Document:

Form of Warrant

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        ________________

WARRANT NO.             
             
             
             
             
             
             
             
             
        Number of Shares

    
    
             
            THIS
WARRANT HAS NOT BEEN REGISTERED UNDER THE UNITED

    
             
             
   STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE

    
             
             
   SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED OR

    
             
             
   DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION, UNLESS

    
             
             
   AN EXEMPTION FROM THE REQUIREMENT OF SUCH REGISTRATION

    
             
             
   IS AVAILABLE UNDER THE CIRCUMSTANCES AT THE TIME
OBTAINING.

Void After
5:00 P.M. December 31, 2003

PEASE OIL
AND GAS COMPANY

Common Stock
Purchase Warrant

        PEASE
OIL AND GAS COMPANY, a NEVADA corporation (“Pease” or the
“Company”), hereby certifies that, __________________,
with an address of ________________________, _______, _____________, or ___
permitted assigns, for valuable consideration received, is entitled, subject to
the terms and conditions herein set forth, to purchase from the Company up to
_____ fully paid and nonassessable shares of Common Stock, $0.01 par value per
share, of the Company, at the per share purchase price of $0.50 per share (the
“Purchase Price”), at any time or from time to time on or after
the date hereof and up to 5:00 p.m. December 31, 2003 (the “Expiration
Date”). The number and character of such shares of Common Stock are
subject to adjustment as provided herein. 

        1.
Definitions.  As used herein, unless the context otherwise requires, the following
terms have the following respective meanings:

	 	        (a)
“Act” shall mean the Securities Act of 1933, as amended.

	 	        (b)
“Additional Shares of Common Stock” shall mean all shares
(including treasury shares) of Common Stock issued or sold (or, pursuant to
Section 3.7 hereof, deemed to be issued) by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
shares of Common Stock issuable pursuant to this Warrant.

	 	        (c)
“Adjusted Exercise Price” shall have the meaning specified in
Section 3.2 hereof.

	 	        (d)
“Company” means Pease Oil and Gas Company or any corporation
which shall succeed to or assume the obligations of Pease Oil and Gas Company
hereunder.

	 	        (e)
“Common Stock” shall mean the Common Stock, par value $0.10 per
share, of the Company and any stock into which such common stock shall have been
changed or any stock resulting from any reclassification of such common stock,
and shall include all other stock of any class (however designated) of the
Company the holders of which have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions of any shares
entitled to preference.

	 	        (f)
“Convertible Securities” shall mean any evidences of
indebtedness, shares of stock (other than Common Stock) or other securities
directly or indirectly convertible into or exchangeable for Common Stock, other
than any securities issuable pursuant to this Warrant.

	 	        (g)
“Market Price”, as used with reference to any share of stock on
any specified date, shall mean:

	 	
(i) if such stock is listed and registered on any national securities exchange
or traded on The Nasdaq Stock Market (“Nasdaq”) or the OTC Bulletin
Board (“OTCBB”), (A) the last reported sale price on such exchange or
Nasdaq or OTCBB of such stock on the business day immediately preceding the
specified date, or (B) if there shall have been no such reported sale price of
such stock on the business day immediately preceding the specified date, the
average of the last reported sale price on such exchange or on Nasdaq or the
OTCBB on (x) the day next preceding the specified date for which there was
a reported sale price and (y) the day next succeeding the specified date
for which there was a reported sale price; or

	 	
(ii) if such stock is not at the time listed on any such exchange or traded on
Nasdaq or the OTCBB but is traded on the over-the-counter market as reported by
the National Quotation Bureau or other comparable service, (A) the average of
the closing bid and asked prices for such stock on the business day immediately
preceding the specified date, or (B) if there shall have been no such reported
bid and asked prices for such stock on the business day immediately preceding
the specified date, the average of the last bid and asked prices on (x) the
day next preceding the specified date for which such information is available
and (y) the day next succeed ing the specified date for which such
information is available; or

	 	
(iii) if clauses (i) and (ii) above are not applicable, the fair value per
share of such stock as determined in good faith and on a reasonable basis by the
Board of Directors of the Company and, if requested, set forth in a certificate
delivered to the holder of this Warrant upon the exercise hereof.

	 	        (h)
“Options” shall mean rights, options or warrants to subscribe
for, purchase or otherwise acquire either Common Stock or Convertible
Securities.

