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  EXHIBIT 10.2    
    

 STOCK REPURCHASE AGREEMENT  

 BETWEEN AND AMONG  

 DHW LEASING, L.L.C.,  

 DONALD A. DUNHAM, JR., CHRISTINE DUNHAM,  

 CHARLES J. HEY,  

 DUNHAM CAPITAL MANAGEMENT, L.L.C.,  

 CONCEPT DEVELOPMENT PARTNERS LLC,  

 AND  

 GRANITE CITY FOOD & BREWERY LTD.  

 DATED AS OF FEBRUARY 8, 2011  

 

  Table of Contents  

 

 

							
	 
	 	 
	 	Page 	 
	1.	 	Defined Terms	 	 	1	 
	2.	 	Purchase and Sale of Shares	 	 	1	 
	3.	 	Time and Place of Closing	 	 	1	 
	4.	 	Purchase Price	 	 	2	 
	5.	 	Delivery of Shares; Payment for Personal Property	 	 	2	 
	6.	 	Obligations of DHW Prior to Closing Date	 	 	2	 
	7.	 	Agreement Regarding Escrow of Shares	 	 	2	 
	8.	 	Right of First Refusal Option	 	 	2	 
	9.	 	Representations and Warranties of DHW	 	 	4	 
	10.	 	Representations of the Company	 	 	5	 
	11.	 	Payment of Break-Up Fees and Expenses	 	 	6	 
	12.	 	DCM Agreements	 	 	6	 
	13.	 	Purchase Agreement Between the Company and DCM for Troy Property	 	 	6	 
	14.	 	Other Landlord Lease Reductions	 	 	6	 
	15.	 	Amendments to Debt Conversion and Registration Rights Agreements	 	 	6	 
	16.	 	Voting Agreements	 	 	6	 
	17.	 	Conditions to Each Party's Obligations	 	 	7	 
	18.	 	Conditions Precedent to Company's Obligation	 	 	7	 
	19.	 	Conditions to Obligations of DHW	 	 	8	 
	20.	 	Survival of Representations and Warranties	 	 	8	 
	21.	 	Indemnification	 	 	8	 
	22.	 	Additional Agreements	 	 	9	 
	23.	 	Termination	 	 	10	 
	24.	 	Miscellaneous	 	 	11	 

 

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   STOCK REPURCHASE AGREEMENT  

        This Stock Repurchase Agreement, dated as of February 8, 2011, between and among DHW Leasing, L.L.C., a South Dakota limited
liability company ("DHW"), Donald A. Dunham, Jr., Christine Dunham (collectively, "Dunham"), Charles J. Hey ("Hey"), Dunham Capital Management, L.L.C., a South Dakota limited
liability company ("DCM"), Concept Development Partners LLC, a Delaware limited liability company ("CDP"), and Granite City Food & Brewery Ltd., a Minnesota corporation
("Company"). Dunham and Hey are parties to this Agreement solely for purposes of Sections 6, 9, 11, 12, 14, 21, 22, and 24 hereof, and CDP is a party to this Agreement solely for purposes of
Section 8 hereof. 

 RECITALS  

        A.    Pursuant
to a Stock Purchase Agreement of even date entered into with CDP (the "Stock Purchase Agreement"), the Company will issue and sell to CDP, and CDP will purchase
from Company, 3,000,000 shares of the Company's convertible preferred stock for the sum of $9,000,000 (such sale and purchase hereinafter referred to as the "Preferred Stock Transaction"). In
addition, CDP has agreed that as a condition to Company's obligation to close the Preferred Stock Transaction, CDP will cause the Company to enter into a $10,000,000 senior credit facility (the
"Credit Facility") for the financing of the Company's operations and to fund payment or retirement of other obligations, as set forth in the Stock Purchase Agreement. The proceeds from the Preferred
Stock Transaction and the Credit Facility are intended, among other things, to fund the Company's purchase from DHW of 3,000,000 shares of the Company's issued and outstanding common stock owned by
DHW (the "Shares"), and the purchase from DCM of certain real estate in Troy, Michigan. The closing of the Preferred Stock Transaction and the Company's entry into the Credit Facility are conditions
to the Company's obligation to purchase the Shares and close the transactions contemplated by this Agreement. 

        B.    The
Company desires to purchase the Shares from DHW, and DHW desires to sell the Shares to the Company on the terms, and subject to the conditions set forth in this
Agreement. 

        C.    Dunham
and Hey are the owners of all DHW's outstanding membership interests and the sole members of DHW's management and board. 

        D.    DCM
has entered into real estate leases with the Company and, as a condition to the Company's obligation to consummate the transactions contemplated by this Agreement,
has agreed to reduce the fixed rents on certain of the properties leased to the Company, and to grant the Company an option to purchase the improvements associated with the properties for which such
rents are reduced. In addition, the Company has agreed to purchase from DCM a two-acre site on Big Beaver Road in Troy, Michigan, together with all plans, permits and related assets
associated with such property (the "Troy Property"), for the sum of $2,500,000, plus real estate taxes due and owing on such property for the years 2009 and 2010. 

        NOW,
THEREFORE, in consideration of the agreements and undertakings, and in reliance upon the representations and warranties set forth in this Agreement, the parties agree as follows: 

        1.    Defined Terms.    All capitalized terms not otherwise defined in this Agreement, shall have the meanings set
forth in the Stock Purchase Agreement. 

        2.    Purchase and Sale of Shares.    Subject to the terms and conditions and in reliance on the representations and
warranties contained in this Agreement, at the Closing (as hereinafter defined), DHW shall sell, assign and transfer to the Company, free and clear of all liens, pledges or encumbrances of any kind,
nature or description, and the Company agrees to purchase, the Shares from DHW for the consideration specified in Section 4 hereof. 

        3.    Time and Place of Closing.    The closing of the transactions pursuant to this Agreement (the "Closing") shall
take place on the Closing Date, at 9:00 a.m., local time, at the Minneapolis offices of Briggs and Morgan or such other date or place as shall be mutually agreed upon by the parties hereto. 

 

        4.    Purchase Price.    The purchase price for the Shares shall be $7,050,000 (the "Purchase Price"), which shall be
payable by the Company to the Escrow Agent (as hereinafter defined) pursuant to the Release and Escrow Agreements (as herein defined). 

        5.    Delivery of Shares; Payment for Personal Property.    Pursuant to the terms of Release and Escrow Agreements
(the "Release and Escrow Agreements") to be entered into by and among DHW, the Company, and each of Great Western Bank, CorTrust Bank and Dacotah Bank (collectively, the "Banks"), and First Dakota
Title Limited Partnership (the "Escrow Agent"), DHW shall cause each Bank to deliver to the Company at the Closing, the certificates representing the Shares (which are currently being held by the
Banks as security for DHW's obligations to the Banks), duly endorsed and executed, with signatures guaranteed and stock powers attached, in proper form for transfer, against payment by the Company. 

        6.    Obligations of DHW Prior to Closing Date.    After the date hereof and prior to or until the Closing Date, as
the case may be, DHW, Dunham and Hey agree that: 

        (a)   DHW
will carry on its business in a manner consistent with past practices and in the ordinary course; 

        (b)   Other
than as permitted by this Agreement, no disposition, sale, offer for sale or option to purchase, the Shares, or any other shares of capital stock of the Company
beneficially owned by DHW, will be made, proposed or entered into with any person or entity; and 

        (c)   DHW
will not directly or indirectly redeem, retire, purchase or otherwise reacquire the Shares or any other shares of capital stock of the Company beneficially owned by
DHW. 

        7.    Agreement Regarding Escrow of Shares.    Within ten (10) days following the execution of this Agreement,
DHW and the Company will enter into Release and Escrow Agreements with each of the Banks. Pursuant to the Release and Escrow Agreements, the Shares shall remain subject to the lien and security
interest of the Banks, as their interests appear, until the Closing Date and completion of the purchase of the Shares by the Company hereunder. 

