Document:

EXHIBIT 10.4

 

Registration
Rights Agreement

 

THIS REGISTRATION RIGHTS AGREEMENT (“Agreement”)
is made and entered into as of this 5th day of October, 2009, by and between Granite
City Food & Brewery Ltd., a Minnesota corporation (the “Company”) and DHW Leasing L.L.C., a South Dakota limited
liability company (“DHW”).

 

WHEREAS, upon the terms and subject to the conditions of the
Debt Conversion Agreement by and between the Company and DHW of even date
herewith (the “Debt Conversion Agreement”), the Company has agreed to sell the
Shares (as defined herein) to DHW; and

 

WHEREAS, to induce DHW to execute and deliver the Debt
Conversion Agreement, the Company has agreed to provide certain registration
rights under the Securities Act (as defined herein) and applicable state
securities laws.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Company and DHW agree as
follows:

 

Section 1.              Definitions.

 

As used in this Agreement, the following terms shall have the meanings
as set forth herein:

 

1.1           “Board” means the Board of Directors
of the Company.

 

1.2           “Closing Date” shall mean the date on which the
closing of the transactions contemplated by the Debt Conversion Agreement
occurs.

 

1.3           “Commission” means the United States
Securities and Exchange Commission, and any successor thereto.

 

1.4           “Common Stock” means the Company’s
common stock, $.01 par value per share.

 

1.5           “DHW” includes any person to whom the rights under
this Agreement have been assigned or transferred (each, a “Holder”).

 

1.6           “Holder” means DHW and the persons defined in Section 1.6.

 

1.7           “Person” means an individual,
partnership, limited partnership, corporation, business trust, limited
liability company, association, joint stock company, trust, unincorporated
organization, joint venture, or other entity of whatever nature.

 

1

 

1.8           “Prospectus” means the Prospectus included in a
Registration Statement (including, without limitation, a Prospectus that
includes any information previously omitted from a Prospectus filed as part of
an effective Registration Statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any Prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.

 

1.9           “Registrable Shares” means the
shares of Common Stock purchased by DHW pursuant to the Debt Conversion Agreement;
provided, however, that such shares of Common Stock shall no longer be
Registrable Shares (A) when they shall have been effectively registered
under the Securities Act and sold by DHW in accordance with such registration
or sold by DHW pursuant to Section 4(1) of the Securities Act or Rule 144,
(B) when registration under the Securities Act would no longer be required
for the immediate sale of all such shares of Common Stock pursuant to the
provisions of Rule 144, or (C) on or after the date which is three
years after the Closing Date.

 

1.10         “Registration Statement” means a Registration
Statement filed on Form S-3 (or such other form as is then available to
the Company) under the Securities Act to permit the resale of the Registrable
Shares, including the Prospectus, amendments and supplements to each such
Registration Statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such Registration Statement.

 

1.11         “Register,” “registered” and “registration”
refer to a registration effected by preparing and filing a Registration
Statement and the declaration or ordering of the effectiveness of such
Registration Statement.

 

1.12         “Rule 144” promulgated by the
Commission under the Securities Act, as such rule may be amended from time
to time, or any successor rule thereto.

 

1.13         “Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated from time to time
thereunder.

 

1.14         “Shares” means the shares of Common Stock issuable
pursuant to the Debt Conversion Agreement.

 

Section 2.              Registration
Rights.

 

2.1           Initial Registration.  The Company shall prepare and file with the
Commission, not later than 90 days after the Closing Date, a Registration
Statement covering 4,666,666 Registrable Shares to be registered under the
Securities Act on a non-underwritten basis.

 

2.2           Additional Registration.  At least six months after the Closing Date,
if DHW has sold all of the Registrable Shares included in the initial
Registration Statement, DHW may request the filing of an additional
Registration Statement covering up to 4,666,666 Registrable Shares (a “Registration
Request”).  Upon receipt of a
Registration Request, the Company shall 

 

2

 

use best commercial efforts to, within 45 days of the
Registration Request, prepare and file a Registration Statement covering the
shares which are the subject of the Registration Request and shall use best
commercial efforts to cause such Registration Statement to become effective as
soon as is practicable following its filing. 
Upon the sale of all of the Registrable Shares included in such Registration
Statement, DHW may submit an additional Registration Request covering up to
4,666,666 Registrable Shares and the Company will follow the same procedure of
preparing, filing and seeking effectiveness of a Registration Statement
covering the shares which are the subject of such Registration Request.  The procedure set forth in the immediately
preceding sentence will be followed until all of the Registrable Shares have
been sold; provided, however, that this Section 2.2 shall not obligate the
Company to file (a) more than six Registration Statements (including the
initial Registration Statement) in total, (b) Registration Statements any
more frequently than one every six months, nor (c) any Registration
Statement more than three years after the Closing Date.  If for any reason the Commission does not
permit registration of all of the Registrable Securities included in any
Registration Statement filed pursuant this Section 2.2, then the Company’s
obligation to register the affected shares shall cease.

