cumulative voting is currently required under
certain circumstances by applicable provisions of California law. Under
cumulative voting, each shareholder may give any one candidate whose name is
placed in nomination prior to the commencement of voting a number of votes equal
to the number of directors to be elected, multiplied by the number of votes to
which the shareholder's shares are normally entitled, or distribute such number
of votes among as many candidates as the shareholder sees fit. The effect of
cumulative voting is that the holders of a majority of the outstanding shares of
Common Stock may not be able to elect all of the Company's directors. The Common
Stock will be, when issued pursuant to the terms of this Prospectus, fully paid
and nonassessable.

PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares of Preferred Stock. The
Company's Board of Directors is authorized to issue the Preferred Stock in one
or more series and, with respect to each series, to determine the preferences
and rights and the qualifications, limitations or restrictions thereof,
including the dividends rights, conversion rights, voting rights, redemption
rights and terms, liquidation preferences, sinking fund provisions, the number
of shares constituting the series and the designation of such series. The Board
of Directors could, without shareholder approval, issue Preferred Stock with
voting and other rights that could adversely affect the voting rights of the
holders of Common Stock and could have certain anti-takeover effects.

REDEEMABLE WARRANTS

The following is a brief summary of certain provisions of the Redeemable
Warrants, but such summary does not purport to be complete and is qualified in
all respects by reference to the actual text of the warrant agreement between
the Company and The Boston Group, L.P., as warrant solicitation agent (the
"Warrant Agreement"). A copy of the Warrant Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. See
"Additional Information."

Each Redeemable Warrant entitles the holder thereof to purchase, at any time
during the 54-month period commencing one year after the date of this
Prospectus, one share of Common Stock at a price of 110% of the initial public
offering price per share, subject to adjustment in accordance with the
anti-dilution and other provisions referred to below.

The Redeemable Warrants are subject to redemption by the Company, at any
time, commencing one year after the date of this Prospectus, at a price of $.25
per Redeemable Warrant if the average closing bid price of the Common Stock
equals or exceeds 140% of the initial public offering price per

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share for any 20 trading days within a period of 30 consecutive trading days
ending on the fifth trading day prior to the date of notice of redemption.
Redemption of the Redeemable Warrants can be made only after 30 days notice,
during which period the holders of the Redeemable Warrants may exercise the
Redeemable Warrants. If the Redeemable Warrants are redeemed, the holders
thereof may lose the benefit of the difference between the market price of the
underlying Common Stock as of such date and the exercise price of such
Redeemable Warrants, as well as any possible future price appreciation in the
Common Stock. Notwithstanding the above, the Special Warrants described below
are not redeemable until sold by the current holder or their affiliates.

The exercise price and the terms of the Redeemable Warrants bear no relation
to any objective criteria of value and should in no event be regarded as an
indication of any future market price of the Securities offered hereby.

The exercise price and the number of shares of Common Stock purchasable upon
the exercise of the Redeemable Warrants are subject to adjustment upon the
occurrence of certain events, including stock dividends, stock splits,
combinations or reclassification on or of the Common Stock and issuances of
shares of Common Stock for a consideration less than the exercise price of the
Redeemable Warrants. Additionally, an adjustment would be made in the case of a
reclassification or exchange of Common Stock, consolidation or merger of the
Company with or into another corporation or sale of all or substantially all of
the assets of the Company in order to enable holders of Redeemable Warrants to
acquire the kind and number of shares of stock or other securities or property
receivable in such event by a holder of the number of shares that might
otherwise have been purchased upon the exercise of the Redeemable Warrant. No
adjustments will be made unless such adjustment would require an increase or
decrease of at least $.10 or more in such exercise price. No adjustment to the
exercise price of the shares subject to the Redeemable Warrants will be made for
dividends (other than stock dividends), if any, paid on the Common Stock.

The Redeemable Warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date at the offices of the Warrant
Agent, with the exercise form on the reverse side of the certificate completed
and executed as indicated, accompanied by full payment of the exercise price (by
certified check payable to the Company) to the Warrant Agent for the number of
Redeemable Warrants being exercised. The holders of Redeemable Warrants do not
have the rights or privileges of holders of Common Stock.

No Redeemable Warrant will be exercisable unless at the time of exercise the
Company has filed a current prospectus with the Securities and Exchange
Commission (the "Commission") covering the shares of Common Stock issuable upon
exercise of such Redeemable Warrant and such shares have been registered or
qualified or deemed to be exempt under the securities laws of the jurisdiction
of residence of the holder of such Redeemable Warrant. The Company will use its
best efforts to have all such shares so registered or qualified on or before the
exercise date and to maintain a current prospectus relating thereto until the
expiration of the Redeemable Warrants, subject to the terms of the Warrant
Agreement. While it is the Company's intention to do so, there is no assurance
that it will be able to do so. This Prospectus initially covers the shares
issuable upon exercise of the Redeemable Warrants.

No fractional shares will be issued upon exercise of the Redeemable
Warrants. However, if a warrantholder exercises all Redeemable Warrants then
owned of record by him, the Company will pay to such warrantholder, in lieu of
the issuance of any fractional share which is otherwise issuable, an amount in
cash based on the market value of the Common Stock on the last trading day prior
to the exercise date.

The Selling Security Holders' Redeemable Warrants include 4,700,000 Special
Warrants, which convert into Redeemable Warrants upon sale by the current
holders or their affiliates. By definition, these Special Warrants are governed
by the same terms as the Redeemable Warrants offered hereby with the exception
that subject to certain conditions, the Special Warrants are not subject to any
rights which the Company may have to call the Redeemable Warrants offered hereby
for redemption

65
<PAGE>

and these Special Warrants provide for certain additional demand and piggy-back
registration rights so long as owned by their current owners or affiliates, but
when sold by said owners convert into Redeemable Warrants. See "Certain
Transactions -- Pietro's Acquisition."

TRANSFER AGENT AND REDEEMABLE WARRANTS AGENT

U.S. Stock Transfer Corporation, Glendale, California is the transfer agent
and registrar for the shares of Common Stock and warrant agent for the
Redeemable Warrants.

SHARES ELIGIBLE FOR FUTURE SALE

All outstanding shares prior to this Offering are restricted securities
under Rule 144 under the Securities Act of 1933. However, of these restricted
securities the 1,766,864 shares held by the Selling Security Holders may be sold
at any time in the over the counter market and an additional 2,730,052 shares
will be eligible for resale in the near future under Rule 144. However,
1,317,714 of such 2,730,052 shares include shares held by officers and directors
who, including the Selling Director with respect to shares and warrants not
included in the Selling Security Holder Securities, have agreed not to sell
their shares for one year after the date hereof without the written consent of
the Representative. See "Underwriting." In general, under Rule 144, a person (or
persons whose shares are aggregated) holding restricted securities who has
satisfied a two-year holding period may, commencing 90 days after the date
hereof, under certain circumstances, sell within any three-month period that
number of shares which does not exceed the greater of 1% of the then outstanding
shares of Common Stock or the average weekly reported trading volume during the
four calendar weeks prior to such sale. Rule 144 also permits, under certain
circumstances, the sale of shares without any quantity limitation by a person
who has satisfied a three-year holding period and who is not, and has not been
for the preceding three months, an affiliate of the Company. The Securities and
Exchange Commission has proposed to shorten the two year and three year holding
periods of Rule 144 to one year and two years, respectively. If such holding
periods are shortened, the holders of restricted securities could accelerate the
date that they could sell their shares. Future sales under Rule 144 or by the
Selling Security Holders (including sales of the Selling Security Holders'
Redeemable Warrants and the shares issuable upon exercise of the Selling
Security Holders' Redeemable Warrants) may have an adverse effect on the market
price of the shares of Common Stock or Redeemable Warrants should a public
market develop for such Securities.

66
<PAGE>
UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
(the form of which has been filed as an exhibit to the registration statement of
which this Prospectus is a part), the Underwriters named below (the
"Underwriters"), represented by the Boston Group, L.P. (the "Representative")
have severally agreed to purchase from the Company, as applicable, the
respective number of Shares and the respective number of Redeemable Warrants set
forth opposite their name in the table below. The Underwriting Agreement
provides that the obligations of the Underwriters are subject to certain
conditions precedent, and that the Underwriters will be obligated, as set forth
in the Underwriting Agreement, to purchase all of the 1,500,000 Shares and
1,500,000 Redeemable Warrants being offered hereby, excluding shares and
warrants covered by the over-allotment options granted to the Underwriters, if
any are purchased.

<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
UNDERWRITER SHARES REDEEMABLE WARRANTS
- ---------------------------------------------------------- ----------- --------------------
<S> <C> <C>
The Boston Group, L.P.....................................

----------- ----------
Total................................................... 1,500,000 1,500,000
----------- ----------
----------- ----------
</TABLE>

Through the Representative, the Underwriters have advised the Company that
the Underwriters propose to offer the Shares and the Redeemable Warrants to the
public initially at the public offering prices set forth on the cover page of
this Prospectus and may offer the Shares and Redeemable Warrants to selected
dealers at such prices less a concession of not more than $ per Share and
$ per Redeemable Warrant. The Underwriters may allow, and such dealers may
reallow, a concession of not more than $ per Share and $ per Redeemable
Warrant on sales to certain other dealers. The initial public offering prices
and concessions and reallowances to dealers may be changed by the Underwriters.

The Company has granted the Underwriters an option, exercisable within 45
days after the date of this Prospectus, to purchase up to an aggregate of an
additional 225,000 Shares and 225,000 Redeemable Warrants from the Company, at
the same price per share and per Redeemable Warrant being paid by the
Underwriters for the other Shares and Redeemable Warrants offered hereby. To the
extent that the Underwriters exercise such option, each of the Underwriters will
have, subject to certain conditions, a firm commitment, as set forth in the
Underwriting Agreement, to purchase approximately the same percentage of the
additional Shares and Redeemable Warrants that the number of Shares of Stock and
Redeemable Warrants to be purchased by it shown in the above table bears to
1,500,000 and the Company will be obligated, pursuant to the option, to sell
such Shares to the Underwriters.

The Company has agreed to grant to the Representative, effective upon the
closing of the Offering, the right to nominate from time to time one individual
to be a director of the Company or to have an individual selected by the
Representative attend all meetings of the Board of Directors of the Company as a
non-voting advisor. The Company has agreed to indemnify and hold harmless such
director or advisor to the maximum extent permitted by law in connection with
such individual's service as a director or advisor. At this time, however, the
Representative has waived his right to nominate a director.

The Company has agreed to pay to the Representative a non-accountable
expense allowance equal to 3% of the gross proceeds from the sale of all Shares
and Redeemable Warrants offered hereby,

67
<PAGE>
including shares and warrants sold to cover over-allotments, if any. The Company
has agreed to sell to the Representative for an aggregate of $100 the
Representative's Warrants to purchase up to 150,000 shares of Common Stock at an
exercise price of 120% of the initial public offering price per share of Common
Stock. Underlying the Representative's Warrants are an additional 150,000
Redeemable Warrants to purchase up to an additional 150,000 shares of Common
Stock. The Representative's Warrants may not be transferred for one year, except
to officers or partners of the Representative, and are exercisable during the
four-year period commencing one year from the date of this Prospectus. The
Representative's Warrants grant to the holder(s) thereof piggy-back registration
rights for a period of seven years after the date of this Prospectus with
respect to the Representative's Warrants and the securities issuable upon
exercise of the Representative's Warrants. Holders of the Representative's
Warrants have the right to demand, for a period of five years after the date of
this Prospectus, that the Company prepare and file two registration statements
covering the sale of the Representative's Warrants and the securities issuable
upon exercise of the Representative's Warrants, one of which is to be prepared
at the expense of the Company.

During the term of the Representative's Warrants, the holders are given the
opportunity (upon exercise thereof) to profit from a rise in the market price of
the Common Stock, if any, causing dilution in the interests of other
shareholders. Further, the holders may exercise the Representative's Warrants at
a time when the Company would in all likelihood be able to obtain equity capital
on terms more favorable than those provided in the Representative's Warrants.

All of the Company's officers and directors, including the Selling Director
with respect to such shares and warrants which are not included in the Selling
Security Holders' Securities, have agreed not to directly or indirectly offer,
offer to sell, sell, grant an option to purchase or sell, transfer, assign,
pledge, hypothecate or otherwise encumber any shares of Common Stock owned by
them for a period of one year from the date of this Prospectus without the prior
written consent of the Representative.

The Company has agreed, in connection with the exercise of Redeemable
Warrants pursuant to solicitation by the Representative (commencing one year
from the date of this Prospectus), to pay to the Representative a fee of 5% of
the Redeemable Warrant exercise price of which % may be reallowed to any
dealer who solicited the exercise (which may also be the Representative) for
each Redeemable Warrant exercised, provided, however, that the Representative
will not be entitled to receive such compensation in any Redeemable Warrant
exercise transactions in which (i) the market price of the Common Stock of the
Company at the time of exercise is lower than the exercise price of the
Redeemable Warrants; (ii) the Redeemable Warrants are held in any discretionary
account; (iii) disclosure of compensation arrangements is not made, in addition
to the disclosure provided in this Prospectus, in documents provided to holders
of the Redeemable Warrant at the time of exercise; (iv) the exercise of the
Redeemable Warrants is unsolicited; (v) after the Company has called the
Redeemable Warrants for redemption; and (vi) the solicitation of exercise of the
Redeemable Warrants was in violation of Rule 10b-6 promulgated under the
Securities Exchange Act of 1934, as amended. In addition, unless granted an
exemption by the Commission from Rule 10b-6, the Representative will be
prohibited from engaging in any market-making activities or solicited brokerage
activities with regard to the Company's securities during the period prescribed
by Rule 10b-6 before the solicitation of the exercise of any Redeemable Warrant
until the later of (i) the termination of such solicitation activity or (ii) the
termination by waiver or otherwise of any right the Representative may have to
receive a fee for the exercise of the Redeemable Warrants following such
solicitations. The Company has agreed not to solicit warrant exercises other
than through the Representative.

The Representative has informed the Company that no sales to any accounts
over which it exercises discretionary authority will be made in this Offering.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.

Prior to this Offering, there has not been an established public market for
the Common Stock or Redeemable Warrants. The initial public offering price of
the Shares and Redeemable Warrants

68
<PAGE>
offered hereby and the exercise price and other terms of the Representative's
Warrants have been determined by negotiations between the Company and the
Representative. The major factors considered in determining the public offering
price of the Shares and the Redeemable Warrants were the prevailing market
conditions, the market prices relative to earnings, cash flow and assets for
publicly traded common stocks of comparable companies, the sales and earnings of
the Company and comparable companies in recent periods, the Company's earning
potential, the experience of its management and the position of the Company in
the industry.

For certain transactions between the Company and the Representative, see
"Certain Transactions -- Pietro's and Other Proposed Acquisitions."

LEGAL MATTERS

The validity of the issuance of the Common Stock and Redeemable Warrants
offered hereby will be passed upon for the Company by Jeffer, Mangels, Butler &
Marmaro LLP, Los Angeles, California. Certain legal matters will be passed upon
for the Underwriters by Kaye, Scholer, Fierman, Hays & Handler, LLP.

EXPERTS

The consolidated balance sheet of Chicago Pizza & Brewery, Inc. as of
December 31, 1995, the combined statements of operations, shareholders' equity
and cash flows for the year ended December 31, 1994 and the consolidated
statements of operations, shareholders' equity and cash flows for the year ended
December 31, 1995, included in this Prospectus and Registration Statement, have
been included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

The combined balance sheet of Pietro's Corp.'s Business Related to Purchased
Assets as of December 25, 1995 and the combined statements of operations, equity
and cash flows for the year ended December 26, 1994 and the year ended December
25, 1995, included in this Prospectus and Registration Statement, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a registration statement under the Securities
Act with respect to the Shares and Redeemable Warrants. This Prospectus omits
certain information contained in said registration statement as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the Common Stock and Redeemable Warrants, reference is made to
such registration statement, including the exhibits thereto. Statements
contained herein concerning the contents of any contract or any other document
are not necessarily complete, and in each instance, reference is made to such
contract or other document filed with the Commission as an exhibit to the
registration statement, or otherwise, each such statement being qualified in all
respects by such reference. The registration statement, including exhibits and
schedules thereto, may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, at the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and at the New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048. Copies of such materials can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

69
<PAGE>
CHICAGO PIZZA & BREWERY, INC.

INDEX TO COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS

------------------------

PAGE
----
Report Of Independent Accountants......................................... F-2
Consolidated Balance Sheets As Of December 31, 1995, March 31, 1996
(Unaudited) And March 31, 1996 (Unaudited Pro Forma)..................... F-3
Combined Statement Of Operations For The Year Ended December 31, 1994 And
Consolidated Statements Of Operations For The Year Ended December 31,
1995 And For The Three-Month Periods Ended March 31, 1995 (Unaudited) And
1996 (Unaudited)......................................................... F-4
Combined Statement Of Shareholders' Equity For The Year Ended December 31,
1994 And Consolidated Statements Of Shareholders' Equity For The Year
Ended December 31, 1995 And For The Three-Month Period Ended March 31,
1996 (Unaudited)......................................................... F-5
Combined Statement Of Cash Flows For The Year Ended December 31, 1994 And
Consolidated Statements Of Cash Flows For The Year Ended December 31,
1995 And For The Three-Month Periods Ended March 31, 1995 (Unaudited) And
1996 (Unaudited)......................................................... F-6
Notes To Combined And Consolidated Financial Statements................... F-7

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

------------------------

To the Investors and Shareholders
Chicago Pizza & Brewery, Inc.

