<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)(4) 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:*
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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 SEPTEMBER 28, 1999
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 September
28, 1999 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 eight 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 amend the 1996 Stock Option Plan to increase the total
number of shares available under the plan and to increase the
limit on the number of shares which may be granted per person
in any year.
(3) To ratify the appointment of PricewaterhouseCoopers L.L.P. as
independent accountants for the fiscal year ending December 31,
1999.
(4) 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 August 9,
1999, 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
CO-CHIEF EXECUTIVE OFFICER
Mission Viejo, California
September 1, 1999
- --------------------------------------------------------------------------------
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: September 1, 1999
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 September 28, 1999 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 eight of the
nominee-directors specified herein, FOR approval of the amendment of the
Company's 1996 Stock Option Plan (the "1996 Plan") and FOR the ratification of
the selection of PricewaterhouseCoopers L.L.P. as the Company's independent
public accountants for fiscal year 1999, 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 August 9, 1999 (the "Record Date")
will be entitled to notice of, and to vote at, the Annual Meeting. On such date,
there were 7,658,321 shares of Common Stock outstanding, with one vote per
share.
With respect to election of directors, assuming a quorum is present,
the eight candidates receiving the highest number of votes are elected. See
"Nomination and Election of Directors." To approve the amendment of the 1996
Plan and to ratify the appointment of PricewaterhouseCoopers 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
<PAGE>
by proxy of shares representing a majority of the voting power of the Common
Stock.
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 proposals to amend the 1996 Plan and
to ratify the selection of PricewaterhouseCoopers 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>
NON-AFFILIATED SHAREHOLDERS:
ASSI, Inc.............................................. 2,206,500 (4) 28.81%
5075 Spyglass Hill Dr.
Las Vegas, NV 89122
Norton Herrick......................................... 700,000 (5) 9.14%
2295 Corporate Blvd., Northwest
Boca Raton, FL 33431
OFFICERS AND DIRECTORS:
Paul A. Motenko........................................ 680,357 8.88%
Jeremiah J. Hennessy.................................. 661,357 8.64%
Ernest T. Klinger...................................... 270,000 (6) 3.41%
Alexander M. Puchner................................... 75,000 (7) 0.97%
Barry J. Grumman....................................... 80,000 (8) 10.39%
Stanley B. Schneider .................................. 65,000 (9) 0.84%
R.Dean Gerrie.......................................... 25,000 (10) 0.33%
Mark James............................................. 0 0%
Allyn Burroughs........................................ 0 0%
All directors and executive officers as a group
(9 persons).......................................... 1,866,714 22.90%
</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
<PAGE>
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.
(4) Consists of 2,206,500 shares held of record by ASSI, Inc., a Nevada
corporation that is owned and controlled by Louis Habash whose address
is the same as that of ASSI, Inc..
(5) Consists of 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) Consists of 30,000 shares of Common Stock issued as an independent
director and 240,000 shares of stock issued pursuant to the employment
agreement described elsewhere, all subject to options which are
exercisable currently or within 60 days.
(7) Consists of 75,000 shares of Common Stock subject to options which
are exercisable currently or within 60 days.
(8) Consists of 10,000 shares of Common Stock which are held in a
Professional Corporation Money Purchase Plan of which Mr. Grumman is
the beneficiary and 30,000 shares of Common Stock held in a joint
account by Mr. and Mrs. Barry Grumman, and 40,000 shares of Common
Stock subject to options which are exercisable currently or within
60 days.
(9) Includes 40,000 shares of Common Stock subject to options which are
exercisable currently or within 60 days.
(10) Includes 25,000 shares of Common Stock subject to options which are
exercisable currently or within 60 days.
NOMINATION AND ELECTION OF DIRECTORS
(PROPOSAL NO. 1 ON PROXY CARD)
The Company's directors are to be elected at each annual meeting of
shareholders. At this Annual Meeting, eight 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 eight 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.
