CALIFORNIA BEACH RESTAURANTS INC
10-K405/A, 1996-08-27
EATING PLACES
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<PAGE>   1





                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                                  FORM 10-K/A
                               (Amendment No. 1)
(Mark One)

( X )    Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 [Fee Required]

         For the fiscal year ended April 30, 1996
                          or
(    )   Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 [No Fee Required]

         For the transition period from ______ to _______

Commission File No. 0-12226

                       CALIFORNIA BEACH RESTAURANTS, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
                      <S>                                                             <C>
                                         California                                              95-2693503
                               (state or other jurisdiction                           (IRS Employer Identification
                                    of incorporation or                                           No.)
                                       organization)

                         17383 Sunset Boulevard, Suite 140
                           Pacific Palisades, California                                          90272
                      (Address of principal executive office)                                  (ZIP Code)
</TABLE>

                 Registrant's telephone number:  (310) 459-9676

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

                                      None

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

                          Common Stock, $.01 par value
                                (Title of Class)

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

                           Yes    X         No ______

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

The aggregate market value of voting stock held by non-affiliates of the
Registrant based upon the average bid price in the over-the-counter market on
August 11, 1995 (the date of the last posted quote) was approximately $12,144.

The number of outstanding shares of the Registrant's Common Stock as of June
21, 1996 was 3,400,975.

Documents incorporated by reference:       None
<PAGE>   2



                                    PART III

ITEM 10  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                 The directors of the Registrant are as follows:
<TABLE>
<CAPTION>
Name                             Age            Title
- ----                             ---            -----
<S>                              <C>            <C>
Alan Redhead                     53             Chairman of the Board, President, Chief Executive Officer
J. Christopher Lewis             40             Director
Jefferson W. Asher, Jr.          71             Director
Scott C. Dew                     38             Director
George Nicolais                  52             Director
Faisal Shah                      35             Director
Barry A. Chase                   40             Director
</TABLE>


                 The executive officers of the Registrant are Mr. Redhead and
Mark E. Segal, age 37, Vice President - Finance, Chief Financial Officer and
Secretary.  Directors hold office until their term of office expires and their
successors are elected and qualified.  Executive officers serve at the
discretion of the Board of Directors.

                 Alan Redhead joined the Registrant in June 1992 as its Chief
Executive Officer ("CEO") and as a member of its Board of Directors and
executive committee. Mr. Redhead resigned as a member of the Board of Directors
and the Executive Committee in November 1992.  Mr. Redhead subsequently
re-joined the Board of Directors in September 1993.  From 1986 to 1992 Mr.
Redhead was involved in various restaurant businesses and a non-profit
organization.  From 1974 to 1986 Mr. Redhead was with Hungry Tiger, Inc.,
including 7 years as its CEO.  Hungry Tiger Inc. owned and operated Hungry
Tiger Restaurants, Breakers Seafood Restaurants, Castagnola's Lobster House and
the restaurant and catering operations at the Los Angeles Music Center.

                 J. Christopher Lewis, a director of the Registrant since June
29, 1990 and a member of its Stock Plan and Compensation Committees, has been
associated with Riordan, Lewis and Haden, a venture capital firm, for the past
eleven years.  He is currently a director of Tetra Tech, Inc. and Data
Processing Resources Corporation and several privately-held companies.

                 Jefferson W. Asher, Jr. joined the Registrant as a member of
the Board of Directors on November 23, 1992 and is a member of its Audit
Committee.  Mr. Asher has spent the past twenty years as an independent
management consultant and currently serves as an advisor to several private
companies.  Mr. Asher is also a member of the Board of Directors of Baldor
Electric Company, a New York Stock Exchange manufacturer of industrial electric
motors and drives.

                 Scott C. Dew joined the Registrant as a member of the Board of
Directors on March 13, 1995 and is a member of its Stock Plan and Compensation
Committees.  Since  June 1995, Mr. Dew has been General Counsel for
Rubin-Pachulski Properties, Inc., a real estate investment firm.  From 1985 to
June 1995, Mr. Dew was an attorney with the law firm of Levene & Eisenberg,
P.C.

                 George Nicolais joined the Registrant as a member of the Board
of Directors on April 28, 1995 and is a member of the Audit Committee.  Mr.
Nicolais was nominated for election to the Board of Directors at the request of
the Bank of America National Trust and Savings Association (the "Bank"),
pursuant to the exercise of its contractual rights with the Registrant.  See
"Certain Relationships and Related Transactions -- December 1994 Private
Placement and Debt Restructurings."  Mr. Nicolais has been President of George
Nicolais & Associates, Inc., a firm providing financial advisory and management
consulting services, since 1976.


                                       2
<PAGE>   3




                 Faisal Shah joined the Registrant as a member of the Board of
Directors on May 6, 1996, at the request of the Bank, pursuant to the exercise
of its contractual rights with the Registrant.  See "Certain Relationships and
Related Transactions -- December 1994 Private Placement and Debt
Restructurings."  Mr. Shah is a partner at the law firm of Pillsbury Madison &
Sutro LLP, a firm he joined in 1986.

                 Barry A. Chase joined the Registrant as a member of the Board
of Directors on April 28, 1995 and is a member of the Audit Committee.  Mr.
Chase was nominated for election to the Board of Directors at the request of
John C. Cushman, III, pursuant to the exercise of Mr. Cushman's contractual
rights with the Registrant.  See "Certain Relationships and Related
Transactions -- December 1994 Private Placement and Debt Restructurings."  Mr.
Chase was a consultant to Cushman Equities Corporation from 1990 to 1991 and
was President of such corporation and Cushman Energy Corporation from 1991
until February 1996.  From 1993 until 1996, he was also President of Cushman
Investment and Development Corporation, a real estate developer.  Mr. Chase is
currently engaged in various activities relating to certain Cushman entities.

