**Exhibit10.5**

 

THE SECURITIES EVIDENCEDHEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR APPLICABLESTATE SECURITIES LAW.  THESE SECURITIESHAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,ASSIGNED, TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BYTHE COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR ANOPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOTREQUIRED.

 

 

**GRANITE CITY FOOD & BREWERYLTD.**

 

**COMMON STOCK PURCHASE WARRANT**

 

Granite City Food &Brewery Ltd., a Minnesota corporation (the**“Company”**), hereby agrees that, for valuereceived, Aethlon Capital, LLC,Minneapolis, Minnesota, or its assigns, is entitled, subject to the terms setforth below, to purchase from the Company at any time or from time to timeafter the date hereof and before 5:00 P.M., Central Time, on                  , 2007,                                                       (                )shares of the common stock of the Company (the**“Common Stock”**), at anexercise price of $1.58 per share, subject to adjustment as provided herein(the **“WarrantExercise Price”**).

 

1.             Exercise of Warrant.  The purchase rights granted by this Warrant shall be exercised(in minimum quantities of 100 shares) by the holder surrendering this Warrantwith the form of exercise attached hereto duly executed by such holder, to theCompany at its principal office, accompanied by payment, in cash or by cashier’scheck payable to the order of the Company, of the purchase price payable inrespect of the Common Stock being purchased. If less than all of the Common Stock purchasable hereunder is purchased,the Company will, upon such exercise, execute and deliver to the holder hereofa new Warrant (dated the date hereof) evidencing the number of shares of CommonStock not so purchased.  As soon aspracticable after the exercise of this Warrant and payment of the purchaseprice, the Company will cause to be issued in the name of and delivered to theholder hereof, or as such holder may direct, a certificate or certificatesrepresenting the shares purchased upon such exercise.  The Company may require that such certificate or certificatescontain on the face thereof a legend substantially as follows:

 

“The transfer of the sharesrepresented by this certificate is restricted pursuant to the terms of a CommonStock Purchase Warrant dated                     ,2002, issued by Granite City Food & Brewery Ltd., a copy of which isavailable for inspection at the offices of Granite City Food & BreweryLtd.  Transfer may not be made except inaccordance with the terms of the Common Stock Purchase Warrant.  In addition, no sale, offer to sell ortransfer of the shares represented by this certificate shall be made unless aregistration statement under the Securities Act of 1933, as amended, withrespect to such shares is then in effect or an exemption from registration isthen in fact applicable to such shares.”

 

2.             Negotiability and Transfer. This Warrant is issued upon the following terms, to which each holderhereof consents and agrees:

 

(a)           Until this Warrant is dulytransferred on the books of the Company, the Company may treat the registeredholder of this Warrant as absolute owner hereof for all purposes without beingaffected by any notice to the contrary.

 

(b)           Each successive holder of thisWarrant, or of any portion of the rights represented thereby, shall be bound bythe terms and conditions set forth herein.

 

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(c)           This Warrant is immediatelyassignable, notwithstanding anything herein to the contrary, to officers,directors, employees, consultants and registered representatives of AethlonCapital, LLC and its affiliates, sub-agent(s) of Aethlon Capital, LLC, andofficers, directors, employees, consultants and registered representatives ofthe sub-agent(s) of Aethlon Capital, LLC.

 

3.             AntidilutionAdjustments.

 

(a)           The Warrant Exercise Price shall besubject to adjustment from time to time as hereinafter provided.  Upon each adjustment of the Warrant ExercisePrice the holder of this Warrant shall thereafter be entitled to purchase thenumber of shares of Common Stock of the Company obtained by multiplying theWarrant Exercise Price in effect immediately prior to such adjustment by thenumber of shares issuable pursuant to exercise immediately prior to suchadjustment and dividing the product thereof by the Warrant Exercise Priceresulting from such adjustment.

