Exhibit 10.1

Grill Concepts, Inc.

Executive Compensation Deferral Plan

Table of Contents

 

SECTION 1 – STATEMENT OF PURPOSE

   2

SECTION 2 – DEFINITIONS

   2

SECTION 3 – PLAN ADMINISTRATION

   3

SECTION 4 – ELIGIBILITY AND PARTICIPATION

   7

SECTION 5 – CREDITS UNDER THE PLAN

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SECTION 6 – PARTICIPANTS’ ACCOUNTS

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SECTION 7 – DISTRIBUTIONS

   9

SECTION 8 – PRE-RETIREMENT SURVIVOR BENEFIT

   10

SECTION 9 – COMPANY-OWNED LIFE INSURANCE (“COLI”)

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SECTION 10 – ADMINISTRATOR

   11

SECTION 11 – AMENDMENT OR TERMINATION

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SECTION 12 – MISCELLANEOUS

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SECTION 13 – CONSTRUCTION

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Grill Concepts ExecCompDeferralPlan 3-12-08

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Section 1 – Statement of Purpose

1.1 This Executive Compensation Deferral Plan is designed and implemented for
the purpose of providing to a select group of management or highly compensated
employees of the Company (as herein defined), as well as certain other
designated individuals who perform services for the Company, the opportunity to
accumulate capital on a tax deferred basis, thereby increasing the incentive for
such employees and individuals to continue to perform services for the Company.

It is the Company’s intention that the Plan and all elections, deferrals, rights
and features, notwithstanding any written terms or provisions to the contrary,
be operated in good faith compliance with Section 409 A of the Code and the
regulations promulgated thereunder.

Section 2 – Definitions

 

2.1 “Account” means the account established for each Participant by the Plan
Administrator.

2.2 “Account Balance” means the amount as denominated in dollars credited to a
Participant’s Account as indicated by the records of the Company as maintained
by the Plan Administrator.

2.3 “Administrator” means the person designated by the Board pursuant to
Section 3.1 to administer the Plan on behalf of the Company.

2.4 “Affiliate” means (a) a corporation that is a member of the same controlled
group of corporations (within the meaning of section 414(b) of the Code) as the
Company, (b) a trade or business (whether or not incorporated) under common
control (within the meaning of section 414(c) of the Code) with the Company,
(c) any organization (whether or not incorporated) that is a member of an
affiliated service group (within the meaning of section 414(m) of the Code) that
includes (i) the Company, (ii) a corporation described in clause (a) of this
definition or (iii) a trade or business described in clause (b) of this
definition, or (d) any other entity that is required to be aggregated with the
Company pursuant to regulations promulgated under section 414(o) of the Code by
the U.S. Treasury Department. A corporation, trade or business or entity shall
be an Affiliated employer only for such period or periods of time during which
such corporation, trade or business or entity is described in the preceding
sentence.

2.5 “Beneficiary” means the person to whom the balance in a deceased
Participant’s account is payable, as designated by a Participant in writing on a
form satisfactory to the Company. In the absence of any living designated
Beneficiary, a deceased Participant’s Beneficiary shall be the deceased
Participant’s then living spouse, if any, for his or her life; if none, or from
and after such spouse’s death, then the living children of the deceased
Participant, if any, in equal shares, for their joint and survivor lives; and if
none, or after their respective joint and survivor lives, the estate of the
deceased Participant.

2.6 “Board” means the Board of Directors of the Company, or any committee of
such Board that is authorized to oversee, administer and amend the Plan.

2.7 “Code” means the Internal Revenue Code of 1986, as it may be amended from
time to time.

2.8 “Company” means Grill Concepts, Inc., as well as any successor(s) that shall
maintain this Plan.

 

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2.9 “Deferral Election” means the provisions of the Participant Enrollment Form
and Election providing for the Participant to elect to defer a portion of his or
her salary and/or bonus, as amended from time to time.

2.10 “Disability” means a situation where a Participant (i) is unable to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or (ii) is,
by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering
employees of the Company. The Disability of a Participant shall be determined by
a licensed physician selected by the Company.

2.11 “Effective Date” means April 1, 2008.

2.12 “Employee” means an employee of the Company.

2.13 “ERISA” means the Employee Retirement Income Security Act of 1974, as may
be amended from time to time.

2.14 “Participant” means an Employee who participates in the Plan as provided in
Section 4 and who has not for any reason become ineligible to participate
further in the Plan. An individual shall continue to be a Participant until all
benefits payable to the Participant under this Plan have been distributed.
Members of the Company’s Board of Directors and independent contractors
performing services for the Company may, under rules that may be promulgated by
the Board, be included as Participants.