 

2.3           Underwritten
Offering.  If DHW intends to distribute the
Registrable Shares covered by any Registration Statement filed hereunder, DHW
shall so inform the Company in the related Registration Request.  DHW shall select the underwriter with the
written approval of the Company, which approval shall not be unreasonably
withheld.

 

2.4           Abandonment of Registration.  In the event that DHW determines for any
reason not to proceed with a registration at any time before a Registration
Statement has been declared effective by the Commission, and such Registration
Statement, is withdrawn with respect to the Registrable Shares covered thereby,
DHW agrees to bear its own expenses incurred in connection therewith and to
reimburse the Company for the reasonable expenses incurred by it attributable
to the registration of such Registrable Shares, and if DHW in fact so
reimburses the Company, then DHW shall not be deemed to have exercised its
right to require the Company to register Registrable Shares pursuant to Section 2.2.

 

Section 3.              Registration Procedures. 
When the Company is required by the terms of this Agreement to effect
the registration of Registrable Shares under the Securities Act, the Company
will do the following:

 

3.1           Filing. 
Prepare and file with the Commission a Registration Statement with
respect to such securities, and use best commercial efforts to cause such
Registration Statement to become and remain effective for such period as may be
reasonably necessary to effect the sale of such securities; provided, however,
such period shall not exceed the earlier to occur of (i) the completion by
the underwriters of the distribution pursuant to such Registration Statement or
(ii) as set forth in Section 3.2 (the “Effectiveness
Period”).

 

(a)           Not less than four trading days prior
to the filing of a Registration Statement or any related Prospectus or any
amendment or supplement thereto, the Company shall furnish to each Holder
copies of the “Selling Stockholders” section of such document, the “Plan of
Distribution” and any risk factor section contained in such document that
addresses 

 

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specifically the transactions under the Debt
Conversion Agreement or the selling stockholders, as proposed to be filed.

 

(b)           (i)  Prepare and file with the
Commission such amendments, including post effective amendments, to each
Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep such Registration Statement continuously effective as to
the applicable Registrable Securities for its Effectiveness Period; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received
from the Commission with respect to each Registration Statement or any
amendment thereto; and (iv) comply in all material respects with the
provisions of the Securities Act with respect to the Registration Statements.

 

(c)           Notify the Holders as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than three
trading days prior to such filing) (i)(A) when a Prospectus or any
Prospectus supplement or post effective amendment to a Registration Statement
is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever
the Commission comments in writing on such Registration Statement; and (C) with
respect to each Registration Statement or any post effective amendment, when
the same has become effective; (ii) of any request by the Commission or
any other Federal or state governmental authority for amendments or supplements
to a Registration Statement or Prospectus or for additional information; (iii) of
the issuance by the Commission of any stop order suspending the effectiveness
of a Registration Statement covering any or all of the Registrable Securities
or the initiation of any Proceedings for that purpose; (iv) of the receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of
any proceeding for such purpose; and (v) of the occurrence of any event or
passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in such
Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to such Registration Statement, Prospectus or other
documents so that, in the case of such Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.

 

(d)           Use its reasonable commercial efforts
to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any
order suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction.

 

(e)           Prior to any public offering of
Registrable Securities, to register or qualify or cooperate with the selling
Holders in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer
and sale under the securities or Blue Sky laws a mutually agreeable number of
jurisdictions within the United States, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things necessary or 

 

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advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statements except that the Company shall not for any purpose be required to
execute a general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified. .

