July 19, 2000



GRILL CONCEPTS, INC.
11677 San Vicente Blvd., Suite 404
Los Angeles, CA 90049


Gentlemen:

     This  letter is to confirm  that WELLS  FARGO  BANK,  NATIONAL  ASSOCIATION
("Bank"),  subject to all terms and conditions  contained herein,  has agreed to
make available the credit described below to GRILL CONCEPTS, INC. ("Borrower"):

     1. A  revolving  line of credit  under  which  Bank will make  advances  to
Borrower from time to time up to and including  August 1, 2001, not to exceed at
any  time  the  maximum  principal  amount  of Three  Hundred  Thousand  Dollars
($300,000.00) ("Line of Credit"),  the proceeds of which shall be used first, to
refinance  Borrower's credit  accommodations with Bank of America, and second to
provide working capital for Borrower.

     2. A term loan in the principal  amount of One Million Two Hundred Thousand
Dollars  ($1,200,000.00)  ("Term Loan"),  the proceeds of which shall be used to
refinance  the  existing  credit  accommodations  with Bank of  America.  Bank's
commitment to grant the Term Loan shall terminate on August 19, 2000.

I.   CREDIT TERMS:

     1.   LINE OF CREDIT:

     (a) Line of Credit Note.  Borrower's obligation to repay advances under the
Line of Credit shall be evidenced by a promissory note substantially in the form
of Exhibit A  attached  hereto ("Line of Credit  Note"),  all terms of which are
incorporated herein by this reference.

     (b) Borrowing and Repayment. Borrower may from time to time during the term
of the  Line of  Credit  borrow,  partially  or  wholly  repay  its  outstanding
borrowings,  and  reborrow,  subject  to  all  of  the  limitations,  terms  and
conditions  contained  herein or in the Line of Credit Note;  provided  however,
that the total outstanding  borrowings under the Line of Credit shall not at any
time exceed the maximum  principal  amount  available  thereunder,  as set forth
above. Notwithstanding the foregoing,  Borrower shall maintain a zero balance on
advances under the Line of Credit for a period of at least 30  consecutive  days
during the term of the Line of Credit.

     2.   TERM LOAN:

     (a) Term  Note.  Borrower's  obligation  to repay  the Term  Loan  shall be
evidenced by a promissory note  substantially in the form of Exhibit B  attached
hereto  ("Term  Note"),  all  terms of which  are  incorporated  herein  by this
reference.

     (b)  Repayment.  The  principal  amount of the Term Loan shall be repaid in
accordance with the provisions of the Term Note.
<PAGE>

     (c)  Prepayment.  Borrower may prepay  principal on the Term Loan solely in
accordance with the provisions of the Term Note.

     3.   GUARANTIES:

     All  indebtedness  of  Borrower to Bank shall be  guaranteed  by Michael S.
Weinstock,  as an individual and as Trustee of the Michael S.  Weinstock  Living
Trust  u/t/a  dated  April  13,  1990  (each,   a  "Weinstock   Guarantor"   and
collectively,   the  "Weinstock   Guarantors")   in  the  principal   amount  of
$750,000.00,  Lewis Wolff and Lewis N. Wolff and Jean Adele  Wolff,  Trustees of
the Wolff Revocable Trust of 1993 in the principal  amount of $750,000.00,  each
as evidenced  by and subject to the terms of  guaranties  in form and  substance
satisfactory  to Bank.  In the event any such  guaranty  were to be treated as a
partial  guaranty  for the  purposes  of  California  Civil Code  Section  2822,
Borrower hereby waives any right Borrower may have thereunder, including without
limitation  any right  Borrower may have  thereunder to designate the portion of
indebtedness  of Borrower to Bank to which any payment or  satisfaction is to be
applied.

II.  INTEREST/FEES:

     1. Interest.  The outstanding  principal  balance of the Line of Credit and
the Term Loan shall bear interest at the rates of interest set forth in the Line
of Credit Note and the Term Note.

     2.  Computation  and Payment.  Interest shall be computed on the basis of a
360-day year,  actual days elapsed.  Interest  shall be payable at the times and
place set forth in the Line of Credit Note and the Term Note .

     3. Commitment Fee.  Borrower shall pay to Bank a non-refundable  commitment
fee for the Line of Credit equal to $1,000.00  and a  non-refundable  commitment
fee for the Term Loan equal to $2,000.00, which fees shall be due and payable in
full upon the execution of this letter.