 

(b)           Except for (i) options, warrants orother rights to purchase securities outstanding on the date of the issuance ofthis Warrant (provided there is no adjustment to the terms of such options,warrants or other securities on or after the date of issuance of this Warrant);(ii) options to purchase shares of Common Stock and the issuance of awards ofCommon Stock pursuant to stock option or employee stock purchase plans adoptedby the Company and shares of Common Stock issued upon the exercise of suchoptions granted pursuant to such plans (provided there is no adjustment to theterms of such options, awards or other securities on or after the date ofissuance of this Warrant) (appropriately adjusted to reflect stock splits,combinations, stock dividends, reorganizations, consolidations and similarchanges); or (iii) Common Stock issued to holders of the Company’s Series AConvertible Preferred Stock or upon conversion or in lieu of cash dividends onthe Company’s Series A Convertible Preferred Stock, if and whenever the Companyshall issue any additional securities, warrants or rights or any securityconvertible or exchangeable into equity, securities, warrants or rights(collectively, “Convertible Securities”) without consideration or for aconsideration per share less than the Warrant Exercise Price in effect immediatelyprior to the time of such issue or sale, then, forthwith upon such issue orsale, the Warrant Exercise Price shall be adjusted to a price determined bymultiplying such Warrant Exercise Price by a fraction, the numerator of whichshall be the number of shares of Common Stock outstanding immediately prior tosuch issuance plus the number of shares of Common Stock that the aggregateconsideration received by the Company for such issuance would purchase at suchWarrant Exercise Price; and the denominator of which shall be the number ofshares of such additional Common Stock and the number of shares of Common Stockoutstanding prior to such issuance.  Forthe purpose of the above calculation, the number of shares of Common Stockimmediately prior to such issuance shall be calculated on a fully-dilutedbasis, as if this Warrant and any other outstanding warrants, options or otherrights for the purchase of shares of stock or Convertible Securities had beenfully exercised as of such date.  Exceptas provided in Section 3(e) below, no further adjustments of the WarrantExercise Price shall be made upon the actual issuance of Common Stock or of anyConvertible Securities upon the exercise of such rights or options or upon theactual issue of such Common Stock upon conversion or exchange of suchConvertible Securities.

 

(c)           For purposes of this Section 3,in case any shares of Common Stock or Convertible Securities or any rights oroptions to purchase any such Common Stock or Convertible Securities shall beissued or sold for cash, the consideration received therefor shall be deemed tobe the amount received by the Company therefor, without deducting therefrom anyexpenses incurred or any underwriting commissions, discounts or concessionspaid or allowed by the Company in connection therewith.  In case any shares of Common Stock orConvertible Securities or any rights or options to purchase any such CommonStock or Convertible Securities shall be issued or sold for a considerationother than cash, the amount of the consideration other than cash received bythe Company shall be deemed to be the fair value of such consideration asdetermined by the Board of Directors of the Company, without deductingtherefrom any expenses incurred or any underwriting commissions, discounts orconcessions paid or allowed by the Company in connection therewith.  In case any shares of Common Stock 

 

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or Convertible Securities orany rights or options to purchase such Common Stock or Convertible Securitiesshall be issued in connection with any merger or consolidation in which theCompany is the surviving corporation, the amount of consideration thereforshall be deemed to be the fair value as determined by the Board of Directors ofthe Company of such portion of the assets and business of the non-survivingcorporation or corporations as such Board shall determine to be attributable tosuch Common Stock, Convertible Securities, rights or options, as the case maybe.  In the event of any consolidationor merger of the Company in which the Company is not the surviving corporationor in the event of any sale of all or substantially all of the assets of theCompany for stock or other securities of any other corporation, the Companyshall be deemed to have issued a number of shares of its Common Stock for stockor securities of the other corporation computed on the basis of the actualexchange ratio on which the transaction was predicated and for a considerationequal to the fair market value on the date of such transaction of such stock orsecurities of the other corporation, and if any such calculation results inadjustment of the Warrant Exercise Price, the determination of the number ofshares of Common Stock issuable upon exercise immediately prior to such merger,conversion or sale, for purposes of Section 3(f) below, shall be madeafter giving effect to such adjustment of the Warrant Exercise Price.

 

(d)           In case the Company shall at any timesubdivide its outstanding shares of Common Stock into a greater number ofshares, the Warrant Exercise Price in effect immediately prior to suchsubdivision shall be proportionately reduced, and conversely, in case theoutstanding shares of Common Stock of the Company shall be combined into asmaller number of shares, the Warrant Exercise Price in effect immediatelyprior to such combination shall be proportionately increased.

