EXHIBIT 10.28

 

EMPLOYMENT AND SEVERANCE AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into
effective December 2, 2008, by and between Granite City Food & Brewery Ltd., a
corporation duly organized and existing under the laws of the State of
Minnesota, with a place of business at Suite 101, 5402 Parkdale Drive,
Minneapolis, MN 55416 (hereinafter referred to as the “Company”), and Darius H.
Gilanfar, a Texas resident (hereinafter referred to as “Executive”).

 

RECITALS

 

·                                          The Company and Executive recognize
that it is important that the Company protect its rights with respect to its
confidential business information and business relationships.

 

·                                          Executive enters into this Agreement
in consideration of the following:  (1) the Company’s offer of continuing
employment and the creation of a severance benefit upon a change of control of
the Company; (2) the Company’s continued grant to Executive of access to
confidential information; and (3) other consideration which Executive
acknowledges was received and sufficient consideration for the promises in this
Agreement.

 

1.  EMPLOYMENT, COMPENSATION AND BENEFITS

 

1.01  The Company agrees to continue to employ Executive as a full-time employee
on an at-will basis.  Either party may terminate Executive’s employment at any
time for any reason as provided in Article 2 of this Agreement.

 

1.02  Executive shall generally have the authority, responsibilities, travel
obligations, and such other duties as are customarily performed by a chief
operating officer of similar businesses, and shall also render such additional
services and duties as may be reasonably requested of him from time to time by
the Company’s Chief Executive Officer or Board of Directors.

 

1.03  Executive shall report to the Chief Executive Officer of the Company and
the Board of Directors of the Company or any committee thereof as the Board
shall direct, and shall generally be subject to direction, orders and advice of
said officer and the Board.  The Company retains the discretion to transfer or
reassign Executive to another executive position or to other executive duties,
and any such transfer or reassignment shall not constitute a breach of this
Agreement.

 

1.04  Executive agrees that he will at all times faithfully, industriously, and
to the best of his ability, experience, and talents, perform all of the duties
that may be required of and from him pursuant to the express and implicit terms
of this Agreement, to the reasonable satisfaction of the Company.

 

1.05  During the initial term of employment hereunder, Executive shall be paid a
base

 

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salary at Executive’s current annual rate (“Base Salary”), payable in accordance
with the Company’s established pay periods, reduced by all deductions and
withholdings required by law and as otherwise specified by Executive. 
Executive’s Base Salary shall be reviewed approximately annually and changes to
Base salary may be made upon the approval of the the Borard of the company or
its Compensation Committee; provided, however, that Executive’s  Base Salary
shall not be reduced except in connection with Company compensation reductions
applied to all other senior executives of the Company.  In the event Executive’s
employment shall for any reason terminate during the Term, Executive’s final
monthly Base Salary payment shall be made on a pro-rated basis as of the last
day of the month in which such employment terminated.

 

1.06  During the term of employment, Executive shall be entitled to participate
in employee benefit plans, policies, programs, perquisites and arrangements, as
the same may be provided and amended from time to time, that are provided
generally to similarly situated executive employees of the Company, to the
extent Executive meets the eligibility requirements for any such plan, policy,
program, perquisite or arrangement.

 

1.07  The Company shall reimburse Executive for all reasonable business expenses
incurred by Executive in carrying out Executive’s duties, services, and
responsibilities under this Agreement.  Executive shall comply with generally
applicable policies, practices and procedures of the Company with respect to
reimbursement for, and submission of expense reports, receipts or similar
documentation of, such expenses.

 

1.08  Executive shall be entitled to three weeks of paid vacation per year, in
addition to the Company’s normal holidays.  Vacation time will be scheduled
taking into account the Executive’s duties and obligations at the Company.  Sick
leave and all other leaves of absence will be in accordance with the Company’s
stated personnel policies.

 

2.  TERMINATION OF EMPLOYMENT

 

2.01  The Company may terminate Executive’s employment by giving Executive
written notice if Executive, due to sickness or injury, is prevented from
carrying out his essential job functions for a period of three (3) months or
longer.  In the event of such termination, Executive shall receive base
compensation due through the date of termination and to a pro-rated bonus due
Executive pursuant to any bonus plan or arrangement established prior to
termination, to the extent earned or performed through the date of termination
based upon the requirements or criteria of such plan or arrangement, as the
Board shall in good faith determine.