III. REPRESENTATIONS AND WARRANTIES:

     Borrower makes the following  representations and warranties to Bank, which
representations  and  warranties  shall survive the execution of this letter and
shall  continue in full force and effect until the full and final  payment,  and
satisfaction  and discharge,  of all  obligations of Borrower to Bank subject to
this letter.

     1. Legal Status. Borrower is a corporation, duly organized and existing and
in good  standing  under the laws of the State of Delaware,  and is qualified or
licensed to do  business in all  jurisdictions  in which such  qualification  or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

     2.  Authorization  and  Validity.  This  letter and each  promissory  note,
contract, instrument and other document deemed necessary by Bank to evidence any
extension of credit to Borrower pursuant to the terms and conditions  hereof, or
now or at any time hereafter required by or delivered to Bank in connection with
this letter (collectively,  the "Loan Documents") have been duly authorized, and
upon their execution and delivery in accordance with the provisions  hereof will
constitute legal, valid and binding agreements and obligations of
<PAGE>

Borrower or the party which executes the same,  enforceable  in accordance  with
their respective terms.

     3. No Violation.  The  execution,  delivery and  performance by Borrower of
each  of the  Loan  Documents  do  not  violate  any  provision  of  any  law or
regulation,  or  contravene  any provision of the Articles of  Incorporation  or
By-Laws of Borrower,  or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.

     4. Litigation. There are no pending, or to the best of Borrower's knowledge
threatened,  actions, claims, investigations,  suits or proceedings by or before
any governmental  authority,  arbitrator,  court or administrative  agency which
could have a material adverse effect on the financial  condition or operation of
Borrower other than those  disclosed by Borrower to Bank in writing prior to the
date hereof.

     5. Correctness of Financial Statement.  The financial statement of Borrower
dated March 26,  2000,  a true copy of which has been  delivered  by Borrower to
Bank prior to the date hereof,  (a) is  complete and correct and presents fairly
the financial  condition of Borrower,  (b) discloses all liabilities of Borrower
that are required to be reflected or reserved  against under generally  accepted
accounting principles, whether liquidated or unliquidated,  fixed or contingent,
and (c) has been  prepared in  accordance  with  generally  accepted  accounting
principles  consistently  applied.  Since the date of such  financial  statement
there has been no material  adverse  change in the  condition  or  operation  of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in or
otherwise  encumbered any of its assets or properties except in favor of Bank or
as otherwise permitted by Bank in writing.

     6. Income Tax Returns. Borrower has no knowledge of any pending assessments
or adjustments of its income tax payable with respect to any year.

     7.  No  Subordination.  There  is  no  agreement,  indenture,  contract  or
instrument to which  Borrower is a party or by which  Borrower may be bound that
requires the subordination in right of payment of any of Borrower's  obligations
subject to this letter to any other obligation of Borrower.

     8. Permits, Franchises. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and all rights to
trademarks,  trade names,  patents and fictitious  names,  if any,  necessary to
enable it to conduct the business in which it is now engaged in compliance  with
applicable law.

     9. ERISA.  Borrower is in  compliance  in all  material  respects  with all
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended or recodified from time to time ("ERISA"); Borrower has not violated any
provision  of any defined  employee  pension  benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan");  no Reportable Event,
as defined in ERISA,  has  occurred and is  continuing  with respect to any Plan
initiated by Borrower;  Borrower has met its minimum funding  requirements under
ERISA  with  respect to each  Plan;  and each Plan will be able to  fulfill  its
benefit  obligations as they come due in accordance  with the Plan documents and
under generally accepted accounting principles.
<PAGE>


     10. Other  Obligations.  Borrower is not in default on any  obligation  for
borrowed  money,  any purchase  money  obligation or any other  material  lease,
commitment, contract, instrument or obligation.

     11.  Environmental  Matters.  Except as  disclosed  by  Borrower to Bank in
writing  prior to the date  hereof,  Borrower is in  compliance  in all material
respects with all applicable  federal or state  environmental,  hazardous waste,
health  and  safety  statutes,  and any rules or  regulations  adopted  pursuant
thereto,  which govern or affect any of Borrower's operations and/or properties,
including  without  limitation,   the  Comprehensive   Environmental   Response,
Compensation   and  Liability  Act  of  1980,   the  Superfund   Amendments  and
Reauthorization Act of 1986, the Federal Resource  Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended,  modified or supplemented  from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action  involving a material  expenditure is needed to respond to a
release  of any toxic or  hazardous  waste or  substance  into the  environment.
Borrower has no material contingent  liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

IV.      CONDITIONS:

     1.  Conditions of Initial  Extension of Credit.  The  obligation of Bank to
extend any credit  contemplated  by this  letter is  subject to  fulfillment  to
Bank's satisfaction of all of the following conditions:

     (a)  Documentation.  Bank shall have received  each of the Loan  Documents,
duly executed and in form and substance satisfactory to Bank.

