Exhibit
10.1


EXECUTIVE EMPLOYMENT
AGREEMENT


THIS EXECUTIVE EMPLOYMENT AGREEMENT (“Agreement”) is made and
entered into August 17, 2005, by and between
Granite City Food & Brewery Ltd., a corporation duly organized
and existing under the laws of the State of Minnesota, with a place of business
at 5831 Cedar Lake Road, St. Louis Park, Minnesota 55416 (hereinafter referred
to as the “Company”), and Daniel H. Bauer, a resident of the state of
Georgia (hereinafter referred to as “Executive”).


BACKGROUND
OF AGREEMENT


•                                          The Company desires to
employ Executive as its Chief Financial Officer and principal accounting
officer, and Executive desires to accept such employment.


•                                          This Agreement memorializes
the terms and conditions of Executive’s employment.


In consideration of the foregoing, the Company and Executive agree as
follows:


ARTICLE 1



EMPLOYMENT


1.01  Subject to the terms of Articles 3 and 6, the
Company hereby agrees to employ Executive pursuant to the terms of this
Agreement, and Executive agrees to such employment as its Chief Financial
Officer and as the Company’s principal accounting officer, and shall continue
to hold such title under the terms of this Agreement.  Executive’s primary place of employment shall
be the Company’s executive offices at St. Louis Park, Minnesota.


1.02  Executive shall generally have the authority,
responsibilities, and such duties as are customarily performed by the chief
financial officer and principal accounting officer of a public company of
similar size and industry, specifically including, without limitation, the
following responsibilities:


(i)            working with senior management of
the Company and its Board of Directors (the “Board”) in formulating short and
long term goals and developing, implementing, and executing strategies to
attain Company objectives;


(ii)           participating as a key member of the
senior management team and as the Chief Executive Officer’s financial advisor
in setting and executing on strategies to meet Company objectives;


(iii)          endeavoring to establish and maintain
a relationship of trust and credibility with members of the senior management
team, the Board, its committees, outside auditors and legal counsel;


(iv)          supervising the implementation of the
Company’s policies and business processes in order to meet the corporate
governance and internal control requirements established by the senior
management team, the Board and relevant laws, including, but not limited
to:  (A) designing and implementing
effective disclosure controls and procedures that are necessary to insure
accurate financial reporting; (B) conducting periodic reviews and evaluations
of the effectiveness of the Company’s disclosure controls and procedures,
including, without limitation, interfacing with the senior management team and
other Company personnel, the Board, Audit Committee, outside auditors and legal
counsel to 


 


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insure
the effectiveness of the Company’s disclosure controls and procedures; (C)
accurately reporting the results of Company operations and related matters to
the Securities and Exchange Commission, 
and other regulatory agencies; and (D) acting as a certifying officer of
the Company’s financial reporting under the Exchange Act and other regulatory
agencies;


(v)           interfacing with the
financial/investment community;


(vi)          managing and protecting the Company’s
capital and liquid assets and monitoring and advising management regarding the
availability of adequate capital at all times;


(vii)         regularly and systematically appraising
and evaluating the Company’s performance results against the Company’s
established objectives; and


(viii)        consistent with the foregoing, such
other finance functions as the Chief Executive Officer of the Company may
assign to Executive from time to time during his employment period.


Executive shall also render
such additional services and duties within the scope of Executive’s experience
and expertise as may be reasonably requested of him from time to time by the
Board.


1.03  Executive shall report to the Board or any
committee thereof as the Board shall direct, and shall generally be subject to
direction, orders and advice of the Board.


ARTICLE 2



BEST EFFORTS OF EXECUTIVE


2.01  In his capacity as Chief Financial Officer,
Executive shall use his best energies and abilities in the performance of his
duties, services and responsibilities for the Company.  As of the date of this Agreement, the Company
is not requiring Executive to relocate his residence to Minnesota.  Executive agrees that on or before December
31, 2005, he will relocate his residence to Minnesota.  The Company will pay Executive a relocation
payment in connection with Executive’s move to Minnesota, as set forth on Schedule
A.  Executive will reimburse the
Company for such relocation payment if Executive terminates his employment
without Good Reason prior to September 13, 2006.


