##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.

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

(Mark One)

|       |  |                                                                                     
|------ |  | ------------------------------------------------------------------------------------
|[X]    |  | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|      
|       |  | For the fiscal year ended April 30, 2001                                            
|      
|       |  | or                                                                                  
|      
|[    ] |  | Transition Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934     
|      
|       |  | For the transition period from  to                                                  

Commission File No. 0-12226

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

|                                                                                                        |  |                                             
|------------------------------------------------------------------------------------------------------- |  | --------------------------------------------
|California
(state or other jurisdiction
of incorporation or organization)                               |  | 95-2693503
(IRS Employer Identification No.)
|                                                                                                       
|17383 Sunset Boulevard, Suite 140
Pacific Palisades, California
(Address of principal executive office) |  | 90272
(ZIP Code)                            

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

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)

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

Yes [X]    No [    ]

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

The aggregate market value of voting and non-voting common stock held by
non-affiliates of the Registrant based upon the average bid price in the
over-the-counter market on July 11, 2001 was approximately $37,219.

The number of outstanding shares of the Registrants Common Stock as of July 5,
2001 was 3,400,930.

Documents incorporated by reference: None





---

TABLE OF CONTENTS



|          |                                                                        |  |  |  |  |  |  | 
|--------- | ---------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART III 
|          | ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT            
|          | ITEM 11 EXECUTIVE COMPENSATION                                        
|          | ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|          | ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                
|SIGNATURE




PART III




ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors of the Registrant are as follows:

|                        |  |     |    |       |  |                                                                                      
|----------------------- |  | --- | -- | ----- |  | -------------------------------------------------------------------------------------
|Name                    |  | Age |    | Title
|                        |  |     |    |      
|Alan Redhead            |  |     | 58 |       |  | Chairman of the Board, President, Chief
Executive Officer and Chief Financial
Officer
|                       
|                       
|                       
|                       
|J. Christopher Lewis    |  |     | 45 |       |  | Director                                                                             
|                       
|                       
|                       
|                       
|Jefferson W. Asher, Jr. |  |     | 76 |       |  | Director                                                                             
|                       
|                       
|                       
|                       
|Richard P. Bermingham   |  |     | 66 |       |  | Director                                                                             
|                       
|                       
|                       
|                       
|Robert L. Morrison      |  |     | 54 |       |  | Director                                                                             

The executive officers of the Registrant are Mr. Redhead and Robert A.
Kissinger, age 46, Vice President and Chief Operating Officer. Directors hold
office until their term of office expires and their successors are elected and
qualified. Executive officers serve at the discretion of the Board of
Directors.

Alan Redhead joined the Registrant in June 1992 as its Chief Executive
Officer (CEO) and as a member of its Board of Directors and executive
committee. Mr. Redhead resigned as a member of the Board of Directors and the
Executive Committee in November 1992. Mr. Redhead subsequently re-joined the
Board of Directors in September 1993. He became Chairman of the Board in March
1995. In June 2000 he became the Registrants Chief Financial Officer. From
1986 to 1992, Mr. Redhead was involved in various restaurant businesses and a
non-profit organization. From 1974 to 1986 Mr. Redhead was with Hungry Tiger,
Inc., including 7 years as its CEO. Hungry Tiger Inc. owned and operated Hungry
Tiger Restaurants, Breakers Seafood Restaurants, Castagnolas Lobster House and
the restaurant and catering operations at the Los Angeles Music Center.

J. Christopher Lewis, a director of the Registrant since June 29, 1990 and
a member of its Audit Committee, has been associated with Riordan, Lewis and
Haden, a venture capital firm, for the past twenty years. He is currently a
director of Tetra Tech, Inc., Data Processing Resources Corporation, PIA
Merchandising Co. Inc., Steven Myers and Associates, Inc., and several
privately-held companies.

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

Richard P. Bermingham joined the Registrant as a member of the Board of
Directors on March 9, 1998 and is a member of its Audit Committee. From 1980 to
1994, Mr. Bermingham was with Collins Foods International, Inc., the parent
company of the Sizzler restaurant chain. Mr. Bermingham served Collins Foods
International, Inc., as a member of its Board of Directors from 1970 to 1994,
as President from 1980 to 1987, and as CEO from 1987 to 1994. From 1994 to
1997, Mr. Bermingham served as Vice Chairman and as a member of the Board of
Directors of American Golf Corporation, a privately-held company. Currently,
Mr. Bermingham is a director of Farr, Inc., and several privately-held
companies.