        8.    Right of First Refusal Option.    Subject to and contingent upon the Closing and payment for the Shares, DHW
hereby grants to the Company, its successors and assigns, the right and option, but not the obligation, to purchase all or any portion of DHW's remaining shares of common stock of the Company that DHW
desires to sell after the Closing Date and prior to the later of the fifth anniversary
of the Closing Date or the date on which DHW has repaid in full the current principal balances of DHW's indebtedness to the Banks, which DHW acknowledges is in an aggregate amount of approximately
$14,000,000 (the "Loans"). The Company shall have the right to assign its rights under this Section 8 of this Agreement. The right and option of the Company shall be carried out and exercised
on the following basis: 

        (a)    Notice of Proposed Sale.    If DHW, directly or pursuant to any collateral agreement with any of the Banks,
desires to sell or otherwise dispose of any common stock of the Company to any party (a "Transfer"), DHW shall give the Company and CDP written notice of such proposed Transfer (the "First Offer
Notice") which notice shall specify: (i) the number of shares that DHW proposes to sell (the "Sale Stock"); (ii) the name and address of the person or persons to whom the Sale Stock is
to be sold or transferred; and (iii) the terms of sale (e.g., public market or private sale, price and payment provisions), and if a private sale, shall furnish with the First Offer
Notice a copy of the agreement or other documentation under which the proposed Transfer is expected to occur, including, but not limited to, the sale price, closing date, and other significant terms
and conditions, in reasonable detail of the proposed transaction (collectively, the "First Offer Terms"). The First Offer Terms shall state in U.S. dollars the per share price at which DHW proposes to
sell the Sale Stock to a private party. The First Offer Notice shall constitute an offer to sell to the Company and CDP all or any portion of the Sale Stock on the First Offer Terms and at the price 

2

 

set
forth herein. The offer, as set forth in the First Offer Notice, is hereinafter referred to as the "First Offer." 

        (b)    Purchase Price.    If the Sale Stock is to be sold in a non-public transaction, the purchase price
of the Sale Stock shall be the per share price set forth in the First Offer Notice, which price shall be a bona fide, arm's-length price with a third
party; or, if DHW proposes to sell the Sale Stock on an exchange or in the over-the-counter market, the purchase price per share shall be the closing price of the Company's
common stock on the date of the First Offer Notice. The purchase price payable pursuant to this right of first refusal shall be payable in U.S. funds, even if the consideration proposed to be paid by
a third party is to be paid in a form other than cash or U.S. funds. 

        (c)    Notice of Acceptance or Rejection of First Offer.    The Company shall notify DHW and CDP whether it elects to
purchase some or all of the Sale Stock set forth in the First Offer in writing within seven (7) business days after receipt by the Company of the First Offer Notice (the "First Offer Period"). 

        (d)    CDP Notice of Acceptance or Rejection of Offer; Election upon Company Failure to Exercise.    CDP shall notify
DHW and the Company whether it wishes to purchase some or all of the Sale Stock set forth in the First Offer in writing within the First Offer Period. If the Company or its assignee does not elect to
purchase some or all of the Sale Stock set forth under the First Offer, CDP shall purchase all or the remainder of the Sale Stock which the Company has elected not to purchase, on the First Offer
Terms. 

        (e)    All Sale Stock Purchased.    Notwithstanding the foregoing, if the Company and/or CDP elect to purchase the
Sale Stock pursuant to this Section 8, all the Sale Stock must be purchased. Such purchase may be by a combination of the Company, CDP, and their assignees. 

        (f)    Closing on Sale Stock.    If the Company or CDP elects to purchase some or all of the Sale Stock pursuant to
this Section 8, the Closing on that sale shall take place at 9:00 a.m. local time at the Company's principal executive office and shall occur on the fifteenth (15) business day
following (i) the expiration of the First Offer Period, or (ii) the receipt by DHW of a Notice of Acceptance of Offer, whichever is earlier. The Closing may occur earlier or at another
date, time or location if mutually agreed upon by DHW and the purchaser(s) hereunder. DHW shall deliver documentation representing the common stock to be purchased, duly endorsed for transfer with
signatures guaranteed, shall represent and warrant that it has good and marketable title to such common stock and that such common stock is free from all liens, encumbrances and interests of third
parties at the time of the Closing, and shall take all other actions necessary to transfer the common stock free and clear of all liens, as the purchaser may reasonably request. 

        (g)    Failure of any Party to Exercise or DHW to Sell.    If neither the Company nor CDP accepts the First Offer
prior to the expiration of the First Offer Period, the First Offer shall terminate, and DHW shall be free, for a period of thirty (30) days, to transfer the Sale Stock specified in the First
Offer Notice in the manner and on the terms disclosed in the First Offer. If the sale by DHW of the Sale Stock has not been so effected within thirty (30) days following termination of the
First Offer Period, such Sale Stock shall again be subject to all of the provisions of the right of first refusal option in this Section 8. 

        (h)    Arbitration of Disputes.    Any dispute or controversy concerning the parties' obligations under this
Section 8 may, at the demand of any party, be submitted for resolution by binding arbitration by a single arbitrator by and in accordance with the rules of the American Arbitration Association.
The decision of the arbitrator therein shall be conclusive and binding upon the parties and shall include the award of reasonable attorney's fees and interest to a prevailing party. The award shall be
enforceable in a court of competent jurisdiction. 

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        (i)    Legend and Stop Transfer Order.    On the Closing Date, DHW agrees to surrender all of its certificates for
shares of the Company's common stock to the Company's transfer agent, to apply thereon the following restrictive legend: 

THESE
SECURITIES ARE SUBJECT TO A RIGHT OF FIRST REFUSAL BY GRANITE CITY FOOD & BREWERY LTD. AND ITS SUCCESSORS AND ASSIGNS, PURSUANT TO THE TERMS
OF A STOCK REPURCHASE AGREEMENT DATED FEBRUARY 8, 2011 (THE "REPURCHASE RIGHT"). ANY SALE, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES SHALL BE SUBJECT TO SUCH REPURCHASE RIGHT AND ANY
PURPORTED SALE, TRANSFER OR OTHER DISPOSITION WHICH DOES NOT REFERENCE THE REPURCHASE RIGHT SHALL BE NULL AND VOID. ANY PERSON ACQUIRING ANY PORTION OF THESE SECURITIES SHALL BE DEEMED TO HAVE ADOPTED
AND BE BOUND BY SUCH REPURCHASE RIGHTS. A COPY OF THE STOCK REPURCHASE AGREEMENT HAS BEEN FILED BY GRANITE CITY FOOD & BREWERY LTD. WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
AVAILABLE WITHOUT CHARGE BY CONTACTING THE CHIEF FINANCIAL OFFICER AND/OR SECRETARY OF THE COMPANY AT ITS REGISTERED OFFICE IN THE STATE OF MINNESOTA. 

Such
legend shall be in addition to pre-existing restrictive legends thereon. DHW further agrees that a stop transfer order may be placed on its shares by the Company for the purpose of
complying with this Section 8. 

        (j)    Use of Proceeds.    DHW agrees that the proceeds of any sale of shares of Common Stock of the Company, whether
to the Company, CDP or a third party, will be used to prepay the Loans due to the Banks. DHW agrees that the Loans (including the principal and all accrued interest and fees) shall be fully paid and
discharged by the fifth anniversary of the Closing Date. 

        9.    Representations and Warranties of DHW.    DHW, Dunham and Hey represent, warrant and agree that each of the
following statements is true and correct on the date hereof and will be true on the Closing Date: 

        (a)    Title to Shares.    DHW is the record and beneficial owner of the Shares. Except for the liens and interests of
the Banks, the Shares are free and clear of any security interests, claims, liens (including tax liens), pledges, penalties, charges, encumbrances, buy-sell agreements,
rights-of-first refusal, or rights of others whatsoever. 

        (b)    Status of DHW.    DHW is a limited liability company duly organized, validly existing and in good standing
under the laws of the state of South Dakota, and has the organizational power and authority to own and operate its business as now being conducted. 

        (c)    Authority and Binding Obligation.    DHW has the requisite power and authority to enter into this Agreement and
to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by DHW and the consummation by DHW of the transactions contemplated by this Agreement have
been duly authorized by the governing board of DHW and the holders of DHW's membership interests, consisting solely of Dunham and Hey. Dunham and Hey have caused DHW to take all necessary action on
the part of DHW to carry out the transactions contemplated by this Agreement. This Agreement has been executed and delivered by DHW and constitutes a legal,
valid and binding obligation of DHW enforceable against DHW in accordance with its terms, except as enforceability thereof may be limited by creditors' rights generally or by general principles of
equity. 