2.15 “Participation Agreement” means a written agreement between a Participant
and the Company in substantially the form attached hereto as Exhibit A.

2.16 “Plan” means the Grill Concepts, Inc. Executive Compensation Deferral Plan,
as contained in this document, including all amendments thereto.

2.17 “Plan Year” means the Plan’s accounting year of twelve (12) months
commencing on January 1 of each year and ending the following December 31. The
initial Plan Year shall be April 1, 2008 through December 31, 2008.

2.18 “Severe Financial Hardship” shall have the meaning set forth in
Section 7.3.

2.19 “Termination” means the separation from service with the Company or any of
its Affiliates, as described in Treasury Regulation § 1.409A-l(h).

2.20 “Vested” means the nonforfeitable portion of any Account maintained on
behalf of a Participant.

Section 3 – Plan Administration

3.1 Powers and Duties of the Administrator. The Company shall appoint the Plan
Administrator, who shall administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries, subject to the specific terms of the Plan.
The Administrator shall administer the Plan in accordance with its terms and
shall have the power and discretion to construe the terms of the Plan and to
determine all questions arising in connection with the administration,
interpretation, and application of the Plan, including the making of any factual
determinations. The Administrator may establish procedures, correct any defect,
supply any information, or

 

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reconcile any inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purpose of the Plan; provided, however,
that any procedure, discretionary act, interpretation or construction shall be
done in a nondiscriminatory manner based upon uniform principles consistently
applied. The Administrator shall have all powers necessary or appropriate to
accomplish his duties under this Plan.

The Administrator shall be charged with the duties of the general administration
of the Plan, including, but not limited to, the following:

(a) The discretion to determine all questions relating to the eligibility of
Employees to participate or remain a Participant hereunder and to receive
benefits under the Plan;

(b) To compute and make determinations with respect to the amount of benefits to
which any Participant shall be entitled hereunder;

(c) To authorize and make nondiscretionary or otherwise directed disbursements
to Participants, provided that such distributions are made in compliance with
Code Section 409A and the regulations promulgated thereunder;

(d) To maintain all necessary records for the administration of the Plan;

(e) To interpret the provisions of the Plan and to make and publish such rules
for the regulation of the Plan as are consistent with the terms hereof and Code
Section 409A and the regulations promulgated thereunder;

(f) To prepare and implement a procedure to notify employees that they have been
selected as eligible to participate in the Plan;

(g) To assist any Participant regarding his rights, benefits, or elections
available under the Plan.

The Company shall indemnify, hold harmless and defend the Administrator from any
liability which the Administrator may incur in connection with the performance
of his or her duties in connection with this Plan, so long as the Administrator
was acting in good faith and within what the Administrator reasonably understood
to be the scope of his or her duties.

3.2 Records and Reports. The Administrator shall keep a record of all actions
taken and shall keep all other books of account, records, and other data that
may be necessary for proper administration of the Plan and shall be responsible
for supplying all information and reports to the Company, Participants and
Beneficiaries.

3.3 Participant Statement. The Administrator shall provide each Participant each
Plan Year a statement indicating that Participant’s Account Balance.

3.4 Information from Company. To enable the Administrator to perform his
functions, the Company shall supply relevant information to the Administrator on
matters relating to the compensation of all Participants, their death,
Disability, or Termination, and such other pertinent facts as the Administrator
may require. The Administrator may rely upon such information as is supplied by
the Company and shall have no duty or responsibility to verify such information.

3.5 Claims Procedure. Claims for benefits under the Plan may be filed with the
Administrator on forms supplied by the Company. Written or electronic notice of
the disposition of a claim shall be furnished to the claimant within 90 days
after the claim is filed. If additional time (up to 90 days) is required by the
Administrator to process the claim, written notice shall be

 

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provided to the claimant within the initial 90 day period. The extension notice
shall indicate the special circumstances requiring an extension of time and the
date by which the Administrator expects to render a determination.

If the request for benefits is based on the claimant’s Disability, written or
electronic notice of the disposition of a claim shall be furnished to the
claimant or claimant’s authorized representative within 45 days after the claim
is filed. If additional time (up to 30 days) is required by the Administrator,
written notice shall be provided to the claimant within the initial 45 day
period, which additional time may be extended for another 30 days upon written
notice.