Robert L. Morrison joined the Registrant as a member of the Board of
Directors on December 15, 1997 and is a member of its Stock Plan and
Compensation Committees. Mr. Morrison is a partner at the law firm of Pillsbury
Madison & Sutro LLP, a firm he joined in 1972. Mr. Morrison is also a director
of the Friends of Child Advocates, a non-profit organization.

Robert A. Kissinger joined the Registrant in March 2000 as Vice President
and Chief Operating Officer and as President of Sea View Restaurants, Inc. and
General Manager of Gladstones 4 Fish. From 1997 to 2000 Mr. Kissinger served
as President/CEO of the Rosti group of restaurants owned and operated by
Farnigilia Toscana. From 1993 to 1997 he was Executive Vice President and
Chief Operating Officer of Louises Trattoria.

2



---



##### Table of Contents



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

During the year ended April 30, 2001, the Registrant paid Board of
Directors fees of $500 per meeting attended for each outside Board member.

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

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

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws of the United States, the Registrants
directors, its executive (and certain other) officers, and any persons holding
more than ten percent of the Common Stock are required to report their
ownership of the Common Stock and any changes in that ownership to the
Securities and Exchange Commission (Commission). Specific due dates for these
reports have been established and the Registrant is required to report in this
document any failure to file by these dates during the fiscal year ended April
30, 2001. All of these filing requirements were satisfied by its directors,
officers and ten percent holders, except that Robert A. Kissinger, Vice
President and Chief Operating Officer of the Registrant, filed late his initial
ownership report on Form 3. In making these statements, the Registrant has
relied on the written representations of its directors, officers and its ten
percent holders and copies of the reports that they have filed with the
Commission.




ITEM 11 EXECUTIVE COMPENSATION

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

SUMMARY COMPENSATION TABLE

|                            |                             |             |      |            |  |           |                     |                  |        |  |   |   |  |                       |              |   | 
|--------------------------- | --------------------------- | ----------- | ---- | ---------- |  | --------- | ------------------- | ---------------- | ------ |  | - | - |  | --------------------- | ------------ | - | 
|                            |                             |             |      |            |  |           |                     |                  |        |  |   |   |  |                       | Long Term   
|                            |                             |             |      |            |  |           |                     |                  |        |  |   |   |  |                       | Compensation
|                            |                             |             |      |            |  |           | Annual Compensation |                  | Awards
|                            |                             |             |      |            |  |           |                     |                  |       
|                            |                             |             |      |            |  |           |                     |                  |        |  |   |   |  | Securities Underlying
|Name and Principal Position |                             | Fiscal Year |      | Salary ($) |  | Bonus ($) |                     | Options/SARs (#)
|                            |                             |             |      |            |  |           |                     |                 
|Alan Redhead, Chairman      |                             |             | 2001 |            |  | $         | 207,642             |                  |        |  |  |   |  |                       |             |  
|                           
|                           
|                           
|                           
|                            | of the Board, President,    |             |      | 2000       |  |           | $                   | 219,646          |        |  |   |  |  |                       |              |  | 
|                           
|                           
|                           
|                           
|                            | Chief Executive Officer     |             |      | 1999       |  |           | $                   | 218,953          |        |  |   |  |  |                       |              |  | 
|                           
|                           
|                           
|                           
|                            | and Chief Financial
Officer |             |      |            |  |           |                     |                  |        |  |   |   |  |                       |              |   | 
|                           
|                           
|                           
|                           
|Robert A. Kissinger,        |                             |             | 2001 |            |  | $         | 107,711             |                  |        |  |  |   |  |                       | 110,000      |  
|                           
|                           
|                           
|                           
|                            | Vice President and          |             |      | 2000       |  |           | $                   | 16,154           |        |  |   |  |  |                       |              |  | 
|                           
|                           
|                           
|                           
|                            | Chief Operating Officer     |             |      | 1999       |  |           | $                   |                 |        |  |   |  |  |                       |              |  | 

