**Exhibit10.1**

 

**LOAN AGREEMENT**

 

**BETWEEN**

 

**GRANITE CITY FOOD & BREWERY LTD.**

 

**AND**

 

**FIRST NATIONAL BANK**

 

 

**August 28, 2003**

 

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LOAN AGREEMENT

 

Dated as of August 28, 2003

 

GRANITE CITY FOOD & BREWERY LTD., a Minnesota corporation (the“Borrower”) located at 5831 Cedar Lake Road, St. Louis Park, Minnesota 55416,and FIRST NATIONAL BANK, a national banking association (the “Bank”) located at125 West Sioux Avenue, Pierre, South Dakota 57501, agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1.  Definitions.  As used in this Agreement the followingterms shall have the following meanings (and such meanings shall be equallyapplicable to singular and plural forms of the terms defined):

 

(a)           “Affiliate” shall mean (i) a person whichowns directly or indirectly 10% or more of the equity of the Borrower, a personwhich is directly or indirectly owned 10% or more by a person described abovein subparagraph (i), and a person in which the Borrower owns directly orindirectly 10% or more of the equity.

 

(b)           “Business Day” shall mean any day other thana Saturday, Sunday or a public holiday or the equivalent under the laws of theState of Minnesota.

 

(c)           “Debt” means (i)indebtedness for borrowed money or for the deferred purchase price of propertyor services, (ii) obligations as lessee under leases including the Lease (ashereinafter defined), and (iii) obligations under direct or indirectguaranties in respect of, and obligations (contingent or otherwise) to purchaseor otherwise acquire, or otherwise to assure a creditor against loss in respectof, indebtedness or obligations of others of the kinds referred to in clauses(i) or (ii) above except endorsements for collection, deposit or negotiation ofinstruments in the ordinary course of business.

 

(d)           “Event of Default” shall mean one of theevents specified in Section 6.1.

 

(e)           “Guarantor” shall mean Steven J. Wagenheim.

 

(f)            “Lease” shall mean the lease between DunhamCapital Management, L.L.C., a South Dakota limited liability company, andBorrower dated February 7, 2003, for the property legally described as Lot 1Huntington Ridge Commercial Plat 2, Clive, Polk County, Iowa (the “LeasedProperty”).

 

(g)           “Lien” shall mean any mortgage, deed oftrust, pledge, security interest, assignment, deposit arrangement, encumbrance,lien (statutory or otherwise), or preference, priority, or other security

 

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agreement, or preferential arrangement, charge, or encumbrance of anykind or nature whatsoever including, without limitation, any conditional saleor other title retention agreement, any financing lease having substantiallythe same economic effect as any of the foregoing, or the filing of anyfinancing statement under the Uniform Commercial Code or comparable law of anyjurisdiction to evidence any of the foregoing.

 

(h)           “Loan Documents” shall mean this Agreement,the Term Note, the Security Agreement, the Financing Statements, the Assignmentof Leases and Rents, the Guaranty of Steven J. Wagenheim, and Landlord Waiverand Consent, and all other documents to be executed and delivered in connectionwith this Agreement.

 

(i)            “Loan Parties” shall mean the Borrower andthe Guarantor.

 

(j)            “Person” shall mean an individual,corporation, partnership, joint venture, trust or unincorporated organizationor government or other agency or political subdivision thereof.

 

(k)           “Project” shall meanthe equipping of a Granite City Food & Brewery at the Leased Property.

 

(l)            “Term Note” shall mean the Term Notedescribed in Section 2.5.

 

Section 1.2.  Accounting andOther Terms.  All accounting termsnot specifically defined in this Agreement shall be construed in accordancewith generally accepted accounting principles. Other terms defined herein shall have the meanings ascribed to themherein.

 

ARTICLE II

 

THE LOAN

 

Section 2.1.  Loan Commitment.  In accordance with the terms and conditionsherein, the Bank agrees to lend to the Borrower, and the Borrower agrees toborrow from the Bank, the amount of $750,000 (the “Loan”) for the purpose ofthe Project.

 

Section 2.2  Making ofAdvances.

 

(a)           Borrower may requestadvances under this Agreement directly from the Bank, not more often than fourtimes each month, for the purpose of the Project.  Borrower shall deliver to Bank in connection with each requestunder this Subsection 2.2(a) invoices, bills of lading, or any other writtenschedules or information satisfactory to the Bank listing and describing theitems to be purchased by Borrower.