        (d)    No Conflict or Violation.    The execution and delivery of this Agreement by DHW does not, and the consummation
of the transaction contemplated by this Agreement will not, (i) conflict with, or result in any violation of, DHW's organizational documents, or (ii) result in any violation 

4

 

or
breach of, or default (with or without notice or lapse of time, or both) under, will give rise to a right of termination, cancellation or acceleration of any obligation, or result in the creation
of any lien upon the properties or assets of DHW under, any provision of any agreement, note, bond, mortgage, indenture, lease or other contractual obligation to which DHW is a party or by which its
properties and assets are bound. 

        (e)    Access to Information.    DHW has reviewed the Disclosure Materials described in Section 10(c) and has
been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the
purchase of the Shares; (ii) access to information about the Company and its subsidiaries and their respective financial condition, results of operations, business, properties, management and
prospects; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the sale of the Shares. Dunham and Hey acknowledge that they are members of the Company's board of directors and are familiar with the Company's operations and
financial condition. 

        (f)    Independent Investment Decision.    DHW has independently evaluated the merits of its decision to sell Shares
to the Company pursuant to this Agreement, and confirms that it has not relied on the advice of the Company or any of the Company's advisors. 

        10.    Representations of the Company.    

        (a)    Status of Company.    The Company is a corporation duly organized, validly existing and in good standing under
the laws of the state of Minnesota, and has the corporate power and authority to own and operate its business as now being conducted. 

        (b)    Authority and Binding Obligation of the Company.    The Company has the requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by the board of directors of the Company. The board of directors of the Company has taken all necessary action on the part of
the Company to carry out the transactions contemplated by this Agreement, subject to the Company receiving approval of its shareholders for the transactions contemplated by this Agreement. This
Agreement has been executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as
enforceability thereof may be limited by creditors' rights generally or by general principles of equity. 

        (c)    Company Disclosure.    The Company has filed with the Securities and Exchange Commission ("SEC") all reports,
forms or other information required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (the
foregoing materials being collectively referred to herein as the "Disclosure Materials") on a timely basis or has timely filed a valid extension of such time of filing and has filed any such
Disclosure Materials prior to the expiration of any such extension. The financial statements of the Company included in the Disclosure Materials comply in all material respects with applicable
accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments. 

5

 

        11.    Payment of Break-Up Fees and Expenses.    DHW, Dunham, Hey and DCM acknowledge that the Company
will be required to pay break-up fees and expenses pursuant to the terms of the Stock Purchase Agreement, in the event that any of them fail to perform their obligations under this
Agreement. Accordingly, DHW, Dunham, Hey and DCM agree that in the event of such default and if the Company is obligated to pay break-up fees or expenses under the terms of the Stock
Purchase Agreement, they will, upon written demand of the Company, promptly pay such break-up fees and expenses when due, or indemnify and reimburse the Company for the amount of such
break-up fees and expenses paid or payable by it, together with interest, expenses and reasonable attorney's fees incurred by the Company in enforcing this obligation. Such indemnification
obligation shall be joint and several and shall be made in accordance and pursuant to the terms of Section 21 of this Agreement. Notwithstanding the foregoing, if any such break-up
fees or expenses are payable by the Company solely because one of the Banks has breached or withdrawn its obligations under the Release and Escrow Agreements and not due to any act or omission on the
part of DHW, Dunham, Hey or DCM, no payment or indemnification by them shall be required under this Agreement. For purposes of the foregoing sentence, an act or omission on the part of DHW, Dunham,
Hey or DCM after the date of this Agreement that gives any of the Banks the right to withhold performance under the Release and Escrow Agreements shall not relieve such parties of their obligation to
pay, reimburse or indemnify the Company for any break-up fees or expenses the Company shall be obligated to pay under the Stock Purchase Agreement. 

        12.    DCM Agreements.    Within ten days following execution of this Agreement, DCM will enter into a Lease
Restructuring and Option Agreement with the Company, pursuant to which Dunham has agreed that fixed rents on properties listed in such Lease Restructuring and Option Agreement will be reduced as set
forth therein. Consummation and performance of the Lease Restructuring and Option Agreement is a condition to the Company's performance of this Agreement. Dunham agrees to take all action necessary or
required to cause DCM to sign, consummate and perform DCM's obligations under the Lease Restructuring and Option Agreement. 

        13.    Purchase Agreement Between the Company and DCM for Troy Property.    Within ten days following execution of
this Agreement, as a further condition to the parties' obligations under this Agreement, the Company and DCM shall have entered into a real estate purchase agreement (the "Real Estate Purchase
Agreement") for the purchase by the Company from DCM of the Troy Property. 

        14.    Other Landlord Lease Reductions.    Pursuant to the terms of the Stock Purchase Agreement, the Company has
agreed with CDP that it will achieve permanent rent reductions in the amount of $250,000 per year from either non-DCM affiliated lessors on the DCM land leases, or on
fee-simple restaurants owned by third party landlords. Such $250,000 rent reduction is in addition to and separate and apart from the rent reductions which DCM has agreed to provide the
Company pursuant to the Lease Restructuring and Option Agreement. DCM and Dunham agree to use reasonable commercial efforts to assist the Company in achieving such rent reductions, but shall not be
obligated to provide further rent concessions beyond those agreed to in the Lease Restructuring and Option Agreement. 

        15.    Amendments to Debt Conversion and Registration Rights Agreements.    Prior to the Closing Date, the Company and
DHW shall execute and deliver each of the Ancillary Documents to which they are stated parties. 

        16.    Voting Agreements.    DHW, concurrent with the execution of this Agreement, will enter into the Voting
Agreement and Irrevocable Proxy, pursuant to which DHW will agree to vote in favor of the Preferred Stock Transaction and the stock repurchase contemplated by this Agreement to be submitted to
shareholders of the Company at a special shareholders' meeting of the Company, scheduled to be held in 2011. Such meeting will be called, among other purposes, to obtain shareholder approval of the
Preferred Stock Transaction and the purchase of the Shares, as contemplated by this Agreement ("Company's Shareholder Approval"). 

6

 

        17.    Conditions to Each Party's Obligations.    The obligation of the Company to purchase the Shares, and the
obligation of DHW to sell the Shares, is subject to the satisfaction of the following conditions: 

        (a)   This
Agreement and the Stock Purchase Agreement shall have been approved by the requisite vote of the holders of shares of the Company's common stock in accordance with
the Minnesota Business Corporation Act and in accordance with the voting requirements specified by the board of directors of the Company in the Company's proxy statement, which includes approval
thereof by the holders of a majority of the outstanding common stock of the Company and the holders of a majority of the outstanding common stock of the Company not owned by DHW and its affiliates
present at the meeting in person or by proxy. 

        (b)   The
Company shall have closed on the sale of 3,000,000 shares of the Company's Series A Convertible Preferred Stock to CDP pursuant to the terms of the Stock
Purchase Agreement entered into between the Company and CDP. 

        (c)   The
Company shall have entered into the Credit Facility and shall have drawn on such facility to the extent necessary, as determined by the Company, to fund the purchase
of the Shares and the performance of the Company's obligations under the Real Estate Purchase Agreement. 

        (d)   The
Company shall have reasonably determined that the purchase of the Shares does not violate Minnesota Statutes Section 302A.551, as evidenced by a certificate
of the Company's Chief Financial Officer. 

        (e)   No
statute, rule, regulation, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any
governmental entity or other legal restraint or prohibition preventing, or rendering illegal, the consummation and performance of this Agreement, or causing the Company to sustain any loss or
prospective loss of any liquor, beer, food or brewing license or permit, shall be in effect; provided, however, that prior to asserting this condition, the Company shall have used reasonable best
efforts to prevent the entry of any such injunction or other order, to have any such order or injunction lifted or withdrawn, and to appeal as promptly as practicable any such injunction or other
order that may be entered. 

        (f)    The
Company and DHW shall have completed the purchase and sale of the Troy Property pursuant to the terms and conditions of the Real Estate Purchase Agreement. 

        (g)   Each
of the Ancillary Agreements has been executed and delivered by the respective parties thereto. 