3



---



##### Table of Contents



Option Grants in Last Fiscal Year

The following sets forth certain information concerning individual grants
of stock options during the fiscal year ended April 30, 2001 to each of the
Registrants executive officers. No SARs were granted in the fiscal year ended
April 30, 2001:

OPTION/SAR GRANTS IN LAST FISCAL YEAR

|                    |  |              |         |              |     |             |    |                 |     |   |     |  |     |               |  | 
|------------------- |  | ------------ | ------- | ------------ | --- | ----------- | -- | --------------- | --- | - | --- |  | --- | ------------- |  | 
|                    |  | Number of    |         | % of Total   |     |             |    |                 |     |   |     | 
|                    |  | Securities   |         | Options/SARS |     |             |    |                 |     |   |     | 
|                    |  | Underlying   |         | Granted to   |     | Exercise or |    |                 |     |  
|                    |  | Options/SARs |         | Employees in |     | Base Price  |    |                 |     |  
|Name                |  | Granted(#)   |         | Fiscal Year  |     | ($/Share)   |    | Expiration Date
|                    |  |              |         |              |     |             |    |                
|Alan Redhead        |  | None         |         |              | N/A |             |    |                 | N/A |   |     |  | N/A |              
|                   
|                   
|                   
|                   
|Robert A. Kissinger |  |              | 110,000 |              |     |             | 56 | %               |     | $ | .90 |  |     | June 16, 2010

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

No options were exercised in the fiscal year ended April 30, 2001. The
following table sets forth certain information concerning executive officers
and the aggregated fiscal year-end value of the unexercised options of each of
the named executive officers.

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

|                    |  |             |  |             |   |             |  |               |         |                        |  |                           |        |  |  |   |   |  |  |   |   |  |  | 
|------------------- |  | ----------- |  | ----------- | - | ----------- |  | ------------- | ------- | ---------------------- |  | ------------------------- | ------ |  |  | - | - |  |  | - | - |  |  | 
|                    |  |             |  |             |   |             |  |               |         | Number of              |  |                           |        |  |  |   |   | 
|                    |  |             |  |             |   |             |  |               |         | Securities Underlying  |  |                           |        |  |  |   |   | 
|                    |  |             |  |             |   |             |  |               |         | Unexercised            |  | Value of Unexercised     
|                    |  |             |  |             |   |             |  |               |         | Options/SARs at Fiscal |  | In the Money Options/SARs
|                    |  |             |  |             |   |             |  |               |         | Year-End (#)           |  | at Fiscal Year-End ($)(1)
|                    |  |             |  |             |   |             |  |               |         |                        |  |                          
|                    |  | Shares      |  |             |   |             |  |               |         |                        |  |                           |        |  |  |   |   |  |  |   |   | 
|                    |  | Acquired on |  | Value       |   |             |  |               |         |                        |  |                           |        |  |  |   |   |  |  |  
|Name                |  | Exercise(#) |  | Realized($) |   | Exercisable |  | Unexercisable |         | Exercisable            |  | Unexercisable            
|                    |  |             |  |             |   |             |  |               |         |                        |  |                          
|Alan Redhead        |  | None        |  | $           |  |             |  |               | 335,000 |                        |  | $                         |       |  |  | $ |  |  |  | $ |  | 
|                   
|                   
|                   
|                   
|Robert A. Kissinger |  | None        |  | $           |  |             |  |               | 20,625  |                        |  |                           | 89,375 |  |  | $ |  |  |  | $ |  | 



---

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

Other Compensation Agreements

Effective November 14, 1997, the Registrant entered into an employment
agreement with Alan Redhead, the Registrants Chief Executive Officer. The
agreement sets forth certain of the terms of employment, including the right to
receive twelve months of salary as severance pay upon (i) termination of
employment without cause (as defined in the agreement) or (ii) resignation for
good reason (as defined in the agreement). The term of Mr. Redheads agreement
was three years. Mr. Redheads agreement has been extended for an additional
year for 70% of his time, and his current base salary is $159,000, subject to
annual cost of living adjustments.