 

(b)           Any request for an advance under thisSection 2.2 shall be deemed to be a representation that the Borrower’srepresentations and warranties contained in Section 4.1 herein are trueand correct as of

 

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the date of the advance as though made on and as of such date and thatno event has occurred and is continuing, or will result from such advance,which constitutes an Event of Default or would constitute an Event of Defaultbut for the requirement that notice be given or time elapse or both.

 

Section 2.3.  DisbursementProcedures for Advances.

 

(a)           Whenever the Borrower desires to borrowunder Subsection 2.2, which shall be no more often than four times each month,the Borrower shall submit to the Bank a draw request in a form acceptable tothe Bank, duly executed on behalf of the Borrower, setting forth theinformation requested therein.  Eachdraw request shall be submitted at least ten (10) Business Days before the datethe advance is desired.

 

(b)           At the time of submission of each drawrequest, the Borrower shall submit the following:

 

(i)            A written invoice or purchase agreementfrom each equipment vendor for equipment to be purchased with the advanceproceeds.

 

(ii)           Such other supporting evidence as may berequested by the Bank to substantiate all payments which are to be made out ofthe correct draw request and/or to substantiate all payments then made forprior draw requests.

 

(c)           If on the date an advance is desired, theBorrower has performed all of its agreements and complied with all requirementstherefor to be performed or complied with hereunder including satisfaction ofall applicable conditions precedent contained herein, the Bank shall fund tothe equipment vendor(s) identified on the draw request the amount of therequested advance, such sums to be paid in accordance with the requirementscontained herein.  Each advancedisbursed shall bear interest at the rate provided in the Term Note from thedate such advance is so disbursed.

 

Section 2.4.  Origination Fee.  The Borrower agrees to pay to the Bank an originationfee (the “Origination Fee”) in the amount of Seven Thousand Five Hundred and00/100 Dollars ($7,500.00).

 

Section 2.5.  The Term Note.  The Loan made by the Bank shall have amaturity of August 27, 2010 (the “Maturity Date”), and shall be evidencedby a note, together with all renewal and replacement notes (the “Term Note”).

 

Section 2.6.  Interest andPayments.  The Borrower shall repay,and shall pay interest on, the aggregate unpaid principal amount of alladvances under the Loan in accordance with the Term Note.  The payments shall be sufficient to pay theTerm Note in full on the Maturity Date. All payments of principal, interest and fees under this Agreement shallbe made when due to the Bank in immediately available funds.  All computations of interest shall

 

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be made by the Bank on the basis of the actual number of days elapsedin a year of 360 days.  Whenever anysuch payment shall be due on a non-Business Day such payment shall be made onthe next succeeding Business Day, and such extension of time shall be includedin the computation of interest.  TheBank is expressly authorized to charge any principal or interest payment, whenpast due, to any account maintained by Borrower at the Bank.

 

Section 2.7.  Interest Rate.  The parties agree that the interest rate onthe Term Note from August 28, 2003 until August 28, 2006, will be6.125%, and thereafter shall be adjusted every three years to the greater of(a) 5.5% or (b) the then-current Prime Rate (as defined in the Term Note) plus2.0%.  Interest on the Term Note shallbe compounded per annum and accrual shall commence on the unpaid advancedprincipal amount.

 

Section 2.8.  Prepayment ofTerm Loan.  The Borrower may, uponnotice to the Bank, prepay the Term Note, in whole or in part, with accruedinterest to the date of such prepayment on the amount prepaid, together with aone percent (1%) prepayment fee on the amount of the prepayment; provided,however, the Bank may, at its option, waive the prepayment fee.  All prepayments shall be applied first toaccrued interest and then to principal installments due under the Term Note inthe inverse order of their maturities.

 

Section 2.09.  Late PaymentCharge.  If any installment orpayment is paid more than ten (10) days after the due date thereof, theBorrower agrees to pay a late payment charge of five percent (5%) of theinstallment or payment to cover the expenses of collection.

 

ARTICLE III

 

# **CONDITIONS OF LENDING**

# ** **

Section 3.1.  Conditions Precedentto Initial Advance on the Term Loan. The Bank shall have no obligation to make the initial advance hereunderunless the Bank shall have received on or before the date of such advance thefollowing documents:

 

(a)           Borrower shall have expended cash equity atleast in the amount of $321,428.55 for the Project, inclusive of pre-openingcosts.

