EXHIBIT 10.1

 

Option:           

 

GRANITE CITY FOOD & BREWERY LTD.

NONQUALIFIED STOCK OPTION AGREEMENT

PURSUANT TO 1997 STOCK OPTION PLAN

 

This AGREEMENT is dated this          day of                           ,
        , and is entered into by and between Granite City Food & Brewery Ltd., a
Minnesota corporation (the “Company”), and                                     
(the “Optionee”).  Unless otherwise defined herein, certain capitalized terms
shall have the meaning set forth in the Company’s 1997 Stock Option Plan.

 

W I T N E S S E T H :

 

1.                                       Nature of the Option.  This Option does
not constitute an Incentive Stock Option as defined in Section 422 of the Code.

 

2.                                       Grant of Option.  Pursuant to the
provisions of the Plan, the Company has granted to the Optionee on
                                 ,         , subject to the terms and conditions
of the Plan and subject further to the terms and conditions herein set forth,
the right and option to purchase from the Company all or a part of an aggregate
of                  shares of Stock (the “Shares”) at the purchase price of
$        per share, such option to be exercised as hereinafter provided.

 

3.                                       Terms and Conditions.  It is understood
and agreed that the option evidenced hereby is subject to the following terms
and conditions:

 

(a)                                  Expiration Date.  The option shall expire
ten years after the date of grant specified in Section 2.

 

(b)                                 Exercise of Option.  Subject to the other
terms of this Agreement regarding the exercisability of this option, this Option
shall be exercisable                                  , all as more completely
described in Exhibit A; provided, however, that the partial exercise of the
option shall, in no event, be for less than 25% of the number of shares for
which options have been granted to the Optionee, unless such purchase would
entirely exhaust the outstanding options then held by such Optionee.

 

Any exercise shall be accompanied by a written notice to the Company specifying
the number of shares of Stock as to which the option is being exercised. 
Notation of any partial exercise shall be made by the Company on Schedule I
hereto.

 

(c)                                  Payment of Purchase Price Upon Exercise. 
At the time of any exercise, the purchase price of the Shares as to which this
option is exercised shall be paid in cash to the Company, unless the Board shall
permit payment of the purchase price in another manner permitted by Section 7.4
of the Plan.

 

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(d)                                 Transferability.  This option shall not be
transferable other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order.  During the lifetime of the
Optionee, this option shall be exercisable only by the Optionee or by the
Optionee’s guardian or legal representative.

 

(e)                                  No Rights as Shareholder.  The Optionee
shall have no rights as a shareholder of the Company with respect to any shares
of Stock subject to this option prior to the date of issuance to him of a
certificate for such shares.

 

(f)                                    Compliance with Law and Regulations. 
This option and the obligation of the Company to sell and deliver shares
hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may
be required.  The Company shall not be required to issue or deliver any
certificates for shares of Stock prior to (i) the listing of such shares on any
stock exchange on which the Stock may then be listed, and (ii) the completion of
any registration or qualification of such shares under any federal or state law,
or any rule or regulation of any government body which the Company shall, in its
sole discretion, determine to be necessary or advisable.  Moreover, this option
may not be exercised if its exercise or the receipt of shares of Stock pursuant
thereto would be contrary to applicable law.

 

(g)                                 Provision for Payment of Withholding Taxes. 
Optionee understands that, upon exercise of this Option, Optionee will recognize
income for tax purposes in an amount equal to the excess of the then fair market
value of the shares over the exercise price.  The Company may be required to
withhold tax from Optionee’s current compensation with respect to such income;
to the extent that Optionee’s current compensation is insufficient to satisfy
the withholding tax liability, the Company will require the Optionee to make a
cash payment to cover such liability as a condition of exercise of this Option.

 

4.                                       Termination of Relationship for
Misconduct.  If the Board reasonably believes that the Optionee has committed an
act of misconduct, it may suspend the Optionee’s right to exercise this option
pending a determination by the Board.  If the Board determines that the Optionee
has committed an act of embezzlement, fraud, dishonesty, nonpayment of an
obligation owed to the Company, breach of fiduciary duty or deliberate disregard
of the Company’s rules resulting in loss, damage or injury to the Company, or if
the Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair competition
with respect to the Company, or induces any party to breach a contract with the
Company, neither the Optionee nor the Optionee’s estate shall be entitled to
exercise any option whatsoever.  In making such determination, the Board shall
act fairly and shall give the Optionee an opportunity to appear and present
evidence on the Optionee’s behalf at a hearing before the Board.

 

5.                                       Investment Representation.  The Board
may require the Optionee to furnish to the Company, prior to the issuance of any
shares upon the exercise of all or any part of this option, an agreement (in the
form attached hereto as Exhibit B) in which the Optionee represents that the
shares acquired by him upon exercise are being acquired for investment and not
with a view to the sale or distribution thereof.

 

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6.                                       Optionee Bound by Plan.  The Optionee
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
the terms and provisions thereof.