<PAGE>
The following table sets forth certain information concerning the
nominees for election as directors:
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION AGE
<S> <C> <C>
Paul A. Motenko Co-Chairman of the Board, Co- Chief Executive Officer, 44
Vice President and Secretary of the Company
Jeremiah J. Hennessy Co-Chairman of the Board, Co-Chief Executive Officer 40
and Chief Operating Officer of the Company
Ernest T. Klinger Co-Chairman of the Board, President 64
and Chief Financial Officer of the Company
Alexander M. Puchner Vice President of Brewing Operations of the Company 38
Barry J. Grumman Senior Partner in the Law Offices of Grumman 48
& Rockett
Stanley B. Schneider Managing Partner of Gursey, Schneider & Co. 63
Mark James Senior Partner in the Law Offices of James, Driggs, Walch, 39
Santoro, Kearney, Johnston & Thompson, and a Nevada
State Senator
Allyn Burroughs Chief Executive Officer of American Convenience Corp. 66
</TABLE>
PAUL A. MOTENKO has been Co-Chairman of the Board, Co-Chief Executive
Officer, Vice President and Secretary of the Company since June 1999.
Previously, since its inception in 1991, he was the Chief Executive Officer,
Chairman of the Board, Vice President and Secretary of the Company. He is also
Chairman of the Board 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 Co-Chairman of the Board, Co-Chief
Executive Officer and Chief Operating Officer of the Company since June 1999.
Previously, since its inception in 1991, he was the President, Chief Operating
Officer and a Director of the Company. 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.
ERNEST T. KLINGER has been Co-Chairman of the Board, President and
Chief Financial Officer of the Company since June 1999 and has been a Director
of the Company since April 23, 1997. Mr. Klinger was Chief Financial Officer and
Vice President-Finance and Administration of Arden Group, Inc., which consists
of thirteen supermarkets, including Gelson's
<PAGE>
and Mayfair, with a related distribution center, from 1983 until joining the
Company in June, 1999. Mr. Klinger is a Certified Public Accountant, received
a Bachelor of Laws from LaSalle University, Chicago, Illinois and a Bachelor
of Business Administration from the University of Minnesota, Minneapolis.
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. That was followed by a bronze medal in The American Pale Ale category
in 1998 for BJ's Piranha Pale Ale. Other awards for BJ's beers include: a silver
medal at the 1998 World Beer Cup and First Place awards at the California State
Fair in both 1997 and 1998. Mr. Puchner has also earned over 40 awards as a
homebrewer, including in 1991 and 1992 at the 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.
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, 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.
MARK JAMES received a B.S. in Political Science from Lewis & Clark
College in 1981. He also served as a Senate Judiciary Committee intern for
Senator Paul Laxalt of Nevada during 1981. In 1985, Mr. James earned a J.D. with
High Distinction from the University of Arizona College of Law. In April, 1996,
Mr. James and several partners joined to create the law firm of James, Driggs &
Walch, which has now become the law firm of James, Driggs, Walch, Santoro,
Kearney, Johnston & Thompson. Mr. James has an extensive practice in the areas
of business litigation, water law and natural resources and environmental law.
Previously, he was with the internationally prominent law firm of Baker & Botts
the Las Vegas firm of Jolley, Urga, Wirth & Woodbury. In 1992, Mr. James was
elected to the Nevada State Senate. He was selected to chair the Senate
Judiciary Committee, the only freshman selected for the post since 1935. In
1994, he was re-elected and continues to serve as Senate Judiciary Committee
chairman.
ALLYN R. BURROUGHS is Chief Executive Officer and Chairman of the Board
of American Convenience Corp.. For the past 15 years, Mr. Burroughs has served
as an executive officer of various real estate and hotel development and
management companies. He has participated in the investment, acquisition,
development, sale and management of multi-family residential properties,
shopping centers and office buildings in the western region of the United
States. Most recently, Mr. Burroughs was Executive Vice President of NCA
Management, Inc., a hotel management company where his responsibilities were
senior hotel staffing, management information systems, sales, monitoring daily
operations and cash management.
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
<PAGE>
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 48 Vice President Design & Marketing
Salvador A. Navarro 44 Director of Food and Beverage
Ramon David 49 President of Chicago Pizza Northwest, Inc.
