SUBSCRIPTION AGREEMENT

                  SUBSCRIPTION  AGREEMENT,  dated  as of May 16,  2001,  between
GRILL CONCEPTS, INC., a corporation organized and existing under the laws of the
State of Delaware ("Issuer"); and STARWOOD HOTELS AND RESORTS WORLDWIDE, INC., a
corporation  organized  and  existing  under the laws of the  State of  Maryland
("Investor");

                              W I T N E S S E T H:

                  WHEREAS,  Issuer  wishes  to issue and sell to  Investor,  and
Investor  wishes to purchase  from  Issuer,  666,667  shares (the  "Shares")  of
Issuer's common stock,  par value $0.00004 per share ("Common Stock") at a price
of $1.50 per share,  all upon the terms and subject to the  conditions set forth
herein;

                  WHEREAS,  Issuer  wishes to issue to  Investor,  and  Investor
wishes to acquire from Issuer,  warrants  (the  "Initial  Warrants") to purchase
666,667  shares (the  "Initial  Warrant  Shares") of Common Stock at an exercise
price of $2.00 per share,  all upon the terms and subject to the  conditions set
forth herein and in the applicable warrant certificate; and

                  WHEREAS,  Issuer and Investor wish to enter into an agreement,
effective  concurrently  with the purchase of the Shares and  acquisition of the
Initial  Warrants,  substantially  in the form attached hereto as Exhibit A (the
"Development  Agreement")  pursuant to which,  inter alia,  Issuer has agreed to
issue to Investor: (i) warrants (the "Development Warrants") to purchase certain
additional  shares of Common  Stock from time to time for every five GCI Concept
Facilities  (as  defined in the  Development  Agreement)  opened  after the date
hereof;  and (ii)  warrants  (the  "Incentive  Warrants,"  and together with the
Development Warrants,  the "Subsequent Warrants") to purchase certain additional
shares of Common  Stock from time to time in the event that the total  number of
GCI Concept Facilities  represent more than thirty-five percent of the aggregate
then  operational GCI Facilities (as defined in the Development  Agreement);  in
each  case,  upon the terms  and  subject  to the  conditions  specified  in the
Development Agreement and the applicable warrant certificate;

                  NOW,  THEREFORE,  in  consideration  of the  foregoing and the
representations,  warranties,  covenants,  and agreements set forth herein,  and
other good and  valuable  consideration,  the receipt and  adequacy of which are
hereby  acknowledged,  and  intending to be legally  bound  hereby,  the parties
hereto hereby covenant and agree as follows:

                  SECTION 1.  Certain Defined Terms.  Capitalized terms used and
not otherwise defined in the body hereof are used herein as defined in Schedule
I hereto.

                  SECTION 2.  Authorization  of the  Securities.  Issuer  shall,
prior to the Closing:  (a) duly authorize the issuance and sale of the Shares to
Investor at a purchase price of $1.50 per share; (b) duly authorize the issuance
of the Initial  Warrants,  and the Initial Warrant Shares upon exercise thereof,
to Investor; and (c) duly authorize the issuance of the Subsequent Warrants, and
the shares of Common Stock  issuable upon exercise  thereof  (collectively,  the
"Subsequent Warrant Shares"), to Investor.

<PAGE>

                  SECTION .  Purchase  and Sale of Shares and  Warrants.  On the
Closing Date and at the Closing,  Issuer shall: (a) sell,  issue, and deliver to
Investor or its assigns, free and clear of all Encumbrances, and Investor or its
assigns  shall  purchase  from  Issuer  for  an  aggregate   purchase  price  of
$1,000,000.50 (the "Purchase  Price"),  the Shares; and (b) issue and deliver to
Investor  or its  assigns,  free and  clear  of all  Encumbrances,  the  Initial
Warrants.

                  SECTION 4. Closing  Deliveries.  Subject to Section 13, at the
Closing:  (a) Issuer  shall  execute  and  deliver or cause to be  delivered  to
Investor the Share Certificate,  the Initial Warrant Certificate,  and the other
Transaction  Agreements,  opinions,  certificates,  and documents required to be
delivered pursuant to Section 12(b); and (b) Investor shall deliver to Issuer by
wire transfer of immediately  available funds to the Purchase Price Bank Account
the Purchase  Price,  and subject to the  satisfaction of each of the conditions
specified  in Section  12(b),  execute and  deliver to Issuer  each  Transaction
Agreement to which Investor is a party.

                  SECTION .  Representations  and  Warranties  of Issuer.  As an
inducement to Investor to enter into this Agreement,  except as set forth in the
Disclosure   Schedule  (with  reference  to  the  section  and,  if  applicable,
subsection or clause to which such exception relates),  Issuer hereby represents
and warrants to Investor as provided below:

                           (a)  Organization  and  Authority.  Issuer  and  each
         Subsidiary is a  corporation  or other entity duly  organized,  validly
         existing and in good  standing  under the laws of its  jurisdiction  of
         incorporation or  organization,  and, upon approval of the terms of the
         Transaction  Agreements  by the  stockholders  of Issuer as required by
         Sections  8,  12(a)(ii),  and  12(b)(xii)  (the  "Stockholder  Approval
         Requirement"),  has all necessary  power and authority:  (i) to own and
         operate its  properties  and assets and to carry on its business as now
         conducted  and presently  proposed to be  conducted;  (ii) to issue and
         sell: (A) the Shares; (B) the Initial Warrants; (C) the Initial Warrant
         Shares;  (D) the Subsequent  Warrants;  and (E) the Subsequent  Warrant
         Shares;  and  (iii) to enter  into  this  Agreement,  to carry  out its
         obligations hereunder, and to consummate the transactions  contemplated
         hereby.  Issuer and each Subsidiary is duly licensed or qualified to do
         business  and is in good  standing  in each  jurisdiction  in which the
         properties owned or leased by it or the operation of its business makes
         such licensing or qualification necessary,  appropriate,  or desirable,
         except for those  jurisdictions  in which  failure to be so licensed or
         qualified would not have a Material Adverse Effect.

                           (b) Authorization, Execution and Delivery. Subject to
         the  Stockholder  Approval  Requirement,  the execution and delivery of
         this  Agreement and each other  Transaction  Agreement to which it is a
         party by Issuer, the performance by Issuer of its obligations hereunder
         and  thereunder,  and the  consummation  by Issuer of the  transactions
         contemplated  hereby and  thereby  will have been duly  authorized  and
         approved by all requisite action on the part of Issuer.  Subject to the
         Stockholder  Approval  Requirement,  this  Agreement has been, and upon
         execution of Issuer of each other Transaction  Agreement to which it is
         a party will have been,  duly  executed and  delivered  by Issuer,  and
         (assuming due  authorization,  execution and delivery by Investor) this
         Agreement constitutes, and each other Transaction Agreement to which it
         is a party will constitute,  a legal,  valid, and binding obligation of
         Issuer enforceable against Issuer in accordance with its terms.

                                       2
<PAGE>


                           (c) Capital Stock. A true and complete description of
         the authorized,  issued, and outstanding capital stock of Issuer is set
         forth  in  Section  5(c)(i)  of  the  Disclosure  Schedule.  Except  as
         described in Section 5(c)(i) of the Disclosure  Schedule,  there are no
         options,  warrants,  convertible securities,  or other Contracts of any
         kind, nature, or description  whatsoever  relating to the capital stock
         of Issuer or  obligating  Issuer to issue or sell any shares of capital
         stock of, or any other  interest  in,  Issuer.  None of the  issued and
         outstanding  shares of  Common  Stock was  issued in  violation  of any
         preemptive rights. There are no outstanding  contractual obligations of
         Issuer or any Subsidiary to repurchase,  redeem,  or otherwise  acquire
         any shares of Common Stock or Preferred  Stock or to provide  funds to,
         or make any investment (in the form of a loan, capital contribution, or
         otherwise) in, any other Person.

                  (ii) Upon consummation of the transactions contemplated hereby
         (excluding the impact of the issuance of any  Subsequent  Warrants) and
         registration of the Shares in the name of Investor in the stock records
         of  Issuer:  (A)  Investor  will  own the  percent  of the  issued  and
         outstanding  capital stock of Issuer on a fully-diluted basis (assuming
         the exercise,  exchange, or conversion of all of the options, warrants,
         convertible  securities,  and other Contracts of any kind,  nature,  or
         description  whatsoever  relating  to the  capital  stock of  Issuer or
         obligating  Issuer to issue or sell any shares of capital  stock of, or
         any other interest in, Issuer or any subsidiary  thereof;  and assuming
         consummation of all of the transactions  contemplated hereby) specified
         in Section 5(c)(i) of the Disclosure  Schedule;  (B) the Shares and the
         Initial  Warrants will be duly authorized,  validly issued,  fully paid
         and nonassessable,  and free and clear of all Encumbrances; and (C) the
         Subsequent  Warrants  and the  shares of  Common  Stock  issuable  upon
         exercise of the Initial  Warrants and the  Subsequent  Warrants will be
         duly and properly reserved for issuance and, upon the issuance thereof,
         will be duly authorized, validly issued, fully paid, and nonassessable,
         and free and clear of all Encumbrances.

                  (iii) The offer,  issuance, and sale of all outstanding shares
         of capital  stock of Issuer were  registered  and related  prospectuses
         delivered in accordance  with, or were exempt from the registration and
         prospectus  delivery  requirements  of, the  Securities  Act;  and were
         registered  or  qualified,   or  were  exempt  from   registration  and
         qualification,   under  the  registration,   permit,  or  qualification
         requirements of all applicable state securities laws.

                                       3
<PAGE>


                  (iv)  Other  than  the  Investor  Rights   Agreement  and  the
         Stockholders  Agreement,   there  are  no  voting  trusts,  stockholder
         agreements,  proxies,  or other Contracts in effect with respect to the
         voting or  transfer  of any  shares of  capital  stock of, or any other
         interests in, Issuer.

                  (v) The stock register of Issuer accurately  records:  (A) the
         name and  address of each  Person  owning  shares of  capital  stock of
         Issuer; and (B) the certificate  number of each certificate  evidencing
         shares  of  capital  stock  issued  by  Issuer,  the  number  of shares
         evidenced by each such certificate,  the date of issuance thereof, and,
         in the case of cancellation, the date of cancellation thereof.

                           (d) Subsidiaries. Set forth in Section 5(d)(i) of the
         Disclosure  Schedule is a true and complete  list of all  Subsidiaries.
         Except as  described  in Section  5(d)(i) of the  Disclosure  Schedule,
         neither Issuer nor any Subsidiary: (A) owns, beneficially or of record,
         any  direct  or  indirect   equity  or  other  interest  or  any  right
         (contingent  or otherwise) to acquire the same in any Person;  (B) is a
         member  of,  nor is any part of its  business  conducted  through,  any
         partnership;  and (C) is a participant  in any joint venture or similar
         arrangement.