     (b) Financial Condition.  There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower or any
guarantor  hereunder,  nor any material  decline,  as determined by Bank, in the
market value of any collateral  required  hereunder or a substantial or material
portion of the assets of Borrower or any such guarantor.

     2.  Conditions of Each Extension of Credit.  The obligation of Bank to make
each extension of credit requested by Borrower hereunder shall be subject to the
fulfillment to Bank's satisfaction of each of the following conditions:

     (a) Compliance.  The representations and warranties contained herein and in
each of the  other  Loan  Documents  shall  be true on and as of the date of the
signing  of this  letter  and on the date of each  extension  of  credit by Bank
pursuant  hereto,  with the same  effect  as  though  such  representations  and
warranties  had been made on and as of each such date, and on each such date, no
default  hereunder,  and no  condition,  event or act which  with the  giving of
notice or the  passage of time or both would  constitute  such a default,  shall
have occurred and be continuing or shall exist.
<PAGE>

     (b) Documentation.  Bank shall have received all additional documents which
may be required in connection with such extension of credit.

V.   COVENANTS:

     Borrower  covenants that so long Bank remains committed to extend credit to
Borrower  pursuant  hereto,  or any  liabilities  (whether direct or contingent,
liquidated or  unliquidated) of Borrower to Bank under any of the Loan Documents
remain  outstanding,  and until payment in full of all  obligations  of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

     1. Punctual Payment. Punctually pay all principal,  interest, fees or other
liabilities  due under any of the Loan  Documents  at the times and place and in
the manner specified therein;  provided,  however, that notwithstanding anything
herein or in any of the Loan  Documents  to the  contrary,  an event of  default
shall not exist under the Loan  Documents as a result of  Borrower's  failure to
make a payment  when due to Bank  thereunder  and Bank shall not be  entitled to
accelerate  Borrower's  indebtedness to Bank hereunder as a result of Borrower's
failure to make a payment when due to Bank under the Loan Documents  unless such
payment is more than five (5) days past due.

     2. Accounting  Records.  Maintain  adequate books and records in accordance
with generally accepted accounting  principles  consistently applied, and permit
any  representative  of Bank,  at any  reasonable  time,  to inspect,  audit and
examine  such books and  records,  to make  copies of the same and  inspect  the
properties of Borrower.

     3. Financial Statements.  Provide to Bank all of the following, in form and
detail satisfactory to Bank:

     (a) not later  than 90 days  after and as of the end of each  fiscal  year,
allowing  for  one 15 day SEC  extension,  an  audited  financial  statement  of
Borrower,  prepared by a certified  public  accountant  acceptable  to Bank,  to
include  balance sheet,  income  statement and statement of cash flow,  together
with all supporting schedules and footnotes;

     (b) not later than 60 days after and as of the end of each fiscal  quarter,
a financial  statement of Borrower,  reviewed by a certified  public  accountant
acceptable to Bank, to include balance sheet and income statement;

     (c) not  later  than  each  April 1 and as of each  calendar  year  end,  a
financial  statement of Michael S.  Weinstock,  prepared by such  guarantor,  to
include balance sheet and income statement, and within 45 days after filing, but
in no event later than each December 1, copies of such guarantor's filed federal
income tax returns for the  previous  year,  with  K-1's,  notes and  supporting
schedules;

     (d) not  later  than  each  April 1 and as of each  calendar  year  end,  a
financial  statement  of Lewis  Wolff,  prepared by such  guarantor,  to include
balance sheet and income statement;
<PAGE>

     (e)  not  later  than  30 days  after  and as of the  end of each  calendar
quarter, a liquidity statement of the Weinstock Guarantors  hereunder,  prepared
by such guarantor, to include supporting brokerage statements;

     (f)  not  later  than  30 days  after  and as of the  end of each  calendar
quarter,  a  balance  sheet  of  Lewis  Wolff in form  previously  approved  and
certified to Bank.