The
provisions of this Section 18 may not be waived without the express written consent of the Company and DHW. 

        18.    Conditions Precedent to Company's Obligation.    In addition to the satisfaction of the conditions in
Section 18, the obligation of the Company to purchase the Shares is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: 

        (a)    Delivery of Shares.    DHW has delivered the Shares to the Escrow Agent free and clear of any security
interests, claims, liens (including tax liens), pledges, penalties, charges, encumbrances, buy-sell agreements, rights-of-first refusal, or rights of others
whatsoever, other than rights in favor of the Company and CDP created by this Agreement. 

        (b)    Representations and Warranties.    The representations and warranties of DHW set forth in this Agreement shall
be true and correct on the date of this Agreement and at the Closing (except to the extent that such representation and warranty speaks as of a particular date, in which case such representation and
warranty shall be true and correct as of that date). The Company shall 

7

 

have
received a certificate to such effect signed on behalf of DHW by Dunham and Hey on behalf of DHW. 

        (b)    Resignations of Directors.    Except as otherwise specified in writing by the Company, the Company shall have
received, effective as of the Closing Date, the resignations of five incumbent directors of the Company who were previously designated and elected by DHW. 

        (c)    Performance of Covenants and Obligations.    DHW, Dunham and Hey shall have performed or complied with, in all
material respects, all obligations and covenants required to be performed or complied with by them under this Agreement at or prior to the Closing, and the Company shall have received a certificate
signed on behalf of DHW by an executive officer to such effect. 

        19.    Conditions to Obligations of DHW.    In addition to the satisfaction of the conditions in Section 18,
the obligation of DHW to sell the Shares subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: 

        (a)    Delivery of Purchase Price.    The Company shall have delivered the Purchase Price as provided in
Section 4. 

        (b)    Representations and Warranties.    The representations and warranties of the Company set forth in this
Agreement shall be true and correct on the date of this Agreement and at the Closing (except to the extent that such representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of that date). DHW shall have received a certificate to such effect signed on behalf of the Company. 

        (c)    Performance of Covenants and Obligations.    The Company shall have performed or complied with, in all material
respect, all obligations and covenants required to be performed or complied with by them under this Agreement at or prior to the Closing, and DHW shall have received a certificate signed on behalf of
the Company by an executive officer to such effect. 

        20.    Survival of Representations and Warranties.    The representations, warranties and covenants of the Company,
DHW, Dunham, Hey and DCM contained in this Agreement shall survive the Closing Date. 

        21.    Indemnification.    

        (a)    Indemnification of the Company.    DHW, DCM, Dunham and Hey (collectively, "DHW Indemnifying Parties") agree to
indemnify, defend and hold the Company, its directors, officers, employees and agents, harmless from and against any and all losses, claims, demands, suits, actions, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements) of every kind, nature and description (collectively, "Losses") based upon, arising out of or otherwise in respect of: 

          (i)  breach
of any warranty, agreement, covenant or representation made in this Agreement by any of the DHW Indemnifying Parties or in any statement, document, exhibit or
certification furnished by DHW Indemnifying Parties pursuant hereto; 

         (ii)  any
liabilities or obligations arising from a breach by any of the DHW Indemnifying Parties of their obligations under the Ancillary Agreements; and 

        (iii)  the
Company's payment or liability for payment of damages or other amounts to CDP (including, but not limited to, break-up fees or expenses) pursuant to
the Stock Purchase Agreement as contemplated by Section 11 of this Agreement. 

8

 

 

        (b)    Indemnification by Company.    The Company agrees to indemnify, defend and hold DHW, its members, directors,
officers, employees and agents, harmless from and against any and all Losses based upon, arising out of or otherwise in respect of: 

          (i)  a
breach of any warranty, agreement, covenant or representation made in this Agreement by the Company or in any statement, document, exhibit or certification furnished
by the Company pursuant hereto; and 

         (ii)  any
liabilities or obligations arising from a breach by the Company of its obligations to DHW or DCM under the Ancillary Agreements. 

        (c)    Indemnification Procedure.    A party claiming the right to indemnification pursuant to this Section 22
(the "Indemnified Party") shall notify the other party (the "Indemnifying Party") in writing promptly after it becomes aware of a Loss or claimed Loss, including the assertion of any third-party claim
("Claim") upon which the Indemnified Party has a right to base a claim for indemnification hereunder; provided, however, that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless and solely to the extent the Indemnifying Party thereby is prejudiced. Upon receipt of such notice, the
Indemnifying Party shall be entitled to (i) participate at its own expense in the defense or investigation of any such Claim, or (ii) assume the defense thereof in which event the
Indemnifying Party shall not be liable to the Indemnified Party for legal or attorneys' fees thereafter incurred by the Indemnified Party in defense of such Claim; provided, that if the Indemnified
Party may have any unindemnified liability arising out of such Claim, the Indemnified Party shall have the right to approve the counsel selected by the Indemnifying Party, which approval shall not be
unreasonably withheld. If the Indemnifying Party assumes the defense of any Claim, all costs of defense of such Claim shall thereafter be borne by the Indemnifying Party and he shall have the
authority to compromise and settle such Claim, or to appeal any adverse judgment or ruling with the costs of such appeal to be paid by the Indemnifying Party; provided, however, if the Indemnified
Party may have any unindemnified liability arising out of such Claim, the Indemnifying Party shall have the authority to compromise and settle each such Claim only with the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld.
The Indemnified Party may continue to participate in the litigation of any Claim at his expense after the Indemnifying Party assumes the defense of such Claim. In the event the Indemnifying Party does
not elect to assume the defense of a third-party Claim within twenty (20) days after receipt of notice of the Claim from the Indemnified Party, the Indemnified Party shall have authority to
compromise and settle such Claim at the expense of the Indemnifying Party, or to appeal any adverse judgment or ruling with the costs to be paid by the Indemnifying Party. 

        22.    Additional Agreements.    

        (a)    Company Shareholder Approval; Proxy Statement.    The Company shall take all action reasonably necessary in
accordance with the Minnesota Business Corporation Act and its Articles of Incorporation and Bylaws to establish a record date for, duly call, give notice of, convene and hold a meeting of its
Shareholders (the "Shareholder Meeting") for the purpose of voting on the approval of this Agreement and the transactions contemplated hereby, as soon as reasonably practicable following clearance of
the Company's proxy statement by the SEC. The Company's Board of Directors shall recommend to the Company Shareholders the approval of this Agreement and the transactions contemplated hereby and
include such recommendation in the Proxy Statement; provided, that the Board of Directors may withdraw (or modify in a manner adverse to DHW) its approval and recommendation of this Agreement
(i) in accordance with the provisions of Section 5.2 of the Stock Purchase Agreement or (ii) other than in connection with the provisions of Section 5.2 of the Stock
Purchase Agreement, if the Board of Directors of the Company shall have determined in good faith (based on the advice of the Company's outside 

9

 

counsel)
that failure to take such action would reasonably be expected to result in a breach of the fiduciary duties of the board of directors of the Company under applicable law. 

        (b)    Reasonable Best Efforts.    Upon the terms and subject to the conditions set forth in this Agreement, each of
the parties hereto other than CDP shall use its or his reasonable best efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, and to assist and cooperate with
the other parties in doing, all things reasonably necessary, proper, or advisable to consummate and make effective, in the most expeditious manner practicable, the sale of the Shares pursuant to this
Agreement, including (i) the obtaining of all consents and the taking of all reasonable steps as may be necessary to obtain consents, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, and (iv) the execution and delivery of any additional instruments necessary to carry out the purposes of this Agreement; provided, however, that the
obligations set forth in this sentence shall not be deemed to have been breached as a result of the Company taking any of the actions under Section 5.2 of the Stock Purchase Agreement. 

        (c)    Transfer Taxes.    DHW shall pay all taxes arising out of the sale of the Shares to the Company, including, but
not limited to stock transfer and similar taxes and fees, arising out of or in connection
with the transactions contemplated by this Agreement. For avoidance of doubt, the Company shall not be required to assume liability for or pay any income or gains tax of DHW or its members as a result
of any income or gains recognized by them. 