 

(b)           The Term Note properlyexecuted and delivered on behalf of the Borrower.

 

(c)           The Security Agreement properly executed anddelivered on behalf of the Borrower, granting to the Bank a first securityinterest in all of the Borrower’s inventory, accounts, general intangibles,equipment, furniture, fixtures, and all other personal property of Borrower assecurity for the performance of the Borrower’s obligations under this Agreementand the Term Note, together with any UCC-1 and UCC-2 FinancingStatements, or other documents deemed necessary or desirable by the Bank toperfect the security interest granted by the Security Agreement.

 

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(d)           An Assignment of Leases and Rents properlyexecuted and delivered on behalf of the Borrower.

 

(e)           The Landlord Waiver and Consent properlyexecuted and delivered on behalf of the Borrower and Landlord.

 

(f)            The Guaranty properly executed anddelivered on behalf of the Guarantor.

 

(g)           A Borrower’s Certificate properly executedand delivered on behalf of the Borrower.

 

(h)           Certificates satisfactory in form andsubstance to the Bank of all required insurance coverage for the Project listingthe Bank as loss payee.

 

(i)            All governmental permits and approvalsrequired to equip the Project (and prior to the final draw, all governmentalpermits and approvals to operate the Leased Property as a restaurant).

 

(j)            Financial statements of the Borrower andGuarantor which are, both in form and substance, acceptable to the Bank.

 

(k)           The Origination Fee and all loan expenses(including without limitation attorneys fees for the Bank) shall have been paidby Borrower.

 

(l)            Certified copies of the organizationaldocuments of the Borrower.

 

(m)          A certified copy of appropriate documents ofthe Borrower approving the execution and delivery of the Loan Documents andapproving all other matters contemplated by this Agreement.

 

(n)           Such other requirements and documents as theBank shall reasonably require.

 

Section 3.2.  ConditionsPrecedent to Each Advance.  Eachadvance under the Term Note shall be subject to the further conditionsprecedent, that on the date of such advance:

 

(a)           The representations and warranties containedin Section 4.1 of this Agreement are correct on and as of the date of suchadvance as though made on such date.

 

(b)           No event has occurredand is continuing, or will result from such advance, which constitutes an Eventof Default or would constitute an Event of Default but for the requirement thatnotice be given or time elapse or both.

 

(c)           As of the dateimmediately prior to any advance, the total amount of the unadvanced proceedsof the Loan shall be sufficient, in Bank’s opinion, to complete theProject.  To the extent the unadvancedLoan proceeds shall be insufficient, in Bank’s opinion, to complete theProject, Borrower shall immediately deposit with Bank, an amount equal to suchdeficiency as additional equity funds. Such additional equity funds shall be disbursed prior to thedisbursement of any further advance or advances

 

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under thisAgreement.  In this regard, it shall bethe obligation of Borrower to inform the Bank of any increase or decrease inthe costs of the Project.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.  Representationsand Warranties of the Borrower.  Toinduce the Bank to make the Loan, the Borrower represents and warrants asfollows:

 

(a)           Existence of Borrower.  The Borrower is a corporation duly formedand validly existing and in good standing under the laws of the State ofMinnesota, and it is in good standing in Minnesota and qualified to do businessin Iowa.

 

(b)           Authority to Execute.  The execution, delivery and performance bythe Loan Parties of their respective Loan Documents are within their corporateor individual powers, as the case may be, have been duly authorized by allnecessary corporate or individual action, as the case may be, and do not andwill not conflict with any provision of law, their organizational documents, asapplicable, or any contractual restriction binding upon or affecting them orany of their property, and need no further consent.

 

(c)           Binding Obligation.  This Agreement is, and the other LoanDocuments when delivered hereunder will be, legal, valid and bindingobligations of the Loan Parties enforceable against the Loan Parties inaccordance with their respective terms.

 

(d)           Governmental Approval.  No consent of, or filing with, anygovernmental authority or court, including, without limitation, any bankruptcycourt is required on the part of any Loan Party in connection with theexecution, delivery or performance of any Loan Documents.

 

(e)           Financial Statements.  The financial statements of the Borrower andGuarantor, copies of which have been furnished to the Bank, have been preparedin conformity with generally accepted accounting principles consistentlyapplied and present fairly the financial condition of the Borrower andGuarantor as of such date, and the results of its operations for the financialperiod then ended, except for any necessary year-end adjustments in the case ofunaudited statements, and since such date, there has been no materially adversechange in such financial condition.