In the event the claim is denied in whole or in part, the notice shall set forth
in language calculated to be understood by the claimant (i) the specific reason
or reasons for the denial, (ii) specific reference to pertinent Plan provisions
on which the denial is based, (iii) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary, and (iv) a description of the
Plan’s review procedures and the time limits applicable to such procedures,
including a statement of the claimant’s right, if any, to bring a civil action
under Section 502(a) of ERISA, following an adverse benefit determination on
review.

3.6 Claims Review Procedure. Any Participant, former Participant, or Beneficiary
who has been denied a benefit by a decision of the Administrator pursuant to
Section 3.5 shall be entitled to request the Administrator to give further
consideration to his claim by filing with the Administrator a request for a
hearing. Such request, together with a written statement of the reasons why the
claimant believes his claim should be allowed, shall be filed with the
Administrator no later than 60 days after receipt of the written notification of
the denial of the claim provided for in Section 3.5. The claimant shall be
provided, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant to the claimant’s claim
for benefits. The Administrator shall then conduct a hearing within the next 60
days, at which the claimant shall have an opportunity to submit comments,
documents, records and other information relating to the claim without regard to
whether such information was submitted or considered in the initial benefit
determination.

The Administrator shall make a final decision as to the allowance of the claim
within 60 days of receipt of the appeal (unless there has been an extension due
to special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant in writing within the 60 day
period), and a decision shall be rendered as soon as possible but not later than
110 days after receipt of the request for review; provided, however, in the
event the claimant fails to submit information necessary to make a benefit
determination on review, such period shall be tolled from the date on which the
extension notice is sent to the claimant until the date on which the claimant
responds to the request for additional information. The decision on review shall
be written or electronic and, in the case of an adverse determination, shall
include specific reasons for the decision, in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based. The decision on review shall also
include (i) a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant to the claimant’s claim for benefits, (ii) a
statement describing any voluntary appeal procedures offered by the Plan,
(iii) a statement of the claimant’s right, if any, to bring an action under
Section 502(a) of ERISA and (iv) specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.

 

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3.7 Binding Arbitration. Except as otherwise provided in Sections 3.5 and 3.6,
any dispute, controversy or claim between the Company and a claimant (or any
successors thereto), whether arising out of or relating to the Plan, the breach
of the Plan, or otherwise, shall be settled by arbitration in Los Angeles,
California, administered by the American Arbitration Association (the “AAA”),
with any such dispute or controversy arising under the Plan being so
administered in accordance with its National Rules for the Resolution of
Employment Disputes then in effect as modified by the Plan, and judgment on the
award rendered pursuant to arbitration under the Plan shall be final and binding
upon the parties, and any judgment upon such an award may be entered and
enforced in any court having jurisdiction thereof.

The arbitrator shall have the authority to award any remedy or relief that a
court of competent jurisdiction could order or grant, including, without
limitation, the issuance of an injunction. The arbitrator’s decision, however,
shall be consistent with the provisions of the substantive law governing the
claims asserted and shall not vary from those substantive legal provisions in
terms of the scope of either rights or remedies. Also, either party may, without
inconsistency with this arbitration provision, apply to any court having
jurisdiction over such dispute or controversy and seek interim provisional,
injunctive or other equitable relief until the arbitration award is rendered or
the controversy is otherwise resolved. Except as necessary in court proceedings
to enforce this arbitration provision or an award rendered hereunder, or to
obtain interim relief, neither a party nor an arbitrator may disclose the
existence, content or results of any arbitration hereunder without the prior
written consent of the Company and the claimant. The Company and each
Participant acknowledge that the Plan evidences a transaction involving
interstate commerce. Notwithstanding any choice of law provision included in the
Plan, the United States Federal Arbitration Act shall govern the interpretation
and enforcement of this arbitration provision. To the extent this Section 3.7 is
deemed a separate agreement independent from the Plan, Articles 12 and 13 are
incorporated in this Section 3.7 by reference.

A claimant may commence an arbitration only after first exhausting the
provisions of the Claims Procedure and Claims Review Procedure described in
Sections 3.5 and 3.6. Either party (the “Initiating Party”) may commence an
arbitration by submitting a Demand for Arbitration under the AAA Rules and by
notice to the other Party (the “Respondent”) in accordance with Section 12.12.
Such notice shall set forth in reasonable detail the basic operative facts upon
which the Initiating Party seeks relief and specific reference to the provisions
of the Plan, the amount claimed, if any, and any nonmonetary relief sought
against the Respondents. After the initial list of issues to be resolved has
been submitted, the arbitrators shall permit either party to propose additional
issues for resolution in the pending proceedings. For purposes of this
Section 3.7, the “commencement of the arbitration proceeding” shall be deemed to
be the date upon which the Demand for Arbitration has been received by the AAA.