For purposes of Mr. Redheads employment agreement, cause is defined to
mean (i) the willful engaging by the employee in misconduct which is or could
reasonably be expected to become materially injurious to the Registrant,
monetarily or otherwise; (ii) conviction of a felony or any crime involving
moral turpitude; or (iii) participation in any fraud against or theft from the
Registrant. Good reason is defined to mean (i) the failure of the Registrant
to vest the employee with the powers and authority of his office or any removal
of the employee from or failure to re-elect the employee to his office; (ii) a
reduction by the Registrant in the employees base salary; (iii) the
requirement by the Registrant that the employee be based anywhere other than
within 25 miles of the employees present office location; (iv) the disposition
of the business of the Registrant; or (v) a failure by the Registrant to comply
with any material provision, or group of provisions that are material in the
aggregate, of the

4



---



##### Table of Contents



employment agreement.

Effective March 6, 2000, the Registrant entered into an employment
agreement with Robert A. Kissinger, the Registrants Vice President and Chief
Operating Officer, President of
Sea View Restaurants, Inc. and General Manager of Gladstones 4 Fish. The
agreement sets forth certain of the terms of employment, including a base
salary of $105,000 (which currently is $115,000) and the right to receive six
months salary as severance pay upon (i) termination of employment without
cause (as defined in the agreement), or (ii) resignation for good reason (as
defined in the agreement).

Officers of the Registrant are entitled to a bonus of 20% of their salary
if the Registrants annual earnings, before interest, taxes, depreciation and
amortization (EBITDA) are $800,000 or greater; 25% of their salary if $825,000
or greater; or 30% of their salary if $850,000 or greater.

The Omnibus Stock Plan

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

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

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

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

5



---



##### Table of Contents



outstanding voting
securities entitled to vote generally in the election of directors, but
excluding, for this purpose, any such acquisition by the Registrant or any of
its subsidiaries, or any employee benefit plan (or related trust) of the
Registrant or its subsidiaries, or any corporation with respect to which,
following such acquisition, more than 60% of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners of the voting
securities of the Registrant immediately prior to such acquisition in
substantially the same proportion as their ownership, immediately prior to
such acquisition, of the then outstanding combined voting power of the then
outstanding voting securities of the Registrant entitled to vote generally in
the election of directors.

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

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

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

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

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

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

6



---



##### Table of Contents



422 of the Code, or any successor provision, and the par
value of a share of Common Stock as to other options.

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

In addition, the Plan authorizes the Committee to grant stock appreciation
rights (SAR). No SARs have been granted under the Plan.

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

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

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

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

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

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

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

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

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

7



---



##### Table of Contents



Private Placement and Debt Restructurings.




ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth information as to the shares of the Common
Stock owned as of August 1, 2001 by (i) each person known to the Registrant to
be the beneficial owner of more than five percent of the Common Stock, (ii)
each director, (iii) each executive officer named in the summary compensation
table, and (iv) all directors and executive officers of the Registrant as a
group. Unless otherwise indicated in the footnotes following the table, the
persons as to whom the information is given had sole voting and investment
power over the shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.