        (d)    Board Observers.    Effective on the Closing of the transaction contemplated by this Agreement, DHW may
designate two representatives who shall be invited to attend regularly scheduled Board meetings as observers, who may include Donald A. Dunham, Jr., Charles J. Hey, Nancy Hughes,
or other persons approved by CDP. Such observers may be excluded from all or any portion of a meeting where their presence could reasonably result in (i) the disclosure of trade secrets or
other confidential information to a competitor; or (ii) the loss of the attorney-client privilege. All such observers shall enter into a confidentiality agreement with the Company prior to
exercising their observation rights. Subject to the immediately preceding sentence, such observers shall be entitled to receive all materials provided to Board members and shall be invited to attend
all Board training and education sessions. 

        23.    Termination.    

        (a)    Termination By Mutual Consent.    This agreement may be terminated by mutual written consent of DHW and the
Company without liability on the part of DHW or the Company. 

        (b)    Termination by Either DHW or the Company.    This Agreement may be terminated by either DHW or the Company if
the conditions precedent to the parties' obligations to consummate the transactions contemplated by this Agreement as set forth in Section 18 of this Agreement have not been satisfied, waived
or performed; or the Closing shall not have occurred on or before July 31, 2011, provided, however, that such date may be extended up to December 31, 2011 by mutual agreement of the
parties hereto (the "Outside Date"); provided, however, that the right to terminate this agreement under this Section 24(b) shall not be available to a party whose failure to fulfill any
obligation under this Agreement has been the cause of or resulted in the failure of this transaction to occur on or before the Outside Date. 

        (c)    Termination by the Company.    The Company may terminate this Agreement if DHW breaches or fails to perform any
of its material representations, warranties, covenants or obligations contained in this Agreement as a result of which a condition set forth in Section 19 is incapable of being satisfied and,
such breach (if curable) has not been cured within 30 days after notice to DHW or waived by the Company (provided that the Company is not then in material 

10

 

breach
of any representation, warranty or covenant contained in this agreement); or if the Company or CDP shall have terminated the Stock Purchase Agreement pursuant to Section 10 thereof. 

        (d)    Termination By DHW.    DHW may terminate this Agreement if the Company breaches or fails to perform any of its
material representations, warranties, covenants or obligations contained in this Agreement, as a result of which a condition set forth in Section 20 is incapable of being satisfied and such
breach (if curable) has not been cured within 30 days after notice to the Company or waived by DHW (provided that DHW is not then in material breach of any representation, warranty, or covenant
contained in this Agreement) or if the Company or CDP shall have terminated the Stock Purchase Agreement pursuant to Section 10 thereof. 

        (e)    Effect of Termination.    In the event of termination of this Agreement by either the Company or DHW as
provided in this Section 23, this Agreement shall forthwith become void and of no effect, without any liability on the part of the Company or DHW, other than the indemnity obligations contained
in Section 21 which shall survive such termination, and except to the extent that such termination results from a fraud or willful and intentional breach by a party of any representation,
warranty or covenant set forth in this Agreement. 

        24.    Miscellaneous.    

        (a)    Amendment.    This Agreement may be amended by the parties at any time before or after receipt of the Company's
Shareholder Approval; provided, however, that after the receipt of the Company's Shareholder Approval, there shall be no amendment that by applicable law, requires further approval by the Shareholders
of the Company without the further approval of such Shareholders; and provided, further, that after this Agreement is approved by the Company's Shareholders, no such amendment or modification shall be
made that materially and adversely affects the Company, without the further approval of the Company's Shareholders. This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties. 

        (b)    Extension; Waiver.    At any time prior to Closing, the parties may extend the time for performance of any of
the obligations or other acts of the other parties or waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement
or, subject to the last sentence of Section 18, waive compliance with any of the Agreements or conditions contained in this Agreement (provided that a waiver must be in writing and signed by
the party against whom the waiver is to be effective). Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument signed on behalf of such
party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. No provision of this Agreement requiring
any party to use reasonable efforts or to act in good faith in any context shall be interpreted to require a party, as a part of such party's duty to use reasonable efforts or to act in good faith in
the context in question, to waive any condition to the obligations of such party hereunder or to refrain from exercising any right or power such party may have hereunder. 

        (c)    Expenses and Brokers.    Each party hereto shall bear and pay its or his own costs and expenses in connection
herewith (including, without limitation, fees and expenses of any finders or brokers) in all events. DHW represents and warrants that it has not negotiated in connection with the transactions
contemplated by this Agreement with any finder, broker or agent. The Company represents and
warrants that it has not negotiated in connection with the transactions contemplated by this Agreement with any finder, broker or agent. 

11

 

        (d)    Successors.    This Agreement shall be binding upon and inure to the benefit of the respective successors,
assigns, heirs or legal representatives of the parties hereto. Notwithstanding the foregoing sentence, this Agreement shall not be assigned by any party hereto without the prior written consent of the
other parties. 

        (e)    Notices.    Any notice, request, instruction or other document to be given hereunder or to any party shall be
in writing delivered personally or sent by registered or certified mail, postage prepaid, as follows: 

If
to the Company: 

Granite
City Food & Brewery Ltd.

5402 Parkdale Drive, Suite 101

Minneapolis, MN 55416 

With
a copy to: 

Briggs
and Morgan, P.A.

2200 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

Attention: Avron L. Gordon 

If
to DHW: 

DHW
Leasing, L.L.C.

230 South Phillips Avenue, Suite 202

Sioux Falls, SD 57104 

With
a copy to: 

John F.
Archer

Hagen, Wilka & Archer, LLP

600 South Main Avenue, Suite 102

P.O. Box 964

Sioux Falls, SD 57104 

If
to Dunham and DCM: 

Donald A.
Dunham, Jr. and Dunham Capital Management

230 South Phillips Avenue, Suite 202

Sioux Falls, SD 57104-6321

Attention: Nancy J. Hughes, President and Chief Operating Officer 

With
a copy to: 

John F.
Archer

Hagen, Wilka & Archer, LLP

600 South Main Avenue, Suite 102

P.O. Box 964

Sioux Falls, SD 57104 

If
to Charles J. Hey: 

Charles J.
Hey

One South Pintail Place

Sioux Falls, SD 57105 

12

 

If
to CDP: 

Concept
Development Partners LLC

5724 Calpine Drive

Malibu, California 90265 

With
a copy to: 

CIC II LP

500 Crescent Court, Suite 250

Dallas, Texas 75201

Attention: Fouad Bashour 

and

Fulbright
and Jaworski LLP

1301 McKinney Street, Suite 5100

Houston, Texas 77010

Attention: Edward Rhyne 

Any
party may change its address for the purposes of this Section 25(e) by giving notice of such change of address to the other party in the manner herein provided for giving notice. Any
notice or communication hereunder must be in writing, and may be given by registered or certified mail, return receipt requested, and, if given by registered or certified mail, shall be deemed to have
been given and received forty-eight (48) hours after the deposit in the United States mail of a registered or certified letter, return receipt requested, containing such notice, properly
addressed, with postage prepaid; and if given otherwise than by registered or certified mail, it shall be deemed to have been given when delivered to and received by the party to whom it is addressed
at the time received. 

        (f)    Captions.    The headings of the sections herein and of the Appendices hereto are inserted for convenience only
and shall not control or affect the meaning or construction of any of the provisions of this Agreement. 

        (g)    Entire Agreement.    This Agreement, together with the Stock Purchase Agreement and the Ancillary Agreements,
constitutes the entire understanding between the parties hereto with respect to the matters covered herein. This Agreement may not be amended or modified, nor may any of its terms be waived, except by
written instruments signed by the parties hereto. 

        (h)    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
Minnesota, without regard to its rules of conflict of laws. The parties do not intend that any dispute or controversy under this Agreement be subject to arbitration or be arbitrated, except to the
extent provided in Section 8 hereof. 

        (i)    Severability.    If any term or other provision of this Agreement is invalid, illegal or unenforceable, all
other provisions of this Agreement shall remain in force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the maximum extent possible. 

        (j)    Specific Performance.    The parties hereto acknowledge that irreparable damage would result if this Agreement
were not specifically enforced, and they therefore consent that the rights and obligations of the parties under this Agreement may be enforced by a decree of specific 

13

 

performance
issued by a court of competent jurisdiction. Such remedy shall, however, not be exclusive and shall be in addition to any other remedies which any party may have under this Agreement or
otherwise. 