                  (ii) There are no options,  warrants,  convertible securities,
         or other  Contracts  of any kind,  nature,  or  description  whatsoever
         relating to the capital stock of any Subsidiary or obligating Issuer or
         any  Subsidiary to issue or sell any shares of capital stock of, or any
         other interest in, any  Subsidiary.  None of the issued and outstanding
         shares of capital  stock of any  Subsidiary  was issued in violation of
         any preemptive rights. There are no outstanding contractual obligations
         of Issuer or any Subsidiary to repurchase, redeem, or otherwise acquire
         any shares of capital  stock of any  Subsidiary or to provide funds to,
         or make any investment (in the form of a loan, capital contribution, or
         otherwise) in, any other Person.

                  (iii)  There are no  voting  trusts,  stockholder  agreements,
         proxies,  or other  Contracts  in effect with  respect to the voting or
         transfer of any shares of capital stock of, or any other  interests in,
         any Subsidiary.

                  (iv) The stock register of each Subsidiary accurately records:
         (A) the name and address of each Person  owning shares of capital stock
         of such Subsidiary;  and (B) the certificate number of each certificate
         evidencing  shares of  capital  stock  issued by such  Subsidiary,  the
         number  of  shares  evidenced  by each  such  certificate,  the date of
         issuance  thereof,  and,  in the  case  of  cancellation,  the  date of
         cancellation thereof.

                                       4
<PAGE>


                           (e)  Exchange  Act  Documents.  Issuer is  subject to
         Section  13 or  15(d)  of the  Exchange  Act and has  timely  made  all
         periodic and other  filings  required to be made under the Exchange Act
         and the rules  promulgated  thereunder for Issuer's  fiscal years ended
         December 26, 1999 and December 31, 2000. The  information  contained in
         the following  documents  (collectively,  the "Exchange Act Documents")
         filed by Issuer with the Commission was true, correct,  and complete in
         all  material  respects as of the  respective  filing date of each such
         document:

                                    (i) Issuer's Annual Report on Form  10-K for
                  the year ended December 31, 2000; and

                                    (ii) all other  documents,  if any, filed by
                  Issuer with the Commission since December 31, 2000.

                           (f)  No  Conflict.   The  execution,   delivery,  and
         performance of this Agreement and each other  Transaction  Agreement to
         which  it is a party  by  Issuer  do not and  will  not:  (i)  violate,
         conflict  with,  or  result  in  the  breach  of any  provision  of the
         certificate  of  incorporation  or by-laws (or  similar  organizational
         documents) of Issuer or any  Subsidiary;  (ii) conflict with or violate
         (or cause an event or condition  which could  reasonably be expected to
         result  in a  Material  Adverse  Effect  as a  result  of)  any  Law or
         Governmental  Order  applicable  to Issuer or any  Subsidiary or any of
         their respective assets,  properties, or businesses; or (iii) except as
         set forth in Section 5(f) of the  Disclosure  Schedule,  conflict with,
         result in any breach of,  constitute a default (or event which with the
         giving  of  notice  or lapse of time or both  would  become a  default)
         under,  require  any  consent  under,  or give to others  any rights of
         termination,   amendment,   acceleration,   suspension,  revocation  or
         cancellation of, or result in the creation of any Encumbrance on any of
         the Shares,  the Initial  Warrants,  the Initial  Warrant  Shares,  the
         Subsequent Warrants, or the Subsequent Warrant Shares, or on any of the
         assets or  properties  of Issuer or any  Subsidiary  pursuant  to,  any
         Contract to which Issuer or any  Subsidiary  is a party or by which any
         of such assets or properties is bound or affected.

                           (g) Consents and Approvals. The execution,  delivery,
         and performance of this Agreement and each other Transaction  Agreement
         to which  it is a party by  Issuer  do not and  will  not  require  any
         consent, approval,  authorization, or other order of, action by, filing
         with,  or  notification  to, any  Governmental  Authority  or any other
         Person;  except for the Stockholder Approval Requirement and the filing
         of notices of sale in  accordance  with the  registration,  permit,  or
         qualification requirements of all applicable state securities laws.

                           (h) Financial Information; Books and Records. (i) The
         Financial Statements: (A) were prepared in accordance with the books of
         account and other financial records of Issuer and each Subsidiary;  (B)
         present  fairly the  consolidated  financial  condition  and results of
         operations of Issuer and each Subsidiary as of the dates thereof or for
         the periods covered thereby;  (C) were prepared in accordance with U.S.
         GAAP applied on a basis  consistent  with the past  practices of Issuer
         and each  Subsidiary  and  throughout  the  periods  involved;  and (D)
         include all adjustments  (consisting only of normal recurring accruals)
         that  are  necessary  for  a  fair  presentation  of  the  consolidated
         financial condition and results of operations of Issuer as of the dates
         thereof or for the periods covered thereby.

                                       5
<PAGE>

          (ii) The books of account  and other  financial  records of Issuer and
     each Subsidiary  reflect all items of income and expense and all assets and
     liabilities  required to be reflected  therein in accordance with U.S. GAAP
     applied on a basis  consistent  with the past  practices of Issuer and each
     Subsidiary and throughout  the periods  involved,  are true and complete in
     all material respects,  do not contain or reflect any material inaccuracies
     or discrepancies, and have been maintained in accordance with good business
     and accounting practices.

               (i) No  Undisclosed  Liabilities.  There  are no  Liabilities  of
          Issuer or any  Subsidiary;  except  for:  (i)  Liabilities  adequately
          reflected or reserved  against on the  Financial  Statements;  or (ii)
          Liabilities  incurred since December 31, 2000, in the ordinary  course
          of  business,  consistent  with  past  practice,  of  Issuer  and each
          Subsidiary, which Liabilities are not material, individually or in the
          aggregate.  Set forth in Section 5(i) of the Disclosure  Schedule is a
          true and complete  schedule of all outstanding  indebtedness of Issuer
          and its Subsidiaries, except for any outstanding indebtedness which is
          not in excess of $10,000 individually, or $50,000 in the aggregate.

               (j) Conduct in the  Ordinary  Course.  Since  December  31, 2000,
          Issuer and each Subsidiary has conducted its businesses and operations
          in the ordinary course and consistent with good business practices.

               (k) Litigation; Governmental Orders. Set forth in Section 5(k)(i)
          of the  Disclosure  Schedule  is a true and  complete  list and  brief
          description  of each Action by or against  Issuer or any Subsidiary or
          affecting  any of the assets,  properties,  businesses,  or operations
          thereof,  pending  before,  or,  to  the  best  knowledge  of  Issuer,
          threatened to be brought by or before,  any Governmental  Authority at
          any  time  during  the  past  three  years,  which  has  had or  could
          reasonably  be  expected  to have a Material  Adverse  Effect or could
          reasonably   be  expected  to  affect  the  legality,   validity,   or
          enforceability of this Agreement or any other Transaction Agreement or
          the consummation of the transactions contemplated hereby or thereby.

     (ii) Set forth in Section 5(k)(ii) of the Disclosure Schedule is a true and
complete list and brief  description of each  Governmental  Order  applicable to
Issuer or any Subsidiary or affecting any of the assets, properties, businesses,
or  operations  thereof;  and no  such  Governmental  Order  has  had  or  could
reasonably be expected to have a Material  Adverse Effect or could reasonably be
expected to affect the legality,  validity,  or enforceability of this Agreement
or any other  Transaction  Agreement  or the  consummation  of the  transactions
contemplated hereby or thereby.

                                       6
<PAGE>

          (l) Compliance  with Laws.  Issuer and each  Subsidiary have conducted
     and continue to conduct  their  respective  businesses  and  operations  in
     accordance with all applicable Laws and  Governmental  Orders,  and neither
     Issuer nor any  Subsidiary is in violation of any such Law or  Governmental
     Order,  except where the failure to so comply or any such  violation  could
     not reasonably be expected to have a Material Adverse Effect.

          (m) Contracts.  Each Material Contract is legal, valid, and binding on
     the  respective  parties  thereto and is in full force and effect and, upon
     consummation of the  transactions  contemplated  hereby,  shall continue in
     full force and effect without penalty or other adverse consequence. Neither
     Issuer nor any Subsidiary  nor, to the best knowledge of Issuer,  any other
     party thereto is in breach of or default under any Material Contract.

          (n) Real Property.  Issuer or a Subsidiary,  as the case may be, is in
     peaceful and  undisturbed  possession  of each parcel of Real  Property and
     there are no  contractual or legal  restrictions  that preclude or restrict
     the  ability  of  Issuer or such  Subsidiary  to use the  premises  for the
     purposes for which they are currently being used.

          (o) Intellectual  Property.  All of the Owned Intellectual Property is
     owned by Issuer or a Subsidiary,  free and clear of all  Encumbrances,  and
     all of the Licensed Intellectual Property is held by Issuer or a Subsidiary
     pursuant to valid and  subsisting  licenses or  sublicenses.  The rights of
     Issuer  and the  Subsidiaries  in,  to, or under  such  Owned  Intellectual
     Property  and  Licensed  Intellectual  Property  do not  conflict  with  or
     infringe  on the  rights of any other  Person.  No Action  has been made or
     asserted or is pending,  nor, to the best knowledge of Issuer, has any such
     Action been threatened,  against Issuer or any Subsidiary either based upon
     or  challenging  or  seeking to deny or  restrict  the use by Issuer or any
     Subsidiary  of  any  of  the  Owned   Intellectual   Property  or  Licensed
     Intellectual  Property or alleging that any services provided,  or products
     manufactured  or sold by  Issuer  or any  Subsidiary  are  being  provided,
     manufactured,  or sold in  violation  of any  Intellectual  Property of any
     Person.   To  the  best  knowledge  of  Issuer,  no  Person  is  using  any
     Intellectual Property that is confusingly similar to the Owned Intellectual
     Property or the Licensed  Intellectual  Property or that  infringe upon the
     Owned Intellectual  Property or the Licensed  Intellectual Property or upon
     the rights of Issuer or any  Subsidiary  therein,  thereto,  or thereunder.
     Neither  Issuer nor any Subsidiary has granted any license or sublicense or
     other  right  to any  other  Person  with  respect  to  any  of  the  Owned
     Intellectual   Property  or  the  Licensed   Intellectual   Property.   The
     consummation of the transactions contemplated hereby will not result in the
     termination or impairment of any of the Owned Intellectual  Property or the
     Licensed  Intellectual  Property.  To the  best  knowledge  of  Issuer,  no
     employee  of  Issuer  or  any  Subsidiary  has  violated  any   proprietary
     information  agreement,  employment agreement,  or similar Contract,  which
     such employee had with any previous employer,  or any Intellectual Property
     policy  of any such  employer,  or is a party  to any  Action  relating  to
     Intellectual Property.

                                       7
<PAGE>

          (p) Assets.  Issuer or a  Subsidiary  owns,  leases,  or has the legal
     right to use all of the  Material  Assets and,  with  respect to  Contracts
     forming a part of the Material Assets, Issuer or a Subsidiary is a party to
     and  enjoys  the  right to the  benefits  of such  Contracts.  Issuer  or a
     Subsidiary has good and  marketable  title to, or, in the case of leased or
     subleased, or licensed or sublicensed Material Assets, valid and subsisting
     leasehold interests in or licenses to, all of the Material Assets, free and
     clear of all Encumbrances, except for Permitted Encumbrances.