     (g)  from  time to time  such  other  information  as Bank  may  reasonably
request.

     4. Compliance.  Preserve and maintain all licenses,  permits,  governmental
approvals,  rights,  privileges and franchises  necessary for the conduct of its
business;  and comply with the  provisions  of all  documents  pursuant to which
Borrower is organized  and/or which govern  Borrower's  continued  existence and
with  the  requirements  of  all  laws,  rules,  regulations  and  orders  of  a
governmental agency applicable to Borrower and/or its business.

     5.  Insurance.  Maintain  and keep in force  insurance  of the types and in
amounts  customarily  carried in lines of business  similar to that of Borrower,
including but not limited to fire, extended coverage,  public liability,  flood,
property damage and workers' compensation,  with all such insurance carried with
companies and in amounts  satisfactory to Bank, and deliver to Bank from time to
time at Bank's request schedules setting forth all insurance then in effect.

     6.  Facilities.  Keep all  properties  useful or  necessary  to  Borrower's
business  in good  repair and  condition,  and from time to time make  necessary
repairs,  renewals and  replacements  thereto so that such  properties  shall be
fully and efficiently preserved and maintained.

     7.  Taxes and Other  Liabilities.  Pay and  discharge  when due any and all
indebtedness,  obligations,  assessments  and  taxes,  both  real  or  personal,
including without  limitation federal and state income taxes and state and local
property  taxes and  assessments,  except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction,  for eventual payment thereof in the
event Borrower is obligated to make such payment.

     8.  Litigation.  Promptly  give  notice in writing to Bank of any  material
litigation pending or threatened against Borrower.

     9.  Financial  Condition.  Maintain  Borrower's  financial  condition  on a
consolidated  basis as follows using generally  accepted  accounting  principles
consistently  applied and used  consistently with prior practices (except to the
extent modified by the definitions herein):

     (a) Total Liabilities divided by Tangible Net Worth not greater than 3.0 to
1.0 determined on a quarterly  basis,  commencing with the fiscal quarter ending
December 31, 2000, with "Total Liabilities"  defined as the aggregate of current
liabilities  and  non-current  liabilities  less  subordinated  debt,  and  with
"Tangible Net Worth" defined as the aggregate of total stockholders' equity plus
subordinated debt less any intangible assets.
<PAGE>


     (b) Debt Service  Coverage  Ratio not less than 1.25 to 1.0 determined on a
four rolling  quarter basis,  commencing with the fiscal quarter ending December
31, 2000,  with "Debt Service  Coverage  Ratio" defined as the sum of net income
after  taxes  plus  depreciation  expense,   amortization  expense,  pre-opening
expense,  and interest  expense minus cash  dividends  divided by the sum of the
current portion of long-term liabilities plus interest expense.

     10.  Financial  Condition.  Cause each  guarantor to maintain its financial
condition as follows using generally accepted accounting principles consistently
applied  and used  consistently  with  prior  practices  (except  to the  extent
modified by the definitions herein):

     Unencumbered  personal  liquid assets  (defined as cash,  cash  equivalents
and/or  publicly  traded/quoted  marketable  securities  acceptable  to Bank and
excluding  Grill  Concepts,  Inc.) with an aggregate  fair market value not less
than One Million Five Hundred Thousand Dollars ($1,500,000.00),  determined on a
quarterly basis. Pension and retirement assets qualify for this calculation, but
at fifty percent (50%) of their valuation.

     11. Other  Indebtedness.  Cause the  Weinstock  Guarantors,  not to create,
incur,   assume  or  permit  to  exist  any  indebtedness  or  liabilities  from
borrowings,  loans  or  advances,  whether  secured  or  unsecured,  matured  or
unmatured,  liquidated  or  unliquidated,  joint  or  several,  except  for  (a)
liabilities  of the Weinstock  Guarantors  existing as of, and disclosed to Bank
prior to the date  hereof  and  replacements  thereof,  (b)  liabilities  of the
Weinstock   Guarantors  to  Bank,  (c)  non-recourse   borrowings  hereafter  by
partnerships or limited  liability  companies in which the Weinstock  Guarantors
are partners or members,  (d) purchase money indebtedness  incurred hereafter to
finance the  acquisition  of real property,  secured by such real property,  (e)
purchase money  indebtedness  incurred  hereafter to finance the  acquisition of
motor vehicles,  secured by such vehicles,  and (f) other  borrowings  hereafter
which do not exceed  $250,000.00  in the aggregate for the Weinstock  Guarantors
combined.

