**Exhibit 10.3**

 

**COMMERCIALGUARANTY**

 
| **Principal**                                                                                                                                                                                                                                   |                                                                                                                                         | **Loan Date** |        | **Maturity**                                                                                |   | **Loan No** |   | **Call/Coll** |   | **Account** |   | **Officer** |   | **Initials** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|---------------|-------------|---------------------------------------------------------------------------------------------|--------|-------------|--------|---------------|--------|-------------|--------|-------------|--------|--------------|
|                                                                                                                                                                                                                                            |                                                                                                                                         |          |        |                                                                                        |   |        |   | **0026**      |   |        |   | **CD**      |   |         |
|                                                                                                                                                                                                                                            |                                                                                                                                         |          |        |                                                                                        |   |        |   |          |   |        |   |        |   |         |
| References in the shaded area are for  Lender’s use only and do not limit the applicability of this document to any  particular loan or item.  Any item above containing “***” has been omitted due to text length  limitations. |
|                                                                                                                                                                                                                                            |
| **Borrower:**                                                                                                                                                                                                                                   | **Granite  City Food & Brewery Ltd.,  a Minnesota Corporation  (TIN: 41-1883639)  5831 CEDAR LAKE ROAD  ST. LOUIS PARK, MN  55416** |          | **Lender:** | **First  National Bank  Pierre  125 W. Sioux Avenue  P.O. Box 730  Pierre, SD  57501** |
|                                                                                                                                                                                                                                            |                                                                                                                                         |          |        |                                                                                        |
| **Guarantor:**                                                                                                                                                                                                                                  | **Steven  J. WAGENHEIM  (SSN:  ###-##-####)  321 Westwood Drive North  Golden Valley, MN 55422**                                        |          |        |                                                                                        |
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**AMOUNT OF GUARANTY.  This is a guaranty of payment of the Note,including without limitation the principal Note amount of Seven Hundred FiftyThousand & 00/100 Dollars ($750,000.00).**

 

**GUARANTY.**  **For good andvaluable consideration, Steven J. WAGENHEIM (“Guarantor”) absolutely andunconditionally guarantees and promises to pay to First National Bank(“Lender”) or its order, on demand, in legal tender of the United States ofAmerica, the Indebtedness (as that term is defined below) of Granite City Food& Brewery Ltd., a Minnesota Corporation (“Borrower”) to Lender on the termsand conditions set forth in this Guaranty.**

 

**MAXIMUM LIABILITY.** The maximum liability of Guarantor under this Guaranty shall not exceedat any one time the amount of the Indebtedness described herein, plus all costsand expenses of (A) enforcement of this Guaranty and (B) collection and sale ofany collateral securing this Guaranty.

 

The abovelimitation on liability is not a restriction on the amount of the Indebtednessof Borrower to Lender either in the aggregate or at any one time.  If Lender presently holds one or moreguaranties, or hereafter receives additional guaranties from Guarantor,Lender’s rights under all guaranties shall be cumulative.  This Guaranty shall not (unless specificallyprovided below to the contrary) affect or invalidate any such otherguaranties.  Guarantor’s liability willbe Guarantor’s aggregate liability under the terms of this Guaranty and anysuch other unterminated guaranties.

 

**INDEBTEDNESS GUARANTEED.** The Indebtedness guaranteed by this Guaranty includes the Note,including (a) all principal, (b) all interest, (c) all late charges, (d) allloan fees and loan charges, and (e) all collection costs and expenses relatingto the Note or to any collateral for the Note. Collection costs and expenses include without limitation all of Lender’sattorneys’ fees.

