EXHIBIT 10.1


 


EQUIPMENT LEASE
COMMITMENT


 


THIS EQUIPMENT LEASE COMMITMENT (“Agreement”) is made
and entered into this 6th day of December, 2007, by and between DHW Leasing,
L.L.C., a South Dakota limited liability company, 230 S. Phillips Avenue, Suite
202, Sioux Falls, SD 57104 (“DHW”) and Granite City Food & Brewery, Ltd., a
Minnesota corporation, 5402 Parkdale, Suite 101, St. Louis Park, MN 55416 (“GCFB”).


 


In consideration of the mutual promises herein
contained, and for other valuable consideration, the parties agree as follows:


 


1.                                       Equipment Finance Lease. On the terms and conditions set forth
in this Agreement, DHW agrees to provide GCFB equipment leases of equipment
costing up to Sixteen Million Dollars ($16,000,000). Subject to the total cost
limitation of up to Sixteen Million Dollars ($16,000,000), the term stated in
Section 4 and the per restaurant minimum and maximum cost limitations set forth
below, DHW shall acquire and lease to GCFB all furniture, fixtures and
equipment, as specified by GCFB (the “Equipment”) including without limitation
computer office equipment, point of sale, hardware, software, smallwares and
brewery equipment reasonably necessary for the operation of up to sixteen (16)
new, previously constructed, or under construction, GCFB restaurants. DHW and
GCFB will enter into a master lease in the form attached hereto as Exhibit A (“Master
Lease”), which sets forth the general terms and conditions upon which each
restaurant equipment lease will be governed. Any capitalized terms not otherwise
defined in this Agreement shall have the meaning set forth in the Master Lease.
A separate Schedule A will be completed and executed by the parties with
respect to each restaurant for which Equipment will be purchased under this
Agreement. Each Schedule A (each referred to as a “Lease”) will be for
Equipment which costs a minimum of $800,000 per restaurant and a maximum of
$1,250,000 per restaurant. Such amount shall include the sales and/or use tax
on such Equipment. Notwithstanding, DHW shall have the right to reject any
request for financing for any restaurant that is not being developed and
constructed by Dunham Capital Management, L.L.C.


 


2.                                       Steve Wagenheim Participation. DHW shall not pay Steve Wagenheim (“Wagenheim”)
any fee, guaranty fee, dividend, charge or distribution of any kind arising out
of Wagenheim’s ownership interest of DHW or Wagenheim’s guaranty of any loan to
DHW made to fund the acquisition of equipment leased by DHW to GCFB. Notwithstanding
the previous remittance, DHW may reimburse Wagenheim the amount of any payment
or reasonable expense, including reasonable attorney fees, incurred by
Wagenheim as a result of enforcement of any guaranty by Wagenheim of a DHW loan.
Notwithstanding the above, Wagenheim will continue to be obligated to
personally guarantee 20% (or such greater percentage as any lender may require)
of DHW’s financing described in Section 4 below.


 

















 


3.                                       Rates, Payments and Fees. The payments due under any Schedule A
shall be based on an amortization of the purchase price of the Equipment under
such Schedule, calculated at an interest rate equal to the rate resulting from
the following formula:


 


Bank Base Rate plus (6.00% X 80%) = Lease Rate


 


For example if the Bank Base Rate equals 8.5%, the
Lease Rate equals:


 


8.50% + (6.00% X 80%) =


8.5% + 4.8% = 13.3%


 


“Bank Base Rate” shall be the actual interest rate
charged by DHW’s lender with respect to the term loan financing used to
purchase the Equipment subject to any particular Lease.


 


GCFB shall pay DHW an origination fee equal to 0.25%
of the principal amount financed under each Lease at the time each such Lease
is executed by DHW and GCFB. GCFB shall be responsible for all other commitment
fees, loan fees, filing and recording fees connected with origination of each
loan underlying a Lease and imposed on DWH pursuant to the loan commitments
referenced in paragraph 4 herein.


 


4.                                       DHW Financing. DHW shall enter into loan commitments
substantially the same as the (i) two million dollar ($2,000,000.00) loan
commitment with Dacotah Bank dated December 6, 2007, as attached hereto (“Dacotah
Bank Commitment”); (ii) a four million dollar ($4,000,000.00)  loan commitment with CorTrust Bank dated
December 5, 2007, as attached hereto (“CorTrust Commitment”); and (iii) a ten
million dollar ($10,000,000.00) loan commitment with Great Western Bank, dated
November 21, 2007, as attached hereto (“Great Western Commitment”),
(collectively the Dacotah Bank Commitment, the CorTrust Commitment and the
Great Western Commitment are sometimes called the “Commitments”). All
Commitments shall provide term loans which amortize over a term not less than
five years. All Commitments shall permit prepayment of any loan made pursuant
to the Commitment on terms consistent with Section 4.c. herein. The parties
anticipate that the above referenced commitments may be amended with GCFB’s
consent.