We have audited the accompanying consolidated balance sheet of Chicago Pizza
& Brewery, Inc., as identified in Note 1 of the Notes To Combined And
Consolidated Financial Statements (referred to as the "Company"), as of December
31, 1995, and the related combined and consolidated statements of operations,
shareholders' equity, and cash flows for the years ended December 31, 1994 and
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Chicago Pizza &
Brewery, Inc. as of December 31, 1995, and the combined and consolidated results
of their operations and their cash flows for the years ended December 31, 1994
and 1995, in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Los Angeles, California
June 14, 1996

F-2
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
CONSOLIDATED BALANCE SHEETS

------------------------

ASSETS:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ MARCH 31, MARCH 31,
1996 1996
----------- -----------
(UNAUDITED) (UNAUDITED
PRO FORMA)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents........................................... $ 1,791,769 $ 1,537,224 $ 1,537,224
Restricted cash..................................................... 200,000 362,116 362,116
Accounts receivable................................................. 11,100 113,027 113,027
Inventory........................................................... 62,525 243,049 243,049
Prepaids and other current assets................................... 285,432 1,087,631 697,631
------------ ----------- -----------
Total current assets............................................ 2,350,826 3,343,047 2,953,047
Property and equipment, net........................................... 1,870,531 5,717,310 5,717,310
Other assets.......................................................... 163,608 396,960 396,960
Restricted cash....................................................... 200,000 200,000
Intangible assets, net................................................ 5,558,244 6,278,988 6,278,988
------------ ----------- -----------
Total assets.................................................... $ 9,943,209 $15,936,305 $15,546,305
------------ ----------- -----------
------------ ----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable.................................................... $ 446,597 $ 1,670,878 $ 1,670,878
Accrued expenses.................................................... 900,326 1,537,003 1,537,003
Notes payable to related parties.................................... 967,474 4,296,016 1,296,016
Notes payable, current.............................................. 504,070 504,070
Current portion of obligations under capital lease.................. 14,655 14,655 14,655
------------ ----------- -----------
Total current liabilities....................................... 2,329,052 8,022,622 5,022,622
Notes payable to related parties...................................... 3,122,761 2,801,853 2,801,853
Obligations under capital lease....................................... 22,239 18,596 18,596
Notes payable......................................................... 980,619 980,619
Minority interest in partnerships..................................... 252,541 265,827 265,827
Other liabilities..................................................... 193,167 190,308 190,308
------------ ----------- -----------
Total liabilities............................................... 5,919,760 12,279,825 9,279,825
------------ ----------- -----------
Commitments (Note 8)
Shareholders' equity:
Preferred stock, 5,000,000 shares authorized, none issued or
outstanding
Common stock, no par value, 20,000,000 and 30,000,000 shares
authorized as of December 31, 1995 and March 31, 1996,
respectively, 3,788,878 shares issued and outstanding as of
December 31, 1995 and March 31, 1996 and 4,608,321 shares
(unaudited pro forma) as of March 31, 1996......................... 5,568,467 5,568,467 8,343,467
Capital surplus..................................................... 278,750 278,750 503,750
Accumulated deficit................................................. (1,823,768) (2,190,737) (2,580,737)
------------ ----------- -----------
Total shareholders' equity...................................... 4,023,449 3,656,480 6,266,480
------------ ----------- -----------
Total liabilities and shareholders' equity...................... $ 9,943,209 $15,936,305 $15,546,305
------------ ----------- -----------
------------ ----------- -----------
</TABLE>

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

F-3
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS

------------------------

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE-MONTH PERIODS
DECEMBER 31, ENDED MARCH 31,
----------------------- ----------------------
1994 1995 1995 1996
---------- ----------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.............................................................. $6,452,582 $ 6,586,195 $1,581,897 $1,768,255
Cost of sales......................................................... 1,638,068 1,848,282 432,851 546,098
---------- ----------- ---------- ----------
Gross profit.................................................... 4,814,514 4,737,913 1,149,046 1,222,157
---------- ----------- ---------- ----------
Costs and expenses:
Labor and benefits.................................................. 2,706,463 2,647,089 634,908 748,871
Occupancy........................................................... 653,804 654,138 151,766 125,143
Operating expenses.................................................. 1,330,750 1,249,418 279,017 299,983
General and administrative.......................................... 473,699 878,681 146,911 227,454
Depreciation and amortization....................................... 173,449 359,282 92,684 109,664
---------- ----------- ---------- ----------
Total cost and expenses......................................... 5,338,165 5,788,608 1,305,286 1,511,115
---------- ----------- ---------- ----------
Loss from operations............................................ (523,651) (1,050,695) (156,240) (288,958)
Other income (expense):
Interest expense, net............................................... (118,841) (471,653) (330,926) (63,106)
Other............................................................... (33,741) (104,000) 2,262
---------- ----------- ---------- ----------
Total other expense............................................. (152,582) (575,653) (330,926) (60,844)
---------- ----------- ---------- ----------
Loss before minority interest and taxes......................... (676,233) (1,626,348) (487,166) (349,802)
Minority interest in partnerships..................................... 132,165 26,828 17,405 (13,286)
---------- ----------- ---------- ----------
Loss before taxes............................................... (544,068) (1,599,520) (469,761) (363,088)
Income tax expense.................................................... (6,400) (6,400) (800) (3,881)
---------- ----------- ---------- ----------
Net loss........................................................ $ (550,468) $(1,605,920) $ (470,561) $ (366,969)
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------
Net loss per common share........................................... $ (0.55) $ (0.22) $ (0.10)
----------- ---------- ----------
----------- ---------- ----------
Weighted average of common shares outstanding....................... 2,935,819 2,171,989 3,788,878
----------- ---------- ----------
----------- ---------- ----------
</TABLE>

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

F-4
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

------------------------

<TABLE>
<CAPTION>
CHICAGO PIZZA &
BREWERY, INC. COMMON ROMAN SYSTEMS
STOCK COMMON STOCK PARTNER'S
--------------------- CAPITAL ----------------- CAPITAL ACCUMULATED
SHARES AMOUNT SURPLUS SHARES AMOUNT (DEFICIT) DEFICIT TOTAL
--------- ---------- -------- ------- -------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1993.............. 1,395,840 20,000 $ 10,000 392,112 $ (462,793) $ (60,681)
Partner distributions................. (186,531) (186,531)
Net loss.............................. (166,726) (383,742) (550,468)
Common stock issued for purchase of
Limited Partnerships................. 226,824 $ 170,118 170,118
--------- ---------- -------- ------- -------- --------- ----------- -----------
Balance, December 31, 1994.............. 1,622,664 170,118 20,000 10,000 38,855 (846,535) (627,562)
Adjustment to consolidate previously
combined entities.................... (20,000) (10,000) (38,855) 628,687 579,832
Common stock issued for consulting
services............................. 69,792 52,344 52,344
Common stock issued for the purchase
of Roman Systems..................... 348,960 261,720 261,720
Common stock issued for private
placement offerings (net of issuance
costs of $953,812)................... 1,747,462 5,084,285 5,084,285
Warrants issued for financing......... $ 42,000 42,000
Warrants issued for private placement
offerings............................ 236,750 236,750
Net loss.............................. (1,605,920) (1,605,920)
--------- ---------- -------- ------- -------- --------- ----------- -----------
Balance, December 31, 1995.............. 3,788,878 5,568,467 278,750 -- -- -- (1,823,768) 4,023,449
Net loss (unaudited).................... (366,969) (366,969)
--------- ---------- -------- ------- -------- --------- ----------- -----------
Balance, March 31, 1996 (unaudited)..... 3,788,878 $5,568,467 $278,750 -- -- -- $(2,190,737) $ 3,656,480
--------- ---------- -------- ------- -------- --------- ----------- -----------
--------- ---------- -------- ------- -------- --------- ----------- -----------
</TABLE>

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

F-5
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS

------------------------

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE-MONTH PERIODS
DECEMBER 31, ENDED MARCH 31,
------------------------ ------------------------
1994 1995 1995 1996
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss.................................................. $ (550,468) $(1,605,920) $ (470,561) $ (366,969)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization........................... 173,449 359,282 92,684 109,664
Minority interest in partnership........................ (132,165) (26,828) (17,405) 13,286
Noncash interest expense on private placement offering
notes.................................................. 166,847 166,847
Noncash payment of Director fees........................ 21,000
Noncash interest expense on private placement offerings
warrants............................................... 8,000 8,000
Changes in assets and liabilities:
Accounts receivable................................... (15,913) 4,850 (3,988) (14,659)
Inventory............................................. (20,218) 4,313 5,016 (32,180)
Prepaids and other current assets..................... 41,140 (227,381) 38,076 (606,294)
Other assets.......................................... (556,054) 142,238 47,089 193,410
Accounts payable...................................... 264,005 (31,713) (195,355) 682,432
Accrued expenses...................................... 539,251 212,040 113,237 270,078
----------- ----------- ----------- -----------
Net cash provided by (used in) operating
activities......................................... (256,973) (973,272) (216,360) 248,768
----------- ----------- ----------- -----------
Cash flows provided by (used in) investing activities:
Acquisition of Roman Systems and limited partnership
interests................................................ (4,421,142) (4,421,142)
Acquisition of Chicago Pizza Northwest.................... (2,591,208)
Acquisition of Brea, California Micro-brewery leasehold
interest................................................. (930,400)
Purchases of equipment.................................... (1,000,944) (710,532) (266,249) (964,379)
Receivable from related party............................. 4,372
----------- ----------- ----------- -----------
Net cash used in investing activities............... (996,572) (5,131,674) (4,687,391) (4,485,987)
----------- ----------- ----------- -----------
Cash flows provided by (used in) financing activities:
Borrowings on related party debt.......................... 1,127,672 4,988,113 3,746,113 3,104,342
Borrowing on short-term debt.............................. 227,912
Borrowing on long-term debt............................... 750,771
Payments on related party debt............................ (135,918) (2,096,587) (51,044) (96,708)
Transfer to restricted cash............................... (200,000)
Capital lease payments.................................... (13,392) (11,888) (1,330) (3,643)
Financing costs for private placement offering............ (953,812)
Proceeds from stock issuance.............................. 5,871,250
Proceeds from warrants.................................... 249,750
Contributions from partners............................... 386,000
Distributions to partners................................. (82,991)
Debt issued for private placement offerings............... 1,250,000
----------- ----------- ----------- -----------
Net cash provided by financing activities........... 1,281,371 7,846,826 4,943,739 3,982,674
----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents........................................ 27,826 1,741,880 39,988 (254,545)
Cash and cash equivalents, beginning of year................ 22,063 49,889 49,889 1,791,769
----------- ----------- ----------- -----------
Cash and cash equivalents, end of year...................... $ 49,889 $ 1,791,769 $ 89,877 $ 1,537,224
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>

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

F-6
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS

------------------------

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION:

Chicago Pizza & Brewery, Inc. (the "Company") was formed in 1991 by Mr.
Jeremiah Hennessy and Mr. Paul Motenko (the "Owners") to operate and manage five
existing "BJ's Chicago Pizzeria" restaurants in Southern California owned by
Roman Systems, Inc. ("Roman Systems") under a Management Agreement (the
"Management Agreement") with Roman Systems. Pursuant to the Management
Agreement, the Company had the right and obligation to open, operate and manage
BJ's Chicago Pizzeria restaurants. In 1992, the Owners formed CPA-BG, Inc.
("CPA-BG") and opened two restaurants with CPA-BG as the general partner of BJ's
Belmont Shore, Limited Partnership and BJ's La Jolla, Limited Partnership in
1992 and 1993, respectively. In 1994, the Company opened two BJ's Chicago
Pizzeria restaurants in Huntington Beach and Seal Beach. Additionally, in 1994,
the Company opened a restaurant in Lahaina, Hawaii as a limited partner of BJ's
Lahaina, Limited Partnership. The general partners of BJ's Lahaina, L.P. were
CPA010, Inc. ("CPA010"), which was formed by the Owners, and Blue Max, Inc.
("Blue Max").

Effective January 1, 1995, pursuant to the Asset Purchase Agreement between
the Company and Roman Systems (the "Asset Purchase Agreement"), the Company
purchased the three existing BJ's Chicago Pizzeria restaurants operated and
managed under the Management Agreement and terminated the Management Agreement.
As part of the Asset Purchase Agreement, the Company assumed responsibility for
closing two of Roman Systems' existing BJ's Chicago Pizzeria restaurants in
Santa Ana and San Juan Capistrano, California and assumed the net liabilities
related thereto. These restaurants were closed in 1995.

Effective January 1, 1995, the Company purchased the limited partnership
interests of BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P. The general
partnership interests of CPA-BG were transferred to the Company for no
consideration prior to the acquisition of the limited partnership interests. The
general partnership interests in BJ's Lahaina, L.P. were also transferred to the
Company for no consideration. Additionally, the Company closed a BJ's Chicago
Pizzeria restaurant in 1995. As of December 31, 1995, the Company owned seven
BJ's Chicago Pizzeria restaurants, all in coastal locations in Southern
California and Hawaii.

As a result, the accompanying combined financial statements as of and for
the year ended December 31, 1994 have been presented on a combined basis due to
common ownership and management and for historical comparison purposes. The
combination of companies was accounted for in a manner similar to a pooling of
interests. The combined financial statements for the year ended December 31,
1994 include the accounts of the Company, Roman Systems, CPA-BG, BJ's Belmont
Shore, L.P., BJ's La Jolla, L.P., BJ's Lahaina, L.P., CPA010, and Blue Max. The
accompanying financial statements of the Company as of and for the year ended
December 31, 1995 are presented on a consolidated basis, and include the
accounts of the Company and BJ's Lahaina, L.P. All significant intercompany
transactions and balances have been eliminated.

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for the Debtor's (Pietro's Corp.) Plan of
Reorganization, Dated February 29, 1996, as modified (the "Debtor's Plan") and
thereby acquired all the stock in the reorganized entity known as Chicago Pizza
Northwest, Inc. ("CPNI"). The Debtor's Plan was confirmed by an order of the
Bankruptcy Court on March 18, 1996 and the Company funded the Debtor's Plan on
March 29, 1996. The financial results of the 26 restaurants acquired have been
included in the financial results of the Company since March 29, 1996.

F-7
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company's consolidated balance sheet at March 31, 1996 includes CPNI.
The statement of operations for the three-month period ended March 31, 1996,
however, does not include the results of operations of CPNI for the period from
March 29, 1996 through March 31, 1996.

CASH AND CASH EQUIVALENTS:

Cash and cash equivalents consist of highly liquid investments with an
original maturity of three months or less when purchased. Cash and cash
equivalents are stated at cost, which approximates market value.

RESTRICTED CASH:

During 1995, in connection with the Westwood property lease, the Company
deposited $200,000 into a restricted cash account, which could not be eliminated
without the written consent of the lessor. The landlord consent was obtained in
1996 and the restriction was eliminated.

In 1996, as part of the acquisition of the Brea restaurant location, the
Company assumed an existing bank loan with the condition that a $200,000
certificate of deposit be restricted as collateral.

Additionally, a $362,116 restricted certificate of deposit for Washington
State Workers' Compensation insurance was acquired in the Pietro's acquisition
during the first quarter of 1996.

INVENTORY:

Inventory is stated at the lower of cost (first-in, first-out) or market and
is comprised primarily of food and beverages for the restaurant operations.

PROPERTY AND EQUIPMENT:

Property and equipment are recorded at cost. Renewals and betterments that
materially extend the life of an asset are capitalized while maintenance and
repair costs are charged to operations as incurred. When property and equipment
are sold or otherwise disposed of, the asset account and related accumulated
depreciation and amortization accounts are relieved, and any gain or loss is
included in operations.

Depreciation and amortization is computed using the straight-line method
over the estimated useful lives of the related assets or, for leasehold
improvements, over the term of the lease, if less. The following are the
estimated useful lives:

<TABLE>
<S> <C>
Furniture and fixtures....................................... 7 years
Equipment.................................................... 7-10 years
Leasehold improvements....................................... 7 to 25 years
</TABLE>

Smallwares are capitalized upon the opening of a new restaurant. All
subsequent purchases of smallwares are expensed as incurred.

LEASES:

F-8
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
liabilities is recorded to effect constant rates over the terms of the leases.
Leases that do not meet the criteria for capitalization are classified as
operating leases and rentals are charged to expense as incurred.

PREPAIDS AND OTHER CURRENT ASSETS:

The Company capitalizes restaurant preopening costs which include the direct
and incremental costs associated with the opening of a new restaurant. These are
primarily costs incurred to develop new restaurant management teams, and the
food, beverage and supply costs incurred to perform testing of all equipment,
concept, systems and recipes. The capitalized costs are amortized on a
straight-line basis over a period of one year, beginning on the restaurant's
opening date. Preopening costs totaled $68,405 and $303,464 as of December 31,
1995 and March 31, 1996 (unaudited), respectively.

The costs related to this Offering are being capitalized and will partially
offset Offering proceeds. As of December 31, 1995 and March 31, 1996 costs
totaling $108,000 and $160,000, respectively, have been deferred.

INTANGIBLE ASSETS:

Goodwill from the acquisition of the net assets of Roman Systems and the
acquisition of the limited partnership interests of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P. as of January 1, 1995 represents the excess of cost over
fair value of net assets acquired and is being amortized over 40 years using the
straight-line method. Goodwill related to the Pietro's acquisition will utilize
the same amortization period. The cost of acquiring the trademark for BJ's
Chicago Pizzeria from Roman Systems is being amortized over 10 years.

During 1994, the Company obtained the lease rights to open a BJ's Chicago
Pizzeria restaurant in Lahaina. The original lessee of the property has a
sublease of the property to Blue Max. The Company purchased the stock of Blue
Max to acquire the sole assets of the Company, the liquor license for Lahaina.
The total amount paid was $100,000 which consisted of $25,000 for the liquor
license, $25,000 to obtain the lease and $50,000 for the covenant not to
compete. The lease right and the covenant not to compete are being amortized
over 8.5 years, using the straight-line method. The Company periodically
evaluates the carrying value of goodwill including the related amortization
periods. The Company determines whether there has been impairment by comparing
the anticipated undiscounted future operating income of the acquired restaurants
with the carrying value of the goodwill.

INCOME TAXES:

For the year ended December 31, 1994, the Company consisted of three "C"
corporations (Chicago Pizza & Brewery, CPA010 and Blue Max), two "S"
corporations (CPA-BG and Roman Systems), and three limited partnerships (BJ's
Lahaina, L.P., BJ's Belmont, L.P. and BJ's La Jolla, L.P.). The C corporations
are taxed on their taxable income by the state and federal governments. Under
the S corporation provisions, the companies do not pay federal corporate income
taxes on their taxable incomes. Instead, the shareholder is individually liable
for federal income taxes based on the individual company's taxable income. This
election is also valid for state income tax reporting. However, a provision for
state income taxes is required based on a 1.5% state tax rate on taxable income.
The limited partnerships are required to pay a District of Columbia
unincorporated business tax on its taxable income and a California minimum tax.
For the year ended December 31, 1995, the Company

F-9
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
operated on a consolidated basis as a "C" corporation (Chicago Pizza & Brewery).
BJ's Lahaina, L.P. operated as a limited partnership. In the first quarter of
1996, the Company acquired Chicago Pizza Northwest, Inc.

The Company utilizes Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred income taxes are recognized for the tax consequences in
future years of differences between the tax bases of assets and liabilities and
their financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which differences are expected
to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. The
provision for income taxes represents the tax payable for the period and the
change during the period in deferred tax assets and liabilities.

MINORITY INTEREST:

For the combined and consolidated financial statements as of December 31,
1994, minority interest represents limited partners' interests totaling 46.32%
for BJ's Lahaina, L.P. and 50% for BJ's Belmont Shore, L.P. and BJ's La Jolla,
L.P.

For the consolidated financial statements as of December 31, 1995 and March
31, 1996, minority interest represents limited partners' interests totalling
46.32% for BJ's Lahaina, L.P.

USE OF ESTIMATES:

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions for the reporting period and as of the financial statement date.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities, and the
reported amounts of revenues and expenses. Actual results could differ from
those estimates.

PER SHARE INFORMATION:

Per share information is based on the weighted average number of common
shares outstanding and the dilutive effect of common share equivalents, if any.

STOCK SPLIT:

In December 1994 and May 1995, the Board of Directors declared a
19,000-for-1 stock split and a .34896-for-1 reverse stock split, respectively,
of the Company's common stock. All references to the number of shares and per
share amounts have been adjusted to give retroactive effect to the stock splits
for all periods presented.

RECENTLY ISSUED ACCOUNTING STANDARDS:

In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of" ("SFAS No. 121"). SFAS No. 121 establishes accounting
standards for the impairment of long-lived assets, certain identifiable
intangibles, and goodwill related to those assets to be held and used, and for
long-lived assets and certain identifiable intangibles to be disposed of. The
Company is required to adopt the provisions of SFAS No. 121 for 1996, and the
Company believes that upon its adoption there should be no impact to results of
operations.

F-10
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In November 1995, the FASB also issued SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123 establishes new
accounting standards for the measurement and recognition of stock-based awards.
SFAS No. 123 permits entities to continue to use the traditional accounting for
stock-based awards prescribed by APB Opinion No. 25, "Accounting for Stock
Issued to Employees" however, under this option, the Company will be required to
disclose the pro forma effect of stock-based awards on net income and earnings
per share as if SFAS No. 123 had been adopted. SFAS No. 123 is effective for
1996. The Company intends to use the provisions of APB Opinion No. 25 in
accounting for stock-based awards. As such, this standard will have no impact on
the Company's results of operations upon adoption.

Other recently issued standards of the FASB are not expected to affect the
Company as conditions to which those standards apply are absent.

INTERIM RESULTS (UNAUDITED):

The accompanying consolidated balance sheet as of March 31, 1996 and the
consolidated statements of operations and cash flows for the three month periods
ended March 31, 1996 and 1995, and the statement of equity for the three month
period ended March 31, 1996 are unaudited. In the opinion of management, these
statements have been prepared on the same basis as the audited consolidated
financial statements and include all adjustments, consisting of only normal
recurring adjustments necessary for the fair presentation of results of the
interim periods. The data disclosed in these notes to the consolidated financial
statements for those interim periods are also unaudited.

BUSINESS OPERATIONS

The Company has incurred net losses during its organization and acquisition
of restaurants. While many of these costs were created by the ramping-up of the
organization and restaurant development concepts, including a more expansive
menu, food testing, and micro-brewery concepts, management believes that such
costs will be reduced in the future. Management's plans for a return to
profitability include increasing sales through a more expansive menu and
refurbishing of restaurants in the Northwest, increasing micro-brew beer sales,
reducing the cost of sales through vendor volume purchases, reducing general and
administrative costs by consolidation of the Company's existing corporate
structure and CPNI's corporate structure and reduction of interest expense
through use of a portion of the proceeds of the potential initial public
offering to pay off debt.

While there can be no assurance that management plans, if executed, will
return the Company to profitability, management believes their plans provide the
Company with a strong base to accomplish their goals.

2. CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to a
concentration of credit risk, as defined by SFAS No. 105 "Disclosure of
Information about Financial Instruments with Off-Balance Sheet Risk and
Concentrations of Credit Risk," principally consist of cash and cash
equivalents. The Company maintains its cash accounts at various California and
Hawaii banking institutions. At times, cash balances may be in excess of the
FDIC insurance limit. Cash equivalents represent tax-exempt money market funds.

F-11
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Furniture and fixtures................................................ $ 96,349 $ 182,263
Equipment............................................................. 618,101 2,223,928
Leasehold improvements................................................ 1,421,939 3,369,167
------------ -----------
2,136,389 5,775,358
Less, accumulated depreciation and amortization....................... (265,858) (328,940)
Construction in progress.............................................. -- 270,892
------------ -----------
$ 1,870,531 $ 5,717,310
------------ -----------
------------ -----------
</TABLE>

4. INTANGIBLE ASSETS
Intangible assets consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Goodwill.............................................................. $ 5,555,128 $ 6,273,034
Trademark............................................................. 38,000 48,000
Covenant not to compete............................................... 50,000 50,000
Lease right for Lahaina lease......................................... 25,000 25,000
Liquor licenses....................................................... 45,000 65,000
------------ -----------
5,713,128 6,461,034
Less, accumulated amortization........................................ 154,884 182,046
------------ -----------
$ 5,558,244 $ 6,278,988
------------ -----------
------------ -----------
</TABLE>

5. ACCRUED EXPENSES
Accrued expenses consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Accrued professional fees............................................. $216,151 $ 249,386
Accrued rent.......................................................... 215,271 280,817
Payroll related liabilities........................................... 116,854 544,652
Other................................................................. 352,050 462,148
------------ -----------
$900,326 $ 1,537,003
------------ -----------
------------ -----------
</TABLE>

F-12
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

6. DEBT

RELATED PARTY DEBT:

Related party short-term debt consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Note payable to related party, with interest rate of 6%, due on
demand, collateralized by the property and equipment of BJ's
Huntington Beach restaurant.......................................... $350,000 $ 350,000
Note payable to Paul Motenko, with interest rate of 6%, due on
demand............................................................... 74,686 79,028
Notes payable to related parties which are convertible (automatically
at the closing of an Initial Public Offering) to 750,000 shares of
common stock at a price of $3.70 per share and warrants to purchase
4,500,000 shares of Common Stock at a price of $0.05 per warrant,
with an interest rate of 10%, collateralized by the stock of CPNI.
The terms of the warrants provide that, if the Company consummates an
Initial Public Offering which includes warrants, then the warrants
are automatically converted into warrants included in the Initial
Public Offering...................................................... 3,000,000
Note payable to related party, with interest rate of 19%, due on
September 5, 1996.................................................... 100,000
------------ -----------
Total related party short-term debt................................... $424,686 $3,529,028
------------ -----------
------------ -----------
</TABLE>

Related party long-term debt consisted of the following as of:

<TABLE>
<CAPTION>
DECEMBER 31,
1995
------------ MARCH 31,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Note payable to related party, with interest rate of 12%, maturing on
March 22, 1998....................................................... $ 31,021 $ 27,885
Note payable to Roman Systems, with interest rate of 7%, maturing
April 1, 2004, collateralized by the BJ's Laguna, BJ's La Jolla and
BJ's Balboa restaurants.............................................. 3,487,528 3,409,173
Note payable to Roman Systems, with interest rate of 2.25% plus the
bank's reference rate (8.5% at December 31, 1995 and 8.25% at March
31, 1996), due in monthly installments of $3,500, maturing June 1,
1999................................................................. 147,000 131,783
------------ -----------
Total long-term related party debt.................................... 3,665,549 3,568,841
Less, current portion................................................. 542,788 766,988
------------ -----------
$ 3,122,761 $ 2,801,853
------------ -----------
------------ -----------
</TABLE>

F-13
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

6. DEBT (CONTINUED)
Total interest incurred during the years ended December 31, 1994 and 1995,
and the three-month period ended March 31, 1996 was approximately $120,000,
$532,000 and $79,000 (unaudited), respectively. Future maturities of related
party long-term debt for each of the five years subsequent to December 31, 1995
and thereafter are as follows:

<TABLE>
<S> <C>
1996........................................................ $ 967,474
1997........................................................ 598,084
1998........................................................ 462,497
1999........................................................ 343,227
2000........................................................ 350,147
Thereafter.................................................. 1,368,806
----------
$4,090,235
----------
----------
</TABLE>

OTHER SHORT-TERM DEBT:

Other short-term debt consisted of the following as of March 31, 1996
(Unaudited):

<TABLE>
<S> <C>
Note payable with interest rate of 9.75%, due and paid on
April 15, 1996, collateralized by a $50,000 letter of
credit which expires on September 30, 1996................. $ 227,912
</TABLE>

OTHER LONG-TERM DEBT:

Other long-term debt consisted of the following as of March 31, 1996
(Unaudited):

<TABLE>
<S> <C>
Note payable with interest rate of 2% plus the bank's
reference rate (8.25% at March 31, 1996), due in monthly
installments of $12,513, maturing March 1, 2001,
collateralized by $200,000 certificate of deposit maturing
March 1, 1998.............................................. $ 750,771

Notes payable for Pietro's outstanding tax claims as part of
the Debtor's Plan of Reorganization, due in quarterly
installments of $32,670 from July 1, 1996 through April 1,
1997 and $20,071 from July 1, 1997 through June 30, 2001
and varying payments totaling an aggregate of $34,122 from
October 1, 2001 until April 1, 2002. Interest accrues at
8.25%...................................................... 506,006
---------
1,256,777
Less, current portion....................................... 276,158
---------
$ 980,619
---------
---------
</TABLE>

7. CAPITAL LEASES
The Company leases point of sale and phone equipment under capital lease
arrangements. The equipment related to the capital leases has an original cost
of $53,318 and accumulated amortization

F-14
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

7. CAPITAL LEASES (CONTINUED)
of $7,791 at December 31, 1995. The obligations under capital leases have
interest rates ranging from 6.9% to 13.9% and mature at various dates through
2000. Annual future minimum lease payments for the five years subsequent to
December 31, 1995 are as follows :

<TABLE>
<S> <C>
1996........................................................ $21,131
1997........................................................ 15,240
1998........................................................ 9,927
1999........................................................ 4,347
2000........................................................ 1,764
-------
Total minimum payments.................................. 52,409
Less, amount representing interest.......................... 15,515
-------
Obligations under capital leases........................ 36,894
Less, current portion....................................... 14,655
-------
Long-term portion....................................... $22,239
-------
-------
</TABLE>

8. COMMITMENTS
The Company leases its restaurant and office facilities under noncancelable
operating leases with terms ranging from approximately 7 to 25 years with
renewal options ranging from 5 to 15 years. Rent expense for the years ended
December 31, 1994 and 1995 and for the three-month period ended March 31, 1996
was $609,531, $547,900 and $93,946 (unaudited), respectively.

The Company has certain operating leases which contain fixed escalation
clauses. Rent expense for these leases has been calculated on a straight-line
basis over the term of the leases. A deferred charge in the amount of $207,605
has been established and included in accrued expenses at December 31, 1995 for
the difference between the amount charged to expense and the amount paid. The
deferred charges will be amortized over the life of the lease.

A number of the leases also provide for contingent rentals based on a
percentage of sales above a specified minimum. Total contingent rentals for the
years ended December 31, 1994 and 1995 and the three-month period ended March
31, 1996 were $50,902, $45,763 and $9,922 (unaudited), respectively.

The following are the future minimum rental payments under noncancelable
operating leases for each of the five years subsequent to December 31, 1995 and
March 31, 1996 and in total thereafter:

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 1996
31, ----------
1995
---------- (UNAUDITED)

<S> <C> <C>
1996........................................................ $ 628,030 $1,483,345
1997........................................................ 699,961 2,025,565
1998........................................................ 715,686 1,775,946
1999........................................................ 700,808 1,630,783
2000........................................................ 651,794 1,398,176
Thereafter.................................................. 1,731,876 6,999,845
---------- ----------
$5,128,155 $15,313,660
---------- ----------
---------- ----------
</TABLE>

F-15
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

8. COMMITMENTS (CONTINUED)
LEGAL PROCEEDINGS:

The Company is not a party to any pending legal proceedings which it
believes will have a material adverse effect on its consolidated financial
position or consolidated results of operations.

LETTER OF CREDIT:

As of March 31, 1996, the Company was contingently liable for a letter of
credit of $50,000.

EMPLOYMENT AGREEMENTS:

Effective March 26, 1996, the Company entered into employment agreements
with Paul Motenko and Jeremiah J. Hennessy. The agreements provide for a minimum
annual salary of $135,000 subject to escalation annually in accordance with the
Consumer Price Index and certain benefits through 2004 and may be terminated by
either party. The agreements also contain provisions for additional cash
compensation based on earnings or income of the Company. The agreements contain
provisions which grant the employees the right to receive salary and benefits,
as individually defined, if such employee is terminated by the Company without
cause.

CONSULTING AGREEMENT:

In March 1996 the Company entered into a consulting agreement ("Consulting
Agreement") with ASSI, Inc. pursuant to which ASSI, Inc. agrees to advise the
Company with site selection and marketing and development strategy for
penetrating the Las Vegas, Nevada market. In consideration for such services,
the Company shall pay ASSI, Inc. an annual fee equal to 10% of the Net Profits,
as defined, of the acquired Las Vegas, Nevada restaurants. As additional
consideration for consulting services, the Company issued to ASSI, Inc. an
aggregate of 100,000 warrants to purchase shares of common stock of the Company
at an exercise price of $3.85 per share. The Consulting Agreement expires on
December 31, 2000. The terms of the warrants provide that if the Company
consummates an Initial Public Offering which includes warrants, then the
warrants are automatically converted into warrants included in the Initial
Public Offering.

The Company also entered into a consulting agreement ("Pietro's Consulting
Agreement") with ASSI, Inc. regarding the Pietro's Corp. Acquisition (see Note
13). Under this agreement, ASSI, Inc. agrees to advise the Company in connection
with the reconstruction, expansion, marketing and strategic development of the
restaurants acquired from Pietro's Corp. In consideration for such services, the
Company shall pay to ASSI, Inc. an annual fee equal to 5% of Net Profits, as
defined, of the 26 restaurants acquired, 19 of which the Company currently plans
to retain. As additional consideration for the consulting services, the Company
issued to ASSI, Inc. an additional aggregate of 100,000 warrants to purchase
shares of common stock of the Company at an exercise price of $3.85 per share.
The Pietro's Consulting Agreement expires on December 31, 2000. The terms of the
warrants provide that if the Company consummates an Initial Public Offering
which includes warrants, then the warrants are automatically converted into
warrants included in the Initial Public Offering.

9. SHAREHOLDERS' EQUITY

PREFERRED STOCK:

The Company is authorized to issue 5,000,000 shares in one or more series of
preferred stock and to determine the rights, preferences, privileges and
restrictions to be granted to, or imposed upon, any such series, including the
voting rights, redemption provisions (including sinking fund provisions),
dividend rights, dividend rates, liquidation rates, liquidation preferences,
conversion rights and the description and number of shares constituting any
wholly unissued series of preferred stock. The

F-16
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

9. SHAREHOLDERS' EQUITY (CONTINUED)
Company's Board of Directors, without further shareholder approval, can issue
preferred stock with rights that could adversely affect the rights of holders of
the Company's common stock. The issuance of shares of preferred stock under
certain circumstances could have the effect of delaying or preventing a change
of control of the Company or other corporate action. No shares of preferred
stock were outstanding at December 31, 1995 and March 31, 1996. The Company
currently has no plans to issue shares of preferred stock.

COMMON STOCK:

Shareholders' of the Company's outstanding common stock are entitled to
receive dividends if and when declared by the Board of Directors. Upon
liquidation, dissolution or winding up of the Company, and subject to the
priority of any outstanding preferred stock, the Company's assets legally
available for distribution to shareholders are to be distributable ratably among
the holders of the common stock at the time outstanding. Shareholders are
entitled to one vote for each share of common stock held of record. Pursuant to
the requirements of California law, shareholders are entitled to cumulate votes
in connection with the election of directors.

CAPITAL SURPLUS:

In May 1995, the Company issued warrants to purchase up to 300,000 shares of
common stock at a price of $5.00 per share to each of Barry Grumman, a director
of the Company, and Lexington Ventures, Inc. Each of Mr. Grumman and Lexington
Ventures, Inc. were issued their respective warrants at a price of $0.07 per
warrant or a total price to each of $21,000. Mr. Grumman's liability for payment
of the warrants was extinguished in exchange for past services to the Company as
a Director which had not been compensated. The terms of the warrants provide
that if the Company consummates an Initial Public Offering which includes
warrants to purchase shares of Common Stock, then the warrants issued are
automatically converted into warrants included in the Initial Public Offering.
The proceeds were used for working capital purposes. Proceeds from the valuation
or sale of warrants issued in conjunction with the private placement offerings
totaled $236,750.

PRIVATE PLACEMENTS:

In January 1995, the Company completed a private placement of 17 Units at
$50,000 per Unit, consisting of (i) a Series A Promissory Note in the principal
amount of $50,000 and due December 31, 1995 and (ii) 13,086 shares of common
stock. The net proceeds to the Company of $496,000 (net of issuance costs of
$104,000) were used to finance acquisitions. The Series A Promissory Notes
beared interest, payable quarterly, at a rate of 10% until June 30, 1995 and
13.5% thereafter. The Promissory Notes were repaid in the third quarter of 1995
with proceeds from the June 1995 placement described below.

In March 1995, the Company completed a private placement of 4 Units at
$100,000 per Unit, consisting of (i) a $98,000 promissory note bearing interest
at a rate of 10% per annum with interest and principal due upon the earlier of
completion of an initial public offering of the Company's common stock, or 18
months from the date of issuance and (ii) warrants (valued at a price of $.0573)
to purchase 34,896 shares of common stock at a price of $2.87 per share. The
terms of this private placement provide that if the Company consummates an
Initial Public Offering which includes warrants to purchase shares of Common
Stock, then the warrants issued in this placement are automatically converted
into warrants included in the Initial Public Offering. The net proceeds to the
Company of $400,000 were used for working capital. The promissory notes were
repaid in the third quarter of 1995 with proceeds from the June 1995 private
placement described below.

F-17
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

9. SHAREHOLDERS' EQUITY (CONTINUED)

In September 1995, the Company completed a private placement of 61 Units at
$100,000 per Unit, consisting of (i) 25,000 shares of common stock at a price of
$3.85 per share and (ii) warrants to purchase 75,000 shares of common stock at
an initial exercise price of $3.85 per share for a price of $0.05 per warrant.
The terms of this private placement provide that if the Company consummates an
Initial Public Offering which includes warrants to purchase shares of Common
Stock, then the warrants issued in this placement are automatically converted
into warrants included in the Initial Public Offering. The net proceeds to the
Company of $4,917,438 (net of issuance costs of $953,812) were used (i) to pay a
portion of the acquisition or development expenses of the Northwest Restaurants,
the Westwood Village, Los Angeles, California restaurant and brew pub site, the
Brea, California restaurant and the Boulder Colorado restaurant totaling in the
aggregate $2,600,000, (ii) to repay debt related to previous offerings, which
debt totaled $1,400,000 and (iii) to remodel the La Jolla Village restaurant,
which costs totaled $225,000. The remaining $1,600,000 was utilized as working
capital.

10. INCOME TAXES
The following table presents the current and deferred provision for federal
and state income taxes for the years ended December 31,:

<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Current:
Federal................................................... -- --
State..................................................... $6,400 $6,400
------ ------
6,400 6,400
Deferred:
Federal................................................... -- --
State..................................................... -- --
------ ------
$6,400 $6,400
------ ------
------ ------
</TABLE>

The temporary differences which give rise to deferred tax provision
(benefit) for the years ended December 31, consist of:

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Property and equipment...................................... $ (26,320) $ (2,547)
Goodwill.................................................... 106,511 --
Accrued liabilities......................................... (109,155) (54,397)
Investment in partnerships.................................. (35,366) 14,962
Net operating losses........................................ (651,142) (134,741)
Other....................................................... (548) --
Change in valuation allowance............................... 716,020 176,723
--------- ---------
$ -- $ --
--------- ---------
--------- ---------
</TABLE>

F-18
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

10. INCOME TAXES (CONTINUED)
The provision (benefit) for income taxes differs from the amount that would
result from applying the federal statutory rate as follows:

<TABLE>
<CAPTION>
FOR THE YEARS
ENDED DECEMBER
31,
---------------
1995 1994
----- -----
<S> <C> <C>
Statutory regular federal income tax rate................... (34.0)% (34.0)%
State income taxes, net of federal benefit.................. -- 0.3
Change in valuation allowance............................... 33.8 27.5
Other....................................................... 0.3 6.6
----- -----
0.1% 0.4%
----- -----
----- -----
</TABLE>

The components of the deferred income tax asset and (liability) as of
December 31 are as follows:

<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Property and equipment...................................... $ 28,867 $ 2,547
Goodwill.................................................... (106,511) --
Accrued liabilities......................................... 163,552 54,397
Investment in partnerships.................................. 20,404 (14,962)
Net operating losses........................................ 785,883 134,741
Other....................................................... 548 --
--------- ---------
892,743 176,723
Valuation allowance......................................... (892,743) (176,723)
--------- ---------
Net deferred income taxes................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>

As of December 31, 1995, the Company had net operating loss carryforwards
for federal and state purposes of approximately $2,034,000 and $1,016,000,
respectively. The net operating loss carryforwards begin expiring in 2010 and
2000, respectively.

The utilization of net operating loss ("NOL") and credit carryforwards may
be limited under the provisions of Internal Revenue Code Section 382, NOL
carryforward limitations with respect to change in ownership, and Section 383,
limitation for credit carryforwards.

11. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
FOR THE
FOR THE YEARS THREE-MONTH
ENDED DECEMBER PERIODS ENDED
31, MARCH 31,
----------------- -----------------
1994 1995 1995 1996
------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash paid for:
Interest.................................................. $73,751 $379,676 $257,308 $78,510
Taxes..................................................... $ -- $ -- $ -- $ 2,400
</TABLE>

F-19
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

11. SUPPLEMENTAL CASH FLOW INFORMATION (CONTINUED)
Supplemental information on noncash investing and financing activities:

<TABLE>
<CAPTION>
FOR THE THREE-MONTH
FOR THE YEARS ENDED PERIODS ENDED MARCH
DECEMBER 31, 31,
-------------------- -------------------
1994 1995 1995 1996
-------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Common stock issued for purchase of BJ's Belmont Shore, L.P.
and BJ's La Jolla, L.P..................................... $170,118
Equipment purchases under a capital lease................... $ 29,408 $ 20,968
Common stock issued for consulting services................. $ 52,344
Common stock issued for asset purchase of Roman Systems..... $ 261,720
Purchase of CPNI (assumed liabilities)...................... $1,411,595
</TABLE>

12. 1996 STOCK OPTION PLAN
In March 1996, the Company adopted the 1996 Stock Option Plan under which
options may be granted to purchase up to 600,000 shares of common stock. The
1996 Stock Option Plan provides for the options issued to be either incentive
stock options or non-statutory stock options as defined under Section 422A of
the Internal Revenue Code. The exercise price of the shares under the option
shall be equal to or exceed 100% of the fair market value of the shares at the
date of option grant. The 1996 Stock Option Plan expires on June 30, 2005 unless
terminated earlier. The options generally vest over a three-year period;
however, the Company has waived the vesting period for certain key employees. As
of March 31, 1996, no options had been issued under the 1996 Stock Option Plan.

13. ACQUISITIONS AND TRANSFERS

ROMAN SYSTEMS:

Effective January 1, 1995, the Company purchased the net assets of Roman
Systems for $550,000 in cash, issued a note payable totaling $3,746,113, assumed
liabilities totaling $873,344 including loans, accrued salaries and certain
other expenses and paid $130,000 in acquisition costs. Additionally, 348,960
shares of common stock of the Company, valued at $261,720, were issued to the
sellers. The acquisition was accounted for as a purchase.