 

**DURATION OF GUARANTY.** This Guaranty will take effect when received by Lender without thenecessity of any acceptance by Lender, or any notice to Guarantor or toBorrower, and will continue in full force until all Indebtedness shall havebeen fully and finally paid and satisfied and all of Guarantor’s otherobligations under this Guaranty shall have been performed in full.  Release of any other guarantor ortermination of any other guaranty of the Indebtedness shall not affect theliability of Guarantor under this Guaranty. A revocation Lender receives from any one or more Guarantors shall notaffect the liability of any remaining Guarantors under this Guaranty.  **This Guaranty covers a revolving line of credit and itis specifically anticipated that fluctuations will occur in the aggregateamount of Indebtedness owing from Borrower to Lender.  Guarantor specifically acknowledges and agrees that fluctuationsin the amount of Indebtedness, even to zero dollars ($ 0.00), shall notconstitute a termination of this Guaranty. Guarantor’s Liability under this Guaranty shall terminate only upon (A)termination in writing by Borrower and Lender of the line of credit, (B)payment of the Indebtedness in full in legal tender, and (C) payment in full inlegal tender of all of Guarantor’s other obligations under this Guaranty.**

 

**GUARANTOR’S AUTHORIZATION TO LENDER.** Guarantor authorizes Lender, **without notice or demand and without lesseningGuarantor’s liability under this Guaranty, from time to time:** (A) tomake one or more

 

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additional securedor unsecured loans to Borrower, to lease equipment or other goods to Borrower,or otherwise to extend additional credit to Borrower; (B) to alter, compromise,renew, extend, accelerate, or otherwise change one or more times the time forpayment or other terms of the Indebtedness or any part of the Indebtedness,including increases and decreases of the rate of interest on the Indebtedness;extensions may be repeated and may be for longer than the original loan term;(C) to take and hold security for the payment of this Guaranty or theIndebtedness, and exchange, enforce, waive, subordinate, fail or decide not toperfect, and release any such security, with or without the substitution of newcollateral; (0) to release, substitute, agree not to sue, or deal with any oneor more of Borrower’s sureties, endorsers, or other guarantors on any terms orin any manner Lender may choose; (E) to determine how, when and whatapplication of payments and credits shall be made on the Indebtedness (F) toapply such security and direct the order or manner of sale thereof, includingwithout limitation, any nonjudicial sale permitted by the terms of thecontrolling security agreement or deed of trust, as Lender in its discretionmay determine; (G) to sell, transfer, assign or grant participations in all orany part of the Indebtedness; and (H) to assign or transfer this Guaranty inwhole or in part.

 

**GUARANTOR’S REPRESENTATIONS ANDWARRANTIES.**  Guarantor represents and warrants to Lenderthat (A) no representations or agreements of any kind have been made toGuarantor which would limit or qualify in any way the terms of this Guaranty;(B) this Guaranty is executed at Borrower’s request and not at the request of Lender;(C) Guarantor has full power, right and authority to enter into this Guaranty;(D) the provisions of this Guaranty do not conflict with or result in a defaultunder any agreement or other instrument binding upon Guarantor and do notresult in a violation of any law, regulation, court decree or order applicableto Guarantor; (E) Guarantor has not and will not, without the priorwritten consent of Lender, sell, lease, assign, encumber, hypothecate,transfer, or otherwise dispose of all or substantially all of Guarantor’sassets, or any interest therein; (F) upon Lender’s request, Guarantor willprovide to Lender financial and credit information in form acceptable toLender, and all such financial information which currently has been, and allfuture financial information which will be provided to Lender is and will betrue and correct in all material respects and fairly present Guarantor’sfinancial condition as of the dates the financial information is provided; (G)no material adverse change has occurred in Guarantor’s financial conditionsince the date of the most recent financial statements provided to Lender andno event has occurred which may materially adversely affect Guarantor’sfinancial condition; (H) no litigation, claim, investigation, administrativeproceeding or similar action (including those for unpaid taxes) againstGuarantor is pending or threatened; (I) Lender has made no representation toGuarantor as to the creditworthiness of Borrower; and (J) Guarantor hasestablished adequate means of obtaining from Borrower on a continuing basisinformation regarding Borrower’s financial condition.  Guarantor agrees to keep adequately informed from such means ofany facts, events, or circumstances which might in any way affect Guarantor’srisks under this Guaranty, and Guarantor further agrees that, absent a requestfor information, Lender shall have no obligation to disclose to Guarantor anyinformation or documents acquired by Lender in the course of its relationshipwith Borrower.

