<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CHICAGO PIZZA & BREWERY, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
26131 Marguerite Parkway, Suite A
Mission Viejo, California 92692
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
T0 BE HELD JUNE 10, 1998
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Chicago Pizza & Brewery, Inc. (the
"Annual Meeting") will be held at the "BJ's Pizza, Grill & Brewery" restaurant
located at 600 Brea Mall Drive, Brea, California 92621 on June 10, 1998 at 9:30
a.m. Pacific Time, to consider and act upon the following matters, all as more
fully described in the accompanying Proxy Statement which is incorporated
herein by this reference:
(1) To elect seven members to the Board of Directors to serve until the
next Annual Meeting of Shareholders or until their respective
successors shall be elected and qualify.
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants for the fiscal year ending December 31, 1998.
(3) To transact such other business and to consider and take action upon
any and all matters that may properly come before the Annual Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 27, 1998,
as the record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting.
All shareholders are invited to attend the Annual Meeting in person.
By Order of the Board of Directors
Paul Motenko
CHIEF EXECUTIVE OFFICER
Mission Viejo, California
May 11, 1998
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE SO
THAT YOUR STOCK MAY BE REPRESENTED AT THE ANNUAL MEETING.
<PAGE>
CHICAGO PIZZA & BREWERY, INC.
26131 Marguerite Parkway, Suite A
Mission Viejo, California 92692
(949) 367-8616
PROXY STATEMENT
Approximate date proxy material first
sent to shareholders: May 11, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Chicago Pizza & Brewery, Inc. (the "Company") in connection with the Annual
Meeting of Shareholders (the "Annual Meeting") and adjournments thereof to be
held on June 10, 1998 at the Company's "BJ's Pizza, Grill & Brewery" restaurant
located at 600 Brea Mall Drive, Brea, California 92621, at 9:30 a.m., Pacific
Time.
Shareholders are requested to complete, date and sign the accompanying
proxy and return it promptly to the Company. Any proxy given may be revoked
by a shareholder at any time before it is voted at the Annual Meeting and all
adjournments thereof by filing with the Secretary of the Company a notice in
writing revoking it, or by duly executing and submitting a proxy bearing a
later date. Proxies may also be revoked by any shareholder present at the
Annual Meeting who expresses a desire to vote such shares in person. Subject
to such revocation, all proxies duly executed and received prior to, or at
the time of, the Annual Meeting will be voted FOR the election of all seven
of the nominee-directors specified herein and FOR the ratification of the
selection of Coopers & Lybrand L.L.P. as the Company's independent public
accountants for fiscal year 1998, unless a contrary choice is specified in
the proxy. Where a specification is indicated as provided in the proxy, the
shares represented by the proxy will be voted and cast in accordance with the
specification made. As to other matters, if any, to be voted upon, the
persons designated as proxies will take such actions as they, in their
discretion, may deem advisable. The persons named as proxies were selected
by the Board of Directors of the Company and each of them is a director of
the Company.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others forwarding the
solicitation material to beneficial owners of stock. Directors, officers and
regular employees of the Company may solicit proxies personally, by telephone
or by telegraph but will not be separately compensated for such solicitation
services.
Your execution of the enclosed proxy will not affect your right as a
shareholder to attend the Annual Meeting and to vote in person.
SHAREHOLDERS' VOTING RIGHTS
Only holders of record of the Company's Common Stock, no par value
("Common Stock"), at the close of business on April 27,1998 (the "Record
Date") will be entitled to notice of, and to vote at, the Annual Meeting. On
such date, there were 6,408,321 shares of Common Stock outstanding, with one
vote per share.
With respect to election of directors, assuming a quorum is present, the
seven candidates receiving the highest number of votes are elected. See
"Nomination and Election of Directors." To ratify the appointment of Coopers
& Lybrand L.L.P., assuming a quorum is present, the affirmative vote of
shareholders holding a majority of the voting power represented and voting at
the meeting (which shares voting affirmatively also constitute at least a
majority of the required quorum) is required. A quorum is the presence in
person or by proxy of shares representing a majority of the voting power of
the Common Stock.