BELMONT SHORE, L.P. AND LA JOLLA, L.P.:

Effective January 1, 1995, the Company purchased the limited partnership
interests of BJ's Belmont Shore, L.P. and BJ's La Jolla, L.P. The general
partner interests of the above-mentioned Partnerships, held by CPA-BG, were
transferred to the Company for no consideration prior to the closing of the
acquisition of the limited partnership interests. An aggregate 226,824 shares of
common stock of the Company, valued at $170,118, were transferred to the sellers
for the right, title and interest in the limited partnerships in November 1994.
Additionally, the Company assumed liabilities of $207,068 and paid acquisition
costs of $70,000.

BJ'S LAHAINA, L.P.:

Effective January 1, 1995, the general partners of BJ's in Lahaina, L.P.,
CPA010 and Blue Max transferred their general partnership interests to the
Company for no consideration.

F-20
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
NOTES TO COMBINED AND
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

------------------------

13. ACQUISITIONS AND TRANSFERS (CONTINUED)
PIETRO'S CORP.:

On March 29, 1996, the Company acquired 26 restaurants located in Oregon and
Washington by providing the funding for the Debtor's Plan and thereby acquired
all the stock in the reorganized entity known as Chicago Pizza Northwest, Inc.
The Debtor's Plan was confirmed by an order of the Bankruptcy Court on March 18,
1996 and the Company funded the Plan on March 29, 1996. The Company paid
$2,350,000 to fund the Debtor's Plan plus acquisition costs of $353,073.
Additionally, the Company assumed a $506,006 liability for taxes plus interest
which will be paid over six years. On May 15, 1996, the Company entered into an
agreement to sell seven of the newly acquired restaurants. (See Note 14).

BREA, CALIFORNIA:

On March 27, 1996, the Company completed the acquisition of a restaurant and
brew-pub site in Brea, California. The purchase price totaled $930,400 including
acquisition costs. The restaurant opened as BJ'S PIZZA, GRILL & BREWERY on April
1, 1996.

WESTWOOD, CALIFORNIA:

In 1995, the Company entered into a lease for its Westwood restaurant and
brew-pub location. The site was renovated and opened on March 15, 1996.

14. SUBSEQUENT EVENTS

EXPANSION AND ACQUISITION:

On May 15, 1996, the Company agreed to sell seven newly acquired Chicago
Pizza Northwest, Inc. restaurants. The remaining 19 restaurants will be
converted into "BJ'S PIZZA," "BJ'S PIZZA & GRILL" or "BJ'S PIZZA, GRILL &
BREWERY" restaurants.

15. PRO FORMA DATA (UNAUDITED)

Under the terms of the $3,000,000 Convertible Notes (Note 6 and Note 14),
conversion to common stock is simultaneous with the closing of an underwritten
initial public offering of the Company's common stock resulting in a price per
share to the public of at least $5.00 per share. In addition, the Company paid
13%, or $390,000, for related financing costs which is recorded as an asset and
amortized over the term of the Convertible Notes. Accordingly, the pro forma
information has been prepared so as to classify the aforementioned $3,000,000 of
Convertible Notes as common stock outstanding (750,000 additional shares
outstanding) and capital surplus, to give effect to the aforementioned expected
closing of an initial public offering of common stock and as a result the
$390,000 has been expensed and therefore increases accumulated deficit.

F-21
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

INDEX TO COMBINED FINANCIAL STATEMENTS

------------------------

PAGE
----
Report of Independent Accountants......................................... F-23
Combined Balance Sheets As Of December 25, 1995 and March 29, 1996
(Unaudited).............................................................. F-24
Combined Statements Of Operations For The Years Ended December 26, 1994
And December 25, 1995 And For The Three-Month Periods Ended March 27,
1995 (Unaudited) And March 29, 1996 (Unaudited).......................... F-25
Combined Statements of Equity For The Years Ended December 26, 1994 And
December 25, 1995 And For The Three-Month Period Ended March 29, 1996
(Unaudited).............................................................. F-26
Combined Statements Of Cash Flows For The Years Ended December 26, 1994
And December 25, 1995 And For The Three-Month Periods Ended March 27,
1995 (Unaudited) And March 29, 1996 (Unaudited).......................... F-27
Notes To Combined Financial Statements.................................... F-28

F-22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

------------------------

The Board of Directors
Pietro's Corp.

We have audited the accompanying combined balance sheet of Pietro's Corp.'s
Business Related to Purchased Assets as of December 25, 1995, and the related
combined statements of operations, equity and cash flows for the fiscal years
ended December 26, 1994 and December 25, 1995. These combined financial
statements are the responsibility of the management of Pietro's Corp. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Pietro's Corp.'s
Business Related to the Purchased Assets as of December 25, 1995, and the
results of their operations and their cash flows for the fiscal years ended
December 26, 1994 and December 25, 1995, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.

Los Angeles, California
June 14, 1996

F-23
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED BALANCE SHEETS

------------------------

ASSETS:

<TABLE>
<CAPTION>
MARCH 29,
1996
-------------
DECEMBER 25, (UNAUDITED)
1995
-------------
<S> <C> <C>
Current assets:
Cash........................................................................... $ 34,625 $ 37,395
Inventory...................................................................... 152,009 169,584
Prepaids and other current assets.............................................. 16,780 25,680
------------- -------------
Total current assets......................................................... 203,414 232,659
Property, and equipment, net..................................................... 1,099,551 992,294
Other assets..................................................................... 238,321 238,321
------------- -------------
Total assets................................................................. $ 1,541,286 $ 1,463,274
------------- -------------
------------- -------------

LIABILITIES AND EQUITY:
Current liabilities:
Accrued expenses............................................................... $ 449,928 $ 337,936
------------- -------------
Total current liabilities.................................................... 449,928 337,936
Commitments (Note 5)
Equity........................................................................... 1,091,358 1,125,338
------------- -------------
Total liabilities and equity................................................. $ 1,541,286 $ 1,463,274
------------- -------------
------------- -------------
</TABLE>

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

F-24
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED STATEMENTS OF OPERATIONS

------------------------

<TABLE>
<CAPTION>
FOR THE YEARS ENDED THREE-MONTH PERIOD ENDED
------------------------------------ ------------------------------
DECEMBER 26, 1994 DECEMBER 25, 1995 MARCH 27, 1995 MARCH 29, 1996
----------------- ----------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues.................................. $ 14,609,395 $ 14,633,737 $ 3,670,609 $ 3,779,529
Cost of sales............................. 4,402,869 4,276,635 1,121,048 1,187,513
----------------- ----------------- -------------- --------------
Gross profit............................ 10,206,526 10,357,102 2,549,561 2,592,016
----------------- ----------------- -------------- --------------
Labor and benefits........................ 4,755,491 4,836,188 1,200,993 1,289,705
Occupancy................................. 1,401,658 1,433,616 350,382 351,508
Operating expenses........................ 2,276,493 2,360,887 644,112 620,065
Depreciation and amortization............. 661,828 581,490 139,807 114,291
Overhead allocation from Pietro's Corp.... 1,943,863 1,596,006 402,309 382,374
----------------- ----------------- -------------- --------------
Total expenses.......................... 11,039,333 10,808,187 2,737,603 2,757,943
----------------- ----------------- -------------- --------------
Net loss................................ $ (832,807) $ (451,085) $ (188,042) $ (165,927)
----------------- ----------------- -------------- --------------
----------------- ----------------- -------------- --------------
</TABLE>

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

F-25
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED STATEMENTS OF EQUITY

------------------------

<TABLE>
<S> <C>
Balance at December 20, 1993................................................... $2,055,835
Net loss....................................................................... (832,807)
Contributions from Pietro's Corp............................................... 303,560
----------
Balance at December 26, 1994................................................... 1,526,588
Net loss....................................................................... (451,085)
Contributions from Pietro's Corp............................................... 15,855
----------
Balance at December 25, 1995................................................... 1,091,358
Net loss (unaudited)........................................................... (165,927)
Contributions from Pietro's Corp. (unaudited).................................. 199,907
----------
Balance at March 29, 1996 (unaudited).......................................... $1,125,338
----------
----------
</TABLE>

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

F-26
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS

COMBINED STATEMENTS OF CASH FLOWS

------------------------

<TABLE>
<CAPTION>
FOR THE THREE-MONTH
FOR THE YEARS ENDED PERIODS ENDED
------------------------------------ ------------------------------
DECEMBER 26, 1994 DECEMBER 25, 1995 MARCH 27, 1995 MARCH 29, 1996
----------------- ----------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows provided by (used in) operating
activities:
Net loss................................ $ (832,807) $ (451,085) $ (188,042) $ (165,927)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization......... 661,828 581,490 139,807 114,291
Inventory............................. 1,694 (12,034) (23,428) (17,576)
Prepaids and other current assets..... (4,772) (546) (2,488) (8,900)
Other assets.......................... (69,000) (166,551) (41,638)
Accrued expenses...................... 14,726 108,206 27,052 (111,991)
----------------- ----------------- -------------- --------------
Net cash provided by (used in)
operating activities............... (228,331) 59,480 (88,737) (190,103)
----------------- ----------------- -------------- --------------
Cash flows used in investing activities:
Purchases of equipment.................. (74,629) (76,835) (6,115) (7,034)
----------------- ----------------- -------------- --------------
Net cash used in investing
activities......................... (74,629) (76,835) (6,115) (7,034)
----------------- ----------------- -------------- --------------
Cash flows provided by financing
activities:
Net contributions from parent........... 303,560 15,855 93,352 199,907
----------------- ----------------- -------------- --------------
Net cash provided by financing
activities......................... 303,560 15,855 93,352 199,907
----------------- ----------------- -------------- --------------
Net increase (decrease) in cash..... 600 (1,500) (1,500) 2,770
Cash, beginning of year................... 35,525 36,125 36,125 34,625
----------------- ----------------- -------------- --------------
Cash, end of year......................... $ 36,125 $ 34,625 $ 34,625 $ 37,395
----------------- ----------------- -------------- --------------
----------------- ----------------- -------------- --------------
</TABLE>

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

F-27
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS

------------------------

1. GENERAL
The Pietro's Corp.'s Business Related to the Purchased Assets consists of 26
pizza restaurants located throughout the States of Oregon and Washington.
Pietro's Corp. (the "Company" or "Parent"), a Washington State corporation, owns
and operates these and other restaurants. Revenues are derived from sales of
food and beverages at the restaurants. The Company's Purchased Assets as of
December 31, 1995 consist of 26 restaurants located in the State of Oregon in
Albany, Aloha, Bend, Eugene (three restaurants), Gresham, Hood River, Madras,
McMinnville, Milwaukie, North Bend, Portland (six restaurants), Redmond, Salem
(two restaurants), The Dalles and Woodstock, and the State of Washington in
Kennewick, Longview, Richland and Yakima.

On September 26, 1995, the Company (hereafter also described as the
"Debtor") filed a petition for reorganization in the United States Bankruptcy
Court for the Western District of Washington at Seattle under Chapter 11 of
Title 11 of the United States Code.

Chicago Pizza & Brewery, Inc. ("CPB"), a California corporation, provided
the funding for the "Debtor's Plan of Reorganization, Dated February 29, 1996"
as modified (the "Plan") and thereby acquired all of the stock in the
reorganized entity known as Chicago Pizza Northwest, Inc. and defined in the
Plan as the "Reorganized Debtor." The Plan was confirmed by an order of the
Bankruptcy Court entered by the Court on March 18, 1996 and CPB funded the Plan
on March 29, 1996 (the "Effective Date").

The Plan provided that CPB invest $2,850,000 to fund the Plan. The aggregate
funding amount consists of approximately $2,350,000 in cash to be deposited
immediately into a so-called "Reorganization Fund" and $506,006 plus interest to
be paid over six years with respect to certain pre-petition priority tax debts
of Debtor. The Reorganization Fund will be used to pay the debtor's
administrative (post-petition), priority and lease cure claims in full, and the
balance will be distributed to the Debtor's unsecured creditors on a pro rata
basis. Holders of common stock of the Debtor will receive nothing.

CPB funded the Plan as described above on March 29, 1996. On the Effective
Date, the outstanding common stock of the debtor was cancelled and common stock
in the Reorganized Debtor, Chicago Pizza Northwest, Inc., a Washington
corporation and wholly-owned subsidiary of the CPB was issued.

Due to the transaction described above, the accompanying financial
statements for the three-month period ended March 29, 1996 are presented for the
period December 26, 1995 through March 29, 1996.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND PRINCIPLES OF COMBINATION:

The accompanying combined financial statements include the accounts of the
Purchased Assets, including allocations of overhead from the Parent, for
accounting, legal, information processing, administrative, financing and
marketing services. Such allocation is computed based on the net sales related
to the Purchased Assets (i.e., the 26 restaurants) as a percentage of the
Company's total restaurant net sales. Management believes such allocation is
reasonable as each individual restaurant will incur a portion of cost relative
to its sales volume. The Purchased Assets, as a combined entity, has no separate
legal status. All significant intercompany transactions and balances have been
eliminated in combination.

F-28
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FISCAL YEAR:

The Company utilized a 4-4-5 basis for the months included in its fiscal
year financial reports. The fiscal periods ended for the financial statements
included herein ended on December 20, 1993 (for Statement of Equity only),
December 26, 1994, December 25, 1995, March 27, 1995 and March 29, 1996.

INVENTORY:

Inventory consists of food products and supplies and are recorded at the
lower of cost (determined on a first-in, first-out basis) or market.

PROPERTY AND EQUIPMENT:

Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets as
follows:

<TABLE>
<S> <C>
Equipment....................................................... 5-10 years
Furniture and fixtures.......................................... 7 years
Automobiles..................................................... 3-5 years
</TABLE>

Leasehold improvements are amortized over the terms of the leases or their
estimated useful lives, if shorter.

When property and equipment are sold or otherwise disposed of, the asset
account and related accumulated depreciation and amortization account are
relieved, and any gain or loss is included in operations. Expenditures for
maintenance and repairs are charged against operations. Renewals and betterments
that materially extend the life of an asset are capitalized.

LEASES:

Leases that meet certain criteria are capitalized and included with property
and equipment. The resulting assets and liabilities are recorded at the lesser
of cost or amounts equal to the present value of the minimum lease payments at
the beginning of the lease term. Such assets are amortized evenly over the
related life of the lease or the useful lives of the assets. Interest expense
relating to these liabilities is recorded to effect constant rates over the
terms of the leases. Leases that do not meet such criteria are classified as
operating leases and rentals are charged to expense as incurred.

USE OF ESTIMATES:

The presentation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions for the reporting period and as of the financial statement date.
These estimates and assumptions affect the reported amounts of assets and
liabilities, the disclosure of contingent liabilities and the reported amounts
of revenues and expenses. Actual results could differ from these estimates.

INCOME TAXES:

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). Under SFAS No. 109, deferred tax liabilities and assets are determined
based on the difference between the financial statement and tax bases of assets
and liabilities, using enacted tax rates in effect for the year in which the
differences are expected to reverse.

F-29
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The results of operations of the Purchased Assets are included in the
Company's federal and state tax returns. No income tax benefit has been provided
in the accompanying combined financial statements as it is more likely than not
that the deferred tax assets originated in the net operating losses will not be
realized.

If the Purchased Assets had been profitable, or had available past or future
anticipated taxable income, for the years presented, an assumed effective rate
of 40% for provision or benefit of pretax income or loss would have been
reflected in these financial statements.

CONTRIBUTED CAPITAL:

All net charges from the Company for general and administrative expenses and
transfers of cash for cash management purposes are recorded as contributions
from the Company.

INTERIM RESULTS: (UNAUDITED)

The accompanying combined balance sheet as of March 29, 1996 and the
combined statements of operations and cash flows for the three-month periods
ended March 27, 1995 and March 29, 1996, and the combined statement of equity
for the three-month period ended March 29, 1996, are unaudited. In the opinion
of management, these combined statements have been prepared on the same basis as
the audited financial statements and include all adjustments, consisting of only
normal recurring adjustments, necessary for the fair presentation of results of
the interim periods. The data disclosed in these notes to the combined financial
statements for interim periods are also unaudited.

3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following as of:

<TABLE>
<CAPTION>
DECEMBER 25,
1995
------------ MARCH 29,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Leasehold improvements...................................... $ 2,451,211 $ 2,451,211
Equipment................................................... 3,493,962 3,500,749
Furniture and fixtures...................................... 102,330 102,577
Automobiles................................................. 160,781 160,781
------------ -----------
6,208,284 6,215,318
Less, accumulated depreciation and amortization........... (5,108,733) (5,223,024)
------------ -----------
$ 1,099,551 $ 992,294
------------ -----------
------------ -----------
</TABLE>

4. ACCRUED EXPENSES
Accrued expenses consist of the following as of:

<TABLE>
<CAPTION>
DECEMBER 25,
1995
------------ MARCH 29,
1996
-----------
(UNAUDITED)
<S> <C> <C>
Payroll related liabilities................................. $316,797 $276,572
Property taxes.............................................. 91,566 17,950
Other....................................................... 41,565 43,414
------------ -----------
$449,928 $337,936
------------ -----------
------------ -----------
</TABLE>

F-30
<PAGE>
PIETRO'S CORP.'S BUSINESS RELATED TO PURCHASED ASSETS
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

------------------------

5. COMMITMENTS

LEASES:

The Company leases equipment under noncancelable capital lease agreements
that expire in 1997 and 1999.

The Company also is obligated under long-term real estate operating leases
that expire at various dates through December 31, 2009 with options ranging from
3 to 15 years. The leases generally provide that the Company shall pay the
property taxes, insurance and utilities. A number of leases also provide for
contingent rentals based on a percentage of sales above a specified minimum.
Total contingent rentals for the years ended December 26, 1994 and December 25,
1995 and the three-month period ended March 31, 1996 were $42,218, $25,118 and
$3,752 (unaudited), respectively.

Rental payments on operating real estate leases charged to expense for the
years ended December 26, 1994 and December 25, 1995 were approximately
$1,059,000 and $1,152,000, respectively.

At December 25, 1995, minimum annual rental commitments under noncancelable
leases are as follows:

<TABLE>
<S> <C>
1996........................................................ $1,129,563
1997........................................................ 1,105,404
1998........................................................ 840,060
1999........................................................ 709,775
2000........................................................ 526,182
Thereafter.................................................. 2,350,319
----------
Total minimum lease payments........................ $6,661,303
----------
----------
</TABLE>

6. SUBSEQUENT EVENT

On May 15, 1996, CPB entered into an agreement to sell seven of the
restaurants included as part of the Purchased Assets. As part of the agreement,
CPB agreed to sell on May 31, 1996 ("First closing date"), the restaurants
located in Albany and Bend, and on June 30, 1996 ("Second closing date"), the
restaurants located in Richland, Kennewick, Yakima, Madras and Redmond. The
purchase price is equal to $1,000,000 less certain liabilities and other costs
assumed by the Buyer, as defined. This amount will be paid $400,000 on the First
closing date and $600,000 on the Second closing date. As part of the agreement,
CPB entered into covenant not to compete within the "Restrictive Territory," as
defined, for a period of 3 years.

The sales for the seven restaurants sold totaled approximately $3,700,000
and $3,500,000 for the years ended December 26, 1994 and December 25, 1995,
respectively. Operating profit excluding overhead allocation totaled
approximately $313,000 and $270,000 for the years ended December 26, 1994 and
December 25, 1995, respectively. Loss after overhead allocation relating to the
seven restaurants totaled approximately $454,000 and $327,000 for the years
ended December 26, 1994 and December 25, 1995, respectively.

F-31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALES REPRESENTATIVE OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY THE COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 3
The Offering................................... 5
Risk Factors................................... 11
Use of Proceeds................................ 20
Dividend Policy................................ 20
Dilution....................................... 21
Capitalization................................. 23
Selected Combined and Consolidated Financial
Data.......................................... 24
Pro Forma Combined Financial Data for the
Company....................................... 26
Combined Pro Forma Statement of Operations..... 26
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Excluding CPNI).............................. 27
Pietro's Corp. Management's Discussion and
Analysis of Financial Condition and Results of
Operations.................................... 35
The Company.................................... 38
Business....................................... 40
Management..................................... 47
Principal Shareholders......................... 56
Resale of Outstanding Securities............... 57
Certain Transactions........................... 58
Description of Securities...................... 64
Shares Eligible for Future Sale................ 66
Underwriting................................... 67
Legal Matters.................................. 69
Experts........................................ 69
Additional Information......................... 69
Index to Combined and Consolidated Financial
Statements.................................... F-1
Signatures..................................... II-7
Power of Attorney.............................. II-7
</TABLE>

------------------------

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

1,500,000 SHARES
OF COMMON STOCK
AND
1,500,000 REDEEMABLE WARRANTS

CHICAGO PIZZA & BREWERY, INC.