 

2.02  Executive’s employment will be deemed terminated upon the death of the
Executive.  In the event of such termination, Executive shall receive
compensation earned through the date of termination and to a pro-rated bonus due
Executive pursuant to any bonus plan or arrangement established prior to
termination, to the extent earned or performed based upon the requirements or
criteria of such plan or arrangement, as the Board shall in good faith
determine.

 

2.03  Any other provision of this Agreement notwithstanding, the Company may
terminate Executive’s employment upon written notice if the termination is based
on any of the following events that constitute Cause for the purposes of this
Agreement:

 

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(a)                                  any conviction or nolo contendere plea by
Executive to a felony, gross misdemeanor or misdemeanor involving moral
turpitude, or any public conduct by Executive that has or can reasonably be
expected to have a detrimental effect on the Company and the image of its
management;

 

(b)                                 any act of material misconduct, willful and
gross negligence, willful violation of federal or state securities laws, or
material breach of duty with respect to the Company, including, but not limited
to, embezzlement, fraud, dishonesty, nonpayment of an obligation owed to the
Company, or material breach of a fiduciary duty to the Company which results in
harm or loss to the Company;

 

(c)                                  any material breach of any material
provision of this Agreement or of the Company’s announced or written rules,
codes or polices; provided, however, that such breach shall not constitute Cause
if Executive cures or remedies such breach within thirty (30) days after written
notice to Executive, without material harm or loss to the Company, unless
(i) such breach is part of a pattern of chronic breaches of the same, which may
be evidenced by reports or warning letters given by the Company to Executive; or
(ii) such breach is of a nature that it is deemed by the Board not to be
curable, including situations where the Board determines that harm or loss to
the Company has already occurred or can reasonably be expected to occur and
cannot be eliminated or remedied by such cure;

 

(d)                                 any act of insubordination by Executive;
provided, however, an act of insubordination by Executive shall not constitute
Cause if Executive cures or remedies such insubordination within thirty (30)
days after written notice to Executive, without material harm or loss to the
Company, unless (i) such insubordination is a part of a pattern of chronic
insubordination, which may be evidenced by reports or warning letters given by
the Company to Executive; or (ii) such insubordination is of a nature that it is
deemed by the Board not to be curable, including situations where the Board
determines that harm or loss to the Company has already occurred or can
reasonably be expected to occur and cannot be eliminated or remedied by such
cure; or

 

(e)                                  any unauthorized disclosure of any Company
trade secret or confidential information, or conduct constituting unfair
competition with respect to the Company, including inducing a party to breach a
contract with the Company.

 

In the event of such termination, and not withstanding any contrary provision
otherwise stated, Executive shall receive only his base salary earned through
the date of termination.

 

2.04  Executive or the Company may terminate Executive’s employment without
Cause upon not less than sixty (60) days written notice.

 

3.  SEVERANCE BENEFIT

 

3.01  The Company, its successors or assigns, will pay Executive as severance
pay an amount equal to twelve (12) months of the Executive’s monthly base salary
for full-time employment at the time of Executive’s separation if
(1) Executive’s employment is terminated by

 

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the Company Without Cause (other than due to death or disability); or (2) there
has been a Change of Control of the Company (as defined in Section 3.02), and
(a) Executive is an active and full-time employee at the time of the Change of
Control, and (b) within twelve (12) months following the date of the Change of
Control, Executive employment is involuntarily terminated for any reason other
than for Cause or death or disability of Executive.  Nothing in this Subsection
3.01 shall limit the authority of the Committee or Board to terminate
Executive’s employment for Cause.  Payment of such amount, less customary
withholdings, will be made in one lump sum and will occur within thirty (30)
days of the Executive’s termination or resignation.  Such payment shall be made
contingent upon Executive’s compliance with Sections 4 and 5 of this Agreement.