 

**GUARANTOR’S WAIVERS.** Except as prohibited by applicable law, Guarantor waives any right torequire Lender (A) to continue lending money or to extend other credit toBorrower; (B) to make any presentment, protest, demand, or notice of any kind,including notice of any nonpayment of the Indebtedness or of any nonpaymentrelated to any collateral, or notice of any action or nonaction on the part ofBorrower, Lender, any surety, endorser, or other guarantor in connection withthe Indebtedness or in connection with the creation of new or additional loansor obligations; (C) to resort for payment or to proceed directly or at onceagainst any person, including Borrower or any other guarantor; (D) to proceeddirectly against or exhaust any collateral held by Lender from Borrower, anyother guarantor, or any other person; (E) to give notice of the terms, time,and place of any public or private sale of personal property security held byLender from Borrower or to comply with any other applicable provisions of theUniform Commercial Code; (F) to pursue any other remedy within Lender’s power;or (G) to commit any act or omission of any kind, or at any time, with respectto any matter whatsoever.

 

In addition to thewaivers set forth herein, if now or hereafter Borrower is or shall becomeinsolvent and the Indebtedness shall not at all times until paid be fullysecured by collateral pledged by Borrower, Guarantor hereby forever waives andgives up in favor of Lender and Borrower, and Lender’s and Borrower’srespective successors, any claim or right to payment Guarantor may now have orhereafter have or acquire against Borrower, by subrogation or otherwise, sothat at no time shall Guarantor be or become a “creditor” of Borrower withinthe meaning of 11 U.S.C. section 547(b), or any successor provision of theFederal bankruptcy laws.

 

Guarantor alsowaives any and all rights or defenses arising by reason of (A) any “one action”or “anti-deficiency” law or any other law which may prevent Lender frombringing any action, including a claim for deficiency, against Guarantor,before or after Lender’s commencement or completion of any foreclosure action,either judicially or by exercise of a power of sale; (B) any election ofremedies by Lender which destroys or otherwise adversely affects Guarantor’ssubrogation rights of Guarantor’s rights to proceed against Borrower forreimbursement, including without limitation, any loss of rights Guarantor maysuffer by reason of any law limiting, qualifying, or discharging theIndebtedness; (C) any disability or other defense of Borrower, of any otherguarantor, or of any other person, or

 

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by reason of thecessation of Borrower’s liability from any cause whatsoever, other than paymentin full in legal tender, of the Indebtedness; (D) any right to claim dischargeof the Indebtedness on the basis of unjustified impairment of any collateralfor the Indebtedness; (E) any statute of limitations, if at any time any actionor suit brought by Lender against Guarantor is commenced, there is outstandingIndebtedness of Borrower to Lender which is not barred by any applicablestatute of limitations; or (F) any defenses given to guarantors at law or inequity other than actual payment and performance of the Indebtedness.  If payment is made by Borrower, whethervoluntarily or otherwise, or by any third party, on the Indebtedness andthereafter Lender is forced to remit the amount of that payment to Borrower’strustee in bankruptcy or to any similar person under any federal or statebankruptcy law or law for the relief of debtors, the Indebtedness shall beconsidered unpaid for the purpose of the enforcement of this Guaranty.

 

Guarantor furtherwaives and agrees not to assert or claim at any time any deductions to theamount guaranteed under this Guaranty for any claim of setoff, counterclaim,counter demand, recoupment or similar right, whether such claim, demand orright may be asserted by the Borrower, the Guarantor, or both.

 

**GUARANTOR’S UNDERSTANDING WITHRESPECT TO WAIVERS.**  Guarantor warrants and agrees that each ofthe waivers set forth above is made with Guarantor’s full knowledge of itssignificance and consequences and that, under the circumstances, the waiversare reasonable and not contrary to public policy or law.  If any such waiver is determined to becontrary to any applicable law or public policy, such waiver shall be effectiveonly to the extent permitted by law or public policy.