 

(f)            Upon the occurrence of any event
contemplated by Section 3.1(c)(v), as promptly as reasonably possible,
prepare a supplement or amendment, including a post effective amendment, to the
affected Registration Statements or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, no
Registration Statement nor any Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

 

3.2           Period of Effectiveness.  Prepare and file with the Commission such
amendments to such Registration Statement and supplements to the Prospectus
contained therein as may be necessary to keep such Registration Statement
effective for such period as may be reasonably necessary to effect the sale of
such securities, provided, however, such period shall not exceed the earlier to
occur of (i) the completion by the underwriters of the distribution
pursuant to such Registration Statement, (ii) three years after the
Closing Date, or (iii) a reasonable determination by the Company that the
Shares covered by the Registration Statement may be sold in their entirety
under Rule 144.

 

3.3           Copies. 
Furnish to DHW and to the underwriters of the securities being
registered, if any, such reasonable number of copies of the Registration
Statement, preliminary Prospectus, final Prospectus and such other documents as
DHW and such underwriters may reasonably request in order to facilitate the
public offering of such securities.

 

3.4           Holder Sales; Discontinuance and Allowed
Suspension.  Each Holder
covenants and agrees that it will not sell any Registrable Securities under the
Registration Statement until the Company has electronically filed the final
Prospectus as then amended or supplemented as contemplated in Section 3.1
and the Holder has received notice from the Company that such Registration
Statement and any post-effective amendments thereto have become effective.  Each Holder agrees that, upon receipt of a
notice from the Company of the occurrence of any event of the kind described in
Section 3.1(c), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder’s
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement contemplated by Section 3.1(f), or until it is
advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement.  If (i) there
is material non-public information regarding the Company which the Company’s
Board determines not to be in the Company’s or the Company’s stockholder’s best
interest to disclose and which the Company is not otherwise required to
disclose, (ii) there is a significant business opportunity (including, but
not limited to, the acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or
other similar transaction) available to the Company which the Board determines
not to be in the Company’s or the 

 

5

 

Company’s stockholders’ best interest to disclose, or (iii) the
Company is required to file a post-effective amendment to a Registration
Statement to incorporate the Company’s quarterly and annual reports and audited
financial statements on Forms 10-Q and 10-K (or such other forms as the Company
may then be eligible to file), then the Company may (x) postpone or
suspend filing of a Registration Statement for a period not to exceed sixty
(60) consecutive days or (y) postpone (or cause suspension) effectiveness
of a Registration Statement for a period not to exceed thirty (30) consecutive
days, and (z) require each holder to cease sales of Registrable Securities
under any such Registration Statement until such material non-public
information has been made public.

 

Section 4.              Expenses. 
Except as provided in Section 2.4 hereof, with respect to the
registration under Section 2.1 or 2.2 hereof, the Company shall bear the
following fees, costs and expenses: all registration, fees, printing expenses,
fees and disbursements of counsel and accountants for the Company, all internal
Company expenses, all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions in which
the securities to be offered are to be registered or qualified.  Underwriting discounts and commissions,
insurance and transfer taxes relating to the shares of Registrable Shares
included in the offering (if any) and any other expenses incurred by DHW, shall
be borne by DHW.

 

Section 5.              Indemnification. 
In the event that any Registrable Shares is included in a Registration
Statement under this Agreement:

 

5.1           Indemnification by Company.  To the fullest extent permitted by law, the
Company will indemnify and hold harmless DHW pursuant to the provisions hereof,
its directors and officers, and any underwriter (as defined in the Securities
Act) for DHW and each Person, if any, who controls DHW or such underwriter
within the meaning of the Securities Act, from and against, and will reimburse
the  DHW and each such underwriter and
controlling Person with respect to, any and all loss, damage, liability
(collectively, “Losses”) to which DHW or any such
underwriter or controlling Person may become subject under the Securities Act,
state securities laws or otherwise, and the Company will pay to DHW or each
such underwriter or controlling person any legal or other costs or expenses
reasonably incurred by such person in connection with investigating or
defending any such Loss, insofar as such Losses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
Registration Statement, any Prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided, however, that the Company will
not be liable in any such case to the extent that any such Loss arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by DHW, such
underwriter or such controlling Person in writing specifically for use in the
preparation thereof, provided however, that the indemnity agreement in this Section 5.1
shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, and that the foregoing indemnity obligation with
respect to any preliminary Prospectus shall not inure to the benefit of any
other holder of Common Stock on account of any Loss whatsoever arising from the
sale of any Registrable Shares by DHW to any person if (A) a copy of the
final Prospectus (as amended or supplemented if such amendments or supplements
shall 

 

6

 

have been furnished to DHW prior to the confirmation
of the sale involved) shall not have been sent or given by or on behalf of DHW
to such person, if required by law, with or prior to the written confirmation
of the sale involved, and (B) the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact contained in such
preliminary Prospectus from which such Loss arose was corrected in the final
Prospectus (as amended or supplemented if such amendments or supplements
thereto shall have been furnished as aforesaid).