------------------

PROSPECTUS

------------------

THE BOSTON GROUP, L.P.

, 1996

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION, DATED AUGUST 1, 1996

PROSPECTUS

1,766,864 SHARES OF COMMON STOCK
10,014,584 REDEEMABLE WARRANTS

[LOGO]

COMMON STOCK

This Prospectus relates to the registration by Chicago Pizza & Brewery, Inc.
(the "Company"), at its expense, for the account of certain non-affiliated
security holders (the "Non-Affiliated Selling Security Holders") and one
independent director of the Company (the "Selling Director") with respect to a
total of: 1,766,864 shares of Common Stock (the "Selling Security Holders'
Shares"); 10,014,584 selling security holders' Redeemable Warrants (as
hereinafter defined) (the "Selling Security Holders' Redeemable Warrants"); and
10,014,584 shares of Common Stock issuable by the Company upon exercise of such
Selling Security Holders' Redeemable Warrants. As used in this Prospectus, the
Non-Affiliated Selling Security Holders and the Selling Director are
collectively referred to as the "Selling Security Holders." The Selling Security
Holders' Shares, the Selling Security Holders' Redeemable Warrants and the
shares of Common Stock issuable upon exercise of the Selling Security Holders'
Redeemable Warrants (all of which are collectively referred to herein as the
"Selling Security Holders' Securities") are not being underwritten in this
offering. However, substantially all of the Selling Security Holders are clients
of and are required to sell their Securities through the Representative, subject
to the customary compensation practices of the Representative. With the
exception of the exercise price of the Selling Security Holders' Redeemable
Warrants, the Company will not receive any proceeds from the sale of the Selling
Security Holders' Securities. See "Selling Security Holders". The Selling
Security Holders' Securities may be sold by the Selling Security Holders or
their respective transferees commencing on the date of this Prospectus. Sales of
the Selling Security Holders' Securities may depress the price of the Common
Stock or Redeemable Warrants in any market that may develop for the Common Stock
or Redeemable Warrants. See "The Offering," "Risk Factors" and "Certain
Transactions -- Private Placements."

Concurrently with this offering, the Company is offering 1,500,000 shares of
Common Stock and 1,500,000 Redeemable Warrants (the "Offering"). See "The
Offering." This Prospectus, except for this cover page, the back cover page and
the information contained herein under the heading "Selling Security Holders,"
and "Plan of Distribution" is part of a Prospectus relating to the Offering by
the Company. This Prospectus includes certain information (including all
information relating to the proposed underwritten Offering and the underwriters
thereof) that may not be pertinent to the sale by the Selling Security Holders.

Prior to this offering, there has been no public market for the Common Stock
or the Redeemable Warrants and there is no assurance that such a market will
develop, or if a market develops, that it will be sustained. The Company has
applied for approval for listing of the Common Stock and Redeemable Warrants on
the Nasdaq Small-Cap Market under the symbols CHGO and CHGOW, respectively.

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION. SEE "RISK FACTORS" AND "DILUTION" COMMENCING ON PAGES 11 AND 21,
RESPECTIVELY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------------------

The sale of the Selling Security Holders' Securities may be effected from
time to time in transactions (which may include block transactions by or for the
account of the Selling Security Holders) in the over-the-counter market or in
negotiated transactions, through the writing of options on the Selling Security
Holders' Securities, through a combination of such methods of sale or otherwise.
Sales may be made at fixed prices which may be changed, at market prices
prevailing at the time of sale, or at negotiated prices. If any Selling Security
Holder sells his, her or its Selling Security Holders' Securities or options
thereon, pursuant to this Prospectus at a fixed price or at a negotiated price
which is, in either case, other than the prevailing market price or in a block
transaction to a purchaser who resells, or if any Selling Security Holder pays
compensation to a broker-dealer that is other than the usual and customary
discounts, concessions or commissions, or if there are any arrangements either
individually or in the aggregate that would constitute a distribution of the
Selling Security Holders' Securities, a post-effective amendment to the
Registration Statement of which this Prospectus is a part would need to be filed
and declared effective by the Securities and Exchange Commission before such
Selling Security Holder could make such sale, pay such compensation or make such
a distribution. The Company is under no obligation to file a post-effective
amendment to the Registration Statement of which this Prospectus is a part under
such circumstances.

THE DATE OF THIS PROSPECTUS IS , 1996
<PAGE>
SELLING SECURITY HOLDERS

An aggregate of 1,766,864 shares of Common Stock, 10,014,584 Redeemable
Warrants and 10,014,584 shares of Common Stock issuable upon exercise of the
Redeemable Warrants are being registered in this Offering for the account of the
Selling Security Holders. The Selling Security Holders' Securities may be sold
by the Selling Security Holders or their respective transferees commencing on
the date of this Prospectus. Sales of such shares of Common Stock or Redeemable
Warrants by the Selling Security Holders or their respective transferees may
depress the price of the Common Stock or Redeemable Warrants in any market that
may develop for such Selling Security Holders' Securities.

The following table sets forth certain information with respect to persons
for whom the Company is registering such shares of Common Stock for resale to
the public. With the exception of the exercise price of the Selling Security
Holders' Redeemable Warrants, the Company will not receive any of the proceeds
from the sale of such shares of Common Stock. Except as described in "Certain
Transactions," none of the Selling Security Holders other than the Selling
Director, Barry Jon Grumman, has had any position, office or material
relationship with the Company or its affiliates since the Company's inception in
1991. However, one of the Selling Security Holders, Mr. Stanley Schneider is
currently a nominee to the Company's board of directors. Neither the Seller
Security Holders' Shares, the Selling Security Holders' Redeemable Warrants nor
the shares issuable upon exercise of the Selling Security Holders' Redeemable
Warrants are being underwritten by the Underwriters in connection with the
Offering. However, substantially all of the Selling Security Holders are clients
of and are required to sell their Securities through the Representative, subject
to the customary compensation practices of the Representative.

AMOUNT OF
REDEEMABLE
WARRANTS OWNED
NAME OF SELLING SECURITY HOLDER (1) AFTER OFFERING
- ------------------------------------------- -----------------
<S> <C>
Robert & Antoinette Ahr.................... 0
Alico Limited Partnership.................. 0
Karim Amiryani............................. 0
Stanley S. Arkin........................... 0
Lester C. Aroh............................. 0
Ashden LLORCA Limited Director's Pension
Scheme.................................... 0
D.S. Asher................................. 0
Assi, Inc. (4)............................. 0
Jonathon Axelrod........................... 0
Robert L. & Kathleen F. Barnett as Joint
Tenants with Right of Survivorship........ 0
Morris Boladian & Peru Grigorian as Tenants
in Common................................. 0
Gregory John Branch........................ 0
Jeffery C. Brenner......................... 0
Charles R. Buckridge as Trustee of the
Charles R. Buckridge Revocable Trust...... 0
Dr. Robert Cano............................ 0
Anthony Ceracche........................... 0
Mark Jeffrey Chayet Revocable Trust........ 0
Joe & Sue Cogdell as Joint Tenants with
Right of Survivorship..................... 0
David Coward............................... 0
David B. Coward & Linda J. Coward as
Trustees of the Coward Family Trust....... 0
Cystic Fybrosis Foundation................. 0
Stan Dreyfus............................... 0
John Paul De Joria......................... 0
</TABLE>

SS-1
<PAGE>

<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF AMOUNT OF
SHARES AMOUNT OF AMOUNT OF REDEEMABLE REDEEMABLE
OWNED SHARES SHARES WARRANTS OWNED WARRANTS
(BEFORE BEING OWNED AFTER (BEFORE BEING
NAME OF SELLING SECURITY HOLDER (1) OFFERING) REGISTERED OFFERING (2) OFFERING) REGISTERED(3)
- ------------------------------------------- ----------- ----------- ----------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Laura M. Durso............................. 12,500 6,250 6,250 37,500 37,500
L. Dean Echelbarger........................ 25,000 12,500 12,500 75,000 75,000
Laurie Fisher.............................. 6,250 3,125 3,125 18,750 18,750
Larry M. Follett........................... 12,500 6,250 6,250 37,500 37,500
Jack Friedman.............................. 18,750 9,375 9,375 56,250 56,250
Mark & Janelle Friedman as Community
Property.................................. 6,250 3,125 3,125 18,750 18,750
Robert & Thelma Gault as Joint Tenants with
Right of Survivorship..................... 25,000 12,500 12,500 75,000 75,000
Larry R. Gordon............................ 138,672 82,422 56,250 442,188 442,188
Donald B. Greenwood........................ 12,500 6,250 6,250 37,500 37,500
Dean O. & John Gregg as Tenants in
Common.................................... 13,086 13,086 0 0 0
Barry Jon Grumman, Selling Director........ 285,579 39,258 246,321 300,000 300,000
Louis Habash............................... 26,172 26,172 0 0 0
Norton Herrick (4)......................... 250,000 250,000 0 1,500,000 1,500,000
HiTek Inc. Melvin Gondelman................ 25,000 12,500 12,500 75,000 75,000
Richard Houlihan........................... 5,234 5,234 0 0 0
International Capital Investment Company... 12,500 6,250 6,250 37,500 37,500
J.M.J. Resources........................... 6,250 3,125 3,125 18,750 18,750
Robert & Ruth Jurgensmeyer as Joint Tenants
with Right of Survivorship................ 25,000 12,500 12,500 75,000 75,000
Gabriel Kaplan............................. 63,672 44,922 18,750 112,500 112,500
Gabriel Kaplan P/Adm City National Bank C/F
Rotunda Productions Inc. MPPP............. 37,500 18,750 18,750 112,500 112,500
Martin Katz................................ 6,250 3,125 3,125 18,750 18,750
P/ADM Larry Gordon as Trustee of the Keca
Music Profit Sharing Plan................. 25,000 12,500 12,500 75,000 75,000
Dr. Michael Kesselbrenner.................. 12,500 6,250 6,250 37,500 37,500
L. Rolls Nominee Ltd....................... 25,000 12,500 12,500 75,000 75,000
Donna Ann Leahy as Trustee of the Donna Ann
Leahy Revocable
Inter-vivos Trust......................... 50,000 25,000 25,000 150,000 150,000
Jeffrey R. Lemler.......................... 18,750 9,375 9,375 56,250 56,250
Marc Levin................................. 12,500 6,250 6,250 37,500 37,500
Lexington Ventures......................... 50,000 25,000 25,000 450,000 450,000
Ronald A. Litz............................. 12,500 6,250 6,250 37,500 37,500
Michael & Julie Loshin as Joint Tenant with
Right of Survivorship..................... 3,125 1,563 1,562 9,375 9,375
Fred & Barbara Martell as Joint Tenants
with Right of Survivorship................ 25,000 12,500 12,500 75,000 75,000
Walter Matthews............................ 12,500 6,250 6,250 37,500 37,500
Lon W. Mericle............................. 13,086 13,086 0 0 0
Ronald T. & Carol E. Michalski as Joint
Tenants with Right of Survivorship........ 12,500 6,250 6,250 37,500 37,500
L.A. Moore................................. 12,500 6,250 6,250 37,500 37,500
The Mulkey Limited Partnership............. 31,543 19,043 12,500 75,000 75,000
NFSC/FMTC JRA-FBO Dr. Carmen
Schuller-Lemler........................... 6,250 3,125 3,125 18,750 18,750
Stephano Natale............................ 38,086 25,586 12,500 75,000 75,000
Doyle L. Parker............................ 12,500 6,250 6,250 37,500 37,500
Liliana M. Partida......................... 13,086 13,086 0 0 0
Michael Pizitz............................. 6,250 3,125 3,125 18,750 18,750
Richard Pizitz............................. 6,250 3,125 3,125 18,750 18,750
John Post.................................. 12,500 6,250 6,250 37,500 37,500
Giovanni Purificato........................ 12,500 6,250 6,250 37,500 37,500

AMOUNT OF
REDEEMABLE
WARRANTS OWNED
NAME OF SELLING SECURITY HOLDER (1) AFTER OFFERING
- ------------------------------------------- -----------------
<S> <C>
Laura M. Durso............................. 0
L. Dean Echelbarger........................ 0
Laurie Fisher.............................. 0
Larry M. Follett........................... 0
Jack Friedman.............................. 0
Mark & Janelle Friedman as Community
Property.................................. 0
Robert & Thelma Gault as Joint Tenants with
Right of Survivorship..................... 0
Larry R. Gordon............................ 0
Donald B. Greenwood........................ 0
Dean O. & John Gregg as Tenants in
Common.................................... 0
Barry Jon Grumman, Selling Director........ 0
Louis Habash............................... 0
Norton Herrick (4)......................... 0
HiTek Inc. Melvin Gondelman................ 0
Richard Houlihan........................... 0
International Capital Investment Company... 0
J.M.J. Resources........................... 0
Robert & Ruth Jurgensmeyer as Joint Tenants
with Right of Survivorship................ 0
Gabriel Kaplan............................. 0
Gabriel Kaplan P/Adm City National Bank C/F
Rotunda Productions Inc. MPPP............. 0
Martin Katz................................ 0
P/ADM Larry Gordon as Trustee of the Keca
Music Profit Sharing Plan................. 0
Dr. Michael Kesselbrenner.................. 0
L. Rolls Nominee Ltd....................... 0
Donna Ann Leahy as Trustee of the Donna Ann
Leahy Revocable
Inter-vivos Trust......................... 0
Jeffrey R. Lemler.......................... 0
Marc Levin................................. 0
Lexington Ventures......................... 0
Ronald A. Litz............................. 0
Michael & Julie Loshin as Joint Tenant with
Right of Survivorship..................... 0
Fred & Barbara Martell as Joint Tenants
with Right of Survivorship................ 0
Walter Matthews............................ 0
Lon W. Mericle............................. 0
Ronald T. & Carol E. Michalski as Joint
Tenants with Right of Survivorship........ 0
L.A. Moore................................. 0
The Mulkey Limited Partnership............. 0
NFSC/FMTC JRA-FBO Dr. Carmen
Schuller-Lemler........................... 0
Stephano Natale............................ 0
Doyle L. Parker............................ 0
Liliana M. Partida......................... 0
Michael Pizitz............................. 0
Richard Pizitz............................. 0
John Post.................................. 0
Giovanni Purificato........................ 0
</TABLE>

SS-2
<PAGE>

AMOUNT OF
REDEEMABLE
WARRANTS OWNED
NAME OF SELLING SECURITY HOLDER (1) AFTER OFFERING
- ------------------------------------------- -----------------
<S> <C>
Gordon Rausser............................. 0
Clarke E. Reynolds......................... 0
Daniel & Laura Rosenbaum as Joint
Tenants................................... 0
William Russell-Shapiro.................... 0
Mark L. Saginor, MD........................ 0
Ronald M. Sanders.......................... 0
Stephen Schmidt............................ 0
Stanley B. Schneider, Nominee to Board..... 0
Leonard Shaykin............................ 0
Michael S. & Nancy E. Sitrick, Trustees or
the Successor Trustee of the Michael and
Nancy Sitrick Trust....................... 0
Albert A. & Mary K Skwiertz, Jr. as Joint
Tenants with Right of Survivorship........ 0
Nicholas P. Smith.......................... 0
Michael & Lee Srednick Family Trust Dated
May 9, 1991............................... 0
Arthur Steinberg IRA Rollover.............. 0
NFSC/FMTC IRA Rollover FBO Carl F.
Steinfield................................ 0
Carl F. Steinfield......................... 0
Michael & Robin Stern, Community Property
as Tenants in Common...................... 0
Douglas F. Stuart.......................... 0
Tri Ventures............................... 0
Joseph & Susan Vasselli as Joint Tenants
with Right of Survivorship................ 0
Aldo & Melissa Verrelli as Joint Tenants
with Right of Survivorship................ 0
Claudia K. Walters......................... 0
Dr. Paul X. Welch.......................... 0
Nick Westland.............................. 0
James Widdoes.............................. 0
James Edward Willard....................... 0
Yesterday's Amusement Co................... 0
</TABLE>

- ------------------------------
(1) Information set forth in the table regarding the Selling Security Holders'
Shares and the Selling Security Holders' Redeemable Warrants is provided to
the best knowledge of the Company based on information furnished to the
Company by the respective Selling Security Holders and/or available to the
Company through its stock ledgers.

(2) Assumes that each Selling Security Holder sells all of the Securities which
the respective Selling Security Holder has the right to register pursuant to
the respective placement in which the Selling Security Holder obtained his
or her interest in the Company. See "Certain Transactions -- Private
Placements."

(3) Alternatively, the holders of the Selling Security Holders' Redeemable
Warrants may exercise their respective Redeemable Warrants and sell the
underlying Common Stock.

(4) Selling Security Holders of special warrants. Upon sale of such special
warrants by such Selling Security Holders or their respective affiliates,
such special warrants become Redeemable Warrants. Such holders are offering
the Redeemable Warrants for sale and are included in the Selling Security
Holders Redeemable Warrants. See "Description of Securities -- Redeemable
Warrants."

PLAN OF DISTRIBUTION

The sale of the Selling Security Holders' Securities may be effected from
time to time in transactions (which may include block transactions by or for the
account of the Selling Security Holders) in

SS-3
<PAGE>

the over-the-counter market or in negotiated transactions, through the writing
of options on the Selling Security Holders' Securities, through a combination of
such methods of sale, or otherwise. Sales may be made at fixed prices which may
be changed, at market prices prevailing at the time of sale, or at negotiated
prices. If any Selling Security Holder sells his, her or its Selling Security
Holders' Securities, or options thereon, pursuant to this Prospectus at a fixed
price or at a negotiated price which is, in either case, other than the
prevailing market price or in a block transaction to a purchaser who resells, or
if any Selling Security Holder pays compensation to a broker-dealer that is
other than the usual and customary discounts, concessions or commissions, or if
there are any arrangements either individually or in the aggregate that would
constitute a distribution of the Selling Security Holders' Securities, a
post-effective amendment to the Registration Statement of which this Prospectus
is a part would need to be filed and declared effective by the Securities and
Exchange Commission before such Selling Security Holder could make such sale,
pay such compensation or make such a distribution. The Company is under no
obligation to file a post-effective amendment to the Registration Statement of
which this Prospectus is a part under such circumstances.

The Selling Security Holders may effect transactions in their Selling
Security Holders' Securities by selling their securities directly to purchasers,
through broker-dealers acting as agents for the Selling Security Holders or to
broker-dealers who may purchase the Selling Security Holders' Securities as
principals and thereafter sell such securities from time to time in the
over-the-counter market, in negotiated transactions, or otherwise. Such
broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Security Holders and/or the
purchasers for whom such broker-dealers may act as agents or to whom they may
sell as principals or both.

The Selling Security Holders and broker-dealers, if any, acting in
connection with such sales might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Act and any commission received by them and any
profit on the resale of such securities might be deemed to be underwriting
discounts and commissions under the Act.