                 Mark E. Segal joined the Registrant in July 1991 as Vice
President - Finance and Chief Financial Officer.  From October 1987 through
June 1991, Mr. Segal was Vice President - Finance of Martin Lawrence Limited
Editions, Inc., a New York Stock Exchange retailer and wholesaler of fine art.
From January 1984 through September 1987 Mr. Segal was Controller and Assistant
Treasurer for Orange Julius International, Inc.  He is a Certified Public
Accountant and spent four years with the international accounting firm of
KPMG-Peat Marwick.

                 None of the officers and directors of the Registrant is
related to any other officer or director of the Registrant.

                 During the year ended April 30, 1996, the Registrant
established the Board of Directors fees at $500 per meeting attended for each
outside Board member.

                 On October 7, 1992 the Registrant, faced with the loss of its
directors and officers liability insurance, entered into indemnification
agreements with Messrs. Redhead, Lewis and Segal.  On November 23, 1992, the
Registrant entered into an indemnification agreement with Mr. Asher.  The
Registrant believed that the indemnification agreements were required to induce
the various officers and directors to continue to serve in their existing
capacities.  Generally the agreements provide for indemnification by the
Registrant to each of the individuals against expenses, judgments, fines and
penalties incurred in connection with any proceeding to the full extent
permitted by the law of the State of California and the advancement of expenses
prior to any final disposition of a proceeding.  Each indemnitee has agreed to
repay any amount advanced if it is determined that the indemnitee was not
entitled to be indemnified pursuant to the agreement.  All directors and
officers of the Registrant are entitled to the protection of directors' and
officers' insurance policies that are maintained by the Registrant.

                 At the Annual Meeting of Shareholders held on April 28, 1995,
the Registrant's shareholders approved an amendment to the Registrant's
Articles of Incorporation to eliminate, to the fullest extent permitted by
California law, the monetary liability of directors of the Registrant in
performing their duties.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Under the securities laws of the United States, the Registrant's
directors, its executive (and certain other) officers, and any persons holding
more than ten percent of the Common Stock are required to report their
ownership of the Common Stock and any changes in that ownership to the
Securities and Exchange Commission ("Commission").  Specific due dates for
these reports have been established and the Registrant is required to report in
this document any failure to file by these dates during the fiscal year ended
April 30, 1996.  All of these filing requirements were satisfied by its
directors, officers and ten percent holders.  In making these statements, the
Registrant has relied on the written representations of its directors, officers
and its ten percent holders and copies of the reports that they have filed with
the Commission.





                                       3
<PAGE>   4




ITEM 11  EXECUTIVE COMPENSATION

         The following summary compensation table sets forth certain summary
compensation information concerning the Registrant's executive officers for the
three most recent fiscal years:

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                              
                                                                                              
                                                                               
                                                                               Long Term      
                                                                              Compensation    
                                          Annual Compensation (1)                Awards       
                            -------------------------------------------   --------------------
                                                                               Securities
Name and                   Fiscal                                              Underlying
Principal Position          Year          Salary($)       Bonus($)           Options/SARs(#) 
- ------------------        ------         ---------       --------         ------------------
<S>                        <C>               <C>             <C>                <C>
Alan Redhead, Chairman     1996              $212,000        $30,894                 --
of the Board, President    1995               207,000          --               335,000
and Chief Executive        1994               204,000          --                    --
Officer
Mark E. Segal, Vice        1996              $112,000        $21,214                 --
President--Finance,        1995               111,000          --               110,000
Chief Financial Officer    1994               108,000          --                    --
and Secretary
</TABLE>



Option Grants in Last Fiscal Year

         The following sets forth certain information concerning individual
grants of stock options during the fiscal year ended April 30, 1996 to each of
the Registrant's executive officers.  No SARs were granted in the fiscal year
ended April 30, 1996:

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                               Number of           % of Total
                              Securities          Options/SARs
                              Underlying           Granted to                         
                             Options/SARs         Employees in        Exercise or Base
Name                          Granted(#)           Fiscal Year       Price  ($/Share)      Expiration Date
- ----                       ----------------      ---------------     -----------------     ---------------
<S>                              <C>                   <C>                  <C>                  <C>
Alan Redhead                     None                  N/A                  N/A                  N/A
Mark E. Segal                    None                  N/A                  N/A                  N/A
</TABLE>


Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option
Values

         No options were exercised in the fiscal year ended April 30, 1996.
The following table sets forth certain information concerning executive
officers and the aggregated fiscal year-end value of the unexercised options of
each of the named executive officers.





                                       4
<PAGE>   5




              AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                     AND FISCAL YEAR END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                 Number of Securities
                                                Underlying Unexercised             Value of Unexercised
                                                Options/SARs at Fiscal           In the Money Options/SARs
                   Shares                            Year-End (#)                at Fiscal Year-End ($)(1)
                 Acquired on     Value       -----------------------------      ------------------------------
Name             Exercise(#)   Realized($)   Exercisable     Unexercisable      Exercisable      Unexercisable
- ----             -----------   -----------   -----------     -------------      -----------      -------------
<S>                 <C>           <C>             <C>              <C>             <C>               <C>
Alan Redhead        None          $--             223,333          111,667         $ --              $  --
Mark E. Segal       None          $--              73,333           36,667         $ --              $  --
</TABLE>


(1)      Market value of underlying securities at year-end, minus the exercise
         or base price of "in the money" options.


