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The following is an excerpt from a S-1 SEC Filing, filed by CALIFORNIA PIZZA KITCHEN INC on 5/25/2000.
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CALIFORNIA PIZZA KITCHEN, INC. - S-1 - 20000525 - PROSPECTUS_SUMMARY

PROSPECTUS SUMMARY

The items in the following summary are described in more detail later in this prospectus. The summary provides an overview of selected information and does not contain all the information you should consider. Therefore, you should also read the more detailed information set out in this prospectus, including the "Risk Factors" section and the consolidated financial statements and notes.

California Pizza Kitchen

California Pizza Kitchen is a leading casual dining restaurant chain in the premium pizza segment with a recognized consumer brand and an established, loyal customer base. We currently own, license or franchise 100 restaurants in 21 states, the District of Columbia and three foreign countries, of which 74 are company-owned and 26 are licensed or franchised. Our signature line of innovative premium pizzas include our original best sellers, the BBQ Chicken Pizza and the Thai Chicken Pizza, and more recent creations such as the Philly Cheesesteak Pizza, Havana Chicken Pizza, and Grilled Garlic Shrimp Pizza. We also serve distinctive pastas, salads, soups, appetizers and desserts, including our Chicken-Tequila Fettuccine, BBQ Chicken Chopped Salad, Hearth- Baked Tortilla Spring Rolls and Key Lime Pie. Our restaurants feature an exhibition-style kitchen centered around an open-flame oven and provide a high energy, casual dining experience. We believe our restaurants, which offer a highly differentiated and distinctive menu, outstanding customer service, and an average guest check of approximately $10.50, provide an exceptional dining value and appeal to a broad base of consumers.

California Pizza Kitchen was founded in 1985 by Rick Rosenfield and Larry Flax who were among the first to recognize the broad consumer appeal of innovative premium pizzas. In 1992, PepsiCo, Inc. acquired a majority interest in our company. In September 1997, PepsiCo divested its interest, and Bruckmann, Rosser, Sherrill & Co., L.P. became our controlling shareholder through a merger and leveraged recapitalization transaction. Soon thereafter, a new management team led by Frederick R. Hipp, our Chief Executive Officer and President and a 25-year veteran of the restaurant industry, was put in place. Under our new ownership and management team, and in conjunction with our co- founders, we implemented a number of new initiatives including increased portion sizes, cost reduction strategies, broadened distribution channels, upgraded ingredients and menu items, and a more disciplined growth plan. These initiatives have resulted in improved operating results as evidenced by an increase in our restaurant level cash flow margins from 13.9% in 1997, to 17.6% in 1998, to 18.4% in 1999 and to 19.4% in the first three months of 2000, and increases in company-owned comparable restaurant sales of 6.1% in 1998, 4.1% in 1999 and 6.8% during the first three months of 2000.

Since our inception 15 years ago, we believe we have developed strong brand awareness primarily through the development of our full service restaurants. As part of our strategy to build upon our leadership position in the premium pizza segment and expand our channels of distribution, we have developed a high quality fast-casual concept called California Pizza Kitchen ASAP. Our ASAP restaurants, which are significantly smaller than our full service restaurants and offer a limited selection of our most popular pizzas, salads, sandwiches and appetizers, provide us with additional development opportunities in attractive high traffic venues. There are currently a total of 19 franchised ASAP locations, of which 18 are franchised by Host Marriott Services. We also have a strategic alliance with Kraft Pizza Company, a subsidiary of Kraft Foods, Inc., to distribute a line of premium frozen pizzas through supermarkets and other retail outlets. We expect these additional distribution channels to provide significant growth opportunities; however, development of full service restaurants will remain our primary focus in the near-term.

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Our objectives include continuing to build our brand awareness and customer loyalty, and extending our leadership position in the casual dining and premium pizza segments. We intend to utilize the strategies discussed below to achieve these objectives.

. Offer high quality, innovative menu items. We believe the success of our concept is due to our ability to interpret various food trends on our platform of pizza, pasta, salads and appetizers, and offer items that appeal to a variety of tastes. Our restaurants feature menu items that use high quality ingredients, such as 100% pure olive oil, imported cheeses and fresh produce, imaginative pizza toppings such as barbecue chicken, spicy peanut ginger and sesame sauce and Japanese eggplant, and showcase recipes that capture an assortment of unique tastes and flavors that customers readily identify, but do not typically associate with pizza.

. Provide an excellent dining value with broad consumer appeal. We offer large portions of innovative, high quality food, superior service and a sophisticated yet casual atmosphere, all for an average guest check of approximately $10.50. We believe this price-to-value relationship differentiates us from our competitors, many of whom have significantly higher average checks, and allows us to appeal to a broad group of consumers.

. Build awareness of the California Pizza Kitchen brand. We believe that California Pizza Kitchen is a brand that has traditionally been associated with high quality, innovative food items, exceptional service and a strong price-to-value relationship. We also believe that many of our original recipes are closely associated with the California Pizza Kitchen brand name. We have promoted brand awareness through the distinctive features of our yellow, black and white logo, innovative marketing and public relations programs and strategic alliances with high quality partners, including Kraft Pizza Company which distributes our premium frozen pizzas, and Host Marriott Services, which franchises our ASAP fast-casual concept.

. Pursue disciplined restaurant growth. Our new management team adheres to a disciplined expansion strategy, including the limited development of additional franchise restaurants. We opened five company-owned full service restaurants in 1999 and expect to open an additional company- owned restaurants in 2000, of which will be full service restaurants and will be ASAP restaurants. Thus far in 2000, we have opened three full service restaurants in Chicago, Denver and San Diego. We currently have four company-owned restaurants under construction, including two ASAP restaurants. We have signed leases and letters of intent covering the remaining restaurants we plan to open in 2000. In addition, in late 1999 we hired a Senior Vice President and Chief Development Officer with more than ten years of restaurant real estate experience to oversee our expansion.

. Maintain strong unit economics. For 1999, sales for our 66 full service restaurants open for the entire year averaged $2.6 million and generated average restaurant-level pre-tax cash flow of $496,000 or 19.2% of restaurant sales. Since the beginning of 1998, our total cash investment per full service restaurant, net of landlord contributions, averaged $1.4 million, excluding pre-opening costs, which were approximately $147,000 per restaurant. We believe that our cash flow margins and return on investment for our company-owned ASAP restaurants will be comparable to those of our full service restaurants.

. Provide superior customer service. We have developed and fostered an organizational culture based on mutual respect, open communication and strong relationships with our employees. We believe that our culture, a highly evolved training program for our restaurant staff, and a profitability and service-based bonus program for our restaurant managers, allow us to achieve a high level of customer service and satisfaction and help us to ensure superior execution at the restaurant level.

We are a California corporation formed on October 7, 1985. Our principal executive offices are located at 6053 West Century Boulevard, 11th Floor, Los Angeles, California 90045, and our telephone number is (310) 342-5000. Our website is located at www.cpk.com.

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The Offering

Common stock offered...............................          shares

Common stock to be outstanding after the offering..          shares(1)

Use of proceeds.................................... We will receive
                                                    approximately $   million
                                                    in net proceeds in this
                                                    offering, assuming the
                                                    midpoint of the filing
                                                    range. We intend to use
                                                    the proceeds:

                                                       . to repay approximately
                                                         $40.0 million of
                                                         outstanding bank debt;

                                                       . to redeem up to
                                                         approximately
                                                         $   million of our
                                                         outstanding preferred
                                                         stock; and

                                                       . for other general
                                                         corporate purposes.

Proposed Nasdaq National Market symbol............. "CPKI"

Risk factors....................................... See "Risk Factors" and the
                                                    other information included
                                                    in this prospectus for a
                                                    discussion of factors you
                                                    should carefully consider
                                                    before deciding to invest
                                                    in shares of our common
                                                    stock.


(1) The number of shares to be outstanding after the offering does not include 1,346,313 shares of common stock issuable upon exercise of options outstanding as of the date of this prospectus at a weighted average exercise price of $2.44 per share. Our Chief Executive Officer and President has advised us that he intends to exercise options to purchase an aggregate of 221,392 of these shares concurrently with the consummation of this offering.

We currently have outstanding an aggregate of 20,303,542 shares of preferred stock, all of which we intend to redeem upon consummation of this offering. However, as described under "Use of Proceeds," we are allowing the holders of our redeemable preferred stock to convert their preferred shares into common stock at the initial public offering price prior to the redemption of the shares. Assuming a public offering price of $ per share, we estimate that an aggregate of shares of common stock will be issued upon the conversion of shares of preferred stock. The number of common shares which will be outstanding after the offering reflected throughout this prospectus includes the issuance of these shares. We will redeem all shares of preferred stock which are not converted using a portion of the net proceeds we receive upon consummation of this offering.

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Summary Consolidated Financial and Operating Data
(dollars in thousands, except per share, operating data and footnotes)

                                                               Three Months
                                  Fiscal Year                      Ended
                           ---------------------------------  ----------------
                                                               April    April
                             1997         1998        1999    4, 1999  2, 2000
                           --------     --------    --------  -------  -------
                                                                (unaudited)
Statement of Operations
 Data:
Total revenues...........  $160,416     $167,041    $179,193  $41,934  $48,266
Operating income (loss)..      (895)       9,455      12,784    2,763    3,824
Other expense(1).........    (9,604)         (85)     (1,198)     --       --
Interest expense.........      (930)      (3,956)     (3,415)    (968)    (761)
Income (loss) before
 income tax benefit
 (provision).............   (11,429)       5,414       8,171    1,795    3,063
Net income (loss)........   (11,680)(2)   10,553(2)    5,399    1,184    1,991
Redeemable preferred
 stock accretion.........       --        (4,478)     (5,147)  (1,314)  (1,438)
Net income (loss)
 attributable to common
 shareholders(3).........   (11,680)       6,075         252     (130)     553
Net income per common
 share(4):
  Basic..................                           $   0.01           $  0.03
  Diluted................                           $   0.01           $  0.03
Shares used in computing
 net income per common
 share(4):
  Basic..................                             21,598            21,793
  Diluted................                             22,335            22,432

Pro Forma Data(5):
Net income attributable
 to common shareholders..                           $  8,253           $ 2,632
Net income per common
 share:
  Basic..................
  Diluted................
Shares used in computing
 net income per common
 share:
  Basic..................
  Diluted................

Selected Operating Data:
System-wide restaurants
 open at end of period...        80           90          96       90       97
Company-owned restaurants
 open at end of period...        66           67          70       66       71
Average weekly company-
 owned restaurant sales..  $ 43,514     $ 47,490    $ 49,490  $47,755  $51,692
Company-owned comparable
 restaurant sales
 increase(6).............       0.6%         6.1%        4.1%     6.2%     6.8%

                                                              April 2, 2000
                                                           ---------------------
                                                                    Pro Forma As
                                                           Actual    Adjusted(7)
                                                           -------  ------------
                                                               (unaudited)
Balance Sheet Data:
Cash and cash equivalents................................. $ 3,732     $
Total assets..............................................  94,130
Total debt, including current portion.....................  40,075         75
Redeemable preferred stock................................  45,359         --
Total shareholders' equity (deficiency)...................  (9,276)

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(1) Other expenses consist of $9.6 million in 1997 related to loss on impairment of property and equipment, $85,000 in 1998 related to establishment of a reserve for the closure of a restaurant, and $1.2 million in 1999 related to the write-off of bank financing fees and obsolete equipment.

(2) Net income for 1998 was favorably impacted by the reversal of a $7.6 million deferred tax asset valuation allowance that was previously provided for in 1997. We eliminated the valuation allowance in 1998 due to our belief that current year activity made realization of this benefit more likely than not.

(3) Net income (loss) attributable to common shareholders includes the effect of the accretion of the liquidation preference on the redeemable preferred stock which reduces net income attributable to common shareholders for the relative periods.

(4) See notes 2 and 9 of notes to audited consolidated financial statements and notes 3 and 4 of notes to unaudited consolidated financial statements for an explanation of the method used to calculate the net income per common share and shares used in computing net income per common share, basic and diluted.

(5) Pro forma information gives effect, as of the beginning of each period, to the sale of shares of common stock offered by us at an assumed initial public offering price of $ per share, net of estimated underwriting discounts and estimated offering expenses, the conversion of shares of preferred stock into shares of common stock, the use of the net proceeds to redeem all other shares of preferred stock, the elimination of interest expense related to the repayment of our bank debt, and the elimination of $900,000 in annual compensation expense ($225,000 per quarter) due to the amendment of our co-founders' employment agreements.

(6) Company-owned restaurants are included in the computation of comparable restaurant sales after they have been open 12 months.

(7) Reflects our receipt of estimated net proceeds of $ from the sale of shares of common stock offered by us at an assumed initial public offering price of $ per share, net of estimated underwriting discounts and estimated offering expenses, the conversion of shares of preferred stock into shares of common stock, the use of the net proceeds to redeem all other shares of preferred stock and to repay $40.0 million in bank debt that was outstanding as of April 2, 2000, and the elimination of interest expense on bank debt and $225,000 in compensation expense due to the amendment of our co-founders' employment agreements. See "Use of Proceeds."

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RISK FACTORS

You should read the following risk factors carefully before purchasing any common stock. If any of the risks discussed below actually occur, our business, financial condition, operating results or cash flows could be materially adversely affected. This impact could cause the trading price of our common stock to decline, and you could lose all or part of your investment.

We may not be able to achieve and manage our planned expansion

We are pursuing an accelerated, but disciplined, growth strategy which to be successful will depend in large part on our ability, and the ability of our franchisees and licensees, to open new restaurants and to operate these restaurants on a profitable basis. Under the direction of PepsiCo, Inc., we opened only two new company-owned restaurants a year in 1996 and 1997. Since the group led by Bruckmann, Rosser, Sherrill & Co., L.P. acquired a controlling interest in our company and our new management team was put into place, we have opened ten new company-owned, full service restaurants, two in 1998, five in 1999 and three to date in 2000. We presently anticipate that we will open new company-owned restaurants during 2000, of which will be full service restaurants and of which will be ASAP restaurants. We also anticipate that our franchisees will open approximately seven or eight new restaurants during 2000. The success of our planned expansion will be dependent upon numerous factors, many of which are beyond our control, including the following:

. the hiring, training and retention of qualified operating personnel, especially managers;

. identification and availability of suitable restaurant sites;

. competition for restaurant sites;

. negotiation of favorable lease terms;

. timely development of new restaurants, including the availability of construction materials and labor;

. management of construction and development costs of new restaurants;

. securing required governmental approvals and permits;

. competition in our markets; and

. general economic conditions.

Our two biggest challenges in meeting our growth objectives will be attracting and retaining personnel of the requisite caliber and number, and securing an adequate supply of suitable new restaurant sites. We have experienced delays in opening some of our restaurants and may experience delays in the future. We were unable to achieve our originally targeted number of new openings in 1999 due in large part to the lack of a senior executive who focused full-time on real estate development prior to our hiring of a Senior Vice President and Chief Development Officer in November 1999, intense competition for restaurant sites and our unwillingness to compromise on lease economics. There can be no assurance that we will be able to find sufficient suitable locations for our planned expansion in any future period. Delays or failures in opening new restaurants could materially adversely affect our business, financial condition, operating results or cash flows. We cannot guarantee that we or our franchisees will be able to achieve our expansion goals or that new restaurants will be operated profitably. Furthermore, we cannot assure you that any new restaurant that we open will obtain similar operating results to those of our existing restaurants.

We anticipate that our new restaurants will typically take several months to reach budgeted operating levels due to problems commonly associated with new restaurants, including lack of market awareness, inability to hire sufficient staff and other factors. Although we have attempted to mitigate these factors by expanding primarily in markets in which we already have a significant presence and by careful attention to training and staffing needs, there can be no assurance that we will be successful in operating our new restaurants on a profitable basis. In addition, we entered Denver, Colorado earlier this year, which is a new market in which we

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have no prior operating experience. The Denver market may have different competitive conditions, consumer tastes and discretionary spending patterns than our existing markets, which may cause our new Denver restaurants to be less successful than restaurants in our existing markets. We may also enter other new markets over the next several years which will involve these same risks and uncertainties.

We also face the risk that our existing systems and procedures, restaurant management systems, financial controls, and information systems will be inadequate to support our planned expansion. We cannot predict whether we will be able to respond on a timely basis to all of the changing demands that our planned expansion will impose on management and these systems and controls. If we fail to continue to improve our information systems and financial controls or to manage other factors necessary for us to achieve our expansion objectives, our business, financial condition, operating results or cash flows could be materially adversely affected.

We depend upon our key personnel

Our future success significantly depends on the continued services and performance of our senior management, particularly Frederick R. Hipp, our Chief Executive Officer and President; H.G. Carrington, Jr., our Executive Vice President and Chief Financial Officer; Frederick F. Wolfe, our Senior Vice President Operations; and Tom N. Jenneman, our Senior Vice President and Chief Development Officer. Our future performance will depend on our ability to motivate and retain these and other executive officers and key employees, particularly restaurant general managers and kitchen managers. Competition for these employees is intense. The loss of the services of members of our senior management or key employees or the inability to attract additional personnel as needed could materially adversely affect our business, financial condition, operating results or cash flows. See "Management."

We will experience fluctuations in operating results as we open additional restaurants

Our operating results will fluctuate because of several factors, including the timing of new restaurant openings and related expenses, profitability of our new restaurants, and increases or decreases in comparable restaurant sales. In the past, our pre-opening costs have varied significantly from quarter to quarter primarily due to the timing of restaurant openings. We typically incur most pre-opening costs for a new restaurant within the one month immediately preceding, and the month of, its opening. In addition, our labor and operating costs for a newly opened restaurant during the first three months of operation are often materially greater than what can be expected after that time, both in aggregate dollars and as a percentage of restaurant sales. Accordingly, the volume and timing of new restaurant openings in any quarter has had and is expected to continue to have a significant impact on quarterly pre-opening costs, labor costs and direct operating and occupancy expenses. In addition, in accordance with SFAS No. 121, we recognize the impairment of certain property and equipment by reducing the carrying value of the assets to the estimated fair value based on discounted cash flows. Such a write-down in any period will further increase the fluctuations in our operating results.

In accordance with our expansion strategy, we intend to open new restaurants primarily in our existing markets. Since we typically draw customers from a relatively small radius around each of our restaurants, the sales performance and customer counts for restaurants near the area in which a new restaurant opens may decline due to cannibalization.

Our business is also subject to seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the summer months and winter holiday season of each fiscal year. As a result, we expect our highest earnings to occur in those periods. In addition to seasonality, and other factors discussed earlier, our quarterly and annual operating results and comparable unit sales may fluctuate significantly as a result of a variety of additional factors, including labor costs for our hourly and management personnel, particularly in the event of an increase in federal or state minimum wage requirements.

Accordingly, results for any one quarter are not necessarily indicative of the results to be expected for any other quarter or for any year and comparable unit sales for any particular future period may decrease. In the

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future, results of operations may fall below the expectations of public market analysts and investors. In that event, the price of our common stock would likely decrease. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations--Potential Fluctuations in Quarterly Results and Seasonality" for a discussion of factors which have historically affected our operating results.

Our operations are susceptible to changes in food and supply costs which could adversely affect our margins

Our profitability depends, in part, on our ability to anticipate and react to changes in food and supply costs. Our centralized purchasing staff negotiates prices for all of our ingredients and supplies through either contracts (terms of one month up to one year) or commodity pricing formulas. Our master distributor delivers goods at a set, flat fee per case twice a week to all of our restaurants. Our contract with our master distributor expires in December 2000. Although we believe we will be able to negotiate a similarly priced contract with either our current master distributor or another distributor, any increase in distribution prices could cause our food and supply costs to increase. Furthermore, various factors beyond our control, including adverse weather conditions and governmental regulations, could also cause our food and supply costs to increase. We cannot predict whether we will be able to anticipate and react to changing food and supply costs by adjusting our purchasing practices. A failure to do so could adversely affect our operating results and cash flows.

Changes in consumer preferences or discretionary consumer spending could negatively impact our results

Our restaurants feature pizzas, pastas, salads and appetizers in an upscale, family-friendly, casual environment. Our continued success depends, in part, upon the popularity of these foods and this style of informal dining. Shifts in consumer preferences away from this cuisine or dining style could materially adversely affect our future profitability. Also, our success depends to a significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Adverse changes in these factors could reduce customer traffic or impose practical limits on pricing, either of which could materially adversely affect our business, financial condition, operating results or cash flows. Like other restaurant chains, we can also be materially adversely affected by negative publicity concerning food quality, illness, injury, publication of government or industry findings concerning food products served by us, or other health concerns or operating issues stemming from one restaurant or a limited number of restaurants.

We operate in a highly competitive industry

Competition in the restaurant industry is increasingly intense. We compete on the basis of the taste, quality, and price of food offered, customer service, ambiance and overall dining experience. We believe that our operating concept, attractive dining value and quality of food and customer service enable us to differentiate ourselves from our competitors. However, while we believe that our restaurants are distinctive in design, we are aware of other restaurants that operate with somewhat similar concepts. Our competitors include a large and diverse group of restaurant chains and individual restaurants that range from independent local operators that have opened restaurants in various markets, to well-capitalized national restaurant companies. In addition, we compete with other restaurants and with retail establishments for real estate. Many of our competitors are well-established in the casual dining market segment and some of our competitors have substantially greater financial, marketing and other resources than we do.

We could face labor shortages which could slow our growth

Our success depends in part upon our ability to attract, motivate and retain a sufficient number of qualified, high energy employees, including restaurant managers, kitchen staff and servers, necessary to keep pace with our expansion schedule. Qualified individuals needed to fill these positions are in short supply in some areas, and the inability to recruit and retain these individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants, which could have a material adverse effect on our

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business, financial condition, operating results or cash flows. Additionally, competition for qualified employees could require us to pay higher wages to attract sufficient employees, which could result in higher labor costs.

We are subject to extensive government regulation

The restaurant business is subject to various federal, state and local government regulations, including those relating to the sale of food and alcoholic beverages. While at this time we have been able to obtain and maintain the necessary governmental licenses, permits and approvals, the failure to maintain these licenses, permits and approvals, including food and liquor licenses, could have a material adverse effect on our operating results. Difficulties or failure in obtaining the required licenses and approvals could delay or result in our decision to cancel the opening of new restaurants. Local authorities may suspend or deny renewal of our food and liquor licenses if they determine that our conduct does not meet applicable standards. Although we have satisfied restaurant and liquor licensing requirements for our existing restaurants, we cannot predict whether we will be able to maintain these approvals or obtain these approvals at future locations. We are also subject to state and local health code requirements, including regulations relating to food safety and food handling and storage.

We are also subject to federal regulation and state laws that regulate the offer and sale of franchises and aspects of the licensor-licensee relationship. Many state franchise laws impose restrictions on the franchise agreement, including limitations on non-competition provisions and the termination or non- renewal of a franchise. Some states, such as California, require that franchise materials be registered before franchises can be offered or sold in the state.

Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime pay, unemployment tax rates, workers' compensation rates, citizenship requirements and sales taxes. Additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, or increased tax reporting and tax payment requirements for employees who receive gratuities could materially adversely affect us. California, where almost half of our company-owned restaurants are located, instituted a change to its overtime pay regulations effective January 1, 2000. We are required to pay 1 1/2 times regular pay for any hours worked in excess of eight per day, and double time for hours in excess of 12 per day, even if an employee is a part-time worker. We hope to be able to schedule our employees' shifts around these requirements and, to the extent we can do so, this change will not have a material adverse effect on us. Furthermore, changes in the state laws, or a reduction in the number of states that allow tips to be credited toward minimum wage requirements, could materially adversely affect us.

Given the location of many of our restaurants, even though we operate our restaurants in strict compliance with the requirements of the Immigration and Naturalization Service, our employees may not all meet federal citizenship or residency requirements, which could lead to disruptions in our work force. In addition, the Federal Americans with Disabilities Act prohibits discrimination on the basis of disability in public accommodations and employment. Although our restaurants are designed to be accessible to the disabled, we could be required to make modifications to our restaurants to provide service to, or make reasonable accommodation for, disabled persons. See "Business--Government Regulation."

We face risk of litigation

We are sometimes the subject of complaints or litigation from customers alleging illness, injury or other food quality, health or operational concerns. Adverse publicity resulting from these allegations may materially adversely affect us and our restaurants, regardless of whether the allegations are valid or whether California Pizza Kitchen is liable. In fact, we are subject to the same risks of adverse publicity resulting from these sorts of allegations even if the claim actually involves one of our franchisees or licensees. Further, employee claims against us based on, among other things, discrimination, harassment or wrongful termination may divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. We have been subject to these employee claims before, and a significant increase in the number of these claims or any increase in the number of successful claims could materially adversely affect our business,

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financial condition, operating results or cash flows. We also are subject to some states' "dram shop" statutes. These statutes generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person.

Geographic concentration

Forty percent of our restaurants are located in California. As a result, we are particularly susceptible to adverse trends and economic conditions in California. In addition, given our geographic concentration, negative publicity regarding any of our restaurants in California could have a material effect on our business and operations, as could other regional occurrences such as local strikes, earthquakes or other natural disasters.

Our existing shareholders will retain significant control

Upon consummation of this offering, and assuming the conversion of an aggregate of shares of preferred stock owned by our executive officers, directors and principal shareholders (including Bruckmann, Rosser, Sherrill & Co., L.P.) into shares of common stock upon the closing of this offering, Bruckmann, Rosser and its affiliates will own approximately % of the outstanding shares of common stock (or % if the underwriters' over-allotment option is exercised), and our executive officers, directors and principal shareholders (including Bruckmann, Rosser) and their affiliates will own approximately % of the outstanding shares of common stock (or % if the underwriters' over-allotment option is exercised). As a result, Bruckmann, Rosser and/or these other shareholders will be able to control us and direct our affairs, including the election of directors and approval of significant corporate transactions. This concentration of ownership also may delay, defer or prevent a change in control of California Pizza Kitchen, and make some transactions more difficult or impossible without the support of these shareholders. These transactions might include proxy contests, mergers, tender offers, open market purchase programs or other purchases of common stock that could give our shareholders the opportunity to realize a premium over the then- prevailing market price for shares of common stock. See "Management," "Use of Proceeds" and "Principal Shareholders."

A significant number of shares will be eligible for future sale either in the market or through the exercise of registration rights

The shares of common stock sold in this offering (and any shares sold upon exercise of the underwriters' over-allotment option) will be freely tradable without restriction under the Securities Act of 1933, as amended, except for any shares held by our officers, directors and principal shareholders. The other shares of our common stock which are outstanding are "restricted shares" within the meaning of Rule 144 under the Securities Act and sales of these shares are subject to restrictions under the Securities Act. Of these restricted shares, are subject to lock-up agreements under which the holders have agreed not to sell or otherwise dispose of any of their shares for a period of 180 days after the date of this prospectus without the prior written consent of Banc of America Securities LLC. In its sole discretion and at any time without notice, Banc of America Securities may release all or any portion of the shares subject to the lock-up agreements. All of the restricted shares subject to lock-up agreements will become available for sale in the public market immediately following expiration of the 180-day lock-up period, subject (to the extent applicable) to the volume and other limitations of Rule 144 or Rule 701 under the Securities Act. Beginning 90 days after the date of this prospectus, restricted shares not subject to lock-up agreements or contractual restrictions will become available for sale in the public market, subject to the volume and other limitations of Rule 144 or Rule 701. In addition, after expiration of the lock-up period, some of our securityholders have the contractual right to require us to register some of their shares of common stock for future sale.

We intend to file a registration statement on Form S-8 covering all shares of common stock issuable upon exercise of stock options in effect on the date of this prospectus and stock options or other stock rights to be granted under our stock option plans. Upon this registration on Form S-8, up to an additional 1,346,313 shares of common stock, together with any additional shares of common stock that will be issuable pursuant to stock

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options or other stock rights granted in the future under our stock option plans, will be eligible for sale in the public market.

Sales of substantial amounts of common stock in the public market, or the perception that these sales may occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital through a public offering of our equity securities. See "Shares Eligible for Future Sale," "Principal Shareholders" and "Description of Capital Stock."

Provisions of our articles of incorporation could discourage potential acquisition proposals and delay or prevent a change in control

Our articles of incorporation authorize our board of directors to issue up to 40,000,000 shares of preferred stock and to determine the powers, preferences, privileges, rights, including voting rights, qualifications, limitations and restrictions of those shares, without any further vote or action by the shareholders. All of the currently outstanding shares of preferred stock will be either converted into shares of common stock or redeemed upon consummation of this offering and therefore the full 40,000,000 shares of preferred stock will be available for designation and issuance by our board of directors. The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock could have the effect of delaying, deterring, or preventing a change in control and could adversely affect the voting power of your shares.

In addition, provisions of California law could make it more difficult for a third party to acquire a majority of our outstanding voting stock by discouraging a hostile bid, or delaying or deterring a merger, acquisition or tender offer in which our shareholders could receive a premium for their shares, or a proxy contest for control of our company or other changes in our management. See "Description of Capital Stock" for a discussion of these provisions.

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USE OF PROCEEDS

We estimate that the net proceeds from the sale of the shares of common stock offered by us at an assumed initial public offering price of $ per share, after deducting estimated underwriting discounts and estimated offering expenses, will be approximately $ . We will receive an additional $ , after deducting estimated underwriting discounts and estimated offering expenses, if the underwriters' over-allotment option is exercised in full. We intend to use approximately $40.0 million of the net proceeds from the offering to repay outstanding bank debt under our existing credit agreement with Bank of America, N.A. This debt consists of a $25.0 million term loan due September 30, 2004 and a $25.0 million revolving line of credit, under which we have drawn approximately $15.0 million. Both the term loan and the revolving line of credit bear interest at a rate of LIBOR as of the date of borrowing plus 1.50% (currently, 7.79%). The entire amount of debt outstanding under the credit facility with Bank of America, N.A. was drawn on October 29, 1999, the date of initial funding, and all of this debt was used to repay other outstanding bank debt, which bore interest at a higher rate.

The balance of the net proceeds from this offering will be used to redeem approximately % of the outstanding shares of our preferred stock and for general corporate purposes. Currently, we have two outstanding series of preferred stock, Series A 12 1/2% Cumulative Compounding Preferred Stock and Series B 13 1/2% Cumulative Compounding Preferred Stock. All preferred shareholders own an equal number of shares of Series A Preferred Stock and Series B Preferred Stock. All of the outstanding Series A Preferred Stock is currently redeemable at our option at a fixed price per share of $1.9095 per share, plus accrued and unpaid dividends as of the date of redemption, and all of the outstanding Series B Preferred Stock is currently redeemable at our option at a fixed price per share of $1.4688, plus accrued and unpaid dividends as of the date of redemption. Prior to the consummation of this offering, we will notify all preferred shareholders that we intend to redeem their outstanding shares with the proceeds from this offering. Additionally, we will also extend an offer to allow them to convert an equal number of their shares of Series A Preferred Stock and their shares of Series B Preferred Stock into common stock at the initial public offering price. All preferred shares that are not converted into common stock will be redeemed using the proceeds from this offering. Any and all conversions will be effected concurrently with the consummation of this offering.

Assuming an initial public offering price of $ per share and that this offering is completed on or about July , 2000, we estimate that an aggregate of shares of common stock will be issued upon the conversion of shares of preferred stock and $ of the net proceeds will be used to redeem the remaining shares of preferred stock. This results in the conversion of approximately % of our preferred stock and redemption of the remaining %. The number of shares of common stock which will be outstanding after the offering as reflected throughout this prospectus includes the issuance of these shares.

Pending application of the net proceeds, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing securities. See "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources" for additional information regarding our sources and uses of capital.

12

DIVIDEND POLICY

We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on our common stock in the foreseeable future. We have not paid any cash dividends since 1992 when dividends were paid in connection with PepsiCo's acquisition of a controlling interest in us. In 1997, we declared a stock dividend of one share of Series A 12 1/2% Cumulative Compounding Preferred Stock and one share of Series B 13 1/2% Cumulative Compounding Preferred Stock on each outstanding share of our common stock. In November 1998, we effected a two-for-one forward split of our common stock.

Our credit agreement with Bank of America, N.A. currently prohibits us from declaring or paying any dividends or other distributions on any shares of our capital stock other than dividends payable solely in shares of capital stock or the stock of our subsidiaries. Any payment of cash dividends in the future will be at the discretion of our board of directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions contained in our credit agreement with Bank of America, N.A., or other agreements, and other factors deemed relevant by our board.

13

CAPITALIZATION

The following table sets forth at April 2, 2000 our capitalization on an actual basis and on a pro forma as adjusted basis to reflect the sale of the shares of common stock offered by us and the application of the estimated net proceeds from this offering, including the use of $40.0 million to repay our bank debt that was outstanding as of April 2, 2000, $ to redeem an estimated shares of our Series A 12 1/2% Cumulative Compounding Preferred Stock and $ to redeem an estimated shares of our Series B 13 1/2% Cumulative Compounding Preferred Stock, the conversion of the remaining shares of both series of preferred stock into common stock at the public offering price, and the elimination of interest expense on bank debt and $225,000 in compensation expense due to the amendment of our co-founders' employment agreements. This table assumes we will sell shares of common stock in this offering at a price per share of $ and is based on the number of shares of common stock and Class A Preferred Stock outstanding on April 2, 2000. It excludes 1,346,313 shares of common stock issuable upon the exercise of options outstanding at a weighted average exercise price of $2.44 per share. The capitalization information set forth in the table below is qualified by the more detailed consolidated financial statements and notes included elsewhere in this prospectus and should be read in conjunction with those consolidated financial statements and notes.

                                                     April 2, 2000
                                             -----------------------------------
                                                                  Pro Forma
                                                Actual           As Adjusted
                                             ----------------  -----------------
                                             (dollars in thousands, except
                                               share and per share data)
Cash and cash equivalents................... $          3,732    $
                                             ================    =============
Long-term debt, including current portion... $         40,075    $          75
Class A Redeemable Preferred Stock:
 40,000,000 shares authorized,
 20,303,542 shares issued and outstanding,
 actual; 40,000,000 shares authorized, no
 shares issued and outstanding, pro forma as
 adjusted(1)................................           45,359              --

Shareholders' equity (deficiency):
  Common Stock, $ 0.01 par value: 80,000,000
   shares authorized, 21,793,372 shares
   issued and outstanding, actual;
   80,000,000 shares authorized,
   shares issued and outstanding, pro forma
   as adjusted..............................              218
Additional paid-in capital..................          102,793
Accumulated deficit.........................         (112,287)
                                             ----------------    -------------
    Total shareholders' equity
     (deficiency)...........................           (9,276)
                                             ----------------    -------------
    Total capitalization.................... $         76,158    $
                                             ================    =============


(1) Class A Redeemable Preferred Stock is divided into two series: (a) Series A 12 1/2% Cumulative Compounding Preferred Stock, $0.01 par value; 10,151,775 shares authorized, 10,151,771 shares issued and outstanding, and (b) Series B 13 1/2% Cumulative Compounding Preferred Stock, $0.01 par value; 10,151,775 shares authorized, 10,151,771 shares issued and outstanding. Upon consummation of this offering and the application of the net proceeds, no shares of Class A Redeemable Preferred Stock will be outstanding.

14

DILUTION

Our net tangible book value as of April 2, 2000 was approximately $ million or $ per share of common stock. Net tangible book value per share is equal to our total tangible assets less our total liabilities, divided by the number of shares of common stock outstanding as of April 2, 2000. Our pro forma net tangible book value as of April 2, 2000 would have been $ million or $ per share of outstanding common stock after giving effect to the conversion of shares of preferred stock into shares of common stock at an assumed initial public offering price of $ upon consummation of this offering, and after giving effect to the sale of shares of common stock offered by us at the same assumed initial public offering price and our receipt of the estimated net proceeds after deducting estimated underwriting discounts and estimated offering expenses. This represents an immediate increase in net tangible book value of $ per share to existing shareholders and an immediate dilution of $ per share to new investors purchasing shares in this offering. If the initial public offering price is higher or lower, the dilution to the new investors will be greater or less. The following table illustrates this per share dilution:

Assumed initial public offering price per share..............         $
  Net tangible book value per share as of April 2, 2000...... $(    )
  Increase in net tangible book value per share attributable
   to new investors..........................................
                                                              ------
Pro forma net tangible book value per share after the
 offering....................................................
                                                                      -----
    Dilution per share to new investors......................         $
                                                                      =====

The following table summarizes as of April 2, 2000, on a pro forma basis after giving effect to the conversion of an aggregate of shares of preferred stock into shares of common stock and the redemption of the remaining shares of preferred stock upon consummation of this offering, the number of shares of common stock purchased from us, the total consideration paid to us, and the average price per share paid by existing shareholders and by the investors purchasing shares of common stock in this offering (before deducting estimated underwriting discounts and estimated offering expenses):

                             Shares
                           Purchased    Total Consideration
                         -------------- ----------------------  Average Price
                         Number Percent  Amount      Percent      Per Share
                         ------ ------- ----------  ----------  -------------
Existing shareholders...             %  $                     %      $
New investors(1)(2).....                                             $
                          ----    ---   ----------    --------
  Total.................          100%  $                  100%
                          ====    ===   ==========    ========


(1) As of April 2, 2000, we had reserved 1,346,313 shares of our common stock for issuance upon exercise of outstanding options at a weighted average exercise price of $2.44 per share. To the extent any of the options are exercised, including, without limitation, the exercise of 221,392 of these shares by our Chief Executive Officer and President, there will be further dilution to new investors. See "Management--Stock Plans" and note 8 to notes to consolidated financial statements for additional information.

(2) Assuming full exercise of the underwriters' over-allotment option, the number of shares of common stock held by new shareholders would be increased to shares or % of the total number of shares outstanding.

15

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following selected consolidated financial and operating data for each of the five fiscal years in the period ended January 2, 2000 are derived from our audited consolidated financial statements. The selected consolidated financial and operating data as of and for the three months ended April 4, 1999 and April 2, 2000 have been derived from our unaudited consolidated financial statements which, in the opinion of management, reflect all adjustments necessary to present fairly, in accordance with generally accepted accounting principles, the information for those periods. The audited consolidated financial statements and notes for each of the three fiscal years in the period ended January 2, 2000, and the report of independent auditors on those years, are included elsewhere in this prospectus. This selected consolidated financial and operating data should be read in conjunction with the consolidated financial statements and notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other financial information included elsewhere in this prospectus.

16

Selected Consolidated Financial and Operating Data
(dollars in thousands, except per share, operating data and footnotes)

                                                                                   Three Months
                                          Fiscal Year                                  Ended
                          -----------------------------------------------------  ------------------
                                                                                 April 4,  April 2,
                            1995      1996      1997         1998        1999      1999      2000
                          --------  --------  --------     --------    --------  --------  --------
                                                                                    (unaudited)
Statement of Operations
 Data:
Revenues:
 Restaurant sales.......  $155,890  $160,133  $159,391     $165,028    $176,933  $41,438   $47,711
 Franchise and other
  revenues..............       620       698     1,025        2,013       2,260      496       555
                          --------  --------  --------     --------    --------  -------   -------
   Total revenues.......   156,510   160,831   160,416      167,041     179,193   41,934    48,266

Costs and expenses:
 Cost of sales..........    41,170    43,647    43,361       43,201      44,740   10,399    11,799
 Labor..................    59,811    57,796    57,321       58,547      63,701   14,960    17,086
 Direct operating and
  occupancy.............    37,183    36,633    36,481       34,171      35,848    8,497     9,582
                          --------  --------  --------     --------    --------  -------   -------
   Total restaurant
    operating costs.....   138,164   138,076   137,163      135,919     144,289   33,856    38,467

 General and
  administrative........    12,769    15,722    15,896       13,890      13,123    3,250     3,550
 Depreciation and
  amortization..........    14,762     9,944     7,807        7,543       8,234    2,065     2,289
 Pre-opening............       --        279       445          234         763      --        136
                          --------  --------  --------     --------    --------  -------   -------
Operating income
 (loss).................    (9,185)   (3,190)     (895)       9,455      12,784    2,763     3,824

Other income (expense):
 Loss on impairment of
  property and
  equipment and
  restaurant closures...   (15,453)     (280)   (9,604)         (85)       (200)     --        --
 Insurance gain and
  bank financing fees...       973       277       --           --         (998)     --        --
 Interest expense.......    (6,885)   (3,297)     (930)      (3,956)     (3,415)    (968)     (761)
                          --------  --------  --------     --------    --------  -------   -------
   Total other income
    (expense), net......   (21,365)   (3,300)  (10,534)      (4,041)     (4,613)    (968)     (761)
                          --------  --------  --------     --------    --------  -------   -------
Income (loss) before
 income tax benefit
 (provision)............   (30,550)   (6,490)  (11,429)       5,414       8,171    1,795     3,063
Income tax benefit
 (provision)............       (51)      514      (251)(1)    5,139(1)   (2,772)    (611)   (1,072)
                          --------  --------  --------     --------    --------  -------   -------
Net income (loss).......   (30,601)   (5,976)  (11,680)      10,553       5,399    1,184     1,991
Redeemable preferred
 stock accretion........       --     (2,626)      --        (4,478)     (5,147)  (1,314)   (1,438)
                          --------  --------  --------     --------    --------  -------   -------
Net income (loss)
 attributable to common
 shareholders(2)(4).....  $(30,601) $ (8,602) $(11,680)    $  6,075    $    252  $  (130)  $   553
                          ========  ========  ========     ========    ========  =======   =======
Net income (loss) per
 common share(3)(4):
 Basic..................                                   $   0.30    $   0.01  $ (0.01)  $  0.03
 Diluted................                                   $   0.29    $   0.01  $ (0.01)  $  0.03


Shares used in computing
 net income per common
 share (in
 thousands)(3):
 Basic..................                                     20,226      21,598   21,504    21,793
 Diluted................                                     21,058      22,335   22,240    22,432

Pro Forma Data(5):
Net income attributable
 to common
 shareholders...........                                               $  8,253            $ 2,632
Net income per common
 share:
 Basic..................
 Diluted................

Shares used in computing
 net income per common
 share (in thousands):
 Basic..................
 Diluted................

Selected Operating Data:
System-wide restaurants
 open at end of period..                            80           90          96       90        97
Company-owned
 restaurants open at end
 of period..............                            66           67          70       66        71
Average weekly company-
 owned restaurant
 sales..................                       $43,514      $47,490     $49,490  $47,755   $51,692
Comparable company-owned
 restaurant sales
 increase(6)............                           0.6%         6.1%        4.1%     6.2%      6.8%

17

                                         Fiscal Year                         April 2, 2000
                         -----------------------------------------------  --------------------
                                                                                    Pro Forma
                                                                                       As
                           1995      1996      1997      1998     1999    Actual   Adjusted(7)
                         --------  --------  --------  --------  -------  -------  -----------
                                                                              (unaudited)
Cash and cash
 equivalents............ $  1,774  $  4,143  $  5,455  $ 14,553  $ 5,686  $ 3,732    $
Total assets............  110,414   104,953    82,915    96,155   94,750   94,130
Total debt, including
 current portion........  115,928       192    47,157    45,385   40,085   40,075         75
Redeemable preferred
 stock..................      --    118,791    33,783    38,774   43,921   45,359         --
Shareholders' equity
 (deficiency)...........  (33,591)  (39,567)  (16,840)  (10,439)  (9,829)  (9,276)


(1) Net income for 1998 was favorably impacted by the reversal of a $7.6 million deferred tax asset valuation allowance that was previously provided for in 1997. We eliminated the valuation allowance in 1998 due to our belief that current year activity made realization of this benefit more likely than not.

(2) Net income (loss) attributable to common shareholders includes the effect of the accretion of the liquidation preference on the redeemable preferred stock which reduces net income or increases net loss attributable to common shareholders for the relative periods.

(3) See notes 2 and 9 of notes to audited consolidated financial statements and notes 3 and 4 of notes to unaudited consolidated financial statements for an explanation of the method used to calculate the net income per common share and shares used in computing net income per common share, basic and diluted.

(4) Net income for 1998 was favorably impacted by the reversal of a $7.6 million deferred tax asset valuation allowance. Assuming an effective tax rate of 33.9%, consistent with fiscal year 1999, net income would have been $3,579,000 before redeemable preferred stock accretion. Net income attributable to common shareholders would have been a loss of $899,000 and net loss per common share, basic and diluted, would have been $0.04.

(5) Pro forma information gives effect, as of the beginning of each period, to the sale of shares of common stock offered by us at an assumed initial public offering price of $ per share, net of estimated underwriting discounts and estimated offering expenses, the conversion of shares of preferred stock into shares of common stock, the use of the net proceeds to redeem all other shares of preferred stock and to the elimination of interest expense related to the repayment of our bank debt, and the elimination of $900,000 in annual compensation expense ($225,000 per quarter) due to the amendment of our co-founders' employment agreements.

(6) Company-owned restaurants are included in the computation of comparable restaurant sales after they have been open 12 months.

(7) Reflects our receipt of estimated net proceeds of $ from the sale of shares of common stock offered by us at an assumed initial public offering price of $ per share, net of estimated underwriting discounts and estimated offering expenses, the conversion of shares of preferred stock into shares of common stock, the use of the net proceeds to redeem all other shares of preferred stock and to repay $40.0 million in bank debt that was outstanding as of April 2, 2000, and the elimination of interest expense on bank debt and $225,000 in compensation expense due to the amendment of our co-founders' employment agreements.

18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Overview

California Pizza Kitchen is a leading casual dining restaurant chain in the premium pizza segment with a recognized consumer brand and an established, loyal customer base. We currently own, license or franchise 100 upscale, casual dining restaurants in 21 states, the District of Columbia and three foreign countries, of which 74 are company-owned and 26 operate under franchise or license arrangements. During our 15 years of operating history, we believe we have developed strong brand awareness and demonstrated the appeal of our concept in a wide variety of geographic areas. Our concept was, and remains, to take our customers' favorite food cravings and put them on a pizza--to figuratively put the world on a pizza.

We opened our first casual dining restaurant in 1985 in Beverly Hills, California and grew steadily to 25 restaurants by early 1992. Our concept, with its signature line of innovative, premium pizzas, open-flame ovens in exhibition-style kitchens and excellent guest service, attracted PepsiCo, Inc. which bought a controlling interest in our company in May 1992.

During the approximately five-year period when PepsiCo was our controlling shareholder, we opened 60 restaurants, 16 of which have subsequently been closed. We experimented with different locations and different restaurant sizes, ranging from 3,600 square feet to more than 11,000 square feet. Our rapid expansion strained our infrastructure, resulted in a variety of management and operational changes, diverted our attention from the execution of our concept and led to disappointing operating results and financial performance, including a decline in comparable restaurant sales in 1996.

At the end of 1996, PepsiCo concluded that it would sell or otherwise divest all of its restaurant businesses, including California Pizza Kitchen. In September 1997, we consummated a series of transactions to effect a merger and leveraged recapitalization through which an investor group led by Bruckmann, Rosser, Sherrill & Co., L.P. acquired a 67.4% interest in our company. Under the terms of the merger and leveraged recapitalization agreements, PepsiCo contributed all of its shares of Class A Common Stock to us and converted all of its redeemable preferred stock and Class B Common Stock into a right to receive a cash payment of approximately $60.0 million. The holders of our outstanding shares of Class A Common Stock received merger consideration consisting of cash and shares of our new common stock in exchange for their shares of our old Class A Common Stock, which were then canceled. Immediately after giving effect to the recapitalization, there were 10,000,001 shares of common stock outstanding and no shares of preferred stock (we subsequently effected a two-for-one forward stock split of our common stock in November 1998). As a result of the recapitalization, PepsiCo retained no ownership interest in our company, although it did retain four under-performing restaurants which were subsequently closed, and assumed some of the obligations and liabilities of six other restaurants that had closed prior to the completion of the merger and leveraged recapitalization transaction. As a result of PepsiCo's retention of these restaurants and other liabilities, our financial position was materially improved.

Since the recapitalization, we have hired new management, who, in conjunction with our co-founders, refocused our efforts on improving food quality, customer service, and the overall dining experience at our restaurants. Our new management team, led by Frederick R. Hipp, Chief Executive Officer and President, H. G. Carrington, Jr., Executive Vice President and Chief Financial Officer, and Frederick F. Wolfe, Senior Vice President Operations, reorganized our operations and developed a new business strategy. Initiatives put in place at the end of 1997 included increasing the size of our pizzas by 17% and the size of our pasta portions by 25% to enhance the price- to-value relationship of our core menu offerings, and reducing the number of tables assigned per server to improve the overall customer experience. Since the beginning of 1998 we have introduced 17 new menu items, improved the quality of many of our ingredients, and introduced a new, updated decor package for our new and remodeled restaurants. We believe these initiatives, coupled with our innovative food and average guest check of approximately $10.50, provide an excellent dining value and have contributed

19

to our company-owned comparable restaurant sales growth of 6.1% in 1998, 4.1% in 1999 and 6.8% through the first three months of 2000.

Our new management team was able to fund these initiatives while still improving our operating margins by realizing various operating and purchasing efficiencies. Specifically, we instituted real-time reporting requirements, significantly reduced our food costs by negotiating improved terms under our purchasing contracts, and substantially reduced general and administrative expenses by rationalizing our corporate office structure. These initiatives have resulted in improved profitability as evidenced by an improvement in our restaurant level cash flow margins from 13.9% in 1997, to 17.6% in 1998, 18.4% in 1999 and 19.4% in the first three months of 2000.

We have instituted an accelerated, but disciplined, growth plan, focused largely on further penetrating our existing markets. Since the beginning of 1998, we have opened ten new company-owned, full service restaurants. In 1999, we hired a Senior Vice President and Chief Development Officer with more than ten years of restaurant real estate experience to spearhead our expansion efforts. We plan to add additional company-owned restaurants in 2000, of which three have opened. We have signed leases and letters of intent covering the remaining restaurants we plan to open in 2000. Our new restaurants typically experience lower operating margins in their first few months of operation due to operational inefficiencies, but are expected to achieve a level of operating performance similar to those of our mature restaurants after 90 days.

Our revenues are comprised of restaurant sales, franchise royalties and other income. Our restaurant sales are comprised almost entirely of food and beverage sales. In 1999 and for the first three months of 2000, alcohol sales represented 5.3% of restaurant sales. Our franchise royalties and other revenues consist primarily of monthly royalty income and initial franchise fees.

Cost of sales is composed of food, beverage and paper supply expenses. The components of costs of sales are variable and increase with sales volume. Labor costs include direct hourly and management wages, bonuses, taxes and benefits for restaurant employees. Direct and occupancy costs generally increase with sales volume but decline as a percentage of restaurant sales. Direct and occupancy costs include restaurant supplies, marketing costs, fixed rent, percentage rent, common area maintenance charges, utilities, real estate taxes, repairs and maintenance and other related costs.

General and administrative costs include all corporate and administrative functions that support existing operations and provide infrastructure to facilitate our future growth. Components of this category include management, supervisory and staff salaries and related employee benefits, travel, information systems, training, corporate rent and professional and consulting fees. Depreciation and amortization principally includes depreciation on capital expenditures for restaurants. Pre-opening costs, which are expensed as incurred, consist of the costs of hiring and training the initial workforce, travel, the cost of food used in training, marketing costs, the cost of the initial stocking of operating supplies and other direct costs related to the opening of a new restaurant.

In calculating company-owned comparable restaurant sales, we include a restaurant in the comparable base once it has been open for 12 months. As of April 2, 2000, we had 66 company-owned restaurants which met this criteria.

In the second quarter of 2000, we expect to take a one-time charge of approximately $ related to the prior grant of performance options to Frederick R. Hipp. With the filing of this registration statement, it becomes more likely than not that Mr. Hipp's performance options will become exercisable, which triggers the charge for variable plan accounting purposes.

20

Results of operations

Our operating results for 1997, 1998 and 1999 and for the three months ended April 4, 1999 and April 2, 2000 are expressed as a percentage of revenue below, except for restaurant operating costs and expenses, which are expressed as a percentage of restaurant sales:

                                                                 Three Months
                                            Fiscal Year              Ended
                                         --------------------  -----------------
                                                               April 4, April 2,
                                         1997    1998   1999     1999     2000
                                         -----   -----  -----  -------- --------
                                                                  (unaudited)
Revenues:
  Restaurant sales.....................   99.4%   98.8%  98.7%   98.8%    98.9%
  Franchise and other revenues.........    0.6     1.2    1.3     1.2      1.1
                                         -----   -----  -----   -----    -----
    Total revenues.....................  100.0   100.0  100.0   100.0    100.0
Costs and expenses:
  Cost of sales........................   27.2    26.2   25.3    25.1     24.7
  Labor................................   36.0    35.5   36.0    36.1     35.8
  Direct operating and occupancy.......   22.9    20.7   20.3    20.5     20.1
                                         -----   -----  -----   -----    -----
    Total restaurant operating costs...   86.1    82.4   81.6    81.7     80.6
  General and administrative...........    9.9     8.3    7.3     7.8      7.4
  Depreciation and amortization........    4.9     4.5    4.6     4.9      4.7
  Pre-opening..........................    0.3     0.1    0.4     --       0.3
                                         -----   -----  -----   -----    -----
Operating income (loss)................   (0.6)    5.7    7.1     6.6      7.9
Other income (expense):
  Loss on impairment of property and
   equipment and restaurant closures...   (6.0)   (0.1)  (0.1)    --       --
  Bank financing fees..................    --      --    (0.6)    --       --
  Interest expense.....................   (0.6)   (2.5)  (1.9)   (2.3)    (1.6)
                                         -----   -----  -----   -----    -----
    Total other income (expense), net..   (6.6)   (2.4)  (2.6)   (2.3)    (1.6)
Income (loss) before income tax benefit
 (provision)...........................   (7.1)    3.2    4.6     4.3      6.4
Income tax benefit (provision).........   (0.2)    3.1   (1.5)   (1.5)    (2.2)
                                         -----   -----  -----   -----    -----
Net income (loss)......................   (7.3)%   6.3%   3.0%    2.8%     4.2%
                                         =====   =====  =====   =====    =====

Three months ended April 2, 2000 compared to three months ended April 4, 1999

Total revenues. Total revenues increased by $6.3 million, or 15.2%, to $48.3 million in the first three months of 2000 from $41.9 million in the first three months of 1999 due to a $ 6.3 million increase in restaurant sales and a $59,000 increase in franchise and other revenues. The increase in restaurant sales was due to $3.5 million in sales from a full three months of operations for the five restaurants that opened in 1999, $642,000 in sales derived from the consolidation of our limited partnership restaurant and $2.7 million from comparable restaurant sales increases of 6.8%. This increase in restaurant sales was offset by the loss of revenue from two restaurants that closed in 1999. The increase in comparable restaurant sales was driven by increases in customer counts of approximately 4.7% and increases in the average check of approximately 2.1% compared to the first three months of 1999. Approximately one-half of the increase in the average check was due to price increases taken in 1999 and the remainder was due to modest shifts in our menu mix. Franchise and other revenue growth was due primarily to a full three months of operations for the seven new franchise restaurants that opened in 1999.

Cost of sales. Cost of sales increased by $1.4 million, or 13.5%, to $11.8 million for the first three months of 2000 from $10.4 million for the first three months of 1999. Cost of sales as a percentage of restaurant sales decreased to 24.7% for the first three months of 2000 from 25.1% in the prior period. This reduction was primarily a result of lower commodity costs in produce and dairy compared to 1999 and increased operational efficiency.

21

Labor. Labor increased by $2.1 million, or 14.2%, to $17.1 million for the first three months of 2000 from $15.0 million for the first three months of 1999. Labor as a percentage of restaurant sales decreased to 35.8% for the first three months of 2000 from 36.1% for the prior period. The decrease in labor was primarily due to lower restaurant level management wages as a percentage of sales resulting from higher weekly restaurant sales. Hourly labor as a percentage of sales increased to 21.3% for the first three months of 2000 from 21.2% of sales for the prior period.

Direct operating and occupancy. Direct operating and occupancy increased by $1.1 million, or 12.8%, to $9.6 million for the first three months of 2000 from $8.5 million for the first three months of 1999. Direct operating and occupancy as a percentage of restaurant sales decreased to 20.1% for the first three months of 2000 from 20.5% from the prior period. The reduction was due primarily to higher net sales spread over relatively fixed restaurant level operating expenses.

General and administrative. General and administrative increased by $300,000, or 9.2%, to $3.6 million for the first three months of 2000 from $3.3 million for the first three months of 1999. General and administrative as a percentage of total revenues decreased to 7.2% for the first three months of 2000 from 7.6% for the prior period. The dollar increase in general and administrative was primarily a result of higher travel and moving expenses related to manager relocations for our new restaurants and higher personnel costs related to new management positions. The decrease as a percentage of sales was due to the relatively fixed nature of many of our general and administrative expenses.

Depreciation and amortization. Depreciation and amortization increased $224,000, or 10.9%, to $2.3 million for the first three months of 2000 from $2.1 million for the first three months of 1999. The increase was primarily due to the additional depreciation on the five new restaurants opened during 1999 and depreciation related to our new point of sales system that was implemented in all restaurants during fiscal year 1999.

Pre-opening. Pre-opening was $136,000 for the first three months of 2000, and related to the three new restaurants that opened in April 2000. In 1999 we did not open our first restaurant until the end of May and therefore did not incur pre-opening expenses until the second quarter.

Interest expense. Interest expense decreased by $207,000, or 21.4%, to $761,000 for the first three months of 2000 from $968,000 for the first three months of 1999. The decrease was primarily a result of a lower debt balance due to payments made under our credit facility and a lower interest rate due to our new credit facility that was put in place in October 1999.

Income tax benefit (provision). The income tax benefit (provision) for the first three months of 2000 and 1999 was based on annual effective tax rates applied to the income (loss) before income tax benefit (provision). The 35.0% tax rate applied to the first three months of 2000 comprises the federal and state statutory rates based on the annual estimated effective tax rate for 2000. The 33.9% tax rate applied to the first three months of 1999 comprises the federal and state statutory rates based on the annual estimated effective tax rate for 1999.

1999 (52 weeks) compared to 1998 (53 weeks)

Total revenues. Total revenues increased by $12.2 million, or 7.3%, to $179.2 million in 1999 from $167.0 million in 1998 due to an $11.9 million increase in restaurant sales and a $247,000 increase in franchise and other revenues. The increase in restaurant sales was due to $3.1 million in sales from a full year of operations for the two restaurants that opened in 1998, $7.3 million in sales derived from the five restaurants opened in 1999, and $6.5 million from comparable restaurant sales increases of 4.1%. This increase in restaurant sales was offset by two restaurant closures in 1999 and one restaurant closure in 1998, plus the impact of one additional week of sales in 1998 which contributed $3.4 million of revenue in 1998. The increase in comparable restaurant sales was driven by an increase in customer counts of approximately 1.9% and an increase in the average check of approximately 2.2% compared to 1998. The increase in average check was

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primarily due to price increases implemented in 1998 and 1999. Franchise and other revenue growth was due to seven new franchise restaurants that opened in 1999 and a full year of operations for the 12 franchise restaurants that opened in 1998.

Cost of sales. Cost of sales increased by $1.5 million, or 3.6%, to $44.7 million in 1999 from $43.2 million in 1998. Cost of sales as a percentage of restaurant sales decreased to 25.3% in 1999 from 26.2% in 1998. This reduction was primarily a result of lower commodity costs in 1999 compared to 1998 and management's ongoing effort to reduce the cost of food products and improve margins.

Labor. Labor increased by $5.2 million, or 8.8%, to $63.7 million in 1999 from $58.5 million in 1998. Labor as a percentage of restaurant sales increased to 36.0% in 1999 from 35.5% in 1998. The increase in labor was primarily due to higher restaurant level management wages as a result of our ongoing initiative to reduce management turnover. Hourly labor as a percentage of sales remained constant at 21.7% in 1999 and 1998.

Direct operating and occupancy. Direct operating and occupancy increased by $1.7 million, or 4.9%, to $35.8 million in 1999 from $34.1 million in 1998. Direct operating and occupancy as a percentage of restaurant sales decreased to 20.3% in 1999 from 20.7% in 1998. The reduction was due primarily to higher net sales spread over relatively fixed restaurant level operating expenses.

General and administrative. General and administrative decreased by $767,000, or 5.5%, to $13.1 million in 1999 from $13.9 million in 1998. General and administrative as a percentage of total revenues decreased to 7.3% in 1999 from 8.3% in 1998. The decrease was primarily a result of improved cost management initiatives related to certain insurance programs.

Depreciation and amortization. Depreciation and amortization increased $691,000, or 9.2%, to $8.2 million in 1999 from $7.5 million in 1998. The increase was primarily due to the additional depreciation on the two new restaurants opened during the second half of 1998 and the five new restaurants opened in 1999.

Pre-opening. Pre-opening increased by $529,000 to $763,000 in 1999 from $234,000 in 1998. The increase was due to the five new restaurants opened in 1999 compared to only two restaurants opened in 1998.

Loss on impairment of property and equipment and restaurant closures. Loss on impairment of property and equipment and restaurant closures increased by $115,000 to $200,000 in 1999 from $85,000 in 1998. The increase was due to the write off of our old point of sale system. In 1999 we implemented new point of sale systems in all of our restaurant locations.

Bank financing fees. Bank financing fees of $1.0 million represents the unamortized costs relating to our prior credit agreement, which were written off when we refinanced our senior credit facility in 1999.

Interest expense. Interest expense decreased by $541,000, or 13.7%, to $3.4 million in 1999 from $3.9 million in 1998. The decrease was primarily a result of a lower debt balance due to payments made under our credit facility and higher interest earning cash balances.

Income tax benefit (provision). The income tax benefit (provision) in 1999 and 1998 was based on annual effective tax rates applied to the income (loss) before income tax benefit (provision). The effective tax rate was 33.9% in 1999. In 1998, the income tax benefit differs from the expected income tax provision derived by applying the effective tax rate as a result of an offsetting reduction in the previously provided deferred income tax asset valuation allowance of $7.6 million.

1998 (53 weeks) compared to 1997 (52 weeks)

Total revenues. Total revenues increased by $6.6 million, or 4.1%, to $167.0 million in 1998 from $160.4 million in 1997. The one additional week of operations in 1998, contributed $3.5 million of the increased revenue in 1998, of which $3.4 million came from increased restaurant sales. The remainder of the increase in

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revenues was primarily attributable to a $2.1 million increase in restaurant sales and a $1.0 million increase in franchise and other revenues. The increase in restaurant revenue was primarily attributable to comparable restaurant sales' increases of $9.2 million, or 6.1%, offset by the closure of three restaurants and the conversion of four restaurants to licensed locations in connection with the merger and leveraged recapitalization. The increase in comparable restaurant sales was driven by increases in customer counts of approximately 3.0% and an increase in average check of approximately 3.1% in 1998. Most of the increase in the average check was due to price increases taken in 1998. Franchise revenue growth was due to 12 new franchise restaurants that opened in 1998 and a full year of operations for the three franchise restaurants that opened in 1997.

Cost of sales. Cost of sales decreased by $160,000, or 0.4%, to $43.2 million in 1998 from $43.4 million in 1997. Cost of sales as a percentage of restaurant sales decreased to 26.2% in 1998 from 27.2% in 1997. This reduction was a result of management's effort to reduce the cost of food products and improve margins through the renegotiation of many of our food vendor contracts.

Labor. Labor increased by $1.2 million, or 2.1%, to $58.5 million in 1998 from $57.3 million in 1997 primarily due to one additional week of operations in 1998. Labor as a percentage of restaurant sales decreased to 35.5% in 1998 from 36.0% in 1997. The decrease in labor as a percentage of restaurant sales was primarily due to improvements in the management of hourly labor, which decreased to 21.7% of restaurant sales in 1998 from 22.1% in 1997. Management labor as a percentage of restaurant sales decreased to 7.4% in 1998 from 7.6% in 1997, primarily as a result of increased restaurant efficiencies and higher net sales.

Direct operating and occupancy. Direct operating and occupancy decreased by $2.3 million, or 6.3%, to $34.2 million in 1998 from $36.5 million in 1997. Direct operating and occupancy as a percentage of restaurant sales decreased to 20.7% in 1998 from 22.9% in 1997. The reduction was due primarily to higher net sales spread over relatively fixed restaurant operating expenses and the closure of three restaurants and the conversion of four restaurants to licensed locations in connection with the merger and leveraged recapitalization.

General and administrative. General and administrative decreased by $2.0 million, or 12.6%, to $13.9 million in 1998 from $15.9 million in 1997. General and administrative as a percentage of restaurant sales decreased to 8.3% in 1998 from 9.9% in 1997. The decrease was primarily a result of improved cost management in legal and consulting expenses of $840,000 and reduced travel and entertainment costs of $700,000.

Depreciation and amortization. Depreciation and amortization decreased by $264,000, or 3.4%, to $7.5 million in 1998 from $7.8 million in 1997. The decrease was primarily due to the write-down of 12 restaurant locations in 1997 in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards No. 121.

Pre-opening. Pre-opening decreased by $211,000, or 47.4%, to $234,000 in 1998 from $445,000 in 1997. The decrease was due to a more disciplined approach to managing pre-opening expenses implemented by our new management team for the two restaurants we opened in 1998 compared to the two restaurants we opened in 1997.

Loss on impairment of property and equipment and restaurant closures. Loss on impairment of property and equipment and restaurant closures decreased by $9.5 million to $85,000 in 1998 from $9.6 million in 1997. The decrease was due to the reserve for restaurant closure expenses related to one restaurant recognized in 1998 compared to the write-down of 12 restaurant locations in 1997 in accordance with Financial Accounting Standards No. 121.

Interest expense. Interest expense increased by $3.0 million to $4.0 million in 1998 from $930,000 in 1997. The increase was a result of a full year of interest related to the borrowings incurred as of September 30, 1997 in connection with the merger and leveraged recapitalization transaction.

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Income tax benefit (provision). The income tax provision in 1998 and 1997 was based on annual effective tax rates applied to the income (loss) before income tax benefit (provision). In 1998, the income tax benefit differs from the expected provision for income taxes derived by applying the effective tax rate as a result of an offsetting reduction in the previously provided deferred income tax asset valuation allowance of $7.6 million. Prior to the merger and leveraged recapitalization in 1997, income taxes were filed on a consolidated basis with PepsiCo under a tax sharing agreement. Subsequent to the merger and leveraged recapitalization, the income tax provision in 1997 was adjusted because we established a valuation allowance equal to the net deferred tax asset. The valuation allowance was recorded due to uncertainty at the time of our ability to realize the benefit of the net deferred tax asset.

Potential fluctuations in quarterly results and seasonality

Our quarterly operating results may fluctuate significantly as a result of a variety of factors, including the timing of new restaurant openings and related expenses, profitability of new restaurants, increases or decreases in comparable restaurant sales, general economic conditions, consumer confidence in the economy, changes in consumer preferences, competitive factors, changes in food costs, changes in labor costs, and weather conditions. In the past we have experienced significant variability in pre-opening costs from quarter to quarter. These fluctuations are primarily a function of the timing of restaurant openings. We typically incur the most significant portion of pre- opening costs associated with a given restaurant within the one month immediately preceding, and the month of, the opening of a restaurant. In addition, our experience to date has been that labor and direct operating and occupancy costs associated with a newly opened restaurant for the first three months of operation are often materially greater than what will be expected after that time, both in aggregate dollars and as a percentage of restaurant sales. Accordingly, the volume and timing of new restaurant openings in any quarter has had and is expected to continue to have a significant impact on quarterly pre-opening costs and labor and direct operating and occupancy costs. As a result of our plans to open new restaurants at an accelerated pace, we anticipate that we will experience significantly increased pre-opening costs, labor and direct operating and occupancy costs in 2000.

Our business is also subject to seasonal fluctuations. Historically, sales in most of our restaurants have been higher during the summer months and winter holiday season. As a result, we expect our highest earnings to occur in those periods. As a result of all of these factors, results of any one quarter are not necessarily indicative of the results to be expected for any other quarter or for any year.

Liquidity and capital resources

In recent years we have funded our capital requirements through cash flow from operations. In 1997, in order to fund the merger and leveraged recapitalization, Bruckmann, Rosser, Sherrill & Co., L.P. and its co-investors made a $25.0 million capital contribution to us and we entered into a $57.0 million credit facility, of which $49.0 million was drawn.

For the first three months of 2000, net cash flows from operating activities were $2.2 million. Net cash flows from operating activities decreased from $15.0 million in 1998 to $13.6 million in 1999. The decrease from 1998 to 1999 was primarily due to the reduction of certain current liabilities partially offset by an increase in prepaid expenses and other current assets.

For the first three months of 2000, net cash used in investing activities was $4.3 million. Net cash used in investing activities was $5.0 million in 1998 and $17.3 million in 1999. The increase from 1998 to 1999 was primarily due to the increase in the number of restaurant openings from two in 1998 to five in 1999. In addition, we spent approximately $3.3 million for our new point of sale system which was installed in all of our restaurants in 1999. We opened our first three new restaurants of 2000 in April and anticipate opening another restaurants this year. Capital expenditures consist primarily of construction of new restaurants and remodels of existing restaurants. In 1998, we incurred capital expenditures of approximately $7.5 million, of which $3.1 million was spent on new restaurants opened in 1998 and $2.2 million was spent on remodels. In

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1999 we spent approximately $17.3 million on capital expenditures, of which approximately $7.7 million was spent on new restaurants opened in 1999, $2.1 million was spent on remodels and $3.3 million was spent on our new point of sales system. Total capital expenditures for 2000 are expected to be approximately $22.0 million, of which $17.0 million is expected to be invested in the opening of new restaurants and $5.0 million is expected to be spent on remodels. Our capital expenditures for 1997 through 1999 were financed through internally generated funds and we expect our capital expenditures for 2000 to be financed through internally generated funds and the proceeds of this offering.

For the first three months of 2000, cash used in financing activities was $9,000. Net cash used in financing activities increased from $1.0 million in 1998 to $5.2 million in 1999. The increase from 1998 to 1999 was due to an increase in payments on debt incurred in connection with the merger and leveraged recapitalization transaction. On September 30, 1997 we entered into a $57.0 million credit facility, a portion of which was used to fund the merger and leveraged recapitalization transaction. On October 29, 1999, we repaid all borrowings under that facility and replaced it with a new credit facility led by Bank of America, N.A. The new credit facility consists of a $25.0 million term loan and a $25.0 million revolving line of credit, of which we have drawn $15.0 million. Both the term loan and the revolving line of credit currently bear interest at a rate of LIBOR as of the date of borrowing plus 1.50% (currently, 7.79%). Under the terms of the credit agreement, the term loan must be repaid upon consummation of this offering. We also currently intend to repay all amounts outstanding under the revolving line of credit using proceeds from this offering.

We believe that the proceeds from this offering, together with anticipated cash flows from operations and funds anticipated to be available from our credit facility, will be sufficient to satisfy our working capital and capital expenditures requirements for at least the next twelve months. Changes in our operating plans, acceleration of our expansion plans, lower than anticipated sales, increased expenses or other events may cause us to seek additional financing sooner than anticipated. Additional financing may not be available on acceptable terms, or at all. Failure to obtain additional financing as needed could have a material adverse effect on our business and results of operations.

Quantitative and qualitative disclosures about market risk

Our market risk exposures are related to our cash and cash equivalents. We invest our excess cash in investment grade, highly liquid investments, consisting of money market instruments, bank certificates of deposit and short- term investments in commercial paper. We anticipate investing our net proceeds from this offering in similar investment grade and highly liquid investments pending their use as described in this prospectus. We do not feel these investments are subject to significant market risk. We have no derivative financial instruments or derivative commodity investments in our cash and cash equivalents and investments.

Under our revolving credit facility, we will be exposed to market risk from changes in interest rates on borrowings which bear interest at the lending bank's reference rate or LIBOR plus a fixed percentage. Because we do not believe that the amount of borrowings under the revolving line of credit will be material to our operations, we do not believe this risk will be material. Primarily all of our transactions are conducted, and our accounts are denominated, in United States dollars. Accordingly, we are not exposed to foreign currency risk.

Many of the food products purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors which are outside our control. We believe that substantially all of our food and supplies are available from several sources, which helps to control food commodity risk. We believe we have the ability to increase menu prices, or vary the menu items offered, if needed in response to a food product price increase.

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Inflation

The primary inflationary factors affecting our operations are food and labor costs. A large number of our restaurant personnel are paid at rates based on the applicable minimum wage, and increases in the minimum wage directly affect our labor costs. Many of our leases require us to pay taxes, maintenance, repairs, insurance and utilities, all of which are generally subject to inflationary increases. We believe inflation has not had a material impact on our results of operations in recent years.

Preferred stock accretion

In December 1997, we issued an aggregate of 10,000,001 shares of Series A 12 1/2% Cumulative Compounding Preferred Stock and 10,000,001 shares of Series B 13 1/2% Cumulative Compounding Preferred Stock as a stock dividend on our outstanding shares of common stock. In 1998, we sold an additional 151,769 shares of our Series A Preferred Stock and 151,769 shares of our Series B Preferred Stock at $1.91 and $1.47 per share, respectively. The Series A Preferred Stock is entitled to receive cash dividends of $0.2387 per annum and all dividends are cumulative, whether or not declared. Unpaid dividends accrue interest at 14.5% annually. The Series B Preferred Stock is entitled to receive cash dividends of $0.1983 per annum and all dividends are cumulative, whether or not declared. Unpaid dividends accrue interest at 15.5% annually. We may redeem the Series A and Series B Preferred Stock at a price equal to their liquidation value plus any unpaid and accrued dividends. There was no dividend accretion on the Series A and Series B Preferred Stock in 1997. Dividend accretion on the Series A and Series B Preferred Stock for 1998, 1999 and the first three months of 2000 was $4.5 million, $5.1 million and $1.4 million, respectively. At April 2, 2000, the carrying basis of the preferred stock was $45.4 million. We will use the proceeds from this offering to redeem approximately shares of Series A Preferred Stock and shares of Series B Preferred Stock, and will convert the remaining preferred stock into shares of common stock at the initial public offering price.

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BUSINESS

Overview

California Pizza Kitchen is a leading casual dining restaurant chain in the premium pizza segment with a recognized consumer brand and an established, loyal customer base. We currently own, license or franchise 100 restaurants in 21 states, the District of Columbia and three foreign countries, of which 74 are company-owned and 26 operate under franchise or license arrangements. During our 15 years of operating history, we have developed strong brand awareness and demonstrated the appeal of our concept in a wide variety of geographic areas.

Our restaurants feature our signature line of innovative premium pizzas, including our original best sellers, the BBQ Chicken Pizza and the Thai Chicken Pizza, and more recent creations such as the Philly Cheesesteak Pizza, Havana Chicken Pizza and Grilled Garlic Shrimp Pizza. We also serve a broad selection of distinctive pastas, salads, soups, appetizers and desserts, including our Chicken-Tequila Fettuccine, BBQ Chicken Chopped Salad, Hearth-Baked Tortilla Spring Rolls and Key Lime Pie. Our restaurants, which feature an exhibition- style kitchen centered around an open-flame oven, provide a high-energy, casual dining experience which is family-friendly and has broad consumer appeal. We believe our restaurants, with an average guest check of approximately $10.50, provide an exceptional dining value and are recognized by consumers for offering a highly differentiated and distinctive menu, with outstanding customer service.

We intend to expand in other distribution channels by building upon our longstanding position as an innovator and leader in the premium pizza segment. For instance, our premium fast-casual California Pizza Kitchen ASAP concept provides a selection of the high quality, innovative menu items that we serve in our full service restaurants, and we may introduce distinctive items made specifically for the "grab and go" market. Host Marriott Services, our largest franchisee, operates 18 ASAP restaurants, primarily at airports throughout the United States. We expect to develop company-owned ASAP restaurants in a wide variety of venues, including regional shopping centers and high-traffic urban office areas and currently have two such restaurants under construction, both of which are scheduled to open by July 2000. We are also extending our leading brand position in the premium pizza segment through a strategic alliance with Kraft Pizza Company. Together, we have developed and are distributing a line of premium frozen pizzas through supermarkets and other retail outlets in selected markets.