2.02  During the term of his employment, Executive
shall devote substantially all of his business time and attention to the
business of the Company and its subsidiaries and affiliates and shall not
engage in any substantial activity inconsistent with the foregoing, whether or
not such activity shall be engaged in for pecuniary gain, unless approved by
the Board; provided, however, that, to the extent such activities do not violate,
or substantially interfere with his performance of his duties, services and
responsibilities under this Agreement, Executive shall be permitted to serve on
civic or charitable boards or committees thereof.


2.03  The Company shall grant Executive a nonincentive
stock option pursuant to its 2002 Equity Incentive Plan (the “Plan”), to
purchase up to 175,000 shares of common stock at an exercise price equal to the
Company’s closing sale price of a share of common stock on the date of grant,
which shall be as soon as reasonably practicable after approval of this
Agreement by the Company and Executive, shall have a ten-year term, and shall
vest in three installments as follows: 
(i) 75,000 shares on the date of commencement of employment; (ii) an
additional 50,000 shares on the first anniversary of the date of employment;
and (iii) the remaining 50,000 shares on the second anniversary of employment,
subject to acceleration upon a change of control as defined under the Company’s
2002 Equity Incentive Plan.  The option
will in all respects be governed under the terms and conditions of the Plan and
the Company’s standard form of non-qualified stock option agreement.


 


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ARTICLE 3



TERM AND NATURE OF EMPLOYMENT


3.01  Executive’s employment shall commence on
September 13, 2005.  Executive’s
employment pursuant to this Agreement shall be on an at-will basis, with either
Executive or the Company having the right to terminate Executive’s employment
with or without cause on not less than sixty (60) days’ prior written
notice.  The terms and conditions of this
Agreement may be amended from time to time with the consent of the Company and
Executive.  All such amendments shall be
effective when memorialized by a written agreement between the Company and
Executive or by resolutions of the Board or the Company’s Compensation
Committee (the ”Committee”).


ARTICLE 4



COMPENSATION AND BENEFITS


4.01  During the term of
employment hereunder, Executive shall be paid a base salary at the rate of Two
Hundred Fifteen Thousand ($215,000) per year (“Base Salary”), payable in
monthly installments in accordance with the Company’s established pay periods,
reduced by all deductions and withholdings required by law and as otherwise
specified by Executive.  Executive’s
salary may be increased (but not decreased), in the sole discretion of the
Board.  In the event Executive’s
employment shall, for any reason, terminate during the Term, Executive’s final
monthly Base Salary payment shall be made on a pro-rated basis as of the last
day of the month in which such employment terminated.


4.02  During the term of employment, in addition to
payments of Base Salary set forth above, Executive shall be eligible to
participate in any performance-based cash bonus or equity award plan for senior
executives of the Company based upon achievement of individual and/or Company
goals established with respect to each fiscal year by the Board or Committee
after reasonable consultation with Executive. 
The extent of Executive’s participation in bonus plans shall be within
the discretion of the Company’s Board or Compensation Committee provided,
however, that for the fiscal years 2005 and 2006, Executive shall be eligible
to receive an annual cash bonus of up to $75,000 based upon performance targets
that are established by the Company’s Compensation Committee.  Annual performance metrics that may be
established by the compensation committee may include, but not be limited to,
objective performance criteria such as revenue, IROP, G&A, opening
expenses, operating weeks and EBITDA, as well as achievement of individual
performance goals.  The annual cash bonus
will be pro-rated for 2005 and any partial future fiscal year in which
Executive’s employment may terminate.


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


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


 


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ARTICLE 5



VACATION AND LEAVE OF ABSENCE


5.01  Executive shall be entitled
to four (4) weeks of paid vacation per year, in addition to the Company’s normal
holidays.  Vacation time will be
scheduled taking into account the Executive’s duties and obligations at the
Company.  Unused paid vacation time shall
not accumulate from year to year, unless otherwise approved in writing by the
Board or Committee.  Sick leave and all
other leaves of absence will be in accordance with the Company’s stated
personnel policies.


ARTICLE
6



TERMINATION


6.01  The Company may terminate
Executive’s employment without Cause by giving Executive at least sixty (60)
days written notice thereof.  In the
event of such termination (other than a termination due to a Change of
Control), Executive shall be entitled to receive:  (i) his base salary pro-rated as of the date
of termination; (ii) the Severance Payment provided in Section 7.01; and (iii)
a pro-rated bonus pursuant to any bonus plan or arrangement established or
mutually agreed-upon prior to termination, to the extent earned or performed
through the date of termination, based upon the requirements or criteria of
such bonus plan or arrangement, as the Board shall in good faith
determine.  Such pro-rated bonus, shall
be payable at the time and in the manner payable to other executives of the
Company who participate in such plan or arrangement.