SS-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALES REPRESENTATIVE OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
BUY THE COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
The Offering................................... 5
Risk Factors................................... 11
Use of Proceeds................................ 20
Dividend Policy................................ 20
Dilution....................................... 21
Capitalization................................. 23
Selected Combined and Consolidated Financial
Data.......................................... 24
Pro Forma Combined Financial Data for the
Company....................................... 26
Combined Pro Forma Statement of Operations..... 26
The Company Management's Discussion and
Analysis of Financial Condition and Results of
Operations (Excluding CPNI)................... 27
Pietro's Corp. Management's Discussion and
Analysis of Financial Condition and Results of
Operations.................................... 35
The Company.................................... 38
Business....................................... 40
Management..................................... 47
Principal Shareholders......................... 56
Resale of Outstanding Securities............... 57
Certain Transactions........................... 58
Description of Securities...................... 64
Shares Eligible for Future Sale................ 66
Underwriting................................... 67
Legal Matters.................................. 69
Experts........................................ 69
Additional Information......................... 69
Selling Security Holders....................... SS-1
Plan of Distribution........................... SS-3
Index to Combined and Consolidated Financial
Statements.................................... F-1
</TABLE>

------------------------

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

1,766,864 SHARES
OF COMMON STOCK
AND
10,014,584 REDEEMABLE WARRANTS

[LOGO]

------------------

PROSPECTUS

------------------

, 1996

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following tables sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions and non-accountable expense allowance.
All of the amounts shown are estimates, except the Securities and Exchange
Commission registration and NASD filing fees.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee................... $ 35,672.73
NASD fees............................................................. $ 10,848.23
Nasdaq listing fee.................................................... $ 10,000.00
Accounting fees and expenses.......................................... $300,000.00
Printing and engraving expenses....................................... $ 60,000.00
Transfer agent and registrar (fees and expenses)...................... $ 10,000.00
NASD expenses (including counsel fees)................................ $ 12,500.00
Blue sky fees and expenses (including counsel fees)................... $ 45,000.00
Other legal fees and legal expenses................................... $300,000.00
Miscellaneous expenses................................................ $ 15,979.04
-----------
Total............................................................... $800,000.00
-----------
-----------
</TABLE>

- ------------------------

* To be filed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Pursuant to provisions of the California General Corporation Law, the
Articles of Incorporation of the registrant (the "Company"), as amended, include
a provision which eliminates the personal liability of its directors to the
Company and its shareholders for monetary damage to the fullest extent
permissible under California law. This limitation has no effect on a director's
liability (i) for acts or omissions that involve intentional misconduct or a
knowing and culpable violation of law, (ii) for acts or omissions that a
director believes to be contrary to the best interests of the Company or its
shareholders or that involve the absence of good faith on the part of the
director, (iii) for any transaction from which a director derived an improper
personal benefit, (iv) for acts or omissions that show a reckless disregard for
the director's duty to the Company or its shareholders in circumstances in which
the director was aware, or should have been aware, in the ordinary course of
performing his or her duties, of a risk of a serious injury to the Company or
its shareholders, (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to the
Company or its shareholders, (vi) under Section 310 of the California General
Corporation Law (concerning contracts or transactions between the Company and a
director) or (vii) under Section 316 of the California General Corporation Law
(concerning directors' liability for improper dividends, loans and guarantees).
The provision does not eliminate or limit the liability of an officer for any
act or omission as an officer, notwithstanding that the officer is also a
director or that his actions, if negligent or improper, have been ratified by
the Board of Directors. Further, the provision has no effect on claims arising
under federal or state securities or blue sky laws and does not affect the
availability of injunctions and other equitable remedies available to the
Company's shareholders for any violation of a director's fiduciary duty to the
Company or its shareholders.

II-1
<PAGE>
Company will indemnify each such person (an "indemnitee") against certain claims
arising out of certain past, present or future acts, omissions or breaches of
duty committed by an indemnitee while serving in his employment capacity. Such
indemnification does not apply to acts or omissions which are knowingly
fraudulent, deliberately dishonest or arise from willful misconduct.
Indemnification will only be provided to the extent that the indemnitee has not
already received payments in respect of a claim from the Company or from an
insurance company. Under certain circumstances, such indemnification (including
reimbursement of expenses incurred) will be allowed for liability arising under
the Securities Act.

THE COMPANY INTENDS TO PURCHASE A DIRECTORS' AND OFFICERS' LIABILITY
INSURANCE POLICY INSURING DIRECTORS AND OFFICERS OF THE COMPANY.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

During the past three years, the Company issued securities pursuant to the
following transactions:

On November 1, 1994 the Company entered into an agreement with Woodbridge
Holdings, Inc. ("WHI"), a consulting firm in Newport Beach, California. The
agreement was for services related to selection of professional advisers and
general corporate development. WHI was to assist the Company in the selection of
legal counsel and accountants, in designing public relations materials and
printed materials, in formulating a description of the Company's business plan,
in designing a stock compensation plan and negotiating for printing services.
The contract expired on May 1, 1995 and was not renewed. Actual services
provided by WHI were limited to logo printing design, printing arrangements and
selection of professionals. For its services in that period, WHI received
$60,000, from which WHI was required to pay for printing expenses. In addition,
for services rendered during that period, WHI received 69,792 shares of Common
Stock which were earned and issuable on May 1, 1995 and the right to receive an
additional 69,443 shares of Common Stock ("Additional Shares") issuable after
completion of an initial public offering, such as this Offering, by the Company.
The value attributed to the 69,792 shares earned and issuable to WHI as of May
1, 1995 is $0.75 per share or $52,344 and the value attributed to the 69,443
shares to be issued is $6.00 or $416,658. On August , 1996, on the assumption
that this Offering would close, the Company issued WHI the Additional Shares.
WHI has the right to have its shares registered by the Company at WHI's cost.
The above transaction was exempt from registration under Section 4(2) of the
Securities Act of 1933 as a private placement to a single entity.

On November 7, 1994 as partial consideration for the purchase of the Roman
Systems restaurants pursuant to the Acquisition Agreement, the Company issued
500,000 shares of Common Stock of the Company to each of Mr. Cunningham and Mr.
Phillips, which as a result of the May 1995 stock split are currently equivalent
to 174,480 shares of Common Stock of the Company outstanding to each of Mr.
Phillips and Mr. Cunningham. On November 14, 1994 as partial consideration for
the purchase of the Belmont Shore and La Jolla-Prospect restaurants through the
acquisition of Mr. Grumman's limited partnership interests, the Company issued
to Mr. Grumman 226,824 shares of Common Stock of the Company. See "Certain
Transactions." The above transactions were exempt from registration under
Section 4(2) of the Securities Act of 1933 as private placements to a limited
number of individuals.

II-2
<PAGE>

holders or respective transferees commencing on the date of this Prospectus. The
principal underwriter of this placement was the Representative who received 13%
of the total gross proceeds raised in the placement. The placement was to
accredited investors only and was exempt from registration pursuant to
Regulation D promulgated by the Securities and Exchange Commission.

In May 1995, the Company issued warrants to purchase up to 300,000 shares of
Common Stock at a price of $5.00 per share to each of Barry Grumman, a director
of the Company, and Lexington Ventures, Inc. The warrants were issued to each of
Mr. Grumman and Lexington Ventures, Inc. at a price of $0.07 per warrant or a
total price to each of $21,000. Mr. Grumman's liability for payment of the
warrants was extinguished in consideration for past services as a director of
the Company which had not been previously compensated. Upon effectiveness of the
Registration Statement of which this Prospectus is a part, the warrants issued
in this placement convert into a like number of Redeemable Warrants which are
being registered concurrently with this Offering as Selling Security Holders'
Redeemable Warrants. The Selling Security Holders' Redeemable Warrants and all
of the shares issuable upon exercise of such Selling Security Holders'
Redeemable Warrants may be sold by the holders or respective transferees
commencing on the date of this Prospectus. The above placements were to
accredited investors and were exempt from registration pursuant to Regulation D
promulgated by the Securities and Exchange Commission.

In September 1995, the Company completed an offering of $6,100,000 in Units,
each consisting of 25,000 shares of Common Stock at a price of $3.85 per share
and 75,000 warrants at a price of $0.05 per warrant. Half of the shares issued
in this placement are being registered concurrently with this Offering and are
included in the Selling Security Holders' Shares. Upon effectiveness of the
Registration Statement of which this Prospectus is a part, all of the warrants
issued in this placement convert into a like number of Redeemable Warrants which
are also being registered concurrently with this Offering and are included in
the Selling Security Holders' Redeemable Warrants. As a result, half of the
shares, all of the warrants issued in this placement and the shares issuable
upon exercise of such warrants may be sold by the holders or respective
transferees commencing on the date of this Prospectus. The principal underwriter
of this placement was the Representative who received 13% of the total gross
proceeds raised in the placement. The placement was to accredited investors only
and was exempt from registration pursuant to Regulation D promulgated by the
Securities and Exchange Commission.

II-3
<PAGE>

$1,000,000, respectively, which Convertible Notes both convert simultaneously
with the closing of this Offering. The Convertible Note issued to ASSI, Inc.
converts into 500,000 shares of Common Stock and into Special Warrants to
purchase 3,000,000 shares of Common Stock. See "Description of Securities --
Redeemable Warrants." The Convertible Note issued to Mr. Herrick converts into
250,000 shares of Common Stock and into Special Warrants to purchase 1,500,000
shares of Common Stock. The 4,700,000 Redeemable Warrants into which the
4,700,000 Special Warrants convert upon sale of the Special Warrants by the
current holders or their affiliates are included in the Selling Security
Holders' Redeemable Warrants.

In connection with the aforementioned financing of the Pietro's Acquisition,
which was obtained through the Representative, the Company paid the
Representative 13% of the total $3,000,000 investment, or $390,000. Both ASSI,
Inc. and Mr. Herrick are accredited investors and are exempt from registration
pursuant to Regulation D promulgated by the Securities and Exchange Commission.

Also on February 20, 1996, the Company entered into a consulting agreement
with ASSI, Inc. regarding the Pietro's Acquisition (the "Pietro's Consulting
Agreement"). Under this Agreement, ASSI, Inc. agrees to advise the Company in
connection with the reconstruction, expansion, marketing and strategic
development of the restaurants acquired from Pietro's. In consideration for such
services, the Company shall pay to ASSI, Inc. an annual fee equal to 5% of Net
Profits of the restaurants acquired under the plan of reorganization and
retained by the Company. As additional consideration for the consulting
services, the Company has issued to ASSI, Inc. an additional aggregate of
100,000 Special Warrants to purchase shares of common stock of the Company.
These Special Warrants convert into Redeemable Warrants upon their sale by the
current holders or their affiliates and such Redeemable Warrants are also
included in the Selling Security Holders' Redeemable Warrants. See "Description
of Securities -- Redeemable Warrants." The Pietro's Consulting Agreement
terminates on December 31, 2000.

The Company also entered into a consulting agreement with ASSI, Inc. (the
"Vegas Consulting Agreement") pursuant to which ASSI, Inc. agrees to advise the
Company with site selection and marketing and development strategy for
penetrating the Las Vegas, Nevada market. In consideration for such services,
the Company shall pay to ASSI, Inc. an annual fee (the "Annual Fee") equal to
10% of Net Profits (as hereinafter defined) of the acquired Las Vegas
restaurants. As additional consideration for the consulting services, the
Company has issued to ASSI, Inc. an aggregate of 100,000 Special Warrants. The
Vegas Consulting Agreement terminates on December 31, 2000. These Special
Warrants convert into Redeemable Warrants upon their sale by the current holders
or their affiliates and such Redeemable Warrants are included in the Selling
Security Holders' Redeemable Warrants. See "Description of Securities --
Redeemable Warrants."

ASSI, Inc. is an accredited investor. As a result, the Company's issuance of
Special Warrants under both the Pietro's Consulting Agreement and the Vegas
Consulting Agreement is exempt from registration pursuant to Regulation D
promulgated by the Securities and Exchange Commission.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement**
2.1 Debtor's Plan of Reorganization**
2.2 Asset Purchase Agreement by and between the Company and Roman Systems, Inc.**
2.3 Secured Promissory Note by and between the Company and Roman Systems, Inc.**
3.1 Amended and Restated Articles of Incorporation of the Company, as amended**
3.2 Bylaws of the Company**
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
4.1 Specimen Stock Certificate of the Company*
<C> <S>
4.2 Warrant Agreement
4.3 Form of Public Warrant
4.4 Form of Representative's Warrant**
5.1 Opinion of Jeffer, Mangels, Butler & Marmaro LLP*
10.1 Employment Agreement of Jeremiah J. Hennessy**
10.2 Employment Agreement of Paul Motenko**
10.6 Form of Indemnification Agreement with Officers and Directors**
10.7 Chicago Pizza & Brewery, Inc. Stock Option Plan**
10.8 Placement Agent Agreement between the Company and The Boston Group, L.P., as amended*
10.9 Lease Agreement -- Corporate Headquarters, Mission Viejo**
10.10 Lease Agreement -- Corporate Headquarters, Chicago Pizza Northwest**
10.11 Consulting Agreement between the Company and Assi, Inc. -- Pietro's**
10.12 Consulting Agreement between the Company and Assi, Inc. -- Nevada**
10.13 Note Purchase Agreement by and between the Company and Assi, Inc.**
10.14 Note Purchase Agreement by and between the Company and Norton Herrick**
10.15 Asset Purchase Agreement by and between the Company and Abby's, Inc.**
10.16 BJ's Lahaina, L.P. Partnership Agreement**
10.17 Pepsi Supplier Agreement**
21.1 List of Subsidiaries**
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Jeffer, Mangels, Butler & Marmaro* (included in Exhibit 5.1)
24 Power of Attorney (please see page II-7 of the Registration Statement on Form SB-2).
</TABLE>

- ------------------------
* To be filed by Amendment.

** Previously filed.

(b) Financial Statement Schedules

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:

(i) To include any Prospectus required by section 10(a)(3) of the
Securities Act of 1933;

(ii) To reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually, or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement; notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum Offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
(Section230.424(b) of this Chapter) if, in the

II-5
<PAGE>
aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate Offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.

(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein,
and the Offering of such securities at that time shall be deemed to be
the initial bona fide Offering thereof.

(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the Offering.

Insofar as indemnification for liabilities arising from the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Act shall be deemed to be part of this Registration Statement
as of the time it was declared effective.

For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of Prospectus shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the Offering of such securities at that time shall be deemed to be
the initial bona fide Offering thereof.

II-6
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California on the 31st day of July, 1996.

CHICAGO PIZZA & BREWERY, INC.

By: /s/ PAUL MOTENKO

-----------------------------------
Paul Motenko,
CHIEF EXECUTIVE OFFICER

POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Paul
Motenko his true and lawful attorney-in-fact and agent, acting alone, with full
powers of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, any Amendments
thereto and any Registration Statement for the same Offering which is effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, each acting alone, full powers and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all said attorney-in-fact
and agent, acting alone, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Company in the capacities and on the dates indicated.

SIGNATURE CAPACITY DATE
- ----------------------------------- ------------------------- ----------------

Chief Executive Officer,
/s/ PAUL MOTENKO Chairman of the Board,
- ----------------------------------- Vice President and July 31, 1996
Paul Motenko Secretary

/S/ JEREMIAH J. HENNESSY President, Chief
- ----------------------------------- Operating Officer and July 31, 1996
Jeremiah J. Hennessy Director

Chief Financial Officer,
/S/ LAURA PARISI Chief Accounting
- ----------------------------------- Officer, July 31, 1996
Laura Parisi Assistant Secretary

[SIGNATURES CONTINUED ON PAGE II-8]

II-7
<PAGE>

[SIGNATURES CONTINUED FROM PAGE II-7]

SIGNATURE CAPACITY DATE
- ----------------------------------- ------------------------- ----------------

/S/ ALEXANDER M. PUCHNER
- ----------------------------------- Director of Brewing July 31, 1996
Alexander M. Puchner Operations and Director

/S/ BARRY J. GRUMMAN
- ----------------------------------- Director July 31, 1996
Barry J. Grumman

II-8
<PAGE>

CONSENT OF NOMINEES

We, the undersigned, consent to be referred to in this Prospectus and
Registration Statement on Form SB-2 (File No. 333-5182-LA) as nominees to the
Board of Directors of Chicago Pizza & Brewery, Inc.

/S/ STANLEY B. SCHNEIDER
- ----------------------------------- Date: June 20, 1996
Stanley B. Schneider

/S/ STEVEN F. MAYER
- ----------------------------------- Date: June 14, 1996
Steven F. Mayer

/S/ STEPHEN F. MONTICELLI
- ----------------------------------- Date: June 17, 1996
Stephen F. Monticelli

II-9

<PAGE>

WARRANT AGREEMENT

This WARRANT AGREEMENT, dated this ___ day of ____, 1996, by and between
CHICAGO PIZZA & BREWERY, INC., a California corporation (the "Company"), and
U.S. STOCK TRANSFER CORPORATION, a California corporation.

WITNESSETH:

WHEREAS, in connection with (i) the offering to the public (the "Public
Offering") of One Million Five Hundred Thousand (1,500,000) shares (the
"Shares") of the Company's common stock and One Million Five Hundred Thousand
(1,500,000) redeemable warrants, each warrant entitling the holder thereof to
purchase one Share of the Company's common stock (the "Warrant Stock") pursuant
to that certain Underwriting Agreement (the "Underwriting Agreement") dated
__________, 1996 between the Company and The Boston Group, L.P. (the
"Representative"), as representative of the several underwriters named therein
(the "Underwriters"); (ii) the over-allotment option granted to the Underwriters
in connection with the Public Offering to purchase up to an additional Two
Hundred Twenty Five Thousand (225,000) Shares and/or an additional Two Hundred
Twenty Five Thousand (225,000) Warrants (the "Over-Allotment Option"), (iii) the
automatic conversion of Ten Million Fourteen Thousand Five Hundred Eighty Four
(10,014,584) outstanding warrants (which includes Four Million Seven Hundred
Thousand (4,700,000) special warrants referred to herein as
"Special Warrants") in accordance with their terms into Redeemable Warrants
(collectively with the warrants issued in the Public Offering, the "Warrants"),
and (iv) the issuance of warrants to the Representative (the "Representative's
Warrants") exercisable for One Hundred Fifty Thousand (150,000) shares of Common
Stock, and (v) the issuance of warrants underlying the Representative's
Warrants exercisable for One Hundred Fifty Thousand (150,000) shares of
Common Stock, the Company will have outstanding a total of Twelve Million
Thirty Nine Thousand Five Hundred Eighty Four (12,039,584) warrants, all of
which shall be designated as "Redeemable Warrants" (referred to herein as
"Warrants") (subject to increase as provided herein (as such term is defined in
SECTION 1(u) hereof));

WHEREAS, the Company desires to provide for the issuance of certificates
representing the Redeemable Warrants; and

WHEREAS, the Company desires U.S. Stock Transfer Corporation to act on
behalf of the Company, and U.S. Stock Transfer Corporation is willing to so act,
in connection with the issuance, registration, transfer and exchange of
certificates representing the Warrants and the exercise of the Warrants.

NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the

<PAGE>

certificates representing the Warrants and the respective rights and obligations
thereunder of the Company, the Underwriters, the holders of certificates
representing the Warrants and U.S. Stock Transfer Corporation, the parties
hereto agree as follows:

SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise requires:

(a) "Act" shall have the meaning assigned to such term in Section
5(b) of this Agreement.

(b) "Change of Shares" shall have the meaning assigned to such term
in Section 8(a)(i) of this Agreement.

(d) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
voting and in the distribution of earnings and assets of the Company without
limit as to amount or percentage.

(e) "Company" shall have the meaning assigned to such term in the
first (1st) paragraph of this Agreement.

(f) "Corporate Office" shall mean the office of the Warrant Agent (as
such term is defined in Section 1(y) hereof) at which at any particular time its
principal business shall be administered, which office is located on the date
hereof at 1745 Gardena Avenue, Glendale, California 91204-2991.

(g) "Exchange Act" shall have the meaning assigned to such term in
Section 4(c) of this Agreement.

(h) "Exercise Date" shall mean, subject to the provisions of Section
5(b) hereof, as to any Warrant, the date on which the Warrant Agent shall have
received both (i) the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder (as such term is
defined in Section 1(o) hereof) thereof or his attorney duly authorized in
writing, and (ii) payment in cash or by check made payable to the Warrant Agent
for the account of the Company of the amount in lawful money of the United
States of America equal to the applicable Purchase Price (as such term is
defined in Section 1(l) hereof).

(i) "Initial Warrant Exercise Date" shall mean _____________, 1997
[ONE YEAR AFTER EFFECTIVE DATE].

(j) "Initial Warrant Redemption Date" shall mean _____________, 1997
[ONE YEAR AFTER EFFECTIVE DATE].

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<PAGE>

(k) "NASD" shall have the meaning assigned to such term in Section
4(c) hereof.

(l) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8 hereof, ____ dollars and _____ cents ($____)
per share of Common Stock [110% OF IPO PRICE].

(m) "Over-Allotment Option" shall have the meaning assigned to such
term in the first (1st) WHEREAS clause of this Agreement.

(n) "Redemption Date" shall have the meaning assigned to such term in
Section 9(c) hereof.