History

California Pizza Kitchen was formed in 1985 by Rick Rosenfield and Larry Flax, who were the first to combine fresh, distinctive ingredients on premium pizzas to create innovative tastes that consumers could easily identify with, yet had never previously associated with pizza. By May 1992, we were operating 23 California Pizza Kitchen restaurants in seven states including California, Hawaii, Georgia, Virginia, Illinois, Missouri, and Arizona. We had also licensed two California Pizza Kitchen restaurants to Mirage Resorts International in Las Vegas. Through our efforts to raise capital to expand our concept across the United States, PepsiCo, Inc. became interested in our concept and purchased a controlling interest in our company in May 1992. We then embarked on an aggressive growth plan which strained our infrastructure, resulted in a number of management and operational changes, diverted our attention from the execution of our concept and led to disappointing operating results and financial performance. In the five-year period during which PepsiCo was our controlling shareholder, we opened 60 restaurants, including 43 in 1993 and 1994. At the end of 1996, PepsiCo decided that it would sell or divest all of its restaurant businesses, including California Pizza Kitchen.

In September 1997, we consummated a series of transactions to effect a merger and leveraged recapitalization through which a group led by Bruckmann, Rosser, Sherrill & Co., L.P., an experienced restaurant investor, acquired a controlling interest in our company. As a result of these transactions, PepsiCo retained no ownership interest in our company. We hired a new management team led by Frederick R. Hipp, Chief Executive Officer and President, H.G. Carrington, Jr., Executive Vice President and Chief Financial Officer, and Frederick F. Wolfe, Senior Vice President Operations, with over 50 years of combined experience

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in the restaurant industry. The new management team, in conjunction with our co-founders, implemented a number of initiatives to restore and improve overall operations and financial performance. These initiatives included improving the food quality, customer service and overall dining experience at our restaurants, while simultaneously improving profitability. Specifically, we upgraded a number of our existing menu items by improving the quality of our ingredients, reduced the number of tables typically assigned to each server, and increased portion sizes to enhance our dining value. We also instituted programs calculated to attract, motivate, and retain quality management personnel, pursued cost reduction initiatives and extended our brand into new distribution channels. Finally, we embarked on a new, more disciplined restaurant expansion program.

These improvements have enabled us to attract an extremely loyal base of customers, resulting in company-owned comparable restaurant sales increases of 6.1% in 1998, 4.1% in 1999 and another 6.8% in the first three months of 2000. Our restaurant-level cash flow margins improved from 13.9% in 1997, to 17.6% in 1998, 18.4% in 1999, and 19.4% in the first three months of 2000. Our new management team also restructured our corporate organization, resulting in a decrease in corporate general and administrative expenses from $15.9 million or 9.9% of total revenues in 1997 to $13.1 million or 7.3% of total revenues for 1999. We believe that our quality-enhancing initiatives, coupled with improved cost controls and operating efficiencies, have greatly strengthened our concept and our organization.

Our concept and business strategy

Our objectives include continuing to build our brand awareness and customer loyalty, and extending our leadership position in the casual dining and premium pizza segments. We intend to utilize the strategies discussed below to achieve these objectives.

Offer high quality, innovative menu items. Our restaurants feature menu items that use imaginative toppings, and showcase recipes that capture tastes and flavors that customers readily identify, but do not typically associate with pizza, pasta or salads. While we do offer traditional menu items, we believe the success of our concept is due to our ability to interpret food trends on our platform of pizza, pasta, salads and appetizers, and to offer items that appeal to a variety of tastes. For instance, our menu includes numerous items incorporating Asian influences (Thai Chicken Pizza, Kung Pao Spaghetti and Oriental Chicken Salad with Crispy Angel Hair Pasta), Southwestern influences (Santa Fe Chicken Pizza, Chicken-Tequila Fettuccine and Sedona White Corn Tortilla Soup), and California cuisine (Goat Cheese with Roasted Peppers Pizza and White Balsamic Provencal Salad with Feta Cheese and Sun-Dried Tomatoes). Another distinguishing characteristic of our food is our use of high quality ingredients, including imported Italian tomatoes and pastas, 100% pure or extra virgin Italian olive oil, imported Kalamata olives, Japanese eggplant, black tiger shrimp, imported cheeses and exotic lettuces and other fresh produce.

Provide an excellent dining value with broad consumer appeal. We offer large portions of innovative, high quality food, superior service and a sophisticated yet casual atmosphere, all for an average check of approximately $10.50. We believe this price-to-value relationship differentiates us from our competitors, many of whom have significantly higher average checks, and allows us to appeal to a broad group of consumers. In addition to attracting families and groups, our restaurants feature counter seating around the open kitchen, which is popular with single diners. Our restaurants are popular during both the day and evening hours as evidenced by our nearly equal split between lunch and dinner sales. We believe that our diverse menu, which incorporates a wide array of both traditional and multi-ethnic flavors and ingredients, further enhances our broad appeal by accommodating groups with varied tastes or cravings. Our guests dine in a clean, high energy environment that vividly displays the colorful ingredients used in the preparation of our menu items, many of which are prepared in our signature open-flame ovens which cook with intense heat to sear in our unique flavors. In addition, the redesigned decor used in our new and remodeled restaurants gives them a softer, more comfortable look and further refines our "sophisticated yet casual" ambience.

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Build awareness of the California Pizza Kitchen brand. We believe that California Pizza Kitchen is a brand that has traditionally been associated with high quality, innovative food items, exceptional service and a strong price-to- value relationship. We also believe that many of our original recipes, including the BBQ Chicken Pizza and Thai Chicken Pizza, are closely associated with the California Pizza Kitchen brand name. The design features of our trademarked yellow, black and white logo are intended to further enhance our brand awareness. We have promoted awareness of the California Pizza Kitchen brand through innovative marketing and public relations programs, including the California Pizza Kitchen cookbooks and various local and national media events. We intend to continue to expand our brand awareness through the use of multiple distribution channels, including our ASAP fast-casual concept and our premium frozen pizzas. We also intend to pursue additional strategic alliances with large, well-established partners, similar to our relationships with Kraft Pizza Company and Host Marriott Services.

Pursue disciplined restaurant growth. Our new management team adheres to a disciplined expansion strategy, focused primarily on existing markets and the limited development of additional franchise restaurants. In late 1999, we hired Tom N. Jenneman, with more than ten years of restaurant real estate experience, as our Senior Vice President and Chief Development Officer to spearhead our development efforts. We opened five company-owned, full service restaurants in 1999 and intend to open an additional company-owned restaurants in 2000, of which will be full service restaurants and will be ASAP restaurants. Our largest franchisee, Host Marriott Services, which currently operates 18 ASAP restaurants, has plans to open four new ASAP restaurants in 2000, one of which has already opened.

Maintain strong unit economics. For 1999, sales for our 66 full service restaurants open for the entire year averaged $2.6 million and generated average restaurant-level pre-tax cash flow of $496,000 or 19.2% of restaurant sales. Our cash investment per full service restaurant, net of landlord contributions, is expected to average $1.4 million, excluding pre-opening costs, which are anticipated to be approximately $150,000 per restaurant. We believe that our cash flow margins and return on investment for our company- owned ASAP restaurants will be comparable to those of our full service restaurants.

Provide superior customer service. We enjoy a high rate of repeat business and view the personal interaction of our employees with our customers as an integral part of our success. We have developed and fostered an organizational culture we refer to as R.O.C.K. (Respect, Opportunity, Communication and Kindness) which fosters strong relationships with our employees. We believe that our culture, together with a highly evolved training program for our servers, kitchen staff and management, leads to a superior customer experience. We encourage our employees to share a sense of ownership and mission with management and believe that an employee-oriented culture creates a sense of pride in our company and our menu items and helps to ensure superior execution at the restaurant level.

Growth strategies

We believe that we are extremely well-positioned to grow our concept and brand through several channels simultaneously, including company-owned restaurants, franchised restaurants, and retail and other non-traditional channels. In 2000, we intend to open company-owned restaurants, of which will be full service restaurants and of which will be ASAP restaurants. Our franchisees have advised us that they intend to open an aggregate of seven or eight restaurants in 2000.

Full service restaurants. Our full service restaurant concept has been our core business unit and our primary source of growth historically, and we anticipate that it will be our primary source of expansion in the near term. We have adopted a manageable growth strategy and intend to develop many of our new restaurants in our existing markets to gain operational efficiencies, enhance convenience for our customers, and increase brand awareness. Our site selection criteria for new full service restaurants is flexible and allows us to adapt to a variety of locations, including regional shopping malls, retail and entertainment centers, in-line shopping centers, office buildings and free- standing buildings. Our growth strategy incorporates a market penetration or cluster strategy which we believe enhances convenience and ease of access for our customers and results in significant repeat business.

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Company ASAP restaurants. We currently franchise a total of 19 ASAP restaurants, of which 18 are franchised by Host Marriott Services. Two company- owned ASAP restaurants are currently under construction. We intend to increase the development of company-owned ASAP restaurants as part of our strategy to provide our customers with access to California Pizza Kitchen in a convenient, fast-casual environment. In addition to our signature menu items, we may introduce other unique items designed specifically for the "grab and go" nature of our ASAP concept. Our company-owned ASAP menus will generally provide ten to 15 pizza varieties, as well as salads, sandwiches, appetizers, and desserts. Our ASAP restaurants are designed to be 2,000 to 3,000 square feet in size, and include seating for 50 to 60 customers. In addition to accommodating customers desiring to order and eat in, the concept caters to customers wishing to order and take out, or pre-order and pick up. We believe that our ASAP restaurants will be successful in regional shopping centers, high density urban office and retail centers, entertainment centers, transportation centers including airports, and similar venues.

Franchise channels. Although our main focus will be on company-owned domestic expansion, we believe that franchise development will complement our growth strategy. Our principal growth in franchise operations is expected to occur through the development of new restaurants by existing franchisees. We also intend to pursue the limited development of additional franchise relationships with quality-conscious partners that operate in specialized segments of the restaurant industry or in targeted international territories and that possess the expertise and resources to execute the development of new restaurants on a large scale.

Alternative retail channels. We have entered into a strategic alliance with Kraft Pizza Company to manufacture and distribute a line of California Pizza Kitchen premium frozen pizzas in the United States and Canada. Currently, Kraft distributes our pizzas in supermarkets in Atlanta, Las Vegas, Phoenix, the San Francisco Bay area, Sacramento and the greater Southern California area, including Los Angeles and San Diego. Kraft intends to expand the markets in which our frozen pizzas are distributed, with an initial focus on those markets in which our restaurants are located. We are strategically positioning our pizzas to attract not only the typical purchaser of a premium frozen pizza, but also to tap into the potentially huge home meal replacement market by attracting the attention of the quality-oriented supermarket shopper who is not presently a consumer of frozen pizza. We are also investigating the potential for selling our premium frozen pizzas in alternative settings.

Take-out and delivery services. We offer take-out and/or delivery services in each of our restaurants. Our new restaurants are designed to accommodate this growing segment of our business and typically have separate take-out order windows and waiting areas and, in most cases, a separate cashier. Our goal is to capture a greater share of this market and maximize our revenue-generating opportunities by developing a more customer-friendly, operationally-efficient take-out and delivery service. We generally use independent third parties to provide our delivery services. In 1999, take-out and delivery sales comprised approximately 16.4% of our total restaurant sales. For the first three months of 2000, our take-out and delivery sales accounted for approximately 17.7% of our restaurant sales.

Unit level economics

For 1999, sales for our 66 full service restaurants open for the entire year averaged $2.6 million and generated restaurant-level pre-tax cash flow of $496,000 or 19.2% of restaurant sales. Our prototype full service restaurant is approximately 4,800 to 5,000 square feet. Our average cash investment, net of landlord contributions, was approximately $1.4 million for the ten restaurants opened since 1998, excluding pre-opening costs which averaged approximately $147,000 per restaurant. We expect that in the future our cash investment, net of landlord contributions, will average approximately $1.4 million, excluding pre-opening costs, which are anticipated to be approximately $150,000 per restaurant.

Our ASAP restaurants will generally be in the range of 2,000 to 3,000 square feet. We estimate that future ASAP restaurants, net of landlord contributions, will generally cost approximately $750,000 and that pre-opening expenses will average approximately $75,000. We believe that our cash flow margins and return on investment for our company-owned ASAP restaurants will be comparable to those of our full service restaurants.

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Menu

We continuously experiment with food items and flavor combinations in an attempt to create selections that are innovative and capture unique tastes. We first applied our innovative approach to creating and defining a new category of pizza--the premium pizza. For example, our signature creation, the Original BBQ Chicken Pizza, utilizes barbecue sauce instead of tomato sauce, and adds toppings of marinated chicken breast, smoked gouda and mozzarella cheeses, sliced red onion and fresh cilantro. Our Original Thai Chicken Pizza is created with a base of spicy, peanut-ginger and sesame sauce, and topped with marinated chicken breast, mozzarella cheese, roasted peanuts, green onions, bean sprouts, julienne carrots and fresh cilantro. Our other innovative pizzas include the Philly Cheesesteak Pizza, Grilled Garlic Shrimp Pizza, Rosemary Chicken-Potato Pizza and B.L.T. Pizza.

We have broadened our menu beyond pizza to include pastas, salads, soups, appetizers and desserts, and we strive to bring the same level of creativity and innovation involved in developing our pizzas to our entire menu. Among our other signature menu items are Tequila-Chicken Fettuccine which captures unique Southwestern flavors in a rich tequila-lime and jalapeno cream sauce, our BBQ Chicken Chopped Salad which uses both barbecue sauce and garden-herb ranch dressing, Oriental Chicken Salad with Crispy Angel Hair Pasta, and our hearth- baked Tortilla Spring Roll Appetizers which are sprinkled with parmesan cheese and baked in our pizza ovens. The Spring Rolls include such flavors as the Bangkok BBQ Chicken with grilled chicken breast, carmelized onions, smoked gouda and mozzarella cheeses, fresh cilantro, and our Bangkok BBQ sauce served with a side of horseradish cream sauce, and the recently introduced Baja with grilled lime chicken breast, roasted corn and black bean relish, Monterey jack and cheddar cheeses, fire-roasted mild chiles, red onions and fresh cilantro served with a side of guacamole.

Our menu is also designed to satisfy customers who seek traditional, American-style, tomato sauce-based pizza or authentic, Italian-style Neapolitan pizza. For the traditionalist, we offer a variety of items such as the Mushroom, Pepperoni and Sausage Pizza, the Fresh Tomato, Basil and Garlic Pizza, and the Sweet and Spicy Italian Sausages Pizza which combines sweet Italian sausage and grilled spicy Italian sausage, a tomato sauce base, roasted red and yellow peppers and mild onions. Our Neapolitan pizzas are prepared on a thin, crisp crust and include our Classic Margherita Pizza with imported tomatoes, fresh mozzarella, fresh basil and parmesan cheese and our Rustica Pizza made with imported tomatoes, fresh mozzarella, garlic, crushed chilies, capers and Mediterranean olives. Our menu similarly accommodates traditional tastes in pastas and salads, with a wide variety of tomato sauce-based pastas and our high quality versions of popular salads, including our Caesar Salad and Original Chopped Salad.

We believe that an important point of differentiation from our competitors is that all of our menu items are prepared to order in our full service restaurants. This reinforces our customers' confidence in the freshness and quality of our preparations as well as allows us to customize any dish to accommodate specific dietary or taste preferences.

Our menu is continuously evolving to track the increasingly discriminating and sophisticated palate of the American public. We review the sales mix of our menu items and replace lower selling items in each category with new menu items once or twice a year. Because of our ability to quickly change our menu, we believe that we are able to meet our customers' changing tastes and expectations. Our entrees range in price from $6.99 to $11.99 and our average guest check is currently approximately $10.50 including alcoholic beverages. We offer a variety of wines by the bottle or the glass, as well as bottled and tap beers, primarily to complement our menu offerings.

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Current restaurant locations

We currently own 74 restaurants in 17 states and the District of Columbia. We franchise or license our concept to other restaurant operators including:
Host Marriott Services, which operates 18 ASAP restaurants; Mirage Resorts, which operates two full service Las Vegas casino restaurants; a franchisee, which operates one full service restaurant in Texas; a franchisee, which operates one ASAP restaurant in California; and two international franchisees, which currently operate a total of four full service restaurants in Singapore, Malaysia and the Philippines.

                                       Franchised/Licensed Franchised
                        Company-Owned     Full service        ASAP
Region                  Restaurants(1)     Restaurants     Restaurants Total
------                  -------------- ------------------- ----------- -----
Domestic
Arizona................        2                --               1        3
California.............       35                --               6       41
Colorado...............        1                --              --        1
Florida................        3                --               3        6
Georgia................        3                --              --        3
Hawaii.................        3                --              --        3
Illinois...............        5(2)             --              --        5
Indiana................       --                --               1        1
Maryland...............        3                --              --        3
Massachusetts..........        3                --              --        3
Michigan...............        1                --              --        1
Minnesota..............       --                --               1        1
Missouri...............        1                --               2        3
Nevada.................       --                 2              --        2
New Jersey.............        1                --              --        1
New York...............        4                --              --        4
North Carolina.........       --                --               2        2
Pennsylvania...........        1                --              --        1
Texas..................        4                 1              --        5
Virginia...............        2                --               3        5
Washington.............        1                --              --        1
Washington, D.C........        1                --              --        1

International
Singapore..............       --                 1              --        1
Malaysia...............       --                 1              --        1
The Philippines........       --                 2              --        2
                             ---               ---             ---      ---
  Totals...............       74                 7              19      100


(1) All of our company-owned restaurants are full service.

(2) Includes one restaurant in the Chicago area in which we are the general partner and own approximately 70% of the total partnership interests.

Expansion strategy and site selection

Our restaurant expansion strategy focuses primarily on further penetrating existing markets. This clustering approach enables us to increase brand awareness and improve our operating and marketing efficiencies. For example, clustering also enables us to reduce costs associated with regional supervision of restaurant operations and provides us with the opportunity to leverage marketing costs over a greater number of restaurants. We also believe this approach reduces the risks involved with opening new restaurants given that we better understand the competitive conditions, consumer tastes, demographics and discretionary spending patterns in our existing markets. In addition, our ability to hire qualified employees is enhanced in markets in which we are well known.

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We believe that our site-selection strategy is critical to our success and we devote substantial effort to evaluating each potential site at the highest levels within our organization. We identify areas within our target markets that meet our demographic requirements, focusing on daytime and evening populations, shopping patterns, availability of personnel and household income levels. We will presently only consider expanding to new markets that will meet our strict demographic criteria. Our site selection criteria are flexible given that we operate restaurants in regional shopping malls, in-line shopping centers, retail and entertainment centers, free-standing buildings in commercial and residential neighborhoods, office buildings and hotels. Our prototype full service restaurant is approximately 4,800 to 5,000 square feet and has 150 seats. However, we have the ability to operate a full service restaurant in less than 4,000 square feet, particularly if we are able to secure additional patio seating. While our ASAP restaurants are primarily being operated in airports, we believe they could also be successful in a variety of additional venues including regional shopping centers, high density urban locations, office kiosks, food courts, stadiums, and other similar locations. Currently we have two company-owned ASAP restaurants under construction at shopping malls in the San Francisco Bay area. Our company-owned ASAP restaurants will generally be 2,000 to 3,000 square feet and have dedicated in- restaurant seating which will allow our customers to either dine in or take out.

Our full service restaurants will continue to represent the majority of our growth in the near-term. We expect to open new restaurants in 2000, including full service restaurants and ASAP restaurants. Thus far in 2000, we have opened three full service restaurants and are building four company-owned restaurants, including two ASAP restaurants. We have signed leases and letters of intent covering the remaining restaurants we plan to open in 2000.

Host Marriott Services has advised us that it anticipates opening four additional ASAP restaurants in 2000, one of which already opened in the first quarter. One of our other domestic franchisees has requested approval to open one full service restaurant in California in 2000. Our international franchisees currently operate a total of four full service restaurants, two in the Philippines, one in Singapore and one in Malaysia. Our Philippines franchisee has a full service restaurant in Guam and a full service restaurant in the Philippines under construction and expects both of them to open in 2000. Our Singapore franchisee has a full service restaurant under construction in Singapore and expects it to open in 2000.

With the exception of the five sites for which we own the real estate, we operate our restaurants under leases. We do not intend to purchase real estate for any of our sites in the future. We believe that the flexibility of our two formats (full service and fast-casual), both of which offer high quality casual dining menu items, provides us with a competitive advantage in securing sites. We have several long-standing relationships with major mall developers and owners, and are therefore afforded the opportunity to negotiate multiple location deals. Our two formats provide us with a great deal of flexibility in these negotiations since these concepts are suitable for a wide variety of venues and lend themselves to a broad range of sizes and footprints.

Marketing

Our marketing strategy focuses on communicating the California Pizza Kitchen brand through many creative and non-traditional avenues. As the innovators of a new and exciting food product, we continue to benefit from national media attention which we believe provides us with a significant competitive advantage. Rick Rosenfield and Larry Flax, our co-founders, currently serve as the focal point of our public relations and media efforts. They have been the subject of a national print and television campaign sponsored by American Express and appeared in a recent People magazine article. In addition, we have been featured on the Today Show for three years in a row during national pizza month, and have been the subject of feature stories appearing in Forbes, Business Week, The Wall Street Journal and USA Today. We appear periodically on The Food Channel and have been featured on The Oprah Winfrey Show and NBC's Later Today show. Rosie O'Donnell has given unsolicited rave reviews about our pizza on her show. For added exposure, we seek to obtain placement for our products and restaurants in movies and television shows.

We also engage to a limited extent in paid advertising for individual restaurant locations, including billboards, newspaper ads and radio. We utilize a variety of printed marketing materials, including restaurant location brochures, hotel concierge cards, take-out menus and direct mailings. During 1999, we spent an

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aggregate of 1.2% of restaurant sales on marketing efforts. We expect to continue investing approximately 1.0% to 1.5% of restaurant sales in marketing efforts in the future, primarily in connection with the opening of new restaurants.

We use the openings of our new restaurants as opportunities to reach out to the media. Our openings are often featured on live local television and radio broadcasts and receive coverage in local newspapers. We employ a variety of marketing techniques in connection with our new restaurant openings, including concierge parties, and invitations to media personalities and community leaders. In addition, our openings are generally associated with a charitable event.

Our involvement in the community does not end once we have opened a restaurant. In each of the markets in which we operate, we continuously engage in a variety of charitable and civic causes and donate food and services on an on-going basis. We have developed two cookbooks and have donated all of our proceeds to worthwhile children's charities. These cookbooks are sold at our restaurants, through national bookstore chains and through on-line retailers. We are also the official restaurant of the Starlight Children's Foundation Wish Granting Program.

We recently formed the CPK Foundation as a California non-profit public benefit corporation. The Foundation will support designated children's charities in the markets in which we operate. We intend to fund the Foundation by contributing a portion of the selling price of each BBQ Chicken Pizza we sell on a system-wide basis.

Operations

Restaurant management. We currently have 13 regional directors who report to our Senior Vice President Operations. Each regional director oversees three to eight restaurants and supervises the general manager for each restaurant within his or her area of control. The typical full service restaurant management team consists of a general manager, who oversees the entire operation of the restaurant, an assistant general manager, a kitchen manager and an assistant manager. Additionally, depending upon the size and sales volume of a restaurant, we may also employ an assistant kitchen manager or a second assistant manager in the dining area. Most of our full service restaurants employ approximately 50 to 75 hourly employees, many of whom work part-time. The general manager of each restaurant is responsible for the day-to-day operation of that restaurant, including hiring, training and development of personnel, as well as operating results. The kitchen manager is responsible for product quality, food costs and kitchen labor costs. Our full service restaurants are generally open Sunday through Thursday from 11:00 a.m. until 10:00 p.m., and on Friday and Saturday from 11:00 a.m. until 11:00 p.m.

Training. We strive to maintain quality and consistency in each of our restaurants through the careful training and supervision of personnel and the establishment of, and adherence to, high standards relating to personal performance, food and beverage preparation and maintenance facilities. We provide all new employees with complete orientation and training for their positions to ensure they are able to meet our high standards. Each location has certified trainers who provide classroom and on-the-job instruction. Employees are certified for their positions by passing a series of tests and evaluations. New restaurant managers are trained over a nine-week period at a certified training restaurant. Training includes service, kitchen and management responsibilities. An extensive series of interactive modules and on-line quizzes are used in conjunction with on-the-job training. Newly trained managers are then assigned to their home restaurant where they spend one additional training week with their general manager. We place a high priority on our continuing management development programs in order to ensure that qualified managers are available for our future openings. In addition we have detailed written operating procedures, standards, and controls, food quality assurance systems, and safety programs. Once a year we hold a general manager conference in which all of our general managers receive additional training on financial information, food preparation, hospitality and other relevant topics.

When we open a new restaurant, we provide varying levels of training to each type of employee as is necessary to ensure the smooth and efficient operation of a California Pizza Kitchen restaurant from the first

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day it opens to the public. Approximately two weeks prior to opening a new restaurant, our dedicated training/opening team travels to the location to begin intensive seven-day per week training of all new employees for that restaurant. Our training teams stay on site during the first two weeks of operation. We believe this additional investment in our new restaurants is important since it helps us provide our customers with a quality dining experience from day one. We also make on-site training teams available when our franchisees open new restaurants. After a restaurant has been opened and is operating smoothly, the general manager supervises the training of new employees.

Recruiting and retention. We seek to hire experienced general managers and staff. We support our employees by offering competitive wages, competitive benefits including a 401(k) plan and salary deferral plan, both with a discretionary match, medical insurance for all of our employees, including part-time workers, generous discounts on dining, and, effective upon completion of this offering, an employee stock purchase plan which will allow all employees who have worked for us for at least a year and who work a minimum of 20 hours per week to participate.

We attempt to motivate and retain our employees by providing them with opportunities for increased responsibilities and advancement, as well as performance-based cash incentives tied to sales, profitability and qualitative measures such as our mystery shoppers, who anonymously evaluate individual restaurants. Our most successful general managers are eligible for promotion to senior general manager status and are entitled to receive more lucrative compensation packages based on various performance criteria. We believe we also enjoy the recruiting advantage of offering our general managers restaurants that are easier to manage because they are generally smaller than those of our competitors, have hours that typically do not extend late into the night, and generally do not require management of a separate bar business. We believe these advantages offer our managers an excellent quality of life compared to many of our competitors.

Customer satisfaction. Customer satisfaction is of extreme importance to us. To that end, we routinely solicit and analyze our customers' opinions through periodic surveys of 20,000 to 25,000 randomly-selected guests. The mystery shopper program is also an important tool in our quality control efforts from both a food quality and customer service perspective.

Restaurant franchise and licensing arrangements

Our largest franchisee, Host Marriott Services, operates 18 California Pizza Kitchen ASAP restaurants, primarily in airports, throughout the United States under a development and franchise arrangement. Mirage Resorts operates two full service California Pizza Kitchen restaurants in high-profile resorts in Las Vegas, Nevada. We also have a franchisee operating one full service restaurant in San Antonio, Texas, a franchisee operating one ASAP restaurant in Thousand Oaks, California, an international franchisee operating two full service franchised restaurants in Singapore and Malaysia, and an international franchisee operating two full service franchised restaurants in the Philippines. During 2000, we expect Host Marriott Services to open four ASAP restaurants and our international franchisees to open three additional full service restaurants. In addition, one of our other domestic franchisees has requested our approval to open a full service restaurant in California in 2000.

Our development agreement with Host Marriott Services grants it limited exclusive rights to open new ASAP restaurants in airports, in travel plazas along toll-roads and in mall food court locations; however, any location proposed by Host Marriott Services is subject to approval by us in our sole discretion. If Host Marriott Services determines not to submit a bid or proposal for a new airport, or travel plaza or mall location or determines not to include us in the proposal or bid, we are free to bid ourselves or to license another party to operate an ASAP in that location. Under our agreement, Host Marriott Services may only develop a franchised restaurant in a mall when it obtains a master concessionaire agreement with the landlord to provide all food services within the food court or other multiple-concept area. Once we have agreed to Host Marriott Services' development of an ASAP restaurant in an airport or travel plaza location, we may not license or operate a full service restaurant ourselves at those locations. There is no corresponding prohibition with respect to mall locations.

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Host Marriott Services retains its limited exclusive rights for the development of ASAP restaurants until May 2003, after which it may continue our agreement for three additional terms which ultimately expire in 2018. We have the right to terminate the agreement if Host Marriott Services does not open 25 restaurants by May 2003. Host Marriott Services pays an initial franchise fee of $20,000 for each ASAP restaurant at a new location and $10,000 for each additional ASAP restaurant at an existing location, and continuing royalties at rates of 5% to 5.5% of gross sales. The Host Marriott Services franchise agreements typically terminate at the same time as Host Marriott Services' concessionaire agreement to operate at an airport or mall.

Our territorial development agreements with our other franchisees grant them the exclusive right to an identified territory subject to meeting development obligations. Our basic franchise agreement with these franchisees generally requires payment of an initial fee of between $55,000 and $65,000 for a full service restaurant, as well as continuing royalties at a rate of 5% to 6% of gross revenue. Most of our franchise agreements contain a ten or 20 year term.

Agreement with Kraft Pizza Company

We have entered into a strategic alliance with Kraft Pizza Company to manufacture and distribute a line of California Pizza Kitchen premium frozen pizzas in the United States and Canada. Kraft currently makes and distributes frozen versions of seven of our pizzas: the Five Cheese Pizza, BBQ Chicken Pizza, Garlic Chicken Pizza, Rosemary Chicken-Potato Pizza, Portabello Mixed Mushroom Pizza, Southwestern Chicken Pizza, and Thai Chicken Pizza. Our frozen pizzas are currently sold in supermarkets in Atlanta, Las Vegas, Phoenix, the San Francisco Bay area, Sacramento and the greater Southern California area, including Los Angeles and San Diego. We intend to expand our distribution area to include additional selected markets, with an initial focus on those markets in which our restaurants are located. We are also investigating the potential for selling our premium frozen pizza in alternative settings.

Management information systems

All of our restaurants use computerized management information systems, which are designed to improve operating efficiencies, provide corporate management timely access to financial and marketing data, and reduce restaurant and corporate administrative time and expense. Our restaurant systems include a point-of-sale system which facilitates the movement of customer food and beverage orders from the dining areas to the appropriate menu item preparation area within the restaurant. The data captured by our restaurant level systems include restaurant sales, cash and credit card receipts, quantities of each menu item sold, customer counts and daily labor expense. This information is generally transmitted to the corporate office daily. Each week, every restaurant prepares a flash profit and loss statement that is compared to budget and the prior year.

Our corporate information systems provide management with operating reports that show restaurant performance comparisons with budget and prior year results both for the current accounting period and year-to-date. These systems allow us to closely monitor restaurant sales, cost of sales, labor expense and other restaurant trends on a daily, weekly and monthly basis. We believe these systems will enable both restaurant and corporate management to adequately manage the operational and financial performance of our restaurants as necessary to support our planned expansion.

Purchasing

Our purchasing staff procures all of our food ingredients, products and supplies. We seek to obtain the highest quality ingredients, products and supplies from reliable sources at competitive prices. To that end, we continually research and evaluate various food ingredients, products and supplies for consistency and compare them to our detailed specifications. Specific qualified manufacturers and growers are then inspected and approved for use. This process is repeated at least once a year. To maximize our purchasing efficiencies and obtain the lowest possible prices for our ingredients, products and supplies, while maintaining the highest quality, our centralized purchasing staff generally negotiates all prices in one of two formats: (a) fixed price contracts generally with terms of between one month to one year or (b) based on monthly commodity pricing formulas.

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In order to provide the freshest ingredients and products, and to maximize operating efficiencies between purchase and usage, each restaurant's kitchen manager determines its daily usage requirements for food ingredients, products and supplies. The kitchen manager orders accordingly from approved local vendors and our national master distributor. The kitchen managers also inspect all deliveries daily to ensure that the items received meet our quality specifications and negotiated prices. We believe that competitively priced, high quality alternative manufacturers, vendors, growers and distributors are available should the need arise.

Employees

As of the date of this prospectus, we have approximately 5,000 employees, including 66 employees located at our corporate headquarters. Our employees are not covered by any collective bargaining agreement. We consider our employee relations to be very good.

Competition

The restaurant industry is intensely competitive. We compete on the basis of the taste, quality and price of food offered, customer service, ambience, location and overall dining experience. We believe that our concept, attractive price-value relationship and quality of food and service enable us to differentiate ourselves from our competitors. Although we believe we compete favorably with respect to each of these factors, many of our direct and indirect competitors are well-established national, regional or local chains and some have substantially greater financial, marketing, and other resources than we do. We also compete with many other restaurant and retail establishments for site locations and restaurant level employees. The packaged food industry is also intensely competitive.

Properties

Our corporate headquarters are located in Los Angeles, California. We occupy this facility under a lease which terminates in August 2002, with an option to extend until August 2007. We lease the majority of our restaurant facilities, although we own our restaurants in: Alpharetta, Georgia; Grapevine, Texas; Scottsdale, Arizona; Schaumberg, Illinois; and one location in Atlanta, Georgia. The majority of our leases are for ten- or fifteen-year terms and include options to extend the terms. The majority of our leases also include both minimum rent and percentage-of-sales rent provisions.

Trademarks

Our registered trademarks and service marks include, among others, the word mark "California Pizza Kitchen" and our stylized logo set forth on the front and back pages of this prospectus. We have registered all of our marks with the United States Patents and Trademark Office. We have registered our most significant trademarks and service marks in 22 foreign countries, in addition to the Benelux Customs Union and the European Union. In order to better protect our brand, we have also registered our ownership of the Internet domain names "www.cpk.com" and "www.californiapizzakitchen.com". We believe that our trademarks, service marks and other proprietary rights have significant value and are important to our brand-building efforts and the marketing of our restaurant concepts. We have in the past and expect to continue to vigorously protect our proprietary rights. We cannot predict, however, whether steps taken by us to protect our proprietary rights will be adequate to prevent misappropriation of these rights or the use by others of restaurant features based upon, or otherwise similar to, our concept. It may be difficult for us to prevent others from copying elements of our concept and any litigation to enforce our rights will likely be costly.

Government regulation

Our restaurants are subject to licensing and regulation by state and local health, sanitation, safety, fire and other authorities, including licensing and regulation requirements for the sale of alcoholic beverages and food. To date, we have not experienced an inability to obtain or maintain any necessary licenses, permits or

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approvals, including restaurant, alcoholic beverage and retail licensing. The development and construction of additional restaurants will also be subject to compliance with applicable zoning, land use and environmental regulations. We are also subject to federal regulation and state laws that regulate the offer and sale of franchises and substantive aspects of a licensor-licensee relationship. Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws include minimum wage requirements, overtime, unemployment tax rates, workers' compensation rates, citizenship requirements and sales taxes. In addition, the federal Americans With Disabilities Act prohibits discrimination on the basis of disability in public accommodations and employment.

Litigation

Occasionally, we are a defendant in litigation arising in the ordinary course of our business, including claims resulting from "slip and fall" accidents, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. To date, none of these types of litigation, all of which are covered by insurance, has had a material effect on us and, as of the date of this prospectus, we are not a party to any material litigation except as described below.

We are a defendant to a lawsuit filed on March 11, 1998 in the 152nd Judicial District Court of Harris County, Texas, brought under the Telephone Consumer Protection Act of 1991. This lawsuit alleges that we sent 8,200 faxes in violation of the federal act that requires the recipient's consent prior to sending an unsolicited fax. The federal act provides for minimum damages of $500 per fax received by a plaintiff with the possibility for an additional $1,000 per fax if the plaintiff can prove that the defendant knowingly violated the law. Although not currently so certified, if the plaintiff is able to achieve class certification, we could potentially be liable for significant amounts, including the amounts claimed by plaintiff of $4.1 million in regular damages, and $8.2 million in additional damages. We currently believe we will prevail on this claim because the plaintiffs have been unable thus far to produce evidence that any faxes were actually sent by us or on our behalf, or that the agent that we employed to send the faxes did so without obtaining the necessary consents. We filed for and successfully obtained summary judgment in this matter on March 7, 2000. The plaintiffs subsequently moved for a new trial, and we expect the judge to make a ruling on the motion in the near future.

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MANAGEMENT

Executive officers and directors

The following table sets forth information with respect to our executive officers and directors.

Name                          Age                   Position
----                          ---                   --------
Larry S. Flax...............  57  Co-Chairman of the Board of Directors and
                                   Director

Richard L. Rosenfield.......  55  Co-Chairman of the Board of Directors and
                                   Director

Frederick R. Hipp...........  50  Chief Executive Officer, President and
                                   Director

H.G. Carrington, Jr. .......  45  Executive Vice President, Chief Financial
                                   Officer and Secretary

Frederick F. Wolfe..........  50  Senior Vice President Operations

Tom N. Jenneman.............  39  Senior Vice President and Chief Development
                                   Officer

Sarah A. Goldsmith..........  35  Vice President Marketing and Public
                                   Relations

Julie Carruthers............  38  Vice President Human Resources and Training

Douglas A. MacDonald........  58  Vice President Design and Construction

Karen M. Settlemyer.........  48  Vice President Product Development and
                                   Purchasing

Gregory S. Levin............  32  Vice President, Controller and Assistant
                                   Secretary

Harold O. Rosser(1).........  51  Director

Bruce C. Bruckmann(1).......  46  Director

Fortunato N. Valenti........  52  Director

Brian P. Friedman(1)........  44  Director


(1) Compensation and Audit Committee member.

Larry S. Flax, a co-founder, has served as Co-Chairman of the Board of Directors since our formation in October 1985. From 1985 to 1996, Mr. Flax also served as Co-Chief Executive Officer. Prior to founding our company, he practiced law as a principal in Flax and Rosenfield, Inc. after serving as an Assistant United States Attorney, Department of Justice and Assistant Chief of Criminal Division and Chief, Civil Rights Division of the United States Attorney's Office in Los Angeles. Mr. Flax also serves on the board of directors of Arden Realty, Inc.

Richard L. Rosenfield, a co-founder, has served as Co-Chairman of the Board of Directors since our formation in October 1985. From 1985 to 1996, Mr. Rosenfield also served as Co-Chief Executive Officer. Prior to founding our company, he practiced law as a principal of Flax and Rosenfield, Inc. after serving with the Department of Justice, Criminal Division, Appellate Section in Washington, D.C. and as an Assistant United States Attorney, Special Prosecutions Section of the Criminal Division, in Los Angeles. Mr. Rosenfield also serves on the board of directors of Callaway Golf Company.

Frederick R. Hipp has served as Chief Executive Officer and President since January 1998 and as a Director since February 1998. From 1980 to 1997, Mr. Hipp was employed by Houlihan's Restaurant Group, in Kansas City, Missouri, where he most recently served as President and Chief Executive Officer. From 1978 to 1980, Mr. Hipp was President of Restaurant Data Systems in Dallas, Texas where he consulted with major hotel and restaurant chains on financial and restaurant operations. From 1972 to 1978, Mr. Hipp worked for Steak & Ale Restaurants in Dallas, Texas where he last served as the Director of Restaurant Systems and Administration. Mr. Hipp serves on the board of directors of Acapulco Restaurants, Inc.

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H.G. Carrington, Jr. has served as Executive Vice President, Chief Financial Officer, and Secretary since May 1998. From 1993 to 1998, Mr. Carrington served as Chief Financial Officer of Dallas-based Spaghetti Warehouse, Inc., and, from 1990 to 1998, on its board of directors.

Frederick F. Wolfe has served as Senior Vice President Operations since July 1997. From 1983 to 1997, Mr. Wolfe worked at Acapulco Restaurants where he most recently served as Senior Vice President Operations.

Tom N. Jenneman has served as Senior Vice President and Chief Development Officer since November 1999. From 1992 to 1999, Mr. Jenneman worked at Brinker International where he most recently served as Vice President, Real Estate, New Business Development.

Sarah A. Goldsmith has served as Vice President Marketing and Public Relations since 1992. Ms. Goldsmith joined us in 1990 as Director of Public Relations. In addition to her duties at California Pizza Kitchen, Ms. Goldsmith currently acts as Co-Chairperson of the Board of Marketing Executives Group, a division of the National Restaurant Association. In 1996, Advertising Age Magazine named Ms. Goldsmith one of the "Marketing 100," a distinction given to the top 100 marketers in the United States.

Julie Carruthers has served as Vice President Human Resources and Training since 1998. We hired Ms. Carruthers as our first employee in January 1985 to create a service training program and train the service staff of the first location. Ms. Carruthers was Vice President of Training from 1990 to 1998.

Douglas A. MacDonald has served as Vice President Design and Construction since 1997. From 1996 to 1997, Mr. MacDonald was Director of Design and Construction with Papa Murphy's, a 240 unit "take and bake" chain. From 1987 to 1996, he served as Director of Design and Construction with International House of Pancakes in Glendale, California. Mr. MacDonald has directed the design and construction of over 580 new food facilities throughout the United States and Canada as well as the remodeling of over 450 existing restaurants.

Karen M. Settlemyer, has served as Vice President Product Development and Purchasing since 1996. From 1993 to 1996, Ms. Settlemyer was Director of Product Development at Boston Market, Inc., during which time she created their very successful Carver Sandwich Program. In 1989, she held the position of Vice President of Research and Development for Grand American Fare. Ms. Settlemyer is a 22 year food service veteran and registered dietician.

Gregory S. Levin has served as Controller and Assistant Secretary since August 1998 and was appointed a Vice President in November 1999. Since joining us in 1996, Mr. Levin has served in various accounting and finance positions. From 1990 to 1996, Mr. Levin worked at Ernst & Young LLP, most recently as a manager in their Entrepreneurial Services Group.

Harold O. Rosser has served as a Director since September 1997. Since 1995, Mr. Rosser has been a managing director of the investment firm of Bruckmann, Rosser, Sherrill & Co., Inc., the management company for Bruckmann, Rosser, Sherrill & Co., L.P., which is a 39.5% shareholder in our company. Mr. Rosser serves on numerous boards of directors including those of O'Sullivan Industries, Inc., B&G Foods, Inc., American Paper Group, Inc., Acapulco Restaurants, Inc., Au Bon Pain Corporation and Penhall International, Inc.

Bruce C. Bruckmann has served as a Director since September 1997. Since 1995, Mr. Bruckmann has been a managing director of the investment firm of Bruckmann, Rosser, Sherrill & Co., Inc. Mr. Bruckmann serves on numerous boards of directors including those of Mohawk Industries, Inc., AmeriSource Health Corporation, Chromcraft Revington Corporation, Jitney-Jungle Stores of America, Inc., Town Sports International, Inc., Anvil Knitwear, Inc., Mediq Incorporated, Acapulco Restaurants, Inc. and Penhall International, Inc.

Fortunato N. Valenti has served as a Director since September 1997, and briefly served as our Chief Executive Officer from mid-1997 to January 1998. Since 1994, Mr. Valenti has been the President and Chief Executive Officer of Restaurant Associates, Corp. Mr. Valenti also serves on the boards of directors of Papa Gino's pizza chain, Au Bon Pain Corporation and Acapulco Restaurants, Inc.

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Brian P. Friedman has served as a Director since October 1997. Since 1994, Mr. Friedman has been the President of ING Furman Selz Investments, a private equity investment firm. Furman Selz SBIC Investments LLC, of which Mr. Friedman is the president, is the general partner in Furman Selz SBIC, L.P. which is a 11.5% shareholder in our company. Mr. Friedman also serves on the boards of directors of Acapulco Restaurants, Inc., Au Bon Pain Corporation, BricsNet N.V., Gilat-To-Home, Inc., Cognitive Arts, Inc. and IDB Carries B.V. Mr. Friedman also serves on the boards of managers of Apartment MediaWorks LLC, Beacon Industrial Group LLC and Stagebill LLC.

Board of directors; committees

Our board of directors consists of seven members. Subject to a securities holders agreement, in accordance with our bylaws, our board of directors may elect to increase the number of directors as long as the number of directors is not below five or above nine.

Pursuant to a securities holders agreement which we expect will terminate upon the consummation of this offering, our board of directors must be composed of at least five persons, with the exact number to be determined by Bruckmann, Rosser, Sherrill & Co., L.P. from time to time. Pursuant to this agreement, Rick Rosenfield and Larry Flax each were elected Co-Chairman of the Board, and all remaining members of our board have been designated by Bruckmann, Rosser. The voting rights contained in this agreement will terminate upon the completion of this offering.

The compensation committee of our board of directors recommends, reviews and oversees the salaries, benefits and option plans for our employees, consultants and other individuals compensated by us. The compensation committee also administers our option plan. The members of the compensation committee are Messrs. Rosser, Bruckmann and Friedman.

The audit committee of our board of directors reviews, acts on and reports to our board with respect to various auditing and accounting matters, including the recommendation of our auditors, the scope of our annual audits, fees to be paid to the auditors, evaluating the performance of our independent auditors and our accounting practices. The members of the audit committee are Messrs. Rosser, Bruckmann and Friedman.

Director compensation

Our directors do not receive cash compensation for their services. Non- employee directors are reimbursed for reasonable expenses incurred in connection with serving as a director.

Compensation committee interlocks and insider participation

Our compensation committee currently consists of Messrs. Rosser, Bruckmann and Friedman. No member of the compensation committee has served as one of our officers or employees at any time. None of our executive officers serves as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our board of directors or compensation committee.

Indemnification and limitation of director and officer liability

In accordance with provisions of the California Corporations Law, our articles of incorporation provide that the liability for monetary damages of our directors shall be eliminated to the fullest extent permitted by California law. Further, our articles authorize us to provide indemnification to our agents (including our officers and directors). Our bylaws provide for this indemnification of our corporate agents to the maximum extent permitted by California law. See "Certain Relationships and Related Transactions."

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Executive compensation

The following table sets forth information regarding the compensation earned during 1999 by our Chief Executive Officer and President and each of our other four most highly compensated executive officers.

Summary Compensation Table

                                                                    Long Term
                                                   Annual          Compensation
                                               Compensation(1)        Awards
                                              -------------------- ------------
                                                                    Securities
                                                                    Underlying
         Name and Principal Position           Salary      Bonus     Options
         ---------------------------          --------    -------- ------------
Frederick R. Hipp
 Chief Executive Officer and President....... $500,000    $312,500       --

Larry S. Flax
 Co-Founder and Co-Chairman of the Board of
  Directors..................................  450,000(2)      --        --

Richard L. Rosenfield
 Co-Founder and Co-Chairman of the Board of
  Directors..................................  450,000(2)      --        --

H.G. Carrington, Jr.
 Executive Vice President and Chief Financial
 Officer.....................................  207,523     118,720    35,000

Frederick F. Wolfe
 Senior Vice President Operations............  188,754     104,720    35,000


(1) In accordance with the rules of the Securities and Exchange Commission, the compensation described in this table does not include medical, group life insurance or other benefits received by the named executive officers that are available generally to all of our salaried employees and perquisites and other personal benefits received by the named executive officers that do not exceed the lesser of $50,000 or 10% of the officer's salary and bonus disclosed in this table.

(2) We expect Messrs. Flax and Rosenfield to execute amended and restated two year employment agreements that become effective upon consummation of this offering. These agreements will provide that we will eliminate their individual salaries as of October 1, 2000 and grant each of them non- qualified stock options to purchase 180,000 shares of common stock with an exercise price equal to the initial public offering price. See "Management--Employment Agreements."

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Option grants during 1999

The following table sets forth information concerning stock options that we granted to our named executive officers in 1999. We have never issued stock appreciation rights.

                                         Individual Grants
                         ---------------------------------------------------
                                                                             Potential Realizable
                                                                               Value at Assumed
                                                                               Annual Rates of
                         Number of   Percentage of                               Stock Price
                         Securities  Total Options                             Appreciation for
                         Underlying   Granted to                                Option Term(5)
                          Options    Employees in  Exercise Price Expiration --------------------
   Name                  Granted(1)     1999(2)    (per share)(3)  Date(4)      5%        10%
   ----                  ----------  ------------- -------------- ---------- --------- ----------
Frederick R. Hipp.......      --           --%         $  --          --     $     --  $      --

Larry S. Flax...........      --           --             --          --           --         --

Richard L. Rosenfield...      --           --             --          --           --         --

H.G. Carrington, Jr. ...   35,000(6)     6.38           4.35       11/02/09     95,749    242,647

Frederick F. Wolfe......   35,000(6)     6.38           4.35       11/02/09     95,749    242,647


(1) Represents options we granted under our 1998 Stock Option Plan.

(2) Based on an aggregate of 549,000 shares of our common stock which are subject to options granted to employees during 1999.

(3) We granted options at an exercise price equal to the fair market value of our common stock as determined by our board of directors at the date of grant. In determining the fair market value of our common stock, the board considered various factors, including the formula used to value our stock in our merger and leveraged recapitalization transaction, our financial condition and business prospects, operating results, the absence of a market for our common stock and the risks normally associated with investments in companies engaged in similar businesses.

(4) The term of each option we grant is generally ten years from the date of grant. Our options may terminate before their expiration dates if the option holder's status as an employee is terminated or upon the option holder's death or disability.

(5) The 5% and 10% assumed annual rates of compounded stock price appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent either historical appreciation or our estimate or projection of our future common stock prices.

(6) 8,750 of these options vest on each of the first four anniversaries of the grant date of November 2, 1999.

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Aggregated option exercises in 1999 and year-end option values

The following table sets forth information concerning options that our named executive officers exercised during 1999 and the number of shares subject to both exercisable and unexercisable stock options as of January 2, 2000. The table also reports values for "in-the-money" options that represent the positive spread between the exercise prices of outstanding options and the assumed initial public offering price. We have never issued stock appreciation rights.

                                                Number of Securities
                                               Underlying Unexercised     Value of Unexercised
                          Number of             Options at January 2,    In-the-Money Options at
                           Shares                       2000               January 2, 2000 (1)
                         Acquired on  Value   ------------------------- -------------------------
          Name            Exercise   Realized Exercisable Unexercisable Exercisable Unexercisable
          ----           ----------- -------- ----------- ------------- ----------- -------------
Frederick R. Hipp.......       --    $    --     $ --        221,392(2)    $ --         $

Larry S. Flax...........       --         --       --            --          --          --

Richard L. Rosenfield...       --         --       --            --          --          --

H.G. Carrington, Jr.....   140,122    236,025      --         35,000         --

Frederick F. Wolfe......   123,196    161,683      --         72,500         --


(1) Calculated by determining the difference between the initial public offering price and the exercise price of each officer's options.

(2) This option grant will become fully exercisable upon the consummation of this initial public offering, if the public offering price implies an aggregate market value for all shares of our common stock, on a pre- offering basis of $150 million. If this implied pricing is not achieved, the option may then become exercisable if Bruckmann, Rosser, Sherrill & Co., L.P. and its co-investors sell a majority of their shares of our capital stock at minimum prices which imply an aggregate market value for all outstanding shares of our common stock of $115,875,758 if the sale occurs before January 1, 2002 or $165,875,758 if the sale occurs after January 1, 2002 but prior to January 1, 2004.

Stock plans

As of the date of this prospectus, our employees hold outstanding stock options for the purchase of 1,346,313 shares of our common stock. Options for the purchase of an additional 1,201,132 shares of the our common stock are presently reserved for issuance under our 1998 Stock Plan. The following section provides more detailed information concerning this plan as well as information concerning stock options that we granted in prior years under older plans.

Employee stock purchase plan

In November 1999, we adopted an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended, which will become effective upon the completion of this offering. Under our employee stock purchase plan, all employees who work at least 20 hours a week and have been with us for a minimum of one year are eligible to purchase shares of our common stock through after-tax payroll deductions. Eligible employees will be able to apply up to 15% of their annual gross pay towards the purchase of our common stock at a price equal to 85% of the then fair market value of the shares. The fair market value will be the lesser of (a) the price on the first day of each offering period under the plan (which, in the case of the first offering period, will be the price at which shares are sold in this offering) or, if the employee is not eligible to participate on the first day of the offering period, on the date he or she actually begins to participate, and (b) the price on the date of actual purchase. All employees with rights to purchase shares under the plan will only be able to do so on pre-determined exercise dates that will occur four times per offering period, and may only purchase up to that number of shares having an aggregate fair market value of $21,250 per year.

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1998 Stock-Based Incentive Compensation Plan

In February 1998, we adopted our 1998 Stock-Based Incentive Compensation Plan to assist us in attracting, retaining and rewarding valued employees, directors and independent contractors by offering them a greater stake in our success and to encourage ownership in our stock by these employees, directors and independent contractors. A total of 4,000,000 shares of our common stock have been reserved for issuance under this plan. To date we have granted options to acquire 2,798,868 shares under this plan and our employees have exercised options to purchase 1,475,976 shares. We last granted options under this plan in February 2000.

Our 1998 plan functions as a discretionary option grant program, under which eligible individuals in our employ or service, including officers, non-employee board members and consultants, may, at the discretion of the plan administrator, be granted options to purchase shares of common stock at an exercise price to be determined by our compensation committee. However, the exercise price of incentive stock options must be not less than 100% of the fair market value of the shares on the grant date or, in the case of incentive stock options granted to our employees who hold more than 10% of our outstanding common stock, the exercise price must be not less than 110% of the fair market value of the shares on the grant date.

Our compensation committee administers our 1998 plan and has complete discretion to determine which individuals are eligible to receive option awards, the time or times when these option awards are to be made, the number of shares subject to each award, the status of any grant as either an incentive stock option or a non-statutory stock option under the federal tax laws, the vesting schedule to be in effect for the option award, the term for which any granted option is to remain outstanding (not to exceed ten years), the extent to which a change in control of our company will affect outstanding option awards, the extent of transferability of non-qualified option awards by the holder, and the extent to which an option may be exchanged for cash.

The exercise price for the shares of common stock subject to option grants made under our 1998 plan may be paid in cash, in shares of common stock valued at fair market value on the exercise date or other consideration as our compensation committee may determine. The option may also be exercised through a same-day sale program without any cash outlay by the optionee.

The 1998 plan shall remain in effect until 2008 unless terminated earlier by our board of directors.

1990 Employee Equity Participation Plan

We adopted our 1990 Employee Equity Participation Plan effective March 1, 1990. This plan enabled our board of directors to grant to officers, directors, employees and consultants of our company options for the purchase of up to an aggregate of 1,000,000 shares of common stock. We granted both non-qualified options and incentive stock options under this 1990 plan. The number of outstanding and exercisable options remaining under this plan totals 23,421 and the exercise price of each option is $7.50. No further options can be granted under this plan.

Employment agreements

We expect to enter into an amended employment agreement with our Co-Chairman of the Board of Directors, Rick Rosenfield, which will be effective upon consummation of this offering. This agreement will provide that we will continue to employ Mr. Rosenfield through September 30, 2002 to assist us in developing our menu and recipes, engage in public relations activities, work on the aesthetic design of the restaurants and identify potential locations and franchisees for new restaurant locations. Under this agreement, we will pay Mr. Rosenfield a salary of $450,000 per year through September 30, 2000. After that date, Mr. Rosenfield will not receive any further salary or bonus payments. However, Mr. Rosenfield will be granted options to purchase an additional 180,000 shares of our common stock which will vest as to half of the shares on September 30, 2001 and as to the remaining shares on September 30, 2002. Mr. Rosenfield will also receive an automobile allowance of $2,000 each month and reimbursement of dues in a country or dining club. During the term of the agreement, Mr. Rosenfield may not compete in any business that sells pizza or other menu items with recipes

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that are identical or substantially the same as our recipes. Mr. Rosenfield has also agreed not to solicit any of our employees until three years after his employment terminates.

We also expect to enter into an amended employment agreement with our Co- Chairman of the Board of Directors, Larry S. Flax, on the same terms as Mr. Rosenfield's amended employment agreement.

In March 1998, we entered into a severance agreement with our Chief Executive Officer and President, Frederick R. Hipp. This agreement provides that we will be obligated to pay Mr. Hipp the amount of his base salary (up to a maximum of $500,000) for one year following the date his employment terminates, unless we terminate Mr. Hipp for cause, his employment terminates because of his death, disability or retirement, or he voluntarily terminates his employment. This severance agreement does not obligate Mr. Hipp to continue his employment with us or obligate us to continue to employ him.

In May 1998, we entered into a severance agreement with our Executive Vice President and Chief Financial Officer, H.G. Carrington, Jr. This agreement provides that if we terminate Mr. Carrington, or constructively terminate him (by demoting him or decreasing his base salary), following a change in control or after Mr. Hipp is no longer the person to whom Mr. Carrington reports or the person who has ultimate control over Mr. Carrington's employment, we will be obligated to pay Mr. Carrington the amount of his base salary for one year following the termination. We will not make this severance payment if we terminate Mr. Carrington for cause or if his employment is terminated because of death, disability or retirement. This severance agreement does not obligate Mr. Carrington to continue his employment with us or obligate us to continue to employ him.

In November 1999, we entered into an agreement with our Senior Vice President Operations, Frederick F. Wolfe, that provides that, after the termination of his employment, we will continue to pay him amounts equal to his base salary for a period of twenty-six weeks unless his employment is terminated as a result of his death, disability or retirement or unless we terminate his employment for cause. We will continue to pay him thereafter for a subsequent period of twenty-six weeks amounts equal to his base salary if he is reasonably unable to find new employment unless his employment is terminated as a result of his death, disability or retirement or unless we terminate his employment for cause. If he finds employment during this subsequent twenty-six week period that pays less than the base salary we would otherwise owe him, we will pay him an amount equal to the difference.

In November 1999, we entered into an agreement with our Senior Vice President and Chief Development Officer, Tom N. Jenneman, on the same terms as Mr. Wolfe's severance agreement.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our articles of incorporation provide that the liability of our directors to us for monetary damages shall be eliminated to the fullest extent permissible under California law. Our articles of incorporation further provide that we are authorized to provide indemnification of agents (as defined in the California General Corporation Law) for breach of duty to us and our shareholders which is in excess of the indemnification otherwise permitted by Section 317 of the California General Corporation Law, subject to the limits set forth in the
Section 204 of the California General Corporation law which exclude indemnification for (a) acts or omissions that involve intentional misconduct or knowing and culpable violation of law, (b) acts or omissions that a director believes to be contrary to our best interests or to the best interests of our shareholders or that involve the absence of good faith on the part of the director, (c) any transaction from which a director derived an improper personal benefit, (d) for acts or omissions that show a reckless disregard for the director's duty to us or our shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing the director's duties, of a risk of serious loss to us or our shareholders, (e) acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to us or our shareholders, (f) in certain circumstances involving contracts in which the director has a material financial interest, and (g) for circumstances involving improper dividends, loans and guarantees.

Our bylaws provide that we will indemnify any person who is made a party or is threatened to be made a party to any legal action based on the person's serving as our officer or director or at our request as an officer or director of another entity. Our bylaws also provide that we will advance expenses in defending against any such action.

Our Chief Executive Officer and President, Frederick R. Hipp, has advised us that he intends to exercise options to purchase an aggregate of 221,392 shares concurrently with the consummation of this offering. Under the agreement granting these options, we must pay Mr. Hipp an amount of cash equal to 20% of the gain he will recognize for federal income tax purposes as a result of such exercise. We intend to loan Mr. Hipp an amount equal to difference between this cash payment and the total tax liability he will incur as a result of this exercise (including the amount of the cash payment). The promissory note will bear interest at the rate of %. The principal and interest under the note will be due and payable on the earlier to occur of (a) three days after the date of sale of any of the option shares purchased upon exercise, (b) 30 days after the date his employment is terminated for cause or after the date he voluntarily terminates his employment, (c) one year after the date his employment terminates due to death or disability, and (d) , 2002. Mr. Hipp will also be required to apply a portion of any amounts which would otherwise be payable as bonus compensation against amounts due under this note.

On September 28, 1999, we loaned $96,000 to our Executive Vice President and Chief Financial Officer, H. G. Carrington, Jr., and $71,000 to our Senior Vice President Operations, Frederick F. Wolfe, to enable them to pay the taxes resulting from their exercise of options to purchase shares of our common stock on the same date. The loans are evidenced by promissory notes which bear interest at 7.5%. The principal and interest under the notes is due and payable on the earlier to occur of (a) three days after the date of sale of any of the option shares purchased upon exercise and (b) March 31, 2001. Each officer must also apply a portion of any amounts which would otherwise be payable as bonus compensation against amounts due under the notes. We also have the right to repurchase 56,049 of Mr. Carrington's shares and 55,348 of Mr. Wolfe's shares for their original exercise price of $0.1655 per share if that officer voluntarily terminates his employment or is terminated for cause prior to the consummation of this offering. As of April 2, 2000 the amounts outstanding under Mr. Carrington's and Mr. Wolfe's promissory notes are $70,000 and $49,000, respectively.

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PRINCIPAL SHAREHOLDERS

The following table sets forth information with respect to the beneficial ownership of our common stock as of the date of this prospectus and after the offering, in each case as adjusted to reflect the conversion and redemption of our outstanding preferred stock and the sale of the common stock offered by us with respect to:

. each person or entity who is known by us to beneficially own five percent or more of our outstanding common stock;

. each of our directors;

. each of our named executive officers; and

. all of our directors and executive officers as a group.

                                                                  Shares
                                        Shares Beneficially    Beneficially
                                        Owned Prior to the    Owned After the
                                            Offering(1)         Offering(2)
                                       --------------------- -----------------
Name of Beneficial Owner                 Number   Percentage Number Percentage
------------------------               ---------- ---------- ------ ----------
Bruckmann, Rosser, Sherrill & Co.,
 L.P.(3)..............................  8,738,169    39.5%                %
Larry S. Flax(4)......................  2,613,729    11.8
Richard L. Rosenfield(5)..............  2,469,552    11.2
Bruce Bruckmann(3)(6).................  9,352,757    42.3
Harold O. Rosser(3)(7)................ 12,489,944    56.4
Stephen C. Sherrill(3)(8).............  9,352,757    42.3
Stephen F. Edwards(3)(9).............. 12,489,188    56.4
Furman Selz SBIC LP(10)...............  2,535,894    11.5
Frederick R. Hipp(11).................  1,087,588     4.9
F. Nicholas Valenti(12)...............    830,220     3.8
H.G. Carrington, Jr.(13)..............    280,244     1.3
Frederick F. Wolfe(14)................    123,196      *
Brian P. Friedman(15).................  2,535,894    11.5
All directors and executive officers
 as a group (15 persons)(16).......... 20,075,167    90.7


* Less than 1%

(1) Percentage of ownership is calculated as required by Commission Rule 13d-
3(d)(1). Except as indicated in the footnotes to this table, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws. The table above includes the number of shares underlying options which are exercisable within 60 days after the date of this prospectus. The share numbers in this section have been rounded to the nearest whole number.

(2) Reflects the number of shares of common stock expected to be issued upon conversion of shares of preferred stock owned by the named shareholder. This assumes an initial public offering price of $ per share and is based upon responses received from the preferred shareholders regarding their desire to convert their shares into shares of common stock as of the date of this prospectus.

(3) Bruckmann, Rosser, Sherrill & Co., L.P. is a limited partnership, the sole general partner of which is BRS Partners, Limited Partnership and the manager of which is Bruckmann, Rosser, Sherrill & Co., Inc. The sole general partner of BRS Partners is BRSE Associates, Inc. Bruce C. Bruckmann, Harold O. Rosser, Stephen C. Sherrill and Stephen F. Edwards are the only stockholders of Bruckmann, Rosser, Sherrill & Co., Inc. and BRSE Associates and may be deemed to share beneficial ownership of the shares shown as beneficially owned by Bruckmann, Rosser, Sherrill & Co., L.P. Each of Messrs. Bruckmann, Rosser, Sherrill and Edwards disclaims beneficial ownership of any such shares. The address for all of these shareholders is Greenwich Plaza, Suite 100, Greenwich, CT 06830.

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(4) Mr. Flax exercises voting control over 169,918 of these shares as the trustee of the Rosenfield Children's Trust. Mr. Flax disclaims any beneficial ownership over these shares. Mr. Flax's address is 6053 West Century Blvd., 11th Floor, Los Angeles, California 90045.

(5) Mr. Rosenfield's address is 6053 West Century Blvd., 11th Floor, Los Angeles, California 90045.

(6) Mr. Bruckmann individually owns 177,748 shares of our common stock. The total number also includes shares which are owned by Bruckmann, Rosser, Sherrill & Co., L.P. and other entities and individuals affiliated with it. Although Mr. Bruckmann may be deemed to share beneficial ownership of such shares, he disclaims any beneficial ownership thereof.

(7) Mr. Rosser individually owns 36,222 shares of our common stock. Mr. Rosser shares voting power over 3,137,188 shares with Stephen F. Edwards as co- voting trustee under a Voting Trust Agreement dated September 30, 1997. The voting trust will terminate upon consummation of this offering. Mr. Rosser disclaims any beneficial ownership of such shares. The total number also includes shares which are owned by Bruckmann, Rosser, Sherrill & Co., L.P. and other entities and individuals affiliated with it. Although Mr. Rosser may also be deemed to share beneficial ownership of such shares, he disclaims any beneficial ownership thereof.

(8) Mr. Sherrill individually owns 185,935 shares of our common stock. The total number also includes shares which are owned by Bruckmann, Rosser, Sherrill & Co., L.P. and other entities and individuals affiliated with it. Although Mr. Sherrill may be deemed to share beneficial ownership of such shares, he disclaims any beneficial ownership thereof.

(9) Mr. Edwards shares voting power over 3,137,188 shares with Harold O. Rosser as co-voting trustee under a Voting Trust Agreement dated September 30, 1997. The voting trust will terminate upon consummation of this offering. Mr. Edwards disclaims any beneficial ownership of such shares. The total number also includes shares which are owned by Bruckmann, Rosser, Sherrill & Co., L.P. and other entities and individuals affiliated with it. Although Mr. Edwards also may be deemed to share beneficial ownership of such shares, he disclaims any beneficial ownership thereof.

(10) Furman Selz has transferred its voting power to Messrs. Rosser and Edwards under a Voting Trust Agreement dated September 30, 1997. The voting trust will terminate upon consummation of this offering. Furman Selz's address is 55 E. 52nd Street, New York, NY 10055.

(11) Mr. Hipp individually owns 664,176 shares of our common stock. We have the right to repurchase 221,392 of these shares at a price of $0.15054 per share if Mr. Hipp is terminated for cause or voluntarily quits his employment prior to January 1, 2001. As the trustee of the Frederick R. Hipp Revocable Trust, he controls an additional 202,020 shares. Additionally, upon the completion of this initial public offering, Mr. Hipp's options to buy 221,392 shares of our common stock may immediately vest if the public offering price implies an aggregate market value for all shares of our common stock, on a pre-offering basis, of $150 million. If this implied pricing is not achieved, the option may then become exercisable if Bruckmann, Rosser and its co-investors sell a majority of their shares of our capital stock at minimum prices which imply an aggregate market value for all outstanding shares of our common stock of $115,875,758 if the sale occurs before January 1, 2002 or $165,875,758 if the sale occurs after January 1, 2002 but prior to January 1, 2004. Mr. Hipp's address is 6053 West Century Blvd., 11th Floor, Los Angeles, California 90045.

(12) Mr. Valenti's address is Restaurant Associates, 120 E. 45th Street, New York, NY 10036.

(13) Mr. Carrington, in joint tenancy with his wife, Ricki L. Carrington, owns 280,244 shares of our common stock. Mr. Carrington has options to buy an additional 35,000 shares, none of which will be exercisable within 60 days of this initial public offering. Mr. Carrington's address is 6053 West Century Blvd., 11th Floor, Los Angeles, California 90045.

(14) Mr. Wolfe, as trustee of the 1998 Frederick Wolfe Revocable Trust, exercises voting control over 123,196 shares of our common stock. Mr. Wolfe has options to buy an additional 72,500 shares, 12,500 of which will be exercisable within 60 days of this initial public offering. Mr. Wolfe's address is 6053 West Century Blvd., 11th Floor, Los Angeles, California 90045.

50

(15) Mr. Friedman serves as the president of Furman Selz SBIC Investments LLC, a general partner of Furman Selz SBIC LP which owns all 2,615,120 shares. Mr. Friedman's address is ING Furman Selz Investments, 55 E. 52nd Street, New York, NY 10055.

(16) These 15 persons include all directors and executive officers detailed in the "Management" section above. See notes 4, 5, 6, 7, 11, 12, 13, 14 and 15 above. Sarah Goldsmith individually owns 15,803 shares and has options to buy an additional 89,273 shares, 20,523 of which will be exercisable within 60 days of this initial public offering. Julie Carruthers individually owns 20,874 shares and has options to buy an additional 98,494 shares, 29,744 of which will be exercisable within 60 days of this initial public offering. Douglas MacDonald individually owns 12,500 shares and has options to buy 52,500 shares, 12,500 of which will be exercisable within 60 days of this initial public offering. Karen Settlemyer individually owns 12,500 shares and has options to buy 52,500 shares, 12,500 of which will be exercisable within 60 days of this initial public offering. Tom N. Jenneman individually owns no shares and has options to buy 75,000 shares, 18,750 of which will be exercisable within 60 days of this initial public offering. Greg Levin individually owns no shares and has options to buy 55,000 shares, 12,500 of which will be exercisable within 60 days of this initial public offering. The address for all these officers is 6053 West Century Blvd., 11th Floor, Los Angeles, California 90045.

51

DESCRIPTION OF CAPITAL STOCK

Upon the closing of this offering, our authorized capital stock will consist of 80,000,000 shares of common stock, par value $0.01 per share, of which shares will be issued and outstanding (assuming shares are sold in this offering), and 40,000,000 shares of Class A Preferred Stock, of which no shares will be issued and outstanding. In December 1997, we declared a dividend of one share of Series A 12 1/2% Cumulative Compounding Preferred Stock and one share of Series B 13 1/2% Cumulative Compounding Preferred Stock on each outstanding share of our common stock. Subsequently, two of our executive officers were also permitted to purchase shares of preferred stock (each was required to purchase the same number of shares of Series A Preferred Stock as Series B Preferred Stock). As discussed under "Use of Proceeds", all outstanding shares of preferred stock will be converted into shares of common stock upon consummation of this offering or redeemed using the proceeds of this offering. All of the shares of outstanding Class A Preferred Stock which are redeemed or converted will return to the status of authorized and unissued shares of preferred stock and may be reissued as a part of a new series of preferred stock to be created by resolution or resolutions of the board of directors.

Common stock

Before giving effect to the conversion of preferred stock into common stock in connection with this offering, there are 21,793,372 shares of common stock outstanding as of the date of this prospectus. These shares are held of record by shareholders.

Holders of common stock are entitled to one vote per share on all matters to be voted upon by shareholders. In accordance with California law, prior to the closing of this offering, holders of common stock were entitled to cumulate votes in the election of directors. However, after consummation of this offering, holders of common stock will no longer be entitled to cumulate votes in the election of directors. The shares of common stock have no preemptive rights, no redemption or sinking fund provisions, and are not liable for further call or assessment.

The holders of common stock are entitled to receive dividends when and as declared by the board of directors out of funds legally available for dividends. In the past, we have declared and paid cash dividends only in connection with extraordinary corporate transactions such as PepsiCo's acquisition of a controlling interest in us 1992. We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future.

Upon a liquidation of California Pizza Kitchen, our creditors and holders of our preferred stock with preferential liquidation rights will be paid before any distribution to holders of our common stock. The holders of common stock would be entitled to receive a pro rata distribution per share of any excess amount.

The rights, preferences and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which we may designate and issue in the future.

Class A Preferred Stock

Our articles of incorporation empower the board of directors to issue up to 40,000,000 shares of Class A Preferred Stock from time to time in one or more series. The board also may fix the designation, privileges, preferences and rights and the qualifications, limitations and restrictions of those shares, including dividend rights, conversion rights, voting rights, redemption rights, terms of sinking funds, liquidation preferences and the number of shares constituting any series or the designation of the series. Terms selected could decrease the amount of earnings and assets available for distribution to holders of our common stock or adversely affect the rights and power, including voting rights, of the holders of our common stock without any further vote or action by the shareholders. The rights of holders of common stock will be subject to, and may be adversely affected

52

by, the rights of the holders of any Class A Preferred Stock that may be issued by us in the future. The issuance of Class A Preferred Stock could have the effect of delaying or preventing a change in control of the company or make removal of management more difficult. Additionally, the issuance of Class A Preferred Stock may have the effect of decreasing the market price of our common stock, and may adversely affect the voting and other rights of the holders of common stock. Upon consummation of this offering, there will be no outstanding shares of our Class A Preferred Stock. While we have no present intention to issue any shares of Class A Preferred Stock, any issuance could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.

Potential anti-takeover effect of provisions of California law

Section 1203 of the California General Corporations Law includes provisions that may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management of our company. First, if an "interested person" makes an offer to purchase the shares of some or all of our shareholders, we must obtain an affirmative opinion in writing as to the fairness of the offering price prior to completing the transaction. California law considers a person to be an "interested person" if the person directly or indirectly controls our company, if the person is directly or indirectly controlled by one of our officers or directors, or if the person is an entity in which one of our officers or directors holds a material financial interest. If after receiving an offer from such an "interested person" we receive a subsequent offer from a neutral third party, then we must notify our shareholders of this offer and afford each of them the opportunity to withdraw their consent to the "interested person" offer.

Section 1203 and other provisions of California law could make it more difficult for a third party to acquire a majority of our outstanding voting stock, by discouraging a hostile bid, or delaying, preventing or detering a merger, acquisition or tender offer in which our shareholders could receive a premium for their shares, or effect a proxy contest for control of our company or other changes in our management.

Registration rights

Following this offering the holders of shares of common stock will be entitled to registration rights with respect to these shares pursuant to a registration rights agreement by and among Bruckmann, Rosser, Sherrill & Co., L.P. and its co-investors and Rick Rosenfield and Larry Flax dated September 30, 1997. Subject to several exceptions, including our right to defer a demand registration for a single period of up to 180 days under some circumstances, Bruckmann, Rosser may require that we use our best efforts to register for public resale under the Securities Act all shares of common stock they request be registered. Bruckmann, Rosser may exercise an unlimited number of demand registrations so long as the securities being registered are reasonably expected to produce aggregate proceeds of $5 million or more. Rick Rosenfield, Larry Flax and all of the co-investors with Bruckmann, Rosser in the recapitalization transaction are entitled to piggyback registration rights on a pro rata basis with respect to any demand registration request made by Bruckmann, Rosser. All fees, costs and expenses of this registration, other than underwriting discounts and commissions, will be borne by us.

In addition, all holders of shares with registration rights have the right to piggyback on any registration for our account or the account of another shareholder. Accordingly, in the event that we propose to register additional shares of common stock under the Securities Act, either for our own account or for the account of any other security holder, the holders of shares having piggyback registration rights are entitled to receive notice of this registration and to include their shares in the registration, subject to limitations described in the agreement. All registration rights are subject to conditions and limitations, among them the right of the underwriters of any offering to limit the number of shares of common stock held by these security holders to be included in the registration. We are generally required to bear all of the expenses of all registrations, except underwriting discounts and selling commissions. Registration of the shares of common stock held by security holders with registration rights would result in these shares becoming freely tradeable without restriction under the Securities Act immediately upon effectiveness of this registration.

53

Transfer agent and registrar

has been appointed as the transfer agent and registrar for the common stock. Its telephone number is .

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the offering, there has been no market for our common stock. Future sales of substantial amounts of common stock in the public market could adversely affect market prices prevailing from time to time. Upon completion of this offering, we will have outstanding an aggregate of shares of common stock, assuming no exercise of the underwriters' over-allotment option, no exercise of outstanding options and the conversion of shares of our preferred stock into shares of common stock. Of these shares, the shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act, except that any shares purchased by "affiliates" of the Company, as that term is defined in Rule 144 of the Securities Act, may generally only be sold in compliance with the limitations of Rule 144 described below.

Sales of restricted shares

The remaining shares of common stock held by existing shareholders are "restricted securities" under Rule 144. The number of shares of common stock available for sale in the public market is limited by restrictions under the Securities Act and lock-up agreements under which the holders of shares have agreed not to sell or otherwise dispose of any of their shares for a period of 180 days after the date of this prospectus without the prior written consent of Banc of America Securities LLC. On the date of this prospectus, no shares other than those offered in this initial public offering will be eligible for sale. In addition, following the expiration of the lock-up period, none of the restricted shares will become available for sale in the public market until the expiration of their respective holding periods (approximately % of these shares will have been held for more than one year).