6.02  Executive’s employment  will be deemed terminated as of the date
hereof the death of the Executive.  In
the event of such termination, there shall be payable to Executive’s estate
compensation earned through the date of death together with a pro-rata portion
of any bonus due Executive pursuant to any bonus plan or arrangement
established or mutually agreed-upon prior to termination, to the extent earned
or performed based upon the requirements or criteria of such plan or
arrangement, as the Board shall in good faith determine.  Such pro-rated bonus, shall be payable at the
time and in the manner payable to other executives of the Company who
participate in such plan or arrangement.


6.03  Any other provision of this Agreement
notwithstanding, the Company may terminate Executive’s employment upon written
notice specifying a termination date based on any of the following events that
constitute Cause:


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


(b)                                 Any act of
material misconduct, willful and gross negligence, or breach of duty to the
Company, including, but not limited to, embezzlement, fraud, dishonesty,
nonpayment of an obligation owed to the Company, or willful breach of fiduciary
duty to the Company which results in a material loss, damage, or injury to the
Company;


(c)                                  Any material
breach of any material provision of this Agreement or of the Company’s
announced rules, codes or polices, which remains uncured or uncorrected for a
period of thirty (30) days following written notice thereof to Executive
specifying such breach;


(d)                                 Any act of
insubordination by Executive; provided, however, an act of insubordination by
Executive shall not constitute Cause if Executive cures or remedies such
insubordination within thirty (30) days after written notice to Executive,
without material harm or loss to the Company, unless such insubordination is a
part of a pattern of chronic insubordination, which may be evidenced by reports
or warning letters given by the Company to Executive, in which case such
insubordination is deemed not curable.


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


(f)                                    A willful
violation of federal or state securities laws.


 


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The
identification of a significant or material weakness in the Company’s internal
control over financial reporting, or an error, inaccuracy or misstatement in
financial statements resulting in a restatement of financial statements shall
not, by itself, constitute Cause, unless the same results from (i) a failure of
Executive to address recommendations or directives from the Audit Committee or
the Company’s outside auditors; (ii) a chronic failure of Executive to carry
out the major duties of his employment or to follow or implement Company’s
established internal controls over financial reporting; or (iii) a failure on
the part of Executive to communicate material financial information on a timely
basis to the Company’s Audit Committee or outside auditors regarding the
Company’s financial reporting.  In making
such determination, the Board shall act in good faith and give Executive a
reasonably detailed written notice and a reasonable opportunity to be heard on
the issues at a Board or Committee meeting. 
For purposes of this Agreement, no act or failure by the Executive shall
be considered “willful” if such act is done by Executive in good faith in the
belief that such act is or was lawful and in the best interest of the Company
or one or more of its businesses. 
Nothing in this paragraph 6.03 shall be construed to prevent Executive
from contesting the Board or Committee’s determination that Cause exists.  In the event of such termination, and not
withstanding any contrary provision otherwise stated, Executive shall receive
only his Base Salary earned through the date of termination.


 


6.04  Executive may terminate his employment upon
sixty (60) days prior written notice to the Company for “Good Reason.”  For purposes of this Agreement, “Good Reason”
means any of the following actions taken by the Company without Cause:


(a)                                  the Company or
any of its subsidiaries reduces Executive’s Base Salary or base rate of annual
Compensation as in effect immediately prior to the Change of Control, or otherwise
fails to provide Executive compensation and benefit plans, arrangements,
policies and procedures which, taken as a whole, are materially less favorable
to Executive than those, taken as a whole, provided by the Company or any of
its subsidiaries to Executive immediately prior to the Change of Control;


(b)                                 without
Executive’s express written consent, the Company or any of its subsidiaries
significantly reduces Executive’s job authority and responsibility as the
Company’s Chief Financial Officer, as conducted on the date preceding a Change
of Control;


(c)                                  without
Executive’s express written consent, the Company or any of its subsidiaries
requires Executive to change the location of Executive’s job or office, so that
Executive will be based at a location more than fifty (50) miles from the
location of Executive’s job or office immediately prior to the Change of
Control;


(d)                                 a successor
company fails or refuses to assume the Company’s obligations under this
Agreement;


(e)                                  the Company or
any successor company breaches any of the material provisions of this
Agreement; provided, however, that Executive shall provide detailed information
to the Company in such written notice and such grounds for Good Reason are not
remedied or continue for a period of thirty (30) days or more following receipt
of such notice; or


(f)                                    following a
Change of Control (as defined in Section 7.02) Steven J. Wagenheim, if he is
the Chief Executive Officer of the Company immediately preceding the Change of
Control, ceases to be the Chief Executive Officer of the Company within the
twelve-month period following the Change of Control.


