EXHIBIT10.2

CHANGE IN CONTROL AGREEMENT

This CHANGE IN CONTROL AGREEMENT (this “Agreement”) is dated as of June 23, 2008
and is entered into by and between Philip Gay (“Executive”) and Grill Concepts,
Inc., a Delaware corporation (the “Company”).

BACKGROUND

The Company believes that because of its position in the industry, financial
resources and historical operating results there is a possibility that the
Company may become the subject of a Change in Control (as defined below), either
now or at some time in the future.

The Company believes that it is in the best interest of the Company and its
stockholders to foster Executive’s objectivity in making decisions with respect
to any pending or threatened Change in Control of the Company and to assure that
the Company will have the continued dedication and availability of Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control.
The Company believes that these goals can best be accomplished by alleviating
certain of the risks and uncertainties with regard to Executive’s financial and
professional security that would be created by a pending or threatened Change in
Control and that inevitably would distract Executive and could impair his
ability to objectively perform his duties for and on behalf of the Company.
Accordingly, the Company believes that it is appropriate and in the best
interest of the Company and its stockholders to provide to Executive
compensation arrangements upon a Change in Control that lessen Executive’s
financial risks and uncertainties and that are reasonably competitive with those
of other corporations.

With these and other considerations in mind, the Compensation Committee of the
Company has authorized the Company to enter into this Agreement with the
Executive to provide the protections set forth herein for Executive’s financial
security following a Change in Control.

This Agreement amends and replaces in whole the Change of Control Agreement
previously entered into between the Company and the Executive, dated
September 30, 2005.

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration the receipt of which is hereby acknowledged, it is hereby
agreed as follows:

AGREEMENT

1. TERM OF AGREEMENT. This Agreement shall be effective from the date first
written above and, subject to the provisions of Section 4, shall extend to (and
thereupon automatically terminate) one (1) day after Executive’s termination of
employment with the Company for any reason. No termination of this Agreement
shall limit, alter or otherwise affect Executive’s rights hereunder with respect
to a Change in Control which has occurred prior to such termination, including
without limitation Executive’s right to receive the various benefits hereunder.

2. PURPOSE OF AGREEMENT. The purpose of this Agreement is to provide that, in
the event of a “Change in Control,” Executive may become entitled to receive
certain additional benefits, as described herein, in the event of his
termination under specified circumstances.

3. CHANGE IN CONTROL. As used in this Agreement, the phrase “Change in Control”
shall mean:

(i) Except as provided by subparagraph (iii) hereof, the acquisition (other than
from the Company) by any person, entity or “group”, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (excluding, for this purpose, the Company or its
subsidiaries, or any executive benefit plan of the Company or its subsidiaries
which acquires beneficial ownership of voting securities of the Company), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty-five percent (25%) or more of either the then
outstanding shares of common stock or the combined voting power of the Company’s
then outstanding voting securities entitled to vote generally in the election of
directors; or

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(ii) Individuals who, as of the date hereof, constitute the Board of Directors
of the Company (as of the date hereof the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board of Directors of the
Company, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company’s stockholders,
is or was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company) shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board; or

(iii) Approval by the stockholders of the Company of a reorganization, merger or
consolidation with any other person, entity or corporation, other than

 

  (1) a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
another entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Company or such other entity outstanding
immediately after such merger or consolidation, or

 

  (2) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires twenty-five percent
(25%) or more of the combined voting power of the Company’s then outstanding
voting securities; or

(iv) Approval by the stockholders of the Company of a plan of complete
liquidation of the Company or an agreement for the sale or other disposition by
the Company of all or substantially all of the Company’s assets.

4. EFFECT OF A CHANGE IN CONTROL. In the event of a Change in Control, Sections
6 through 11 of this Agreement shall become applicable to Executive. These
Sections shall continue to remain applicable until the second anniversary of the
date upon which the Change in Control occurs. On such second anniversary date,
and provided that the employment of Executive has not been terminated on account
of a Qualifying Termination (as defined in Section 5 below), this Agreement
shall terminate and be of no further force or effect.