        (k)    Trial by Jury.    EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE OTHER AGREEMENTS AND TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR REFERRED TO HEREIN. 

        (l)    Multiple Counterparts.    This Agreement may be executed in separate counterparts by the parties hereto and all
of such counterparts shall be considered as one and the same instrument and all of such agreements shall be deemed but one and the same agreement. 

        (m)    Singular, Plural.    Whenever the singular form of any word is used in this Agreement, the same shall include
the plural form of such word, whenever appropriate, and vice versa. 

        (n)    Survival of Covenants.    Each of the covenants and agreements contained herein to be performed after Closing
shall survive the Closing of the transactions contemplated by this Agreement. 

[THIS
SPACE INTENTIONALLY LEFT BLANK] 

14

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as herein provided as of the day and year first above written. 

 

 

					
	 	 	 DHW:
	

 	
 	
 DHW LEASING, L.L.C.
	

 	
 	
 By:	
 	
 /s/ DONALD A. DUNHAM, JR.

 
	 	 	 Its:	 	 Managing Member
	

 	
 	
 BUYER:
	

 	
 	
 GRANITE CITY FOOD & BREWERY LTD.
	

 	
 	
 By:	
 	
 /s/ JAMES G. GILBERTSON

 
	 	 	 Its:	 	 Chief Financial Officer
	

 	
 	
 DUNHAM CAPITAL MANAGEMENT, L.L.C.
	

 	
 	
 By:	
 	
 /s/ DONALD A. DUNHAM, JR.

 
	 	 	 Its:	 	 Managing Member
	

 	
 	
/s/ DONALD A. DUNHAM, JR.

  Donald A. Dunham, Jr.
	

 	
 	
/s/ CHRISTINE DUNHAM

  Christine Dunham
	

 	
 	
/s/ CHARLES J. HEY

  Charles J. Hey
	

 	
 	
 CONCEPT DEVELOPMENT PARTNERS LLC
	

 	
 	
 By:	
 	
 /s/ FOUAD BASHOUR

 
	 	 	 Its:	 	 Manager

 

 

 [Signature page to Stock Repurchase Agreement dated February 8, 2011]

15

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EXHIBIT 10.2QuickLinks
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  EXHIBIT 10.3    
    

 
 

  VOTING AGREEMENT AND IRREVOCABLE PROXY    
    

        This VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of February 8, 2011 (as amended, this "Voting Agreement") between DHW
Leasing, LLC, a South Dakota limited liability company ("DHW"), the undersigned shareholders listed on Schedule A hereto ("Shareholders",
and each individually, "Shareholder") of Granite City Food & Brewery Ltd., a Minnesota corporation (the "Company"), Joel C. Longtin, an individual resident in South Dakota ("Longtin"),
Steven J. Wagenheim, an individual resident in Minnesota ("Wagenheim"; Longtin and Wagenheim are collectively referred to as the "Proxies" herein), and Concept Development Partners, LLC
("Investor"). 

 
 

  RECITALS    
    

        WHEREAS, the Company and Investor have entered into a Stock Purchase Agreement dated the date hereof (the "Stock Purchase Agreement"),
pursuant to which Investor will purchase 3,000,000 shares of newly issued convertible preferred stock from the Company (the "Preferred Stock Purchase Transaction"), and DHW, the Company, the Investor
and certain other parties have entered into a Stock Repurchase Agreement dated the date hereof (the "Stock Repurchase Agreement"), pursuant to which the Company will repurchase 3,000,000 shares of its
common stock from DHW (the "Stock Repurchase Transaction") (collectively, the Preferred Stock
Purchase Transaction and the Stock Repurchase Transaction are referred to as the "Transactions," and the Stock Purchase Agreement and the Stock Repurchase Agreement are collectively referred to as the
"Transaction Agreements"); and 

        WHEREAS,
the Company intends to ask its shareholders to approve the Transactions, as well as an option exchange program which would permit the Company's employees to exchange certain
stock options for newly issued options (the "Option Exchange Program"), at a special meeting of the Company's shareholders and will be sending a proxy statement regarding those proposals (the "Proxy
Statement"); and 

        WHEREAS,
the Company and Investor will incur substantial expenses in connection with the Transactions and may be required to pay break-up or termination fees as a result of
the termination of the Transactions; and 

        WHEREAS,
in order to induce the Company and Investor to enter into the Transaction Agreements, each of the Shareholders is willing to make certain representations, warranties, covenants
and agreements with respect to the shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock") beneficially owned by such Shareholder and set forth across from
Shareholder's name on Schedule A hereto (the "Original Shares" and, together with any additional shares of Company Common Stock pursuant to Section 6 hereof, the "Shares"). 

        NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows: 

        1.    Certain Definitions.    In addition to terms defined elsewhere herein, capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Stock Purchase Agreement or the Stock Repurchase Agreement, as appropriate, which are incorporated by reference herein. For purposes of this
Voting Agreement: 

        (a)   "Affiliate" means, as to any specified Person, (i) any shareholder, equity- holder, officer, or director of such
Person and their family, members or (ii) any other Person which, directly or indirectly, controls, is controlled by, employed by or is under common control with, any of the foregoing. For the
purposes of this definition, "control" means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise. 

 

        (b)   "Beneficially Own" or "Beneficial Ownership" with respect to any
securities means having "beneficial ownership" of such securities as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act. 

        (c)   "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint
stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof. 

        2.    Disclosure.    Each Shareholder hereby authorizes the Company to publish and disclose in the Proxy Statement and
any and all other filings of the Company (including all documents and schedules filed with the SEC), and any press release or other disclosure document which the Company or Investor reasonably
determines to be necessary or desirable in connection with the Transactions and the Option Exchange Program, Shareholder's identity and ownership of the Shares and the nature of Shareholder's
commitments, arrangements and understandings under this Voting Agreement. 

        3.    Voting of Company Stock.    Each Shareholder hereby agrees that, during the period commencing on the date hereof
and continuing until the termination of this Voting Agreement, at any meeting of the shareholders of the Company, however called, or in connection with any written consent of the shareholders of the
Company, he, she or it shall vote (or cause to be voted) the Shares held by Shareholder (i) in favor of approval of the Transactions, and in favor of approval of the Option Exchange Program,
and any actions required in furtherance thereof and hereof, and (ii) against any action or agreement that would result in a breach in any respect of any covenant, representation or warranty, or
any other obligation or agreement, of the Company under the Stock Purchase Agreement or the Stock Repurchase Agreement or of Shareholder under this Voting Agreement. Further, no Shareholder shall
enter into any agreement or understanding with any Person the effect of which would be inconsistent with or violative of any provision contained in this Section 3. Notwithstanding the
foregoing, nothing in this Section 3 shall require Shareholder to exercise any options with respect to the Shares. 

        4.    Grant of Proxy; Appointment of Proxy.    Each Shareholder hereby irrevocably grants to, and appoints, Joel C.
Longtin and Steven J. Wagenheim, or each of them individually, as Shareholder's proxies and attorneys-in-fact (with full power of substitution), for and in the name, place and
stead of Shareholder, to vote such Shareholder's Shares, or grant a consent or approval in
respect of such Shares as set forth in Section 3 hereof. Shareholder shall not have any claim against such proxies and attorneys-in-fact, for any action taken, decision
made or instruction given by such proxies and attorneys-in-fact in accordance with this Voting Agreement. This proxy and power of attorney shall be irrevocable during the term
of this Agreement, shall be deemed to be coupled with an interest sufficient in law to support an irrevocable proxy and shall revoke any and all prior proxies granted by Shareholder with respect to
the Shares. The power of attorney granted by Shareholder herein is a durable power of attorney and shall survive the dissolution, bankruptcy, death or incapacity of Shareholder. The proxy and power of
attorney granted hereunder shall terminate upon the termination of this Voting Agreement. 