	 	        (i)
“Other Securities” shall mean any stock and other securities of
the Company or any other person (corporate or otherwise) which the holders of
this Warrant at any time shall be entitled to receive, or shall have received,
upon the exercise of this Warrant, in lieu of or in addition to the Common
Stock, or which at any time shall be issuable or shall have been issued to
holders of the Common Stock in exchange for, in addition to or in replace ment
of the Common Stock or Other Securities pursuant to Section 3.5 or
otherwise.

	 	        (j)
“Purchase Price” shall mean $0.50 per share, subject to
adjustment as provided herein.

        2.
Exercise of Warrant.

        2.1.
Manner of Exercise.

	 	        (a)
This Warrant may be exercised by the holder hereof, in whole or in part (but not
as to fewer than 10,000 shares of the Common Stock unless, at the time of
exercise, this Warrant entitles the holder to purchase fewer than 10,000 shares
of the Common Stock), on any business day on or after the date hereof and before
the Expiration Date, by surrender of this Warrant, with the form of subscription
at the end hereof (or a reasonable facsimile thereof) duly executed by such
holder, to the Company at its office in Grand Junction, Colorado, and, except as
otherwise provided in Section 2.1 (b), accompanied by payment, by certified or
official bank check payable to the order of the Company, in the amount obtained
by multiplying (x) the number of shares of the Common Stock (without giving
effect to any adjustment therein) designated in such form of subscription (or
such reasonable facsimile) by (y) the Purchase Price, and such holder shall
thereupon be entitled to receive the number of shares of the Common Stock
determined as provided hereunder.

	 	        (b)
The exercise price of this warrant may be paid, at the election of the holder in
accordance with Section 2.1 (a) by delivering to the Company fully paid shares
of the Company's common stock, which shall be valued at the Market Price on the
day preceding the delivery and the value of the shares delivered may be used for
the exercise of this Warrant at the Purchase Price.

        2.2.
When Exercise Effective. Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the business
day on which this Warrant shall have been surrendered to the Company as provided
in Section 2.1, and the person(s) in whose name(s) the certificate(s) for shares
of the Common Stock (or Other Securities) that are to be issued upon such
exercise in accordance with Section 2.3 shall be deemed the holder(s) of record
thereof at such time. 

        2.3.
Delivery of Stock Certificates, etc. As soon as practicable after the
exercise of this Warrant in full or in part in accordance herewith the Company,
at its expense (including the payment by it of any applicable issue taxes), will
cause to be issued in the name of and delivered to the holder hereof, or as such
holder (upon payment by such holder of any applicable transfer taxes) may
direct, 

	 	        (a)
a certificate or certificates, marked with an appropriate legend referring to
the terms of this Warrant and any applicable restrictions on such shares imposed
by the Federal or any state securities laws, for the number of full shares of
the Common Stock (or Other Securities) to which such holder shall be entitled
upon such exercise plus, in lieu of any fractional share to which such holder
would otherwise be entitled, cash in an amount equal to the same fraction of the
Market Price of one full share of the Common Preferred Stock on the business day
next preceding the date of such exercise, and

	 	        (b)
in case such exercise is in part only, a new Warrant or Warrants of like tenor,
calling in the aggregate on the face or faces thereof for the number of shares
of the Common Stock equal (without giving effect to any adjustment therein) to
the number of such shares called for on the face of this Warrant minus the
number of shares designated by the holder upon such exercise as provided in
Section 2.1.

        3.
Common Stock Issuable Upon Exercise..

        3.1.
General. The number of shares of the Common Stock which the holder of
this Warrant shall be entitled to receive upon the exercise hereof or, if
securities or other property in addition to or in lieu of the Common Stock shall
by reason of the operation of the provisions of this Section be issuable upon
such exercise, the amount and kind of such securities or other property, shall
be adjusted or determined as provided in this Section 3. 

        3.2.
Adjusted Exercise Price. The number of shares of the Common Stock which
the holder of this Warrant shall be entitled to receive upon the exercise hereof
shall be determined by multiplying the number of shares of the Common Stock
which, but for the provisions of this Section 3, would otherwise be issuable
upon such exercise, as designated by the holder hereof pursuant to Section 2.1,
by the fraction of which the numerator is the per share Purchase Price and the
denominator is the per share Adjusted Exercise Price (as herein defined) in
effect on the date of such exercise. The per share Adjusted Exercise Price of
the Common Stock shall initially be the Purchase Price (as defined in
Section 1) and shall be adjusted and readjusted from time to time as
provided in this Section 3 (and, as so adjusted or readjusted, shall remain in
effect until a further adjustment or readjustment thereof is required by this
Section 3). 

