Document:

Exhibit 10.2

 

PROMISSORY
NOTE

 

	
  Principal 

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call/Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  
	
  $

  	
  750,000.00

  	
   

  	
  04-14-2004

  	
   

  	
  09-01-2004

  	
   

  	
  76601

  	
   

  	
  0026

  	
   

  	
   

  	
   

  	
  CD

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  References in the shaded area are for
  Lender’s use only and do not limit the applicability of this document to any

  particular loan or item.

  Any item above containing “***” has been omitted due to text length
  limitations.

  
	
   

  
	
  Borrower:

  	
  Granite
  City Food & Brewery Ltd.,

  a Minnesota Corporation

  (TIN: 41-1883639)

  5831 CEDAR LAKE ROAD

  ST. LOUIS PARK, MN  55416

  	
   

  	
  Lender:

  	
  First
  National Bank

  Pierre

  125 W. Sioux Avenue

  P.O. Box 730

  Pierre, SD  57501

  
																				

 

	
  Principal Amount:  $750,000.00

  	
   

  	
  Interest
  Rate:  6.750%

  	
   

  	
  Date of Note:  April 14, 2004

  

 

PROMISE TO PAY.  Granite City Food & Brewery Ltd., a
Minnesota Corporation (“Borrower”) promises to pay to First National Bank
(“Lender”), or order, in lawful money of the United States of America, the
principal amount of Seven Hundred Fifty Thousand & 00/100 Dollars
($750,000.00) or so much as may be outstanding, together with interest at the
rate of 6.750% per annum on the unpaid outstanding principal balance of each
advance.  Interest shall be calculated
from the date of each advance until repayment of each advance.

 

PAYMENT.  Borrower will pay this loan on demand.  Payment in full is due immediately upon Lender’s demand.  If no demand is made, Borrower will pay this
loan in one payment of all outstanding principal plus all accrued unpaid
interest on September 1, 2004. 
Unless otherwise agreed or required by applicable law, payments will be
applied first to any accrued unpaid interest; then to principal; then to any
unpaid collection costs; and then to any late charges.  The annual interest rate for this Note is
computed on a 365/360 basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding.  Borrower will pay Lender
at Lender’s address shown above or at such other place as Lender may designate
in writing.

 

PREPAYMENT; MINIMUM INTEREST CHARGE. 
Borrower agrees that all loan fees and other prepaid finance charges are
earned fully as of the date of the loan and will not be subject to refund upon
early payment (whether voluntary or as a result of default), except as
otherwise required by law.  In any
event, even upon full prepayment of this Note, Borrower understands that Lender
is entitled to a minimum interest charge of $75.00.  Other than Borrower’s obligation to pay any minimum interest
charge, Borrower may pay without penalty all or a portion of the amount owed
earlier than it is due.  Early payments
will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s
obligation to continue to make payments. 
Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments
marked “paid in full”, “without recourse”, or similar language.  If Borrower sends such a payment, Lender may
accept it without losing any of Lender’s rights under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender.  All written communications concerning
disputed amounts, including any check or other payment instrument that
indicates that the payment constitutes “payment in full” of the amount owed or
that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: First National Bank,
Pierre, 125 W Sioux Avenue, P.O. Box 730, Pierre, SD 57501.

 

LATE CHARGE. 
If a payment is 10 days or more late, Borrower will be charged 5.000% of
the regularly scheduled payment or $10.00, whichever is greater.

 

INTEREST AFTER DEFAULT. 
Upon default, including failure to pay upon final maturity, the total
sum due under this Note will bear interest from the date of acceleration or
maturity at the interest rate on this Note. 
The interest rate will not exceed the maximum rate permitted by
applicable law.

 

DEFAULT. 
Each of the following shall constitute an event of default (“Event of
Default”) under this Note:

 

Payment Default. 
Borrower fails to make any payment when due under this Note.

