Document:

Exhibit 10.8

 

October
5, 2009

 

VIA
FACSIMILE AND U.S. MAIL

 

Granite
City Food & Brewery Ltd.

Granite
City Restaurant Operations, Inc.

5402
Parkdale Drive, Suite 101

Minneapolis,
MN 55416

Attn:  James G. Gilbertson

 

Re:                            WAIVER OF DEFAULT — Bridge Loan Agreement, as amended, from Harmony
Equity Income Fund, L.L.C., and Harmony Equity Income Fund II, L.L.C., to
Granite City Food & Brewery Ltd. and Granite City Restaurant
Operations, Inc.

 

Ladies and Gentlemen:

 

Reference is made to that certain Bridge Loan
Agreement by and between Granite City Food & Brewery Ltd. (the “Company”),
Granite City Restaurant Operations, Inc. (along with the Company, the “Borrowers”),
Harmony Equity Income Fund, L.L.C. (the “Administrative Agent”), and
Harmony Equity Income Fund II, L.L.C. (together with Harmony Equity Income Fund
L.L.C., the “Lenders”), dated as of March 30, 2009, as amended on April 22,
2009, April 30, 2009, May 29, 2009 and July 31, 2009, and as
such may be amended from time to time (the “Loan Agreement”).  For the purposes of this letter, the Loan
Agreement shall be deemed to include the Convertible Bridge Notes, Security
Agreement, IP Agreement and Leasehold Mortgage, Investor Rights Agreement and
all other agreements and instruments entered into and binding upon the
undersigned and the Borrowers pursuant thereto. 
Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Agreement.

 

This letter confirms that Lenders have
previously waived certain specific defaults by letter dated August 2009.

 

The Company has entered into a Debt
Conversion Agreement with DHW Leasing, LLC dated September 21, 2009 (“DHW
Agreement”), an accurate and complete copy of which has been delivered to
Administrative Agent and its counsel. 
Borrowers have represented that pursuant to the DHW Agreement the
equipment originally leased by Borrowers for the Restaurant will become the
property of Borrowers free and clear of any indebtedness or encumbrances.  Borrowers have further represented that
Borrowers are current with respect to the rent due under the real estate lease
for the Restaurant.  Administrative Agent
and Lenders hereby consent to the transaction contemplated by the DHW Agreement
and waive any and all of Borrowers’ defaults under the Loan Agreement which are
triggered on account of the consummation of the transactions contemplated by
the DHW Agreement.

 

1

 

Administrative Agent and Lenders hereby waive
default under Section 2.5(c) of the Agreement for failure to make the
interest payment due October 1, 2009. 
Administrative Agent and Lenders have previously waived the July 1,
2009 interest payment.  Both the October 1,
2009 and July 1, 2009 interest payments shall be added to the principal
amount of indebtedness due Lenders as of the date that each interest payment
was due and shall each accrue interest from said date.

 

Administrative Agent and Lenders hereby agree
to amend Section 5.2(b) of the Loan Agreement pertaining to
maintenance of Borrowers’ net consolidated revenue.  For the quarters ending September 30,
2009 and ending December 29, 2009, Borrowers shall maintain net
consolidated revenue at a minimum of $20,264,500 and $20,556,600, respectively.

 

Administrative Agent and
Lenders hereby waive Borrowers default for failure to timely deliver various
items pursuant to Section 5.1 of the Loan Agreement through the date of
this letter; provided, that Borrowers shall hereafter be required to perform in
a timely manner the agreements contained in Section 5.1.

 

Lenders hereby waive the
“Participation Rights” set forth in Section 3 of the Investor Rights Agreement
dated March 30, 2009, between Borrower and Lenders, to the extent such rights
would arise due to the transaction contemplated by the DHW Agreement.

 

This waiver is limited to this particular
instance.  Administrative Agent and
Lenders are not waiving any other agreement, covenant or obligation of the
Borrowers and are not waiving any default or breach of the Sections identified
herein in the future.  Except for the
deferral of the October 1, 2009 interest payment, modification of the
minimum net consolidated revenue for the quarters ending September 30,
2009 and December 29, 2009 and the extension of the lending date to October 31,
2009, this letter shall not constitute an amendment of the Agreement.

 

Signature page follows.

 

2

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
  HARMONY
  EQUITY INCOME FUND, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eugene E. McGowan

  
	
   

  	
   

  	
  Eugene E. McGowan, Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  HARMONY
  EQUITY INCOME FUND, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Eugene E. McGowan

  
	
   

  	
   

  	
  Eugene
  E. McGowan, Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARMONY
  EQUITY INCOME FUND II, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Eugene E. McGowan

  
	
   

  	
   

  	
  Eugene
  E. McGowan, Managing Member

  
	
   

  	
   

  
	
  Agreed
  and accepted by:

  	
   

  
	
   

  	
   

  
	
  GRANITE
  CITY FOOD & BREWERY LTD.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/
  James Gilbertson

  	
   

  
	
   

  	
  James
  Gilbertson, Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
  GRANITE
  CITY RESTAURANT OPERATIONS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
  /s/
  James Gilbertson

  	
   

  
	
   

