Document:

INVESTOR RIGHTS AGREEMENT

     INVESTOR RIGHTS AGREEMENT, dated as of June __, 2001 (as hereafter amended,
supplemented,  or  otherwise  modified  from  time to time,  this  "Agreement"),
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,  pursuant to the subscription agreement,  dated as of May 16, 2001
(the "Subscription  Agreement"),  between Issuer and Investor,  Issuer issued to
Investor  666,667  shares (the  "Shares") of common  stock of Issuer,  par value
$0.00004 per share (the "Common Stock"), and warrants to purchase 666,667 shares
of Common Stock (the "Initial Warrants");

     WHEREAS,  pursuant to the development agreement,  dated as of June __, 2001
(the "Development Agreement"), between Issuer and Investor, Issuer has agreed to
issue to Investor  additional  warrants to purchase shares of Common Stock based
on: (i) certain  development  thresholds (the  "Development  Warrants") and (ii)
certain  incentive  thresholds (the  "Incentive  Warrants" and together with the
Initial Warrants and the Development Warrants, the "Warrants"); and

     WHEREAS,  it  is  a  condition  precedent  to  Investor's   willingness  to
consummate the transactions  contemplated by the Subscription  Agreement and the
Development  Agreement  that  Issuer  shall have  executed  and  delivered  this
Agreement;

     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 the  Subscription
Agreement.

     SECTION 2. Preemptive Rights. If at any time prior to the third anniversary
of the date first above  written,  Issuer wishes to issue or otherwise  Transfer
additional  Securities  which,  after  giving  effect  to such  Transfer,  would
constitute  less than fifty  percent (50%) of the Adjusted  Diluted  Shares (for
purposes of this section, the "Proposed Transaction"),  and as of the Issue Date
(as defined  below)  Investor  holds no less than 333,333 shares of Common Stock
(as adjusted for stock splits, stock dividends, recapitalizations and the like),
Issuer  shall give  Investor and each  transferee  of Investor of not fewer than
100,000 shares of Common Stock or Securities  convertible into or exercisable or
exchangeable  for not fewer than 100,000  shares of Common Stock  (together with
Investor,  the "Rights  Holders")  written  notice thereof (for purposes of this
section,  an "Offer  Notice")  not fewer  than sixty days prior to the date (for
purposes of this section, the "Issue Date") on which Issuer wishes to consummate
the Proposed Transaction.  The Offer Notice shall describe in reasonable detail:
(iii)  the  voting  powers,  designations,   preferences,  and  rights  of,  and
qualifications,  limitations,  and restrictions  with respect to, the Securities
Issuer  wishes to issue or  otherwise  Transfer;  and (iv) the price per  share,
unit, or face amount, as the case may be, at which, and all other material terms
and conditions  (including the expected Issue Date) upon which, Issuer wishes to
issue or otherwise  Transfer such Securities.  The Offer Notice shall constitute
an offer by Issuer to each Rights Holder to issue and sell to such Rights Holder
the  number of shares  or units or the face  amount,  as the case may be, of the
Securities  Issuer  wishes to issue or otherwise  Transfer (for purposes of this
section, the "Offered  Securities"),  equal to the product of: (A) the aggregate
number of shares or units or the aggregate  face amount,  as the case may be, of
Securities proposed to be issued in the Proposed Transaction;  multiplied by (B)
the  quotient  of: (1) the number of  Fully-Diluted  Shares  held by such Rights
Holder as of the date of the Offer  Notice;  divided by (2) the total  number of
Fully-Diluted Shares outstanding as of the date of the Offer Notice.
<PAGE>

     (b) During the fifteen-day period immediately  following its receipt of the
Offer Notice (for purposes of this section,  the "Notice  Period"),  each Rights
Holder  (and any  successors  or  assigns  thereof)  may  accept  the offer made
thereby, in whole or in part, by giving Issuer written notice of acceptance (for
purposes of this section, an "Acceptance Notice"),  which notice shall state the
number  of shares or units or the face  amount,  as the case may be, of  Offered
Securities  with respect to which such Rights Holder accepts  Issuer's offer. An
Acceptance  Notice  shall  constitute  an  irrevocable  agreement by such Rights
Holder to purchase the number of shares or units or the face amount, as the case
may be, of Offered  Securities  with respect to which such notice was given,  at
the price and upon the other  terms and subject to the  conditions  set forth in
the Offer Notice.  Notwithstanding  the delivery of an Acceptance  Notice by any
Rights Holder,  Issuer may revoke its offer pursuant to the corresponding  Offer
Notice at any time prior to consummation of the Proposed  Transaction;  provided
that Issuer shall not  thereafter:  (i) issue or Transfer any of the  Securities
with respect to which it gave such Offer Notice  unless it again  complies  with
the  requirements  of Sections 2(a), (b), and (c); or (ii) deliver another Offer
Notice for a period of ninety days after the effective date of such  revocation.
Immediately  after  expiration  of the  Notice  Period,  Issuer  shall  offer to
Investor (or any successor thereto) any Offered Securities not subscribed for by
any other Rights Holder, and the Notice Period shall be extended for a period of
ten  days  after  delivery  of such  offer in order  for  Investor  (or any such
successor)  to amend its (or give an)  Acceptance  Notice  with  respect to such
Offered Securities.

     (c) During the thirty-day  period  immediately  following the expiration of
the Notice  Period (as it may be extended as  provided  above) (for  purposes of
this section,  the "Closing  Period"),  Issuer and each accepting  Rights Holder
shall consummate the issuance, sale, and purchase of the Offered Securities with
respect to which Issuer's  offer was accepted.  At the closing of such issuance,
sale, and purchase:  (i) Issuer shall deliver to each Rights Holder certificates
evidencing the Offered Securities purchased thereby; and (ii) each Rights Holder
shall deliver to Issuer the purchase price for the Offered Securities  purchased
thereby.
<PAGE>

     (d) During the ninety-day  period  immediately  following the expiration of
the Closing  Period,  Issuer may issue or Transfer to any Third Party all of the
Securities  with  respect  to which it gave an Offer  Notice  and which were not
otherwise  timely purchased by the Rights Holders in accordance  herewith,  upon
terms and subject to conditions  no more  favorable to such Third Party than the
terms and conditions set forth in the Offer Notice. If the Proposed  Transaction
contemplated  by such Offer  Notice is not  consummated  within such  ninety-day
period,  or Issuer proposes to consummate such transaction upon terms or subject
to conditions less favorable to Issuer than those set forth in the Offer Notice,
Issuer may not  consummate  such  transaction  unless it again complies with the
requirements of Sections 2(a), (b), and (c).

     (e) During the three year period  following  the date hereof,  Issuer shall
not grant to any Person any rights to  participate in any issuances or Transfers
of additional Securities which rights are more favorable than the rights granted
to the Rights Holders pursuant to this section.

