Exhibit 10.8

 

October 5, 2009

 

VIA FACSIMILE AND U.S. MAIL

 

Granite City Food & Brewery Ltd.

Granite City Restaurant Operations, Inc.

5402 Parkdale Drive, Suite 101

Minneapolis, MN 55416

Attn:  James G. Gilbertson

 

Re:                            WAIVER OF DEFAULT — Bridge Loan Agreement, as
amended, from Harmony Equity Income Fund, L.L.C., and Harmony Equity Income Fund
II, L.L.C., to Granite City Food & Brewery Ltd. and Granite City Restaurant
Operations, Inc.

 

Ladies and Gentlemen:

 

Reference is made to that certain Bridge Loan Agreement by and between Granite
City Food & Brewery Ltd. (the “Company”), Granite City Restaurant
Operations, Inc. (along with the Company, the “Borrowers”), Harmony Equity
Income Fund, L.L.C. (the “Administrative Agent”), and Harmony Equity Income Fund
II, L.L.C. (together with Harmony Equity Income Fund L.L.C., the “Lenders”),
dated as of March 30, 2009, as amended on April 22, 2009, April 30, 2009,
May 29, 2009 and July 31, 2009, and as such may be amended from time to time
(the “Loan Agreement”).  For the purposes of this letter, the Loan Agreement
shall be deemed to include the Convertible Bridge Notes, Security Agreement, IP
Agreement and Leasehold Mortgage, Investor Rights Agreement and all other
agreements and instruments entered into and binding upon the undersigned and the
Borrowers pursuant thereto.  Capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement.

 

This letter confirms that Lenders have previously waived certain specific
defaults by letter dated August 2009.

 

The Company has entered into a Debt Conversion Agreement with DHW Leasing, LLC
dated September 21, 2009 (“DHW Agreement”), an accurate and complete copy of
which has been delivered to Administrative Agent and its counsel.  Borrowers
have represented that pursuant to the DHW Agreement the equipment originally
leased by Borrowers for the Restaurant will become the property of Borrowers
free and clear of any indebtedness or encumbrances.  Borrowers have further
represented that Borrowers are current with respect to the rent due under the
real estate lease for the Restaurant.  Administrative Agent and Lenders hereby
consent to the transaction contemplated by the DHW Agreement and waive any and
all of Borrowers’ defaults under the Loan Agreement which are triggered on
account of the consummation of the transactions contemplated by the DHW
Agreement.

 

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Administrative Agent and Lenders hereby waive default under Section 2.5(c) of
the Agreement for failure to make the interest payment due October 1, 2009. 
Administrative Agent and Lenders have previously waived the July 1, 2009
interest payment.  Both the October 1, 2009 and July 1, 2009 interest payments
shall be added to the principal amount of indebtedness due Lenders as of the
date that each interest payment was due and shall each accrue interest from said
date.

 

Administrative Agent and Lenders hereby agree to amend Section 5.2(b) of the
Loan Agreement pertaining to maintenance of Borrowers’ net consolidated
revenue.  For the quarters ending September 30, 2009 and ending December 29,
2009, Borrowers shall maintain net consolidated revenue at a minimum of
$20,264,500 and $20,556,600, respectively.

 

Administrative Agent and Lenders hereby waive Borrowers default for failure to
timely deliver various items pursuant to Section 5.1 of the Loan Agreement
through the date of this letter; provided, that Borrowers shall hereafter be
required to perform in a timely manner the agreements contained in Section 5.1.

 

Lenders hereby waive the “Participation Rights” set forth in Section 3 of the
Investor Rights Agreement dated March 30, 2009, between Borrower and Lenders, to
the extent such rights would arise due to the transaction contemplated by the
DHW Agreement.

 

This waiver is limited to this particular instance.  Administrative Agent and
Lenders are not waiving any other agreement, covenant or obligation of the
Borrowers and are not waiving any default or breach of the Sections identified
herein in the future.  Except for the deferral of the October 1, 2009 interest
payment, modification of the minimum net consolidated revenue for the quarters
ending September 30, 2009 and December 29, 2009 and the extension of the lending
date to October 31, 2009, this letter shall not constitute an amendment of the
Agreement.

 

Signature page follows.

 

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Sincerely,

 

 

 

ADMINISTRATIVE AGENT:

 

 

 

HARMONY EQUITY INCOME FUND, L.L.C.

 

 

 

 

 

By:

/s/ Eugene E. McGowan

 

 

Eugene E. McGowan, Managing Member

 

 

 

 

 

LENDERS:

 

 

 

HARMONY EQUITY INCOME FUND, L.L.C.

 

 

 

 

 

By:

/s/ Eugene E. McGowan

 

 

Eugene E. McGowan, Managing Member

 

 

 

 

 

HARMONY EQUITY INCOME FUND II, L.L.C.

 

 

 

 

 

By:

/s/ Eugene E. McGowan

 

 

Eugene E. McGowan, Managing Member

 

 

Agreed and accepted by:

 

 

 

GRANITE CITY FOOD & BREWERY LTD.

 

 

 

 

 

By

/s/ James Gilbertson

 

 

James Gilbertson, Chief Financial Officer

 

 

 

GRANITE CITY RESTAURANT OPERATIONS, INC.

 

 

 

 

 

By

/s/ James Gilbertson

 

 

James Gilbertson, Chief Financial Officer

 

 

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