 

3.02  For the purposes of this Agreement, “Change in Control” shall mean any one
of the following:

 

(a)                        an acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) of 50% or more of either:

 

(1)           the then outstanding Stock; or

 

(2)           the combined voting power of the Company’s outstanding voting
securities immediately after the merger or acquisition entitled to vote
generally in the election of directors; provided, however, that the following
acquisition shall not constitute a Change of Control:

 

(i)            any acquisition directly from the Company;

 

(ii)           any acquisition by the Company or Subsidiary;

 

(iii)          any acquisition by the trustee or other fiduciary of any employee
benefit plan or trust sponsored by the Company or a Subsidiary;

 

(iv)          any acquisition by any corporation with respect to which,
following such acquisition, more than 50% of the Stock or combined voting power
of Stock and other voting securities of the Company is beneficially owned by
substantially all of the individuals and entities who were beneficial owners of
Stock and other voting securities of the Company immediately prior to the
acquisition in substantially similar proportions immediately before and after
such acquisition; or

 

(b)                       individuals who, during any twelve (12) month period,
constitute the Board (the “Incumbent Board”), cease to constitute a majority of
the Board.  Individuals nominated or whose nominations are approved by the
Incumbent Board and subsequently elected shall be deemed for this purpose to be
members of the Incumbent Board;

 

(c)                        approval by the shareholders of the Company of a
reorganization, merger, consolidation, liquidation, dissolution, sale or
statutory exchange of Stock which

 

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changes the beneficial ownership of Stock and other voting securities so that
after the corporate change the immediately previous owners of 50% of Stock and
other voting securities do not own 50% of the Company’s Stock and other voting
securities either legally or beneficially;

 

(d)                       the sale, transfer or other disposition of all
substantially all of the Company’s assets; or

 

(e)                        a merger of the Company with another entity after
which the pre-merger shareholders of the Company own less than 50% of the stock
of the surviving corporation.

 

A “Change in Control” shall not be deemed to occur with respect to Executive if
the merger, sale, transfer or an acquisition of a 50% or greater interest is to
or by a group that includes the Executive, nor shall it be deemed to occur if at
least 50% of the Stock and other voting securities owned before the occurrence
are beneficially owned subsequent to the occurrence by a group that includes the
Executive.

 

3.03  Section 409A of the Code.  Notwithstanding any other provision of this
Agreement to the contrary, the parties to this Agreement intend that this
Agreement shall satisfy the applicable requirements, if any, of Section 409A of
the Code (“Section 409A”) in a manner that will preclude the imposition of the
penalties described in Section 409A.  The parties agree that the Agreement shall
be deemed modified as may become necessary (as determined by the Company in its
discretion) to satisfy the requirements described above.

 

3.04  In addition to the Severance Payment payable pursuant to Section 3.01, the
Company will pay Executive a pro-rated bonus due Executive pursuant to any bonus
plan or arrangement in which Executive participates at the time of termination
of his employment.  Such bonus shall be reduced by the amount of cash severance
benefits to which Executive may be entitled pursuant to any other cash severance
plan, agreement, policy or program of the Company or any of its subsidiaries.
Without limiting other payments which would not constitute “cash severance-type
benefits” hereunder, any cash settlement of stock options, accelerated vesting
of stock options and retirement, pension and other similar benefits shall not
constitute “cash severance-benefits” for purposes of this Section 3.03.

 

3.05  All severance payments made under this Agreement, including those paid
under 2, shall be conditioned upon the Executive’s signing and not rescinding a
separation agreement and release in a form acceptable to the Company, which
agreement shall include, at a minimum a full and general release of all claims
to the greatest extent allowed by applicable law, a covenant not to sue, an
agreement to be reasonably available for consultation and assistance to the
Company during any period in which severance is paid, and an agreement to
promptly return to the Company all Company property.

 

3.06  Notwithstanding any other provision of this Agreement, the Company and
Executive intend that any payments, benefits or other provisions applicable to
this Agreement comply with the payout and other limitations and restrictions
imposed under Section 409A of the Code (“Section 409A”), as clarified or
modified by guidance from the U.S. Department of Treasury or the Internal
Revenue Service — in each case if and to the extent Section 409A is

 

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otherwise applicable to this Agreement and such compliance is necessary to avoid
the penalties otherwise imposed under Section 409A.  In this connection, the
Company and Executive agree that the payments, benefits and other provisions
applicable to this Agreement, and the terms of any deferral and other rights
regarding this Agreement, shall be deemed modified if and to the extent
necessary to comply with the payout and other limitations and restrictions
imposed under Section 409A, as clarified or supplemented by guidance from the
U.S. Department of Treasury or the Internal Revenue Service, in each case if and
to the extent Section 409A is otherwise applicable to this Agreement and such
compliance is necessary to avoid the penalties otherwise imposed under
Section 409A.

 

3.07  The Company may withhold from any amounts payable under this Agreement all
federal, state, city or other taxes required by applicable law to be withheld by
the Company.

