Incorporated under the laws                           of the State of California

        NUMBER                                                   SHARES
    [            ]                                           [             ]

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CHICAGO PIZZA & BREWERY, INC.

IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO
AFFIXED
      THIS ______________ DAY                   OF ________, A.D. 19___

________________________           [SEAL]       ___________________________
               SECRETARY                                         PRESIDENT

DRAFT OF
AUGUST 19, 1996

WARRANT AGREEMENT

This WARRANT AGREEMENT, dated this ___ day of ____, 1996, by and among CHICAGO PIZZA & BREWERY, INC., a California corporation (the "Company"), THE BOSTON GROUP, L.P. (the "Representative") and U.S. STOCK TRANSFER CORPORATION, a California corporation.

WITNESSETH:

WHEREAS, in connection with (i) the offering to the public (the "Public Offering") of One Million Five Hundred Thousand (1,500,000) shares (the "Shares") of the Company's common stock, no par value (the "Common Stock") and One Million Five Hundred Thousand (1,500,000) redeemable warrants (the "Warrants"), each Warrant entitling the holder thereof to purchase one share of Common Stock (the "Warrant Stock") pursuant to that certain Underwriting Agreement (the "Underwriting Agreement") dated __________, 1996 between the Company and the Representative, as representative of the several underwriters named therein (the "Underwriters"); (ii) the over-allotment option (the "Over- Allotment Option") granted to the Underwriters in connection with the Public Offering to purchase up to an additional Two Hundred Twenty Five Thousand
(225,000) Shares and Two Hundred Twenty Five Thousand (225,000) Warrants; (iii)
the automatic conversion of Ten Million Fourteen Thousand Five Hundred Eighty Four (10,014,584) outstanding warrants (which includes Four Million Seven Hundred Thousand (4,700,000) special warrants (the "Special Warrants")) in accordance with their terms, into Warrants; and (iv) the issuance of a warrant to the Representative (the "Representative's Warrant") exercisable to purchase One Hundred Fifty Thousand (150,000) shares of Common Stock and One Hundred Fifty Thousand (150,000) Warrants, the Company will have outstanding a total of Eleven Million Eight Hundred Eighty Nine Thousand Five Hundred Eighty Four (11,889,584) Warrants, (subject to increase as provided herein (as such term is defined in SECTION 1(u) hereof));

WHEREAS, the Company desires to provide for the issuance of certificates representing the Warrants; and

WHEREAS, the Company desires U.S. Stock Transfer Corporation to act on behalf of the Company, and U.S. Stock Transfer Corporation is willing to so act, in connection with the issuance, registration, transfer and exchange of certificates representing the Warrants and the exercise of the Warrants.

NOW, THEREFORE, in consideration of the premises and the mutual agreements

hereinafter set forth and for the purpose of defining the terms and provisions of the Warrants and the certificates representing the Warrants and the respective rights and obligations thereunder of the Company, the Underwriters, the holders of certificates representing the Warrants and U.S. Stock Transfer Corporation, the parties hereto agree as follows:

SECTION 1. DEFINITIONS. As used herein, the following terms shall have the following meanings, unless the context shall otherwise requires:

(a) "Act" shall have the meaning assigned to such term in SECTION 5(b) of this Agreement.

(b) "Change of Shares" shall have the meaning assigned to such term in SECTION 8(a)(i) of this Agreement.

(c) "Commission" shall have the meaning assigned to such term in
SECTION 5(b) of this Agreement.

(d) "Common Stock" shall mean stock of the Company of any class, whether now or hereafter authorized, which has the right to participate in the voting and in the distribution of earnings and assets of the Company without limit as to amount or percentage.

(e) "Company" shall have the meaning assigned to such term in the first (1st) paragraph of this Agreement.

(f) "Corporate Office" shall mean the office of the Warrant Agent (as such term is defined in SECTION 1(y) hereof) at which at any particular time its principal business shall be administered, which office is located on the date hereof at 1745 Gardena Avenue, Glendale, California 91204-2991.

(g) "Exchange Act" shall have the meaning assigned to such term in
SECTION 4(b) of this Agreement.

(h) "Exercise Date" shall mean, subject to the provisions of Section 5(b) hereof, as to any Warrant, the date on which the Warrant Agent shall have received both (i) the Warrant Certificate representing such Warrant, with the exercise form thereon duly executed by the Registered Holder (as such term is defined in SECTION 1(o) hereof) thereof or his attorney duly authorized in writing, and (ii) payment in cash or by check made payable to the Warrant Agent for the account of the Company of the amount in lawful money of the United States of America equal to the applicable Purchase Price (as such term is defined in SECTION 1(l) hereof).

(i) "Initial Warrant Exercise Date" shall mean _____________, 1997
[ONE YEAR AFTER EFFECTIVE DATE].

(j) "Initial Warrant Redemption Date" shall mean _____________, 1997
[ONE YEAR AFTER EFFECTIVE DATE].

(k) "NASD" shall have the meaning assigned to such term in SECTION 4(b) hereof.

(l) "Over-Allotment Option" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(m) "Purchase Price" shall mean, subject to modification and adjustment as provided in SECTION 8 hereof, ____ dollars and _____ cents ($____) per share of Common Stock [110% OF IPO PRICE].

(n) "Redemption Date" shall have the meaning assigned to such term in
Section 9(c) hereof.

(o) "Registered Holder" shall mean the person in whose name any certificate representing the Warrants shall be registered on the books maintained by the Warrant Agent pursuant to SECTION 6 hereof.

(p) "Representative" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(q) "Representative's Warrant" shall mean the warrant issued by the Company to the Representative to purchase up to One Hundred Fifty Thousand
(150,000) shares of Common Stock and up to One Hundred Fifty Thousand (150,000) Warrants pursuant to the Representative's Warrant Agreement.

(r) "Representative's Warrant Agreement" shall mean the agreement dated as of ______, 1996 between the Company and the Representative relating to and governing the terms and provisions of the Representative's Warrant.

(s) "Selling Security Holders" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(t) "Shares" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(u) "Subsidiary" or "Subsidiaries" shall mean any corporation or corporations, as the case may be, of which stock having ordinary power to elect a majority of the Board of Directors of such corporation or corporations (regardless of whether or not at the time the stock of any other class or classes of such corporation shall have or may have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by the Company

or by one or more Subsidiaries, or by the Company and one or more Subsidiaries.

(v) "Transfer Agent" shall mean U.S. Stock Transfer Corporation, Glendale, California, or its authorized successor.

(w) "Underwriters" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(x) "Underwriting Agreement" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(y) "Warrant Agent" shall mean U.S. Stock Transfer Corporation, Glendale, California, Colorado or its authorized successor.

(z) "Warrant Certificate" shall mean a certificate representing each of the Warrants substantially in the form annexed hereto as EXHIBIT A.

(aa) "Warrant Expiration Date" shall mean, unless the Warrants are redeemed as provided in Section 9 hereof prior to such date, 5:00 p.m. (California time) on _________, 2002 [54 MONTHS AFTER THE ONE YEAR ANNIVERSARY OF THE EFFECTIVE DATE], or, if such date shall in the State of California be a holiday or a day on which banks are authorized to close, then 5:00 p.m. (California time) on the next following day which in the State of California is not a holiday or a day on which banks are authorized to close, subject to the Company's right, prior to the Warrant Expiration Date, in its sole discretion, to extend such Warrant Expiration Date on five (5) business days prior written notice to the Registered Holders.

(bb) "Warrants" shall have the meaning assigned to such term in the first (1st) WHEREAS clause of this Agreement.

(cc) "Warrant Stock" shall mean the shares of Common Stock issuable upon exercise of the Warrants.

SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.

(a) Each Warrant shall initially entitle the Registered Holder of the Warrant Certificate representing such Warrant to purchase at the Purchase Price therefor from the Initial Warrant Exercise Date until the Warrant Expiration Date one (1) share of Common Stock upon the exercise thereof, subject to modification and adjustment as provided in SECTION 8 hereof.

(b) Upon execution of this Agreement, Warrant Certificates representing up to Eleven Million Seven Hundred Thirty Four Thousand Five Hundred Eighty Four (11,734,584) Warrants to purchase up to an aggregate of Eleven Million Seven Hundred Thirty Four Thousand Five Hundred Eighty Four (11,734,584) shares of Common Stock (subject to modification and

adjustment as provided in SECTION 8 hereof), shall be executed by the Company and delivered to the Warrant Agent.

(c) Upon exercise of the Over-Allotment Option, in whole or in part, Warrant Certificates representing up to Two Hundred Twenty Five Thousand (225,000) Warrants to purchase up to an aggregate of Two Hundred Twenty Five Thousand (225,000) shares of Common Stock (subject to modification and adjustment as provided in SECTION 8 hereof) shall be executed by the Company and delivered to the Warrant Agent.

(d) From time to time, up to the Warrant Expiration Date, as the case may be, the Warrant Agent shall countersign and deliver Warrant Certificates in required denominations of one or whole number multiples thereof to the person entitled thereto in connection with any transfer or exchange permitted under this Agreement. No Warrant Certificates shall be issued except (i) Warrant Certificates initially issued hereunder, (ii) Warrant Certificates issued upon any transfer or exchange of Warrants, (iii) Warrant Certificates issued in replacement of lost, stolen, destroyed or mutilated Warrant Certificates pursuant to SECTION 7 hereof, and (iv) at the option of the Company, Warrant Certificates in such form as may be approved by its Board of Directors, to reflect any adjustment or change in the Purchase Price, the number of shares of Common Stock purchasable upon the exercise of a Warrant or the redemption price therefor.

SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATES.

(a) The Warrant Certificates shall be substantially in the form annexed hereto as Exhibit A (the provisions of which are hereby incorporated herein) and may have such letters, numbers or other marks of identification or designation and such legends, summaries or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange or securities association on which the Warrants may be listed, or to conform to usage. The Warrant Certificates shall be dated the date of issuance thereof (whether upon initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or destroyed Warrant Certificates).

(b) Warrant Certificates shall be executed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, President or any Vice President and by its Chief Operating Officer, its Treasurer or its Secretary, by manual signatures or by facsimile signatures printed thereon, and shall have imprinted thereon a facsimile of the Company's seal. Warrant Certificates shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Warrant Certificates shall cease to be such officer of the Company before the date of issuance of the Warrant Certificates or before countersignature by the Warrant Agent and issue and delivery thereof, such Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent and issued and delivered with the same force and effect as though the officer of

the Company who signed such Warrant Certificates had not ceased to hold such office.

SECTION 4. EXERCISE.

(a) Warrants in denominations of one or whole number multiples thereof may be exercised commencing at any time on or after the Initial Warrant Exercise Date, but not after the Warrant Expiration Date or the Redemption Date, upon the terms and subject to the conditions set forth herein (including the provisions set forth in SECTIONS 5 and 9 hereof) and in the applicable Warrant Certificate. A Warrant shall be deemed to have been exercised immediately prior to the close of business on the Exercise Date, provided that the Warrant Certificate representing such Warrant, with the exercise form thereon duly executed by the Registered Holder thereof or his attorney duly authorized in writing, together with payment in cash or by check made payable to the Warrant Agent for the account of the Company of an amount in lawful money of the United States of America equal to the applicable Purchase Price, has been received by the Warrant Agent. The person entitled to receive the securities deliverable upon such exercise shall be treated for all purposes as the holder of such securities as of the close of business on the Exercise Date. As soon as practicable on or after the Exercise Date and in any event within five (5) business days after such date, the Warrant Agent on behalf of the Company shall cause to be issued to the person or persons entitled to receive the same a certificate or certificates for the shares of Common Stock deliverable upon such exercise, and the Warrant Agent shall deliver the same to the person or persons entitled thereto. Upon the exercise of any Warrants, the Warrant Agent shall promptly notify the Company in writing of such fact and of the number of securities delivered upon such exercise and, subject to Section 4(b) hereof, shall cause all payments in cash or by check made payable to the order of the Company in respect of the Purchase Price to be deposited promptly in the Company's bank account.

(b) The Company hereby appoints the Representative as the exclusive solicitation agent for the Warrants, and agrees to pay the Representative a commission equal to five percent (5%) of the exercise price of the Warrants of which __% may be reallowed to any dealer who solicited the exercise (which may also be the Representative) for each Warrant exercised, payable on the date of the exercise thereof. The Company agrees that it will not solicit the exercise of the Warrants other than through the Representative. Upon exercise of any Warrants, the person or entity responsible for the solicitation of exercise of such Warrants shall be identified by the holder of the Warrants, and the commission payable for exercise of such Warrants shall be paid to the person or entity so designated.

(c) At any time upon the exercise of any Warrants after the Initial Warrant Exercise Date, the Warrant Agent shall, on a daily basis, within two (2) business days after any such exercise, notify the Representative or its successors or assigns of the exercise of any such Warrants and shall, on a weekly basis (subject to collection of funds constituting the tendered Purchase Price, but in no event later than five (5) business days after the last day of the calendar week in which such funds were tendered), remit to the Representative or its successors or assigns an amount equal to five percent (5%) of the Purchase Price of such Warrants being then

exercised unless the Representative or its successors or assigns shall have notified the Warrant Agent that the payment of such amount with respect to any such Warrant is violative of the rules and regulations promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations of the National Association of Securities Dealers, Inc. (the "NASD") or applicable state securities or "blue sky" laws, in which event the Warrant Agent shall have to pay such amount to the Company; PROVIDED, HOWEVER, that the Warrant Agent shall not be obligated to pay any amounts pursuant to this SECTION 4(c) during any week that such amounts payable are less than one thousand dollars ($1,000) and the Warrant Agent's obligation to make such payments shall be suspended until the amount payable aggregates one thousand dollars ($1,000), and provided further, that, in any event, any such payment (regardless of amount) shall be made not less frequently than monthly. Under current rules of the NASD, amounts can be paid to the Representative upon any exercise of a Warrant under this Section 4(c) only if (i) the market price of the Company's Common Stock is greater than the then Purchase Price of the Warrants, (ii) the exercise of the Warrant was solicited by a member of the National Association of Securities Dealers, Inc. ("NASD"), (iii) the Warrant was not held in a discretionary account, (iv) disclosure of compensation arrangements has been made in documents provided to customers both as part of the original offering and at the time of exercise and (v) the solicitation of the exercise of the Warrant was not in violation of Rule 10b-6 (as such rule or any successor rule may be in effect as of such time of exercise) promulgated under the Exchange Act. The provisions of this Section 4(b) may not be modified, amended or deleted without the prior written consent of the Representative.