The parties shall attempt, by agreement, to nominate a sole arbitrator for
confirmation by the AAA. If the parties fail so to nominate a sole arbitrator
within 30 days from the date following the submission of an initial list of
potential arbitrators by the AAA to the parties, a board of three arbitrators
shall be appointed by the parties jointly or, if the parties cannot agree as to
three arbitrators within such 60 days after the submission of an initial list of
potential arbitrators by the AAA to the parties, then one arbitrator shall be
appointed by each of the Company and the claimant within 90 days after the
submission of an initial list of potential arbitrators by the AAA to the parties
and the third arbitrator shall be appointed by mutual agreement of such two
arbitrators. If such two arbitrators shall fail to agree upon the appointment of
the third arbitrator within 105

 

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days after the submission of an initial list of potential arbitrators by the AAA
to the parties, then the third arbitrator shall be appointed by the AAA in
accordance with its then existing rules. Notwithstanding the foregoing, if any
party shall fail to appoint an arbitrator within the specified time period, such
arbitrator and the third arbitrator shall be appointed by the AAA in accordance
with its then existing rules. Any award shall be rendered by a majority of the
members of the board of arbitration.

No claimant may initiate arbitration under or pursuant to the Plan more than one
year after the date of the Plan Administrator’s denial of the claimant’s appeal
described in Section 3.6.

Section 4 – Eligibility and Participation

4.1 Eligibility. The Board, in its sole discretion, shall select the Employees
who are eligible to become Participants. Members of the Company’s Board of
Directors and independent contractors performing services for the Company may,
under rules that may be promulgated by the Board, be included as eligible to
participate.

4.2 Participation. The Board or its designee shall notify those Employees or
other individuals selected for participation of the benefits available under the
Plan. An eligible individual becomes a Participant in the Plan upon the timely
completion and delivery of the Participation Agreement and Deferral Election to
the Company.

Section 5 – Credits under the Plan

5.1 Participant Credits. A Participant may elect to defer each year up to 100%
of his or her salary and/or bonus.

5.2 Deferral Elections. A Participant’s Deferral Election shall be made no later
than the December 31 of the calendar year preceding the calendar year in which
the salary and/or bonus is earned.

The total amount of salary and/or bonus that is deferred shall be considered a
credit made by the Participant to the Plan for that year. Additional Participant
credits are not permitted. Any Deferral Election under this Section shall remain
in effect until the following December 31, when a new Deferral Election must be
made with respect to compensation for services to be performed in the following
Plan Year.

For each Plan Year in which a Participant has filed a Deferral Election with the
Company, the Company shall withhold from the Participant’s salary and bonuses
that are not being deferred, as applicable, in a manner determined by the
Company, the Participant’s share of FICA and any other taxes on the amount(s)
being deferred. If necessary, the Board may reduce the amount deferred in order
to comply with this Section.

5.3 Initial Deferral Election. In the first year in which a Participant becomes
eligible to participate in the Plan, such Participant may make a Deferral
Election within the first 30 days after becoming eligible, which Deferral
Election shall be effective for compensation for services to be performed after
the date of such Deferral Election; provided that the Participant was not
previously eligible to participate in any other account balance plan (within the
meaning of Treasury Regulation§1.409A-l(c)(2)) of the Company or any of its
Affiliates.

 

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5.4 Valid Elections. A Participant’s Participation Agreement and Deferral
Election must be completed and signed by the Participant, timely delivered to
the Board and accepted by the Board in order for such Participation Agreement
and Deferral Election to be valid.

5.5 Vesting of Accounts. Participant credits and the earning thereon shall be
fully Vested at all times.

5.6 Company Credits. The Company, within its sole and absolute discretion, may
make additional credits to the Accounts of any or all Plan Participants. The
Company shall state at the time of such Company credit the vesting schedule, if
any, which shall apply to the additional credits and the earnings thereon.

Section 6 – Participants’ Accounts

6.1 Maintenance of Participants’ Accounts. The Administrator shall maintain a
separate Account for each Participant, to which shall be credited or charged
Participants’ deferrals and any increases or decreases in value determined under
Section 6.2. These Accounts shall be for recordkeeping purposes only and no
actual funds will be deposited or set aside for any individual Participant or
for the group of Participants as a whole.