 

5.2           Indemnification by DHW.  To the fullest extent permitted by law, DHW
will indemnify and hold harmless the Company, its directors and officers, each
Person, if any, who controls the Company within the meaning of the Securities
Act, (each, an “Indemnitee”) from and against, and
will reimburse any Indemnitee with respect to, any and all Losses to which such
Indemnitee may become subject under the Securities Act, state securities laws
or otherwise, and DHW will pay to the Company and each such controlling person
any legal or other costs or expenses reasonably incurred by such person in
connection with investigating or defending any such Loss, insofar as such
Losses are caused by any untrue or alleged untrue statement of any material
fact contained in such Registration Statement, any Prospectus contained therein
or any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
conformity with written information furnished by DHW specifically for use in
the preparation thereof, and provided, however, that the indemnity agreement in
this Section 5.2 shall not apply to amounts paid in settlement of any such
Loss if such settlement is effected without the consent of DHW, which consent
shall not be unreasonably withheld.

 

5.3           Indemnification Procedures.  Promptly after receipt by a party entitled to
indemnification pursuant to this Section 5 (each, an “Indemnified
Party”) of notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions such Indemnified Party
will, if a claim is to be made against the party obligated to provide
indemnification pursuant to this section (each, an “Indemnifying
Party”), promptly notify the Indemnifying Party of the commencement
thereof; but the omission to provide such notice will not relieve the
Indemnifying Party from any liability hereunder, except to the extent that the
delay in giving, or failing to give, such notice has a material adverse effect
upon the ability of the Indemnifying Party to defend against the claim. In case
such action is brought against an Indemnified Party, the Indemnifying Party
shall have the right to participate in and, at the Indemnifying Party’s option,
to assume the defense thereof, singly or jointly with any other Indemnifying
Party similarly notified, with counsel satisfactory to the Indemnified Party;
provided, however, that if the defendants in any action include both the
Indemnified Party and the Indemnifying Party and the Indemnified Party shall
have reasonably concluded based on advice of counsel that there may be legal
defenses available to any Indemnified Party that are different from or
additional to those available to the Indemnifying Party, or if there is a
conflict of interest which would prevent counsel for the Indemnifying Party
from also representing the Indemnified Party, the Indemnified Party shall have
the right to select counsel to participate in the defense of such action on
behalf of such Indemnified Party at the expense of the Indemnified Party; provided
that the Indemnifying Party shall be responsible for the expense of only one
such 

 

7

 

special counsel selected jointly by the Indemnified
Parties, if there is more than one Indemnified Party. After notice from an
Indemnifying Party to any Indemnified Party of such Indemnifying Party’s
election to assume the defense of the action, the Indemnifying Party will not
be liable to such Indemnified Party pursuant to this Section 5 for any
legal or other expense subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the Indemnified Party shall have employed
counsel in accordance with the proviso of the preceding sentence, or (ii) the
Indemnifying Party shall not have employed counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party within a reasonable
time after the notice of the commencement of the action, or (iii) the
Indemnifying Party has authorized the employment of counsel for the Indemnified
Party at the expense of the Indemnifying Party.

 

Section 6.              Cooperation. 
DHW hereby agrees to cooperate with all reasonable requests by the
Company necessary to effectuate the purposes of this Agreement, including by
timely providing the Company with all information necessary to file a
Registration Statement.  DHW and each
Holder agrees upon the Company’s request from time to time to furnish to the
Company a completed Questionnaire in the form attached to this Agreement as Annex
A (a “Selling Holder Questionnaire”). 
The Company shall not be required to include the Registrable Securities
of a Holder in a Registration Statement and shall not be required to pay any
damages to any Holder who fails to furnish to the Company a fully completed and
accurate Selling Holder Questionnaire at least three business days prior to the
filing date of any Registration Statement.

 

Section 7.              Miscellaneous.