5. QUALIFYING TERMINATION. If within twelve (12) months following a Change in
Control Executive voluntarily terminates his employment with the Company and its
affiliated companies, or if following or within ninety (90) days prior to a
Change in Control Executive’s employment with the Company and its affiliated
companies is terminated, such termination shall be conclusively considered a
“Qualifying Termination” unless:

(a) Executive voluntarily terminates his employment with the Company and its
affiliated companies on a date that is more than twelve (12) months after the
Change in Control. Executive, however, shall NOT be considered to have
voluntarily terminated his employment with the Company and its affiliated
companies if, following, or within ninety (90) days prior to, the Change in
Control, Executive’s overall compensation is reduced or adversely modified in
any material respect or his authority or duties are materially changed and he
elects to terminate his employment within sixty (60) days following such
reduction, modification or change. For such purposes, Executive’s authority or
duties shall conclusively be considered to have been “materially changed” if,
without Executive’s express and voluntary written consent, there is any
substantial diminution or adverse modification in Executive’s title, status,
overall position, responsibilities, reporting relationship, general working
environment (including without limitation secretarial and staff support,
offices, and frequency and mode of travel), or if, without Executive’s express

 

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and voluntary written consent, Executive’s job location is transferred to a site
more than fifty (50) miles away from his place of employment. In this regard as
well, Executive’s authority and duties shall conclusively be considered to have
been “materially changed” if, without Executive’s express and voluntary written
consent, Executive no longer holds the same title or no longer has the same
authority and responsibilities or no longer has the same reporting
responsibilities, in each case with respect and as to a publicly held parent
company which is not controlled by another entity or person.

(b) The termination is on account of Executive’s death or Disability. For such
purposes, “Disability” shall mean a physical or mental incapacity as a result of
which Executive becomes unable to continue the performance of his
responsibilities for the Company and its affiliated companies and which, at
least three (3) months after its commencement, is determined to be total and
permanent by a physician agreed to by the Company and Executive, or in the event
of Executive’s inability to designate a physician, Executive’s legal
representative. In the absence of agreement between the Company and Executive,
each party shall nominate a qualified physician and the two physicians so
nominated shall select a third physician who shall make the determination as to
Disability.

(c) Executive is involuntarily terminated for “Cause.” For this purpose, “Cause”
shall be limited to only three types of events

 

  (1) Executive is convicted by any federal, state or local authority with
(i) an act of dishonesty; or (ii) an act involving moral turpitude; or (iii) an
act constituting a felony;

 

  (2) Narcotics addition or habitual intemperance; or

 

  (3) The continued failure by Executive, following written notice from the
Company, to fulfill Executive’s obligations under or comply with any of the
provisions of Executive’s Employment Agreement.

6. SEVERANCE PAYMENT. If Executive’s employment is terminated as a result of a
Qualifying Termination, and provided that the Executive does not elect to
receive payments owing under paragraph 5.3(a) of his existing Employment
Agreement dated of even date herewith, the Company shall pay Executive within
thirty (30) days after the Qualifying Termination a cash lump sum equal to two
hundred percent (200%) of Executive’s Compensation, as hereinafter defined (the
“Severance Payment”). Notwithstanding anything to the contrary herein, the sum
of the aggregate present value of (i) such Severance Payment, (ii) any and all
additional amounts or benefits which may be paid or conferred to or on behalf of
Executive in accordance with subsections (a) or (b) of Section 7 hereof, and
(iii) any and all other amounts or benefits paid or conferred to or on behalf of
Executive that constitute a “parachute payment” (“parachute payment,” as defined
in Section 280G(b)(2), or any successor thereto, of the Internal Revenue Code of
1986, as amended (the “Code”)), shall not exceed an amount equal to one dollar
less than three (3) times Executive’s “base amount” (“base amount,” as defined
in Section 280G(b)(3), or any successor thereto, of the Code). For the avoidance
of doubt, the purpose and intent of the foregoing sentence is to avoid giving
rise to any obligation of the Company to reimburse the Executive for (or
otherwise pay on Executive’s behalf) any Excise Tax (hereinafter defined)
pursuant to Section 8 hereof, to the extent of then-current applicable law. The
Severance Payment payable by the Company to the Executive shall be reduced to
the extent necessary to fulfill the requirement of the two immediately preceding
sentences that payment of amounts includable in Executive’s base amount shall
not exceed an amount equal to one dollar less than three (3) times Executive’s
base Amount.

