Document:

Exhibit 10.9

 

SPX Corporation

 

2002 STOCK COMPENSATION PLAN

 

EXTERNAL PERFORMANCE-BASED RESTRICTED STOCK AGREEMENT

[  ] AWARD

 

THIS AGREEMENT (the “Agreement”) is made between SPX CORPORATION, a Delaware corporation (the “Company”), and the Recipient pursuant to the SPX Corporation 2002 Stock Compensation Plan, as amended, and related plan documents (the “Plan”) in combination with an SPX Restricted Stock Summary (the “Award Summary”) to be displayed at the Fidelity website.  The Award Summary, which identifies the person to whom the Restricted Stock is granted (the “Recipient”) and specifies the date (the “Award Date”) and other details of this grant of Restricted Stock, and the electronic acceptance of this Agreement (which also is to be displayed at the Fidelity website), are incorporated herein by reference.  Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Plan.  The parties hereto agree as follows:

 

1.                                      Grant of Restricted Stock.  The Company hereby grants to the Recipient the target number of shares of Restricted Stock specified in the Award Summary (the “Award”), subject to the terms and conditions of the Plan and this Agreement.  The Restricted Stock shall vest based on the Recipient’s performance during the Period of Restriction, as specified in Section 4 and pursuant to the terms of the Award Summary.  The Recipient must accept the Restricted Stock Award within ninety (90) days after notification that the Award is available for acceptance and in accordance with the instructions provided by the Company.  The Award automatically will be rescinded upon the action of the Company, in its discretion, if the Award is not accepted within ninety (90) days after notification is sent to the Recipient indicating availability for acceptance.

 

2.                                      Restrictions.  The Restricted Stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, whether voluntarily or involuntarily or by operation of law, until the termination of the Period of Restriction specified in Section 4 below or as otherwise provided in the Plan or this Agreement.  Except for such restrictions, and the provisions relating to dividends paid during the Period of Restriction as described in Section 9, the Recipient will be treated as the owner of the shares of Restricted Stock and shall have all of the rights of a shareholder, including, but not limited to, the right to vote such shares.

 

3.                                      Restricted Stock Certificates.  The Restricted Stock Award may be evidenced in such manner as the Committee shall determine.  The stock certificate(s) representing the Restricted Stock may be issued or held in book entry form promptly following the acceptance of this Agreement.  If a stock certificate is issued, it shall be delivered to the Secretary of the Company or such other custodian as may be designated by the Company, to be held until the end of the Period of Restriction or until the Restricted Stock is forfeited.  The certificates representing shares of Restricted Stock granted pursuant to this Agreement, if issued, shall bear a legend in substantially the form set forth below:

 

 

The sale or other transfer of the shares of stock represented by this certificate, whether voluntary, involuntary or by operation of law, is subject to certain restrictions on transfer set forth in the SPX Corporation 2002 Stock Compensation Plan, as amended and restated effective May 3, 2012, rules and administration adopted pursuant to such Plan, and a Restricted Stock award agreement with an Award Date as specified in the Recipient’s Award Summary.  A copy of the Plan, such rules and such Restricted Stock award agreement may be obtained from the Secretary of SPX Corporation.

 

4.                                      Period of Restriction.  Subject to the provisions of the Plan and this Agreement, unless vested or forfeited earlier as described in Section 5, 6, or 7 of this Agreement, as applicable, the number of shares of Restricted Stock that shall become vested and freely transferable shall be calculated in accordance with the chart below, based on the relationship between Total Shareholder Return (as defined below) and S&P Return (as defined below) for the Measurement Period (as defined below), calculated as of the Measurement Date (as defined below).  If Total Shareholder Return  falls between Threshold and Target or between Target and Maximum levels of performance, the number of shares of Restricted Stock that vest shall be calculated using straight-line interpolation.  Such vesting shall occur upon certification by the Board (or appropriate Board committee) that the applicable performance criteria have been met.