     (f)  Notwithstanding  the  provisions  of Sections 2(a) through (e) of this
section,  no Rights Holder shall have the right to participate  pursuant to this
Section 2 in  issuances  or other  Transfers  of any  Securities:  (i) issued or
issuable  on a pro rata basis to all  holders  of  Securities  then  outstanding
(based on such holders' respective ownership of such Securities); (ii) issued or
issuable to any  employee of Issuer  pursuant to any employee  equity  incentive
plan approved by the board of directors of Issuer; provided,  however, that such
exclusion  shall only apply with respect to the issuance of  Securities  that do
not exceed fifteen percent (15%) in the aggregate of the then total  outstanding
Securities on a fully-diluted basis; (iii) issued or issuable upon the exercise,
conversion,  or exchange  of any  options,  warrants,  or other  convertible  or
exchangeable   Securities;   (iv)   issued  in   connection   with  any  merger,
consolidation,  combination,  acquisition  of  securities,  acquisition  of  any
business or assets, or similar extraordinary  transaction between Issuer and any
Third Party  approved by the board of  directors  of Issuer;  provided  that the
board of  directors  of  Issuer  has  determined  that the  consideration  to be
received by Issuer in connection with any such  transaction is not less than the
fair market value of the  Securities  to be issued in such  transaction;  or (v)
issued to any other  strategic  partner  approved by the board of  directors  of
Issuer;  provided that Issuer has obtained  Investor's  prior written consent to
such  issuance,  which  consent shall not be  unreasonably  withheld or delayed;
provided  further  that not more than an  incidental  portion of such  strategic
partner's business is the ownership, management, or franchising of hotels.

     SECTION 3. Registration Rights. Request for Registration.  On and after the
first  anniversary  of  the  date  first  above  written,  Rights  Holders  (the
"Initiating  Holders")  holding a majority of the then  outstanding  Registrable
Securities (as defined below) may request in a written notice that Issuer file a
registration  statement under the Securities Act (or a similar document pursuant
to any  other  statute  then in  effect  corresponding  to the  Securities  Act)
covering the  registration  of any or all  Registrable  Securities  held by such
Initiating  Holders in the manner specified in such notice;  provided that there
must be included in such registration Registrable Securities with an anticipated
aggregate  offering  price of not less than $250,000.  Following  receipt of any
notice under this Section  3(a)(i),  Issuer shall:  give written  notice of such
request to all other Rights  Holders  within ten Business  Days; and (B) use its
best efforts to cause to be registered  under the Securities Act all Registrable
Securities  that the  Initiating  Holders and such other  Rights  Holders  have,
within ten  Business  Days after  Issuer has given  such  notice,  requested  be
registered in accordance with the manner of disposition specified in such notice
by the Initiating Holders. Without limiting the foregoing, at the request of the
Initiating  Holders,  Issuer  shall take all such  actions  (including,  without
limitation,  filing and maintaining in effect a registration statement under the
Securities Act) as are necessary,  appropriate,  or desirable in order to permit
the Initiating  Holders to dispose of Registrable  Securities held thereby in an
orderly and controlled  manner (so as, among other things,  to not unduly affect
in the  sole  judgment  of the  Initiating  Holders  the  market  price  of such
Registrable  Securities) over such period of time as the Initiating  Holders may
deem  appropriate  pursuant to a publicly  announced  disposition  program.  For
purposes of this Agreement:  (A) "register",  "registered",  and  "registration"
refer  to a  registration  effected  by  preparing  and  filing  a  registration
statement or similar  document in  compliance  with the  Securities  Act and the
declaration  or ordering of  effectiveness  of such  registration  statement  or
document;  and (B)  "Registrable  Securities"  means:  the Shares and the Common
Stock or other Securities issued upon exercise of the Warrants; any other Common
Stock  hereafter  acquired by Investor;  any Common Stock issued as (or issuable
upon  the  conversion  or  exercise  of any  warrant,  right,  option,  or other
convertible  security which is issued as) a dividend or other  distribution with
respect to, in exchange for, or in replacement of, any Securities referred to in
clause (1) or (2) of this definition;  and (4) any Common Stock issued by way of
a stock split of any  Securities  referred to in clause (1), (2), or (3) of this
definition.  For purposes of this Agreement,  any Registrable  Securities  shall
cease to be Registrable  Securities when: (A) a registration  statement covering
such  Registrable  Securities has been declared  effective and such  Registrable
Securities  have  been  disposed  of  pursuant  to such  effective  registration
statement; (B) such Registrable Securities are sold by a person in a transaction
in which the rights under the provisions of this Agreement are not assigned;  or
(C)  such  Registrable  Securities  may be sold  by the  Rights  Holder  thereof
pursuant to Rule 144(k) (or any similar  provision  then in force,  but not Rule
144A) under the Securities Act without registration under the Securities Act.
<PAGE>

     (ii) If the Initiating  Holders intend to have the  Registrable  Securities
distributed  by means of an  underwritten  offering,  Issuer shall  include such
information in the written  notice  referred to in Section  3(a)(i)(A).  In such
event,  the right of any Rights Holder to include its Registrable  Securities in
such registration  shall be conditioned upon such Rights Holder's  participation
in  such  underwritten  offering  and the  inclusion  of  such  Rights  Holder's
Registrable  Securities in the underwritten  offering (unless otherwise mutually
agreed by a majority  in  interest  of the  Initiating  Holders  and such Rights
Holder) to the extent provided below. All Rights Holders proposing to distribute
Registrable  Securities  through such underwritten  offering shall enter into an
underwriting  agreement in customary form with the underwriter or  underwriters.
Such underwriter or underwriters  shall be selected by a majority in interest of
the Initiating Holders and shall be approved by Issuer, which approval shall not
be  unreasonably  withheld;  provided that: (A) all of the  representations  and
warranties  by, and the other  agreements  on the part of, Issuer to and for the
benefit of such  underwriters  shall also be made to and for the benefit of such
Rights Holders; (B) any or all of the conditions precedent to the obligations of
such  underwriters  under  such  underwriting   agreement  shall  be  conditions
precedent to the  obligations of such Rights  Holders;  and (C) no Rights Holder
shall be required to make any  representations  or  warranties  to or agreements
with  Issuer or the  underwriters  other than  representations,  warranties,  or
agreements  regarding such Rights  Holder,  the  Registrable  Securities of such
Rights Holder, and such Rights Holder's intended method of distribution, and any
other  representations  required by law. If any Rights Holder disapproves of the
terms of the  underwriting,  such Rights  Holder may elect to  withdraw  all its
Registrable  Securities by written notice to Issuer,  the managing  underwriter,
and the Initiating Holders.  The securities so withdrawn shall also be withdrawn
from registration.
<PAGE>

     (iii)  Notwithstanding  anything to the contrary  contained herein,  Issuer
shall not be required to effect a  registration  pursuant to this  Section  3(a)
during the period starting with the date of filing by Issuer of, and ending on a
date ninety days  following  the  effective  date of, a  registration  statement
pertaining to a public  offering of  securities  for the account of Issuer or on
behalf  of  the  selling   stockholders  under  any  other  registration  rights
agreement,  which  registration  the Rights  Holders have been  entitled to join
pursuant to Section  3(b);  provided that Issuer shall  actively  employ in good
faith all reasonable efforts to cause such registration statement filed pursuant
to this Section 3(a) to become  effective as soon as possible;  provided further
that Issuer may not delay any  registration  requested  pursuant to this Section
3(a) more than once during any twelve-month period.