Other Compensation Agreements

         Effective May 21, 1993, the Registrant entered into employment
agreements with Messrs. Redhead and Segal.  These employment agreements set
forth certain of the terms of employment for each of these individuals,
including the right to receive nine months salary as severance pay upon (i)
termination of employment without cause (as defined below) or (ii) resignation
for good reason (as defined below).  The term of Mr.  Redhead's agreement is
four years, expiring May 21, 1997, and provides for a base salary of $200,000,
subject to annual cost of living adjustments.  His current salary is $210,000.
Mr. Segal's original agreement was for three years, expiring May 21, 1996, and
provided for a base salary of $103,000, subject to annual cost of living
adjustments.  In April 1996, Mr. Segal's agreement was extended for one year.
His current salary is $108,000.

         For purposes of each of these individuals' employment agreements,
"cause" is defined to mean (i) the willful engaging by the employee in
misconduct which is or could reasonably be expected to become materially
injurious to the Registrant, monetarily or otherwise; (ii) conviction of a
felony or any crime involving moral turpitude; or (iii) participation in any
fraud against or theft from the Registrant.  "Good reason" is defined to mean
(i) the failure of the Registrant to vest the employee with the powers and
authority of his office or any removal of the employee from or failure to
re-elect the employee to his office; (ii) a reduction by the Registrant in the
employee's base salary; or (iii) the requirement by the Registrant that the
employee be based anywhere other than within 25 miles of the employee's present
office location.

         In recognition of their past services, including their efforts during
the Registrant's recent debt restructuring, the Board of Directors has agreed
to pay (i) Mr. Redhead a one time cash bonus equal to 125% of his base annual
salary, and (ii) Mr. Segal a one time cash bonus equal to 100% of his base
annual salary, in the event the Registrant meets certain significant business
objectives.  Any such bonuses would also be subject to certain other
conditions, including that the Registrant's current debt obligations to the
Bank shall have been repaid in full and the Board of Directors shall have
determined that the Registrant has sufficient cash resources.

Compensation Pursuant to Plans

         During fiscal 1984, the Registrant adopted a non-statutory stock
option plan ("NSOP") pursuant to which options to purchase approximately 27,000
shares of Common Stock could be granted to employees or non-employees of the
Registrant.  Under the NSOP, options could be granted to any person when the
Board of Directors, in its sole discretion, determined that the grant of
options to such person would be in the best interests of the Registrant.  The
option price would be established by the Board of Directors at the time the
option was granted but could not be less than 85% of the market price of Common
Stock at the time of grant of the option.  Options would expire not later than
ten years after the date of grant.  As of April 30, 1996, options to purchase
450 shares of Common Stock, at $33.29 per share, were outstanding under the
NSOP.  The options expire in 1997.  In March 1995, the Board of Directors
terminated the NSOP except as to the outstanding options.





                                       5
<PAGE>   6




         In July 1992, the Registrant's Board of Directors approved the 1992
incentive stock option plan and the 1992 non-statutory stock option plan,
subject to shareholder approval of the plans.  These plans provided for the
granting of options to purchase up to approximately 60,000 shares of Common
Stock at a price not less than 100% of the market price at the date of grant.
Options granted pursuant to these plans were subject to vesting provisions of
up to five years.  In March 1995, the Board of Directors terminated such plan,
the outstanding options thereunder were cancelled with the optionholders
consent, and the Board adopted the Omnibus Stock Plan.

The Omnibus Stock Plan

         The Omnibus Stock Plan (the "Plan") was adopted by the Board of
Directors in March 1995 and was approved by the shareholders of the Registrant
on April 28, 1995.  The Plan provides for the issuance of a maximum of
1,000,000 shares of Common Stock  The Plan provides for the issuance of stock
options, stock appreciation rights, restricted stock and other awards
(collectively "awards").

         The shares awarded shall be authorized but unissued shares.  If an
award granted under the Plan expires, terminates or lapses for any reason,
without the issuance of shares of Common Stock thereunder, or if the Registrant
receives any shares of Common Stock as the exercise price of any award, such
shares shall again be available under the Plan.

         Under the Plan, options or awards granted and outstanding as of the
date the Plan terminates are not affected or impaired by such termination.  In
the event of a merger, consolidation, reorganization, recapitalization,
spinoff, stock dividend or stock split, or combination or other increase or
reduction in the number of issued shares of Common Stock, or extraordinary cash
dividend or any other similar event, the Board of Directors or the Committee
(as defined herein) may, in order to prevent the dilution or enlargement of
rights under awards, make such adjustments in the number and type of shares
covered by, or with respect to which payments are measured under, outstanding
awards and the exercise prices specified therein as may be determined to be
appropriate and equitable.  The Committee may provide in the agreement
evidencing any award for adjustments to such award in order to prevent the
dilution or enlargement of rights thereunder or to provide for acceleration of
benefits thereunder in the event of a change in control, merger, consolidation,
reorganization, recapitalization, sale or exchange of substantially all assets
or dissolution of, or spinoff or similar transaction by, the Registrant.

         The options granted to date by the Committee provide that such options
shall become fully exercisable upon a "change of control" of the Registrant.  A
"change of control" is deemed to have occurred (i) if individuals who, as of
the date of such award, constitute the board of directors of the Registrant
("Incumbent Board") cease for any reason to constitute at least a majority of
the board, provided that a person becoming a director subsequent to the date of
the award whose election, or nomination for election by the Registrant's
shareholders, was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection with an
actual or threatened election contest) shall be considered a member of the
Incumbent Board; or (ii) upon approval by the shareholders of the Registrant of
(a) a reorganization, merger or consolidation, in each case, with respect to
which persons who were the shareholders of the Registrant immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter,
own more than 60% of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated
corporation's then outstanding voting securities, (b) a liquidation or
dissolution of the Registrant or (c) the sale of all or substantially all of
the Registrant's assets; or (iii) upon the acquisition (other than from the
Registrant) by any person, entity or "group," within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 51% or more of either the then outstanding shares or
the combined voting power of the Registrant's then outstanding voting
securities entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by the Registrant or any of
its subsidiaries, or any employee benefit plan (or related trust) of the
Registrant or its subsidiaries, or any corporation with respect to which,
following such acquisition, more than 60% of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by the
individuals and entities who were the





                                       6
<PAGE>   7




beneficial owners of the voting securities of the Registrant immediately prior
to such acquisition in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the then outstanding combined voting
power of the then outstanding voting securities of the Registrant entitled to
vote generally in the election of directors.