Alan S. Rodomsky 51 Director of Northwest Operations
Peter N. Rogers 41 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. He brings to his position more than 20 years of
experience in the food and beverage industry. Before joining Chicago Pizza &
Brewery, Mr. Navarro was Central Operations Manager for Knott's Berry Farm in
Buena Park, CA. Prior to that, he spent 14 years as Director of Food and
Beverage for Southwest Foods, Inc.'s Claim Jumper Restaurants. Mr. Navarro was
instrumental in the expansion of BJ's menu.
RAMON DAVID came to the Company in 1996 after 30 years of service with
Pietro's Corporation, former owner and operator of Pietro's restaurants. The
Company bought the Pietro's chain in 1995. Mr. David is the current President of
Chicago Pizza Northwest, Inc., a Washington corporation and wholly owned
subsidiary of the Company. He also serves as the Company's Director of Human
Resources, the same post he held with Pietro's. Mr. David has a Bachelor's
Degree from the University of Oregon and is certified as a senior professional
in human resources.
ALAN S. RODOMSKY, Director of Pacific Northwest operations, came to the
Company in 1998 with more than 21 years of experience in the restaurant
industry. Before joining the Company, Mr. Rodomsky was general manager for the
10,000 square foot Champps Americana restaurant and sportsbar in Irvine,
California. There he oversaw a staff of 175 employees and 10 managers producing
annual sales of more than $5.5 million. Mr. Rodomsky also has supervised 75
restaurants and 3 district managers as a Regional Manager for Subway
restaurants, was a district manager for the casual dining Olga's Kitchen chain
and began his career with Marriott's Roy Rogers concept. Mr. Rodomsky holds a
Bachelor of Arts Degree from Northland College and has completed graduate work
from the University of Miami.
PETER N. ROGERS has been Director of Southern California Operations for
Chicago Pizza & Brewery, Inc. since 1998. He has spent nearly two decades in the
restaurant industry, starting out as a waiter at El Gato Gordo in Redlands,
California. Mr. Rogers considers his ownership of the Match Point Bar and Grill
in Redlands the best previous professional experience of his career. More
recently, he served as regional manager for Country Harvest Restaurants, where
he was responsible for six restaurants with annual sales of $12 million. Before
Country Harvest, he was regional director of operations for Specialty
Restaurants, overseeing eight restaurant concepts with annual sales of $26
million. Mr. Rogers has a Bachelor of Arts Degree in Business Administration
from California State University San Bernardino.
<PAGE>
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. Grumman. Mr. Schneider is the Chairman of the Audit Committee.
The Audit Committee held two meetings 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 Mr. Mark James and Mr. Barry Grumman. Mr. Grumman is the Chairman of
the Stock Option Committee. The Stock Option Committee held no meetings during
the last fiscal year.
The board of Directors does not have a Nominating Committee.
There were three meetings of the Board of Directors of the Company
during the last fiscal year of the Company. Each of the incumbent 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
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning compensation of
the four 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, 1998, for the fiscal years ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION
Stock
Other Annual Option All Other
Name and Principal Position(1) Year Salary Bonus Compensation(2) Grants(3) Compensation
- ------------------------------------- -------- ---------- ------------ ---------------- -------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Paul A. Motenko 1998 $141,900 $25,000 -0-
Co-Chief Executive Officer, Vice 1997 137,975 0 -0-
President, Secretary and 1996 127,077 0 -0-
Co-Chairman of the Board
Jeremiah J. Hennessy 1998 $141,900 $25,000 -0-
Co-Chief Executive Officer, Chief 1997 137,975 0 -0-
Operating Officer and Co-Chairman 1996 127,077 0 -0-
of the Board
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Ernest T. Klinger (4) 1998 0 0 -0-
President, Chief Financial Officer 1997 0 0 -0-
and Co-Chairman Of the Board 1996 0 0 -0-
Dean Gerrie 1998 $125,000 $0 75,000
Vice President, Design & Marketing 1997 125,000 0 -0-
1996 0 0 -0-
</TABLE>
- ---------------------------------------
(1) No other executive officer received salary and bonuses in excess of
$100,000 in 1998 or 1997.
(2) Perquisites and other personal benefits did not in the aggregate equal
or exceed the lesser of $50,000 for any named individual or 10 percent
of the total of annual salary and bonus reported in this table for such
person.
(3) Number of shares of the Company's common stock subject to stock options
granted to the named indivdual.