(d) The Company shall not be obligated to issue any fractional share interests or fractional Warrant interests upon the exercise of any Warrant or Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of fractional interests. Any fraction equal to or greater than one-half shall be rounded up to the next full share or Warrant, as the case may be. Any fraction less than one-half shall be eliminated.

SECTION 5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.

(a) The Company covenants that it will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon the exercise of Warrants (including the Warrants underlying the Representative's Warrant), such number of shares of Common Stock as shall then be issuable upon the exercise of all outstanding Warrants. The Company covenants that, upon exercise of the Warrants and payment of the Purchase Price for the shares of Common Stock underlying the Warrants, all shares of Common Stock which shall be issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable, free from all preemptive or similar rights, and free from all taxes, liens and charges with respect to the issuance thereof, and that upon issuance such shares shall be listed or quoted on each securities exchange or NASDAQ, if any, on which the other shares of outstanding Common Stock of the Company are then listed.

(b) The Company covenants that if any securities reserved for the purpose of

exercise of Warrants hereunder require registration with, or approval of, any governmental authority under any federal securities law before such securities may be validly issued or delivered upon such exercise, then the Company will file a registration statement under the federal securities laws or a post- effective amendment to a registration statement, use its best efforts to cause the same to become effective, keep such registration statement current while any of the Warrants are outstanding and deliver a prospectus which complies with
Section 10(a)(3) of the Act, to the Registered Holder exercising the Warrant (except, if in the opinion of counsel to the Company, such registration is not required under the federal securities law or if the Company receives a letter from the staff of the Securities and Exchange Commission (the "Commission") stating that it would not take any enforcement action if such registration is not effected). The Company will use its best efforts to obtain appropriate approvals or registrations under the state "blue sky" securities laws of all states in which Registered Holders reside. Warrants may not be exercised by, nor may shares of Common Stock be issued to, any Registered Holder in any state in which such exercise would be unlawful.

(c) The Company shall pay all documentary, stamp or similar taxes and other governmental charges that may be imposed with respect to the issuance of Warrants, or the issuance or delivery of any shares of Common Stock upon exercise of the Warrants; PROVIDED, HOWEVER, that if shares of Common Stock are to be delivered in a name other than the name of the Registered Holder of the Warrant Certificate representing any Warrant being exercised, then no such delivery shall be made unless the person requesting the same has paid to the Warrant Agent the amount of transfer taxes or charges incident thereto, if any.

(d) The Warrant Agent is hereby irrevocably authorized as the Transfer Agent to requisition from time to time certificates representing shares of Common Stock or other securities required upon exercise of the Warrants, and the Company will comply with all such requisitions.

(e) Nothing contained in this Agreement shall be construed as conferring upon any Registered Holder the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, the Company shall adopt a resolution for the liquidation, dissolution or winding up of the Company's business, then the Company shall give written notice of the adoption of such resolution to all Registered Holders. No such liquidation, dissolution or winding-up of the Company's affairs shall commence until at least thirty (30) days after such written notice is given, at which time the right of the Registered Holders to participate in the liquidation, dissolution or winding-up of the Company's affairs shall terminate unless the Warrants are exercised within such thirty (30) day period.

SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.

(a) Warrant Certificates may be exchanged for other Warrant Certificates representing an equal aggregate number of Warrants or may be transferred in whole or in part. Warrant Certificates to be so exchanged shall be surrendered to the Warrant Agent at its Corporate Office, and the Company shall execute and the Warrant Agent shall countersign, issue and deliver in exchange therefor the Warrant Certificate or Certificates which the Registered Holder making the exchange shall be entitled to receive.

(b) The Warrant Agent shall keep, at such office, books in which, subject to such reasonable regulations as it may prescribe, it shall register Warrant Certificates and the transfer thereof. Upon due presentment for registration of transfer of any Warrant Certificate at such office, the Company shall execute and the Warrant Agent shall issue and deliver to the transferee or transferees a new Warrant Certificate or Certificates representing an equal aggregate number of Warrants.

(c) With respect to any Warrant Certificates presented for registration of transfer, or for exchange or exercise, the subscription or assignment form, as the case may be, on the reverse thereof shall be duly endorsed or be accompanied by a written instrument or instruments of subscription or assignment, in form satisfactory to the Company and the Warrant Agent, duly executed by the Registered Holder thereof or his attorney duly authorized in writing.

(d) No service charge shall be made for any exchange or registration of transfer of Warrant Certificates. However, the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.

(e) All Warrant Certificates surrendered for exercise or for exchange shall be promptly canceled by the Warrant Agent.

(f) Prior to due presentment for registration or transfer thereof, the Company and the Warrant Agent may deem and treat the Registered Holder of any Warrant Certificate as the absolute owner thereof of each Warrant represented thereby (notwithstanding any notations of ownership or writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes and shall not be affected by any notice to the contrary.

SECTION 7. LOSS OR MUTILATION.

Upon receipt by the Company and the Warrant Agent of evidence satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and (in the case of loss, theft or destruction) of indemnity satisfactory to them, and (in case of mutilation) upon surrender and cancellation thereof, the Company shall execute and the Warrant Agent shall countersign and deliver in lieu thereof a new Warrant Certificate, representing an

equal number of Warrants. Applicants for a substitute Warrant Certificate shall also comply with such other reasonable regulations and pay such other reasonable charges as the Warrant Agent may prescribe.

SECTION 8. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK DELIVERABLE.

(a) (i) Except as hereinafter provided, in the event the Company shall, at any time or from time to time after the date hereof, sell any shares of Common Stock, including shares held in the Company's treasury and shares of Common Stock issued upon the exercise of any options, rights or warrants to subscribe for shares of Common Stock and shares of Common Stock issued upon the direct or indirect conversion or exchange of securities, for a consideration per share less than the Purchase Price or issue any shares of Common Stock as a stock dividend to the holders of Common Stock, or subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares (any such sale, issuance, subdivision or combination being herein called a "Change of Shares"), then, and thereafter upon each further Change of Shares, the Purchase Price for the Warrants (whether or not the same shall be issued and outstanding) in effect immediately prior to such Change of Shares shall be changed to a price (including any applicable fraction of a cent to the nearest cent) determined by dividing (A) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such Change of Shares, multiplied by the Purchase Price in effect immediately prior to such Change of Shares, and
(y) the consideration, if any, received by the Company upon such sale, issuance, subdivision or combination by (B) the total number of sham of Common Stock outstanding immediately after such Change of Shares; PROVIDED, HOWEVER, that in no event shall the Purchase Price be adjusted pursuant to this computation to an amount in excess of the Purchase Price in effect immediately prior to such computation, except in the case of a combination of outstanding shares of Common Stock.

For the purposes of any adjustment to be made in accordance with this
Section 8(a)(i) the following provisions shall be applicable:

(A) In case of the issuance or sale of shares of Common Stock (or of other securities deemed hereunder to involve the issuance or sale of shares of Common Stock) for a consideration part or all of which shall be cash, the amount of the cash portion of the consideration therefor deemed to have been received by the Company shall be (i) the subscription price, if shares of Common Stock are offered by the Company for subscription, or (ii) the public offering price (before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith), if such securities are sold to underwriters or dealers for public offering without a subscription offering, or (iii) the gross amount of cash actually received by the Company for such securities, in any other case.

(B) In case of the issuance or sale (otherwise than as a dividend or other

distribution on any stock of the Company) of shares of Common Stock (or of other securities deemed hereunder to involve the issuance or sale of shares of Common Stock) for a consideration part or all of which shall be other than cash or as part of a unit, the amount of the consideration therefor other than cash deemed to have been received by the Company or the amount received per share as part of a unit shall be the value of such consideration as determined in good faith by the Board of Directors of the Company on the basis of a record of values of similar property, services or securities.

(C) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of shareholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration.

(D) The reclassification of securities of the Company other than shares of Common Stock into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in Section 8(a)(i)(B) hereof.

(E) The number of shares of Common Stock at any one time outstanding shall be deemed to include the aggregate maximum number of shares issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of options, rights or warrants and upon the conversion or exchange of convertible or exchangeable securities.

(ii) Upon each adjustment of the Purchase Price pursuant to this
Section 8, the number of shares of Common Stock purchasable upon the exercise of each Warrant shall be the number derived by multiplying the number of shares of Common Stock purchasable immediately prior to such adjustment by the Purchase Price in effect prior to such adjustment and dividing the product so obtained by the applicable adjusted Purchase Price.

(b) In case the Company shall at any time after the date hereof issue options, rights or warrants to subscribe for shares of Common Stock, or issue any securities convertible into or exchangeable for shares of Common Stock, for a consideration per share (determined as provided in Section 8(a)(i) hereof and as provided below) less than the Purchase Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, or without consideration (including the issuance of any such securities by way of dividend or other distribution), the Purchase Price for the Warrants (whether or not the same shall be issued and outstanding) in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, as the case may be, shall be reduced to a price determined by making the computation in accordance with the provisions of Section 8(a)(i) hereof, provided that:

(i) The aggregate maximum number of shares of Common Stock, as the case may be, issuable or that may become issuable under such options, rights or warrants (assuming exercise in full even if not then currently exercisable or currently exercisable in full) shall be deemed to be issued and outstanding at the time such options, rights or warrants were issued, for a consideration equal to the minimum purchase price per share provided for in such options, rights or warrants at the time of issuance, plus the consideration, if any, received by the Company for such options, rights or warrants; PROVIDED, HOWEVER, that upon the expiration or other termination of such options, rights or warrants, if any thereof shall not have been exercised, the number of shares of Common Stock deemed to be issued and outstanding pursuant to this subsection (i) (and for the purposes of Section 8(a)(i)(E) hereof) shall be reduced by the number of shares as to which options, warrants and/or rights shall have expired, and such number of shares shall no longer be deemed to be issued and outstanding, and the Purchase Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares actually issued plus the shares remaining issuable upon the exercise of those options, rights or warrants as to which the exercise rights shall not have expired or terminated unexercised.

(ii) The aggregate maximum number of shares of Common Stock issuable or that may become issuable upon conversion or exchange of any convertible or exchangeable securities (assuming conversion or exchange in full even if not then currently convertible or exchangeable in full) shall be deemed to be issued and outstanding at the time of issuance of such securities, for a consideration equal to the consideration received by the Company for such securities, plus the minimum consideration, if any, receivable by the Company upon the conversion or exchange thereof; PROVIDED, HOWEVER, that upon the termination of the right to convert or exchange such convertible or exchangeable securities (whether by reason of redemption or otherwise), the number of shares of Common Stock deemed to be issued and outstanding pursuant to this subsection
(ii) (and for the purposes of Section 8(a)(i)(E) hereof) shall be reduced by the number of shares as to which the conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be issued and outstanding, and the Purchase Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares actually issued plus the shares remaining issuable upon conversion or exchange of those convertible or exchangeable securities as to which the conversion or exchange rights shall not have expired or terminated unexercised.

(iii) If any change shall occur in the price per share provided for in any of the options, rights or warrants referred to in Section 8(b)(i) hereof, or in the price per share or ratio at which the securities referred to in Section 8(b)(ii) hereof are convertible or exchangeable, such options, rights or warrants or conversion or exchange rights, as the case may be, to the extent not theretofore exercised, shall be deemed to have expired or terminated on the date when such price change became effective in respect of shares not theretofore issued pursuant to the exercise or conversion or exchange thereof, and the Company shall be deemed to have issued upon such date new options, rights or warrants or convertible or exchangeable securities.

(c) In case of any reclassification or change of outstanding shares of Common Stock issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination), or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a Subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification or change of the then outstanding shares of Common Stock or other capital stock issuable upon exercise of the Warrants), or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, then, as a condition of such reclassification, change, consolidation, merger, sale or conveyance, the Company, or such successor or purchasing corporation, as the case may be, shall make lawful and adequate provision whereby the Registered Holder of each Warrant then outstanding shall have the right thereafter to receive on exercise of such Warrant the kind and amount of securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the number of securities issuable upon exercise of such Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance and shall forthwith file at the Corporate Office of the Warrant Agent a statement signed by its Chairman of the Board, President or a Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary evidencing such provision. Such provisions shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in Sections 8(a) and 8(b) hereof. The above provisions of this Section 8(c) shall similarly apply to successive reclassifications and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances.

(d) Irrespective of any adjustments or changes in the Purchase Price or the number of shares of Common Stock purchasable upon exercise of the Warrants, the Warrant Certificates theretofore and thereafter issued shall, unless the Company shall exercise its option to issue new Warrant Certificates pursuant to Section 2(e) hereof, continue to express the Purchase Price per share and the number of shares purchasable thereunder as the Purchase Price per share and the number of shares purchasable thereunder were expressed in the Warrant Certificates when the same were originally issued.

(e) After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the Chairman of the Board, President, or a Vice President and by the Treasurer or the Secretary of the Company setting forth: (i) the Purchase Price, as so adjusted, (ii) the number of shares of Common Stock purchasable upon exercise of each Warrant, after such adjustment, and (iii) a brief statement of the facts accounting for such adjustment. The Company will promptly file such certificate with the Warrant Agent and cause a brief summary thereof to be sent by ordinary first class mail to each Registered Holder at his last address as it shall appear on the registry books of the Warrant Agent. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity thereof except as to the holder to whom the Company failed to mail such notice, or except as to the holder whose notice was defective. The affidavit of an officer of the Warrant Agent or the Secretary or an Assistant Secretary of the Company that such notice has been mailed shall, in the

absence of fraud, be prima facie evidence of the facts stated therein.

(f) No adjustment of the Purchase Price shall be made as a result of or in connection with (i) the issuance or sale of shares of Common Stock upon the exercise of any "incentive stock options" (as such term is defined in the Internal Revenue Code of 1986, as amended), or any non-qualified stock options to non-employee directors of the Company pursuant to the Company's 1996 Stock Option Plan, whether or not such options were outstanding on the date hereof, or
(ii) the issuance or sale of shares of Common Stock if the amount of said adjustment shall be less than ten cents ($.10); PROVIDED, HOWEVER, that in such case, any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment that shall amount, together with any adjustment so carried forward, to at least ten cents ($. 10). In addition, Registered Holders shall not be entitled to cash dividends paid by the Company prior to the exercise of any Warrant or Warrants held by them.