        5.    Covenants, Representations and Warranties of each Shareholder.    Each Shareholder hereby represents and
warrants (with respect to such Shareholder only and not with respect to any other Shareholder) to, and agrees with, Investor as follows: 

        (a)    Ownership of Shares.    Shareholder Beneficially Owns all of his, her or its Original Shares as set forth on
Schedule A, and any other Beneficial Owners of such Shares are as set forth on Schedule A. Shareholder does not beneficially own any shares of Company Common Stock other 

2

 

than
(i) the Original Shares and (ii) any options, warrants or other rights to acquire any additional shares of Company Common Stock or any security exercisable for or convertible into
shares of Company Common Stock, as set forth on Schedule A (collectively, "Options") and (ii) except for DHW's pledge of its Shares to the Banks (as defined in the Stock Repurchase
Agreement) or pursuant hereto, there are no options, warrants or other rights, agreements, arrangements or commitments of any character to which Shareholder is a party relating to the pledge,
disposition or voting of any of the Original Shares and there are no voting trusts or voting agreements with respect to the Original Shares. 

        (b)    Authorization.    Shareholder has the legal capacity, power and authority to enter into and perform all of his,
her or its obligations under this Voting Agreement. The execution, delivery and performance of this Voting Agreement by Shareholder will not violate any other agreement to which Shareholder is a party
including, without limitation, any voting agreement, shareholders agreement, voting trust, trust or similar agreement. This Voting Agreement has been duly and validly executed and delivered by
Shareholder and constitutes a valid and binding agreement enforceable against Shareholder in accordance with its terms. 

        (c)    No Conflicts.    (i) No filing with, and no permit, authorization, consent or approval of, any state or federal
public body or authority is necessary for the execution of this Voting Agreement by Shareholder and the consummation by Shareholder of the transactions contemplated hereby and (ii) the
execution and delivery of this Voting Agreement by Shareholder, the consummation by Shareholder of the transactions contemplated hereby or compliance by Shareholder with any of the provisions hereof
will not (A) conflict with or result in any breach of the organizational documents of Shareholder (if applicable); (B) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, commitment, arrangement, understanding, agreement or other
instrument or, obligation of any kind to which Shareholder is a party or by which Shareholder or any of its properties or assets may be bound, or (C) violate any order, writ injunction, decree,
judgment, order, statute, rule or regulation applicable to Shareholder or any of its properties or assets. 

        (d)    No Encumbrances.    Except as applicable in connection with the Transactions and this Voting Agreement, the
Shares at all times during the term hereof will be Beneficially Owned by Shareholder, free and clear of all liens, claims, security interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever. 

        (e)    No Solicitation.    Shareholder agrees not to take any action inconsistent with or in violation of
Section 5.2 of the Stock Purchase Agreement. 

        (f)    Restriction on Transfer, Proxies and Non-Interference.    Shareholder shall not, directly or
indirectly (i) except as contemplated by the Transaction Agreements, offer for sale, sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option
or other arrangement or understanding with respect to or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or other disposition of, any or all of any such
Shareholder's Shares or any interest therein, (ii) except as contemplated by this Voting Agreement, grant any proxies or powers of attorney, deposit any Shares into a voting trust or enter into
a voting agreement with respect to the Shares, or (iii) take any action that would make any representation or warranty of Shareholder contained herein untrue or incorrect or have the effect of
preventing or disabling Shareholder from performing Shareholder's obligations under this Voting Agreement. 

3

 

        (g)    Reliance by Investor.    Shareholder understands and acknowledges that Investor is entering into the
Transaction Agreements in reliance upon Shareholder's execution and delivery of this Voting Agreement. 

        6.    Additional Shares.    Each Shareholder agrees that all shares of Company Common Stock that Shareholder
purchases, acquires the right to vote or otherwise acquires Beneficial Ownership of after the execution of this Voting Agreement, but excluding shares of Company Common Stock underlying unexercised
options, shall be subject to the terms of this Voting Agreement and shall constitute Shares for all purposes of this Voting Agreement. 

        7.    Stop Transfer Legend.    

        (a)   Each
Shareholder agrees and covenants that he, she or it shall not request that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of the Shares, unless such transfer is made in compliance with this Voting Agreement. 

        (b)   Without
limiting the covenants set forth in paragraph (a) above, in the event of a stock dividend or distribution, or any change in the Company's shares by reason
of any stock dividend, split-up, recapitalization, combination, exchange of shares or the like, other than pursuant to the Transactions, the term "Shares" shall be deemed to refer to and
include the Shares into which or for which any or all of the Shares may be changed or exchanged and appropriate adjustments shall be made to the terms and provisions of this Voting Agreement. 

        8.    Further Assurances.    From time to time, at the Company's request and without further consideration,
Shareholder shall execute and deliver such additional documents and take all such further lawful action as may be necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Voting Agreement. 

        9.    Shareholder Capacity.    Each of the Shareholders makes no agreement or understanding in this Agreement in
Shareholder's capacity as a director or officer of the Company or any of its subsidiaries (if Shareholder holds such office), and nothing in this Agreement: (a) will limit or affect any actions
or omissions taken by Shareholder in his or her capacity as such a director or officer, including in exercising rights under the Transaction Agreements, and no such actions or omissions shall be
deemed a breach of this Voting Agreement or (b) will be construed to prohibit, limit or restrict Shareholder from exercising his or her fiduciary duties as an officer or director to the Company
or its shareholders. 

        10.    Termination.    This Voting Agreement shall terminate upon the earlier of (a) the Closing or
(b) the termination of the Stock Purchase Agreement in accordance with its terms. 

        11.    Miscellaneous.    

        (a)    Entire Agreement.    This Voting Agreement constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. 

        (b)    Certain Events.    Subject to Section 5(f) hereof, each Shareholder agrees that this Voting Agreement
and the obligations hereunder shall attach to each such Shareholder's Shares and shall be binding upon any Person to which legal or Beneficial Ownership of such Shares shall pass, whether by operation
of
law or otherwise, including without limitation, each Shareholder's heirs, guardians, administrators or successors. Notwithstanding any such transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Voting Agreement. 

        (c)    Assignment.    This Voting Agreement shall not be assigned by operation of law or otherwise (i) by any
Shareholder, without the prior written consent of Investor and the Proxies; or 

4

 

(ii) by
the Investor, without the prior written consent of the Proxies, provided that Investor may assign, in its sole discretion, its rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Investor, but no such assignment shall relieve Investor of its obligations hereunder if such assignee does not perform such obligations. 

        (d)    Amendment and Modification.    This Voting Agreement may not be amended, changed, supplemented, waived or
otherwise modified or terminated, except upon the execution and delivery of a written agreement executed by the parties hereto affected by such amendment. 

        (e)    Notices.    Any notice or other communication required or which may be given hereunder shall be in writing and
delivered (i) personally, (ii) via facsimile; (iii) via overnight courier (providing proof of delivery) or (iv) via registered or certified mail (return receipt requested).
Such notice shall be deemed to be given, dated and received (i) when so delivered personally, via facsimile upon confirmation, or via overnight courier upon actual delivery or (ii) two
days after the date of mailing, if mailed by registered or certified mail. Any notice pursuant to this section shall be delivered as follows: 

        If
to a Shareholder, to the address set forth for such Shareholder on Schedule A to this Voting Agreement. 

        If
to the Company: 

Granite
City Food & Brewery Ltd.

5402 Parkdale Drive, Suite 101

Minneapolis, MN 55416

Facsimile: (952) 215-0661

Attention: Corporate Secretary

with a copy to:

Briggs and Morgan, P.A.

2200 IDS Center

80 South Eighth Street

Minneapolis, MN 55402

Facsimile: (612) 977-8650

Attention: Avron L. Gordon, Esq.

If to Investor:

Concept Development Partners, LLC

5724 Calpine Drive

Malibu, California 90265

Facsimile: (310) 457-0256

Attention: Dean Oakey

with a copy to:

CIC II L.P.

500 Crescent Court, Suite 250

Dallas, Texas 75201

Facsimile: (214) 880-4491

Attention: Fouad Bashour

and

Fulbright and Jaworski LLP

1301 McKinney Street, Suite 5100

5

 

Houston,
Texas 77010

Facsimile: (713) 651-5246

Attention: Edward Rhyne

If to Joel C. Longtin:

3800 Country Club Boulevard

Sioux City, IA 51104

Facsimile: (712) 755-5824

If to Steve Wagenheim:

321 Westwood Drive North

Golden Valley, MN 55422 

        (f)    Severability.    Whenever possible, each provision or portion of any provision of this Voting Agreement will be
interpreted in such a manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Voting Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or portion of any provision of this Voting Agreement in such jurisdiction, and this Voting Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein. 