6.2 Shadow Investment of Amounts Representing Participant Deferrals. At the
election of a Participant and under rules adopted by the Administrator, a
Participant’s Account shall be treated as if it had been used to purchase one or
more specific investments and had participated in the income from and the growth
or decline in value of such investments. Each Participant will be required to
choose the “shadow investments” for his or her Account from a list presented by
the Plan Administrator. All of the shadow investments shall be securities or
mutual funds which are registered for sale to investors in the United States.
The performance of each shadow investment (either positive or negative) shall be
determined by the Administrator, in its reasonable discretion, based on the
performance of the investment vehicles upon which the shadow investments are
based. In determining the value of each shadow investment the Administrator may
establish the value of a shadow investment at a lower amount than the investment
vehicle upon which such shadow investment is based to take into account
management fees and expenses incurred in the administration of the Plan.
Participants will be allowed to change such designated investments in the manner
and frequency determined by the Administrator, which shall be no less frequently
than once each calendar quarter. Changes in value of the shadow investments
shall be credited or charged to Participants’ Accounts as these changes occur.

If the Participant does not make an election under the previous paragraph, then
for purposes of determining the balance in such Participant’s Account, the
Account shall be credited on a quarterly basis with a rate of interest set by
the Board at the beginning of each Plan Year.

6.3 Statements of Participants’ Accounts. The Administrator shall prepare or
have prepared within a reasonable period of time after the end of each Plan Year
a statement for each Participant of his or her Account Balance and shall send
such statement to the Participant.

6.4 Participant Misrepresentation. If Participant makes a material
misrepresentation which affects the calculation of benefits under this Plan,
then the Board, in its sole discretion, may correspondingly adjust Participant’s
(or Participant’s Beneficiary’s) benefits otherwise receivable under this Plan.

 

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Section 7 – Distributions

7.1 Distributions from the Plan. The Company will distribute to Participants in
a lump sum an amount equal to their Account Balance within 60 days following the
Participant’s Termination or death. However, when a Participant makes a Deferral
Election with respect to a Plan Year, he or she may elect instead to have
deferrals which will be credited to his or her Account for that Plan Year be
distributed at a specified date, which must be at least 2 years after the
December 31st of the calendar year preceding the calendar year in which the
salary is earned and in which the performance period begins. Such Deferral
Election must specify whether the Participant will receive the distribution
either in a lump sum on, or in equal annual installments beginning on, such
specified date.

Regardless of any election Participant has made, the balance in his or her
Account will be distributed to the Participant’s Beneficiary in a lump sum
within 60 days following the Participant’s death.

7.2 Subsequent Election to Extend Deferral. A Participant may elect to delay any
distribution of his or her Account Balance, as long as such election (1) is made
at least 12 months before the scheduled distribution date or starting date,
(2) may not take effect until at least 12 months following the date of the new
election, and (3) the new distribution date is at least five years after the
scheduled distribution or starting date. There is no limit to the number of
times a Participant can elect to defer a distribution, as long as (1) each such
further deferral is made at least 12 months before the scheduled distribution
date or starting date, (2) may not take effect until at least 12 months
following the date of the new election and (3) the new distribution date is at
least five years after the scheduled distribution or starting date. Any election
to defer a distribution must be made in a manner consistent with Code
Section 409A and the regulations promulgated thereunder.

7.3 Unforeseeable Emergency Distributions. In the event of an unforeseeable
emergency which is a Severe Financial Hardship, the Participant may request that
an amount no greater than his or her Vested Account Balance be paid to him or
her in order to satisfy such financial need. Severe Financial Hardship shall be
defined as (1) resulting from an illness or accident of Participant,
Participant’s spouse, Beneficiary or dependent ( as defined in Code Section 152
(without regard to Section 152(b)(l), (b)(2) or (d)(l)(B)); (2) loss of the
Participant’s property due to casualty; or (3) other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the
Participant’s control. The determination as to what constitutes a Severe
Financial Hardship shall be made by the Administrator. The amount of the
distribution will be limited to the amount needed to satisfy the Severe
Financial Hardship plus taxes reasonably anticipated as a result of the
distribution. A distribution will not be allowed to the extent that the Severe
Financial Hardship may be relieved through reimbursement or compensation by
insurance or otherwise, or by liquidation of the Participant’s assets (to the
extent that such liquidation would not itself cause a Severe Financial Hardship)
or by cessation of deferrals under the Plan. Any request for a Severe Financial
Hardship distribution shall be considered by the Administrator, whose decision
whether to grant such request shall be final. If a Severe Financial Hardship
distribution is authorized, the Administrator shall distribute to such
Participant within a reasonable time after the Participant’s request for such
distribution, but no later than sixty (60) days following the occurrence of the
Severe Financial Hardship, an amount determined by the Administrator to be
sufficient to alleviate the Severe Financial Hardship, but not in excess of the
Participant’s Vested Account Balance as of such date. The Participant shall not
repay to the Company amounts distributed pursuant to this Section 7.3.