2
<PAGE>
Under the Company's bylaws and California law, shares represented by
proxies that reflect abstentions or "broker non-votes" (i.e., shares held by
a broker or nominee which are represented at the Annual Meeting, but with
respect to which such broker or nominee is not empowered to vote on a
particular proposal) will be counted as shares that are present and entitled
to vote for purposes of determining the presence of a quorum. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no
impact on the election of directors, except to the extent that the failure to
vote for an individual results in another individual receiving a larger
proportion of votes. Any shares represented at the Annual Meeting but not
voted (whether by abstention, broker non-vote or otherwise) with respect to
the proposal to ratify the selection of Coopers & Lybrand L.L.P. will have no
effect on the vote for such proposal except to the extent the number of
abstentions causes the number of shares voted in favor of the proposal not to
equal or exceed a majority of the quorum required for the Annual Meeting.
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of the Record Date by (a) each
director of the Company, (b) each executive officer identified in the Summary
Compensation Table, (c) all executive officers and directors of the Company as a
group and (d) each person known by the Company to be the beneficial owner of 5%
or more of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
---------------------------------------
NUMBER
NAME AND ADDRESS (2) OF SHARES PERCENTAGE OF CLASS(3)
- -------------------- --------- ----------------------
<S> <C> <C>
ASSI, Inc. . . . . . . . . . . . . . . . . . . 3,200,000(4) 33.30%
5075 Spyglass Hill Dr.
Las Vegas, NV 89122
Norton Herrick. . . . . . . . . . . . . . . . . 700,000(5) 10.11%
2295 Corporate Blvd., Northwest
Boca Raton, FL 33431
Paul A. Motenko . . . . . . . . . . . . . . . . 678,857 10.59%
Jeremiah J. Hennessy . . . . . . . . . . . . . 658,857 10.28%
R. Dean Gerrie. . . . . . . . . . . . . . . . . 0 0%
Alexander M. Puchner. . . . . . . . . . . . . . 18,750(6) 0.29%
Barry J. Grumman. . . . . . . . . . . . . . . . 147,500(7) 2.28%
Stanley B. Schneider. . . . . . . . . . . . . . 37,500(8) 0.58%
Steven F. Mayer. . . . . . . . . . . . . . . . 12,500(8) 0.19%
Ernest T. Klinger . . . . . . . . . . . . . . . 12,500(8) 0.19%
All directors and executive officers as a group
(8 persons) . . . . . . . . . . . . . . . . . 1,566,464 24.05%
</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.
(2) The address of the officers and directors of the Company 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. Does not
include shares issuable upon exercise of any warrants or options issued by
the Company which are not exercisable within 60 days from the date hereof.
3
<PAGE>
(4) Includes 3,200,000 Special Warrants held by ASSI, Inc., a Nevada
corporation controlled by Louis Habash, exercisable for $5.50 per share and
expiring on April 8, 2002. See "Certain Relationships and Related
Transactions."
(5) Includes 185,000 shares of Common Stock and 515,000 Special Warrants held
by Norton Herrick, exercisable for $5.50 per share and expiring on April 8,
2002. See "Certain Relationships and Related Transactions."
(6) Includes 18,750 shares of Common Stock purchasable upon exercise of
options.
(7) Includes 10,000 shares of Common Stock which are held in a Professional
Corporation Money Purchase Plan of which Mr. Grumman is the beneficiary and
90,000 shares of Common Stock held in a joint account by Mr. and Mrs.
Barry Grumman, 35,000 warrants exercisable for $5.50 per share and expiring
on April 8, 2002 and 12,500 shares of Common Stock purchasable upon
exercise of options.
(8) Includes 12,500 shares of Common Stock purchasable upon exercise of
options.
NOMINATION AND ELECTION OF DIRECTORS
The Company's directors are to be elected at each annual meeting of
shareholders. At this Annual Meeting, seven directors are to be elected to
serve until the next annual meeting of shareholders and until their
successors are elected and qualify. The nominees for election as directors
at this Annual Meeting set forth in the table below are all recommended by
and all currently serve as members of the Board of Directors of the Company.