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated) who has beneficially owned restricted shares for at least one year (including the holding period of any prior owner, except if the prior owner was an affiliate) would be entitled to sell within any three-month period a number of shares that does not exceed the greater of: (a) one percent of the number of shares of common stock then outstanding (which will equal approximately shares immediately after the offering); or (b) the average weekly trading volume of the common stock on the Nasdaq National Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to this sale. Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years (including the holding period of any prior owner except a prior owner who was an affiliate), is entitled to sell its shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144; therefore, unless otherwise restricted, "144(k) shares" could be sold immediately upon the completion of the offering. On the date of this Prospectus, an aggregate of shares will qualify as "144(k)" shares which are not otherwise restricted.

Upon completion of the offering, the holders of shares of common stock, or their transferees, will be entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming freely tradeable without restriction under the Securities Act (except for shares purchased by affiliates) immediately upon the effectiveness of this registration.

54

Options

We intend to file a registration statement on Form S-8 covering all shares of common stock issuable upon exercise of stock options in effect on the date of this prospectus and stock options or other stock rights to be granted under our stock option plan. Upon this registration on Form S-8, up to an additional 1,346,313 shares of common stock, together with any additional shares of common stock that will be issuable pursuant to stock options or other stock rights granted in the future under our stock option plan, will be eligible for sale in the public market.

Subject to certain conditions, Rule 701 under the Securities Act may be relied upon with respect to the resale of securities originally purchased from us by our employees, directors, officers, consultants or advisors prior to the closing of this offering, under written compensatory benefit plans or written contracts relating to the compensation of these persons. This also applies to stock options we granted prior to this offering, along with the shares acquired upon exercise of those options after the closing of this offering. Beginning 90 days after the date of this prospectus (unless subject to lockup agreements or other contractual restrictions) these shares may be sold by persons other than affiliates subject only to the manner of sale provisions of Rule 144 and by affiliates under Rule 144 without compliance with the one year minimum holding period requirement.

Sales of substantial amounts of common stock in the public market, or the perception that these sales may occur, could adversely affect the prevailing market price of our common stock and our ability to raise capital through capital offering or equity securities.

55

PLAN OF DISTRIBUTION

We are offering the shares of common stock described in this prospectus through a number of underwriters. Banc of America Securities LLC, Deutsche Bank Securities Inc. and FleetBoston Robertson Stephens Inc. are the representatives of the underwriters. We have entered into an underwriting agreement with the representatives. According to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each of the underwriters has agreed to purchase, the number of shares of common stock listed next to its name in the following table:

                                                                       Number
                                                                         of
Underwriter                                                            Shares
-----------                                                            ------
Banc of America Securities LLC........................................
Deutsche Bank Securities Inc. ........................................
FleetBoston Robertson Stephens Inc. ..................................
                                                                        ----
  Total...............................................................
                                                                        ====

The underwriting agreement provides that the underwriters must buy all of the shares if they buy any of them. The underwriters will sell the shares to the public when and if the underwriters buy the shares from us. The underwriters initially will offer shares to the public at the price specified on the cover page of this prospectus. The underwriters may allow to some dealers a concession of not more than $ per share. The underwriters also may allow, and any other dealers may reallow, a concession of not more than $ per share to some other dealers. If all the shares are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms. The common stock is offered subject to a number of conditions, including:

. receipt and acceptance of our common stock by the underwriters, and

. the right on the part of the underwriters to reject orders in whole or in part.

We have granted an option to the underwriters to buy up to additional shares of common stock. These additional shares would cover sales of shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days to exercise this option. If the underwriters exercise this option, they will each purchase additional shares approximately in proportion to the amounts specified in the table above.

We, all of our officers and directors and our principal shareholders have entered into lock-up agreements with the underwriters. Under those agreements, we may not issue any new shares of common stock (except upon exercise of outstanding options), and we and those holders of stock and options may not dispose of or hedge any common stock or securities convertible into or exchangeable for shares of common stock. These restrictions will be in effect for a period of 180 days after the date of this prospectus. At any time and without notice, Banc of America Securities LLC may, in its sole discretion, release all or some of the securities from these lock-up agreements.

We will indemnify the underwriters against some liabilities, including some liabilities under the Securities Act. If we are unable to provide this indemnification, we will contribute to payments the underwriters may be required to make in respect to those liabilities.

In connection with this offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include:

. short sales,

. stabilizing transactions, and

. purchases to cover positions created by short sales.

56

Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in this offering. Stabilizing transactions consist of bids or purchases made for the purpose of preventing or retarding a decline in the market price of the common stock while this offering is in progress.

The underwriters also may impose a penalty bid. This means that if the representatives purchase shares in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.

The underwriters may engage in activities that stabilize, maintain or otherwise affect the price of the common stock, including:

. over-allotment,

. stabilization,

. syndicate covering transactions, and

. imposition of penalty bids.

As a result of these activities, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on the Nasdaq National Market, in the over-the-counter market or otherwise.

The underwriters do not expect sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by this prospectus.

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between us and the underwriters. Among the factors to be considered in the negotiations are:

. our history and prospects, and the history and prospects of the industry in which we compete,

. our past and present financial performance,

. an assessment of our management,

. the present state of our development,

. our prospects for future earnings,

. the prevailing market conditions of the U.S. securities markets at the time of this offer,

. market valuations of publicly traded companies that we and the underwriters believe to be comparable to us, and

. other factors deemed relevant by us and the underwriters.

It is anticipated that more than ten percent of the proceeds of the offering will be applied to repay our debt obligations owed to affiliates of Banc of America Securities LLC and Deutsche Bank Securities Inc. under our credit agreement. Because more than ten percent of the net proceeds of the offering may be paid to members or affiliates of members of the National Association of Securities Dealers, Inc. participating in the offering, the offering will be conducted in accordance with NASD Conduct Rule 2710(c)(8). This rule requires that the public offering price of an equity security be no higher than the price recommended by a "qualified independent underwriter" which has participated in the preparation of the registration statement and performed its usual standard of due diligence with respect thereto. FleetBoston Robertson Stephens Inc. has agreed to act as qualified independent underwriter for the offering, and the price of the shares will be no higher than that recommended by FleetBoston Robertson Stephens Inc. An affiliate of FleetBoston Robertson Stephens Inc. owns 519,598 shares of our common stock and 539,200 shares of our preferred stock. The affiliate has advised us that it intends to convert all of its shares of preferred stock into common stock upon consummation of this offering.

57

LEGAL MATTERS

The validity of the shares of common stock offered in this initial public offering will be passed upon for California Pizza Kitchen by Paul, Hastings, Janofsky & Walker LLP, Los Angeles, California. Legal matters in connection with the common stock offered in this initial public offering will be passed upon for the underwriters by Fried, Frank, Harris, Shriver & Jacobson (a partnership including professional corporations), Los Angeles, California.

EXPERTS

The consolidated financial statements of California Pizza Kitchen, Inc. at January 3, 1999 and January 2, 2000, and for each of the three fiscal years in the period ended January 2, 2000, appearing in this Prospectus and the Registration Statement have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

We have filed a registration statement on Form S-1 with the Securities and Exchange Commission for the common stock we are offering by this prospectus. This prospectus does not include all the information contained in the registration statement and its exhibits and schedules. You should refer to the registration statement and its exhibits for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other documents. When we complete this offering, we will also be required to file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission.

You can read our filings with the Securities and Exchange Commission, including the registration statement, over the internet at the SEC's website at www.sec.gov. You may read and copy any document we file with the SEC at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C. 20549, the New York Regional Office located at 7 World Trade Center, 13th Floor, New York, NY 10048, and the Chicago Regional Office located at Northwestern Atrium Center, 500 West Madison Street, Chicago, IL 60661. You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference facilities. Our SEC filings are also available at the office of the Nasdaq National Market. For further information on obtaining copies of our public filings at the Nasdaq National Market you should call (212) 656-5060.

58

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                            Page
                                                                            ----
Report of Independent Auditors............................................   F-2

Consolidated Financial Statements

Consolidated Balance Sheets at January 3, 1999 and January 2, 2000........   F-3

Consolidated Statements of Operations for the Years Ended December 28,
 1997, January 3, 1999 and January 2, 2000................................   F-4

Consolidated Statements of Shareholders' Deficiency for the Years Ended
 December 28, 1997, January 3, 1999 and January 2, 2000...................   F-5

Consolidated Statements of Cash Flows for the Years Ended December 28,
 1997, January 3, 1999 and January 2, 2000................................   F-6

Notes to Consolidated Financial Statements................................   F-8

Unaudited Consolidated Financial Statements

Unaudited Consolidated Balance Sheet at April 2, 2000.....................  F-19

Unaudited Consolidated Statements of Operations for the Three Months Ended
 April 4, 1999 and April 2, 2000..........................................  F-20

Unaudited Consolidated Statements of Cash Flows for the Three Months Ended
 April 4, 1999 and April 2, 2000..........................................  F-21

Notes to Unaudited Consolidated Financial Statements......................  F-22

F-1

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
California Pizza Kitchen, Inc.

We have audited the accompanying consolidated balance sheets of California Pizza Kitchen, Inc. and Subsidiaries (the "Company") as of January 3, 1999 and January 2, 2000, and the related consolidated statements of operations, shareholders' deficiency and cash flows for each of the three fiscal years in the period ended January 2, 2000. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of California Pizza Kitchen, Inc. and Subsidiaries at January 3, 1999 and January 2, 2000, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended January 2, 2000 in conformity with accounting principles generally accepted in the United States.

Woodland Hills, California
January 28, 2000, except for notes 9 and 12, as to which the date is , 2000


The foregoing report is in the form that it will be signed upon the completion of the restatement of the capital accounts described in notes 9 and 12 to the consolidated financial statements and the execution of the amendments of the co-founders' and co-chairmen's employment agreements described in note 9 to the consolidated financial statements.

                                          /s/ Ernst & Young LLP

Woodland Hills, California
May 24, 2000

F-2

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

January 3, 1999 and January 2, 2000
(in thousands, except for share and per share data)

                                                            1998       1999
                                                          ---------  ---------
Assets

Current assets:
  Cash and cash equivalents.............................. $  14,553  $   5,686
  Trade accounts receivable..............................     2,097      1,509
  Inventories............................................     1,208      1,239
  Prepaid expenses and other current assets..............       891      2,395
                                                          ---------  ---------
Total current assets.....................................    18,749     10,829

Property and equipment, net..............................    69,028     78,048
Deferred taxes...........................................     6,102      4,754
Other assets.............................................     2,276      1,119
                                                          ---------  ---------
Total assets............................................. $  96,155  $  94,750
                                                          =========  =========

Liabilities and shareholders' deficiency

Current liabilities:
  Accounts payable....................................... $   4,585  $   3,661
  Accrued compensation and benefits......................     6,947      7,658
  Accrued rent...........................................     4,571      4,655
  Other accrued liabilities..............................     5,365      3,993
  Current maturities of long-term debt...................     2,562      1,537
                                                          ---------  ---------
Total current liabilities................................    24,030     21,504

Long-term debt, less current maturities..................    42,823     38,548
Other liabilities........................................       967        606

Commitments..............................................

Redeemable preferred stock:
  Series A Class A Redeemable Preferred Stock--10,151,770
   shares issued and outstanding at January 3, 1999 and
   January 2, 2000, respectively; liquidation preference
   of $21,831 and $24,625 at January 3, 1999 and January
   2, 2000, respectively.................................    21,831     24,625
  Series B Class A Redeemable Preferred Stock--10,151,770
   shares issued and outstanding at January 3, 1999 and
   January 2, 2000, respectively; liquidation preference
   of $16,943 and $19,296 at January 3, 1999 and January
   2, 2000, respectively.................................    16,943     19,296

Shareholders' deficiency:
  Common Stock--$0.01 par value, 80,000,000 shares
   authorized, 20,937,577 and 21,793,370 shares issued
   and outstanding at January 3, 1999 and January 2,
   2000, respectively....................................       209        218
  New Class B Common Stock--$0.01 par value, 80,000,000
   shares authorized, 539,200 and 0 shares issued and
   outstanding at January 3, 1999 and January 2, 2000,
   respectively..........................................         6        --
  Additional paid-in capital.............................   109,023    104,231
  Accumulated deficit....................................  (119,677)  (114,278)
                                                          ---------  ---------
Total shareholders' deficiency...........................   (10,439)    (9,829)
                                                          ---------  ---------
Total liabilities and shareholders' deficiency........... $  96,155  $  94,750
                                                          =========  =========

See accompanying notes.

F-3

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 28, 1997, January 3, 1999 and January 2, 2000
(in thousands, except for per share data)

                                                    1997      1998      1999
                                                  --------  --------  --------
Revenues:
  Restaurant sales..............................  $159,391  $165,028  $176,933
  Franchise and other revenues..................     1,025     2,013     2,260
                                                  --------  --------  --------
    Total revenues..............................   160,416   167,041   179,193

Costs and expenses:
  Cost of sales.................................    43,361    43,201    44,740
  Labor.........................................    57,321    58,547    63,701
  Direct operating and occupancy................    36,481    34,171    35,848
                                                  --------  --------  --------
    Total restaurant operating costs............   137,163   135,919   144,289

  General and administrative....................    15,896    13,890    13,123
  Depreciation and amortization.................     7,807     7,543     8,234
  Pre-opening...................................       445       234       763
                                                  --------  --------  --------
    Operating income (loss).....................      (895)    9,455    12,784

Other income (expenses):
  Loss on impairment of property and equipment
   and restaurant closures......................    (9,604)      (85)     (200)
  Bank financing fees...........................       --        --       (998)
  Interest expense..............................      (930)   (3,956)   (3,415)
                                                  --------  --------  --------
    Total other income (expenses), net..........   (10,534)   (4,041)   (4,613)
                                                  --------  --------  --------

Income (loss) before income tax benefit
 (provision)....................................   (11,429)    5,414     8,171
Income tax benefit (provision)..................      (251)    5,139    (2,772)
                                                  --------  --------  --------
Net income (loss)...............................  $(11,680) $ 10,553  $  5,399
                                                  ========  ========  ========
Redeemable preferred stock accretion............       --     (4,478)   (5,147)
                                                  --------  --------  --------
Net income (loss) attributable to common
 shareholders...................................  $(11,680) $  6,075  $    252
                                                  ========  ========  ========
Net income per common share:
  Basic.........................................            $   0.30  $   0.01
                                                            ========  ========
  Diluted.......................................            $   0.29  $   0.01
                                                            ========  ========
Shares used in calculating net income per common
 share:
  Basic.........................................              20,226    21,598
                                                            ========  ========
  Diluted.......................................              21,058    22,335
                                                            ========  ========
Pro forma net income attributable to common
 shareholders (unaudited).......................                      $  8,253
                                                                      ========
Pro forma net income per common share
 (unaudited):
  Basic.........................................                      $
                                                                      ========
  Diluted.......................................                      $
                                                                      ========
Pro forma shares used in calculating pro forma
 net income per common share (unaudited):
  Basic.........................................
                                                                      ========
  Diluted.......................................
                                                                      ========

See accompanying notes.

F-4

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
(in thousands, except for share data)

                         Class A               Class B                              New Class B
                      Common Stock           Common Stock         Common Stock     Common Stock    Additional
                   --------------------  ---------------------  ----------------- ----------------  Paid-in   Accumulated
                     Shares     Amount     Shares      Amount     Shares   Amount  Shares   Amount  Capital     Deficit
                   -----------  -------  -----------  --------  ---------- ------ --------  ------ ---------- -----------
Balances at
December 29,
1996.............    5,445,686  $ 7,694    5,915,566  $ 71,289         --   $--        --    $ --   $    --    $(118,550)
 Contribution of
 Class A Common
 Stock...........   (2,185,686)  (2,495)         --        --          --    --        --      --      2,495         --
 Exercise of
 stock options...          --        14          --        --          --    --        --      --        --          --
 Merger with CP
 Kitchen
 Acquisition
 Corp. ..........          --       --           --        --   12,940,801   130   539,200      6      1,864         --
 Conversion of
 Class B Common
 Stock to right
 to receive cash
 and certain net
 assets..........          --       --    (5,915,566)  (71,289)        --    --        --      --    126,796         --
 Conversion of
 Class A Common
 Stock to right
 to receive cash
 and Common
 Stock...........   (3,260,000)  (5,213)         --        --    6,520,000    65       --      --     (4,852)        --
 Capital
 contribution....          --       --           --        --          --    --        --      --     23,000         --
 Restructuring
 related
 expenses........          --       --           --        --          --    --        --      --     (2,331)        --
 Preferred stock
 dividend........          --       --           --        --          --    --        --      --    (33,783)        --
 Net loss........          --       --           --        --          --    --        --      --        --      (11,680)
                   -----------  -------  -----------  --------  ----------  ----  --------   ----   --------   ---------
Balances at
December 28,
1997.............          --       --           --        --   19,460,801   195   539,200      6    113,189    (130,230)
 Issuance of
 Common Stock....          --       --           --        --      314,118     3       --      --         58         --
 Exercise of
 employee stock
 options.........          --       --           --        --      692,200     6       --      --        109         --
 Exercise of
 nonemployee
 stock options...          --       --           --        --      470,458     5       --      --        120         --
 Preferred stock
 accretion.......          --       --           --        --          --    --        --      --     (4,478)        --
 Other...........          --       --           --        --          --    --        --      --         25         --
 Net income......          --       --           --        --          --    --        --      --        --       10,553
                   -----------  -------  -----------  --------  ----------  ----  --------   ----   --------   ---------
Balances at
January 3, 1999..          --       --           --        --   20,937,577   209   539,200      6    109,023    (119,677)
 Exercise of
 employee stock
 options.........          --       --           --        --      316,593     3       --      --        133         --
 Tax benefit from
 employee stock
 option
 exercises.......          --       --           --        --          --    --        --      --        222         --
 Conversion of
 New Class B to
 Common Stock....          --       --           --        --      539,200     6  (539,200)    (6)       --          --
 Preferred stock
 accretion.......          --       --           --        --          --    --        --      --     (5,147)        --
 Net income......          --       --           --        --          --    --        --      --        --        5,399
                   -----------  -------  -----------  --------  ----------  ----  --------   ----   --------   ---------
Balances at
January 2, 2000..          --   $   --           --   $    --   21,793,370  $218       --    $ --   $104,231   $(114,278)
                   ===========  =======  ===========  ========  ==========  ====  ========   ====   ========   =========
                    Total
                   ---------
Balances at
December 29,
1996.............  $(39,567)
 Contribution of
 Class A Common
 Stock...........       --
 Exercise of
 stock options...        14
 Merger with CP
 Kitchen
 Acquisition
 Corp. ..........     2,000
 Conversion of
 Class B Common
 Stock to right
 to receive cash
 and certain net
 assets..........    55,507
 Conversion of
 Class A Common
 Stock to right
 to receive cash
 and Common
 Stock...........   (10,000)
 Capital
 contribution....    23,000
 Restructuring
 related
 expenses........    (2,331)
 Preferred stock
 dividend........   (33,783)
 Net loss........   (11,680)
                   ---------
Balances at
December 28,
1997.............   (16,840)
 Issuance of
 Common Stock....        61
 Exercise of
 employee stock
 options.........       115
 Exercise of
 nonemployee
 stock options...       125
 Preferred stock
 accretion.......    (4,478)
 Other...........        25
 Net income......    10,553
                   ---------
Balances at
January 3, 1999..   (10,439)
 Exercise of
 employee stock
 options.........       136
 Tax benefit from
 employee stock
 option
 exercises.......       222
 Conversion of
 New Class B to
 Common Stock....       --
 Preferred stock
 accretion.......    (5,147)
 Net income......     5,399
                   ---------
Balances at
January 2, 2000..  $ (9,829)
                   =========

See accompanying notes.

F-5

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 28, 1997, January 3, 1999 and January 2, 2000
(in thousands)

                                                     1997     1998     1999
                                                   --------  -------  -------
Operating activities:
Net income (loss)................................. $(11,680) $10,553  $ 5,399
Adjustments to reconcile net income (loss) to net
 cash provided by operating activities:
  Depreciation and amortization of property and
   equipment......................................    7,799    7,300    8,086
  Amortization of bank fees.......................        8      243      148
  Net loss on sale of assets......................      295      118      200
  Bank financing fees write-off...................      --       --       998
  Equity in net losses of limited partnerships....       82       46      --
  Loss on impairment of property and equipment....    9,604      --       --
  Reserve for restaurant closure..................      --        85      --
  Bad debt write-off..............................      484      --       --
  Change in deferred tax asset....................      250   (6,102)   1,348
  Changes in operating assets and liabilities:
    Trade accounts receivable.....................    2,659       28      588
    Inventories...................................      119      142      (31)
    Prepaid expenses and other assets.............     (294)    (525)  (1,493)
    Accounts payable..............................      744     (102)    (924)
    Accrued liabilities...........................     (439)   2,876     (355)
    Other liabilities.............................     (440)     346     (361)
                                                   --------  -------  -------
Net cash provided by operating activities.........    9,191   15,008   13,603

Investing activities:
Capital expenditures..............................   (6,607)  (7,517) (17,318)
Proceeds from sale of property and equipment......    1,106    2,490       12
Purchase of liquor licenses.......................     (142)     --       --
Distribution from limited partnership.............       46       50      --
                                                   --------  -------  -------
Net cash used in investing activities.............   (5,597)  (4,977) (17,306)

Financing activities:
Proceeds from long-term debt......................       47      --    25,000
Payments on long-term debt........................      (34)  (1,772) (45,300)
Capitalized bank fees.............................   (1,395)     --       --
Proceeds from revolving line of credit............    2,000      --    15,000
Payments on revolving line of credit..............   (2,000)     --       --
Proceeds from stock purchases, net................       14      864      136
Capital contribution..............................   23,000      --       --
Cash paid to previous shareholders................  (70,536)     --       --
Restructuring related expenses....................   (2,331)     (25)     --
                                                   --------  -------  -------
Net cash used in financing activities.............   (4,282)    (933)  (5,164)
                                                   --------  -------  -------
Net increase (decrease) in cash and cash
 equivalents......................................     (688)   9,098   (8,867)

Cash and cash equivalents at beginning of year....    4,143    5,455   14,553
Cash from merger..................................    2,000      --       --
                                                   --------  -------  -------
Cash and cash equivalents at end of year.......... $  5,455  $14,553  $ 5,686
                                                   ========  =======  =======
Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest...................................... $    418  $ 4,552  $ 3,640
    Income taxes.................................. $    --   $   575  $ 1,303

F-6

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)

Years ended December 28, 1997, January 3, 1999 and January 2, 2000
(in thousands)


Supplemental disclosure of noncash financing activities:

In September 1997, the Company completed a merger and leveraged recapitalization. In connection with the recapitalization, assets with a net book value of $2,748 were distributed to PepsiCo, Inc., the prior majority shareholder, as part of the settlement payment for its Preferred Stock and Class B Common Stock.

During December 1997, the Company declared a preferred stock dividend payable to the Common and New Class B Common Shareholders. The dividend consisted of Series A Class A Redeemable Preferred Stock and Series B Class A Redeemable Preferred Stock.

During the fiscal year ended January 3, 1999, certain employees and nonemployees exercised stock options. Compensation expense incurred by the Company related to the option exercises was approximately $123.

See accompanying notes.

F-7

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 28, 1997, January 3, 1999 and January 2, 2000
(in thousands, except for share and per share data)

1. Description of Business

Nature of Business

As of January 2, 2000, the Company operates 72 restaurants in 16 states and the District of Columbia; 70 restaurants are wholly owned by the Company, one restaurant is owned by a limited partnership in which the Company is a general partner and one restaurant is owned by a third party and operated under a management agreement. In addition to the 72 restaurants operated by the Company, there are an additional 25 franchised restaurants, of which 21 are located in the United States and four are located in the Pacific Rim.

The Company manages its operations by restaurant. The Company has aggregated its operations to one reportable segment.

Recapitalization

In September 1997, the Company consummated a series of transactions to effect a merger and leveraged recapitalization of the Company. The merger and leveraged recapitalization was completed after PepsiCo, Inc., the majority shareholder of the Company, contributed all of its shares of Class A Common Stock to the Company. Then, under the terms of a Merger and Recapitalization Agreement (the "Agreement"), the Company merged with C.P. Kitchen Acquisition Corp. ("C.P.K. Acquisition"). CPK was a newly formed wholly owned subsidiary of Bruckmann, Rosser, Sherrill & Co. ("BRS"), which was capitalized with $2.0 million. The merger was completed by the exchange of all outstanding shares of C.P.K. Acquisition for 6,470,000 shares of the Company's New Class A Common Stock ("Common Stock") and 269,600 shares of New Class B Common Stock. Then, under the terms of the Agreement, the Company converted all the Preferred Stock and Class B Common Stock owned by PepsiCo, Inc. into a right to receive cash of $30,977 and $29,022, respectively. The Company then converted all remaining outstanding shares of Class A Common Stock into a right to receive cash and .884986 shares of Common Stock for each of the then outstanding shares of Class A Common Stock. BRS then made an additional capital contribution to the Company in the amount of $23.0 million. In order to fund the rights to receive cash, the Company entered into a long-term borrowing arrangement with a bank, borrowing $49.0 million. The bank borrowings plus capital contributions received under the terms of the Agreement, and certain other assets of the Company, were used to fund the rights to receive cash discussed above.

2. Summary of Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of California Pizza Kitchen, Inc. and its wholly owned subsidiaries (the "Company"). In addition, the Company is a general partner in two limited partnerships which were formed to operate two restaurants in Chicago of which one was closed in December 1999. The Company accounts for its investments in these limited partnerships (which are not material) under the equity method and are included in other assets in the accompanying consolidated balance sheets. All significant intercompany balances and transactions have been eliminated.

Fiscal Year End

The Company's fiscal year ends on the Sunday closest to December 31. The Company's fiscal years ended December 28, 1997, January 3, 1999 and January 2, 2000, covered 52, 53 and 52 weeks, respectively. For

F-8

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

purposes of the accompanying consolidated financial statements, the years ended December 28, 1997, January 3, 1999 and January 2, 2000 may be referred to as the fiscal years 1997, 1998 and 1999, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents. The Company places its cash deposits with highly qualified financial institutions.

Inventories

Inventories consist of food and beverage, uniforms and supplies. Inventories are stated at the lower of cost (first-in, first-out method) or market.

Property and Equipment

The Company depreciates property and equipment over the assets' estimated useful lives using the straight-line method. Leasehold improvements are amortized using the straight-line method over the estimated useful life of the asset or the term of the related lease, whichever is shorter. The lives for furniture, fixtures, and equipment are ten years. The lives for buildings and leasehold improvements are the shorter of ten to 20 years or the term of the related operating lease.

Liquor Licenses

Transferable liquor licenses, included in other long-term assets, which have a market value are carried at cost and are not amortized.

Gift Certificates

The Company sells gift certificates and recognizes deferred revenue, included in accrued liabilities, for gift certificates outstanding until the gift certificates are redeemed.

Restaurant and Franchise Revenues

Revenues from the operation of Company-owned restaurants are recognized when sales occur. All fees from franchised operations are included in revenue as earned. Royalty fees are based on franchised restaurants' revenues and are recorded by the Company in the period the related franchised restaurants' revenues are earned.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising expenses totaled $2,270 in fiscal 1997, $2,495 in fiscal 1998 and $2,100 in fiscal 1999.

F-9

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Pre-opening Costs

The Company follows Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-up Activities," which was issued by the Accounting Standards Executive Committee and provides guidance on the financial reporting of the start-up costs and organization costs. The SOP requires costs of start-up activities and organization costs to be expensed as incurred.

Earnings Per Share

In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No 128, "Earnings Per Share" (EPS), effective for all financial statements issued after December 15, 1997. SFAS No. 128 requires dual presentation of "Basic" and "Diluted" EPS by entities with complex capital structures, replacing "Primary" and "Fully Diluted" EPS under Accounting Principles Board (APB) Opinion No. 15. Basic EPS excludes dilution and is computed by dividing net income or loss attributable to common shareholders by the weighted average of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (convertible preferred stock, warrants to purchase common stock and common stock options using the treasury stock method) were exercised or converted into common stock. Potential common shares in the diluted EPS computation are excluded where their effect would be antidilutive. The Company's EPS for all periods presented have been computed in accordance with SFAS No. 128 (see note 9).

Earnings per share data for periods prior to fiscal 1998 have not been reported in the accompanying financial statements as the Company had a substantially different capital structure prior to the September 30, 1997 merger and leveraged recapitalization transaction.

Pro forma net income is computed assuming the elimination of interest expense related to the repayment of the Company's outstanding bank debt, elimination of the co-founders' and co-chairmen's compensation expense and the elimination of the accretion of the liquidation preference on the redeemable preferred stock then outstanding.

Pro forma basic net income per share is computed based on the weighted average number of common shares outstanding during the year, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock at January 3, 1999 and the issuance of shares of Common Stock upon the closing of this initial public offering. Pro forma diluted earnings per share is computed based on the weighted average number of common shares outstanding during the year, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock, the issuance of shares of Common Stock upon the closing of this offering and the dilution upon exercise of options to purchase common shares using the treasury stock method, as if such events occurred on January 3, 1999.

Fair Value of Financial Instruments

The fair values of the Company's cash and cash equivalents, trade accounts receivable, accounts payable and all other current liabilities approximate the carrying values because of the short maturities of these instruments.

The fair value of the Company's long-term debt approximates the carrying value based on current rates available to the Company for debt with comparable terms.

F-10

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and cash equivalents with high quality financial institutions. At times, balances in the Company's cash accounts may exceed the Federal Deposit Insurance Corporation (FDIC) limit.

Reclassifications

Certain reclassifications have been made to the December 28, 1997 and January 3, 1999, consolidated financial statements to conform with the January 2, 2000 presentation.

3. Property and Equipment

Property and equipment consists of the following at January 3, 1999 and January 2, 2000:

                                                             1998     1999
                                                           -------- --------
Land...................................................... $  5,786 $  5,786
Buildings.................................................    7,965    7,965
Furniture, fixtures, and equipment........................   40,209   47,030
Leasehold improvements....................................   62,649   68,845
Construction in progress..................................    1,695    1,120
                                                           -------- --------
                                                            118,304  130,746
Less accumulated depreciation and amortization............   49,276   52,698
                                                           -------- --------
                                                           $ 69,028 $ 78,048
                                                           ======== ========

The Company periodically reviews the carrying value of long-lived assets in accordance with SFAS No. 121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." In accordance with SFAS No. 121, the Company recognizes the impairment of certain property and equipment by reducing the carrying value of the assets to the estimated fair value based on discounted cash flows. The Company increased accumulated depreciation and amortization and recorded a loss on impairment of property and equipment in the amount of $9,604 at December 28, 1997.

4. Long-term Debt

Long-term debt consists of the following at January 3, 1999 and January 2, 2000:

                                                              1998    1999
                                                             ------- -------
Term Loan................................................... $   --  $25,000
Revolving Note..............................................     --   15,000
A Term Loan.................................................  20,575     --
B Term Loan.................................................  24,688     --
10% note payable due November 2001..........................     122      85
                                                             ------- -------
                                                              45,385  40,085
Less current maturities.....................................   2,562   1,537
                                                             ------- -------
                                                             $42,823 $38,548
                                                             ======= =======

On September 30, 1997, the Company entered into a credit agreement with a banking syndication providing for a $10,000 revolving line of credit (Line), a $22,000 A Term Loan and a $25,000 B Term Loan.

F-11

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

On October 29, 1999, the Company repaid all borrowings under the September 30, 1997 credit agreement and replaced it with a new credit facility. The new credit facility provides for a $25,000 term loan (Term Loan) and a $25,000 revolving note (Revolving Note), of which $15,000 is outstanding as of January 2, 2000. The Term Loan and Revolving Note are secured by first priority security interests. The Term Loan expires on September 30, 2004 and the Revolving Note expires on October 31, 2004. Both the Term Loan and Revolving Note bear interest at the prime rate (8.50% at January 2, 2000) plus 0.25% or LIBOR (6.04% at January 2, 2000) plus 1.5%. Interest is payable quarterly for both the Term Loan and the Revolving Note. Principal payments for the Term Loan begin September 30, 2000. The terms of the credit facility include financial covenants which the Company was in compliance with as of January 2, 2000. Interest expense for all loans totaled $4,012 and $3,722 for the years ended January 3, 1999 and January 2, 2000, respectively. In connection with entering into the new credit facility, the Company wrote-off $998 of deferred bank financing costs related to the prior credit agreement.

The new credit facility provides for the issuance of letters of credit, which reduce the availability under the Revolving Note. Letters of credit outstanding in connection with various insurance programs totaled $755 and $652 at January 3, 1999 and January 2, 2000, respectively.

The aggregate maturities of long-term debt for each of the five years subsequent to fiscal 1999 are as follows:

Fiscal year ending:
  2000............................................................... $ 1,537
  2001...............................................................   3,037
  2002...............................................................   5,011
  2003...............................................................   6,000
  2004...............................................................  24,500
                                                                      -------
                                                                      $40,085
                                                                      =======

5. Income Taxes

For the period from the date of the merger and leveraged recapitalization, September 30, 1997 to December 28, 1997, the Company began filing separate income tax returns. For the period from June 15, 1996 to September 30, 1997, the Company filed a consolidated federal income tax return with PepsiCo, Inc., the majority shareholder. The income tax provision since September 30, 1997, has been calculated on a separate-entity basis. For the period during which the Company filed consolidated tax returns with PepsiCo Inc., the Company had allocated income tax benefit (provision) based on 35% of income (loss) before income taxes, pursuant to a tax-sharing agreement.

F-12

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The details of the benefit (provision) for income taxes for the fiscal years 1997, 1998 and 1999 are set forth below:

                                                      1997    1998    1999
                                                      -----  ------  -------
Current:
  Federal............................................ $ --   $ (576) $(1,052)
  State..............................................    (1)   (387)    (372)
                                                      -----  ------  -------
                                                         (1)   (963)  (1,424)
Deferred:
  Federal............................................  (250)  5,335   (1,151)
  State..............................................   --      767     (197)
                                                      -----  ------  -------
                                                       (250)  6,102   (1,348)
                                                      -----  ------  -------
                                                      $(251) $5,139  $(2,772)
                                                      =====  ======  =======

The income tax benefit (provision) differs from the federal statutory rate because of the effect of the following items for the fiscal years 1997, 1998 and 1999:

                         1997    1998    1999
                         -----   -----   -----
Statutory rate..........  34.0 % (34.0)% (34.0)%
State income taxes, net
 of federal benefit.....   4.5    (4.5)   (4.5)
Tax tip credit..........   1.3     5.2     4.9
Other...................   --      --     (0.3)
Valuation allowance..... (42.0)  128.2     --
                         -----   -----   -----
                          (2.2)%  94.9 % (33.9)%
                         =====   =====   =====

Deferred income taxes reflect the net tax effects of temporary differences between the carrying value of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The valuation allowance during the year ended January 3, 1999 was reduced by $7,567, as in management's opinion--it is more likely than not that the benefit of the deferred tax amount will be realized. As a result, there was no valuation allowance at January 3, 1999 and January 2, 2000. Significant components of the Company's net deferred tax asset at January 3, 1999 and January 2, 2000 consist of the following:

                                                               1998    1999
                                                              ------  ------
Deferred tax assets:
  Restaurant asset reserves.................................. $3,882  $2,665
  Insurance reserves.........................................    476     396
  Vacation reserves..........................................    408     439
  Other accruals.............................................    388     685
  Inventory UNICAP...........................................    134     125
  Tax credits................................................    470     275
  Accrued rent...............................................    502     544
Deferred tax liabilities:
  Tax depreciation over book depreciation....................   (158)   (375)
                                                              ------  ------
    Net deferred tax asset................................... $6,102  $4,754
                                                              ======  ======

F-13

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

6. Preferred Stock

In December 1997, the Company authorized 10,101,010 shares of Series A 12 1/2% Cumulative Compounding Preferred Stock and 10,101,010 shares of Series B 13 1/2% Cumulative Compounding Preferred Stock. Concurrently, the Company issued 10,000,001 shares of Series A Preferred Stock and 10,000,001 shares of Series B Preferred Stock as a stock dividend to all shareholders of record. Each shareholder received one share of Series A Preferred Stock and one share of Series B Preferred Stock for each share of common stock or New Class B Common Stock held.

The Series A Preferred Stock has a $0.01 par value and is nonvoting. There were 10,151,771 shares issued and outstanding at January 3, 1999 and January 2, 2000. The Series A Preferred Stock has a liquidation value of $1.9095 per share and a liquidation preference over the Series B Preferred Stock and over the common stock. The Series A Preferred Stock is entitled to receive cash dividends of $0.2387 per share per annum and all dividends are cumulative, whether or not declared, and are payable annually in arrears. Unpaid dividends accrue interest at 14.5% annually. The Company, at its option, may redeem the Series A Preferred Stock at a redemption price equal to the liquidation value plus unpaid and accrued dividends ($24,625 as of January 2, 2000) at any time. Additionally, the Series A Preferred Stock is mandatorily redeemable at a value equal to its liquidation value plus unpaid and accrued dividends on January 15, 2008. The accretion of the liquidation preference on the Series A Preferred Stock is reflected in the consolidated statement of shareholders' deficiency as a reduction of additional paid-in capital and an increase in the preferred stock book value. Accumulated, but undeclared, dividends for the Series A Preferred Stock are $2,446 at January 3, 1999 and $5,240 at January 2, 2000.

The Series B Preferred Stock has a $0.01 par value and is nonvoting. There were 10,151,771 shares issued and outstanding at January 3, 1999 and January 2, 2000. The Series B Preferred Stock, has a liquidation value of $1.4688 and a liquidation preference over the common stock, but is junior to the Series A Preferred Stock. The Series B Preferred Stock is entitled to receive cash dividends of $0.1983 per share per annum and all dividends are cumulative, whether or not declared, and are payable annually in arrears. Unpaid dividends accrue interest at 15.5% annually. The Company, at its option, may redeem the Series B Preferred Stock at a redemption price equal to the liquidation value plus unpaid and accrued dividends ($19,296 as of January 2, 2000) at any time. Additionally, the Series B Preferred Stock is mandatorily redeemable at a value equal to the liquidation value plus any unpaid and accrued dividends on January 15, 2008. The accretion of the liquidation preference on the Series B Preferred Stock is reflected in the consolidated statement of shareholders' deficiency as a reduction of additional paid-in capital and an increase in the preferred stock book value. Accumulated, but undeclared, dividends for the Series B Preferred Stock are $2,032 at January 3, 1999 and $4,385 at January 2, 2000.

During the year ended January 3, 1999, the Company sold 151,769 shares each of Series A Preferred Stock and Series B Preferred Stock to certain members of management. The shares were sold for cash at their estimated fair value at date of issue.

7. Shareholders' Deficiency

During the year ended January 3, 1999, the Company issued a two-for-one stock split on the common stock and New Class B Common Stock. The financial statements have been adjusted for all periods presented to reflect this change. Additionally, the Company sold 314,118 shares (adjusted for the two-for-one stock split) of common stock during the year ended January 3, 1999 at their estimated fair value.

On November 30, 1999, the shareholder of New Class B Common Stock converted all of its shares into 539,200 shares of Common Stock.

F-14

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

8. Common Stock Option Plans

In 1998, the Company adopted the 1998 Stock Based Incentive Compensation Plan ("1998 Plan"). The 1998 Plan allows for the Company to reward, retain and attract valued employees, directors and independent contractors. The Company has reserved 4,000,000 shares of common stock under the 1998 Plan for future awards. Options under the 1998 Plan may be either nonqualified options or incentive stock options. Nonqualified options may be granted at prices determined by the Company's Board of Directors. Incentive stock options may be granted at not less than 100% of fair value on the date of grant for employees owning 10% or less of the Company's stock and at not less than 110% for employees owning more than 10% of the Company's stock. The terms governing the exercise of options and direct stock bonuses are determined by the Company's Board of Directors.

Shares subject to option under the Plans were as follows:

                                                                 Weighted
                                                                 Average
                                                    Shares    Exercise Price
                                                  ----------  --------------
Outstanding at December 29, 1996.................    817,140      $6.08
Anti-dilution adjustment at September 29, 1997...    (11,720)       --
Granted..........................................        --         --
Exercised........................................    (18,798)      4.71
Canceled.........................................   (708,658)      6.04
                                                  ----------      -----
Outstanding at December 28, 1997.................     77,964       6.62
Granted..........................................  2,249,868       0.46
Exercised........................................ (1,162,658)      0.17
Canceled.........................................    (51,268)      6.59
                                                  ----------      -----
Outstanding at January 3, 1999...................  1,113,906       0.93
Granted..........................................    549,000       4.22
Exercised........................................   (316,593)      0.43
Canceled.........................................        --         --
                                                  ----------      -----
Outstanding at January 2, 2000...................  1,346,313      $2.39
                                                  ==========      =====

The following table summarizes information regarding options outstanding and options exercisable at January 2, 2000:

                                      Weighted                    Number
                                       Average                  Exercisable
                                      Remaining     Weighted       as of       Weighted
                           Number of Contractual    Average     January 2,     Average
Range of Exercise Prices    Shares      Life     Exercise Price    2000     Exercise Price
------------------------   --------- ----------- -------------- ----------- --------------
$0.17...................     221,392    5.00         $0.17            --        $ --
 1.25...................     552,500    8.64          1.25         91,250        1.25
 3.25-7.50..............     572,421    9.40          4.36         42,171        6.10
                           ---------    ----         -----        -------       -----
                           1,346,313    8.36         $2.39        133,421       $2.78
                           =========    ====         =====        =======       =====

Options available for future grant totaled 1,361,718 and 1,201,132 shares at January 3, 1999 and January 2, 2000, respectively.

During the year ended January 3, 1999, certain employees exercised stock options, which required the recording of compensation expense. Additionally, two non-employees exercised options during 1998, which

F-15

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

have been accounted for in accordance with SFAS No. 123. These options were valued at the date of grant and their value was recorded as consulting expense in the statement of operations. The Company recognized compensation expense of approximately $123 related to the exercise of employee and non-employee stock options and received total proceeds of $240.

The Company has elected to follow APB No. 25, "Accounting for Stock Issued to Employees," and related Interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123, "Accounting for Stock Based Compensation," requires use of option valuation models that were not developed for use in valuing employee stock Options. Under APB No. 25, because the exercise price of the Company's employee stock options equals or exceeds the fair value of the underlying stock on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income is required by SFAS No. 123, which also requires that the information be determined as if the Company has accounted for its employee stock options granted subsequent to December 31, 1994, under the fair value method of that Statement. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions for the year ended January 2, 2000:

Risk free interest rate................................................ 5.43%
Expected lives (in years)..............................................    5
Dividend yield.........................................................    0%
Expected volatility....................................................    0%

The Black-Scholes option valuation model was developed for use in estimating the fair value of the traded options which have no vesting restrictions and are usually transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price and expected volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate of fair value, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. Under SFAS No. 123, the Company would have incurred an additional compensation expense of $60 and $92 for the fiscal year 1998 and 1999, respectively.

F-16

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

9. Net Income Per Share and Pro Forma Net Income Per Share

Reconciliation of basic and diluted net income per share in accordance with SFAS No. 128 (see note 1) for the fiscal year ended January 3, 1999 and January 2, 2000 is as follows, both actual and pro forma:

                                            Fiscal 1998 Fiscal 1999 Fiscal 1999
                                              Actual      Actual    Pro Forma(1)
                                            ----------- ----------- ------------
                                                                    (Unaudited)
Numerator:
  Net income attributable to common
   shareholders............................   $6,075      $  252       $  252
  Adjustments for the calculation of pro
   forma net income per share attributable
   to common shareholders:
    Interest expense, net of income taxes..      --          --         2,259
    Co-founders' and co-chairmen's
     compensation expense, net of income
     taxes(2)..............................      --          --           595
    Redeemable preferred stock accretion...      --          --         5,147
                                              ------      ------       ------
      Numerator for basic and diluted net
       income per share attributable to
       common shareholders.................   $6,075      $  252       $8,253
                                              ======      ======       ======
Denominator:
  Denominator for basic net income per
   share--weighted average shares..........   20,226      21,598
  Effect on denominator upon closing of
   this offering:                                --          --
    Common shares issued...................      --          --
    Redeemable preferred shares converted
     to Common Stock.......................
  Effect of dilutive securities:
    Employee stock options.................      832         737
                                              ------      ------       ------
      Denominator for diluted net income
       per share--weighted average shares..   21,058      22,335
                                              ======      ======       ======


(1) Pro forma basic net income per share is computed based on the weighted average number of common shares outstanding during the year assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock and the issuance of shares of Common Stock upon the closing of this offering, as if such events occurred on January 3, 1999. Pro forma diluted earnings per share is computed based on the weighted average number of common shares outstanding during the year assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock, the issuance of shares of Common Stock upon the closing of this offering and the dilution upon exercise of options to purchase common shares using the treasury stock method, as if such events occurred on January 3, 1999.

(2) The co-founders and co-chairmen of the Board executed amendments to their employment agreements that become effective upon the closing of this offering which will grant each of them non-qualified stock options to purchase 180,000 shares of Common Stock with an exercise price equal to the initial public offering price.

10. Commitments

The Company leases certain restaurant facilities and its corporate headquarters under noncancelable operating leases with terms ranging from five to 20 years. The restaurant leases generally require payment of contingent rental based on a percentage of sales and require payment of various expenses incidental to the use of property. Rent expense on all operating leases approximated $10,013 for fiscal 1997, $9,234 for fiscal 1998 and $10,719 for fiscal 1999, including contingent rental expense of $595, $654 and $615 for the fiscal years

F-17

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

1997, 1998 and 1999, respectively. Most leases contain renewal options and may be subject to periodic adjustments for inflation and scheduled escalations.

The aggregate future minimum annual lease payments under noncancelable operating leases for the fiscal year end January 2, 2000 are as follows:

Fiscal year ending:
  2000............................................................. $  9,803
  2001.............................................................    9,926
  2002.............................................................    9,382
  2003.............................................................    9,019
  2004.............................................................    8,955
  Thereafter.......................................................   57,887
                                                                    --------
    Total future minimum annual lease payments..................... $104,972
                                                                    ========

11. Employee Benefit Plan

In January 1994, the Company established a defined contribution plan for certain qualified employees as defined. Participants may contribute from 1% to 15% of pretax compensation, subject to certain limitation. The plan provides for certain discretionary contributions by the Company. The Company has recorded contribution expense of $200 for 1999, and no Company contributions were made for 1999.

12. Subsequent Events

On May 5, 2000, the Company amended its Articles of Incorporation to change the name of the Company's New Class A Common Stock to "Common Stock." The consolidated financial statements and accompanying notes have been restated for all periods presented to reflect this change.

On , 2000, the board of directors approved a for reverse stock split. The consolidated financial statements and accompanying notes have been restated for all periods presented to reflect this change.

F-18

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEET
(in thousands, except for share data)

                                                                  Pro forma as
                                                                    adjusted
                                                                  Shareholders'
                                                                     Equity
                                                    April 2, 2000 April 2, 2000
                                                    ------------- -------------
Assets
Current assets:
  Cash and cash equivalents........................   $   3,732
  Trade accounts receivable, net...................       1,995
  Inventories......................................       1,184
  Prepaid expenses and other current assets........       1,275
                                                      ---------
Total current assets...............................       8,186
Property and equipment, net........................      79,933
Deferred taxes.....................................       4,754
Other assets.......................................       1,257
                                                      ---------
Total assets.......................................   $  94,130
                                                      =========

Liabilities and shareholders' equity (deficiency)
Current liabilities:
  Accounts payable.................................   $   1,616
  Accrued compensation and benefits................       5,217
  Accrued rent.....................................       4,636
  Other accrued liabilities........................       5,838
  Current maturities of long-term debt.............       2,287
                                                      ---------
Total current liabilities..........................      19,594
Long-term debt, less current maturities............      37,788
Other liabilities..................................         665

Commitments........................................

Redeemable stock:
  Series A Class A Redeemable Preferred Stock--
   10,151,771 shares issued and outstanding at
   April 2, 2000; liquidation preference of $25,401
   at April 2, 2000................................      25,401        $
  Series B Class A Redeemable Preferred Stock--
   10,151,771 shares issued and outstanding at
   April 2, 2000; liquidation preference of $19,958
   at April 2, 2000................................      19,958
Shareholders' equity (deficiency):
  Common Stock--$0.01 par value, 80,000,000 shares
   authorized, 21,793,372 shares issued and
   outstanding at April 2, 2000; pro forma
         shares issued and outstanding.............         218
  Additional paid-in capital.......................     102,793
  Accumulated deficit..............................    (112,287)
                                                      ---------        ---
Total shareholders' equity (deficiency)............      (9,276)
                                                      ---------        ---
Total liabilities and shareholders' equity
 (deficiency)......................................   $  94,130        $
                                                      =========        ===

See accompanying notes.

F-19

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)

                                                                 For the
                                                              Three Months
                                                                  Ended
                                                            ------------------
                                                            April 4,  April 2,
                                                              1999      2000
                                                            --------  --------
Revenues:
  Restaurant sales......................................... $41,438   $47,711
  Franchise and other revenues.............................     496       555
                                                            -------   -------
    Total revenues.........................................  41,934    48,266
Costs and expenses:
  Cost of sales............................................  10,399    11,799
  Labor....................................................  14,960    17,086
  Direct operating and occupancy...........................   8,497     9,582
                                                            -------   -------
    Total restaurant operating costs.......................  33,856    38,467
  General and administrative...............................   3,250     3,550
  Depreciation and amortization............................   2,065     2,289
  Pre-opening..............................................     --        136
                                                            -------   -------
Operating income...........................................   2,763     3,824
Other income (expenses):
  Interest expense.........................................    (968)     (761)
                                                            -------   -------
    Total other income (expense), net......................    (968)     (761)
Income before income tax provision.........................   1,795     3,063
Income tax provision.......................................    (611)   (1,072)
                                                            -------   -------
Net income................................................. $ 1,184   $ 1,991
                                                            =======   =======
Redeemable preferred stock accretion.......................  (1,314)   (1,438)
                                                            -------   -------
Net income (loss) attributable to common shareholders...... $  (130)  $   553
                                                            =======   =======
Net income (loss) per common share:
  Basic.................................................... $ (0.01)  $  0.03
                                                            =======   =======
  Diluted.................................................. $ (0.01)  $  0.03
                                                            =======   =======
Shares used in calculating net income (loss) per common
 share:
  Basic....................................................  21,504    21,793
                                                            =======   =======
  Diluted..................................................  22,240    22,432
                                                            =======   =======
Pro-forma net income.......................................           $ 2,632
                                                                      =======
Pro forma net income per common share:
  Basic....................................................           $
                                                                      =======
  Diluted..................................................           $
                                                                      =======
Pro forma shares used in calculating pro forma net income
 per common share:
  Basic....................................................
                                                                      =======
  Diluted..................................................
                                                                      =======

See accompanying notes.

F-20

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

                                                                 For the
                                                              Three Months
                                                                  Ended
                                                             ----------------
                                                              April    April
                                                             4, 1999  2, 2000
                                                             -------  -------
Operating activities:
Net income.................................................. $ 1,184  $ 1,991
Adjustments to reconcile net income to net cash provided by
 (used in) operating activities:
  Depreciation and amortization of property and equipment...   2,016    2,289
  Amortization of bank fees.................................      49      --
  Changes in operating assets and liabilities:
    Trade accounts receivable...............................     128     (637)
    Inventories.............................................      11       73
    Prepaid expenses and other assets.......................      34    1,156
    Accounts payable........................................  (3,491)  (2,064)
    Accrued liabilities.....................................  (1,574)    (536)
    Other liabilities.......................................     408      (52)
                                                             -------  -------
Net cash provided by (used in) operating activities.........  (1,235)   2,220

Investing activities:
Capital expenditures........................................  (2,276)  (4,337)
                                                             -------  -------
Net cash used in investing activities.......................  (2,276)  (4,337)

Financing activities:
Payments on long-term debt..................................  (3,490)      (9)
                                                             -------  -------
Net cash used in financing activities.......................  (3,490)      (9)
                                                             -------  -------
Net decrease in cash and cash equivalents...................  (7,001)  (2,126)
Cash and cash equivalents at beginning of period............  14,553    5,686
Cash from consolidation of investment in limited
 partnership................................................     --       172
                                                             -------  -------
Cash and cash equivalents at end of period.................. $ 7,552  $ 3,732
                                                             =======  =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
  Interest.................................................. $   309  $    38
  Income taxes.............................................. $    89  $   355

See accompanying notes.

F-21

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying consolidated financial information has been prepared by California Pizza Kitchen, Inc. and its wholly-owned subsidiaries (collectively, the "Company") without audit, in accordance with the instructions to Form 10-Q and therefore does not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States.

In January 2000, the Company acquired a majority interest in its remaining Limited Partnership restaurant. As such, beginning January 3, 2000, the Company began to consolidate the financial statements of the limited partnership with its own financial statements. Prior to fiscal 2000, the Company accounted for its ownership in the limited partnership under the equity method of accounting. All significant intercompany balances and transactions have been eliminated.

Unaudited Interim Financial Data

In the opinion of management, the unaudited consolidated financial statements for the interim periods presented reflect all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of the consolidated financial position and results of operations as of and for such periods indicated. These consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this prospectus for the year ended January 2, 2000. Results for the interim periods presented herein are not necessarily indicative of results which may be reported for any other interim period or for the entire fiscal year.

Pro Forma Net Income and Net Income Per Share

Pro forma net income is computed assuming the elimination of interest expense related to the repayment of the Company's outstanding bank debt, elimination of the co-founders' and co-chairmen's compensation expense and the elimination of the accretion of the liquidation preference on the redeemable preferred stock then outstanding.

Pro forma basic net income per share is computed based on the weighted average number of common shares outstanding during the period, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock at the beginning of the period and the issuance of shares of Common Stock upon the closing of this offering. Pro forma diluted earnings per share is computed based on the weighted average number of common shares outstanding during the period, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock, the issuance of shares of Common Stock upon the closing of this offering and the dilution upon exercise of options to purchase common shares using the treasury stock method, as if such events occurred at the beginning of the period.

Pro Forma Shareholders' Equity

Consolidated shareholders' equity as of April 2, 2000 has been shown on a pro forma basis, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of common stock and the issuance of shares of common stock upon the closing of this offering.

F-22

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

2. Property and Equipment

Property and equipment consists of the following at April 2, 2000:

Land............................................................... $  5,786
Buildings..........................................................    7,965
Furniture, fixtures, and equipment.................................   46,250
Leasehold improvements.............................................   71,174
Construction in progress...........................................    1,150
                                                                    --------
                                                                     132,325
Less accumulated depreciation and amortization.....................   52,392
                                                                    --------
                                                                    $ 79,933
                                                                    ========

3. Net Income (Loss) Per Share

Reconciliation of basic and diluted net income per share in accordance with SFAS No. 128 for the three months ended April 4, 1999 and April 2, 2000 is as follows:

                                                  For the
                                               Three Months
                                                   Ended
                                               --------------     Pro Forma
                                               April   April       for the
                                                 4,      2,   Three Months Ended
                                                1999    2000   April 2, 2000(1)
                                               ------  ------ ------------------
Numerator:
  Net income (loss) attributable to common
   shareholders............................... $ (130) $  553       $  553
  Adjustments for the calculation of pro forma
   net income (loss) per share attributable to
   common shareholders:
    Interest expense, net of income taxes.....    --      --           495
    Co-founders' and co-chairmen's
     compensation expense, net of income
     taxes(2).................................    --      --           146
    Redeemable preferred stock accretion......    --      --         1,438
                                               ------  ------       ------
      Numerator for basic and diluted net
       income (loss) per share attributable to
       common shareholders.................... $ (130) $  553       $2,632
                                               ======  ======       ======
Denominator:
  Denominator for basic net income (loss) per
   share--weighted average shares............. 21,504  21,793
  Effect on denominator upon closing of this
   offering:
    Common shares issued......................    --      --
    Redeemable preferred shares converted to
     Common Stock.............................    --      --
  Effect of dilutive securities:
    Employee stock options....................    736     639
                                               ------  ------       ------
      Denominator for diluted net income
       (loss) per share--weighted average
       shares................................. 22,240  22,432
                                               ======  ======       ======
Net income (loss) per common share:
  Basic....................................... $(0.01) $ 0.03       $
                                               ======  ======       ======
  Diluted..................................... $(0.01) $ 0.03       $
                                               ======  ======       ======

F-23

CALIFORNIA PIZZA KITCHEN, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)


(1) Pro forma basic net income per share is computed based on the weighted average number of common shares outstanding during the period, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock at the beginning of the period and the issuance of shares of Common Stock upon the closing of this offering. Pro forma diluted earnings per share is computed based on the weighted average number of common shares outstanding during the period, assuming the conversion of shares of redeemable preferred stock then outstanding into shares of Common Stock, the issuance of shares of Common Stock upon the closing of this offering and the dilution upon exercise of options to purchase common shares using the treasury stock method, as if such events occurred at the beginning of the period.

(2) The co-founders and co-chairmen of the Board executed amendments to their employment agreements that become effective upon the closing of this offering which will grant each of them non-qualified stock options to purchase 180,000 shares of Common Stock with an exercise price equal to the initial public offering price.

4. Subsequent events

On May 5, 2000, the Company amended its Articles of Incorporation to change the name of the Company's New Class A Common Stock to "Common Stock." The unaudited consolidated financial statements and accompanying notes have been restated for all periods presented to reflect this change.

On , 2000 the board of directors approved a for reverse stock split. The consolidated financial statements and accompanying notes have been restated for all periods presented to reflect this change.

F-24



Shares

[CALIFORNIA PIZZA KITCHEN LOGO APPEARS HERE]


Prospectus

, 2000


Banc of America Securities LLC

Deutsche Banc Alex. Brown


Robertson Stephens

Until , 2000 (25 days after the date of this prospectus), all dealers that buy, sell or trade these shares of common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.




PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 13. Other expenses of issuance and distribution

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid in connection with the sale of the common stock being registered, all of which will be paid by the Registrant. All amounts are estimates except the registration fee and the NASD filing fee.

Registration fee.................................................. $18,480
NASD filing fee...................................................   7,500
Nasdaq National Market application fee............................      *
Blue Sky fees and expenses........................................   5,000
Accounting fees and expenses......................................      *
Legal fees and expenses...........................................      *
Transfer agent and registrar fees.................................      *
Printing and engraving expenses...................................      *
Miscellaneous expenses............................................      *
                                                                   -------
  Total........................................................... $    *
                                                                   =======


*To be completed by amendment.

Item 14. Indemnification of directors and officers

Section 317 of the California General Corporations Law authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers who are parties or are threatened to be made parties to any proceeding (with certain exceptions) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if that person acted in good faith and in a manner the person reasonably believed to be in the best interests of the corporation.
Section 204 of the law provides that this limitation on liability has no effect on a director's liability (a) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (b) for acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (c) for any transaction from which a director derived an improper personal benefit, (d) for acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of a serious injury to the corporation or its shareholders, (e) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders, (f) under Section 310 of the law (concerning contracts or transactions between the corporation and a director), or (g) under Section 316 of the law (directors' liability for improper dividends, loans and guarantees). Section 317 does not extend to acts or omissions of a director in his capacity as an officer. Further, Section 317 has no effect on claims arising under federal or state securities laws and does not affect the availability of injunctions and other equitable remedies available to our shareholders for any violation of a director's fiduciary duty to us or our shareholders. Although the validity and scope of the legislation underlying Section 317 have not yet been interpreted to any significant extent by the California courts, Section 317 may relieve directors of monetary liability to us for grossly negligent conduct, including conduct in situations involving attempted takeovers of our company.

In accordance with Section 317, our articles of incorporation eliminate the liability of each of our directors for monetary damages to the fullest extent permissible under California law. Our articles further authorize us to provide indemnification to our agents (including our officers and directors), subject to the limitations set forth above. The articles and bylaws further provide for indemnification of our corporate agents

II-1


to the maximum extent permitted by California law. Additionally, we maintain insurance policies which insure our officers and directors against certain liabilities. Finally, reference is made to the indemnification and contribution provisions of the Underwriting Agreement filed as an exhibit to this Registration Statement.

The foregoing summaries are necessarily subject to the complete text of the statute, our articles, our bylaws and the agreements referred to above and are qualified in their entirety by reference thereto.

Item 15. Recent sales of unregistered securities

Since May 1, 1997, we have sold and issued the following securities:

1. During the period, the Registrant granted options to purchase an aggregate of 2,798,868 shares of common stock, at exercise prices ranging from $0.17 per share to $4.63 per share, to key employees, officers and directors under its 1998 Stock-Based Incentive Compensation Plan. These options vest over a period of time ranging from one to four years following their respective dates of grant.

2. On November 19, 1999, the Registrant sold 1,773 shares of its common stock to Julie Carruthers for aggregate consideration of $8,865.00.

3. On November 10, 1998, the Registrant sold 28,024 shares of its common stock to H.G. Carrington, Jr. and Ricki L. Carrington, as joint tenants with rights of survivorship, for aggregate consideration of $4,637.97 pursuant to the exercise of stock options.

4. On May 4, 1999, the Registrant sold 28,024 shares of its common stock to H.G. Carrington, Jr. and Ricki L. Carrington, as joint tenants with rights of survivorship, for aggregate consideration of $4,637.97 pursuant to the exercise of stock options.

5. On September 28, 1999 the Registrant sold 112,098 shares of its common stock to H.G. Carrington, Jr. and Ricki L. Carrington, as joint tenants with rights of survivorship, for aggregate consideration of $18,546.61 pursuant to the exercise of stock options.

6. On November 10, 1998, the Registrant sold 110,696 shares of its common stock to Frederick R. Hipp, as trustee of the Frederick R. Hipp Revocable Trust, for aggregate consideration of $18,314.65 pursuant to the exercise of stock options.

7. On December 24, 1998, the Registrant sold 553,480 shares of its common stock to Frederick R. Hipp for aggregate consideration of $91,573.27 pursuant to the exercise of stock options.

8. On December 24, 1998, the Registrant sold 415,110 shares of its common stock to Fortunato N. Valenti for aggregate consideration of $68,679.95 pursuant to the exercise of stock options.

9. On December 24, 1998, the Registrant sold 55,348 shares of its common stock to Richard C. Stockinger for aggregate consideration of $9,157.33 pursuant to the exercise of stock options.

10. On January 5, 1999, the Registrant sold 27,674 shares of its common stock to Frederick F. Wolfe, as trustee of the 1998 Frederick Wolfe Revocable Trust, for aggregate consideration of $4,578.66 pursuant to the exercise of stock options.

11. On August 19, 1999, the Registrant sold 12,500 shares of its common stock to Frederick F. Wolfe, as trustee of the 1998 Frederick Wolfe Revocable Trust, for aggregate consideration of $15,625.00 pursuant to the exercise of stock options.

12. On September 28, 1999, the Registrant sold 83,022 shares of its common stock to Frederick F. Wolfe, as trustee of the 1998 Frederick Wolfe Revocable Trust, for aggregate consideration of $13,735.99 pursuant to the exercise of stock options.

II-2


13. On July 15, 1999, the Registrant sold 1,502 shares of common stock to Julie Carruthers for aggregate consideration of $6,383.50 pursuant to the exercise of stock options.

14. On August 19, 1999, the Registrant sold 12,500 shares of its common stock to Julie Carruthers for aggregate consideration of $15,625.00 pursuant to the exercise of stock options.

15. On August 19, 1999, the Registrant sold 12,500 shares of its common stock to Sarah Goldsmith for aggregate consideration of $15,625.00 pursuant to the exercise of stock options.

16. On August 19, 1999, the Registrant sold 12,500 shares of its common stock to Karen Settlemyer for aggregate consideration of $15,625.00 pursuant to the exercise of stock options.

17. On August 19, 1999, the Registrant sold 12,500 shares of its common stock to Douglas MacDonald for aggregate consideration of $15,625.00 pursuant to the exercise of stock options.

18. On November 10, 1998, the Registrant sold 112,098 shares of its common stock, 50,759 shares of its Series A 12 1/2% Cumulative Compounding Preferred Stock and 50,759 shares of its Series B 13 1/2% Cumulative Compounding Preferred Stock to H.G. Carrington, Jr. for aggregate consideration of $198,381.67 pursuant to a Securities Purchase Agreement and Joinder, dated November 10, 1998, between the Registrant and Mr. Carrington.

19. On March 31, 1998, the Registrant sold 202,020 shares of its common stock, 101,010 shares of its Series A 12 1/2% Cumulative Compounding Preferred Stock and 101,010 shares of its Series B 13 1/2% Cumulative Compounding Preferred Stock to Frederick R. Hipp for aggregate consideration of $374,666.30 pursuant to a Securities Purchase Agreement and Joinder, dated March 31, 1998, between the Registrant and Mr. Hipp.

20. On September 30, 1997, the Registrant effected a recapitalization of its capital stock in connection with the Company's merger with C.P. Kitchen Acquisition Corp. Pursuant to the merger, the Registrant issued .884986 shares of new Class A Common Stock in exchange for each share of old Class A Common Stock outstanding immediately before the recapitalization. Additionally, the Registrant issued 6,470,400 shares of its Class A Common Stock and 269,600 shares of its Class B Common Stock to Bruckmann, Rosser, Sherrill & Co., L.P. and its co-investors in exchange for an aggregate capital contribution of $25,000,000. All Class B Common Stock has subsequently been converted into Class A Common Stock and the class renamed "Common Stock."

21. On June 13, 1997, the Registrant sold 10,855 shares of its Common Stock to Gary Beauregard for aggregate consideration of $60,095.00 pursuant to the exercise of stock options.

22. On June 13, 1997, the Registrant sold 1,559 shares of its Common Stock to Julie Carruthers for aggregate consideration of $7,488.50 pursuant to the exercise of stock options.

23. On June 13, 1997, the Registrant sold 708 shares of its Common Stock to Priscilla Nanong for aggregate consideration of $3,400.00 pursuant to the exercise of stock options.

24. On June 13, 1997, the Registrant sold 3,513 shares of its Common Stock to Douglas Middleton for aggregate consideration of $19,147.50 pursuant to the exercise of stock options.

25. On December 22, 1997, the Registrant declared a dividend of two shares of Series A 12 1/2% Cumulative Compounding Preferred Stock and two shares of Series B 13 1/2% Cumulative Compounding Preferred Stock on each outstanding share of common stock.

26. On November 9, 1998, the Registrant effected a two-for-one forward stock split of its common stock by issuing a stock dividend.

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The transactions referred to in numbers 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17 were made in reliance upon the exemption from registration provided pursuant to Rule 701 under the Securities Act for securities sold pursuant to certain compensatory benefit plans and contracts relating to compensation. The transactions referred to in numbers 18 and 19 were made in reliance upon the exemption from registration provided pursuant to Rule 504 of Regulation D of the Securities Act. The transactions referred to in number 20 were made in reliance upon the exemptions from registration provided pursuant to Section 3(a)(9) and Section 4(2) of the Securities Act. The transactions referred to in numbers 21 and 22 did not require registration under the Securities Act because they do not fall within the definition of "sale" under Section 5 of the Securities Act. No underwriters were involved in connection with the above-referenced sales of securities.

Item 16. Exhibits and financial statement schedules

a. Exhibits

EXHIBIT INDEX

Number                            Description                             Page
------                            -----------                             ----
 1.1*  Form of Underwriting Agreement

 3.1   Amended and Restated Articles of Incorporation, and amendments
        thereto

 3.2   Amended and Restated Bylaws

 4.1*  Specimen Common Stock Certificate

 4.2   Registration Rights Agreement dated September 30, 1997

 4.3*  Form of Lock-Up Agreement

 5.1*  Paul, Hastings, Janofsky & Walker LLP Opinion of Legality

 9.1   Voting Trust Agreement dated September 30, 1997

10.1   Memorandum of Understanding Regarding Form of Agreement between
        Host Marriott Services and California Pizza Kitchen, Inc. dated
        May 12, 1998

10.2   Credit Agreement by and among California Pizza Kitchen, Inc. and
        Bank Of America, N.A., as Administrative Agent and Issuing
        Lender, Bankers Trust Company, as Documentation Agent, and each
        lender from time to time party thereto, dated October 29, 1999

10.3   Security Agreement by and among California Pizza Kitchen, Inc.,
        CPK Management Company, California Pizza Kitchen of Illinois,
        Inc. and Bank of America, N.A. dated October 29, 1999

10.4   Supplemental Security Agreement (Trademarks) by and between CPK
        Management Company and Bank of America, N.A. dated October 29,
        1999

10.5   Pledge Agreement by and among California Pizza Kitchen, Inc.,
        California Pizza Kitchen of Illinois, Inc., H.G. Carrington,
        Jr., Gregory S. Levin and Bank of America, N.A. dated October
        29, 1999

10.6   Master Subsidiary Guaranty issued to Bank of America, N.A. by
        CPK Management Company and California Pizza Kitchen of
        Illinois, Inc. dated October 29, 1999

10.7*  Third Amended and Restated Employment Agreement of Richard L.
        Rosenfield dated May 25, 2000

10.8*  Third Amended and Restated Employment Agreement of Larry S. Flax
        dated May 25, 2000

10.9   Severance Agreement between Frederick R. Hipp and California
        Pizza Kitchen, Inc. dated March 31, 1998

10.10  Severance Agreement between H.G. Carrington, Jr. and California
        Pizza Kitchen, Inc. dated May 4, 1998

10.11  Severance Agreement between Frederick F. Wolfe and California
        Pizza Kitchen, Inc. dated November    [sic], 1999

10.12  Severance Agreement between Tom N. Jenneman and California Pizza
        Kitchen, Inc. dated November    [sic], 1999

II-4


Number                            Description                             Page
------                            -----------                             ----
10.13  California Pizza Kitchen, Inc. Employee Stock Purchase Plan
        adopted on November 2, 1999

10.14  California Pizza Kitchen, Inc. 1998 Stock-Based Incentive
        Compensation Plan adopted February 5, 1998, as amended on July
        21, 1998 and November 2, 1999 and forms of stock option
        agreement thereunder

10.15  California Pizza Kitchen, Inc. Non-Qualified Stock Option
        Agreements between California Pizza Kitchen, Inc. and Frederick
        R. Hipp dated March 31, 1998

10.16  Promissory Note between California Pizza Kitchen, Inc. and H.G.
        Carrington, Jr. dated September 28, 1999

10.17  Promissory Note between California Pizza Kitchen, Inc. and
        Frederick F. Wolfe dated September 28, 1999

10.18  Securities Holders Agreement dated as of September 30, 1998
        among California Pizza Kitchen, Inc., Bruckmann, Rosser,
        Sherrill & Co., L.P., Richard L. Rosenfield, Larry S. Flax and
        the additional investors named therein

21.1   Subsidiaries of California Pizza Kitchen, Inc.

23.1   Consent of Ernst & Young LLP

23.2*  Consent of Paul, Hastings, Janofsky & Walker LLP (included in
        Exhibit 5.1)

24.1   Power of Attorney

27.1   Financial Data Schedule


*To be filed by amendment.
(b) Financial Statement Schedules

Item 17. Undertakings

(a) The undersigned Registrant hereby undertakes to provide to the Underwriters, at the closing specified in the Underwriting Agreement, certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

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

(c) The undersigned Registrant hereby undertakes that:

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

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, hereunto duly authorized, in the City of Los Angeles, State of California, on May 25, 2000.

California Pizza Kitchen, Inc.

   /s/ Frederick R. Hipp
By: _________________________________
Name: Frederick R. Hipp
Title: Chief Executive Officer and
      President, and Director

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EXHIBIT INDEX

Number                            Description                             Page
------                            -----------                             ----
 1.1*  Form of Underwriting Agreement

 3.1   Amended and Restated Articles of Incorporation, and amendments
        thereto

 3.2   Amended and Restated Bylaws

 4.1*  Specimen Common Stock Certificate

 4.2   Registration Rights Agreement dated September 30, 1997

 4.3*  Form of Lock-Up Agreement

 5.1*  Paul, Hastings, Janofsky & Walker LLP Opinion of Legality

 9.1   Voting Trust Agreement dated September 30, 1997

10.1   Memorandum of Understanding Regarding Form of Agreement between
        Host Marriott Services and California Pizza Kitchen, Inc. dated
        May 12, 1998

10.2   Credit Agreement by and among California Pizza Kitchen, Inc. and
        Bank Of America, N.A., as Administrative Agent and Issuing
        Lender, Bankers Trust Company, as Documentation Agent, and each
        lender from time to time party thereto, dated October 29, 1999

10.3   Security Agreement by and among California Pizza Kitchen, Inc.,
        CPK Management Company, California Pizza Kitchen of Illinois,
        Inc. and Bank of America, N.A. dated October 29, 1999

10.4   Supplemental Security Agreement (Trademarks) by and between CPK
        Management Company and Bank of America, N.A. dated October 29,
        1999

10.5   Pledge Agreement by and among California Pizza Kitchen, Inc.,
        California Pizza Kitchen of Illinois, Inc., H.G. Carrington,
        Jr., Gregory S. Levin and Bank of America, N.A. dated October
        29, 1999

10.6   Master Subsidiary Guaranty issued to Bank of America, N.A. by
        CPK Management Company and California Pizza Kitchen of
        Illinois, Inc. dated October 29, 1999

10.7*  Third Amended and Restated Employment Agreement of Richard L.
        Rosenfield dated May 25, 2000

10.8*  Third Amended and Restated Employment Agreement of Larry S. Flax
        dated May 25, 2000

10.9   Severance Agreement between Frederick R. Hipp and California
        Pizza Kitchen, Inc. dated March 31, 1998

10.10  Severance Agreement between H.G. Carrington, Jr. and California
        Pizza Kitchen, Inc. dated May 4, 1998

10.11  Severance Agreement between Frederick F. Wolfe and California
        Pizza Kitchen, Inc. dated November    [sic], 1999

10.12  Severance Agreement between Tom N. Jenneman and California Pizza
        Kitchen, Inc. dated November    [sic], 1999

10.13  California Pizza Kitchen, Inc. Employee Stock Purchase Plan
        adopted on November 2, 1999

10.14  California Pizza Kitchen, Inc. 1998 Stock-Based Incentive
        Compensation Plan adopted February 5, 1998, as amended on July
        21, 1998 and November 2, 1999 and forms of stock option
        agreement thereunder

10.15  California Pizza Kitchen, Inc. Non-Qualified Stock Option
        Agreements between California Pizza Kitchen, Inc. and Frederick
        R. Hipp dated March 31, 1998

10.16  Promissory Note between California Pizza Kitchen, Inc. and H.G.
        Carrington, Jr. dated September 28, 1999


Number                           Description                           Page
------                           -----------                           ----
10.17  Promissory Note between California Pizza Kitchen, Inc. and
        Frederick F. Wolfe dated September 28, 1999

10.18  Securities Holders Agreement dated as of September 30, 1998
        among California Pizza Kitchen, Inc., Bruckmann, Rosser,
        Sherrill & Co., L.P., Richard L. Rosenfield, Larry S. Flax
        and the additional investors named therein

21.1   Subsidiaries of California Pizza Kitchen, Inc.

23.1   Consent of Ernst & Young LLP

23.2*  Consent of Paul, Hastings, Janofsky & Walker LLP (included in
        Exhibit 5.1)

24.1   Power of Attorney

27.1   Financial Data Schedule


* To be filed by amendment.


EXHIBIT 3.1

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

CALIFORNIA PIZZA KITCHEN, INC.

I

The name of this corporation is CALIFORNIA PIZZA KITCHEN, INC. and is sometimes referred to herein as the "Corporation."

II

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code.

III

A. Designation of Capital Stock. The Corporation is authorized to issue two classes of common stock designated respectively "Class A Common Stock" and "Class B Common Stock" and one class of preferred stock designated as "Class A Preferred Stock." Class A Common Stock and Class B Common Stock are sometimes hereinafter collectively referred to as "Common Stock." Class A Preferred Stock is sometimes hereinafter referred to as "Preferred Stock."

B. Number of Authorized Shares. The total number of shares of Class A Common Stock authorized to be issued is 40,000,000. The total number of shares of Class B Common Stock authorized to be issued is 40,000,000. The total number of shares Class A Preferred Stock authorized to be issued is 40,000,000.