 


a.                                       Each time that DHW and GCFB enter into an
Equipment Lease pursuant to the Master Lease, DHW shall execute a term loan
pursuant to one of the Commitments for an amount not to exceed the cost of the
Equipment. DHW shall enter into term loans which utilize the Dacotah Bank
Commitment and the CorTrust Commitment to the fullest extent possible before
utilizing the Great Western Commitment unless GCFB provides written direction
to use the Great Western Commitment.


 

















 


b.                                      In the event that DHW finds it necessary
to replace one or more of the Commitments, DHW shall use its best efforts to
obtain, but cannot guaranty, a replacement Commitment acceptable to GCFB with
substantially the same or more favorable terms as the Commitment being replaced.
DHW shall pay each term loan underlying a Lease in accordance with its terms.


 


c.                                       In the event that GCFB desires to pre-pay
any Lease, it will be required to pay an amount equal to the outstanding
principal amount of the term loan underlying such Lease at the time of such
prepayment, in addition to any refinance penalty incurred by DHW on any loan
commitment.


 


d.                                      DHW shall provide GCFB copies of the loan
documents used to finance the purchase of the Equipment and the amount of any
prepayment penalty for any proposed prepayment upon GCFB’s request. Upon
payment of such principal amount of the financing underlying a Lease, GCFB
shall not be required to pay any additional payments under such Lease and if
GCFB elects to purchase the Equipment subject to such Lease, DHW shall deliver
a bill of sale to GCFB conveying marketable title to the Equipment to GCFB.


 


5.                                       Term and Termination. This Agreement shall be effective as of
the date of execution and continue thereafter until all payments under the
Master Lease and Leases are paid in full. The offer of maximum financing
described in Section 1 above shall be available to purchase Equipment  within 30 
months after the date of the respective Commitments described above,
subject, however, to Great Western Bank’s annual renewal of their Commitment. Each
Lease shall be for a term of at least five (5) years unless the parties
mutually agree in writing otherwise. GCFB shall not be obligated to use this
commitment to equip any particular restaurant.


 


6.                                       Conditions Precedent. DHW’s continued obligation to provide
the financing under this Agreement is expressly subject to the following
conditions precedent, such conditions which shall be met each time a new Lease
is sought:


 


a.                                       All representations and warranties made
by GCFB herein, as well as in any referenced attachment, are and remain true
and complete in all material respects.


 


b.                                      GCFB has complied with all of the terms
and conditions of this Agreement and any referenced Lease or other attachment.


 


c.                                       No event of default has occurred under
the terms and conditions of this Agreement or any Lease or attachment.


 

















 


7.                                       Representations. GCFB makes to DHW the following
representations and warranties:


 


a.                                       No unsatisfied judgment or judgments have
been rendered against  GCFB.


 


b.                                      No proceedings in bankruptcy have ever
been instituted by or against GCFB, and GCFB has never made an assignment for
the benefit of the creditors.


 


c.                                       If required by DHW’s lender, the lender
may issue payment directly to suppliers or vendors of the Equipment under any
Lease.


 


8.                                       Assignment. GCFB agrees not to assign its rights or obligations
under this Agreement, nor any of the collateral documents or other instruments
executed pursuant hereto except as permitted by the terms and conditions of the
Master Lease.


 


9.                                       Quiet Possession. DHW shall pay the purchase price for
any Equipment leased to GCFB and shall warrant and defend title and quiet
possession of the Equipment from any party claiming title or the right of
possession through DHW. DHW represents and warrants that title to the Equipment
shall be marketable and free from liens, security agreements, and other
encumbrances owned or claimed by parties prior in interest to DHW.


 


10.                                 GCFB’s Option to Purchase Equipment. GCFB shall have an option to purchase
the Equipment subject to a Lease for $1.00 upon the payment in full of all rent
payments due thereunder or upon prepayment of the Lease. DHW shall convey
marketable title to such Equipment to GCFB by Bill of Sale upon receiving
notice of GCFB’s exercise of such option and payment of the option price of
$1.00.


 


11.                                 Notices. Any notices required or permitted to be given under
the terms and conditions of this Agreement shall be given or made in writing
and shall be deemed given when delivered by telecopier, personally, or mailed
in the United States, postage prepaid, first class mail to the parties at the
addresses provided in the introduction on the first page of this Agreement, as
updated from time to time by the parties.


 


12.                                 Successors. This Agreement and all of its covenants and
conditions contained shall be for the benefit and shall apply to and bind the
parties hereto and their respective successors and assigns.


 


13.                                 Conflict with Master Lease. In the event the terms and conditions
of this Equipment Lease Commitment conflict with the terms and conditions of
the Master Lease, the terms and conditions of the Master Lease shall prevail
and be deemed controlling.


 

















 


Dated this 6th day of December, 2007.


 


	
   

  	
  GRANITE CITY FOOD &
  BREWERY, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ James G. Gilbertson

  	
   

  
	
   

  	
   

  	
  James G. Gilbertson

  	
   

  
	
   

  	
   

  	
  Title: Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DHW LEASING, LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald A. Dunham,
  Jr.

  	
   

  
	
   

  	
  Title:

  	
  Donald A. Dunham, Jr.

  	
   

  
	
   

  	
   

  	
  Managing Member