In the event that any of the nominees for director should become unable to
serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by the Company's existing Board of Directors.
The seven nominee-directors receiving the highest number of votes cast
at the Annual Meeting will be elected as the Company's directors. Subject to
certain exceptions specified below, shareholders of record on the Record Date
are entitled to cumulate their votes in the election of the Company's
directors (i.e., they are entitled to the number of votes determined by
multiplying the number of shares held by them times the number of directors
to be elected) and may cast all of their votes so determined for one person,
or spread their votes among two or more persons as they see fit. No
shareholder shall be entitled to cumulate votes for a given candidate for
director unless such candidate's name has been placed in nomination prior to
the vote and the shareholder has given notice at the Annual Meeting, prior to
the voting, of the shareholder's intention to cumulate his or her votes. If
any one shareholder has given such notice, all shareholders may cumulate
their votes for candidates in nomination. Discretionary authority to cumulate
votes is hereby solicited by the Board of Directors.
The following table sets forth certain information concerning the
nominees for election as directors (all of such nominees being continuing
members of the Company's present Board of Directors):
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION AGE
- ------- -------------------- ---
<S> <C> <C>
Paul A. Motenko Chairman of the Board, Chief Executive Officer, 43
Vice President and Secretary of the Company
Jeremiah J. Hennessy President, Chief Financial Officer and Chief 39
Operating Officer of the Company
Alexander M. Puchner Vice President of Brewing Operations 37
of the Company
Barry J. Grumman Senior Partner in the Law Offices of Grumman 47
& Rockett
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
Stanley B. Schneider Managing Partner of Gursey, Schneider & Co. 62
Steven F. Mayer Managing Director of Libra Investments, Inc. 38
Ernest T. Klinger Chief Financial Officer and Vice President- 62
Finance and Administration of Arden Group, Inc.
</TABLE>
PAUL A. 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, President and Secretary of Chicago
Pizza Northwest, Inc., a Washington corporation and wholly owned subsidiary
of the Company ("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 has been the President, Chief Operating Officer and
a Director of the Company since its inception in 1991. During 1997 he was
appointed the Chief Financial Officer of the Company. 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.
ALEXANDER M. PUCHNER is Vice President of Brewing Operations for the
Company, having been appointed to such position in January 1996. From 1994
to 1995, Mr. Puchner served as brewmaster 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 strong ale category at the 1996 Great American Beer
Festival for BJ's Jeremiah Red Ale, and also was awarded a silver medal in
the American pale ale category at the 1994 Great American Beer Festival. At
the 1997 California State Fair, first and second place ribbons were awarded
to BJ's PM Porter and Harvest Hefeweizen, respectively. In 1998, Jeremiah
Red earned a silver medal and BJ's Wassail earned a bronze medal in the World
Beer Championships. Mr. Puchner has also earned over 40 awards as a
homebrewer, including in 1991 and 1992 National Homebrew Competition. Mr.
Puchner has been a nationally certified beer judge since 1990. 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.
ERNEST T. KLINGER has been a Director of the Company since April 23,
1997. Mr. Klinger is a certified public accountant and has been a Chief
Financial Officer and Vice President-Finance and Administration of Arden
Group, Inc. from 1983 to the present, which consists of thirteen
supermarkets, including Gelson's and Mayfair, with a related distribution
center. Mr. Klinger received a Bachelor of Laws from LaSalle University,
Chicago, Illinois and a Bachelor of Business Administration from the
University of Minnesota, Minneapolis.
STEVEN F. MAYER has been a Director of the Company since August 7, 1996.
Mr. Mayer is currently a managing director of Libra Investments, Inc., an
investment banking and private investment firm. From June 1994 until
November 1996, Mr. Mayer was the president of Aries Capital Group, LLC, 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. 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 member of the Board of Directors of Dove
Entertainment, Inc., a publicly traded publishing and television production
company. Mr. Mayer is a graduate of Princeton University and Harvard Law
School.