 

(f)            Litigation.  No litigation or governmental proceeding ispending or threatened against the Borrower or the Guarantor, or any of theirproperties, which may have a materially adverse effect on the finan­cialconditions or operations of such Persons. No bankruptcy proceeding is pendingor threatened against the Borrower or the Guarantor.

 

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(g)           Title to Project.  Borrower has and will have good andmarketable title to all equipment purchased in connection with the Project, andnone of such equipment is subject to any Lien of any kind.  The equipment shall be new and purchaseddirectly from the manufacturer.

 

(h)           Taxes.  The Borrower and Guarantor have filed by applicable due dates allfederal and state income and excess profits tax returns which are required tobe filed, and have paid all taxes shown on such returns to be due and all othertax assessments received by them to the extent that such assessments havebecome due.

 

(i)            Defaults.  Neither the Borrower nor the Guarantor are in default in thepayment of principal or interest on any indebtedness for borrowed money nor indefault under any instrument or agreement under or subject to which any indebtednessfor borrowed money has been issued, and no event has occurred and is continuingwhich, with or without the lapse of time or the giving of notice, or both,constitutes or would constitute an event of default under any such instrumentor agreement or an Event of Default hereunder.

 

(j)            Franchises.  The Borrower has all permits and licensesnecessary for the Project and will have all necessary permits, licenses, andfranchises necessary for the operation of Borrower’s restaurant businesses onthe Leased Property.

 

(k)           Compliance by Borrower with Laws.  The Borrower has not, and to the knowledgeof Borrower after due inquiry, all owners of the Leased Property have not,failed to comply with any regulation or ordinance of any applicablejurisdiction in any respect, the violation of which might materially andadversely affect the business, properties, operations or assets of Borrower.

 

ARTICLE V

 

COVENANTS OF THE BORROWER

 

Section 5.1.  AffirmativeCovenants.  So long as the Term Noteshall remain unpaid or outstanding hereunder, the Borrower will, unless theBank shall give its prior written consent:

 

(a)           Lease.  Pay and perform all terms and conditions contained in the Lease.

 

(b)           Financial Reporting.  Borrower shall furnish to the Bank as soonas available and in any event within ninety (90) days after the end of eachfiscal year:  (a) an auditedbalance sheet, (b) a statement of income, expenses and retained earningsof the Borrower for the period commencing at the end of the previous fiscalyear and ending with the end of such month, and (c) a statement of cash flows. The Borrower’s annual Financial Report shall be in reasonable detail, inform and substance satisfactory to the

 

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Bank and reviewed by an independent certified public accountant inaccordance with generally accepted accounting principles, showing the resultsof the operations of the Property for such fiscal year.  Within ninety (90) days after the end of thefiscal year, Guarantor shall furnish to the Bank his personal financialstatements in form and substance acceptable to the Bank.  Borrower and Guarantor shall also furnishsuch other information concerning the conditions or operations, financial orotherwise, of the Borrower and Guarantor as may be requested by the Bank.

 

(c)           Visitation Rights.  At any reasonable time and from time to timeupon reasonable prior notice to Borrower, permit the Bank, or any agents,representatives or participants thereof, to examine and make copies of andabstracts from the records and books of account of, and visit the LeasedProperty and all other properties of, the Borrower, and to discuss the affairs,finances and accounts of the Borrower with any of its employees or agents;  and permit the Bank or any agents,representatives or participants thereof, to conduct an inspection, atBorrower’s expense, of all of the Leased Property.

 

(d)           Notification of Default.  Notify the Bank as promptly as practicable(but in any event not later than five (5) Business Days) after Borrower obtainsknowledge of:  (i) the occurrenceof any event which constitutes an Event of Default or which would constitute anEvent of Default with the passage of time or the giving of notice or both; or(ii) the commencement of any litigation or governmental proceedings of anytype which could materially adversely affect the financial condition orbusiness operations of the Borrower or the Guarantor.

 

(e)           Keeping of Financial Records and Books ofAccount.  Maintain proper financialrecords in accordance with generally accepted accounting principlesconsistently applied which fully and correctly reflect all financialtransactions and all assets and liabilities of the Borrower.