  	
  James Gilbertson, Chief Financial Officer

  	
   

  

 

3Exhibit 10.9

 

MASTER AMENDMENT TO LEASES

 

THIS MASTER AMENDMENT TO
LEASES (the “Master Amendment”) entered into effective the 5th day of October, 2009 (the “Execution Date”),
by and among GC Omaha Limited Partnership, Dunham Capital Management, L.L.C.,
GC Rosedale, L.L.C., GC Lincoln Limited Partnership, GC Olathe Limited
Partnership, GC Eagan Limited Partnership, GC Cedar Rapids/Davenport Limited
Partnership, GC Des Moines Limited Partnership, GC Holdings Limited Partnership
and GC Wichita Limited Partnership (each, a “Dunham Landlord”, collectively,
the “Dunham Landlords”), and Granite City Food & Brewery, Ltd. (“GCFB”).

 

WITNESSETH:

 

WHEREAS, one of the Dunham
Landlords is the landlord under each lease agreement with GCFB described on the
attached Exhibit A for the location indicated on Exhibit A
for the applicable lease (the “Leases”), and

 

WHEREAS, GCFB and DHW
Leasing, L.L.C., have entered into a Debt Conversion Agreement and the Dunham
Landlords have agreed in connection therewith to amend the terms of the Leases;

 

NOW, THEREFORE, in
consideration of the above recitals that by this reference are incorporated
herein, the mutual covenants and conditions contained herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties have agreed to amend the Leases as set forth below.

 

1.             Deferred Rent System.  For all rent payments due on and after June 1,
2009 under the Leases, the Dunham Landlords agree to defer each payment of rent
once for one month (the “Deferred Rent System”).  For example, each rent payment due on October 1,
2009 shall be payable on November 1, 2009.

 

2.             Reduced Rent System  For all rent payments due on and after June 1,
2009 under the Leases, the Dunham Landlords agree to reduce each rent payment
by thirty percent (30%) (the “Reduced Rent System”).  The total amount of rent reductions granted
under this Section 2 shall be payable by GCFB as described in Section 3
below.

 

3.             Duration of Rent Deferrals and
Reductions; Repayment.  The Deferred
Rent System and the Reduced Rent System shall be in effect until the earlier
of: (i) the date GCFB closes on aggregate net proceeds to GCFB of at least
$2,000,000 from any combination of debt or equity financings (the “Financing
Date”) or (ii) the first anniversary of the Execution Date.  At the earlier of the Financing Date or the
first anniversary of the Execution Date, GCFB shall (i) pay each Dunham
Landlord the total amount of rent reductions and unpaid deferred rent granted
in Sections 1 and 2 above by such Dunham Landlord in one lump sum, without any
accrued interest, and (ii) make the rent payments for the remainder of the
Leases in the amounts and at the times required by the Leases.

 

1

 

4.             Defaults.  The Dunham Landlords hereby waive all
defaults or events of default under the Leases existing as of the Execution
Date.

 

5.             Authority.  Each signatory of this Master Amendment
represents hereby that he or she has the authority to execute and deliver the
same on behalf of the party hereto for which such signatory is acting. This
Master Amendment shall be binding upon and inure to the benefit of each Dunham
Landlord and GCFB and their respective successors, assigns and related
entities.

 

6.             Miscellaneous.  The parties are also subject to the following
miscellaneous provisions: (a) this Master Amendment is governed by and
shall be construed in accordance with the laws of the state of Minnesota; (b) captions
used in this Master Amendment are for convenience only and are not a part of
the agreement; (c) time is of the essence; (d) if any provision of
this Master Amendment is invalid or unenforceable to any extent, the remainder
of this Master Amendment shall continue in effect and be enforceable to the
fullest extent permitted by law; (e) this Master Amendment may be modified
only by a writing executed and delivered by all parties; and (f) nothing
contained in this Master Amendment shall be deemed or construed to create a
partnership or joint venture of or between any Dunham Landlord and GCFB.

 

7.             Counterparts.  This Master Amendment may be executed in any
number of counterparts, all of which together shall constitute one and the same
instrument, and any party or signatory hereto may execute this Master Amendment
by signing any such counterpart. 
Delivery of a facsimile or digital copy (pdf) of an executed copy of
this Master Amendment shall be effective to bind the executing party.  Each party so executing this Master Amendment
shall promptly deliver an original executed counterpart to the other
signatories.

 

WITH RESPECT TO ANY ACTION OR PROCEEDING ARISING IN
CONNECTION WITH THIS MASTER AMENDMENT, EACH PARTY HERETO (I) WAIVES ITS
RIGHT TO A TRIAL BY JURY IN ANY SUCH ACTION, (II) CONSENTS TO ANY SUCH
ACTION BEING VENUED IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN
MINNEAPOLIS OR ST. PAUL, MINNESOTA AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH
FORUMS IS NOT CONVENIENT.

 

2

 

IN WITNESS WHEREOF, the Dunham Landlords and GCFB have executed this
Master Amendment as of the day and year first above written.

 

DUNHAM
LANDLORDS

 

	
  GC
  Omaha Limited Partnership

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  	
   

  	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  
	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham 

  	
   

  	
  Name
  :

  	
  Donald
  A. Dunham, Jr.