C. Class A and Class B Common Stock. The par value of both of the Class A Common Stock and Class B Common Stock is $.01 per share. Except as otherwise provided herein, all shares of Class A Common Stock and Class B Common Stock will be identical and will entitle the holders thereof to the same rights and privileges.

1. Dividends. Holders of Common Stock will be entitled to receive such dividends as may be declared by the Board of Directors, provided that if dividends are declared which are payable in shares of Class A Common Stock or Class B Common Stock, dividends will be declared which are payable at the same rate on each class of Common Stock, and the dividends payable in shares of Class A Common Stock will be payable to holders of Class A Common Stock and the dividends payable in shares of Class B Common Stock will be payable to holders of Class B Common Stock.

2. Conversion. Each record holder of Class A Common Stock will be entitled to convert any or all of such holder's Class A Common Stock into the same number of shares of Class B Common Stock, and each record holder of Class B Common Stock will be entitled to convert any or all of the shares of such holder's Class B Common

Stock into the same number of shares of Class A Common Stock, provided that at the time of conversion of shares of Class B Common Stock into shares of Class A Common Stock such holder would be permitted, pursuant to applicable law, to hold the total number of shares of Class A Common Stock such holder would hold after giving effect to such conversion. The delivery to the Corporation of a certificate from a holder of shares of Class B Common Stock who wishes to convert such shares into shares of Class A Common Stock, which certificate is to the effect that in the good faith judgment of such holder such holder is permitted, pursuant to applicable law, to hold the total number of shares of Class A Common Stock which such holder would hold after giving effect to such conversion, shall be conclusive and binding on the Corporation.

Each conversion of shares of one class of Common Stock into shares of another class of Common Stock will be effected by the surrender of the certificate or certificates representing the shares to be converted at the principal office of the Corporation at any time during normal business hours, together with a written notice by the holder of such shares stating the number of shares that any such holder desires to convert into the other class of Common Stock. Such conversion will be deemed to have been effected as of the close of business on the date on which such certificate or certificates have been surrendered and such notice has been received by the Corporation, and at such time the rights of any such holder with respect to the converted class of Common Stock will cease and the person or persons in whose name or names the certificate or certificates for shares of the other class of Common Stock are to be issued upon such conversion will be deemed to have become the holder or holders of record of the shares of such other class of Common Stock represented thereby.

Promptly after such surrender and the receipt by the Corporation of the written notice from the holder hereinbefore referred to, the Corporation will issue and deliver in accordance with the surrendering holder's instructions the certificate or certificates for the other class of Common Stock issuable upon such conversion and a certificate representing any shares of Common Stock which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted. The issuance of certificates for the other class of Common Stock upon conversion will be made without charge to the holder or holders of such shares for any issuance tax (except stock transfer taxes) in respect thereof or other cost incurred by the Corporation in connection with such conversion.

3. Transfers. The Corporation will not close its books against the transfer of any share of Common Stock, or of any share of Common Stock issued or issuable upon conversion of shares of the other class of Common Stock, in any manner that would interfere with the timely conversion of such shares of Common Stock.

4. Subdivision and Combinations of Shares. If the Corporation in any manner subdivides or combines the outstanding shares of any class of Common Stock, the outstanding shares of the other class of Common Stock will be proportionately subdivided or combined.

5. Reservation of Shares for Conversion. So long as any shares of any class of Common Stock are outstanding, the Corporation will at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock and Class

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B Common Stock (or any shares of Class A Common Stock or Class B Common Stock which are held as treasury shares), the number of shares sufficient for issuance upon conversion.

6. Distribution of Assets. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of Common Stock will be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders after all amounts to which the holders of any Preferred Stock are entitled have been paid or set aside in cash for payment.

7. Voting Rights. The holders of Class A Common Stock shall have the general right to vote for all purposes, including the election of directors, as provided by law. Each holder of Class A Common Stock shall be entitled to one vote for each share thereof held. Except as otherwise required by law, the holders of Class B Common Stock shall have no voting rights.

8. Merger, etc. In connection with any merger, consolidation, or recapitalization (other than the merger contemplated by the Agreement and Plan of Merger, dated as of July 1, 1997, as amended, among the Corporation and the other parties thereto) in which holders of Class A Common Stock generally receive, or are given the opportunity to receive, consideration for their shares
(a) all holders of Class B Common Stock shall be given the opportunity to receive the same form of consideration for their shares as is received by holders of Class A Common Stock and (b) holders of Class B Common Stock shall be entitled to receive the same amount of consideration per share as received by holders of Class A Common Stock.

D. Class A Preferred Stock.

1. Issue in Series. Shares of Class A Preferred Stock may be issued from time to time in one or more series, each such series to have the terms stated herein or in a resolution of the Board of Directors of the Corporation providing for its issue. All shares of any one series of Class A Preferred Stock will be identical, but shares of different series of Class A Preferred Stock need not be identical or rank equally except insofar as provided by law or herein.

2. Creation of Series. The Board of Directors will have authority by resolution to cause to be created one or more series of Class A Preferred Stock and to determine and fix with respect to each such series prior to the issuance of any shares of the series to which such resolution relates:

(i) The distinctive designation of the series and the number of shares which will constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors;

(ii) The dividend rate and the times of payment of dividends on the shares of the series, whether dividends will be cumulative, and if so, from what date or dates;

(iii) The price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation;

-3-

(iv) Whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;

(v) Whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities, and if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(vi) The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(vii) Whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class in any respect or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class having priority over or being on a parity with the shares of such series in any respect, or restricting the payment of dividends on or the making of other distributions in respect of shares of any other series or class ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms of any such restriction;

(viii) Whether the series will have voting rights, in addition to any voting rights provided by law, and, if so, the terms of such voting rights; and

(ix) Any other preferences, qualifications, privileges, options and other relative or special rights and limitations of that series.

3. Dividends. Holders of Class A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors, out of funds legally available for the payment thereof, dividends at the rates fixed for the respective series, and no more, before any dividends shall be declared and paid, or set apart for payment, on Common Stock with respect to the same dividend period.

4. Preference on Liquidation. In the event of the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, holders of each series of Class A Preferred Stock created will be entitled to receive the amount fixed for such series plus, in the case of any series on which dividends are cumulative, an amount equal to all dividends accumulated and unpaid thereon to the date of final distribution whether or not earned or declared before any distribution shall be paid, or set aside for payment, to holders of Common Stock. If the assets of the Corporation are not sufficient to pay such amounts in full, holders of all shares of such Class A Preferred Stock will participate in the distribution of assets ratably in proportion to the full amounts to which they are entitled or in such order or priority, if any, as will have been fixed for the series of Class A Preferred Stock. Neither the merger nor consolidation of the Corporation into or with any other corporation, nor a sale, transfer or lease of all or part of its assets, will be deemed a liquidation, dissolution or winding up of the Corporation within the meaning of this paragraph except to the extent specifically provided for herein.

-4-

(5) Redemption. The Corporation, at the option of the Board of Directors, may redeem all or part of the shares of any series of Class A Preferred Stock on the terms and conditions fixed for such series.

IV

The liability of the directors of this Corporation for monetary damages shall be eliminated to the fullest extent permissible under California law.

This Corporation is authorized to provide indemnification of agents (as defined in Section 317 of the General Corporation Law of the State of California) for breach of duty to the Corporation and its shareholders through bylaw provisions or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by Section 317 of the General Corporation Law of the State of California, subject to the limits on such excess indemnification set forth in Section 204 of the General Corporation Law of the State of California. Any repeal or modification of the provisions of this Article IV shall not adversely affect any rights or protections to which the corporation's directors, officers or agents were entitled prior to such repeal or modification.

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CERTIFICATE OF DETERMINATION FOR
SERIES A 12 1/2% CUMULATIVE COMPOUNDING PREFERRED STOCK
AND SERIES B 13 1/2% CUMULATIVE COMPOUNDING PREFERRED STOCK

OF

CALIFORNIA PIZZA KITCHEN, INC.

To the Secretary of State
State of California

Pursuant to the provisions of Section 401 of the General Corporation Law of the State of California, the undersigned officers of the corporation hereinafter named (the "Corporation") do hereby certify as follows:

(1) The name of the Corporation is California Pizza Kitchen, Inc.

(2) The following is a copy of the resolution adopted by the Board of Directors of the Corporation pursuant to the authority given to the Board of Directors by the Corporation's Articles of Incorporation:

RESOLVED, that, pursuant to Article III, Section D of the Articles of Incorporation, as amended (which authorizes the creation and issuance of shares of Class A Preferred Stock on such terms as are determined by the Board of Directors), the Board of Directors hereby fixes the designations, rights, preferences, privileges, restrictions and limitations of the following two series of Class A Preferred Stock:

A. Series A Class A Preferred Stock.

1. Designation of Series. The first series of Class A Preferred Stock shall be designated as Series A 12 1/2% Cumulative Compounding Preferred Stock ("Series A Preferred Stock"), and the number of shares which shall constitute such series shall be 10,101,010. The par value of Series A Preferred Stock shall be $.01 per share.

2. Rank. With respect to dividend rights and rights on

liquidation, winding up and dissolution of the Corporation, Series A Preferred Stock shall rank (a) senior to (i) the Class A Common Stock of the Corporation, par value $.01 per share ("Class A Common Stock"), the Class B Common Stock of the Corporation, par value $.01 per share ("Class B Common Stock"), the Series B Preferred Stock (defined in paragraph B(l) below) of the Corporation,and (ii) each other class of capital stock or class or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series shall rank junior to Series A Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (each of the securities in clauses (i) and (ii) collectively referred to as "Series A Junior Securities"), (b) on a parity with each other class of capital stock or class or series of preferred stock issued by the Corporation after the date hereof the terms of which do not specifically provide that they rank junior to Series A Preferred Stock or senior to Series A Preferred Stock as to

dividend distributions or distributions upon liquidation, winding up and dissolution of the Corporation (collectively referred to as "Series A Parity Securities"), and (c) junior to each other class of capital stock or other class or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series shall rank senior to Series A Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "Series A Senior Securities").

3. Dividends.

(a) Each Holder (as defined in paragraph C) of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available therefor, cash dividends on each share of Series A Preferred Stock at a rate equal to $0.2387 per share per annum. All dividends shall be cumulative, whether or not earned or declared, and shall accrue on a daily basis from the date of issuance of Series A Preferred Stock, and shall be payable annually in arrears on each Dividend Payment Date (as defined in paragraph C), commencing on the second Dividend Payment Date after the date of issuance of such Series A Preferred Stock. Each dividend on Series A Preferred Stock shall be payable to the Holders of record of Series A Preferred Stock as they appear on the stock register of the Corporation on such record date as may be fixed by the Board of Directors, which record date shall not be less than ten nor more than 60 days prior to the applicable Dividend Payment Date. Dividends shall cease to accrue in respect of shares of Series A Preferred Stock on the date of their repurchase by the Corporation unless the Corporation shall have failed to pay the relevant repurchase price on the date fixed for repurchase. Notwithstanding anything to the contrary set forth above, unless and until such dividends are declared by the Board of Directors, there shall be no obligation to pay such dividends in cash; provided, that such dividends shall continue to cumulate and shall be paid at the time of repurchase as provided herein if not earlier declared and paid. Accrued dividends on the Series A Preferred Stock if not paid on the first or any subsequent Dividend Payment Date following accrual shall thereafter accrue additional dividends ("Additional Dividends") in respect thereof, compounded annually, at the rate of 14 1/2% per annum.

(b) All dividends paid with respect to shares of Series A Preferred Stock pursuant to paragraph A(3)(a) shall he paid pro rata to the Holders entitled thereto.

(c) Dividends on account of arrears for any past Dividend Period and dividends in connection with any optional redemption pursuant to paragraph A(5)(a) may be declared and paid at any time, without reference to any regular Dividend Payment Date, to the Holders of record on any date as may be fixed by the Board of Directors, which date is not more than 30 days prior to the payment of such dividends.

(d) No full dividends shall be declared by the Board of Directors or paid or funds set apart for the payment of dividends or other distributions on any Series A Parity Securities for any period, and no Series A Parity Securities may be repurchased, redeemed or otherwise retired, nor may funds be set apart for such payment, unless (i) full Accumulated Dividends have been paid or set apart for such payment on the Series A Preferred Stock and Series A Parity Securities for all Dividend

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Periods terminating on or prior to the date of payment of such full dividends or distributions on, or such repurchase or redemption of, such Series A Parity Securities (the "Series A Parity Payment Date") and (ii) an amount equal to a prorated dividend on the Series A Preferred Stock and Series A Parity Securities at the customary dividend rates for such securities for the period from the Dividend Payment Date immediately prior to the Series A Parity Payment Date to the Series A Parity Payment Date have been paid or set apart for payment. In the event that such dividends are not paid in full or set apart for payment with respect to all outstanding shares of Series A Preferred Stock and of any Series A Parity Securities and funds available for payment of dividends shall be insufficient to permit payment in full to the holders of all such stock of the full preferential amounts to which they are then entitled, then the entire amount available for payment of dividends shall be distributed ratably among all such holders of Series A Preferred Stock and of any Series A Parity Securities in proportion to the full amount to which they would otherwise be respectively entitled.

(e) The Holders shall be entitled to receive the dividends provided for in paragraph A(3)(a) hereof in preference to and in priority over any dividends, upon any of the Series A Junior Securities. Such dividends on the Series A Preferred Stock shall be cumulative, whether or not earned or declared, so that if at any time full Accumulated Dividends on all shares of Series A Preferred Stock then outstanding have not been paid for all Dividend Periods then elapsed and a prorated dividend on the Series A Preferred Stock at the rate aforesaid from the Dividend Payment Date immediately preceding the Series A Junior Payment Date (as defined below) to the Series A Junior Payment Date have not been paid or set aside for payment, the amount of such unpaid dividends shall be paid before any sum shall be set aside for or applied by the Corporation to the purchase, redemption or other acquisition for value of any shares of Series A Junior Securities (either pursuant to any applicable sinking fund requirement or otherwise) or any dividend or other distribution shall be paid or declared and set apart for payment on any Series A Junior Securities (the date of any such actions to be referred to as the "Series A Junior Payment Date"); provided, however, that the foregoing shall not prohibit the Corporation from repurchasing shares of Series A Junior Securities from a Holder who is, or was, a director or employee of the Corporation (or a subsidiary of the Corporation).

(f) Dividends payable on Series A Preferred Stock for any period less than one year shall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed in the period for which such dividends are payable.

(g) The Corporation shall not claim any deduction from gross income for dividends paid on Series A Preferred Stock in any Federal income tax return, claim for refund, or other statement, report or submission made to the Internal Revenue Service, and shall make any election or take any similar action to effectuate the foregoing except, in each case, if there shall be a change in law such that the Corporation may claim such dividends as deductions from gross income without affecting the ability of the Holders to claim the dividends received deduction under Section 243(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code") (or any successor provision). At

the reasonable request of any Holder (and at the expense of such Holder), the Corporation shall join in the submission to the Internal Revenue Service of a request for a ruling that the dividends paid on Series A Preferred Stock shall be eligible for the dividends received deduction under Section 243(a)(1) of the

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Code (or any successor provision). In addition, the Corporation shall cooperate with any Holder (at the expense of such Holder) in any litigation, appeal or other proceeding relating to the eligibility for the dividends received deduction under Section 243(a)(1) of the Code (or any successor provision) of any dividends (within the meaning of Section 316(a) of the Code or any successor provision) paid on Series A Preferred Stock. To the extent possible, the principles of this paragraph A(3)(g) shall also apply with respect to state and local income taxes.

4. Liquidation Preference.

(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the Holders of all shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $1.9095 in cash per share, plus an amount equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon, including Additional Dividends, to the date of final distribution and no more, before any distribution is made on any Series A Junior Securities. If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the application of all amounts available for payments with respect to Series A Preferred Stock and all other Series A Parity Securities would not result in payment in full of Series A Preferred Stock and such other Series A Parity Securities, the Holders and holders of Series A Parity Securities shall share equally and ratably in any distribution of assets of the Corporation in proportion to the full liquidation preference to which each is entitled. After payment in full pursuant to this paragraph A(4)(a), the Holders shall not be entitled to any further participation in any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation.

(b) For the purposes of this paragraph A(4), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation, merger or other business combination of the Corporation with one or more corporations shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation, unless such sale, conveyance, exchange or transfer is in connection with a dissolution or winding up of the business of the Corporation; provided, however, that any consolidation or merger of the Corporation in which the Corporation is not the surviving entity shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this paragraph A(4) if, (i) in connection therewith, the holders of Common Stock of the Corporation receive as consideration, whether in whole or in part, for such Common Stock (1) cash, (2) notes, debentures or other evidences of indebtedness or obligations to pay cash or (3) preferred stock of the surviving entity (whether or not the surviving entity is the Corporation) which ranks on a parity with or senior to the preferred stock received by holders of the Series A Preferred Stock with respect to liquidation or dividends or (ii) the holders of the Series A Preferred Stock do not receive preferred stock of the surviving entity with rights, powers and preferences equal to (or more favorable to the holders than) the rights, powers and preferences of the Series A Preferred Stock.

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5. Redemption.

(a) Optional Redemption.

(i) The Corporation may, at its option, redeem at any time or from time to time, from any source of funds legally available therefor, in whole or in part, in the manner provided in paragraph A(5)(c) hereof, any or all of the shares of Series A Preferred Stock, at a redemption price per share of $1.9095 per share, plus an amount equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon, including Additional Dividends, to the Redemption Date (as defined in paragraph C).

(ii) No partial redemption of Series A Preferred Stock pursuant to paragraph A(5)(a) hereof may be authorized or made unless prior thereto, full accrued and unpaid dividends thereon for all Dividend Periods terminating on or prior to the Redemption Date and an amount equal to a prorated dividend thereon for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date have been or immediately prior to the Redemption Notice are declared and paid in cash or are declared and there has been a sum set apart sufficient for such cash payment on the Redemption Date.

(iii) In the event of a redemption pursuant to paragraph A(5)(a) hereof of only a portion of the then outstanding shares of Series A Preferred Stock, the Corporation shall effect such redemption pro rata according to the number of shares held by each Holder of Series A Preferred Stock.

(b) Mandatory Redemption. All outstanding shares of the Series A Preferred Stock shall be redeemed from funds legally available therefor on January 15, 2008 (the "Mandatory Redemption Date"), at a price per share equal to $1.9095 plus an amount per share equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon, including Additional Dividends, to the Mandatory Redemption Date.

(c) Procedures for Redemption.

(i) At least 30 days and not more than 60 days prior to the date fixed for any redemption of Series A Preferred Stock, written notice (the "Redemption Notice") shall be given by first class mail, postage prepaid, to each Holder of record of Series A Preferred Stock on the record date fixed for such redemption of Series A Preferred Stock at such Holder's address as set forth on the stock register of the Corporation on such record date; provided that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the redemption of any shares of Series A Preferred Stock to be redeemed except as to the Holder or Holders to whom the Corporation has failed to give said notice or except as to the Holder or Holders whose notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which shares of Series A Preferred Stock may be listed or admitted to trading, the Redemption Notice shall state:

(A) the redemption price;

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(B) whether all or less than all of the outstanding shares of Series A Preferred Stock redeemable thereunder are to be redeemed and the aggregate number of shares of Series A Preferred Stock being redeemed;

(C) the number of shares of Series A Preferred Stock held, as of the appropriate record date, by the Holder that the Corporation intends to redeem;

(D) the Redemption Date;

(E) that the Holder is to surrender to the Corporation, at the place or places where certificates for shares of Series A Preferred Stock are to be surrendered for redemption, in the manner and at the price designated, his, her or its certificate or certificates representing the shares of Series A Preferred Stock to be redeemed; and

(F) that dividends on the shares of Series A Preferred Stock to be redeemed shall cease to accumulate on such Redemption Date unless the Corporation defaults in the payment of the redemption price.

Upon the mailing of any such Redemption Notice, the Corporation shall become obligated to redeem, on the Redemption Date specified therein, all shares of Series A Preferred Stock called for redemption.

(ii) Each Holder shall surrender the certificate or certificates representing such shares of Series A Preferred Stock being so redeemed to the Corporation, duly endorsed, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full redemption price for such shares shall be payable in cash to the Person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be canceled and retired. In the event that less than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

(iii) If a Redemption Notice has been mailed in accordance with paragraph A(5)(c) above, unless the Corporation defaults in the payment in full of the redemption price, dividends on Series A Preferred Stock called for redemption shall cease to accumulate on the Redemption Date, and the Holders of such redemption shares shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the redemption price without interest.

6. Voting Rights.

(a) The Holders shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the shareholders of the Corporation, except as otherwise required by California law or these Articles of Incorporation and except that without the written consent of the holders of a majority of the outstanding shares of Series A Preferred Stock or the vote of the holders of a majority of the outstanding shares of Series A Preferred Stock at a meeting of the holders of Series A Preferred Stock called for such purpose, the Corporation shall not

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(a) create, authorize or issue any other class or series of stock entitled to a preference prior to Series A Preferred Stock upon any dividend or distribution or any liquidation, distribution of assets, dissolution or winding up of the Corporation, or increase the authorized amount of any such other class or series, or (b) amend, alter or repeal any provision of the Corporation's Articles of Incorporation so as to adversely affect the relative rights and preferences of the Series A Preferred Stock; provided, however that any such amendment that changes the dividend payable on, or liquidation preference of, the Series A Preferred Stock shall require the affirmative vote of the holder of each share of Series A Preferred Stock at a meeting of such holders called for such purpose or the written consent of the holder of each share of Series A Preferred Stock.

(b) In any case in which the Holders shall be entitled to vote, each Holder shall be entitled to one vote for each share of Series A Preferred Stock held unless otherwise required by applicable law.

7. Conversion or Exchange. The Holders shall not have any rights hereunder to convert such shares into or exchange such shares for shares of any other class or classes or of any other series of any class or classes of Capital Stock of the Corporation.

8. Reissuance of Series A Preferred Stock. Shares of Series A Preferred Stock which have been issued and reacquired in any manner, including shares purchased, redeemed or exchanged, shall have the status of authorized and unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in any resolution or resolutions adopted by the Board of Directors providing for the issuance of any series of Preferred Stock; except that the Corporation may reissue shares of Series A Preferred Stock which are reacquired by the Corporation from a Holder who is, or was, an employee or director of the Corporation (or its subsidiaries) provided that such reissued shares of Series A Preferred Stock are reissued to a person who is an employee or director of the Corporation (or its subsidiaries) at the time of such reissue.

9. Business Day. If any payment shall be required by the terms hereof to be made on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day.

10. Certain Additional Provisions.

(a) Reports. So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall send to the Holders of such Series A Preferred Stock at their addresses as set forth on the stock register of the Corporation all quarterly and annual reports sent to holders of Common Stock of the Corporation.

(b) Method of Payment. Series A Preferred Stock shall be payable as to liquidation preference, dividends, redemption payments, cash in lieu of fractional shares or other payments at the office of the Corporation maintained for such purpose or, at the option of the Corporation, payment of dividends may be made by check mailed to the Holders at their addresses set forth in the stock register of the Corporation.

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(c) Prohibitions and Restrictions Imposed by Senior
Securities and Indebtedness. To the extent that any action required to be taken by the Corporation under this Resolution shall be prohibited or restricted by the terms of the Senior Securities or any contract or instrument to which the Corporation is a party in respect of the incurrence of indebtedness, such Corporation's actions shall be delayed until such time as such prohibition or restriction is no longer in force.

B. Series B Class A Preferred Stock.

1. Designation of Series. The second series of Class A Preferred Stock shall be designated as Series B 13 1/2% Cumulative Compounding Preferred Stock ("Series B Preferred Stock"), and the number of shares which shall constitute such series shall be 10,101,010. The par value of Series B Preferred Stock shall be $.01 per share.

2. Rank. With respect to dividend rights and rights on

liquidation, winding up and dissolution of the Corporation, Series B Preferred Stock shall rank (a) senior to (i) the Class A Common Stock and Class B Common Stock of the Corporation, and (ii) each other class of capital stock or class or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series shall rank junior to Series B Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (each of the securities in clauses (i) and (ii) collectively referred to as "Series B Junior Securities"), (b) on a parity with each other class of capital stock or class or series of preferred stock issued by the Corporation after the date hereof the terms of which do not specifically provide that they rank junior to Series B Preferred Stock or senior to Series B Preferred Stock as to dividend distributions or distributions upon liquidation, winding up and dissolution of the Corporation (collectively referred to as "Series B Parity Securities"), and
(c) junior to Series A Preferred Stock and each other class of capital stock or other class or series of preferred stock issued by the Corporation after the date hereof the terms of which specifically provide that such class or series shall rank senior to Series B Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up and dissolution of the Corporation (collectively referred to as "Series B Senior Securities").

3. Dividends.

(a) Each Holder of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available therefor, cash dividends on each share of Series B Preferred Stock at a rate equal to $0.1983 per share per annum. All dividends shall be cumulative, whether or not earned or declared, and shall accrue on a daily basis from the date of issuance of Series B Preferred Stock, and shall be payable annually in arrears on each Dividend Payment Date (as defined in paragraph C), commencing on the second Dividend Payment Date after the date of issuance of such Series B Preferred Stock. Each dividend on Series B Preferred Stock shall be payable to the Holders of record of Series B Preferred Stock as they appear on the stock register of the Corporation on such record date as may be fixed by the Board of Directors, which record date shall not be less than ten nor more than 60 days prior to the applicable Dividend Payment Date. Dividends

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shall cease to accrue in respect of shares of Series B Preferred Stock on the date of their repurchase by the Corporation unless the Corporation shall have failed to pay the relevant repurchase price on the date fixed for repurchase. Notwithstanding anything to the contrary set forth above, unless and until such dividends are declared by the Board of Directors, there shall be no obligation to pay such dividends in cash; provided, that such dividends shall continue to cumulate and shall be paid at the time of repurchase as provided herein if not earlier declared and paid. Accrued dividends on the Series B Preferred Stock if not paid on the first or any subsequent Dividend Payment Date following accrual shall thereafter accrue Additional Dividends (as defined in paragraph C) in respect thereof, compounded annually, at the rate of 15 1/2% per annum.

(b) All dividends paid with respect to shares of Series B Preferred Stock pursuant to paragraph B(3)(a) shall be paid pro rata to the Holders entitled thereto.

(c) Dividends on account of arrears for any past Dividend Period and dividends in connection with any optional redemption pursuant to paragraph B(5)(a) may be declared and paid at any time, without reference to any regular Dividend Payment Date, to the Holders of record on any date as may be fixed by the Board of Directors, which date is not more than 30 days prior to the payment of such dividends.

(d) No full dividends shall be declared by the Board of Directors or paid or funds set apart for the payment of dividends or other distributions on any Series B Parity Securities for any period, and no Series B Parity Securities may be repurchased, redeemed or otherwise retired, nor may funds be set apart for such payment, unless (i) full Accumulated Dividends have been paid or set apart for such payment on Series B Preferred Stock and Series B Parity Securities for all Dividend Periods terminating on or prior to the date of payment of such full dividends or distributions on, or such repurchase or redemption of, such Series B Parity Securities (the "Series B Parity Payment Date") and (ii) an amount equal to a prorated dividend on the Series B Preferred

Stock and Series B Parity Securities at the customary dividend rates for such securities for the period from the Dividend Payment Date immediately prior to the Series B Parity Payment Date to the Series B Parity Payment Date have been paid or set apart for payment. In the event that such dividends are not paid in full or set apart for payment with respect to all outstanding shares of Series B Preferred Stock and of any Series B Parity Securities and funds available for payment of dividends shall be insufficient to permit payment in full to the holders of all such stock of the full preferential amounts to which they are then entitled, then the entire amount available for payment of dividends shall be distributed ratably among all such holders of Series B Preferred Stock and of any Series B Parity Securities in proportion to the full amount to which they would otherwise be respectively entitled.

(e) The Holders shall be entitled to receive the dividends provided for in paragraph B(3)(a) hereof in preference to and in priority over any dividends upon any of the Series B Junior Securities. Such dividends on the Series B Preferred Stock shall be cumulative, whether or not earned or declared, so that if at any time full Accumulated Dividends on all shares of Series B Preferred Stock then outstanding have not been paid for all Dividend Periods then elapsed and a prorated dividend at the rate aforesaid from the Dividend Payment Date immediately preceding

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the Series B Junior Payment Date (as defined below) to the Series B Junior Payment Date have not been paid or set aside for payment, the amount of such unpaid dividends shall be paid before any sum shall be set aside for or applied by the Corporation to the purchase, redemption or other acquisition for value of any shares of Series B Junior Securities (either pursuant to any applicable sinking fund requirement or otherwise) or any dividend or other distribution shall be paid or declared and set apart for payment on any Series B Junior Securities (the date of any such actions to be referred to as the "Series B Junior Payment Date"); provided, however, that the foregoing shall not prohibit the Corporation from repurchasing shares of Series B Junior Securities from a Holder who is, or was, a director or employee of the Corporation (or a subsidiary of the Corporation).

(f) Dividends payable on Series B Preferred Stock for any period less than one year shall be computed on the basis of a 360-day year consisting of twelve 30-day months and the actual number of days elapsed in the period for which such dividends are payable.

(g) The Corporation shall not claim any deduction from gross income for dividends paid on Series B Preferred Stock in any Federal income tax return, claim for refund, or other statement, report or submission made to the Internal Revenue Service, and shall make any election or take any similar action to effectuate the foregoing except, in each case, if there shall be a change in law such that the Corporation may claim such dividends as deductions from gross income without affecting the ability of the Holders to claim the dividends received deduction under Section 243(a)(1) of the Code (as defined in paragraph C) (or any successor provision). At the reasonable request of any Holder (and at the expense of such Holder), the Corporation shall join in the submission to the Internal Revenue Service of a request for a ruling that the dividends paid on Series B Preferred Stock shall be eligible for the dividends received deduction under Section 243(a)(1) of the Code (or any successor provision). In addition, the Corporation shall cooperate with any Holder (at the expense of such Holder) in any litigation, appeal or other proceeding relating to the eligibility for the dividends received deduction under Section 243(a)(1) of the Code (or any successor provision) of any dividends (within the meaning of Section 316(a) of the Code or any successor provision) paid on Series B Preferred Stock. To the extent possible, the principles of this paragraph B(3)(g) shall also apply with respect to state and local income taxes.

4. Liquidation Preference.

(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the Holders of all shares of Series B Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $1.4688 in cash per share, plus an amount equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon, including Additional Dividends, to the date of final distribution and no more, before any distribution is made on any Series B Junior Securities. If upon any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the application of all amounts available for payments with respect to Series B Preferred Stock and all other Series B Parity Securities would not result in payment in full of Series B Preferred Stock and such other Series B Parity Securities, the Holders and holders of Series B Parity

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Securities shall share equally and ratably in any distribution of assets of the Corporation in proportion to the full liquidation preference to which each is entitled. After payment in full pursuant to this paragraph B(4)(a), the Holders shall not be entitled to any further participation in any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation.

(b) For the purposes of this paragraph B(4), neither the voluntary sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation, merger or other business combination of the Corporation with one or more corporations shall be deemed to be a voluntary or involuntary liquidation, dissolution or winding up of the Corporation, unless such sale, conveyance, exchange or transfer is in connection with a dissolution or winding up of the business of the Corporation; provided, however, that any consolidation or merger of the Corporation in which the Corporation is not the surviving entity shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation within the meaning of this paragraph B(4) if, (i) in connection therewith, the holders of Common Stock of the Corporation receive as consideration, whether in whole or in part, for such Common Stock (1) cash, (2) notes, debentures or other evidences of indebtedness or obligations to pay cash or (3) preferred stock of the surviving entity (whether or not the surviving entity is the Corporation) which ranks on a parity with or senior to the preferred stock received by holders of the Series B Preferred Stock with respect to liquidation or dividends or (ii) the holders of the Series B Preferred Stock do not receive preferred stock of the surviving entity with rights, powers and preferences equal to (or more favorable to the holders than) the rights, powers and preferences of the Series B Preferred Stock.

5. Redemption.

(a) Optional Redemption.

(i) The Corporation may, at its option, redeem at any time or from time to time, from any source of funds legally available therefor, in whole or in part, in the manner provided in paragraph B(5)(c) hereof, any or all of the shares of Series B Preferred Stock, at a redemption price per share of $1.4688 per share, plus an amount equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon, including Additional Dividends, to the Redemption Date.

(ii) No partial redemption of Series B Preferred Stock pursuant to paragraph B(5)(a) hereof may be authorized or made unless prior thereto, full accrued and unpaid dividends thereon for all Dividend Periods terminating on or prior to the Redemption Date and an amount equal to a prorated dividend thereon for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date have been or immediately prior to the Redemption Notice are declared and paid in cash or are declared and there has been a sum set apart sufficient for such cash payment on the Redemption Date.

(iii) In the event of a redemption pursuant to paragraph B(5)(a) hereof of only a portion of the then outstanding shares of Series B Preferred Stock, the Corporation shall effect such redemption pro rata according to the number of shares held by each Holder of Series B Preferred Stock.

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(b) Mandatory Redemption. All outstanding shares of the Series B Preferred Stock shall be redeemed from funds legally available therefor on January 15, 2008 (the "Mandatory Redemption Date"), at a price per share equal to $1.4688 plus an amount per share equal to full cumulative dividends (whether or not earned or declared) accrued and unpaid thereon, including Additional Dividends, to the Mandatory Redemption Date.

(c) Procedures for Redemption.

(i) At least 30 days and not more than 60 days prior to the date fixed for any redemption of Series B Preferred Stock, a Redemption Notice (as defined in paragraph C) shall be given by first class mail, postage prepaid, to each Holder of record of Series B Preferred Stock on the record date fixed for such redemption of Series B Preferred Stock at such Holder's address as set forth on the stock register of the Corporation on such record date; provided that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the redemption of any shares of Series B Preferred Stock to be redeemed except as to the Holder or Holders to whom the Corporation has failed to give said notice or except as to the Holder or Holders whose notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which shares of Series B Preferred Stock may be listed or admitted to trading, the Redemption Notice shall state.

(A) the redemption price;

(B) whether all or less than all of the outstanding shares of Series B Preferred Stock redeemable thereunder are to be redeemed and the aggregate number of shares of Series B Preferred Stock being redeemed;

(C) the number of shares of Series B Preferred Stock held, as of the appropriate record date, by the Holder that the Corporation intends to redeem;

(D) the Redemption Date;

(E) that the Holder is to surrender to the Corporation, at the place or places where certificates for shares of Series B Preferred Stock are to be surrendered for redemption, in the manner and at the price designated, his, her or its certificate or certificates representing the shares of Series B Preferred Stock to be redeemed; and

(F) that dividends on the shares of Series B Preferred Stock to he redeemed shall cease to accumulate on such Redemption Date unless the Corporation defaults in the payment of the redemption price.

Upon the mailing of any such Redemption Notice, the Corporation shall become obligated to redeem, on the Redemption Date specified therein, all shares of Series B Preferred Stock called for redemption.

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(ii) Each Holder shall surrender the certificate or certificates representing such shares of Series B Preferred Stock being so redeemed to the Corporation, duly endorsed, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full redemption price for such shares shall be payable in cash to the Person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be canceled and retired. In the event that less than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares.

(iii) If a Redemption Notice has been mailed in accordance with paragraph B(5)(c) above, unless the Corporation defaults in the payment in full of the redemption price, dividends on Series B Preferred Stock called for redemption shall cease to accumulate on the Redemption Date, and the Holders of such redemption shares shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the redemption price without interest.

6. Voting Rights.

(a) The Holders shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the shareholders of the Corporation, except as otherwise required by California law or these Articles of Incorporation and except that without the written consent of the holders of a majority of the outstanding shares of Series B Preferred Stock or the vote of the holders of a majority of the outstanding shares of Series B Preferred Stock at a meeting of the holders of Series B Preferred Stock called for such purpose, the Corporation shall not (a) create, authorize or issue any other class or series of stock entitled to a preference prior to Series B Preferred Stock upon any dividend or distribution or any liquidation, distribution of assets, dissolution or winding up of the Corporation, or increase the authorized amount of any such other class or series, or (b) amend, alter or repeal any provision of the Corporation's Articles of Incorporation so as to adversely affect the relative rights and preferences of the Series B Preferred Stock; provided, however, that any such amendment that changes the dividend payable on, or liquidation preference of, the Series B Preferred Stock shall require the affirmative vote of the holder of each share of Series B Preferred Stock at a meeting of such holders called for such purpose or the written consent of the holder of each share of Series B Preferred Stock.

(b) In any case in which the Holders shall be entitled to vote, each Holder shall be entitled to one vote for each share of Series B Preferred Stock held unless otherwise required by applicable law.

7. Conversion or Exchange. The Holders shall not have any rights hereunder to convert such shares into or exchange such shares for shares of any other class or Classes or of other series of any class or classes of Capital Stock of the Corporation.

8. Reissuance of Series B Preferred Stock. Shares of Series B Preferred Stock which have been issued and reacquired in any manner, including shares purchased, redeemed or exchanged, shall have the status of authorized and unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors or as

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part of any other series of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in any resolution or resolutions adopted by the Board of Directors providing for the issuance of any series of Preferred Stock; except that the Corporation may reissue shares of Series B Preferred Stock which are reacquired by the Corporation from a Holder who is, or was, an employee or director of the Corporation (or its subsidiaries) provided that such reissued shares of Series B Preferred Stock are reissued to a person who is an employee or director of the Corporation (or its subsidiaries) at the time of such reissue.

9. Business Day. If any payment shall be required by the terms hereof to be made on a day that is not a Business Day, such payment shall be made on the immediately succeeding Business Day.

10. Certain Additional Provisions.

(a) Reports. So long as any shares of Series B Preferred Stock remain outstanding, the Corporation shall send to the Holders of such Series B Preferred Stock at their addresses as set forth on the stock register of the Corporation all quarterly and annual reports sent to holders of Common Stock of the Corporation.

(b) Method of Payment. Series B Preferred Stock shall be payable as to liquidation preference, dividends, redemption payments, cash in lieu of fractional shares or other payments at the office of the Corporation maintained for such purpose or, at the option of the Corporation, payment of dividends may be made by check mailed to the Holders at their addresses set forth in the stock register of the Corporation.

(c) Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the Corporation under this Resolution shall be prohibited or restricted by the terms of the Senior Securities or any contract or instrument to which the Corporation is a party in respect of the incurrence of indebtedness, such Corporation's actions shall be delayed until such time as such prohibition or restriction is no longer in force.

C. Definitions. As used in this Resolution, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires:

"Accumulated Dividends" means (i) with respect to any share of Preferred Stock, the dividends that have accrued on such share as of such specific date for Dividend Periods ending on or prior to such date and that have not previously been paid in cash, and (ii) with respect to any Series A Parity Security or Series B Parity Security, the dividends that have accrued and are due on such security as of such specific date.

"Additional Dividends" has the meaning given to such term in paragraph A(3)(a).

" Annual Dividend Period" means the annual period commencing on each January 16 and ending on each Dividend Payment Date, respectively.

14

"Business Day" means any day except a Saturday, Sunday or other day on which commercial banking institutions in New York City are authorized by law or executive order to close.

"Capital Stock" means any and all shares, interests, participations, rights, or other equivalents (however designated) of corporate stock including, without limitation, partnership interests.

"Dividend Payment Date" means January 15 of each year.

"Dividend Period" means the Initial Dividend Period and, thereafter, each Annual Dividend Period.

"Holder" means a holder of shares of Series A Preferred Stock and/or Series B Preferred Stock, as applicable.

"Initial Dividend Period" means the dividend period commencing on the Issue Date and ending on the second Dividend Payment Date to occur thereafter.

"Issue Date" means December 26, 1997.

"Person" means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or any other entity of any kind.

"Preferred Stock" means Series A Preferred Stock and/or Series B Preferred Stock, as applicable.

"Redemption Date", with respect to any shares of Preferred Stock, means the date on which such shares of Preferred Stock are redeemed by the Corporation pursuant to paragraph A(5) or B(5).

"Redemption Notice" has the meaning given to such term in paragraph A(5)(c).

"Securities Act" means the Securities Act of 1933, as amended.

"Series A Junior Payment Date" has the meaning given to such term in A(3)(e).

"Series A Junior Securities" has the meaning given to such term in paragraph A(2).

"Series A Parity Payment Date" has the meaning given to such term in A(3)(d).

"Series A Parity Securities" has the meaning given to such term in paragraph A(2).

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"Series A Preferred Stock" has the meaning given to such term in paragraph A(i).

"Series A Senior Securities" has the meaning given to such term in paragraph A(2).

"Series B Junior Payment Date" has the meaning given to such term in B(3)(e).

"Series B Junior Securities" has the meaning given to such term in paragraph B(2).

"Series B Parity Payment Date" has the meaning given to such term in B(3)(d).

"Series B Parity Securities" has the meaning given to such term in paragraph B(2).

"Series B Preferred Stock" has the meaning given to such term in paragraph B(1).

"Series B Senior Securities" has the meaning given to such term in paragraph B(2).

* * *

(3) The number of authorized shares of Series A Preferred Stock is 10,101,010, none of which have been issued.

(4) The number of authorized shares of Series B Preferred Stock is 10,101,010, none of which have been issued.

Each of the undersigned does hereby declare under the penalty of perjury under the laws of the State of California that he signed this Certificate of Determination in the official capacity set forth beneath his signature, and that the statements set forth in said document are true of his own knowledge.

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IN WITNESS WHEREOF, the undersigned officers of the corporation have caused this Certificate of Determination to be signed this 23/rd/ day of December, 1997.

By: Fortunato N. Valenti
Fortunato N. Valenti Acting Chief Executive Officer

By: Richard C. Stockinger
Richard C. Stockinger Assistant Secretary

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CERTIFICATE OF AMENDMENT

OF

ARTICLES OF INCORPORATION

OF

CALIFORNIA PIZZA KITCHEN, INC.


We, Frederick R. Hipp, the President, and H.G. Carrington, Jr., the Secretary of California Pizza Kitchen, Inc., a corporation duly organized and existing under the laws of the State of California, do hereby certify:

1. That they are the President and the Secretary, respectively of California Pizza Kitchen, Inc., a California corporation.

2. That an amendment to the articles of incorporation has been approved by the board of directors.

3. The amendment so approved by the board of directors is as follows:

Paragraph B of Article III of the articles of incorporation of this corporation is amended to read in its entirety as follows:

B. Number of Authorized Shares. The total number of shares of Class A Common Stock authorized to be issued is 80,000,000. The total number of shares of Class B Common Stock authorized to be issued is 80,000,000. The total number of shares of Class A Preferred Stock authorized to be issued is 40,000,000. Upon the filing and the effectiveness of this amendment of this article, each outstanding share of Class A Common Stock is split up and converted into two such shares. Upon the filing and the effectiveness of this amendment of this article, each outstanding share of Class B Common Stock is split up and converted into two such shares.

4. That the shareholders have adopted said amendment by written consent. That the wording of said amendment as approved by written consent of the shareholders is the same as that set forth above. That said written consent was signed by holders of outstanding shares having not less than the minimum number of required votes of shareholders necessary to approve said amendment in accordance with Section 902 of the California Corporations Code.


5. That the designation and total number of outstanding shares entitled to vote on or give written consent to said amendment and the minimum percentage vote required of each class or series entitled to vote on or give written consent to said amendment for approval thereof are as follows:

                       Number of shares
                       outstanding entitled
                       to vote or give             Minimum percentage vote
Designation            written consent             required to approve
-----------            --------------------        -----------------------
Class A Common         9,887,459                   more than 50%
Class B Common           269.600                   more than 50%

6. That the number of shares of each class which gave written consent in favor of said amendment equaled or exceeded the minimum percentage vote required of each class entitled to vote, as set forth above.

7. That this certificate shall become effective on the date of filing with the Secretary of State of California.


Each of the undersigned declares under penalty of perjury that the statements contained in the foregoing certificate are true of their own knowledge. Executed at Los Angeles, California on September 30, 1998.

By: /s/ Frederick R. Hipp
    ____________________________
    Name: Frederick R. Hipp
    Title: President


By: /s/ H.G. Carrington, Jr.
    _____________________________
    Name: H.G. Carrington, Jr.
    Title: Secretary


CERTIFICATE OF INCREASE IN NUMBER
OF SERIES A PREFERRED SHARES
OF

CALIFORNIA PIZZA KITCHEN, INC.,
a California corporation

The undersigned President and Chief Financial Officer do hereby certify that:

1. They are the duly elected and acting President and Chief Financial Officer, respectively, of the Corporation.

2. Pursuant to authority given by the Corporation's Articles of Incorporation, the Board of Directors of the corporation has duly adopted the following recitals and resolutions:

WHEREAS, the Articles of Incorporation of this Corporation provide for a class of shares known as Class A Preferred Stock, issuable from time to time in one or more series; and

WHEREAS, the Board of Directors of this Corporation is authorized to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and increase or decrease (but not below the number of shares of that series then outstanding) the number of shares of any series after the issue of shares of that series; and

WHEREAS, the rights, preferences, privileges, and restrictions relating to a series of Preferred Stock designated "Series A Preferred Stock" were fixed by a resolution adopted by the Board of Directors on December 22, 1997, and a Certificate of Determination of Preferences of Preferred shares of that series was executed by the officers of this corporation on December 23, 1997, and filed with the Secretary of State of the State of California on December 24, 1997; and

WHEREAS, the number of shares of that series is 10,101,010 and this Board of Directors now desires to increase that number to 10,151,769, and there are no limits or restrictions stated in the resolution of the Board of Directors originally fixing the number of shares constituting shares of that series:

WHEREAS, the increase in the number of shares of Series A Preferred Stock has been approved by the holders of a majority of shares of Series B Preferred Stock;

NOW, THEREFORE, BE IT RESOLVED, that the number of shares of Series A Preferred Stock constituting shares of that series be and it hereby is increased to 10,151,769; and


RESOLVED, FURTHER, that the Chairman of the Board, the President, or any Vice President, and the Secretary, the Chief Financial Officer, the Treasurer or any Assistant Secretary or Assistant Treasurer of this corporation are each authorized to execute, verify, and file a Certificate of Increase in the number of shares of that series in accordance with California Law.

3. The authorized number of shares of Preferred Stock of the corporation is 40,000,000, and the number of shares constituting Series A Preferred Stock which are outstanding as of the date hereof, is 10,101,010 and the increase in the number of shares constituting shares of that series is 50,759.

4. The increase in the number of shares of Series A Preferred Stock has been approved by the vote of a majority of the outstanding shares of Series B Preferred Stock.

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IN WITNESS WHEREOF, the undersigned have executed this certificate on August 21, 1998.

/s/ Frederick R. Hipp
--------------------------
Frederick R. Hipp
President



/s/ H.G. Carrington, Jr.
--------------------------
H.G. Carrington, Jr.
Chief Financial Officer

On the date set forth below, in the City of Los Angeles in the State of California, each of the undersigned does hereby declare under the penalty of perjury under the laws of the State of California that the statements set forth in this certificate are true of his own knowledge.

Dated: August 21, 1998


                                       /s/ Frederick R. Hipp
                                       --------------------------
                                       Frederick R. Hipp
                                       President


                                       /s/ H.G. Carrington, Jr.
                                       --------------------------
                                       H.G. Carrington, Jr.
                                       Chief Financial Officer

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CERTIFICATE OF INCREASE IN NUMBER
OF SERIES B PREFERRED SHARES
OF

CALIFORNIA PIZZA KITCHEN, INC.,
a California corporation

The undersigned President and Chief Financial Officer do hereby certify that:

1. They are the duly elected and acting President and Chief Financial Officer, respectively, of the Corporation.

2. Pursuant to authority given by the Corporation's Articles of Incorporation, the Board of Directors of the corporation has duly adopted the following recitals and resolutions:

WHEREAS, the Articles of Incorporation of this Corporation provide for a class of shares known as Class A Preferred Stock, issuable from time to time in one or more series; and

WHEREAS, the Board of Directors of this Corporation is authorized to determine or alter the rights, preferences, privileges, and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and increase or decrease (but not below the number of shares of that series then outstanding) the number of shares of any series after the issue of shares of that series; and

WHEREAS, the rights, preferences, privileges, and restrictions relating to a series of Preferred Stock designated "Series B Preferred Stock" were fixed by a resolution adopted by the Board of Directors on December 22, 1997, and a Certificate of Determination of Preferences of Preferred shares of that series was executed by the officers of this corporation on December 23, 1997, and filed with the Secretary of State of the State of California on December 24, 1997; and

WHEREAS, the number of shares of that series is 10,101,010 and this Board of Directors now desires to increase that number to 10,151,769, and there are no limits or restrictions stated in the resolution of the Board of Directors originally fixing the number of shares constituting shares of that series;

NOW, THEREFORE, BE IT RESOLVED, that the number of shares of Series B Preferred Stock constituting shares of that series be and it hereby is increased to 10,151,769, and


RESOLVED, FURTHER, that the Chairman of the Board, the President, or any Vice President, and the Secretary, the Chief Financial Officer, the Treasurer or any Assistant Secretary or Assistant Treasurer of this corporation are each authorized to execute, verify, and file a Certificate of Increase in the number of shares of that series in accordance with California Law.

3. The authorized number of shares of Preferred Stock of the corporation is 40,000,000, and the number of shares constituting Series B Preferred Stock which are outstanding as of the date hereof, is 10,101,010 and the increase in the number of shares constituting shares of that series is 50,759.

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IN WITNESS WHEREOF, the undersigned have executed this certificate on August 21, 1998.

/s/ Frederick R. Hipp
----------------------------
Frederick R. Hipp
President


/s/ H.G. Carrington, Jr.
----------------------------
H.G. Carrington, Jr.
Chief Financial Officer

On the date set forth below, in the City of Los Angeles in the State of California, each of the undersigned does hereby declare under the penalty of perjury under the laws of the State of California that the statements set forth in this certificate are true of his own knowledge.

Dated: August 21, 1998


                                                 /s/ Frederick R. Hipp
                                                 ------------------------------
                                                 Frederick R. Hipp
                                                 President


                                                 /s/ H.G. Carrington, Jr.
                                                 ------------------------------
                                                 H.G. Carrington, Jr.
                                                 Chief Financial Officer

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EXHIBIT 3.2

AMENDED AND RESTATED

BY-LAWS

OF

CALIFORNIA PIZZA KITCHEN, INC.

ARTICLE I

Shareholders

SECTION 1. Annual Meetings. The annual meeting of the shareholders (the "Annual Meeting of Shareholders") of California Pizza Kitchen, Inc. (the "Corporation") for the purpose of electing directors and for the transaction of such other business as may be brought before the meeting shall be held, in each year on such day, at such time and such place within or without the State of California as shall be fixed by the Board of Directors and stated in the notice of the meeting.

SECTION 2. Special Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, or by any number of shareholders owning or having the right to vote an aggregate of not less than a majority of outstanding shares of capital stock entitled to vote. Special meetings shall be held on such day, at such time and such place either within or without the State of California specified in the notice thereof.

SECTION 3. Notice of Meetings. Except as otherwise expressly required by applicable law or the Articles of Incorporation, written notice to shareholders complying with Section 601 of the California General Corporation Law, or any successor section, shall be given either by delivering a notice personally or mailing a notice to each shareholder of record entitled to vote thereat at his address as it appears on the records of the Corporation not less than ten (10) nor more than sixty (60) days prior to the meeting. No business other than that stated in the notice shall be transacted at any special meeting. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall attend such meeting in person or represented by proxy; and if any shareholder shall, in person or by attorney thereunto duly authorized, in writing or by telegraph, cable or wireless, waive notice of any meeting, whether before or after such meeting be held, the notice thereof need not be given to him. Notice of any adjourned meeting of shareholders need not be given except as provided in Section 5 of this Article 1.

SECTION 4. Quorum. Subject to the provisions of law and the Articles of Incorporation in respect of the vote that shall be required for a specific action, the number of shares the holders of which shall be present or represented by proxy at any meeting of shareholders in order to constitute a quorum for the transaction of any business, shall be a majority of all the shares issued and outstanding and entitled to vote at such meeting.

SECTION 5. Adjournment. At any meeting of shareholders, whether or not there shall be a quorum present, the holders of a majority of shares voting at the meeting, whether present in person at the meeting or represented by proxy at the meeting, may adjourn the meeting from time to time. Except as otherwise provided by law, notice of such adjourned meeting need not be given otherwise than by announcement of the time and place of such adjourned meeting at the meeting at which the adjournment is taken. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the original meeting.

SECTION 6. Organization. The President, or in his absence, a Vice President, shall call meetings of the shareholders to order, and shall act as chairman of such meetings. In the absence of the President or a Vice President, the holders of a majority in number of the shares of the capital stock of the Corporation present in person or represented by proxy and entitled to vote at such meeting shall elect a chairman, who may be the Secretary of the Corporation. The Secretary of the Corporation shall act as secretary of all meetings of the shareholders, but in the absence of the Secretary, the chairman of the meeting may appoint any person to act as secretary of the meeting.

SECTION 7. Voting. Each shareholder of record shall, except as otherwise provided by law or by the Articles of Incorporation, at every meeting of the shareholders, be entitled to one vote in person or by proxy for each share of capital stock entitled to vote held by such shareholder. Unless otherwise provided by applicable law or the Articles of Incorporation, no vote upon any matter before the meeting, including the election of directors, need be by ballot, provided however upon the demand of any shareholder, the vote for directors and the vote upon any matter before the meeting, shall be by ballot.

SECTION 8. Election of Directors. Directors shall be elected in accordance with the requirements of the Articles of Incorporation and applicable law.

SECTION 9. Addresses of Shareholders. Each shareholder shall designate to the Secretary of the Corporation an address to which notice of meetings and all other corporate notices may be served upon or mailed to him, and if any shareholder shall fail to designate such address, corporate notices may be served upon him by mail directed to him at his last known post office address.

SECTION 10. Inspectors of Election. The Board of Directors may at any time appoint one or three persons to serve as Inspectors of Election at the next succeeding Annual Meeting of Shareholders or at any other meeting or meetings and the Board of Directors may at any time fill any vacancy in the office of Inspectors of Election. If the Board of Directors fails to appoint Inspectors of Election, or if any Inspector of Election appointed is absent or refuses to act, or if his office becomes vacant and not filled by the Board of Directors, the chairman of any meeting of the shareholders may appoint a temporary Inspector of Election for such meeting. All proxies shall be filed with the Inspectors of Election of the meeting before being voted upon.

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ARTICLE II

Directors

SECTION 1. Powers. Subject to the Corporations Code and any limitations in the Articles of Incorporation relating to action requiring approval by the shareholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.

SECTION 2. Number and Qualification of Directors. The Board of Directors shall have authority to determine the number of directors constituting the Board of Directors; provided, however, that in no event shall the number be less than five or more than nine, with the exact number within that range to be fixed by resolution of the Board of Directors.

SECTION 3. Election and Term of Office. Directors shall be elected at each annual meeting of shareholders, but if any such annual meeting is not held or the directors are not elected at any annual meeting, the directors may be elected at any special meeting of shareholders held for that purpose. Each director, including a director elected to fill a vacancy, shall, subject to
Section 4, hold office until the expiration of the term for which elected and until his successor has been elected and qualified.

SECTION 4. Place of Meetings. Regular and special meetings of the Board of Directors may be held at any place within or without the State of California which has been designated in the notice of the meeting, or, if not stated in the notice or there is no notice, designated by resolution or by written consent of all of the members of the Board of Directors. If the place of a regular or special meeting is not designated in the notice or fixed by a resolution of the Board or consented to in writing by all members of the Board of Directors, it shall be held at the Corporation's principal executive office.

SECTION 5. Regular Meetings. Immediately following each annual shareholder's meeting the Board of Directors shall hold a regular meeting to elect officers and transact other business. Such meeting shall be held at the same place as the annual shareholders' meeting or such other place as shall be fixed by the Board of Directors. Other regular meetings of the Board of Directors shall be held at such times and places as are fixed by the board. Call and notice of regular meetings of the Board of Directors shall not be required and is hereby dispensed with.

SECTION 6. Special Meetings. Special meetings of the Board of Directors for any purpose or purposes may be called at any time by a majority of the Board of Directors. Notice of the time and place of special meetings shall be given to each director. A notice need not specify the purpose of any regular or special meeting of the Board of Directors. Special meetings of the Board of Directors may also be called by a number of directors constituting less than a majority of the Board of Directors; provided, however, that (i) no such meeting called by less than

3

a majority of the Board of Directors may be called within 30 days before or after a regular meeting of the Board of Directors and (ii) no more than two special meetings may be called by less than a majority of the Board of Directors in any calendar year. Any special meeting called by less than a majority of the Board of Directors shall be called on not less than one week's prior notice given to each director.

SECTION 7. Quorum. A majority of the members of the Board of Directors shall constitute a quorum of the Board of Directors for the transaction of business. Every act or decision done or made by the vote of a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, subject to the provisions of Section 310 (Transactions with Interested Directors) and subdivision (e) of Section 317 (Indemnification of Corporate Agents) of the Corporations Code.

SECTION 8. Waiver of Notice or Consent. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum is present and if, either before or after the meeting, each of the directors not present or who, though present, has prior to the meeting or at its commencement, protested the lack of proper notice to him, signs a written waiver of notice, or a consent to holding the meeting, or an approval of the minutes of the meeting. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the Board of Directors. Notice of a meeting need not be given to any director who attends the meeting without protesting, prior to or at its commencement, the lack of notice to such director.

SECTION 9. Adjournment. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than twenty-four (24) hours, notice of the adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

SECTION 10. Meetings by Conference Telephone. Members of the Board of Directors may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Participation by directors in a meeting in the manner provided in this section constitutes presence in person at such meeting.

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ARTICLE III

Officers

SECTION 11. Executive Officers. The officers of the Corporation, who shall be elected by the Board of Directors, shall be a President, a Chief Financial Officer, a Secretary and the Chairman of the Board (which office may be held by two persons). In addition, the Board of Directors may elect such other officers as may be appointed in accordance with the provisions of Section 3 of this Article III. Any number of offices may be held by the same person. Whenever any officer of the Corporation ceases to be an employee of the Corporation and of all corporations which control, are controlled by or are under common control with, the Corporation, such officer shall thereupon also cease to be an officer of the Corporation without any further action on his part or on the part of the Board of Directors.

SECTION 12. Election, Term of Office and Qualification. So far as is practicable, the officers shall be elected annually by the Board of Directors at their first meeting after each Annual Meeting of Shareholders of the Corporation. Each officer, except such officers as may be appointed in accordance with the provisions of Section 3 of this Article III, shall hold office until his successor shall have been duly elected and qualified in his stead, or until his death, resignation, disqualification or removal in the manner hereinafter provided.

SECTION 13. Subordinate Officers. The Board of Directors or the President may from time to time appoint such other officers, including one or more Vice Presidents, one or more Assistant Treasurers and one or more Assistant Secretaries, and such agents and employees of the Corporation as may be deemed necessary or desirable. Such officers, agents and employees shall hold office for such period and upon such terms and conditions, have such authority and perform such duties as provided in these Bylaws or as the Board of Directors or the President may from time to time prescribe. The Board of Directors or the President may from time to time authorize any officer to appoint and remove agents and employees and to prescribe the powers and duties thereof.

SECTION 14. Removal. Any officer may be removed, either with or without cause, by the Board of Directors or, except in the case of any officer elected by the Board of Directors, by any committee or superior officer upon whom the power of removal may be conferred by the Board of Directors or by these Bylaws.

SECTION 15. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors or to the President or to the Secretary. Any such resignation shall take effect immediately unless a date certain is specified therein for it to take effect, in which event it shall be effective upon such date, and the acceptance of such resignation shall not be necessary to make it effective, irrespective of whether the resignation is tendered subject to such acceptance.

5

SECTION 16. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in the Bylaws for the regular election or appointment to such office.

SECTION 17. Chairman of the Board. The Chairman or Chairmen shall have such duties and responsibilities as (i) are set forth in the Chairman's employment agreement with the Corporation or (ii) adopted in a resolution of the Board of Directors so long as such resolution is not inconsistent with the terms of the Chairman's employment agreement with the Corporation. The Chairman or Chairmen shall have the authority (i) set forth in the Chairman's employment agreement with the Corporation or (ii) as is expressly granted in a resolution of the Board of Directors.

SECTION 18. The President. The President shall have general direction of the affairs of the Corporation and general supervision over its several officers, subject, however, to the control of the Board of Directors. He shall at each annual meeting and from time to time report to the shareholders and to the Board of Directors all matters within his knowledge which the interest of the Corporation may require to be brought to their notice; may sign with the Chief Financial Officer or an Assistant Treasurer or the Secretary or an Assistant Secretary any or all Certificates of stock of the Corporation; shall preside at all meetings of the shareholders and at all meetings of the Board of Directors; shall have the power to sign and execute in the name of the Corporation all contracts, or other instruments authorized by the Board of Directors; and in general, shall perform all duties incident to the office of President and such other duties as from time to time may be assigned to him by the Board of Directors or as are prescribed by these Bylaws.

SECTION 19. The Vice Presidents. Each Vice President shall have such powers and shall perform such duties as may from time to time be assigned to him by the Board of Directors or by the President and shall have the power to sign and execute in the name of the Corporation all contracts or other instruments authorized by the Board of Directors, except where the Board of Directors or the Bylaws shall expressly delegate or permit some other officer to do so. A Vice President may also sign with the Chief Financial Officer or an Assistant Treasurer or the Secretary or an Assistant Secretary Certificates of stock of the Corporation.

SECTION 20. The Secretary. The Secretary shall keep or cause to be kept the minutes of the meetings of the shareholders, of the Board of Directors and of any committee when so required; shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; shall be custodian of the corporate records and of the seal of the Corporation and see that the seal is affixed to all documents on which it is required, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of the Bylaws; shall keep or cause, to be kept a register of the post office address of each shareholder; may sign with the President or Vice President Certificates of stock of the Corporation; and, in general, shall perform all duties incident to the office of Secretary and

6

such other duties as may from time to time be assigned to him by the Board of Directors or by the President.

SECTION 21. Assistant Secretaries. At the request of the Secretary, or in his absence or disability, an Assistant Secretary shall perform the duties of the Secretary and, when so acting, shall have all the powers of, and be subject to, all the restrictions upon, the Secretary. An Assistant Secretary shall perform such other duties as from time to time may be assigned to him by the President, the Secretary or the Board of Directors.

SECTION 22. The Chief Financial Officer. The Chief Financial Officer shall have charge and custody of, and be responsible for, all funds and securities of the Corporation, and deposit all such funds in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of these Bylaws; at all reasonable times exhibit his books of account and records, and cause to be exhibited the books of account and records of any corporation controlled by the Corporation, to any of the directors of the Corporation upon application during business hours at the office of the Corporation, or such other corporation where such books and records are kept; render a statement of the condition of the finances of the Corporation at all regular meetings of the Board of Directors and a full financial report at the Annual Meeting of Shareholders; if called upon to do so, receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, may sign with the President or Vice President Certificates of stock of the Corporation; and, in general, perform all the duties incident to the office of Chief Financial Officer and such other duties as from time to time may be assigned to him by the Board of Directors or the President.

SECTION 23. Assistant Treasurers. At the request of the Chief Financial Officer, or in his absence or disability, an Assistant Treasurer shall perform the duties of the Chief Financial Officer, and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chief Financial Officer. An Assistant Treasurer shall perform such duties as from time to time may be assigned to him by the President, the Chief Financial Officer or the Board of Directors.

SECTION 24. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation.

ARTICLE IV

Contracts, Checks, Drafts, Bank Account, Etc.

SECTION 1. Contracts, etc., How Executed. The Board of Directors, except as otherwise provided in these Bylaws, may authorize any officer or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so

7

authorized by the Board of Directors or by these Bylaws, no agent or employee, other than an officer of the Corporation acting within the scope of his authority, shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount.

SECTION 2. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money and all notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, employee or employees of the Corporation as shall from time to time be determined by resolution of the Board of Directors.

SECTION 3. Deposits. All funds of the Corporation shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may from time to time designate, or as may be designated by any officer or officers of the Corporation to whom such power may be delegated by the Board of Directors, and for the purpose of such deposit, the President, Vice President, Chief Financial Officer, Assistant Treasurer, Secretary or Assistant Secretary may endorse, assign and deliver checks, drafts and other orders for the payment of money which are payable to the order of the Corporation.

SECTION 4. General and Special Bank Accounts. The Board of Directors may from time to time authorize the opening and keeping with such banks, trust companies or other depositories as it may designate of general and special bank accounts, and may make such special rules and regulations with respect thereto, not inconsistent with the provisions of these Bylaws, as it may deem expedient.

ARTICLE V

Stock and Transfer of Stock

SECTION 1. Certificates of Stock. Certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with law, as shall be approved by the Board of Directors. They shall be numbered in order of their issue, and shall be signed by the President or a Vice President and by the Chief Financial Officer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, and the seal of the Corporation shall be affixed thereto. The signatures of any of such officers and the seal of the Corporation upon such Certificates may be in facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a Certificate shall have ceased to be such officer, transfer agent or registrar before such Certificate is issued, it may nevertheless be issued and delivered by the Corporation with the same effect as if he were such officer, transfer agent or registrar.

SECTION 2. Transfers of Stock. Transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof, or by his

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attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary of the Corporation or with a transfer agent of the Corporation, if any, and on surrender of the Certificates for such shares properly endorsed. A person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof as regards the Corporation and the Corporation shall not be bound to recognize any equitable or other claim to, or interest in, such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of California.

SECTION 3. Lost, Destroyed and Mutilated Certificates. The holder of any stock issued by the Corporation shall immediately notify the Corporation of any loss, destruction or mutilation of the Certificates therefor, or failure to receive Certificates of stock issued by the Corporation, and the Board of Directors or the Secretary of the Corporation may, in its or his discretion, cause to be issued to such holder of stock a new Certificates of stock upon compliance with such rules, regulations and/or procedures as may have been prescribed by the Board of Directors with respect to the issuance of new Certificates in lieu of such other Certificates or Certificates of stock.

ARTICLE VI

Seal

The Board of Directors shall provide a suitable seal containing the name of the Corporation, which seal shall be in the charge of the Secretary and which may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. If and when so directed by the Board of Directors, a duplicate of the seal may be kept and be used by any officer of the Corporation designated by the Board of Directors.

ARTICLE VII

Indemnification

SECTION 1. Right to Indemnification. The Company shall indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a "proceeding"), by reason of the fact that such person is or was a director or officer of the Company or a constituent corporation absorbed in a consolidation or merger, or is or was serving at the request of the Company or a constituent corporation absorbed in a consolidation or merger, as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or is or was a director or officer of the Company serving at its request as an administrator, trustee or other fiduciary of one or more of the employee benefit plans of the Company or other enterprise, against expenses (including attorneys' fees), liability and loss actually and reasonably incurred or suffered by such person in connection with such proceeding, whether or not the indemnified liability arises

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or arose from any threatened, pending or completed proceeding by or in the right of the Company, except to the extent that such indemnification is prohibited by applicable law.

SECTION 2. Advance of Expenses. Expenses incurred by a director or officer of the Company in defending a proceeding shall be paid by the Company in advance of the final disposition of such proceeding subject to the provisions of any applicable statute.

SECTION 3. Procedure for Determining Permissibility. To determine whether any indemnification or advance of expenses under this Article IV is permissible, the Board of Directors by a majority vote of a quorum consisting of directors not parties to such proceeding may, and on request of any person seeking indemnification or advance of expenses shall be required to, determine in each case whether the applicable standards in any applicable statute have been met, or such determination shall be made by independent legal counsel if such quorum is not obtainable, or, even if obtainable, a majority vote of a quorum of disinterested directors so directs, provided that, if there has been a change in control of the Company between the time of the action or failure to act giving rise to the claim for indemnification or advance of expenses and the time such claim is made, at the option of the person seeking indemnification or advance of expenses, the permissibility of indemnification or advance of expenses shall be determined by independent legal counsel. The reasonable expenses of any director or officer in prosecuting a successful claim for indemnification, and the fees and expenses of any special legal counsel engaged to determine permissibility of indemnification or advance of expenses, shall be borne by the Company.

SECTION 4. Contractual Obligation. The obligations of the Company to indemnify a director or officer under this Article IV, including the duty to advance expenses, shall be considered a contract between the Company and such director or officer, and no modification or repeal of any provision of this Article IV shall affect, to the detriment of the director or officer, such obligations of the Company in connection with a claim based on any act or failure to act occurring before such modification or repeal.

SECTION 5. Indemnification Not Exclusive: Inuring of Benefit. The indemnification and advance of expenses provided by this Article IV shall not be deemed exclusive of any other right to which one indemnified may be entitled under any statute, provision of the Articles of Incorporation, these Bylaws, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall inure to the benefit of the heirs, executors and administrators of any such person.

SECTION 6. Insurance and Other Indemnification. The Board of Directors shall have the power to (i) authorize the Company to purchase and maintain, at the Company's expense, insurance on behalf of the Company and on behalf of others to the extent that power to do so has not been prohibited by statute,
(ii) create any fund of any nature, whether or not under the control of a trustee, or otherwise secure any of its indemnification obligations, and (iii) give other indemnification to the extent permitted by statute.

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SECTION 7. Additional Indemnification. The Board of Directors of this Corporation is authorized to enter into an agreement or agreements with any agent or agents of the corporation, providing for or permitting indemnification in excess of that permitted under Section 317 of the Corporations Code, subject to the limitations of Section 204 of the Corporations Code.

ARTICLE VIII

Miscellaneous Provisions

SECTION 1. Fiscal Year. The fiscal year of the Corporation shall end on such date in each year as shall be determined by resolution of the Board of Directors of the Corporation.

SECTION 2. Waivers of Notice. Whenever any notice of any nature is required to be given by law, the provisions of the Articles of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

SECTION 3. Qualifying in Foreign Jurisdictions. The Board of Directors shall have the power at any time and from time to time to take or cause to be taken any and all measures which it may deem necessary for qualification to do business as a foreign corporation in any one or more foreign jurisdictions and for withdrawal therefrom.

ARTICLE IX

Amendments

These Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws not inconsistent with any provision of the Articles of Incorporation of the Corporation or any provision of applicable law may be made, either by the affirmative vote of the holders of record of a majority of the outstanding voting stock of the Corporation or, except in the case of Article II, Section 2 hereof, by the affirmative vote of the Board of Directors.

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EXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT FOR COMMON STOCK

This Registration Rights Agreement for Common Stock (the "Agreement") is made and entered into September 30, 1997, by and among California Pizza Kitchen, Inc., a California corporation (the "Company"), Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited partnership ("BRS"), the individuals and entities set forth on Exhibit A hereto (the "Additional Investors"), and Richard L. Rosenfield and Larry S. Flax (the "Founding Investors"). BRS, the Additional Investors and the Founding Investors, each of whom in their individual capacity and as Trustee under the California Pizza Kitchen, Inc. Voting Trust Agreement, dated March 1, 1990, as amended March 2, 1990 (the "Voting Trust Agreement"), with respect to the shares of stock subject thereto, are sometimes referred to hereinafter individually as an "Investor" and collectively as the "Investors."

This Agreement is made pursuant to the Securities Holders Agreement (as hereinafter defined). In order to induce the Investors to enter into the Securities Holders Agreement, the Company has agreed to provide the registration rights set forth in this Agreement.

The parties hereby agree as follows:

1. Definitions

As used in this Agreement, the following capitalized terms shall have the following meanings:

"Affiliate" has the meaning set forth in Rule 12b-2 of the Rules promulgated under the Exchange Act.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the Common Stock of the Company as adjusted for any stock dividend or distribution payable thereon or stock split, reverse stock split, recapitalization, reclassification, reorganization, exchange, subdivision or combination thereof.

"Demand Registration" has the meaning set forth is Section 4(a) of this Agreement.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.

"Person" means an individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

"Prospectus" means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference in such Prospectus.

"Registration Expenses" means the costs and expenses of all registrations and qualifications under the Securities Act, and of all other actions the Company is required to take in order to effect the registration of Registrable Securities under the Securities Act pursuant to this Agreement (including all federal and state registration and filing fees, printing expenses, fees and disbursements of counsel for the Company and the fees and expenses of the Company's independent public accountants (including the expenses of any special audit and "cold comfort" letters required by or incident to such registration)) other than the costs and expenses of any Investors whose Registrable Securities are to be registered pursuant to this Agreement comprising underwriters' commissions, brokerage fees, transfer taxes or the fees and expenses of any accountants or other representatives retained by any Investor.

"Registration Statement" means any registration statement of the Company which covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

"Registrable Securities" has the meaning set forth in Section 2 of this Agreement.

"Securities Act" means the Securities Act of 1933, as amended from time to time.

"Securities Holders Agreement" means the Securities Holders Agreement dated as of the date hereof among the Company and the Investors.

"Special Registration Statement" means a registration statement on Forms S-8 or S-4 or any similar or successor form or any other registration statement relating to an exchange offer or an offering of securities solely to the Company's employees or security holders or used in connection with the acquisition of the business of another person or entity or used to offer or sell a combination of debt and equity securities of the Company in which (i) not more than 10% of the gross proceeds from such offering is attributable to the equity securities and (ii) after giving effect to such offering, the Company does not have a class of equity securities required to be registered under the Securities Exchange Act of 1934, as amended.

"Underwritten registration" or "Underwritten offering" means a registration in which securities of the Company are sold to an underwriter for reoffering to the public.

2. Registrable Securities. The securities entitled to the benefits of this Agreement are the Registrable Securities. As used herein, "Registrable Securities" means the shares of Common Stock that are issued and outstanding on the date hereof and the shares of Common Stock that become issued and outstanding after the date hereof, in each case to the extent subject to the Securities Holders Agreement; provided that each share of Common Stock shall cease to be a Registrable Security when (i) it has been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering it; (ii) it is distributed to the public pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act; or (iii) it has otherwise been transferred and a new certificate or other evidence of ownership for it not bearing a legend as set forth in Section 2.2 of the Securities Holders Agreement (or other legend of similar import) and not subject to any stop transfer order has been delivered by or on behalf of the Company and no other restriction on transfer exists under the Securities Act.

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3. Incidental Registration.

(a) Right to Include Common Stock. If the Company at any time proposes to register any of its Common Stock under the Securities Act (other than on a Special Registration Statement, but expressly including a Demand Registration pursuant to Section 4(a) hereof), whether or not for sale for its own account, it will each such time give at least 30 days prior written notice (the "Notice") to all holders of Registrable Securities of its intention to file a registration statement under the Securities Act and of such holders' rights under this
Section 3. Upon the written request of any such holders of Registrable Securities made within 15 days of the date of the Notice (which request shall specify the aggregate number of the Registrable Securities to be registered and will also specify the intended method of disposition thereof), the Company will effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the holders thereof (an "Incidental Registration"), to the extent required to permit the public disposition (in accordance with such intended methods thereof) of the Registrable Securities to be so registered; provided, that (i) if, any time after giving written notice of its intention to register shares of Common Stock and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register the Company's Common Stock, the Company shall give written notice of such determination to each holder of Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith); (ii) if a registration requested pursuant to this Section 3 shall involve an underwritten public offering, any holder of Registrable Securities requesting to be included in such registration may elect, in writing at least 20 days prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration; and (iii) if, at any time after the 180-day or shorter period specified in Section 5(b), the sale of the securities has not been completed, the Company may withdraw from the registration on a pro rata basis (based on the number of Registrable Securities requested by each holder of Registrable Securities to be so registered) the Registrable Securities which the Company has been requested to register and which have not been sold.

(b) Priority in Incidental Registrations. If a registration pursuant to Section 3(a) involves an underwritten offering and the managing underwriter advises the Company in writing that, in its opinion, the total number of shares of Common Stock to be included in such registration, including the Registrable Securities requested to be included pursuant to this Section 3, exceeds the maximum number of shares of Common Stock specified by the managing underwriter that may be distributed without adversely affecting the price, timing or distribution of such shares of Common Stock, then the Company shall include in such registration only such maximum number of Registrable Securities which, in the reasonable opinion of such underwriter or underwriters, can be sold in the following order of priority: (i) first, all of the shares of Common Stock that the Company proposes to sell for its own account, if any, and (ii) second, the Registrable Securities of BRS, the Additional Investors and the Founding Investors requested to be included in such Incidental Registration. To the extent that shares of Common Stock to be included in the Incidental Registration must be allocated among the holders(s) of Registrable Securities pursuant to clause (ii) above, such shares shall be allocated pro rata among the holders(s) of Registrable Securities based on the number of shares of Common Stock that such holders(s) of Registrable Securities shall have requested to be included therein.