 

Other Defaults. 
Borrower fails to comply with or to perform any other term, obligation,
covenant or condition contained in this Note or in any of the related documents
or to comply with or to perform any term, obligation, covenant or condition
contained in any other agreement between Lender and Borrower.

 

 

Default in Favor of Third Parties. 
Borrower or any Grantor defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement, in
favor of any other creditor or person that may materially affect any of
Borrower’s property or Borrower’s ability to repay this Note or perform
Borrower’s obligations under this Note or any of the related documents.

 

False Statements. 
Any warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower’s behalf under this Note or the related documents is false
or misleading in any material respect, either now or at the time made or
furnished or becomes false or misleading at any time thereafter.

 

Insolvency. 
The dissolution or termination of Borrower’s existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any
part of Borrower’s property, any assignment for the benefit of creditors, any
type of creditor workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.

 

Creditor or Forfeiture Proceedings. 
Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Borrower or by any governmental agency against any collateral securing
the loan.  This includes a garnishment
of any of Borrower’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not
apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Lender written notice of the creditor or
forfeiture proceeding and deposits with Lender monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Lender, in its
sole discretion, as being an adequate reserve or bond for the dispute.

 

Events Affecting Guarantor. 
Any of the preceding events occurs with respect to any Guarantor of any
of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or
disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note.  In the event of
a death, Lender, at its option, may, but shall not be required to, permit the
Guarantor’s estate to assume unconditionally the obligations arising under the
guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event
of Default.

 

Change In Ownership. 
Any change in ownership of twenty-five percent (25%) or more of the
common stock of Borrower.

 

Adverse Change. 
A material adverse change occurs in Borrower’s financial condition, or
Lender believes the prospect of payment or performance of this Note is
impaired.

 

Insecurity. 
Lender in good faith believes itself insecure.

 

Cure Provisions. 
If any default, other than a default in payment is curable and if
Borrower has not been given a notice of a breach of the same provision of this
Note within the preceding twelve (12) months, it may be cured if Borrower,
after receiving written notice from Lender demanding cure of such default: (1)
cures the default within ten (10) days; or (2) if the cure requires more than
ten (10) days, immediately initiates steps which Lender deems in Lender’s sole
discretion to be sufficient to cure the default and thereafter continues and
completes all reasonable and necessary steps sufficient to produce compliance
as soon as reasonably practical.

 

LENDER’S RIGHTS. 
Upon default, Lender may declare the entire unpaid principal balance on
this Note and all accrued unpaid interest immediately due, and then Borrower
will pay that amount.

 

ATTORNEYS’ FEES; EXPENSES. 
Lender may hire or pay someone else to help collect this Note if
Borrower does not pay.  Borrower will
pay Lender that amount.  This includes,
subject to any limits under applicable law, Lender’s attorney’s fees and
Lender’s legal expenses, whether or not there is a lawsuit, including
attorneys’ fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums provided
by law.

 

JURY WAIVER.  Lender and Borrower hereby waive the right
to any jury trial in any action, proceeding, or counterclaim brought by either
Lender or Borrower against the other.

 

 

GOVERNING LAW.  This Note will be governed by, construed and
enforced in accordance with federal law and the laws of the State of South
Dakota.  This Note has been accepted by Lender
in the State of South Dakota.

 

DISHONORED ITEM FEE. 
Borrower will pay a fee to Lender of $27.00 if Borrower makes a payment
on Borrower’s loan and the check or preauthorized charge with which Borrower
pays is later dishonored.

 

RIGHT OF SETOFF. 
To the extent permitted by applicable law, Lender reserves a right of
setoff in all Borrower’s accounts with Lender (whether checking, savings, or
some other account).  This includes all
accounts Borrower holds jointly with someone else and all accounts Borrower may
open in the future.  However, this does
not include any IRA or Keogh accounts, or any trust accounts for which setoff
would be prohibited by law.  Borrower
authorizes Lender, to the extent permitted by applicable law, to charge or
setoff all sums owing on the indebtedness against any and all such accounts,
and, at Lender’s option, to administratively freeze all such accounts to allow
Lender to protect Lender’s charge and setoff rights provided in this paragraph.