(g) In case of any consolidation of the Company with or merger of the Company into another corporation or other entity or in case of any sale, lease, conveyance or other transfer to another corporation, person or other entity of the property, assets or business of the Company as an entirety or substantially as an entirety, the Company or such successor or purchasing corporation, person or other entity, as the case may be, shall execute with the Warrantholder, and the agreements governing such consolidation, merger, sale, lease, conveyance or other transfer shall require such execution of, an agreement that the Warrantholder shall have the right thereafter upon payment of the Warrant Price in effect immediately prior to such event, upon exercise of the Warrants, to receive the kind and amount of shares and other securities and property which it would have owned or have been entitled to receive after the happening of such consolidation, merger, sale, lease, conveyance or other transfer had the Warrants (and each underlying security) been exercised immediately prior to such action. The Company shall promptly mail to each Warrantholder by first class mail, postage prepaid, notice of the execution of any such agreement. In the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue Code of 1986, in which the Company is the surviving corporation, the right to purchase shares of Warrant Stock under the Warrants shall terminate on the date of such merger and thereupon the Warrants shall become null and void, but only if the controlling corporation shall agree to substitute for the Warrants its warrant which entitles the holder thereof to purchase upon its exercise the kind and amount of shares and other securities and property which it would have owned or been entitled to receive had the Warrants been exercised immediately prior to such merger. Any such agreements referred to in this Section 8(g) shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 8 hereof, and shall provide for terms and provisions at least as favorable to the Warrantholder as those contained in this Agreement. The provisions of this Section 8(g) shall similarly apply to successive consolidations, mergers, sales, leases, conveyances or other transfers.

(h) Before taking any action which would cause an adjustment effectively

reducing the portion of the Purchase Price allocable to each share of Warrant Stock below the then par value per share, if any, of the Warrant Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Stock upon exercise of the Warrants.

(i) The Company may retain Coopers & Lybrand L.L.P. (or such other accounting firm qualified to practice in front of the Securities and Exchange Commission (the "Commission") as is reasonably acceptable to the Representative) to make any computation required under this Section 8, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section 8.

SECTION 9. REDEMPTION.

(a) Commencing on the Initial Warrant Redemption Date, the Company may, on thirty (30) days' prior written notice, redeem all of the Warrants at a redemption price of twenty five cents ($.25) per Warrant; PROVIDED, HOWEVER, that before any such call for redemption of Warrants can take place, (i) the average closing bid price for the Common Stock in the over-the-counter market as reported by the Nasdaq Stock Market or (ii) the average closing sale price on the primary exchange on which the Common Stock is traded, if the Common Stock is traded on a national securities exchange, shall have for any twenty (20) trading days within a period of thirty (30) consecutive trading days ending on the fifth
(5th) trading day prior to the date on which the notice contemplated by SECTIONS 9(b) and 9(c) hereof is given, equaled or exceeded ____ Dollars and _____ Cents ($____) [140% OF IPO PRICE] per share (subject to adjustment in the event of any stock splits or other similar events as provided in SECTION 8 hereof).

(b) In case the Company shall exercise its right to redeem all of the Warrants, it shall give or cause to be given notice to the Registered Holders of the Warrants, by mailing to such Registered Holders a notice of redemption, first class, postage prepaid, at their last address as shall appear on the records of the Warrant Agent. Any notice mailed in the manner provided herein shall be conclusively presumed to have been duly given whether or not the Registered Holder receives such notice. Not less than five (5) business days prior to the mailing to the Registered Holders of the Warrants of the notice of redemption, the Company shall deliver or cause to be delivered to the Representative or its successors or assigns a similar notice telephonically and confirmed in writing, together with a list of the Registered Holders (including their respective addresses and number of Warrants beneficially owned by them) to whom such notice of redemption has been or will be given.

(c) The notice of redemption shall specify (i) the redemption price,
(ii) the date fixed for redemption, which shall in no event be less than thirty
(30) days after the date of mailing of such notice, (iii) the place where the Warrant Certificates shall be delivered and the redemption price that shall be paid, (iv) that the Representative or its successors or assigns is the Company's exclusive warrant solicitation agent and shall receive the commission contemplated

by SECTION 4(b) hereof, and (v) that the right to exercise the Warrant shall terminate at 5:00 p.m. (California time) on the business day immediately preceding the date fixed for redemption. The date fixed for the redemption of the Warrants shall be the "Redemption Date" for purposes of this Agreement. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for such redemption except as to a holder (A) to whom notice was not mailed or (B) whose notice was defective. An affidavit of the Warrant Agent or the Secretary or Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(d) Any right to exercise a Warrant shall terminate at 5:00 p.m. (California time) on the business day immediately preceding the Redemption Date. The redemption price payable to the Registered Holders shall be mailed to such persons at their addresses of record.

(e) The Company shall indemnify the Underwriters and each person, if any, who controls either of the Underwriters within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act against all loss, claim, damage, expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise arising out of the registration statement or prospectus referred to in Section 5(b) hereof to the same extent and with the same effect (including the provisions regarding contribution) as the provisions pursuant to which the Company has agreed to indemnify the Underwriters contained in SECTION 7 of the Underwriting Agreement.

(f) Five (5) business days prior to the Redemption Date, the Company shall furnish to the Representative (i) an opinion of counsel to the Company, dated such date and addressed to the Representative, and (ii) a "cold comfort" letter dated such date addressed to the Representative, signed by the independent public accountants who have issued a report on the Company's financial statements included in the registration statement referred to in
SECTION 5(b) hereof, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities, including, without limitation, those matters covered in SECTION 6(i) of the Underwriting Agreement.

(g) The Company shall as soon as practicable after the Redemption Date, and in any event within fifteen (15) months thereafter, make "generally available to its security holders" (within the meaning of Rule 158 under the Act) an earnings statement (which need not be audited) complying with SECTION 11(a) of the Act and covering a period of at least twelve (12) consecutive months beginning after the Redemption Date.

(h) The Company shall deliver to the Representative within five (5) business days prior to the Redemption Date copies of all correspondence between the Commission and the

Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement referred to in SECTION 5(b) hereof and permit the Representative to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or the rules of the NASD. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as the Representative shall reasonably request.

SECTION 10. REGISTRATION REQUIREMENT.

The Company shall be obligated to the registered holders of the Warrants to continually maintain, at the Company's own expense, the currency and effectiveness of a registration statement of the Company under the Act including the filing of any and all applications and other notifications, filings and post-effective amendments and supplements (collectively, the "Current Registration Statement") and any necessary filings under applicable state blue sky (securities) laws, as may be necessary, so as to permit the issuance of the Common Stock underlying the Warrants to the holder of the Warrants and the subsequent resale thereof to the public, until the earlier of the time that all Warrants have been exercised pursuant to the Current Registration Statement or the Warrant Expiration Date.

SECTION 11. CONCERNING THE WARRANT AGENT.

(a) The Warrant Agent acts hereunder as agent and in a ministerial capacity for the Company and the Representative, and its duties shall be determined solely by the provisions hereof. The Warrant Agent shall not, by issuing and delivering Warrant Certificates or by any other act hereunder, be deemed to make any representations as to the validity or value or authorization of the Warrant Certificates or the Warrants represented thereby or of any securities or other property delivered upon exercise of any Warrant or whether any stock issued upon exercise of any Warrant is fully paid and non-assessable.

(b) The Warrant Agent shall not at any time be under any duty or responsibility to any holder of Warrant Certificates to make or cause to be made any adjustment of the Purchase Price provided in this Agreement, or to determine whether any fact exists which may require any such adjustment, or with respect to the nature or extent of any such adjustment, when made, or with respect to the method employed in making the same. It shall not (i) be liable for any recital or statement of fact contained herein or for any action taken, suffered or omitted by it in reliance on any Warrant Certificate or other document or instrument believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties, (ii) be responsible for any failure on the part of the Company to comply with any of its covenants and obligations contained in this Agreement or in any Warrant Certificate, or (iii) be liable for any act or omission in connection with this Agreement except for its own gross negligence or willful misconduct.

(c) The Warrant Agent may at any time consult with counsel satisfactory to it (who may be counsel for the Company or the Representative) and shall incur no liability or responsibility for any action taken, suffered or omitted by it in good faith in accordance with the opinion or advice of such counsel.

(d) Any notice, statement, instruction, request, direction, order or demand of the Company shall be sufficiently evidenced by an instrument signed by the Chairman of the Board of Directors, President or any Vice President (unless other evidence in respect thereof is herein specifically prescribed). The Warrant Agent shall not be liable for any action taken, suffered or omitted by it in accordance with such notice, statement, instruction, request, direction, order or demand.

(e) The Company agrees to pay the Warrant Agent reasonable compensation for its services hereunder and to reimburse it for its reasonable expenses hereunder; the Company further agrees to indemnify the Warrant Agent and hold it harmless against any and all losses, expenses and liabilities, including judgments, costs and counsel fees, for anything done or omitted by the Warrant Agent in the execution of its duties and powers hereunder except losses, expenses and liabilities arising as a result of the Warrant Agent's gross negligence or willful misconduct.

(f) The Warrant Agent may resign its duties and be discharged from all further duties and liabilities hereunder (except liabilities arising as a result of the Warrant Agent's own gross negligence or willful misconduct), after giving thirty (30) days' prior written notice to the Company. At least fifteen
(15) days prior to the date such resignation is to become effective, the Warrant Agent shall cause a copy of such notice of resignation to be mailed to the Registered Holder of each Warrant Certificate at the Company's expense. Upon such resignation the Company shall appoint in writing a new warrant agent. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation by the resigning Warrant Agent, then the Registered Holder of any Warrant Certificate may apply to any court of competent jurisdiction for the appointment of a new warrant agent. Any new warrant agent, whether appointed by the Company or by such a court, shall be a bank or trust company having a capital and surplus, as shown by its last published report to its stockholders, of not less than ten million dollars ($10,000,000) or a stock transfer company reasonably acceptable to the Representative. After acceptance in writing of such appointment by the new warrant agent is received by the Company, such new warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as the warrant agent, without any further assurance, conveyance, act or deed; but if for any reason it shall be necessary or expedient to execute and deliver any further assurance, conveyance, act or deed, the same shall be done at the expense of the Company and shall be legally and validly executed and delivered by the resigning Warrant Agent. Not later than the effective date of any such appointment, the Company shall file notice thereof with the resigning Warrant Agent and shall forthwith cause a copy of such notice to be mailed to the Registered Holder of each Warrant Certificate.

(g) Any corporation into which the Warrant Agent or any new warrant agent may be converted or merged, any corporation resulting from any consolidation to which the Warrant Agent or any new warrant agent shall be a party, or any corporation succeeding to the corporate trust business of the Warrant Agent or any new warrant agent shall be a successor warrant agent under this Agreement without any further act, provided that such corporation is eligible for appointment as successor to the Warrant Agent under the provisions of the preceding paragraph. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed to the Company and to the Registered Holders of each Warrant Certificate.

(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or their officers or directors, may buy and hold or sell Warrants or other securities of the Company and otherwise deal with the Company in the same manner and to the same extent and with like effect as though it were not Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.

(i) The Warrant Agent shall retain for a period of two (2) years from the date of exercise any Warrant Certificate received by it upon such exercise.

SECTION 12. MODIFICATION OF AGREEMENT.

The Warrant Agent and the Company may by supplemental agreement make any changes or corrections in this Agreement (a) that they shall deem appropriate to cure any ambiguity or to correct any defective or inconsistent provision or manifest mistake or error herein contained, or (b) that they may deem necessary or desirable and which shall not be inconsistent with the Warrant Certificates or adversely affect the interests of the holders of Warrant Certificates; PROVIDED, HOWEVER, that this Agreement shall not otherwise be modified, supplemented or altered in any respect except with the consent in writing of the Registered Holders holding not less than sixty-six and two-thirds percent (66-2/3%) of the Warrants then outstanding; provided, further, that no change in the number or nature of the securities purchasable upon the exercise of any Warrant, and no change that increases the Purchase Price of any Warrant, other than such changes as are specifically set forth in this Agreement as originally executed, shall be made without the consent in writing of each Registered Holder affected by such change. In addition, this Agreement may not be modified, amended or supplemented without the prior written consent of the Representative or its successors or assigns, other than to cure any ambiguity or to correct any defective or inconsistent provision or manifest mistake or error herein contained or to make any such change that the Warrant Agent and the Company deem necessary or desirable and which shall not adversely affect the interests of the Representative or its successors or assigns.

SECTION 13. NOTICES.

All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed first- class postage prepaid or delivered to a telegraph office for transmission, if to the Registered Holder of a Warrant Certificate, at the address of such holder as shown on the registry books maintained by the Warrant Agent; if to the Company, at 26131 Marguerite Parkway, Suite A, Mission Viejo, California 92692, Attention: Paul A. Motenko, Chief Executive Officer, or at such other address as may have been furnished to the Warrant Agent in writing by the Company; if to the Representative, at 2049 Avenue of the Stars, 30th Floor, Los Angeles, California 90067, Attention: Mr. Robert A. DiMinico; and if to the Warrant Agent, at its Corporate Office.

SECTION 14. GOVERNING LAW.

This Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to conflicts of laws.

SECTION 15. BINDING EFFECT.

This Agreement shall be binding upon and inure to the benefit of the Company, the Warrant Agent, the Representative and their respective successors and assigns and the holders from time to time of Warrant Certificates or any of them. Except as hereinafter stated, nothing in this Agreement is intended or shall be construed to confer upon any other person any right, remedy or claim or to impose upon any other person any duty, liability or obligation.

SECTION 16. COUNTERPARTS.

This Agreement may be executed in several counterparts, which taken together shall constitute a single document.

[Rest of page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

CHICAGO PIZZA & BREWERY, INC.

By:_________________________
Name: Paul A. Motenko
Title: Chief Executive Officer

THE BOSTON GROUP, L.P.

By:_________________________
Name:
Title:

U.S. STOCK TRANSFER CORPORATION
As Warrant Agent

By:_________________________
Name:
Title:

No. W_____                   VOID AFTER _________, 2001
                           [66 MONTHS AFTER EFFECTIVE DATE]

                                        ____ WARRANTS

REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE SHARES OF COMMON STOCK

CHICAGO PIZZA & BREWERY, INC.