     (iv)  Issuer  shall not be  obligated  to effect  and pay for more than two
registrations  pursuant  to this  Section  3(a);  provided  that a  registration
requested  pursuant  to this  Section  3(a)  shall  not be  deemed  to have been
effected for purposes of this  Section  3(a)  unless:  (A) it has been  declared
effective by the  Commission;  (B) it has remained  effective for the period set
forth in Section 3(d)(i);  (C) Rights Holders included in such registration have
not withdrawn  sufficient  shares from such registration such that the remaining
holders requesting registration would not have been able to request registration
under the  provisions of Section  3(a)(i);  and (D) the offering of  Registrable
Securities  pursuant  to such  registration  is not  subject to any stop  order,
injunction, or other order or requirement of the Commission (other than any such
stop order,  injunction,  or other requirement of the Commission prompted by any
act or omission of any Rights Holders).

     (b) Incidental Registration. Subject to Section 3(g), if at any time Issuer
determines to file a registration statement under the Securities Act (other than
a  registration  statement on a Form S-4 or S-8 or filed in  connection  with an
exchange  offer  or an  offering  of  securities  solely  to  Issuer's  existing
stockholders)  on any form  that  would  also  permit  the  registration  of the
Registrable  Securities  and such filing is to be on its behalf and/or on behalf
of selling  holders of its  Securities  for the general  registration  of Common
Stock to be sold for cash, Issuer shall each such time promptly give each Rights
Holder  written  notice of such  determination  setting  forth the date on which
Issuer  proposes  to file such  registration  statement,  which date shall be no
earlier than thirty days from the date of such notice,  and advising each Rights
Holder  of  its  right  to  have   Registrable   Securities   included  in  such
registration.  Upon the written  request of any Rights Holder received by Issuer
no later than twenty days after the date of Issuer's  notice,  Issuer  shall use
its best efforts to cause to be registered  under the  Securities Act all of the
Registrable  Securities  that each such  Rights  Holder has so  requested  to be
registered.  If, in the written opinion of the managing  underwriter (or, in the
case of a  non-underwritten  offering,  in the written  opinion of Issuer),  the
total amount of such securities to be so registered,  including such Registrable
Securities,  will exceed the maximum amount of Issuer's  securities which can be
marketed:  (i) at a price reasonably related to the then current market value of
such securities;  or (ii) without otherwise  materially and adversely  affecting
the entire  offering;  then  Issuer  shall be  entitled  to reduce the number of
shares of Registrable  Securities to not less than one-third of the total number
of shares in such offering;  provided that in any such case the number of shares
of Securities to be  registered on behalf of all other selling  stockholders  is
reduced on a pro rata basis based on the aggregate number of Securities owned by
each selling stockholder at the time of filing the registration statement.  Such
reduction  shall be allocated  among all such Rights  Holders in proportion  (as
nearly as  practicable)  to the amount of Registrable  Securities  owned by each
Rights Holder at the time of filing the registration statement.
<PAGE>

     (c)  Registration  on Form  S-3.  If at any  time  on or  after  the  first
anniversary  of the date  first  above  written:  (A) Rights  Holders  holding a
majority of the then outstanding  Registrable Securities request in writing that
Issuer file a registration  statement on Form S-3 or any successor thereto for a
public  offering of all or any portion of the shares of  Registrable  Securities
held by such requesting  Rights Holders,  the reasonably  anticipated  aggregate
price  to the  public  of which  would  exceed  $250,000;  and (B)  Issuer  is a
registrant  entitled to use Form S-3 or any  successor  thereto to register such
shares;  then Issuer shall use its best efforts to register under the Securities
Act on Form S-3 or any successor thereto, for public sale in accordance with the
method  of  disposition  specified  in such  request,  the  number  of shares of
Registrable Securities specified in such request. Whenever Issuer is required by
this  Section  3(c) to use its  best  efforts  to  effect  the  registration  of
Registrable  Securities,  each of the  procedures and  requirements  of Sections
3(a)(ii) and (iii) (including,  without limitation,  the requirement that Issuer
notify all Rights  Holders from whom a request has not been received and provide
them with the  opportunity to  participate in the offering)  shall apply to such
registration mutatis mutandis.

     (d) Obligations of Issuer.  Whenever  required under Section 3(a) or (c) to
use its best efforts to effect the  registration of any Registrable  Securities,
the Issuer shall, as expeditiously as possible:
<PAGE>

          (i) prepare and file with the Commission a registration statement with
     respect to such  Registrable  Securities  and use its best efforts to cause
     such  registration  statement to become and remain effective for the period
     of the distribution contemplated thereby determined as provided hereafter;

          (ii)  prepare  and  file  with  the  Commission  such  amendments  and
     supplements  to such  registration  statement  and the  prospectus  used in
     connection  therewith as may be necessary to comply with the  provisions of
     the  Securities  Act with  respect to the  disposition  of all  Registrable
     Securities covered by such registration statement;

          (iii)  furnish to the  Rights  Holders  such  numbers of copies of the
     registration  statement and the prospectus included therein (including each
     preliminary  prospectus  and  any  amendments  or  supplements  thereto  in
     conformity  with the  requirements  of the  Securities  Act) and such other
     documents and information as they may reasonably request;

          (iv) use its best  efforts  to  register  or qualify  the  Registrable
     Securities covered by such registration statement under such securities and
     other (i.e., blue sky) laws of such jurisdictions  within the United States
     of  America  and Puerto  Rico as shall be  reasonably  appropriate  for the
     distribution  of the  Registrable  Securities  covered by the  registration
     statement;  provided,  however,  that  Issuer  shall  not  be  required  in
     connection therewith or as a condition thereto to qualify to do business in
     or to file a general  consent to  service  of  process in any  jurisdiction
     wherein it would not but for the  requirements of this Section  3(d)(iv) be
     obligated to do so; and provided  further that Issuer shall not be required
     to qualify such  Registrable  Securities in any  jurisdiction  in which the
     securities  regulatory authority requires that any Rights Holder submit any
     shares  of  its  Registrable  Securities  to  the  terms,  provisions,  and
     restrictions  of any escrow,  lockup,  or similar  agreement for consent to
     sell Registrable  Securities in such jurisdiction unless such Rights Holder
     agrees to do so;

          (v)  promptly  notify  each  Rights  Holder for whom such  Registrable
     Securities is covered by such  registration  statement,  at any time when a
     prospectus   relating  thereto  is  required  to  be  delivered  under  the
     Securities  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 any
     material  fact  required  to be stated  therein  or  necessary  to make the
     statements  therein not misleading in the light of the circumstances  under
     which they were made, and at the request of any such Rights Holder promptly
     prepare and furnish to such Rights Holder a reasonable  number of copies of
     a supplement  to or an amendment of such  prospectus as may be necessary so
     that, as thereafter  delivered to the purchasers of such  securities,  such
     prospectus shall not include an untrue statement of a material fact or omit
     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
     under which they were made;
<PAGE>