VI.  DEFAULT, REMEDIES:

     1. Default, Remedies. Upon the violation of any term or condition of any of
the Loan  Documents,  or upon the  occurrence of any default or defined event of
default under any of the Loan Documents:  (a) all indebtedness of Borrower under
each of the Loan  Documents,  any term thereof to the contrary  notwithstanding,
shall at Bank's  option and without  notice become  immediately  due and payable
without  presentment,  demand,  protest or notice of dishonor,  all of which are
expressly waived by Borrower;  (b) the obligation, if any, of Bank to extend any
further  credit  under any of the Loan  Documents  shall  immediately  cease and
terminate;  and (c) Bank  shall have all rights,  powers and remedies  available
under  each  of the  Loan  Documents,  or  accorded  by law,  including  without
limitation  the right to resort to any or all  security  for any credit  subject
hereto  and to  exercise  any or all of the rights of a  beneficiary  or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the  occurrence of any
such  breach or  default,  are  cumulative  and not  exclusive,  and shall be in
addition to any other rights, powers or remedies provided by law or equity.
<PAGE>

     2. No Waiver. No delay, failure or discontinuance of Bank in exercising any
right,  power or remedy under any of the Loan Documents  shall affect or operate
as a waiver of such  right,  power or  remedy;  nor shall any  single or partial
exercise of any such right, power or remedy preclude,  waive or otherwise affect
any other or further exercise thereof or the exercise of any other right,  power
or remedy.  Any waiver,  permit,  consent or approval of any kind by Bank of any
breach of or default  under any of the Loan  Documents  must be in  writing  and
shall be effective only to the extent set forth in such writing.

     3. Cure  Periods.  Notwithstanding  anything  herein or in any of the other
Loan Documents to the contrary:

     (a) An event of  default  shall not exist  under  the Loan  Documents  as a
result of Borrower's  failure to make a payment when due to Bank  thereunder and
Bank  shall  not be  entitled  to  accelerate  Borrower's  indebtedness  to Bank
hereunder as a result of  Borrower's  failure to make a payment when due to Bank
under the Loan  Documents  unless  such  payment is more than five (5) days past
due.

     (b) An event of  default  shall not exist  under  the Loan  Documents  as a
result of Borrower's default in compliance with any covenant therein (other than
a payment  default  referred  to in  paragraph  (a) above) and Bank shall not be
entitled to accelerate Borrower's  indebtedness to Bank hereunder as a result of
any such default  unless,  with respect to any such default  which by its nature
can be cured,  such default shall continue for a period of twenty (20) days from
its  occurrence;  provided,  however,  that in the case of a  default  under the
following covenants, Borrower shall have twenty (20) days from the date Borrower
receives  notice  thereof from Bank to cure such  default:  paragraph  V,1 as it
relates to the  maintenance of adequate books and records;  paragraph V, 3 as it
relates to financial  statements being in form and detail  satisfactory to Bank;
paragraph V,4;  paragraph V,5; paragraph V,6; and paragraph V,7 as it relates to
making provisions satisfactory to Bank.

VII. MISCELLANEOUS:

     1. Notices.  All notices,  requests and demands which any party is required
or may desire to give to any other party under any provision of this letter must
be in writing  delivered to each party at its address first set forth above,  or
to such other address as any party may designate by written  notice to all other
parties.  Each such notice,  request and demand shall be deemed given or made as
follows: (a) if sent by hand delivery, upon delivery;  (b) if sent by mail, upon
the  earlier of the date of receipt or three (3) days after  deposit in the U.S.
mail,  first  class  and  postage  prepaid;  and (c) if sent by  telecopy,  upon
receipt.