        3.3.
Stock Dividends, Stock Splits, etc. In case the Company at any time or
from time to time after the date hereof shall declare or pay any dividend on the
Common Stock payable in Common Stock, or effect a subdivision of the outstanding
shares of the Common Stock into a greater number of shares of the Common Stock
(by reclassification or otherwise than by payment of a dividend in shares of
Common Stock), then, in any such event, the per share Adjusted Exercise Price
per share shall be adjusted effective as of the close of business on (i) the
record date for the determination of shareholders entitled to receive such
dividend if such dividend is in fact paid, or (ii) the day immediately preceding
the day upon which such subdivision shall become effective (any such day, as the
case may be, shall be referred to herein as the “Subdivision Effective
Date”), by multiplying the per share Adjusted Exercise Price in effect
immediately prior to the Subdivision Effective Date by the fraction of which
(x) the numerator shall be the number of shares of the Common Stock
outstanding immediately prior to the Subdivision Effective Date and
(y) the denominator shall be the number of shares of the Common
Stock outstanding immediately prior to the Subdivision Effective Date plus the
number of shares of the Common Stock issuable upon the payment of such dividend
or the consummation of such subdivision, as the case may be. 

        3.4.
Adjustments for Combinations, etc. In case the outstanding shares of the
Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Adjusted Exercise
Price shall be adjusted, effective as of the close of business on the day
immediately preceding the day upon which such combination or consolidation is
effective (the “Combination Effective Date”), by multiplying
the per share Adjusted Exercise Price in effect immediately prior to the
Combination Effective Date by the fraction of which (x) the
numerator shall be the number of shares of the Common Stock outstanding
immediately prior to the Combination Effective Date and (y) the
denominator shall be the number of shares of the Common Stock outstanding
immediately after the Combination Effective Date. 

        3.5.
Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
etc. In case the Company, after the date hereof, (a) shall
consolidate with or merge into any other person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall
permit any other person to consolidate with or merge into the Company and the
Company shall be the continuing or surviving person but, in connection with such
consolidation or merger, the Common Stock shall be changed into or exchanged for
stock or other securities or property of any other person, or (c) shall
effect a capital reorganization or reclassification of the Common Stock (other
than a reclassification subject to Sections 3.3 or 3.4), then, and in each such
case, proper provision shall be made so that the holder of this Warrant, upon
the exercise hereof at any time after the consummation of such consolidation,
merger, reorganization or reclassification, shall be entitled to receive, in
lieu of the Common Stock (or Other Securities) issuable upon such exercise prior
to such consummation, the stock and other securities and property to which such
holder would have been entitled upon such consummation if such holder had so
exercised this Warrant immediately prior thereto, subject to adjustments
(subsequent to such corporate action) as nearly equivalent as possible to the
adjustments provided for in this Section 3. 

        4.
No Dilution or Impairment. The Company will not, by amendment of its
articles of organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of this
Warrant against dilution or other impairment. 

        5.
Notices of Record Date, etc.  In the event of 

	 	        (a)
any taking by the Company of a record of the holders of any class of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or

	 	        (b)
any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to any other person or any
consolidation or merger involving the Company and any other person, or

	 	        (c)
any voluntary or involuntary dissolution, liquidation or winding-up of the
Company,

the Company will give to
the holder of this Warrant a notice specifying (i) the date or expected
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, and (ii) the date or expected date on which any
such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place
and the time, if any such time is to be fixed, as of which the holders of record
of the Common Stock (or Other Securities) shall be entitled to exchange their
shares of the Common Stock (or Other Securities) for securities or other
property deliverable upon such reorganization, reclassification, recapitaliza
tion, transfer, consolidation, merger, dissolution, liquidation or winding-up.
Unless otherwise required by law to be given sooner, such notice shall be mailed
within a reasonable time prior to the date therein specified. 

        6.
Reservation of Stock, etc. The Company will at all times reserve and keep
available out of its authorized but unissued Common Stock, solely for issuance
and delivery upon the exercise of this Warrant, the full number of shares of
Common Stock (or Other Securities) then issuable upon the exercise of this
Warrant. All shares of the Common Stock issuable upon the exercise of this
Warrant shall be duly authorized, and when issued and paid for in full, validly
issued, fully paid and non-assessable with no liability on the part of the
holders thereof. 