 

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7.4 Loans. Loans against the Plan Account are not permitted.

7.5 Withholding Taxes. The Company shall deduct from any payment of benefits
under the Plan the amount of any federal, state and local income, employment or
other taxes required to be withheld or paid with respect to the distribution.
The amounts to be withheld shall be determined in the sole discretion of the
Board.

7.6 Distribution for Minor Beneficiary. In the event a distribution is to be
made to a minor, then the Administrator may direct that such distribution be
paid to the legal guardian, or if none, to a parent of such Beneficiary, or to
the custodian of such Beneficiary under the Uniform Gifts to Minors Act or
Uniform Transfers to Minors Act, if such is permitted by the laws of the state
in which said Beneficiary resides. Such payment to the legal guardian, custodian
or parent of a minor Beneficiary shall fully discharge the Administrator,
Company and Plan from further liability on account thereof.

7.7 Distributions to Specified Employee. Notwithstanding anything herein to the
contrary, no payment payable upon a Participant’s Termination shall be made to
any Participant who is a “specified employee” as defined in Section 409A(a)(2)
and the regulations promulgated thereunder until six (6) months after such
Participant’s Termination or, if earlier, the date of such Participant’s death.
Any distribution delayed pursuant to the immediately preceding sentence shall be
paid to the Participant as soon as practicable, and in no event more than sixty
(60) days, after the date which is six (6) months after the date of Termination
or, if earlier, the date of death of such Participant.

7.8 Compliance with Code Section 409A. Notwithstanding anything contained herein
to the contrary, no distribution of benefits shall be made to any Participant if
such distribution would violate the provisions of Code Section 409A.
Distribution of a Participant’s Account may, therefore, be delayed until such
time as the distribution is permissible under Code Section 409A and the
regulations promulgated thereunder. Notwithstanding the foregoing, under no
circumstances shall the Company be responsible for any taxes, penalties,
interest or other losses or expenses incurred by a Participant due to any
failure to comply with Code Section 409A.

7.9. Tax Matters. If benefits credited or payable to a Participant under the
Plan become taxable before the date on which such benefits are actually paid,
the Company shall remit any required withholding or employment taxes to the
taxing authorities. If at any time the Plan is found to fail to meet the
requirements of Code Section 409A and the regulations thereunder, the Company
may distribute the amount required to be included in the Participant’s income as
a result of such failure. Any amount distributed under this Section 7.9 shall be
charged against amounts owed to the Participant and offset against future
payments. A Participant shall have no discretion and shall have no direct or
indirect election, as to whether a payment will be accelerated under this
Section 7.9.

Section 8 – Pre-Retirement Survivor Benefit

8.1 Pre-Retirement Survivor Benefit. If an Employee who is a Participant dies
while employed by the Company, the Company shall pay to the deceased
Participant’s Beneficiary, as a survivor benefit, a lump sum amount equal to the
excess (if any) of (1) an amount equal to 50% of the deceased Employee’s annual
salary at date of death, over (2) the balance in the deceased

 

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Employee’s Account at date of death. This Survivor Benefit shall be payable only
if the deceased Employee became a Participant within 30 days of first becoming
eligible to participate in the Plan. This Survivor Benefit shall be paid within
60 days following the Participant’s death. Notwithstanding the foregoing, if a
Participant dies by reason of suicide while sane or insane within two (2) yeas
of becoming a Participant, then Participant’s Beneficiary shall have no right to
any Survivor Benefit under this Section 8.1.

Section 9 – Company-Owned Life Insurance (“COLI”)

9.1 The Company Owns All Rights. In the event that, in its discretion, the
Company purchases a life insurance policy or policies insuring the life of any
Participant in connection with the benefits hereunder, neither the Participant
nor any Beneficiary shall have any rights whatsoever therein. The Company shall
be the sole owner and beneficiary of any such policy or policies and shall
possess and may exercise all incidents of ownership therein, except in the event
of the establishment of and transfer of said policy or policies to a trust by
the Company as described in Section 12.9 hereof.

9.2 Participant Cooperation. If the Company decides to purchase a life insurance
policy or policies on any Participant, the Company will so notify such
Participant. Such Participant shall consent to being insured for the benefit of
the Company and shall take whatever actions may be necessary to enable the
Company to timely apply for and acquire such life insurance and to fulfill the
requirements of the insurance carrier relative to the issuance thereof as a
condition of eligibility to participate in the Plan.