  
	
   

  	
  Equity
  Management, L.L.C.

  	
   

  	
  Its:

  	
  Managing
  Member

  
	
  Its:

  	
  General
  Partner

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GC
  Rosedale, L.L.C.

  	
   

  	
  GC
  Lincoln Limited Partnership

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  	
   

  	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  
	
  Name
  :

  	
  Donald
  A. Dunham, Jr.

  	
   

  	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham 

  
	
  Its:

  	
  Managing
  Member

  	
   

  	
   

  	
  Equity
  Management, L.L.C.

  
	
   

  	
   

  	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  	
   

  
	
  GC
  Olathe Limited Partnership

  	
   

  	
  GC
  Eagan Limited Partnership

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  	
   

  	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  
	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham Equity Management, L.L.C.

  	
   

  	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham Equity Management, L.L.C.

  
	
  Its:

  	
  General
  Partner

  	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  	
   

  
	
  GC
  Cedar Rapids/Davenport Limited Partnership

  	
   

  	
  GC
  Des Moines Limited Partnership

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  	
   

  	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  
	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham Equity Management, L.L.C.

  	
   

  	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham Equity Management, L.L.C.

  
	
  Its:

  	
  General
  Partner

  	
   

  	
  Its:

  	
  General
  Partner

  
	
   

  	
   

  	
   

  
	
  GC
  Holdings Limited Partnership

  	
   

  	
  GC
  Wichita Limited Partnership

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  	
   

  	
  By:

  	
  /s/
  Donald A. Dunham, Jr.

  
	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham Equity Management, L.L.C.

  	
   

  	
  Name
  :

  	
  Donald
  A. Dunham, Jr., Managing Member of Dunham Capital Management, L.L.C.

  
	
  Its:

  	
  General
  Partner

  	
   

  	
  Its:

  	
  General
  Partner

  

 

3

 

	
  TENANT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Granite
  City Food & Brewery, Ltd.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Steven J. Wagenheim

  	
   

  	
   

  
	
  Name:

  	
  Steven
  J. Wagenheim

  	
   

  	
   

  
	
  Its:

  	
  President
  and Chief Executive Officer

  	
   

  	
   

  

 

4

 

EXHIBIT A

 

List of Leases

 

	
   

  	
   

  	
  Location

  	
   

  	
  Title of Lease

  	
   

  	
  Current Landlord

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Omaha

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated May 17, 2006 (as later amended and
  assigned).

  	
   

  	
  GC
  Omaha Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Madison

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated May 31, 2006 (as later amended and
  assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Roseville

  	
   

  	
  Sublease
  Agreement by and between GC Rosedale, L.L.C. and Granite City Food &
  Brewery Ltd. dated May 11, 2006 (as later amended and assigned).

  	
   

  	
  GC
  Rosedale, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Lincoln

  	
   

  	
  Sublease
  Agreement by and between Donald A. Dunham, Jr. and Granite City
  Food & Brewery Ltd. dated August 6, 2003 (as later amended and
  assigned).

  	
   

  	
  GC
  Lincoln Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Rockford

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated November 9, 2006 (as later amended
  and assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Creve
  Coeur

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated June 19, 2007 (as later amended and
  assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Ft.
  Wayne

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated September 12, 2006 (as later amended
  and assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Maumee

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated August 7, 2007 (as later amended and
  assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Mishawaka-South
  Bend

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated March 17, 2008 (as later amended and
  assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  

 

 

	
  10.

  	
   

  	
  Carmel-Indianapolis

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated March 17, 2008 (as later amended and
  assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Rogers

  	
   

  	
  Sublease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated June 7, 2007 (as later amended and
  assigned).

  	
   

  	
  Dunham
  Capital Management, L.L.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Olathe

  	
   

  	
  Lease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated June 3, 2005 (as later amended and
  assigned).

  	
   

  	
  GC
  Olathe Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Eagan

  	
   

  	
  Lease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated June 1, 2005 (as later amended and
  assigned).

  	
   

  	
  GC
  Eagan Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Davenport

  	
   

  	
  Lease
  Agreement by and between Donald A. Dunham, Jr. and Granite City
  Food & Brewery Ltd. dated April 3, 2003 (as later amended and
  assigned).

  	
   

  	
  GC
  Cedar Rapids/ Davenport Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Clive-Des
  Moines

  	
   

  	
  Lease
  Agreement by and between Donald A. Dunham, Jr. and Granite City
  Food & Brewery Ltd. dated February 7, 2003 (as later amended
  and assigned).

  	
   

  	
  GC
  Des Moines Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Zona
  Rosa-Kansas City

  	
   

  	
  Lease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated March 29, 2005 (as later amended and
  assigned).

  	
   

  	
  GC
  Holdings Limited Partnership

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Wichita

  	
   

  	
  Lease
  Agreement by and between Dunham Capital Management, L.L.C. and Granite City
  Food & Brewery Ltd. dated October 22, 2004 (as later amended
  and assigned).

  	
   

  	
  GC
  Wichita Limited Partnership

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