 

	
Total Shareholder Return Performance
   During the Measurement Period
    	
 
    	
Number of Shares of Restricted Stock
   Vesting
    
	
Below Threshold:
   More than 9% below S&P Return
    	
 
    	
 
    	
0
    
	
 
    	
 
    	
 
    	
 
    
	
Threshold:
   9% below S&P Return
    	
 
    	
 
    	
0.25x
    
	
 
    	
 
    	
 
    	
 
    
	
Target:
   Equal to S&P Return
    	
 
    	
 
    	
x
    
	
 
    	
 
    	
 
    	
 
    
	
Maximum:
   6% above S&P Return
    	
 
    	
 
    	
1.25x
    

 

x = Target amount of shares of Restricted Stock, as specified in the Award Summary

 

“Total Shareholder Return” shall mean the average annual percentage change in the Fair Market Value of a share of Common Stock (using total shareholder return of the Common Stock as reported by Interactive Data Corporation) during the Measurement Period.   Average values of the Common Stock (i.e., average values for the first calendar month and the final calendar month of the Measurement Period) shall be used to value the Common Stock at the beginning and end of the Measurement Period.

 

“S&P Return” shall mean the average annual percentage return of the S&P Composite 1500 Industrials Index (using total shareholder return of the S&P Composite 1500 Industrials Index as reported by Interactive Data Corporation) during the Measurement Period.  Average

 

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values of the Common Stock shall be used to value the S&P Composite 1500 Industrials Index at the beginning and end of the Measurement Period.

 

“Measurement Period” shall mean the three (3) year period commencing on [  ] and ending on [  ].

 

“Measurement Date” shall mean [  ].

 

Upon vesting, all vested shares shall cease to be considered Restricted Stock, subject to the terms and conditions of the Plan and this Agreement, and the Recipient shall be entitled to have the legend removed from the Recipient’s Common Stock certificate(s), if applicable.

 

5.                                      Vesting upon Termination due to Retirement, Disability or Death.

 

(a)                                 If, while the Restricted Stock is subject to the Period of Restriction, the Recipient experiences a termination of Service by reason of Disability (as defined below) or death, then the Restricted Stock subject to the Period of Restriction shall become fully vested at the Target level of performance (as specified in the Award Summary) as of the date of such termination of Service without regard to the Period of Restriction set forth in Section 4 of this Agreement.  “Disability” means, in the written opinion of a qualified physician selected by the Company, the Recipient is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (i) unable to engage in any substantial gainful activity, or (ii) receiving income replacement benefits for a period of not less than three months under the Company’s disability plan.

 

(b)                                 If, while the Restricted Stock is subject to the Period of Restriction, the Recipient experiences a termination of Service by reason of Retirement (as defined below), such Restricted Stock shall vest only if (and at the time that) the specified performance goals are achieved and vesting occurs for Recipients who remain actively employed.  A Recipient will be eligible for “Retirement” treatment for purposes of this Agreement if, at the time of the Recipient’s termination of Service, the Recipient is age 55 or older, has completed five years of Service with the Company or a Subsidiary (provided that the Subsidiary has been directly or indirectly owned by the Company for at least three years), and voluntarily elects to retire.

 

6.                                      Forfeiture upon Termination due to Reason other than Retirement, Disability or Death.  If, prior to the end of the Measurement Period,  the Recipient experiences a termination of Service for any reason other than the Recipient’s Retirement, Disability or death, then the Recipient shall forfeit any such unvested tranche on the date of such termination of Service.

 

7.                                      Vesting upon Change of Control.  In the event of a “Change of Control” of the Company as defined in this Section, the Restricted Stock subject to the Period of Restriction shall become fully vested at the Target level of performance (as specified in the Award Summary) as of the date of the occurrence of such Change of Control, without regard to the Period of Restriction set forth in Section 4 of this Agreement.  A “Change of Control” shall be deemed to have occurred if:

 