 

(e)           If (i) the purchase price providedfor in any right or option referred to in Section 3(b), or (ii) theadditional consideration, if any, payable upon the conversion or exchange ofConvertible Securities, or (iii) the rate at which any Convertible Securitiesare convertible into or exchangeable for Common Stock, shall change at any time(other than under or by reason of provisions designed to protect againstdilution), or any Convertible Securities shall terminate, expire or cease to beoutstanding without exercise thereof, the Warrant Exercise Price then in effecthereunder shall forthwith be increased or decreased to such Warrant ExercisePrice as would have applied had the adjustments made upon the issuance of suchrights, options or Convertible Securities been made upon the basis of(a) the issuance of the number of shares of Common Stock theretoforeactually delivered upon the exercise of such options or rights or upon theconversion or exchange of such Convertible Securities, and the totalconsideration received therefor, and (b) the issuance at the time of suchchange of any such options, rights, or Convertible Securities then stilloutstanding for the consideration, if any, received by the Company therefor andto be received on the basis of such changed price; and on the expiration of anysuch option or right or the termination of any such right to convert orexchange such Convertible Securities, the Warrant Exercise Price then in effecthereunder shall forthwith be increased to such Warrant Exercise Price as wouldhave been obtained had the adjustments made upon the issuance of such rights oroptions or Convertible Securities been made upon the basis of the issuance ofthe shares of Common Stock theretofore actually delivered (and the totalconsideration received therefor) upon the exercise of such rights or options orupon the conversion or exchange of such Convertible Securities.  If the purchase price provided for in anyright or option referred to in Section 3(b), or the rate at which anyConvertible Securities referred to in Section 3(b) are convertible into orexchangeable for Common Stock, shall decrease at any time under or by reason ofprovisions with respect thereto designed to protect against dilution, then incase of the delivery of Common Stock upon the exercise of any such right oroption or upon conversion or exchange of any such Convertible Security, theWarrant Exercise Price then in effect hereunder shall forthwith be decreased tosuch Warrant Exercise Price as would have applied had the adjustments made uponthe issuance of such right, option or Convertible Security been made upon thebasis of the issuance of (and the total consideration received for) the sharesof Common Stock delivered as aforesaid.

 

(f)            If any capital reorganization orreclassification of the capital stock of the Company, or consolidation ormerger of the Company with another corporation, or the sale of all orsubstantially all of its assets to another corporation shall be effected insuch a way that holders of Common Stock

 

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shall be entitled to receivestock, securities or assets with respect to or in exchange for Common Stock,then, as a condition of such reorganization, reclassification, consolidation,merger or sale, and except as otherwise provided herein, lawful and adequateprovision shall be made whereby the holder of this Warrant shall thereafterhave the right to receive upon the basis and upon the terms and conditionsspecified herein and in lieu of the shares of the Common Stock of the Companyimmediately theretofore receivable upon the exercise of this Warrant, suchshares of stock, securities or assets as may be issued or payable with respectto or in exchange for a number of outstanding shares of such Common Stock equalto the number of shares of such stock immediately theretofore receivable uponthe exercise of this Warrant had such reorganization, reclassification,consolidation, merger or sale not taken place, and in any such case appropriateprovision shall be made with respect to the rights and interests of the holderof this Warrant to the end that the provisions hereof (including withoutlimitation provisions for adjustments of the Warrant Exercise Price and of thenumber of shares receivable upon the exercise hereof) shall thereafter beapplicable, as nearly as may be in relation to any shares of stock, securitiesor assets thereafter receivable upon the exercise of this Warrant.  The Company shall not effect any suchconsolidation, merger or sale, unless prior to the consummation thereof thesuccessor corporation (if other than the Company) resulting from suchconsolidation or merger or the corporation purchasing such assets shall assumeby written instrument executed and mailed to the registered holder of thisWarrant, at the last address of such holder appearing on the books of theCompany, the obligation to deliver to such holder such shares of stock,securities or assets as, in accordance with the foregoing provisions, suchholder may be entitled to receive.