 

**SUBORDINATION OF BORROWER’S DEBTS TOGUARANTOR. **Guarantor agrees that the Indebtedness ofBorrower to Lender, whether now existing or hereafter created, shall besuperior to any claim that Guarantor may now have or hereafter acquire againstBorrower, whether or not Borrower becomes insolvent.  Guarantor hereby expressly subordinates any claim Guarantor mayhave against Borrower, upon any account whatsoever, to any claim that Lendermay now or hereafter have against Borrower. In the event of insolvency and consequent liquidation of the assets ofBorrower, through bankruptcy, by an assignment for the benefit of creditors, byvoluntary liquidation, or otherwise, the assets of Borrower applicable to thepayment of the claims of both Lender and Guarantor shall be paid to Lender andshall be first applied by Lender to the Indebtedness of Borrower to Lender.  Guarantor does hereby assign to Lender allclaims which it may have or acquire against Borrower or against any assignee ortrustee in bankruptcy of Borrower; provided however, that such assignment shallbe effective only for the purpose of assuring to Lender full payment in legal tenderof the Indebtedness, if Lender so requests, any notes or credit agreements nowor hereafter evidencing any debts or obligations of Borrower to Guarantor shallbe marked with a legend that the same are subject to this Guaranty and shall bedelivered to Lender.  Guarantor agrees,and Lender is hereby authorized, in the name of Guarantor, from time to time tofile financing statements and continuation statements and to execute documentsand to take such other actions as Lender deems necessary or appropriate toperfect, preserve and enforce its rights under this Guaranty.

 

**MISCELLANEOUS PROVISIONS.** The following miscellaneous provisions are a part of this Guaranty:

 

**Amendments. **ThisGuaranty, together with any Related Documents, constitutes the entire understandingand agreement of the parties as to the matters set forth in this Guaranty.  No alteration of or amendment to thisGuaranty shall be effective unless given in writing and signed by the party orparties sought to be charged or bound by the alteration or amendment.

 

**Attorneys’ Fees; Expenses.** Guarantor agrees to pay upon demand all of Lender’s costs and expenses,including Lender’s attorneys’ fees and Lender’s legal expenses, incurred inconnection with the enforcement of this Guaranty.  Lender may hire or pay someone else to help enforce thisGuaranty, and Guarantor shall pay the costs and expenses of suchenforcement.  Costs and expenses includeLender’s attorneys’ fees and legal expenses whether or not there is a lawsuit,including attorneys’ fees and legal expenses for bankruptcy proceedings(including efforts to modify or vacate any automatic stay or injunction),appeals, and any anticipated post-judgment collection services.  Guarantor also shall pay all court costs andsuch additional fees as may be directed by the court.

 

**Caption Headings. **Caption headings in this Guaranty are for conveniencepurposes only and are not to be used to interpret or define the provisions ofthis Guaranty.

 

**Governing Law.  This Guaranty will be governed by, construedand enforced in accordance with federal law and the laws of the State of SouthDakota.  This Guaranty has been acceptedby Lender in the State of South Dakota.**

 

**Integration. **Guarantor further agrees that Guarantor has read andfully understands the terms of this Guaranty; Guarantor has had the opportunityto be advised by Guarantor’s attorney with respect to this

 

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Guaranty; theGuaranty fully reflects Guarantor’s intentions and parol evidence is notrequired to interpret the terms of this Guaranty.  Guarantor hereby indemnifies and holds Lender harmless from alllosses, claims, damages, and costs (including Lender’s attorneys’ fees)suffered or incurred by Lender as a result of any breach by Guarantor of thewarranties, representations and agreements of this paragraph.

 

**Interpretation. **In all cases where there is more than one Borrower orGuarantor, then all words used in this Guaranty in the singular shall be deemedto have been used in the plural where the context and construction so require;and where there is more than one Borrower named in this Guaranty or when thisGuaranty is executed by more than one Guarantor, the words “Borrower” and“Guarantor” respectively shall mean all and any one or more of them.  The words “Guarantor,” “Borrower,” and “Lender”include the heirs, successors, assigns, and transferees of each of them.  If a court finds that any provision of thisGuaranty is not valid or should not be enforced, that fact by itself will notmean that the rest of this Guaranty will not be valid or enforced.  Therefore, a court will enforce the rest ofthe provisions of this Guaranty even if a provision of this Guaranty may befound to be invalid or unenforceable.  Ifany one or more of Borrower or Guarantor are corporations, partnerships, limitedliability companies, or similar entities, it is not necessary for Lender toinquire into the powers of Borrower or Guarantor or of the officers, directors,partners, managers, or other agents acting or purporting to act on theirbehalf, and any indebtedness made or created in reliance upon the professedexercise of such powers shall be guaranteed under this Guaranty.