         The purpose of the Plan, which, in addition to non-qualified stock
options and stock appreciation rights, provides for the granting of incentive
stock options (which qualify under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and restricted stock and
various types of awards described herein, is to promote the long term financial
interests and growth of the Registrant by (i) attracting and retaining
executive personnel, (ii) motivating executive personnel by means of
growth-related incentives; (iii) providing incentive compensation opportunities
that are competitive with those of other comparable corporations, and (iv)
furthering the identity of interests of participants with those of the
shareholders of the Registrant.

         The Plan is not subject to the Employee Retirement Income Security Act
of 1974.  The Plan is not qualified under Section 401(a) of the Code.

         Participants in the Plan are selected by the Stock Plan Committee of
the Board of Directors (the "Committee") which administers the Plan.  The Plan
contemplates that awards will be granted to key employees, to directors and to
consultants, and that participants will be such employees or directors of or
consultants to the Registrant and its affiliates, including officers of the
Registrant, as from time to time are designated as such by the Committee.  The
Plan requires that the Committee consist of at least two directors of the
Registrant who are "disinterested persons" as such term is used in Rule 16b-3
under the Exchange Act.  Members of the Committee are selected by and serve at
the pleasure of the Board of Directors.  Each member of the Committee is a
director of the Registrant.  Under the Plan and subject to the limitations
thereunder, the Committee is authorized: (i) to select participants in the
Plan, (ii) to make awards in such forms and amounts as it shall determine,
(iii) to impose such limitations, restrictions and conditions upon such awards
as it shall deem appropriate, (iv) to interpret the Plan and to adopt, amend
and rescind administrative guidelines and other rules and regulations relating
to the Plan, (v) to correct any defect or omission or to reconcile any
inconsistency in the Plan or in any award granted thereunder and (vi) to make
all other determinations and to take all other actions necessary or advisable
for the implementation and administration of the Plan.

         The Board of Directors or the Committee may suspend or terminate the
Plan or any portion thereof at any time and may amend it from time to time in
such respects as the Board of Directors or the Committee may deem advisable;
provided, however, that no such amendment will be made, without shareholder
approval to the extent such approval is required by law, agreement or the rules
of any exchange upon which the Common Stock is listed, and provided further,
that the Plan will terminate no later than March 9, 2005.  No such amendment,
suspension or termination will impair the rights of participants under
outstanding awards without the consent of the participants affected thereby or
make any change that would disqualify the Plan, or any other plan of the
Registrant intended to be so qualified from the exemption provided by Rule
16b-3.

         The Committee may amend or modify any award in any manner to the
extent that the Committee would have had the authority under the Plan to
initially grant such award.  No such amendment or modification will impair the
rights of any participant under any award without the consent of such
participant.

         Under the Plan, a participant to whom an option is granted will have
the right to purchase the number of shares of Common Stock covered by the
option, subject to the terms and provisions of the Plan.  The option price to
be paid by a participant is determined by the Committee and is set forth in a
stock option agreement between the Registrant and the participant.  Such price
cannot be less than 100% of the fair market value of the Common Stock on the
date on which the option in respect thereof is granted as to incentive stock
options within the meaning of Section 422 of the Code, or any successor
provision, and the par value of a share of Common Stock as to other options.





                                       7
<PAGE>   8




         Under the Plan, the purchase price of an option is payable in cash or
by the surrender, at the fair market value on the date on which the option is
exercised, of shares of Common Stock, by any combination of cash and such
shares or with any other consideration.

         In addition, the Plan authorizes the Committee to grant stock
appreciation rights ("SAR").  No SAR's have been granted under the Plan.

         SARs and options which are not incentive stock options may, in the
Committee's discretion, provide that in connection with exercises thereof the
holders will receive cash payments in amounts necessary to reimburse holders
for their income tax liability resulting from such exercise and the payment
made pursuant to this provision.

         Incentive stock options (within the meaning of Section 422 of the
Code) may be granted at the option of the Committee under the Plan.  The fair
market value of the Common Stock is determined as of the time of award of the
option to which it is subject.  Incentive stock options are subject to a
$100,000 exercise limitation per year.

         Any option granted under the Plan must be fully exercised prior to its
expiration on the date determined by the Committee or on an earlier termination
date in the case of termination of employment or consultant status.

         With respect to the options granted to date, the Committee has
provided in the stock option agreement that if such participant's employment by
the Registrant or its subsidiaries is terminated for any reason, other than
death or disability, such participant may exercise an option within the period
ending on the earlier of three months after such termination or the date the
option expires in accordance with its terms.  If such participant dies or is
disabled prior to termination of employment, he or his legatees, executors,
distributees or personal representatives may, subject to the provisions of the
Plan, exercise the option granted to such participant within the period ending
on the earlier of (i) twelve months after the date of such death or disability
or (ii) the date the option expires in accordance with its terms.

         The option of a participant who dies after termination may be
exercised in respect to the same number of shares in the same manner and to the
extent as if such participant were then living.

         The right of any participant to exercise an option granted to such
participant may not be transferred, assigned, pledged or hypothecated in any
way other than by will or the laws of descent and distribution.  Options are
exercisable by a participant during his lifetime only by him.

         The Plan also permits the Committee to grant shares of Common Stock to
a participant subject to the terms and conditions imposed by the Committee
("restricted stock").  No shares of restricted stock have been awarded under
the Plan.