          (vi)  furnish,   at  the  request  of  any  Rights  Holder  requesting
     registration of Registrable  Securities pursuant to Section 3(a) or (c), if
     the method of distribution is by means of an underwriting, on the date that
     the shares of Registrable  Securities are delivered to the underwriters for
     sale pursuant to such  registration,  or if such Registrable  Securities is
     not being  sold  through  underwriters,  on the date that the  registration
     statement  with respect to such shares of  Registrable  Securities  becomes
     effective:  (A) a signed opinion, dated such date, of the independent legal
     counsel  (which  counsel  shall be  reasonably  acceptable to a majority in
     interest of the Rights Holders) representing Issuer for the purpose of such
     registration,   addressed  to  the  underwriters,   if  any,  and  if  such
     Registrable Securities is not being sold through underwriters,  then to the
     Rights Holders making such request, as to such matters as such underwriters
     or the Rights  Holders  holding a majority  of the  Registrable  Securities
     included in such  registration,  as the case may be, may reasonably request
     and as would be customary in such a transaction; and (B) letters dated such
     date and the date the  offering  is priced from the  independent  certified
     public accountants of Issuer, addressed to the underwriters, if any, and if
     such Registrable Securities is not being sold through underwriters, then to
     the Rights Holders making such request and, if such  accountants  refuse to
     deliver such letters to such Rights  Holders,  then to Issuer:  (1) stating
     that they are independent  certified public  accountants within the meaning
     of the  Securities  Act and that, in the opinion of such  accountants,  the
     financial  statements and other  financial  data of Issuer  included in the
     registration  statement or the  prospectus,  or any amendment or supplement
     thereto,  comply as to form in all material  respects  with the  applicable
     accounting  requirements of the Securities Act; and (2) covering such other
     financial matters  (including  information as to the period ending not more
     than five  Business Days prior to the date of such letters) with respect to
     the  registration  in respect of which such  letter is being  given as such
     underwriters  or the Rights Holders  holding a majority of the  Registrable
     Securities  included  in  such  registration,  as  the  case  may  be,  may
     reasonably request and as would be customary in such a transaction;

          (vii)  enter into  customary  agreements  (including  if the method of
     distribution is by means of an underwriting,  an underwriting  agreement in
     customary  form) and take such other actions as are reasonably  required in
     order  to  expedite  or  facilitate  the  disposition  of  the  Registrable
     Securities to be so included in the registration statement;

          (viii)  otherwise  use its best efforts to comply with all  applicable
     rules and regulations of the Commission, and make available to its security
     holders,  as soon as  reasonably  practicable,  but not later than  fifteen
     months after the effective date of the registration  statement, an earnings
     statement  covering the period of at least twelve months beginning with the
     first full month after the effective date of such  registration  statement,
     which earnings  statements shall satisfy the provisions of Section 11(a) of
     the Securities Act; and
<PAGE>

          (ix) use its best efforts to list the Registrable  Securities  covered
     by such  registration  statement with any securities  exchange on which the
     Common Stock is then listed.

For  purposes  of  Section  3(d)(i)  and  (ii) the  period  of  distribution  of
Registrable  Securities in a firm commitment  underwritten public offering shall
be deemed to extend until each underwriter has completed the distribution of all
securities  purchased  by it,  and the  period of  distribution  of  Registrable
Securities in any other registration shall be deemed to extend until the earlier
of the sale of all Registrable  Securities  covered thereby and six months after
the effective date thereof.

          (e) Rights Holder  Information.  It shall be a condition  precedent to
     the  obligations  of Issuer to take any  action  pursuant  hereto  that the
     Rights  Holders  shall  furnish  to  Issuer  such   information   regarding
     themselves,  the  Registrable  Securities  held by them,  and the  intended
     method of disposition of such  securities as Issuer may reasonably  request
     and as shall be  required  in  connection  with the  action  to be taken by
     Issuer.

          (f) Expenses of Registration. All expenses incurred in connection with
     each  registration  pursuant  to Sections  3(a),  (b),  and (c),  excluding
     underwriters' discounts and commissions, but including, without limitation,
     all  registration,   filing,  and  qualification   fees;  word  processing,
     duplicating,  printers', and accounting fees (including the expenses of any
     special  audits or "cold comfort"  letters  required by or incident to such
     performance and compliance); fees of the National Association of Securities
     Dealers,  Inc. or listing fees;  messenger and delivery expenses;  all fees
     and expenses of complying  with state  securities or blue sky laws; and the
     reasonable fees and  disbursements of counsel for Issuer;  shall be paid by
     Issuer. The Rights Holders shall bear and pay the fees and disbursements of
     their  respective  counsel  and  underwriting   commissions  and  discounts
     applicable to securities  offered for their account in connection  with any
     registrations, filings, and qualifications made pursuant hereto.

          (g)  Underwriting  Requirements.  In connection with any  underwritten
     offering, Issuer shall not be required under Section 3(b) to include shares
     of Registrable  Securities in such underwritten  offering unless the Rights
     Holders of such shares of  Registrable  Securities  accept the terms of the
     underwriting of such offering that have been reasonably agreed upon between
     Issuer and the underwriters selected by Issuer.

          (h)  Rule  144  and  Rule  144A  Information.  With a view  to  making
     available the benefits of certain rules and  regulations  of the Commission
     which may at any time permit the sale of the Registrable  Securities to the
     public without  registration:  (i) at all times after ninety days after any
     registration  statement  covering a public offering of securities of Issuer
     under the Securities Act has become  effective,  Issuer shall: (A) make and
     keep  public  information  available,  as those  terms are  understood  and
     defined in Rule 144 under the Securities  Act; (B) file with the Commission
     in a timely manner all reports and other documents required of Issuer under
     the  Securities  Act and the  Exchange  Act; and (C) furnish to each Rights
     Holder of Registrable Securities forthwith upon request a written statement
     by Issuer as to its compliance with the reporting requirements of such Rule
     144 and of the  Securities  Act and the  Exchange  Act,  a copy of the most
     recent  annual or quarterly  report of Issuer,  and such other  reports and
     documents so filed by Issuer as such Rights Holder may  reasonably  request
     in availing  itself of any rule or  regulation of the  Commission  allowing
     such Rights Holder to sell any Registrable Securities without registration;
     and (ii) at all times  during  which the Issuer is  neither  subject to the
     reporting  requirements  of Section 13 or 15(d) of the  Exchange  Act,  nor
     exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act, it
     will provide,  upon the written request of any holder of Shares,  Warrants,
     or Registrable Securities,  in written form (as promptly as practicable and
     in any event within fifteen  business days),  to any  prospective  buyer of
     such stock  designated  by such holder,  all  information  required by Rule
     144A(d)(4)(i)  of the General  Regulations  promulgated  by the  Commission
     under the Securities Act.
<PAGE>

          (i)  Indemnification.  In the  event  any  Registrable  Securities  is
     included in a registration statement hereunder:

               (i) Issuer shall  indemnify and hold harmless each Rights Holder,
          such  Rights  Holder's   directors  and  officers,   each  person  who
          participates in the offering of such Registrable Securities, including
          underwriters (as defined in the Securities  Act), and each person,  if
          any, who controls  such Rights Holder or  participating  person within
          the  meaning  of the  Securities  Act,  against  any  losses,  claims,
          damages,  or liabilities,  joint or several,  to which they may become
          subject under the Securities Act or otherwise, insofar as such losses,
          claims,  damages,  or liabilities (or proceedings in respect  thereof)
          arise out of or are based on any untrue or alleged untrue statement of
          any  material  fact  contained in such  registration  statement on the
          effective date thereof  (including any prospectus filed under Rule 424
          under the Securities Act or any amendments or supplements  thereto) or
          arise out of or are based upon the  omission  or alleged  omission  to
          state  therein  a  material  fact  required  to be stated  therein  or
          necessary to make the  statements  therein not  misleading,  and shall
          reimburse each such Rights Holder,  such Rights Holder's directors and
          officers,  such  participating  person or  controlling  person for any
          legal or other expenses reasonably incurred by them in connection with
          investigating or defending any such loss, claim, damage, liability, or
          action;  provided,  however, that the indemnity agreement contained in
          this Section  3(i)(i) shall not apply to amounts paid in settlement of
          any such loss, claim, damage,  liability, or action if such settlement
          is effected  without the consent of Issuer (which consent shall not be
          unreasonably  withheld);  provided,  further, that Issuer shall not be
          liable to any  Rights  Holder,  such  Rights  Holder's  directors  and
          officers,  participating person or controlling person in any such case
          for any such loss, claim, damage,  liability,  or action to the extent
          that it arises out of or is based upon an untrue  statement or alleged
          untrue  statement or omission or alleged  omission  made in connection
          with  such  registration  statement,   preliminary  prospectus,  final
          prospectus, or amendments or supplements thereto, in reliance upon and
          in conformity with written information  furnished expressly for use in
          connection  with such  registration  by any such Rights  Holder,  such
          Rights  Holder's  directors  and  officers,  participating  person  or
          controlling  person.  Such  indemnity  shall  remain in full force and
          effect  regardless  of any  investigation  made by or on behalf of any
          such Rights  Holder,  such Rights  Holder's  directors  and  officers,
          participating  person or  controlling  person,  and shall  survive the
          transfer of such securities by such Rights Holder.
<PAGE>

               (ii) Each Rights Holder  requesting or joining in a  registration
          severally  and not jointly shall  indemnify and hold harmless  Issuer,
          each of its directors and officers,  each person, if any, who controls
          Issuer  within the meaning of the  Securities  Act, and each agent and
          any  underwriter for Issuer (within the meaning of the Securities Act)
          against any losses, claims, damages, or liabilities, joint or several,
          to which Issuer or any such  director,  officer,  controlling  person,
          agent, or underwriter may become subject,  under the Securities Act or
          otherwise, insofar as such losses, claims, damages, or liabilities (or
          proceedings  in  respect  thereof)  arise out of or are based upon any
          untrue  statement or alleged  untrue  statement  of any material  fact
          contained in such registration statement on the effective date thereof
          (including  any  prospectus  filed under Rule 424 under the Securities
          Act or any amendments or  supplements  thereto) or arise out of or are
          based  upon the  omission  or  alleged  omission  to state  therein  a
          material fact  required to be stated  therein or necessary to make the
          statements  therein not  misleading,  in each case to the extent,  but
          only to the  extent,  that such  untrue  statement  or alleged  untrue
          statement   or  omission  or  alleged   omission   was  made  in  such
          registration statement, preliminary or final prospectus, or amendments
          or  supplements  thereto,  in  reliance  upon and in  conformity  with
          written  information  furnished by or on behalf of such Rights  Holder
          expressly for use in connection with such registration;  and each such
          Rights Holder shall  reimburse any legal or other expenses  reasonably
          incurred by Issuer or any such director, officer,  controlling person,
          agent,  or  underwriter  (but not in excess of  expenses  incurred  in
          respect  of one  counsel  for all of them  unless  there is an  actual
          conflict  of  interest   between  any   indemnified   parties,   which
          indemnified  parties  may  be  represented  by  separate  counsel)  in
          connection  with  investigating  or  defending  any such loss,  claim,
          damage,  liability, or action;  provided,  however, that the indemnity
          agreement  contained  in this  Section  3(i)(ii)  shall  not  apply to
          amounts paid in settlement of any such loss, claim, damage, liability,
          or action if such  settlement is effected  without the consent of such
          Rights Holder (which consent shall not be unreasonably withheld);  and
          provided,  further, that the liability of each Rights Holder hereunder
          shall be limited to the  proportion of any such loss,  claim,  damage,
          liability,  or expense which is equal to the  proportion  that the net
          proceeds  from the sale of the shares sold by such Rights Holder under
          such  registration  statement bears to the total net proceeds from the
          sale of all securities sold thereunder, but not in any event to exceed
          the net  proceeds  received  by such  Rights  Holder  from the sale of
          Registrable Securities covered by such registration statement.
<PAGE>

               (iii) Promptly  after receipt by an indemnified  party under this
          Section  3(i)  of  notice  of the  commencement  of any  action,  such
          indemnified  party shall,  if a claim in respect thereof is to be made
          against any  indemnifying  party under this Section  3(i),  notify the
          indemnifying  party in writing  of the  commencement  thereof  and the
          indemnifying  party shall have the right to  participate in and assume
          the defense thereof with counsel  selected by the  indemnifying  party
          and  reasonably  satisfactory  to  the  indemnified  party;  provided,
          however,  that an indemnified party shall have the right to retain its
          own  counsel,  with all fees and  expenses  thereof to be paid by such
          indemnified  party,  and  to  be  apprised  of  all  progress  in  any
          proceeding  the defense of which has been assumed by the  indemnifying
          party.  The failure to notify an  indemnifying  party  promptly of the
          commencement of any such action,  if and to the extent  prejudicial to
          its ability to defend such action,  shall  relieve  such  indemnifying
          party of any  liability  to the  indemnified  party under this Section
          3(i),  but the omission so to notify the  indemnifying  party will not
          relieve it of any liability that it may have to any indemnified  party
          otherwise than under this Section 3(i).

               (iv) To the extent any  indemnification  by an indemnifying party
          is prohibited or limited by law, the  indemnifying  party,  in lieu of
          indemnifying  such indemnified  party,  shall contribute to the amount
          paid or payable by such indemnified  party as a result of such losses,
          claims,  damages,  or liabilities in such proportion as is appropriate
          to  reflect  the  relative  fault  of  the   indemnifying   party  and
          indemnified  party in connection  with the actions  which  resulted in
          such losses,  claims,  damages,  or liabilities,  as well as any other
          relevant  equitable   considerations.   The  relative  fault  of  such
          indemnifying  party  and  indemnified  party  shall be  determined  by
          reference  to,  among other  things,  whether any action in  question,
          including any untrue or alleged  untrue  statement of material fact or
          omission or alleged  omission to state a material  fact, has been made
          by, or relates to information  supplied by, such indemnifying party or
          indemnified party, and the parties' relative intent, knowledge, access
          to information, and opportunity to correct or prevent such action. The
          amount paid or payable by a party as a result of the  losses,  claims,
          damages,  or liabilities  referred to above shall be deemed to include
          any legal or other fees or expenses  reasonably incurred by such party
          in connection with any investigation or proceeding. The parties hereto
          agree that it would not be just and equitable if contribution pursuant
          to this Section  3(i)(iv) were determined by pro rata allocation or by
          any other  method of  allocation  which  does not take  account of the
          equitable  considerations  referred  to in the  immediately  preceding
          sentence. No person guilty of fraudulent misrepresentation (within the
          meaning of Section 11(f) of the  Securities  Act) shall be entitled to
          contribution  from any person  who was not  guilty of such  fraudulent
          misrepresentation.