CUSIP ___________

THIS CERTIFIES THAT, FOR VALUE RECEIVED

or registered assigns (the "Registered Holder") is the owner of the number of redeemable warrants (the "Warrants") specified above. Each Warrant initially entitles the Registered Holder to purchase, subject to the terms and conditions set forth in this Certificate and the Warrant Agreement (as hereinafter defined), one fully paid and non-assessable share of Common Stock, no par value, of Chicago Pizza & Brewery, Inc., a California corporation (the "Company"), at any time from ______, 1997 [ONE YEAR AFTER EFFECTIVE DATE] and prior to the Expiration Date (as hereinafter defined) upon the presentation and surrender of this Warrant Certificate with the Subscription Form on the reverse hereof duly executed, at the corporate office of U.S. Stock Transfer Corporation, 1745 Gardena Avenue, Glendale, California 91204-2991, as Warrant Agent, or its successor (the "Warrant Agent"), accompanied by payment of $____ [110% OF IPO PRICE], subject to adjustment (the "Purchase Price"), in lawful money of the United States of America in cash or by check made payable to the Warrant Agent for the account of the Company.

This Warrant Certificate and each Warrant represented hereby are issued pursuant to and are subject in all respects to the terms and conditions set forth in the Warrant Agreement (the "Warrant Agreement"), dated ______, 1996, by and among the Company, The Boston Group, L.P. and the Warrant Agent.

In the event of certain contingencies provided for in the Warrant Agreement, the Purchase Price and the number of shares of Common Stock subject to purchase upon the exercise of each Warrant represented hereby are subject to modification or adjustment.

Each Warrant represented hereby is exercisable at the option of the Registered Holder, but no fractional interests will be issued. In the case of the exercise of less than all the Warrants represented hereby, the Company shall cancel this Warrant Certificate upon the surrender hereof and shall execute and deliver a new Warrant Certificate or Warrant Certificates of like tenor, which the Warrant Agent shall countersign, for the balance of such Warrants.

The term "Expiration Date" shall mean 5:00 p.m. (California time) on _________, 2002 [66 MONTHS AFTER EFFECTIVE DATE]. If such date shall in the State of California be a holiday or a day on which banks are authorized to close, then the Expiration Date shall mean 5:00 p.m. (California time) the next following day which in the State of California is not a holiday or a day on which banks are authorized to close.

The Company shall not be obligated to deliver any securities pursuant to the exercise of this Warrant unless a registration statement under the Securities Act of 1933, as amended (the "Act"), with respect to such securities is effective or an exemption thereunder is available. The Company has covenanted and agreed that it will file a registration statement under the Federal securities laws, use its best efforts to cause the same to become effective, to keep such registration statement current, if required under the Act, while any of the Warrants are outstanding, and deliver a prospectus which complies with Section 10(a)(3) of the Act to the Registered Holder exercising this Warrant. This Warrant shall not be exercisable by a Registered Holder in any state where such exercise would be unlawful.

This Warrant Certificate is exchangeable, upon the surrender hereof by the Registered Holder at the corporate office of the Warrant Agent, for a new Warrant Certificate or Warrant Certificates of like tenor representing an equal aggregate number of Warrants, each of such new Warrant Certificates to represent such number of Warrants as shall be designated by such Registered Holder at the time of such surrender. Upon due presentment and payment of any tax or other charge imposed in connection therewith or incident thereto, for registration of transfer of this Warrant Certificate at such office, a new Warrant Certificate or Warrant Certificates representing an equal aggregate number of Warrants will be issued to the transferee in exchange therefor, subject to the limitations provided in the Warrant Agreement.

Prior to the exercise of any Warrant represented hereby, the Registered Holder shall not be entitled to any rights of a stockholder of the Company, including, without limitation, the right to vote or to receive dividends or other distributions, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided in the Warrant Agreement.

Subject to the provisions of the Warrant Agreement, this Warrant may be redeemed at the option of the Company, at a redemption price of $.25 per Warrant, at any time commencing ____ _, 1997 [ONE YEAR AFTER EFFECTIVE DATE], provided that (i) the average closing bid price for the Company's Common Stock in the over-the-counter market as reported by the Nasdaq Stock Market or (ii) the average closing sale price on the primary exchange on which the Common Stock is traded, if the Common Stock is traded on a national securities exchange, shall

have for any twenty (20) trading days within a period of thirty (30) consecutive trading days ending on the fifth trading day prior to the Notice of Redemption, as defined below, equaled or exceeded $____ [140% OF IPO PRICE] per share (subject to adjustment in the event of any stock splits or other similar events). Notice of redemption (the "Notice of Redemption") shall be given not later than the thirtieth day before the date fixed for redemption, all as provided in the Warrant Agreement. On and after the date fixed for redemption, the Registered Holder shall have no rights with respect to this Warrant except to receive the $.25 per Warrant upon surrender of this Certificate.

Under certain circumstances, The Boston Group, L.P. shall be entitled to receive an aggregate of five percent of the Purchase Price of the Warrants represented hereby.

Prior to due presentment for registration of transfer hereof, the Company and the Warrant Agent may deem and treat the Registered Holder as the absolute owner hereof and of each Warrant represented hereby (notwithstanding any notations of ownership or writing hereon made by anyone other than a duly authorized officer of the Company or the Warrant Agent) for all purposes and shall not be affected by any notice to the contrary, except as provided in the Warrant Agreement.

This Warrant Certificate shall be governed by and construed in accordance with the laws of the State of California without giving effect to conflicts of laws.

This Warrant Certificate is not valid unless countersigned by the Warrant Agent.

IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed, manually or in facsimile by two of its officers thereunto duly authorized and a facsimile of its corporate seal to be imprinted hereon.

Dated:     _________, 1996
                                   CHICAGO PIZZA & BREWERY, INC.
[SEAL]


                                   By:______________________________
`                                     Name:  Paul A. Motenko
                                      Title: Chief Executive Officer


                                   By:__________________________
                                      Name:  Jeremiah J. Hennessy
                                      Title: Chief Operating Officer

COUNTERSIGNED:

U.S. STOCK TRANSFER CORPORATION,
as Warrant Agent

By:_____________________________
Authorized Officer

SUBSCRIPTION FORM

To Be Executed by the Registered Holder
in Order to Exercise Warrant

The undersigned Registered Holder hereby irrevocably elects to exercise Warrants represented by this Warrant Certificate, and to purchase the securities issuable upon the exercise of such Warrants, and requests that certificates for such securities be issued in the name of

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER

and be delivered to

please print or type name and address)

and if such number of Warrants shall not be all the Warrants evidenced by this Warrant Certificate, that a new Warrant Certificate for the balance of such Warrants be registered in the name of, and delivered to, the Registered Holder at the address stated below.

The undersigned represents that the exercise of the within Warrant was solicited by a member of the National Association of Securities Dealers, Inc. If not solicited by an NASD member, please write "unsolicited" in the space below. Unless otherwise indicated by listing the name of another NASD member firm, it will be assumed that the exercise was solicited by The Boston Group, L.P.

Check below to indicate the soliciting agent:

_____ The Boston Group, L.P.

Dated:_____________                     X______________________

                                        _______________________

                                        _______________________
                                             Address

                                        _______________________
                                        Social Security or Taxpayer
                                        Identification Number

                                        _______________________
                                         Signature Guaranteed

                                        _______________________

ASSIGNMENT

To Be Executed by the Registered Holder
in Order to Assign Warrants

FOR VALUE RECEIVED, ______________________, hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

________________________ of the Warrants represented by this Warrant Certificate, and hereby irrevocably constitutes and appoints ________________________ Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in the premises.

Dated:_____________ X______________________

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, MIDWEST STOCK EXCHANGE OR BOSTON STOCK EXCHANGE.

Draft of August 19, 1996

CHICAGO PIZZA & BREWERY, INC.

THE BOSTON GROUP, L.P.

REPRESENTATIVE'S WARRANT AGREEMENT

Dated as of ____________, 1996

REPRESENTATIVE'S WARRANT AGREEMENT

THIS REPRESENTATIVE'S WARRANT AGREEMENT (the "Agreement"), dated as of _________ __, 1996, is made and entered into by and between CHICAGO PIZZA & BREWERY, INC., a California corporation (the "Company") and THE BOSTON GROUP, L.P. (the "Representative").

The Company agrees to issue and sell to the Representative and the Representative agrees to purchase from the Company, for the price of $100, a warrant, as hereinafter described (the "Warrant" and together with any warrants subsequently issued hereunder, the "Warrants"), to purchase (a) up to 150,000 shares, as may be adjusted from time to time as set forth herein, of the Company's common stock, no par value (the "Common Stock") and (b) up to 150,000 Redeemable Warrants (as defined below), as adjusted from time to time as set forth herein or in the Warrant Agreement dated ____________, 1996 between the Company and Corporate Stock Transfer Corporation (the "Redeemable Warrant Agreement"). The Warrant is being issued in connection with a public offering (the "Offering") by the Company of 1,500,000 shares of Common Stock and 1,500,000 warrants (the "Redeemable Warrants") to purchase Common Stock subject to the terms of the Redeemable Warrant Agreement, pursuant to an underwriting agreement (the "Underwriting Agreement"), dated as of ___________, 1996, by and between the Company and the Representative. The shares of Common Stock issuable upon exercise of the Warrants, and the shares of Common Stock issuable upon exercise of the Redeemable Warrants that may be purchased upon exercise of this Warrant are hereinafter referred to as the "Warrant Stock." The Redeemable Warrants issuable upon exercise of the Warrants are identical to the Redeemable Warrants issued pursuant to the Underwriting Agreement. The Warrants shall be issued pursuant to this Agreement on the Closing Date, as such term is defined in the Underwriting Agreement.

In consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants, the Warrant Stock, the Redeemable Warrants issuable upon exercise of the Warrants and the respective rights and obligations thereunder, the Company and the Representative, for value received, hereby agree as follows:

SECTION 1. TRANSFERABILITY AND FORM OF WARRANTS.

1.1 REGISTRATION. All Warrants shall be numbered and shall be registered on the books of the Company when issued.

1.2 TRANSFER. The Warrants shall be transferable only on the books of the Company maintained at its principal office, wherever its principal office may then be located, upon delivery thereof duly endorsed by a Warrantholder (a "Warrantholder") or by its duly authorized attorney or representative and with the signatures properly guaranteed, accompanied by proper evidence of succession, assignment or authority to transfer. Upon any registration of transfer, the Company shall execute and deliver a new certificate evidencing each such Warrant

to each person entitled thereto.

1.3 LIMITATIONS ON TRANSFER OF THE WARRANTS. The Warrants, Warrantstock, and Redeemable Warrants (collectively, the "Securities") shall not be sold, transferred, assigned or hypothecated by the Representative until 9:00
a.m., Pacific time, on ______________, 1997 [ONE YEAR AFTER THE EFFECTIVE DATE] and appropriate legends shall be placed on the Warrants, except that Warrants may be transferred before such date: (i) to one or more officers or partners of any Warrantholder, and the officers or partners of any such partner; (ii) to any other member of the National Association of Securities Dealers, Inc. which participated in the Offering and the officers or partners of any such member;
(iii) to successors to a Warrantholder or the officers or partners of any such successor; (iv) to a purchaser of all or substantially all of the assets of a Warrantholder; or (v) by will, pursuant to the laws of descent or distribution or by operation of law. The Warrants may be divided or combined, upon request to the Company by a Warrantholder, into a certificate or certificates representing the right to purchase the same aggregate number of Warrant Stock. Unless the context indicates otherwise, the term "Warrantholder" shall include the Representative and any transferee or transferees of the Warrants pursuant to this subsection 1.3 and as otherwise permitted by this Agreement, and the term "Warrants" shall include any and all Warrants outstanding pursuant to this Agreement, including those evidenced by a certificate or certificates issued upon division, exchange, substitution or transfer pursuant to this Agreement.

1.4 FORM OF WARRANTS. The text of the Warrant certificates and of the form of election to purchase Warrant Stock and/or Redeemable Warrants shall be substantially as set forth in Exhibit A attached hereto. The aggregate number of shares of Common Stock and Redeemable Warrants issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events, all as hereinafter or therein provided. The Warrants shall be executed on behalf of the Company by its President or by a Vice President and attested to by its Secretary or by an assistant Secretary. A Warrant certificate bearing the signature of an individual who was at any time the proper officer of the Company shall bind the Company, notwithstanding that such individual shall have ceased to hold such office prior to the delivery of such Warrant certificate or did not hold such office on the date of this Agreement or at any time thereafter.

The Warrant certificate shall be dated as of the date of signature thereof by the Company either upon initial issuance or upon division, exchange, substitution or transfer.

1.5 LEGENDS. Each certificate for any of the Securities and Warrant Stock shall bear the following legend, unless, at the time of issuance such Security is subject to a currently effective Registration Statement under the Securities Act of 1933, as amended (the "Act"):

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933

AND MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT IN COMPLIANCE WITH SECTION 11 OF THE REPRESENTATIVE'S WARRANT AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED."

Any certificate issued at any time in exchange or substitution for any certificate bearing such legend (except a new certificate issued upon completion of a public distribution pursuant to an effective registration statement under the Act, of the securities represented thereby) shall also bear the above legend unless, in the opinion of the Company's counsel, the securities represented thereby need no longer be subject to such restrictions.

SECTION 2. EXCHANGE OF WARRANT CERTIFICATE. Any Warrant certificate may be exchanged for another certificate or certificates entitling the Warrantholder to purchase a like aggregate number of shares of Warrant Stock or Redeemable Warrants as the certificate or certificates surrendered then entitled such Warrantholder to purchase. Any Warrantholder desiring to exchange a Warrant certificate shall make such request in writing delivered to the Company, and shall surrender, properly endorsed, the certificate evidencing the Warrant to be so exchanged. Thereupon, the Company shall execute and deliver to the person entitled thereto a new Warrant certificate or certificates as so requested.

SECTION 3. TERM OF WARRANTS; EXERCISE OF WARRANTS.

3.1 EXERCISE OF WARRANTS. Subject to the terms of this Agreement, the Warrantholder shall have the right, at any time and from time to time until 5:00 p.m., Pacific Time, on _____________, 2002 [SIX YEARS AFTER THE EFFECTIVE DATE] (the "Termination Date"), to purchase from the Company up to the number of fully paid and nonassessable shares of Warrant Stock and Redeemable Warrants to which the Warrantholder may at the time be entitled to purchase pursuant to this Agreement, upon surrender to the Company, at its principal office, of the certificate evidencing the Warrants to be exercised, together with the purchase form on the reverse thereof duly completed and executed, and upon payment to the Company of the respective Warrant Price (as defined in and determined in accordance with the provisions of this Section 3 and Sections 7 and 8 hereof) for the number of shares of Warrant Stock and/or Redeemable Warrants in respect of which such Warrants are then exercised, but in no event for less than 100 shares of Warrant Stock or 100 Redeemable Warrants (unless less than an aggregate of 100 shares of Warrant Stock or Redeemable Warrants, respectively, are then purchasable under all outstanding Warrants held by such Warrantholder). This Warrant may be exercised from time to time in whole or in part.