(o) "Registered Holder" shall mean the person in whose name any
certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6 hereof.

(p) "Representative" shall have the meaning assigned to such term in
the first (1st) WHEREAS clause of this Agreement.

(q) "Underwriters" shall have the meaning assigned to such term in
the first (1st) WHEREAS clause of this Agreement.

(r) "Selling Security Holders" shall have the meaning assigned to
such term in the first (1st) WHEREAS clause of this Agreement.

(s) "Shares" shall have the meaning assigned to such term in the
first (1st) WHEREAS clause of this Agreement.

(t) "Subsidiary" or "Subsidiaries" shall mean any corporation or
corporations, as the case may be, of which stock having ordinary power to elect
a majority of the Board of Directors of such corporation or corporations
(regardless of whether or not at the time the stock of any other class or
classes of such corporation shall have or may have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
Company or by one or more Subsidiaries, or by the Company and one or more
Subsidiaries.

(u) "Transfer Agent" shall mean U.S. Stock Transfer Corporation,
Glendale, California, or its authorized successor.

(v) "Underwriters" shall have the meaning assigned to such term in
the first (1st) WHEREAS clause of this Agreement.

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<PAGE>

(w) "Representative's Warrant Agreement" shall mean the agreement
dated as of ______, 1996 between the Company and the Representative relating to
and governing the terms and provisions of the Underwriters' Warrants.

(x) "Representative's Warrants" shall mean the warrants issued by
the Company to the Representative to purchase up to One Hundred Fifty Thousand
(150,000) shares of Common Stock pursuant to the Representative's Warrant
Agreement.

(y) "Underwriting Agreement" shall have the meaning assigned to such
term in the first (1st) WHEREAS clause of this Agreement.

(z) "Warrant Agent" shall mean U.S. Stock Transfer Corporation,
Glendale, California, or its authorized successor.

(aa) "Warrant Certificate" shall mean a certificate representing each
of the Warrants substantially in the form annexed hereto as EXHIBIT A.

(ab) "Warrant Expiration Date" shall mean, unless the Warrants are
redeemed as provided in Section 9 hereof prior to such date, 5:00 p.m.
(California time) on _________, 2002 [54 MONTHS AFTER THE ONE YEAR ANNIVERSARY
OF THE EFFECTIVE DATE], or, if such date shall in the State of California be a
holiday or a day on which banks are authorized to close, then 5:00 p.m.
(California time) on the next following day which in the State of California is
not a holiday or a day on which banks are authorized to close, subject to the
Company's right, prior to the Warrant Expiration Date, in its sole discretion,
to extend such Warrant Expiration Date on five (5) business days prior written
notice to the Registered Holders.

(ac) "Warrants" shall have the meaning assigned to such term in the
first (1st) WHEREAS clause of this Agreement.

(ad) "Warrant Stock" shall mean the shares of Common Stock issuable
upon exercise of the Warrants.

SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.

(a) Each Warrant shall initially entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase at the Purchase Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one (1) share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8 hereof.

(b) Upon execution of this Agreement, Warrant Certificates
representing up to Eleven Million Seven Hundred Eighty Nine Thousand Five
Hundred Eighty Four (11,789,584)

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<PAGE>

Warrants to purchase up to an aggregate of Eleven Million Seven Hundred
Eighty Nine Thousand Five Hundred Eighty Four (11,789,584) shares of Common
Stock (subject to modification and adjustment as provided in Section 8
hereof), shall be executed by the Company and delivered to the Warrant Agent.

(c) Upon exercise of the Over-Allotment Option, in whole or in
part, Warrant Certificates representing up to Two Hundred Twenty Five
Thousand (225,000) Warrants to purchase up to an aggregate of Two Hundred
Twenty Five Thousand (225,000) shares of Common Stock (subject to
modification and adjustment as provided in Section 8 hereof) shall be
executed by the Company and delivered to the Warrant Agent.

(d) From time to time, up to the Warrant Expiration Date, as the case
may be, the Warrant Agent shall countersign and deliver Warrant Certificates in
required denominations of one or whole number multiples thereof to the person
entitled thereto in connection with any transfer or exchange permitted under
this Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) Warrant Certificates issued upon
any transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7 hereof, and (iv) at the option of the Company, Warrant
Certificates in such form as may be approved by its Board of Directors, to
reflect any adjustment or change in the Purchase Price, the number of shares of
Common Stock purchasable upon the exercise of a Warrant or the redemption price
therefor.

SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATES.

(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be dated the date of issuance
thereof (whether upon initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates).

(b) Warrant Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
by manual signatures or by facsimile signatures printed thereon, and shall have

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<PAGE>

imprinted thereon a facsimile of the Company's seal. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent
and issued and delivered with the same force and effect as though the officer of
the Company who signed such Warrant Certificates had not ceased to hold such
office.

SECTION 4. EXERCISE.

(a) Warrants in denominations of one or whole number multiples
thereof may be exercised commencing at any time on or after the Initial Warrant
Exercise Date, but not after the Warrant Expiration Date or the Redemption Date,
upon the terms and subject to the conditions set forth herein (including the
provisions set forth in Sections 5 and 9 hereof) and in the applicable Warrant
Certificate. A Warrant shall be deemed to have been exercised immediately prior
to the close of business on the Exercise Date, provided that the Warrant
Certificate representing such Warrant, with the exercise form thereon duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing, together with payment in cash or by check made payable to the Warrant
Agent for the account of the Company of an amount in lawful money of the United
States of America equal to the applicable Purchase Price, has been received by
the Warrant Agent. The person entitled to receive the securities deliverable
upon such exercise shall be treated for all purposes as the holder of such
securities as of the close of business on the Exercise Date. As soon as
practicable on or after the Exercise Date and in any event within five (5)
business days after such date, the Warrant Agent on behalf of the Company shall
cause to be issued to the person or persons entitled to receive the same a
Common Stock certificate or certificates for the shares of Common Stock
deliverable upon such exercise, and the Warrant Agent shall deliver the same to
the person or persons entitled thereto. Upon the exercise of any Warrants, the
Warrant Agent shall promptly notify the Company in writing of such fact and of
the number of securities delivered upon such exercise and, subject to Section
4(b) hereof, shall cause all payments in cash or by check made payable to the
order of the Company in respect of the Purchase Price to be deposited promptly
in the Company's bank account.

(b) The Company has appointed the Representative as the exclusive
solicitation agents for the Warrants, and has agreed to pay the Representative a
commission equal to five percent (5%) of the exercise price of the Warrants,
payable on the date of the exercise thereof. The Company has agreed that it
will not solicit the exercise of the Warrants other than through

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<PAGE>

the Representative. Upon exercise of any Warrants, the Representative
responsible for the solicitation of exercise of such Warrants shall be
identified by the holder of the Warrants, and the commission payable for
exercise of such Warrants shall be paid to the Representative so designated.

(c) At any time upon the exercise of any Warrants after the Initial
Warrant Exercise Date, the Warrant Agent shall, on a daily basis, within two (2)
business days after any such exercise, notify the designated Representative or
its successors or assigns of the exercise of any such Warrants and shall, on a
weekly basis (subject to collection of funds constituting the tendered Purchase
Price, but in no event later than five (5) business days after the last day of
the calendar week in which such funds were tendered), remit to the designated
Representative or its successors or assigns an amount equal to five percent (5%)
of the Purchase Price of such Warrants being then exercised unless the
Representative or its successors or assigns shall have notified the Warrant
Agent that the payment of such amount with respect to any such Warrant is
violative of the rules and regulations promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the rules and regulations of the
National Association of Securities Dealers, Inc. (the "NASD") or applicable
state securities or "blue sky" laws, in which event the Warrant Agent shall have
to pay such amount to the Company; PROVIDED, HOWEVER, that the Warrant Agent
shall not be obligated to pay any amounts pursuant to this Section 4(c) during
any week that such amounts payable are less than One Thousand dollars ($1,000)
and the Warrant Agent's obligation to make such payments shall be suspended
until the amount payable aggregates One Thousand dollars ($1,000), and provided
further, that, in any event, any such payment (regardless of amount) shall be
made not less frequently than monthly. Under current rules of the NASD, amounts
can be paid to the Representative upon any exercise of a Warrant under this
Section 4(c) only if (i) the market price of the Company's Common Stock is
greater than the then Purchase Price of the Warrants, (ii) the exercise of the
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. ("NASD"), (iii) the Warrant was not held in a discretionary
account, (iv) disclosure of compensation arrangements has been made in documents
provided to customers both as part of the original offering and at the time of
exercise and (v) the solicitation of the exercise of the Warrant was not in
violation of Rule 10b-6 (as such rule or any successor rule may be in effect as
of such time of exercise) promulgated under the Securities Exchange Act of 1934.
The provisions of this Section 4(b) may not be modified, amended or deleted
without the prior written consent of the Representative.

(d) The Company shall not be obligated to issue any fractional share
interests or fractional warrant interests upon the exercise of any Warrant or
Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fraction equal to or greater than one-half shall

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<PAGE>

be rounded up to the next full share or Warrant, as the case may be. Any
fraction less than one-half shall be eliminated.

SECTION 5. RESERVATION OF SHARES, LISTING, PAYMENT OF TAXES, ETC.

(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issuance
upon the exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that, upon exercise of the Warrants and payment of the Purchase Price
for the shares of Common Stock underlying the Warrants, all shares of Common
Stock which shall be issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable, free from all preemptive or similar rights,
and free from all taxes, liens and charges with respect to the issuance thereof,
and that upon issuance such shares shall be listed or quoted on each securities
exchange or NASDAQ, if any, on which the other shares of outstanding Common
Stock of the Company are then listed.

(b) The Company covenants that if any securities reserved for the
purpose of exercise of Warrants hereunder require registration with, or approval
of, any governmental authority under any federal securities law before such
securities may be validly issued or delivered upon such exercise, then the
Company will file a registration statement under the federal securities laws or
a post-effective amendment to a registration statement, use its best efforts to
cause the same to become effective, keep such registration statement current
while any of the Warrants are outstanding and deliver a prospectus which
complies with Section 10(a)(3) of the Securities Act of 1933, as amended (the
"Act"), to the Registered Holder exercising the Warrant (except, if in the
opinion of counsel to the Company, such registration is not required under the
federal securities law or if the Company receives a letter from the staff of the
Securities and Exchange Commission (the "Commission") stating that it would not
take any enforcement action if such registration is not effected). The Company
will use its best efforts to obtain appropriate approvals or registrations under
the state "blue sky" securities laws of all states in which Registered Holders
reside. Warrants may not be exercised by, nor may shares of Common Stock be
issued to, any Registered Holder in any state in which such exercise would be
unlawful.

(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; PROVIDED, HOWEVER, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person

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<PAGE>

requesting the same has paid to the Warrant Agent the amount of transfer taxes
or charges incident thereto, if any.

(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates representing shares
of Common Stock or other securities required upon exercise of the Warrants, and
the Company will comply with all such requisitions.

(e) Nothing contained in this Agreement shall be construed as
conferring upon any Registered Holder the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, the Company shall adopt a
resolution for the liquidation, dissolution or winding-up of the Company's
business, then the Company shall give written notice of the adoption of such
resolution to all Registered Holders. No such liquidation, dissolution or
winding-up of the Company's affairs shall commence until at least thirty (30)
days after such written notice is given, at which time the right of the
Registered Holders to participate in the liquidation, dissolution or winding-up
of the Company's affairs shall terminate unless the Redeemable Warrants are
exercised within such thirty (30) day period.

SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.

(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and the Company
shall execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.

(b) The Warrant Agent shall keep, at such office, books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate at such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.

(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription or
assignment form, as the case may be, on the reverse thereof shall be duly
endorsed or be accompanied by a written instrument or instruments of
subscription or assignment, in form satisfactory to the Company

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<PAGE>

and the Warrant Agent, duly executed by the Registered Holder thereof or his
attorney duly authorized in writing.

(d) No service charge shall be made for any exchange or registration
of transfer of Warrant Certificates. However, the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.

(e) All Warrant Certificates surrendered for exercise or for exchange
shall be promptly canceled by the Warrant Agent.

(f) Prior to due presentment for registration or transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate as the absolute owner thereof of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.

SECTION 7. LOSS OR MUTILATION.

Upon receipt by the Company and the Warrant Agent of evidence satisfactory
to them of the ownership of and the loss, theft, destruction or mutilation of
any Warrant Certificate and (in the case of loss, theft or destruction) of
indemnity satisfactory to them, and (in case of mutilation) upon surrender and
cancellation thereof, the Company shall execute and the Warrant Agent shall
countersign and deliver in lieu thereof a new Warrant Certificate, representing
an equal number of Warrants. Applicants for a substitute Warrant Certificate
shall also comply with such other reasonable regulations and pay such other
reasonable charges as the Warrant Agent may prescribe.

SECTION 8. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON
STOCK DELIVERABLE.

(a) (i) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof, sell any shares
of Common Stock for a consideration per share less than the Purchase Price or
issue any shares of Common Stock as a stock dividend to the holders of Common
Stock, or subdivide or combine the outstanding shares of Common Stock into a
greater or lesser number of shares (any such sale, issuance, subdivision or
combination being herein called a "Change of Shares"), then, and thereafter upon
each further Change of Shares, the Purchase Price for the Warrants (whether or
not the same shall be issued and outstanding) in effect immediately prior to
such Change of Shares shall be changed to a price (including any applicable
fraction of a cent to the nearest cent) determined by dividing (A) the sum of
(x) the total number of shares of Common Stock outstanding immediately prior to
such

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<PAGE>

Change of Shares, multiplied by the Purchase Price in effect immediately prior
to such Change of Shares, and (y) the consideration, if any, received by the
Company upon such sale, issuance, subdivision or combination by (B) the total
number of shares of Common Stock outstanding immediately after such Change of
Shares; PROVIDED, HOWEVER, that in no event shall the Purchase Price be adjusted
pursuant to this computation to an amount in excess of the Purchase Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock.

For the purposes of any adjustment to be made in accordance with this
Section 8(a)(i) the following provisions shall be applicable:

(A) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be cash, the amount
of the cash portion of the consideration therefor deemed to have been received
by the Company shall be (i) the subscription price, if shares of Common Stock
are offered by the Company for subscription, or (ii) the public offering price
(before deducting therefrom any compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection therewith),
if such securities are sold to underwriters or dealers for public offering
without a subscription offering, or (iii) the gross amount of cash actually
received by the Company for such securities, in any other case.

(B) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company, and otherwise than on the
exercise of options, rights or warrants or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale of shares of Common
Stock) for a consideration part or all of which shall be other than cash or as
part of a unit, the amount of the consideration therefor other than cash deemed
to have been received by the Company or the amount received per share as part of
a unit shall be the value of such consideration as determined in good faith by
the Board of Directors of the Company on the basis of a record of values of
similar property, services or securities.

(C) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.

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<PAGE>

(D) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in Section 8(a)(i)(B) hereof.

(E) The number of shares of Common Stock at any one time outstanding
shall be deemed to include the aggregate maximum number of shares issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights or warrants and upon the conversion or exchange of convertible
or exchangeable securities.

(ii) Upon each adjustment of the Purchase Price pursuant to this
Section 8, the number of shares of Common Stock purchasable upon the exercise of
each Warrant shall be the number derived by multiplying the number of shares of
Common Stock purchasable immediately prior to such adjustment by the Purchase
Price in effect prior to such adjustment and dividing the product so obtained by
the applicable adjusted Purchase Price.

(b) In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share (determined as provided in Section 8(a)(i) hereof and
as provided below) less than the Purchase Price in effect immediately prior to
the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration (including the issuance of any
such securities by way of dividend or other distribution), the Purchase Price
for the Warrants (whether or not the same shall be issued and outstanding) in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making the computation in accordance with the
provisions of Section 8(a)(i) hereof, provided that:

(i) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable or that may become issuable under such options, rights
or warrants (assuming exercise in full even if not then currently exercisable or
currently exercisable in full) shall be deemed to be issued and outstanding at
the time such options, rights or warrants were issued, for a consideration equal
to the minimum purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration, if any, received by
the Company for such options, rights or warrants; PROVIDED, HOWEVER, that upon
the expiration or other termination of such options,

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<PAGE>

rights or warrants, if any thereof shall not have been exercised, the number of
shares of Common Stock deemed to be issued and outstanding pursuant to this
subsection (i) (and for the purposes of Section 8(a)(i)(E) hereof) shall be
reduced by the number of shares as to which options, warrants and/or rights
shall have expired, and such number of shares shall no longer be deemed to be
issued and outstanding, and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued plus
the shares remaining issuable upon the exercise of those options, rights or
warrants as to which the exercise rights shall not have expired or terminated
unexercised.

(ii) The aggregate maximum number of shares of Common Stock
issuable or that may become issuable upon conversion or exchange of any
convertible or exchangeable securities (assuming conversion or exchange in full
even if not then currently convertible or exchangeable in full) shall be deemed
to be issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; PROVIDED, HOWEVER, that upon the
termination of the right to convert or exchange such convertible or exchangeable
securities (whether by reason of redemption or otherwise), the number of shares
of Common Stock deemed to be issued and outstanding pursuant to this subsection
(ii) (and for the purposes of Section 8(a)(i)(E) hereof) shall be reduced by the
number of shares as to which the conversion or exchange rights shall have
expired or terminated unexercised, and such number of shares shall no longer be
deemed to be issued and outstanding, and the Purchase Price then in effect shall
forthwith be readjusted and thereafter be the price that it would have been had
adjustment been made on the basis of the issuance only of the shares actually
issued plus the shares remaining issuable upon conversion or exchange of those
convertible or exchangeable securities as to which the conversion or exchange
rights shall not have expired or terminated unexercised.

(iii) If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in Section 8(b)(i)
hereof, or in the price per share or ratio at which the securities referred to
in Section 8(b)(ii) hereof are convertible or exchangeable, such options, rights
or warrants or conversion or exchange rights, as the case may be, to the extent
not theretofore exercised, shall be deemed to have expired or terminated on the
date when such price change became effective in respect of shares not
theretofore issued pursuant to the exercise or conversion or exchange thereof,
and the Company shall be deemed to have issued upon such date new options,
rights or warrants or convertible or exchangeable securities.

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<PAGE>

(c) In case of any reclassification or change of outstanding shares
of Common Stock issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par value
or as a result of a subdivision or combination), or in case of any consolidation
or merger of the Company with or into another corporation (other than a merger
with a Subsidiary in which merger the Company is the continuing corporation and
which does not result in any reclassification or change of the then outstanding
shares of Common Stock or other capital stock issuable upon exercise of the
Warrants), or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially as an entirety, then, as
a condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company, or such successor or purchasing corporation, as the
case may be, shall make lawful and adequate provision whereby the Registered
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of securities and
property receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of securities issuable upon
exercise of such Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and shall forthwith file at the
Corporate Office of the Warrant Agent a statement signed by its Chairman of the
Board, President or a Vice President and by its Treasurer or an Assistant
Treasurer or its Secretary or an Assistant Secretary evidencing such provision.
Such provisions shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Sections
8(a) and 8(b) hereof. The above provisions of this Section 8(c) shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales or conveyances.

(d) Irrespective of any adjustments or changes in the Purchase Price
or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(e) hereof, continue to express the Purchase Price per
share and the number of shares purchasable thereunder as the Purchase Price per
share and the number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.

(e) After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman of the Board, President, or a Vice President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth: (i) the Purchase Price, as so adjusted, (ii) the number of shares
of Common Stock purchasable upon exercise of each Warrant,

-14-
<PAGE>

after such adjustment, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will promptly file such certificate with the
Warrant Agent and cause a brief summary thereof to be sent by ordinary first
class mail to each Registered Holder at his last address as it shall appear on
the registry books of the Warrant Agent. No failure to mail such notice nor any
defect therein or in the mailing thereof shall affect the validity thereof
except as to the holder to whom the Company failed to mail such notice, or
except as to the holder whose notice was defective. The affidavit of an officer
of the Warrant Agent or the Secretary or an Assistant Secretary of the Company
that such notice has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.