 

(g)           Upon any adjustment of the WarrantExercise Price, the Company shall give written notice thereof, by first-classmail, postage prepaid, addressed to the registered holder of this Warrant, asshown on the books of the Company, which notice shall state the WarrantExercise Price resulting from such adjustment and the increase or decrease, ifany, in the number of shares purchasable at such price upon the exercise ofthis Warrant, setting forth in reasonable detail the method of calculation andthe facts upon which such calculation is based.  No adjustment to the Warrant Exercise Price shall be requiredunless such adjustment would require an increase or decrease of at least fivecents ($0.05); provided, however, that any adjustments which by reason of thisSection 3(g) are not required to be made shall be carried forward andtaken into account in any subsequent adjustment; and, provided further, thatadjustment shall be required and made in accordance with the provisions of thisSection 3 (other than this Section 3(g)) not later than such time asmay be required in order to preserve the tax-free nature of a distribution tothe holders of shares of Common Stock. All calculations under this Section 3 shall be made to the nearestcent or to the nearest one-hundredth of a share, as the case may be.  Anything in this Section 3 to thecontrary notwithstanding, the Company shall be entitled to make such increasesin the conversion rate in addition to those required by this Section 3 asit in its discretion shall determine to be advisable in order that any stockdividends, subdivisions of shares, distribution of rights to purchase stock orsecurities, or distribution of securities convertible into or exchangeable forstock hereafter made by the Company to its stockholders shall not be taxable.

 

(h)  In case at any time: (i) there shall be anycapital reorganization, or reclassification of the capital stock of theCompany, or consolidation or merger of the Company with, or sale of all orsubstantially all of its assets to, another corporation; or (ii) there shall bea voluntary or involuntary dissolution, liquidation or winding up of theCompany; then, in any one or more of said cases, the Company shall give writtennotice, by first–class mail, postage prepaid, addressed to the registeredholder of this Warrant at the address of such holder as shown on the books ofthe Company, of the date on which (a) the books of the Company shall closeor a record shall be taken for such dividend, distribution or subscriptionrights, or (b) such reorganization, reclassification, consolidation, merger,sale, dissolution, liquidation or winding up shall take place, as the case maybe.  Such notice shall also specify thedate as of which the holders of Common Stock of record shall participate insuch dividend, distribution or subscription rights, or shall be entitled toexchange their Common Stock for securities or other property deliverable uponsuch reorganization, reclassification, consolidation, merger, sale,dissolution, liquidation, or winding up, as the case may be.  Such written notice shall be given at least

 

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twenty (20) days prior tothe action in question and not less than twenty (20) days prior to the recorddate or the date on which the Company’s transfer books are closed in respectthereto.

 

(i)            If any event occurs as to which inthe opinion of the Board of Directors of the Company the other provisions ofthis Section 3 are not strictly applicable or if strictly applicable wouldnot fairly protect the rights of the holder of this Warrant in accordance withthe essential intent and principles of such provisions, then the Board ofDirectors shall make an adjustment in the application of such provisions, inaccordance with such essential intent and principles, so as to protect suchrights as aforesaid.

 

(j)            As used in this Section 3 theterm “Common Stock” shall mean and include the Company’s presently authorizedCommon Stock and any additional Common Stock that may be authorized by dueaction of the Company’s Board of Directors and shareholders entitled to votethereon.

 

(k)           No fractional shares of Common Stockshall be issued upon exercise, but, instead of any fraction of a share whichwould otherwise be issuable, the Company shall pay a cash adjustment in respectof such fraction in an amount equal to the same fraction of the market price pershare of Common Stock as of the close of business on the day of exercise.  “Market price” shall mean if the CommonStock is traded on a securities exchange or on the NASDAQ Stock Market, theclosing sale price of the Common Stock on such exchange or the NASDAQ StockMarket, or, if the Common Stock is otherwise traded in the over-the-countermarket, the closing bid price, in each case averaged over a period of twenty(20) consecutive trading days prior to the date as of which “market price” isbeing determined.  If at any time theCommon Stock is not traded on an exchange or the NASDAQ Stock Market, orotherwise traded in the over-the-counter market, the “market price” shall bedeemed to be the higher of (i) the book value thereof as determined by anyfirm of independent public accountants of recognized standing selected by theBoard of Directors of the Company as of the last day of any month ending withinsixty (60) days preceding the date as of which the determination is to be made,or (ii) the fair value thereof determined in good faith by the Board ofDirectors of the Company as of a date which is within fifteen (15) days of thedate as of which the determination is to be made.