3.2 PAYMENT OF WARRANT PRICE. Payment of the Warrant Price shall be made in cash, by certified or official bank check in Los Angeles Clearing House funds (next day funds), or any combination thereof.

3.3 CASHLESS EXERCISE. In addition to the method of payment set forth in Section 3.2 above and in lieu of any cash payment required thereunder, unless otherwise prohibited by law, the Warrantholders shall have the right at any time and from time to time to exercise the Warrants in full or in part (i) by receiving from the Company the number of shares of Warrant Stock or Redeemable Warrants, as the case may be, equal to the number of shares of Warrant Stock or Redeemable Warrants, respectively, otherwise issuable upon such exercise less the number of shares of Warrant Stock or Redeemable Warrants, respectively, having an aggregate value on the date of exercise equal to the respective Warrant Price multiplied by the number of shares of Warrant Stock or Redeemable Warrants, respectively, for which this Warrant is being exercised and/or (ii) by delivering to the Company the number of shares of Common Stock or Redeemable Warrants, respectively, having an aggregate value on the date of exercise equal to the respective Warrant Price multiplied by the number of shares of Warrant Stock or Redeemable Warrants, respectively, for which this Warrant is being exercised.

Upon surrender of the Warrants and payment of the respective Warrant Price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to or upon the written order of the Warrantholder, and in such name or names as the Warrantholder may designate, certificates for the number of full shares of Warrant Stock or Redeemable Warrants so purchased upon such exercise of the Warrant, together with cash, as provided in Section 9 hereof, in respect of any fractional shares or Redeemable Warrants otherwise issuable upon such surrender. Such certificate or certificates, to the extent permitted by law, shall be deemed to have been issued and any person so designated to be named therein shall be defined to have become a holder of record of such securities as of the date of surrender of the Warrants and payment of the respective Warrant Price, as aforesaid, notwithstanding that the certificate or certificates representing such securities shall not actually have been delivered or that the stock transfer books or Redeemable Warrants books of the Company shall then be closed. The Warrants shall be exercisable, at the election of the Warrantholder, either in full or from time to time in part for Common Stock or Redeemable Warrants, or both, and, in the event that a Warrant is exercised in respect of less than all of the shares of Warrant Stock or Redeemable Warrants specified therein at any time prior to the Termination Date, a new Warrant evidencing the remaining shares of the Warrant Stock or Redeemable Warrants purchasable by such Warrantholders hereunder shall be issued by the Company to such Warrantholders.

3.4 SOLICITATION FEE. The Company hereby appoints the Representative as the exclusive solicitation agent for the Warrants, and hereby agrees to pay the Representative a commission equal to five percent (5%) of the exercise price of the Warrants (other than Warrants exercised directly on behalf of the Representative), payable on the date of the exercise thereof. The Company will not solicit the exercise of the Warrants other than through the Representative.

SECTION 4. VALIDITY; PAYMENT OF TAXES. All securities delivered upon exercise of a Warrant shall be duly and validly issued and non-assessable. The Company shall pay all documentary stamp taxes, if any, attributable to the initial issuance of the Warrants and the shares of Warrant Stock and Redeemable Warrants issuable upon the exercise of the Warrants;

provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any secondary transfer of the Warrants, the Warrant Stock or Redeemable Warrants.

SECTION 5. MUTILATED OR MISSING WARRANTS. In case the certificate or certificates evidencing the Warrants shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of the Warrantholder, issue and deliver in exchange and substitution for and upon cancellation of the mutilated certificate or certificates, or in lieu of and substitution for the certificate or certificates lost, stolen or destroyed, a new Warrant certificate or certificates of like tenor and representing an equivalent right or interest, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of such Warrant.

SECTION 6. RESERVATION OF SHARES. The Company represents and warrants to the Warrantholder that there has been reserved, and the Company shall at all times keep reserved so long as the Warrants and Redeemable Warrants remain outstanding, out of its authorized Common Stock, such number of shares of Common Stock as shall be subject to purchase under the Warrants and Redeemable Warrants. Every transfer agent for the Common Stock and other securities of the Company issuable upon the exercise of the Warrants shall be irrevocably authorized and directed at all times to reserve such number of authorized shares and other securities as shall be required for such purpose. The Company shall keep a copy of this Agreement on file with every transfer agent for the Common Stock and other securities of the Company issuable upon the exercise of the Warrants. The Company shall supply every such transfer agent with duly executed stock and other certificates, as appropriate, for such purpose and shall provide or otherwise make available any cash which may be payable in lieu of the issuance of fractional shares, as provided in Section 9 hereof.

SECTION 7. WARRANT PRICE. The price per share at which shares of Warrant Stock shall be purchasable upon the exercise of the Warrants shall be 120% of the initial public offering price of Common Stock in the Offering, subject to adjustment pursuant to Section 8 hereof (as so adjusted from time to time, the "Purchase Price"). The price per Redeemable Warrant at which Redeemable Warrants shall be purchasable upon the exercise of the Warrants shall be 120% of the initial public offering price of Redeemable Warrants sold in the Offering, subject to adjustment pursuant to Section 8 hereof (as so adjusted from time to time, the "Redeemable Warrant Price"). (The "Purchase Price" and "Redeemable Warrant Price" are herein referred to as the respective "Warrant Price".)

SECTION 8. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OF COMMON STOCK DELIVERABLE.

8.1 ADJUSTMENT OF PURCHASE PRICE.

(a) Except as hereinafter provided, in the event the Company shall, at any time or from time to time after the date hereof, sell any shares of Common Stock, including shares held in the Company's treasury and shares of Common Stock issued upon the exercise of

any options, rights or warrants to subscribe for shares of Common Stock and shares of Common Stock issued upon the direct or indirect conversion or exchange of securities for a consideration per share less than the Purchase Price or issue any shares of Common Stock as a stock dividend to the holders of Common Stock, or subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares (any such sale, issuance, subdivision or combination being herein called a "Change of Shares"), then, and thereafter upon each further Change of Shares, the Purchase Price for the Warrants in effect immediately prior to such Change of Shares shall be changed to a price (including any applicable fraction of a cent to the nearest cent) determined by dividing (A) the sum of (x) the total number of shares of Common Stock outstanding immediately prior to such Change of Shares, multiplied by the Purchase Price in effect immediately prior to such Change of Shares, and (y) the consideration, if any, received by the Company upon such sale, issuance, subdivision or combination by (B) the total number of shares of Common Stock outstanding immediately after such Change of Shares; PROVIDED, HOWEVER, that in no event shall the Purchase Price be adjusted pursuant to this computation to an amount in excess of the Purchase Price in effect immediately prior to such computation, except in the case of a combination of outstanding shares of Common Stock.

For the purposes of any adjustment to be made in accordance with this
Section 8.1(a) the following provisions shall be applicable:

(i) In case of the issuance or sale of shares of Common Stock (or of other securities deemed hereunder to involve the issuance or sale of shares of Common Stock) for a consideration part or all of which shall be cash, the amount of the cash portion of the consideration therefor deemed to have been received by the Company shall be (i) the subscription price, if shares of Common Stock are offered by the Company for subscription, or (ii) the public offering price (before deducting therefrom any compensation paid or discount allowed in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services, or any expenses incurred in connection therewith), if such securities are sold to underwriters or dealers for public offering without a subscription offering, or (iii) the gross amount of cash actually received by the Company for such securities, in any other case.

(ii) In case of the issuance or sale (otherwise than as a dividend or other distribution on any stock of the Company of shares of Common Stock (or of other securities deemed hereunder to involve the issuance or sale of shares of Common Stock) for a consideration part or all of which shall be other than cash or as part of a unit, the amount of the consideration therefor other than cash deemed to have been received by the Company or the amount received per share as part of a unit shall be the value of such consideration as determined in good faith by the Board of Directors of the Company on the basis of a record of values of similar property, services or securities.

(iii) Shares of Common Stock issuable by way of dividend or other distribution on any stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of

shareholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration.

(iv) The reclassification of securities of the Company other than shares of Common Stock into securities including shares of Common Stock shall be deemed to involve the issuance of such shares of Common Stock for a consideration other than cash immediately prior to the close of business on the date fixed for the determination of security holders entitled to receive such shares, and the value of the consideration allocable to such shares of Common Stock shall be determined as provided in Section 8.1(a)(ii) hereof.

(v) The number of shares of Common Stock at any one time outstanding shall be deemed to include the aggregate maximum number of shares issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of options, rights or warrants and upon the conversion or exchange of convertible or exchangeable securities.

(b) Upon each adjustment of the Purchase Price pursuant to this
Section 8, the number of shares of Common Stock purchasable upon the exercise of each Warrant shall be the number derived by multiplying the number of shares of Common Stock purchasable immediately prior to such adjustment by the Purchase Price in effect prior to such adjustment and dividing the product so obtained by the applicable adjusted Purchase Price.

8.2 ADJUSTMENTS FOR OPTIONS, ETC. In case the Company shall at any time after the date hereof issue options, rights or warrants to subscribe for shares of Common Stock, or issue any securities convertible into or exchangeable for shares of Common Stock, for a consideration per share (determined as provided in Section 8.1(a) hereof and as provided below) less than the Purchase Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, or without consideration (including the issuance of any such securities by way of dividend or other distribution), the Purchase Price in effect immediately prior to the issuance of such options, rights or warrants, or such convertible or exchangeable securities, as the case may be, shall be reduced to a price determined by making the computation in accordance with the provisions of
Section 8.1(a) hereof, provided that:

(a) The aggregate maximum number of shares of Common Stock, as the case may be, issuable or that may become issuable under such options, rights or warrants (assuming exercise in full even if not then currently exercisable or currently exercisable in full) shall be deemed to be issued and outstanding at the time such options, rights or warrants were issued, for a consideration equal to the minimum purchase price per share provided for in such options, rights or warrants at the time of issuance, plus the consideration, if any, received by the Company for such options, rights or warrants; PROVIDED, HOWEVER, that upon the expiration or other termination of such options, rights or warrants, if any thereof shall not have been exercised, the number of shares of Common Stock deemed to be issued and outstanding pursuant to this subsection (a) (and for the purposes of Section 8.1(a)(v) hereof) shall be reduced by the number of shares as to which options, warrants and/or rights shall have expired, and such number of

shares shall no longer be deemed to be issued and outstanding, and the Purchase Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares actually issued plus the shares remaining issuable upon the exercise of those options, rights or warrants as to which the exercise rights shall not have expired or terminated unexercised.

(b) The aggregate maximum number of shares of Common Stock issuable or that may become issuable upon conversion or exchange of any convertible or exchangeable securities (assuming conversion or exchange in full even if not then currently convertible or exchangeable in full) shall be deemed to be issued and outstanding at the time of issuance of such securities, for a consideration equal to the consideration received by the Company for such securities, plus the minimum consideration, if any, receivable by the Company upon the conversion or exchange thereof; PROVIDED, HOWEVER, that upon the termination of the right to convert or exchange such convertible or exchangeable securities (whether by reason of redemption or otherwise), the number of shares of Common Stock deemed to be issued and outstanding pursuant to this subsection
(b) (and for the purposes of Section 8.1(a)(v) hereof) shall be reduced by the number of shares as to which the conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be issued and outstanding, and the Purchase Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares actually issued plus the shares remaining issuable upon conversion or exchange of those convertible or exchangeable securities as to which the conversion or exchange rights shall not have expired or terminated unexercised.

(c) If any change shall occur in the price per share provided for in any of the options, rights or warrants referred to in Section 8.2(a) hereof, or in the price per share or ratio at which the securities referred to in Section 8.2(b) hereof are convertible or exchangeable, such options, rights or warrants or conversion or exchange rights, as the case may be, to the extent not theretofore exercised, shall be deemed to have expired or terminated on the date when such price change became effective in respect of shares not theretofore issued pursuant to the exercise or conversion or exchange thereof, and the Company shall be deemed to have issued upon such date new options, rights or warrants or convertible or exchangeable securities.

(d) In case of any reclassification or change of outstanding shares of Common Stock issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination), or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a Subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification or change of the then outstanding shares of Common Stock or other capital stock issuable upon exercise of the Warrants), or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, then, as a condition of such reclassification, change, consolidation, merger, sale or conveyance, the Company, or such

successor or purchasing corporation, as the case may be, shall make lawful and adequate provision whereby the Registered Holder of each Warrant then outstanding shall have the right thereafter to receive on exercise of such Warrant the kind and amount of securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of the number of securities issuable upon exercise of such Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance and shall forthwith file at the Corporate Office of the Warrant Agent a statement signed by its Chairman of the Board, President or a Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary evidencing such provision. Such provisions shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in Sections 8.1 and 8.2 hereof. The above provisions of this Section 8.2(d) shall similarly apply to successive reclassifications and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances.

(e) Irrespective of any adjustments or changes in the Warrant Price or the number of shares of Common Stock or Redeemable Warrants purchasable upon exercise of the Warrants, no changes shall be necessary to the face of the Warrant Certificates theretofore and thereafter issued.

(f) After each adjustment of the Purchase Price and the Warrant Exercise Price pursuant to this Section 8, the Company will promptly prepare a certificate signed by the Chairman of the Board, President, or a Vice President and by the Treasurer or the Secretary of the Company setting forth: (i) the Purchase Price and Warrant Exercise Price, as so adjusted, (ii) the number of shares of Common Stock purchasable upon exercise of each Warrant, after such adjustment, and (iii) a brief statement of the facts accounting for such adjustment. The Company will promptly file such certificate with the Company's Transfer Agent and cause a brief summary thereof to be sent by ordinary first class mail to each Registered Holder at his last address as it shall appear on the registry books of the Warrant Agent. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity thereof except as to the holder to whom the Company failed to mail such notice, or except as to the holder whose notice was defective. The affidavit of an officer of the Warrant Agent or the Secretary or an Assistant Secretary of the Company that such notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(g) No adjustment of the Purchase Price shall be made as a result of or in connection with (i) the issuance or sale of shares of Common Stock pursuant to options, warrants, stock purchase agreements and convertible or exchangeable securities outstanding or in effect on the date hereof, (ii) the issuance or sale of shares of Common Stock upon the exercise of any "incentive stock options" (as such term is defined in the Internal Revenue Code of 1986, as amended), or any non-qualified stock options to non-employee directors of the Company pursuant to the Company's 1996 Stock Option Plan, whether or not such options were outstanding on the date hereof, or (iii) the issuance or sale of shares of Common Stock if the amount of said adjustment shall be less than ten cents ($.10); PROVIDED, HOWEVER, that in such

case, any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment that shall amount, together with any adjustment so carried forward, to at least ten cents ($.10). In addition, Registered Holders shall not be entitled to cash dividends paid by the Company prior to the exercise of any Warrant or Warrants held by them.