 

COLLATERAL. 
Borrower acknowledges this Note is secured by a Commercial Security
Agreement from Borrower to Lender dated April 14, 2004 and any and all
other security agreement executed by borrower to lender regardless of purpose
or date.  This loan shall be
cross-collateralized with all other loans outstanding.

 

LINE OF CREDIT. 
This Note evidences a revolving line of credit.  Advances under this Note may be requested
either orally or in writing by Borrower or as provided in this paragraph.  All oral requests shall be confirmed in
writing on the day of the request, on forms acceptable to Lender.  All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender’s
office shown above.  The following
persons currently are authorized, except as provided in this paragraph, to
request advances and authorize payments under the line of credit until Lender
receives from Borrower, at Lender’s address shown above, written notice of
revocation of their authority:  Steven J.
WAGENHEIM, President of Granite City Food & Brewery Ltd., a Minnesota
Corporation; and Monica Underwood, Agent. 
Advances to be done based upon bank approved borrowing base certicate
only.  Borrower agrees to be
liable for all sums either: (A) advanced in accordance with the instructions of
an authorized person or (B) credited to any of Borrower’s accounts with
Lender.  The unpaid principal balance
owing on this Note at any time may be evidenced by endorsements on this Note or
by Lender’s internal records, including daily computer print-outs.  Lender will have no obligation to advance
funds under this Note if: (A) Borrower or any guarantor is in default under the
terms of this Note or any agreement that Borrower or any guarantor has with
Lender, including any agreement made in connection with the signing of this
Note; (B) Borrower or any guarantor ceases doing business or is insolvent; (C)
any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor’s guarantee of this Note or any other loan with Lender; (D)
Borrower has applied funds provided pursuant to this Note for purposes other
than those authorized by Lender; or (E) Lender in good faith believes itself
insecure.

 

SUCCESSOR INTERESTS. 
The terms of this Note shall be binding upon Borrower, and upon
Borrower’s heirs, personal representatives, successors and assigns, and shall
inure to the benefit of Lender and its successors and assigns.

 

NOTIFY US OF INACCURATE INFORMATION
WE REPORT TO CONSUMER REPORTING AGENCIES.  Please notify
us if we report any inaccurate information about your account(s) to a consumer
reporting agency.  Your written notice
describing the specific inaccuracy(ies) should be sent to us at the following
address: First National Bank 125 W. Sioux Ave. Pierre, SD 57501-2424

 

GENERAL PROVISIONS.  This Note is payable on demand.  The inclusion of specific default provisions
or rights of Lender shall not preclude Lender’s right to declare payment of
this Note on its demand.  Lender may
delay or forgo enforcing any of its rights or remedies under this Note without
losing them.  Borrower and any other
person who signs, guarantees or endorses this Note, to the extent allowed by
law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note,
and unless otherwise expressly stated in writing, no party who signs this Note,
whether as maker, guarantor, accommodation maker or endorser, shall be released
from liability.  All such parties agree
that Lender may renew or extend (repeatedly and for any length of time) this
loan or release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Lender’s security interest in the collateral; and take
any other action deemed necessary by Lender without the consent of or notice to
anyone.  All such parties also agree
that Lender may modify this loan without the consent of or notice to anyone
other than the party with whom the modification is made.  The obligations under this Note are joint
and several.

 

 

PRIOR TO SIGNING THIS NOTE, BORROWER
READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A
COMPLETED COPY OF THIS PROMISSORY NOTE.

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  
	
  GRANITE
  CITY FOOD & BREWERY LTD.,

  	
   

  
	
  A
  MINNESOTA CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Steven
  J. WAGENHEIM, President of Granite City

  
	
   

  	
   

  	
  Food
  & Brewery Ltd., a Minnesota CorporationExhibit 10.3

 

COMMERCIAL
GUARANTY

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call/Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0026

  	
   

  	
   

  	
   

  	
  CD

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  References in the shaded area are for
  Lender’s use only and do not limit the applicability of this document to any

  particular loan or item.