 

4.             Transferability; Registration Rights. Prior to making any disposition of the Warrant or of any Common Stockpurchased upon exercise of the Warrant, the holder will give written notice tothe Company describing briefly the manner of any such proposeddisposition.  The holder will not make anysuch disposition until (i) the Company has notified the holder that, in theopinion of its counsel, registration under the Act is not required with respectto such disposition, or (ii) a registration statement covering the proposeddistribution has been filed by the Company and has become effective.  The holder then will make any dispositiononly pursuant to the conditions of such opinion or registration.  The Company agrees that, upon receipt ofwritten notice from the holder hereof with respect to such proposeddistribution, it will use its best efforts, in consultation with the holder’scounsel, to ascertain as promptly as possible whether or not registration isrequired, and will advise the holder promptly with respect thereto, and theholder will cooperate in providing the Company with information necessary tomake such determination.  If a state andfederal registration of the  CommonStock purchased upon exercise of the Warrant is not in effect such that the  Common Stock purchased upon exercise of theWarrant is not freely transferable by the holder of the Warrant or, in theabsence of such an effective state and federal registration, if an exemptionfrom state and federal registration of the exercising of the Warrant and saleof the Common Stock is not available during the term of this Warrant when theholder of the Warrant seeks to exercise the Warrant and sell the Common Stockso acquired, the exercise period of the Warrant will automatically be extendeduntil such time as either state and federal registration of the Common Stockpurchased upon exercise of the Warrant becomes effective and applicable to theholder of the Warrant or an exemption for the exercise of the Warrant and saleof the Common Stock by the holder, in the absence of such an effective stateand federal registration, is available to the holder of the Warrant, and, if soextended, the Warrant shall then remain exercisable for a period of at leastthirty (30) calendar days from the date the Company delivers to the holder ofthe Warrant written notice of the availability of such state and federal

 

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registration or exemption from suchregistration.  In no event will theexercise period of the Warrant expire before                 ,2007.

 

If, at any time after thedate hereof and prior to the expiration of seven (7) years from the datehereof, the Company shall propose to file any registration statement under theSecurities Act of 1933, as amended, (the **“Act”**) covering a public offering of theCompany’s Common Stock (other than a registration on Form S-4, Form S-8 or anyregistration form that does not permit secondary sales), it will notify theholder hereof at least thirty (30) days prior to each such filing and willinclude in the registration statement (to the extent permitted by applicableregulation) the Common Stock purchased by the holder or purchasable by theholder upon the exercise of the Warrant to the extent requested by the holderhereof.  Notwithstanding the foregoing,the number of shares of Common Stock of the holders of the Warrants proposed tobe registered thereby shall be reduced pro rata with any other sellingshareholder (other than the Company) upon the request of the managingunderwriter of such offering.  If the registrationstatement or offering statement filed pursuant to such thirty (30) day noticehas not become effective within six months following the date such notice isgiven to the holder hereof, the Company must again notify such holder in themanner provided above.

 

At any time one (1) year afterthe date hereof and prior to the expiration of five (5) years from the datehereof, and provided that a registration statement on Form S-3 (or itsequivalent) is then available to the Company, and on a one-time basis only, ifthe holders of 51% or more of the Warrants and the shares of Common Stockacquired upon exercise of the Warrants request the registration of the sharesof Common Stock on Form S-3 (or its equivalent), the Company shall promptlythereafter use its best efforts to effect the registration under the Act of allsuch shares of Common Stock which such holders request in writing to be soregistered, and in a manner corresponding to the methods of distributiondescribed in such holders’ request.

 

All expenses of any suchregistrations referred to in this Section 4, except the fees of counsel to suchholders and any of their underwriting commissions or discounts shall be borneby the Company.

 

The Company will mail toeach record holder, at the last known post office address, written notice of anyexercise of the rights granted under this Section 4, by certified or registeredmail, return receipt requested, and each holder shall have twenty (20) daysfrom the date of deposit of such notice in the U.S. Mail to notify the Companyin writing whether such holder wishes to join in such exercise.

 

The Companywill furnish the holder hereof with a reasonable number of copies of anyprospectus included in such filings and will amend or supplement the same asrequired during the period of required use thereof.  The Company will maintain the effectiveness of any registrationstatement or the offering statement filed by the Company, whether or not at therequest of the holder hereof, for at least one (1) year following the effectivedate thereof.

 

In the case of the filing ofany registration statement, and to the extent permissible under the Act andcontrolling precedent thereunder, the Company and the holder hereof shallprovide cross indemnification agreements to each other in customary scopecovering the accuracy and completeness of the information furnished by each.