 

(f)            Maintenance of Insurance.  Maintain such insurance with reputableinsurance carriers as is normally carried by companies engaged in operating andowning restaurant properties, and name the Bank as loss payee on all policiesinsuring the Property and provide the Bank with certificates of insuranceevidencing its status as a loss payee.

 

(g)           Maintenance of Property.  Maintain and preserve all of its assets,necessary or useful in the proper conduct of its business, in good workingorder and condition, ordinary wear and tear excepted.

 

(h)           Payment of Taxes.  Pay all taxes, assessments and governmentalcharges of any kind payable by it as such taxes, assessments and charges becomedue and before any penalty shall be imposed,

 

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except as Borrower shall contest in good faith and by appropriateproceedings providing such reserves as are required by generally acceptedaccounting principles.

 

(i)            Preservation of Existence.  Preserve and maintain its corporateexistence, rights, franchises and privileges.

 

(j)            Compliance by Borrower with Laws.  Comply with any and all laws, regulations,and ordinances of any applicable jurisdiction in any respect, the violation ofwhich might materially and adversely affect the business, property, operationsor assets of Borrower; hold Bank harmless from any and all liability which theBank may incur as a result of Borrower’s failure to comply with any such law,regulation, or ordinance described above; and continue to hold all governmentallicenses and permits, all franchising and all other authorities necessary toconduct its business and to use its properties in the manner in which they willbe used.

 

Section 5.2.  NegativeCovenants.  So long as the Term Noteshall remain unpaid or outstanding hereunder, the Borrower will not, unless theBank shall give its prior written consent:

 

(a)           Debt.  Create or suffer to exist any Debt except for (i) the Debt underthis Agreement; and (ii) indebtedness pursuant to that Loan Agreement, datedJuly 19, 2001, between the Borrower and the Bank; (iii) ordinary trade debtincurred in Borrower’s business that is not in default and that is unsecured;(iv) other indebtedness not exceeding, in aggregate $150,000 in any twelvemonth period; (v) the Lease; or (vi) indebtedness under existing real estateleases for Borrower’s restaurants located or to be developed in Fargo, NorthDakota, Davenport, Iowa, Cedar Rapids, Iowa, Maple Grove, Minnesota, andWichita-area, Kansas, pursuant to the terms of the Development Agreementbetween Borrower and Donald A. Dunham, Jr. (“Dunham”), dated October 22, 2002,subsequently assigned by Dunham to Dunham Capital Management, L.L.C. (the“Development Agreement”).

 

(b)           Liens.  Create or suffer to exist any Lien except the Lien of the LoanDocuments or other loans by the Bank to the Borrower, including the loan madeon July 19, 2001.

 

(c)           Merger.  Merge or consolidate with any other Person (except where theBorrower is the successor to the merger); sell, transfer, convey, assign,encumber or otherwise dispose of any legal, beneficial, or equitable ownershipof Borrower; or sell, transfer, convey, assign, encumber, lease or otherwisedispose of any of the Project assets (whether now owned or hereafter acquired)to any other Person.

 

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(d)           Transactions with Affiliates.  Engage after the date hereof, in anytransaction (including without limitation loans or financial accommodations ofany kind) with any Affiliate; provided, such transactions shall be permitted ifthey are on terms no less favorable to the Borrower than would be obtainable ifno such relationship existed; provided, however, that Borrower may engage in(i) debt or equity financing transactions with (a) Brew Buddies, L.L.C., aSouth Dakota limited liability company; or (b) Bluestem Capital Partners IIILimited Partnership, a South Dakota limited partnership (“Bluestem”); (ii)consulting agreement (not to exceed $25,000) with Bluestem; and(iii) development, construction and lease agreements pursuant to theDevelopment Agreement for the restaurants identified in Section 5.2(a).

 

(e)           Investments in Other Persons.  Make any loan or advance to any Person; orpurchase or otherwise acquire the capital stock, assets, or obligations of, orany interest in, any other Person other than (i) readily marketable directobligations of the United States of America; (ii) certificates of timedeposits issued by commercial banks of recognized standing operating in theUnited States of America; and (iii) trade and customer accounts receivablearising in the ordinary course of business.

 

(f)            Distributions.  If any default or Event of Default hasoccurred hereunder and is continuing, make any cash or property distributions(other than distributions payable only in common stock or payments forfractions thereof) to any of its shareholders or set aside any funds for suchpurpose.