  Any item above containing “***” has been omitted due to text length
  limitations.

  
	
   

  
	
  Borrower:

  	
  Granite
  City Food & Brewery Ltd.,

  a Minnesota Corporation

  (TIN: 41-1883639)

  5831 CEDAR LAKE ROAD

  ST. LOUIS PARK, MN  55416

  	
   

  	
  Lender:

  	
  First
  National Bank

  Pierre

  125 W. Sioux Avenue

  P.O. Box 730

  Pierre, SD  57501

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Guarantor:

  	
  Steven
  J. WAGENHEIM

  (SSN:  ###-##-####)

  321 Westwood Drive North

  Golden Valley, MN 55422

  	
   

  	
   

  	
   

  
																			

 

AMOUNT OF GUARANTY.  This is a guaranty of payment of the Note,
including without limitation the principal Note amount of Seven Hundred Fifty
Thousand & 00/100 Dollars ($750,000.00).

 

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

 

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

 

The above
limitation on liability is not a restriction on the amount of the Indebtedness
of Borrower to Lender either in the aggregate or at any one time.  If Lender presently holds one or more
guaranties, or hereafter receives additional guaranties from Guarantor,
Lender’s rights under all guaranties shall be cumulative.  This Guaranty shall not (unless specifically
provided below to the contrary) affect or invalidate any such other
guaranties.  Guarantor’s liability will
be Guarantor’s aggregate liability under the terms of this Guaranty and any
such other unterminated guaranties.

 

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

 

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

 

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

 

 

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

 

GUARANTOR’S REPRESENTATIONS AND
WARRANTIES.  Guarantor represents and warrants to Lender
that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower’s request and not at the request of Lender;
(C) Guarantor has full power, right and authority to enter into this Guaranty;
(D) the provisions of this Guaranty do not conflict with or result in a default
under any agreement or other instrument binding upon Guarantor and do not
result in a violation of any law, regulation, court decree or order applicable
to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate,
transfer, or otherwise dispose of all or substantially all of Guarantor’s
assets, or any interest therein; (F) upon Lender’s request, Guarantor will
provide to Lender financial and credit information in form acceptable to
Lender, and all such financial information which currently has been, and all
future financial information which will be provided to Lender is and will be
true and correct in all material respects and fairly present Guarantor’s
financial condition as of the dates the financial information is provided; (G)
no material adverse change has occurred in Guarantor’s financial condition
since the date of the most recent financial statements provided to Lender and
no event has occurred which may materially adversely affect Guarantor’s
financial condition; (H) no litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Guarantor is pending or threatened; (I) Lender has made no representation to
Guarantor as to the creditworthiness of Borrower; and (J) Guarantor has
established adequate means of obtaining from Borrower on a continuing basis
information regarding Borrower’s financial condition.  Guarantor agrees to keep adequately informed from such means of
any facts, events, or circumstances which might in any way affect Guarantor’s
risks under this Guaranty, and Guarantor further agrees that, absent a request
for information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

 

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

 

In addition to the
waivers set forth herein, if now or hereafter Borrower is or shall become
insolvent and the Indebtedness shall not at all times until paid be fully
secured by collateral pledged by Borrower, Guarantor hereby forever waives and
gives up in favor of Lender and Borrower, and Lender’s and Borrower’s
respective successors, any claim or right to payment Guarantor may now have or
hereafter have or acquire against Borrower, by subrogation or otherwise, so
that at no time shall Guarantor be or become a “creditor” of Borrower within
the meaning of 11 U.S.C. section 547(b), or any successor provision of the
Federal bankruptcy laws.