Section 10 – Administrator

10.1 Resignation. The Administrator may resign at any time by written notice to
the Board,which shall be effective thirty (30) days after receipt of such notice
unless the Administrator and the Board agree otherwise.

10.2 Removal. The Administrator may be removed by the Board on thirty (30) days
notice or upon shorter notice accepted by the Administrator.

10.3 Appointment of Successor. If the Administrator resigns or is removed, a
successor shall be appointed, in accordance with Section 10.4, by the effective
date of resignation or removal under this Section 10. If no such appointment has
been made, the Administrator may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the
Administrator in connection with the proceeding shall be allowed as
administrative expenses of the Company.

10.4 Successor Administrator. If the Administrator resigns or is removed in
accordance with Section 10.1 or 10.2, the Board may appoint any third party as
successor Administrator. The appointment shall be effective when accepted in
writing by the new Administrator. The new Administrator shall have all of the
rights and powers of the former Administrator.

Section 11 – Amendment or Termination

11.1 Amendment. The Board shall have the right to amend the Plan from time to
time except that (i) no such amendment shall, without the consent of the
Participant to whom deferred compensation has been credited to such
Participant’s Account, adversely affect the Participant’s (or such Participant’s
Beneficiary’s) right to any payment under the Plan and (ii) the Plan shall only
be amended to the extent, and in the manner, permitted by section 409A of the
Code.

 

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11.2 Termination. The Company shall have the right to terminate the Plan and
distribute the Participants’ Accounts in the form of a lump sum distribution;
provided, however, that (i) any such termination of the Plan and distribution of
the Accounts shall be implemented in a manner that complies with Code
Section 409A and the regulations thereunder and (ii) the termination of the Plan
does not reduce the amount already credited to any Participant’s Account.
Participants understand that in the event the Plan is terminated, the
Participants, including Participants who are currently receiving distributions
pursuant to prior Deferral Elections, shall receive a distribution of the
balance of their Accounts at a date that is earlier than would have been the
case had the termination of the Plan not occurred, and the distribution may be
made in a form that differs from the form of distribution that has been elected
by the Participants.

Section 12 – Miscellaneous

12.1 Nonalienation of Benefits. No right or benefit under this Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber,
or charge any right or benefit under this Plan, any Participation Agreement or
any Deferral Election shall be void. No such right or benefit shall in any
manner be liable for or subject to the debts, contracts, liabilities or torts of
the person entitled thereto. No amount of the benefit will, prior to payment, be
subject to garnishment, attachment, execution or levy of any kind, and will not
be transferable by operation of law in the event of the bankruptcy or insolvency
of the Participant. If a Participant or any Beneficiary hereunder shall become
bankrupt, or attempt to anticipate, alienate, sell assign, pledge, encumber,or
charge any right hereunder, then such right or benefit shall, in the discretion
of the Company, cease and terminate, and in such event, the Company may hold or
apply the same or any part thereof for the benefit of the Participant or his or
her Beneficiary, spouse, children, or other dependents, or any of them in such
manner and in such amounts and proportions as the Company may deem proper. Any
payment to the Participant or his or her Beneficiary, spouse, children, or other
dependents, pursuant to this Section 12.1 shall fully discharge the
Administrator, Company and Plan from further liability on account thereof.

12.2 Unfunded Top Hat Plan. This Plan is unfunded and is maintained to provide
deferred compensation for a select group of management or highly compensated
employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(l) of
ERISA.

12.3 Unsecured Liability. The obligation of the Company to make payments
hereunder to a Participant or Beneficiary shall constitute no more than an
unsecured liability of the Company. Such payments shall be made from the general
funds of the Company and the Company shall not be required to establish or
maintain any special or separate fund, to purchase or acquire life insurance on
a Participant’s life, or otherwise to segregate assets to assure that such
payments shall be made. Neither a Participant nor any other person shall have
any interest in any particular asset of the Company by reason of its obligations
hereunder and the right of any of them to receive payments under this Plan shall
be no greater than the right of any other unsecured general creditor of the
Company. Nothing contained in the Plan shall create or be construed as creating
a trust of any kind or any other fiduciary relationship between the Company and
a Participant or any other person.

 

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12.4 No Contract of Employment. This Plan shall not be deemed to constitute a
contract between the Company and any Participant or to be a consideration or an
inducement for the employment of any Participant or Employee. Nothing contained
in this Plan shall be deemed to give any Participant or Employee the right to be
retained in the service of the Company or to interfere with the right of the
Company to discharge any Participant or Employee at any time regardless of the
effect which such discharge may have upon him or her as a Participant of this
Plan.

