INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is entered into as of
this _______ day of _____________, 2000, by and among ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇, TRUSTEE OF THE ▇▇▇▇▇ REVOCABLE TRUST OF 1993 (hereinafter collectively
AWolff@) and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, TRUSTEE OF THE
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ LIVING TRUST (hereinafter collectively AWeinstock@) (▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇ are hereinafter collectively referred to as AGuarantors.@) on the
one hand and GRILL CONCEPTS, INC. (AGCI@) and GRILL CONCEPTS, INC., A DELAWARE
CORPORATION, (AGCID@) and THE GRILL ON THE ALLEY, INC. (AGA@) (GCI, GCID AND GA
shall hereinafter collectively be referred to as the ACompanies@) on the other
hand, in light of the following facts and circumstances:
A. The Companies entered into those certain Loan Agreements with ▇▇▇▇▇
Fargo Bank (the ALoan Agreements@) as more fully described on Exhibit AA@
attached hereto and incorporated herein by this reference.
▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ have, as set forth in the Loan Agreements, each
unconditionally guaranteed one of the Companies= loans from ▇▇▇▇▇ Fargo Bank in
the principal amount of Seven Hundred Fifty Thousand Dollars ($750,000) each (a
AGuaranteed Loan@).
C. As a condition of each Guarantors' guaranteeing their respective
Guaranteed Loan, Guarantors have required that the Companies indemnify
Guarantors from and against any and all liability Guarantors may have with
regard to their respective Guaranteed Loans.
NOW THEREFORE, in consideration of the foregoing, and for good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. INDEMNITY. The Companies hereby assume liability for, hereby agree to
pay, protect, defend and save Guarantors harmless from and against, and hereby
indemnify Guarantors from and against any and all liabilities, obligations,
losses, damages, costs and expenses (including, without limitation, attorneys=
fees), causes of action, suits, claims, demands and judgments of any nature or
description whatsoever (collectively, ACosts@) which may at any time be incurred
by them (or either of them), directly or indirectly, in connection with the two
respective Guaranteed Loans. Without limiting the generality of the foregoing,
it is expressly understood that the Companies shall be obligated immediately to
reimburse Guarantors for any and all payments they, or either of them, may make
to ▇▇▇▇▇ Fargo Bank or otherwise in respect of their guarantees of the
Guaranteed Loan. Such payments by Guarantors shall be deemed to be included
within the term ACosts.@ For purposes hereof, such Costs shall be deemed to
include an administrative charge equal to two percent (2%) annually on all other
unreimbursed Cost items so incurred by Guarantors (the AAdministrative Charge@).
Such Costs shall be in addition to the Loan Guarantee payment due Guarantors
from the Companies pursuant to and as defined in that certain letter agreement
between GCI and Guarantors dated July __, 2000, which shall continue until all
obligations hereunder are satisfied in full. To the extent Guarantors pay off
all or any portion of a Guaranteed Loan, Guarantor shall receive in addition to
the above, interest on the sums so paid at the then prevailing ▇▇▇▇▇ Fargo Bank
interest rate being charged to the Companies for the Guaranteed Loan. It is the
intent of the parties in the execution of this Indemnification Agreement and all
other documents and instruments executed in connection herewith, to contract in
strict compliance with applicable usury laws governing the obligations evidenced
or covered by this Indemnification Agreement and such other documents and
instruments. In furtherance thereof, the parties stipulate and agree that none
of the terms and provisions contained in this Indemnification Agreement or in
any other document or instrument executed in connection herewith shall ever be
construed to create a contract for the use, forbearance or detention of money
that requires payment of interest at a rate in excess of the maximum interest
rate permitted to be charged in connection therewith under any applicable usury
laws. Companies shall never be required to pay interest on such obligations at a
rate in excess of the maximum interest rate that may be so lawfully charged, and
the provisions of this paragraph shall control over all of the provisions hereof
and of any other document or instrument executed in connection herewith which
may be in apparent conflict herewith. If any person shall collect monies which
are deemed to constitute interest which would otherwise increase the effective
interest rate on any obligations to a rate in excess of that permitted to be
charged by such applicable laws, all such sums deemed to constitute interest in
excess of such maximum rate shall, at the option of such recipient, be either
credited to the payment of principal of the obligations evidenced or covered by
this Indemnification Agreement and all other documents and instruments executed
in connection herewith, or returned to Companies.