          (q) Customers and Suppliers.  No supplier to or customer of Issuer has
     terminated  or  substantially  altered,  or  has  notified  Issuer  of  any
     intention to  terminate  or  substantially  alter,  its  existing  business
     relationship  with Issuer,  except for any termination or alteration  which
     could not reasonably be expected to have a Material Adverse Effect.

          (r) Key  Employees.  To the best  knowledge  of Issuer,  no officer or
     senior  management,  technical,  or professional  employee of Issuer or any
     Subsidiary  (each  a  "Key  Employee")  intends  to  terminate  his  or her
     employment  relationship  with Issuer or any such  Subsidiary,  and neither
     Issuer nor any  Subsidiary  has any  present  intention  to  terminate  the
     employment  of  any  officer  or  management,  technical,  or  professional
     employee thereof.  Each director and Key Employee is under written contract
     to  Issuer  or the  relevant  Subsidiary  to  maintain  in  confidence  all
     confidential or proprietary  information acquired by such individual in the
     course of his or her employment therewith,  and to assign to Issuer or such
     Subsidiary all inventions made by such  individual  within the scope of his
     or her  employment  during  such  employment  and for a  reasonable  period
     thereafter.

          (s)  Certain  Interests.  Except as set forth in  Section  5(s) of the
     Disclosure  Schedule,  to the best  knowledge  of Issuer,  no  stockholder,
     director, officer, or Key Employee of Issuer or any Subsidiary, no relative
     or spouse (or relative of such spouse) who resides  with, or is a dependent
     of,  any such  stockholder,  director,  officer,  or Key  Employee,  and no
     Affiliate  of any such  Person:  (i) has any direct or  indirect  financial
     interest  in  any  competitor,  customer,  or  supplier  of  Issuer  or any
     Subsidiary;   provided,   however,   that  the   ownership  of   securities
     representing  no more than one percent of the  outstanding  voting power of
     any  competitor,  supplier,  or customer,  and which are also listed on any
     national   securities   exchange  or  traded   actively  in  the   national
     over-the-counter  market,  shall not be deemed to be a "financial interest"
     so long as the Person  owning such  securities  has no other  connection or
     relationship  with  such  competitor,  supplier  or  customer;  (ii)  owns,
     directly or  indirectly,  in whole or in part, or has any other interest in
     any tangible or intangible  property belonging to or used, held for use, or
     intended  to be used by Issuer or any  Subsidiary  or  forming a part of or
     used,  held for use, or intended to be used in connection  with,  necessary
     for, or otherwise  material to the conduct of, the business and  operations
     of Issuer or any Subsidiary;  or (iii) has outstanding any  indebtedness to
     Issuer  or any  Subsidiary.  Except  as set  forth in  Section  5(s) of the
     Disclosure Schedule, neither Issuer nor any Subsidiary has any Liability or
     any other obligation of any kind,  nature, or description  whatsoever to or
     on behalf of any stockholder,  director, officer, or Key Employee of Issuer
     or any Subsidiary,  or, to the best knowledge of Issuer, to any relative or
     spouse (or relative of such spouse) who resides with, or is a dependent of,
     any  such  stockholder,  director,  officer,  or  Key  Employee,  or to any
     Affiliate of any such Person;  except for Liabilities  relating to: (A) the
     payment  of  salary  for  services  rendered;   (B)  the  reimbursement  of
     reasonable and necessary  business expenses incurred on behalf of Issuer or
     such  Subsidiary;  and (C) the payment or grant of other standard  employee
     benefits  made  generally  available  to all  employees  of  Issuer or such
     Subsidiary  (including  stock  option  agreements   outstanding  under  any
     employee  stock option plan approved by the board of directors of Issuer or
     such Subsidiary).

                                       8
<PAGE>

          (t) Taxes. Issuer and each Subsidiary has timely filed each return and
     report in respect of Taxes required to be filed thereby (collectively,  the
     "Tax  Returns").  All  Taxes  required  to be  shown on any Tax  Return  or
     otherwise due from Issuer or any Subsidiary  have been timely paid. All Tax
     Returns  are true and  complete in all  material  respects.  No  adjustment
     relating to any Tax Return has been proposed  formally or informally by any
     Governmental  Authority  and,  to the best  knowledge  of Issuer,  no basis
     exists  for any such  adjustment.  There  are no  pending  or,  to the best
     knowledge of Issuer, threatened Actions for the assessment or collection of
     Taxes  against  Issuer  or any  Subsidiary  or any  other  Person  that was
     required  or  permitted  to be  included in the filing of a Tax Return with
     Issuer or any Subsidiary on a consolidated or combined basis.  There are no
     Tax liens on any properties or assets of Issuer or any  Subsidiary,  except
     for  Tax  liens  in  excess  of  $7,500  individually,  or  $15,000  in the
     aggregate.  Issuer is entitled to a valid tax loss carry-forward for United
     States  income  tax  purposes  of not less than  $2,254,000  as of the last
     audited Issuer financial statements,  which tax loss carry-forward will not
     expire  (to the  extent  not used) for at least  four  years  from the date
     hereof;   provided   that:  (i)  Issuer  has  not  utilized  any  tax  loss
     carry-forward since the date of Issuer's last audited financial statements;
     and (ii) neither  Issuer nor any Subsidiary has taken any action that could
     reasonably be expected to preclude  Issuer from utilizing any such tax loss
     carry-forward.

          (u) Environmental Matters.  Issuer and each Subsidiary is and has been
     in compliance  with all  applicable  Environmental  Laws;  has obtained all
     Environmental  Permits necessary,  appropriate,  or desirable in connection
     with the  ownership  of their  respective  properties  and  assets  and the
     conduct of their respective  businesses;  and is and has been in compliance
     with the  requirements  of all such  Environmental  Permits;  in each case,
     except  for any  failure  to so  comply,  or to so obtain an  Environmental
     Permit,  which could not reasonably be expected to have a Material  Adverse
     Effect.

                                       9
<PAGE>

          (v) Insurance.  All material assets,  properties,  and risks of Issuer
     and each Subsidiary are, and for the past three years have been, covered by
     valid and,  except for policies  that have expired under their terms in the
     ordinary  course,  currently  effective  insurance  policies  or binders of
     insurance  (including,  without  limitation,  general liability  insurance,
     property insurance, business interruption insurance, directors and officers
     insurance and workers'  compensation  insurance) issued in favor of Issuer,
     in each case with reputable insurance companies,  in such types and amounts
     and covering  such risks as are  consistent  with  customary  practices and
     standards of companies  engaged in  businesses  and  operations  similar to
     those of Issuer and each Subsidiary.

          (w)  Private  Offering;  NASD  Compliance.  Assuming  the  accuracy of
     Investor's  representations in Section 6, the offer,  issuance, and sale of
     the  Shares,  the  Initial  Warrants,   the  Initial  Warrant  Shares,  the
     Subsequent  Warrants,  and the  Subsequent  Warrant  Shares are and will be
     exempt from the  registration and prospectus  delivery  requirements of the
     Securities Act, and have been  registered or qualified,  or are exempt from
     registration  and  qualification,   under  the  registration,   permit,  or
     qualification  requirements of all applicable  state  securities  laws. The
     offering  and sale of the Shares and the Initial  Warrants  pursuant to the
     terms and conditions of this Agreement and the Initial Warrants Certificate
     do not  violate  the  National  Association  of  Securities  Dealers,  Inc.
     ("NASD") By-Laws or the marketplace  rules of the Nasdaq Stock Market,  and
     Issuer is in full compliance with the listing eligibility rules promulgated
     by the  Nasdaq  Stock  Market  and has not  received  any  oral or  written
     notification from NASD or any Governmental  Authority regarding any failure
     to comply with such listing eligibility criteria.

          (x)  Registration  Rights.  Except as set forth in Section 5(x) of the
     Disclosure  Schedule,  the Investor Rights  Agreement and the  registration
     rights  to  be  provided  to  the  investors  making  the   contemporaneous
     investment described in Section 12(b)(iv) of this Agreement, neither Issuer
     nor any  Subsidiary has granted to any Person any rights to cause Issuer or
     any such  Subsidiary to register  under the  Securities  Act, any shares of
     capital  stock of  Issuer  or any such  Subsidiary  now or  hereafter  held
     thereby, or to sell any such shares of capital stock in connection with any
     registration  under  the  Securities  Act,  undertaken  by  Issuer  or  any
     Subsidiary on its own behalf or on behalf of any other Person.

          (y) Full  Disclosure.  Set  forth in  Section  5(y) of the  Disclosure
     Schedule is a list of pending material transactions not otherwise disclosed
     in the Disclosure Schedule. To the best knowledge of Issuer, there exist no
     facts,  circumstances,  or  conditions,  that  have  resulted  in or  could
     reasonably  be  expected to result in a Material  Adverse  Effect and which
     have not been disclosed in this Agreement or the  Disclosure  Schedule.  No
     representation  or  warranty  of  Issuer  in this  Agreement  or any  other
     Transaction Agreement,  nor any statement or certificate furnished or to be
     furnished to Investor pursuant hereto or thereto, or in connection with the
     transactions  contemplated hereby or thereby,  contains or will contain any
     untrue  statement  of a  material  fact,  or omits or will  omit to state a
     material fact necessary to make the statements  contained herein or therein
     not misleading.

                                       10
<PAGE>

          (z) Brokers.  No broker,  finder,  or investment banker is entitled to
     any brokerage,  finder's, or other fee or commission in connection with the
     transactions  contemplated  hereby  based upon any  Contract  made by or on
     behalf of Issuer.

     SECTION . Representations  and Warranties of Investor.  As an inducement to
Issuer to enter into this Agreement,  except as set forth in a writing delivered
by Investor prior to the date hereof, Investor hereby represents and warrants to
Issuer as follows:

          (a)  Organization  and  Authority.  Investor  is  a  corporation  duly
     organized,  validly  existing,  and in good standing  under the laws of the
     State of Maryland,  and has all necessary power and authority to enter into
     this Agreement and each other Transaction Agreement to which it is a party,
     to carry out its obligations  hereunder and  thereunder,  and to consummate
     the transactions contemplated hereby and thereby.

          (b) Authorization,  Execution and Delivery. The execution and delivery
     of this  Agreement  and each other  Transaction  Agreement to which it is a
     party by Investor, the performance by Investor of its obligations hereunder
     and  thereunder,  and the  consummation  by  Investor  of the  transactions
     contemplated  hereby and thereby have been duly  authorized and approved by
     all requisite action on the part of Investor.  This Agreement has been, and
     at the Closing each other Transaction Agreement to which it is a party will
     have been,  duly  executed and  delivered by Investor,  and  (assuming  due
     authorization,  execution,  and  delivery  by Issuer and each  other  party
     thereto)  this  Agreement  constitutes,  and  at  the  Closing  each  other
     Transaction  Agreement  to which it is a party  will  constitute,  a legal,
     valid, and binding obligation of Investor  enforceable  against Investor in
     accordance with its terms.