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(c) Expenses. The Company will pay all Registration Expenses in connection with any registration of Registrable Securities requested pursuant to this Section 3.

(d) Liability for Delay. The Company shall not be held responsible for any delay in the filing or processing of a registration statement which includes any Registrable Securities due to requests by holders of Registrable Securities pursuant to this Section 3 nor for any delay in requesting the effectiveness of such registration statement.

(e) Participation in Underwritten Registrations. No holder of Registrable Securities may participate in any underwritten registration hereunder unless such holder (i) agrees to sell his or its Common Stock on the basis provided in any underwriting arrangements approved by the persons who have selected the underwriter and (ii) accurately completes in a timely manner and executes all questionnaires, powers of attorney, underwriting agreements and other documents customarily required under the terms of such underwriting arrangements.

4. Demand Registration

(a) Right to Demand Registration. Subject to Section 4(b) below, BRS shall be entitled to make a written request ("Demand Registration Request") to the Company for registration with the Commission under and in accordance with the provisions of the Securities Act of all or part of the Registrable Securities owned by it (a "Demand Registration") (which Demand Registration Request shall specify the intended number of Registrable Securities to be disposed of by such holder and the intended method of disposition thereof); provided, that (i) the Company may, if the Board of Directors so determines in the exercise of its reasonable judgment that due to a pending or contemplated acquisition or disposition or public offering or other similar occurrence it would be inadvisable to effect such Demand Registration at such time, defer such Demand Registration for a single period not to exceed 180 days, and (ii) if the Company elects not to effect the Demand Registration pursuant to the terms of this sentence, no Demand Registration shall be deemed to have occurred for purposes of this Agreement.

(b) Number of Demand Registrations. BRS shall be entitled to make one or more Demand Registration Requests at any time and from time to time provided that the aggregate proceeds reasonably expected from the sale of Registrable Securities (including Registrable Securities being sold by holders of Registrable Securities other than BRS) pursuant to a Demand Registration are $5 million or more. The Registration Expenses shall be borne by the Company.

(c) Priority on Demand Registration. If any of the Registrable Securities proposed to be registered pursuant to a Demand Registration are to be sold in a firm commitment underwritten offering and the managing underwriter or underwriters of a Demand Registration advise the Company and the holders of such Registrable Securities in writing that in its or their reasonable opinion the number of shares of Common Stock proposed to be sold in such Demand Registration exceeds the maximum number of shares specified by the managing underwriter that may be distributed without adversely affecting the price, timing or distribution of the Common Stock, the Company shall include in such registration only such maximum number of Registrable Securities which, in the reasonable opinion of such underwriter or underwriters can be sold in the following order of priority:
(i) first, the Registrable Securities requested to be included in such Demand Registration held by BRS, the Additional Investors and the Founding Investors, provided that such

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amount shall be allocated among such other holders on a pro rata basis based upon their respective percentage of ownership of the total number of shares of Common Stock then outstanding and (ii) second, shares of Common Stock to be offered by the Company in such Demand Registration.

5. Registration Procedures. If and whenever the Company is required to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company will, as expeditiously as reasonably possible:

(a) prepare and file with the Commission a registration statement with respect to such Registrable Securities, and use its best efforts to cause such registration statement to become effective, provided, however, that the Company may discontinue any registration of its securities which is being effected pursuant to Sections 3 or 4 herein at any time prior to the effective date of the registration statement relating thereto;

(b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 180 days or such shorter period which will terminate when all Registrable Securities covered by such registration statement have been sold (but not before the expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;

(c) furnish to each seller of such Registrable Securities such number of copies of such registration statement and of each such amendment and supplement thereof (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities by such seller;

(d) use its best efforts to register or qualify such Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as each seller shall request, and do any and all other acts and things which may be necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process in any such jurisdiction where it is not then so subject or subject itself to general taxation in any jurisdiction where it is not then so subject;

(e) immediately notify each seller of any Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Act within the appropriate period mentioned in clause (b) of this Section 5, of the Company becoming aware that the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and within ten days prepare and furnish to all sellers a reasonable number of copies of an

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amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;

(f) use its best efforts to list such Registrable Securities on any securities exchange on which the Common Stock is then listed or NASDAQ if the Common Stock is then quoted on NASDAQ, if such Registrable Securities are not already so listed or quoted and if such listing is then permitted under the rules of such exchange or NASDAQ, and provide an independent transfer agent and registrar for such Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

(g) furnish to each seller of Registrable Securities covered by such registration statement a signed counterpart, addressed to such seller (and the underwriters, if any) of:

(i) an opinion of counsel for the Company, dated the effective date of such registration statement (or, if such registration involves an underwritten public offering, dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to the sellers of not less than 50% of such Registrable Securities (and the managing underwriter, if any); and

(ii) a "comfort" letter, dated the effective date of such registration statement (or, if such registration involves an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the independent public accountants who have certified the Company's financial statements included in such registration statement, covering such matters with respect to such registration statement as are customarily covered in accountants' letters delivered to the underwriters in underwritten offerings of securities as may reasonably be requested by the sellers of not less than 50% of such Registrable Securities (and the managing underwriter, if any); and

(h) make available for inspection by any seller of such Registrable Securities covered by such registration statement, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such seller or any such underwriter (individually, an "Inspector" and collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate documents and properties of the Company as shall be reasonably necessary to enable them to exercise their due diligence responsibility (collectively, the "Records"), and cause all of the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; provided that any Records that are designated by the Company in writing as confidential shall be kept confidential by the Inspectors unless (A) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (B) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or by any regulatory authority having jurisdiction. Each Investor agrees that non-public information obtained by it as a result of such Inspections shall be deemed confidential and acknowledges its obligations under the Federal securities laws not to trade any securities of the Company on the basis of material non-public information.

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The Company may require each seller of Registrable Securities as to which any registration is being effected promptly to furnish to the Company
(i) an opinion of counsel for such seller dated the effective date of the registration statement relating to such seller's Registrable Securities (or, if such registration involves an underwritten public offering, dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to the Company (and the managing underwriter, if any) and (ii) such information regarding the distribution of such Registrable Securities as may be legally required. Such information shall be furnished in writing and shall state that it is being furnished for use in the registration statement.

Each holder of Registrable Securities agrees by acquisition of such Registrable Securities that, upon receipt of any notice from the Company of the happening of any event of the kind described in clause (e) of this Section 5, such holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by clause (e) of this Section 5, and, if so directed by the Company, such holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of the Company's notice. In the event the Company shall give any such notice, the period mentioned in clause (b) of this Section 5 shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to clause (e) of this Section 5 and including the date when each seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by clause (e) of this Section 5.

6. Indemnification.

(a) Indemnification by the Company. The Company hereby agrees to indemnify and hold harmless each holder of Registrable Securities which shall have been registered under the Securities Act, and such holder's officers, directors and agents and each other Person, if any, who controls such holder within the meaning of the Securities Act and each other Person (including underwriters) who participates in the offering of such Registrable Securities against any losses, claims, damages, liabilities, reasonable attorneys' fees, costs or expenses (collectively, the "Damages"), joint or several, to which such holder or controlling Person or participating Person may become subject under the Securities Act or otherwise, insofar as such Damages (or proceedings in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact made by the Company or its agents contained in any registration statement under which such Registrable Securities are registered under the Securities Act, in any preliminary prospectus or final prospectus contained therein, or in any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse such holder of Registrable Securities or such controlling Person or participating Person in connection with investigating or defending any such Damages or proceeding; provided, however, that the Company will not be liable in any such case to the extent that any such Damages arise out of or are based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, said preliminary or final prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such holder or such controlling or participating Person, as the case may be, specifically for use in the preparation thereof; or (ii) an untrue statement or alleged untrue statement, omission or alleged omission in a prospectus if such untrue statement or alleged untrue statement, omission or alleged omission is

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corrected in an amendment or supplement to the prospectus which amendment or supplement is delivered to such holder in a timely manner and such holder thereafter fails to deliver such prospectus as so amended or supplemented prior to or concurrently with the sale of such Registrable Securities to the Person asserting such Damages.

(b) Indemnification by the Holders of Registrable Securities
Which Are Registered. It shall be a condition of the Company's obligations under this Agreement to effect any registration under the Securities Act that there shall have been delivered to the Company an agreement or agreements duly executed by each holder of Registrable Securities to be so registered, whereby such holder agrees to indemnify and hold harmless the Company, its directors, officers and agents and each other Person, if any, which controls the Company within the meaning of the Securities Act against any Damages, joint or several, to which the Company, or such other Person or such Person controlling the Company may become subject under the Securities Act or otherwise, but only to the extent that such Damages (or proceedings in respect thereof) arise out of or are based upon any untrue statements or alleged untrue statement of any material fact contained, on the effective date thereof, in any registration statement under which such Registrable Securities are registered under the Securities Act, in any preliminary prospectus or final prospectus contained therein or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, which, in each such case, has been made in or omitted from such registration statement, said preliminary or final prospectus or said amendment or supplement in reliance upon, and in conformity with, written information furnished to the Company by such holder of Registrable Securities specifically for use in the preparation thereof. The Company shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above, with respect to information furnished in writing by such Persons specifically for inclusion in any prospectus or registration statement.

(c) Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of the commencement of any action or proceeding involving a claim referred to in the preceding paragraphs of this Section 6; and (ii) unless the indemnified party has been advised by its counsel that a conflict of interest exists between such indemnified and indemnifying parties under applicable standards of professional responsibility, with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. Whether or not such defense is assumed by the indemnifying party, the indemnifying party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnifying party will consent to the entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation; provided, however, that no indemnifying party will consent to the entry of any judgment or enter into any settlement (other than for the payment of money only) without the consent of the indemnified party (which consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of the claim, will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other such indemnified parties with respect to such

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claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels.

(d) Contribution. If for any reason the indemnification provided for in the preceding Sections 6(a) or 6(b) is unavailable to an indemnified party in respect of any Damages referred to therein, the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such Damages in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that in no event shall the liability of any selling holder of Registrable Securities hereunder be greater in amount than the difference between the dollar amount of the proceeds received by such holder upon the sale of the Registrable Securities giving rise to such contribution obligation and all amounts previously contributed by such holder with respect to such Damages. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of fraudulent misrepresentation.

7. Hold-Back Agreements

(a) Restrictions on Public Sale by Holder of Registrable
Securities. Each holder of Registrable Securities whose Registrable Securities are eligible for inclusion in a Registration Statement filed pursuant to Sections 3 or 4 agrees, if requested by the managing underwriter or underwriters in an underwritten offering of any Registrable Securities, not to effect any public sale or distribution of Registrable Securities, including a sale pursuant to Rule 144 (or any similar provision then in force) under the Securities Act (except as part of such underwritten registration), during the 10-day period prior to, and during the 90-day period (or such shorter period as may be agreed to by the parties hereto) beginning on the effective date of such Registration Statement, to the extent timely notified in writing by the Company or the managing underwriter or underwriters.

The foregoing provisions shall not apply to any holder of Registrable Securities if such holder is prevented by applicable statute or regulation from entering into any such agreement; provided, however, that any such holder shall undertake, in its request to participate in any such underwritten offering, not to effect any public sale or distribution of Registrable Securities (except as part of such underwritten registration) during such period unless it has provided 45 days prior written notice of such sale or distribution to the managing underwriter or underwriter.

(b) Restrictions on Public Sale by the Company and Others. The Company shall (i) not effect any public sale or distribution of any of its Common Stock for its own account during the 10-day period prior to, and during the 90-day period beginning on, the effective date of a Registration Statement filed pursuant to Sections 3 or 4 (except as part of a Special Registration Statement), and (ii) use reasonable efforts to cause each holder of Common Stock purchased from the Company at any time after the date of this Agreement (other than in a registered

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public offering) to agree not to effect any public sale or distribution of any such securities during such period, including a sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten registration, if permitted).

8. Underwritten Registration

If any of the Registrable Securities covered by any Incidental Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Company and, in the case of a Demand Registration, reasonably acceptable to BRS.

Notwithstanding anything herein to the contrary, no Person may participate in any underwritten registration hereunder unless such Person (a) agrees to sell such Person's securities on the basis provided in any underwritten arrangements approved by the Persons entitled hereunder to approve such arrangement and (b) accurately completes and executes all questionnaires, powers of attorney, indemnities, custody agreements, underwriting agreements and other documents required under the terms of such underwriting arrangements.

9. Miscellaneous

(a) Amendment and Modification. This Agreement may be amended or modified, or any provision hereof may be waived, provided that such amendment or waiver is set forth in a writing executed by (i) the Company, (ii) BRS (so long as BRS and its Affiliates own in the aggregate at least 25% of the outstanding Common Stock on a fully diluted basis), (iii) the holders of a majority of the shares of the Registrable Securities held by Investors other than BRS, and (iv) in the case of any amendment which materially and adversely affects any Investor differently from any other Investor, such Investor. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement.

(b) Survival of Representations and Warranties. All representations, warranties, covenants and agreements set forth in this Agreement will survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation made by an Investor or on its behalf.

(c) Successors and Assigns: Entire Agreement. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns and executors, administrators and heirs. This Agreement sets forth the entire agreement and understandings among the parties as to the subject matter hereof and merges and supersedes all prior discussions and understandings of any and every nature among them.

(d) Separability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless that provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement.

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(e) Notices. All notices provided for or permitted hereunder shall be made in writing by hand-delivery, registered or certified first-class mail, telex, telecopier or air courier guaranteeing overnight delivery to the other party at the following addresses (or at such other address as shall be given in writing by any party to the others):

If to the Company:

California Pizza Kitchen, Inc.
6053 West Century Blvd., 11th Floor
Los Angeles, California 90045-6442

Attention: President
Fax: (310) 575-5750
Confirm: (310) 575-3000

with a required copy to:

Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell, Esq.

Fax: (215) 994-2222

Confirm: (215) 994-2762

If to BRS:

Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street, 29th Floor
New York, New York 10022

Attention: Harold 0. Rosser II Fax: (212) 521-3799
Confirm: (212) 521-3707

with a required copy to:

Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: G. Daniel O'Donnell, Esq.

Fax: (215) 994-2222

Confirm: (215) 994-2762

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If to Richard L. Rosenfield or Larry S. Flax:

c/o California Pizza Kitchen, Inc.
6053 West Century Blvd., 11th Floor
Los Angeles, California 90045-6442

Fax: (310) 575-5750
Confirm: (310) 575-3000

in each case, with a required copy to:

Stein & Kahan
1299 Ocean Avenue, 4th Floor Santa Monica, California 90401 Attention: Robert Kahan
Fax: (310) 394-4759
Confirm: (310) 458-6900

All such notices shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery.

(f) Governing Law. The validity, performance, construction and effect of this Agreement shall be governed by and construed in accordance with the internal law of California, without giving effect to principles of conflicts of law.

(g) Headings. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement, nor shall they affect their meaning, construction or effect.

(h) Counterparts. This Agreement may be executed in two or more counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same instrument.

(i) Further Assurances. Each party shall cooperate and take such action as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.

(j) Termination. Unless sooner terminated in accordance with its terms, this Agreement shall terminate on the fifteenth anniversary of the date of this Agreement; provided that the indemnification rights and obligations set forth in Section 6 hereof shall survive the termination of this Agreement.

(k) Remedies. In the event of a breach or a threatened breach by any party to this Agreement of its obligations under this Agreement, any party injured or to be injured by such breach, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement, it being agreed

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by the parties that the remedy at law, including monetary damages, for breach of such provision will be inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.

(l) Party No Longer Owning Securities. If a party hereto ceases to own any Securities, such party will no longer be deemed to be an Investor for purposes of this Agreement; provided that the indemnification rights and obligations set forth in Section 6 hereof shall survive any such cessation of ownership.

(m) Pronouns. Whenever the context may require, any pronouns used herein shall be deemed also to include the corresponding neuter, masculine or feminine forms.

(n) No Effect on Employment. Nothing herein contained shall confer on any Investor the right to remain in the employ of the Company or any of its subsidiaries or Affiliates.

(o) Attorneys' Fees. In the event any party hereto commences any action to enforce any rights of such party hereunder, the prevailing party in such action shall be entitled to recover such party's costs and expenses incurred in such action, including, without limitation, reasonable attorneys' fees.

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

CALIFORNIA PIZZA KITCHEN, INC.

By:   /s/  Richard C. Stockinger
    --------------------------------------
    Name:  Richard C. Stockinger
    Title: Vice President

BRUCKMANN, ROSSER, SHERRILL & CO., L.P. By BRS Partners, Limited Partnership, its general partner,
By BRSE Associates, Inc., its general partner

By:   /s/  Harold O. Rosser
    -------------------------------------
    Name:  Harold O. Rosser
    Title: Managing Director


/s/ Larry S. Flax
-----------------------------------------
Larry S. Flax
Individually and as trustee under the Voting Trust
Agreement

/s/ Richard L. Rosenfield
-----------------------------------------
Richard L. Rosenfield
Individually and as trustee under the Voting Trust
Agreement


/s/ Bruce C. Bruckmann *
-----------------------------------------
Bruce C. Bruckmann
Address:  125 East 84th Street, Apt. 5A
          New York, NY 10028

BCB FAMILY PARTNERS
By Bruce C. Bruckmann, General Partner

By: /s/ Bruce C. Bruckmann *
    -----------------------------------------
    Name:
    Title:

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/s/ Donald Bruckmann *
---------------------------------------
Donald Bruckmann
Address:  66 East 79th Street
          New York, NY 10021

NAZ FAMILY PARTNERS
By Nancy A. Zweng, General Partner

By: /s/ Nancy A. Zweng *
    -----------------------------------
    Name:
    Title:


/s/ Nancy A. Zweng *
---------------------------------------
Nancy A. Zweng
Address:  125 East 84th Street, Apt. 5A
          New York, NY 10028


/s/ H. Virgil Sherrill *
---------------------------------------
H. Virgil Sherrill
Address:  One Sutton Place South
          New York, NY 10022


/s/ Stephen C. Sherrill *
---------------------------------------
Stephen C. Sherrill
Address:  765 Park Avenue, Apt. 4B
          New York, NY 10021


/s/ Harold O. Rosser
---------------------------------------
Harold O. Rosser
Address:  499 Silvermine Road
          New Canaan, CT 06840


/s/ Paul D. Kaminski *
---------------------------------------
Paul D. Kaminski
Address:  54 W. 9th Street
          New York, NY 10011

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/s/ J. Rice Edmonds*
--------------------------------------
J. Rice Edmonds
Address:


/s/ Marilena Tibrea*
--------------------------------------
Marilena Tibrea
Address:

FURMAN SELZ SBIC, L.P.
By Furman Selz SBIC Investments L.L.C.

By: /s/ James L. Luikart
   -----------------------------------
   James L. Luikart
   Title: EUD
   230 Park Avenue
   New York, NY 10169


/s/ Roy Furman
--------------------------------------
Roy Furman
Address:  230 Park Avenue
          New York, NY 10169



/s/ David Harris
--------------------------------------
David Harris
Address:  230 Park Avenue
          New York, NY 10169

BANCBOSTON INVESTMENTS INC.

By: /s/ Theresa A. Nibi
    ----------------------------------
    Name:  Theresa A. Nibi
    Title: Vice President


/s/ Eric Gleacher
--------------------------------------
Eric Gleacher
Address:  1133 Fifth Avenue
          New York, NY 10128

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/s/ Robert Engel
--------------------------------------
Robert Engel
Address:  425 West End Avenue, #7B
          New York, NY 10024


/s/ James Goodwin
--------------------------------------
James Goodwin
Address:  39 East 79th St.
          New York, NY 10021


/s/ Emil Henry
--------------------------------------
Emil Henry
Address:  654 Guard Hill Rd.
          Bedford, NY 10506


/s/ Roger Hoit
--------------------------------------
Roger Hoit
Address:  83 Blackburn Rd.
          Summit, NJ 07901


/s/ H. Conrad Meyer III
--------------------------------------
H. Conrad Meyer III
Address:  1 Woodland Ave.
          Bronxville, NY 10708


/s/ David W. Mills
--------------------------------------
David Mills
Address:  16 Highland Park Place
          Rye, NY 10580


/s/ Charles Phillips
--------------------------------------
Charles Phillips
Address:  775 Park Avenue
          New York, NY 10021


/s/ Clayton J. Rohrbach, III
--------------------------------------
Clayton J. Rohrbach, III
Address:  21 Clapboard Ridge Road
          Greenwich, CT 06830

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/s/ Jeffrey Tepper
--------------------------------
Jeffrey Tepper
Address:  40 East 88th St., #5A
          New York, NY 10128

GLEACHER IV, L.P.

By: /s/ Robert A. Engel
   -----------------------------
   Robert A. Engel
   General Partner
   c/o Gleacher Natwest, Inc.
   660 Madison Ave.
   New York, NY 10021

* By Harold O. Rosser, as attorney-in-fact.

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EXHIBIT 9.1

VOTING TRUST AGREEMENT

THIS IS A VOTING TRUST AGREEMENT, dated as of September 30, 1997, among the entities and individuals listed on Exhibit A attached hereto (individually, a "Shareholder" and collectively, the "Shareholders"), and Harold
0. Rosser II and Stephen F. Edwards, and their successors appointed as provided in this Agreement, as Voting Trustees (the "Voting Trustees").

Background

A. California Pizza Kitchen, Inc., a California corporation (the "Company"), is duly organized and validly existing under the laws of the State of California. Pursuant to an Agreement and Plan of Merger, dated as of July 1, 1997, as amended (the "Merger Agreement"), among the Company, Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS"), C.P. Kitchen Acquisition Corp., CPK Acquisition Corp. and Richard L. Rosenfield and Larry S. Flax, the Shareholders will acquire an aggregate of 1,887,200 shares of Class A Common Stock, par value $.01 per share ("Class A Common Stock"), or Class B Common Stock, par value $.01 per share ("Class B Common Stock" and, together with Class A Common Stock, "Common Stock"), of the Company.

B. The Voting Trustees are representatives of BRS.

C. In consideration of the premises and of the mutual undertakings of the parties hereinafter set forth, a voting trust (the "Trust") in respect of the shares of Common Stock of the Company owned by the Shareholders is hereby created and established, subject to the following terms and conditions, to all and every one of which the parties hereto expressly assent and agree.

Terms

In consideration of the mutual agreements contained herein, and intending to be legally bound hereby, the parties agree as follows:

1. Deposit of Common Stock.

(a) Transfer of Shares. Each Shareholder agrees that, immediately following the merger contemplated under the Merger Agreement, he or it will transfer and assign, or cause to be transferred and assigned, to the Voting Trustees all of the shares of Common Stock of the Company then owned by him or it (the "Shares") and will deposit or cause to be deposited hereunder, with the Voting Trustees, the certificates for such Shares, all of which certificates, if not registered in the name of the Voting Trustees at the time of such deposit, shall be duly endorsed in blank or accompanied by proper instruments of assignment and transfer thereof duly executed in blank.

(b) All Shares of Common Stock. The provisions of this Agreement shall apply to any and all shares of Common Stock of the Company that (i) may be issued in respect of, in exchange for, or in substitution of any Shares transferred to the Voting Trustees pursuant to

paragraph (a) hereof, or (ii) are hereafter acquired by any Shareholder at any time, whether upon exercise of options, warrants or rights or upon conversion of securities or otherwise, and each Shareholder agrees that until the termination of this Agreement, no shares of Common Stock of the Company shall be held by such Shareholder, but all such shares shall be deposited with the Voting Trustees in accordance with the terms and conditions of this Agreement.

2. Voting Trust Certificates.

(a) Issue of Certificates. The Voting Trustees shall from time to time issue to each Shareholder, with respect to the shares of Common Stock of the Company owned by such Shareholder and so deposited hereunder, a Voting Trust Certificate or Voting Trust Certificates, each in the form of Exhibit B hereto, for the number of shares of Common Stock equal to that deposited hereunder by such Shareholder, which Certificate(s) shall refer to the provisions of this Agreement and be registered on the books of the Trust in such Shareholder's name.

(b) Transfer of Certificates. No Shareholder shall, directly or indirectly, except pursuant to the terms of this Agreement and the Securities Holders Agreement, dated as of the date hereof (the "Securities Purchase Agreement"), among the Company, BRS, Richard L. Rosenfield and Larry S. Flax, enter into any contract, option or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition ("Transfer") of, any or all of such Shareholder's Shares or any interest therein or any Voting Trust Certificates or interest therein; provided, however, that in any event no Shareholder shall Transfer any Shares or Voting Trust Certificates unless the transferee is a signatory to this Agreement or the transferee executes an instrument reasonably satisfactory to the Voting Trustees whereby such transferee becomes a signatory to, and bound by, this Agreement.

3. Replacement of Certificates.

(a) Issue of Replacement Certificates. In case any Voting Trust Certificate shall be mutilated, lost, destroyed or stolen, the Voting Trustees may issue and deliver in exchange therefor and upon cancellation of the mutilated Voting Trust Certificate, or in lieu of the lost, destroyed or stolen Voting Trust Certificate, a new Voting Trust Certificate or Voting Trust Certificates representing a like number of shares of Common Stock, upon the production of evidence of such loss, destruction or theft, satisfactory to the Voting Trustees, and upon receipt of an indemnity satisfactory to the Voting Trustees, and upon compliance also with such other reasonable conditions as the Voting Trustees may prescribe.

4. Certificates for Securities held by Voting Trustees.

(a) Surrender of Certificates. The certificates for Common Stock of the Company deposited with the Voting Trustees shall, if not registered in the name of the Voting Trustees at the time of deposit, be surrendered to the Company and cancelled and new certificates therefor issued to and in the name of the Voting Trustees. Notation shall be made on the face of all certificates issued in the name of the Voting Trustees that they are issued pursuant

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to this Agreement, and such fact shall also be noted in the records of stock ownership of the Company.

(b) Securities Held in Trust. All shares of Common Stock deposited with the Voting Trustees hereunder shall be held in trust for the Shareholders and their respective heirs, executors, administrators and assigns, and used and applied by the Voting Trustees and its successors in office for the purposes of and in accordance with this Agreement and shall remain subject to the Securities Purchase Agreement.

(c) Transfer of Shares. The Voting Trustees may cause any shares of Common Stock at any time held by them under this Agreement to be transferred to any name or names other than the name of the Voting Trustees herein named, if such transfer becomes necessary by reason of any change in the person holding the office of Voting Trustees as hereinafter provided.

5. Dividends: Subscription Rights.

(a) Dividends. The Company is hereby authorized and directed, and the Company hereby agrees, to pay all distributions and dividends that are paid in cash, stock (other than voting stock) or other property directly to the registered holder of the Voting Trust Certificate evidencing the shares of Common Stock of the Company on which such distributions or dividends are declared. All shares of voting stock issued as dividends on shares of Common Stock of the Company that are subject to this Agreement shall also be subject to this Agreement. The stock certificates for such shares shall be issued in the name of and delivered to the Voting Trustees to be held hereunder, subject to all of the provisions hereof, and the Voting Trustees shall issue additional Voting Trust Certificates in respect of such shares to the Shareholders entitled thereto.

(b) Distributions of Capital Stock. In case the Company shall at any time issue any stock or other securities to which the holders of the capital stock of the Company shall be entitled to subscribe by way of preemptive right or otherwise, or any Shareholder shall be otherwise entitled to purchase any shares of capital stock of the Company, the Voting Trustees shall promptly give notice of such right so to subscribe or purchase and of the terms thereof to such Shareholder at his or its address registered with the Voting Trustees; and such Shareholder upon providing the Voting Trustees with funds in the requisite amount, shall have the right, subject to such reasonable regulations as may be prescribed by the Voting Trustees, to instruct the Voting Trustees to subscribe for or purchase such stock or other securities, or any part thereof; and to the extent that such Shareholder shall fail to exercise such rights the Voting Trustees shall be entitled, in their absolute discretion, to permit such rights so to subscribe or purchase to lapse. Upon receiving proper instructions in writing, the Voting Trustees shall subscribe for or purchase such stock or other securities (but only out of funds provided by such Shareholder for the purpose) and shall distribute the same to such Shareholder, except that any shares of voting stock of the Company, when so subscribed for or purchased and received by the Voting Trustees, shall not be distributed but shall be held hereunder, subject to all the provisions hereof, and the Voting Trustees shall issue new or additional Voting Trust Certificates in respect of such shares to such Shareholder.

-3-

6. Actions by Voting Trustees.

(a) Proxy. A proxy may not be given with respect to the shares of stock subject hereto to any person other than the Voting Trustees, unless the Voting Trustees consent in writing to such proxy.

(b) Agents. The Voting Trustees may at any time or from time to time appoint an agent or agents and may delegate to such agent or agents the performance of any administrative duty of the Voting Trustees, including, without limitation, the appointment of a domestic bank or other institution to act as custodian of the shares of Common Stock of the Company held by it hereunder. The fees of such agent or agents shall constitute an expense of the Voting Trustees.

7. Liability of Voting Trustees: Indemnification.

(a) No Liability. The Voting Trustees assume no liability as a shareholder, their interest hereunder being that of trustee only. In voting the stock represented by the stock certificates deposited hereunder (which they may do either in person or by proxy as aforesaid), the Voting Trustees will vote and act in all matters in accordance with their good faith judgment and the terms of this Agreement; but they assume no responsibility or liability in respect of any action taken by them or taken in pursuance of their vote so cast, and the Voting Trustees shall not incur any responsibility or liability as trustee or otherwise by reason of any error of fact or law, mistake of judgment, or of any matter or thing done or suffered or omitted to be done under this Agreement, except for their own individual willful misconduct.

(b) Agents. The Voting Trustees shall not be answerable for the default or misconduct of any agent or attorney appointed by them in pursuance hereof if such agent or attorney shall have been selected with reasonable care.

(c) Expenses. The Voting Trustees shall not be entitled to any compensation for their services hereunder.

(d) Indemnity. The Shareholders hereby jointly and severally agree that they will at all times protect, indemnify and save harmless the Voting Trustees from any loss, cost or expense of any kind or character whatsoever incurred in connection with this Trust except those, if any, arising from the willful misconduct of the Voting Trustees, and will at all times themselves undertake, assume full responsibility for, and pay all costs and expenses of any suit or litigation of any character, including any proceedings before any governmental agency, with respect to the Shares of Common Stock or this Agreement and, if the Voting Trustees shall be made a party thereto, the shareholders will pay all costs and expenses, including counsel fees, to which the Voting Trustees may be subject by reason thereof. The Voting Trustees may consult with counsel and other advisors, and the opinions of such counsel and advisors shall be full and complete authorization and protection in respect of any action taken or omitted or suffered by the Voting Trustees hereunder in good faith and in accordance with such opinions.

-4-

(e) Notwithstanding any other provision hereof, the provisions of this Section 7 shall survive the termination of this Agreement.

8. Voting Discretion.

(a) Voting Discretion. Except as otherwise provided herein, until the termination of this Agreement and the actual delivery to the Shareholders of certificates for shares of Common Stock in exchange for Voting Trust Certificates hereunder, the Voting Trustees shall possess and shall be entitled in their discretion, not subject to any review, to exercise in person or by proxy, in respect of any and all shares of Common Stock at any time deposited under this Agreement, all rights and powers of every name and nature, including the right to vote thereon or to consent to any and every act of the Company, in the same manner and to the same extent as if the Voting Trustees were the absolute owner of such stock in their own right.

(b) Permitted Actions. Without limiting the generality of the foregoing paragraph (a), the Voting Trustees are, among other things, specifically authorized to vote for, consent to or authorize any of the following:

(i) the election, removal or replacement of directors of the Company,

(ii) the sale or disposal in the normal course of business of any part or parts of the property, assets or business of the Company;

(iii) any changes or amendments in or to the Articles of Incorporation or Bylaws of the Company;

(iv) any loans to officers, directors or shareholders of the Company;

(v) any indemnification of officers, directors or agents of the Company;

(vi) the entering into or submitting of a bid in connection with the negotiation of or application for any contract that the Company may not enter into or submit without the approval of the shareholders;

(vii) any other action that, by the terms of the General Corporation Law of the State of California or the Articles of Incorporation or Bylaws of the Company, permits or requires a vote of the holders of the capital stock of the Company, and

(viii) any action with respect to any of the foregoing that any shareholder might lawfully take.

9. Termination of this Agreement.

(a) Termination. This Agreement shall terminate with respect to any shares of Common Stock of the Company (i) as to which a registration statement shall have been filed

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pursuant to the Securities Act promptly upon the effectiveness thereof or (ii) upon the Voting Trustees' delivery of written notice of termination to the Shareholders. In addition, this Agreement shall terminate in the event of a sale by the Company, pursuant to an effective registration statement (other than a registration statement on Form S-4 or S-8 or their successor forms) under the Securities Act of 1933, as amended, of any stock for gross offering proceeds of at least $20 million.

(b) Irrevocable. Subject to paragraph (a) hereof, during the term of this Agreement, the Trust hereby created shall be irrevocable and no shares of Common Stock of the Company held by the Voting Trustees pursuant to the terms of this Agreement shall be transferred to or upon the order of the holder of a Voting Trust Certificate evidencing the beneficial ownership thereof prior to the termination of this Agreement.

(c) Termination By Law. Unless terminated sooner (i) pursuant to paragraph (a) hereof as to all shares of Common Stock held by the Voting Trustees, or (ii) by operation of law, this Agreement shall terminate without any action of or notice by or to the Voting Trustees, the Company or the Shareholders ten years from the day preceding the date hereof.

10. Delivery of Certificates for Common Stock upon Termination of this

Agreement.

(a) Certificates. Upon termination of this Agreement, the Voting Trustees, in exchange for and upon surrender of any Voting Trust Certificates then outstanding, shall, in accordance with the terms hereof, deliver certificates for shares of Common Stock in the amount called for by such Voting Trust Certificate and either registered in the name of the holder thereof or duly endorsed in blank or accompanied by proper instruments of assignment and transfer thereof duly executed in blank to the holder thereof, and the Voting Trustees may require the holder of such Voting Trust Certificate to surrender the same for such exchange.

(b) Obligations of Trustee. After any termination of this Agreement as above provided with respect to all shares of Common Stock, and delivery by the Voting Trustees of any stock or other property then held hereunder in exchange for outstanding Voting Trust Certificates as provided in this Section 10, all further obligations or duties of the Voting Trustees under this Agreement or any provision hereof shall cease.

11. Resignation: Successor Trustee.

The Voting Trustees may resign at any time by providing the Company and each Shareholder with written notice to such effect. If for any reason either of Harold 0. Rosser or Stephen F. Edwards shall cease to serve as Voting Trustees hereunder, his immediate successor in such capacity shall be an officer of Bruckmann, Rosser, Sherrill & Co., Inc. as is designated by BRS. Each such successive designated person shall, upon assuming the duties hereunder upon a vacancy occurring in the office of any of the Voting Trustees, be a Voting Trustee.

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12. Interests Allowed as Voting Trustees.

The Voting Trustees may be a creditor or shareholder of the Company and may act as a director, officer or employee of, or consultant or advisor to, the Company and receive compensation therefor. In addition, the Voting Trustees and any firm of which they may be a member, and any of their affiliates, may contract with the Company or have a pecuniary interest in any matter or transaction to which the Company may be a party, or in which the Company may be in any way concerned.

13. Effect of Agreement upon Representatives, Successors and Assigns.

This Agreement shall inure to the benefit of and be binding upon the Voting Trustees and each Shareholder and their respective legal representatives, successors and assigns.

14. Miscellaneous.

(a) Notices. All notices to be given to the owners of Voting Trust Certificates shall be given by mailing the same in a sealed postpaid envelope to the registered owners of Voting Trust Certificates addressed to their respective addresses as shown on the books of the Trust, and any notice whatsoever when mailed by or on behalf of the Voting Trustees to such registered owners of Voting Trust Certificates as herein provided shall have the same effect as though personally served on all holders of Voting Trust Certificates. All notices to be given to the Voting Trustees shall be given by serving a copy thereof upon them personally or by mailing the same in a sealed postpaid envelope addressed to them at the address set forth below or to such other address as they shall from time to time in writing designate.

(b) Filing of Agreement. Until the termination of this Agreement, one original counterpart hereof shall be filed with the Secretary of the Company at the principal office of the Company and such counterpart shall be open to the inspection of any holder of any Voting Trust Certificate or any shareholder of the Company daily during business hours.

(c) Amendment. If at any time it is deemed advisable for the parties hereto to amend or revoke this Agreement, it may be amended or revoked by an agreement executed by the Voting Trustees, the Company and the holder or holders of all of the Voting Trust Certificates.

(d) Acknowledgment of Obligations. The Voting Trustees accept the trust created hereby subject to all the terms and conditions herein contained.

(e) Entire Agreement. This Agreement contains the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral and written, among the parties hereto with respect to the subject matter hereof.

(f) Section Headings. The section headings contained herein are included for convenience of reference only and shall not constitute a part of this Agreement for any purpose.

-7-

(g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

(h) Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts to be performed entirely within such State, except to the extent that the laws of the State of California apply mandatorily hereto.

(i) Severability. Any section, clause, sentence, provision, subparagraph or paragraph of this Agreement held by a court of competent jurisdiction to be invalid, illegal or ineffective shall not impair, invalidate or nullify the remainder of this Agreement, but the effect thereof shall be confined to the section, clause, sentence, provision, subparagraph, or paragraph so held to be invalid, illegal or ineffective.

-8-

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

VOTING TRUSTEES

/s/ Harold O. Rosser
-----------------------
Harold O. Rosser

/s/ Stephen F. Edwards*
------------------------
Stephen F. Edwards

Address: c/o Bruckmann, Rosser, Sherrill & Co., L.P.


126 East 56th Street
New York, New York 10022

FURMAN SELZ SBIC, L.P.
By Furman Selz SBIC Investments L.L.C.

 By /s/ [ILLEGIBLE]
    --------------------------
    Name:
    Title:


/s/ Roy L. Furman
_______________________________
Roy L. Furman

/s/ David S. Harris
_______________________________
David S. Harris

-9-

/s/ Eric Gleacher
-------------------------
Eric Gleacher



/s/ Robert Engel
-------------------------
Robert Engel


/s/ James Goodwin
-------------------------
James Goodwin


/s/ Emil Henry
-------------------------
Emil Henry


/s/ Roger Hoit
-------------------------
Roger Hoit


/s/ H. Conrad Meyer III
-------------------------
H. Conrad Meyer III


/s/ David W. Mills
-------------------------
David Mills


/s/ Charles Phillips
-------------------------
Charles Phillips


/s/ Clayton Rohrbach, III
-------------------------
Clayton J. Rohrbach, III

-10-

/s/ Jeffrey Tepper
--------------------------
Jeffrey Tepper

GLEACHER IV, L.P.

By /s/ Robert A. Engel
   -----------------------
   Name:  Robert Engel
   Title: General Partner

*By Harold O. Rosser, as attorney-in-fact.

-11-

Exhibit A Shareholders

Furman Selz SBIC, L.P.
Roy L. Furman
David S. Harris
Eric Gleacher
Robert Engel
James Goodwin
Emil Henry
Roger Hoit
Conrad Meyer
David Mills
Charles Phillips
Clay Rohrbach
Jeffrey Tepper
Gleacher IV, L.P.

-12-

Exhibit B

THIS VOTING TRUST CERTIFICATE HAS BEEN ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND NO INTEREST THEREIN MAY BE TRANSFERRED EXCEPT IN COMPLIANCE, ESTABLISHED TO SATISFACTION OF THE ISSUER, WITH SAID ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER BY THE SECURITIES AND EXCHANGE COMMISSION.

THIS VOTING TRUST CERTIFICATE AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT
TO THE PROVISIONS OF A SECURITIES HOLDERS AGREEMENT ON FILE WITH THE COMPANY.

VOTING TRUST CERTIFICATE

CALIFORNIA PIZZA KITCHEN, INC.

No._____
Class:______
Shares:_____
This certificate is evidence that _____________ has deposited _______ ( ) shares of [Class A] Common Stock of California Pizza Kitchen, Inc., a California corporation (the "Company"), with the Voting Trustees hereinafter named in accordance with the terms of the Voting Trust Agreement (the "Agreement") dated as of September __, 1997, among the Company, each of the Shareholders listed on the signature pages thereof and the person whose name appears below as Voting Trustees (the "Trustees").

This certificate and the interest represented hereby is transferable on the books of the Trust only in accordance with the terms of the Agreement and any holder of this Certificate takes the same subject to all of the terms and conditions of such Agreement.

IN WITNESS WHEREOF, the Trustees have signed this certificate as of this ___th day of____________.

VOTING TRUSTEES


Name:


Name:

EXHIBIT 10.1

MEMORANDUM OF UNDERSTANDING REGARDING
FORM OF AGREEMENT

This Memorandum of Understanding ("MOU" or "Agreement") is made and entered into effective the 12/th/ day of May, 1998 by and between California Pizza Kitchen, Inc., a California corporation having an address at 6053 West Century Boulevard, Suite 1100, Los Angeles, California 90045-6442 ("Licensor") and Host International, Inc., having an address at Third Floor (Mail Stop 177), 6600 Rockledge Drive, Third Floor, Bethesda, Maryland 20817, Attn: Chief Counsel, Development, Dept. 72/928.83 ("Licensee").

RECITALS:

WHEREAS, Licensor represents that it has the right and authority to license the use of the name California Pizza Kitchen, CPK, CPK ASAP and the other licensed marks of Licensor, service marks, copyrights, interior and exterior designs and specifications ("Marks"); and

WHEREAS, Licensee is in the business of conducting food and beverage and merchandise concessions at domestic and international airports, tollroads, enclosed malls, stadiums & arenas, and other off-airport locations; and

WHEREAS, Licensor and Licensee are parties to a certain Trademark License Agreement dated as of the 31st day of July, 1996, for the operation of trademarked locations at Los Angeles International Airport (referred to herein as the "Existing License Agreement"); and

WHEREAS, the parties desire to enter into this MOU for the purpose of creating a binding obligation on each party with respect to future development opportunities for California Pizza Kitchen ASAP and the form of agreement with addendum to be executed for any and all future locations developed during the term of this MOU (the "Form Agreement" attached hereto as Exhibit "A").

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth in this MOU and for other good and valuable consideration, the parties hereby contract as follows:

1. Form Agreement.

a. Licensor and Licensee are parties to the Existing License Agreement with respect to Los Angeles International Airport ("LAX"). The Existing License Agreement for LAX remains in full force and effect with respect to LAX; however, the additional terms of this MOU shall apply to the relationship of the parties with respect to San Diego International Airport, Dulles International Airport, and all other Locations (as defined below) developed during the term of this MOU.


b. Licensee and Licensor will consider development of additional licensed sites for California Pizza Kitchen ASAP restaurants in Licensee's domestic and international airport concessions ("Airport Locations"), tollroad concessions ("Tollroad Locations"), malls where the landlord/owner/developerseeks a master concessionaire for a food court or other multiple concept area ("Mall Locations") and other locations in addition to the LAX site. The Airport Locations, Tollroad Locations and Mall Locations are collectively referred to herein as the "Locations," except that the Locations set forth in Exhibit D are excluded from the terms of this Agreement.

c. The parties hereby agree that the Form Agreement (with addendum) attached hereto as Exhibit A, and by this reference incorporated herein, shall be used to document the agreement of the parties for each California Pizza Kitchen ASAP site developed during the term of this MOU, subject to compliance with applicable law. California Pizza Kitchen ASAP restaurants are generally smaller in size, have a more limited menu and more limited service than the full service California Pizza Kitchen, because the full service CPK is a unit offering the full CPK menu (the current version of which is attached as Exhibit B, but is subject to change), providing full waiter/waitress table service and full bar, and operating in a restaurant space of generally 2,500 or more square feet (the "Full Service CPK Restaurant").

d. Licensee may, in its sole discretion, designate an affiliate of Licensee to hold or be transferred the site-specific Form Agreement, so that the entity which holds the California Pizza Kitchen ASAP license will be the same entity which holds the rights to concession space under the ground lease or master concession agreement for the Location. By way of example and not by way of limitation, Licensee and Licensor acknowledge that the Form Agreement for Mall Locations would ordinarily be entered into in the name of Host Marriott Services USA, Inc., while Host Marriott Tollroads, Inc. may be the entity which holds or is transferred the rights to operate a California Pizza Kitchen ASAP facility at certain Tollroad Locations.

e. The Franchise Fee (as defined in the Form Agreement) shall be Twenty Thousand ($20,000), or Ten Thousand Dollars ($10,000) if such Form Agreement is executed in connection with an additional California Pizza Kitchen restaurant at any Location. The level of support provided by Licensor for any initial openings shall be the same as that provided in the opening at LAX (including but not limited to three of Licensor's trainers for 21 days each; plus two directors, one of whom will stay for ten days and the other shall stay for four days; at least one quality insurance inspection; and two mystery shoppers within six weeks of restaurant opening). Such Twenty Thousand Dollar ($20,000) Franchise Fee shall remain in effect during the five-year initial term of this MOU, and shall be adjusted every five years (i.e., upon each renewal of this MOU) to reflect the percentage increase, if any in the Consumer Price Index.

2

f. The level of support provided by Licensor for any California Pizza Kitchen restaurant which has a Ten Thousand Dollar ($10,000) Franchise Fee shall be less than that provided for a first unit at a Location, and the parties' goal shall be to manage such support so that overall costs for subsequent units are lower.

2. Inclusion in Portfolio: Renewal Rights: Exclusivity.

a. Inclusion in Portfolio. Licensee and Licensor hereby agree that Licensor is an authorized member of Licensee's portfolio of approved branded products for use in its concession operations, including but not limited to prospective Locations. Each Licensed site shall be documented by the Form Agreement, subject to compliance with applicable law.

b. Limited Exclusivity. Except as otherwise expressly provided herein, this Agreement shall not affect Licensor's right to operate and license others to operate a Full Service CPK Restaurant and shall apply only to California Pizza Kitchen ASAP (or other later version of smaller limited square footage or limited service or menu version of California Pizza Kitchen differing from the Full Service CPK Restaurant concept) for all Locations (except that Mall Locations are also subject to the additional provisions of Subsection 2(b)(vi) below):

i. Extension Rights for Locations. Licensee's and its affiliates' right to extend the term of any of the individual Form Agreements shall be governed by the terms of the applicable Form Agreement for the Location, which term shall correspond to the term of Licensee's lease for the premises at the applicable Location.

ii. Bids and Proposals Where Licensee Holds a Form Agreement. Licensee and its affiliates shall have the right to include Licensor in their proposals or bids for extension or renewal of the ground lease or master concession agreement for the Locations where Licensee or its subsidiary or affiliate then holds a Form Agreement; provided however, that Licensee shall notify Licensor of Licensee's intention to include Licensor in a proposal or bid (the lesser of: two months prior to the bid/proposal submission date; or one-half the number of days between release of a request for proposals or invitation to bid and the submission date, so as to allow Licensor sufficient time to comply with the requirements of applicable law); and provided, further, that Licensee shall provide Licensor with the information described in Paragraph 2(b)(iii)(B) below. In such event, Licensor agrees that it shall bid with Licensee or its affiliates and shall not

3

(directly or indirectly, neither as a California Pizza Kitchen ASAP nor as a Full Service CPK Restaurant) bid against Licensee or its subsidiaries or affiliates for any Location where Licensee or its subsidiary or affiliate then holds a Form Agreement, except as follows:

A. Notification Procedure Where Licensee Holds a Franchise Agreement. Licensee shall inform Licensor of whether or not Licensee intends to submit a bid or proposal for a particular Location, and whether or not Licensee intends to include Licensor in such bid or proposal at the lesser of two months prior to the submission date, or a date which is one-half the number of days between the public release of the request for proposals and the proposal/bid submission date. In the event that Licensee does not intend to submit a bid or proposal, or does not intend to include Licensor in a bid or proposal for a particular Location, then Licensor shall be free to itself bid or propose for such Location, or to enter into an agreement with another party to include Licensor in such other party's bid or proposal. Notwithstanding the foregoing, nothing contained in this Agreement is intended to negate any radius restriction granted to Licensee by Licensor in the Form Agreement (e.g., Licensor will not grant a new CPK ASAP or Full Service CPK Restaurant to a third party, or itself operate a CPK ASAP of Full Service CPK Restaurant, in the same Airport Location or Tollroad Location where such new facility would serve the same customer already being served by Licensee's existing facility).

B. Set-Aside Locations. Notwithstanding anything to the contrary herein contained, in the event that a lessor releases a request for a bid or proposal for which Licensee is ineligible (e.g. a set-aside contract for a minority business), Licensee and Licensor will consult with one another as to a qualified candidate for the bid or proposal. Licensor shall not bid or propose for such set-aside contract unless Licensee has affirmatively indicated, within the time periods set forth above, that Licensor will not be a part of Licensee's bid or proposal for the non set-aside Locations in the same facility. Notwithstanding the foregoing, nothing contained in this Agreement is intended to negate any radius restriction granted to Licensee by Licensor in the Form Agreement (e.g., Licensor will not grant a new CPK ASAP or Full Service

4

CPK Restaurant to a third party, or itself operate a CPK ASAP of Full Service CPK Restaurant, in the same Airport Location or Tollroad Location where such new facility would serve the same customer).

iii. Locations Where Licensee Does Not Hold a Form Agreement. With respect to Locations in which Licensee or its subsidiary or affiliate does not then hold a Form Agreement, the following Procedure shall apply:

A. Notice Procedure Where Licensee Does Not Hold a Form Agreement. At the lesser of two (2) months prior to the submission date, or a date which is one-half the number of days between the public release of the request for proposals and the proposal/bid submission date, Licensee shall notify Licensor of whether or not Licensee intends to submit a bid or proposal for a particular Location, and whether or not Licensee intends to include Licensor in such bid or proposal.

B. Licensor Option to be a part of any bid that Licensee brings to Licensor. In the event that Licensee intends to provide Licensor the option to be a part of such bid or proposal for a new Location, Licensee shall also notify Licensor of the projected date of commencement of construction, the projected opening date, and a site plan of the particular Location, which site plan shall include the proposed location of the restaurant and the lessor's then-proposed location of other spaces available for food and beverage development. In the case of Airport Locations, Licensee shall, in addition to the information above, provide Licensor with any government-supplied: layout of the airport terminals; list or diagram from the request for proposals reflecting other then-contemplated real estate in the airport for food service concepts; and any government- supplied data concerning enplanement and deplanement. Licensor shall notify Licensee within five (5) business days of whether or not Licensor in its sole and absolute discretion, accepts the option to have CPK ASAP included in Licensee's bid or proposal, and subject to the provisions of Para. 2(b)(vi) below, in the event that Licensor has declined the option to have CPK ASAP included in Licensee's bid or proposal, Licensor will not pursue such Location with another party or on its own, or

5

otherwise permit California Pizza Kitchen ASAP or a Full Service CPK Restaurant, in any other bid or proposal for concessions at such Location (except that in malls there shall be no restriction on Licensor's freedom to grant a Full Service CPK Restaurant to a third party, or itself operate such Full Service CPK Restaurant).

C. Acceptance of Option. If Licensor accepts the option to become part of the bid or proposal for a Location by Licensee or its affiliates, Licensee shall promptly notify Licensor of whether or not the proposal was awarded to Host.

iv. Restrictions After Inclusion of CPK ASAP in a bid or proposal. In any Location where Licensor has agreed to become part of the bid or proposal for such Location by Licensee or its affiliates, Licensor shall not itself or through any third party, directly or indirectly (neither as a California Pizza Kitchen ASAP nor as a Full Service CPK Restaurant), bid or submit a proposal for any lease, sublease, concession agreement or permit rights for such Location; and shall not be the subtenant of any party other than Licensee (except that in malls there shall be no restriction on Licensor's freedom to grant a Full Service CPK Restaurant to a third party, or itself operate such Full Service CPK Restaurant). Otherwise, except as provided in Para. 2(b)(vi) below, if Licensee elects not to offer Licensor an opportunity to be in Licensee's bid or proposal, Licensor shall then have the right to pursue the bid/proposal for the Location.

v. Airport and Tollroad Opportunities Not Awarded in a Bid or Proposal Process. If Licensor has an opportunity to develop a California Pizza Kitchen ASAP or a Full Service CPK Restaurant at an Airport Location or Tollroad Location where neither Licensee nor its affiliates currently has a Form Agreement, and Licensor in its sole and absolute discretion, elects to do so, and such opportunity is not offered pursuant to a public bid or award process for which Licensee is eligible, Licensor shall notify Licensee of the opportunity and shall offer Licensee a right of first refusal to act as Licensor's licensee/franchisee for such Airport Location or Tollroad Location, subject to compliance with applicable law, and further subject to any agreements entered into by Licensor prior to the effective date of this Agreement. Licensee shall have thirty (30) days following receipt of all relevant information regarding such potential site, to accept or reject development of such site under the same terms and conditions as the Form Agreement. If, after Licensee declines such opportunity,

6

Licensor desires to grant a California Pizza Kitchen license to a party other than Licensee or its affiliates under terms more favorable than those in the Form Agreement, Licensor shall first offer such improved terms to Licensee, and Licensee shall have thirty (30) days to accept or reject such Location.

vi. Additional Mall Provisions. With regard to Mall Locations, in addition to other rights and restrictions contained herein, the parties agree that:

A. If Licensee becomes aware of an opportunity for development of a California Pizza Kitchen ASAP or a Full Service CPK restaurant for a Mall Location, and the landlord/developer for such development opportunity has declared that the opportunity is not part of a master concessionaire for the food court/mall, Licensee shall notify Licensor or such opportunity.

B. Subject to the provisions of this Agreement, if Licensor becomes aware of an opportunity for a master lease to develop food and beverage facilities in a Mall Location, Licensor shall notify Licensee of such opportunity pursuant to the notice provision of this Agreement.

C. Licensor continues to have the right to operate and to license a third party to operate a California Pizza Kitchen ASAP Restaurant in a mall, so long as the site was not then being developed or leased by a master concessionaire/master lessee of a mall food court/mall at the time Licensor began operations, or at the time Licensor licenses the third party. In Mall Locations (i.e. where the landlord/owner/developer seeks a master concessionaire for a food court or other multiple concept area, or where there is a master concessionaire of the mall food court(s) or other multiple concept area), Licensee shall have the same limited exclusivity for California Pizza Kitchen ASAP as it has in Airport Locations or Tollroad Locations pursuant to this subsection
2(b), above, subject to territorial rights as set forth in the list attached hereto as Exhibit C and by this reference incorporated herein.

3. Term. The term of this MOU shall commence effective as of the date first

above written and shall terminate March 31, 2003; except that Licensee shall have the option to extend this

7

MOU for three (3) additional terms of five (5) years each upon written notice not less than thirty (30) days prior to the expiration of the then-current term. Notwithstanding the foregoing, in the event that Licensee and its affiliates have failed to execute a total of at least twenty-five (25) franchise agreements with Licensor for CPK ASAP Restaurants within five (5) years following the date of execution of this MOU, then Licensor shall have the option to revoke the extension options and by exercising such revocation shall cause this Agreement to terminate as of its fifth anniversary. If Licensee operates two (or more) CPK ASAP facilities under any one franchise agreement, such franchise agreement shall be counted as two (or more) franchise agreements for the purpose of determining whether or not Licensee and its affiliates have met or exceed such twenty-five (25) site agreement threshold requirement. Licensor acknowledges that the twenty-five (25) site agreement requirement shall be met by Licensee's execution of the form agreements, and there is no requirement that all twenty-five (25) CPK ASAP restaurants still be open and operating at the end of such five-year period. The Form Agreements shall continue in full force and effect for their individual terms under each Form Agreement, notwithstanding any termination of this MOU.

4. Other Terms. Notwithstanding any other provision of this MOU, or any provision of the Form Agreement, the parties agree that:

a. Licensee and its subsidiaries and affiliates are experienced licensees of food and beverage concessions, and Licensee is the holder of numerous competing licenses (e.g., Pizza Hut, Sbarro, California Pizza Kitchen etc...). Licensor acknowledges and agrees that Licensee shall not be prohibited from developing its own pizza concepts, operating other such concepts, or granting others the right to operate pizza concepts; provided, however, that Licensee shall in no event use Licensor's trademarks, trade dress, franchise systems, trade secrets or any proprietary information in connection with the development or operation of such other concepts.

b. At Licensee's option, Licensee may designate a minority business enterprise ("MBE") to operate a Location in which Licensor has been included in Licensee's bid in accordance with the terms hereof or Licensee's concept plan as provided herein, and in such event, Licensor shall, subject to compliance with applicable law and the conditions described below, take all steps necessary to assure that such MBE is provided a California Pizza Kitchen Form Agreement, as attached hereto. In the alternative, Licensee may assign any such Form Agreement, subject to compliance with applicable law and the conditions described below, to any of Licensee's MBE subtenants. Licensee shall provide all relevant information concerning the MBE to Licensor and Licensor shall have the opportunity to perform Licensor's normal approval and due diligence investigation with regard to such MBE, in accordance with Licensor's standard policies and practices. Licensor shall not be required to enter into the Form Agreement with a proposed MBE unless the MBE meets Licensor's then-current criteria for new owners of California Pizza Kitchen restaurants, as determined by Licensor in its sole discretion. Notwithstanding the

8

foregoing, Host may assign or transfer any Form Agreement to joint venture or other entity, such as a joint venture with a DBE, so long as Host retains at least fifty and one-tenth percent (50.1%) ownership of assignee or transferee.

c. Licensee acknowledges that Licensor is currently a party to or may shortly become party to contracts with third parties for the inclusion of Licensor or its other licensees in bids or proposals in the Austin, Texas airport.

d. There shall be no press releases without the mutual written agreement of the parties.

e. Notices issued hereunder shall be by certified or registered mail, return receipt requested, to the addresses first listed above. Notices sent in accordance with this Section shall be deemed effective on the date of dispatch, and an affidavit of mailing or dispatch, executed under penalty of perjury, shall be deemed presumptive evidence of the date of dispatch.

f. The parties agree that the interpretation of this Agreement and the rights and liabilities of the parties hereto shall be governed by the laws of the state of Delaware. The prevailing party in any litigation, arbitration or other proceeding shall be ensiled to payment of its reasonable costs, including attorney's fees.

g. The rights and remedies of either party hereunder shall not be mutually exclusive (i.e., the exercise of one or more of the provisions hereof shall not preclude the exercise of any other provisions hereof). Each party confirms that damages at law will be an inadequate remedy for a breach or threatened breach of this Agreement and agree that, in the event of a breach or threatened breach of any provision hereof, the respective rights and obligations hereunder shall be enforceable by specific performance, injunction or other equitable remedy, but nothing herein contained is intended to, nor shall it, limit or affect any rights of law or by statute or otherwise of any party aggrieved as against the other for a breach or threatened breach of any provision hereof, it being the intent of the parties that the respective rights and obligations of the parties be enforceable in equity as well as at law.

h. Except as otherwise expressly provided herein, Licensee and Licensor shall use their best efforts to resolve any differences which may arise between them by discussion and negotiation rather than litigation. If these methods fail, either party may refer the matter to non-binding mediation to be conducted under the Procedure for Resolution of Franchise Disputes of the Center for Public Resources, Inc. of New York, New York. Mediation shall take place in mutually agreed upon location, and each party shall bear their own costs and one-half (1/2) of the costs of the mediator and the Center for Public Resources, Inc.

9

5. Entire Agreement. This MOU and the exhibits attached hereto, the Existing License Agreement, and the Form Agreement (with form addendum) attached hereto, constitute the entire agreement between the parties, superseding any other written and oral agreements between the parties. If any article, section, provision, term or condition of the Agreement is held to be invalid by a court of competent jurisdiction, such article, section, provision term or condition shall be reformed to the extent necessary to be held valid, and the parties agree that the remainder of this Agreement shall not be affected thereby.

IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Understanding the day and year first above written.

CALIFORNIA PIZZA KITCHEN, INC.

Attest:_________________       By: /s/ Frederick R. Hipp
                                  ----------------------

                               Title: PRESIDENT
                                     -------------------

HOST INTERNATIONAL, INC.

Attest: /s/ Jon W. Stentz      By: /s/ J.A. Boragno
       ------------------         ----------------------
       JON W. STENTZ
       ASSISTANT SECRETARY     Title: SVP - CONCEPTS
                                     -------------------

10

Exhibit A CPK ASAP Franchise Agreement and Addendum

11

EXHIBIT 10.2

Credit Agreement

Dated as of October 29, 1999

among

California Pizza Kitchen, Inc.,

The Financial
Institutions Party Hereto,

Bank of America, N.A.,

as Administrative Agent, Swing Line Lender and Letter of Credit Issuing Lender,

Banc of America Securities LLC, as Sole Arranger and Sole Book Manager

and Bankers Trust Company, as Documentation Agent

[LOGO of Bank of America]



TABLE OF CONTENTS

Section                                                                                        Page
-------                                                                                        ----
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS                                                       1
      1.01  Defined Terms....................................................................     1
      1.02  Use of Certain Terms.............................................................    24
      1.03  Accounting Terms.................................................................    24
      1.04  Rounding.........................................................................    24
      1.05  Exhibits and Schedules...........................................................    25
      1.06  References to Agreements and Laws................................................    25

SECTION 2. THE COMMITMENTS AND EXTENSIONS OF CREDIT..........................................    25
      2.01  Amount and Terms of Commitments..................................................    25
      2.02  Borrowings, Conversions and Continuations of Loans...............................    26
      2.03  Letters of Credit................................................................    27
      2.04  Swing Line Loans.................................................................    31
      2.05  Prepayments......................................................................    33
      2.06  Reduction or Termination of Revolving Commitments................................    34
      2.07  Principal and Interest...........................................................    34
      2.08  Fees.............................................................................    35
      2.09  Computation of Interest and Fees.................................................    35
      2.10  Making Payments..................................................................    35
      2.11  Funding Sources..................................................................    37
      2.12  Master Subsidiary Guaranty and Collateral........................................    37

SECTION 3. TAXES, YIELD PROTECTION AND ILLEGALITY............................................    37
      3.01  Taxes............................................................................    37
      3.02  Illegality.......................................................................    38
      3.03  Inability to Determine Rates.....................................................    38
      3.04  Increased Cost and Reduced Return; Capital Adequacy..............................    39
      3.05  Breakfunding Costs...............................................................    39
      3.06  Matters Applicable to all Requests for Compensation..............................    40
      3.07  Survival.........................................................................    41

SECTION 4. CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT......................................    41
      4.01  Conditions of Initial Extension of Credit........................................    41
      4.02  Conditions to all Extensions of Credit...........................................    43

SECTION 5. REPRESENTATIONS AND WARRANTIES....................................................    44
      5.01  Existence and Qualification; Power; Compliance with Laws.........................    44
      5.02  Power; Authorization; Enforceable Obligations....................................    44
      5.03  No Legal Bar.....................................................................    45
      5.04  Financial Statements; No Material Adverse Effect.................................    45
      5.05  Litigation.......................................................................    45
      5.06  No Default.......................................................................    45
      5.07  Ownership of Property; Liens.....................................................    46
      5.08  Taxes............................................................................    46

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      5.09  Margin Regulations; Investment Company Act; Public Utility Holding Company Act...    46
      5.10  No ERISA Plans...................................................................    46
      5.11  Intangible Assets................................................................    46
      5.12  Compliance With Laws.............................................................    47
      5.13  Environmental Compliance.........................................................    47
      5.14  Insurance........................................................................    47
      5.15  Subsidiaries.....................................................................    47
      5.16  Year 2000........................................................................    47
      5.17  Collateral.......................................................................    48
      5.18  Projections and Operating Budgets................................................    48
      5.19  Disclosure.......................................................................    48

SECTION 6. AFFIRMATIVE COVENANTS.............................................................    48
      6.01  Financial Statements.............................................................    49
      6.02  Certificates, Notices and Other Information......................................    49
      6.03  Payment of Taxes.................................................................    51
      6.04  Preservation of Existence........................................................    51
      6.05  Maintenance of Properties........................................................    51
      6.06  Maintenance of Insurance.........................................................    51
      6.07  Compliance With Laws.............................................................    51
      6.08  Inspection Rights................................................................    52
      6.09  Keeping of Records and Books of Account..........................................    52
      6.10  Compliance With Agreements.......................................................    52
      6.11  Use of Proceeds..................................................................    52
      6.12  Additional Guarantors, Debtors and Collateral....................................    52
      6.13  Further Assurances...............................................................    53

SECTION 7. NEGATIVE COVENANTS................................................................    53
      7.01  Indebtedness.....................................................................    54
      7.02  Liens and Negative Pledges.......................................................    54
      7.03  Fundamental Changes..............................................................    54
      7.04  Dispositions.....................................................................    55
      7.05  Investments......................................................................    55
      7.06  Lease Obligations................................................................    55
      7.07  Restricted Payments..............................................................    56
      7.08  ERISA............................................................................    56
      7.09  Change in Nature of Business.....................................................    56
      7.10  Transactions with Affiliates.....................................................    56
      7.11  Capital Expenditures.............................................................    56
      7.12  Financial Covenants..............................................................    56
      7.13  Change in Auditors...............................................................    57

SECTION 8. EVENTS OF DEFAULT AND REMEDIES....................................................    58
      8.01  Events of Default................................................................    58
      8.02  Remedies Upon Event of Default...................................................    60

SECTION 9. ADMINISTRATIVE AGENT..............................................................    61
      9.01  Appointment and Authorization of Administrative Agent............................    61
      9.02  Delegation of Duties.............................................................    62

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      9.03  Liability of Administrative Agent................................................    62
      9.04  Reliance by Administrative Agent.................................................    62
      9.05  Notice of Default................................................................    63
      9.06  Credit Decision; Disclosure of Information by Administrative Agent...............    63
      9.07  Indemnification of Administrative Agent..........................................    64
      9.08  Administrative Agent in Individual Capacity......................................    64
      9.09  Successor Administrative Agent...................................................    64
      9.10  Proportionate Interest in any Collateral.........................................    65
      9.11  Documentation Agent..............................................................    65

SECTION 10. MISCELLANEOUS....................................................................    65
     10.01  Amendments; Consents.............................................................    65
     10.02  Transmission and Effectiveness of Communications and Signatures..................    66
     10.03  Attorney Costs, Expenses and Taxes...............................................    67
     10.04  Binding Effect; Assignment.......................................................    68
     10.05  Set-off..........................................................................    69
     10.06  Sharing of Payments..............................................................    70
     10.07  No Waiver; Cumulative Remedies...................................................    70
     10.08  Usury............................................................................    71
     10.09  Counterparts.....................................................................    71
     10.10  Integration......................................................................    71
     10.11  Nature of Lenders' Obligations...................................................    71
     10.12  Survival of Representations and Warranties.......................................    72
     10.13  Indemnity by Borrower............................................................    72
     10.14  Nonliability of Lenders..........................................................    72
     10.15  No Third Parties Benefited.......................................................    73
     10.16  Severability.....................................................................    73
     10.17  Confidentiality..................................................................    73
     10.18  Further Assurances...............................................................    74
     10.19  Headings.........................................................................    74
     10.20  Time of the Essence..............................................................    74
     10.21  Foreign Lenders and Participants.................................................    74
     10.22  Governing Law....................................................................    75
     10.23  Waiver of Right to Trial by Jury.................................................    76
     10.24  Entire Agreement.................................................................    76

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EXHIBITS

               Form of

     A         Request for Extension of Credit
     B         Compliance Certificate
     C-1       Revolving Note
     C-2       Term Note
     D         Notice of Assignment and Acceptance
     E         Master Subsidiary Guaranty
     F         Security Agreement
     G         Pledge Agreement
     H         Joinder Agreement

SCHEDULES

     2.01      Commitments and Pro Rata Shares
     5.05      Material Litigation
     5.11      Trademarks, Patents, Copyrights
     5.15      Subsidiaries
     7.01      Existing Indebtedness, Liens and Negative Pledges
     10.02     Offshore and Domestic Lending Offices, Addresses for Notices

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CREDIT AGREEMENT

This CREDIT AGREEMENT ("Agreement") is entered into as of October 29, 1999 by and among CALIFORNIA PIZZA KITCHEN, INC., a California corporation ("Borrower"), each lender from time to time party hereto (collectively, "Lenders" and individually, a "Lender"), and BANK OF AMERICA, N.A., as Administrative Agent and Issuing Lender and BANKERS TRUST COMPANY, as Documentation Agent.

RECITAL

Borrower has requested that Lenders and Issuing Lender provide a revolving line of credit and term loans, and Lenders, Issuing Lender and Administrative Agent are willing to do so on the terms and conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

SECTION 1. DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

"Administrative Agent" means Bank of America, N.A., in its capacity as Administrative agent under any of the Loan Documents, or any successor administrative agent.

"Administrative Agent's Office" means Administrative Agent's address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as Administrative Agent hereafter may designate by written notice to Borrower and Lenders.

"Administrative Agent-Related Persons" means Administrative Agent (including any successor agent), together with its Affiliates (including, in the case of Administrative Agent, the Arranger), and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.

"Affiliate" means any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, another Person. A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 25% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners; or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

"Agreement" means this Credit Agreement, as amended, restated, extended, supplemented or otherwise modified in writing from time to time.

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"Applicable Amount" means the following amounts per annum, based upon the Leverage Ratio as set forth in the most recent Compliance Certificate received by Administrative Agent pursuant to Section 6.02(b); provided, however, that, until Administrative Agent receives the first Compliance Certificate after the Closing Date, such amounts shall be those indicated for Pricing Level 2 set forth below:

                               Applicable Amount

                                                      Offshore
                                     Revolving         Rate +
                                                     ----------
 Pricing                            Commitment       Letters of      Base Rate
  Level       Leverage Ratio           fee             Credit            +
--------------------------------------------------------------------------------
    1       *2.00:1 but  **2.50:1      0.375            1.75           0.50
    2       *1.50:1 but  **2.00:1      0.375            1.50           0.25
    3              **1.50:1            0.250            1.25           None

* Greater than or equal to ** Less than

The Applicable Amount shall be in effect from the date the most recent Compliance Certificate is received by Administrative Agent to but excluding the date the next Compliance Certificate is received; provided, however, that if Borrower fails to timely deliver the next Compliance Certificate, the Applicable Amount from the date such Compliance Certificate was due to but excluding the date such Compliance Certificate is received by Administrative Agent shall be the highest pricing level set forth above, and, thereafter, the pricing level indicated by such Compliance Certificate when received.

"Applicable Payment Date" means, (a) as to any Offshore Rate Loan, the last day of the relevant Interest Period and any date that such Loan is prepaid or converted in whole or in part and the Maturity Date; provided, however, that if any Interest Period for an Offshore Rate Loan exceeds three months, interest shall also be paid on the date which falls every three months after the beginning of such Interest Period, and (b) as to any other amount, the last Business Day of each calendar quarter and the Maturity Date; provided, further, that interest accruing at the Default Rate shall be payable from time to time upon demand of Administrative Agent.

"Arranger" means Banc of America Securities LLC, in its capacity as sole arranger and sole book manager.

"Attorney Costs" means and includes all reasonable fees and disbursements of any law firm or other external counsel and the reasonable allocated cost of internal legal services and all reasonable disbursements of internal counsel.

"Audited Financial Statements" means the audited consolidated balance sheet of Borrower and its Subsidiaries for the fiscal year ended January 3, 1999, and the related consolidated statements of income and cash flows for such fiscal year of Borrower.

"Bank of America" means Bank of America, N.A.

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"Base Rate" means a fluctuating rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its "prime rate." Such rate is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

"Base Rate Loan" means a Loan which bears interest based on the Base Rate.

"Borrower" has the meaning set forth in the introductory paragraph hereto.

"Borrower Party" means Borrower or any Person other than Lenders and any Affiliates of Lenders, Administrative Agent, Issuing Lender and Documentation Agent from time to time party to a Loan Document.

"Borrowing" and "Borrow" each mean, a borrowing hereunder consisting of Loans of the same type made on the same day and, other than in the case of Base Rate Loans, having the same Interest Period.

"Borrowing Date" means the date that a Loan is made, which shall be a Business Day.

"Business Day" means any day other than a Saturday, Sunday, or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where Administrative Agent's Office is located and, if such day relates to any Offshore Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the offshore Dollar interbank market.

"Cash Equivalents" means, when used in connection with any Person, that Person's Investments in:

(a) Government Securities due within one year after the date of the making of the Investment;

(b) readily marketable direct obligations of any State of the United States of America or any political subdivision of any such State or any public agency or instrumentality thereof given on the date of such Investment a credit rating of at least Aa by Moody's Investors Service, Inc. or AA by Standard & Poor's Corporation, in each case due within one year from the making of the Investment;

(c) certificates of deposit issued by, bank deposits in, eurodollar deposits through, bankers' acceptances of, and repurchase agreements covering Government Securities executed by any Lender or any bank incorporated under the Laws of the United States of America, any State thereof or the District of Columbia and having on the date of such Investment combined capital, surplus and undivided profits of at least $250,000,000,

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or total assets of at least $5,000,000,000, in each case due within one year after the date of the making of the Investment;

(d) certificates of deposit issued by, bank deposits in, eurodollar deposits through, bankers' acceptances of, and repurchase agreements covering Government Securities executed by any Lender or any branch or office located in the United States of America of a bank incorporated under the Laws of any jurisdiction outside the United States of America having on the date of such Investment combined capital, surplus and undivided profits of at least $500,000,000, or total assets of at least $15,000,000,000, in each case due within one year after the date of the making of the Investment;

(e) repurchase agreements covering Government Securities executed by a broker or dealer registered under Section 15(b) of the Securities Exchange Act of 1934, as amended, having on the date of the Investment capital of at least $50,000,000, due within 90 days after the date of the making of the Investment; provided that the maker of the Investment receives written confirmation of the transfer to it of record ownership of the Government Securities on the books of a "primary dealer" in such Government Securities or on the books of such registered broker or dealer, as soon as practicable after the making of the Investment;

(f) readily marketable commercial paper or other debt securities issued by corporations doing business in and incorporated under the Laws of the United States of America or any State thereof or of any corporation that is the holding company for a bank described in clause (c) or (d) above

given on the date of such Investment a credit rating of at least P-1 by Moody's Investors Service, Inc. or A-1 by Standard & Poor's Corporation, in each case due within one year after the date of the making of the Investment;

(g) "money market preferred stock" issued by a corporation incorporated under the Laws of the United States of America or any State thereof (i) given on the date of such Investment a credit rating of at least Aa by Moody's Investors Service, Inc. and AA by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., in each case having an investment period not exceeding 50 days or (ii) to the extent that investors therein have the benefit of a standby letter of credit issued by a Lender or a bank described in clauses (c) or (d) above;

provided that (y) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (z) the aggregate amount of all such Investments does not exceed $15,000,000;

(h) a readily redeemable "money market mutual fund" sponsored by a bank described in clause (c) or (d) hereof, or a registered broker or

dealer described in clause (e) hereof, that has and maintains an investment

policy limiting its investments primarily to instruments of the types described in clauses (a) through (g) hereof and given on the date of such

Investment a credit rating of at least Aa by Moody's Investors Service, Inc. and AA by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc.; and

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(i) corporate notes or bonds having an original term to maturity of not more than one year issued by a corporation incorporated under the Laws of the United States of America, or a participation interest therein; provided that (i) commercial paper issued by such corporation is given on the date of such Investment a credit rating of at least Aa by Moody's Investors Service, Inc. and AA by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., (ii) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (iii) the aggregate amount of all such Investments does not exceed $15,000,000.

"Cash Flow Coverage Ratio" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) (i) Consolidated EBITDA for the period of the four prior fiscal quarters ending on such date less (ii) capital expenditures made during such period less (iii) cash

taxes paid during such period to (b) the sum of (i) Consolidated Interest Charges for such period plus (ii) scheduled principal payments of Indebtedness

for such period (unless renewable or extendible at the option of the obligor beyond such period).