        7.
Registration Rights.

	 	        (a)
Definitions. For purposes of this Section 7, the following terms shall
have the following respective meanings:

	 	
(i) “Commission” shall mean the United States Securities and Exchange
Commission or any other Federal agency at the time administering the Act.

	 	
(ii) The term “holder or holders of Registrable Stock” shall mean the
holders of Common Stock or Other Securities issued pursuant to this
Warrant.

	 	
(iii) The terms “register,” “registered” and
“registration” refer to a registration effected by preparing and
filing a registration statement or similar document in compliance with the Act,
and the declaration or ordering of effectiveness of such registration statement
or document by the Commission.

	 	
(iv) The term "Registration Period" shall mean the period commencing on the
date hereof and ending (a) if this Warrant shall expire without having been
exercised in whole or in part, the Expiration Date or (b) if this Warrant shall
have been exercised in whole or in part, at such time as all shares of
Registrable Stock have been sold by the initial holder or can be sold publicly
without registration under the Act.

	 	
(v) The term "Registrable Stock" means (a) the shares of Common Stock issued or
issuable upon the exercise of this Warrant, and (b) any Other Securities issued
or issuable pursuant to this Warrant; provided, however, that shares of
Registrable Stock shall cease to be Registrable Stock if they are sold or
transferred pursuant to a registered public offering or other transaction which
does not result in restrictions on resale being imposed on the transfer by
virtue of Federal or state securities laws; and provided further that
Registrable Stock shall cease to be Registrable Stock if the holder could sell
or transfer such securities held by him in one or more transactions pursuant to
Rule 144 promulgated under the Act.

	 	        (b)
Registration.

	 	
(i) The Company shall use its best commercial efforts to file, by April 15,
2001, and shall use its best commercial efforts to cause to become effective as
soon as practicable, a registration statement on Form S-3, or if Form S-3 is not
then available, another appropriate form, covering all the Registrable Stock
(the "Initial Registration"). In the event such registration is not so declared
effective or does not include all Registrable Stock, a holder of Registrable
Stock shall have the right to require by notice in writing that the Company
register all or any part of the Registrable Stock held by such holder (a Demand
Registration") and the Company shall thereupon effect such registration in
accordance herewith (which may include adding such shares to an existing shelf
registration). The parties agree that if the holder of Registrable Stock demands
registration of less than all of the Registrable Stock, the Company, at its
option, may nevertheless file a registration statement covering all of the
Registrable Stock. If such registration statement is declared effective with
respect to all Registrable Stock and the Company is in compliance with its
obligations under Subsection (c) hereof, the demand registration rights granted
pursuant to this Subsection (b) shall cease. If such registration statement is
not declared effective with respect to all Registrable Stock the demand
registration rights described herein shall remain in effect until all
Registrable Stock have been registered under the Act. The Company shall provide
holders of Registrable Stock reasonable opportunity to review any such
registration statement or amendment or supplement thereto prior to the filing
thereof, but in no event shall such period exceed seven (7) days. If the
Registrable Stock is registered initially on a form other than Form S-3, the
Company shall register the Registrable Stock on Form S-3 as soon as use of such
form is permissible.

	 	
(ii) The Company shall not be obligated to effect Demand Registration under
Subsection (b)(i) if all of the Registrable Stock held by the holder of
Registrable Stock which are demanded to be covered by the Demand Registration
are, at the time of such demand, included in an effective registration statement
and the Company is in compliance with its obligations under Subsection (c)
hereof.

	 	
(iii) The Company may suspend the effectiveness of any such registration
effected pursuant to this Subsection (b) in the event, and for such period of
time as, such a suspension is required by the rules and regulations of the
Securities and Exchange Commission (“SEC”). The Company will use its
best efforts to cause such suspension to terminate at the earliest possible
date.

	 	        (c)
Covenants of the Company with Respect to Registration. In connection with
any registration under this Section 7, the Company shall, as expeditiously as is
reasonably possible:

	 	
(i) Prepare and file with the Commission a registration statement with respect
to the Participating Holders' Registrable Stock and use its best reasonable
efforts to cause such registration statement to become effective.

	 	
(ii) Prepare and file with the Commission such amendments and supplements to
such registration statement and prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.