          (c) No Conflict.  The  execution,  delivery,  and  performance of this
     Agreement  and each other  Transaction  Agreement to which it is a party by
     Investor do not and will not: (i) violate,  conflict with, or result in the
     breach of any provision of the certificate of  incorporation  or by-laws of
     Investor;  (ii)  conflict  with or violate  any Law or  Governmental  Order
     applicable to Investor;  or (iii) conflict  with,  result in any breach of,
     constitute  a default (or event which with the giving of notice or lapse of
     time or both would become a default)  under,  require any consent under, or
     give  to  others  any  rights  of  termination,   amendment,  acceleration,
     suspension, revocation or cancellation of, or result in the creation of any
     Encumbrance on any of the assets or properties of Investor pursuant to, any
     Contract  to which  Investor  is a party or by which any of such  assets or
     properties is bound or affected.

                                       11
<PAGE>

          (d) Governmental Consents and Approvals. The execution,  delivery, and
     performance of this Agreement and each other Transaction Agreement to which
     it is a party  by  Investor  do not  and  will  not  require  any  consent,
     approval,  authorization,  or other order of,  action by,  filing with,  or
     notification to, any Governmental Authority.

          (e)  Investment  Purpose,   Knowledge  and  Experience.   Investor  is
     acquiring the Shares and the Initial Warrants for its own account, not as a
     nominee or agent,  solely for the purpose of investment and not with a view
     to, or for offer or sale in  connection  with,  any  distribution  thereof.
     Investor  has such  knowledge  and  experience  in  financial  and business
     matters  that it is  capable  of  evaluating  the  merits  and risks of its
     purchase  of the  Shares  and the  Initial  Warrants,  is able to bear  the
     economic risk of such investment for an indefinite  period of time, and has
     sufficient  financial  resources  available to support the complete loss of
     its investment the Shares and the Initial Warrants.

     SECTION 7. Access to Information. From the date hereof until the earlier of
the  Closing  or the  termination  hereof in  accordance  with its  terms,  upon
reasonable  notice,  Issuer shall and shall cause its  Representatives  and each
Subsidiary and their respective Representatives:  (i) to afford Investor and its
Representatives reasonable access, during normal business hours, to the offices,
properties,  other facilities,  books, and records of Issuer and each Subsidiary
and to those of their respective Representatives who have any knowledge relating
to  Issuer  or  any  Subsidiary;  and  (ii)  to  furnish  to  Investor  and  its
Representatives   such  additional   financial  and  operating  data  and  other
information regarding the business,  assets,  properties, and goodwill of Issuer
and each Subsidiary as Investor may reasonably request from time to time.

     SECTION 8.  Regulatory  and Other  Authorizations;  Notices  and  Consents.
Issuer  shall  use its best  efforts  to  obtain  or cause  to be  obtained  all
authorizations,  consents, orders, and approvals of all Governmental Authorities
and officials that may be or become necessary for its execution and delivery of,
and the  performance  of its  obligations  pursuant to, this Agreement and shall
cooperate   fully  with  Investor  in  promptly   seeking  to  obtain  all  such
authorizations,  consents, orders, and approvals.  Issuer shall promptly give or
cause to be given such  notices  to third  parties  and use its best  efforts to
obtain  or  cause  to  be  obtained  such  third  party  consents  and  estoppel
certificates   (including,   without  limitation  appropriate  evidence  of  the
satisfaction  of the  Stockholder  Approval  Requirement) as Investor may in its
sole and  absolute  discretion  deem  necessary,  appropriate,  or  desirable in
connection with the transactions  contemplated  hereby. To the best knowledge of
Issuer, there exist no facts, circumstances, or conditions that could reasonably
be expected to result in the failure of Issuer to obtain each consent, approval,
and authorization necessary,  appropriate,  or desirable for the consummation of
the transactions contemplated hereby.

                                       12
<PAGE>

                  SECTION 9. Notice of Developments.  From the date hereof until
the  earlier of the Closing or the  termination  hereof in  accordance  with its
terms,  Issuer  shall  promptly  notify  Investor in writing of: (a) all events,
facts, circumstances, conditions, and occurrences arising subsequent to the date
hereof  which  could  reasonably  be  expected  to result  in any  breach of any
representation,  warranty, covenant, or agreement of Issuer contained herein, or
which  could   reasonably   be  expected  to  have  the  effect  of  making  any
representation  or warranty of Issuer  contained herein untrue,  incomplete,  or
incorrect  in any  material  respect;  and (b) all other  material  developments
affecting the assets, liabilities,  business,  financial condition,  operations,
results of operations, or prospects of Issuer.

                  SECTION 10. Ordinary Course of Business; Closing Efforts. From
the date hereof  until the earlier of the Closing or the  termination  hereof in
accordance with its terms:  (a) Issuer shall carry on its business in the usual,
regular and ordinary course in all material respects,  in substantially the same
manner as previously conducted, and shall use all reasonable efforts to preserve
intact its rights and franchises and preserve its relationships  with customers,
suppliers  and  others  having  business  dealings  with it to the end  that its
ongoing  business shall not be impaired in any material  respect at the Closing;
and Issuer  shall not enter into any new line of  business or incur or commit to
any capital  expenditures or any Liabilities in connection  therewith other than
capital  expenditures  and Liabilities  incurred or committed to in the ordinary
course of business  consistent with past practice;  and (b) Issuer shall use its
best efforts to take,  or cause to be taken,  all actions and to do, or cause to
be done,  all things  necessary,  proper or advisable  under this  Agreement and
applicable  Laws to  consummate  the  purchase  and sale of the  Shares  and the
Initial Warrants as contemplated by this Agreement as soon as practicable  after
the date hereof,  including: (i) preparing and filing as promptly as practicable
all  documentation  to effect all necessary  applications,  notices,  petitions,
filings,  ruling  requests  and other  documents  and to obtain as  promptly  as
practicable all proxies, consents,  waivers,  licenses,  orders,  registrations,
approvals,  permits,  rulings and  authorizations  necessary  or advisable to be
obtained  from  Issuer's  stockholders  and any Third Party and/or  Governmental
Authority  in order to  consummate  the  purchase and sale of the Shares and the
Initial Warrants contemplated by this Agreement;  and (ii) taking all reasonable
steps as may be  necessary  to  obtain  all  such  material  proxies,  consents,
waivers, licenses, registrations, permits, authorizations,  rulings, orders, and
approvals.

                  SECTION  11. No  Solicitation  or  Negotiation.  From the date
hereof until the earlier of the Closing or the termination  hereof in accordance
with its terms and except as expressly  provided in Section 11 of the Disclosure
Schedule,  Issuer shall not, and shall cause its controlled Affiliates and other
Representatives not to, directly or indirectly: (a) solicit, initiate, consider,
encourage,  or accept any other proposals or offers from any Person relating to:
(i) any  acquisition  or purchase of all or any portion of the capital  stock or
assets (other than sales of non-material assets of Issuer in the ordinary course
of Issuer's business) of Issuer or any Subsidiary; (ii) any business combination
with  Issuer  or any  Subsidiary;  or (iii)  any  other  extraordinary  business
transaction involving or otherwise relating to Issuer or any Subsidiary;  or (b)
participate  in  any   discussions,   conversations,   negotiations,   or  other
communications  regarding,  or furnish to any other Person any information  with
respect  to,  or  otherwise  cooperate  in any way,  assist or  participate  in,
facilitate  or encourage any effort or attempt by any other Person to seek to do
any of the foregoing;  provided, however, that nothing contained in this section
shall  prohibit  the  board  of  directors  of  Issuer  from:  (i)  considering,
negotiating,  and approving and  recommending to the  stockholders of Issuer the
contemporaneous  investment in Issuer by an investor satisfactory to Investor in
its sole  discretion on  substantially  the same terms and  conditions set forth
herein;  (ii) complying with Rule 14e-2  promulgated under the Exchange Act with
regard to a tender or exchange  offer;  or (iii) after  receiving  the advice of
outside  counsel to the effect that the board of directors of Issuer is required
to do so in order to  discharge  properly  its  fiduciary  duties,  considering,
negotiating,  and approving and  recommending  to the  stockholders of Issuer an
unsolicited bona fide written  acquisition  proposal relating to the sale of the
entire company, which acquisition proposal was not received in violation of this
section. Issuer shall promptly notify Investor if any such proposal or offer, or
any inquiry or other  contact  with any Person with respect  thereto,  is or has
been made and shall,  in any such notice to  Investor,  indicate  in  reasonable
detail the  identity of the Person  making such  proposal,  offer,  inquiry,  or
contact and the terms and conditions of such proposal,  offer, inquiry, or other
contact.  Neither  Issuer nor any  Subsidiary  shall,  without the prior written
consent of Investor,  release any Person from,  or waive any  provision  of, any
confidentiality  or standstill  agreement to which Issuer or any Subsidiary is a
party.

                                       13
<PAGE>

     SECTION  12.  Conditions  to  Closing.  (a) The  obligations  of  Issuer to
consummate  the  transactions  contemplated  hereby  shall  be  subject  to  the
fulfillment, at or prior to the Closing, of each of the following conditions:

          (i) Representations, Warranties and Covenants. The representations and
     warranties of Investor  contained  herein shall have been true and complete
     when made and shall be true and complete in all material respects as of the
     Closing  Date,  with the same  force and effect as if made as of such date,
     other than such  representations  and  warranties as are made as of another
     date,  which shall remain true and complete in all material  respects as of
     such other date;  and the covenants and agreements  contained  herein to be
     performed  or observed  by  Investor at or prior to the Closing  shall have
     been performed or observed in all material respects.

          (ii) Stockholder Approval.  The stockholders of Issuer shall have duly
     approved  the  terms  of,  and the  execution  by  Issuer  of,  each of the
     Transaction Agreements to which it is a party.

          (iii) No  Actions;  Laws.  No  Action  shall  have been  commenced  or
     threatened  by or  before  any  Governmental  Authority  against  Issuer or
     Investor,  and  no  Law  shall  have  been  enacted,  issued,  promulgated,
     enforced,  or entered,  that could  reasonably  be  expected  to  restrain,
     prohibit,   invalidate,   render  impossible  or  unlawful,   or  otherwise
     materially  and  adversely  affect the  transactions  contemplated  hereby;
     provided, however, that the provisions of this paragraph shall not apply if
     Issuer shall have solicited or encouraged, directly or indirectly, any such
     Action or Law.

                                       14
<PAGE>

          (b)  The  obligations  of  Investor  to  consummate  the  transactions
     contemplated hereby shall be subject to the fulfillment, at or prior to the
     Closing, of each of the following conditions:

          (i) Representations, Warranties and Covenants. The representations and
     warranties  of Issuer  contained  herein  shall have been true and complete
     when made and shall be true and complete in all material respects as of the
     Closing  Date,  with the same  force and effect as if made as of such date,
     other than such  representations  and  warranties as are made as of another
     date,  which shall remain true and complete in all material  respects as of
     such other date;  and the covenants and agreements  contained  herein to be
     performed or observed by Issuer at or prior to the Closing  shall have been
     performed or observed in all material respects.