         Under the Plan, in addition to stock options, stock appreciation
rights and restricted stock, participants may be awarded performance shares,
convertible debentures, other convertible securities and any other forms of
awards that the Committee in its discretion may determine are consistent with
the objectives and limitations of the Plan.  No such awards have been granted
under the Plan.

         On August 1, 1995, the Registrant and the Bank entered into an
amendment to stock purchase agreement under which the Registrant agreed to
issue the Bank securities equivalent in form if more than 600,000 shares of
Common Stock in the aggregate are issued by the Registrant under the Plan or
other similar plan, or otherwise, to directors, officers, employees,
consultants, or other persons providing services to the Registrant for so long
as the Bank or its permitted successor holds not less than 75% of the shares of
Common Stock currently held by the Bank.  Until August 1, 1996, the Bank will
pay only nominal consideration for any stock issued pursuant to the amendment,
and thereafter will, with certain exceptions, pay the same consideration as
provided in any such issuances of shares in excess of the 600,000 share amount.
See "Certain Relationships and Related Transactions--December 1994 Private
Placement and Debt Restructurings."





                                       8
<PAGE>   9





ITEM 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                 The following tables set forth information as to the shares of
the Common Stock owned as of July 1, 1996 by (i) each person known to the
Registrant to be the beneficial owner of more than five percent of the Common
Stock, (ii) each director, (iii) each executive officer named in the summary
compensation table, and (iv) all directors and executive officers of the
Registrant as a group.  Unless otherwise indicated in the footnotes following
the table, the persons as to whom the information is given had sole voting and
investment power over the shares of Common Stock shown as beneficially owned by
them, subject to community property laws where applicable.

<TABLE>
<CAPTION>
                                                                           Amount of Beneficial Ownership(1)
                  Name and Address of                                      ---------------------------------
                  Beneficial Owners                                          No. Shares        % Ownership*
                  -----------------                                          ----------        ------------
                 <S>                                                          <C>                  <C>
                 Bank of America National Trust and Savings                   1,200,000           35.3%
                 Association
                 555 California Street, 18th Floor
                 Department 15027
                 San Francisco, CA 94104

                 Eli Broad                                                      228,345            6.7%
                 1999 Avenue of the Stars, Suite 3170
                 Los Angeles, CA 90067

                 Sand and Sea Partners(2)                                       332,478            9.8%
                 300 S. Grand Avenue, 29th Floor
                 Los Angeles, CA 90071

                 Sea Fair Partners(2)                                           332,478            9.8%
                 300 South Grand Avenue, 29th Floor
                 Los Angeles, CA 90071

                 J. Christopher Lewis (2)                                       664,956           19.6%
                 300 South Grand Avenue, 29th Floor
                 Los Angeles, CA 90071

                 Alan Redhead                                                   582,891(3)        16.0%
                 California Beach Restaurants, Inc.
                 17383 Sunset Boulevard, Suite 140
                 Pacific Palisades. CA 90272

                 Jefferson W. Asher, Jr.                                         52,666(4)         1.5%
                 4118 Stansbury Avenue
                 Sherman Oaks, CA 91423

                 Mark E. Segal                                                  116,316(5)         3.3%
                 California Beach Restaurants, Inc.
                 17383 Sunset Boulevard, Suite 140
                 Pacific Palisades, CA 90272


                 Scott C. Dew                                                         0              0%
                 1901 Avenue of the Stars, Suite 1600
                 Los Angeles, CA 90067
</TABLE>





                                       9
<PAGE>   10



<TABLE>
<CAPTION>
                  Name and Address of
                  Beneficial Owners                                         No. Shares          % Ownership*
                  -----------------                                         ----------          ------------
                 <S>                                                         <C>                    <C>
                 George Nicolais                                                     0(6)              0%
                 George Nicolais &  Associates, Inc.
                 3452 East Foothill Blvd.
                 Pasadena, CA 91107

                 Faisal Shah                                                         0(6)              0%
                 725 S. Figueroa Street, Suite 1200
                 Los Angeles, CA 90017

                 Barry A. Chase                                                 17,571(7)              *
                 Cushman Equities Corporation
                 601 S. Figueroa Street, 47th Floor
                 Los Angeles, CA 90017-5752

                 John C. Cushman III (8)                                       268,894               7.9%
                 601 S. Figueroa Street, 47th Floor
                 Los Angeles, CA 90017-5752

                 All directors and executive officers as a group (8          1,434,400(9)           38.4%
                 persons)
</TABLE>
 *  Denotes holdings of less than 1%.

(1)  The number of shares and percentages in these columns are based on
     3,400,975 shares of Common Stock outstanding.

(2)  J. Christopher Lewis, a director of the Registrant, is the general partner
     and a limited partner of Sand and Sea Partners and Sea Fair Partners, which
     together own 664,956 shares of Common Stock.  Mr. Lewis disclaims
     beneficial ownership of the shares owned by such partnerships, except with
     respect to (i) 25,268 shares which represent a limited partnership interest
     in each partnership of approximately 3.8% and (ii) an additional
     undetermined number of such shares by virtue of his rights as a general
     partner under the limited partnership agreement.  As general partner of
     such partnership, Mr. Lewis may have the power to direct the voting or
     disposition of such shares and therefore may be deemed to beneficially own
     all the shares held by such partnerships.

(3)  Includes currently exercisable options to purchase 237,291 shares of Common
     Stock issued under the Omnibus Stock Plan.

(4)  Reflects currently exercisable options to purchase 22,666 shares of Common
     Stock issued under the Omnibus Stock Plan and 30,000 shares which represent
     his limited partnership interest of 9% in Sand and Sea Partners.  As a
     limited partner, Mr. Asher does not possess sole power to direct the voting
     or disposition of such shares.