5
<PAGE>
STANLEY B. SCHNEIDER has been a Director of the Company since August 7,
1996. Mr. Schneider is a certified public accountant and founding member and
the managing partner of Gursey, Schneider & Co. LLP, 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, California
based high-tech defense firm; Jerry's Famous Deli, Inc., a Los Angeles-based
restaurant company; Golden West Baseball Co., the co-owner of the American
League California Angels; and 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.
BARRY J. GRUMMAN was named a Director of the Company in November 1994.
Mr. Grumman has been the Senior Partner in the Law Offices of Grumman &
Rockett, a Newport Beach, California law firm specializing in civil
litigation, since 1977. Mr. Grumman also has extensive experience as an
investor in private companies and has invested in companies which have gone
public.
The terms of all directors will expire at the next annual meeting of
shareholders or when their successors are elected and qualified. The Board
of Directors may fill interim vacancies of directors. Each officer is
elected by and serves at the discretion of, the Board of Directors, subject
to the terms of any employment agreement. The Company agreed to grant to the
representative of the underwriters (the "Representative") of the Company's
initial public offering which closed October 15, 1996 (the "Offering"), for a
period of five years following 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. As of the Record Date, the
Representative has waived its right to nominate a director.
SIGNIFICANT EMPLOYEES
The following table sets forth certain information concerning certain
significant employees of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
R. Dean Gerrie 46 Vice President Design & Marketing
Salvador A. Navarro 43 Director of Food and Beverage
Ramon David 48 President of Chicago Pizza Northwest, Inc.
Alan S. Rodomsky 50 Director of Northwest Operations
Peter N. Rogers 39 Director of Southern California
Operations
</TABLE>
R. DEAN GERRIE has served as Vice President of Marketing and Design
since January 1997. Previously, Mr. Gerrie served as President/Creative
Director with Guzman Gerrie Advertising from 1980 to 1989 and as principal of
Dean Gerrie Design, a corporate identity and marketing consultancy, from 1989
to 1997. Mr. Gerrie studied economics/business administration at the
University of California, Berkeley, design at California State University,
Long Beach and taught as an adjunct professor at the Southern California
Institute of the Arts from 1994 to 1997.
SALVADOR A. 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.
RAMON DAVID has been President of Chicago Pizza Northwest, Inc., a
Washington corporation and wholly owned subsidiary of the Company, since
September 30, 1996. In addition, he is currently and has been serving as
Director of Human Resources since March 30, 1996. Prior to that, from 1966
through March 29, 1996, Mr. David served in various capacities with Pietro's
Corporation, including restaurant General Manager, District Supervisor,
Regional Supervisor, Training Manager and Director of Human Resources. Mr.
David graduated from the University of Oregon in 1975 with a B.S. in Biology
and is certified as a Senior Professional in Human Resources.
6
<PAGE>
ALAN S. RODOMSKY has been Director of Northwest Operations since January
1998. Previously, he held the position of General Manager for the 10,000
square foot "Champs" restaurant and sportsbar in Irvine, California. At
"Champs", Mr. Rodomsky oversaw a staff of 175 employees and 10 managers
producing annual sales of more than $5.5 million. In addition, he has worked
with Marriott's Roy Rogers, Olga's Kitchen and held the position of regional
manager for the Subway chain. Mr. Rodomsky has a Bachelor of Arts Degree
with additional graduate school training at the University of Miami.
PETER N. ROGERS was recently appointed Director of Southern California
Operations. Previously, Mr. Rogers served as regional manager for Country
Harvest Restaurants overseeing 6 restaurants with annual sales of $12.0
million and as regional director of operations for Specialty Restaurants
overseeing 8 different restaurant concepts with annual sales of $26.0
million. Mr. Rogers received a Bachelor of Arts in Business Administration
in 1982 from Cal State San Bernardino.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
AND CERTAIN COMMITTEES THEREOF
The business of the Company's Board of Directors is conducted through
full meetings of the Board, as well as through meetings of its committees.
Set forth below is a description of the committees of the Board.
The Audit Committee reviews and reports to the Board on various auditing
and accounting matters, including the annual audit report from the Company's
independent public accountants. The Audit Committee consists of Mr. Schneider
and Mr. Klinger. Mr. Schneider is the Chairman of the Audit Committee. The
Audit Committee held one meeting during the last fiscal year.