(4) Mr. Klinger joined the Company on June 21, 1999 pursuant to the
Employment Agreement described below.
OPTION GRANTS DURING 1998
The following table sets forth information on grants of stock options
pursuant to the Option Plan during the last fiscal year to the officers named in
the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR 1998
INDIVIDUAL GRANTS
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS GRANTED ASSUMED RATES OF STOCK APPRE-
OPTIONS TO EMPLOYEES EXERCISE EXPIRATION CIATION FOR OPTION TERM(2)
NAME GRANTED(1) IN 1998 PRICE DATE 5% 10%
- ------------------ ---------- ---------------- -------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. Dean Gerrie 75,000 54.9 $1.88 01/27/08 95,236 224,718
</TABLE>
(1) Options become exercisable as to one-third of the option shares
one year after the date of grant and as to an additional one-third
of the option shares each one-year interval thereafter.
(2) These columns represent hypothetical future values of the
stock purchasable upon exercise of the options net of the
option's exercise price, assuming that the market price of the
Company's common stock appreciates at a five or ten percent
compounded annual rate over the remaining term of the options.
The five and ten percent rates of stock price appreciation are
presented as examples pursuant to the Proxy Rules and do not
necessarily reflect management's assessment of the Company's
future stock price performance. The potential realizable values
presented are not intended to indicate the value of the options.
OPTION EXERCISES IN 1998 AND YEAR-END OPTION VALUES
The following table sets forth information concerning stock options
which were exercised during, or held at the end of fiscal 1998 by the officers
named in the Summary Compensation Table:
OPTION EXERCISES AND YEAR-END VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
DECEMBER 31, 1998(1) IN-THE-MONEY OPTIONS (2)
------------------------------ -----------------------------
SHARES
ACQUIRED ON VALUE UNEXER- UNEXER-
NAME EXERCISE REALIZED EXERCISABLE CISABLE EXERCISABLE CISABLE
---- -------- -------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
R. Dean Gerrie -0- -0- -0- 75,000 -0- -0-
</TABLE>
(1) Shares of common stock.
<PAGE>
(2) Value based on closing sale price of $1.34 per share on December 31,
1998.
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.
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 are increased by 20% per year.
The Company entered into a five year employment agreement with Ernest
T. Klinger (sometimes referred to as the "Executive") effective June 21, 1999.
Pursuant to said agreement, Mr. Klinger is to receive annual cash compensation
of $145,000, subject to escalation annually in accordance with the Consumer
Price Index (the "CPI"). In addition, Mr. Klinger's employment agreement
entitles him to receive two annual bonuses based on the Company's financial
performance, one for attainment of specified earnings before interest,
amortization, depreciation and income tax ("EBITDA"), and one for attainment of
specified annual pre-tax income.
The EBITDA bonus would entitle Mr. Klinger to receive the following
amounts if the following EBITDA amounts are obtained for each fiscal year during
the term of his employment agreement.
<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 bonus would entitle Mr. Klinger to receive the following
amounts if the following pre-tax amounts (as determined by the Company's
independent public accountants in accordance with GAAP) are attained for each
fiscal year during the term of his employment agreement commencing with the
fiscal year ended December 31, 1999:
<PAGE>
<TABLE>
<CAPTION>
Pre-Tax
Income Cumulative Cash Bonus
<S> <C>
$ 2,880,000 $25,000
$ 5,760,000 $75,000
$11,520,000 $150,000
</TABLE>
The pre-tax income levels required to receive each bonus level for each
fiscal year following the 1999 fiscal year are increased by 20% per year.
Pursuant to their respective employment agreements, Messrs. Motenko,
Hennessy and Klinger 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,
Hennessy and Klinger'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, Mr. Hennessy or Mr. Klinger, 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, Mr. Hennessy, or Mr.
Klinger terminates the employment agreement because of a breach by the Company
of its obligations thereunder or for Good Reason (as hereinafter defined), Mr.
Motenko, Mr. Hennessy, or Mr. Klinger, 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.