 

7.1           Waivers. Amendments and Approvals.  Any term or provision of this Agreement
requiring performance by or binding upon the Company or DHW may be amended, and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only by a
writing signed by the Company and DHW. The waiver by a party of any breach
hereof or default in payment of any amount due hereunder or default in the
performance hereof shall not be deemed to constitute a waiver of any other
default or succeeding breach or default.

 

7.2           Notices.  All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or certified mail,
as follows:

 

If to the Company:                                                                                     Granite City Food & Brewery Ltd.

5402 Parkdale Drive

Suite 101

St. Louis Park, MN 55416

Facsimile:  (952) 215-0671

Attention:  Chief Financial Officer

 

8

 

With a copy to:                                                                                                       Briggs and Morgan, P.A.

80 South 8th Street

2200 IDS Center

Minneapolis, MN 55402

Facsimile:  (612) 977-8650

Attention:  Avron L. Gordon, Esq.

 

If to DHW:                                                                                                                              Dunham Capital Management, L.L.C.

The Dunham Company

230 South Phillips
Avenue, Suite 202

Sioux Falls, SD  57104-6321

 

With a copy to:                                                                                                       Leonard Street and Deinard

150 South Fifth Street, Suite 2300

Minneapolis, MN  55402

Facsimile:  (612) 335-1657

Attention:  Mark S. Weitz, Esq.

Hagen, Wilka & Archer, LLP

600 South Main Avenue, Suite 102

P.O. Box 964

Sioux Falls, SD  57104

Facsimile:  (605) 334-4814

Attention:  John F. Archer, Esq.

 

Such
notices and other communications shall for all purposes of this Agreement be
treated as being effective or having been given if delivered personally, or, if
sent by mail, when received. Any party may change its address for such
communications by giving notice thereof to the other parties in conformity with
this Section.

 

7.3           Delays or Omissions.  Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party under
this Agreement shall impair any such right, power or remedy of such party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence thereto, or of a similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any party
hereto of any breach of default under the Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such writing.

 

7.4           Attorneys’ Fees.  Should suit
be brought to enforce or interpret any part of this Agreement, the prevailing
party shall be entitled to recover, as an element of the costs of suit and not
as damages, reasonable attorneys’ fees to be fixed by the court (including,
without limitation, costs, expenses and fees on any appeal). The prevailing
party shall be the party entitled to recover its costs of suit, regardless of
whether such suit proceeds to final judgment. A party not entitled to recover
its costs shall not be entitled to recover attorneys’ fees. No sum for
attorneys’

 

9

 

fees shall be counted in calculating the amount of a
judgment for purposes of determining if a party is entitled to recover costs or
attorneys’ fees.

 

7.5           Entire Agreement.  This Agreement, the documents referenced
herein and the exhibits thereto, constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements or
understandings, inducements or conditions, express or implied, written or oral,
between the parties with respect hereto and thereto. The express terms hereof
control and supersede any course of performance or usage of the trade
inconsistent with any of the terms hereof.

 

7.6           Severability.  Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement,
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby. The parties
further agree to replace such void or unenforceable provision of this Agreement
with a valid and enforceable provision which will achieve, to the extent
possible, the economic, business and other purposes of the void or
unenforceable provision.

 

7.7           Successors and Assigns.  The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon and be enforceable by the
respective heirs, successors and assigns of the parties hereto; provided,
however, that such assignee or transferee agrees in writing to be bound by all
of the provisions of this Agreement. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties hereto or
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. Notwithstanding any provision contained elsewhere in this
Agreement, upon the transfer of Shares by any party hereto, no claims or causes
of action arising out of or related to this Agreement existing as of the
transfer date shall be transferred by such party to any respective heir,
successor, assign or permitted transferee, provided that the transfer of Shares
shall not be deemed a waiver by the transferring party of any such claim or
cause of action.

 

7.8           Governing Law.  This Agreement shall be governed by and
construed under the laws of the State of Minnesota, without regard to its
conflicts of laws provisions.

 

7.9           Counterparts.  This Agreement may be executed concurrently
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

 

(Balance of Page Intentionally Blank; Signature Pages
Follow Next)

 

10

 

IN WITNESS WHEREOF, this Agreement is hereby executed
as of the date first written above.

 

	
   

  	
  GRANITE
  CITY FOOD & BREWERY LTD.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven J.
  Wagenheim

  
	
   

  	
   

  	
  Name:

  	
  Steven J.
  Wagenheim

  
	
   

  	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DHW
  LEASING L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donald A.
  Dunham, Jr.