          (ii) Transaction  Agreements.  Each  Transaction  Agreement shall have
     been  executed and  delivered  by the parties  thereto and shall be in full
     force and  effect on the  Closing  Date,  and there  shall  exist no facts,
     circumstances,  or conditions that constitute or, with the giving of notice
     or lapse of time or both, could  constitute a default  thereunder or breach
     thereof  or could  give any  party  thereto  the  right to  terminate  such
     agreement.

          (iii) No  Actions;  Laws.  No  Action  shall  have been  commenced  or
     threatened  by or  before  any  Governmental  Authority  against  Issuer or
     Investor,  and  no  Law  shall  have  been  enacted,  issued,  promulgated,
     enforced, or entered,  that could reasonably be expected:  (A) to restrain,
     prohibit,   invalidate,   render  impossible  or  unlawful,   or  otherwise
     materially and adversely affect the transactions  contemplated  hereby;  or
     (B) to result in a Material  Adverse Effect;  provided,  however,  that the
     provisions  of this  paragraph  shall  not  apply if  Investor  shall  have
     solicited or encouraged, directly or indirectly, any such Action or Law.

          (iv) Contemporaneous Investment.  Issuer shall have received aggregate
     net  proceeds of not less than  $1,000,000  from the  issuance  and sale of
     shares of Common Stock to one or more investors  other than Investor,  at a
     price  per  share  of not  less  than  $1.50,  in a  financing  transaction
     consummated subsequent to the date first above written.

          (v) Board  Representation.  Starwood's  initial designee to serve as a
     member of the board of directors  of Issuer shall have been duly  appointed
     or elected to such office.

                                       15
<PAGE>

          (vi) Pizzeria Uno Disposition.  Issuer shall have consummated the sale
     of its South  Plainfield,  New Jersey  Pizzeria Uno restaurant for not less
     than $700,000 in gross cash proceeds to Issuer.

          (vii) HRP  Amendment.  Issuer and Hotel  Restaurant  Properties,  Inc.
     shall have  executed  and  delivered  to  Investor  an  amendment  to their
     agreement, dated August 27, 1998, and amended as of August 10, 1998 and May
     11, 1999, which shall be in the form attached hereto as Exhibit H.

          (viii) Westin Michigan Avenue Release.  Issuer shall have executed and
     delivered to Investor,  in exchange for a payment of not more than $25,000,
     a settlement and release agreement in the form attached hereto as Exhibit I
     relating to the Issuer restaurant in the Westin Michigan Avenue.

          (ix)  Officers'  and  Secretary's  Certificate.  Investor  shall  have
     received from the president and the chief  financial  officer of Issuer and
     from the secretary of Issuer executed  certificates dated the Closing Date,
     substantially   in  the  forms  attached   hereto  as  Exhibits  B  and  C,
     respectively.

          (x) Legal Opinions.  Investor shall have received from Herzog, Fisher,
     Grayson & Wolfe, and Vanderkam and Sanders,  each counsel to Issuer,  legal
     opinions in form and substance reasonably satisfactory to Investor.

          (xi) Share and Warrant Certificates.  Investor shall have received the
     Share  Certificate  and  the  Initial  Warrants   Certificate,   each  duly
     authorized and executed by Issuer.

          (xii) Consents and Approvals.  The  stockholders  of Issuer shall have
     duly  approved  the terms of, and the  execution  by Issuer of, each of the
     Transaction  Agreements  to which it is a party.  Investor and Issuer shall
     have received,  each in form and substance  satisfactory  to Investor,  all
     authorizations,   consents,  orders,  and  approvals  of  all  Governmental
     Authorities  and  officials  and all  third  party  consents  and  estoppel
     certificates and all corporate  approvals  (including,  without  limitation
     appropriate  evidence  of  the  satisfaction  of the  Stockholder  Approval
     Requirement)  which Investor  reasonably deems necessary,  appropriate,  or
     desirable for the consummation of the transactions contemplated hereby.

          (xiii) No  Material  Adverse  Effect.  No event or events  shall  have
     occurred, or shall be reasonably likely to occur, which, individually or in
     the aggregate,  have resulted in or could  reasonably be expected to result
     in a Material Adverse Effect.

     SECTION 13. Termination. This Agreement may be terminated by written notice
of termination at any time prior to the Closing:

                                       16
<PAGE>

          (a) by Investor if: (i) any event or condition occurs that results in,
     or could  reasonably be expected to result in, a Material  Adverse  Effect;
     (ii) any representation or warranty of Issuer contained herein was not true
     and  complete in all  material  respects  when made;  (iii) Issuer does not
     comply in all material  respects with each covenant or agreement  contained
     herein to be  performed  or observed by it; or (iv) Issuer  makes a general
     assignment for the benefit of creditors, or any proceeding is instituted by
     or against  Issuer  seeking to adjudicate  it a bankrupt or  insolvent,  or
     seeking  the  liquidation,  winding  up,  or  reorganization,  arrangement,
     adjustment,  protection,  relief, or composition of its debts under any Law
     relating to bankruptcy, insolvency, or reorganization;

          (b) by Issuer if:  (i) any  representation  or  warranty  of  Investor
     contained  herein was not true and complete in all material  respects  when
     made; or (ii)  Investor does not comply in all material  respects with each
     covenant or agreement contained herein to be performed or observed by it;

          (c) by  Investor  or Issuer if the  Closing  has not  occurred  within
     thirty (30) days after the date of Issuer's  annual  stockholders'  meeting
     with respect to fiscal year 2000, which is anticipated to occur on June 25,
     2001;  provided,  however,  that the  right  to  terminate  this  Agreement
     pursuant to this clause shall not be  available to any party whose  failure
     to fulfill  any  obligation  hereunder  is the cause of, or results in, the
     failure of the Closing to occur on or prior to such date;

          (d) by Investor  or Issuer if any  Governmental  Authority  issues any
     order, decree, or ruling or takes any other action restraining,  enjoining,
     or otherwise  prohibiting  the  transactions  contemplated  hereby and such
     order, decree, ruling, or other action becomes final and nonappealable; or

          (e) by the mutual written consent of Investor and Issuer.

     SECTION 14. Use of Proceeds.  Issuer shall use the proceeds  received  from
the sale of the Shares  hereunder for working capital purposes and shall not use
any of such proceeds for repayment of any of Issuer's outstanding indebtedness.

     SECTION 15. Senior Management.  Issuer shall use its best efforts to retain
pursuant to a written  employment  contract Robert Spivak as the chief executive
officer of Issuer for at least the three-year  period  commencing on the Closing
Date, with the  compensation  package  described in Section 15 of the Disclosure
Schedule.

     SECTION  16.  Indemnification;  Contribution.  Indemnification.  Each party
hereto (in its  capacity  as  indemnitor  hereunder,  the  "Indemnitor"),  shall
indemnify  the other party  hereto,  each  Affiliate of such other  party,  each
successor and assign of each such Person, and each Representative of each of the
foregoing  (each  such  Person  in its  capacity  as  indemnitee  hereunder,  an
"Indemnitee"), with respect to, and hold each of them harmless from and against,
any and all Losses  resulting from,  arising out of, or relating to Indemnitor's
breach of any representation, warranty, covenant, or agreement thereof contained
in this Agreement or any other Transaction Agreement, and any action or omission
of Indemnitor in connection with the  performance of its obligations  under this
Agreement or any other Transaction Agreement.

                                       17
<PAGE>

          (b)  Contribution.  To the extent that the  undertakings of Indemnitor
     set forth in this section may be unenforceable, Indemnitor shall contribute
     the maximum amount that it is permitted to contribute  under applicable Law
     to the payment and satisfaction of all Losses incurred by any Indemnitee.

          (c) Loss  Notices.  If any  Indemnitee  determines  that any  facts or
     circumstances  have given or could reasonably be expected to give rise to a
     right of  indemnification  under this section,  such Indemnitee  shall give
     Indemnitor  notice (a "Loss Notice") of such facts or circumstances  within
     thirty  days of such  determination,  stating  the  amount of the Loss,  if
     known,  and method of  computation  thereof,  and  describing in reasonable
     detail the facts and circumstances  upon which such determination is based;
     provided that, if any such  determination is based, in whole or in part, on
     any  Action  brought  by or on behalf of any  third  party (a  "Third-Party
     Claim"),  such  Indemnitee  shall give  Indemnitor a Loss Notice in respect
     thereof within ten days of such  determination;  provided  further that any
     failure timely to provide a Loss Notice shall not release  Indemnitor  from
     any of its obligations under this section,  except to the extent Indemnitor
     is materially  prejudiced by such failure, and shall not relieve Indemnitor
     from any other  obligation or liability  that it may have to any Indemnitee
     otherwise than under this section.

          (d) Third-Party  Claims. If Indemnitor  acknowledges in writing within
     five  Business  Days after its receipt of any Loss  Notice  relating to any
     Third-Party  Claim  its  obligation  to  indemnify  and hold  harmless  any
     Indemnitee  under this section from and against any Losses  resulting  from
     such  Third-Party  Claim,  then Indemnitor  shall be entitled to assume and
     control  the defense of such  Third-Party  Claim at its expense and through
     counsel of its choice (which counsel shall be reasonably acceptable to such
     Indemnitee);  provided  that,  if there exists or is  reasonably  likely to
     exist a  conflict  of  interest  that would  make it  inappropriate  in the
     judgment of such  Indemnitee  for the same counsel to  represent  both such
     Indemnitee and Indemnitor, then such Indemnitee shall be entitled to retain
     its  own  counsel,   at  Indemnitor's  sole  cost  and  expense,   in  each
     jurisdiction  for which such Indemnitee  reasonably  determines  counsel is
     required. If Indemnitor is, directly or indirectly,  conducting the defense
     against any Third-Party  Claim,  Indemnitee shall cooperate with Indemnitor
     in such defense and make available to Indemnitor  all witnesses,  pertinent
     records,  materials,  and  information in such  Indemnitee's  possession or
     under its control relating thereto as is reasonably required by Indemnitor.
     If any  Indemnitee  is,  directly  or  indirectly,  conducting  the defense
     against  any  Third-Party  Claim,  Indemnitor  shall  cooperate  with  such
     Indemnitee  in such  defense  and make  available  to such  Indemnitee,  at
     Indemnitor's sole cost and expense, all such witnesses, records, materials,
     and  information in Indemnitor's  possession or under its control  relating
     thereto as is reasonably required by such Indemnitee.  Indemnitor shall not
     settle any  Third-Party  Claim  without  the prior  written  consent of the
     Indemnitee which delivered the Loss Notice in respect thereof.

                                       18
<PAGE>

          (e) Other Rights and Remedies Not Affected. The indemnification rights
     of the parties  under this  section are  independent  of and in addition to
     such  rights and  remedies  as the  parties may have at law or in equity or
     otherwise  for any  misrepresentation,  breach of  warranty,  or failure to
     fulfill  any  agreement  or  covenant  hereunder  on the part of any  party
     hereto,  including,   without  limitation,   the  right  to  seek  specific
     performance,  rescission, or restitution,  none of which rights or remedies
     shall be affected or diminished hereby.