If
Executive intends to terminate this Agreement for Good Reason, Executive must
give not less than sixty (60) days written notice to the Company of the facts
or events giving rise to Good Reason, and must give such notice within ninety
(90) days following the facts or event alleged to give rise to Good
Reason.  The failure to give such notice
shall be deemed a waiver of the right to terminate this Agreement for Good
Reason based on such fact or event.


 


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6.05  During the term of his employment and for 24
months after the date of Executive’s termination of employment, (i) Executive
shall not, directly or indirectly, make or publish any disparaging statements
(whether written or oral) regarding the Company or any of its affiliated
companies or businesses, or the affiliates, directors, officers, agents,
principal shareholders or customers of any of them and (ii) neither the Company
or any of its affiliated companies or businesses or their affiliates,
directors, or officers shall directly or indirectly, make or publish any
disparaging statements (whether written or oral) regarding Executive.  Information 
which the Company or Executive is required to make or disclose regarding
the other to comply with laws or regulations, or makes in a pleading on the
advice of litigation counsel, shall not constitute a disparaging statement.


6.06  Upon any termination of
Executive’s employment with the Company, Executive shall be deemed to have
resigned from all other positions he then holds as an officer, employee or
director or other independent contactor of the Company or any of its
subsidiaries or affiliates, unless otherwise agreed by the Company and
Executive.


ARTICLE
7



SEVERANCE PAYMENTS


7.01  The Company, its successors
or assigns, will pay Executive as severance pay a lump sum (the “Severance
Payment”) amount equal to twelve (12) months of the Executive’s monthly Base
Salary for full-time employment at the time of Executive’s termination:


(a)                                  if (i) there
has been a Change of Control of the Company (as defined in Section 7.02), and
(ii) Executive is an active and full-time employee at the time of the Change of
Control, and (iii) within twelve (12) months following the date of the Change
of Control, Executive employment is involuntarily terminated for any reason
(including Good Reason (as definition Section 6.04)), other than for Cause or
death or disability.  If prior to a
Change of Control (a) Executive’s employment is involuntarily terminated by the
Company without cause or (b) Executive voluntarily terminates his employment
for Good Reason, and such involuntary termination for Good Reason (x) occurred
at the request of a person who indicated an intention, or taken steps
reasonably calculated, to effect a Change of Control or (y) otherwise occurred
in connection with, or in anticipation of, a Change of Control which actually
occurs, then the termination of Executive’s employment shall be deemed to have
occurred immediately following a Change of Control; or


(b)                                 the employment
of Executive is terminated by the Company without Cause, or by the Executive
for Good Reason.


Nothing
in this Subsection 7.01 shall limit the authority of the Committee or Board to
terminate Executive’s employment in accordance with Section 6.03.  Payment of the Severance Payment pursuant to
Section 7.01, less customary withholdings, shall be made in one lump sum within
thirty (30) days of the Executive’s termination or resignation.


 


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


(a)                        an acquisition
by any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
of 50% or more of either:  (1) the then
outstanding Stock; or (2) the combined voting power of the Company’s
outstanding voting securities immediately after the merger or acquisition
entitled to vote generally in the election of directors; provided, however,
that the following acquisition shall not constitute a Change of Control:  (i) any acquisition directly from the
Company; (ii) any acquisition by the Company or Subsidiary; (iii) any
acquisition by the trustee or other fiduciary of any employee benefit plan or
trust sponsored by the Company or a Subsidiary; or (iv) any acquisition by any
corporation with respect to which, following such acquisition, more than 50% of
the Stock or 


 


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                                      combined voting
power of Stock and other voting securities of the Company is beneficially owned
by substantially all of the individuals and entities who were beneficial owners
of Stock and other voting securities of the Company immediately prior to the
acquisition in substantially similar proportions immediately before and after
such acquisition; or


(b)                       individuals
who, as of the date of this Agreement, constitute the Board (the ”Incumbent
Board”), cease to constitute a majority of the Board.  Individuals nominated or whose nominations
are approved by the Incumbent Board and subsequently elected shall be deemed
for this purpose to be members of the Incumbent Board; or