|                                                                                                 |  |                                   |           |             |  |  |      |  
|------------------------------------------------------------------------------------------------ |  | --------------------------------- | --------- | ----------- |  |  | ---- | -
|                                                                                                 |  | Amount of Beneficial Ownership(1)
|                                                                                                 |  |                                  
|Name and Address of Beneficial Owners                                                            |  | No. Shares                        |           | % Ownership
|                                                                                                 |  |                                   |           |            
|Bank of America National Trust and Savings Association                                           |  |                                   | 1,200,000 |             |  |  | 35.3 | %
|555 California Street, 18th Floor
Department 15027
San Francisco, CA 94104                       |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Eli Broad                                                                                        |  |                                   | 753,345   | (2)         |  |  | 19.2 | %
|1999 Avenue of the Stars, Suite 3170
Los Angeles, CA 90067                                       |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Sand and Sea Partners                                                                            |  |                                   | 1,116,228 | (3)         |  |  | 26.5 | %
|300 S. Grand Avenue, 29th Floor
Los Angeles, CA 90071                                            |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Sea Fair Partners                                                                                |  |                                   | 332,478   | (3)         |  |  | 9.8  | %
|300 South Grand Avenue, 29th Floor
Los Angeles, CA 90071                                         |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|J. Christopher Lewis                                                                             |  |                                   | 1,448,706 | (3)         |  |  | 34.4 | %
|300 South Grand Avenue, 29th Floor
Los Angeles, CA 90071                                         |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Alan Redhead                                                                                     |  |                                   | 785,600   | (4)         |  |  | 20.5 | %
|California Beach Restaurants, Inc.
17383 Sunset Boulevard, Suite 140
Pacific Palisades. CA 90272 |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Jefferson W. Asher, Jr.                                                                          |  |                                   | 88,250    | (5)         |  |  | 2.6  | %
|4765 Park Encino Lane, #134
Encino, CA 91436                                                     |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Richard P. Bermingham                                                                            |  |                                   | 0         |             |  |  | 0    | %
|2105 Stoney Hill Road
Los Angeles, CA 90049                                                      |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Robert L. Morrison                                                                               |  |                                   | 0         |             |  |  | 0    | %
|725 Figueroa St., Suite 1200
Los Angeles, CA 90017                                               |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|John C. Cushman III                                                                              |  |                                   | 426,394   | (6)         |  |  | 12   | %
|601 S. Figueroa St., 47th Floor
Los Angeles, CA 90017-5752                                       |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Robert A. Kissinger                                                                              |  |                                   | 20,625    | (7)         |  |  | *    |  
|California Beach Restaurants, Inc.
17383 Sunset Boulevard, Suite 140
Pacific Palisades, CA 90272 |  |                                   |           |             |  |  |      |  
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|All directors and executive officers as a group (6 persons)                                      |  |                                   | 2,343,181 | (8)         |  |  | 49.5 | %



---

|*   |  | Denotes holdings of less than 1%                                                                                                                                                  
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(1) |  | The number of shares and percentages in these columns are based on
3,400,930 shares of Common Stock outstanding.                                                                  
|   
|   
|   
|   
|(2) |  | Includes 525,000 shares of Common Stock that are subject to a currently
convertible note.                                                                                         
|   
|   
|   
|   
|(3) |  | J. Christopher Lewis, a director of the Company, is the general partner
and a limited partner of Sand and Sea Partners and Sea Fair Partners,
which together own 634,956 shares of

8



---



##### Table of Contents



|    |  | Common Stock; in addition, Sand and
Sea Partners is deemed the beneficial owner of an additional 813,750
shares of
Common Stock that are subject to a currently convertible note.
Mr. Lewis disclaims beneficial ownership of the shares owned by such
partnerships, except with respect to (i) 25,268 shares which represent a
limited partnership interest in each partnership of approximately 3.8% and
(ii) an additional undetermined number of such shares by virtue of his
rights as a general partner under the limited partnership agreement. As
general partner of such partnership, Mr. Lewis may have the power to
direct the voting or disposition of such shares and therefore may be
deemed to beneficially own all the shares held by such partnerships.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(4) |  | Includes currently exercisable options to purchase 335,000 shares of
Common Stock issued under the Omnibus Stock Plan, and 105,000 shares of
Common Stock that are subject to a currently convertible note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|   
|   
|   
|(5) |  | Includes currently exercisable options to purchase 32,000 shares of
Common Stock issued under the Omnibus Stock Plan and 26,250 shares of
Common Stock that are subject to a currently convertible note owned by a
family trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|   
|   
|   
|(6) |  | Includes 128,911 shares held by Cushman Sea View Partners, a California
general partnership, 85,938 shares held by Cushman K Sea View Partners,
and 54,045 shares held by the Cushman Family Trust. The Cushman Family
Trust is deemed the beneficial owner of an additional
157,500 shares of Common Stock that are subject to a currently convertible
note. Mr. Cushman is a general partner in Cushman Sea View Partners and
Cushman K Sea View Partners and may be deemed to beneficially own Cushman
Equities Corporation, which is also a general partner of such partnerships.                                                                                                                                                                                   
|   
|   
|   
|   
|(7) |  | Includes currently exercisable options to purchase 20,625 shares of
Common Stock issued under the Omnibus Stock Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|   
|   
|   
|(8) |  | Includes currently exercisable options to purchase 387,625 shares of
Common Stock issued under the Omnibus Stock Plan and 945,000 shares of
Common Stock that are subject to a currently convertible note.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              




ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

December 1994 Private Placement and Debt Restructurings

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

Additionally, Sea View was the issuer of a certain Contingent Promissory
Note (Contingent Note) payable to jojos Restaurant, Inc., a wholly-owned
subsidiary of Family Restaurants, Inc. (collectively FRI). The Contingent
Note became payable upon the renewal of the Concession Agreement between Sea
View and the County of Los Angeles with respect to the Registrants Gladstones
4 Fish restaurant. The Contingent Note was in the principal amount of
$5,000,000 with contingent accrued interest of 12.5% from April 2, 1990 of
approximately $4,000,000. The

9



---



##### Table of Contents



Registrant and Sea View were in default under the
Loan, and in the event of the renewal of the Concession Agreement, would be
unable to pay the Contingent Note. The Bank required as a condition to the debt
restructuring that the Contingent Note be settled. Accordingly, as part of the
debt restructuring, the Registrant paid FRI $500,000 on December 22, 1994 in
full satisfaction of the Contingent Note.

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

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

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

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

10



---



##### Table of Contents



Also, the Registrant and the Bank entered into an Amendment to Stock
Purchase Agreement dated as of August 1, 1995 (Amendment), amending the Stock
Purchase Agreement by providing that the Registrant would, no later than
November 15, 1995, register for resale the Common Stock held by the Bank
pursuant to Rule 415 under the Securities Act and would file amendments in
order to update it at any time for up to two years when requested in writing by
the Bank, with the Registrant bearing all the expenses of such registration and
updates up to certain limits. The Offering effected such registration. The
purchasers of Series A Preferred Stock and Notes in the December 1994 private
placement included in the Offering the shares of Common Stock received by them
(i) upon conversion of the Series A Preferred Stock in connection with the
Reverse Stock Split and (ii) to the extent the proceeds of the Subscription
Rights Offering did not fully redeem the Notes. Certain other shareholders of
the Registrant who had registration rights were also afforded an opportunity to
include shares in the Offering, subject to the terms and conditions of such
registration rights. The Registrant also agreed, in the Amendment, to issue the
Bank securities equivalent in form if more than 600,000 shares of Common Stock
in the aggregate are issued by the Registrant under the Registrants Omnibus
Stock Plan or other similar plan, or otherwise, to directors, officers,
employees, consultants, or other persons providing services to the Registrant
for so long as the Bank or its permitted successor holds not less than 75% of
the shares of Common Stock currently held by the Bank. Until August 1, 1996,
the Bank would have paid only nominal consideration for any stock issued
pursuant to the Amendment, and thereafter would, with certain exceptions, pay
the same consideration as provided in any such issuance of shares in excess of
the 600,000 share amount. See Executive Compensation  The Omnibus Stock Plan.

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

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

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

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

As a condition to the closing of the Stock Purchase Agreement and the
Securities Purchase Agreement, Sand and Sea Partners, Sea Fair Partners and the
Bank entered into a Shareholders and Noteholders Agreement dated as of December
22, 1994 (the Shareholders Agreement) pursuant to which Sand and Sea Partners
and Sea Fair Partners agreed to vote their shares of the Registrant in a manner
that would elect to the Board of Directors of the Registrant two individuals
designated by the Bank until such time as the Bank holds less than 75% of its
current holdings in Common Stock or repayment in full of the Registrants
$3,400,000 indebtedness to the Bank. The Registrants three directors also
agreed under the Shareholders Agreement, when requested by the Bank, to take
all Board action and all steps necessary to assist shareholder action in order
to elect two designees of the Bank to the Board of Directors, including
increasing the size of

11



---



##### Table of Contents



the Board to six. Two Bank nominees were elected to the
Board of Directors at the April 28, 1995 Annual Meeting of Shareholders. Such
directors later resigned. The Shareholders Agreement is subject to the
shareholders agreement dated April 10, 1990 (1990 Shareholders Agreement)
among Sand and Sea Partners, Sea Fair Partners, John C. Cushman, III, and other
investors in a 1990 private placement of Common Stock in the Registrant. The
1990 Shareholders Agreement provides that Sand and Sea Partners, Sea Fair
Partners and other investors will cause certain representatives of the investor
group to be nominated to the Board. During the fiscal year ended April 30,
1998, the balance of the Loan owed to the Bank was paid in full.