(5)  Includes currently exercisable options to purchase 77,916 shares of Common
     Stock issued under the Omnibus Stock Plan.

(6)  Does not include 1,200,000 shares of Common Stock owned by the Bank.
     Messrs. Nicolais and Shah were nominated for election to the Board of
     Directors of the Registrant at the request of the Bank pursuant to the
     exercise of its contractual rights with the Registrant.  See "Certain
     Relationships and Related Transactions."  Messrs. Nicolais and Shah
     disclaim beneficial ownership of all shares of Common Stock of the
     Registrant owned by the Bank.

(7)  Includes 14,500 shares indirectly owned by Mr. Chase through North American
     Trust.  Does not include 268,894 shares deemed to be beneficially owned by
     John C. Cushman, III, including shares held by partnerships in which
     Cushman Equities Corporation is a general partner and the Cushman Family
     Trust.  Mr. Chase is affiliated with Cushman Equities Corporation but holds
     no equity interest in such corporation.  Mr. Chase was nominated for
     election to the Board of Directors of the Registrant at the request of Mr.
     Cushman pursuant to the exercise of Mr. Cushman's contractual rights with
     the Registrant.  See "Certain Relationships and Related Transactions."  Mr.
     Chase disclaims beneficial ownership of all shares of Common Stock of the
     Registrant beneficially owned by Mr. Cushman.





                                       10
<PAGE>   11




(8)  Includes 128,911 shares held by Cushman Sea View Partners, a California
     general partnership, 85,938 shares held by Cushman K Sea View Partners, and
     54,045 shares held by the Cushman Family Trust.  Mr. Cushman is a general
     partner in Cushman Sea View Partners and Cushman K Sea View Partners and
     may be deemed to beneficially own Cushman Equities Corporation, which is
     also a general partner of such partnerships.

(9)  Includes currently exercisable options to purchase 337,873 shares of Common
     Stock issued under the Omnibus Stock Plan.


ITEM 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

December 1994 Private Placement and Debt Restructurings

         On December 22, 1994, the Registrant completed a $1,600,000 private
placement of its Series A Convertible Preferred Stock ("Series A Preferred
Stock") and 9-3/4% Convertible Subordinated Notes Due October 31, 1995 (the
"Notes") to certain existing shareholders, members of management and new
investors.  The purpose of the private placement was to implement certain debt
restructurings of the Registrant as follows: Sea View Restaurants, Inc. ("Sea
View"), a wholly owned subsidiary of the Registrant, was the borrower and the
Registrant was the guarantor under a loan agreement ("Loan Agreement") with the
Bank which, prior to the private placement, had an outstanding principal
balance plus accrued interest of approximately $9,680,000 ("Loan"), which was
in default.  The Loan was secured by substantially all of the assets of Sea
View.  On August 24, 1994, the Bank recorded a notice of foreclosure with
respect to all of the real property and personal property collateral for the
Loan.  In light of these severe financial circumstances, the Registrant's Board
of Directors concluded that a consensual debt restructuring offered the best
opportunity to enable the Registrant to continue its business, preserve value
for the Registrant's shareholders and maintain creditor relationships.
Accordingly, the Registrant entered into a term sheet with the Bank on December
2, 1994, pursuant to which the Bank agreed not to publish a foreclosure sale
notice, or foreclose on the collateral if certain payments (as described below)
were made by the Registrant to the Bank by December 22, 1994.  If the
Registrant had not reached an agreement to restructure the Loan, the Bank would
have proceeded with such foreclosure actions in December 1994.

         Additionally, Sea View was the issuer of a certain Contingent
Promissory Note ("Contingent Note") payable to jojo's Restaurant, Inc., a
wholly-owned subsidiary of Family Restaurants, Inc. (collectively "FRI").  The
Contingent Note became payable upon the renewal of the Concession Agreement
between Sea View and the County of Los Angeles with respect to the Registrant's
Gladstone's 4 Fish restaurant.  The Contingent Note was in the principal amount
of $5,000,000 with contingent accrued interest of 12.5% from April 2, 1990 of
approximately $4,000,000.  The Registrant and Sea View were in default under
the Loan, and in the event of the renewal of the Concession Agreement, would be
unable to pay the Contingent Note.  The Bank required as a condition to the
debt restructuring that the Contingent Note be settled.  Accordingly, as part
of the debt restructuring, the Registrant paid FRI $500,000 on December 22,
1994 in full satisfaction of the Contingent Note.

         The Bank agreed to compromise the Loan by amending the Loan Agreement
to provide for the payment by Sea View of an aggregate of $4,700,000, payable
$300,000 on December 2, 1994; $1,000,000 not later than December 22, 1994; and
the balance of $3,400,000 in two notes: a senior secured note in the principal
amount of $3,000,000, bearing interest at the rate of 12% per annum and payable
at varying monthly amounts through October 31, 1997, and a junior secured note
in the principal amount of $400,000, accruing interest at 12% per annum with
both interest and principal payable in a single lump sum on October 31, 1997.
Such notes are guaranteed by the Registrant.  As additional consideration for
the restructuring of the Loan, and pursuant to the terms of a Stock Purchase
Agreement dated as of December 22, 1994 between the Registrant and the Bank
(the "Stock Purchase Agreement"), the Registrant issued to the Bank on December
22, 1994, 1,223,556 shares of Series A Preferred Stock that converted into
1,200,000 shares of Common Stock on May 1, 1995 upon the filing of a
Certificate of Amendment to the Articles of Incorporation of the Registrant
effecting the one-for-33.286962 reverse stock split ("Reverse Stock Split")
(constituting 30% of the combined voting power of all outstanding shares of
capital stock on a fully diluted basis).  Additionally, as described below, the
Bank is entitled to participate together with investors in the private
placement in certain demand and incidental registration rights with respect to
future registered offerings by the Registrant of its capital stock and the Bank
is entitled to participate in any future equity offerings by the Registrant to
the extent required to maintain its then percentage equity ownership in the
Registrant, and to a mandatory prepayment of the restructured Loan in an amount
equal to 35% of the net proceeds of any such future equity offering by the
Registrant.  The Registrant has a right of first





                                       11
<PAGE>   12




refusal under the Stock Purchase Agreement with respect to any private sale or
transfer of the shares held by the Bank.