(a) For purposes of this Agreement, Executive’s “Compensation” shall equal the
sum of (i) Executive’s highest annual salary rate with the Company, or any of
its affiliated companies, within the three (3) year period ending on the date of
Executive’s Qualifying Termination, or such shorter period if Executive has been
employed by the Company or any of its affiliated companies for a shorter period,
plus (ii) a “Bonus Increment.” The Bonus Increment shall equal the annualized
average of all bonuses and incentive compensation payments paid to Executive
during the two (2) year period immediately before the date of Executive’s
Qualifying Termination under all of the Company’s bonus and incentive
compensation plans or arrangements, or during such shorter period if Executive
has been employed by the Company or any of its affiliated companies for a
shorter period.

 

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(b) The Severance Payment hereunder is in lieu of any severance payment that
Executive might otherwise be entitled to from the Company in the event of a
Change in Control under the Company’s applicable severance pay policies, if any,
or under any other oral or written agreement; PROVIDED, HOWEVER, that Executive
shall continue to be entitled to receive the severance pay benefits under the
Company’s applicable policies, if any, or under another written agreement if and
to the extent Executive’s termination is not a Qualifying Termination after, or
within ninety (90) days prior to, a Change in Control.

7. ADDITIONAL BENEFITS.

(a) In the event of a Qualifying Termination, any and all unvested stock options
of Executive shall immediately become fully vested and exercisable.

(b) In the event of a Qualifying Termination, Executive shall be entitled to
continue to participate in the following executive benefit programs which had
been made available to Executive (including his family) before the Qualifying
Termination: group medical insurance, group dental insurance, group-term life
insurance and disability insurance. These programs shall be continued at no cost
to Executive, except to the extent that tax rules require the inclusion of the
value of such benefits in Executive’s income. The programs shall be continued in
the same way and at the same level as immediately prior to the Qualifying
Termination. The programs shall continue for Executive’s benefit for two
(2) years after the date of the Qualifying Termination; PROVIDED, HOWEVER, that
Executive’s participation in each of such programs shall be earlier terminated
or reduced, as applicable, if and to the extent Executive receives benefits as a
result of concurrent coverage through another program.

8. INDEMNIFICATION FOR EXCISE TAX. In the event that Executive becomes entitled
to receive a Severance Payment in accordance with the provisions of Section 6
above, and notwithstanding the provision for a reduction in Severance Payment in
Section 6, such Severance Payment and any other benefits or payments (including
transfers of property) that Executive receives, or is to receive, pursuant to
this Agreement or any other agreement, plan or arrangement with the Company in
connection with a Change in Control of the Company (“Other Benefits”) shall be
subject to the tax imposed pursuant to Section 4999 of the Code (or any
successor thereto) or any comparable provision of state law (an “Excise Tax”),
the following rules shall apply:

(a) The Company shall pay to Executive, within thirty (30) days after the
Executive’s Qualifying Termination, an additional amount (the “Gross-Up
Payment”) such that the net amount retained by Executive, after deduction of any
Excise Tax with respect to the Severance Payment or the Other Benefits and any
federal, state and local income tax, FICA tax and Excise Tax upon such Gross-Up
Payment, is equal to the amount that would have been retained by Executive if
such Excise Tax were not applicable. It is intended that Executive shall not
suffer any loss or expense resulting from the assessment of any Excise Tax or
the Company’s reimbursement of Executive for payment of any such Excise Tax.

(b) For purposes of determining whether any of the Severance Payments or Other
Benefits will be subject to an Excise Tax and the amount of such Excise Tax,
(i) any other payments or benefits received or to be received by Executive in
connection with a Change in Control of the Company or Executive’s termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in a
Change in Control or any person affiliated with the Company or such person)
shall be treated as “parachute payments” within the meaning of
Section 280G(b)(2) of the Code (or any successor thereto), and all “excess
parachute payments” within the meaning of Section 280G(b)(l) of the Code (or any
successor thereto) shall be treated as subject to the Excise Tax, unless in the
opinion of tax counsel selected by the Company’s independent auditors and
acceptable to Executive such other payments or benefits (in whole or in part) do
not constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code (or any successor thereto),
(ii) the amount of the Severance Payments and Other Benefits which shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the Severance Payments or Other Benefits or (B) the amount of
excess parachute payments within the meaning of Sections 280G(b)(l) and (4) of
the Code (or any successor or successors thereto), after applying clause (i),
above, and (iii) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code (or any successor
or successors thereto).