8.3 ADJUSTMENT OF REDEEMABLE WARRANT PRICE. Upon each adjustment of the Purchase Price pursuant to this Section 8, the Redeemable Warrant Price shall be adjusted by multiplying the number of Redeemable Warrants immediately prior to such adjustment by the Purchase Price in effect prior to such adjustment and dividing the product so obtained by the applicable adjusted Purchase Price. Upon any exercise of this Warrant, the Redeemable Warrants issued shall reflect all anti-dilution changes made in such Redeemable Warrants since the Warrant Agreement for the Redeemable Warrants was entered into.

8.4 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION, CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger of the Company into another corporation or other entity or in case of any sale, lease, conveyance or other transfer to another corporation, person or other entity of the property, assets or business of the Company as an entirety or substantially as an entirety, the Company or such successor or purchasing corporation, person or other entity, as the case may be, shall execute with the Warrantholder, and the agreements governing such consolidation, merger, sale, lease, conveyance or other transfer shall require such execution of, an agreement that the Warrantholder shall have the right thereafter upon payment of the Warrant Price in effect immediately prior to such event, upon exercise of the Warrants, to receive the kind and amount of shares and other securities and property which it would have owned or have been entitled to receive after the happening of such consolidation, merger, sale, lease, conveyance or other transfer had the Warrants (and each underlying security) been exercised immediately prior to such action. The Company shall promptly mail to each Warrantholder by first class mail, postage prepaid, notice of the execution of any such agreement. In the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue Code of 1986, in which the Company is the surviving corporation, the right to purchase shares of Warrant Stock under the Warrants shall terminate on the date of such merger and thereupon the Warrants shall become null and void, but only if the controlling corporation shall agree to substitute for the Warrants its warrant which entitles the holder thereof to purchase upon its exercise the kind and amount of shares and other securities and property which it would have owned or been entitled to receive had the Warrants been exercised immediately prior to such merger. Any such agreements referred to in this Section 8.4 shall provide for adjustments, which shall be as nearly equivalent as may be practicable to the adjustments provided for in
Section 8 hereof, and shall provide for terms and provisions at least as favorable to the Warrantholder as those contained in this Agreement. The provisions of this Section 8.4 shall similarly apply to successive consolidations, mergers, sales, leases, conveyances or other transfers.

8.5 PAR VALUE OF SHARES OF COMMON STOCK. Before taking any action which would cause an adjustment effectively reducing the portion of the Warrant Price allocable to each

share of Warrant Stock below the then par value per share, if any, of the Warrant Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Stock upon exercise of the Warrants.

8.6 INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain Coopers & Lybrand L.L.P. (or such other accounting firm qualified to practice in front of the Securities and Exchange Commission (the "Commission") as is reasonably acceptable to the Representative) to make any computation required under this
Section 8, and a certificate signed by such firm shall be conclusive evidence of the correctness of any computation made under this Section 8.

8.7 REDEMPTION OF WARRANTS. Notwithstanding anything to the contrary contained in this Agreement or elsewhere, the Warrants cannot be redeemed by the Company under any circumstances.

SECTION 9. FRACTIONAL SHARES; CURRENT MARKET PRICE. The Company shall not be required to issue fractional shares of Common Stock or Redeemable Warrants on the exercise of a Warrant. If any fraction of a share of Common Stock or Redeemable Warrants would, except for the provisions of this Section 9, be issuable upon the exercise of a Warrant (or specified portion thereof), the Company shall in lieu thereof pay an amount in cash equal to the then Current Market Price multiplied by such fraction (less the applicable Redeemable Warrant Price for a Redeemable Warrant). For purposes of this Agreement, the term "Current Market Price" shall mean (i) if the Common Stock is traded on the Nasdaq National Market ("NNM") or on a national securities exchange, the per share closing price of the Common Stock in the NNM or on the principal stock exchange on which it is listed, as the case may be, on the date of exercise of the Warrant or, with respect to any adjustment pursuant to Section 8.1 hereof, on the date immediately preceding the announcement of the event causing such adjustment or (ii) if the Common Stock is traded in the over-the-counter market and not in the NNM or on any national securities exchange, the average of the per share closing bid prices of the Common Stock on the thirty (30) consecutive trading days immediately preceding the date in question, as reported by The Nasdaq Small Cap Market (or an equivalent generally accepted reporting service if quotations are not reported on The Nasdaq Small Cap Market). The closing price referred to in clause (i) above shall be the last reported sale price or, in the case no such reported sale takes place on such day, the average of the reported closing bid and asked prices, in either case in the NNM or on the principal stock exchange on which the Common Stock is then listed. For purposes of clause (ii) above, if trading in the Common Stock is not reported by The Nasdaq Small Cap Market, the bid price referred to in said clause shall be the lowest bid price as reported in the Nasdaq Electronic Bulletin Board or, if not reported thereon, as reported in the "pink sheets" published by National Quotation Bureau, Incorporated, and, if such Common Stock is not so reported, shall be the price of a share of Common Stock determined by the Company's Board of Directors in good faith.

SECTION 10. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER. Except as

expressly provided herein, nothing contained in this Agreement or in the Warrants shall be construed as conferring upon the Warrantholder or its transferees any rights as a shareholder of the Company, including the right to vote, receive dividends, consent or receive notices as a shareholder in respect of any meeting of shareholders for the election of directors of the Company or any other matter. If, however, at any time prior to the expiration of the Warrants and prior to their exercise, any one or more of the following events shall occur:

(a) any action which would require an adjustment pursuant to
Section 8 hereof;

(b) an issuance by the Company of rights, options, warrants or convertible securities to all or substantially all holders of its Common Stock, without any charge to such holders, containing the right to subscribe for or purchase Common Stock; or

(c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation, merger or sale of its property, assets and business as an entirety or substantially as an entirety) shall be proposed;

then the Company shall give notice in writing of such event to the Warrantholder, as provided in Section 13 hereof, at least 20 days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to any relevant dividend, distribution or other rights or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation or winding up. Such notice shall specify such record date or the date of closing the transfer books, as the case may be.

SECTION 11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS; OBLIGATIONS IN REGISTRATION.

11.1 NOTICE OF TRANSFER. The Warrantholder agrees that prior to making any disposition of the Securities, other than to persons or entities identified in the first sentence of Section 1.3, the Warrantholder shall give written notice to the Company describing briefly the manner in which any such proposed disposition is to be made; and no such disposition shall be made unless the Warrantholder has notified, or currently with such disposition notifies, the Company that in the opinion of counsel reasonably satisfactory to the Company a registration statement, application or other notification, filing or post- effective amendment or supplement thereto (hereinafter collectively a "Registration Statement") under the Act or the state securities or "blue sky" laws of any applicable jurisdiction is not required with respect to such disposition and no such Registration Statement has been filed by the Company with, and declared effective, if necessary, by, the Commission or state securities commission or agency. The Warrantholder agrees that it shall use its reasonable best efforts to obtain from any transferee who acquires any Warrants in a private transaction with the Warrantholder an agreement by such transferee that it agrees to be bound by any transfer restrictions set forth in this subsection 11(a) then applicable to such transferees.

11.2 REGISTRATION OF SECURITIES. The Company shall be obligated to prepare and file a registration statement, and amendments thereto, with the Commission for the registration of the Securities under the Act and shall be obligated to cause such registration statement, and amendments thereto, to be declared effective by the Commission on or prior to ______________, 199_ [ONE YEAR AFTER WARRANT ISSUED]. The Company shall be obligated to the registered holders of the Securities to continually maintain, at the Company's own expense, the currency and effectiveness of such registration statement of the Company, including the filing of any and all applications and other notifications, filings and post-effective amendments and supplements (collectively, the "Current Registration Statement"), as may be necessary, so as to permit the resale of the Securities until the earlier of the time that all shares of Securities have been sold pursuant to the Current Registration Statement or the Termination Date.

11.3 FURTHER RIGHTS OF WARRANT HOLDERS. If at any time after the date hereof the Current Registration Statement is no longer in effect other than because all Securities have been sold pursuant to the Current Registration Statement or because the Termination Date has already occurred, the Company shall be obligated to the registered holders of the Securities as follows:

(a) Whenever during the period beginning on ____________, 1997
[ONE YEAR AFTER THE EFFECTIVE DATE] and ending on _____________, 2004 [SEVEN YEARS AFTER THE EFFECTIVE DATE], the Company proposes to file with the Commission a Registration Statement (other than as to securities issued pursuant to an employee benefit plan or as to a transaction subject to Rule 145 promulgated under the Act), it shall, at least thirty (30) days prior to each such filing, give written notice of such proposed filing to each holder of the Securities at their respective addresses as they appear on the records of the Company, and shall offer to include and shall include in such filing any proposed disposition of the Securities upon receipt by the Company, not more than twenty (20) days following the receipt of such notice, of a request therefor setting forth the facts with respect to such proposed disposition and all other information with respect to such person reasonably necessary to be included in such Registration Statement. In the event that such registration statement relates to an underwritten offering on a "firm commitment" basis and the managing underwriter for said offering advises the Company in writing that the inclusion of such Securities in the offering would be materially and substantially detrimental to the completion of the offering, such Securities shall nevertheless be included in the Registration Statement, provided that the Warrantholder and each holder of Securities desiring to have such Securities included in the Registration Statement agrees in writing for a period of ninety
(90) days following such offering not to sell or otherwise dispose of such Securities pursuant to such Registration Statement, which Registration Statement the Company shall keep effective for a period of at least nine (9) months following the expiration of such ninety (90) day period.

(b) In addition to any Registration Statement pursuant to subparagraph (i) above, during the four-year period beginning on _____________, 1997 [ONE YEAR AFTER THE EFFECTIVE DATE] and ending on the Termination Date, the Company will, as promptly as practicable (but in any event within sixty (60) days), after written request (the

"Request") by the Representative, or by a person or persons holding (or having the right to acquire by virtue of holding the Warrants) at least sixty percent (60%) of the shares of Warrant Stock which have been (or may be) issued upon exercise of the Warrants and Redeemable Warrants underlying the Warrants, prepare and file at the Company's expense (for the first registration statement prepared under this Section 11.3(b) only; the second registration statement prepared under this Section 11.3(b) shall be at the requesting holder's expense) a Registration Statement with the Commission and such applications or other filings as required under applicable state securities or blue sky laws sufficient to permit the public offering of the Securities, and shall use its reasonable best efforts at its own expense through its officers, directors, auditors and counsel, in all matters necessary or advisable, to cause such Registration Statement to become effective as promptly as practicable and to maintain such effectiveness so as to permit resale of the Securities covered by the Request until the earlier of the time that all such Securities have been sold or the expiration of one hundred eighty (180) days from the effective date of the Registration Statement; provided, however, that the Company shall be obligated to file only two such Registration Statements under this Section 11.3(b) only one of which shall be at the Company's expense. Notwithstanding the foregoing, once and only once during the period the Company would have an obligation to register the Securities pursuant to this Section 11.3(b), the Company shall not be obligated to effect a registration pursuant to this Section 11.3(b) during the three (3) month period starting with the date thirty (30) days prior to the Company's estimated date of filing of an underwritten public offering of securities solely for the account of the Company; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective and that the Company's estimate of the date of filing such registration statement is made in good faith; provided further, that the Company shall furnish to the Warrantholder and each holder of Securities a certificate signed by the managing underwriter stating that it would be seriously detrimental to the Company or its shareholders for the registration statement to be filed in the near future.

(c) All fees, disbursements and out-of-pocket expenses (other than the Warrantholder's brokerage fees and commissions and legal fees of counsel to the Warrantholder, if any) in connection with the filing of any Registration Statement or maintaining the currency and effectiveness of the Current Registration Statement (or obtaining the opinion of counsel and any no- action position of the commission with respect to sales under Rule 144) and in complying with applicable federal securities and state securities and blue sky laws shall be borne by the Company except for the second registration statement filed under Section 11.3(b). The Company at its expense shall supply any holder of the Securities with copies of such Registration Statement and the prospectus included therein and other related documents and any opinions and no-action letters in such quantities as may be reasonably requested by such holder of the Securities.

(d) The Company shall not be required by this Section 11 to file such Registration Statement if, in the opinion of counsel for the Representative, which counsel shall be reasonably satisfactory to the Company, or in the opinion of another counsel experienced in

securities law matters acceptable to counsel for such holders, the proposed public offering or other transfer as to which such Registration Statement is requested is exempt from applicable federal securities and state securities and blue sky laws and would result in all purchasers or transferees obtaining securities which are not "restricted securities," as defined in Rule 144 under the Act.

(e) The provisions of this Section 11 and of Section 12 hereof shall apply to the extent provided herein if the Company chooses to file an Offering Statement under Regulation A promulgated under the Act.

(f) Notwithstanding the other provisions of this Section 11, the Company may, in full satisfaction of its obligations under this Section 11, register the Securities with the Commission pursuant to the Act on any form then available to it so as to allow the unrestricted sale of the Securities to the public from time to time commencing at 9:00 a.m. Pacific time on _____________, 1997 [ONE YEAR AFTER THE EFFECTIVE DATE] and ending at 5:00 p.m. Pacific time on ____________, 2001 [SEVEN YEARS AFTER THE EFFECTIVE DATE] (the "Registration Period"). If the Company elects to so satisfy its obligations under this
Section 11, the Company shall also file such applications and other documents necessary to permit the sale of the Securities to the public during the Registration Period in those states in which the Securities were qualified for sale in the Offering or such other states as the holders of the Securities reasonably request. In order to comply with the provisions of this Section 11.3(f), the Company may, but is not required to, file more than one Registration Statement. The Company shall file such post-effective amendments and supplements as may be necessary to maintain the currency of such Registration Statement(s) during the period of its (their) use. In addition, if the holders of the Securities participating in such registration are advised by counsel that such Registration Statement, in their opinion, is deficient in any material respect, the Company shall use its best efforts to cause such Registration Statement to be amended to eliminate the concerns raised.