 

7.                                       Notices.  Any notice hereunder to the
Company shall be addressed to it at its principal executive offices, located at
5831 Cedar Lake Road, St. Louis Park, Minnesota 55416, Attention: Chief
Executive Officer; and any notice hereunder to the Optionee shall be addressed
to him at the address set forth below; subject to the right of either party to
designate at any time hereunder in writing some other address.

 

8.                                       Counterparts.  This Agreement may be
executed in two counterparts each of which shall constitute one and the same
instrument.

 

IN WITNESS WHEREOF, Granite City Food & Brewery Ltd. has caused this Agreement
to be executed by its Chief Executive Officer and the Optionee has executed this
Agreement, both as of the day and year first above written.

 

 

 

GRANITE CITY FOOD & BREWERY LTD.

 

 

 

 

 

By:

 

 

 

 

Steven J. Wagenheim

 

 

Chief Executive Officer

 

 

 

 

Optionee (signature)

 

Name and address of Optionee

(type or print):

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

 

OPTION AND VESTING DATA

 

Name of Optionee

:

 

Number of Shares Subject to Option

:

 

Date of Grant

:

 

 

OPTION VESTING SCHEDULE

 

 

 

NO. OF SHARES

DATE

 

EXERCISABLE

 

 

 

 

 

 

 

 

 

 

The above vesting schedule assumes a ongoing relationship with the Company. 
Your rights to exercise the unvested portion of your option will cease upon
termination of relationship with the Company.  Reference is made to the Plan and
to relevant sections of the Agreement between you and the Company for your
rights to exercise the vested portion of your option in the event of termination
of your relationship with the Company during lifetime or upon death.  The above
vesting schedule is in all respects subject to the terms of those documents.

 

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EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

PURCHASER:

 

 

ISSUER

:

Granite City Food & Brewery Ltd.

SECURITY

:

Common Stock

AMOUNT

:

                         Shares

DATE

:

 

 

In connection with the purchase of the common stock (“Securities”) of Granite
City Food & Brewery Ltd. (the “Company”), the undersigned represents to the
Company the following:

 

(a)                                  I am aware of the Company’s business
affairs and financial condition, and have acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities.  I am purchasing the Securities for my own account for investment
purposes only and not with a view to, or for the resale in connection with, any
“distribution” thereof for purposes of the Securities Act of 1933, as amended
(the “Securities Act”).

 

(b)                                 I understand that the Securities have not
been registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of my investment intent as expressed herein.  In this connection, I
understand that, in the view of the Securities and Exchange Commission (the
“SEC”), the statutory basis for such exemption may be unavailable if my
representation was predicated solely upon a present intention to hold the
Securities for the minimum capital gains period specified under tax statutes,
for a deferred sale, for or until an increase or decrease in the market price of
the Securities, or for a period of one year or any other fixed period in the
future.

 

(c)                                  I further understand that the Securities
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from registration is otherwise available.  Moreover,
I understand that the Company is under no obligation to register the
Securities.  In addition, I understand that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel for the Company.

 

(d)                                 I am familiar with the provisions of
Rule 701 and Rule 144, each promulgated under the Securities Act by the SEC,
which, in substance, permit limited public resale of “restricted securities”
acquired, directly or indirectly, from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions.  Rule 701 provides
that if the issuer qualifies under Rule 701 at the time of issuance of the
Securities, such issuance will be exempt from registration under the Securities
Act.  In the event the Company later becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, ninety (90) days thereafter the securities exempt under Rule 701 may be
resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including among other things:  (1) the sale being made through a
broker in an unsolicited “broker’s transaction” or in transactions directly with
a market maker (as said term is defined under the

 

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Securities Exchange Act of 1934, as amended); and, in the case of an affiliate
of the Company, (2) the availability of certain public information about the
Company, and the amount of securities being sold during any three month period
not exceeding the limitations specified in paragraph (e) of Rule 144, if
applicable.  Notwithstanding this paragraph (d), I acknowledge and agree to the
restrictions set forth in paragraph (e) hereof.

 

In the event that the Company does not qualify under Rule 701 at the time of
issuance of the Securities, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires among other
things:  (1) the availability of certain public information about the Company,
(2) the resale occurring not less than one year after the party has purchased,
and made full payment for, within the meaning of Rule 144, the securities to be
sold; and, in the case of an affiliate, or of a non-affiliate who has held the
securities less than two years, (3) the sale being made through a broker in an
unsolicited “broker’s transaction” or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three month period
not exceeding the specified limitations stated therein, if applicable.

 

(e)                                  I further understand that in the event all
of the applicable requirements of Rule 144 or Rule 701 are not satisfied,
registration under the Securities Act, compliance with Regulation A, or some
other registration exemption will be required; and that, notwithstanding the
fact that Rule 144 and Rule 701 are not exclusive, the Staff of the SEC has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rule 144 or Rule 701 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk.

 

 

Dated:

 

 

Signature of Purchaser:

 

 

 

 

 

 

 

 

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SCHEDULE I - NOTATIONS AS TO PARTIAL EXERCISE

 

Date of
Exercise

 

Number of
Purchased
Shares

 

Balance of
Shares on
Option

 

Authorized
Signature

 

Notation
Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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