         Pursuant to the terms of the Stock Purchase Agreement, the Bank is
entitled to two nominees on the Registrant's Board of Directors until it holds
either less than 75% of the stock purchased or the restructured Loan is repaid,
and upon the election of two nominees from the Bank, the Registrant is
obligated to revise its bylaws (i) to entitle the Bank to designate any
successor directors to fill vacancies resulting from the resignation or death
of directors serving at the direction of the Bank, (ii) to provide for a quorum
of not less than 3 directors, including one director designated by the Bank,
(iii) to provide that there shall be no delegation of the powers of the Board
of Directors to a committee without a vote of at least one Bank designated
director, and (iv) to cause the bylaws of Sea View to provide that Sea View
will have the same Board of Directors as the Registrant, and that Sea View will
not be authorized to issue securities without the approval of both Bank
designated directors, or if there are none, by the written consent of the Bank.
Pursuant to the foregoing, the Bank selected George Nicolais and Samuel M.
Victor as its nominees for election to the Registrant's Board of Directors,
they were elected at the Annual Meeting of Shareholders held on April 28, 1995
and the Registrant's bylaws have been appropriately amended.  On May 1, 1996,
Samuel M. Victor resigned as a director, and on May 6, 1996 Faisal Shah was
elected a director as designated by the Bank.

         The private placement was effected pursuant to the terms of a
Securities Purchase Agreement among the Registrant and the purchasers, dated as
of December 22, 1994 ("the Securities Purchase Agreement").  The purchasers
invested $1,600,000 consisting of $817,290 of Series A Preferred Stock and
$782,710 of Notes.  Sand and Sea Partners and Sea Fair Partners, California
limited partnerships of which J. Christopher Lewis, a director of the
Registrant, is general partner, each purchased 126,026 shares of Series A
Preferred Stock for $103,000 in cash and $209,500 principal amount of Notes.
Eli Broad, an over 10% shareholder of the Registrant at the time, purchased
168,036 shares of Series A Preferred Stock for $137,334 in cash and $37,666
principal amount of Notes; Alan Redhead, President and Chief Executive Officer
and a director of the Registrant, purchased 352,384 shares of Series A
Preferred Stock for $288,000 in cash; and Mark E. Segal, Vice President -
Finance, Chief Financial Officer and Secretary of the Registrant, purchased
39,154 shares of Series A Preferred Stock for $32,000 in cash.  Each share of
Series A Preferred Stock automatically converted into .980748 shares of Common
Stock (or a total of 2,180,748 shares, approximately 55% of the outstanding
Common Stock of the Registrant on a fully diluted basis) upon the effective
date of the Reverse Stock Split.  On April 28, 1995, the Registrant's
shareholders approved the Reverse Stock Split.  A Certificate of Amendment to
the Articles of Incorporation of the Registrant was filed on May 1, 1995 to
effect the Reverse Stock Split.

      In October 1995, the Registrant effected a subscription rights offering
("Subscription Rights Offering") in which shareholders who did not participate
in the December 1994 private placement or otherwise were excluded by contract
were offered rights to subscribe for 4.7215 shares of Common Stock for each
share owned as of September 11, 1995 at a price of $.83 per share.  244,020
shares of Common Stock were purchased in the Subscription Rights Offering.  The
proceeds of the Subscription Rights Offering of $202,536.60 were used to redeem
a portion of the Notes on a pro rata basis.  The unredeemed portion of the
Notes converted into 696,207 shares of Common Stock on October 30, 1995.

         Pursuant to the terms of the Stock Purchase Agreement and the
Securities Purchase Agreement, the Registrant is obligated, to the extent
permitted under applicable securities laws and subject to reasonable costs, to
use its best efforts to register under the Securities Act of 1933 ("Securities
Act") the resale of the Common Stock issued upon the  conversion of the Series
A Preferred Stock and Notes and to maintain such registration for a reasonable
period to facilitate resale.  The Registrant effected such registration in
December 1995 (the "Offering").

         Also, the Registrant and the Bank entered into an Amendment to Stock
Purchase Agreement dated as of August 1, 1995 ("Amendment"), amending the Stock
Purchase Agreement by providing that the Registrant would, no later than
November 15, 1995, register for resale the Common Stock held by the Bank
pursuant to Rule 415 under the Securities Act and would file amendments in
order to update it at any time for up to two years when requested in writing by
the Bank, with the Registrant bearing all the expenses of such registration and
updates up to certain limits. The Offering effected such registration.  The
purchasers of Series A Preferred Stock and Notes in the December 1994 private
placement included in the Offering the shares of Common Stock received by them
(i) upon conversion of the Series A Preferred Stock in connection with the
Reverse Stock Split and (ii) to the extent





                                       12
<PAGE>   13




the proceeds of the Subscription Rights Offering did not fully redeem the
Notes.  Certain other shareholders of the Registrant who have registration
rights were also afforded an opportunity to include shares in the Offering,
subject to the terms and conditions of such registration rights.  The
Registrant also agreed, in the Amendment, to issue the Bank securities
equivalent in form if more than 600,000 shares of Common Stock in the aggregate
are issued by the Registrant under the Registrant's Omnibus Stock Plan or other
similar plan, or otherwise, to directors, officers, employees, consultants, or
other persons providing services to the Registrant for so long as the Bank or
its permitted successor holds not less than 75% of the shares of Common Stock
currently held by the Bank.  Until August 1, 1996, the Bank will pay only
nominal consideration for any stock issued pursuant to the Amendment, and
thereafter will, with certain exceptions, pay the same consideration as
provided in any such issuance of shares in excess of the 600,000 share amount.
See "Executive Compensation--The Omnibus Stock Plan."