     SECTION 17. Miscellaneous. (a) Further Action. Issuer shall, promptly after
any request therefor by Investor and at Issuer's sole cost and expense,  take or
cause to be taken all  actions,  do or cause to be done all things,  and execute
and deliver or cause to be executed and  delivered all  documents,  instruments,
certificates, further assurances, or other papers, which Investor may reasonably
deem necessary,  appropriate, or desirable in connection with this Agreement and
the consummation of the transactions contemplated hereby.

                  (b) Survival of Certain  Covenants  and  Agreements.  Issuer's
covenants and  representations  and agreements  contained in Sections 5, 14, 15,
16, and 17 shall survive the Closing; and Issuer's covenants and representations
and agreements contained in Sections 5, 16, and 17 shall survive the termination
or expiration hereof.

                  (c) Expenses.  Except as otherwise  provided herein each party
hereto shall pay its own costs and expenses,  including, without limitation, all
fees and  disbursements  of  counsel,  incurred by or on behalf of such party in
connection  with  this  Agreement  and  the  consummation  of  the  transactions
contemplated hereby; provided, however, that, if a final and binding judgment is
obtained  by any  party  to this  Agreement  against  any  other  party  to this
Agreement  in  any  Designated  Action,  such  judgment  debtor  shall  pay  all
out-of-pocket costs and expenses (including, without limitation, reasonable fees
and disbursements of counsel, accountants, experts, and consultants) incurred by
such judgment  creditor in  connection  with or resulting  from such  Designated
Action.

                  (d) Notices.  Any notice,  request,  claim,  demand,  or other
communication  given or made  hereunder  by any party hereto shall be in writing
and shall be given or made by  delivery  in person,  or by  reputable  overnight
business  courier  service,  telecopy,  or registered or certified mail (postage
prepaid, return receipt requested) to the addressee at its address or telecopier
number set forth in Schedule II hereto (or to such other  address or  telecopier
number as such party may  hereafter  specify for such purpose by notice given in
accordance with this paragraph).  Any notice,  request,  claim, demand, or other
communication  given or made hereunder by telecopy shall be followed promptly by
a confirmation copy sent by reputable  overnight  business courier service.  Any
notice,  demand,  request, or other  communication  hereunder shall be effective
upon the earliest of: (i) the receipt thereof by the addressee; (ii) the deposit
thereof in the mails of the United States of America;  provided,  however,  that
the time period in which any response to any such notice,  demand,  request,  or
other  communication  is required to be given  shall  commence  from the date of
receipt thereof by the addressee as evidenced by the return receipt with respect
thereto;  (iii) the  rejection  or other  refusal  of  delivery  thereof  by the
addressee or any agent of the addressee; or (iv) the failure of delivery thereof
as a result of the addressee's  failure to properly give notice hereunder of any
change of its address or telecopier number.

                                       19
<PAGE>

     (e) Assignment.  Except as otherwise provided herein, no party hereto shall
assign its rights or delegate its  obligations  hereunder by operation of law or
otherwise  without each other party's express written consent (which consent may
be granted or withheld in such party's sole and absolute  discretion);  provided
that  Investor  may  assign  in  whole or in part its  rights  hereunder  to any
Affiliate  thereof  without the consent of Issuer;  and either  party hereto may
assign in whole or in part its rights hereunder to any Person that acquires more
than 50% of the outstanding voting securities or all or substantially all of the
assets  of  the  assigning  party  (whether  by  way of  merger  or  otherwise).
Notwithstanding  anything to the contrary  contained in this  Agreement,  Issuer
shall not  assign in whole or in part any of its rights or  delegate  any of its
obligations hereunder to any acquiror thereof that is a Major Hotel Operator (as
defined in Section 3(a) of the Development  Agreement) other than Investor until
the later to occur of : (A) the Closing Date; and (B) the expiration pursuant to
its terms of Issuer's  exclusivity  covenant in Section 3(b) of the  Development
Agreement.

     (f) Amendment;  Waiver. No amendment or restatement hereof or supplement or
other  modification  hereto shall be valid or effective  unless such  amendment,
restatement,  supplement, or other modification is in writing,  expressly refers
hereto, and is signed by each party hereto. No consent to, or waiver, discharge,
or  release  of,  any  term or  provision  or  breach  hereof  shall be valid or
effective  unless such  consent,  waiver,  discharge,  or release is in writing,
expressly refers hereto, and is signed by the party to be bound thereby,  and no
such consent, waiver,  discharge, or release shall constitute a consent, waiver,
discharge,  or release of any other term or provision  hereof or any  subsequent
breach  hereof,  whether  or not  similar in nature,  or a  subsequent  consent,
waiver,  discharge, or release of the same term, provision, or breach hereof. No
failure to exercise or delay in exercising any right, power, or remedy hereunder
by either party  hereto,  including  any failure to insist in any instance  upon
strict,  complete, or timely performance or observance by the other party hereto
of any term or provision  hereof or  obligation  hereunder,  shall  constitute a
consent, waiver,  discharge, or release of any such right, power, or remedy, and
no single or partial  exercise of any right,  power,  or remedy by either  party
hereto shall preclude any other or further exercise of any such right, power, or
remedy.

     (g) Entire Agreement.  This Agreement,  including all annexes,  appendices,
exhibits,  and schedules  hereto,  constitutes the entire agreement  between the
parties  hereto with respect to the subject  matter  hereof and  supersedes  all
prior or contemporaneous negotiations,  covenants, agreements,  representations,
warranties,  undertakings,  and understandings,  written or oral, and courses of
conduct and dealing  between the  parties  hereto,  with  respect to the subject
matter hereof.

                                       20
<PAGE>

     (h)  Severability.  If any term or other provision  hereof is determined by
any court of competent jurisdiction to be invalid,  illegal, or unenforceable in
whole or in part by reason of any  applicable  Law or  public  policy,  and such
determination  becomes  final and  nonappealable,  such term or other  provision
shall  remain in full force and effect to the fullest  extent  permitted by Law,
and all other terms and provisions  hereof shall remain in full force and effect
in their entirety.

     (i) Successors and Assigns;  No Third-Party  Beneficiaries.  This Agreement
shall be binding upon and inure solely to the benefit of the parties  hereto and
their respective  successors and permitted assigns, and nothing herein,  whether
express or implied,  is intended  to or shall  confer upon any other  Person any
legal or equitable right,  power, or remedy of any kind,  nature, or description
whatsoever  under or by reason  hereof;  provided,  however,  that the terms and
provisions hereof relating to indemnification of any indemnitee not party hereto
shall inure to the benefit of such indemnitee.

     (j) Remedies.  (i) All rights, powers, and remedies hereunder of each party
hereto shall,  to the fullest  extent  permitted by law, be  cumulative  and not
alternative,  and in addition to all other rights,  powers, and remedies of such
party,  whether  specifically  granted hereunder or otherwise existing under any
Law,  and may be  exercised  from time to time and as often and in such order as
such party may deem necessary,  appropriate,  or desirable,  and the exercise or
the  beginning  of the  exercise  of any right,  power,  or remedy  shall not be
construed to be a waiver of the right to exercise at the same time or thereafter
any other right, power, or remedy.

     (ii) Issuer hereby  acknowledges  that irreparable  damage would occur, and
Investor's remedies at law would be inadequate,  if any term or provision hereof
was not  performed  or observed  strictly  in  accordance  herewith,  and hereby
unconditionally  and irrevocably  waives any defense that may be available to it
that  Investor's  remedies  at law are  adequate  or that its  injuries  are not
irreparable.  Investor may,  without  posting any bond or other  security and in
addition to any remedy  available to it at law, obtain  equitable  relief in the
form  of  specific  performance,   temporary  restraining  order,  temporary  or
permanent injunction,  or any other equitable remedy which may then be available
to it.

     (k) Governing Law. This  Agreement  shall be governed by, and construed and
enforced in accordance with, the laws of the State of California.

     (l) Waiver of Jury Trial.  Each party  hereto  hereby  unconditionally  and
irrevocably waives all right to trial by jury in any action, suit, or proceeding
(whether  based on contract,  tort, or otherwise)  based upon,  resulting  from,
arising out of, or relating to this  Agreement or any  transaction  or agreement
contemplated hereby.

                                       21
<PAGE>

     (m)   Jurisdiction;   Service  of  Process.   Each  party   hereto   hereby
unconditionally  and irrevocably  submits,  for itself and its property,  to the
exclusive  jurisdiction of the Designated Courts over any Designated Action. All
claims with respect to any Designated  Action shall be heard and determined in a
Designated Court. No party hereto shall commence any Designated Action except in
a Designated  Court. No party hereto shall,  and each party hereto hereby waives
any right it may have to:  (i) plead or make any  objection  to the venue of any
Designated  Court;  (ii)  plead or make any  claim  that any  Designated  Action
brought in any  Designated  Court has been  brought in an improper or  otherwise
inconvenient  forum;  (iii)  plead or make any claim that any  Designated  Court
lacks personal  jurisdiction  over it; or (iv) seek any punitive  damages in any
Designated  Action.  Any final Governmental Order in any Designated Action shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner  provided by law. The summons and  complaint or any other
process  in  any  Designated  Action  may be  served  by  mailing  to any of the
addresses  set forth herein or by hand delivery to an individual of suitable age
and  discretion at any such address,  and any such service shall be deemed to be
complete on the date such process is so mailed or delivered and to have the same
force and effect as personal service within the State of California.

     (n) Preparation  and  Negotiation of This Agreement.  Each party hereto has
participated  equally in the  preparation  and  negotiation  of this  Agreement,
including all annexes,  appendices,  exhibits,  and schedules  hereto,  and each
party hereto hereby unconditionally and irrevocably waives to the fullest extent
permitted by law any rule of interpretation or construction  requiring that this
Agreement,  including  any annex,  appendix,  exhibit,  or schedule  hereto,  be
interpreted or construed against the drafting party.

     (o) Headings. The descriptive headings contained herein are for convenience
of reference only and shall not affect in any way the meaning,  construction, or
interpretation of any term or provision hereof.

     (p) Exhibits. Each annex, appendix,  exhibit, and schedule hereto is hereby
incorporated herein by reference in its entirety.

     (q)  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts and by the different parties hereto in separate counterparts,  each
of which when executed shall be deemed to be an original, and all of which taken
together shall  constitute one and the same agreement with the same effect as if
such signatures were upon the same instrument.

     (r) Delivery Via Telecopier. Delivery of an executed counterpart hereof via
telecopier shall be as effective as delivery of a manually executed  counterpart
hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       22
<PAGE>

                  IN  WITNESS  WHEREOF,  each  party  hereto  has  executed  and
delivered this Agreement as of the date first written above.


                                     GRILL CONCEPTS, INC.


                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:


                                     STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.