	 	
(iii) Furnish to the Participating Holders such numbers of copies of a
prospectus, including, if applicable, a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as the selling
shareholders may reasonably request in order to facilitate the disposition of
Registrable Stock owned by the Participating Holders.

	 	
(iv) Use its best reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States as shall be reasonably
requested by the Participating Holders; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions.

	 	
(v) In the event of any underwritten public offering, enter into and perform its
obligations under an underwriting agreement, in usual and customary form, with
the managing underwriter of such offering. The Participating Holders shall also
enter into and perform their obligations under such an agreement.

	 	
(vi) Notify the Participating Holders, at any time when a prospectus relating to
Registrable Stock covered by such registration statement is required to be
delivered under the Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.

	 	
(vii) Furnish to the Participating Holders, on the date that shares of
Registrable Stock are delivered to the underwriters for sale in connection with
a registration pursuant to this Section 7, if such securities are being sold by
underwriters, or, on the date that the registration statement with respect to
such securities becomes effective, (i) an opinion as to matters of law only,
dated such date, of counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Participating Holders and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
and to the Participating Holders.

	 	        (d)
Costs and Expenses. The Company shall pay all costs, fees and expenses in
connection with all registration statements filed under this Section 7
including, without limitation, the Company's legal and accounting fees, printing
expenses and blue sky fees and expenses, but not including the fees and expenses
of counsel for the Participating Holders in connection with such registration.
However, the Company shall not pay for underwriting discounts and commissions
and underwriters' expenses allocable to the Registrable Stock being registered
or state transfer taxes.

	 	        (e)
Indemnification.

	 	
(i) The Company shall indemnify each Participating Holder under this Agreement,
its officers and directors and any person controlling it within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against any loss,
claim, damage, expense or liability (including without limitation all expenses
reasonably incurred in investigating, preparing, or defending against any claim
whatsoever, such expenses to be reimbursed by the Company as they are incurred)
to which it may become subject under the Act, the Exchange Act or otherwise,
arising out of or based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus or any amendments or supplements thereto in which Registrable Stock
is included or in any application, statement or other document filed by the
Company with the Commission or any securities exchange or in any jurisdiction in
connection with qualifying such shares under the securities laws thereof, or
(ii) the omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not misleading,
unless such statement or omission is made in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Participating Holder or an underwriter expressly for use in any such
registration statement or other document.

	 	
(ii) Each Participating Holder shall, as a condition to such registration of
Registrable Stock, agree to indemnify the Company, its officers and directors
and any person controlling the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, against any loss, claim, damage or
expense or liability (including without limitation all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever,
such expenses to be reimbursed by the undersigned as they are incurred) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
out of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus or any
amendments or supplements thereto in which Registrable Stock is included or in
any application, statement or other document filed by the Company with the
Commission or any securities exchange or in any jurisdiction in connection with
qualifying such shares under the securities laws thereof, or (ii) the omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided in each
case that such statement or omission is made in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Participating Holder expressly for use in any such registration statement or
other document, or (iii) any misuse by the Participating Holder of any
prospectus included in the registration statement or any violation of the Act by
the Participating Holder in connection with the sale or distribution of his or
her Registrable Stock under the registration statement.

	 	
(iii) Promptly upon receipt by a party claiming indemnification hereunder of
notice of the commencement of any action involving a claim referred to above,
such indemnified party will, if a claim in respect thereof is to be made against
a party which may be required to indemnify such party hereunder, give written
notice to the latter of the commencement of such action. In case any such action
is brought against an indemnified party, the indemnifying party shall be
entitled to participate in and to assume the defense of such action, to the
extent that it may wish, with counsel reasonably satisfactory to such
indemnified party. Except as set forth herein, the indemnified party and any
party cooperating in the defense of such claim shall not settle or compromise
any such claim or admit liability without the express written consent of the
indemnifying party. The indemnified party shall have the right to be represented
by an advisory counsel and accountants, at its own expense, and the indemnified
party shall be kept fully informed of such action, suit or proceeding at all
stages thereof whether or not the indemnified party is so represented. After a
period of thirty days following the date the written notice of such claim was
given to the indemnifying party the indemnified party may settle any such claim
(and the amount of any such settlement shall be subject to indemnification
hereunder) unless within such thirty-day period the indemnifying party shall
have provided the indemnified party with notice and evidence to the indemnified
party's satisfaction that the indemnifying party reasonably disputes such claim
and has the financial ability to meet its indemnification obligations hereunder.
Notwithstanding the foregoing, the indemnified party may immediately cause to be
paid or discharged any asserted claim the nonpayment of which would have an
immediate substantial adverse impact on the indemnified party and any claim
which the indemnifying party has not disputed within thirty days of notice as
provided above.