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The liability of the Companies under this Agreement shall be direct and
immediate and not conditional or contingent upon the pursuit of any remedies
against any other person (including, without limitation, other guarantors, if
any). The Companies waive any right to require that an action be brought against
any other person.
2. INDEMNIFICATION PROCEDURES.
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(a) If any action shall be brought against each Guarantor based upon any of
the matters for which said Guarantor is indemnified hereunder, such Guarantor
shall notify the Companies in writing thereof and the Companies shall promptly
assume the defense thereof, including, without limitation, the employment of
counsel acceptable to Guarantor and the negotiation of any settlement; provided,
however, that any failure of Guarantor to notify the Companies of such matter
shall not impair or reduce the obligations of the Companies hereunder. Each
Guarantor shall have the right, at the expense of the Companies (which expense
shall be included in Costs), to employ separate counsel in any such action and
to participate in the defense thereof. In the event the Companies shall fail to
discharge or undertake to defend Guarantor against any claim, loss or liability
for which Guarantors are indemnified hereunder, such Guarantor may, at its sole
option and election, defend or settle such claim, loss or liability. The
liability of the Companies to each Guarantor hereunder shall be conclusively
established by such settlement, provided such settlement is made in good faith,
the amount of such liability to include both the settlement consideration and
the costs and expenses, including, without limitation, attorneys= fees and
disbursements, incurred by such Guarantor in effecting such settlement. In such
event, such settlement consideration, costs and expenses shall be included in
Costs and the Companies shall pay the same as hereinafter provided. A
Guarantor=s good faith in any such settlement shall be conclusively established
if the settlement is made on the advice of independent legal counsel for such
Guarantor.
(b) The Companies shall not, without the prior written consent of
Guarantor: (i) settle or compromise any action, suit, proceeding or claim or
consent to the entry of any judgment that does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to such Guarantor of a
full and complete written release of such Guarantor (in form, scope and
substance satisfactory to such Guarantor in its sole discretion) from all
liability in respect of such action, suit, proceeding or claim and a dismissal
with prejudice of such action, suit, proceeding or claim; or (ii) settle or
compromise any action, suit, proceeding or claim in any manner that may
adversely affect such Guarantor or obligate Guarantor to pay any sum or perform
any obligation as determined by Guarantor in its sole discretion.
(c) All Costs (including, without limitation, any payments made by
Guarantors upon their guarantees of the Guaranteed Loan and the Administrative
Charge) shall be immediately reimbursable to each Guarantor when and as incurred
and, in the event of any litigation, claim or other proceeding, without any
requirement of waiting for the ultimate outcome of such litigation, claim or
other proceeding, and the Companies shall pay to each Guarantor any and all such
Costs within ten (10) days after written notice from such Guarantor itemizing
the amounts thereof incurred to the date of such notice. Nothing contained
herein shall require Guarantors to await legal process of any kind, or to notify
Companies of any claim or demand for payment of all or any portion of a
Guaranteed Loan, but Guarantors may make payment upon a Guaranteed Loan upon the
request of the lender and shall be entitled to immediate reimbursement therefor.
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3. SECURITY/COLLATERAL. The Companies= obligations to Guarantors under this
Agreement will be secured by the collateral as defined in the Security Agreement
executed concurrently herewith and attached hereto as Exhibit AB@.