 

**Notices. **Anynotice required to be given under this Guaranty shall be given in writing, andshall be effective when actually delivered, when actually received bytelefacsimile (unless otherwise required by law), when deposited with anationally recognized overnight courier, or, if mailed, when deposited in theUnited States mail, as first class, certified or registered mail postage prepaid,directed to the addresses shown near the beginning of this Guaranty.  Any party may change its address for noticesunder this Guaranty by giving formal written notice to the other parties,specifying that the purpose of the notice is to change the party’saddress.  For notice purposes, Guarantoragrees to keep Lender informed at all times of Guarantor’s currentaddress.  Unless otherwise provided orrequired by law, if there is more than one Guarantor, any notice given byLender to any Guarantor is deemed to be notice given to all Guarantors.

 

**No Waiver by Lender. **Lender shall not be deemed to have waived any rightsunder this Guaranty unless such waiver is given in writing and signed byLender.  No delay or omission on thepart of Lender in exercising any right shall operate as a waiver of such rightor any other right.  A waiver by Lenderof a provision of this Guaranty shall not prejudice or constitute a waiver ofLender’s right otherwise to demand strict compliance with that provision or anyother provision of this Guaranty.  Noprior waiver by Lender, nor any course of dealing between Lender and Guarantor,shall constitute a waiver of any of Lender’s rights or of any of Guarantor’sobligations as to any future transactions. Whenever the consent of Lender is required under this Guaranty, thegranting of such consent by Lender in any instance shall not constitutecontinuing consent to subsequent instances where such consent is required andin all cases such consent may be granted or withheld in the sole discretion ofLender.

 

**Successors and Assigns. **Subject to any limitations stated in this Guaranty ontransfer of Guarantor’s interest, this Guaranty shall be binding upon and inureto the benefit of the parties, their successors and assigns.

 

**Waive Jury.**  **Lender andGuarantor hereby waive the right to any jury trial in any action, proceeding,or counterclaim brought by either Lender or Borrower against the other.**

 

**DEFINITIONS.** The following capitalized words and terms shall have the followingmeanings when used in this Guaranty. Unless specifically stated to the contrary, all references to dollaramounts shall mean amounts in lawful money of the United States ofAmerica.  Words and terms used in thesingular shall include the plural, and the plural shall include the singular,as the context may require.  Words andterms not otherwise defined in this Guaranty shall have the meanings attributedto such terms in the Uniform Commercial Code:

 

**Borrower.** The word “Borrower” means Granite City Food & Brewery Ltd., aMinnesota Corporation and includes all co-signers and co-makers signing theNote.

 

**Guarantor.** The word “Guarantor” means each and every person or entity signing thisGuaranty, including without limitation Steven J. WAGENHEIM.

 

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**Guaranty.** The word “Guaranty” means the guaranty from Guarantor to Lender,including without limitation a guaranty of all or part of the Note.

 

**Indebtedness.** The word “Indebtedness” means Borrower’s indebtedness to Lender as moreparticularly described in this Guaranty.

 

**Lender.** The word “Lender” means First National Bank, its successors and assigns.

 

**Note.**  The word“Note” means the promissory note dated April 14, 2004, **in theoriginal principal amount of $750,000.00** from Borrower to Lender,together with all renewals of, extensions of, modifications of, refinancingsof, consolidations of, and substitutions for the promissory note or agreement.

 

**Related Documents.** The words “Related Documents” mean all promissory notes, creditagreements, loan agreements, environmental agreements, guaranties, securityagreements, mortgages, deeds of trust, security deeds, collateral mortgages,and all other instruments, agreements and documents, whether now or hereafterexisting, executed in connection with the Indebtedness.

 

**EACH UNDERSIGNED GUARANTORACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITSTERMS.  IN ADDITION, EACH GUARANTORUNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION ANDDELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTILTERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OFGUARANTY”.  NO FORMAL ACCEPTANCE BYLENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED APRIL 14, 2004.**

 
| **GUARANTOR:** |                    |
|----------------|-------------------------|
|           |                    |
| **x**          |                    |   |
|           | **Steven J. WAGENHEIM** |   |

 

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