     2.  Costs,  Expenses  and  Attorneys'  Fees.  Borrower  shall  pay to  Bank
immediately  upon demand the full  amount of all  payments,  advances,  charges,
costs and expenses,  including  reasonable  attorneys'  fees (to include outside
counsel fees and all allocated  costs of Bank's in-house  counsel),  expended or
incurred by Bank in connection with (a) the  negotiation and preparation of this
letter and the other Loan Documents,  Bank's continued administration hereof and
thereof,  and the  preparation  of  amendments  and waivers  hereto and thereto,
(b) the  enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents,  and (c) the  prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation,  any action for declaratory relief,  whether incurred at the
trial or  appellate  level,  in an  arbitration  proceeding  or  otherwise,  and
including  any of the  foregoing  incurred  in  connection  with any  bankruptcy
proceeding (including without limitation,  any adversary  proceeding,  contested
matter or motion  brought by Bank or any other person)  relating to any Borrower
or any other person or entity.
<PAGE>

     3. Successors,  Assignment.  This letter shall be binding upon and inure to
the  benefit of the heirs,  executors,  administrators,  legal  representatives,
successors and assigns of the parties;  provided however,  that Borrower may not
assign or transfer its interest  hereunder without Bank's prior written consent.
Bank  reserves  the  right  to  sell,  assign,  transfer,   negotiate  or  grant
participations  in all or any part of, or any  interest  in,  Bank's  rights and
benefits  under each of the Loan  Documents.  In connection  therewith  Bank may
disclose all  documents  and  information  which Bank now has or  hereafter  may
acquire  relating to any credit subject  hereto,  Borrower or its business,  any
guarantor  hereunder  or the  business  of  such  guarantor,  or any  collateral
required hereunder.

     4. Entire  Agreement;  Amendment.  This letter and the other Loan Documents
constitute the entire  agreement  between Borrower and Bank with respect to each
credit  subject  hereto and  supersede all prior  negotiations,  communications,
discussions and correspondence concerning the subject matter hereof. This letter
may be amended or modified only in writing signed by each party hereto.

     5. No Third Party  Beneficiaries.  This letter is made and entered into for
the sole  protection  and  benefit of the  parties  hereto and their  respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection  with,  this letter or any other of the Loan Documents to which it is
not a party.

     6.  Severability  of  Provisions.  If any provision of this letter shall be
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  only  to the  extent  of such  prohibition  or  invalidity  without
invalidating the remainder of such provision or any remaining provisions of this
letter.

     7.  Governing  Law.  This  letter  shall be governed  by and  construed  in
accordance with the laws of the State of California.

     8. Arbitration.

     (a)  Arbitration.  Upon the  demand  of any  party,  any  Dispute  shall be
resolved by binding  arbitration in accordance with the terms of this letter.  A
"Dispute"  shall mean any action,  dispute,  claim or  controversy  of any kind,
whether in contract or tort,  statutory or common law,  legal or equitable,  now
existing  or  hereafter  arising  under  or in  connection  with,  or in any way
pertaining  to,  any of the Loan  Documents,  or any  past,  present  or  future
extensions of credit and other  activities,  transactions  or obligations of any
kind related  directly or  indirectly  to any of the Loan  Documents,  including
without limitation, any of the foregoing arising in connection with the exercise
of any  self-help,  ancillary  or  other  remedies  pursuant  to any of the Loan
Documents.  Any party  may by  summary  proceedings  bring an action in court to
compel  arbitration  of a  Dispute.  Any party who fails or refuses to submit to
arbitration  following  a lawful  demand by any other party shall bear all costs
and  expenses  incurred by such other  party in  compelling  arbitration  of any
Dispute.
<PAGE>

     (b) Governing Rules.  Arbitration  proceedings shall be administered by the
American  Arbitration  Association  ("AAA") or such other  administrator  as the
parties  shall  mutually  agree  upon in  accordance  with  the  AAA  Commercial
Arbitration  Rules. All Disputes  submitted to arbitration  shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding  any  conflicting  choice  of law  provision  in any of the Loan
Documents.  The  arbitration  shall be  conducted  at a location  in  California
selected  by the AAA or  other  administrator.  If  there  is any  inconsistency
between the terms hereof and any such rules,  the terms and procedures set forth
herein shall control. All statutes of limitation applicable to any Dispute shall
apply to any arbitration proceeding. All discovery activities shall be expressly
limited to matters directly relevant to the Dispute being  arbitrated.  Judgment
upon any award  rendered in an  arbitration  may be entered in any court  having
jurisdiction; provided however, that nothing contained herein shall be deemed to
be a waiver by any party that is a bank of the protections  afforded to it under
12 U.S.C.  91 or any similar applicable state law.

     (c)  No  Waiver;  Provisional  Remedies,   Self-Help  and  Foreclosure.  No
provision  hereof  shall  limit  the right of any  party to  exercise  self-help
remedies  such as setoff,  foreclosure  against or sale of any real or  personal
property collateral or security, or to obtain provisional or ancillary remedies,
including  without  limitation  injunctive  relief,  sequestration,  attachment,
garnishment  or the  appointment  of a  receiver,  from  a  court  of  competent
jurisdiction  before,  after or during the pendency of any  arbitration or other
proceeding.  The  exercise of any such  remedy  shall not waive the right of any
party to compel arbitration or reference hereunder.