"Change in Control" means Richard L. Rosenfield, Rosenfield Children Trust, Larry S. Flax, Bruckmann, Rosser, Sherrill & Co., L.P., Furman Selz SBIC, L.P., Roy L. Furman, David S. Harris, Eric Gleacher, Robert A. Engel, James Goodwin, Emil Henry, Roger Hoit, H. Conrad Meyer III, David Mills, Charles Phillips, Clayton J. Rohrbach III, Jeffrey Tepper, Gleacher IV, L.P., BancBoston Investments, Inc., Bruce C. Bruckmann, BCB Family Partners, NAZ Family Partners, Nancy A. Zweng, H. Virgil Sherrill, Harold O. Rosser, Paul D. Kaminski, J. Rice Edmonds, and Marilena Tibrea ceasing, as a group, to have beneficial ownership and control of at least 51% of the total voting power of all classes of capital stock of Borrower entitled to vote generally in the election of directors.

"Closing Date" means the date all the conditions precedent in Section 4.01

      ------------                                                 ------------
are satisfied or waived in accordance with Section 4.01.
                                           ------------

     "Code" means the Internal Revenue Code of 1986, as amended from time to
      ----
time.

"Collateral Documents" means, collectively, the Security Agreement, any Supplemental Security Agreements, the Pledge Agreement, any Joinder Agreement and any other security agreements, pledge agreements, deeds of trust, mortgages, collateral security agreements, supplements, financing statements (or comparable documents now or hereafter filed in accordance with the Uniform Commercial Code or comparable law), filings, recordings, consents and other documents from time to time executed, delivered, filed or recorded in connection with perfecting, effecting, facilitating, consenting to, providing notice of or otherwise evidencing Liens to secure the Obligations, in each case either as originally executed or as from time to time supplemented, modified, amended, extended or supplanted.

"Commitments" means the Revolving Commitments and the Term Commitments.

"Compliance Certificate" means a certificate substantially in the form of Exhibit B, properly completed and signed by a Responsible Officer of Borrower.

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"Consolidated EBIRT" means, for any period, for Borrower and its Subsidiaries on a consolidated basis, an amount equal to the sum of (a) Consolidated Net Income, (b) Consolidated Interest Charges, (c) lease and rental expense, (d) the amount of taxes, based on or measured by income, used or included in the determination of such Consolidated Net Income and (e) non-cash charges which will not result in a cash expense, including, without limitation, such charges resulting from compliance with FASB 121, compensation expense relating to variable plan accounting and write-offs of unamortized cost relating the Existing Credit Facility.

"Consolidated EBITDA" means, for any period, for Borrower and its Subsidiaries on a consolidated basis, an amount equal to the sum of (a) Consolidated Net Income, (b) Consolidated Interest Charges, (c) the amount of taxes, based on or measured by income, used or included in the determination of such Consolidated Net Income, (d) the amount of depreciation and non-cash amortization expense deducted in determining such Consolidated Net Income, and
(e) non-cash charges which will not result in a cash expense, including, without limitation, such charges resulting from compliance with FASB 121, compensation expense relating to variable plan accounting and write-offs of unamortized cost relating the Existing Credit Facility.

"Consolidated Funded Indebtedness" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the sum of (a) the outstanding principal amount of all obligations and liabilities, whether current or long-term, for borrowed money (including Obligations hereunder), (b) that portion of obligations with respect to capital leases that are capitalized in the consolidated balance sheet of Borrower and its Subsidiaries, and (c) without duplication, all Guaranty Obligations with respect to Indebtedness of the type specified in subsections (a) and (b) above of Persons other than Borrower or any of its Subsidiaries.

"Consolidated Interest Charges" means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, fees, charges and related expenses payable by Borrower and its Subsidiaries in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent payable by Borrower and its Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP.

"Consolidated Net Income" means, for any period, for Borrower and its Subsidiaries on a consolidated basis, the net income of Borrower and its Subsidiaries from continuing operations for that period excluding extraordinary items, gains or losses from Dispositions of assets and non-cash gains.

"Consolidated Net Worth" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, Shareholders' Equity of Borrower and its Subsidiaries on that date.

"Continuation" and "Continue" mean, with respect to any Offshore Rate Loan, the continuation of such Offshore Rate Loan as an Offshore Rate Loan on the last day of the Interest Period for such Loan.

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"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its property is bound.

"Conversion" and "Convert" mean, with respect to any Loan, the conversion of such Loan from or into another type of Loan.

"Debtor" means a Person pledging Collateral under the Security Agreement or the Pledge Agreement.

"Debtor Relief Laws" means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States of America or other applicable jurisdictions from time to time in effect affecting the rights of creditors generally.

"Default" means any event that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

"Default Rate" means an interest rate equal to the Base Rate plus the
Applicable Amount, if any, applicable to Base Rate Loans plus 2% per annum, to

the fullest extent permitted by applicable Laws; provided, however, that with respect to an Offshore Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Amount) otherwise applicable to such Loan plus 2% per annum.

"Designated Deposit Account" means a deposit account maintained by Borrower with Bank of America, as from time to time designated by Borrower to Administrative Agent.

"Disposition" or "Dispose" means the sale, transfer, license or other disposition (including any sale and leaseback transaction) of any property by any Person, including any sale, assignment, transfer or other disposal with or without recourse of any notes or accounts receivable or any rights and claims associated therewith.

"Dollar" and "$" means lawful money of the United States of America.

"Documentation Agent" means Bankers Trust Company in its capacity as documentation agent hereunder.

"Domestic Subsidiary" means a Subsidiary of Borrower which is incorporated under the laws of any State of the United States, other than such a Subsidiary which is a Subsidiary of a Foreign Subsidiary (collectively, the "Domestic Subsidiaries").

"Eligible Assignee" means (a) a financial institution organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development, or a political

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subdivision of any such country, and having a combined capital and surplus of at least $100,000,000, provided that such bank is acting through a branch or agency located in the United States; (c) a Person that is primarily engaged in the business of commercial banking that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; (d) another Lender and (e) any other entity which is an "accredited investor" (as defined in Regulation D under the Securities Act of 1933, as amended) which extends credit or buys loans as one of its businesses, including but not limited to, insurance companies, mutual funds and lease financing companies. No Borrower Party or any Affiliate of a Borrower Party shall be an Eligible Assignee.

"Environmental Laws" means all Laws relating to environmental, health, safety and land use matters applicable to any property.

"ERISA" means the Employee Retirement Income Security Act of 1974 and any regulations issued pursuant thereto, as amended from time to time.

"ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Sections 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

"Event of Default" means any of the events specified in Section 8.

"Existing Credit Facility" means that certain Credit Agreement dated as of September 30, 1997, as amended, among Borrower, Union Bank of California, as agent and a syndicate of lenders.

"Extension of Credit" means (a) a Borrowing, Conversion or Continuation of Loans or (b) a Letter of Credit Action which has the effect of increasing the amount of a Letter of Credit, extending the maturity of a Letter of Credit or making any material modification to a Letter of Credit or the reimbursement of drawings under a Letter of Credit (collectively, the "Extensions of Credit").

"Federal Funds Rate" means, for any day, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to Bank of America on such day on such transactions as determined by Administrative Agent.

"Fixed Charge Coverage Ratio" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated EBIRT for the period of the

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four prior fiscal quarters ending on such date to (b) the sum of (i) Consolidated Interest Charges for such period plus (ii) lease and rental expense

during such period.

"Foreign Subsidiary" means a Subsidiary of Borrower which is not a Domestic Subsidiary (collectively, the "Foreign Subsidiaries").

"GAAP" means generally accepted accounting principles set forth in the

opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination, consistently applied. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either Borrower or the Requisite Lenders shall so request: (a) Administrative Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Requisite Lenders), and (b) until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) Borrower shall provide to Administrative Agent, and Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

"Governmental Authority" means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, central bank or public body, or (c) any court, administrative tribunal or public utility.

"Government Securities" means readily marketable (a) direct full faith and credit obligations of the United States of America or obligations guaranteed by the full faith and credit of the United States of America and (b) obligations of an agency or instrumentality of, or corporation owned, controlled or sponsored by, the United States of America that are generally considered in the securities industry to be implicit obligations of the United States of America.

"Guarantor" means each Person from time to time a guarantor under the Master Subsidiary Guaranty (collectively, the "Guarantors").

"Guaranty Obligation" means, as to any Person, any (a) guaranty by that Person of Indebtedness of, or other obligation payable or performable by, any other Person or (b) assurance, agreement, letter of responsibility, letter of awareness, undertaking or arrangement given by that Person to an obligee of any other Person with respect to the payment or performance of an obligation by, or the financial condition of, such other Person, whether direct, indirect or contingent, including any purchase or repurchase agreement covering such obligation or any collateral security therefor, any agreement to provide funds (by means of loans, capital contributions or otherwise) to such other Person, any agreement to support the solvency or level of any balance sheet item of such other Person or any "keep-well" or other arrangement of whatever nature given for the purpose of assuring or holding harmless such obligee against loss

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with respect to any obligation of such other Person; provided, however, that the term Guaranty Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, covered by such Guaranty Obligation or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith.

"Indebtedness" means as to any Person at a particular time, all items which would, in conformity with GAAP, be classified as liabilities on a balance sheet of such Person as at such time (excluding trade and other accounts payable in the ordinary course of business in accordance with customary trade terms and which are not overdue for a period of more than 60 days and excluding deferred taxes), but in any event including, without duplication:

(a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(b) any direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), banker's acceptances, bank guaranties, surety bonds and similar instruments;

(c) net obligations under any Swap Contract in an amount equal to (i) if such Swap Contract has been closed out, the termination value thereof, or (ii) if such Swap Contract has not been closed out, the mark-to-market value thereof determined on the basis of readily available quotations provided by any recognized dealer in such Swap Contract;

(d) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

(e) lease payment obligations under capital leases or Synthetic Lease Obligations; and

(f) all Guaranty Obligations of such Person in respect of any of the foregoing; provided, however, that Indebtedness shall not include redeemable preferred stock.

For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person except for customary exceptions acceptable to the Requisite Lenders.

"Indemnified Liabilities" has the meaning set forth in Section 10.13.

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"Initial Projections" means those certain projections dated September 23, 1999, as amended by a letter dated October 26, 1999.

"Interest Period" means, for each Offshore Rate Loan as requested by Borrower, (a) initially, the period commencing on the date such Offshore Rate Loan is disbursed, Continued as, or Converted into, an Offshore Rate Loan and
(b) thereafter, the period commencing on the last day of the preceding Interest Period, and ending, in each case, on the earlier of (x) the scheduled Maturity Date, or (y) one, two, three or six months thereafter (or such other period consented to by Lenders); provided that:

(i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

(ii) any Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;

(iii) No Interest Period applicable to any Term Loan shall extend beyond the next Principal Payment Date unless, on that Principal Payment Date, the sum of (A) the aggregate principal amount of Term Loans which are Base Rate Loans plus (B) the aggregate principal amount of Term Loans which

are Offshore Rate Loans with an Interest Period ending on that Principal Payment Date is at least equal to the Principal Payment Amount due on that Principal Payment Date; and

(iv) unless Administrative Agent otherwise consents, there may not be more than six Interest Periods in effect at any time.

"Interim Financial Statements" means the company-prepared consolidated balance sheet of Borrower and its Subsidiaries for the 39-weeks ended October 3, 1999, and the related consolidated statements of income and cash flows for such fiscal year of Borrower.

"Investment" means, as to any Person, any acquisition or any investment by such Person, whether by means of the purchase or other acquisition of stock or other securities of any other Person or by means of a loan, creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other Person, including any partnership and joint venture interests in such other Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

"IRS" means the Internal Revenue Service.

"Issuing Lender" means Bank of America, or any successor issuing lender hereunder.

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"Joinder Agreement" means a Joinder Agreement substantially in the form of Exhibit H, either as originally executed or as it may from time to time be supplemented, modified, amended, extended or supplanted.

"Laws" or "Law" means all international, foreign, federal, state and local

statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

"Lender" means each lender from time to time party hereto and, as the context requires, Issuing Lender and Swing Line Lender.

"Lending Office" means, as to any Lender, the office or offices of such Lender described as such on Schedule 10.02, or such other office or offices as such Lender may from time to time notify Administrative Agent.

"Letter of Credit" means any standby letter of credit issued or outstanding hereunder.

"Letter of Credit Action" means the issuance, supplement, amendment, renewal, extension, modification or other action relating to a Letter of Credit hereunder.

"Letter of Credit Application" means an application for a Letter of Credit Action as from time to time in use by Issuing Lender.

"Letter of Credit Cash Collateral Account" means a blocked deposit account at Bank of America with respect to which Borrower hereby grants a security interest in such account to Bank of America as security for Letter of Credit Usage and with respect to which Borrower agrees to execute and deliver from time to time such documentation as Bank of America or Administrative Agent may reasonably request to further assure and confirm such security interest.

"Letter of Credit Sublimit" means an amount equal to the lesser of the combined Revolving Commitments and $2,000,000. The Letter of Credit Sublimit is part of the Revolving Commitments and is not in addition to the Revolving Commitments or the Term Commitments.

"Letter of Credit Usage" means, as at any date of determination, the aggregate undrawn face amount of outstanding Letters of Credit plus the

aggregate amount of all drawings under the Letters of Credit not reimbursed to Issuing Lender by Borrower or converted into Loans.

"Leverage Ratio" means, as of any date of determination, for Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the period of the four fiscal quarters ending on that date.

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"Lien" means any mortgage, pledge, hypothecation, assignment, deposit

arrangement (in the nature of compensating balances, cash collateral accounts or security interests), encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of accounts receivable.

"Loan" means any advance made by any Lender to Borrower as provided in

Section 2 (collectively, the "Loans").

"Loan Documents" means this Agreement, the Master Subsidiary Guaranty, the Collateral Documents, any Letter of Credit Application, any Request for Extension of Credit and any Note, certificate, any fee letter, and other instrument, document or agreement from time to time delivered in connection with this Agreement.

"Master Subsidiary Guaranty" means the Master Subsidiary Guaranty substantially in the form of Exhibit E hereto, either as originally executed or as it may from time to time be supplemented, modified, amended, extended or supplanted.

"Material Adverse Effect" means any set of circumstances or events which
(a) has or would reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of any Principal Loan Document or the perfection or priority of any Lien on any material Collateral under any Collateral Document, (b) is or would reasonably be expected to be material and adverse to the condition (financial or otherwise), business, assets, operations or prospects of Borrower and its Subsidiaries, taken as a whole, or (c) materially impairs or would reasonably be expected to materially impair the ability of any Borrower Party to perform a material portion of the Obligations, in each case as reasonably determined by Requisite Lenders.

"Maturity Date" means October 31, 2004, as such date may be earlier terminated or extended in accordance with the terms hereof.

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"Minimum Amount" means, with respect to each of the following actions, the minimum amount and any multiples in excess thereof set forth opposite such action:

                                                                    Multiples in
                                                       Minimum         excess
                Type of Action                        Amount/1/      thereof/1/
--------------------------------------------------------------------------------
Borrowing or prepayment of, or Conversion            $  500,000         $100,000
into, Base Rate Loans
Borrowing, prepayment or Continuation of, or         $  500,000         $100,000
Conversion into, Offshore Rate Loans
Borrowing or prepayment of Swing Line Loans          $  100,000           None
Letter of Credit Action                              $   25,000           None
Reduction in Commitments                             $1,000,000         $500,000
Assignments                                          $5,000,000           None

"Negative Pledge" means a Contractual Obligation that restricts Liens on a material portion of property.

"Net Cash Proceeds" means the gross proceeds received by Borrower and its Subsidiaries from any applicable transaction in Cash, net of brokerage commissions, legal expenses and other transactional costs payable by Borrower and its Subsidiaries in connection therewith and net of an amount determined in good faith by Borrower to be the estimated amount of income, sales and uses taxes payable by Borrower attributable to such transaction.

"Note" means a Revolving Note or a Term Note (collectively, the "Notes").

"Notice of Assignment and Acceptance" means a Notice of Assignment and Acceptance substantially in the form of Exhibit D.

"Obligations" means all advances to, and debts, liabilities, obligations, covenants and duties of, any Borrower Party arising under any Loan Document, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement of any proceeding under any Debtor Relief Laws by or against any Borrower Party or any Subsidiary or Affiliate of any Borrower Party.

/1/ Or such lesser amount as may be required to facilitate the payment of the Principal Payment Amount payable on any Principal Payment Date.

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"Offshore Base Rate" has the meaning set forth in the definition of Offshore Rate.

"Offshore Rate" means for any Interest Period with respect to any Offshore Rate Loan, a rate per annum determined by Administrative Agent pursuant to the following formula:

Offshore Rate = Offshore Base Rate


1.00 - Eurodollar Reserve Percentage

Where,

"Offshore Base Rate" means, for such Interest Period:

(a) the rate per annum equal to the rate determined by Administrative Agent to be the offered rate that appears on the page of the Telerate Screen that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

(b) in the event the rate referenced in the preceding subsection (a) does not appear on such page or service or such page or service shall cease to be available, the rate per annum equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service that displays an average British Bankers Association Interest Settlement Rate for deposits in Dollars (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, determined as of approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, or

(c) in the event the rates referenced in the preceding subsections (a) and (b) are not available, the rate per annum determined by Administrative Agent as the rate of interest (rounded up to the nearest 1/100% of 1%) at which Dollar deposits (for delivery on the first day of such Interest Period) in same day funds in the approximate amount of the applicable Offshore Rate Loan and with a term equivalent to such Interest Period would be offered by its London Branch to major banks in the offshore Dollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period.

"Eurodollar Reserve Percentage" means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities"). The Offshore Rate for each outstanding Offshore Rate Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

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"Offshore Rate Loan" means a Loan bearing interest based on the Offshore Rate.

"Ordinary Course Dispositions" means:

(a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

(b) Dispositions of cash, cash equivalents, inventory and other property in the ordinary course of business;

(c) Dispositions of property to the extent that such property is exchanged for credit against the purchase price of similar replacement property, or the proceeds of such sale are reasonably promptly applied to the purchase price of such replacement property or where Borrower or its Subsidiary determine in good faith that the failure to replace such property will not be detrimental to the business of Borrower or such Subsidiary provided, further, that no such Disposition shall be for less than the fair market value of the property being disposed of; and

(d) Dispositions of assets or property by any Subsidiary of Borrower to Borrower or another wholly-owned Subsidiary of Borrower; provided, however, that if any asset so Disposed of is subject to a Lien under the Collateral Documents, such asset shall remain subject to such Lien, and if the transferor Subsidiary is a Guarantor or had its equity interests pledged under the Pledge Agreement, the transferee Subsidiary shall also be a Guarantor or have its equity interests pledged under the Pledge Agreement, and in each such case Borrower shall promptly notify Administrative Agent of such Disposition;

(e) the grant of licenses to use Trademark Collateral and Trade Secret Collateral (as defined in the Security Agreement) in the ordinary course of business.

"Ordinary Course Indebtedness" means:

(a) Indebtedness under the Loan Documents;

(b) intercompany Guaranty Obligations of Borrower or any of its Subsidiaries guarantying Indebtedness otherwise permitted hereunder of Borrower or any wholly-owned Subsidiary of Borrower;

(c) Indebtedness arising from the honoring of a check, draft or similar instrument against insufficient funds; and

(d) Ordinary Course Swap Obligations.

"Ordinary Course Investments" means Investments consisting of:

(a) cash and Cash Equivalents;

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(b) advances to officers, directors and employees of Borrower and its Subsidiaries for travel, entertainment, relocation and analogous ordinary business purposes;

(c) other advances to officers, directors and employees of Borrower and its Subsidiaries not exceeding $500,000 in the aggregate outstanding at any time;

(d) Investments of Borrower in any of its Subsidiaries and Investments of any Subsidiary of Borrower in Borrower or another Subsidiary of Borrower;

(e) extensions of credit to customers or suppliers of Borrower and its Subsidiaries in the ordinary course of business and any Investments received in satisfaction or partial satisfaction thereof; and

(f) Guaranty Obligations permitted by Section 7.01;

provided, however, that for purposes of this definition, Subsidiaries shall not include CPK Beverage, Inc., CPK I, Limited Partnership or CPK Water Tower Limited Partnership.

"Ordinary Course Liens" means:

(a) Liens pursuant to any Loan Document;

(b) Liens for taxes not yet due or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

(c) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

(d) pledges or deposits in connection with worker's compensation, unemployment insurance and other social security legislation;

(e) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(f) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of any Person; and

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(g) attachment, judgment or other similar Liens arising in connection with litigation or other legal proceedings (and not otherwise a Default hereunder) in the ordinary course of business that is currently being contested in good faith by appropriate proceedings provided that such Lien is junior to the Lien of the Collateral Documents, adequate reserves have been set aside and no material property is subject to a material risk of loss or forfeiture and the claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary deductibles).

"Ordinary Course Swap Obligations" means all obligations (contingent or otherwise) of Borrower or any Subsidiary existing or arising under any Swap Contract, provided that each of the following criteria is satisfied: (a) such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated with liabilities, commitments or property held or reasonably anticipated by such Person, or changes in the value of securities issued by such Person in conjunction with a securities repurchase program not otherwise prohibited hereunder, and not for purposes of speculation or taking a "market view;" and
(b) such Swap Contracts do not contain (i) any provision ("walk-away" provision) exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party, or (ii) any provision creating or permitting the declaration of an event of default, termination event or similar event upon the occurrence of an Event of Default hereunder (other than an Event of Default referred to in Section 8.01(f)(ii)).

"Organization Documents" means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws; (b) with respect to any limited liability company, the articles of formation and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership or joint venture agreement and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation with the secretary of state or other department in the state of its formation, in each case as amended from time to time.

"Outstanding Obligations" means the Outstanding Revolving Obligations and the Outstanding Term Obligations.

"Outstanding Revolving Obligations" means, as of any date, and giving effect to making any Extensions of Credit requested on such date and all payments, repayments and prepayments made on such date, (a) when reference is made to all Lenders, the sum of (i) the aggregate outstanding principal amount of all Revolving Loans and Swing Line Loans, and (ii) all Letter of Credit Usage, and (b) when reference is made to one Lender the sum of (i) the aggregate outstanding principal amount of all Revolving Loans made by such Lender (excluding, in the case of the Swing Line Lender, its Swing Line Loans except to the extent provided in clause (iii) below), (ii) such Lender's ratable risk participation in all Letter of Credit Usage, and (iii) such Lender's ratable risk participation in all outstanding Swing Line Loans.

"Outstanding Term Obligations" means, as of any date, and giving effect to making any Extensions of Credit requested on such date and all payments, repayments and prepayments made on such date, (a) when reference is made to all Lenders, the aggregate outstanding principal amount

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of all Term Loans, and (b) when reference is made to one Lender the aggregate outstanding principal amount of all Term Loans made by such Lender.

"Person" means any individual, trustee, corporation, general partnership, limited partnership, limited liability company, joint stock company, trust, unincorporated organization, bank, business association, firm, joint venture, Governmental Authority, or otherwise.

"Pledge Agreement" means the pledge agreement substantially in the form of Exhibit G, either as originally executed or as it may from time to time be supplemented, modified, amended, extended or supplanted.

"Pledged Collateral" means all certificates or instruments representing or evidencing the Collateral pledged or to be pledged under the Pledge Agreement.

"Principal Loan Documents" means this Agreement, the Master Subsidiary Guaranty, the Security Agreement, the Pledge Agreement, any Supplemental Security Agreements, any Note and any other principal agreement delivered from time to time in connection with this Agreement.

"Principal Payment Amount" means, with respect to any Principal Payment Date, the amount set forth below opposite that Principal Payment Date:

                                        Principal                              Principal
Principal Payment                        Payment     Principal Payment          Payment
      Date                               Amount            Date                 Amount
----------------------------------------------------------------------------------------------------
September 30, 2000                     $  750,000    March 31, 2002            $1,250,000
December 31, 2000                      $  750,000    June 30, 2002             $1,250,000
Total for year                         $1,500,000    September 30, 2002        $1,250,000
                                                     December 31, 2002         $1,250,000
                                                     Total for year            $5,000,000

March 31, 2001                         $  750,000    March 31, 2003            $1,500,000
June 30, 2001                          $  750,000    June 30, 2003             $1,500,000
September 30, 2001                     $  750,000    September 30, 2003        $1,500,000
December 31, 2001                      $  750,000    December 31, 2003         $1,500,000
Total for year                         $3,000,000    Total for year            $6,000,000

                                                     March 31, 2004            $3,167,000
                                                     June 30, 2004             $3,167,000
                                                     September 30, 2004        $3,166,000
                                                     Maturity Date             Remaining

"Principal Payment Date" means each of the dates set forth under "Principal Payment Date" in the definition of "Principal Payment Amount."

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"Pro Rata Share" means, with respect to each Lender, the percentage of the combined Commitments set forth opposite the name of that Lender on Schedule 2.01.

"Request for Extension of Credit" means a written request substantially in the form of Exhibit A duly completed and signed by a Responsible Officer of Borrower and delivered by Requisite Notice. In the case of a Letter of Credit Action, the Letter of Credit Application shall be deemed to be the Request for Extension of Credit.

"Requisite Lenders" means, as of any date of determination: (a) if the Commitments are then in effect, at least two Lenders (excluding any Lenders not funding when required to do so hereunder) having in the aggregate more than 66- 2/3% of the combined Commitments then in effect and (b) if the Commitments have then been terminated and there are Outstanding Obligations, at least two Lenders holding Obligations aggregating more than 66-2/3% of such Outstanding Obligations.

"Requisite Notice" means, unless otherwise provided herein, (a) irrevocable written notice to the intended recipient or (b) except with respect to Letter of Credit Actions (which must be in writing), irrevocable telephonic notice to the intended recipient, promptly followed by a written notice to such recipient. Such notices shall be (i) delivered to such recipient at the address or telephone number specified on Schedule 10.02 or as otherwise designated by such recipient by Requisite Notice to Administrative Agent, and (ii) if made by any Borrower Party, given or made by a Responsible Officer of such Borrower Party. Any written notice delivered in connection with any Loan Document shall be in the form, if any, prescribed herein or therein and may be delivered as provided in Section 10.02. Any notice sent by other than hardcopy shall be promptly confirmed by a telephone call to the recipient and, if requested by Administrative Agent, by a manually-signed hardcopy thereof.

"Requisite Time" means, with respect to any of the actions listed below, not later than the time and date set forth below opposite such action (all times are California time):

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                 Type of Action                          Time          Date of Action
---------------------------------------------------------------------------------------------------
Delivery of Request for Extension of Credit
for, or notice for:
.   Borrowing or prepayment of, or Conversion          8:30 a.m.  Same date as such Borrowing,
    into, Base Rate Loans                                         prepayment or Conversion

.   Borrowing, prepayment or Continuation of, or      10:00 a.m.  3 Business Days prior to such
    Conversion into, Offshore Rate Loans                          Borrowing, prepayment,
                                                                  Continuation, or Conversion

.   Borrowing or prepayment of Swing Line Loans        1:00 p.m.  Same date as such Borrowing or
                                                                  prepayment

.   Letter of Credit Action                           10:00 a.m.  2 Business Days prior to such
                                                                  action (or such lesser time which
                                                                  is acceptable to Issuing Lender)

.   Voluntary reduction in or termination of          10:00 a.m.  2 Business Days prior to such
    Commitments                                                   reduction or termination

Payments by Lenders or Borrower to                    11:00 a.m.  On date payment is due
Administrative Agent

"Responsible Officer" means the president, chief financial officer or controller of a Borrower Party. Any document or certificate hereunder that is signed by a Responsible Officer of a Borrower Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Borrower Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Borrower Party.

"Restricted Payment" means:

(a) the declaration or payment of any dividend or distribution by Borrower or any of its Subsidiaries, either in cash or property, on any shares of the capital stock of any class of Borrower or any of its Subsidiaries (except dividends or other distributions payable solely in shares of capital stock of Borrower or any of its Subsidiaries or payable by a Subsidiary to Borrower or another wholly-owned Subsidiary of Borrower);

(b) the purchase, redemption or retirement by Borrower or any of its Subsidiaries of any shares of its capital stock of any class or any warrants, rights or options to purchase or acquire any shares of its capital stock, whether directly or indirectly;

(c) any other payment or distribution by Borrower or any of its Subsidiaries in respect of its capital stock, either directly or indirectly;

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(d) any Investment other than an Investment otherwise permitted under any Loan Document; and

(e) the payment or prepayments of any principal (including sinking fund payments) or any other amount (other than scheduled interest payments) with respect to any Indebtedness (including the payment of cash in connection with such a conversion thereof), or the purchase or redemption of (or offer to purchase or redeem) any Indebtedness, or the deposit of any monies, securities or other property with any trustee or other Person to provide assurance that the principal or any portion thereof of any Indebtedness will be paid when due or any other provision for the defeasance of any Indebtedness.

"Revolving Commitment" means, as to any Lender, the amount set forth opposite such Lender's name on Schedule 2.01 hereto under the heading Revolving Commitments, as such amount may be reduced from time to time in accordance with this Agreement (collectively, the "combined Revolving Commitments").

"Revolving Loan" has the meaning specified in Section 2.01(a).

"Revolving Note" means a promissory note made by Borrower in favor of a Lender evidencing Revolving Loans made by such Lender, substantially in the form of Exhibit C-1 (collectively, the "Revolving Notes").

"Security Agreement" means the security agreement substantially in the form of Exhibit F, either as originally executed or as it may from time to time be supplemented, modified, amended, extended or supplanted.

"Shareholders' Equity" means, as of any date of determination for Borrower and its Subsidiaries on a consolidated basis, shareholders' equity, including redeemable preferred stock, as of that date determined in accordance with GAAP.

"Subsidiary" means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by Borrower.

"Supplemental Security Agreement" means a duly executed, delivered and completed Supplemental Security Agreements (Trademarks) substantially in the form of Exhibit A to the Security Agreement.

"Swap Contract" means (a) any and all rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward

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foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any other master agreement (any such master agreement, together with any related schedules, as amended, restated, extended, supplemented or otherwise modified in writing from time to time, a "Master Agreement"), including any such obligations or liabilities under any Master Agreement.

"Swap Termination Value" means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a) the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include any Lender).

"Swing Line" means the revolving line of credit established by Swing Line Lender in favor of Borrower pursuant to Section 2.04.

"Swing Line Lender" means Bank of America, or any successor swing line Lender hereunder.

"Swing Line Loan" means a loan which bears interest at a rate per annum equal to interest payable on a Base Rate Loan (plus the Applicable Amount, if any) and made by Swing Line Lender to Borrower under the Swing Line.

"Swing Line Sublimit" means an amount equal to the lesser of (a) $5,000,000 and (b) the combined Revolving Commitments. The Swing Line Sublimit is part of the Revolving Commitments and is not in addition to the Revolving Commitments or the Term Commitments.

"Synthetic Lease Obligations" means all monetary obligations of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations which do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the Indebtedness of such Person (without regard to accounting treatment).

"Term Commitment" means, as to any Lender, the amount set forth opposite such Lender's name on Schedule 2.01 hereto under the heading Term Commitments, as such amount may be reduced from time to time in accordance with this Agreement (collectively, the "combined Commitments").

"Term Loan" has the meaning specified in Section 2.01(b).

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"Term Note" means a promissory note made by Borrower in favor of a Lender evidencing Term Loans made by such Lender, substantially in the form of Exhibit

C-2 (collectively, the "Term Notes").
---                     ----------

     "to the best knowledge of" means, when modifying a representation, warranty
      ------------------------

or other statement of any Person, that the fact or situation described therein is known by such Person (or, in the case of a Person other than a natural Person, known by a Responsible Officer of such Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a reasonable Person in similar circumstances would have done) would have been known by such Person (or, in the case of a Person other than a natural Person, would have been known by a Responsible Officer of such Person).

"type" of Loan means (a) a Base Rate Loan, (b) an Offshore Rate Loan or (c)

a Swing Line Loan.

1.02 Use of Certain Terms.

(a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto or thereto, unless otherwise defined therein.

(b) As used herein, unless the context requires otherwise, the masculine, feminine and neuter genders and the singular and plural include one another.

(c) The words "herein" and "hereunder" and words of similar import when used in any Loan Document shall refer to the Loan Documents as a whole and not to any particular provision thereof. The term "including" is by way of example and not limitation. References herein to a Section, subsection or clause shall, unless the context otherwise requires, refer to the appropriate Section, subsection or clause in this Agreement.

(d) The term "or" is disjunctive; the term "and" is conjunctive. The term

                    --                            ---
"shall" is mandatory; the term "may" is permissive.  Masculine terms also apply
 -----                          ---

to females; feminine terms also apply to males.

1.03 Accounting Terms. All accounting terms not specifically or completely defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

1.04 Rounding. Any financial ratios required to be maintained by Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this Agreement and rounding the result up or down to the nearest number (with a

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round-up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement.

1.05 Exhibits and Schedules. All exhibits and schedules to this Agreement, either as originally existing or as the same may from time to time be supplemented, modified or amended, are incorporated herein by this reference. A matter disclosed on any Schedule shall be deemed disclosed on all Schedules.

1.06 References to Agreements and Laws. Unless otherwise expressly provided herein, (a) references to agreements (including the Loan Documents) and other contractual instruments shall include all amendments, restatements, extensions, supplements and other modifications thereto (unless prohibited by any Loan Document), and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law.

SECTION 2.
THE COMMITMENTS AND EXTENSIONS OF CREDIT

2.01 Amount and Terms of Commitments.

(a) The Revolving Commitments. Subject to the terms and conditions set forth in this Agreement, each Lender severally agrees until the Maturity Date to
(i) make, Convert and Continue revolving loans (each such loan, a "Revolving Loan") as Borrower may from time to time request; and (ii) purchase risk

participations in outstanding Letter of Credit Usage and Swing Line Loans; provided, however, that the Outstanding Revolving Obligations of each Lender shall not exceed such Lender's Revolving Commitment, and the Outstanding Revolving Obligations of all Lenders shall not exceed the combined Revolving Commitments at any time. Subject to the foregoing and the other terms and conditions hereof, Borrower may borrow, Convert, Continue, prepay and reborrow Revolving Loans as set forth herein without premium or penalty.

(b) The Term Commitments. Subject to the terms and conditions set forth in this Agreement, each Lender severally agrees to make a single term loan (each such loan, a "Term Loan") on the Closing Date and thereafter Convert and Continue such Term Loan as Term Loans hereunder as Borrower may from time to time request; provided, however, that the aggregate principal amount of each Lender's Term Loans shall not exceed such Lender's Term Commitment, and the aggregate principal amount of all Lenders' Term Loans shall not exceed the combined Term Commitments at any time. The Term Commitments are not revolving, and except as provided in Section 2.05, Term Loans which are repaid or prepaid may not be reborrowed.

(c) Loans made by each Lender shall be evidenced by one or more loan accounts or records maintained by such Lender in the ordinary course of business. Upon the request of any Lender made through Administrative Agent, such Lender's Revolving Loans may be evidenced by one or

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more Revolving Notes, and such Lender's Term Loans may be evidenced by one or more Term Notes, instead of or in addition to loan accounts. Each such Lender may attach schedules to its Notes and endorse on its Revolving Note the date, amount and maturity of its Revolving Loans and payments with respect thereto and endorse on its Term Note the date, amount and maturity of its Term Loans and payments with respect thereto. Such loan accounts, records or Notes shall be conclusive absent manifest error of the amount of such Loans and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower to pay any amount owing with respect to the Loans.

2.02 Borrowings, Conversions and Continuations of Loans.

(a) Borrower may irrevocably request a Borrowing, Conversion or Continuation of Loans in a Minimum Amount therefor by delivering a Request for Extension of Credit therefor by Requisite Notice to Administrative Agent not later than the Requisite Time therefor. All Borrowings, Conversions and Continuations shall constitute Base Rate Loans unless properly and timely otherwise designated as set forth in the prior sentence.

(b) Following receipt of a Request for Extension of Credit, Administrative Agent shall promptly notify each Lender of its Pro Rata Share thereof by Requisite Notice. In the case of a Borrowing of Loans, each Lender shall make the funds for its Loan available to Administrative Agent at Administrative Agent's Office not later than the Requisite Time therefor on the Business Day specified in such Request for Extension of Credit. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, in the case of the initial Extension of Credit hereunder, Section 4.01), all funds so received shall be made available to Borrower in like funds received. Administrative Agent shall promptly notify Borrower and Lenders of the interest rate applicable to any Loan other than a Base Rate Loan upon determination of same.

(c) Except as otherwise provided herein, an Offshore Rate Loan may be Continued or Converted only on the last day of the Interest Period for such Offshore Rate Loan. During the existence of a Default or Event of Default, no Loans may be requested as, Converted into or Continued as Offshore Rate Loans if so determined by Requisite Lenders, and Requisite Lenders may demand that any or all of the then outstanding Offshore Rate Loans be Converted immediately into Base Rate Loans. Such Conversion shall be effective upon notice to Borrower and shall continue so long as such Default or Event of Default continues to exist.

(d) If a Loan is to be made on the same date that another Loan is due and payable, Borrower or Lenders, as the case may be, shall, unless Administrative Agent otherwise requests, make available to Administrative Agent the net amount of funds giving effect to both such Loans and the effect for purposes of this Agreement shall be the same as if separate transfers of funds had been made with respect to each such Loan.

(e) The failure of any Lender to make any Loan on any date shall not relieve any other Lender of any obligation to make a Loan on such date, but no Lender shall be responsible for the failure of any other Lender to so make its Loan.

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2.03 Letters of Credit.

(a) The Letter of Credit Sublimit. Subject to the terms and conditions set forth in this Agreement, until the Maturity Date, Issuing Lender shall take such Letter of Credit Actions under the Revolving Commitments as Borrower may from time to time request; provided, however, that (i) the aggregate outstanding Letter of Credit Usage shall not exceed the Letter of Credit Sublimit at any time and (ii) the Outstanding Obligations of each Lender shall not exceed such Lender's Revolving Commitment and the Outstanding Obligations of all Lenders shall not exceed the combined Revolving Commitments at any time. Each Letter of Credit Action shall be in a form acceptable to Issuing Lender. Unless consented to by the Issuing Lender and the Requisite Lenders, no Letter of Credit may expire more than 12 months after the date of its issuance or last renewal; provided, however, that no Letter of Credit shall expire after the Maturity Date. If any Letter of Credit Usage remains outstanding after the Maturity Date, Borrower shall deposit cash in an amount equal to such Letter of Credit Usage in a Letter of Credit Cash Collateral Account not later than the Maturity Date.

(b) Requesting Letter of Credit Actions. Borrower may irrevocably request a Letter of Credit Action in a Minimum Amount therefor by delivering a Letter of Credit Application therefor to Issuing Lender, with a copy to Administrative Agent (who shall notify Lenders), by Requisite Notice not later than the Requisite Time therefor. Unless Administrative Agent notifies Issuing Lender that such Letter of Credit Action is not permitted hereunder or Issuing Lender notifies Administrative Agent that it has determined that such Letter of Credit Action is contrary to any Laws or policies of Issuing Lender, Issuing Lender shall, upon satisfaction of the applicable conditions set forth in Section 4.02 with respect to any Letter of Credit Action constituting an Extension of Credit, effect such Letter of Credit Action. This Agreement shall control in the event of any conflict with any Letter of Credit Application. Upon the issuance of a Letter of Credit, each Lender shall be deemed to have purchased a pro rata participation in such Letter of Credit from Issuing Lender in an amount equal to that Lender's Pro Rata Share thereof.

(c) Reimbursement of Payments Under Letters of Credit. Borrower shall reimburse Issuing Lender through Administrative Agent for any payment that Issuing Lender makes under a Letter of Credit on or before the date of such payment; provided, however, that if the conditions precedent set forth in Section 4.02 can be satisfied, Borrower may request a Borrowing of Loans to reimburse Issuing Lender for such payment pursuant to Section 2.02, or, failing to make such request, Borrower shall be deemed to have requested a Borrowing of Base Rate Loans on such payment date pursuant to subsection (e) below.

(d) Funding by Lenders When Issuing Lender Not Reimbursed. Upon any drawing under a Letter of Credit, Issuing Lender shall notify Administrative Agent and Borrower. If Borrower fails to timely make the payment required pursuant to subsection (c) above, Issuing Lender shall notify Administrative Agent of such fact and the amount of such unreimbursed payment. Administrative Agent shall promptly notify each Lender of its Pro Rata Share of such amount by Requisite Notice. Each Lender shall make funds in an amount equal its Pro Rata Share of such amount available to Administrative Agent at Administrative Agent's

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Office not later than the Requisite Time therefor on the Business Day specified by Administrative Agent. Administrative Agent shall remit the funds so received to Issuing Lender. The obligation of each Lender to so reimburse Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of a Default or Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of Borrower to reimburse Issuing Lender for the amount of any payment made by Issuing Lender under any Letter of Credit, together with interest as provided herein.

(e) Nature of Lenders' Funding. If the conditions precedent set forth in
Section 4.02 can be satisfied (except for the giving of a Request for Extension of Credit) on the date Borrower is obligated to make, but fails to make, a reimbursement of a payment under a Letter of Credit, the funding by Lenders pursuant to subsection (d) above shall be deemed to be a Borrowing of Base Rate Loans (without regard to the Minimum Amount therefor) deemed requested by Borrower. If the conditions precedent set forth in Section 4.02 cannot be satisfied on the date Borrower is obligated to make, but fails to make, a reimbursement of a payment under a Letter of Credit, the funding by Lenders pursuant to subsection (d) above shall be deemed to be a funding by each Lender of its risk participation in such Letter of Credit, and each Lender making such funding shall thereupon acquire a pro rata participation, to the extent of its reimbursement, in the claim of Issuing Lender against Borrower in respect of such payment and shall share, in accordance with that pro rata participation, in any payment made by Borrower with respect to such claim. Such funds shall be payable by Borrower upon demand of Administrative Agent and shall bear interest at the Default Rate payable on demand.

(f) Special Provisions Relating to Evergreen Letters of Credit. Borrower may request Letters of Credit that have automatic extension or renewal provisions ("evergreen" Letters of Credit) so long as Issuing Lender has the right not to permit any such extension or renewal at least annually within a notice period to be agreed upon at the time each such Letter of Credit is issued. If the conditions set forth in Section 4.02 could be satisfied within such notice period, an evergreen Letter of Credit shall be permitted to automatically extend or renew in accordance with its terms for the period(s) specified therein (but not to a date later than the Maturity Date). If the conditions set forth in Section 4.02 could not be satisfied within such notice period, Administrative Agent shall notify Borrower, Issuing Lender and each Lender of such fact. Unless Requisite Lenders (with the consent of Issuing Lender given in its sole and absolute discretion) decide to allow such Letter of Credit to nonetheless automatically extend or renew, Issuing Lender shall notify the beneficiary of such non-extension or nonrenewal.

(g) Obligations Absolute. The obligation of Borrower to pay to Issuing Lender the amount of any payment made by Issuing Lender under any Letter of Credit shall be absolute, unconditional, and irrevocable. Without limiting the foregoing or limiting Borrower's rights to pursue such rights and remedies as it may have against Issuing Lender, Administrative Agent or any Lender or beneficiaries of a Letter of Credit, Borrower's obligation shall not be affected by any of the following circumstances:

(i) any lack of validity or enforceability of the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;

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(ii) any amendment or waiver of or any consent to departure by Borrower from the Letter of Credit, this Agreement, or any other agreement or instrument relating hereto or thereto;

(iii) the existence of any claim, setoff, defense, or other rights which Borrower may have at any time against Issuing Lender, Administrative Agent or any Lender, any beneficiary of the Letter of Credit (or any persons or entities for whom any such beneficiary may be acting) or any other Person, whether in connection with the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto, or any unrelated transactions;

(iv) any demand, statement, or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever so long as any such document appeared to comply with the terms of the Letter of Credit;

(v) payment by Issuing Lender in good faith under the Letter of Credit against presentation of a draft or any accompanying document which does not strictly comply with the terms of the Letter of Credit; or any payment made by Issuing Lender under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Laws;

(vi) the existence, character, quality, quantity, condition, packing, value or delivery of any property purported to be represented by documents presented in connection with any Letter of Credit or for any difference between any such property and the character, quality, quantity, condition, or value of such property as described in such documents;

(vii) the time, place, manner, order or contents of shipments or deliveries of property as described in documents presented in connection with any Letter of Credit or the existence, nature and extent of any insurance relative thereto;

(viii) the solvency or financial responsibility of any party issuing any documents in connection with a Letter of Credit;

(ix) any failure or delay in notice of shipments or arrival of any property;

(x) any error in the transmission of any message relating to a Letter of Credit not caused by Issuing Lender, or any delay or interruption in any such message;

(xi) any error, neglect or default of any correspondent of Issuing Lender in connection with a Letter of Credit;

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(xii) any consequence arising from acts of God, wars, insurrections, civil unrest, disturbances, labor disputes, emergency conditions or other causes beyond the control of Issuing Lender;

(xiii) so long as Issuing Lender in good faith determines that the document appears to comply with the terms of the Letter of Credit, the form, accuracy, genuineness or legal effect of any contract or document referred to in any document submitted to Issuing Lender in connection with a Letter of Credit; and

(xiv) where Issuing Lender has acted in good faith under any other circumstances whatsoever.

In addition, Issuing Lender shall deliver the form of any proposed Letter of Credit or amendment thereto to Borrower prior to issuing the same to any beneficiary. Upon Borrower affirmatively notifying Issuing Lender that the same is acceptable, Issuing Bank shall thereupon issue it to the beneficiary thereof. After giving any such notice of acceptance, Borrower shall be conclusively deemed to have waived any claim of noncompliance with Borrower's instructions or other irregularity in the Letter of Credit against Issuing Lender and its correspondents with respect to such Letter of Credit or amendment.

(h) Role of Issuing Lender. Each Lender and Borrower Party agree that, in paying any drawing under a Letter of Credit, Issuing Lender shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. No Administrative Agent- Related Person nor any of the respective correspondents, participants or assignees of Issuing Lender shall be liable to any Lender for any action taken or omitted in connection herewith at the request or with the approval of Lenders or the Requisite Lenders, as applicable; any action taken or omitted in the absence of gross negligence or willful misconduct; or the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit. Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude Borrower's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Administrative Agent-Related Person, nor any of the respective correspondents, participants or assignees of Issuing Lender, shall be liable or responsible for any of the matters described in subsection (g) above. In furtherance and not in limitation of the foregoing, Issuing Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and Issuing Lender shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

(i) Applicability of ISP98 and UCP. Unless otherwise expressly agreed by the Issuing Lender and Borrower when a Letter of Credit is issued, performance under Letters of

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Credit by the Issuing Lender, its correspondents, and beneficiaries will be governed by the rules of the "International Standby Practices 1998" (ISP98) or such later revision as may be published by the International Chamber of Commerce (the "ICC").

(j) Letter of Credit Fee. On each Applicable Payment Date, Borrower shall pay to Administrative Agent in arrears, for the account of each Lender in accordance with its Pro Rata Share, a Letter of Credit fee in an amount equal to the indicated Applicable Amount for Letters of Credit times the actual daily maximum amount available to be drawn under each Letter of Credit since the later of the Closing Date and the previous Applicable Payment Date. If there is any change in the Applicable Amount during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Amount separately for each period during such quarter that such Applicable Amount was in effect. The minimum fee for any single Letter of Credit shall be $150 per annum.

(k) Fronting Fee and Documentary and Processing Charges Payable to Issuing Lender. On each Applicable Payment Date, Borrower shall pay to Administrative Agent for the sole account of Issuing Lender a fronting fee in an amount equal to 1/4 of 1% per annum on the actual daily maximum amount available to be drawn under each Letter of Credit since the later of the Closing Date and the previous Applicable Payment Date. In addition, Borrower shall pay directly to Issuing Lender, upon demand, for its sole account its customary documentary and processing charges in accordance with its standard schedule, as from time to time in effect, for any Letter of Credit Action or other occurrence relating to a Letter of Credit for which such charges are customarily made. Such fees and charges are nonrefundable.

2.04 Swing Line Loans.

(a) Subject to the terms and conditions set forth in this Agreement, Swing Line Lender agrees to make Swing Line Loans until the Maturity Date in such amounts as Borrower may from time to time request; provided, however, that (i) the aggregate principal amount of all Swing Line Loans shall not exceed the Swing Line Sublimit at any time, and (ii) the Outstanding Revolving Obligations of each Lender shall not exceed such Lender's Revolving Commitment and the Outstanding Revolving Obligations of all Lenders shall not exceed the combined Revolving Commitments at any time. Swing Line Lender may terminate or suspend the Swing Line at any time in its sole discretion upon Requisite Notice to Borrower. Without the consent of all Requisite Lenders and Swing Line Lender, no Swing Line Loan shall be made during the continuation of a Default or Event of Default. Borrower may borrow, repay and reborrow under this Section; provided, however, that Swing Line Lender may terminate or suspend its commitment to make new Swing Line Loans at any time in its sole discretion upon at least 24 hours Requisite Notice to Borrower.

(b) Unless notified to the contrary by Swing Line Lender, Borrower may request Swing Line Loans in the Minimum Amount therefor upon Requisite Notice made to Swing Line Lender not later than the Requisite Time therefor. Each such request for a Swing Line Loan shall constitute a representation and warranty by Borrower that the conditions set forth in Sections 4.02(a) and (b) are satisfied. Promptly after receipt of such request, Swing Line Lender

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shall obtain telephonic verification from the Administrative Agent that there is availability for such Swing Line Loan under the Revolving Commitments. Upon receiving such verification, Swing Line Lender shall make such Swing Line Loan available to Borrower. Upon the making of a Swing Line Loan, each Lender shall be deemed to have purchased from Swing Line Lender a risk participation therein in an amount equal to that Lender's Pro Rata Share times the amount of such Swing Line Loan.

(c) Swing Line Loans shall bear interest at a fluctuating rate per annum equal to the rate of interest payable on Base Rate Loans (plus the Applicable Amount, if any) upon demand of Swing Line Lender and on the Maturity Date. Swing Line Lender shall be responsible for invoicing Borrower (or notifying Administrative Agent to so invoice Borrower) for such interest. The interest payable on Swing Line Loans is solely for the account of Swing Line Lender.

(d) Borrower shall repay each Swing Line Loan on the earliest of (i) the fifth Business Day after it is made and (ii) the Maturity Date. Borrower shall repay the principal amount of each Swing Line Loan by payment directly to Swing Line Lender or by debit at a demand deposit account at the Swing Line Lender not later than the Requisite Time for payments hereunder. If the conditions precedent set forth in Section 4.02 can be satisfied, Borrower may request a Borrowing of Loans to repay Swing Line Lender pursuant to Section 2.02, or, failing to make such request, Borrower shall be deemed to have requested a Borrowing of Base Rate Loans on such payment date pursuant to subsection (e) below.

(e) If Borrower fails to timely make any principal of or interest payment on Swing Line Loans, Swing Line Lender shall notify the Administrative Agent of such fact and the unpaid amount. The Administrative Agent shall promptly notify each Lender of its Pro Rata Share of such amount by Requisite Notice. Each Lender shall make funds in an amount equal its Pro Rata Share of such amount available to the Administrative Agent at the Administrative Agent's Office not later than the Requisite Time for payments hereunder on the following Business Day. The obligation of each Lender to make such payment shall be absolute and unconditional and shall not be affected by the occurrence of an Event of Default or any other occurrence or event. Any such payment shall not relieve or otherwise impair the obligation of Borrower to repay Swing Line Lender for any amount of Swing Line Loans, together with interest as provided herein.

(f) If the conditions precedent set forth in Section 4.02 can be satisfied (except for the giving of a Request for Extension of Credit) on any date Borrower is obligated to make, but fails to make, a repayment of Swing Line Loans, the funding by the Lenders pursuant to subsection (d) above shall be deemed to be part of a Borrowing of Base Rate Loans (without regard to the Minimum Amount therefor) requested by Borrower. If the conditions precedent set forth in Section 4.02 cannot be satisfied on the date Borrower is obligated to make, but fails to make, such payment, the funding by the Lenders pursuant to subsection (d) above shall be deemed to be a funding by each Lender of its participation in such Swing Line Loans, and such funds shall be payable by Borrower upon demand and shall bear interest at the Default Rate, and each Lender making such funding shall thereupon acquire a pro rata participation, to the extent of such payment, in the claim of Swing Line Lender against Borrower in respect of such payment and

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shall share, in accordance with that pro rata participation, in any payment made by Borrower with respect to such claim.

2.05 Prepayments.

(a) Optional Prepayments. Upon Requisite Notice to Administrative Agent not later than the Requisite Time therefor, Borrower may from time to time voluntarily prepay Loans in part in the Minimum Amount therefor or in full without premium or penalty. All voluntary prepayments of Term Loans shall be applied ratably against all remaining Principal Payment Amounts and except as aforesaid shall be subject to subsection (g) below.

(b) Mandatory Prepayments of Term Loans from Proceeds of Dispositions. Upon the receipt of any Net Cash Proceeds of any Disposition (other than Ordinary Course Dispositions) by Borrower or any Subsidiary in excess of $1,000,000 in the aggregate in any calendar year, Borrower shall promptly prepay outstanding Term Loans in an amount equal to 100% of such Net Cash Proceeds (excluding the first $1,000,000). Such prepayments shall be subject to subsections (f) and (g) below.

(c) Mandatory Prepayments of Term Loans from Proceeds of Insurance. Upon the receipt of any insurance proceeds by Borrower or any Subsidiary in excess of $2,000,000 in the aggregate in any calendar year, Borrower shall promptly prepay outstanding Term Loans in an amount equal to 100% of such proceeds (excluding the first $2,000,000). Such prepayments shall be subject to subsections (f) and
(g) below.

(d) Mandatory Prepayments of Term Loans from Proceeds of Additional Equity. Until the Term Loans are paid in full, upon the receipt Borrower or any Subsidiary of any Net Cash Proceeds of any additional equity issued by Borrower after the Closing Date (other than Net Cash Proceeds up to $500,000 in any fiscal year from the exercise of stock options by employees, directors and consultants of Borrower and its Subsidiaries), Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Cash Proceeds thereof. Such prepayments shall be subject to subsection (g) below.

(e) Outstandings in Excess of Commitments. If for any reason the Outstanding Revolving Obligations exceed the combined Revolving Commitments or the Outstanding Term Obligations exceed the combined Term Commitments, in each case as in effect or as reduced or because of any limitation set forth in this Agreement or otherwise, Borrower shall immediately prepay Loans and/or deposit cash in a Letter of Credit Cash Collateral Account in an aggregate amount equal to such excess. Such prepayments shall be subject to subsection (g) below.

(f) Reinvestment of Certain Term Loan Prepayments. So long as no Default or Event of Default shall have occurred and be continuing, Borrower may, within 120 days after any prepayment pursuant to subsection (b) or (c) above, deliver to Administrative Agent (who shall promptly deliver the same to each Lender) a good faith plan for reinvesting such prepaid amounts in capital expenditures and Investments otherwise permitted hereunder. Such plans shall specify the amounts, timing and purposes of such expenditures in reasonable detail and include a schedule for the reborrowings of Term Loans contemplated by such plan. Upon

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satisfaction of the applicable conditions set forth in Section 4.02 at each borrowing, Borrower may thereafter reborrow Term Loans in the amounts, at the times and for the purposes specified in such plans; provided, however, that the aggregate principal amount so reborrowed shall not exceed the aggregate principal amount of all Term Loan prepayments under such subsections to such date. Borrower may from time to time revise in good faith any plan theretofore delivered under this subsection.

(g) Provisions Applicable to all Prepayments. Administrative Agent will promptly notify each Lender of any prepayment hereunder and such Lender's Pro Rata Share thereof. Any prepayment of Offshore Rate Loans shall be accompanied by all accrued interest thereon, together with the costs set forth in Section
3.05. All mandatory prepayments of Term Loans shall be applied against

remaining Principal Payment Amounts in inverse order of Principal Payment Dates. Upon any reborrowing of Term Loans permitted by subsection (f) above, the Principal Payment Amounts previously deemed prepaid shall be reinstated in scheduled order of Principal Payment Dates to the extent of such reborrowings.

2.06 Reduction or Termination of Revolving Commitments. Upon Requisite Notice to Administrative Agent not later than the Requisite Time therefor, Borrower may from time to time, without premium or penalty, permanently and irrevocably reduce the Revolving Commitments in a Minimum Amount therefor to an amount not less than the Outstanding Revolving Obligations at such time or terminate the Revolving Commitments. Any such reduction or termination of the Revolving Commitment shall be accompanied by payment of all accrued and unpaid commitment fees with respect to the portion of the Commitments being reduced or terminated. Administrative Agent shall promptly notify Lenders of any such request for reduction or termination of the Revolving Commitments. Each Lender's Commitment(s) shall be reduced by an amount equal to such Lender's Pro Rata Share thereof times the amount of such reduction.

2.07 Principal and Interest.

(a) Revolving Loans. If not sooner paid, Borrower agrees to pay the outstanding principal amount of each Revolving Loan on the Maturity Date.

(b) The Term Loans. Borrower agrees to repay the Term Loans in installments on each Principal Payment Date in an aggregate principal amount equal to the applicable Principal Payment Amount due on such Principal Payment Date. The remaining aggregate principal amount of all Term Loans shall be repaid in full on the Maturity Date.

(c) Interest. Subject to subsection (d) below, Borrower shall pay interest on the unpaid principal amount of each Loan (before and after default, before and after maturity, before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Laws) from the date borrowed until paid in full (whether by acceleration or otherwise) on each Applicable Payment Date at a rate per annum equal to the interest rate determined in accordance with the definition of such type of Loan, plus, to the

extent applicable in each case, the Applicable Amount.

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(d) Default Rate. If any amount payable by any Borrower Party under any Loan Document is not paid when due (after giving effect to any applicable grace periods), it shall thereafter bear interest (after as well as before entry of judgment thereon to the extent permitted by law) at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Law. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be payable upon demand.

2.08 Fees.

(a) Revolving Commitment Fee. Borrower shall pay to Administrative Agent for the account of each Lender pro rata according to its Pro Rata Share, a Commitment fee equal to the Applicable Amount times the actual daily amount by which the combined Revolving Commitments exceed the Outstanding Revolving Obligations (excluding Swing Line Loans). The commitment fee shall accrue at all times from the Closing Date until the Maturity Date and shall be payable quarterly in arrears on each Applicable Payment Date. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Amount during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Amount separately for each period during such quarter that such Applicable Amount was in effect. The commitment fee shall accrue at all times, including at any time during which one or more conditions in Section 4 are not met.

(b) Agency Fees. Borrower shall pay to Administrative Agent an agency fee in such amounts and at such times as set forth in a separate letter agreement between Borrower and Administrative Agent. The agency fee is for the services to be performed by Administrative Agent in acting as Administrative Agent and is fully earned on the date paid. The agency fee paid to Administrative Agent is solely for its own account and is nonrefundable.

2.09 Computation of Interest and Fees. Computation of interest on Base Rate Loans when the Base Rate is determined by Bank of America's "prime rate" shall be calculated on the basis of a year of 365 or 366 days, as the case may be, and the actual number of days elapsed. Computation of all other types of interest and all fees shall be calculated on the basis of a year of 360 days and the actual number of days elapsed, which results in a higher yield to Lenders than a method based on a year of 365 or 366 days. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall bear interest for one day.

2.10 Making Payments.

(a) Except as otherwise provided herein, all payments by Borrower or any Lender shall be made to Administrative Agent at Administrative Agent's Office not later than the Requisite Time for such type of payment. All payments received after such Requisite Time shall be deemed received on the next succeeding Business Day. All payments shall be made in immediately available funds in lawful money of the United States of America. All payments by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff.

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(b) Upon satisfaction of any applicable terms and conditions set forth herein, Administrative Agent shall promptly make any amounts received in accordance with the prior subsection available in like funds received as follows: (i) if payable to Borrower, by crediting the Designated Deposit Account, and (ii) if payable to any Lender, by wire transfer to such Lender at the address specified in Schedule 10.02.

(c) Subject to the definition of "Interest Period," if any payment to be made by any Borrower Party shall come due on a day other than a Business Day, payment shall instead be considered due on the next succeeding Business Day, and such extension of time shall be reflected in computing interest and fees.

(d) Unless Borrower or any Lender has notified Administrative Agent prior to the date any payment to be made by it is due, that it does not intend to remit such payment, Administrative Agent may, in its sole and absolute discretion, assume that Borrower or Lender, as the case may be, has timely remitted such payment and may, in its sole and absolute discretion and in reliance thereon, make available such payment to the Person entitled thereto. If such payment was not in fact remitted to Administrative Agent in immediately available funds, then:

(i) if Borrower failed to make such payment, each Lender shall forthwith on demand repay to Administrative Agent the amount of such assumed payment made available to such Lender, together with interest thereon in respect of each day from and including the date such amount was made available by Administrative Agent to such Lender to the date such amount is repaid to Administrative Agent at the Federal Funds Rate; and

(ii) if any Lender failed to make such payment, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent's demand therefor, Administrative Agent promptly shall notify Borrower, and Borrower shall pay such corresponding amount to Administrative Agent in an amount not exceeding any such amount made available to Borrower. Administrative Agent also shall be entitled to recover interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Administrative Agent to Borrower to the date such corresponding amount is recovered by Administrative Agent, (A) from such Lender at a rate per annum equal to the daily Federal Funds Rate and (B) from Borrower, at a rate per annum equal to the interest rate applicable to such Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitments or to prejudice any rights which Administrative Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.

(e) If Administrative Agent or any Lender is required at any time to return to Borrower, or to a trustee, receiver, liquidator, custodian, or any official under any proceeding under Debtor Relief Laws, any portion of a payments made by Borrower, each Lender shall, on demand of Administrative Agent, return its share of the amount to be returned, plus interest

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thereon from the date of such demand to the date such payment is made at a rate per annum equal to the daily Federal Funds Rate.

2.11 Funding Sources. Nothing in this Agreement shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

2.12 Master Subsidiary Guaranty and Collateral. The Obligations shall be guarantied under the Master Subsidiary Guaranty and secured by the Collateral pursuant to the Collateral Documents.

SECTION 3.
TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Any and all payments by Borrower to or for the account of Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of Administrative Agent and any Lender, taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which Administrative Agent or such Lender (or its lending office), as the case may be, is organized (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes"). If Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, (iii) Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, Borrower shall furnish to Administrative Agent (who shall forward the same to such Lender) the original or a certified copy of a receipt evidencing payment thereof.

(b) In addition, Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes").

(c) If Borrower shall be required by the Laws of any jurisdiction outside the United States to deduct any Taxes from or in respect of any sum payable under any Loan Document to

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Administrative Agent or any Lender, Borrower shall also pay to such Lender or Administrative Agent (for the account of such Lender), at the time interest is paid, such additional amount that the respective Lender specifies as necessary to preserve the after-tax yield (after factoring in United States (federal and state) taxes imposed on or measured by net income) the Lender would have received if such deductions (including deductions applicable to additional sums payable under this Section) had not been made.

(d) Borrower agrees to indemnify Administrative Agent and each Lender for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by Administrative Agent and such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto (provided that Administrative Agent or such Lender shall have notified Borrower as soon as practicable after having made any such payment).

3.02 Illegality. If any Lender determines that any Laws have made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund Offshore Rate Loans, or materially restricts the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the applicable offshore Dollar market, or to determine or charge interest rates based upon the Offshore Rate, then, on notice thereof by Lender to Borrower through Administrative Agent, any obligation of that Lender to make Offshore Rate Loans shall be suspended until Lender notifies Administrative Agent and Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, Borrower shall, upon demand from such Lender (with a copy to Administrative Agent), prepay or Convert all Offshore Rate Loans of that Lender, either on the last day of the Interest Period thereof, if Lender may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if Lender may not lawfully continue to maintain such Offshore Rate Loans. Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be disadvantageous to such Lender.

3.03 Inability to Determine Rates. If, in connection with any Request for Extension of Credit involving any Offshore Rate Loan, Administrative Agent determines that (a) Dollar deposits are not being offered to banks in the applicable offshore Dollar market for the applicable amount and Interest Period of the requested Offshore Rate Loan, (b) adequate and reasonable means do not exist for determining the underlying interest rate for such Offshore Rate Loan, or (c) such underlying interest rate does not adequately and fairly reflect the cost to Lender of funding such Offshore Rate Loan, Administrative Agent will promptly notify Borrower and all Lenders. Thereafter, the obligation of all Lenders to make or maintain such Offshore Rate Loan shall be suspended until Administrative Agent revokes such notice. Upon receipt of such notice, Borrower may revoke any pending request for a Borrowing of Offshore Rate Loans or, failing that, be deemed to have converted such request into a request for a Borrowing of Base Rate Loans in the amount specified therein.

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3.04 Increased Cost and Reduced Return; Capital Adequacy.

(a) If any Lender determines that any Laws:

(i) subject such Lender to any Tax, duty, or other charge with respect to any Offshore Rate Loans or its obligation to make Offshore Rate Loans, or change the basis on which taxes are imposed on any amounts payable to such Lender under this Agreement in respect of any Offshore Rate Loans;

(ii) shall impose or modify any reserve, special deposit, or similar requirement (other than the reserve requirement utilized in the determination of the Offshore Rate) relating to any extensions of credit or other assets of, or any deposits with or other liabilities or commitments of, such Lender (including its Commitments); or

(iii) shall impose on such Lender or on the offshore Dollar interbank market any other condition affecting this Agreement or any of such extensions of credit or liabilities or commitments;

and the result of any of the foregoing is to increase the cost to such Lender of making, Converting into, Continuing, or maintaining any Offshore Rate Loans or to reduce any sum received or receivable by such Lender under this Agreement with respect to any Offshore Rate Loans, then from time to time upon demand of Lender (with a copy of such demand to Administrative Agent), Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.

(b) If after the date hereof, any Lender determines that any change in or the interpretation of any Laws of general application relating to capital adequacy requirements have the effect of reducing the rate of return on the capital of such Lender or compliance by such Lender (or its Lending Office) or any corporation controlling such Lender as a consequence of such Lender's obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender's desired return on capital), then from time to time upon demand of such Lender (with a copy to Administrative Agent), Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction. Borrower shall not have any obligation under this Section 3.04(b) to the extent any reduction in the rate of return on capital of a Lender or any increased requirements regarding capital adequacy applicable to such Lender are directly or indirectly attributable to any willful misconduct of such Lender or any alleged unsafe, unsound or illegal practice engaged in by such Lender.

3.05 Breakfunding Costs. Upon demand of any Lender (with a copy to Administrative Agent) from time to time, Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a) any Continuation, Conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or

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(b) any failure by Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, Continue or Convert any Loan other than a Base Rate Loan on the date or in the amount notified by Borrower;

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

3.06 Matters Applicable to all Requests for Compensation.

(a) Any Lender claiming compensation under this Section 3 shall furnish to Borrower and Administrative Agent a statement setting forth (with an explanation in reasonable detail) the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. Each Lender shall give Borrower as much advance notice as is reasonably practical of its intention to make a claim for payment under this
Section 3 (with a demand for such additional costs to be sent to Borrower as soon as reasonably practical thereafter), and no Lender shall be entitled to compensation for any such additional amounts relating to a period more than 90 days prior to the giving of such notice by such Lender (except to the extent that such additional costs were retroactively applied against such Lender beyond a period of 90 days). For purposes of this Section 3, a Lender shall be deemed to have funded each Offshore Rate Loan at the Offshore Base Rate used in determining the Offshore Rate for such Loan by a matching deposit or other borrowing in the offshore Dollar interbank market, whether or not such Offshore Rate Loan was in fact so funded.

(b) Upon any Lender making a claim for compensation under Sections 3.01 or 3.04, Borrower may, upon notice to such Lender and Administrative Agent, remove

such Lender by (i) non ratably terminating such Lender's Commitment and/or (ii) causing such Lender to assign its Commitment to one or more other Lenders or Eligible Assignees acceptable to Borrower, Administrative Agent and Issuing Lender. Any removed or replaced Lender shall be entitled to (x) payment in full of all principal, interest, fees and other amounts owing to such Lender through the date of termination or assignment (including any amounts payable pursuant to

Section 3.05), (y) appropriate assurances and indemnities (which may include letters of credit) as such Lender may reasonably require with respect to its participation interest in any Letters of Credit or any Swing Line Loans then outstanding and (z) a release of such Lender from its obligations under the Loan Documents. Any Lender being replaced shall execute and deliver a Notice of Assignment and Acceptance covering that Lender's Commitment. Administrative Agent shall distribute an amended Schedule 2.01, which shall thereafter be incorporated into this Agreement, to reflect adjustments to Lenders and their Commitments. In order to make all Lender's interests in any outstanding Extensions of Credit ratable in accordance with any revised Pro Rata Shares after giving effect to the removal or replacement of a Lender, Borrower shall pay or prepay, if necessary, on the effective date thereof, all outstanding Extensions of Credit of all Lenders, together with any amounts due under Section
3.05. Borrower may concurrently request

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Extensions of Credit from Lenders in accordance with their revised Pro Rata Shares without regard to the Minimum Amount otherwise applicable.

3.07 Survival. All of Borrower's obligations under this Section 3 shall survive termination of the Commitments and payment in full of all Obligations.

SECTION 4.
CONDITIONS PRECEDENT TO EXTENSIONS OF CREDIT

4.01 Conditions of Initial Extension of Credit. The obligation of each Lender to make the initial Extension of Credit is subject to satisfaction of the following conditions precedent:

(a) Unless waived by all Lenders (or by Administrative Agent with respect to immaterial matters or items specified in subsections (iv) or (v) below with respect to which Borrower has given assurances satisfactory to Administrative Agent that they will be delivered promptly following the Closing Date), Administrative Agent's receipt of the following, each of which shall be originals or facsimiles (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Borrower Party, each dated on, or in the case of third-party certificates, recently before the Closing Date and each in form and substance satisfactory to Administrative Agent and its legal counsel:

(i) executed counterparts of this Agreement, sufficient in number for distribution to Administrative Agent, Lenders and Borrower;

(ii) A Revolving Note and a Term Note executed by Borrower in favor of each Lender requesting Notes, in a principal amount equal to that Lender's Revolving Commitment and Term Commitment, respectively;

(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Borrower Party as Administrative Agent may require to establish the identities of and verify the authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer thereof;

(iv) the articles or certificate of incorporation or organization of Borrower and CPK Management Company as in effect on the Closing Date, certified by the Secretary of State of California as of a recent date and the bylaws of Borrower and CPK Management Company, Inc as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of Borrower and CPK Management Company, Inc, respectively, as of the Closing Date; and

(v) a good standing certificate for Borrower and CPK Management Company, Inc from the Secretary of State of California as of a recent date.

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(vi) a certificate signed by a Responsible Officer of Borrower certifying (A) that the conditions specified in Sections 4.01(c) and 4.01(d) have been satisfied, and (B) that there has been no event or circumstance since the date of the Audited Financial Statements which has a Material Adverse Effect;

(vii) an opinion of counsel to Borrower in form and substance satisfactory to Administrative Agent and Lenders;

(viii) the Master Subsidiary Guaranty executed by each Domestic Subsidiary;

(ix) the Collateral Documents, executed by Borrower and each applicable Domestic Subsidiary, in appropriate form for filing or recording where necessary, together with:

(A) the Pledge Agreement, and all Pledged Collateral, together with, as applicable, undated stock transfer powers executed in blank for each certificate representing Pledged Collateral so delivered;

(B) the Security Agreement, and all Collateral and transfer instruments required to be delivered thereunder;

(C) such financing statements on Form UCC-1 executed by Borrower and each Subsidiary as Administrative Agent may request;

(D) such Security Agreement Supplements as Administrative Agent may request; and

(E) evidence that all other actions necessary or, in the reasonable opinion of Administrative Agent, desirable to perfect and protect the Lien created by the Collateral Documents, and to enhance Administrative Agent's ability to preserve and protect its interests in and access to the Collateral, have been taken;

(x) written evidence that the Existing Credit Agreement has been or concurrently is being terminated and all Liens securing such facility have been or concurrently are being released;

(xi) evidence of insurance coverage required under Section 6.06; and

(xii) such other assurances, certificates, documents, consents or opinions as Administrative Agent, Issuing Lender or the Requisite Lenders reasonably may require.

(b) Any fees required to be paid on or before the Closing Date shall have been paid.

(c) The representations and warranties made by Borrower herein, or which are contained in any certificate, document or financial or other statement furnished at any time under or in connection herewith or therewith, shall be correct in all material respects on and as of the Closing Date.

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(d) Each Borrower Party shall be in compliance with all the terms and provisions of the Loan Documents to which it is a party, and no Default or Event of Default shall have occurred and be continuing.

(e) Other than litigation described on Schedule 5.05 hereto, the absence of any action, suit, investigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that purports (i) to materially and adversely affect Borrower or its Subsidiaries, or (ii) to affect any transaction contemplated hereby or the ability of Borrower and its Subsidiaries under the Loan Documents to perform their respective obligations thereunder.

(f) Receipt and review, with results satisfactory to Administrative Agent and its counsel, of information regarding litigation, tax, accounting, labor, insurance, pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, environmental matters, contingent liabilities and management of Borrower and its Subsidiaries.

(g) Receipt and review, with results satisfactory to Administrative Agent and Lenders, of information confirming that (i) Borrower and its Subsidiaries are taking all necessary and appropriate steps to ascertain the extent of, and to quantify and successfully address, business and financial risks facing Borrower and its subsidiaries as a result of what is commonly referred to as the "Year 2000 problem" (i.e., the inability of certain computer applications to recognize correctly and perform date-sensitive functions involving certain dates prior to and after December 31, 1999), including risks resulting from the failure of key vendors and customers of Borrower and its Subsidiaries to successfully address the Year 2000 problem, and (b) Borrower's and its Subsidiaries' material computer applications and those of its key vendors and customers will, on a timely basis, adequately address the Year 2000 problem in all material respects.

(h) The absence of any material disruption of or a material adverse change in conditions in the financial, banking or capital markets which Administrative Agent and Arranger in their sole discretion, deem material in connection with the syndication of the Loan Documentation.

(i) Unless waived by Administrative Agent, Borrower shall have paid all Attorney Costs of Administrative Agent to the extent invoiced prior to or on the Closing Date, plus such additional amounts of Attorney Costs as shall constitute its reasonable estimate of Attorney Costs incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude final settling of accounts between Borrower and Administrative Agent).

4.02 Conditions to all Extensions of Credit. In addition to any applicable conditions precedent set forth elsewhere in this Section 4 or in Section 2, the obligation of each Lender to honor any Request for Extension of Credit is subject to the following conditions precedent:

(a) the representations and warranties of Borrower contained in Section 5, or which are contained in any certificate, document or financial or other statement furnished at any time under or in connection herewith or therewith, shall be correct on and as of the date of such

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Extension of Credit, except to the extent that such representations and warranties specifically refer to an earlier date.

(b) no Default or Event of Default exists, or would result from such proposed Extension of Credit.

(c) Administrative Agent shall have timely received a Request for Extension of Credit by Requisite Notice by the Requisite Time therefor.

(d) Administrative Agent shall have received, in form and substance satisfactory to it, such other assurances, certificates, documents or consents related to the foregoing as Administrative Agent or Requisite Lenders reasonably may require.

Each Request for Extension of Credit by Borrower shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied and on and as of the date of such Extension of

Credit.

SECTION 5. REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Administrative Agent and Lenders that:

5.01 Existence and Qualification; Power; Compliance with Laws. Each Borrower Party is a corporation or partnership duly organized or formed, validly existing and in good standing under the Laws of the state of its incorporation or organization, has the power and authority and the legal right to own and operate its properties, to lease the properties it operates and to conduct its business, is duly qualified and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, and is in compliance with all Laws except to the extent that noncompliance does not have a Material Adverse Effect.

5.02 Power; Authorization; Enforceable Obligations. Each Borrower Party has the power and authority and the legal right to make, deliver and perform each Loan Document to which it is a party and Borrower has power and authority to borrow hereunder and has taken all necessary action to authorize the borrowings on the terms and conditions of this Agreement and to authorize the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party. No consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or any of the other Loan Documents except for filings or recordings required to be obtained to perfect the Liens created by the Collateral Documents. The Loan Documents have been duly executed and delivered by each Borrower Party, and constitute a legal, valid and binding obligation of each Borrower Party, enforceable against each Borrower Party in accordance with their respective terms, except as enforceability may be limited by applicable

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Debtor Relief Laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.