(c)                        approval by the
shareholders of the Company of a reorganization, merger, consolidation,
liquidation, dissolution, sale or statutory exchange of Stock which changes the
beneficial ownership of Stock and other voting securities so that after the
corporate change the immediately previous owners of 50% of Stock and other voting
securities do not own 50% of the Company’s Stock and other voting securities
either legally or beneficially; or


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


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


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


7.03  In addition to the Severance Payment payable
pursuant to Section 7.01, the Company will pay Executive a pro-rata portion of
any bonus earned by Executive as of the date of termination, as provided by
Section 6.01.  The payments to Executive
pursuant to Sections 6.01, 6.02 or 7.01 are not intended to be cumulative or
duplicative and an amount payable as a payment of base salary or pro-rata bonus
under any one of such sections shall be reduced to the extent of similar
payments made under another of such sections. 
In addition, the Severance Payment shall be reduced by the amount of
cash severance-type benefits to which Executive may be entitled pursuant to any
other cash severance plan, agreement, policy or program of the Company or any
of its subsidiaries; including any payment for post-employment restrictions, provided,
however, that if the amount of cash severance benefits payable under such other
severance plan, agreement, policy or program is greater than the amount payable
pursuant to this Agreement, Executive will be entitled to receive the amounts
payable under such other plan, agreement, policy or program which exceeds the
Base Salary severance payment.  Without
limiting other payments which would not constitute “cash severance-type
benefits” hereunder, any cash settlement of stock options, accelerated vesting
of stock options and retirement, pension and other similar benefits shall not
constitute “cash severance-type benefits” for purposes of this Section 7.03.


7.04  If Executive becomes entitled to the
Severance Payment pursuant to Section 7.01, Executive shall be entitled to
receive, if Executive is eligible to and elects to continue, medical coverage
from the Company as provided by law (commonly referred to as the COBRA
continuation period), as part of his severance benefit, continued medical
coverage under the Company’s medical plan. 
The Company will pay the cost of premiums for such COBRA coverage for
Executive and his eligible dependents for a period of one year following
termination, or until Executive is covered by another medical plan providing
medical benefits to Executive.  Executive
must be eligible for COBRA coverage, elect COBRA during the COBRA election
period, and comply with all requirements to obtain such coverage, to be
eligible for coverage and for this benefit.


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


 


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


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


7.07  The provisions of this
Article 7 will be deemed to survive the termination of this Agreement for the
purposes of satisfying the obligations of the Company and Executive hereunder.


ARTICLE
8



NONDISCLOSURE


8.01  Except as permitted or
directed by the Company or as may be required in the proper discharge of
Executive’s employment hereunder, Executive shall not, during his employment or
at any time thereafter, divulge, furnish or make accessible to anyone or use in
any way any Confidential Information of the Company.  “Confidential Information” means any
information or compilation of information that the Executive learns or develops
during the course of his/her employment that is not generally known, that is
proprietary to or within the unique knowledge of the Company, from which it
derives economic value (whether or not conceived, originated, discovered, or
developed in whole or in part by Executive). 
Confidential Information includes but is not limited to, the following
types of information and other information of a similar nature (whether or not
reduced to writing), all of which Executive agrees constitutes the valuable
trade secrets of the Company: research, designs, development, know how,
computer programs and processes, marketing plans and techniques, existing and
contemplated products and services, customer and product names and related
information, prices sales, inventory, personnel, computer programs and related
documentation, technical and strategic plans, and finances.  Confidential Information also includes any
information of the foregoing nature that the Company treats as proprietary or
designates as Confidential Information, whether or not owned or developed by
the Company.  “Confidential Information”
does not include information that (a) is or becomes generally available to the
public through no fault of Executive, (b) was known to Executive prior to its
disclosure by the Company, as demonstrated by files in existence at the time of
the disclosure, (c) becomes known to Executive, without restriction, from a
source other than the Company, without breach of this Agreement by Executive
and otherwise not in violation of the Company’s rights, or (d) is explicitly
approved for release by written authorization of the Company.


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


8.03  Executive agrees that all notes, data,
reference materials, documents, business plans, business and financial records,
computer programs, and other materials that in any way incorporate, embody, or
reflect any of the Confidential Information, whether prepared by Executive or
others, are the exclusive property of the Company, and Executive agrees to
forthwith deliver to the Company all such materials, including all copies or 


 


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memorializations thereof, in
Executive’s possession or control, whenever requested to do so by the Company,
and in any event, upon termination of Executive’s employment with the Company.