                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                                       23

<PAGE>
                                                                     SCHEDULE II
                              CERTAIN DEFINED TERMS


                  "Action" means any claim (including,  without limitation,  any
Environmental Claim), action, suit, arbitration,  inquiry, proceeding, notice of
violation, or investigation by or before any Governmental Authority.

                  "Adjusted  Diluted Shares" means the Fully Diluted Shares less
those Securities issuable upon exercise of outstanding stock options or warrants
to the extent that (i) such  Securities  have an exercise price of not less than
$8.00   per  share   (as   adjusted   for   stock   splits,   stock   dividends,
recapitalizations  and the like),  and (ii) the Fair  Market  Value is less than
$8.00   per  share   (as   adjusted   for   stock   splits,   stock   dividends,
recapitalizations and the like).

                  "Affiliate"  means, with respect to any specified Person,  any
other Person that directly,  or indirectly  through one or more  intermediaries,
controls,  is controlled  by, or is under common  control with,  such  specified
Person. For purposes of this definition,  "control"  (including  "controlled by"
and "under common control with") means, with respect to the relationship between
or among two or more Persons,  the  possession,  directly or  indirectly,  or as
trustee,  personal representative,  or executor, of the power to direct or cause
the  direction of the affairs or  management  of a Person,  whether  through the
ownership  of  voting  securities,  as  trustee,  personal  representative,   or
executor,  by  contract  or  otherwise,   including,   without  limitation,  the
ownership,  directly or  indirectly,  of securities  having the power to elect a
majority of the board of directors or similar body governing the affairs of such
Person.

                  "Agreement" means this subscription  agreement,  including all
annexes, appendices,  exhibits, and schedules hereto, as amended,  supplemented,
or otherwise modified from time to time.

                  "Assets"  means,  collectively,  the properties,  assets,  and
Contract  rights forming a part of or used, held for use, or intended to be used
in connection with,  necessary for, or otherwise material to the conduct of, the
business  and  operations  of Issuer  and each  Subsidiary,  including,  without
limitation, the Owned Intellectual Property, the Licensed Intellectual Property,
the Owned Real Property, and the Leased Real Property.

                  "Business Day" means any day that is not a Saturday, a Sunday,
or another day on which banks are required or  authorized by Law to be closed in
New York, New York or Los Angeles, California.

                  "Closing"  means  the  closing  of  the  sale,  issuance,  and
delivery of the Shares and the Warrants  contemplated by Section 3 to be held at
10:00 a.m., local time, on the Closing Date at the offices of Levin & Srinivasan
LLP, 1776  Broadway,  Suite 1900, New York,  New York,  10019,  or at such other
place or at such other time as Issuer and Investor  may  mutually  agree upon in
writing.

                                       24
<PAGE>

                  "Closing  Date" means the later of: (i) the date  hereof;  and
(ii) the fifteenth  (15th) Business Day following the  satisfaction or waiver of
all conditions to the obligations of the parties set forth in Section 12.

                  "Commission"  means the  United States Securities and Exchange
Commission.

                  "Common  Stock"  has the  meaning  specified  in the  recitals
hereto.

                  "Contract"  means any contract,  agreement,  lease,  sublease,
license,  sublicense,  guaranty,  letter of  credit,  credit or loan  agreement,
pledge or security agreement,  note, bond, mortgage,  deed of trust,  indenture,
commitment,  sale or purchase  order,  or other  understanding  or  arrangement,
written or oral, of any kind, nature, or description whatsoever,  or any waiver,
consent, or other authorization relating to any of the foregoing.

                  "Designated  Action"  means any Action  based upon,  resulting
from,  arising out of, or  relating  to this  Agreement  or any  transaction  or
agreement  contemplated  hereby,  or for the  recognition  or enforcement of any
judgment resulting from any such Action.

                  "Designated  Court" means any court of the State of California
and any federal court of the United States of America,  in either case,  sitting
in the City and County of Los Angeles, and any appellate court therefrom.

                  "Disclosure  Schedule" means the Disclosure  Schedule attached
hereto, dated as of the date hereof, and forming a part hereof.

                  "Development  Agreement"  has  the  meaning  specified  in the
recitals hereto.

                  "Encumbrance" means any security interest,  pledge,  mortgage,
lien (including,  without  limitation,  any environmental or tax lien),  charge,
encumbrance,  adverse  claim,  preferential  arrangement,  or restriction of any
kind, nature, or description  whatsoever,  including,  without  limitation,  any
restriction on the use, voting,  transfer,  receipt of income, or other exercise
of any attributes of ownership.

                  "Environmental  Claim" means any action, suit, demand,  demand
letter, claim, lien, notice of non-compliance or violation,  notice of liability
or potential  liability,  investigation,  proceeding,  consent order, or consent
agreement relating in any way to any Environmental Law, Environmental Permit, or
Hazardous Materials.

                  "Environmental  Law" shall mean any Law,  now or  hereafter in
effect  and as  amended,  and  any  judicial  or  administrative  interpretation
thereof,  including any judicial or  administrative  order,  consent decree,  or
judgment,  relating to  pollution  or  protection  of the  environment,  health,
safety, or natural resources,  including,  without limitation, those relating to
the use, handling,  transportation,  treatment,  storage, disposal,  release, or
discharge of Hazardous Materials.

                                       25
<PAGE>

                  "Environmental  Permit"  shall  mean  any  permit,   approval,
identification  number,  license,  or other  authorization  required  under  any
applicable Environmental Law.

                  "Exchange  Act" means,  as of any date of  determination,  the
Securities Exchange Act of 1934, as amended, or any similar federal statute, and
the rules and regulations of the Commission  thereunder,  all as in effect as of
such date.

                  "Exchange Act Documents" has the meaning  specified in Section
5(e).

                  "Fair Market  Value"  means,  with respect to the Common Stock
and as of any date of  determination:  (i) if such Common Stock is listed on any
national securities exchange of the United States of America, the average of the
closing sale prices of such  securities on the principal  such exchange on which
such Common  Stock is listed (or, on any trading day during such period on which
there were no sales,  the average of the highest bid and lowest  asked prices on
such exchange at the end of such day) on each trading day during the  thirty-day
period  ending  on the last  Business  Day  immediately  preceding  such date of
determination;  (ii)  if  such  Common  Stock  is not  listed  on  any  national
securities  exchange of the United States of America but is quoted on the Nasdaq
System,  the average of the  representative  bid and asked prices quoted on such
system as of 4:00 p.m., New York time, on each trading day during the thirty-day
period  ending  on the last  Business  Day  immediately  preceding  such date of
determination;  (iii)  if  such  Common  Stock  is not  listed  on any  national
securities  exchange  of the United  States of America  and is not quoted on the
Nasdaq  System,  the average of the highest bid and lowest  asked  prices in the
domestic  over-the-counter  market as reported by the National  Quotation Bureau
Incorporated on each trading day during the thirty-day period ending on the last
Business Day immediately  preceding such date of determination;  or (iv) if such
Common Stock is not then publicly traded, the fair value of such Common Stock as
determined  in good faith and  certified  by the board of  directors  of Issuer,
which determination shall be final and binding absent manifest error.

                  "Financial  Statements" means the audited consolidated balance
sheets  of  Issuer  and  the   Subsidiaries  as  at,  and  the  related  audited
consolidated  statements of operations,  stockholders' equity, and cash flows of
Issuer and the  Subsidiaries  for the fiscal year ended as of December 31, 2000,
together  with all  related  notes and  schedules  thereto,  accompanied  by the
reports thereon of Issuer's independent public accountants, in the form as filed
with the Commission as part of an Exchange Act Document.

                  "Fully-Diluted Shares" means, as of any date of determination,
the sum of:  (i) the  aggregate  number of shares of  Common  Stock  issued  and
outstanding  as of such date  (excluding  any shares of Common Stock held in the
treasury of Issuer or held by any controlled Affiliate of Issuer); plus (ii) the
number of shares of Common Stock  issuable  upon the  exercise,  conversion,  or
exchange of all outstanding options, warrants, convertible securities, and other
rights,  agreements,  arrangements,  or  commitments  of any  kind,  nature,  or
description  whatsoever  relating to the capital  stock of Issuer or  obligating
Issuer to issue or sell any  shares of capital  stock of, or any other  interest
in, Issuer.

                                       26
<PAGE>

                  "Governmental  Authority" means any national,  federal, state,
municipal,   local,   or  other   government,   governmental,   regulatory,   or
administrative  authority,  agency, or commission,  or any court,  tribunal,  or
judicial or arbitral body.

                  "Governmental   Order"  means  any  order,   writ,   judgment,
injunction, decree, stipulation,  determination, or award entered by or with any
Governmental Authority.

                  "Hazardous  Materials"  means:  (i)  petroleum  and  petroleum
products, by products, or breakdown products,  radioactive  materials,  asbestos
containing  materials,  and  polychlorinated   biphenyls;  and  (ii)  any  other
chemicals,  materials,  or substances defined or regulated as toxic or hazardous
or  as  a  pollutant  or   contaminant  or  as  a  waste  under  any  applicable
Environmental Law.

                  "Indemnitee" has the meaning specified in Section 16(a).

                  "Indemnitor" has the meaning specified in Section 16(a).

                  "Initial Warrant Certificate" means the warrant certificate of
Issuer  evidencing  the Initial  Warrants,  substantially  in the form  attached
hereto as Exhibit G.

                  "Initial  Warrants" has the meaning  specified in the recitals
hereto.

                  "Initial  Warrant  Shares"  has the meaning  specified  in the
recitals hereto.

                  "Intellectual  Property"  means,  collectively:  all  original
works of authorship or copyrights  fixed in any tangible  medium of  expression;
all interests  patent of the United States of America or any other country;  all
trademarks,  trade names,  trade  styles,  trade dress,  service  marks,  logos,
designs,  corporate names, and other similar general intangibles;  and all other
intellectual  property,   including,  without  limitation,  to  the  extent  not
constituting any of the foregoing, all inventions, ideas, moral rights, computer
software, technology (including know-how and show-how), trade secrets, and other
confidential,  proprietary,  technical,  and business  information  of any kind,
nature, or description whatsoever.

                  "Investor" has the meaning specified in the preamble hereto.

                  "Investor   Rights   Agreement"   means  the  investor  rights
agreement  to be entered  into  between  Issuer and  Investor at or prior to the
Closing, substantially in the form attached hereto as Exhibit D.

                                       27
<PAGE>

                  "Issuer" has the meaning specified in the preamble hereto.

                  "Key Employee" has the meaning specified in Section 5(r).

                  "Law"  means  any  international,  national,  federal,  state,
provincial,  municipal,  local, or other statute,  law,  ordinance,  regulation,
rule, code, order, or other requirement or rule of law.

                  "Leased  Real  Property"  means  all real  property  leased by
Issuer or any  Subsidiary  as tenant,  together  with,  to the extent  leased by
Issuer or any Subsidiary,  all buildings and other  structures,  facilities,  or
improvements  currently or hereafter  located  thereon,  all fixtures,  systems,
equipment and items of personal property of Issuer or any Subsidiary attached or
appurtenant  thereto,  and all easements,  licenses,  rights,  and appurtenances
relating to the foregoing.