Certain Registration Rights

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

In connection with the March 1999 note offering referenced below, the
Registrant afforded such purchasers certain incidental and demand registration
rights with respect to the securities of the Registrant acquired thereunder.

Certain Compensation Arrangements

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

Certain Financing Arrangements

On November 24, 1997, Sea View entered into a one-year, $1,000,000
unsecured line of credit agreement with Outside LLC, an entity affiliated J.
Christopher Lewis, one of the Registrants principal shareholders and a member
of its Board of Directors. Interest of 10% was paid on all amounts borrowed,
as well as a commitment fee of 1.25% of the total line. The line was
guaranteed by the Registrant and was paid in full on March 30, 1999. The line
was used by Sea View for seasonal working capital needs as well as for certain
renovations to Gladstones.

The terms of the 1997 20-year concession agreement between the County of
Los Angeles and Sea View, as amended, require Sea View to post a $2,000,000
letter of credit as a security deposit for rental payments due to the County.
In the event that rents are not paid when due, the County may draw upon the
letter of credit. The Registrant posted the letter of credit by utilizing cash
collateral provided by Overhead Partners, L.P. (Overhead), an entity
affiliated with J. Christopher Lewis. The collateral support of the letter of
credit was extended through July 31, 1999. In consideration of providing the
cash collateral, the Registrant paid Overhead 480,000 for the period November
1, 1997 through April 30, 1998, and $200,000 for the period May 1, 1998 through
April 30, 1999. In the event that any amounts are drawn down on the letter of
credit, such amounts will automatically convert into a debt obligation of the
Registrant, payable with interest ninety days (or earlier under certain
circumstances) from the date of such conversion.

On March 30, 1999, the Registrant completed a private offering of
$1,800,000 of subordinated, convertible notes (Subordinated Notes) to a
limited number of existing shareholders of the Registrant who are accredited
investors within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended. The proceeds of the offering were

12



---



##### Table of Contents



used to retire
existing indebtedness to Outside LLC, and to finance the renovations at
Gladstones. The Subordinated Notes are immediately convertible into common
stock of the Registrant at a rate of $1 per share, and pay interest at 5% per
annum. The Registrant may pay interest on the Subordinated Notes in cash or in
kind. All interest due as of March 31, 2001 was paid in kind by issuing a note
with identical terms to the Subordinated Notes. The Subordinated Notes mature
on March 30, 2003; provided, however, that the holders of the Subordinated
Notes may elect to receive payment for fifty percent of the principal of the
outstanding Subordinated Notes on March 30, 2002 to the extent debt outstanding
to Lyon Credit Corporation  Senior Debt  has been paid in full. Purchasers
included Alan Redhead, the Registrants Chairman of the Board and Chief
Executive Officer, who purchased $100,000 of Subordinated Notes; Sand and Sea
Partners, an over 5% shareholder of the Registrant and which is affiliated with
J. Christopher Lewis, which purchased $775,000 of Subordinated Notes; a family
trust of which Jefferson W. Asher, Jr., a director of the Registrant, is
trustee, which purchased $25,000 of Subordinated Notes; Eli Broad, an over 5%
shareholder of the Registrant, who purchased $500,000 of Subordinated Notes;
and a family trust of which John C. Cushman III, who may be deemed an over 5%
shareholder of the Registrant, is trustee, which purchased $150,000 of
Subordinated Notes.

On March 22, 2000, Sea View entered into a four-month, $250,000 line of
credit agreement with Space Partners, an entity affiliated with J. Christopher
Lewis. This agreement provided for interest of 10% on all amounts borrowed,
required a commitment fee of $2,500 and was guaranteed by the Registrant.
Interest expense associated with the agreement totaled $1,666 for fiscal year
2000. At April 30, 2000, the outstanding balance was $100,000. During fiscal
year 2001 the entire borrowed amount was repaid.

13



---



##### Table of Contents






SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Los Angeles, in the State of California, on August 27, 2001.

| |                                                                   |                 
| | ----------------------------------------------------------------- | ----------------
| | CALIFORNIA BEACH RESTAURANTS, INC.                               
|
| | By:                                                               | /s/ Alan Redhead
| |                                                                  
| | Alan Redhead, Chief Executive Officer
and Chief Financial Officer

14