 

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(c) For purposes of determining the amount of the Gross-Up Payment, Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made and state and local income taxes at the highest marginal rates of
taxation in the state and locality of Executive’s residence on the date of the
Executive’s Qualifying Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.

(d) In the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of the Executive’s
Qualifying Termination, the Executive shall repay to the Company, at the time
that the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction plus interest on
the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code (or any successor thereto) (the “Applicable Rate”). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
at the time of such Qualifying Termination (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus interest, determined at the Applicable Rate,
payable with respect to such excess) at the time that the amount of such excess
is finally determined.

9. RIGHTS AND OBLIGATIONS PRIOR TO A CHANGE IN CONTROL. Prior to the date which
is ninety (90) days before a Change in Control, the rights and obligations of
Executive with respect to his employment by the Company shall be determined in
accordance with the policies and procedures adopted from time to time by the
Company and the provisions of any written employment contract in effect between
the Company and Executive from time to time. This Agreement deals only with
certain rights and obligations of Executive subsequent, or within ninety
(90) days prior to, a Change in Control, and the existence of this Agreement
shall not be treated as raising any inference with respect to what rights and
obligations exist prior to the date which is ninety (90) days before a Change in
Control. Unless otherwise expressly set forth in a separate written employment
agreement between Executive and the Company, the employment of Executive is
expressly at-will, and Executive or the Company may terminate Executive’s
employment with the Company at any time and for any reason, with or without
cause, provided that if such termination occurs within ninety (90) days prior to
or two (2) years after a Change in Control and constitutes a Qualifying
Termination (as defined in Section 5 above) the provisions of this Agreement
shall govern the payment of the Severance Payment and certain other benefits as
provided herein.

10. NON-EXCLUSIVITY OF RIGHTS. Subject to Section 6(c) hereof, nothing in this
Agreement shall prevent or limit Executive’s continuing or future participation
in any benefit, bonus, incentive or other plan or program provided by the
Company or any of its affiliated companies and for which Executive may qualify,
nor shall anything herein limit or otherwise affect such rights as Executive may
have under any stock option or other agreements with the Company or any of its
affiliated companies. Except as otherwise provided in Section 6(c) hereof,
amounts which are vested benefits or which Executive is otherwise entitled to
receive under any plan or program of the Company or any of its affiliated
companies at or subsequent to the date of any Qualified Termination shall be
payable in accordance with such plan or program.

11. FULL SETTLEMENT. The Company’s obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counter-claim, recoupment, defense or other claim,
right or action which the Company may have against Executive or others. In no
event shall Executive be obligated to seek other employment or to take any other
action by way of mitigation of the amounts payable to Executive under any of the
provisions of this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which Executive may reasonably
incur as a result of Executive’s successful collection efforts to receive
amounts payable hereunder, or as a result of any contest (regardless of the
outcome thereof) by the Company or others of the validity or enforceability of,
or liability under, any provision of this Agreement or any guarantee of
performance thereof (including as a result of any contest by Executive about the
amount of any payment pursuant to this Section).

 

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12. SUCCESSORS.

(a) This Agreement is personal to Executive, and without the prior written
consent of the Company shall not be assignable by Executive other than by will
or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive’s legal representatives.

(b) The rights and obligations of the Company under this Agreement shall inure
to the benefit of and shall be binding upon the successors and assigns of the
Company.

13. GOVERNING LAW. This Agreement is made and entered into in the State of
California, and the internal laws of California shall govern its validity and
interpretation in the performance by the parties hereto of their respective
duties and obligations hereunder.

14. MODIFICATIONS. This Agreement may be amended or modified only by an
instrument in writing executed by all of the parties hereto.

15. DISPUTE RESOLUTION.

(a) Any controversy or dispute between the parties involving the construction,
interpretation, application or performance of the terms, covenants, or
conditions of this Agreement or in any way arising under this Agreement (a
“Covered Dispute”) shall, on demand by either of the parties by written notice
served on the other party in the manner prescribed in Section 16 hereof, be
referenced pursuant to the procedures described in California Code of Civil
Procedure (“CCP”) Sections 638, ET seq., as they may be amended from time to
time (or such procedures as nearly the same as may be available under the laws
of California, the “Reference Procedures”), to a retired Judge from the superior
court of California for the County of Los Angeles (the “Venue County”) for a
decision.