 

The holder of the Warrantagrees to cooperate with the Company in the preparation and filing of any suchregistration statement or offering statement, and in the furnishing ofinformation concerning the holder for inclusion therein, or in any efforts bythe Company to establish that the proposed sale is exempt under the Act as toany proposed distribution.

 

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5.             CashlessExercise Option.

 

(a)           The holder of this Warrant shall have the right to require the Companyto convert this Warrant (the **“Conversion Right”**), at any time after itis exercisable, but prior to its expiration, into shares of Common Stock asprovided for in this Section 5. Upon exercise of the Conversion Right, the Company shall deliver to theholder (without payment by the holder of any exercise price) that number ofshares of Common Stock equal to the quotient obtained by dividing (x) the valueof the Warrant at the time the Conversion Right is exercised (determined bysubtracting the aggregate exercise price for the Warrant in effect immediatelyprior to the exercise of the Conversion Right from the aggregate Fair MarketValue (as determined below) for the Warrant immediately prior to the exerciseof the Conversion Right) by (y) the Fair Market Value of one share of CommonStock immediately prior to the exercise of the Conversion Right.  No fractional shares shall be issuable uponexercise of the Conversion Right, and if the number of shares to be issued inaccordance with the foregoing formula is other than a whole number, the Companyshall pay to the holder of this Warrant an amount in cash equal to the fairmarket value of the resulting fractional share.

 

(b)           The Conversion Right may be exercised by the holder, at any time orfrom time to time after this Warrant is exercisable, prior to its expiration,on any business day, by delivering a written notice in the form attached hereto(the **“ConversionNotice”**) to the Company at the offices of the Company exercising theConversion Right and specifying (i) the total number of shares of Stock theholder of this Warrant will purchase pursuant to such conversion, and (ii) aplace, and a date not less than one (1) nor more than twenty (20) business daysfrom the date of the Conversion Notice for the closing of such purchase.

 

(c)           At any closing under Section 5(b) hereof, (i) the holder will surrenderthe Warrant, (ii) the Company will deliver to the holder a certificate orcertificates for the number of shares of Common Stock issuable upon suchconversion, together with cash in lieu of any fraction of a share, and (iii)the Company will deliver to the holder a new Warrant representing the number ofshares, if any, with respect to which the Warrant shall not have beenconverted.

 

(d)           **“Fair MarketValue”** of a share of CommonStock as of a particular date (the **“Determination Date”**) shall mean:

 

(i)            If the Company’s Common Stock istraded on an exchange or is quoted on The National Association of SecuritiesDealers, Inc. Automated Quotation (**“Nasdaq”**) National Market, or The NasdaqSmallCap Market, then the average closing or last sale prices, respectively,reported for the ten (10) business days immediately preceding the DeterminationDate.

 

(ii)           If the Company’s Common Stock is nottraded on an exchange or on The Nasdaq National Market, or The Nasdaq SmallCapMarket, but is traded in the over-the-counter market, then the average of theclosing bid and asked prices reported for the ten (10) business daysimmediately preceding the Determination Date.

 

(iii)          If the Company’s Common Stock is notpublicly traded and there has been a bona fide sale for cash on an arm’s-lengthbasis within 45 days prior to the Determination Date of such Common Stock by theCompany privately to one or more investors unaffiliated with the Company (a“Qualifying Sale”), then the most recent such sales price.

 

(iv)          If the Company’s Common Stock is notpublicly traded and there has been no Qualifying Sale, then the appraised fairmarket value of such stock, as determined by mutual agreement of the Companyand the holder of the Warrant; or if the parties cannot agree to suchvaluation, then the Board of Directors, acting in good faith, shall determinethe Fair Market Value.

 

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6.             Notices. The Company shall mail to the registered holder of the Warrant, at hislast known post office address appearing on the books of the Company, not lessthan fifteen (15) days prior to the date on which (a) a record will be takenfor the purpose of determining the holders of Common Stock entitled todividends (other than cash dividends) or subscription rights, or (b) a recordwill be taken (or in lieu thereof, the transfer books will be closed) for thepurpose of determining the holders of Common Stock entitled to notice of and tovote at a meeting of stockholders at which any capital reorganization,reclassification of shares of Common Stock, consolidation, merger, dissolution,liquidation, winding up or sale of substantially all of the Company’s assetsshall be considered and acted upon.