5.03 No Legal Bar. The execution, delivery, and performance by each Borrower Party of the Loan Documents to which it is a party and compliance with the provisions thereof have been duly authorized by all requisite action on the part of such Borrower Party and do not and will not (a) violate or conflict with, or result in a breach of, or require any consent, except where such violation, conflict, breach or failure to obtain consent would not have a Material Adverse Effect, under (i) any Organization Documents of such Borrower Party or any of its Subsidiaries, (ii) any applicable Laws, rules, or regulations or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (iii) any Contractual Obligation of such Borrower Party or any of its Subsidiaries or by which any of them or any of their property is bound or subject, (b) constitute a default under any such agreement or instrument, except where such default would not have a Material Adverse Effect, or (c) result in, or require, the creation or imposition of any Lien on any material portion of the properties of such Borrower Party or any of its Subsidiaries except for the Liens in favor of Administrative Agent required pursuant to the terms hereof and of the Collateral Documents.

5.04 Financial Statements; No Material Adverse Effect.

(a) The Audited Financial Statements and the Interim Financial Statements
(i) were prepared in accordance with GAAP (excluding, in the case of the Interim Financial Statements, footnotes) consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein (and, in the case of the Interim Financial Statements, year-end audit adjustments); and (iii) show all material indebtedness and other liabilities, direct or contingent, of Borrower and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness in accordance with GAAP consistently applied throughout the period covered thereby.

(b) Since the date of the Audited Financial Statements, there has been no event or circumstance which has a Material Adverse Effect.

5.05 Litigation. Except as described on Schedule 5.05 hereto, no litigation, investigation or proceeding of or before an arbitrator or Governmental Authority is pending or, to the best knowledge of Borrower, threatened by or against any Borrower Party or any of its Subsidiaries or against any of their properties or revenues which, if determined adversely, could have a Material Adverse Effect.

5.06 No Default. Neither any Borrower Party nor any of its Subsidiaries are in default under or with respect to any Contractual Obligation which could have a Material Adverse Effect, and no Default or Event of Default has occurred and is continuing or will result from the consummation of this Agreement or any of the other Loan Documents, or the making of the Extensions of Credit hereunder.

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5.07 Ownership of Property; Liens. Each Borrower Party and its Subsidiaries have valid fee or leasehold interests in all real property which they use in their respective businesses, and each Borrower Party and their respective Subsidiaries have good and marketable title to all their other material property, and none of such property is subject to any Lien, except as permitted in Section 7.02.

5.08 Taxes. Each Borrower Party and its Subsidiaries have filed all tax returns which are required to be filed, and have paid, or made provision for the payment of, all taxes with respect to the periods, property or transactions covered by said returns, or pursuant to any assessment received by such Borrower Party or its respective Subsidiaries, except (a) such taxes, if any, as are being contested in good faith by appropriate proceedings and as to which adequate reserves have been established and maintained, and (b) immaterial taxes; provided, however, that in each case no material item or portion of property of any Borrower Party or any of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited.

5.09 Margin Regulations; Investment Company Act; Public Utility Holding Company Act.

(a) No Borrower Party is engaged or will engage, principally or as one of its important activities, in the business of extending credit for the purpose of "purchasing" or "carrying" "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. No part of the proceeds of any Extensions of Credit hereunder will be used for "purchasing" or "carrying" "margin stock" as so defined or for any purpose which violates, or which would be inconsistent with, the provisions of Regulations U or X of such Board of Governors.

(b) No Borrower Party or any of its Subsidiaries (i) is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, or (ii) is or is required to be registered as an "investment company" under the Investment Company Act of 1940.

5.10 No ERISA Plans. No Borrower Party or any ERISA Affiliate of any Borrower Party sponsors or maintains or contributes (or has an obligation to contribute) to any employee pension benefit plan or employee benefit plan (both as defined in ERISA) insured by the Pension Benefit Guaranty Corporation or subject to Title IV of ERISA, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five plan years.

5.11 Intangible Assets. Each Borrower Party and its Subsidiaries own, or possess the right to use, all trademarks, trade names, servicemarks, franchises, licenses and other intangible assets that are used in the conduct of their respective businesses as now operated, and none of such items, to the best knowledge of Borrower, conflicts with the valid trademark, trade name or intangible asset of any other Person to the extent that such conflict has a Material Adverse Effect.

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Schedule 5.11 sets forth all servicemarks, trademarks, and trade names currently used by Borrower or any of its Subsidiaries.

5.12 Compliance With Laws. Each Borrower Party and its Subsidiaries are in compliance with all Laws that are applicable to it except for such noncompliance which would not have a Material Adverse Effect.

5.13 Environmental Compliance. To the best knowledge of Borrower, there are no violations of Environmental Laws or claims alleging potential liability or responsibility for violation of any Environmental Law which, individually or in the aggregate, would have a Material Adverse Effect.

5.14 Insurance. The properties of each Borrower Party and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where Borrower or such Subsidiary operates.

5.15 Subsidiaries. Schedule 5.15 correctly sets forth for each direct or indirect Subsidiary of Borrower, as of the Closing Date, its name, jurisdiction of formation, type of legal entity and the amount, type and ownership of all issued and outstanding equity interests and specifies which Subsidiaries are, as of the Closing Date, Domestic Subsidiaries and Foreign Subsidiaries. Except as described in Schedule 5.15, Borrower does not, as of the Closing Date, own directly or indirectly any capital stock, partnership or other equity interest or debt security which is convertible, or exchangeable, for capital stock or partnership or other equity interests in any Person which, if fully or partially exercised by any party, would be a Subsidiary. Unless otherwise indicated on in Schedule 5.15, all outstanding equity interests in each Subsidiary as of the Closing Date are owned of record and beneficially by Person specified thereon, there are no outstanding options, warrants or other rights to purchase capital stock of any such Subsidiary, and all such equity interests so owned are duly authorized, validly issued, fully paid and non-assessable, and were issued in compliance with all applicable state and federal securities and other Laws, and are free and clear of all Liens except for Ordinary Course Liens.

5.16 Year 2000. Borrower has conducted a comprehensive review and assessment of Borrower's systems and equipment applications and made inquiry of the Borrower's key suppliers, vendors and customers with respect to the "year 2000 problem" (that is, the inability of computers, as well as embedded microchips in non-computing devices, to properly perform date-sensitive functions with respect to certain dates prior to and after December 31, 1999). Based on that review and inquiry, the Borrower does not believe the year 2000 problem, including costs of remediation, will have a Material Adverse Effect. Borrower has developed adequate contingency plans to ensure uninterrupted and unimpaired business operation in the event of a failure of its own or a third party's systems or equipment due to the year 2000 problem, including those of vendors, customers, and suppliers, as well as a general failure of or interruption in its communications and delivery infrastructure.

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5.17 Collateral. Upon the execution and delivery of the Security Agreement, the Security Agreement will create a valid first priority security interest in the Collateral described therein securing the Obligations (subject only to Ordinary Course Liens and to such qualifications and exceptions as are contained in the Uniform Commercial Code with respect to the priority of security interests perfected by means other than the filing of a financing statement or with respect to the creation of security interests in Property to which Division 9 of the Uniform Commercial Code does not apply) and all action necessary to perfect the security interests so created, other than filing of the UCC-1 financing statements delivered to Lender with the appropriate Governmental Authority have been taken and completed. Upon the execution and delivery of any Supplemental Security Agreements, such agreement will create a valid first priority collateral assignment of the Collateral described therein securing the Obligations and all action necessary to perfect the collateral assignment so created, other than the filing thereof with the United States Patent and Trademark Office, will have been taken and completed. Upon the execution and delivery of the Pledge Agreement, the Pledge Agreement will create a valid first priority security interest in the Collateral described therein and upon delivery of the Pledged Collateral to Administrative Agent, all action necessary to perfect the security interest so created has been taken and completed. The Pledge Agreement creates a valid first priority security interest in 100% of all equity in all Domestic Subsidiaries and not less than 65% of all equity in all Foreign Subsidiaries. All representations and warranties of the Debtors in the Collateral Documents are true and correct.

5.18 Projections and Operating Budgets As of the Closing Date, to the best knowledge of Borrower, the assumptions set forth in the Initial Projections are reasonable and consistent with each other and with all facts known to Borrower, and the Initial Projections are reasonably based on such assumptions. As of each date when delivered, to the best knowledge of Borrower, the assumptions used in the operating budgets delivered pursuant to Section 6.02(d) are reasonable and consistent with each other and with all relevant facts known to Borrower, and such operating budget is reasonably based on such assumptions. Nothing in this
Section shall be construed as a representation or covenant that the Initial Projections or any such operating budget delivered from time to time hereunder in fact will be achieved.

5.19 Disclosure. No statement, information, report, representation, or warranty made by any Borrower Party in any Loan Document or furnished to Administrative Agent or any Lender from time to time in connection with any Loan Document contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading on and as of the date so made or furnished.

SECTION 6. AFFIRMATIVE COVENANTS

So long as any Obligation remains unpaid or unperformed, or any portion of the Commitments remains outstanding, Borrower shall, and shall (except in the case of Borrower's reporting covenants), cause each of its Subsidiaries, to:

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6.01 Financial Statements. Deliver to Administrative Agent in form and detail satisfactory to Administrative Agent and the Requisite Lenders, with sufficient copies for each Lender:

(a) as soon as available, but in any event within 120 days after the end of each fiscal year of Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, audited and accompanied by a report and opinion of Ernst & Young or another of the "big five" nationally recognized independent certified public accountants, which report and opinion shall be prepared in accordance with GAAP and shall not be subject to any qualifications or exceptions as to the scope of the audit nor to any qualifications and exceptions (including possible errors generated by financial reporting and related systems due to the Year 2000 Problem) not reasonably acceptable to the Requisite Lenders; and

(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income and cash flows for such fiscal quarter and for the portion of Borrower's fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations and cash flows of Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.

6.02 Certificates, Notices and Other Information. Deliver to Administrative Agent in form and detail satisfactory to Administrative Agent and the Requisite Lenders, with sufficient copies for each Lender:

(a) concurrently with the delivery of the financial statements referred to in Section 6.01(a), a certificate of its independent certified public accountants certifying such financial statement and stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default hereunder or, if any such Default or Event of Default shall exist, stating the nature and status of such event;

(b) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of Borrower;

(c) concurrently with the delivery of each Compliance Certificate delivered in connection with the financial statement referred to in Sections 6.01(a) and (b), a schedule showing, by location, (i) all lease commitments for new, but unopened restaurants, (ii) the date the leasehold for each such restaurant is anticipated to be available for occupancy by Borrower to commence construction of tenant improvements , and (iii) Borrower's estimate of all

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construction costs for tenant improvements and all furniture, fixtures and equipment costs for each such restaurant less tenant improvement allowances, if

any;

(d) concurrently with the delivery of each Compliance Certificate delivered in connection with the financial statement referred to in Section 6.01(b), a certification signed by the chief financial officer of Borrower certifying that the aggregate of all capital expenditures made in such fiscal year through the date of such certificate, together with all capital expenditures which Borrower and its Subsidiaries are committed or planning to make during the remainder of such fiscal year, have not resulted, and will not result. in a violation under
Section 7.11 of the Agreement as of the end of such calendar year;

(e) concurrently with the delivery of the financial statements referred to in Sections 6.01(b), (i) a report signed by a Responsible Officer of Borrower in a format satisfactory to Requisite Lenders detailing the revenue and the portion of Consolidated EBITDA attributable to each store and (ii) a quarterly store comparison report in the form previously delivered to Administrative Agent;

(f) as soon as practicable, and in any event within 90 days after the end of each fiscal year of Borrower, an operating budget by fiscal quarter for the next fiscal year, including projected consolidated balance sheets, statements of operations and statements of cash flow, all in reasonable detail and in a format acceptable to Requisite Lenders, signed by a Responsible Officer of Borrower;

(g) promptly after request by Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of Borrower by independent accountants in connection with the accounts or books of Borrower or any of its Subsidiaries, or any audit of any of them;

(h) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication, if any, sent to the stockholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements, if any, which Borrower may file or be required to file with the Securities and Exchange Commission under Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and not otherwise required to be delivered to Administrative Agent pursuant hereto;

(i) promptly after the occurrence thereof, notice of any Default or Event of Default;

(j) notice of any material change in accounting policies or financial reporting practices by Borrower or any of its Subsidiaries;

(k) promptly after the commencement thereof, notice of any litigation, investigation, proceeding or judgment affecting any Borrower Party where the amount involved exceeds $2,000,000, or in which injunctive relief or similar relief is sought, which relief, if granted, would have a Material Adverse Effect;

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(l) promptly of any discovery or determination that any computer application (including those of its suppliers and vendors) that is material to any Borrower Parties' or any of their Subsidiaries' business and operations will not be Year 2000 Compliant on a timely basis, except to the extent that such failure could not reasonably be expected to have a Material Adverse Effect; and

(m) promptly, such other data and information as from time to time may be reasonably requested by Administrative Agent, or, through Administrative Agent or any Lender.

Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and stating what action Borrower has taken and proposes to take with respect thereto.

6.03 Payment of Taxes. Pay and discharge when due all taxes, assessments, and governmental charges, Ordinary Course Liens or levies imposed on any Borrower Party or its Subsidiaries or on its income or profits or any of its property, except for any such tax, assessment, charge, or levy which is an Ordinary Course Lien under subsection (b) of the definition of such term.

6.04 Preservation of Existence. Preserve and maintain its existence, licenses, permits, rights, franchises and privileges necessary or desirable in the normal conduct of its business, except where failure to do so does not have a Material Adverse Effect.

6.05 Maintenance of Properties. Except as permitted by Section 7.04, maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good order and condition, subject to wear and tear in the ordinary course of business, and not permit any waste of its properties.

6.06 Maintenance of Insurance. Maintain liability and casualty insurance with responsible insurance companies satisfactory to Lenders in such amounts and against such risks not less than those specified in a certificate furnished to Administrative Agent on or prior to the Closing Date and maintain all risk property damage insurance policies with responsible insurance companies satisfactory to Lenders covering the tangible property comprising the Collateral. Each insurance policy must be for the full replacement cost of the Collateral and include a replacement cost endorsement. All liability insurance shall name Administrative Agent and Lenders as additional insureds and all casualty insurance must include a lender's loss payable endorsement consistent with Section 2.05(c) in favor of Administrative Agent on behalf of Lenders, in each case in a form acceptable to Administrative Agent. Upon the request of any Lender, Borrower shall deliver to such Lender a copy of each insurance policy, or, if permitted by such Lender, a certificate of insurance listing all insurance in force.

6.07 Compliance With Laws.

(a) Comply with the requirements of all applicable Laws and orders of any Governmental Authority, noncompliance with which has a Material Adverse Effect.

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(b) Conduct its operations and keep and maintain its property in material compliance with all Environmental Laws.

6.08 Inspection Rights. Not more than once each fiscal quarter (or, during the existence of a Default or Event of Default, as often as requested) and upon reasonable notice and during regular business hours, permit Administrative Agent or any Lender, or any employee, agent or representative thereof, to examine, audit and make copies and abstracts from the Borrower Parties' records and books of account and to visit and inspect their properties and to discuss their affairs, finances and accounts with any of their officers and key employees, and, upon request, furnish promptly to Administrative Agent or any Lender true copies of all financial information made available to their senior management.

6.09 Keeping of Records and Books of Account. Keep adequate records and books of account reflecting all financial transactions in conformity with GAAP, consistently applied, and in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over Borrower or any of its Subsidiaries.

6.10 Compliance With Agreements. Promptly and fully comply with all Contractual Obligations to which any one or more of them is a party, except for any such Contractual Obligations (a) where nonperformance would not cause a Default or Event of Default, (b) then being contested by any of them in good faith by appropriate proceedings, or (c) where the failure to comply therewith does not have a Material Adverse Effect.

6.11 Use of Proceeds. Use the proceeds of Extensions of Credit to finance tenant improvements, to finance the acquisition of furniture, fixtures and equipment, to refinance existing bank debt, to make Investments and for working capital, in each case not otherwise in contravention of this Agreement.

6.12 Additional Guarantors, Debtors and Collateral. Upon any Person becoming a direct or indirect Subsidiary of Borrower (excluding existing inactive Subsidiaries), Borrower shall, within 60 days of such Person becoming a Subsidiary, do the following, each in form and substance satisfactory to Administrative Agent:

(a) if such Subsidiary is a Domestic Subsidiary, cause such Subsidiary to become a Guarantor under the Master Subsidiary Guaranty by executing and delivering a Joinder Agreement with respect thereto;

(b) pledge or cause to be pledged, all equity interests in any Domestic Subsidiary and not less than 65% of the equity interests in any Foreign Subsidiary by executing and delivering, or causing the execution and delivery of, as applicable, a pledge agreement supplement or Joinder Agreement, and the applicable items required by Section 4.01(a)(ix);

(c) if such Subsidiary is a Domestic Subsidiary, cause such Subsidiary to become a Debtor under the Security Agreement by causing the execution and delivery of, as applicable, a Joinder Agreement with respect thereto and the applicable items required by Section 4.01(a)(ix);

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(d) with respect to any Subsidiary executing and delivering any Loan Document, cause to be delivered, to the extent not previously delivered to Administrative Agent, documents of the type specified in Section 4.01(a)(iii) and, with respect to a Subsidiary representing more than 10% of Shareholder's Equity, in Section 4.01(a)(iv); and

(e) deliver an officer's certificate signed by a Responsible Officer of Borrower certifying to the effect that, among other things, (i) with respect to any additional Collateral, Administrative Agent's security interest therein is duly perfected, (ii) any Subsidiary's obligations under the Loan Documents to which it is a party are legal, valid, binding and enforceable against such Subsidiary, (iii) the execution, delivery and performance of the Loan Documents by each Subsidiary will not violate any law, decree or judgment to which such Subsidiary is a party or by which its assets are bound and (iv) except as may otherwise be required to perfect any security interest, no government approvals, consents, registrations or filings, are required by any Subsidiary; and

(f) such other assurances, certificates, documents, consents or opinions as Administrative Agent, Issuing Lender or the Requisite Lenders reasonably may require.

Notwithstanding Section 4.01(a)(ix) and this Section 6.12, California Pizza

Kitchen of Annapolis, Inc., CPK I, Limited Partnership, an Illinois limited partnership and CPK Water Tower Limited Partnership, an Illinois limited partnership, shall not be required to execute or deliver any Loan Documents or otherwise comply with this Section 6.12; provided, however, that within 30 days after the Closing Date, Borrower shall cause California Pizza Kitchen of Annapolis, Inc. to provide a good standing certificate from the Secretary of State of Maryland, and to comply with subsections (a), (c), (d) and (e) above.

6.13 Further Assurances. Promptly upon request by Administrative Agent, Borrower shall, and shall cause each other Borrower Party to, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register, any and all such further acts, deeds, conveyances, security agreements, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments that Administrative Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of the Loan Documents,
(b) to subject to the Liens created by any of the Collateral Documents any of the properties, rights or interests covered by any of the Collateral Documents,
(c) to perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and the Liens intended to be created thereby, and (d) to better assure, convey, grant, assign, transfer, preserve, protect and confirm to Administrative Agent the rights granted or now or hereafter intended to be granted to Administrative Agent under any Loan Document or under any other document executed in connection therewith.

SECTION 7. NEGATIVE COVENANTS

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So long as any Obligations remain unpaid or unperformed, or any portion of the Commitments remains outstanding, Borrower shall not, nor shall it permit any of its Subsidiaries to, directly or indirectly:

7.01 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:

(a) Indebtedness outstanding on the date hereof and listed on Schedule 7.01 and any refinancings, refundings, renewals or extensions thereof, provided
that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to the premium or other amount paid, and fees and expenses incurred, in connection with such refinancing and by an amount equal to any utilized commitments thereunder; and

(b) Ordinary Course Indebtedness;

(c) secured purchase money Indebtedness, including Capitalized Lease Obligations, relating to the acquisition of personal property, provided that such Indebtedness (i) does not exceed, together with Indebtedness permitted by subsection (d) below, $3,000,000 in the aggregate at any time, (ii) does not exceed the cost to Borrower or its Subsidiary of the personal property acquired with the proceeds of such Indebtedness and (iii) is incurred within 12 months following the date of the acquisition of such personal property; and

(d) unsecured Indebtedness not exceeding, together with Indebtedness permitted by subsection (c) above, $3,000,000 in the aggregate at any time.

7.02 Liens and Negative Pledges. Incur, assume or suffer to exist, any Lien or Negative Pledge upon any of its property, assets or revenues, whether now owned or hereafter acquired, except:

(a) Liens and Negative Pledges existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that the property covered thereby is not increased and any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.01(a);

(b) Ordinary Course Liens; and

(c) Liens on assets securing Indebtedness permitted under Section 7.01(c), including any interest or title of a lessor under any Capitalized Lease, provided that any such Lien does not encumber any property other than assets constructed or acquired with the proceeds of such Indebtedness.

7.03 Fundamental Changes. Merge or consolidate with or into any Person or liquidate, wind-up or dissolve itself, or permit or suffer any liquidation or dissolution or sell all or substantially all of its assets, except, that so long as no Default or Event of Default exists or would result therefrom:

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(a) any Subsidiary of Borrower may merge (i) with Borrower provided that Borrower shall be the continuing or surviving corporation, (ii) with any one or more Subsidiaries of Borrower, and (iii) with any joint ventures, partnerships and other Persons, so long as such joint ventures, partnerships and other Persons will, as a result of making such merger and all other contemporaneous related transactions, become a Subsidiary of Borrower; provided that when any wholly-owned Subsidiary of Borrower is merging into another Subsidiary of Borrower, the wholly-owned Subsidiary of Borrower shall be the continuing or surviving Person;

(b) any Subsidiary of Borrower may sell all or substantially all of its assets (upon voluntary liquidation or otherwise), to Borrower or any of its Subsidiaries; provided that when any wholly-owned Subsidiary of Borrower is selling all or substantially all of its assets to another Subsidiary of Borrower, the Subsidiary acquiring such assets shall be a wholly-owned Subsidiary of Borrower; and

(c) to the extent permitted by Section 7.05(d), Borrower may liquidate one limited partnership of which it is the general partner, as disclosed to Lenders prior to the Closing Date;

provided, however, that Borrower shall provide advance written notice to Administrative Agent of any transaction pursuant to this Section that affects any Lien under the Collateral Documents.

7.04 Dispositions. Make any Dispositions, except:

(a) Ordinary Course Dispositions;

(b) Dispositions permitted by Section 7.03; and

(c) Other Dispositions so long as no Default or Event of Default exists or would result therefrom and Borrower complies with Section 2.05(b) to the extent applicable;

provided, however, that Borrower shall provide advance written notice to Administrative Agent of any transaction pursuant to this Section that affects any Lien under the Collateral Documents.

7.05 Investments. Make any Investments, except:

(a) Investments existing on the date hereof;

(b) Ordinary Course Investments;

(c) Investments permitted by Section 7.03(a) and (b); and

(d) additional Investments after the Closing Date which, together with the costs incurred in liquidating the limited partnership permitted by
Section 7.03(c), do not exceed $2,000,000 in the aggregate.

7.06 Lease Obligations. Create or suffer to exist any obligations for the payment of rent for any property under lease or agreement to lease, except:

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(a) leases in existence on the date hereof and any renewal, extension or refinancing thereof; and

(b) leases (other than Capitalized Lease Obligations permitted by Section 7.01(c)) entered into or assumed by Borrower or any of its Subsidiaries after the date hereof in the ordinary course of business;

7.07 Restricted Payments. Make any Restricted Payments, except purchases by Borrower of capital stock owned by employees upon their termination.

7.08 ERISA. Together with any ERISA Affiliate of any Borrower Party, sponsor or maintain or contribute (or have or incur any obligation to contribute) to any employee pension benefit plan or employee benefit plan (both as defined in ERISA) insured by the Pension Benefit Guaranty Corporation or subject to Title IV of ERISA, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) have made contributions at any time during the immediately preceding five plan years.

7.09 Change in Nature of Business. Make any fundamental change in the nature of the business of any Borrower Party as conducted and as proposed to be conducted as of the date hereof.

7.10 Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of Borrower which is not a Guarantor other than arm's-length transactions which are otherwise permitted hereunder.

7.11 Capital Expenditures. Make, or become legally obligated to make, in any calendar year, capital expenditures in excess of the amount set forth below

opposite such year

                                            Maximum
             Calendar                       Capital
               Year                       Expenditures
           ---------------------------------------------
             1999                          $19,000,000
             2000                          $19,500,000
             2001                          $20,500,000
             Thereafter                    No limit

For purpose of this covenant, capital expenditures shall exclude all "Investments" otherwise permitted hereunder and Borrower's purchase of any assets of CAH Restaurants of California, LLC.

7.12 Financial Covenants.

(a) Consolidated Net Worth. Permit Consolidated Net Worth at any time to be less than the sum of (a) $22,668,000, (b) an amount equal to 75% of the Net Income earned in each

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fiscal quarter ending after January 3, 1999 (with no deduction for a net loss in any such fiscal quarter) and (c) an amount equal to (i) until all Term Loans are repaid or prepaid in full, 100% of the aggregate increases in Shareholders' Equity of Borrower and its Subsidiaries after the date hereof by reason of the issuance and sale of capital stock of Borrower (including upon any conversion of debt securities of Borrower into such capital stock, but excluding up to an aggregate of $500,000 received by Borrower upon the exercise of stock options by employees, directors and consultants) and (ii) thereafter, 50% of such increases.

(b) Cash Flow Coverage Ratio. Commencing with Borrower's fiscal quarter ending March 31, 2002, permit the Cash Flow Coverage Ratio as of the end of any fiscal quarter of Borrower to be less than 1.00 to 1.

(c) Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio as of the end of any fiscal quarter of Borrower to be less than the ratio set forth below opposite such fiscal quarter:

                                         Minimum Fixed
    Fiscal Quarters Ending               Charge Ratio
----------------------------------------------------------
Fourth fiscal quarter of 1999 through      1.35 to 1
     third fiscal quarter of 2000

Fourth fiscal quarter of 2000 through      1.45 to 1
     third fiscal quarter of 2001

Fourth fiscal quarter of 2001 and          1.60 to 1
             thereafter

(d) Leverage Ratio. Permit the Leverage Ratio as of the end of any fiscal quarter of Borrower to be greater than the ratio set forth below opposite such fiscal quarter:

                                            Maximum
    Fiscal Quarters Ending               Leverage Ratio
----------------------------------------------------------
Fourth fiscal quarter of 1999 through      2.50 to 1
     third fiscal quarter of 2000

Fourth fiscal quarter of 2000 through      2.25 to 1
     third fiscal quarter of 2001

Fourth fiscal quarter of 2001 through      2.00 to 1
     third fiscal quarter of 2002

Fourth fiscal quarter of 2002 and          1.75 to 1
             thereafter

7.13 Change in Auditors. Change the certified public accountants auditing the books of Borrower except to another of the "big five" nationally recognized independent certified public accountants.

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SECTION 8. EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. Any one or more of the following events shall constitute an Event of Default:

(a) Borrower fails to pay any principal on any Outstanding Obligation (other than fees) as and on the date when due; or

(b) Borrower fails to pay any interest on any Outstanding Obligation, or any commitment fees due hereunder within three days after the date when due; or fails to pay any other fees or amount payable to Administrative Agent or any Lender under any Loan Document within five days after the date due; or

(c) Any default occurs in the observance or performance of any agreement contained in Sections 6.01, 6.02, 6.08 or 7; provided, however, that with respect to a default under Section 7.02 which is capable of being cured, such default remains uncured after 60 days; or

(d) The occurrence of an Event of Default (as such term is or may hereafter be specifically defined in any other Loan Document) under any other Loan Document; or any Borrower Party fails to perform or observe any other covenant or agreement (not specified in subsections (a), (b) or (c) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

(e) Any representation or warranty in any Loan Document or in any certificate, agreement, instrument or other document made or delivered by any Borrower Party pursuant to or in connection with any Loan Document proves to have been incorrect in any material respect when made or deemed made; or

(f) (i) (x) any Borrower Party defaults in any payment when due of principal of or interest on any Indebtedness (other than Indebtedness hereunder), (y) any Borrower Party defaults in the observance or performance of any other agreement or condition relating to any Indebtedness (other than Indebtedness hereunder) or contained in any instrument or agreement evidencing, securing or relating thereto, or (z) any other event shall occur, in each case, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, Indebtedness having an aggregate principal amount in excess of $2,000,000 to be demanded or become due (automatically or otherwise) prior to its stated maturity, or any Guaranty Obligation in such amount to become payable or cash collateral in respect thereof to be demanded, or any Borrower Party is unable or admits in writing its inability to pay its debts as they mature; or
(ii) the occurrence under any Swap Contract of an Early Termination Date (as defined in such Swap Contract) resulting from (x) any event of default under such Swap Contract as to which Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (y) any Termination Event occurs under any Swap Contract (as defined therein) as to which Borrower or any Subsidiary is an Affected

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Party (as so defined), which, in either event, the Swap Termination Value owed by Borrower or such Subsidiary as a result thereof is greater than $2,000,000; or

(g) Any Principal Loan Document, at any time after its execution and delivery and for any reason other than the agreement of all Lenders or satisfaction in full of all the Obligations, ceases to be in full force and effect or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any material respect; or any Borrower Party denies that it has any or further liability or obligation under any Principal Loan Document, or purports to revoke, terminate or rescind any Principal Loan Document; or

(h) (i) any material provision of any Collateral Document shall for any reason cease to be valid and binding on or enforceable (except to the extent caused by a Lender or Administrative Agent) against any Borrower Party, or any Borrower Party shall so state in writing or bring an action to limit its obligations or liabilities thereunder; or (ii) any Collateral Document shall for any reason (other than pursuant to the terms thereof) cease to create a valid security interest in a material portion of the Collateral purported to be covered thereby or such security interest shall for any reason cease to be a perfected and first priority security interest in a material portion of such Collateral; or

(i) Any final judgments or arbitration awards are entered against Borrower or any of its Subsidiaries, or Borrower or any of its Subsidiaries enters into any settlement agreements with respect to any litigation or arbitration, in an aggregate amount of $2,000,000 or more in excess of any insurance coverage, provided that the insurer has issued a letter of responsibility for payment up to the amount of insurance coverage; or

(j) A final judgment against any Borrower Party is entered for the payment of money in excess of $1,000,000, or any non-monetary final judgment is entered against any Borrower Party which has a Material Adverse Effect and, in each case if such judgment remains unsatisfied without procurement of a stay of execution within 30 calendar days after the date of entry of judgment or, if earlier, five days prior to the date of any proposed sale, or any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 calendar days after its issue or levy; or

(k) Any Borrower Party or any of its Subsidiaries institutes or consents to the institution of any proceeding under Debtor Relief Laws, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of that Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under Debtor Relief Laws relating to any such Person or to all or any part of its property is instituted without the consent of that Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

(l) Any event occurs which has a Material Adverse Effect.

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8.02 Remedies Upon Event of Default. Without limiting any other rights or remedies of Administrative Agent or Lenders provided for elsewhere in this Agreement, or the other Loan Documents, or by applicable Law, or in equity, or otherwise:

(a) Upon the occurrence, and during the continuance, of any Event of Default other than an Event of Default described in Section 8.01(k):

(i) the Requisite Lenders may request Administrative Agent to, and Administrative Agent thereupon shall, terminate the Commitments and/or declare all or any part of the unpaid principal of all Loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan Documents to be immediately due and payable, whereupon the same shall become and be immediately due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower; and

(ii) Issuing Lender may, with the approval of Administrative Agent on behalf of the Requisite Lenders, demand immediate payment by Borrower of an amount equal to the aggregate amount of all outstanding Letters of Credit Usage to be held in a Letter of Credit Cash Collateral Account.

(b) Upon the occurrence of any Event of Default described in Section 8.01(k):

(i) the Commitments and all other obligations of Administrative Agent or Lenders shall automatically terminate without notice to or demand upon Borrower, which are expressly waived by Borrower;

(ii) the unpaid principal of all Loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan Documents shall be immediately due and payable, without protest, presentment, notice of dishonor, demand or further notice of any kind, all of which are expressly waived by Borrower; and

(iii) an amount equal to the aggregate amount of all outstanding Letters of Credit Usage shall be immediately due and payable to Issuing Lender without notice to or demand upon Borrower, which are expressly waived by Borrower, to be held in a Letter of Credit Cash Collateral Account.

(c) Upon the occurrence of any Event of Default, Lenders and Administrative Agent, or any of them, without notice to (except as expressly provided for in any Loan Document) or demand upon Borrower, which are expressly waived by Borrower (except as to demands and notices expressly provided for in any Loan Document), may proceed to (but only with the consent of the Requisite Lenders) protect, exercise and enforce their rights and remedies under the Loan Documents against any Borrower Party and such other rights and remedies as are provided by Law or equity.

(d) The order and manner in which Administrative Agent's rights and remedies are to be exercised shall be determined by the Requisite Lenders in their sole and absolute discretion.

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Regardless of how a Lender may treat payments for the purpose of its own accounting, for the purpose of computing the Obligations hereunder, payments shall be applied first, to costs and expenses (including Attorney Costs) incurred by Administrative Agent and each Lender, second, to the payment of accrued and unpaid interest on the Loans to and including the date of such application, third, to the payment of the unpaid principal of the Loans, and fourth, to the payment of all other amounts (including fees) then owing to Administrative Agent and Lenders under the Loan Documents, in each case paid pro rata to each Lender in the same proportions that the aggregate Obligations owed to each Lender under the Loan Documents bear to the aggregate Obligations owed under the Loan Documents to all Lenders, without priority or preference among Lenders. No application of payments will cure any Event of Default, or prevent acceleration, or continued acceleration, of amounts payable under the Loan Documents, or prevent the exercise, or continued exercise, of rights or remedies of Administrative Agent and Lenders hereunder or thereunder or at Law or in equity except upon payment in full in of all Obligations.

SECTION 9. ADMINISTRATIVE AGENT

9.01 Appointment and Authorization of Administrative Agent.

(a) Each Lender hereby irrevocably (subject to Section 9.09) appoints, designates and authorizes Administrative Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall Administrative Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against Administrative Agent. Without limiting the generality of the foregoing sentence, the use of the term "agent" in this Agreement with reference to Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.

(b) Issuing Lender shall act on behalf of Lenders with respect to any Letters of Credit issued by it and the documents associated therewith until such time and except for so long as Administrative Agent may agree at the request of the Requisite Lenders to act for such Issuing Lender with respect thereto; provided, however, that Issuing Lender shall have all of the benefits and immunities (i) provided to Administrative Agent in this Section 9 with respect to any acts taken or omissions suffered by Issuing Lender in connection with Letters of Credit issued by it or proposed to be issued by it and the application and agreements for letters of credit pertaining to

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the Letters of Credit as fully as if the term "Administrative Agent" as used in this Section 9 included Issuing Lender with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to Issuing Lender.

9.02 Delegation of Duties. Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care.

9.03 Liability of Administrative Agent. None of Administrative Agent- Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of Lenders for any recital, statement, representation or warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by Administrative Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Administrative Agent-Related Person shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, any Collateral, books or records of Borrower or any of Borrower's Subsidiaries or Affiliates.

9.04 Reliance by Administrative Agent.

(a) Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to Borrower), independent accountants and other experts selected by Administrative Agent. Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Requisite Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Administrative Agent shall in all cases be fully protected as to Lenders in acting, or in refraining from acting, under any Loan Document in accordance with a request or consent of the Requisite Lenders or all Lenders, if required hereunder, and such request and any action taken or failure to act pursuant thereto shall be binding upon all of Lenders. Where this Agreement expressly permits or prohibits an action unless the Requisite Lenders otherwise determine, and in all other instances, Administrative

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Agent may, but shall not be required to, initiate any solicitation for the consent or a vote of Lenders.

(b) For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by Administrative Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender.

9.05 Notice of Default. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to Administrative Agent for the account of Lenders, unless Administrative Agent shall have received written notice from a Lender or Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". Administrative Agent will notify Lenders of its receipt of any such notice. Administrative Agent shall take such action with respect to such Default or Event of Default as may be directed by the Requisite Lenders in accordance with Section 8; provided, however, that unless and until Administrative Agent has received any such direction, Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of Lenders.

9.06 Credit Decision; Disclosure of Information by Administrative Agent. Each Lender acknowledges that none of Administrative Agent-Related Persons has made any representation or warranty to it, and that no act by Administrative Agent hereinafter taken, including any consent to and acceptance of any assignment or review of the affairs of Borrower and its Subsidiaries, shall be deemed to constitute any representation or warranty by any Administrative Agent-Related Person to any Lender as to any matter, including whether Administrative Agent-Related Persons have disclosed material information in their possession. Each Lender, including any Lender by assignment, represents to Administrative Agent that it has, independently and without reliance upon any Administrative Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Administrative Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of Borrower. Except for notices, reports and other documents expressly required to be furnished to Lenders by Administrative Agent herein, Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information

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concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower or any of its Subsidiaries which may come into the possession of any of Administrative Agent-Related Persons.

9.07 Indemnification of Administrative Agent. Whether or not the transactions contemplated hereby are consummated, Lenders shall indemnify upon demand each Administrative Agent-Related Person (to the extent not reimbursed by or on behalf of Borrower and without limiting the obligation of Borrower to do so), pro rata, and hold harmless each Administrative Agent-Related Person from and against any and all Indemnified Liabilities incurred by it; provided, however, that no Lender shall be liable for the payment to any Administrative Agent-Related Person of any portion of such Indemnified Liabilities resulting from such Person's gross negligence or willful misconduct; provided, however, that no action taken in accordance with the directions of the Requisite Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section. Without limitation of the foregoing, each Lender shall reimburse Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein, to the extent that Administrative Agent is not reimbursed for such expenses by or on behalf of Borrower. The undertaking in this Section shall survive the payment of all Obligations hereunder and the resignation or replacement of Administrative Agent.

9.08 Administrative Agent in Individual Capacity. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with Borrower and its Subsidiaries and Affiliates as though Bank of America were not Administrative Agent or Issuing Lender hereunder and without notice to or consent of Lenders. Lenders acknowledge that, pursuant to such activities, Bank of America or its Affiliates may receive information regarding Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of Borrower or such Affiliate) and acknowledge that Administrative Agent shall be under no obligation to provide such information to them. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not Administrative Agent or Issuing Lender.

9.09 Successor Administrative Agent. The Administrative Agent may, and at the request of the Requisite Lenders shall, resign as Administrative Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns under this Agreement, the Requisite Lenders shall appoint from among the Lenders a successor administrative agent for the Lenders which successor administrative agent shall be approved by Borrower. If no successor administrative agent is appointed prior to the effective date of the resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and Borrower, a successor administrative agent from among the Lenders. Upon the acceptance of its appointment as

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successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative Agent" shall mean such successor administrative agent and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 9 and Sections 10.03 and 10.13 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor agent as provided for above. Notwithstanding the foregoing, however, Bank of America may not be removed as the Administrative Agent at the request of the Requisite Lenders unless Bank of America shall also simultaneously be replaced as "Issuing Lender" and "Swing Line Lender" hereunder pursuant to documentation in form and substance reasonably satisfactory to Bank of America.

9.10 Proportionate Interest in any Collateral. Administrative Agent, on behalf of all Lenders, shall hold in accordance with the Loan Documents all items of any Collateral or interests therein received or held by Administrative Agent. Subject to Administrative Agent's and Lenders' rights to reimbursement for their costs and expenses hereunder (including reasonable attorneys' fees and disbursements and other professional services and the reasonably allocated costs of attorneys employed by Administrative Agent or a Lender), each Lender shall have an interest in Lenders' interest in the Collateral or interests therein in the same proportions that the aggregate Obligations owed such Lender under the Loan Documents bear to the aggregate Obligations owed under the Loan Documents to all Lenders, without priority or preference among Lenders.

9.11 Documentation Agent. The Lender identified on the facing page or signature pages of this Agreement as "Documentation Agent" shall have no right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, the Documentation Agent shall not have nor be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

SECTION 10. MISCELLANEOUS

10.01 Amendments; Consents. No amendment, modification, supplement, extension, termination or waiver of any provision of this Agreement or any other Loan Document, no approval or consent thereunder, and no consent to any departure by any Borrower Party therefrom shall be effective unless in writing signed by the Requisite Lenders and acknowledged by Administrative Agent, and each such waiver or consent shall be effective only in the specific

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instance and for the specific purpose for which given. Except as otherwise expressly provided herein, without the approval in writing of Administrative Agent and all Lenders, no amendment, modification, supplement, termination, waiver or consent shall be effective:

(a) To reduce the amount of principal, principal prepayments or the rate of interest payable on, any Loan, or the amount of any fee or other amount payable to any Lender under the Loan Documents (unless such modification is consented to by each Lender entitled to receive such fee ) or to waive an Event of Default consisting of the failure of Borrower to pay when due principal, interest or any commitment fee;

(b) To postpone any date fixed for any payment of principal of, prepayment of principal of, or any installment of interest on, any Loan or any installment of any commitment fee, to extend the term of, or increase the amount of, any Lender's Commitment (it being understood that a waiver of an Event of Default or covenant shall not constitute an extension or increase in the Commitment of any Lender) or modify the Pro Rata Share of any Lender;

(c) Release any Guarantor;

(d) to release any material portion of the Collateral (except as otherwise expressly provided in any Loan Document);

(e) To amend the provisions of the definition of "Requisite Lenders", Sections 4, 9, this Section 10.01 or Section 10.06; or

(f) To amend any provision of this Agreement that expressly requires the consent or approval of all Lenders;

provided, however, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Issuing Lender in addition to the Requisite Lenders or all the Lenders, as the case may be, affect the rights or duties of the Issuing Lender under any Loan Document relating to Letters of Credit, (ii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Requisite Lenders or all the Lenders, as the case may be, affect the rights or duties of the Administrative Agent under any Loan Document, (iii) no amendment, waiver or consent shall, unless in writing and signed by Swing Line Lender in addition to the Requisite Lenders or all the Lenders, as the case may be, affect the rights or duties of Swing Line Lender under any Loan Document, and (iv) any fee letters may be amended, or rights or privileges thereunder waived, in a writing executed by the parties thereto. Any amendment, modification, supplement, termination, waiver or consent pursuant to this Section shall apply equally to, and shall be binding upon, all the Lenders and the Administrative Agent.

10.02 Transmission and Effectiveness of Communications and Signatures.

(a) Modes of Delivery. Except as otherwise provided in any Loan Document, notices, requests, demands, directions, agreements and documents delivered in connection with the Loan Documents (collectively, "communications") shall be transmitted by Requisite Notice

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to the number and address set forth on Schedule 10.02, may be delivered by the following modes of delivery, and shall be effective as follows:

 Mode of Delivery          Effective on earlier of actual receipt and:
-----------------------------------------------------------------------
Courier                    Scheduled delivery date

Facsimile                  When transmission in legible form complete

Mail                       Fourth Business Day after deposit in U.S.
                           mail first class postage pre-paid

Personal delivery          When received

Telephone                  When conversation completed

provided, however, that communications delivered to Administrative Agent pursuant to Section 2 shall not be effective until actually received by Administrative Agent; provided, further, that any notice received on other than a Business Day shall not be effective until the next succeeding Business Day.

(b) Reliance by Administrative Agent and Lenders. Administrative Agent and Lenders shall be entitled to rely and act in good faith on any communications purportedly given by or on behalf of any Borrower Party even if such communications (i) were not made in a manner specified herein, (ii) were incomplete, or (iii) were not preceded or followed by any other notice specified herein. Borrower shall indemnify Administrative Agent and Lenders from any loss, cost, expense or liability as a result of relying on any communications permitted herein.

(c) Effectiveness of Facsimile Documents and Signatures. Documents and signatures on communications may be transmitted by facsimile unless Administrative Agent in its sole and absolute discretion otherwise notifies the sending party. The effectiveness of any such signatures accepted by Administrative Agent shall, subject to applicable Law, have the same force and effect as manual signatures and shall be binding on all Borrower Parties and Administrative Agent and Lenders. Administrative Agent may also require that any such signature be confirmed by a manually-signed hardcopy thereof; provided, however, that the failure to deliver or request any such manually-signed hardcopy confirmation shall not affect the effectiveness of any facsimile signatures.

10.03 Attorney Costs, Expenses and Taxes. Borrower agrees (a) to pay or reimburse Administrative Agent for all reasonable costs and expenses incurred in connection with the development, preparation, negotiation and execution of the Loan Documents, and the development, preparation, negotiation and execution of any amendment, waiver, consent, supplement or modification to, any Loan Documents, and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs, and (b) to pay or reimburse Administrative Agent and each Lender for all reasonable costs and expenses incurred in connection with any refinancing, restructuring, reorganization (including a bankruptcy reorganization) and enforcement or attempted enforcement, or preservation of any rights under

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any Loan Documents, and any other documents prepared in connection herewith or therewith, or in connection with any refinancing, or restructuring of any such documents in the nature of a "workout" or of any insolvency or bankruptcy proceeding, including Attorney Costs. Following the occurrence and during the continuance of any Default or Event of Default, the foregoing costs and expenses shall include all search, filing, recording and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by Administrative Agent and the cost of independent public accountants and other outside experts retained by Administrative Agent or any Lender. Such costs and expenses shall also include out of pocket costs of Administrative Agent reasonably attributable to the administration of the Loan Documents. Any amount payable by Borrower under this Section shall bear interest from the 30th day following the date of demand for payment at the Default Rate, unless waived by Administrative Agent. The agreements in this Section shall survive repayment of all Obligations.

10.04 Binding Effect; Assignment.

(a) This Agreement and the other Loan Documents to which Borrower is a party will be binding upon and inure to the benefit of Borrower, Administrative Agent, Lenders and their respective successors and assigns, except that, Borrower may not assign its rights hereunder or thereunder or any interest herein or therein without the prior written consent of all Lenders and any such attempted assignment shall be void. Any Lender may at any time pledge its Notes or any other instrument evidencing its rights as a Lender under this Agreement to a Federal Reserve Lender, but no such pledge shall release that Lender from its obligations hereunder or grant to such Federal Reserve Lender the rights of a Lender hereunder absent foreclosure of such pledge.

(b) From time to time following the Closing Date, each Lender may, at its sole cost and expense, assign to one or more Eligible Assignees all or any portion of its Pro Rata Share of its Commitments and/or Extensions of Credit; provided that (i) such assignment, if not to a Lender or an Affiliate of the assigning Lender, must be consented to by Borrower at all times other than during the existence of a Default or Event of Default and Administrative Agent and Issuing Lender (which approvals shall not be unreasonably withheld or delayed), (ii) a copy of a duly signed and completed Notice of Assignment and Acceptance shall be delivered to Administrative Agent, (iii) except in the case of an assignment to an Affiliate of the assigning Lender, to another Lender or of the entire remaining Commitments of the assigning Lender, the assignment shall not assign a Pro Rata Share equivalent to less than the Minimum Amount therefor, (iv) each assignment shall be of a constant, and not a varying, portion of such Lender's Revolving Commitment and Term Commitment, and (v) the effective date of any such assignment shall be as specified in the Notice of Assignment and Acceptance, but not earlier than the date which is five Business Days after the date Administrative Agent has received the Notice of Assignment and Acceptance. Upon acceptance by Administrative Agent of such Notice of Assignment and Acceptance and consent thereto by Administrative Agent, Issuing Lender and Borrower and payment of the requisite fee described below, the Eligible Assignee named therein shall be a Lender for all purposes of this Agreement, with the Pro Rata Share therein set forth and, to the extent of such Pro Rata Share, the assigning Lender shall be released from its further obligations under this Agreement. Borrower agrees that it shall execute and deliver upon request (against delivery by the assigning Lender to Borrower of any Notes) to such assignee Lender,

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one or more Notes evidencing that assignee Lender's Pro Rata Share, and to the assigning Lender if requested, one or more Notes evidencing the remaining balance Pro Rata Share retained by the assigning Lender. Administrative Agent's consent to and acceptance of any assignment shall not be deemed to constitute any representation or warranty by any Administrative Agent-Related Person as to any matter.

(c) After receipt of a completed Notice of Assignment and Acceptance, and receipt of an assignment fee of $3,500 from such Eligible Assignee (including Affiliates of assigning Lenders), Administrative Agent shall, promptly following the effective date thereof, provide to Borrower and Lenders a revised Schedule 10.02 giving effect thereto.

(d) Each Lender may, at its sole cost and expense, from time to time grant participations to one or more other Person (including another Lender) all or any portion of its Pro Rata Share of its Commitments and/or Extensions of Credit; provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations,
(iii) the participating banks or other financial institutions shall not be a Lender hereunder for any purpose except, if the participation agreement so provides, for the purposes of Section 3 (but only to the extent that the cost of such benefits to Borrower does not exceed the cost which Borrower would have incurred in respect of such Lender absent the participation) and subject to Sections 10.05 and 10.06, (iv) Borrower, Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, (v) the participation shall not restrict an increase in the Commitments or in the granting Lender's Pro Rata Share, so long as the amount of the participation interest is not affected thereby, and (vi) the consent of the holder of such participation interest shall not be required for amendments or waivers of provisions of the Loan Documents; provided, however, that the assigning Lender may, in any agreement with a participant, give such participant the right to consent to any matter which (A) extends the Maturity Date as to such participant or any other date upon which any payment of money is due to such participant, (B) reduces the rate of interest, any fee or any other monetary amount owing to such participant, (C) reduces the amount of any installment of principal owing to such participant or (D) releases any material portion of the Collateral.

10.05 Set-off. In addition to any rights and remedies of Administrative Agent and Lenders or any assignee or participant of Lenders or any Affiliates thereof (each, a "Proceeding Party") provided by law, upon the occurrence and during the continuance of any Event of Default under Section 8.01(k) or following acceleration of the Obligations, each Proceeding Party is authorized from time to time, without prior notice to Borrower, any such notice being waived by Borrower to the fullest extent permitted by law, to proceed directly, by right of set-off, banker's lien, or otherwise, against any assets of the Borrower Parties which may be in the hands of such Proceeding Party (including all general or special, time or demand, provisional or other deposits and other indebtedness owing by such Proceeding Party to or for the credit or the account of Borrower) and apply such assets against the Obligations, irrespective of whether such Proceeding Party shall have made any demand therefor and although such Obligations may be unmatured. Each Lender agrees promptly to notify Borrower and Administrative Agent after any such set-off

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and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.

10.06 Sharing of Payments. Each Lender severally agrees that if it, through the exercise of any right of setoff, banker's lien or counterclaim against Borrower, or otherwise, receives payment of the Obligations held by it that is ratably more than any other Lender, through any means, receives in payment of the Obligations held by that Lender, then, subject to applicable Laws: (a) Lender exercising the right of setoff, banker's lien or counterclaim or otherwise receiving such payment shall purchase, and shall be deemed to have simultaneously purchased, from the other Lender a participation in the Obligations held by the other Lender and shall pay to the other Lender a purchase price in an amount so that the share of the Obligations held by each Lender after the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment shall be in the same proportion that existed prior to the exercise of the right of setoff, banker's lien or counterclaim or receipt of payment; and (b) such other adjustments and purchases of participations shall be made from time to time as shall be equitable to ensure that all of Lenders share any payment obtained in respect of the Obligations ratably in accordance with each Lender's share of the Obligations immediately prior to, and without taking into account, the payment; provided that, if all or any portion of a disproportionate payment obtained as a result of the exercise of the right of setoff, banker's lien, counterclaim or otherwise is thereafter recovered from the purchasing Lender by Borrower or any Person claiming through or succeeding to the rights of Borrower, the purchase of a participation shall be rescinded and the purchase price thereof shall be restored to the extent of the recovery, but without interest. Each Lender that purchases a participation in the Obligations pursuant to this Section shall from and after the purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. Borrower expressly consents to the foregoing arrangements and agrees that any Lender holding a participation in an Obligation so purchased may exercise any and all rights of setoff, banker's lien or counterclaim with respect to the participation as fully as if Lender were the original owner of the Obligation purchased.

10.07 No Waiver; Cumulative Remedies.

(a) No failure by any Lender or Administrative Agent to exercise, and no delay by any Lender or Administrative Agent in exercising, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege under any Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

(b) The rights, remedies, powers and privileges herein or therein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law. Any decision by Administrative Agent or any Lender not to require payment of any interest (including Default Interest), fee, cost or other amount payable under any Loan Document or to calculate any amount payable by a particular method on any occasion shall in no way limit or be deemed a waiver of Administrative Agent's or such Lender's right to require full payment

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thereof, or to calculate an amount payable by another method that is not inconsistent with this Agreement, on any other or subsequent occasion.

(c) The terms and conditions of Section 9 are inserted for the sole benefit of Administrative Agent and Lenders; the same may be waived in whole or in part, with or without terms or conditions, in respect of any Extension of Credit without prejudicing Administrative Agent's or Lenders' rights to assert them in whole or in part in respect of any other Loan.

10.08 Usury. Notwithstanding anything to the contrary contained in any Loan Document, the interest and fees paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the "Maximum Rate"). If Administrative Agent or any Lender shall receive interest or a fee in an amount that exceeds the Maximum Rate, the excessive interest or fee shall be applied to the principal of the Outstanding Obligations or, if it exceeds the unpaid principal, refunded to Borrower. In determining whether the interest or a fee contracted for, charged, or received by Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations.

10.09 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

10.10 Integration. This Agreement, together with the other Loan Documents and any letter agreements referred to herein, comprises the complete and integrated agreement of the parties on the subject matter hereof and supersedes all prior agreements, written or oral, on the subject matter hereof. In the event of any conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control and govern; provided that the inclusion of supplemental rights or remedies in favor of Administrative Agent or Lenders in any other Loan Document shall not be deemed a conflict with this Agreement. Each Loan Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.

10.11 Nature of Lenders' Obligations. The obligations of Lenders hereunder are several and not joint or joint and several. Nothing contained in this Agreement or any other Loan Document and no action taken by Administrative Agent or Lenders or any of them pursuant hereto or thereto may, or may be deemed to, make Lenders a partnership, an association, a joint venture or other entity, either among themselves or with Borrower or any Affiliate of Borrower. Each Lender's obligation to make any Loan pursuant hereto is several and not joint or joint and several, and in the case of the initial Loan only is conditioned upon the performance by all other Lenders of their obligations to make initial Loans. A default by any Lender will not increase the Pro Rata Share attributable to any other Lender.

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10.12 Survival of Representations and Warranties. All representations and warranties made hereunder and in any Loan Document, certificate or statement delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery thereof but shall terminate the later of (a) when the Commitments are terminated and (b) when no Obligations remain outstanding under any Loan Document. Such representations and warranties have been or will be relied upon by Administrative Agent and each Lender, notwithstanding any investigation made by Administrative Agent or any Lender or on their behalf.

10.13 Indemnity by Borrower. Borrower agrees to indemnify, save and hold harmless each Administrative Agent-Related Person and each Lender and their respective Affiliates, directors, officers, agents, attorneys and employees (collectively the "Indemnitees") from and against: (a) any and all claims, demands, actions or causes of action that are asserted against any Indemnitee by any Person (other than Administrative Agent or any Lender) relating directly or indirectly to a claim, demand, action or cause of action that such Person asserts or may assert against any Borrower Party, any of their Affiliates or any of their officers or directors; (b) any and all claims, demands, actions or causes of action arising out of or relating to, the Loan Documents, any predecessor loan documents, the Commitments, the use or contemplated use of the proceeds of any Loan, or the relationship of any Borrower Party, Administrative Agent and Lenders under this Agreement; (c) any administrative or investigative proceeding by any Governmental Authority arising out of or related to a claim, demand, action or cause of action described in subsection (a) or (b) above; and
(d) any and all liabilities, losses, costs or expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a result of the assertion of any foregoing claim, demand, action, cause of action or proceeding, or as a result of the preparation of any defense in connection with any foregoing claim, demand, action, cause of action or proceeding, in all cases, whether or not an Indemnitee is a party to such claim, demand, action, cause of action or proceeding, including those liabilities caused by an Indemnitee's own negligence (all the foregoing, collectively, the "Indemnified Liabilities") net, in each case, of insurance proceeds received by such Indemnitee; provided that no Indemnitee shall be entitled to indemnification for any loss caused by its own gross negligence or willful misconduct or for any loss or claim asserted against it by another Indemnitee.

10.14 Nonliability of Lenders.

Borrower acknowledges and agrees that:

(a) Any inspections of any property of Borrower made by or through Administrative Agent or Lenders are for purposes of administration of the Loan Documents only, and Borrower is not entitled to rely upon the same (whether or not such inspections are at the expense of Borrower);

(b) By accepting or approving anything required to be observed, performed, fulfilled or given to Administrative Agent or Lenders pursuant to the Loan Documents, neither Administrative Agent nor Lenders shall be deemed to have warranted or represented the sufficiency, legality, effectiveness or legal effect of the same, or of any term, provision or

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condition thereof, and such acceptance or approval thereof shall not constitute a warranty or representation to anyone with respect thereto by Administrative Agent or Lenders;

(c) The relationship between Borrower and Administrative Agent and Lenders is, and shall at all times remain, solely that of borrowers and lenders; neither Administrative Agent nor Lenders shall under any circumstance be construed to be partners or joint venturers of Borrower or their Affiliates; neither Administrative Agent nor Lenders shall under any circumstance be deemed to be in a relationship of confidence or trust or a fiduciary relationship with Borrower or their Affiliates, or to owe any fiduciary duty to Borrower or their Affiliates; neither Administrative Agent nor Lenders undertake or assume any responsibility or duty to Borrower or their Affiliates to select, review, inspect, supervise, pass judgment upon or inform Borrower or their Affiliates of any matter in connection with their property or the operations of Borrower or their Affiliates; Borrower and their Affiliates shall rely entirely upon their own judgment with respect to such matters; and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by Administrative Agent or Lenders in connection with such matters is solely for the protection of Administrative Agent and Lenders and neither Borrower nor any other Person is entitled to rely thereon; and

(d) Administrative Agent and Lenders shall not be responsible or liable to any Person for any loss, damage, liability or claim of any kind relating to injury or death to Persons or damage to property caused by the actions, inaction or negligence of Borrower and/or its Affiliates and Borrower hereby indemnifies and holds Administrative Agent and Lenders harmless from any such loss, damage, liability or claim to the extent not caused by the gross negligence or willful misconduct of the Person seeking indemnification.

10.15 No Third Parties Benefited. This Agreement is made for the purpose of defining and setting forth certain obligations, rights and duties of Borrower, Administrative Agent and Lenders in connection with the Loans, and is made for the sole benefit of Borrower, Administrative Agent and Lenders, and Administrative Agent's and Lenders' successors and assigns. Except as provided in Sections 10.04 and 10.13, no other Person shall have any rights of any nature hereunder or by reason hereof.

10.16 Severability. Any provision of the Loan Documents that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

10.17 Confidentiality. Administrative Agent and each Lender shall use any confidential non-public information concerning the Borrower Parties and their Subsidiaries that is furnished to Administrative Agent or such Lender by or on behalf of the Borrower Parties and their Subsidiaries in connection with the Loan Documents (collectively, "Confidential Information") solely for the purpose of evaluating and providing products and services to them and administering and enforcing the Loan Documents, and it will hold the Confidential Information in confidence. Notwithstanding the foregoing, Administrative Agent and each

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Lender may disclose Confidential Information (a) to their affiliates or any of their or their affiliates' directors, officers, employees, advisors, or representatives (collectively, the "Representatives") whom it determines need to know such information for the purposes set forth in this Section; (b) to any bank or financial institution or other entity to which such Lender has assigned or desires to assign an interest or participation in the Loan Documents or the Obligations, provided that any such foregoing recipient of such Confidential Information agrees to keep such Confidential Information confidential as specified herein; (c) to any governmental agency or regulatory body having or claiming to have authority to regulate or oversee any aspect of Administrative Agent's or such Lender's business or that of their Representatives in connection with the exercise of such authority or claimed authority; (d) to the extent necessary or appropriate to effect or preserve Administrative Agent's or such Lender's or any of their Affiliates' security (if any) for any Obligation or to enforce any right or remedy or in connection with any claims asserted by or against Administrative Agent or such Lender or any of their Representatives; and
(e) pursuant to any subpoena or any similar legal process. For purposes hereof, the term "Confidential Information" shall not include information that (x) is in Administrative Agent's or a Lender's possession prior to its being provided by or on behalf of the Borrower Parties, provided that such information is not known by Administrative Agent or such Lender to be subject to another confidentiality agreement with, or other legal or contractual obligation of confidentiality to, a Borrower Party, (y) is or becomes publicly available (other than through a breach hereof by Administrative Agent or such Lender), or
(z) becomes available to Administrative Agent or such Lender on a nonconfidential basis, provided that the source of such information was not known by Administrative Agent or such Lender to be bound by a confidentiality agreement or other legal or contractual obligation of confidentiality with respect to such information.

10.18 Further Assurances. Borrower and its Subsidiaries shall, at their expense and without expense to Lenders or Administrative Agent, do, execute and deliver such further acts and documents as any Lender or Administrative Agent from time to time reasonably requires for the assuring and confirming unto Lenders or Administrative Agent of the rights hereby created or intended now or hereafter so to be, or for carrying out the intention or facilitating the performance of the terms of any Loan Document.

10.19 Headings. Section headings in this Agreement and the other Loan Documents are included for convenience of reference only and are not part of this Agreement or the other Loan Documents for any other purpose.

10.20 Time of the Essence. Time is of the essence of the Loan Documents.

10.21 Foreign Lenders and Participants. Each Lender, and each holder of a participation interest herein, that is a "foreign corporation, partnership or trust" within the meaning of the Code shall deliver to Administrative Agent, prior to receipt of any payment subject to withholding (or after accepting an assignment or receiving a participation interest herein), two duly signed completed copies of either Form W-8BEN or any successor thereto (relating to such Person and entitling it to a complete exemption from withholding on all payments to be made to such Person by Borrower pursuant to this Agreement) or Form W-8ECI

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or any successor thereto (relating to all payments to be made to such Person by Borrower pursuant to this Agreement) of the United States Internal Revenue Service or such other evidence satisfactory to Borrower and Administrative Agent that no withholding under the federal income tax laws is required with respect to such Person. Thereafter and from time to time, each such Person shall (a) promptly submit to Administrative Agent such additional duly completed and signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be available under then current United States laws and regulations to avoid, or such evidence as is satisfactory to Borrower and Administrative Agent of any available exemption from, United States withholding taxes in respect of all payments to be made to such Person by Borrower pursuant to this Agreement, and
(b) take such steps as shall not be disadvantageous to it, in the reasonable judgment of such Lender, and as may be reasonably necessary (including the re- designation of its Lending Office, if any) to avoid any requirement of applicable Laws that Borrower make any deduction or withholding for taxes from amounts payable to such Person. If such Persons fails to deliver the above forms or other documentation, then Administrative Agent may withhold from any interest payment to such Person an amount equivalent to the applicable withholding tax imposed by Sections 1441 and 1442 of the Code, without reduction. If any Governmental Authority asserts that Administrative Agent did not properly withhold any tax or other amount from payments made in respect of such Person, such Person shall indemnify Administrative Agent therefor, including all penalties and interest and costs and expenses (including Attorney Costs) of Administrative Agent. The obligation of Lenders under this subsection shall survive the payment of all Obligations and the resignation or replacement of Administrative Agent.

10.22 Governing Law.

(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE; PROVIDED THAT ADMINISTRATIVE AGENT AND EACH LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH BORROWER PARTY, ADMINISTRATIVE AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON- EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH BORROWER PARTY, ADMINISTRATIVE AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED HERETO. EACH BORROWER PARTY, ADMINISTRATIVE AGENT AND EACH LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR

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OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF CALIFORNIA.

10.23 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

10.24 Entire Agreement. This Agreement and the other Loan Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

CALIFORNIA PIZZA KITCHEN, INC.

By  /s/ H. G. Carrington, Jr.
    -----------------------------------------
            H. G. Carrington, Jr.
     Executive Vice President and Chief
          Financial Officer and Secretary

BANK OF AMERICA, N.A.,
as Administrative Agent

By: /s/ Patrick W. Zetzman
    -----------------------------------------
               Patrick W. Zetzman
                 Vice President

BANK OF AMERICA, N.A., as Issuing Lender, a Lender and Swing Line Lender

By: /s/ David J. Stassel
    -----------------------------------------
               David J. Stassel
                 Vice President

BANKERS TRUST COMPANY, as Documentation Agent and a Lender

By: /s/ David Bell
    -----------------------------------------

Name:    David Bell
      ---------------------------------------

Title:      Principal
       --------------------------------------

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EXHIBIT 10.3

SECURITY AGREEMENT

This SECURITY AGREEMENT (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, this "Agreement"), dated as of October 29, 1999 is made by the signatories hereto and each Person becoming a party hereto identified as a "Debtor" (each, a "Debtor" and collectively, "Debtors"), in favor of Bank of America, N.A. in its capacity as administrative agent (in such capacity, "Administrative Agent") or Lenders, Issuing Lender, Indemnitees and itself (collectively, the "Secured Parties") under the Credit Agreement referred to below.

RECITALS

A. Pursuant to that certain Credit Agreement dated as of October 29, 1999 among California Pizza Kitchen, Inc., a California corporation ("Borrower"), Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and Issuing Lender and Bankers Trust Company, as Documentation Agent (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), Lenders and the Issuing Lender are making certain credit facilities available to Borrower.

B. Concurrently herewith, certain Debtors are executing and delivering to Administrative Agent a Master Subsidiary Guaranty dated as of even date herewith (as amended from time to time, the "Master Subsidiary Guaranty") guarantying the Obligations.

C. It is a requirement of the Credit Agreement that Debtors enter into this Agreement, and that if any Person becomes a Domestic Subsidiary of Borrower after the date hereof, such Person shall enter into a joinder and become a party hereto.

D. Each Debtor expects to realize direct and indirect benefits as a result of the availability of the aforementioned credit facilities.

NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Grant of Security Interest. Each Debtor hereby pledges, assigns and grants to Administrative Agent, for the benefit of the Secured Parties, a security interest in the property described in Paragraph 2 below (collectively and severally, the "Collateral") to secure payment and performance of the Obligations.

2. Collateral. The Collateral shall consist of all right, title and interest of each Debtor in and to the following, but only to the extent that, except in the case of Trademark Collateral, a security interest therein can be perfected by a filing of a financing statement with a secretary of state or county:

(a) All now existing and hereafter arising receivables, accounts, contracts, contract rights, chattel paper, documents, instruments, investment property, and general intangibles of

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each Debtor, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services, and all rights of each Debtor now and hereafter arising in and to all security agreements, guaranties, leases and other writings securing or otherwise relating to any such receivables, accounts, contracts, contract rights, chattel paper, documents, instruments and general intangibles, except, in every case, such receivables, accounts, contracts, contract rights, chattel paper, documents, instruments, investment property, and general intangibles with respect to which a breach or default would occur upon the granting of a security interest hereunder and except, in every case, any nontransferable liquor licenses;

(b) All inventory of each Debtor, now owned and hereafter acquired, wherever located, including, without limitation, all merchandise, goods and other personal property which are held for sale or lease, all raw materials, work in process, materials used or consumed in each Debtor's business and finished goods, all goods in which each Debtor has an interest in mass or a joint or other interest or gifts of any kind (including goods in which each Debtor has an interest or right as consignee), and all goods which are returned to or repossessed by each Debtor, together with all additions and accessions thereto and replacements therefor and products thereof and documents therefor;

(c) All equipment of each Debtor, now owned and hereafter acquired, wherever located, and all parts thereof and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor, including, without limitation, all machinery, tools, dies, blueprints, catalogues, computer hardware and software, furniture, furnishings and fixtures;

(d) All now existing and hereafter acquired Computer Hardware and Software Collateral, Trademark Collateral and Trade Secrets Collateral (as those terms are defined in Paragraph 20 below) (collectively, the "Intellectual Property Collateral");

(e) All now existing and hereafter acquired books, records, writings, data bases, information and other property relating to, used or useful in connection with, embodying, incorporating or referring to, any of the foregoing Collateral;

(f) All other property of each Debtor now or hereafter in the possession, custody or control of Administrative Agent, and all property of each Debtor in which Administrative Agent now has or hereafter acquires a security interest for the benefit of the Secured Parties;

(g) Rights under insurance policies, letter of credit rights, and supporting obligations, including without limitation guaranties;

(h) All now existing and hereafter acquired cash and cash equivalents held by each Debtor not otherwise included in the foregoing Collateral; and

(i) All products and proceeds of the foregoing Collateral. Collateral shall not include leasehold interests or any other interests in real property. For purposes of this Agreement, the term "proceeds" includes whatever is receivable or received when Collateral or proceeds thereof is sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, all rights to payment, including return premiums, with respect to any insurance relating thereto.

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3. Obligations. The Obligations secured by this Agreement shall consist of all Obligations of each Debtor under the Loan Documents to which it is a party whether now existing or hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later increased, created or incurred.

4. Representations and Warranties. In addition to all representations and warranties of each Debtor set forth in the Guaranty and any other Loan Document to which such Debtor may be a party, which are incorporated herein by this reference, each Debtor hereby represents and warrants for itself that:

(a) Except for the Lien in favor of Administrative Agent for the benefit of the Secured Parties granted hereunder, Liens on new property permitted by
Section 7.02(c) of the Credit Agreement and Ordinary Course Liens, no Person has (or, in the case of after-acquired Collateral, at the time Debtor acquires rights therein, will have) any right, title, claim or interest (by way of security interest or other Lien or charge) in, against or to the Collateral.

(b) All information heretofore, herein or hereafter supplied to Administrative Agent or any Secured Party by or on behalf of Debtor with respect to the Collateral is accurate and complete in all material respects.

(c) Debtor is lawfully possessed of ownership of the Collateral which exists on the date hereof and has full right, title and interest in all rights purported to be granted by it hereunder, and has full power and lawful authority to grant the liens in and on the Collateral hereunder.

(d) This Agreement creates in favor of the Secured Parties a valid and enforceable lien on the Collateral, securing the payment and performance of all Obligations. Upon the filing of financing statement(s) covering the Collateral with the appropriate filing offices, all filings and recordings necessary to perfect such lien will have been duly made or taken.

(e) Debtor is a corporation duly organized, validly existing and in good standing under the Laws of the state of its incorporation, has the power and authority and the legal right to own and operate its properties, to lease the properties it operates and to conduct its business, is duly qualified and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, and is in compliance with all Laws except to the extent that noncompliance does not have a Material Adverse Effect.

(f) Debtor has the power and authority and the legal right to make, deliver and perform this Agreement and to authorize the execution, delivery and performance of this Agreement. Except as contemplated herein, no consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement. This Agreement has been duly executed and delivered by Debtor, and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Debtor in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.

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(g) The execution, delivery, and performance by Debtor of this Agreement and compliance with the provisions hereof have been duly authorized by all requisite action on the part of Debtor and do not and will not (i) violate or conflict with, or result in a breach of, or require any consent, except where such violation, conflict, breach or failure to obtain consent would not have a Material Adverse Effect, under (A) any Organization Documents of Debtor or any of its Subsidiaries, (B) any applicable Laws, rules, or regulations or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (C) any Contractual Obligation of Debtor or any of its Subsidiaries or by which any of them or any of their property is bound or subject, (ii) constitute a default under any such agreement or instrument, except where such default would not have a Material Adverse Effect, or (iii) result in, or require, the creation or imposition of any Lien on any material portion of the properties of Debtor or any of its Subsidiaries other than pursuant hereto.

(h) No litigation, investigation or proceeding of or before an arbitrator or Governmental Authority is pending or, to the best knowledge of Debtor, threatened by or against Debtor or any of its Subsidiaries or against any of their properties or revenues which, if determined adversely, could have a Material Adverse Effect.

(i) The execution, delivery and performance by Debtor of this Agreement does not constitute, to the best knowledge of Debtor, a "fraudulent conveyance," "fraudulent obligation" or "fraudulent transfer" within the meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in California.

(j) The offices where Debtors keep their records concerning the Collateral ("Records") are located at the addresses set forth on Schedule 1 hereto.

5. Covenants and Agreements of Each Debtor. In addition to all covenants and agreements of each Debtor set forth in any other Loan Document to which it may be a party, which are incorporated herein by this reference, each Debtor hereby agrees, at no cost or expense to Administrative Agent or any of the Secured Parties:

(a) Subject to Debtor's right to make Dispositions of the type permitted under Section 7.04 of the Credit Agreement, to do all acts that may be necessary to maintain, preserve and protect the Collateral and the priority and perfected nature of the security interest of Administrative Agent for the benefit of the Secured Parties therein.

(b) Not to use or permit any Collateral to be used unlawfully or in violation of any provision of this Agreement, any other agreement with Administrative Agent and/or the Secured Parties related hereto, or any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on each Debtor or affecting any of the Collateral or any contractual obligation affecting any of the Collateral, except, in each case, where such unlawful use or violations would not cause a Material Adverse Effect.

(c) Except as permitted in the definition of Ordinary Course Liens in the Credit Agreement with respect to contested Liens, to pay promptly when due all taxes, assessments, charges, encumbrances and obligations secured by Liens now or hereafter imposed upon or affecting any Collateral.

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(d) To appear in and defend any action or proceeding which may affect its title to or Administrative Agent's interest on behalf of the Secured Parties in the Collateral.

(e) Not to surrender or lose possession of (other than to Administrative Agent), sell, encumber, lease, rent, or otherwise dispose of or transfer any Collateral or right or interest therein except as permitted herein or in the other Loan Documents, and to keep the Collateral free of all levies and security interests or other Liens or charges except as permitted by the Credit Agreement; provided, however, that, unless an Event of Default shall have occurred and be continuing, each Debtor may, in the ordinary course of business, sell or lease any Collateral consisting of Inventory and any other Collateral as permitted under Section 7.04 of the Credit Agreement.

(f) After the occurrence and during the continuance of an Event of Default, to account fully for and promptly deliver to Administrative Agent, in the form received, all proceeds of the Collateral received, all endorsed to Administrative Agent or in blank, as requested by Administrative Agent, and until so delivered all such documents, instruments, agreements and proceeds shall be held by each Debtor in trust for Administrative Agent for the benefit of the Secured Parties, separate from all other property of each Debtor.

(g) To keep records of the Collateral which are accurate and complete in all material respects and to provide Administrative Agent and each of the Secured Parties with such records and such other reports and information relating to the Collateral as Administrative Agent or any Secured Party may reasonably request from time to time.

(h) To give Administrative Agent 30 days prior written notice of any change in any Debtor's chief place of business, any Debtor's state of incorporation or legal name or trade name(s) or style(s) referred to in Paragraph 10 below.

(i) To keep the records concerning the Collateral at the location(s) referred to in Paragraph 10 below and not to remove such records from such location(s) without the prior written consent of Administrative Agent.

(j) To keep the Collateral in good condition and repair and not to cause or permit any waste or unusual or unreasonable depreciation of the Collateral.

(k) To notify Administrative Agent promptly, in reasonable detail, (i) of any material claim made or asserted against any material portion of the Collateral by any person; and (ii) of any event not related to the Subsidiaries' business which is reasonably expected to have a material adverse effect on the security interest hereunder, the value of the Collateral or the ability of the Secured Parties to dispose of the Collateral or the rights and remedies of the Secured Parties.

(l) At the expense of each Debtor, to promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or, in the reasonable opinion of Administrative Agent, desirable, in order to perfect the liens granted or purported to be granted hereby or to enable Administrative Agent to exercise and enforce its rights and remedies hereunder and execute and file such financing or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be necessary

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or, in the reasonable opinion of Administrative Agent, desirable, in order to perfect and preserve the Liens granted or purported to be granted hereby.

(m) To authorize Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of each Debtor where permitted by law.

(n) To pay all filing, registration and recording fees or refiling, re- registration and re-recording fees, and all expenses incident to the execution and acknowledgement of this Agreement, any agreement supplemental hereto and any instruments of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, any agreement supplemental hereto and any instruments of further assurance.

(p) To notify Administrative Agent upon the creation, possession or ownership of any Collateral with respect to which the Lien of the Administrative Agent is not automatically perfected.

(q) To keep the Collateral at the location(s) referred to in Paragraph 10 below and at new restaurants from time to time opened (provided that Borrower shall immediately notify Administrative Agent of any new restaurant located in a state not referred to in Paragraph 10) and, subject to Debtor's right to make Dispositions of the type permitted under Paragraph 5(e) of this Agreement, not to remove the Collateral from such location(s) without the prior written consent of Administrative Agent.