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors issues this report on executive compensation
pursuant to Item 402 of Regulation S-K. This report on Executive Compensation
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filings under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
THE COMPENSATION COMMITTEE. The Board of Directors, as a whole,
functions as the Compensation Committee. Acting in that capacity, the Board
administers the executive compensation plans, reviews programs and policies, and
monitors the performance and compensation of executive officers and other key
employees, except for Messrs. Paul Motenko, Jeremiah Hennessy and Ernest Klinger
whose compensation is established under Employment Agreements dated March 25,
1996 as to Messrs. Motenko and Hennessy and dated June 21, 1999 as to Mr.
Klinger, each as described above.
As to executives and other key employees, other than Messrs. Motenko,
Hennessy and Klinger, the Board established compensation designed to achieve an
overall level of compensation which is competitive with other companies in the
restaurant business in each geographical area in which the Company operates. The
Company's compensation program consists of three main components; (1) base
salary, (2) bonus, and (3) long-term incentives in the form of stock options.
The bonus and long-term incentives constitute the "at risk" portion of the
compensation program. The individual performance, responsibility and achievement
of each executive involved along with the goals of the Company was used to
establish each individuals compensation.
It is anticipated that the Board of Directors will generally adhere to
compensation policies which reflect the belief that (a) the Company must attract
and retain individuals with outstanding ability and motivate and reward such
individuals; (b) a portion of an executives compensation should be at risk based
upon the executives performance and that of the Company; and (c) within these
parameters, levels of compensation should generally be in line with that offered
by comparable companies.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return on Common Stock against the cumulative return of the Standard
& Poor 500 Stock Index and the Media General Restaurant Group Index for the
period since the Company had its Initial Public Stock Offering on October 8,
1996. The graph assumes that $100 was invested at inception in the Common Stock
and in each of the indices that all dividends were reinvested.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMANIES, PEER GROUPS, INDUSTRY INDEXED AND/OR BROAD MARKETS
--------------------FISCAL YEAR ENDING----------------------
COMPANY/INDEX/MARKET 10/09/1996 12/31/1996 12/31/1997 12/31/1998
<S> <C> <C> <C> <C>
Chicago Pizza Brw 100.00 83.33 25.00 22.40
Restaurants 100.00 95.42 98.16 133.67
S&P Composite 100.00 108.34 144.48 185.77
</TABLE>
Note: Base price date is 10/09/1996
<PAGE>
APPROVAL OF AMENDMENT TO 1996 STOCK
OPTION PLAN
(PROPOSAL NO. 2 ON PROXY CARD)
The Board of Directors has unanimously approved and recommends
to its stockholders the adoption of an amendment to the Company's 1996 Stock
Option Plan (the "1996 Plan"). The proposed amendment would (a) increase the
number of shares of Common Stock available for granting under the 1996 Plan from
600,000 to 1,200,000 and (b) would increase the current limit of shares which
may be granted to any one person in any year from 250,000 shares to 500,000
shares.
The primary purpose of the amendment is to provide the Company
with sufficient shares in the 1996 Plan allowing it flexibility to use the 1996
Plan to provide an incentive to existing personnel to continue employment with
the Company and to allow the Company to use the 1996 Plan to recruit the talent
necessary for the future well being of the Company.
1996 STOCK OPTION PLAN
The Company has adopted a 1996 Stock Option Plan (the "1996 Plan"). The
following summary of the 1996 Plan is qualified in its entirety by the form of
Stock Option Plan previously filed.
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. On or after August 15, 1996, the
requirement that all members of the Board of Directors or the Committee be
"disinterested persons" shall not apply. However, all members of the Committee
must be "non-employee directors" within the meaning of Rule 16b-3(b)(3)(i)
promulgated by the Securities and Exchange Commission.
ELIGIBILITY CONDITIONS. All employees (including officers) of the
Company, its subsidiaries, non-employee directors and outside consultants are
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 are wholly within the discretion of
the Committee.
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 1,200,000, as increased by the Board of
Directors in the recent amendment from 600,000. 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
<PAGE>
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. The maximum
number of shares which can be granted to any one person in any year under the
1996 plan is 500,000 shares, as amended by the Board of Directors from 250,000
shares.
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 (1) increase the total number of
shares available for issuance (except as permitted by the 1996 Plan to reflect
changes in capital structure), (2) materially change the eligibility
requirements, or (3) materially increase the benefits accruing to participants
under the 1996 Plan.