8.04  The Executive understands and agrees that any
violation of this Article 8 while employed by the Company may result in
immediate disciplinary action by the Company, including termination of
employment for Cause.


8.05  The provisions of this Article 8 shall
survive termination of this Agreement indefinitely.


ARTICLE 9



NON-INTERFERENCE AND NON-RECRUITMENT


9.01  Executive agrees that during the term of his
employment and for a period of two (2) years after termination of employment
(the “Restricted Period”) he will not directly or indirectly (i) in any way
interfere or attempt to interfere with the Company’s relationships with any of
its current or potential customers, vendors, investors, business partners, or
(ii) employ or attempt to employ any of the Company’s employees on behalf of
any other entity, whether or not such entity competes with the Company.


9.02  Executive agrees that breach by him of the
provisions of this Article 9 will cause the Company irreparable harm that is
not fully remedied by monetary damages. 
In the event of a breach or threatened breach by Executive of the
provisions of this Article 9, the Company shall be entitled to an injunction
restraining Executive from directly or indirectly competing or recruiting as
prohibited herein, without posting a bond or other security.  Nothing herein shall be construed as prohibiting
the Company from pursuing any other equitable or legal remedies available to it
for such breach or threatened breach, including the recovery of damages from
Executive.


9.03  The Executive understands and agrees that any
violation of this Article 9 while employed by the Company may result in
immediate disciplinary action by the Company, including termination of
employment for Cause.


9.04  The obligations contained in this Article 9
shall survive the termination of this Agreement indefinitely.


ARTICLE
10



MISCELLANEOUS


10.01  Governing Law.  This Agreement shall be governed and
construed according to the laws of the State of Minnesota without regard to
conflicts of law provisions.  The Company
and Executive agree that if any action is brought pursuant to this Agreement
that is not otherwise resolved by arbitration pursuant to Section 10.06, such
dispute shall be resolved only in the District Court of Hennepin County,
Minnesota, or the United States District Court for Minnesota, and each party
hereto unconditionally (a) submits for itself in any proceeding relating to
this Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the exclusive jurisdiction of the Hennepin County, Minnesota
District Courts or the United States Federal District Court for Minnesota, and
agrees that all claims in respect to any such proceeding shall be heard and
determined in Hennepin County, Minnesota, Minnesota District Court or, to the
extent permitted by law, in such federal court, (b) consents that any such
proceeding may and shall be brought in such courts and waives any objection
that it may now or thereafter have to the venue or jurisdiction of any such
proceeding in any such court or that such proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; waives all right
to trial by jury in any proceeding (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, or its performance
under or the enforcement of this Agreement; (d) agrees that service of process
in any such proceeding may be effected by mailing a copy of such process by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address as provided in Section 10.06; and



 


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(e) agrees that nothing in
this Agreement shall affect the right to effect service of process in any other
manner permitted by the laws of the State of Minnesota.


10.02  Successors.  This Agreement is personal to Executive and
Executive may not assign or transfer any part of his rights or duties
hereunder, or any compensation due to him hereunder, to any other person or
entity.  This Agreement may be assigned
by the Company and the Company.  The
Company shall require any successor or assignee, whether direct or indirect, by
purchase, merger, consolidation or otherwise, to all or substantially all the
business or assets of the Company, expressly and unconditionally to assume and
agree to perform the Company’s obligations under this Agreement, in the same
manner and to the same extent that the Company would be required to perform if
no such succession or assignment had taken place.  In such event, the term “Company,” as used in
this Agreement, shall mean the Company as defined above and any successor or
assignee to the business or assets which by reason hereof becomes bound by the
terms and provisions of this Agreement.


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


10.04  Entire Agreement; Modification.  This Agreement supersedes, revokes and replaces
any and all prior oral or written understandings, if any, between the parties
relating to the subject matter of this Agreement.  The parties agree that this Agreement: (a) is
the entire understanding and agreement between the parties; and (b) is the
complete and exclusive statement of the terms and conditions thereof, and there
are no other written or oral agreements in regard to the subject matter of this
Agreement.  Except for modifications
described in Article 3, this Agreement shall not be changed or modified
except by a written document signed by the parties hereto.