         Also, investors in the private placement, together with the Bank,
holding at least 20% of the shares of Common Stock into which the Series A
Preferred Stock have been converted have two demand registration rights to
require the Registrant to register such shares for resale under the Securities
Act and applicable state securities laws for resale to the public.  This right
of registration shall continue until such time as in the opinion of counsel for
the Registrant such registration is no longer necessary for shareholders to
sell the shares of Common Stock without registration.  Such investors, together
with the Bank, are also be entitled to certain incidental registration rights.
The Registrant will pay the expenses in connection with any such incidental
registrations and two such demand registrations.

         Pursuant to the terms of the Stock Purchase Agreement and the
Securities Purchase Agreement, and in order to provide the Registrant with a
more reasonable capital structure, the Registrant held a meeting of the
shareholders of the Registrant to vote upon, among other things, the Reverse
Stock Split.   As noted above, the Reverse Stock Split was approved at the
April 28, 1995 Annual Meeting of Shareholders.

         Pursuant to the terms of the Stock Purchase Agreement and the
Securities Purchase Agreement, the Registrant agreed to use its best efforts to
effectuate the Subscription Rights Offering, the proceeds of which were used to
partially redeem the Notes.  The purpose of the Subscription Rights Offering
was to afford to those shareholders of the Registrant who did not participate
in the December 1994 private placement the opportunity to purchase shares of
Common Stock on terms as substantially similar as practicable to the terms
provided to the investors in the private placement.

         Sea View and the Bank entered into a First Amendment to Amended and
Restated Loan Agreement, dated as of August 1, 1995, which amended the covenant
of Sea View regarding maintenance of "Minimum Free Cash Flow" during certain
periods with respect to the accounting treatment of certain expenses, including
expenses of the Offering and the Subscription Rights Offering.

         As a condition to the closing of the Stock Purchase Agreement and the
Securities Purchase Agreement, Sand and Sea Partners, Sea Fair Partners and the
Bank entered into a Shareholders and Noteholders Agreement dated as of December
22, 1994 (the "Shareholders Agreement") pursuant to which Sand and Sea Partners
and Sea Fair Partners agreed to vote their shares of the Registrant in a manner
that would elect to the Board of Directors of the Registrant two individuals
designated by the Bank until such time as the Bank holds less than 75% of its
current holdings in Common Stock or repayment in full of the Registrant's
$3,400,000 indebtedness to the Bank.  The Registrant's three directors also
agreed under the Shareholders Agreement, when requested by the Bank, to take
all Board action and all steps necessary to assist shareholder action in order
to elect two designees of the Bank to the Board of Directors, including
increasing the size of the Board to six.  Two Bank nominees were elected to the
Board of Directors at the April 28, 1995 Annual Meeting of Shareholders.  The
Shareholders Agreement is subject to the shareholders agreement dated April 10,
1990 ("1990 Shareholders Agreement") among Sand and Sea Partners, Sea Fair
Partners, John C.  Cushman, III, and other investors in a 1990 private
placement of Common Stock in the Registrant.  The 1990 Shareholders Agreement
provides that Sand and Sea Partners, Sea Fair Partners and other investors will
cause certain representatives of the investor group to be nominated to the
Board.  Pursuant to such agreement, Mr. Cushman requested that Barry A. Chase
be nominated for election to the Board of Directors.  At a meeting of the Board
of Directors on April 28, 1995, Mr. Chase was elected as an additional
Director.





                                       13
<PAGE>   14




         In October 1995, Jefferson W. Asher, Jr., a director of the
Registrant, purchased a 7.5% limited partnership interest in Sand and Sea
Partners.  He currently owns a 9% limited partnership interest in Sand and Sea
Partners.

Certain Registration Rights

         The Registrant, Richard S. Stevens, Sand and Sea Partners, Sea Fair
Partners, Eli Broad, Cushman/Sea View Partners, Cushman K/Sea View Partners and
certain other shareholders of the Registrant are parties to a Registration
Rights Agreement which, as amended, provides that the Registrant shall use its
best efforts to register under the Securities Act the shares of any of the
shareholders who are party to the Registration Rights Agreement, and who
requests such registration with regard to a certain minimum number of shares of
Common Stock, at certain times when the Registrant otherwise proposes to
register certain of its securities.  Such registration rights applied to the
Offering.  The parties to the Registration Rights Agreement, except Stevens,
individually and collectively may make a total of two written demands for
registration of their shares so long as the demand relates to at least 20% of
the registerable shares of Common Stock then outstanding.  The Registrant will
pay the expenses in connection with any such incidental registrations and two
such demand registrations.  In certain circumstances such shareholders also
have a contractual right of first refusal to purchase, on a pro-rata basis, any
equity securities of the Registrant that the Registrant may propose to sell at
a price less than fair market value.


Certain Compensation Arrangements

         Reference is made to "Executive Compensation -- Other Compensation
Agreements" for a description of employment arrangements and other arrangements
between the Registrant and certain officers and directors.





                                       14
<PAGE>   15



                                   SIGNATURE

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Los Angeles, in the State of California, on August 27, 1996.



                                   CALIFORNIA BEACH RESTAURANTS, INC.


                                   By: /s/ Alan Redhead     
                                       --------------------------------------
                                       Alan Redhead, Chief Executive Officer

                                   By: /s/ Mark E. Segal                        
                                       --------------------------------------
                                       Mark E. Segal, Chief Financial Officer





                                       15



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