 

3.08  The provisions of this Article 3 will be deemed to survive the termination
of this Agreement for the purposes of satisfying the obligations of the Company
and Executive hereunder.

 

4.  NONDISCLOSURE AND INVENTIONS

 

4.01  Except as permitted or directed by the Company or as may be required in
the proper discharge of Executive’s employment hereunder, Executive shall not,
during the Term of employment or at any time thereafter, divulge, furnish or
make accessible to anyone or use in any way any confidential, trade secret or
proprietary information of the Company, including without limitation, whether or
not reduced to writing, customer lists, customer files or information, pricing
information, expansion information, recipes, formulas, planning and financial
information, contracts, sales and marketing information, business strategy or
opportunities for new or developing business, which Executive has prepared,
acquired or become acquainted with during his employment by the Company. 
Executive acknowledges that the above-described knowledge or information is the
property of the Company that constitutes a unique and valuable asset and
represents a substantial investment by the Company, and that any disclosure or
other use of such knowledge or information, other than for the sole benefit of
the Company, would be wrongful and would cause irreparable harm to the Company. 
Executive agrees to at all times maintain the confidentiality of such knowledge
or information, to refrain from any acts or omissions that would reduce its
value to the Company, and to take and comply with reasonable security measures
to prevent any accidental or intentional disclosure or misappropriation.  Upon
termination of Executive’s employment for any reason, Executive shall promptly
return to the Company all such confidential, trade secret and proprietary
information, including all copies thereof, then in Executive’s possession,
control or influence, whether prepared by Executive or others.

 

4.02  The foregoing obligations of confidentiality shall not apply to any
knowledge or information the entirety of which is now published or subsequently
becomes generally publicly known, other than as a direct or indirect result of
the breach of this Agreement by Executive or a breach of a confidentiality
obligation owed to the Company by any third party.

 

4.03  Executive acknowledges that new and valuable proprietary concepts,
recipes, methods, processes, discoveries, trade secrets (as defined in the
Minnesota Uniform Trade Secrets Act), improvements, adaptations, or ideas
(herein individually and collectively referred

 

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to as “Inventions”) may be developed, originated, authorized, conceived,
invented, or made by Executive, either alone or jointly with others, in the
course of Executive’s employment by the Company.  All such Inventions shall be
the exclusive property of the Company, whether or not patentable or
copyrightable, and whether or not shown or described in writing or reduced to
practice.

 

NOTICE:  The Company hereby notifies Executive that the foregoing does not apply
to Inventions or ideas for which no equipment, supplies, facility, or trade
secret information of the Company was used and that was developed entirely on
Executive’s own time, and (1) which does not relate (a) directly to the business
of the Company and (b) to the Company’s actual or demonstrably anticipated
research or development, or (2) which does not result from any work performed by
Executive for the Company.

 

4.04  In the event of a breach or threatened breach by Executive of the
provisions of this Article 8, the Company shall be entitled to an injunction
restraining Executive from directly or indirectly disclosing, disseminating,
lecturing upon, publishing or using such confidential, trade secret or
proprietary information (whether in whole or in part) and restraining Executive
from rendering any services or participating with any person, firm, corporation,
association or other entity to whom such knowledge or information (whether in
whole or in part) has been disclosed, without the posting of a bond or other
security.  Nothing herein shall be construed as prohibiting the Company from
pursuing any other equitable or legal remedies available to it for such breach
or threatened breach, including the recovery of damages from Executive. 
Executive agrees that the Company shall be entitled to recover its costs of
litigation, expenses and attorney fees incurred in enforcing this Agreement.

 

4.05  The Executive understands and agrees that any violation of this Article 4
while employed by the Company may result in immediate disciplinary action by the
Company, including termination of employment pursuant to Section 2.03 hereof.

 

4.06  The provisions of this Article 4 shall survive termination of this
Agreement indefinitely.

 

5.  NON-COMPETITION AND NON-RECRUITMENT

 

5.01  The Company and Executive recognize and agree that: (i) Executive has
received, and will in the future receive, substantial amounts of highly
confidential and proprietary information concerning the Company, its business,
customers, Executives and vendors; (ii) as a consequence of using or associating
himself with the Company’s name, goodwill, and reputation, Executive will
develop personal and professional relationships with the Company’s current and
prospective customers, clients and vendors; and (iii) provision for
non-competition and non-recruitment obligations by Executive is critical to the
Company’s continued economic well-being and protection of the Company’s
confidential and proprietary business information.  In light of these
considerations, this Article 9 sets forth the terms and conditions of
Executive’s obligations of non-competition and non-recruitment during the Term
of and subsequent to the termination of this Agreement and/or Executive’s
employment for any reason.