          (j)  Lockup.   Each  Rights  Holder  shall,  in  connection  with  any
     registration  of  Issuer's  securities,  upon the  request of Issuer or the
     underwriters  managing any  underwritten  offering of Issuer's  securities,
     agree in writing not to effect any sale,  disposition,  or  distribution of
     any Registrable  Securities  (other than that included in the registration)
     without the prior written  consent of Issuer or such  underwriters,  as the
     case may be,  for such  period of time not to exceed  ninety  days from the
     effective  date of such  registration  as  Issuer or the  underwriters  may
     specify;  provided,  however,  that all executive officers and directors of
     Issuer and all of the  significant  stockholders of Issuer also have agreed
     not to effect any sale, disposition, or distribution of any Securities held
     thereby  pursuant to any registration  rights granted by Issuer,  under the
     circumstances and pursuant to the terms set forth in this Section 3(j).
<PAGE>

          (k) Assignment of Registration  Rights.  Each Rights Holder may assign
     its registration rights (and, in connection  therewith,  shall delegate its
     related obligations)  hereunder with respect to any Registrable  Securities
     to any transferee of such  Registrable  Securities;  provided that: (i) the
     transferring  Rights Holder shall  promptly give Issuer  written  notice of
     such  assignment   stating  the  name  and  address  of  the  assignee  and
     identifying  the Securities with respect to which the  registration  rights
     hereunder were assigned;  (ii) such assignee  agrees in writing to be bound
     as a  Rights  Holder  by the  provisions  of  this  Section  3;  and  (iii)
     immediately  following  such  assignment  the further  disposition  of such
     Securities by such assignee is restricted  under the Securities Act. Except
     as set forth in this Section  3(k), no transfer of  Registrable  Securities
     shall cause such Registrable Securities to lose such status.

          (l)  Limits  on Other  Registration  Rights.  From and  after the date
     hereof,  Issuer shall not,  without the prior written consent of the Rights
     Holders holding a majority of the then outstanding  Registrable Securities,
     enter  into any  agreement  with any  holder or  prospective  holder of any
     Securities  which agreement would allow such holder or prospective  holder:
     (i) for a period  of two  years  from  the date  hereof,  to  include  such
     Securities  in any  registration  filed  pursuant  to Section  3(a) or (c),
     unless,  under  the terms of such  agreement,  such  holder or  prospective
     holder may include such  Securities  in any such  registration  only to the
     extent that the inclusion of such Securities would not reduce the amount of
     the Registrable Securities included in such registration; or (ii) to make a
     demand registration which could result in such registration statement being
     declared   effective  prior  to  the  ninetieth  day  after  the  one  year
     anniversary of the date hereof; and no Person currently has any such rights
     pursuant to the certificate of incorporation  (including any certificate of
     designations  thereto) of Issuer or any effective  contract to which Issuer
     is a party or otherwise,  other than as expressly described in Section 5(x)
     of the Disclosure Schedule.

     SECTION 4. Information  Rights.  (a) Reporting  Requirements.  Issuer shall
deliver to each Rights Holder: (i) as soon as available, and in any event within
thirty days after the end of each month,  copies of the balance  sheet of Issuer
as at, and the related statements of income,  retained earnings,  and changes in
cash  flow of  Issuer  for  the  preceding  month,  in each  case,  prepared  in
accordance  with  United  States  generally   accepted   accounting   principles
consistently  applied,  and certified by the chief  executive  officer and chief
financial officer of Issuer; (ii) as soon as available,  and in any event within
forty-five days after the end of each of the first three quarters of each fiscal
year, copies of the balance sheet of Issuer as at, and the related statements of
income,  retained  earnings,  and  changes in cash flow of Issuer for the period
commencing at the end of the previous fiscal year and ending at, the end of such
quarter,  in each case,  prepared in  accordance  with United  States  generally
accepted accounting principles  consistently applied, and certified by the chief
executive  officer  and chief  financial  officer  of  Issuer;  (iii) as soon as
available,  and in any event  within  ninety  days after the end of each  fiscal
year,  copies of the audited  balance  sheet of Issuer as at the end of, and the
related audited statements of income,  retained earnings,  stockholders' equity,
and changes in financial position of Issuer for, such fiscal year, in each case,
prepared  in  accordance  with  United  States  generally  accepted   accounting
principles  consistently applied,  together with all related notes and schedules
thereto  and  accompanied  by  the  report  thereon  of the  independent  public
accountants of Issuer; (iv) as soon as available, and in any event within thirty
days prior to the end of each fiscal year,  copies of the annual  business  plan
and the budget for the next fiscal  year,  and, as soon as  prepared,  any other
budgets,  revised  budgets or business  plans  prepared by Issuer,  in each case
certified by the highest ranking executive officer of Issuer; (v) promptly after
any report,  notice,  or other  document is filed by Issuer with, or received by
Issuer from, any Governmental Authority, copies of such report, notice, or other
document,  which  report,  notice or  document  relates  to a matter  that could
reasonably  be expected to have a Material  Adverse  Effect;  and (vi)  promptly
after any request  therefor,  such other  information  with  respect to Issuer's
business, operations, assets, properties,  condition, and goodwill, financial or
otherwise, as any Rights Holder may from time to time reasonably request.
<PAGE>

     (b) Books and Records.  Issuer  shall  maintain at its  principal  place of
business in the United  States of America true and complete  records and ledgers
and other books of account  prepared in accordance with United States  generally
accepted  accounting  principles  consistently  applied  and  complying  in  all
respects with all applicable Laws.

     (c) Access to Information. Upon reasonable notice, Issuer shall afford each
Rights Holder and their respective  Representatives  reasonable  access,  during
normal business hours, to the executive  officers of Issuer, and to the offices,
properties, and other facilities, and the books and records of Issuer (and, upon
any Rights Holder's request,  provide to such Rights Holder copies of such books
and records).

     SECTION 5. Compliance  With Laws,  Etc. Issuer shall,  and shall cause each
Subsidiary  thereof to, comply in all material respects with all applicable Laws
and Governmental Orders.

     SECTION 6. Miscellaneous. The terms and provisions set forth in Sections 16
and 17 of the  Subscription  Agreement  are  incorporated  in this  Agreement by
reference and made a part hereof mutatis mutandis.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<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:STOCKHOLDERS' AGREEMENT

                  STOCKHOLDERS'  AGREEMENT,  dated  as  of  June  __,  2001  (as
hereafter amended,  supplemented,  or otherwise modified from time to time, this
"Agreement"), between GRILL CONCEPTS, INC., a corporation organized and existing
under the laws of the State of Delaware ("Issuer");  STARWOOD HOTELS AND RESORTS
WORLDWIDE,  INC., a  corporation  organized  and existing  under the laws of the
State of  Maryland  ("Investor");  and THE  STOCKHOLDERS  OF  ISSUER  LISTED  IN
SCHEDULE I HERETO (the "Stockholders");

                              W I T N E S S E T H:

                  WHEREAS,  pursuant to the subscription agreement,  dated as of
May 16, 2001 (the "Subscription Agreement"), between Issuer and Investor, Issuer
issued to Investor 666,667 shares (the "Shares") of common stock of Issuer,  par
value $0.00004 per share (the "Common Stock"),  and warrants to purchase 666,667
shares of Common Stock (the "Initial Warrants");

                  WHEREAS,  pursuant to the development  agreement,  dated as of
June __, 2001 (the "Development Agreement"), between Issuer and Investor, Issuer
has agreed to issue to Investor additional warrants to purchase shares of Common
Stock based on: (i) certain development thresholds (the "Development  Warrants")
and (ii) certain  incentive  thresholds (the  "Incentive  Warrants" and together
with the Initial Warrants and the Development Warrants, the "Warrants"); and

                  WHEREAS, it is a condition precedent to Investor's willingness
to consummate the transactions  contemplated by the  Subscription  Agreement and
the Development  Agreement that Issuer and each Stockholder  shall have executed
and delivered this Agreement;

                  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 the
Subscription Agreement.