     (d)  Arbitrator  Qualifications  and Powers;  Awards.  Arbitrators  must be
active  members of the  California  State Bar or retired  judges of the state or
federal  judiciary  of  California,   with  expertise  in  the  substantive  law
applicable to the subject  matter of the Dispute.  Arbitrators  are empowered to
resolve  Disputes by summary  rulings in response to motions  filed prior to the
final  arbitration  hearing.  Arbitrators  (i) shall  resolve  all  Disputes  in
accordance with the  substantive law of the State of California,  (ii) may grant
any  remedy or relief  that a court of the State of  California  could  order or
grant within the scope hereof and such ancillary  relief as is necessary to make
effective  any award,  and (iii)  shall have the power to award  recovery of all
costs and fees, to impose  sanctions and to take such other actions as they deem
necessary  to the same  extent a judge could  pursuant  to the Federal  Rules of
Civil  Procedure,  the California  Rules of Civil Procedure or other  applicable
law. Any Dispute in which the amount in  controversy is $5,000,000 or less shall
be decided by a single  arbitrator who shall not render an award of greater than
$5,000,000  (including  damages,  costs, fees and expenses).  By submission to a
single  arbitrator,  each party  expressly  waives any right or claim to recover
more than  $5,000,000.  Any Dispute in which the amount in  controversy  exceeds
$5,000,000  shall be decided by majority  vote of a panel of three  arbitrators;
provided however,  that all three  arbitrators must actively  participate in all
hearings and deliberations.

     (e) Real Property Collateral; Judicial Reference.  Notwithstanding anything
herein to the  contrary,  no Dispute  shall be submitted to  arbitration  if the
Dispute concerns  indebtedness  secured  directly or indirectly,  in whole or in
part,  by any real  property  unless  (i) the  holder of the  mortgage,  lien or
security   interest   specifically   elects  in  writing  to  proceed  with  the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits
that  might  accrue to them by virtue  of the  single  action  rule  statute  of
California,  thereby  agreeing  that all  indebtedness  and  obligations  of the
parties,  and  all  mortgages,   liens  and  security  interests  securing  such
indebtedness and obligations,  shall remain fully valid and enforceable.  If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with  California  Code of Civil  Procedure  Section 638 et
seq.,  and this  general  reference  agreement  is intended  to be  specifically
enforceable   in   accordance   with  said  Section  638.  A  referee  with  the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's  selection  procedures.  Judgment upon the decision  rendered by a referee
shall be  entered  in the  court in  which  such  proceeding  was  commenced  in
accordance with California Code of Civil Procedure Sections 644 and 645.
<PAGE>

     (f)  Miscellaneous.  To  the  maximum  extent  practicable,  the  AAA,  the
arbitrators  and the parties  shall take all action  required  to  conclude  any
arbitration  proceeding  within 180 days of the filing of the  Dispute  with the
AAA. No arbitrator or other party to an arbitration  proceeding may disclose the
existence,  content or results thereof, except for disclosures of information by
a party  required in the ordinary  course of its business,  by applicable law or
regulation,  or to the extent  necessary to exercise any judicial  review rights
set forth herein.  If more than one agreement for  arbitration by or between the
parties  potentially  applies  to a  Dispute,  the  arbitration  provision  most
directly  related to the Loan  Documents  or the  subject  matter of the Dispute
shall control. This arbitration  provision shall survive termination,  amendment
or  expiration  of any of the Loan  Documents  or any  relationship  between the
parties.

     Your  acknowledgment  of this letter  shall  constitute  acceptance  of the
foregoing  terms and  conditions.  Bank's  commitment  to extend  any  credit to
Borrower  pursuant to the terms of this  letter  shall  terminate  on August 19,
2000,  unless this letter is acknowledged by Borrower and returned to Bank on or
before that date.

                                                  Sincerely,

                                                  WELLS FARGO BANK,
                                                  NATIONAL ASSOCIATION

                                                  By: __________________________
                                                      Dick Motika
                                                      Vice President
Acknowledged and accepted as of _________:


GRILL CONCEPTS, INC.

By: __________________________

Title: _________________________