(g) The Company agrees that until all the Securities have been sold under a Registration Statement or pursuant to Rule 144 under the Act, it shall keep current in filing all materials required to be filed with the Commission in order to permit the holders of such securities to sell the same under Rule 144.

(h) In the event any holder of Securities timely elects to participate in an offering by including Securities in a Registration Statement pursuant to Section 11.3 hereof, the Company shall use its reasonable best efforts to effect such registration to permit the sale of Securities in accordance with the intended method or methods of disposition thereof, and pursuant thereto, the Company shall, as expeditiously as possible:

(i) Prepare and file with the Commission a Registration Statement or Registration Statements on a form available for the sale of the Securities, and to cause any such Registration Statement filed under the Act pursuant to Section 11.3 hereof to become effective at

the earliest possible date after the filing thereof and remain effective as provided herein and to comply with all applicable rules and regulations of the Commission (the "Rules and Regulations") in connection therewith, provided, however, that before filing a Registration Statement or prospectus or any amendments or supplements thereto, including documents which would be incorporated or deemed to be incorporated by reference in the Registration Statement after the initial filing of any Registration Statement, the Company will furnish to the Representative and the holders of the Securities, their respective counsel, and the underwriters, if any, to be engaged in connection with the offering and sale by the Company (for purposes of this Section 11.3(f), the "Public Underwriter"), copies of all such documents proposed to be filed, which documents will be subject to the review of the Representative and such holders of the Securities, their respective counsel and the Public Underwriter, if any, and the Company will not file any Registration Statement, amendment thereto, any prospectus or any supplement thereto (including such documents incorporated or deemed to be incorporated by reference) to which the Representative or the Public Underwriter, if any, shall reasonably object;

(ii) Prepare and promptly file with the Commission such amendments and post-effective amendments to a Registration Statement as may be necessary to keep such Registration Statement continuously effective for a period of twelve (12) months; cause the related prospectus to be supplemented, by any required prospectus supplement, and as so supplemented, to be filed pursuant to Rule 424 under the Act; and comply with the provisions of the Act with respect to the disposition of all Securities covered by such Registration Statement during the applicable period in accordance with the intended methods of disposition as set forth in such Registration Statement or supplement to such prospectus; the Company shall not be deemed to have used its reasonable best efforts to keep a Registration Statement effective during the applicable period if it intentionally or voluntarily takes any action that would result in the Representative or such Warrantholders not being able to sell their Securities;

(iii) As soon as the Company is advised or obtains knowledge thereof, advise the Representative and confirm the same in writing (1) when the Registration Statement, as amended, becomes effective and when any post- effective amendment to the Registration Statement becomes effective, (2) of the issuance by the Commission or any State or other regulatory body of any stop order or other order, or of the initiation or the threat or contemplation of any proceeding, the outcome of which may result in the suspension of the effectiveness of the Registration Statement or the issuance of any order preventing or suspending the use of any preliminary prospectus or the prospectus, or any amendment or supplement thereto, or the institution of any proceedings for that purpose, (3) of the issuance by the Commission or any State or other regulatory body of any proceedings for the suspension of the qualification of any of the Securities for offering or sale in any jurisdiction or of the initiation or the threat or contemplation of any proceeding for that purpose, (4) of the receipt of any comments from the Commission and (5) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the prospectus related thereto or for additional information; if the commission or any State or other regulatory body shall enter a stop order or other order suspending the effectiveness of the Registration Statement or

preventing or suspending the use of any preliminary prospectus or the prospectus, or any amendment or supplement thereto, or suspend such qualification at any time, make every effort to obtain promptly the lifting of such order or suspension;

(iv) If requested by the Public Underwriter, if any, or the Representative, or any holder of Securities (1) immediately incorporate in a prospectus supplement or post-effective amendment such information as the Representative or such Warrantholder and the Public Underwriter, if any, agree should be included therein relating to such sale and distribution of the Securities, including, without limitation, information with respect to the number of Securities being sold to such Public Underwriter, the purchase price being paid therefor by such Public Underwriter and with respect to any other terms of the underwritten offering of the Securities to be sold in such offering; (2) make all required filings of such prospectus supplement or post- effective amendment as soon as notified of the matters to be so incorporated in such prospectus supplement or post-effective amendment; and (3) supplement or amend any Registration Statement if requested by the Representative, the holders of Securities or any underwriter of Securities;

(v) Furnish to the Representative, each of the holders of Securities and their respective counsel, without charge and at such place as the Representative may designate, copies of each preliminary prospectus, the Registration Statement and any pre-effective or post-effective amendments thereto (two of which will be signed and will include all financial statements and exhibits, one for the Representative and one for the Representative's Counsel), the Prospectus, and all amendments and supplements thereto, including any prospectus prepared after the effective date of the Registration Statement and any term sheet, in each case as soon as available and in such quantities as the Representative and each holder of the Securities may request;

(vi) During the time when a prospectus is required to be delivered under the Act, it shall comply with all requirements imposed upon it by the Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and by the Rules and Regulations, as from time to time in force, so far as necessary to permit the continuance of sales of or dealings in the Securities in accordance with the provisions hereof and the prospectus, or any amendments or supplements thereto; if at any time when a prospectus relating to the Securities is required to be delivered under the Act, any event shall have occurred as a result of which, in the opinion of the Company or counsel for the Company or the Representative or counsel for the Representative , the prospectus, as then amended or supplemented, would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, notify the underwriter and prepare and file, at the Company's expense, with the Commission an appropriate amendment or supplement to the Registration Statement or an amendment or supplement to the prospectus which will correct such statement or omission, or effect such compliance, each such amendment or supplement to be reasonably

satisfactory to the Representative and the counsel for the Representative; and furnish to the Representative copies of such amendment or supplement as soon as available and in such quantities as the Representative may request;

(vii) As soon as practicable, but in any event not later than forty-five (45) days after the end of the twelve (12) month period beginning after the effective date of the Registration Statement, make generally available to its security holders, in the manner specified in Rule 158(b) promulgated under the Act, and to the Representative, an earnings statement which will comply with the provisions of Section 11(a) of the Act and Rule 158(a) promulgated under the Act;

(viii) Deliver to the Representative and each of the holders of Securities, their respective counsel and the Public Underwriter, if any, without charge, as many copies of the prospectus or prospectuses (including each preliminary prospectus) and any amendment or supplement thereto as such persons may reasonably request; the Company consents to the use of any such prospectus or any amendment or supplement thereto by the Representative, the holders of Securities and the Public Underwriter, if any, in connection with the offering and sale of the Securities covered by such prospectus or any amendment or supplement thereto;

(ix) Prior to any public offering of Securities, use its best efforts, at or prior to the time the Registration Statement becomes effective, to qualify the Securities for offering and sale under the securities or "blue sky" laws of such jurisdictions as the Representative may reasonably designate to permit the continuance of sales and dealings therein for as long as may be necessary to complete the distribution, and make such applications, file such documents and furnish such information as may be required for such purpose; provided, however, the Company shall not be required to qualify as a foreign corporation or to execute a general consent to service of process in any such jurisdiction; in each jurisdiction where such qualification shall be effected, use its best efforts to file and make such statements or reports at such times as are or may be required by the laws of such jurisdiction to continue such qualification;

(x) Cooperate with the Representative, the holders of the Securities and the Public Underwriter, if any, to facilitate the timely preparation and delivery of certificates representing Securities to be sold, which certificates shall not bear any restrictive legends; and enable such Securities to be in such denominations and registered in such names as the Public Underwriter, if any, may request at least two (2) business days prior to any sale of such Securities;

(xi) Use its reasonable best efforts to cause the Securities covered by the Registration Statement to be registered with or approved by such other governmental bodies, agencies or authorities as may be necessary to enable the Representative, the holders of the Securities or the Public Underwriter, if any, to consummate the disposition of

such Securities;

(xii) Make every reasonable effort to cause all Securities covered by such Registration Statement to be (1) listed on each securities exchange, if any, in which equity securities issued by the Company are then listed or (2) quoted on the NNM if the Company's Common Stock is then authorized to be quoted on the NNM;

(xiii) Enter into such agreements (including, without limitation, if applicable, an underwriting agreement, in form, scope and substance as is customary in underwritten offerings) and take all such other actions in connection therewith in order to expedite or facilitate the disposition of such Securities and, in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration, (1) make such representations and warranties to the Representative and the holders of the Securities with respect to the business of the Company and its subsidiaries and the Public Underwriter, if any, the Registration Statement, the prospectus, the prospectus supplement (if any) and documents, if any, incorporated or deemed to be incorporated by reference in the Registration Statement, in each case in such form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested; (2) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Representative and the holders of the Securities), addressed to the Representative and the holders of the Securities with respect to the matters referred to in the preceding clause in such form, scope and substance as are customarily rendered to underwriters in underwritten offerings and such other matters as may be reasonably requested by counsel to the Representative, the holders of the Securities or the Public Underwriter, if any; (3) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data is, or is required to be, included in the Registration Statement) addressed to the Representative, the holders of the Securities and each of the Public Underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters to underwriters in connection with underwritten offerings; (4) if an underwriting agreement is entered into, the same shall set forth in full the indemnification and contribution provisions and procedures of Section 12 hereof (or such other provisions and procedures as shall be acceptable to the Representative, the holders of the Securities and to the Public Underwriter of such underwritten offering) with respect to all parties to be indemnified pursuant to said section; and (5) deliver such documents and certificates as may be reasonably requested by the Representative , the holders of the Securities and the Public Underwriter, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (1) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company; the above shall be done at each closing under such underwriting or similar agreement or as and to the extent required thereunder;

(xiv) Make available for inspection by a representative of the Representative or the holders of the Securities or any Public Underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant retained by the Representative or the holders of the Securities or such Public Underwriter, all financial and other records, pertinent corporate documents and properties and assets of the Company and its subsidiaries and cause the officers, directors, agents and employees of the Company and its subsidiaries to supply all information reasonably requested by any such representative, Public Underwriter, attorney or accountant in connection with any registration of the Securities; provided, however, that any records, information or documents that are designated by, the Company in writing at the time of delivery of such records, information or documents as confidential shall be kept confidential by such persons unless (1) disclosure of such records, information or documents is required by court or administrative order or is necessary to respond to inquiries of governmental or regulatory bodies, agencies or authorities, (2) disclosure of such records, information or documents is, in the opinion of counsel to the Representative or the holders of the Securities or to any Public Underwriter, required by law, regulations or legal process, (3) such records, information or documents are otherwise publicly available or (4) such records, information or documents become available to such person from a source other than the Company, and such source is not bound by a confidentiality agreement;

(xv) If the Company, in the exercise of its reasonable judgment, objects to any change reasonably requested by the Representative, the holders of the Securities or the Public Underwriter, if any, to any Registration Statement or prospectus or any amendments or supplements thereto (including documents incorporated or deemed to be incorporated therein by reference) as provided for in this Section 11.3(h), the Company shall not be obligated to make any such change and the Representative or the holders of the Securities may withdraw Securities from such registration, in which event the Company shall pay all registration expenses (including, without limitations, attorneys' fees and expenses) incurred by the Representative and the holders of the Securities in connection with such Registration Statement or prospectus or any amendment thereto or supplement thereof; provided, that if the Company provides the Representative and the holders of the Securities, as applicable, with a written opinion of independent counsel (which counsel may be the Company's regular outside counsel), upon which the Representative and such holders of the Securities may rely, that the change so requested is not required in order that the Registration Statement comply with all applicable securities laws (including any rules and regulations promulgated thereunder), the Representative and such holders of the Securities may withdraw Securities from such registration but the Company shall not be obligated to pay any registration expenses incurred by the Representative and the holders of the Securities; and

(xvi) Pay all costs and expenses incident to the performance of or compliance with the Company's obligations under Section 11.2 hereof and under this Section 11.3 (collectively, "Registration Expenses") whether or not any Registration Statement is filed or becomes effective, including, without limitation, the fees and disbursements of the Company's auditors, legal counsel, special legal counsel, legal counsel responsible for qualifying the

Securities under blue sky laws, all filing fees and printing expenses, all expenses in connection with the transfer and delivery of the Securities, and all expenses in connection with the qualification of the Securities under applicable blue sky laws; provided, however, that the Company shall not bear the Public Underwriter's discount or commission with respect to, or any transfer taxes imposed on, the Securities or the fees and expenses of counsel to the Representative or the holders of the Securities; provided, further, however, that the Representative shall not be responsible in any way for any fees or expenses of the Company's counsel, except, in each case, as provided in this
Section 11.3.

(xvii) For purposes of this Section 11, a holder of Securities shall include any holder of the Securities which have not been offered in the public.

SECTION 12. INDEMNIFICATION AND CONTRIBUTION.

12.1 INDEMNIFICATION OF WARRANTHOLDERS. The Company agrees to indemnify and hold harmless the Warrantholders and any Holder of Securities (for purposes of this Section 12, "Holder" shall include such individuals and the officers, directors, partners, employees, agents and counsel of a Warrantholder or a holder of Securities), and each person, if any, who controls a Holder ("controlling person") within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, from and against any and all losses, claims, damages, expenses (including, without limitation, reasonable attorneys' fees and expenses) or liabilities and all actions, suits, proceedings, injuries, arbitrations, investigations, litigation or governmental or other proceedings (in this Section 12, collectively, "actions") in respect thereof, whatsoever (including, without limitation, any and all expenses whatsoever reasonably incurred in investigating preparing or defending against any action, commenced or threatened, or any claim whatsoever), as such are incurred, to which a Holder or such controlling person may become subject under the Act, the Exchange Act or any other statute or at common law or otherwise, arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained
(i) in any preliminary prospectus, the Current Registration Statement, the Registration Statement or any prospectus (as from time to time amended and supplemented); (ii) in any post-effective amendment or amendments or any new registration statement and prospectus in which is included securities of the Company issued or issuable upon exercise of the Warrants; or (iii) in any application or other document or written communication (in this Section 12, collectively, "application") executed by the Company or based upon written information furnished by the Company in any jurisdiction in order to qualify the Securities under the securities or blue sky laws thereof or filed with the Commission, any state securities commission or agency, the National Association of Securities Dealers, Inc. (the "NASD") or the NNM or any other securities exchange; or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus, in light of the circumstances in which they were made), unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company with respect to a Holder by or on behalf of such Holder expressly for use in any preliminary prospectus, the Current Registration Statement, the Registration Statement or any

prospectus, or any amendment thereof or supplement thereto, or in any application, as the case may be. In addition to its other obligations under this Section 12.1, the Company agrees that, as an interim measure during the pendency of any action arising out of or based upon any untrue statement or omission, or alleged untrue statement or alleged omission as described in this Section 12.1, it shall reimburse the Holders (and, to the extent applicable, each controlling person) on a monthly basis for all reasonable legal or other expenses incurred in connection with investigating or defending any such action notwithstanding the absence of a judicial determination as to the propriety and enforceability of the Company's obligations to reimburse the Holders (and, to the extent applicable, each controlling person) for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. To the extent that any such interim reimbursement is so held to have been improper as to the Company, the Holders (and, to the extent applicable, each controlling person) shall promptly return it to the Company, together with interest compounded daily, based on the "reference rate" announced from time to time by Bank of America NTSA (the "Prime Rate"). Any such interim reimbursement payments which are not made to the applicable Holder within thirty (30) days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request.