(b) The Reference Procedures shall be commenced by either party by the filing in
the superior court of Venue County a petition pursuant to CCP Section 638(1) (or
such procedures as nearly the same as may be available under the laws of
California, a “Petition”). Said Petition shall designate as a referee a Judge
from the list of retired superior court Judges from the Venue County who have
made themselves available for trial or settlement of civil litigation under said
Reference Procedures. If the parties hereto are unable to agree on the
designation of a particular retired superior court Judge of the Venue County, or
the designated Judge is unavailable or unable to serve in such capacity, request
shall be made in said Petition that the Presiding or Assistant Presiding Judge
of the superior court of the Venue County appoint as referee a retired superior
court Judge from the aforementioned list.

(c) Except as hereafter agreed by the parties, the referee shall apply the
internal law of the State of California in deciding the issues submitted
hereunder. Unless formal pleadings are waived by agreement among the parties and
the referee, the moving party shall file and serve its complaint within fifteen
(15) days from the date a referee is designated as provided herein, and the
other party shall have fifteen (15) days thereafter in which to plead to said
complaint. Each of the parties reserves its respective rights to allege and
assert in such pleadings all claims, causes of action, contentions and defenses
which it may have arising out of or relating to the general subject matter of
the Covered Dispute that is being determined pursuant to the Reference
Procedures. Reasonable notice of any motions before the referee shall be given,
and all matters shall be set at the convenience of the referee. Discovery shall
be conducted as the parties agree or as allowed by the referee. Unless waived by
each of the parties, a reporter shall be present at all proceedings before the
referee.

(d) It is the parties’ intention by this Section 15 that all issues of fact and
law and all matters of a legal and equitable nature related to any Covered
Dispute will be submitted for determination by a referee designated as provided
herein. Accordingly, the parties hereby stipulate that a referee designated as
provided herein shall have all powers of a Judge of the superior court
including, without limitation, the power to grant equitable and interlocutory
and permanent injunctive relief.

 

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(e) Each of the parties specifically (i) consents to the exercise of
jurisdiction over his person by a referee designated as provided herein with
respect to any and all Covered Disputes; and (ii) consents to the personal
jurisdiction of the California courts with respect to any appeal or review of
the decision of any such referee.

(f) Each of the parties acknowledges that the decision by a referee designated
as provided herein shall be a basis for a judgment as provided in CCP
Section 644 and shall be subject to exception and review as provided in CCP
Section 645, or such procedures as nearly the same as may be available under the
laws of California.

(g) The Company shall pay all fees and costs incurred by Executive in connection
with the Reference Procedures for a Covered Dispute other than attorneys’ fees
incurred by Executive, except as otherwise required to be paid pursuant to
Section 11.

16. NOTICES. Any notice or communications required or permitted to be given to
the parties hereto shall be delivered personally or be sent by United States
registered or certified mail, postage prepaid and return receipt requested, and
addressed or delivered as follows, or at such other addresses the party
addressed may have substituted by notice pursuant to this Section:

 

To the Company:    Grill Concepts, Inc.    6300 Canoga Avenue, Suite 1700   
Woodland Hills, California 91367    Attn: Chairman To the Executive:    Philip
Gay    5575 Clee Ct.    Agoura Hills, California 91301

17. CAPTIONS. The captions of this Agreement are inserted for convenience and do
not constitute a part hereof.

18. SEVERABILITY. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision had never been contained
herein and there shall be deemed substituted for such invalid, illegal or
unenforceable provision such other provision as will most nearly accomplish the
intent of the parties to the extent permitted by the applicable law. In case
this Agreement, or any one or more of the provisions hereof, shall be held to be
invalid, illegal or unenforceable within any governmental jurisdiction or
subdivision thereof, this Agreement or any such provision thereof shall not as a
consequence thereof be deemed to be invalid, illegal or unenforceable in any
other governmental jurisdiction or subdivision thereof.

19. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which shall together
constitute one in the same Agreement.

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

 

/s/ Philip Gay Philip Gay

 

GRILL CONCEPTS, INC.,

a Delaware corporation

By:   /s/ Robert Spivak Name:   Robert Spivak Title:   Co-Chairman

 

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