        (g)    Specific Performance.    The parties hereto agree recognize and acknowledge that a breach by it of any
covenants or agreements contained in this Voting Agreement will cause the other party to sustain damages for which it would not have an adequate remedy at law for money damages, and therefore each of
the parties hereto agrees that in the event of any such breach the aggrieved party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other
equitable relief in addition to any other remedy to which it may be entitled, at law or in equity. 

        (h)    Remedies Cumulative.    All rights, powers and remedies provided under this Voting Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not alternative; and the exercise of any such rights, powers or remedies by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party. 

        (i)    No Waiver.    The failure of any party hereto to exercise any right, power or remedy provided under this Voting
Agreement or otherwise available in respect hereof at law, or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, will not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. 

        (j)    No Third Party Beneficiaries.    This Voting Agreement is not intended to confer upon any person other than the
parties hereto any rights or remedies hereunder. 

        (k)    Governing Law.    This Voting Agreement will be governed and construed in accordance with the laws of the State
of Minnesota, without giving effect to the principles of conflict of laws thereof. 

        (l)    WAIVER OF JURY TRIAL.    EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION WITH ANY
ACTION, SUIT OR PROCEEDING IN CONNECTION WITH- THIS VOTING AGREEMENT. 

6

 

        (m)    Description Headings.    The description headings used herein are for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this Voting Agreement. 

        (n)    Counterparts.    This Voting Agreement may be executed in counterparts, each of which will be considered one
and the same Voting Agreement and will become effective when such counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not
sign the same counterpart. 

        (o)    Recovery of Attorney's Fees.    In the event of any litigation between the parties relating to this Voting
Agreement, the prevailing party shall be entitled to recover its reasonable attorney's fees and costs (including court costs) from the non-prevailing party, provided that if both parties
prevail in part, the reasonable attorney's fees and costs shall be awarded by the court in such a manner as it deems equitable to reflect the relative amounts and merits of the parties' claims. 

[signature page follows]

7

 

        IN
WITNESS WHEREOF, the Company, Investor and each of the Shareholders have caused this Voting Agreement to be duly executed as of the day and year first above written. 

 

 

					
	 	 	GRANITE CITY FOOD & BREWERY LTD.
	

 	
 	
By	
 	
/s/ STEVEN J. WAGENHEIM

  Name:  Steven J. Wagenheim

Title:  President and Chief Executive Officer
	

 	
 	
CONCEPT DEVELOPMENT PARTNERS, LLC
	

 	
 	
By:	
 	
/s/ FOUAD BASHOUR

  Name:  Fouad Bashour

Title:  Manager
	

 	
 	
 SHAREHOLDERS:

DHW LEASING, L.L.C.
	

 	
 	
By	
 	
/s/ DONALD A. DUNHAM, JR.

  Name:  Donald A. Dunham, Jr.

Title:  Managing Member
	

 	
 	
/s/ DONALD A. DUNHAM, JR.

  Donald A. Dunham, Jr.
	

 	
 	
/s/ CHRISTINE E. DUNHAM

  Christine E. Dunham
	

 	
 	
/s/ CHARLES J. HEY

  Charles J. Hey
	

 	
 	
/s/ JOEL C. LONGTIN

  Joel C. Longtin
	

 	
 	
/s/ STEVEN J. WAGENHEIM

  Steven J. Wagenheim

 

 8

 
 

 

					
	

 	
 	
/s/ JAMES G. GILBERTSON

  James G. Gilbertson
	

 	
 	
/s/ DARIUS H. GILANFAR

  Darius H. Gilanfar
	

 	
 	
/s/ MONICA A. UNDERWOOD

  Monica A. Underwood

 

 9

 

 
 

  Schedule A    
    

 
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
  AND MANAGEMENT    
    

 

 

					
	Name and Address of Beneficial Owner(1)

 
	 	Shares Beneficially Owned(1) 	 
	 Donald A. Dunham, Jr.(2)
	 	 	4,776,707	(3)
	 Charles J. Hey(4)
	 	 	4,687,687	(5)
	 DHW(6)
	 	 	4,666,666	 
	 Steven J. Wagenheim(7)
	 	 	215,467	(8)
	 James G. Gilbertson
	 	 	63,749	(9)
	 Darius H. Gilanfar
	 	 	43,826	(10)
	 Milton D. Avery
	 	 	10,000	(11)
	 Joel C. Longtin
	 	 	9,570	(12)
	 Brian K. Gramm
	 	 	5,000	 
	 David A. Timpe
	 	 	5,000	 
	 All directors and executive officers as a group (10 persons)
	 	 	5,162,171	(13)

 

 

	*
	Represents
less than one percent.

	(1)
	Beneficial
ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to securities. Securities
"beneficially owned" by a person may include securities owned by or for, among others, the spouse, children, or certain other relatives of such person as well as other securities as to which the
person has or shares voting or investment power or has the option or right to acquire within 60 days of February 1, 2011.

	(2)
	Mr. Dunham
may be deemed to be the indirect beneficial owner of the securities held by DHW, L.L.C. The number of shares reported in this proxy
statement as beneficially owned by Mr. Dunham includes the 4,666,666 shares held by DHW. The address of this shareholder is 230 S. Phillips Avenue, Suite 202, Sioux Falls, SD 57104.

	(3)
	Includes
64,097 shares purchasable upon the exercise of warrants held by Mr. Dunham, Dunham Capital Management, L.L.C. and Dunham Equity Management,
L.L.C., two entities controlled by Mr. Dunham.

	(4)
	Mr. Hey
may be deemed to be the indirect beneficial owner of the securities held by DHW. The number of shares reported in this proxy statement as
beneficially owned by Mr. Hey includes the 4,666,666 shares held by DHW. The address of this shareholder is 1 South Pintail Place, Sioux Falls, SD 57105.

	(5)
	Includes
21,021 shares purchasable upon the exercise of warrants.

	(6)
	DHW
has entered into a stock pledge agreement with each of Great Western Bank, CorTrust Bank and Dacotah Bank (collectively, the "Lenders"), each dated
October 5, 2009, pursuant to which DHW has pledged 2,916,666 shares to Great Western Bank, 1,166,666 shares to CorTrust Bank and 583,333 shares to Dacotah Bank as collateral under its loan
arrangements with the Lenders. Upon a default under such loan arrangements by DHW, the Lenders may exercise control over their respective portion of the shares, including exercising the right to vote
and/or dispose of such portion of the shares. The address of this shareholder is 230 S. Phillips Avenue, Suite 202, Sioux Falls, SD 57104. DHW also has entered into the stock repurchase
agreement described in, and subject to shareholder approval of, Proposal No. 2.

	(7)
	Mr. Wagenheim
may be deemed to be the indirect beneficial owner of the securities held by Brewing Ventures LLC. The number of shares reported
in this proxy statement as beneficially owned by Mr. Wagenheim includes the 96,979 shares held by Brewing Ventures LLC. 

	(8)
	Includes
102,914 shares purchasable upon the exercise of options within 60 days of February 1, 2011.

	(9)
	Includes
56,249 shares purchasable upon the exercise of options within 60 days of February 1, 2011.

	(10)
	Includes
43,746 shares purchasable upon the exercise of options within 60 days of February 1, 2011.

	(11)
	Mr. Avery
may be deemed to be the indirect beneficial owner of the securities held by Avery Brothers, LLC. The number of shares reported in
this proxy statement as beneficially owned by Mr. Avery includes the 10,000 shares held by Avery Brothers, LLC.

	(12)
	Includes
2,930 shares purchasable upon the exercise of warrants and 2,000 shares held by Mr. Longtin's spouse's IRA.

	(13)
	Includes
88,048 shares purchasable upon the exercise of warrants and 214,324 shares purchasable upon the exercise of options within 60 days of
February 1, 2011. Also includes securities held by DHW, Brewing Ventures LLC, Avery Brothers, LLC and Mr. Longtin's spouse's IRA. 

QuickLinks

EXHIBIT 10.3

VOTING AGREEMENT AND IRREVOCABLE PROXY

RECITALS

Schedule A

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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