  
	
   

  	
   

  	
  Name:

  	
  Donald A.
  Dunham, Jr.

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  

 

(Signature page to Registration
Rights Agreement)

 

11

 

Annex A

 

GRANITE CITY FOOD & BREWERY LTD.

 

Selling
Securityholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Common Stock”), of Granite City Food & Brewery Ltd. (the
“Company”) understands that the Company
has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration
and resale of the Registrable Securities, in accordance with the terms of the
Registration Rights Agreement, dated as of [                 ],
2009 (the “Registration Rights Agreement”),
among the Company and the Investors named therein.  A copy of the Registration Rights Agreement
is available from the Company upon request at the address set forth below.  All capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement.

 

The undersigned hereby provides the following
information to the Company and represents and warrants that such information is
accurate:

 

QUESTIONNAIRE

 

1.                                      Name.

 

(a)                                  Full Legal Name of Selling Securityholder

 

 

(b)                                 Full Legal Name of Registered Holder (if
not the same as (a) above) through which Registrable Securities Listed in Item
3 below are held:

 

 

(c)                                  Full Legal Name of Natural Control Person
(which means a natural person who directly you indirectly alone or with others
has power to vote or dispose of the securities covered by the questionnaire):

 

 

2.                                      Address for Notices to Selling
Securityholder:

 

 

	
  Telephone:

  	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  
	
  Contact Person:

  	
   

  	
   

  
	
  Email:

  	
   

  	
   

  
						

 

1

 

3.                                      Beneficial Ownership of Registrable
Securities:

 

(a)                                  Type and Number of Registrable Securities
beneficially owned:

 

 

4.                                      Broker-Dealer Status:

 

(a)                                  Are you a broker-dealer?

 

Yes  o                No  o

 

Note:                   If yes, the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

(b)                                 Are you an affiliate of a broker-dealer?

 

Yes  o                No  o

 

(c)                                  If you are an affiliate of a
broker-dealer, do you certify that you bought the Registrable Securities in the
ordinary course of business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings, directly or
indirectly, with any person to distribute the Registrable Securities?

 

Yes  o                No  o

 

Note:                   If no, the Commission’s staff has indicated that you
should be identified as an underwriter in the Registration Statement.

 

5.                                      Beneficial Ownership of Other Securities
of the Company Owned by the Selling Securityholder.

 

Except as set forth below in this Item 5, the
undersigned is not the beneficial or registered owner of any securities of the
Company other than the Registrable Securities listed above in Item 3.

 

(a)                                  Type and Amount of Other Securities
beneficially owned by the Selling Securityholder:

 

 

2

 

6.                                      Relationships with the Company:

 

Except as set forth below, neither the undersigned nor
any of its affiliates, officers, directors or principal equity holders (owners
of 5% of more of the equity securities of the undersigned) has held any
position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.

 

State any exceptions here:

 

 

The
undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the
date hereof and prior to the Effective Date for the Registration Statement.

 

By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related Prospectus.  The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
Prospectus.

 

IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by
its duly authorized agent.

 

	
  Dated:

  	
   

  	
   

  	
  Beneficial
  Owner:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
						

 

PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

[                     ]

 

3Exhibit
10.5

 

EXECUTIVE
EMPLOYMENT AGREEMENT – AMENDMENT NO. 2

 

THIS EXECUTIVE EMPLOYMENT
AGREEMENT – AMENDMENT NO. 2 (this “Agreement”) is made
and entered into effective October 5, 2009, by and between Granite City Food
and Brewery Ltd. (the “Company”) and Steven J. Wagenheim (“Executive”).

 

RECITALS

 

A.                                   Executive is
employed by the Company pursuant to an employment agreement made and entered
into June 15, 2005 and pursuant to amendments thereto (the “Employment
Agreement”).  Pursuant to such Employment
Agreement, Executive is currently employed on an at-will basis and subject to
additional provision of the Employment Agreement.

 

B.                                     The Company
proposes to enter into a debt conversion transaction (the “Transaction”) with
DHW Leasing L.L.C. (“DHW”) pursuant to which DHW will be issued common stock of
the Company in exchange for the conversion of certain indebtedness, and DHW
will thereupon become the majority shareholder of the Company.