(f) No adjustment of the Purchase Price shall be made as a result of
or in connection with (i) the issuance or sale of shares of Common Stock
pursuant to options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding or in effect on the date hereof, (ii) the
issuance or sale of shares of Common Stock upon the exercise of any "incentive
stock options" (as such term is defined in the Internal Revenue Code of 1986, as
amended), or any non-qualified stock options to non-employee directors of the
Company pursuant to the Company's 1995 Stock Option Plan, whether or not such
options were outstanding on the date hereof, or (iii) the issuance or sale of
shares of Common Stock if the amount of said adjustment shall be less than ten
cents ($.10); PROVIDED, HOWEVER, that in such case, any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time of and together with the next subsequent adjustment that shall
amount, together with any adjustment so carried forward, to at least ten cents
($. 10). In addition, Registered Holders shall not be entitled to cash
dividends paid by the Company prior to the exercise of any Warrant or Warrants
held by them.

(g) In case of any consolidation of the Company with or merger of the
Company into another corporation or other entity or in case of any sale, lease,
conveyance or other transfer to another corporation, person or other entity of
the property, assets or business of the Company as an entirety or substantially
as an entirety, the Company or such successor or purchasing corporation, person
or other entity, as the case may be, shall execute with the Warrantholder, and
the agreements governing such consolidation, merger, sale, lease, Conveyance or
other transfer shall require such execution of an agreement that the
Warrantholder shall have the right thereafter upon payment of the Warrant Price
in effect immediately prior to such event, upon exercise of the Warrants, to
receive the kind and amount of shares and other securities and property which it
would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale, lease, conveyance or other transfer had the
Warrants (and each underlying security) been exercised immediately prior to such
action. The Company shall

-15-

<PAGE>

promptly mail to each Warrantholder by first class mail, postage prepaid, notice
of the execution of any such agreement. In the event of a merger described in
Section 368(a)(2)(E) of the Internal Revenue Code of 1986, in which the Company
is the surviving corporation, the right to purchase shares of Warrant Stock
under the Warrants shall terminate on the date of such merger and thereupon the
Warrants shall become null and void, but only if the controlling corporation
shall agree to substitute for the Warrants its warrant which entitles the holder
thereof to purchase upon its exercise the kind and amount of shares and other
securities and property which it would have owned or been entitled to receive
had the Warrants been exercised immediately prior to such merger. Any such
agreements referred to in this Section 8(g) shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Section 8 hereof, and shall provide for terms and provisions at least as
favorable to the Warrantholder as those contained in this Agreement. The
provisions of this Section 8(g) shall similarly apply to successive
consolidations, mergers, sales, leases, conveyances or other transfers.

(h) Before taking any action which would cause an adjustment
effectively reducing the portion of the Purchase Price allocable to each share
of Warrant Stock below the then par value per share, if any, of the Warrant
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Stock upon exercise of the Warrants.

(i) The Company may retain Coopers & Lybrand L.L.P. (or such other
accounting firm qualified to practice in front of the Commission as is
reasonably acceptable to the Representative) to make any computation required
under this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section 8.

SECTION 9. REDEMPTION.

(a) Commencing on the Initial Warrant Redemption Date, the Company
may, on thirty (30) days' prior written notice redeem all of the Warrants at
a Redemption Price of twenty five cents ($.25) per Warrant; PROVIDED,
HOWEVER, that before any such call for redemption of Warrants can take place,
(i) the average closing bid price for the Common Stock in the
over-the-counter market as reported by the Nasdaq Stock Market or (ii) the
average closing sale price on the primary exchange on which the Common Stock
is traded, if the Common Stock is traded on a national securities exchange,
shall have for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth (5th) trading day prior to the
date on which the notice contemplated by Sections 9(b) and 9(c) hereof is
given, equalled or exceeded ____ Dollars and _____ Cents ($____) [140% OF IPO

-16-
<PAGE>

PRICE] per share (subject to adjustment in the event of any stock splits or
other similar events as provided in SECTION 8 hereof).

(b) In case the Company shall exercise its right to redeem all of the
Warrants, it shall give or cause to be given notice to the Registered Holders of
the Warrants, by mailing to such Registered Holders a notice of redemption,
first class, postage prepaid, at their last address as shall appear on the
records of the Warrant Agent. Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice. Not less than five (5) business days
prior to the mailing to the Registered Holders of the Warrants of the notice of
redemption, the Company shall deliver or cause to be delivered to the
Representative or its successors or assigns a similar notice telephonically and
confirmed in writing, together with a list of the Registered Holders (including
their respective addresses and number of Warrants beneficially owned by them) to
whom such notice of redemption has been or will be given.

(c) The notice of redemption shall specify (i) the redemption price,
(ii) the date fixed for redemption, which shall in no event be less than thirty
(30) days after the date of mailing of such notice, (iii) the place where the
Warrant Certificates shall be delivered and the redemption price that shall be
paid, (iv) that the Representative or its successors or assigns is the Company's
exclusive warrant solicitation agent and shall receive the commission
contemplated by Section 4(b) hereof, and (v) that the right to exercise the
Warrant shall terminate at 5:00 p.m. (California time) on the business day
immediately preceding the date fixed for redemption. The date fixed for the
redemption of the Warrants shall be the "Redemption Date" for purposes of this
Agreement. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for such redemption
except as to a holder (A) to whom notice was not mailed or (B) whose notice was
defective. An affidavit of the Warrant Agent or the Secretary or Assistant
Secretary of the Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.

(d) Any right to exercise a Warrant shall terminate at 5:00 p.m.
(California time) on the business day immediately preceding the Redemption Date.
The redemption price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.

(e) The Company shall indemnify the Underwriters and each person, if
any, who controls either of the Underwriters within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the

-17-
<PAGE>

Act, the Exchange Act or otherwise arising out of the registration statement or
prospectus referred to in Section 5(b) hereof to the same extent and with the
same effect (including the provisions regarding contribution) as the provisions
pursuant to which the Company has agreed to indemnify the Underwriters contained
in Section 7 of the Underwriting Agreement.

(f) Five (5) business days prior to the Redemption Date, the Company
shall furnish to the Representative (i) an opinion of counsel to the Company,
dated such date and addressed to the Representative, and (ii) a "cold comfort"
letter dated such date addressed to the Representative, signed by the
independent public accountants who have issued a report on the Company's
financial statements included in the registration statement referred to in
Section 5(b) hereof, in each case covering substantially the same matters with
respect to such registration statement (and the prospectus included therein)
and, in the case of such accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to underwriters in
underwritten public offerings of securities, including, without limitation,
those matters covered in Section 6(i) of the Underwriting Agreement.

(g) The Company shall as soon as practicable after the Redemption
Date, and in any event within fifteen (15) months thereafter, make "generally
available to its security holders" (within the meaning of Rule 158 under the
Act) an earnings statement (which need not be audited) complying with Section
11(a) of the Act and covering a period of at least twelve (12) consecutive
months beginning after the Redemption Date.

(h) The Company shall deliver to the Representative within five (5)
business days prior to the Redemption Date copies of all correspondence between
the Commission and the Company, its counsel or auditors and all memoranda
relating to discussions with the Commission or its staff with respect to the
registration statement referred to in Section 5(b) hereof and permit the
Representative to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
the rules of the NASD. Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as the Representative shall reasonably
request.

-18-
<PAGE>

SECTION 10. REGISTRATION REQUIREMENT.

The Company shall be obligated to the registered holders of the
Warrants to continually maintain, at the Company's own expense, the currency and
effectiveness of a registration statement of the Company under the Securities
Act of 1933, as amended, including the filing of any and all applications and
other notifications, filings and post-effective amendments and supplements
(collectively, the "Current Registration Statement") and any necessary filings
under applicable state blue sky (securities) laws, as may be necessary, so as to
permit the issuance of the Common Stock underlying the Warrants to the holder of
the Warrants until the earlier of the time that all shares of Securities have
been exercised pursuant to the Current Registration Statement or the Expiration
Date.

SECTION 11. CONCERNING THE WARRANT AGENT.

(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company and the Representative, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not, by
issuing and delivering Warrant Certificates or by any other act hereunder, be
deemed to make any representations as to the validity or value or authorization
of the Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or whether
any stock issued upon exercise of any Warrant is fully paid and non-assessable.

(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of fact contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the Company to comply with any of its covenants and obligations
contained in this Agreement or in any Warrant Certificate, or (iii) be liable
for any act or omission in connection with this Agreement except for its own
gross negligence or willful misconduct.

(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company or the Representative)
and shall incur no liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice of such
counsel.

-19-
<PAGE>

(d) Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument signed by
the Chairman of the Board of Directors, President or any Vice President (unless
other evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order or demand.

(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and hold it harmless against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence or willful misconduct.

(f) The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own gross negligence or willful misconduct), after
giving thirty (30) days' prior written notice to the Company. At least fifteen
(15) days prior to the date such resignation is to become effective, the Warrant
Agent shall cause a copy of such notice of resignation to be mailed to the
Registered Holder of each Warrant Certificate at the Company's expense. Upon
such resignation the Company shall appoint in writing a new warrant agent. If
the Company shall fail to make such appointment within a period of thirty (30)
days after it has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant Certificate may apply
to any court of competent jurisdiction for the appointment of a new warrant
agent. Any new warrant agent, whether appointed by the Company or by such a
court, shall be a bank or trust company having a capital and surplus, as shown
by its last published report to its stockholders, of not less than ten million
dollars ($10,000,000) or a stock transfer company reasonably acceptable to the
Representative. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, such new warrant agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named herein as the warrant agent, without any further assurance,
conveyance, act or deed; but if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance, act or deed,
the same shall be done at the expense of the Company and shall be legally and
validly executed and delivered by the resigning Warrant Agent. Not later than
the effective date of any such appointment, the Company shall file notice
thereof with the resigning Warrant Agent and shall forthwith cause a copy of
such notice to be mailed to the Registered Holder of each Warrant Certificate.

-20-
<PAGE>

(g) Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new warrant agent shall be a successor warrant agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding paragraph. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.

(h) The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.

(i) The Warrant Agent shall retain for a period of two (2) years from
the date of exercise any Warrant Certificate received by it upon such exercise.

SECTION 12. MODIFICATION OF AGREEMENT.

The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement (a) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained, or (b) that they may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Warrant Certificates; PROVIDED, HOWEVER, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders holding not less than sixty-six and
two-thirds percent (66-2/3%) of the Warrants then outstanding; provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any Warrant, and no change that increases the Purchase
Price of any Warrant, other than such changes as are specifically set forth in
this Agreement as originally executed, shall be made without the consent in
writing of each Registered Holder affected by such change. In addition, this
Agreement may not be modified, amended or supplemented without the prior written
consent of the Representative or its successors or assigns, other than to cure
any ambiguity or to correct any defective or inconsistent provision or manifest
mistake or error herein contained or to make any such change that the Warrant
Agent and the Company deem necessary or desirable and which shall not adversely
affect the interests of the Representative or its successors or assigns.

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<PAGE>

SECTION 13. NOTICES.

All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid or delivered to a telegraph office for transmission,
if to the Registered Holder of a Warrant Certificate, at the address of such
holder as shown on the registry books maintained by the Warrant Agent; if to the
Company at 26131 Marguerite Parkway, Suite A, Mission Viejo, California 92692,
Attention: Paul A. Motenko, Chief Executive Officer, or at such other address as
may have been furnished to the Warrant Agent in writing by the Company; and if
to the Warrant Agent, at its Corporate Office. Copies of any notice delivered
pursuant to this Agreement shall also be delivered to The Boston Group, L.P.,
2049 Century Park East, Suite 3000, Los Angeles, California 90067, Attention:
Robert A. DiMinico, or at such other address as may have been furnished by the
Representative to the Company and the Warrant Agent in writing.

SECTION 14. GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the
laws of the State of California without giving effect to conflicts of laws.

SECTION 15. BINDING EFFECT.

This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation. The Representative is, and
shall at all times irrevocably be deemed to be, third-party beneficiaries of
this Agreement, with full power, authority and standing to enforce the rights
granted to them hereunder.

SECTION 16. COUNTERPARTS.

This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.

[Rest of page intentionally left blank]

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<PAGE>

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

CHICAGO PIZZA & BREWERY, INC. U.S. STOCK TRANSFER
CORPORATION
As Warrant Agent

By: By:
-------------------------- -----------------------------
Name: Paul A. Motenko Name:
Title: Chief Executive Officer Title:

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<PAGE>

EXHIBIT A

No. W_____ VOID AFTER _________, 2001
[66 MONTHS AFTER EFFECTIVE DATE]

____ WARRANTS

REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK

CHICAGO PIZZA & BREWERY, INC.

CUSIP ___________

THIS CERTIFIES THAT, FOR VALUE RECEIVED

or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and non-assessable share of Common
Stock, no par value, of Chicago Pizza & Brewery, Inc., a California
corporation (the "Company"), at any time from ______, 1997
[ONE YEAR AFTER EFFECTIVE DATE] and prior to the Expiration Date (as
hereinafter defined) upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed,
at the corporate office of U.S. Stock Transfer Corporation, 1745 Gardena
Avenue, Glendale, California 91204-2991, as Warrant Agent, or its successor
(the "Warrant Agent"), accompanied by payment of __________ dollars $____
[110% OF IPO PRICE], subject to adjustment (the "Purchase Price"), in lawful
money of the United States of America in cash or by check made payable to the
Warrant Agent for the account of the Company.

This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated ______, 1996, by
and between the Company and the Warrant Agent.

In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.

Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the

A-1
<PAGE>

Warrants represented hereby, the Company shall cancel this Warrant Certificate
upon the surrender hereof and shall execute and deliver a new Warrant
Certificate or Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Warrants.

The term "Expiration Date" shall mean 5:00 p.m. (California time) on
_________, 2002 [66 MONTHS AFTER EFFECTIVE DATE]. If such date shall in the
State of California be a holiday or a day on which banks are authorized to
close, then the Expiration Date shall mean 5:00 p.m. (California time) the next
following day which in the State of California is not a holiday or a day on
which banks are authorized to close.

The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has
covenanted and agreed that it will file a registration statement under the
Federal securities laws, use its best efforts to cause the same to become
effective, to keep such registration statement current, if required under the
Act, while any of the Warrants are outstanding, and deliver a prospectus which
complies with Section 10(a)(3) of the Act to the Registered Holder exercising
this Warrant. This Warrant shall not be exercisable by a Registered Holder in
any state where such exercise would be unlawful.

This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.

Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.

Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of twenty five
cents ($.25) per Warrant, at any time commencing _____

A-2
<PAGE>

_, 1997 [ONE YEAR AFTER EFFECTIVE DATE], provided that (i) the average
closing bid price for the Company's Common Stock in the over-the-counter
market as reported by the Nasdaq Stock Market or (ii) the average closing
sale price on the primary exchange on which the Common Stock is traded, if
the Common Stock is traded on a national securities exchange, shall have for
any twenty (20) trading days within a period of thirty (30) consecutive
trading days ending on the fifth (5th) trading day prior to the Notice of
Redemption, as defined below, equalled or exceeded _________ dollars $____
[140% OF IPO PRICE] per share (subject to adjustment in the event of any
stock splits or other similar events). Notice of redemption (the "Notice of
Redemption") shall be given not later than the thirtieth (30th) day before
the date fixed for redemption, all as provided in the Warrant Agreement. On
and after the date fixed for redemption, the Registered Holder shall have no
rights with respect to this Warrant except to receive the twenty five cents
($.25) per Warrant upon surrender of this Certificate.

Under certain circumstances, The Boston Group, L.P. shall be entitled to
receive an aggregate of five percent of the Purchase Price of the Warrants
represented hereby.

Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.

This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of California without giving effect to conflicts of
laws.

This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.

A-3
<PAGE>

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.

Dated: 1996
CHICAGO PIZZA & BREWERY, INC.
[SEAL]

By:
------------------------------
Name: Paul A. Motenko
Title: Chief Executive Officer

By:
-----------------------------
Name: Jeremiah J. Hennessy
Title: Chief Operating Officer

COUNTERSIGNED:

U.S. STOCK TRANSFER CORPORATION,
as Warrant Agent

By:
-----------------------------
Authorized Officer

A-4
<PAGE>

SUBSCRIPTION FORM

To Be Executed by the Registered Holder
in Order to Exercise Warrant

The undersigned Registered Holder hereby irrevocably elects to exercise
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities be issued in the name of

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER

-----------------------

-----------------------
(please print or type name and address)

and be delivered to

-----------------------

please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.

A-5
<PAGE>

The undersigned represents that the exercise of the within Warrant was
solicited by a member of the National Association of Securities Dealers, Inc.
If not solicited by an NASD member, please write "unsolicited" in the space
below. Unless otherwise indicated by listing the name of another NASD member
firm, it will be assumed that the exercise was solicited by The Boston Group,
L.P.

Check below to indicate the soliciting agent:

The Boston Group, L.P.
- -----

-----------------------------
(Name of NASD member if other
than The Boston Group, L.P.)

Dated: X
----------------------- ----------------------------

-----------------------------

-----------------------------
Address

-----------------------------
Social Security or Taxpayer
Identification Number

-----------------------------
Signature Guaranteed

-----------------------------

A-6
<PAGE>

ASSIGNMENT

To Be Executed by the Registered Holder
in Order to Assign Warrants

FOR VALUE RECEIVED, _________________________________, hereby sells,
assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

------------------------

------------------------
(please print or type name and address)

________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
________________________ Attorney to transfer this Warrant Certificate on the
books of the Company, with full power of substitution in the premises.

Dated: X
-------------- -----------------------

-----------------------
Signature Guaranteed

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE,
MIDWEST STOCK EXCHANGE OR BOSTON STOCK EXCHANGE.

A-7

<PAGE>

EXHIBIT A

No. W_____ VOID AFTER _________, 2001
[66 MONTHS AFTER EFFECTIVE DATE]

____ WARRANTS

REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK

CHICAGO PIZZA & BREWERY, INC.

CUSIP ___________

THIS CERTIFIES THAT, FOR VALUE RECEIVED

or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and non-assessable share of Common
Stock, no par value, of Chicago Pizza & Brewery, Inc., a California
corporation (the "Company"), at any time from ______, 1997
[ONE YEAR AFTER EFFECTIVE DATE] and prior to the Expiration Date (as
hereinafter defined) upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed,
at the corporate office of U.S. Stock Transfer Corporation, 1745 Gardena
Avenue, Glendale, California 91204-2991, as Warrant Agent, or its successor
(the "Warrant Agent"), accompanied by payment of ________ dollars $____
[110% OF IPO PRICE], subject to adjustment (the "Purchase Price"), in lawful
money of the United States of America in cash or by check made payable to the
Warrant Agent for the account of the Company.

Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the

A-1
<PAGE>

Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of twenty five
($.25) per Warrant, at any time commencing _____

A-2
<PAGE>

Under certain circumstances, The Boston Group, L.P. shall be entitled to
receive an aggregate of five percent of the Purchase Price of the Warrants
represented hereby.

This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of California without giving effect to conflicts of
laws.

This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.

A-3
<PAGE>

Dated: 1996
CHICAGO PIZZA & BREWERY, INC.
[SEAL]

By:
------------------------------
Name: Paul A. Motenko
Title: Chief Executive Officer

By:
-----------------------------
Name: Jeremiah J. Hennessy
Title: Chief Operating Officer

COUNTERSIGNED:

U.S. STOCK TRANSFER CORPORATION,
as Warrant Agent

By:
-----------------------------
Authorized Officer

A-4
<PAGE>

SUBSCRIPTION FORM

To Be Executed by the Registered Holder
in Order to Exercise Warrant

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER

-----------------------

-----------------------
(please print or type name and address)

and be delivered to

-----------------------

please print or type name and address)

A-5
<PAGE>

Check below to indicate the soliciting agent:

The Boston Group, L.P.
- -----

-----------------------------
(Name of NASD member if other
than The Boston Group, L.P.)

Dated: X
----------------------- ----------------------------

-----------------------------

-----------------------------
Address

-----------------------------
Social Security or Taxpayer
Identification Number

-----------------------------
Signature Guaranteed

-----------------------------

A-6
<PAGE>

ASSIGNMENT

To Be Executed by the Registered Holder
in Order to Assign Warrants

FOR VALUE RECEIVED, _________________________________, hereby sells,
assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

------------------------

------------------------
(please print or type name and address)

Dated: X
-------------- -----------------------

-----------------------
Signature Guaranteed

A-7