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(a)                                 Any “Person” (as defined below), excluding for this purpose (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company or any Subsidiary of the Company, and (iii) any entity organized, appointed or established for or pursuant to the terms of any such plan that acquires beneficial ownership of Common Stock, is or becomes the “Beneficial Owner” (as defined below) of twenty-five percent (25%) or more of the Common Stock then outstanding; provided, however, that no Change of Control shall be deemed to have occurred as the result of an acquisition of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate beneficial ownership interest of any Person to twenty-five percent (25%) or more of the Common Stock then outstanding, but any subsequent increase in the beneficial ownership interest of such a Person in Common Stock shall be deemed a Change of Control; and provided further that if the Board determines in good faith that a Person who has become the Beneficial Owner of Common Stock representing twenty-five percent (25%) or more of the Common Stock then outstanding has inadvertently reached that level of ownership interest, and if such Person divests as promptly as practicable a sufficient number of shares of the Company so that the Person no longer has a beneficial ownership interest in twenty-five percent (25%) or more of the Common Stock then outstanding, then no Change of Control shall be deemed to have occurred.  For purposes of this paragraph (a), the following terms shall have the meanings set forth below:

 

(i)                                    “Person” shall mean any individual, firm, limited liability company, corporation or other entity, and shall include any successor (by merger or otherwise) of any such entity.

 

(ii)                                 “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

(iii)                            A Person shall be deemed the “Beneficial Owner” of and shall be deemed to “beneficially own” any securities:

 

(A)                               which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly (determined as provided in Rule 13d-3 under the Exchange Act);

 

(B)                               which such Person or any of such Person’s Affiliates or Associates has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities), or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for

 

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purchase or exchange; or (2) the right to vote pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or understanding to vote such security (a) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (b) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(C)                               which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has any agreement, arrangement or understanding (other than customary agreements with and between underwriters and selling group members with respect to a bona fide public offering of securities) for the purpose of acquiring, holding, voting (except to the extent contemplated by the proviso to subparagraph (a)(iii)(B)(2), above) or disposing of any securities of the Company.

 

Notwithstanding anything in this “Beneficial Ownership” definition to the contrary, the phrase “then outstanding,” when used with reference to a Person’s beneficial ownership of securities of the Company, shall mean the number of such securities then issued and outstanding together with the number of such securities not then actually issued and outstanding which such Person would be deemed to own beneficially hereunder.

 

(b)                                 During any period of two (2) consecutive years (not including any period prior to the acceptance of this Agreement), individuals who at the beginning of such two-year period constitute the Board and any new director or directors (except for any director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraph (a), above, or paragraph (c), below) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board; or

 

(c)                                  The consummation of: (i) a plan of complete liquidation of the Company, (ii) an agreement for the sale or disposition of the Company or all or substantially all of the Company’s assets, (iii) a plan of merger or consolidation of the Company with any other corporation, or (iv) a similar transaction or series of transactions involving the Company (any transaction described in parts (i) through (iv) of this paragraph (c) being referred to as a “Business Combination”), in each case unless after such a Business Combination the shareholders of the Company immediately prior to the Business Combination continue to own at least seventy-five percent (75%) of the voting securities of the new (or continued) entity immediately after such Business Combination, in substantially the same proportion as their ownership of the Company immediately prior to such Business Combination.

 

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Notwithstanding any provision of this Agreement to the contrary, a “Change of Control” shall not include any transaction described in paragraph (a) or (c), above, where, in connection with such transaction, the Recipient and/or any party acting in concert with the Recipient substantially increases his or its, as the case may be, ownership interest in the Company or a successor to the Company (other than through conversion of prior ownership interests in the Company and/or through equity awards received entirely as compensation for past or future personal Services).  Further, notwithstanding the foregoing, any transaction under active consideration by the Company’s Board of Directors within the 30-day period prior to the Award Date shall not constitute a Change of Control under this Agreement.

 

8.                                      Settlement Following Change of Control.  Notwithstanding any provision of this Agreement to the contrary, in connection with or after the occurrence of a Change of Control as defined in Section 7 of this Agreement, the Company may, in its sole discretion, fulfill its obligation with respect to all or any portion of the Restricted Stock that ceases to be subject to the Period of Restriction in conjunction with the Change of Control by:

 

(a)                                 delivery of (i) the number of shares of Common Stock that have ceased to be subject to the Period of Restriction or (ii) such other ownership interest as such shares of Common Stock may be converted into by virtue of the Change of Control transaction;

 

(b)                                 payment of cash in an amount equal to the Fair Market Value of the Common Stock at that time; or

 

(c)                                  delivery of any combination of shares of Common Stock (or other converted ownership interest) and cash having an aggregate Fair Market Value equal to the Fair Market Value of the Common Stock at that time.