 

ARTICLE VI

 

DEFAULT

 

Section 6.1.  Events ofDefault.  “Event of Default” in thisAgreement means any of the following events:

 

(a)           An Event of Default under the Lease;

 

(b)           Failure of the Borrower to pay the principalor interest on the Term Note when due (whether at the stated maturity or at adate fixed for any installment payment or any accelerated payment date orotherwise);

 

(c)           Any representation or warranty made by, oron behalf of, any Loan Party in, or pursuant to, any Loan Document shall proveto have been incorrect in any material respect when made;

 

(d)           Default in performanceof other covenant or agreement of any Loan Party in, or pursuant to, any LoanDocument and continuance of such default or breach for a period of thirty (30)days thereafter;

 

(e)           The Borrower or Guarantor shall generallynot pay its debts as such debts become due, or shall admit in writing itsinability to pay its debts generally, or shall make a general assignment forthe benefit of creditors; or any proceeding shall be instituted by Borrower orGuarantor seeking to adjudicate it

 

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a bankrupt or insolvent, or seeking liquidation, winding up,reorganization, arrangement, adjustment, custodianship, protection, relief, orcomposition of it or its debts under any law relating to bankruptcy, insolvencyor reorganization or relief of debtors, or seeking the entry of an order forrelief, or the appointment of a receiver, custodian, trustee, or other similarofficial for it or for any substantial part of its property; or any suchproceeding shall be instituted against Borrower or Guarantor and shall remainundismissed for a period of sixty (60) days after its commencement; or theBorrower or Guarantor shall take any action to authorize any of the actions setforth above in this subsection (e); or Bank in good faith deems itselfinsecure;

 

(f)            The Borrower shall fail to pay any Debt(other than the Debt evidenced by the Term Note) of the Borrower, or anyinterest or premium thereon, when due (whether by scheduled maturity, requiredprepayment, acceleration, demand or otherwise) and such failure shall continueafter the applicable grace period, if any, specified in the agreement orinstrument relating to such Debt; or any other default under any agreement orinstrument relating to any such Debt, or any other event, shall occur and shallcontinue after the applicable grace period, if any, specified in such agreementor instrument, if the effect of such default or event is to accelerate, or topermit the acceleration of, the maturity of such Debt; or any such Debt shallbe declared to be due and payable, or required to be prepaid (other than by aregularly scheduled required prepayment) prior to the stated maturity thereof;provided, the Borrower may contest in good faith amounts payable in theordinary course of business to its suppliers and vendors if adequate reservesare established to pay such amounts;

 

(g)           The entry against the Borrower or any Guarantorof a final judgment, decree or order for the payment of money in excess of$50,000.00 and the continuance of such judgment, decree or order unsatisfiedfor a period of thirty (30) days without a stay of execution;

 

(h)           The Project is discontinued for thirty (30)consecutive days or remains incomplete after November 1, 2003;

 

(i)            The Guarantor revokes or attempts to revokehis Guaranty; or

 

(j)            A default or event of default occurs underany of the other Loan Documents, or any documents issued in connection with aloan now or hereafter made by the Bank to the Borrower.

 

Section 6.2.  Rights andRemedies.  If any Event of Defaultshall occur, the Bank may exercise any or all of the following rights andremedies:

 

(a)           Refuse to make any further advances to theBorrower under the Term Note.

 

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(b)           Declare the Term Note, all interest thereon,and all other obligations under, or pursuant to, any Loan Document to beimmediately due and payable, and upon such declaration such Term Note, interestand other obligations shall immediately be due and payable, withoutpresentment, demand, protest or any notice of any kind, all of which areexpressly waived.

 

(c)           Exercise any right or remedy under any ofthe Loan Documents, or any other right or remedy of a secured party underapplicable law.

 

(d)           Exercise any other right or remedy availableto the Bank at law or in equity.

 

Notwithstanding anythingto the contrary contained herein, the occurrence of an Event of Default underSubsection 6.1(e) shall automatically result in the acceleration of all amountsdue hereunder and under the Term Note.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1.  No Waiver;Cumulative Remedies.  No failure ordelay on the part of the Bank in exercising any right or remedy under, orpursuant to, any Loan Document shall operate as a waiver thereof, nor shall anysingle or partial exercise of any such right, remedy or power preclude other orfurther exercise thereof, or the exercise of any other right, remedy orpower.  The remedies in the LoanDocuments are cumulative and are not exclusive of any remedies provided by law.