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 is treated as Non-Qualified Stock Options. Incentive Stock
Options are 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).
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 the 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
<PAGE>
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 if the Common Stock is neither
listed for trading on an exchange or quoted by the Nasdaq National Market.
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 Committee,
upon such terms as the Committee shall approve, in shares of the
Common Stock then owned by the optionee.
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 certain
transactions as described below.
.
CERTAIN OTHER TRANSACTIONS AND CONFLICTS OF INTEREST
In March 1999, the Company sold, through a private placement, 1,250,000
shares of its Common Stock to ASSI, Inc. ("ASSI") in exchange for a cash payment
of $1,000,000, the termination of each of two consulting agreements between the
Company and ASSI, a release of any claims that ASSI and its affiliates may have
had against the Company or its affiliates relating to the consulting agreements
and prior investments by ASSI and its affiliates in the Company. In addition,
ASSI agreed to the cancellation of 3.2 million special warrants owned by it. The
shares sold by the Company to ASSI are subject to restrictions on resale
including a right of first refusal in favor of the Company or its designees. As
an additional part of the consideration for the common stock, ASSI and Louis
Habash, the controlling shareholder of ASSI, agreed to finance or guarantee
financing of potential future development projects of the company, subject to
project pre-commitment approval, and agreed to cooperate in connection with any
gaming or licensing applications or proceedings involving the Company. In
connection with its investment, ASSI received certain demand and piggyback
registration rights as well as a commitment from the Company to use its best
efforts to have two of the Company's directors be persons designated by ASSI at
each annual meeting of shareholders occurring prior to March 2002. Messrs. Mark
James and Allyn Burroughs have been so designated by ASSI and are currently
nominees for election. ASSI also received a commitment from Paul Motenko and
Jeremiah Hennessy, the Company's then principal executive officers, to vote
their shares of common stock in favor of ASSI's board nominees in certain
circumstances. Such rights terminate at such time as ASSI and its affiliates no
longer own at least 5 percent of the company's outstanding common stock.
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
The Board of Directors serves the function of a Compensation
Committee for the Company. During the fiscal year ended December 31, 1998,
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
<PAGE>
1996 when the Employment Agreements between the Company and each of them were
approved. Mr. Ernest T. Klinger became an executive officer of the Company on
June 21, 1999 pursuant to the employment agreement described above and was a
Board of Director when the Employment Agreement between the Company and he
was approved. He abstained from voting on that agreement.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 3 ON PROXY CARD)
Action is to be taken by the shareholders at the Annual Meeting with
respect to the ratification of PricewaterhouseCoopers L.L.P. ("PWC"),
independent certified public accountants, as independent accountants for the
Company for the fiscal year ending December 31, 1999. PWC 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 PWC.
The Board of Directors of the Company and its Audit Committee have
approved PWC 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 PWC 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
PWC, the Board of Directors or the Audit Committee may, if the circumstances
dictate, appoint other independent accountants.
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 March 1, 2000.
ANNUAL REPORT
The Company's Annual Report to Shareholders containing its financial
statements for the fiscal year ended December 31, 1998, 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.
<PAGE>
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.
<PAGE>
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
Co-Chief Executive Officer
Mission Viejo, California
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.
<PAGE>
P R O X Y 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 SEPTEMBER 28, 1999
The undersigned hereby appoints Paul Motenko, Jeremiah Hennessy and Ernest
T. Klinger 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 September 28, 1999, 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 the nominees listed below:
<TABLE>
<S> <C>
Paul A. Motenko Barry J. Grumman
Jeremiah J. Stanley Schneider
Hennessy Mark James
Ernest T. Klinger Allyn Burroughs
Alexander Puchner
</TABLE>
INSTRUCTIONS: To withhold authority for any individual nominee, strike the
nominee's name listed above.
2. Amend the 1996 Stock Option Plan to increase the shares available to
1,200,000 and to increase the 250,000 share limit per person per year to 500,000
shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the appointment of PricewaterhouseCoopers L.L.P., as
independent accountants.
/ / FOR / / AGAINST / / ABSTAIN
4. 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, 2 AND 3.
<PAGE>
Dated: ______________, 1999
___________________________
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.