The Stock Option Committee administers and determines appropriate awards
under the Company's 1996 Stock Option Plan. The Stock Option Committee
consists of Steven Mayer and Barry Grumman. Mr. Grumman is the Chairman of
the Stock Option Committee. The Stock Option Committee held no meetings
during the last fiscal year.
There were two meetings of the Board of Directors of the Company during
the last fiscal year of the Company. Each of the directors of the Company
attended 75% or more of the aggregate of the total number of meetings of the
Board of Directors held during the period in which he was a director.
COMPENSATION OF BOARD OF DIRECTORS
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.
In addition, the Company grants annual stock options to its non-employee
directors for each year of service, exercisable for 10,000 shares of common
stock.
EXECUTIVE COMPENSATION AND OTHER MATTERS
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation of
the Chief Executive Officer and the two most highly compensated executive
officers of the Company whose salary and bonus compensation was at least
$100,000 in the fiscal year ended December 31, 1997, for the fiscal years
ended December 31, 1997 and 1996:
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND ANNUAL COMPENSATION
---------------------------- OTHER ANNUAL
PRINCIPAL POSITION(1) YEAR SALARY BONUS COMPENSATION
- ------------------ ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Paul A. Motenko
Chief Executive Officer,
Vice President, Secretary
and Chairman of the 1997 $137,975 $ -0- $8,188(2)
Board................. 1996 $127,077 $ -0- $9,747(3)
Jeremiah J. Hennessy
President, Chief
Operating Officer,
Chief Financial Officer 1997 $137,975 $ -0- $7,877(4)
and Director.......... 1996 $127,077 $ -0- $9,319(5)
R. Dean Gerrie
Vice President 1997 $125,000 $ -0- $4,716(6)
...................... 1996 $ -0- $ -0- $ -0-
</TABLE>
- ------------------------------
(1) No other executive officer received salary and bonuses in excess of
$100,000 in 1997 or 1996.
(2) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $6,805) and
life insurance (approximately $1,383).
(3) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $8,608) and
life insurance (approximately $1,139).
(4) The amount shown above is the estimated value of perquisites and other
personal benefits, including health insurance (approximately $6,494) and
life insurance (approximately $1,383).
(5) The amount shown above is the estimated value of perquisites and other
personal benefits including health insurance (approximately $8,180), and
life insurance (approximately $1,139).
(6) The amount shown above is the estimated value of perquisites and other
personal benefits including health insurance (approximately $4,716).
OPTION GRANTS DURING 1997. No options were granted during the last
fiscal year to any of the executive officers named in the Summary
Compensation Table.
OPTION EXERCISES IN 1997 AND CURRENT OPTION VALUES. No options were
exercised or exercisable during the last fiscal year. No options are held by
the named executive officers as of December 31, 1997.
EMPLOYMENT AGREEMENTS
The Company 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.
8
<PAGE>
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:
EBITDA Cumulative Cash Bonus
---------- ---------------------
$2,000,000 $25,000
$3,000,000 $35,000
$6,000,000 $80,000
$9,000,000 $150,000
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.
Pre-Tax
Income Cumulative Cash Bonus
---------- ---------------------
$2,000,000 $25,000
$4,000,000 $75,000
$8,000,000 $150,000
The pre-tax income levels required to receive each bonus level for each
fiscal year following the 1997 fiscal year are increased by 20% per year.
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
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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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and certain other officers, directors and holders of 5% or
more of the shares of Common Stock of the Company have engaged in numerous
transactions as described below.
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 a January 1995 private placement were repaid. The direct
loans by Messrs. Motenko and Hennessy and deferred salaries were repaid in
1996.