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


10.06  Arbitration.  Any dispute, claim or controversy arising
under this Agreement shall, at the request of any party hereto be resolved by
binding arbitration in Hennepin County, Minnesota by a single arbitrator
selected by employer and Executive, with arbitration governed by The United
States Arbitration Act (Title 9, U.S. Code); provided, however, that a dispute,
claim or controversy shall be subject to adjudication by a court in any
proceeding against the Company or Executive involving third parties (in
addition to the Company or Executive). 
Such arbitrator shall be a disinterested person who is either an
attorney, retired judge or labor relations arbitrator.  In the event employer and Executive are
unable to agree upon such arbitrator, the arbitrator shall, upon petition by
either the Company or Executive, be designated by a judge of the Hennepin
County District Court.  The arbitrator
shall have the authority to make awards of damages as would any court in
Minnesota having jurisdiction over a dispute between employer and Executive,
except that the arbitrator may not make an award of exemplary damages or
consequential damages.  In addition, the
Company and Executive agree that all other matters arising out of Executive’s
employment relationship with the Company shall be arbitrable, unless otherwise
restricted by law.


(a)                                  In any
arbitration proceeding, each party shall pay the fees and expenses of its or
his own legal counsel.


(b)                                 The arbitrator,
in his or her discretion, shall award legal fees and expenses and costs of the
arbitration, including the arbitrator’s fee, to a party who substantially
prevails in its claims in such proceeding.


(c)                                  Notwithstanding
this Section 10.06, in the event of noncompliance or violation, as the case may
be, of Sections 8 or 9 of this Agreement, the Company may alternatively apply to
a court of 


 


10





















 


                                                competent
jurisdiction for a temporary restraining order, injunctive and/or such other
legal and equitable remedies as may be appropriate, if it and such court
reasonably determines that the Company would have no adequate remedy at law for
such violation or noncompliance.


10.07  Legal Fees.  If any contest or dispute shall arise between
the Company and Executive regarding any provision of this Agreement, and such
dispute results in court proceedings or arbitration, a party that prevails to a
substantial extent with respect to a claim brought and pursued in connection
with such dispute, shall be entitled to recover its legal fees and expenses
reasonably incurred in connection with such dispute.  Such reimbursement shall be made as soon as
practicable following the resolution of the dispute (whether or not appealed)
to the extent a party receives documented evidence of such fees and expenses.


10.08  Notices.  For purposes of this Agreement, notices and
all other communications provided for herein shall be in writing and shall be
deemed to have been duly given when personally delivered or may send by
certified mail, return receipt requested, postage prepaid, addressed to
Executive at his residence address appearing on the records of the Company and
to the Company at its then current executive offices to the attention of the
Board.  All notices and communications
shall be deemed to have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice of change of
address shall be effective only upon actual receipt.  No objection to the method of delivery may be
made if the written notice or other communication is actually received.


10.09  Survival.  The provisions of this Article 10 shall
survive the termination of this Agreement, indefinitely.


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


	
   

  	
  GRANITE CITY FOOD & BREWERY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Steven J. Wagenheim

  	
   

  
	
   

  	
   

  	
  Steven J. Wagenheim, Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Daniel H. Bauer

  	
   

  
	
   

  	
   

  	
  Daniel H. Bauer

  



 


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SCHEDULE A


 


1.             Payments to Executive in connection with relocation:


(a)                                  To compensate
Executive for costs he will incur in disposing of his current residence, moving
his family and goods to a new location in Minnesota and related expenses, the
Company will pay Executive $20,000 upon commencement of employment.  Such amount will be treated as fully taxable
to the Executive and subject to normal withholding taxes.


(b)                                 The Company
will reimburse Executive for his reasonable travel expenses and those of his
spouse for two “house hunting” trips to Minneapolis for the purpose of
searching for housing.  At the Company’s
request, Executive will reimburse the Company for air fare for Executive’s
spouse for a trip to Minneapolis in July 2005. 
Such trip will not be considered one of the two house hunting trips.


(c)                                  The Company
will pay the reasonable housing and commuting expenses of Executive for the
months of September, October and November, 2005.


2.             Executive Benefits:


(d)                                 Monthly
allowance for cellular telephone.


(e)                                  $350 monthly
allowance for automobile.


(f)                                    Participation,
with family coverage, in Company health plan.


(g)                                 Participation
in Company group life insurance program, which is generally two times base
salary.


3.             Executive will be furnished with a Company laptop
computer fully-loaded with appropriate software.