 

5.02  Unless the obligation is waived or limited by the Company as set forth
herein, Executive agrees that during the term of Executive’s employment pursuant
to this Agreement and

 

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for a period of twelve (12) months following termination of Executive’s
employment for any reason, Executive will not directly or indirectly:
(a) solicit or do competitive business with any person or entity that is or was
a customer or vendor of the Company within the twelve (12) months prior to the
date of termination; or (b) engage within the U.S. markets in which the Company
engages in business at the time of termination, in any business activity in
competition with the casual dining restaurant business as conducted by the
company at the time of Executive’s termination.  At its sole option, the Company
may, by express written notice to Executive, waive or limit the time and/or
geographic area in which Executive cannot engage in competitive activity or the
scope of such competitive activity.

 

5.03  During the period of employment, and for a period of twelve (12) months
following termination of Executive’s employment for any reason, Executive will
not directly, or indirectly on behalf of any other person, engage in the 
recruitment or hiring of any of the Company’s employees.

 

5.04  Executive agrees that breach by him of the provisions of this Article 5
will cause the Company irreparable harm that is not fully remedied by monetary
damages.  In the event of a breach or threatened breach by Executive of the
provisions of this Article 5, the Company shall be entitled to an injunction
restraining Executive from directly or indirectly competing or recruiting as
prohibited herein, without posting a bond or other security and, if the Company
is successful in establishing a breach of this Agreement, its reasonable
attorneys’ fees and costs..  Nothing herein shall be construed as prohibiting
the Company from pursuing any other equitable or legal remedies available to it
for such breach or threatened breach, including the recovery of damages from
Executive.  Executive agrees that the Company shall be entitled to recover its
costs of litigation, expenses and attorney fees incurred in enforcing this
Agreement.

 

5.05  The obligations contained in this Article 5 shall survive the termination
of this Agreement indefinitely.

 

6.  MISCELLANEOUS

 

6.01  Governing Law.  This Agreement and the employment relationship between the
Company and Executive shall be governed and construed according to the laws of
the State of Minnesota without regard to conflicts of law provisions.

 

6.02  Successors.  This Agreement is personal to Executive and Executive may not
assign or transfer any part of his rights or duties hereunder, or any
compensation due to him hereunder, to any other person or entity.  This
Agreement may be assigned by the Company to any successor to the Company or any
purchaser of its assets.

 

6.03  Waiver.  The waiver by the Company of the breach or nonperformance of any
provision of this Agreement by Executive will not operate or be construed as a
waiver of any future breach or nonperformance under any such provision of this
Agreement or any similar agreement with any other Executive.

 

6.04  Modification.  This Agreement supersedes, revokes and replaces any and all
prior oral or written understandings, if any, between the parties relating to
the subject matter of this Agreement.  The parties agree that this Agreement:
(a) is the entire understanding and agreement

 

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between the parties; and (b) is the complete and exclusive statement of the
terms and conditions thereof, and there are no other written or oral agreements
in regard to the subject matter of this Agreement.  This Agreement shall not be
changed or modified except by a written document signed by the parties hereto.

 

6.05  Severability and Blue Penciling.  To the extent that any provision of this
Agreement shall be determined to be invalid or unenforceable as written, the
validity and enforceability of the remainder of such provision and of this
Agreement shall be unaffected.  If any particular provision of this Agreement
shall be adjudicated to be invalid or unenforceable, the Company and Executive
specifically authorize the tribunal making such determination to edit the
invalid or unenforceable provision to allow this Agreement, and the provisions
thereof, to be valid and enforceable to the fullest extent allowed by law or
public policy.

 

IN WITNESS WHEREOF the following parties have executed the above instrument the
day and year first above written.

 

 

 

GRANITE CITY FOOD & BREWERY, LTD

 

 

 

 

 

 

 

 

By

/s/ Steven J. Wagenheim

 

 

 

Steven J. Wagenheim, Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

By

/s/ Darius H. Gilanfar

 

 

 

Darius H. Gilanfar

 

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