On March 29, 1996, the Company acquired 26 restaurants, eight of which
were subsequently sold, located in Washington and Oregon by providing the
funding for a plan of reorganization filed with the U.S. Bankruptcy Court by
Pietro's Corporation, a Washington state corporation (the "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, plus accrued interest thereon, both
converted simultaneously with the closing of the Offering. The Convertible
Note, plus accrued interest thereon, issued to ASSI, Inc. converted into
500,000 shares of Common Stock and into warrants (the "ASSI Warrants") to
purchase 3,000,000 shares of Common Stock. The Convertible Note, plus accrued
interest thereon, issued to Mr. Herrick converted into 250,000 shares of
Common Stock and into warrants (the "Herrick Warrants") to purchase 1,500,000
shares of Common Stock (the ASSI Warrants and the Herrick Warrants are
collectively referred to herein as the "Special Warrants"). The 4,700,000
Special Warrants are each exercisable for $5.50 per share and expire on April
8, 2002. In addition, in connection with the above financing, the Company
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 nominee to the Board
of Directors of the Company was Mr. Ernest T. Klinger in 1997. During 1997
Assi, Inc. relinquished it's right to nominate a board member or advisor.
Mr. Herrick's current nominee to the Board of Directors is Mr. Steven Mayer.
Mr. Herrick's right to designate a board member or advisor expires in March
of 1999.
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. agreed 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 agreed to 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. No annual fee was
required or paid during 1997. As additional consideration for the consulting
services, the Company
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issued to ASSI, Inc. an additional aggregate of 100,000 Special Warrants to
purchase shares of common stock of the Company. The Pietro's Consulting
Agreement terminates on December 31, 2000.
On February 20, 1996, the Company entered into a consulting agreement
with ASSI, Inc. (the "Vegas Consulting Agreement") pursuant to which ASSI,
Inc. agreed 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 agreed to pay to ASSI, Inc. an
annual fee equal to 10% of Net Profits (as hereinafter defined) of any
acquired Las Vegas restaurants. As additional consideration for the
consulting services, the Company issued to ASSI, Inc. an additional 100,000
Special Warrants. The Vegas Consulting Agreement terminates on December 31,
2000.
For purposes of the Vegas Consulting Agreement and the Pietro's
Consulting Agreement, "Net Profits" means net profits of the respective
operations as determined under generally accepted accounting principles
("GAAP") before payment of the annual fees to Assi, Inc., 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.
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, 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1997, the Board of Directors
of the Company determined compensation for the executive officers of the
Company. Messrs. Paul Motenko and Jeremiah Hennessy were executive officers
and were on the Board of Directors in 1996 when the Employment Agreements
between the Company and each of them were approved. The Board of Directors
serves the function of a Compensation Committee for the Company.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
Action is to be taken by the shareholders at the Annual Meeting with
respect to the ratification of Coopers & Lybrand L.L.P. ("Coopers"),
independent certified public accountants, as independent accountants for the
Company for the fiscal year ending December 31, 1998. Coopers does not have
and has not had at any time any direct or indirect financial interest in the
Company or any of its subsidiaries and does not have and has not had at any
time any connection with the Company or any of its subsidiaries in the
capacity of promoter, underwriter, voting trustee, director, officer, or
employee. Neither the Company nor any officer or director of the Company has
or has had any interest in Coopers.
The Board of Directors of the Company and its Audit Committee have
approved Coopers as its independent accountants. Prior thereto, they have
questioned partners of that firm about its methods of operation and have
received assurances that any litigation or other matters involving it do not
affect its ability to perform as the Company's independent accountants.
Representatives of Coopers will be present at the Annual Meeting, will
have an opportunity to make statements if they so desire, and will be
available to respond to appropriate questions.
Notwithstanding the ratification by shareholders of the appointment of
Coopers, the Board of Directors or the Audit Committee may, if the
circumstances dictate, appoint other independent accountants.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than
10% of a registered class of the Company's equity securities to file various
reports with the Securities and Exchange Commission concerning their holdings
of, and transactions in, securities of the Company. Copies of these filings
must be furnished to the Company.
Based on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and
directors, the Company believes all filings were made on a timely basis.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
In order for a shareholder proposal to be included in the Board of
Directors' Proxy Statement for the next annual meeting of shareholders, such
proposal must be received at 26131 Marguerite Parkway, Suite A, Mission
Viejo, California 92692, Attention: Corporate Secretary, no later than the
close of business on December 27, 1998.