 

Section 7.2.  Amendments andWaivers.  No amendment or waiver ofany provision of any Loan Document shall be effective unless such amendment orwaiver is in writing and is signed by the Bank, and such amendment or waivershall be effective only in the specific instance and for the specific purposefor which it was given.

 

Section 7.3.  Notices.  All notices and other communications providedfor hereunder shall be in writing (including facsimile communication) andmailed, telecopied or personally delivered, if to the Borrower, at its addressstated in the preamble hereof, or to facsimile number (952) 542-3951,Attention:  Steven J. Wagenheim; and ifto the Bank, at its address stated in the preamble hereof, or to facsimilenumber (605) 945-3914, Attention:  CraigDavis, Branch President; or, as to each party, at such other address orfacsimile number as shall be designated by such party in a written notice tothe other party.  All such notices andcommunications shall, when mailed, be effective when deposited in the mail,addressed as aforesaid or, when telecopied, be effective when receipt is receivedfor a telecopy sent to the facsimile number set forth above.

 

Section 7.4.  Costs andExpenses.  The Borrower agrees topay on demand all reasonable out-of-pocket costs and expenses of the Bank inconnection with the preparation of the Loan Documents, including reasonable

 

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attorneys’ fees and legal expenses as well as all reasonableout-of-pocket costs and expenses of the Bank, including reasonable attorneys’fees and expenses, in connection with the administration and enforcement of theLoan Documents (whether suit is commenced or not).

 

Section 7.5.  Right ofSet-off.  Upon the occurrence andduring the continuance of any Event of Default the Bank is hereby authorized atany time and from time to time, to the fullest extent permitted by law, to setoff and apply any and all deposits (general or special, time or demand,provisional or final) at any time held and other indebtedness at any time owingby the Bank to or for the credit or the account of the Borrower against any andall of the obligations of the Borrower now or hereafter existing under any LoanDocuments, irrespective of whether or not the Bank shall have made any demandunder any Loan Documents.  The rights ofthe Bank under this Section are in addition to other rights and remedies (including,without limitation, other rights of set-off) which the Bank may have.

 

Section 7.6.  Governing Law.  All Loan Documents shall be governed by theinternal laws of the State of Minnesota. Any term used in this Agreement and not otherwise defined herein shallhave the definition, if any, given that term in the Uniform Commercial Code asin effect in the State of Minnesota from time to time.  If any term in this Agreement shall be heldto be illegal or unenforceable, the remaining parts of this Agreement shall notbe affected, and this Agreement shall be construed and enforced as if thisAgreement did not contain the term held to be illegal or unenforceable.  THE BORROWER HEREBY CONSENTS TO THEEXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN ORENCOMPASSING HENNEPIN COUNTY, MINNESOTA, AND WAIVES ANY OBJECTIONS BASED ON FORUMNON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGSRELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, ANY RELATED DOCUMENT, ORANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANYOF THE FOREGOING.  Nothing herein shallaffect the Bank’s right to serve process in any manner permitted by law, orlimit the Bank’s right to bring proceedings against the Borrower in thecompetent courts of any other jurisdiction or jurisdictions.

 

**THE BORROWER AND THE BANK HEREBY JOINTLY ANDSEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDINGRELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY TRANSACTIONARISING HEREFROM OR CONNECTED HERETO. THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVERIS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.**

 

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Section 7.7.  Binding Effect;Assignment.  All Loan Documentsshall be binding upon and inure to the benefit of the Loan Parties and the Bankand their respective succes­sors and assigns. No Loan Party shall have the right to assign its rights or interestunder any such Loan Document without the prior written consent of the Bank.

 

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IN WITNESS WHEREOF, the parties have caused this Agree­ment to beexecuted by their duly authorized officers as of the date first above written.

 
|   | BORROWER:                             |
|--------|---------------------------------------|
|   |                                  |
|   | GRANITE CITY FOOD & BREWERY, LTD. |
|   |                                  |
|   |                                  |
|   | By                                    | /s/ Steven J. Wagenheim |   |
|   |                                  | Steven J. Wagenheim |
|   |                                  | Its:  President |
|   |                                  |
|   |                                  |
|   | BANK:                                 |
|   |                                  |
|   | FIRST NATIONAL BANK                   |
|   |                                  |
|   |                                  |
|   | By                                    | /s/ Craig Davis |   |
|   |                                  | Craig Davis |
|   |                                  | Its:  Branch President |

 

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