July 11, 2000
Xxxxx Revocable Trust of 1993
Xxxxx X. Xxxxx, Trustee (AWolff@)
00000 XxXxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx Living Trust
Xxxxxxx Xxxxxxxxx, Trustee (AWeinstock@)
00000 Xxx Xxxxxxx Xxxx. Suite 404
Los Angeles, CA 90049
AGREEMENT WITH REGARD TO GUARANTEE OF
XXXXX FARGO BANK FINANCING (the AWells Fargo Financing@)
TO THE COMPANY
Gentlemen:
The Company is in the process of refinancing the existing credit facility
with the Bank of America in the aggregate amount of approximately One Million
Nine Hundred Thousand Dollars ($1,900,000) (the AExisting Loan@). To enable the
Existing Loan to be paid off, the Company is in the process of receiving
$400,000 in the aggregate from two individual private lenders pursuant to two
promissory notes (the ANew Notes@). In conjunction with these New Notes and to
enable the payoff of the Existing Loan, each of you have agreed to guarantee
$750,000 of the One Million Five Hundred Thousand Dollar ($1,500,000) Xxxxx
Fargo Financing made available to the Company (each respectively, a "Loan
Guarantee").
As a condition of you each agreeing to provide your respective Loan
Guarantee, the Company is concurrently providing you with the following:
1. One warrant for each of you to purchase seventy-five thousand (75,000)
shares of the Company=s Common Stock at an exercise price of $1.40625
per share, in the form of the Warrant No. 1 to Purchase Shares of
Common Stock of Grill Concepts, Inc., attached hereto as Exhibit A
(the AWarrant@);
2. The Indemnification Agreement attached hereto as Exhibit B;
July 11, 2000
Page 4
3. The Security Agreement and UCC-1 Financing Statements attached hereto
as Exhibit C.
Additionally:
1. In the event your respective Loan Guarantees have not been terminated
within twelve (12) months of date of the original Loan Guarantee (the
AAnniversary Date@), or in the event either of you have paid any money
pursuant to the Loan Guarantee and such money, together with any
costs, expenses and fees incurred or payable in connection therewith,
has not been paid in full prior to the Anniversary Date, you will each
receive a warrant to purchase an additional seventy-five thousand
(75,000) shares of the Company=s Common Stock at the then Market Price
of said Common Stock (AWarrant No. 2@). For this purpose, Market Price
shall be the average closing bid price of the Company Common Stock
over the five (5) day trading period preceding the Anniversary Date.
The form of Warrant No. 2 is enclosed as Exhibit D hereto.
2. On each Anniversary Date of your Loan Guarantee, you shall each
receive a cash payment equal to two percent (2%) of the average of the
outstanding quarterly balances of Xxxxx Fargo Financing which is the
subject of your respective Loan Guarantees (a ALoan Guarantee
Payment@), i.e., if $750,000 is outstanding, each quarter on each of
the Xxxxx Fargo loans underlying your respective Loan Guarantees
during each quarter of the twelve (12) month period in question, you
would each receive $15,000 on such Anniversary Date. The Loan
Guarantee Payments shall be made on each Anniversary Date at the end
of any twelve month period during which a Loan Guarantee, or monies
paid by you pursuant to a Loan Guarantee, had been outstanding for all
or any portion of such period, whether or not the Loan Guarantee is
outstanding, or monies are owed to you, as of the Anniversary Date.
As a further inducement and condition to each of you making the respective
Loan Guarantees, the Company agrees as follows:
I. Until such time as your respective Loan Guarantees are terminated, or
in the event either of you have paid any monies pursuant to the Loan
Guarantee, until such monies and all costs, expenses and fees incurred
or payable in connection therewith, have been paid in full, you shall
each have the right to approve any new Company restaurant locations to
the extent such new locations require leases, joint ventures,
syndications or similar transactions that would result in dilution of
the Company=s existing stock ownership by virtue of issuance of
additional stock warrants or securities (a ANew Location@). Company
shall not open any New Location without the prior written consent from
each of you.
II Until the Xxxxx Loan Guarantee is terminated or in the event Xxxxx has
paid any monies pursuant to the Loan Guarantee, until such monies and
all costs, expenses and fees incurred or payable in connection
therewith, have been paid in full, Xxx Xxxxx shall have the right to
require the Company to enter into an agreement with Xxxxx Xxxxx
according to the terms set forth on attached Exhibit E; and
III. Commencing January 1, 2001 and continuing thereafter until your
respective Loan Guarantees are terminated or in the event either of
you have paid any monies pursuant to the Loan Guarantee, until such
monies and all costs, expenses and fees incurred or payable in
connection therewith, have been paid in full, 100% of the cash flow to
the Company from the Burbank Daily Grill and the San Xxxx Fairmont-The
Grill shall be utilized to pay down principal on the New Notes and the
Xxxxx Fargo Financing. No principal reduction of the Xxxxx Fargo
Financing is required during the year 2000.
IV. If at any time prior to the termination of the Loan Guarantees, as the
result of a default under the Xxxxx Fargo Financing or the New Notes,
either (i) Xxxxx and Xxxxxxxxx are compelled to pay off some or all of
the Xxxxx Fargo Financing whether or not such compulsion is by
judgment, other legal process or simply a request to honor the
guarantee, or (ii) a judgment is entered against Xxxxx and Xxxxxxxxx,
the Company agrees that the covenants set forth on the attached
Exhibit F shall become effective and continue until such time as the
Loan Guarantees are terminated, the Xxxxx Fargo Financing is paid in
full and any monies paid by either of you pursuant to the Loan
Guarantee, and all costs, expenses and fees incurred or payable in
connection therewith, have been paid in full.
Your obligations are conditioned upon unanimous approval of this Agreement
and of all the agreements, warrants and other documents related to this
Agreement, by the Board of Directors of the Company and by the Board of
Directors of Grill Concepts, Inc., a Delaware corporation and The Grill on the
Alley, Inc. The parties acknowledge that documents incidental to this
transaction has been prepared by the law firm of Herzog, Fisher, Xxxxxxx &
Xxxxx, a Law Corporation (the AFirm@), at the request of the Company to document
certain relationships among the parties. In view of the fact that the Firm has
in the past rendered legal services to and represented and will continue to
render legal services to and represent the Company, Xxxxx and/or Xxxxxxxxx in
connection with this and other matters, there is a potential for conflicts of
interest. The parties acknowledge that they are aware of such conflicts of
interest and the potential adverse effects to them which may result therefrom,
and, notwithstanding same, hereby reaffirm their request and consent to the
Firm=s preparation of these documents, and waive any potential conflicts of
interest with respect to or against the Firm in connection therewith. Further,
both parties acknowledge that the terms of this transaction and the documents
were negotiated by the parties without the Firm=s participation in same, both
parties being advised by the Firm that independent legal advisors should be
consulted relative to same.
If this properly reflects the agreement between each of you and the Company
with regard to the above, please confirm same in the space indicated below,
returning an executed copy to me for my files; it shall then constitute the
binding agreement between us and shall supersede all previous agreements and
communications relative to same.
Very truly yours,
GRILL CONCEPTS, INC.
By:
Its:
THE FOREGOING IS ACKNOWLEDGED AND AGREED TO THIS DAY OF , 2000:
XXXXX REVOCABLE TRUST OF 1993
By:
Xxxxx X. Xxxxx, Trustee
XXXXXXX X. XXXXXXXXX LIVING TRUST
By:
Xxxxxxx X. Xxxxxxxxx, Trustee