	 	
(iv) If the indemnification provided for in this Section 7(e) is unavailable or
insufficient to hold harmless an indemnified party under such subsection in
respect of any losses, claims, damages or liabilities or action in respect
thereof or referred to therein, then each indemnifying party shall in lieu of
indemnifying such indemnified party contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, liabilities
or actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and the Participating Holders, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or actions as well as any other relevant equitable
considerations, including the failure to give the notice required under such
subsections. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Company on the one hand, or the
Participating Holders, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Participating Holders agree that it
would not be just and equitable if contribution pursuant to this Section
7(e)(iv) were determined by pro rata allocation or by any other method of
allocation which did not take account of the equitable considerations referred
to above in this subsection. No person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the Securities Act), shall be entitled
to contribution from any person who is not guilty of such fraudulent
misrepresentations.

	 	
(v) The obligations of the Company and the Participating Holders under this
Section 7(e) shall survive the completion of any offering of Registrable Stock
in a registration statement under this Section 7.

	 	
(vi) The rights of indemnification contained in this Section 7 shall not be
deemed to be the exclusive remedy of the parties hereto and such rights shall be
in addition to any other rights or remedies which any party hereto may have at
law or equity.

	 	        (f)
Assignment of Registration Rights. The undersigned's rights set forth in
this Section 7 shall automatically be deemed assigned to any transferee or
assignee of this Warrant or shares of Common Stock or Other Securities issuable
hereunder, provided that immediately following such transfer the further
disposition of such securities by the transferee or assignee is restricted under
the Act; provided however, that, the termination of registration rights in
respect of any shares of Registrable Stock shall be binding upon any transferee
of such shares. Upon the request of any such holder, the Company will confirm in
writing to any transferee of such holder's Registrable Stock the Company's
continuing obligation to afford such transferee the benefits of the Company's
agreements contained in this Section 7, but no failure of the Company to confirm
such obligations shall in any way impair such transferee's rights under this
Section 7.

        8.
Substitution of Warrants.

        8.1.
Exchange of Warrants. Subject to the provisions appearing at the top of
the first page of this Warrant concerning, inter alia, the sale,
transfer, encumbrance or other disposition of this Warrant, upon surrender or
exchange of this Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or upon the order of the holder thereof a new
Warrant or Warrants of like tenor, in the name of such holder or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct,
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant or Warrants so
surrendered. 

        8.2.
Replacement of Warrant. Upon receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such loss, theft or destruction, upon delivery of an
indemnity agreement reasonably satisfactory to the Company, or, in the case of
any such mutilation, upon surrender and cancellation of such Warrant, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor. 

        9.
Ownership of Warrant. Until this Warrant is transferred on the books of
the Company, the Company may treat the person in whose name this Warrant is
issued as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary, except that, if and when this Warrant is properly assigned in
blank, the Company may (but shall not be obligated to) treat the bearer hereof
as the absolute owner of this Warrant for all purposes, notwithstanding any
notice to the contrary. A Warrant, if properly assigned, may be exercised to the
extent provided herein by a new holder without first having a new Warrant
issued. 

        10.
Notices, etc. All notices and other communications from the Company to
the holder of this Warrant or from the holder of this Warrant shall be delivered
personally, by facsimile (if confirmed and followed by delivery by first class
mail), reputable overnight courier service, or mailed by first class registered
or certified mail, postage prepaid, to the Company at 751 Horizon Court, Suite
203, P. O. Box 60219, Grand Junction, Colorado 81506-8758, Attn: President, or
to the holder at such address as may have been furnished to the Company in
writing by such holder, or, until an address is so furnished, to and at the
address of the last holder of this Warrant who has so furnished an address to
the Company. Any such notice shall be deemed to have been given on the date of
personal delivery, facsimile, delivery to a reputable overnight courier service
or deposit in the mail. 

        11.
Warrant Holder Not a Shareholder. Holder shall not, by virtue of anything
contained in this Agreement or otherwise, prior to exercise of this Warrant, be
entitled to any right whatsoever, either in law or equity, of a shareholder of
the Company, including without limitation, the right to receive dividends or to
vote or to consent or to receive notice as a shareholder in respect of the
meetings of shareholders or the election of directors of the Company or any
other matter; provided however that all holders of Warrants
will be entitled to notice if: (a) the Company grants holders of its Common
Stock rights to purchase any shares of capital stock or any other rights, or (b)
the Company authorizes a reclassification, capital reorganization,
consolidation, merger or sale of substantially all of its assets. 