12.5 Designation of Beneficiary. Each Participant shall file with the Company a
notice in writing, in a form acceptable to the Board, designating one or more
Beneficiaries to whom payments becoming due by reason of or after his or her
death shall be made. Participants shall have the right to change the Beneficiary
or Beneficiaries so designated from time to time; provided, however, that no
such change shall become effective until received in writing and acknowledged by
the Company.

12.6 Payment to Incompetents. The Company shall make the payments provided
herein directly to the Participant or Beneficiary entitled thereto or, if such
Participant or Beneficiary has been determined by a court of competent
jurisdiction to be mentally or physically incompetent, then payment shall be
made to the duly appointed guardian, committee or other authorized
representative of such Participant or Beneficiary. The Company shall have the
right to make payment directly to a Participant or Beneficiary until it has
received actual notice of the physical or mental incapacity of such Participant
or Beneficiary and actual notice of the appointment of a duly authorized
representative of his or her estate. Any payment to or for the benefit of a
Participant or Beneficiary shall be a complete discharge of all liability of the
Administrator, Company and Plan therefore.

12.7 Interpretation. The interpretation and construction of the Plan by the
Administrator, and any action taken hereunder, shall be binding and conclusive
upon all parties in interest. No officer of the Company or Employee shall be
liable to any person for any action taken or omitted to be taken in connection
with the interpretation, construction or administration of the Plan, so long as
such action or omission be made in good faith.

12.8 Authority to Appoint a Committee. The Board, within its discretion, shall
have the authority to appoint a committee of not less than three (3) of its
members, which shall have authority over the Plan in lieu of the entire Board.

12.9 Authority to Establish a Trust. The Board shall have the right at any time
to establish a trust to which the Company may transfer from time to time certain
assets to be used by said trustee(s) to satisfy some or all of the Company‘s
obligations and liabilities under the Plan. All assets held by such trust shall
be subject to the claims of the Company’s unsecured general creditors in the
event the Company is Insolvent (as defined herein). The Company shall be
considered “Insolvent” for purposes of said trust if (i) the Company is unable
to pay its debts as they become due or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.

12.10 Immunity of Board Members. The members of the Board may rely upon any
information, report or opinion supplied to them by an officer of the Company or
any legal counsel, independent public accountant or actuary and shall be fully
protected in relying upon any such information, report or opinion. No member of
the Board shall have any liability to the Company or any Participant, former
Participant, designated Beneficiary, person claiming under or

 

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through any Participant or designated Beneficiary or other person interested or
concerned in connection with any decision made by such member pursuant to the
Plan which was based upon any such information, report or opinion if such member
reasonably relied thereon in good faith.

12.10 Binding Effect. The Plan is binding on all persons entitled to benefits
hereunder and their respective heirs and legal representatives, on the Board and
its successor, on the Company, and its successor, whether by way of merger,
consolidation, purchase or otherwise.

12.11 Entire Plan. This document and any amendments hereto contain all the terms
and provisions of the Plan and shall constitute the entire Plan, any other
alleged terms or provisions being of no effect.

12.12 Notice. Any notice or other communication required or permitted pursuant
to the terms hereof shall have been duly given when mailed by United States
mail, first class, postage prepaid, addressed to the intended recipient at his,
her or its last known address or, if not mailed by United States mail, first
class, postage prepaid, when otherwise delivered to the intended recipient at
his, her or its last known address.

Section 13 – Construction

13.1 Construction of this Plan. This Plan shall be construed and enforced
according to the laws of the State of California, other than its laws respecting
choice of law, to the extent not preempted by federal law.

13.2 Gender and Number. The masculine gender, where appearing in the Plan, shall
be deemed to include the feminine gender, and the singular shall include the
plural, unless the context clearly indicates to the contrary.

13.3 Headings. All headings used in this Plan are for convenience of reference
only and are not part of the substance of this Plan.

13.4 Enforceability. If any term or condition of this Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of the
Plan, and such term or condition except to such extent or in such application,
shall not be affected thereby, and each and every term and condition of the Plan
shall be valid and enforced to the fullest extent and in the broadest
application permitted by law.

13.5 Uniformity. All provisions of this Plan shall be interpreted and applied in
a uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any summaries or other descriptions of this Plan, the
Plan provisions shall control.

IN WITNESS WHEREOF, this Plan, having been duly approved and adopted by the
Board of Directors of the Company, is executed by a duly authorized officer of
the Company.

 

GRILL CONCEPTS, INC. By:  

/s/ Wayne Lipschitz, CFO

  Wayne Lipschitz, CFO

 

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