                  SECTION 2. Board of Directors Representation.  Issuer and each
Stockholder (whether in its capacity as a stockholder,  director,  or officer of
Issuer or otherwise) shall 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, that may be necessary,  appropriate,  or desirable  (including,  without
limitation,  in the case of each Stockholder:  (x) by attending  stockholder and
board of  directors  meetings in person or by proxy for  purposes of obtaining a
quorum at such meetings, and executing written consents in lieu of meetings; and
(y) by voting at every annual or special  meeting of the  stockholders of Issuer
and at  every  continuation  or  adjournment  thereof,  and on every  action  or
approval by written  consent of the  stockholders  of Issuer in lieu of any such
meeting, all voting Securities then owned or controlled, directly or indirectly,
thereby)  in order to  ensure  that,  so long as  Investor  holds,  directly  or
indirectly  by an Affiliate,  not fewer than 333,333  shares of Common Stock (as
adjusted for stock splits, stock dividends, recapitalizations, and the like):
<PAGE>

                           (i)      not fewer than one nominee of Investor is at
         all times duly elected or appointed as a director of Issuer;

                           (ii)  if  the   aggregate   number  of  GCI   Concept
         Facilities (as defined in the Development  Agreement) equals or exceeds
         ten,  not fewer than two  nominees  of  Investor  are at all times duly
         elected or appointed as directors of Issuer;

                           (iii)  if  the  number  of  individuals  Investor  is
         entitled  pursuant  to this  Section  2(a) to  nominate to the board of
         directors of Issuer is one, the number of  individuals  comprising  the
         entire board of directors of Issuer shall not exceed seven;

                           (iv)  if  the  number  of  individuals   Investor  is
         entitled  pursuant  to this  Section  2(a) to  nominate to the board of
         directors of Issuer is two, the number of  individuals  comprising  the
         entire board of directors of Issuer shall not exceed eight; and

                           (v) for a period of no less than three years,  unless
         Robert Spivak is physically  unable to perform under the  conditions of
         his  current  Employment   Agreement  as  provided  in  the  Disclosure
         Schedule,  no new  employment  agreement will be entered into by Issuer
         with the chief executive officer of Issuer; and no employment agreement
         with the chief executive officer of Issuer will be unreasonably amended
         or otherwise modified during such three-year period.

     (b)  Concurrently  with the execution of this Agreement,  each  Stockholder
shall  deliver  to  Investor a proxy in the form  attached  hereto as Exhibit A,
which proxy shall be  irrevocable  to the fullest  extent  permitted  by law and
shall state the total number of shares of capital  stock of Issuer  beneficially
owned by such Stockholder.

     SECTION 3.  Stockholder  Transfer  Restrictions.  (a)  During the  one-year
period commencing on the Closing Date and ending  immediately prior to the first
anniversary of the Closing Date,  neither  Investor nor any of the  Stockholders
shall Transfer,  or take any action which could reasonably be expected to result
in any Transfer of, any Securities held thereby.

                                       2
<PAGE>

                  (b)  Without  limiting  the  applicability  of the  foregoing,
neither  Investor nor any Stockholder  shall Transfer,  or take any action which
could  reasonably be expected to result in any Transfer of, any Securities  held
thereby,  except in compliance with all applicable securities Laws and the other
terms and conditions of this Agreement.

                  (c) Notwithstanding anything to the contrary contained herein,
Investor and any Stockholder may at any time Transfer any or all Securities held
thereby to any Permitted Transferee; provided that, prior to the consummation of
any Transfer to any Permitted  Transferee,  such Permitted Transferee shall: (i)
execute  and  deliver  to Issuer  and each  Stockholder  a  counterpart  to this
Agreement;  and (ii)  deliver  to Issuer  and each  Stockholder  an  opinion  of
counsel, in form and substance reasonably  satisfactory to Issuer, to the effect
that the  agreements  executed and  delivered by such  Permitted  Transferee  in
accordance  with the  immediately  preceding  clause (i) are legal,  valid,  and
binding  obligations  of such  Permitted  Transferee,  enforceable  against such
Permitted Transferee in accordance with their terms.

                  SECTION 4. Right to Participate in Certain Dispositions. If at
any time prior to the third  anniversary  of the date first  above  written  and
subject  to any  applicable  restriction  in  Section  3, any  Stockholder  (for
purposes of this  section,  the "Selling  Holder")  wishes to sell for cash more
than 50,000  shares  (which  number  shall be adjusted for stock  splits,  stock
dividends,  recapitalizations  and the like) held  thereby to a Third Party in a
bona fide,  fully financed  transaction  the terms of which have been negotiated
directly  between the Selling Holder (or its agent) and one or more  prospective
purchasers (or its/their agent), rather than through an open-market  transaction
with an unidentified  purchaser executed over a securities exchange or quotation
service (for purposes of this section, the "Proposed Transaction"),  the Selling
Holder  shall give  Investor and each  transferee  of Investor of not fewer than
100,000  shares  (which  number  shall  be  adjusted  for  stock  splits,  stock
dividends,  recapitalizations  and the  like)  of  Common  Stock  or  Securities
convertible  into or  exercisable  or  exchangeable  for not fewer than  100,000
shares  (which  number  shall be adjusted  for stock  splits,  stock  dividends,
recapitalizations  and the like) of Common Stock  (together with  Investor,  the
"Rights  Holders")  written  notice  thereof (for  purposes of this  section,  a
"Tag-Along  Notice")  not  fewer  than  forty-five  days  prior to the date (for
purposes of this section, the "Sale Date") on which the Selling Holder wishes to
consummate the Proposed  Transaction;  provided that Michael Weinstock shall not
be  subject  to this  Section 4 from the first  date as of which he is neither a
member of the board of  directors  of Issuer  nor an  employee  of  Issuer.  The
Tag-Along  Notice  shall  describe  in  reasonable  detail:  (i)  the  class  of
Securities,  and the number of shares or units or the face  amount,  as the case
may be, of such  Securities,  the Selling Holder wishes to sell (for purposes of
this section, the "Tag-Along  Securities");  and (ii) the price per share, unit,
or face amount,  as the case may be, at which,  and all other material terms and
conditions  (including  the expected Sale Date) upon which,  the Selling  Holder
wishes to sell the Tag-Along  Securities.  The Tag-Along Notice shall constitute
an offer by the  Selling  Holder to  permit  each  Rights  Holder to sell in the
Proposed Transaction,  upon the terms and subject to the conditions set forth in
the Tag-Along  Notice,  the number of shares or units or the face amount, as the
case may be, of Securities  equal to the product of: (i) the aggregate number of
shares or units or the aggregate  face amount,  as the case may be, of Tag-Along
Securities proposed to be sold in the Proposed  Transaction;  multiplied by (ii)
the  quotient  of: (A) the number of Fully  Diluted  Shares  held by such Rights
Holder as of the date of the Tag-Along  Notice;  divided by (B) the total number
of Fully Diluted Shares outstanding as of the date of the Tag-Along Notice.