 

C.                                     It is
contemplated that Executive will continue in the employ of the Company
following the Transaction and the Company desires to secure the services of
Executive following the Transaction.

 

D.                                    It is desirable
to amend the Employment Agreement to provide for the term of Executive’s
employment and to confirm certain severance arrangements in connection
therewith.

 

NOW, THEREFORE, in
consideration of the premises, the parties hereto agree as follows:

 

1.             Defined Terms.  All capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the
Employment Agreement.

 

2.             Article
3 of the Employment Agreement is hereby amended and restated to read as
follows:

 

Term
of Employment

 

3.01         Executive’s employment pursuant to this Agreement shall
continue for a term ending one year following the closing of the debt
conversion transaction (the “Transaction”) by and between the Company and DHW
Leasing L.L.C. (“DHW”) pursuant to which DHW will be issued common stock of the
Company in exchange for the conversion of certain indebtedness, and DHW will
thereupon become the majority shareholder of the Company (the “Termination Date”).  The term of the Executive’s employment shall
automatically be extended for successive one year periods unless the Company or
Executive elects not to extend employment by giving written notice to the other
not less than sixy (60) days prior to the Termination Date or the end of any extension
periods.  If Executive’s employment
continues beyond the Termination Date, it 

 

1

 

shall continue on an at-will
basis under the remaining terms and conditions of this Agreement, as amended
hereby, and as the same may be amended from time to time with the consent of
the Company and Executive, except that Section 4.02 shall be inapplicable and
incentive compensation payable to Executive, if any, shall be only as fixed by
the Company’s Compensation Committee (“Committee”).  Executive’s base compensation under this
Agreement shall continue at Executive’s current monthly base compensation rate
for each month worked and prorated for any partial month during which
employment continues.

 

3.             Section 4.04 of the Employment Agreement is hereby
amended and restated to read as follows:

 

4.04         Executive agrees that any and all bonuses or equity
compensation awards paid, awarded or vested after September 21, 2009, shall be
subject to the Board of Director’s Policy on the Recoupment of Bonuses and
Incentive or Equity Based Compensation Related to Certain Financial
Restatements dated September 21, 2009, and that such policy is hereby deemed to
be incorporated by reference into this Agreement.  Executive further agrees that Company may, to
the extent permitted by applicable law, require the Executive to reimburse the
Company for any and all bonuses or equity compensation awards, severance
payments provided for under Article 7 of this Agreement, and base salary
payments provided for under Section 6.05 of this Agreement that are paid,
awarded or vested after September 21, 2009, in the event of a material breach
by Executive of his obligations under Articles 8 or 9 of this Agreement.  In the event Executive fails to make prompt
reimbursement of any such bonuses or equity compensation, severance payments or
base salary payments previously paid, awarded or vested, the Company may, to the
extent permitted by applicable law, deduct the amount required to be reimbursed
from Executive’s compensation otherwise due under this Agreement.  The obligations contained in this Section 4.04
shall survive the termination of this Agreement indefinitely.

 

4.             Article
6 of the Employment Agreement is amended to add Section 6.05 as follows:

 

6.05         In the event the employment of Executive is terminated prior
to the Termination Date by the Company without Cause (and other than as
outlined in Sections 6.01 and 6.02) or by the Executive with Good Reason as
defined in Section 7.03, the Company will pay Executive the remainder of
Executive’s Base Salary due through the Termination Date.  Such payments will be made on a monthly basis
commencing with the first month following the Executive’s termination.  Such payments shall be in addition to any
payment which shall be due Executive pursuant to Section 7.01 as amended; shall
not be deemed to be “cash severance-type benefits” under Section 7.01; and
shall not reduce amounts to which Executive is entitled upon a termination
under Section 7.  Notwithstanding the
above, if the Executive terminates employment due to Section 7.03(d), payment
shall be delayed for six (6) months and the delayed payments will be paid in a
lump sum without interest the first month following such six month delay.