4. NOTICE. Whenever provision is made in this Agreement for the giving,
service or delivery of any notice, statement or other instrument, notice shall
be in writing and shall be deemed to have been duly given, served and delivered,
either upon personal delivery, or if mailed, proper postage paid by United
States registered or certified mail, addressed to the party entitled to receive
the same at that address as set forth below, or to any other mailing address as
the parties may by written notice designate:
If to ▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ▇▇▇▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Companies: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5. MISCELLANEOUS PROVISIONS.
a. This Agreement shall be binding and deemed effective when executed by
all of the parties.
b. Paragraph headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by this context, everything
contained in each paragraph hereof applies equally to this entire Agreement.
c. Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against any party hereto, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
each of the parties and their counsel and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly accomplish
the purposes and intentions of all parties hereto.
d. Each provision of the Agreement shall be severable from every other
provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
e. This Agreement may be executed in a number of identical counterparts,
each of which shall be deemed an original for all purposes and all of which
constitute, collectively, one agreement.
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f. This Agreement contains the parties' sole and entire agreement and shall
supersede any and all other agreements between them with respect to the subject
matter hereof.
g. The parties acknowledge and agree that neither has made any
representations with respect to the subject matter of this Agreement, or any
representation inducing the execution and delivery of this Agreement, except as
specifically set forth in this Agreement. Each acknowledges it has relied on its
own judgment in entering into this Agreement.
h. The parties further acknowledge that any statements or representations
that may have been made by either of them to the other are void and of no
effect, and that neither has relied on any statements or representations in
connection with its, his or her dealings with the other.
i. No waiver or modification of this Agreement, or of any covenant,
condition, or limit contained in this Agreement, shall be valid unless made in
writing and duly executed by the party to be charged. No evidence of any waiver
or modification shall be offered or received in evidence in any proceeding,
arbitration, or litigation between the parties arising out of or affecting this
Agreement, or the parties' rights or obligations, unless the waiver or
modification is in writing and duly executed.
j. This Agreement shall be deemed to have been made in the State of
California and the validity of this Agreement, and the construction,
interpretation, and enforcement thereof, and the rights of the parties hereto,
shall be determined under, governed by, and construed in accordance with the
laws of the State of California, without regard to principles of conflicts of
law.
k. To the extent permitted by law, the parties to this Agreement agree that
all actions or proceedings arising in connection with this Agreement, shall be
tried and litigated only in the state and federal courts located in the County
of Los Angeles, State of California.
l. The parties acknowledge that documents incidental to this transaction
has been prepared by the law firm of Herzog, Fisher, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, a Law
Corporation (the AFirm@), at the request of the Company to document certain
relationships among the parties. In view of the fact that the Firm has in the
past rendered legal services to and represented and will continue to render
legal services to and represent the Company, ▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇ in
connection with this and other matters, there is a potential for conflicts of
interest. The parties acknowledge that they are aware of such conflicts of
interest and the potential adverse effects to them which may result therefrom,
and, notwithstanding same, hereby reaffirm their request and consent to the
Firm=s preparation of these documents, and waive any potential conflicts of
interest with respect to or against the Firm in connection therewith. Further,
both parties acknowledge that the terms of this transaction and the documents
were negotiated by the parties without the Firm=s participation in same, both
parties being advised by the Firm that independent legal advisors should be
consulted relative to same.
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6. ATTORNEY FEES. In the event of any action hereunder, the prevailing
party shall be entitled to its reasonable attorneys' fees and court costs.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the _________ day of _________________, 2000.
"▇▇▇▇▇"
▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
▇▇▇▇▇ ▇. ▇▇▇▇▇, as Trustee of the ▇▇▇▇▇
Revocable Trust of 1993
"▇▇▇▇▇▇▇▇▇"
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual
______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, as Trustee of the ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇ Living Trust
ACOMPANIES@ GRILL CONCEPTS, INC., a Delaware corporation
By:
Its:
GRILL CONCEPTS, INC.
By:
Its:
THE GRILL ON THE ALLEY, INC.
By:
Its:
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EXHIBIT A
LOAN AGREEMENTS
EXHIBIT B
SECURITY AGREEMENT