 

7.             Reservation of Common Stock.  A number of shares of Common Stocksufficient to provide for the exercise of the Warrant upon the basis herein setforth shall at all times be reserved for the exercise thereof.

 

8.             Miscellaneous. Whenever reference is made herein to the issue or sale of shares ofCommon Stock, the term**“Common Stock”** shall include any stock ofany class of the Company other than preferred stock with a fixed limit ondividends and a fixed amount payable in the event of any voluntary orinvoluntary liquidation, dissolution or winding up of the Company.

 

The Company will not, byamendment of its Articles of Incorporation or through reorganization, consolidation,merger, dissolution or sale of assets, or by any other voluntary act or deed,avoid or seek to avoid the observance or performance of any of the covenants,stipulations or conditions to be observed or performed hereunder by theCompany, but will, at all times in good faith, assist, insofar as it is able,in the carrying out of all provisions hereof and in the taking of all otheraction which may be necessary in order to protect the rights of the holderhereof against dilution.

 

Upon written request of theholder of this Warrant, the Company will promptly provide such holder with athen current written list of the names and addresses of all holders of warrantsoriginally issued under the terms of, and concurrent with, this Warrant.

 

The representations,warranties and agreements herein contained shall survive the exercise of thisWarrant.  References to the “holder of”include the immediate holder of shares purchased on the exercise of thisWarrant, and the word “holder” shall include the plural thereof.  This Common Stock Purchase Warrant shall beinterpreted under the laws of the State of Minnesota.

 

All shares of Common Stockor other securities issued upon the exercise of the Warrant shall be validlyissued, fully paid and non-assessable.

 

Notwithstanding anythingcontained herein to the contrary, the holder of this Warrant shall not bedeemed a stockholder (including, no right to vote on any matters coming beforethe shareholders) of the Company for any purpose whatsoever until and unlessthis Warrant is duly exercised.

 

**IN WITNESS WHEREOF,** this Warrant has been duly executed byGranite City Food & Brewery Ltd., this           day of                                    ,2002.

 
|   | **GRANITE CITY FOOD & BREWERY LTD.**     |
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|   | By:                                          |   |   |
|   | Name: Steven J. Wagenheim                    |
|   | Title: President and Chief Executive Officer |

 

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**WARRANTEXERCISE FORM**

 

To be signed only upon exercise of Warrant.

 

The undersigned, the holder of the within Warrant, hereby irrevocablyelects to exercise the purchase right represented by such Warrant for, and topurchase thereunder,                             of the shares of Common Stock of Granite City Food & Brewery Ltd. to whichsuch Warrant relates and herewith makes payment of$                     therefor in cash or by certified check, and requests that such shares be issuedand be delivered to                                                 ,the address for which is set forth below the signature of the undersigned.

 
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**ASSIGNMENTFORM**

 

To be signed only upon authorized transfer of Warrant.

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, andtransfers unto                                         the right to purchase shares of Common Stock of Granite City Food & BreweryLtd. to which the within Warrant relates and appoints                                                 ,attorney, to transfer said right on the books of Granite City Food &Brewery Ltd. with full power of substitution in the premises.

 
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**CASHLESS EXERCISEFORM**

 

(To be executed upon exercise of Warrant pursuant to Section 5)

 

To:  Granite City Food & Brewery Ltd.

 

The undersigned hereby irrevocably elects a cashless exercise of theright of purchase represented by the within Common Stock Purchase Warrant for,and to purchase thereunder,                              shares of Common Stock, as provided for in Section 5 therein.

 

If said number of shares shall not be all the shares purchasable underthe within Common Stock Purchase Warrant, a new Warrant is to be issued in thename of said undersigned for the balance remaining of the shares purchasablethereunder rounded up to the next higher number of shares.

 

Please issue a certificate or certificates for such Common Stock in thename of, and pay any cash for any fractional shares to:

 

 
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| SOCIAL SECURITY NO. |                   |
|                |                   |
| SIGNATURE           |                   |
|                     |                        |  |

 

 
|   | **NOTE:**  The above signature should correspond  exactly with the name on the first page of this Common Stock Purchase Warrant  or with the name of the assignee appearing in the assignment form on the  preceding page. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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