                  "Liabilities" means all debts, liabilities, and obligations of
any kind, nature, or description whatsoever,  whether accrued or fixed, absolute
or  contingent,  matured  or  unmatured,  known  or  unknown  or  determined  or
determinable,  including,  without  limitation,  those  arising  under  any  Law
(including,  without limitation, any Environmental Law), Action, or Governmental
Order and those arising under any Contract.

                  "Licensed   Intellectual   Property"  means  all  Intellectual
Property licensed or sublicensed by Issuer or any Subsidiary, as licensee.

                  "Losses"  means,  with respect to any  specified  Person,  all
Liabilities,   losses,  damages,  claims,  costs,  expenses,   amounts  paid  in
settlement,  interest,  awards,  judgments,  penalties,  or fines  of any  kind,
nature, or description whatsoever (including, without limitation, all reasonable
fees and  disbursements  of  counsel,  accountants,  experts,  and  consultants)
suffered,  incurred, or sustained by such Person or to which such Person becomes
subject (including, without limitation, in connection with any Action brought or
otherwise initiated by or on behalf of such Person), resulting from, arising out
of, or relating to any specified facts or circumstances.

                  "Loss Notice" has the meaning specified in Section 16(c).

                  "Material Adverse Effect" means any  circumstance,  change in,
or effect on Issuer, or any Subsidiary  which,  individually or in the aggregate
with  any  other  circumstances,  changes  in,  or  effects  on  Issuer,  or any
Subsidiary is, or could reasonably be expected to be, materially  adverse to the
business, operations, assets or liabilities, employee relationships, customer or
supplier  relationships,  prospects,  results of  operations,  or the  condition
(financial or otherwise) of Issuer and the Subsidiaries, taken as a whole.

                                       28
<PAGE>

                  "Material  Assets"  means  all  Assets of Issuer or any of its
Subsidiaries  that  are  material,  individually  or in  the  aggregate,  to the
business or operations of Issuer and its Subsidiaries, taken as a whole.

                  "Material  Contracts"  means all  Contracts to which Issuer or
any of its  Subsidiaries  are a party or by which the Assets of Issuer or any of
its Subsidiaries are bound that are material,  individually or in the aggregate,
to the business or operations of Issuer and its Subsidiaries, taken as a whole.

                  "NASD" has the meaning specified in Section 5(w).

                  "Owned Intellectual Property" means all Intellectual Property
owned by Issuer or any Subsidiary.

                  "Owned Real Property"  means all real property owned by Issuer
or any Subsidiary, together with all buildings and other structures, facilities,
or improvements  currently or hereafter located thereon, all fixtures,  systems,
equipment,  and items of personal property of Issuer or any Subsidiary  attached
or appurtenant thereto, and all easements,  licenses,  rights, and appurtenances
relating to the foregoing.

                  "Permit" means any license, permit, franchise, certificate, or
other  authorization or approval of any kind, nature, or description  whatsoever
issued by any Governmental Authority.

                  "Permitted  Encumbrances"  means such of the  following  as to
which no  enforcement,  collection,  execution,  levy or foreclosure  proceeding
shall have been commenced:  (i) liens for taxes,  assessments  and  governmental
charges or levies not yet due and  payable  which are not in excess of $7,500 in
the  aggregate;  (ii)  Encumbrances  imposed  by  Law,  such  as  materialmen's,
mechanics',  carriers',  workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business  securing  obligations  that: (A) are
not overdue for a period of more than thirty days;  and (B) are not in excess of
$7,500 in the case of a single property or $15,000 in the aggregate at any time;
(iii) pledges or deposits to secure obligations under workers' compensation laws
or similar  legislation or to secure public or statutory  obligations;  and (iv)
minor survey exceptions,  reciprocal  easement  agreements,  and other customary
encumbrances on title to real property that: (A) were not incurred in connection
with  any  indebtedness;  (B) do not  render  title to the  property  encumbered
thereby  unmarketable;  and  (C)  do  not,  individually  or in  the  aggregate,
materially  adversely  affect the value or use of such  property for its current
and anticipated purposes.

                  "Permitted  Transferee" means, with respect to Investor or any
Stockholder (as defined in the preamble to the Stockholders'  Agreement),  (i) a
natural  person  who is the  issue or  spouse  of such  Stockholder  and to whom
Securities are transferred: (a) by will or the laws of descent and distribution;
or (b) by gift without consideration of any kind; (ii) any charitable foundation
all the trustees of which are Stockholders or otherwise  Permitted  Transferees;
and Investor or any Affiliate of Investor.

                                       29
<PAGE>

                  "Person" means any individual, partnership, firm, corporation,
limited liability company,  joint venture,  association,  trust,  unincorporated
organization, or other entity.

                  "Purchase Price" has the meaning specified in Section 3.

                  "Purchase  Price Bank Account" means one or more bank accounts
in the United States of America to be  designated by Issuer in a written  notice
to Investor not fewer than three Business Days prior to the Closing.

                  "Real Property" means the  Leased  Real Property and the Owned
Real Property.

                  "Representative"  means, with respect to any specified Person,
any Affiliate,  manager,  director,  officer,  employee,  agent, accountant,  or
counsel of, or other Person empowered to act for, such Person.

                  "Securities"   means  shares  of  Common  Stock;  any  rights,
options,  or  warrants  to  purchase  shares  of  Common  Stock;  and any  other
securities of any kind,  nature, or description  whatsoever  convertible into or
exercisable  or  exchangeable  for shares of Common  Stock,  including,  without
limitation, shares of any series of preferred stock of Issuer.

                  "Securities Act" means, as of any date of  determination,  the
Securities  Act of 1933, as amended,  or any similar  federal  statute,  and the
rules and regulations of the Commission thereunder,  all as in effect as of such
date.

                  "Share  Certificate"  means  the share  certificate  of Issuer
evidencing the Shares, substantially in the form attached hereto as Exhibit F.

                  "Shares" has the meaning specified in the recitals hereto.

                  "Stockholder  Approval  Requirement" has the meaning specified
in Section 5(a).

                  "Stockholders' Agreement" means the stockholders' agreement to
be entered into among Issuer, Investor, and certain other stockholders of Issuer
at or prior to the Closing, substantially in the form attached hereto as Exhibit
E.

                  "Subsequent   Warrants"  has  the  meaning  specified  in  the
recitals hereto.

                  "Subsequent  Warrant Shares" has the meaning  specified in the
recitals hereto.

                                       30
<PAGE>

                  "Subsidiaries" means all corporations,  partnerships,  limited
liability companies, joint ventures, associations, and other entities controlled
by (as  such  term is used  in the  definition  of  "Affiliates"  above)  Issuer
directly or indirectly through one or more intermediaries.

                  "Taxes"  means  all  taxes,  fees,  levies,  duties,  tariffs,
imposts,  and other  charges  of any kind,  nature,  or  description  whatsoever
(together  with all  interest,  penalties,  loss,  damage,  liability,  expense,
additions  to tax and  additional  amounts or costs  incurred  or  imposed  with
respect  thereto)  imposed by any  government  or taxing  authority,  including,
without  limitation:  (i) taxes or other  charges on or with  respect to income,
franchises,  concessions,  windfall or other profits, gross receipts,  property,
sales, use, capital, gains, capital stock or shares, payroll, employment, social
security, workers' compensation,  unemployment compensation,  or net worth; (ii)
taxes or other charges in the nature of excise,  withholding, ad valorem, stamp,
transfer,  value  added,  or  gains  taxes;  (iii)  license,   registration  and
documentation fees; and (iv) customs duties, tariffs, and similar charges.

                  "Tax Returns" has the meaning specified in Section 5(t).

                  "Third-Party  Claim"  has the  meaning  specified  in  Section
16(c).

                  "Transaction Agreements" means this Agreement, the Development
Agreement, the Investor Rights Agreement, the Stockholders' Agreement, the Share
Certificate and the Initial Warrants Certificate.

                  "Transfer" means, with respect to any specified Securities, to
make,  offer or  agree  to  make,  or  suffer  to be made  any  sale,  transfer,
assignment,  allocation,  distribution,  gift,  or other  disposition  of, or to
create,  incur, assume,  permit, or suffer to exist any Encumbrance upon or with
respect to, by operation of Law or otherwise (including,  without limitation, by
merger,  consolidation,  dividend,  or  distribution),  all or any  part of such
Securities;  provided  that any pledge by Investor of  Securities  in connection
with a financing  facility  entered  into by  Investor  shall not  constitute  a
"Transfer".

                  "U.S. GAAP" means United States generally accepted  accounting
principles and practices as in effect from time to time and applied consistently
throughout the periods involved.



                                       31
<PAGE>

                              ADDRESSES FOR NOTICES

If to Issuer:            Grill Concepts, Inc.
                         11661 San Vicente Blvd., Suite 404
                         Los Angeles, California  90049
                         Attention: Michael Weinstock, Chairman
                         Telephone:  (310)
                         Telecopier:  (310) 820-6530

with copies to:          Herzog, Fisher, Grayson & Wolfe
                         9460 Wilshire Boulevard, Fifth Floor
                         Beverly Hills, California  90212
                         Attention:  Michael Grayson
                         Telephone:  (310)
                         Telecopier:  (310) 278-5430

                         and

                         Vanderkam & Sanders
                         440 Louisiana, Suite 475
                         Houston, Texas 77002
                         Attention:  Michael Sanders
                         Telephone:  (713) 547-8900
                         Telecopier:  (713) 547-8910

If to Investor:          Before August 1, 2001:

                         Starwood Hotels and Resorts Worldwide, Inc.
                         777 Westchester Avenue
                         White Plains, New York  10604
                         Attention:  Senior Vice President--Business Development
                         Telephone:  (914) 640-8176
                         Telecopier:  (914) 640-8124

                         On or after August 1, 2001:

                         Starwood Hotels and Resorts Worldwide, Inc.
                         1111 Westchester Avenue
                         White Plains, New York  10604-3500
                         Attention:  Senior Vice President--Business Development
                         Telephone:  (914) 640-8176
                         Telecopier:  (914) 640-8124

                                       32
<PAGE>

with copies to:          Before August 1, 2001:

                         Starwood Hotels and Resorts Worldwide, Inc.
                         777 Westchester Avenue
                         White Plains, New York  10604
                         Attention:  General Counsel
                         Telephone:  (914) 640-2609
                         Telecopier:  (914) 640-8260

                         On or after August 1, 2001:

                         Starwood Hotels and Resorts Worldwide, Inc.
                         1111 Westchester Avenue
                         White Plains, New York  10604-3500
                         Attention:  General Counsel
                         Telephone:  (914) 640-2609
                         Telecopier:  (914) 640-8260

                         and

                         Levin & Srinivasan LLP
                         1776 Broadway, Suite 1900
                         New York, New York  10019
                         Attention:  Notices (194/046)
                         Telephone:  (212) 957-4511
                         Telecopier:  (212) 957-4565

                                       33