 

2

 

5.           Section
7.01 of the Employment Agreement is hereby amended and restated to read as
follows:

 

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

 

(a)                                  if (i) there
has been a Change of Control of the Company (as defined in Section 7.04), and (ii)
Executive is an active and full-time employee at the time of the Change of
Control, and (iii) within twelve (12) months following the date of the Change
of Control, Executive’s employment is involuntarily terminated for any reason
(including Good Reason (as definition Section 7.03)), other than for Cause or
death or disability.  If prior to a
Change of Control (a) Executive’s employment is involuntarily terminated by the
Company without cause or (b) Executive terminates his employment for Good
Reason, and such termination for Good Reason (x) occurred at the request of a
person who indicated an intention, or taken steps reasonably calculated, to
effect a Change of Control or (y) otherwise occurred in connection with, or in
anticipation of, a Change of Control which actually occurs, then the
termination of Executive’s employment shall be deemed to have occurred
immediately following a Change of Control; or

 

(b)                                 the employment
of Executive is terminated by the Company without Cause at any time, or the
Executive terminates his employment for “Good Reason” at any time.  For the purposes of this section (7.01(b))
such termination may occur before, on, or after the Termination Date and “Good
Reason” shall be as defined in Section 7.03, except that no “Change of Control”
need occur.

 

(c)                                  if (i) a Change
in Control (as defined in Section 7.04) occurred prior to Executive commencing
his employment with the Company, and (ii) at the time of the Change in Control
Executive had accepted employment with the Company as indicated by his
execution of this Agreement and as a result he was no longer employed by his
previous employer, and (iii) the Company decided to not commence Executive’s
employment as a result of the Change in Control.

 

Nothing in this Subsection
7.01 shall limit the authority of the Committee or Board to terminate Executive’s
employment in accordance with Section 6.03. 
Payment of the Severance Payment pursuant to Section 7.01, less
customary withholdings, shall be made in one lump sum within thirty (30) days
of the Executive’s termination or resignation; however, such payments will be
delayed for six (6) months if the Executive terminates employment due to Section
7.03(d).  In addition, the Severance
Payment shall be reduced by the amount of cash severance-type benefits to which
Executive may be entitled pursuant to any other cash severance plan, agreement,
policy or program of the Company or any of its subsidiaries; including any
payment for post-employment restrictions, provided, however, that if the amount
of cash severance benefits payable under such other severance plan, agreement,
policy or program is greater than the Severance Payment payable pursuant to
this Agreement, Executive will be entitled to receive the

 

3

 

amounts payable under such
other plan, agreement, policy or program which exceeds the Severance
Payment.  Without limiting other payments
which would not constitute “cash severance-type benefits” hereunder, any cash
settlement of stock options, accelerated vesting of stock options and
retirement, pension and other similar benefits shall not constitute “cash
severance-type benefits” for purposes of this Section 7.01.

 

6.             Article
7 of the Employment Agreement is amended to add Section 7.06 as follows:

 

7.06         In addition to the Severance Payment payable pursuant to Section
7.01, the Company will pay Executive a pro-rata portion of any bonus pursuant
to any bonus plan or arrangement established or mutually agreed-upon prior to
termination, to the extent earned through the date of termination, based upon
the requirements or criteria of such bonus plan or arrangement, as the Board
shall in good faith determine.  Such
pro-rated bonus, shall be payable at the time and in the manner payable to
other executives of the Company who participate in such plan or arrangement.

 

7.             Article
7 of the Employment Agreement is amended to add Section 7.07 as follows:

 

7.07         All severance payments made under this Article 7, including
those paid under Section 7.01, 7.02 and 7.06, shall be conditioned upon the
Executive’s signing and not rescinding a separation agreement and release in a
form acceptable to the Company, which agreement shall include, at a minimum, a
full and general release of all claims to the greatest extent allowed by
applicable law, a covenant not to sue, and an agreement to be reasonably
available for consultation and assistance to the Company during any period in
which severance is paid, and an agreement to return to the Company all Company
property and copies thereof in any form or media.

 

8.             Bonus or Incentive Compensation.  Executive
acknowledges that he has waived and is not entitled to any bonus payments or
Annual Incentive Compensation through the Company’s 2009 fiscal year..

 

9.             Remainder of Employment Agreement to Continue. 
Except as provided herein, the remainder of the Employment Agreement is
not affected by the foregoing amendments and shall continue in full force and
effect.

 

4

 

IN WITNESS WHEREAS, the parties
have executed this Agreement effective the date first above written.

 

	
   

  	
  GRANITE
  CITY FOOD AND BREWERY LTD

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Eugene E. McGowan

  
	
   

  	
   

  	
  Eugene
  E. McGowan, Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Steven J. Wagenheim

  
	
   

  	
   

  	
  Steven
  J. Wagenheim

  

 

5

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