 

Guarantor also
waives any and all rights or defenses arising by reason of (A) any “one action”
or “anti-deficiency” law or any other law which may prevent Lender from
bringing any action, including a claim for deficiency, against Guarantor,
before or after Lender’s commencement or completion of any foreclosure action,
either judicially or by exercise of a power of sale; (B) any election of
remedies by Lender which destroys or otherwise adversely affects Guarantor’s
subrogation rights of Guarantor’s rights to proceed against Borrower for
reimbursement, including without limitation, any loss of rights Guarantor may
suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or

 

 

by reason of the
cessation of Borrower’s liability from any cause whatsoever, other than payment
in full in legal tender, of the Indebtedness; (D) any right to claim discharge
of the Indebtedness on the basis of unjustified impairment of any collateral
for the Indebtedness; (E) any statute of limitations, if at any time any action
or suit brought by Lender against Guarantor is commenced, there is outstanding
Indebtedness of Borrower to Lender which is not barred by any applicable
statute of limitations; or (F) any defenses given to guarantors at law or in
equity other than actual payment and performance of the Indebtedness.  If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower’s
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

 

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

 

GUARANTOR’S UNDERSTANDING WITH
RESPECT TO WAIVERS.  Guarantor warrants and agrees that each of
the waivers set forth above is made with Guarantor’s full knowledge of its
significance and consequences and that, under the circumstances, the waivers
are reasonable and not contrary to public policy or law.  If any such waiver is determined to be
contrary to any applicable law or public policy, such waiver shall be effective
only to the extent permitted by law or public policy.

 

SUBORDINATION OF BORROWER’S DEBTS TO
GUARANTOR.  Guarantor agrees that the Indebtedness of
Borrower to Lender, whether now existing or hereafter created, shall be
superior to any claim that Guarantor may now have or hereafter acquire against
Borrower, whether or not Borrower becomes insolvent.  Guarantor hereby expressly subordinates any claim Guarantor may
have against Borrower, upon any account whatsoever, to any claim that Lender
may now or hereafter have against Borrower. 
In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.  Guarantor does hereby assign to Lender all
claims which it may have or acquire against Borrower or against any assignee or
trustee in bankruptcy of Borrower; provided however, that such assignment shall
be effective only for the purpose of assuring to Lender full payment in legal tender
of the Indebtedness, if Lender so requests, any notes or credit agreements now
or hereafter evidencing any debts or obligations of Borrower to Guarantor shall
be marked with a legend that the same are subject to this Guaranty and shall be
delivered to Lender.  Guarantor agrees,
and Lender is hereby authorized, in the name of Guarantor, from time to time to
file financing statements and continuation statements and to execute documents
and to take such other actions as Lender deems necessary or appropriate to
perfect, preserve and enforce its rights under this Guaranty.

 

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

 

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

 

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

 

Caption Headings.  Caption headings in this Guaranty are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Guaranty.

 

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

 

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

 

 

Guaranty; the
Guaranty fully reflects Guarantor’s intentions and parol evidence is not
required to interpret the terms of this Guaranty.  Guarantor hereby indemnifies and holds Lender harmless from all
losses, claims, damages, and costs (including Lender’s attorneys’ fees)
suffered or incurred by Lender as a result of any breach by Guarantor of the
warranties, representations and agreements of this paragraph.

 

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

 

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

 

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

 

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

 

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

 

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

 

Borrower. 
The word “Borrower” means Granite City Food & Brewery Ltd., a
Minnesota Corporation and includes all co-signers and co-makers signing the
Note.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

EACH UNDERSIGNED GUARANTOR
ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS GUARANTY AND AGREES TO ITS
TERMS.  IN ADDITION, EACH GUARANTOR
UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR’S EXECUTION AND
DELIVERY OF THIS GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL
TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED “DURATION OF
GUARANTY”.  NO FORMAL ACCEPTANCE BY
LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE.  THIS GUARANTY IS DATED APRIL 14, 2004.

 

	
  GUARANTOR:

  	
   

  
	
   

  	
   

  
	
  x

  	
   

  	
   

  
	
   

  	
  Steven J. WAGENHEIM

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