 

9.                                      Dividends Paid During Period of Restriction.  If cash dividends are paid with respect to any shares of Restricted Stock, such dividends shall be deposited in the Recipient’s name in an escrow or similar account maintained by the Company for this purpose.  Such dividends shall be subject to the same Period of Restriction as the shares of Restricted Stock to which they relate.  The dividends shall be paid to the Recipient in cash (subject to all applicable tax withholding), without adjustment for interest, as soon as administratively practicable after the date the related shares of Restricted Stock vest.  If the related shares of Restricted Stock are forfeited, then any dividends related to such shares shall also be forfeited on the same date.  If any dividends on Restricted Stock are paid in shares of Common Stock, the dividend shares shall be subject to the same restrictions as the shares of Restricted Stock with respect to which they were paid, and shall vest or be forfeited in the same manner as the underlying Restricted Stock.

 

10.                               Adjustment in Capitalization.  In the event of any change in the Common Stock through stock dividends or stock splits, a corporate split-off or split-up, or recapitalization, merger, consolidation, exchange of shares, or a similar event, the number of shares of Restricted Stock subject to this Agreement shall be equitably adjusted by the Committee.

 

11.                               Delivery of Stock Certificates.  Subject to the requirements of Sections 12 and 13 below, as promptly as practicable after shares of Restricted Stock cease to be subject to the Period of Restriction in accordance with this Agreement, the Company may, if applicable, cause to be issued and delivered to the Recipient, the Recipient’s legal representative, or a brokerage

 

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account for the benefit of the Recipient, as the case may be, certificates for the vested shares of Common Stock.

 

12.                               Tax Withholding.  When the Period of Restriction applicable to the Recipient’s rights to some or all of the Restricted Stock lapses as provided in this Agreement, the Company or its agent shall notify the Recipient of the related amount of tax that must be withheld under applicable tax laws. Regardless of any action the Company, any Subsidiary of the Company, or the Recipient’s employer takes with respect to any or all income tax, social security, payroll tax, payment on account or other tax-related withholding (“Tax”) that the Recipient is required to bear pursuant to all applicable laws, the Recipient hereby acknowledges and agrees that the ultimate liability for all Tax is and remains the responsibility of the Recipient.

 

Prior to receipt of any shares of Common Stock that correspond to Restricted Stock that vests in accordance with this Agreement, the Recipient shall pay or make adequate arrangements satisfactory to the Company and/or any Subsidiary of the Company to satisfy all withholding and payment on account obligations of the Company and/or any Subsidiary of the Company.  In this regard, the Recipient authorizes the Company and/or any Subsidiary of the Company to withhold all applicable Tax legally payable by the Recipient from the Recipient’s wages or other cash compensation paid to the Recipient by the Company and/or any Subsidiary of the Company or from the proceeds of the sale of shares of Common Stock.  Alternatively, or in addition, the Company may sell or arrange for the sale of Common Stock that the Recipient is due to acquire to satisfy the minimum withholding obligation for Tax and/or withhold any Common Stock.  Finally, the Recipient agrees to pay the Company or any Subsidiary of the Company any amount of any Tax that the Company or any Subsidiary of the Company may be required to withhold as a result of the Recipient’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to deliver Common Stock if the Recipient fails to comply with its obligations in connection with the tax as described in this section.

 

The Company advises the Recipient to consult a  lawyer or accountant with respect to the tax consequences for the Recipient under the Plan.

 

The Company and/or any Subsidiary of the Company: (a) make no representations or undertakings regarding the tax treatment in connection with the Plan; and (b) do not commit to structure the Plan to reduce or eliminate the Recipient’s liability for Tax.