ANNUAL REPORT
The Company's Annual Report to Shareholders containing its financial
statements for the fiscal year ended December 31, 1997, has been mailed
concurrently herewith. The Annual Report to Shareholders is not incorporated
in this Proxy Statement and is not deemed to be a part of the proxy
solicitation material. Any shareholder who does not receive a copy of such
Annual Report to Shareholders may obtain one by writing to the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matter which will be brought before the Annual Meeting.
However, if any other matter properly comes before the Annual Meeting, or any
adjournment thereof, the person or persons voting the proxies will vote on
such matters in accordance with their best judgment and discretion.
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REPORT FILED WITH SECURITIES AND EXCHANGE COMMISSION
ANY BENEFICIAL OWNER OF SECURITIES OF THE COMPANY WHOSE PROXY IS HEREBY
SOLICITED MAY REQUEST AND RECEIVE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS THERETO, BUT EXCLUDING
EXHIBITS AND SCHEDULES, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH
REQUEST SHOULD BE ADDRESSED TO: CHICAGO PIZZA & BREWERY, INC., 26131 MARGUERITE
PARKWAY, SUITE A, MISSION VIEJO, CALIFORNIA 92692, ATTENTION: CORPORATE
SECRETARY.
By Order of the Board of Directors
PAUL A. MOTENKO
Chief Executive Officer
Mission Viejo, California
May 8, 1998
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES AND TO DATE, SIGN, AND RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. PROMPT RESPONSE IS HELPFUL AND
YOUR COOPERATION WILL BE APPRECIATED.
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CHICAGO PIZZA & BREWERY, INC.
26131 Marguerite Parkway, Suite A
Mission Viejo, California 92692
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS ON JUNE 10, 1998
THE UNDERSIGNED HEREBY APPOINTS PAUL MOTENKO AND JEREMIAH HENNESSY AS PROXIES,
EACH WITH THE POWER TO APPOINT HIS SUBSTITUTE, AND HEREBY AUTHORIZES THEM OR
EITHER OF THEM TO REPRESENT AT THE ANNUAL MEETING OF SHAREHOLDERS OF CHICAGO
PIZZA & BREWERY, INC. TO BE HELD AT 9:30 A.M. PACIFIC TIME, ON JUNE 10, 1998, AT
THE COMPANY'S "BJ'S PIZZA, GRILL & BREWERY" RESTAURANT AT 600 BREA MALL DRIVE,
BREA, CALIFORNIA, 92621 AND AT ANY ADJOURNMENT THEREOF AND TO VOTE ALL SHARES OF
COMMON STOCK WHICH THE UNDERSIGNED MAY BE ENTITLED TO VOTE AT SUCH MEETING AS
FOLLOWS:
(1) _____FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO CONTRARY
BELOW)
_____WITHHOLDING AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
PAUL A. MOTENKO, JEREMIAH J. HENNESSY, ALEXANDER PUCHNER, BARRY J. GRUMMAN,
STANLEY SCHNEIDER, STEVEN F. MAYER, AND ERNEST T. KLINGER.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, STRIKE
THE NOMINEE'S NAME LISTED ABOVE.)
(2) TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P., AS INDEPENDENT
ACCOUNTANTS.
______FOR ______AGAINST ______ABSTAIN
(3) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON ANY OTHER
BUSINESS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO SPECIFICATION IS MADE, IT WILL BE VOTED FOR PROPOSALS 1 AND 2.
DATED: ____________ ___, 1998
_______________________________
_______________________________ SIGNATURE OF SHAREHOLDER
________________________________ SIGNATURE(S) IF HELD JOINTLY
THIS PROXY SHOULD BE SIGNED EXACTLY AS YOUR NAME APPEARS HEREON. JOINT
OWNERS SHOULD BOTH SIGN. IF SIGNED BY EXECUTORS, ADMINISTRATORS,
TRUSTEES AND OTHER PERSONS SIGNING IN REPRESENTATIVE CAPACITY, THEY
SHOULD GIVE FULL TITLES.
PLEASE READ, COMPLETE, DATE, AND SIGN THIS PROXY AND RETURN IT IN THE
ENCLOSED ENVELOPE.
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