6. Authorized Actions by Administrative Agent. Each Debtor hereby agrees that:

(a) From time to time, without presentment, notice or demand, and without affecting or impairing in any way the rights of Administrative Agent with respect to the Collateral, the obligations of Debtors hereunder or the Obligations, Administrative Agent may, but shall not be obligated to and shall incur no liability to any Debtor, any Secured Party or any third party for failure to take any action which a Debtor is obligated by this Agreement to do and to exercise such rights and powers as a Debtor might exercise with respect to the Collateral.

(b) To the extent permitted by applicable Law, Administrative Agent may execute in its own name or in the name of each Debtor and file one or more financing statements describing the Collateral in such jurisdictions as deemed appropriate by Administrative Agent from time to time.

(c) Administrative Agent may file photostatic or other copies of financing statements signed or authenticated by each Debtor or of this Agreement in such jurisdictions as deemed appropriate by Administrative Agent from time to time.

(d) each Debtor hereby irrevocably appoints Administrative Agent as its attorney-in-fact to exercise after the occurrence and during the continuance of an Event of Default such rights and powers, including without limitation, to collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on account of the Collateral.

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(e) Enter into any extension, reorganization, deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for the Collateral.

(f) Insure, process and preserve the Collateral.

(g) Transfer the Collateral to its own or its nominee's name.

(h) Make any compromise or settlement, and take any action it deems advisable, with respect to the Collateral.

(i) Subject to the provisions of Paragraph 8 below, notify any obligor on any Collateral to make payment directly to Administrative Agent.

provided, however, that Administrative Agent may take the actions listed in paragraphs (e) through (i), inclusive, above only after the occurrence and during the continuance of an Event of Default.

Each Debtor hereby grants to Administrative Agent for the benefit of the Secured Parties an exclusive, irrevocable power of attorney, with full power and authority in the place and stead of each Debtor to take all such action permitted under this Paragraph 6. Each Debtor agrees to reimburse Administrative Agent upon demand for any reasonable costs and expenses, including, without limitation, attorneys' fees, Administrative Agent may incur while acting as each Debtor's attorney-in-fact hereunder, all of which reasonable costs and expenses are included in the Obligations secured hereby. It is further agreed and understood between the parties hereto that such care as Administrative Agent gives to the safekeeping of its own property of like kind shall constitute reasonable care of the Collateral when in Administrative Agent's possession; provided, however, that Administrative Agent shall not be required to make any presentment, demand or protest, or give any notice and need not take any action to preserve any rights against any prior party or any other person in connection with the Obligations or with respect to the Collateral.

7. Remedies. Upon the occurrence and during the continuance of an Event of Default, Administrative Agent may, after notice to Borrower (except in the case of paragraph (g) below) and in addition to all rights and remedies available to Administrative Agent and the Secured Parties with respect to the Obligations, at law, in equity or otherwise, do any one or more of the following:

(a) Foreclose or otherwise enforce Administrative Agent's security interest in any manner permitted by law or provided for in this Agreement.

(b) Sell, lease or otherwise dispose of any Collateral at one or more public or private sales at Administrative Agent's place of business or any other place or places, including, without limitation, any broker's board or securities exchange, whether or not such Collateral is present at the place of sale, for cash or credit or future delivery, on such terms and in such manner as Administrative Agent may reasonably determine.

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(c) Recover from each Debtor all reasonable costs and expenses, including, without limitation, reasonable attorneys' fees (including the allocated cost of internal counsel), incurred or paid by Administrative Agent or any Secured Party in exercising any right, power or remedy provided by this Agreement.

(d) Require each Debtor to assemble the Collateral and make it available to Administrative Agent at a place to be designated by Administrative Agent.

(e) Enter onto property where any Collateral is located and take possession thereof with or without judicial process.

(f) Prior to the disposition of the Collateral, store, process, repair or recondition it or otherwise prepare it for disposition in any manner and to the extent Administrative Agent deems appropriate and in connection with such preparation and disposition, without charge, use any trademark, tradename, copyright, patent or technical process used by each Debtor.

(g) Apply cash proceeds resulting from the collection, liquidation, sale, lease or other disposition of the Collateral for the following purposes and in the following order:

(i) First, to the payment of (A) all costs and expenses relating to the sale of the Collateral and collection of amounts owing hereunder, including reasonable attorneys' fees of the Secured Parties (including the allocated cost of the Secured Parties' inhouse counsel), and disbursements of the Secured Parties for services rendered in good faith in connection therewith or in connection with any proceeding to sell if a sale if not completed and (B) all charges, expenses and advances reasonably incurred or made by the Secured Parties in order to protect the lien of this Agreement or the security afforded hereby;

(ii) Second, to the payment in full of all Obligations; and

(iii) Third, the balance, if any, shall be paid to Debtors or to such other person as shall be lawfully entitled to receive such surplus (as determined by a court of competent jurisdiction, if such procedure is available under applicable law).

Each Debtor shall be given ten (10) Business Days' prior notice of the time and place of any public sale or of the time after which any private sale or other intended disposition of Collateral is to be made, which notice each Debtor hereby agrees shall be deemed reasonable notice thereof. Upon any sale or other disposition pursuant to this Agreement, Administrative Agent shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral or portion thereof so sold or disposed of. Each purchaser at any such sale or other disposition (including Administrative Agent) shall hold the Collateral free from any claim or right of whatever kind, including any equity or right of redemption of each Debtor and each Debtor specifically waives (to the extent permitted by law) all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted.

8. Collection of Collateral Payments.

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(a) Each Debtor shall, at its sole cost and expense, endeavor to obtain payment, when due and payable, of all sums due or to become due with respect to any Collateral ("Collateral Payments" or a "Collateral Payment"), including, without limitation, the taking of such action with respect thereto as Administrative Agent or any Secured Party may reasonably request, or, in the absence of such request, as each Debtor may reasonably deem advisable; provided, however, that each Debtor shall not, without the prior written consent of Administrative Agent and the Secured Parties, grant or agree to any rebate, refund, compromise or extension with respect to any Collateral Payment or accept any prepayment on account thereof, except, in all cases referred to in this sentence, in the ordinary course of business. After the occurrence and during the continuance of an Event of Default, upon the request of Administrative Agent at the direction of all the Secured Parties, each Debtor will notify and direct any party who is or might become obligated to make any Collateral Payment, to make payment thereof to such accounts as Administrative Agent may direct in writing and to execute all instruments and take all action required by Administrative Agent to ensure the rights of Administrative Agent for the benefit of the Secured Parties in any Collateral subject to the Federal Assignment of Claims Act of 1940, as amended.

(b) Upon the request of Administrative Agent, which request will be made only following the occurrence and during the continuance of a Default or Event of Default, each Debtor will, forthwith upon receipt, transmit and deliver to Administrative Agent, in the form received, all cash, checks, drafts and other instruments for the payment of money (properly endorsed where required so that such items may be collected by Administrative Agent) which may be received by each Debtor at any time as payment on account of any Collateral Payment and if such request shall be made, until delivery to Administrative Agent, such items will be held in trust for Administrative Agent and the Secured Parties and will not be commingled by each Debtor with any of its other funds or property. Thereafter, Administrative Agent is hereby authorized and empowered to endorse the name of any Debtor on any check, draft or other instrument for the payment of money received by Administrative Agent on account of any Collateral Payment if Administrative Agent believes such endorsement is necessary or desirable for purposes of collection.

(c) Each Debtor will indemnify and save harmless Administrative Agent from and against all reasonable liabilities and expenses on account of any adverse claim asserted against Administrative Agent relating to any moneys received by Administrative Agent on account of any Collateral Payment except to the extent such liabilities or expenses were caused by Administrative Agent's gross negligence or willful misconduct, and such obligation of each Debtor shall continue in effect after and notwithstanding the discharge of each Debtor Obligations and the release of the security interest granted in Paragraph 2 above.

9. Additional Covenants Regarding Intellectual Property Collateral.

(a) Unless it shall either reasonably and in good faith determine that such Collateral is of negligible economic value to each Debtor or that there is a valid purpose to do otherwise, each Debtor will not:

(1) (i) Fail to continue to use any material portion of the Trademark Collateral in order to maintain all of the Trademark Collateral in full force free from any

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claim of abandonment for non-use, (ii) fail to maintain as in the past the overall quality of products and services offered under all of the Trademark Collateral, or (iii) do or permit any act or knowingly omit to do any act whereby any material portion of the Trademark Collateral may lapse or become invalid or unenforceable; or

(2) Do or permit any act or knowingly omit to do any act whereby any material portion of the Trade Secrets Collateral may lapse or become invalid or unenforceable or placed in the public domain except upon expiration of the end of an unrenewable term of a registration thereof.

(b) Each Debtor shall notify Administrative Agent immediately if it knows, or has reason to know, that any application or registration relating to any material item of the Intellectual Property Collateral may become abandoned or dedicated to the public or placed in the public domain or invalid or unenforceable, or of any adverse determination or development (including the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court) regarding each Debtor's ownership of any of the Intellectual Property Collateral, its right to register the same or to keep and maintain and enforce the same.

(c) In no event shall any Debtor or any of its agents, employees, designees or licensees file an application for the registration of any Intellectual Property Collateral with the United States Patent and Trademark Office, unless it promptly informs Administrative Agent, and upon request of Administrative Agent, executes and delivers any and all agreements, instruments, documents and papers as Administrative Agent may reasonably request to evidence Administrative Agent's security interest in such Intellectual Property Collateral and the goodwill and general intangibles of each Debtor relating thereto or represented thereby.

(d) Each Debtor shall, contemporaneously herewith, execute and deliver to Administrative Agent agreements in the form of Exhibit A hereto, and shall execute and deliver to Administrative Agent any other document required to acknowledge or register or perfect Administrative Agent's security interest in any part of the Intellectual Property Collateral.

(e) Each Debtor hereby grants to the Secured Parties a present, irrevocable, paid-up royalty-free world wide and non-exclusive license under all Intellectual Property Collateral owned by each Debtor or licensed to each Debtor with the right, after the occurrence and during the continuance of an Event of Default, to sublicense to make, have made, reproduce, have reproduced, prepare derivative works of, perform, or display (publicly or otherwise) or otherwise use, sell, lease or distribute any products or processes, except Intellectual Property Collateral as to which the Secured Parties have a perfected security interest that permits exercise of the remedies set forth herein upon an Event of Default. After the occurrence and during the continuance of an Event of Default, the Secured Parties shall have the right to sublicense (with the right of any sublicensee to grant further sublicenses) or unconditionally assign such license without each Debtor's consent, limited only in the case of licenses to each Debtor of intellectual property owned by unaffiliated third parties to the extent permitted in the applicable license. Such license may be subject to the payment of royalties by each Debtor to third parties.

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10. Place of Business; Collateral Location; Records Location. Borrower represents that its chief place of business is at its address set forth on Schedule 10.02 to the Credit Agreement. Each other Debtor represents that its chief place of business is as set forth on Schedule 1 attached hereto. All Debtors represent that the only trade name(s) currently used by them are set forth on Schedule 1; and that, except as otherwise disclosed to Administrative Agent in writing on or prior to the date hereof, the Collateral and each Debtor's records concerning the Collateral are located at the locations listed on Schedule 1.

11. Waiver of Hearing. Each Debtor expressly waives any constitutional or other right to a judicial hearing prior to the time Administrative Agent takes possession or disposes of the Collateral upon the occurrence of an Event of Default.

12. Cumulative Rights. The rights, powers and remedies of Administrative Agent and any of the Secured Parties under this Agreement shall be in addition to all rights, powers and remedies given to Administrative Agent and any of the Secured Parties by virtue of any statute or rule of law, the Credit Agreement, the Loan Documents or any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently without impairing Administrative Agent's and any of the Secured Parties' security interest in the Collateral.

13. Waiver. Any forbearance or failure or delay by Administrative Agent in exercising any right, power or remedy shall not preclude the further exercise thereof, and every right, power or remedy of Administrative Agent or any of the Secured Parties shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by Administrative Agent or such other Secured Party, as applicable. Each Debtor waives any right to require any Secured Party to proceed against any person or to exhaust any Collateral or to pursue any remedy in such Secured Party's power.

14. Setoff. Each Debtor agrees that each Secured Party may exercise its rights of setoff with respect to the Obligations in the same manner as if the Obligations were unsecured.

15. Continuing Assignment and Security Interest; Transfer of Obligations.

(a) This Agreement shall create a continuing assignment of and security interest in the Collateral and shall remain in full force and effect until payment in full of all Obligations, be binding upon each Debtor, their successors and assigns, and inure, together with the rights and remedies of Secured Parties hereunder, to the benefit of Secured Parties and their successors, transferees and assigns.

(b) To the extent permitted in the Credit Agreement, Administrative Agent may assign or otherwise transfer its rights and obligations under the Loan Documents to any other person or entity, and such other person or entity shall thereupon become vested with all the benefits in respect thereof granted to Administrative Agent herein or otherwise, all as provided in, to the extent provided in, and to the extent set forth in, the Credit Agreement. No Debtor may assign or transfer any of its rights or obligations under this Agreement without the prior written consent of Administrative Agent.

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16. Attorney Costs and Expenses. Each Debtor jointly and severally agrees
(a) to pay or reimburse Administrative Agent and each other Secured Party for all reasonable costs and expenses incurred in connection with the enforcement or attempted enforcement, or preservation of any rights under any this Agreement, and any other documents prepared in connection herewith or therewith, or in connection with any refinancing, or restructuring of any such documents in the nature of a "workout" or of any insolvency or bankruptcy proceeding, including reasonable Attorney Costs. The foregoing costs and expenses shall include all reasonable search, filing, recording, and appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by Secured Parties and the cost of independent public accountants and other outside experts retained by Secured Parties. Any amount payable by Borrower under this Section shall bear interest from the 30th day following the date of demand for payment at the Default Rate, unless waived by Administrative Agent. The agreements in this Section shall survive repayment of all Obligations.

17. Appointment of Administrative Agent. Pursuant to Section 9 of the Credit Agreement, each Secured Party has appointed Administrative Agent as its agent under the Loan Documents (as defined in the Credit Agreement to include, without limitation, this Agreement), and Administrative Agent has accepted such appointment. Administrative Agent shall act as secured party, agent, bailee and custodian for the exclusive benefit of the Secured Parties with respect to the Collateral (as defined below). Administrative Agent agrees that Administrative Agent will act with respect to the Collateral for the exclusive benefit of the Secured Parties and is not, and shall not at any time in the future be, in any manner or to any extent, subject to the direction or control of each Debtor except as expressly permitted hereunder, under the other Loan Documents or as required by law.

18. Additional Debtors. From time to time, additional Subsidiaries of Borrower may become parties hereto as additional Debtors (each, an "Additional Debtor"), by executing and delivering to the Administrative Agent a Joinder Agreement substantially in the form of Exhibit I to the Credit Agreement, accompanied by a supplement to Schedule 1 hereto and such other documentation as Administrative Agent may reasonably require in connection therewith, wherein such Additional Debtors agree to become a party hereto and to be bound hereby. Upon delivery of such Joinder Agreement to and acceptance thereof by Administrative Agent, notice of which is hereby waived by Debtors, each such Additional Debtor shall be as fully a party hereto as if such Additional Debtor were an original signatory hereto. Each Additional Debtor shall be deemed to have made the representations and warranties set forth in Paragraph 2 of this Agreement as of the date of its joinder. Each Debtor expressly agrees that its Secured Obligations and the Liens upon its property granted herein shall not be affected or diminished by the addition or release of Additional Debtors hereunder, nor by any election of Secured Parties not to cause any other Subsidiary of Borrower to become an Additional Debtor hereunder. This Agreement shall be fully effective as to any Debtor who is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Debtor hereunder.

19. Extent of Obligations. Each Debtor hereby agrees that its obligations hereunder are independent of the obligations of each other Debtor, and a separate action or actions may be brought and prosecuted against each Debtor whether or not action is brought against another Debtor and whether or not any Debtor is joined in any such action or actions. Each Debtor hereby further agrees that from time to time, without notice or demand and without affecting or

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impairing in any way the rights of the Secured Parties with respect to the Collateral or the obligations of each Debtor hereunder, the Secured Parties may
(a) renew, compromise, extend, accelerate or change the time for payment or the terms of the Obligations, or any part thereof, (b) exchange, enforce, waive, release, apply and direct the order or manner of sale of any and all collateral for the obligations, including, without limitation, the Collateral, all as provided herein, and/or (c) release or substitute any Debtor, endorsers and guarantors. Each Debtor waives any right to require the Secured Parties to (i) proceed against any other Debtor, or (ii) proceed against or exhaust any security of any other Debtor held for its obligations, or (iii) pursue any other remedy whatsoever. Each Debtor waives any defense (other than payment in full of the Obligations) based upon or arising out of any defense of any other Debtor, including, without limitation, any defense based on or arising out of the disability or the cessation of liability of any Debtor or any other person, or the unenforceability of any other Debtor's obligations under any Loan Document or any part thereof from any cause. Each Debtor agrees that the Secured Parties may proceed against all or any portion of the Collateral for all or any portion of the Obligations, as the Secured Parties may elect, without regard to marshalling. Each Debtor acknowledges and agrees that the Secured Parties may foreclose on any security held by it by one or more judicial or nonjudicial sales, or exercise any right or remedy it may have against any other Debtor or security held by it for the Obligations, without affecting or impairing in any way the rights of the Secured Parties with respect to the Collateral or the obligations of each Debtor hereunder. Each Debtor waives any defense arising out of any such election by the Secured Parties, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of each Debtor against any other Debtor or any such security. Until all Obligations shall have been paid in full, each Debtor shall not have any right of subrogation, and each Debtor waives any right to enforce any remedy which the Secured Parties now have or may hereafter have against each other Debtor and Subsidiary, and waives any benefit of, and any right to participate in any security now or hereafter held by the Secured Parties. Each Debtor further assumes all responsibility for being and keeping itself informed of each other Debtor's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risk which each Debtor assumes and incurs hereunder, and agrees that the Secured Parties shall have no duty to advise each Debtor of information known to them regarding such circumstances or risks.

20. Intellectual Property Collateral. For purposes of this Agreement, the following capitalized terms shall have the following meanings:

"Computer Hardware and Software Collateral" means all of each Debtor's right, title and interest in all now existing and hereafter created or acquired:

(a) Computer and other electronic data processing hardware, integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and all peripheral devices and other related computer hardware;

(b) Except to the extent that the grant of a security interest hereunder would cause a breach or default thereunder, software programs (including both source code, object code and all

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related applications and data files), whether owned, licensed or leased, designed for use on the computers and electronic data processing hardware described in subparagraph (a) above;

(c) Firmware associated therewith;

(d) Documentation (including flow charts, logic diagrams, manuals, guides and specifications) with respect to such hardware, software and firmware described in subparagraph (a) through (c) above; and

(e) Rights with respect to all of the foregoing, including, without limitation, any and all of each Debtor's copyrights, licenses, options, warranties, service contracts, program services, test rights, renewal rights and indemnifications and any substitutions, replacements, additions or model conversions of any of the foregoing.

"Trademark Collateral" means all of each Debtor's right, title and interest in now existing and hereafter created or acquired:

(a) Trademarks, trade names, corporate names, business names, fictitious business names, trade styles, service marks, certification makers, collective marks, logos, other source of business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of a like nature (all of the foregoing items in this clause (a) being collectively called a "Trademark"), now existing in the United States or hereafter adopted or acquired, whether currently in use or not, all registrations and recordings thereof and all applications in connection therewith, whether pending or in preparation for filing, including registrations, recordings and applications in the United States Patent and Trademark Office;

(b) Trademark licenses;

(c) Reissues, extensions or renewals of any of the items described in clauses (a) and (b);

(d) The goodwill of the business of each Debtor connected with the use of, and symbolized by the items described in, clauses (a) and (b), and

(e) Proceeds of, and rights of each Debtor associated with, the foregoing, including any claim by each Debtor against third parties for past, present or future infringement or dilution of any Trademark, Trademark registration or Trademark license, or for any injury to the goodwill associated with the use of any such Trademark or for breach or enforcement of any Trademark license.

"Trade Secrets Collateral" means common law and statutory trade secrets and all other confidential or proprietary or useful information and all know-how obtained by or used in or contemplated at any time for use in the business of each Debtor (all of the foregoing being collectively called a "Trade Secret"), whether or not such Trade Secret has been reduced to a writing or other tangible form including all documents and things embodying, incorporating or referring in any way to such Trade Secret, all Trade Secret licenses, including the right to sue for and to enjoin and to collect damages for the actual or threatened misappropriation of any Trade Secret and for the breach or enforcement of any such Trade Secret license.

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EXECUTED as of the day and year first above written.

"Debtors"

CALIFORNIA PIZZA KITCHEN, INC.

By         H.G. Carrington, Jr.
  ---------------------------------------
            H. G. Carrington, Jr.
          Executive Vice President,
    Chief Financial Officer and Secretary

CPK MANAGEMENT COMPANY

By         H.G. Carrington, Jr.
  ---------------------------------------
            H. G. Carrington, Jr.
           Chief Financial Officer
                and Secretary

CALIFORNIA PIZZA KITCHEN
OF ILLINOIS, INC.

By             Larry S. Flax
  ---------------------------------------
               Larry S. Flax
          Secretary and Treasurer

BANK OF AMERICA, N.A.,
as Administrative Agent

By: Patrick W. Zetzman

Patrick W. Zetzman Vice President

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EXHIBIT 10.4

SUPPLEMENTAL SECURITY AGREEMENT
(TRADEMARKS)

THIS SUPPLEMENTAL SECURITY AGREEMENT (the "Supplemental Trademark Agreement") is made and dated this 29th day of October, 1999 by and between CPK Management Company, a California corporation (each, a "Debtor" and collectively, "Debtors"), and BANK OF AMERICA, N.A., a national banking association, as Administrative Agent (in such capacity, "Administrative Agent") for itself, Issuing Lender, Lenders and Indemnitees under (and as that term and capitalized terms not otherwise defined herein are defined in) that certain Credit Agreement dated as of October 29, 1999 among California Pizza Kitchen, Inc., a California corporation ("Borrower"), Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and Issuing Lender and Bankers Trust Company, as Documentation Agent (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined).

RECITALS

A. Pursuant to that certain Security Agreement dated as of even date herewith between each Debtor and Administrative Agent (the "Security Agreement"), each Debtor has granted to Administrative Agent a perfected security interest in certain assets of each Debtor, including, without limitation, all patents, trademarks, service marks, trade names, copyrights, goodwill, licenses and other intellectual property owned by each Debtor or used in each Debtor's business.

B. The parties hereto desire to supplement the Security Agreement as it relates to certain of such intellectual property consisting generally of trademarks and to create hereby a document appropriate for recordation in the Patent and Trademark Office of the United States (the "PTO").

NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

AGREEMENT

1. Confirmation of Grant of Security Interest. Each Debtor hereby confirms the grant of security interest, pledge, assignment and mortgage set forth in the Security Agreement and acknowledges that the Collateral described therein includes, without limitation, all of each Debtor's right, title and interest in the following (the "Trademark Collateral"):

(a) All trademarks, service marks, designs, logos, indicia, tradenames, corporate names, company names, business names, fictitious business names trade styles and other source, product and business identifiers pertaining to the products, services and business of each Debtor in the United States, whether now owned or hereafter acquired, including, without limitation, the trademarks specifically described on Schedule I attached hereto, as the same may be amended or replaced from time to time with the consent of Administrative Agent;

1

(b) All now existing and hereafter arising registrations and applications for registration relating to any of the foregoing, all renewals and extensions thereof in the United States in perpetuity, and all rights to make such applications and to renew and extend the same;

(c) All now existing and hereafter arising rights and licenses to make, have made, use and/or sell any items disclosed and claimed by any of the foregoing;

(d) All now existing and hereafter arising right (but not the obligation) to register claims under any state or federal trademark law or regulation;

(e) All now existing and hereafter arising rights, claims and interests under licensing or other contracts pertaining to any of the foregoing to the extent such rights are assignable;

(f) All now existing and hereafter arising documents, instruments and agreements which reveal the name and address of sources of supply, distribution methods and all terms of purchase, rental, license or use and delivery for all materials, products and components used in connection with any of the foregoing;

(g) All now existing and hereafter arising specifications as to and quality control manuals used in connection with the operations conducted under the name of or in connection with the foregoing;

(h) All now existing and hereafter arising goodwill associated with any of the foregoing;

(i) All now existing and hereafter arising right (but not the obligation) to sue or bring opposition or cancellation proceedings in the name of each Debtor or Administrative Agent for past, present and future infringements of any of the foregoing;

(j) All products and proceeds of any of the foregoing.

2. Additional Representation and Warranty and Covenant. In addition to all representations and warranties, covenants and agreements set forth in the Security Agreement, each Debtor hereby:

(a) Represents and warrants that Schedule I attached hereto sets forth an accurate and complete list of all trademarks owned by each Debtor which are registered with the PTO as of the date hereof; and

(b) Agrees to promptly notify Administrative Agent in writing of any additional trademarks registered with the PTO of which each Debtor becomes the owner and to amend Schedule I accordingly.

3. No Present Assignment. Neither the Security Agreement, this Supplemental Trademark Agreement nor any other document, instrument or agreement creates or is intended to create a present assignment of the Trademark Collateral. Subject to the rights of Administrative Agent under the Security Agreement and this Supplemental Trademark Agreement, it is the intention of the parties hereto that each Debtor continue to own the Trademark Collateral and

2

that upon the indefeasible payment and performance in full of each Debtor Obligations, the rights of Administrative Agent under the Security Agreement and this Supplemental Trademark Agreement in and to the Trademark Collateral shall be released and terminated.

4. Relationship to Security Agreement. The Trademark Collateral shall constitute Collateral for all purposes of the Security Agreement and the other Loan Documents and after the occurrence and during the continuance of an Event of Default Administrative Agent shall have all rights, powers and remedies with respect to the Trademark Collateral to the same extent as they have with respect to other Collateral. Reference is hereby made to the Security Agreement, the terms and conditions of which are incorporated herein by this reference.

EXECUTED as of the day and year first above written.

CPK MANAGEMENT COMPANY

By     /s/ H.G. Carrington, Jr.
   ------------------------------
       H. G. Carrington, Jr.
      Chief Financial Officer
           and Secretary

BANK OF AMERICA, N.A.,
as Administrative Agent

By:      /s/ Patrick W. Zetzman
    -----------------------------
         Patrick W. Zetzman
           Vice President

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EXHIBIT 10.5

PLEDGE AGREEMENT

This PLEDGE AGREEMENT (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, this "Agreement"), dated as of October 29, 1999 is made by the signatories hereto and each Person becoming a party hereto identified as a "Debtor" (each, a "Debtor" and collectively, "Debtors"), in favor of Bank of America, N.A. in its capacity as administrative agent (in such capacity, "Administrative Agent") or Lenders, Issuing Lender, Indemnitees and itself (collectively, the "Secured Parties") under the Credit Agreement referred to below.

RECITALS

A. Pursuant to that certain Credit Agreement dated as of October 29, 1999 among California Pizza Kitchen, Inc., a California corporation ("Borrower"), Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and Issuing Lender and Bankers Trust Company, as Documentation Agent (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Credit Agreement;" the terms defined therein being used herein as therein defined), Lenders and Issuing Lender are making certain credit facilities available to Borrower.

B. Concurrently herewith, certain Debtors are executing and delivering to Administrative Agent a Master Subsidiary Guaranty dated as of even date herewith (as amended from time to time, the "Master Subsidiary Guaranty") guarantying the Obligations.

C. It is a requirement of the Credit Agreement that Debtors enter into this Agreement pledging their direct and indirect beneficial ownership interests in all of their Subsidiaries, and that if Borrower or any of its Domestic Subsidiaries become owners of additional equity interests in new or existing Subsidiaries after the date hereof, it pledge its equity interests therein to the extent required herein to Administrative Agent.

D. Each Debtor expects to realize direct and indirect benefits as a result of the availability of the aforementioned credit facilities.

NOW, THEREFORE, in consideration of the above Recitals and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Grant of Security Interest. Each Debtor hereby pledges, assigns and grants to Administrative Agent, for the benefit of the Secured Parties, a security interest in the property described in Paragraph 2 below (collectively and severally, the "Collateral") to secure payment and performance of the Obligations.

2. Collateral. The Collateral shall consist of all right, title and interest of each Debtor in and to the following:

(a) all shares and direct or indirect partnership, membership, joint venture and other equity and beneficial interests in the Subsidiaries
(collectively, the "Ownership Interests")

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described in Schedule 1 and all additional Ownership Interests in Subsidiaries now owned or from time to time hereafter acquired by such Debtor in any manner;

(b) all certificates and instruments representing or evidencing the Ownership Interests;

(c) all rights of such Debtor now existing or from time to time arising under any partnership, articles of organization, operating, joint venture or other organizational agreements and instruments relating to any Subsidiaries
(collectively, the "Governing Agreements"), including without limitation, (i) all rights as a general partner, limited partner, member, joint venturer or other equity or beneficial holder; (ii) all right, title and interest in any insurance, indemnity, warranty or guaranty with respect to any Governing Agreements; (iii) all tort and other claims for damages arising out of a breach of or default under any Governing Agreements; and (iv) all voting rights, put rights, exchange rights, any other rights and all rights to payment of any kind, including cash and non-cash distributions and redemptions, instruments and other property, from time to time received, receivable or otherwise distributed on account of, or in exchange for Ownership Interests or the Governing Agreements (collectively, the "Rights" and individually, a "Right");

(d) All now existing and hereafter acquired books, records, writings, data bases, information and other property relating to, used or useful in connection with, embodying, incorporating or referring to, any of the foregoing Collateral; and

(e) All products and proceeds of the foregoing Collateral. For purposes of this Agreement, the term "proceeds" includes whatever is receivable or received when Collateral or proceeds thereof is sold, collected, exchanged or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, all rights to payment, including return premiums, with respect to any insurance relating thereto.

All certificates or instruments representing or evidencing the Collateral (collectively, the "Pledged Collateral") shall be delivered to and held by or on behalf of Administrative Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Administrative Agent.

3. Obligations. The Obligations secured by this Agreement shall consist of all Obligations of each Debtor under the Loan Documents to which it is a party whether now existing or hereafter arising, voluntary or involuntary, whether or not jointly owed with others, direct or indirect, absolute or contingent, liquidated or unliquidated, and whether or not from time to time decreased or extinguished and later increased, created or incurred.

4. Representations and Warranties. In addition to all representations and warranties of each Debtor set forth in the Guaranty and any other Loan Document to which such Debtor may be a party, which are incorporated herein by this reference, each Debtor hereby represents and warrants that:

(a) Except as disclosed on Schedule 3 hereto, Liens in favor of Administrative Agent for the benefit of the Secured Parties granted hereunder and Ordinary Course Liens, no Person

2

has (or, in the case of after-acquired Collateral, at the time each Debtor acquires rights therein, will have) any right, title, claim or interest (by way of security interest or other Lien or charge) in, against or to the Collateral.

(b) All information heretofore, herein or hereafter supplied to Administrative Agent or any Secured Party by or on behalf of each Debtor with respect to the Collateral is accurate and complete in all material respects.

(c) Each Debtor is lawfully possessed of ownership of the Collateral which exists on the date hereof and has full right, title and interest in all rights purported to be granted by it hereunder, and has full power and lawful authority to grant the liens in and on the Collateral hereunder.

(d) This Agreement creates in favor of the Secured Parties a valid and enforceable lien on the Collateral, securing the payment and performance of all Obligations. Upon Administrative Agent taking possession of all certificates or instruments representing or evidencing the Collateral and the filing of financing statement(s) covering the Collateral with the appropriate filing offices, all filings and other actions necessary to perfect such lien will have been duly made or taken.

(e) Each Debtor which is a corporation is duly organized, validly existing and in good standing under the Laws of the state of its incorporation or organization, has the power and authority and the legal right to own and operate its properties, to lease the properties it operates and to conduct its business, is duly qualified and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, and is in compliance with all Laws except to the extent that noncompliance does not have a Material Adverse Effect.

(f) Debtor has the power and authority and the legal right to make, deliver and perform this Agreement and to authorize the execution, delivery and performance of this Agreement. Except as contemplated herein, no consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement. This Agreement has been duly executed and delivered by Debtor, and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Debtor in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.

(g) With respect to each Debtor which is a corporation, the execution, delivery, and performance by Debtor of this Agreement and compliance with the provisions hereof have been duly authorized by all requisite action on the part of Debtor and do not and will not (i) violate or conflict with, or result in a breach of, or require any consent, except where such violation, conflict, breach or failure to obtain consent would not have a Material Adverse Effect, under (A) any Organization Documents of Debtor or any of its Subsidiaries, (B) any applicable Laws, rules, or regulations or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (C) any Contractual Obligation of Debtor or any of its Subsidiaries or by which any of them or any of their property is bound or subject, (ii) constitute a default under any such

3

agreement or instrument, except where such default would not have a Material Adverse Effect, or (iii) result in, or require, the creation or imposition of any Lien on any material portion of the properties of Debtor or any of its Subsidiaries other than pursuant hereto.

(h) No litigation, investigation or proceeding of or before an arbitrator or Governmental Authority is pending or, to the best knowledge of Debtor, threatened by or against Debtor or any of its Subsidiaries or against any of their properties or revenues which, if determined adversely, could have a Material Adverse Effect.

(i) The execution, delivery and performance by Debtor of this Agreement does not constitute, to the best knowledge of Debtor, a "fraudulent conveyance," "fraudulent obligation" or "fraudulent transfer" within the meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in California.

(j) The office where each Debtor keeps its records concerning the Collateral ("Records") is located at the address for notices for Borrower set forth on Schedule 10.02 to the Credit Agreement.

(k) The Collateral constituting shares has been duly authorized and validly issued and is fully paid and nonassessable.

(l) The Collateral constitutes all of the Ownership Interests in all active Domestic Subsidiaries held by Debtor and not less than 65% of the Ownership Interests in Foreign Subsidiaries. Except for the intended acquisition of all remaining general partnership interests in CPK I, Limited Partnership and up to all partnership interests in CPK Water Tower Limited Partnership and as disclosed on Schedule 3 hereto, there are no existing options, warrants, calls or commitments of any character whatsoever relating to any Collateral.

5. Covenants and Agreements of Each Debtor. In addition to all covenants and agreements of each Debtor set forth in any other Loan Document to which it may be a party, which are incorporated herein by this reference, each Debtor hereby agrees, at no cost or expense to Administrative Agent or any of the Secured Parties:

(a) To do all acts that may be necessary to maintain, preserve and protect the Collateral and the priority and perfected nature of the security interest of Administrative Agent for the benefit of the Secured Parties therein.

(b) Not to use or permit any Collateral to be used unlawfully or in violation of any provision of this Security Agreement, any other agreement with Administrative Agent and/or the Secured Parties related hereto, or any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on each Debtor or affecting any of the Collateral or any contractual obligation affecting any of the Collateral except, in each case, where such unlawful use or violations would not cause a Material Adverse Effect.

(c) Except as permitted in the definition of Ordinary Course Liens in the Credit Agreement with respect to contested Liens, to pay promptly when due all taxes, assessments, charges, encumbrances and obligations secured by Liens now or hereafter imposed upon or affecting any Collateral.

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(d) To appear in and defend any action or proceeding which may affect its title to or Administrative Agent's interest on behalf of the Secured Parties in the Collateral.

(e) Not to surrender or lose possession of (other than to Administrative Agent), sell, encumber, lease, rent, or otherwise dispose of or transfer any Collateral or right or interest therein except as permitted herein or in the other Loan Documents, and to keep the Collateral free of all levies and security interests or other Liens or charges except as permitted by the Credit Agreement.

(f) To account fully for and after the occurrence and during the continuance of an Event of Default, promptly deliver to Administrative Agent, in the form received, all certificates and instruments constituting Collateral hereunder and all proceeds of the Collateral received, all endorsed to Administrative Agent or in blank, as requested by Administrative Agent, and until so delivered all such documents, instruments, agreements and proceeds shall be held by each Debtor in trust for Administrative Agent for the benefit of the Secured Parties, separate from all other property of each Debtor.

(g) To keep records of the Collateral which are accurate and complete in all material respects and to provide Administrative Agent and each of the Secured Parties with such records and such other reports and information relating to the Collateral as Administrative Agent or any Secured Party may reasonably request from time to time.

(h) To give Administrative Agent 30 days prior written notice of any change in any Debtor's chief place of business, any Debtor's state of incorporation or legal name or trade name(s) or style(s) referred to in Paragraph 10 below.

(i) To keep the records concerning the Collateral at the location(s) referred to in Paragraph 10 below and not to remove such records from such location(s) without the prior written consent of Administrative Agent.

(j) To keep the Collateral in good condition and repair and not to cause or permit any waste or unusual or unreasonable depreciation of the Collateral.

(k) To cause each Subsidiary not to issue any Ownership Interests in addition to or in substitution for the Collateral unless pledged as Collateral hereunder, and to not sell, assign (by operation of law or otherwise) or otherwise dispose of any of the Collateral subject to Debtor's right to make Dispositions of the type permitted under Section 7.04 of the Credit Agreement.

(l) To notify Administrative Agent promptly, in reasonable detail, (i) of any material claim made or asserted against any material portion of the Collateral by any person; (ii) of any event not related to the Subsidiaries' business which is reasonably expected to have a Material Adverse Effect on the security interest hereunder, the value of the Collateral or the ability of the Secured Parties to dispose of the Collateral or the rights and remedies of the Secured Parties; and (iii) any distributions of material non-cash property by any of the Debtors or their Subsidiaries.

(m) At the expense of each Debtor, to promptly execute and deliver all further instruments and documents, and take all further action that may be necessary, or that Administrative Agent may reasonably request, in order to perfect the liens granted or purported

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to be granted hereby or to enable Administrative Agent to exercise and enforce its rights and remedies hereunder and execute and file such financing or continuation statements, or amendments thereto, and such other instruments, endorsements or notices, as may be necessary, or as Administrative Agent may reasonably request, in order to perfect and preserve the Liens granted or purported to be granted hereby.

(n) To authorize Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of each Debtor where permitted by law.

(o) To pay all filing, registration and recording fees or refiling, re- registration and re-recording fees, and all expenses incident to the execution and acknowledgement of this Agreement, any agreement supplemental hereto and any instruments of further assurance, and all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Agreement, any agreement supplemental hereto and any instruments of further assurance.

(p) Upon obtaining any additional Ownership Interests in any Subsidiary or any other Collateral, to promptly deliver to Administrative Agent a duly executed Agreement Supplement in substantially the form of Schedule 2 hereto (a "Pledge Agreement Supplement") identifying such additional Ownership Interests; provided, however that not more than 65% of the Ownership Interests of any Subsidiary shall be required to be pledged hereunder. Such Debtor shall deliver any certificates or instruments representing or evidencing such additional Collateral, accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to Administrative Agent. Each Debtor hereby authorizes Administrative Agent to attach each Pledge Agreement Supplement to this Agreement and agrees that all shares listed on any Agreement Supplement delivered to Administrative Agent shall for all purposes hereunder constitute Collateral. The failure of any Debtor to comply with this covenant or Administrative Agent to attached a Pledge Agreement Supplement shall not limit or otherwise impair the security interest of the Secured Parties in such additional Ownership Interests.

(q) Not to designate, or consent to the designation of, any other Person (including, without limitation, an Affiliate) to be a successor or additional general partner of an Subsidiary who is not a Debtor.

(r) With respect to each Debtor which is a party to a Governing Agreement:

(i) to perform and observe all material terms and provisions of each Governing Agreement to be performed or observed by such Debtor, maintain such Governing Agreement in full force and effect in all material respects, enforce such Governing Agreement in accordance with its terms in all material respects, and take all such action to such end as may be from time to time reasonably requested by Administrative Agent;

(ii) to furnish to Administrative Agent promptly upon receipt thereof, copies of all material notices, requests and other documents received by any Debtor under or

6

pursuant to any Governing Agreement, and from time to time furnish to Administrative Agent such information and reports regarding the Collateral as Administrative Agent may reasonably request; or

(iii) not to amend or waive any material provision of any Governing Agreements or restate or substitute any Governing Agreements with another agreement therefor in a way inconsistent with the terms of this Agreement or which materially adversely affects the rights of the Secured Parties in or with respect to thereto.

6. Authorized Actions by Administrative Agent. Each Debtor hereby agrees that:

(a) From time to time, without presentment, notice or demand, and without affecting or impairing in any way the rights of Administrative Agent with respect to the Collateral, the obligations of Debtors hereunder or the Obligations, Administrative Agent may, but shall not be obligated to and shall incur no liability to any Debtor, any Secured Party or any third party for failure to take any action which a Debtor is obligated by this Security Agreement to do and to exercise such rights and powers as a Debtor might exercise with respect to the Collateral.

(b) Administrative Agent may execute in its own name or in the name of each Debtor and file one or more financing statements describing the Collateral in such jurisdictions as deemed appropriate by Administrative Agent from time to time.

(c) Administrative Agent may file photostatic or other copies of financing statements signed or authenticated by each Debtor or of this Security Agreement in such jurisdictions as deemed appropriate by Administrative Agent from time to time.

(d) Each Debtor hereby irrevocably appoints Administrative Agent as its attorney-in-fact to exercise after the occurrence and during the continuance of an Event of Default such rights and powers, including without limitation, to collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on account of the Collateral.

(e) Enter into any extension, reorganization, deposit, merger, consolidation or other agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange for the Collateral.

(f) Insure, process and preserve the Collateral.

(g) Transfer the Collateral to its own or its nominee's name.

(h) Make any compromise or settlement, and take any action it deems advisable, with respect to the Collateral.

provided, however, that Administrative Agent may take the actions listed in paragraphs (e) through (h), inclusive, above only after the occurrence and during the continuance of an Event of Default.

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Each Debtor hereby grants to Administrative Agent for the benefit of the Secured Parties an exclusive, irrevocable power of attorney, with full power and authority in the place and stead of each Debtor to take all such action permitted under this Paragraph 6. Each Debtor agrees to reimburse Administrative Agent upon demand for any reasonable costs and expenses, including, without limitation, attorneys' fees, Administrative Agent may incur while acting as each Debtor's attorney-in-fact hereunder, all of which reasonable costs and expenses are included in the Obligations secured hereby. It is further agreed and understood between the parties hereto that such care as Administrative Agent gives to the safekeeping of its own property of like kind shall constitute reasonable care of the Collateral when in Administrative Agent's possession; provided, however, that Administrative Agent shall not be required to make any presentment, demand or protest, or give any notice and need not take any action to preserve any rights against any prior party or any other person in connection with the Obligations or with respect to the Collateral.

7. Remedies. Upon the occurrence and during the continuance of an Event of Default, Administrative Agent may, after notice to Borrower (except in the case of paragraph (g) below)and in addition to all rights and remedies available to Administrative Agent and the Secured Parties with respect to the Obligations, at law, in equity or otherwise, do any one or more of the following:

(a) Foreclose or otherwise enforce Administrative Agent's security interest in any manner permitted by law or provided for in this Agreement.

(b) Sell, lease or otherwise dispose of any Collateral at one or more public or private sales at Administrative Agent's place of business or any other place or places, including, without limitation, any broker's board or securities exchange, whether or not such Collateral is present at the place of sale, for cash or credit or future delivery, on such terms and in such manner as Administrative Agent may reasonably determine.

(c) Recover from each Debtor all reasonable costs and expenses, including, without limitation, reasonable attorneys' fees (including the allocated cost of internal counsel), incurred or paid by Administrative Agent or any Secured Party in exercising any right, power or remedy provided by this Agreement.

(d) Sell the Collateral, or any part thereof subject to applicable regulatory and legal requirements, including the requirement that any such purchaser be entitled to beneficially own shares in a Subchapter S corporation, if applicable.

(e) Participate in any recapitalization, reclassification, reorganization, consolidation, redemption, stock split, merger, or liquidation of any issuer of securities that constitute Collateral, and in connection therewith deposit or surrender control of the Collateral, accept money or other property in exchange for the Collateral, and take such action as deemed proper by the Secured Parties in connection therewith, and any other money or property received in exchange for the Collateral shall be applied to satisfy the Obligations or held by the Secured Parties thereafter as Collateral pursuant to the provisions hereof.

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(f) Exercise any and all rights and remedies of, as applicable, a general partner, limited partner, member, joint venturer or other equity or beneficial holder of the Subsidiaries or otherwise in respect of the Collateral, including, without limitation, any and all rights to demand or otherwise require payment of any amounts under, or performance of any provisions of, any Governing Agreement and any and all rights to manage the operation of any Subsidiary, as the case may be. The exercise by any Secured Party of any of the rights of a general partner of any Subsidiary shall not cause any Secured Party to become subject to any of the liabilities or obligations of a general partner thereof; and each Debtor which is a general partner hereby agrees to indemnify each Secured Party against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Secured Party in any way relating to or arising out of the Collateral in any action taken by such Secured Party, with respect thereto except to the extent caused by such Secured Party's gross negligence or willful misconduct.

(g) Apply cash proceeds resulting from the collection, liquidation, sale, lease or other disposition of the Collateral for the following purposes and in the following order:

(i) First, to the payment of (A) all costs and expenses relating to the sale of the Collateral and collection of amounts owing hereunder, including reasonable attorneys' fees of the Secured Parties (including the allocated cost of the Secured Parties' inhouse counsel), and disbursements of the Secured Parties for services rendered in good faith in connection therewith or in connection with any proceeding to sell if a sale if not completed and (B) all charges, expenses and advances reasonably incurred or made by the Secured Parties in order to protect the lien of this Agreement or the security afforded hereby;

(ii) Second, to the payment in full of all Obligations; and

(iii) Third, the balance, if any, shall be paid to Debtors or to such other person as shall be lawfully entitled to receive such surplus (as determined by a court of competent jurisdiction, if such procedure is available under applicable law).

Each Debtor shall be given ten (10) Business Days' prior notice of the time and place of any public sale or of the time after which any private sale or other intended disposition of Collateral is to be made, which notice each Debtor hereby agrees shall be deemed reasonable notice thereof. Upon any sale or other disposition pursuant to this Agreement, Administrative Agent shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral or portion thereof so sold or disposed of. Each purchaser at any such sale or other disposition (including Administrative Agent) shall hold the Collateral free from any claim or right of whatever kind, including any equity or right of redemption of each Debtor and each Debtor specifically waives (to the extent permitted by law) all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter adopted.

8. Sales of Collateral. Whenever the Secured Parties are entitled to sell Collateral:

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(a) Each Debtor recognizes that, by reason of certain prohibitions contained in the Securities Act of 1933, as from time to time amended (or any similar stature then in effect) (the "Securities Act") and applicable state securities laws, the Secured Parties may, at their option, elect not to require each Debtor to register all or any part of the Collateral and may therefore be compelled, with respect to any sale of all or any part of the Collateral, to limit purchasers to those who will agree, among other things, to acquire such securities for their own account, for investment, and not with a view to the distribution or resale thereof. Each Debtor acknowledges and agrees that any such sale may result in prices and other terms less favorable to the seller than if such sale were a public sale without such restrictions. The Secured Parties shall be under no obligation to delay the sale of any of the Collateral for the period of time necessary to permit each Debtor to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if each Debtor would agree to do so.

(b) If the Secured Parties determine to exercise its right to sell any or all of the Collateral, upon written request, each Debtor shall, and shall cause each Subsidiary to, from time to time, furnish to Administrative Agent all such information as it may reasonably request in order to determine the number of shares and other instruments included in the Collateral which may be sold by Administrative Agent as exempt transactions under the Securities Act and rules of the SEC thereunder, as the same are from time to time in effect.

(c) Each Debtor which is an Subsidiary hereby (i) consents to the pledge to the Secured Parties of a security interest in the Collateral, (ii) except as set forth herein, waives any rights it may have with respect to the sale or other transfer of all or any interests in any Subsidiary, (iii) waives any restrictions on transfer of such interests contained in any Governing Agreement and (iv) consents to the admission of any Person, including without limitation any Secured Party, who purchases all or a portion of the Collateral at any sale thereof whether as a result of a bankruptcy or otherwise and agrees to deliver any writings or notices required to effect such admission.

(d) If requested by Administrative Agent, each Debtor shall, ratify and confirm any sale or sales by executing and delivering to Administrative Agent, or to such purchaser or purchasers, all such instruments as may, in the reasonable judgment of Administrative Agent, be advisable for the purpose.

(e) The receipt by Administrative Agent of the purchase money paid at any sale made by it shall be a sufficient discharge therefor to any purchaser of the Collateral, or any portion thereof, sold as aforesaid; and no such purchaser (or the representatives or assigns of such purchaser), after paying such purchase money and receiving such receipt, shall be bound to see to the application of such purchase money or any part thereof or in any manner whatsoever be answerable for any loss, misapplication or nonapplication of any such purchase money, or any part thereof, or be bound to inquire as to the authorization, necessity, expediency or regularity of any such sale.

(f) The Secured Parties shall incur no liability as a result of the sale of the Collateral, or any part thereof, at any private sale conducted in a commercially reasonable manner. Each Debtor hereby waives, to the full extent permitted by applicable law, any claims against the Secured Parties arising by reason of the fact that the price at which the Collateral, or any part

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thereof, may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Secured Parties accept the first offer received which they in good faith deems to be commercially reasonable under the circumstances and does not offer the Collateral to more than one offeree.

9. Voting Rights, Dividends, Etc.

(a) So long as no Event of Default shall have occurred and be continuing (and, in the case of subparagraph (i) below, so long as written notice has not been given by Administrative Agent to Debtors):

(i) Each Debtor shall be entitled to exercise any and all voting and other consensual rights and Rights pertaining to the Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or materially adversely affect the rights of the Secured Parties in or with respect to thereto.

(ii) Subject to Section 6.12(b) of the Credit Agreement, each Debtor shall be entitled to receive and retain any and all dividends paid in respect of the Collateral.

(iii) Administrative Agent shall execute and deliver (or cause to be executed and delivered) to each Debtor all such proxies and other instruments as each Debtor may reasonably request for the purpose of enabling each Debtor to exercise the voting and other rights which it is entitled to exercise pursuant to subparagraph (i) above and to receive the dividends which it is authorized to receive and retain pursuant to subparagraph (ii) above.

(b) Upon the occurrence and during the continuance of an Event of Default and subsequent notice by Administrative Agent to Debtors of their intent to exercise such rights:

(i) All rights of each Debtor to exercise the voting and other consensual rights and Rights which it would otherwise be entitled to exercise pursuant to Paragraph 5(a)(i) above shall cease, and all such rights and Rights shall thereupon become vested in the Secured Parties who shall thereupon have the sole right to exercise such voting and other consensual rights and Rights.

(ii) All rights of each Debtor to receive the dividends which it would otherwise be authorized to receive and retain pursuant to Paragraph 5(a)(ii) above shall cease, and all such rights shall thereupon become vested in the Secured Parties who shall thereupon have the sole right to receive and hold as Collateral such dividends.

(iii) All dividends which are received by each Debtor contrary to the provisions of Paragraph 5(a)(ii) shall be received in trust for the benefit of the Secured Parties, shall be segregated from other funds of each Debtor and shall be forthwith paid over to Administrative Agent as Collateral in the same form as so received, with any necessary endorsement.

(c) In order to permit the Secured Parties to exercise the voting and other rights which it may be entitled to exercise pursuant to Paragraph 5(a)(i) above, and to receive all

11

dividends and distributions which it may be entitled to receive under Paragraph 5(a)(ii) above, each Debtor shall, if necessary, upon written notice from Administrative Agent, from time to time execute and deliver to Administrative Agent appropriate dividend payment orders and other instruments as Administrative Agent may reasonably request.

10. Place of Business; Collateral Location; Records Location. Each Debtor represents that its chief place of business is as set forth on Schedule 2 attached hereto; that the only trade name(s) used by each Debtor are set forth on said Schedule 2; and that, except as otherwise disclosed to Administrative Agent in writing prior to the date hereof, the Collateral and each Debtor's records concerning the Collateral are located at its chief place of business.

11. Waiver of Hearing. Each Debtor expressly waives any constitutional or other right to a judicial hearing prior to the time Administrative Agent takes possession or disposes of the Collateral upon the occurrence of a Default.

12. Cumulative Rights. The rights, powers and remedies of Administrative Agent and any of the Secured Parties under this Security Agreement shall be in addition to all rights, powers and remedies given to Administrative Agent and any of the Secured Parties by virtue of any statute or rule of law, the Credit Agreement, the Loan Documents or any other agreement, all of which rights, powers and remedies shall be cumulative and may be exercised successively or concurrently without impairing Administrative Agent's and any of the Secured Parties' security interest in the Collateral.

13. Waiver. Any forbearance or failure or delay by Administrative Agent in exercising any right, power or remedy shall not preclude the further exercise thereof, and every right, power or remedy of Administrative Agent or any of the Secured Parties shall continue in full force and effect until such right, power or remedy is specifically waived in a writing executed by Administrative Agent or such other Secured Party, as applicable. each Debtor waives any right to require any Secured Party to proceed against any person or to exhaust any Collateral or to pursue any remedy in such Secured Party's power.

14. Setoff. Each Debtor agrees that each Secured Party may exercise its rights of setoff with respect to the Obligations in the same manner as if the Obligations were unsecured.

15. Continuing Assignment and Security Interest; Transfer of Obligations.

(a) This Agreement shall create a continuing assignment of and security interest in the Collateral and shall remain in full force and effect until payment in full of all Obligations, be binding upon each Debtor, their successors and assigns, and inure, together with the rights and remedies of Secured Parties hereunder, to the benefit of Secured Parties and their successors, transferees and assigns.

(b) To the extent permitted in the Credit Agreement, Administrative Agent may assign or otherwise transfer its rights and obligations under the Loan Documents to any other person or entity, and such other person or entity shall thereupon become vested with all the benefits in respect thereof granted to Administrative Agent herein or otherwise, all as provided in, to the extent provided in, and to the extent set forth in, the Credit Agreement. No Debtor may assign or

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transfer any of its rights or obligations under this Agreement without the prior written consent of Administrative Agent.

16. Attorney Costs and Expenses. Each Debtor jointly and severally agrees
(a) to pay or reimburse Administrative Agent and each other Secured Party for all reasonable costs and expenses incurred in connection with the enforcement or attempted enforcement, or preservation of any rights under any this Agreement, and any other documents prepared in connection herewith or therewith, or in connection with any refinancing, or restructuring of any such documents in the nature of a "workout" or of any insolvency or bankruptcy proceeding, including reasonable Attorney Costs. The foregoing costs and expenses shall include all reasonable search, filing, recording, and appraisal charges and fees and taxes related thereto, and other reasonable out-of-pocket expenses incurred by Secured Parties and the reasonable cost of independent public accountants and other outside experts retained by Secured Parties. Any amount payable by Borrower under this Section shall bear interest from the 30th day following the date of demand for payment at the Default Rate, unless waived by Administrative Agent. The agreements in this Section shall survive repayment of all Obligations.

17. Appointment of Administrative Agent. Pursuant to Section 9 of the Credit Agreement, each Secured Party has appointed Administrative Agent as its agent under the Loan Documents (as defined in the Credit Agreement to include, without limitation, this Agreement), and Administrative Agent has accepted such appointment. Administrative Agent shall act as secured party, agent, bailee and custodian for the exclusive benefit of the Secured Parties with respect to the Collateral (as defined below). Administrative Agent agrees that Administrative Agent will act with respect to the Collateral for the exclusive benefit of the Secured Parties and is not, and shall not at any time in the future be, in any manner or to any extent, subject to the direction or control of each Debtor except as expressly permitted hereunder, under the other Loan Documents or as required by law.

18. Additional Debtors. From time to time, additional Persons may become parties hereto, as additional Debtors (each, an "Additional Debtor") by executing and delivering to the Administrative Agent a Joinder Agreement substantially in the form of Exhibit I to the Credit Agreement, accompanied by a supplement in form of Schedule 2 hereto and such other such documentation as Administrative Agent may reasonably require in connection therewith, wherein such Additional Debtors agree to become a party hereto and to be bound hereby. Upon execution and delivery of any such Joinder Agreement to and acceptance thereof by Administrative Agent, notice of which is hereby waived by Debtors, each such Additional Debtor shall be as fully a party hereto as if such Additional Debtor were an original signatory hereto. Each Additional Debtor shall be deemed to have made the representations and warranties set forth in Paragraph 2 of this Agreement as of the date of its joinder. Each Debtor expressly agrees that its Secured Obligations and the Liens upon its property granted herein shall not be affected or diminished by the addition or release of Additional Debtors hereunder, nor by any election of Secured Parties not to cause any other Subsidiary of Borrower to become an Additional Debtor hereunder. This Agreement shall be fully effective as to any Debtor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Debtor hereunder. Each Debtor hereby authorizes Administrative Agent to attach a Pledge Agreement Supplement (and/or produce a composite of all such Pledge Agreement Supplements) reflecting Additional Debtors to this Agreement and agrees that all equity interests

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listed on any Pledge Agreement Supplement delivered to Administrative Agent shall for all purposes hereunder constitute Collateral

19. Extent of Obligations. Each Debtor hereby agrees that its obligations hereunder are independent of the obligations of each other Debtor, and a separate action or actions may be brought and prosecuted against each Debtor whether or not action is brought against another Debtor and whether or not any Debtor is joined in any such action or actions. Each Debtor hereby further agrees that from time to time, without notice or demand and without affecting or impairing in any way the rights of the Secured Parties with respect to the Collateral or the obligations of each Debtor hereunder, the Secured Parties may
(a) renew, compromise, extend, accelerate or change the time for payment or the terms of the Obligations, or any part thereof, (b) exchange, enforce, waive, release, apply and direct the order or manner of sale of any and all collateral for the obligations, including, without limitation, the Collateral, all as provided herein, and/or (c) release or substitute any Debtor, endorsers and guarantors. Each Debtor waives any right to require the Secured Parties to (i) proceed against any other Debtor, or (ii) proceed against or exhaust any security of any other Debtor held for its obligations, or (iii) pursue any other remedy whatsoever. Each Debtor waives any defense (other than payment in full of the Obligations) based upon or arising out of any defense of any other Debtor, including, without limitation, any defense based on or arising out of the disability or the cessation of liability of any Debtor or any other person, or the unenforceability of any other Debtor's obligations under any Loan Document or any part thereof from any cause. Each Debtor agrees that the Secured Parties may proceed against all or any portion of the Collateral for all or any portion of the Obligations, as the Secured Parties may elect, without regard to marshalling. Each Debtor acknowledges and agrees that the Secured Parties may foreclose on any security held by it by one or more judicial or nonjudicial sales, or exercise any right or remedy it may have against any other Debtor or security held by it for the Obligations, without affecting or impairing in any way the rights of the Secured Parties with respect to the Collateral or the obligations of each Debtor hereunder. Each Debtor waives any defense arising out of any such election by the Secured Parties, even though such election operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of each Debtor against any other Debtor or any such security. Until all Obligations shall have been paid in full, each Debtor shall not have any right of subrogation, and each Debtor waives any right to enforce any remedy which the Secured Parties now have or may hereafter have against each other Debtor and Subsidiary, and waives any benefit of, and any right to participate in any security now or hereafter held by the Secured Parties. Each Debtor further assumes all responsibility for being and keeping itself informed of each other Debtor's financial

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condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope and extent of the risk which each Debtor assumes and incurs hereunder, and agrees that the Secured Parties shall have no duty to advise each Debtor of information known to them regarding such circumstances or risks.

20. Limitation on Liability of Certain Debtors. Notwithstanding anything contained in this Agreement to the contrary, and except for the obligation of each Debtor to deliver the Collateral owned by such Debtor to Administrative Agent pursuant to the provisions hereof, in no event shall any Debtor who is a natural person have any personal liability with respect to the Obligations or any obligations, debt or other liabilities that may arise under this Agreement and Secured Parties recourse against such Debtor shall be limited solely to the Collateral owned by such Debtor.

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EXECUTED as of the day and year first above written.

"Debtors"

CALIFORNIA PIZZA KITCHEN, INC.

By   /s/ H.G. Carrington, Jr.
   --------------------------------------------
              H. G. Carrington, Jr.
     Executive Vice President, Chief Financial
              Officer and Secretary

CALIFORNIA PIZZA KITCHEN
OF ILLINOIS, INC.

By   /s/ Larry S. Flax
   --------------------------------------------
                 Larry S. Flax
            Secretary and Treasurer

     /s/ H.G. Carrington, Jr.
   --------------------------------------------
      H. G. Carrington, Jr., an individual

     /s/ Gregory S. Levin
   --------------------------------------------
         Gregory S. Levin, an individual

BANK OF AMERICA, N.A.,
as Administrative Agent

By: /s/ Patrick W. Zetzman
    -------------------------------------------
                Patrick W. Zetzman
                  Vice President

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SCHEDULE 1 TO PLEDGE AGREEMENT

CERTAIN COLLATERAL

Corporations (All stock common unless otherwise noted)

           Issuers                          Debtors                     Certificate         Par         No. of     Percent of
                                                                           Nos.            Value        Shares     Ownership
-------------------------       -----------------------------           -----------      ---------      ------    ------------
CPK Management Company          California Pizza Kitchen, Inc.               1              NPV           100            100%

California Pizza Kitchen        California Pizza Kitchen, Inc.               4              NPV           100            100%
of Illinois, Inc.

Cpk Beverage, Inc               California Pizza Kitchen, Inc.               3              NPV           490             49%

California Pizza Kitchen        California Pizza Kitchen, Inc.               5              NPV            97             97%
of Annapolis, Inc.
                                H. G. Carrington, Jr.                        6              NPV             1              1%

                                Gregory S. Levin                             7              NPV             1              1%

Partnerships

(All owned by California Pizza Kitchen Of Illinois, Inc.)

             Partnership                                                 Ownership interest
----------------------------------------                      -----------------------------------------
CPK I, Limited Partnership, an                                50% of general partnership interest
Illinois limited partnership

CPK Water Tower Limited Partnership,                          50% of general partnership interest
an Illinois limited partnership

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EXHIBIT 10.6

MASTER SUBSIDIARY GUARANTY

TO: Bank of America, N.A., as Administrative Agent

("Administrative Agent")

RECITALS

A. Reference is made to that certain Credit Agreement dated as of October 29, 1999 among California Pizza Kitchen, Inc., a California corporation ("Borrower"), Lenders from time to time party thereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and Issuing Lender and Bankers Trust Company, as Documentation Agent (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the "Agreement;" the terms defined therein being used herein as therein defined).

B. Each Guarantor is a direct or indirect Domestic Subsidiary of Borrower and has derived, and expects to continuing deriving, direct and indirect benefits from extensions of credit made to Borrower, and now desires to guaranty the Obligations

C. It is a requirement of the Credit Agreement that each direct or indirect Domestic Subsidiary of Borrower execute and delivery this Master Subsidiary Guaranty or a joinder hereto (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, this "Guaranty").

NOW, THEREFORE, each Guarantor agrees as follows:

1. For valuable consideration, each of the undersigned (together with Person becoming a party hereto pursuant to Paragraph 18 hereof, each, a "Guarantor" and collectively, "Guarantors") unconditionally, absolutely and irrevocably jointly and severally guarantees and promises to pay to Administrative Agent, or order, on demand, in lawful money of the United States and in immediately available funds, any and all present or future Obligations owing to Lenders, Issuing Lender, Indemnitees and Administrative Agent (collectively, the "Guarantied Parties"). The term Obligations has the meaning assigned to such term under the Credit Agreement and is used herein in its most comprehensive sense and includes any and all advances, debts, obligations, and liabilities of all Borrower Parties, now, or hereafter made, incurred, or created, whether voluntary or involuntarily, and however arising, including, without limitation, any and all attorneys' fees (including the allocated cost of inhouse counsel), costs, premiums, charges, or interest owed by any Borrower Party to any Guarantied Party under the Loan Documents, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, whether a Borrower Party may be liable individually or jointly with others, whether recovery upon such indebtedness may be or hereafter becomes barred by any statute of limitations or whether such indebtedness may be or hereafter become otherwise unenforceable.

2. This Guaranty is a continuing guaranty which relates to any Obligations, including those which arise under successive transactions which shall either cause a Borrower Party to incur new Obligations, continue the Obligations from time to time, or renew them after they have been satisfied. Each Guarantor agrees that nothing shall discharge or satisfy its

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obligations created hereunder except for the full payment of the Obligations. Any payment by any Guarantor shall not reduce its maximum obligation hereunder.

3. Each Guarantor agrees that it is directly and primarily liable to Administrative Agent for the benefit of Guarantied Parties, that its obligations hereunder are independent of the Obligations of any Borrower Party, or of any other guarantor, and that a separate action or actions may be brought and prosecuted against any Guarantor, whether action is brought against a Borrower Party or whether a Borrower Party is joined in any such action or actions. Each Guarantor agrees that any releases which may be given by Guarantied Parties to a Borrower Party or any other guarantor shall not release it from this Guaranty.

4. The obligations of each Guarantor under this Guaranty shall not be affected, modified or impaired upon the occurrence from time to time of any of the following, whether or not with notice to or the consent of any Guarantor (a) the compromise, settlement, change, modification, amendment (whether material or otherwise) or partial termination of any or all of the Obligations; (b) the failure to give notice to any Guarantor of the occurrence of any Event of Default under the terms and provisions of the Agreement; (c) the waiver of the payment, performance or observance of any of the Obligations; (d) the taking or omitting to take any actions referred to in any Loan Document or of any action under this Guaranty; (e) any failure, omission or delay on the part of Administrative Agent and/or Guarantied Parties to enforce, assert or exercise any right, power or remedy conferred in this Guaranty, the Credit Agreement, any other Loan Document or any other indulgence or similar act on the part of Administrative Agent and/or Guarantied Parties in good faith and in compliance with applicable law; (f) the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all of the assets, marshalling of assets, receivership, insolvency, bankruptcy, assignment for the benefit of creditors or readjustment of, or other similar proceedings which affect any Guarantor, any other guarantor of any of the Obligations of a Borrower Party or any of the assets of any of them, or any allegation of invalidity or contest of the validity of this Guaranty in any such proceeding; (g) to the extent permitted by law, the release or discharge of any other guarantors of the Obligations from the performance or observance of any obligation, covenant or agreement contained in any guaranties of the Obligations by operation of law; or
(h) the default or failure of any other guarantors of the Obligations fully to perform any of their respective obligations set forth in any such guaranties of the Obligations. To the extent any of the foregoing refers to any actions which Administrative Agent or Guarantied Parties may take, each Guarantor hereby agrees that Administrative Agent and/or Guarantied Parties may take such actions in such manner, upon such terms, and at such times as Administrative Agent or Guarantied Parties, in their discretion, deem advisable, without, in any way or respect, impairing, affecting, reducing or releasing any Guarantor from its undertakings hereunder and each Guarantor hereby consents to each and all of the foregoing actions, events and occurrences.

5. Each Guarantor hereby waives (a) any and all rights to require Guarantied Parties to prosecute or seek to enforce any remedies against a Borrower Party or any other party liable to Guarantied Parties on account of the Obligations; (b) any right to assert against Guarantied Parties any defense (legal or equitable), set-off, counterclaim, or claim which such Guarantor may now or at any time hereafter have against a Borrower Party or any other party liable to Administrative Agent or Guarantied Parties in any way or manner under the Credit Agreement; (c) all defenses, counterclaims and off-sets of any kind or nature, arising directly or indirectly

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from the present or future lack of perfection, sufficiency, validity or enforceability of any Loan Document and the security interest granted pursuant thereto; (d) any defense arising by reason of any claim or defense based upon an election of remedies by Administrative Agent or Guarantied Parties including, without limitation, any direction to proceed by judicial or nonjudicial foreclosure or by deed in lieu thereof, which, in any manner impairs, affects, reduces, releases, destroys or extinguishes such Guarantor's subrogation rights, rights to proceed against a Borrower Party for reimbursement, or any other rights of such Guarantor to proceed against a Borrower Party, against any other guarantor, or against any other security, with such Guarantor understanding that the exercise by Administrative Agent and/or Guarantied Parties of certain rights and remedies may offset or eliminate such Guarantor's right of subrogation against a Borrower Party, and that such Guarantor may therefore incur partially or totally non-reimbursable liability hereunder; (e) all presentments, demands for performance, notices of non-performance, protests, notices of protest, notices of dishonor, notices of default, notice of acceptance of this Guaranty, and notices of the existence, creation, or incurring of new or additional indebtedness, and all other notices or formalities to which such Guarantor may be entitled; and (f) without limiting the generality of the foregoing, such Guarantor hereby expressly waives any and all benefits of California Civil Code Sections 2809, 2810, 2819, 2825, 2839 and 2845 through 2850.

6. Each Guarantor hereby agrees that unless and until all Obligations have been paid to Guarantied Parties in full, it shall not have any rights of subrogation, reimbursement or contribution as against a Borrower Party or any other guarantor, if any, and shall not seek to assert or enforce the same. Each Guarantor understands that the exercise by Administrative Agent of certain rights and remedies contained in the Loan Documents may affect or eliminate such Guarantor's right of subrogation if any, against a Borrower Party and that such Guarantor may therefore incur a partially or totally non-reimbursable liability hereunder; nevertheless, such Guarantor hereby authorizes and empowers Guarantied Parties to exercise, in their sole discretion, any right and remedy, or any combination thereof, which may then be available, since it is the intent and purpose of such Guarantor that the obligations hereunder shall be absolute, independent and unconditional under any and all circumstances.

7. Each Guarantor is presently informed of the financial condition of each Borrower Party and of all other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Guarantor hereby covenants that it will continue to keep itself informed of the financial condition of each Borrower Party, the status of other guarantors, if any, and of all other circumstances which bear upon the risk of nonpayment. Each Guarantor hereby waives its right, if any, to require Administrative Agent or Guarantied Parties to disclose to it any information which Administrative Agent or any Lender may now or hereafter acquire concerning such condition or circumstances including, but not limited to, the release of any other guarantor.

8. Administrative Agent and each Lender's books and records evidencing the Obligations shall be admissible in any action or proceeding and shall be binding upon the Guarantors for the purpose of establishing the terms set forth therein and shall constitute prima facie proof thereof.

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9. Notwithstanding anything to the contrary contained herein, the obligations of each Guarantor hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code (Title 11, United States Code) or any comparable provisions of any applicable state law.

10. Each Guarantor represents and warrants for and with respect to itself that:

(a) Guarantor is a corporation duly organized, validly existing and in good standing under the Laws of the state of its incorporation, has the power and authority and the legal right to own and operate its properties, to lease the properties it operates and to conduct its business, is duly qualified and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, and is in compliance with all Laws except to the extent that noncompliance does not have a Material Adverse Effect.

(b) Guarantor has the power and authority and the legal right to make, deliver and perform this Guaranty and to authorize the execution, delivery and performance of this Guaranty. No consent or authorization of, filing with, or other act by or in respect of any Governmental Authority, is required in connection with the execution, delivery, performance, validity or enforceability of this Guaranty. This Guaranty has been duly executed and delivered by Guarantor, and constitutes a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as enforceability may be limited by applicable Debtor Relief Laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability.

(c) The execution, delivery, and performance by Guarantor of this Guaranty and compliance with the provisions hereof have been duly authorized by all requisite action on the part of Guarantor and do not and will not (i) violate or conflict with, or result in a breach of, or require any consent, except where such violation, conflict, breach or failure to obtain consent would not have a Material Adverse Effect, under (A) any Organization Documents of Guarantor or any of its Subsidiaries, (B) any applicable Laws, rules, or regulations or any order, writ, injunction, or decree of any Governmental Authority or arbitrator, or (C) any Contractual Obligation of Guarantor or any of its Subsidiaries or by which any of them or any of their property is bound or subject, (ii) constitute a default under any such agreement or instrument, except where such default would not have a Material Adverse Effect or (iii) result in, or require, the creation or imposition of any Lien on any material portion of the properties of Guarantor or any of its Subsidiaries.

(d) No litigation, investigation or proceeding of or before an arbitrator or Governmental Authority is pending or, to the best knowledge of Guarantor, threatened by or against Guarantor or any of its Subsidiaries or against any of their properties or revenues which, if determined adversely, could have a Material Adverse Effect.

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(e) The execution, delivery and performance by Guarantor of this Guaranty does not constitute, to the best knowledge of Guarantor, a "fraudulent conveyance," "fraudulent obligation" or "fraudulent transfer" within the meanings of the Uniform Fraudulent Conveyances Act or Uniform Fraudulent Transfer Act, as enacted in any jurisdiction.

11. All notices and other communications hereunder shall be delivered, in the manner and with the effect provided in the Credit Agreement and, in the case of Guarantors, in care of Borrower.

12. This Guaranty shall be binding upon the successors and assigns of each Guarantor and shall inure to the benefit of Administrative Agent's and Guarantied Parties' successors and assigns. This Guaranty cannot be assigned by any Guarantor without the prior written consent of Guarantied Parties which shall be in Guarantied Parties' sole and absolute discretion.

13. No failure or delay by Administrative Agent or Guarantied Parties in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

14. Guarantors shall jointly and severally pay (a) all reasonable out-of- pocket expenses of Guarantied Parties, including reasonable fees and disbursements of counsel (including the allocated cost of inhouse counsel and staff) for Administrative Agent, in connection with any waiver or consent hereunder or any amendment hereof and (b) all out-of-pocket expenses incurred by Guarantied Parties, including fees and disbursements of counsel (including the allocated cost of inhouse counsel and staff), in connection with the enforcement of this Guaranty (whether or not suit is brought).

15. No modification of this Guaranty shall be effective for any purpose unless it is in writing and executed by an officer of Administrative Agent authorized to do so. This Guaranty merges all negotiations, stipulations and provisions relating to the subject matter of this Guaranty which preceded or may accompany the execution of this Guaranty.

16. Any indebtedness of Borrower Parties now or hereafter held by any Guarantor is hereby subordinated to the indebtedness of Borrower Parties to Guarantied Parties; and after the occurrence and during the continuance of an Event of Default, such indebtedness of Borrower Parties to any Guarantor if Administrative Agent so requests shall be collected, enforced and received by each Guarantor as trustee for Guarantied Parties and be paid over to Administrative Agent on account of the indebtedness of Borrower Parties to Guarantied Parties but without reducing or affecting in any manner the liability of any Guarantor under the other provisions of this guaranty.

17. It is not necessary for Guarantied Parties to inquire into the powers of any Borrower Party or of the officers, directors or agents acting or purporting to act on their behalf, and any indebtedness made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder.

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18. Any Person becoming a Domestic Subsidiary shall become a Guarantor hereunder by executing and delivering a Joinder Agreement and by complying with the terms of Section 6.13 of the Credit Agreement. Upon Administrative Agent's receipt of a duly executed and delivered Joinder Agreement, this Guaranty shall be deemed amended to include such additional Person as a Guarantor, and such Person shall become a party hereto as through a signatory hereto, with no amendment or further action required hereunder, and thereafter, all references to Guarantors shall include such additional Person.

19. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

20. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

DATED AS OF: October 29, 1999

"Guarantors"

CPK MANAGEMENT COMPANY

      /s/ H.G. Carrington, Jr.
By ----------------------------
      H. G. Carrington, Jr.
     Chief Financial Officer
          and Secretary

CALIFORNIA PIZZA KITCHEN
OF ILLINOIS, INC.

        /s/ Larry S. Flax
By ----------------------------
          Larry S. Flax
     Secretary and Treasurer

Acknowledged:

BANK OF AMERICA,N.A.,as Administrative Agent

        /s/ Patrick W. Zetzman
By:---------------------------
          Patrick W. Zetzman
            Vice President

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EXHIBIT 10.9

SEVERANCE AGREEMENT

THIS SEVERANCE AGREEMENT ("Agreement") is made as of March 31, 1998 by and between California Pizza Kitchen, Inc., a California corporation (the "Company"), and Frederick R. Hipp, an individual (the "Executive").

WITNESSETH

A. The Company has retained the Executive to serve as the Company's President and Chief Executive Officer.

B. The Company and the Executive desire to enter into an agreement setting forth the consequences of certain methods of terminating the Executive's employment with the Company.

AGREEMENT

NOW, THEREFORE, for good and valuable consideration, the receipt of which is acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Definitions.

(a) "Base Salary" shall mean the amount of Executive's normal and customary base salary payable by the Company on each normal and c