The indemnity agreement in this subsection 12.1 shall be in addition to any liability which the Company may have at common law or otherwise.

12.2 INDEMNIFICATION OF COMPANY. Each Holder severally agrees to indemnify and hold harmless the Company (for purposes of this Section 12, "Company" shall include the officers, directors, partners, employees, agents and counsel of the Company) and each other person, if any, who controls the Company ("controlling person") within the meaning of the Act, to the same extent as the foregoing indemnity from the Company to the Holders, but only with respect to statements or omissions, if any, made in any preliminary prospectus, the Current Registration Statement, the Registration Statement or any prospectus or any amendment thereof or supplement thereto or in any application made in reliance upon, and in strict conformity with, written information furnished to the Company with respect to such Holder by or on behalf of such Holder expressly for use in any preliminary prospectus, the Current Registration Statement, the Registration Statement or any prospectus or any amendment thereof or supplement thereto or in any application, provided that such written information or omissions only pertain to disclosures in any preliminary prospectus, the Current Registration Statement, the Registration Statement or any prospectus directly relating to the transactions in connection with the Offering contemplated hereby. In addition to its other obligations under this Section 12.2, each Holder severally agrees that, as an interim measure during the pendency of any action arising out of or based upon any untrue statement or omission, or alleged untrue statement or alleged omission as described in this Section 12.2, it shall reimburse the Company (and, to the extent applicable, each

controlling person) on a monthly basis for all reasonable legal or other expenses incurred in connection with investigating or defending any action with respect to such Holder notwithstanding the absence of a judicial determination as to the propriety and enforceability of such Holder's obligations to reimburse the Company (and, to the extent applicable, each controlling person) for such expenses and the possibility that such payments might later be held to have been improper by a court of competent jurisdiction. To the extent that any such interim reimbursement is so held to have been improper as to such Holder, the Company (and, to the extent applicable, each controlling person) shall promptly return it to such Holder, together with interest compounded daily, based on the Prime Rate. Any such interim reimbursement payments which are not made to the Company within thirty (30) days of a request for reimbursement shall bear interest at the Prime Rate from the date of such request. Notwithstanding the provisions of this Section 12.2, in connection with a registration statement that includes Securities pursuant to Section 11.3(a) hereof, no such Holder shall be required to indemnify or hold harmless the Company or any controlling person for any amounts in excess of the net proceeds (before deducting expenses) applicable to the Securities sold by such Holder pursuant to the Registration Statement. Notwithstanding the provisions of this Section 12.2, in connection with a registration statement that includes that Holder's Securities pursuant to Sections 11.2 or 11.3, no such Holder shall be required to indemnify and hold harmless the Company or any controlling person for any amounts in excess of that portion of all expenses as to which indemnification is properly claimed under this Agreement equal to such Holder's relevant proportion of all net proceeds (before deduction of expenses) applicable to all securities sold pursuant to the Current Registration Statement or the Registration Statement, as applicable.

12.3 NOTICE OF CLAIM. Promptly after receipt by an indemnified party under this Section 12 of notice of the commencement of any action, such indemnified party shall notify each party against whom indemnification is to be sought in writing of the commencement thereof (but the failure to so notify an indemnifying party shall not relieve it from any liability which it may have under this Section 12 except to the extent that such indemnifying party has been materially prejudiced by such failure). In case any such action is brought against any indemnified party, and it notifies an indemnifying party or parties of the commencement thereof, the indemnifying party or parties shall be entitled to participate therein, and to the extent it or they may elect by written notice delivered to the indemnified party or parties promptly after receiving the aforesaid notice from such indemnified party or parties, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, an indemnified party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party or parties in connection with the defense of such action at the expense of the indemnifying party or parties, (ii) the indemnifying party or parties shall not have employed counsel reasonably satisfactory to such indemnified party to have charge of the defense of such action within a reasonable time after notice of commencement of the action or (iii) such indemnified party shall have reasonably concluded that there may be one or more defenses available to it which are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such action on behalf of the indemnified party or parties), in any of which events such fees and expenses of one additional counsel (in addition to appropriate local counsel) shall be borne by the indemnifying parties. In no event shall the indemnifying parties be liable for fees

and expenses of more than one counsel (in addition to appropriate local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. Anything in this Section 12 to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or action effected without its written consent; provided, however, that such consent may not be unreasonably withheld.

12.4 CONTRIBUTION. In order to provide for just and equitable contribution in any case in which (i) an indemnified party makes a claim for indemnification pursuant to this Section 12, but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of this Section 12 provide for indemnification in such case or (ii) contribution under the Act may be required on the part of any indemnified party, then each indemnifying party shall contribute to the amount paid as a result of such losses, claims, damages, expenses or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of each of the contributing parties, on the one hand, and the party to be indemnified, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, expenses or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Holder, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages, expenses or liabilities (or actions in respect thereof) referred to in the first sentence of this Section 12.4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 12.4, in a registration statement that includes a Holder's Securities pursuant to Sections 11.2 or 11.3 hereof, no Holder shall be required to contribute any amount in excess of the net proceeds (before deducting expenses) applicable to the Securities sold by such Holder pursuant to such registration statement and prospectus. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act and the cases and promulgations thereunder) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action against such party in respect to which a claim for contribution may be made against another party or parties under this Section 12.4, notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have hereunder or otherwise than under this
Section 12.4 except to the extent it has been materially prejudiced by such failure. The contribution agreement set forth above shall be in addition to any liabilities which any indemnifying party may have at common law or otherwise.

SECTION 13. NOTICES. All notices and communications hereunder, except as herein otherwise specifically provided, shall be in writing and shall be deemed to have been duly given if mailed, delivered by hand or transmitted by any standard form of telecommunication. Notices to the Warrantholders or a holder of Securities shall be directed to The Boston Group, L.P. at 2049 Avenue of the Stars, 30th Floor, Los Angeles, California 90067, Attention: Mr. Robert A. DiMinico, with a copy to Kaye, Scholer, Fierman, Hays & Handler, LLP at 1999 Avenue of the Stars, Suite 1600, Los Angeles, California 90067, Attention:
Channing D. Johnson Esq. Notices to the Company shall be directed to the Company at 26131 Marguerite Parkway, Suite A, Mission Viejo, California 92692, Attention: ______________, with a copy to Jeffer, Mangels, Butler & Marmaro LLP, 2121 Avenue of the Stars, 10th Floor, Los Angeles, California 90067, Attention:
Steven J. Insel, Esq..

SECTION 14. PARTIES. This Agreement shall inure solely to the benefit of and shall be binding upon, the Representative, the Company and the Warrantholders and the holders of Securities and the controlling persons, officers, directors and others referred to in Section 12 hereof, and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any provisions herein contained.

SECTION 15. MERGER OR CONSOLIDATION OF THE COMPANY. The Company shall not merge or consolidate with or into any other corporation or sell all or substantially all of its property to another corporation, unless the provisions of Section 8.4 hereof are complied with.

SECTION 16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements contained in the Underwriting Agreement, any schedule, exhibit, certificate or other instrument delivered by or on behalf of the parties hereto, or in connection with the transactions contemplated by this Agreement, shall be deemed to be representations and warranties hereunder. Notwithstanding any investigations made by or on behalf of the parties to this Agreement, all representations, warranties and agreements made by the parties to this Agreement or pursuant hereto shall survive the termination of this Agreement and the issuance, sale and delivery of the Warrant and the Securities.

SECTION 17. CONSTRUCTION. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of California, without giving effect to conflict of laws principles thereof.

SECTION 18. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which taken together shall be deemed to be one and the same instrument.

SECTION 19. ENTIRE AGREEMENT, AMENDMENTS. This Agreement and the Underwriting Agreement constitute the entire agreement of the parties hereto concerning the subject matter

hereof and supersede all prior written or oral agreements, understandings and negotiations with respect to the subject matter hereof. This Agreement may not be amended, modified or altered except in a writing signed by the Representative and the Company.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed, all as of the day and year first above written.

CHICAGO PIZZA & BREWERY, INC.

By: ____________________________
Name:
Title:

THE BOSTON GROUP, L.P.

By: ____________________________
Name:
Title:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT IN COMPLIANCE WITH SECTION 1.3 OF THE REPRESENTATIVE'S WARRANT AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED.

WARRANT CERTIFICATE NO. __

WARRANT TO PURCHASE _______
SHARES OF COMMON STOCK AND
__________ REDEEMABLE WARRANTS

VOID AFTER 5:00 P.M.
PACIFIC TIME, ON _________________, 2002

CHICAGO PIZZA & BREWERY, INC.

INCORPORATED UNDER THE LAWS
OF THE STATE OF CALIFORNIA

This certifies that, for value received, THE BOSTON GROUP, L.P., the registered holder hereof or assigns (the "Warrantholder"), is entitled to purchase from CHICAGO PIZZA & BREWERY, INC. (the "Company"), at any time during the period commencing at 9:00 am., Pacific time, on ________________, 199_, and before 5:00 p.m., Pacific time, on ________________, 200_, at the purchase price per share of Common Stock of $___________ (the "Purchase Price"), _______ shares of Common Stock of the Company (the "Warrant Stock") and __________ Redeemable Warrants. The number of shares of Common Stock of the Company purchasable upon exercise of each Warrant or exercise price of such shares and Redeemable Warrants evidenced hereby shall be subject to adjustment from time to time as set forth in the Representative's Warrant Agreement, dated as of ___________, 1996, by and between the Company and the Representative (the "Representative's Warrant Agreement").

The Warrants evidenced hereby are issued under and in accordance with the Representative's Warrant Agreement and a Warrant Agreement dated ____________, 1996 between the Company, The Boston Group, L.P. [AND U.S. STOCK TRANSFER CORPORATION], as warrant agent (the "Redeemable Warrant Agreement"), and are subject to the terms and provisions contained in the Representative's Warrant Agreement and the Redeemable Warrant Agreement, to all of which the Warrantholder by acceptance hereof consents.

The Warrants evidenced hereby may be exercised in whole or in part by presentation of this Warrant Certificate with the Purchase Form attached hereto duly executed (with a signature guarantee as provided hereon) and simultaneous payment of the respective Warrant Price at the principal office of the Company. Payment of such price shall be made at the option of the Warrantholder in any manner allowed in the Representative's Warrant Agreement.

Upon any partial exercise of the Warrants evidenced hereby, there shall be signed and issued to the Warrantholder a new Warrant Certificate in respect of the shares of Warrant Stock and Redeemable Warrants as to which the Warrants evidenced hereby shall not have been exercised. These Warrants may be exchanged at the office of the Company by surrender of this Warrant Certificate properly endorsed for one or more new Warrants of the same aggregate number of shares of Warrant Stock or Redeemable Warrants as evidenced by the Warrant or Warrants exchanged. No fractional securities shall be issued upon the exercise of rights to purchase hereunder, but the Company shall pay the cash value of any fraction upon the exercise of one or more Warrants. These Warrants are transferable at the office of the Company in the manner and subject to the limitations set forth in the Representative's Warrant Agreement.

This Warrant Certificate does not entitle any Warrantholder to any of the rights of a shareholder of the Company.

ATTEST:                [Seal]


_____________________________
Name:
Title:

                          CHICAGO PIZZA & BREWERY, INC.
                                  PURCHASE FORM

CHICAGO PIZZA & BREWERY, INC. (the "Company")
26131 Marguerite Parkway, Suite A
Mission Viejo, California 92692
Attention: President

The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant Certificate for, and to purchase thereunder, _____ shares of common stock of the Company (the "Warrant Stock") and/or ________ Redeemable Warrants provided for therein, and requests that certificates for the Warrant Stock and/or Redeemable Warrants be issued in the name of:

and, if said number of shares of Warrant Stock and Redeemable Warrants shall not be all the Warrant Stock and Redeemable Share purchasable hereunder, that a new Warrant Certificate for the balance of the Warrant Stock and Redeemable Share purchasable under the within Warrant Certificate be registered in the name of the undersigned Warrantholder or his Assignee as below indicated and delivered to the address stated below.

Dated:_________________

Name of Warrantholder

or Assignee:             _________________________
                              (Please Print)
Address:                 _________________________

                         _________________________

Signature:               _________________________

Note: The above signature must correspond with the name as it appears upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever, unless these Warrants have been assigned.

Signature Guaranteed:_____________________________

(Signature must be guaranteed by a bank or trust company having an office or correspondent in the United States or by a member firm of a registered securities exchange of the National Association of Securities Dealers, Inc.)

ASSIGNMENT
(To be signed only upon assignment of Warrants)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers the right to purchase _____ shares of Warrant Stock represented by the within Warrant Certificate unto, and requests that a certificate for such Warrant be issued in the name of:

hereby irrevocably constituting and appointing _______________ Attorney to transfer said Warrants on the books of the Company, with full power of substitution in the premises and, if said number of warrant Stock shall not be all of the Securities purchasable under the within Warrant Certificate, that a new Warrant Certificate for the balance of the Securities purchasable under the within Warrant Certificate be registered in the name of the undersigned Warrantholder and delivered to such Warrantholder's address as then set forth on the Company's books.

Dated:_______________ ____________________________ Signature of Registered Holder

Note: The above signature must correspond with the name as it appears upon the face of this Warrant Certificate in every particular, without alteration or enlargement or any change whatever.

Signature Guaranteed:_____________________________

(Signature must be guaranteed by a bank or trust company having an office or correspondent in the United States or by a member firm of a registered securities exchange or the National Association of Securities Dealers, Inc.