        12.
Nontransferable. This Warrant is nontransferable without the prior
consent of the Company. Any such transfer shall be made in accordance with
Section 8.1 above.

        13.
Miscellaneous. The Company may from time to time supplement or amend this
Warrant without the approval of the holder in order to cure any ambiguity or to
be correct or supplement any provision contained herein which may be defective
or inconsistent with any other provision, or to make any other provisions in
regard to matters or questions herein arising hereunder which the Company may
deem necessary or desirable and which shall not materially adversely affect the
interest of the holder. This Warrant and any term hereof may be amended,
changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and consented to in writing by the holder of this Warrant.
If for any reason any provision, paragraph or term of this Warrant is held to be
invalid or unenforceable, all other valid provisions herein shall remain in full
force and effect and all terms, provisions and paragraphs of this Warrant shall
be deemed to be severable. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the state of Colorado applicable to
contracts made and to be performed entirely therein. The headings in this
Warrant are for reference purposes only and shall not limit or otherwise affect
the meaning hereof. 

Dated
as of:      ___________, 2000. 

            
             
             
              
             
       PEASE OIL AND GAS COMPANY

            
             
             
              
             
       a Nevada corporation

ATTEST

     
              
          
             
             
        
        By: /s/ Patrick J. Duncan     

             
             
             
              
             
             Patrick J.
Duncan, President

FORM OF
SUBSCRIPTION

[To be
signed only upon exercise of the Warrant]

To:  PEASE
OIL AND GAS COMPANY

        The
undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise the purchase right represented by such Warrant for, and to purchase
thereunder, ___________* shares of the Common Stock of PEASE OIL AND GAS COMPANY
and herewith makes payment of $ therefor, and requests that the certificates for
such shares be issued in the name of, and delivered to, _________________, whose
address is ________________________ ___________ ___. 

Dated:

             
             
             
             
             
             
(Signature must conform in all

             
             
             
             
             
             
respects to the name of the holder

             
             
             
             
             
             
as specified on the face of the

             
             
             
             
             
             
Warrant)

             
             
             
             
             
             
(Address)

__________

	*	
Insert the number of shares called for on the face of the Warrant (or, in the
case of a partial exercise, the portion thereof as to which the Warrant is being
exercised), in either case without making any adjustment for additional Common
Stock or any other stock or other securities or property or cash which, pursuant
to the adjustment provisions of the Warrant, may be deliverable upon exercise.

FORM OF
ASSIGNMENT

[To be
signed only  upon transfer of the Warrant]

	 	        For
value received, the undersigned hereby sells, assigns and transfers unto
_______________________ the right represented by the within Warrant to purchase
_____________ shares of the Common

        Stock
of PEASE OIL AND GAS COMPANY to which the within Warrant relates, and appoints
Attorney to transfer such right on the books of PEASE OIL AND GAS COMPANY, 

with full power of substitution in the premises.

Dated:

             
             
             
             
             
             
(Signature must conform in all

             
             
             
             
             
             
respects to the name of the holder

             
             
             
             
             
             
as specified on the face of the

             
             
             
             
             
             
Warrant)

             
             
             
             
             
             
(Address)

Signed in the presence of:

__________July 19, 2000

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

Gentlemen:

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

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

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

I.   CREDIT TERMS:

     1.   LINE OF CREDIT:

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

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

     2.   TERM LOAN:

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

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

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

     3.   GUARANTIES:

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

II.  INTEREST/FEES:

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

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

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

III. REPRESENTATIONS AND WARRANTIES:

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

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

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

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

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

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

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

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

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

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

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

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

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

IV.      CONDITIONS:

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

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

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

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

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

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

V.   COVENANTS:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

VI.  DEFAULT, REMEDIES:

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

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

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

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

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

VII. MISCELLANEOUS:

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

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

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

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

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

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

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

     8. Arbitration.

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

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

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

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

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

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

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

                                                  Sincerely,

                                                  WELLS FARGO BANK,
                                                  NATIONAL ASSOCIATION

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

GRILL CONCEPTS, INC.

By: __________________________

Title: _________________________

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