                                       3
<PAGE>

     (b) During the fifteen-day period immediately  following its receipt of the
Tag-Along  Notice (for  purposes of this  section,  the "Notice  Period"),  each
Rights Holder may accept the offer made thereby,  in whole or in part, by giving
the Selling Holder  written notice of acceptance  (for purposes of this section,
an "Acceptance Notice"),  which notice shall state the number of shares or units
or the face amount,  as the case may be, of Securities  which such Rights Holder
wishes to sell in the Proposed Transaction, and delivering to the Selling Holder
in trust for the benefit of such Rights Holder: (i) certificates  evidencing the
Securities  which such Rights Holder wishes to sell in the Proposed  Transaction
(for purposes of this section, the "Participating Securities"), duly endorsed in
blank or  accompanied  by written  instruments  of transfer  in form  reasonably
satisfactory to the Selling Holder duly executed by such Rights Holder;  (ii) an
instrument of assignment  assigning such Rights  Holder's  rights and delegating
its obligations hereunder in respect of the Participating Securities;  and (iii)
a special  irrevocable  power-of-attorney  authorizing  the Selling  Holder,  on
behalf of such Rights  Holder,  to sell the  Participating  Securities  upon the
terms and  subject  to the  conditions  set forth in the  Tag-Along  Notice.  An
Acceptance  Notice  shall  constitute  an  irrevocable  agreement by such Rights
Holder to sell the number of shares or units or the face amount, as the case may
be, of Securities  with respect to which such notice was given, at the price and
upon the other terms and subject to the  conditions  set forth in the  Tag-Along
Notice.  Notwithstanding  the  delivery  of an  Acceptance  Notice by any Rights
Holder,  the Selling Holder may revoke its offer  pursuant to the  corresponding
Tag-Along Notice at any time prior to consummation of the Proposed  Transaction;
provided  that the  Selling  Holder  shall not  thereafter:  (i) sell any of the
Tag-Along  Securities with respect to which it gave such Tag-Along Notice unless
it again complies with the  requirements of Sections 4(a), (b), and (c); or (ii)
deliver another Tag-Along Notice for a period of ninety days after the effective
date of such revocation.

     (c) The Selling  Holder shall  consummate the Proposed  Transaction  within
sixty days after the  expiration  of the Notice  Period.  Immediately  after the
closing of the Proposed  Transaction  the Selling  Holder shall  deliver to each
Rights  Holder,  by wire  transfer  of  immediately  available  fund to the bank
account or accounts  specified in the Acceptance  Notice, the purchase price for
the Participating Securities, if any, sold thereby.

     (d) During the ninety-day  period  immediately  following the expiration of
the Notice Period,  the Selling  Holder may consummate the Proposed  Transaction
without the  participation of any particular Rights Holder if such Rights Holder
did not timely deliver an Acceptance Notice in accordance  herewith or otherwise
timely comply with the requirements hereof, upon terms and subject to conditions
no less favorable to the Third Party purchaser than the terms and conditions set
forth in the Tag-Along Notice. If the Proposed Transaction  contemplated by such
Tag-Along  Notice is not  consummated  within  such  ninety-day  period,  or the
Selling Holder proposes to consummate such  transaction upon terms or subject to
conditions  more  favorable  to the  Selling  Holder than those set forth in the
Tag-Along Notice,  the Selling Holder may not consummate such transaction unless
it again complies with the  requirements of Sections 4(a), (b), and (c), and the
Selling Holder shall  immediately  return to each Rights Holder all certificates
evidencing the unsold Participating Securities that such Rights Holder delivered
for sale pursuant to this Section 4, and the related  instruments  of assignment
and power-of-attorney.

                                       4
<PAGE>

     SECTION 5.  Notice of Certain  Developments.  If Issuer or any  Stockholder
receives  from any Third  Party any  offer,  proposal,  or other  indication  of
interest  (a  "Transaction  Proposal")  relating  to: (i) any  issuance or other
Transfer  of shares of Common  Stock or any other  Securities;  (ii) any merger,
consolidation,  or other  business  combination  with or into Issuer;  (iii) any
acquisition of all or any substantial  portion of the assets of Issuer;  or (iv)
any other extraordinary  business transaction involving or otherwise relating to
Issuer; Issuer or such Stockholder, as the case may be, shall promptly give each
Rights Holder written notice of its receipt of such Transaction Proposal,  which
notice shall describe in reasonable  detail: (A) the identity of the Third Party
making such Transaction  Proposal;  and (B) all material terms and conditions of
such Transaction Proposal.

     SECTION 6. Improper  Transfer.  Any attempt by any  Stockholder to make any
Transfer other than in accordance  with this  Agreement  shall be null and void,
and  neither  Issuer nor any  transfer  agent  thereof  shall give any effect in
Issuer's share records to such attempted Transfer.

     SECTION  7.  Certain  Interests.  Except  as  described  in the  Disclosure
Schedule,  neither Issuer nor any Subsidiary shall knowingly cause or permit any
stockholder,  director,  officer,  employee  of  Issuer  or any  Subsidiary,  or
relative or spouse (or  relative  of such  spouse)  who  resides  with,  or is a
dependent  of, any such  stockholder,  director,  officer,  or employee,  or any
Affiliate  of any such  Person:  (i) to have 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) to own,  directly or indirectly,  in whole or in part, or to have 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) to have  outstanding at any time any  Indebtedness to
Issuer or any  Subsidiary.  Neither  Issuer nor any Subsidiary  shall  knowingly
undertake or assume any liability or any other  obligation of any kind,  nature,
or description whatsoever to or on behalf of any stockholder, director, officer,
or employee of Issuer or any Subsidiary,  to any relative or spouse (or relative
of such spouse) who resides with,  or is a dependent  of, any such  stockholder,
director,  officer, or 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 any  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).

                                       5
<PAGE>

     SECTION 8. Miscellaneous. The terms and provisions set forth in Sections 16
and 17 of the  Subscription  Agreement  are  incorporated  in this  Agreement by
reference and made a part hereof mutatis mutandis.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       6
<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:

                                    --------------------------------
                                    ROBERT SPIVAK

                                    --------------------------------
                                    MICHAEL WEINSTOCK

                                    --------------------------------
                                    LEWIS WOLFF

                                       7
<PAGE>

                                    --------------------------------
                                    KEITH WOLFF

                                    WOLFF REVOCABLE TRUST OF 1993

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

                                       8
<PAGE>

                                                                      SCHEDULE I
                                  STOCKHOLDERS

     Name                                    Address
   ---------                               ------------
Robert Spivak                         11661 San Vicente Blvd.
                                      Suite 404
                                      Los Angeles, California 90049

Michael Weinstock                     11661 San Vicente Blvd.
                                      Suite 404
                                      Los Angeles, California 90049

Lewis Wolff                           11828 La Grange Avenue
                                      Los Angeles, California 90025

Keith Wolff                           11828 La Grange Avenue
                                      Los Angeles, California 90025

Wolff Revocable Trust of 1993         11828 La Grange Avenue
                                      Los Angeles, California 90025

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