 

13.                               Securities Laws.  This Award is a private offer that may be accepted only by a Recipient who is an employee or director of the Company or a Subsidiary of the Company and who satisfies the eligibility requirements outlined in the Plan and the Committee’s administrative procedures.  If a registration statement under the Securities Act of 1933, as amended, is not in effect with respect to the shares of Common Stock to be issued pursuant to this Agreement, the Recipient hereby represents that the Recipient is acquiring the shares of Common Stock for investment and with no present intention of selling or transferring them and that the Recipient will not sell or otherwise transfer the shares except in compliance with all applicable securities laws and requirements of any stock exchange on which the shares of Common Stock may then be listed.

 

14.                               Compliance with Code Section 409A.  Notwithstanding any provision of the Plan or this Agreement to the contrary, the Award is intended to be exempt from or, in the alternative,

 

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comply with Code Section 409A and the interpretive guidance thereunder, including the exceptions for stock rights and short-term deferrals.  The Plan and the Agreement will be construed and interpreted in accordance with such intent.  References in the Plan and this Agreement to “termination of Service” and similar terms shall mean a “separation from service” within the meaning of that term under Code Section 409A.  Any payment or distribution that is to be made to a Recipient who is a “specified employee” of the Company within the meaning of that term under Code Section 409A and as determined by the Committee, on account of a “separation from service” under Code Section 409A, may not be made before the date which is six months after the date of such “separation from service,” unless the payment or distribution is exempt from the application of Code Section 409A by reason of the short-term deferral exemption or otherwise.

 

15.                               No Employment or Compensation Rights.  Participation in the Plan is permitted only on the basis that the Recipient accepts all of the terms and conditions of the Plan and this Agreement, as well as the administrative rules established by the Committee.  This Agreement shall not confer upon the Recipient any right to continue to provide Services, nor shall this Agreement interfere in any way with the Company’s or its Subsidiaries’ right to terminate Recipient’s Service at any time.  Neither the Plan nor this Agreement forms any part of any contract of employment between the Company or any Subsidiary and the Recipient, and neither the Plan nor this Agreement confers on the Recipient any legal or equitable rights (other than those related to the Restricted Stock Award) against the Company or any Subsidiary or directly or indirectly gives rise to any cause of action in law or in equity against the Company or any Subsidiary.

 

The Restricted Stock granted pursuant to this Agreement does not constitute part of the Recipient’s wages or remuneration or count as pay or remuneration for pension or other purposes.  If the Recipient experiences a termination of Service, in no circumstances will the Recipient be entitled to any compensation for any loss of any right or benefit or any prospective right or benefit under the Plan or this Agreement that the Recipient might otherwise have enjoyed had such Service continued, whether such compensation is claimed by way of damages for wrongful dismissal, breach of contract or otherwise.

 

16.                               No Fractional Shares.  No fractional shares of Common Stock shall be issued or delivered under this Agreement.  The Committee shall determine whether cash or other property shall be issued or paid in lieu of such fractional shares of Common Stock or whether such fractional shares of Common Stock or any rights thereto shall be forfeited or otherwise eliminated.

 

17.                               Plan Terms and Committee Authority.  This Agreement and the rights of the Recipient hereunder are subject to all of the terms and conditions of the Plan, as it may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan.  It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate for the administration of the Plan and this Agreement, all of which shall be binding upon Recipient.  Any inconsistency between this Agreement and the Plan shall be resolved in favor of the Plan.  The Recipient hereby acknowledges receipt of a copy of the Plan and this Agreement.

 

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18.                               Amendment.  The Board may at any time amend, modify or terminate the Plan and this Agreement; provided, however, that no such action of the Board shall adversely affect the Recipient’s rights under this Agreement without the consent of the Recipient.  The Board or the Committee, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Agreement so that the Award qualifies for exemption from or complies with Code Section 409A; provided, however, that the Board, the Committee and the Company make no representations that the Award shall be exempt from or comply with Code Section 409A and make no undertaking to preclude Code Section 409A from applying to the Award.

 

19.                               Severability.  If any provision of this Agreement is determined to be invalid, illegal or unenforceable in any jurisdiction, or as to any person, or would disqualify the Plan or the Agreement under any law deemed applicable by the Board, such provision shall be construed or deemed amended to conform to applicable laws, or, if it cannot be so construed or deemed amended without, in the Board’s determination, materially altering the intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or person, and the remainder of the Agreement shall remain in full force and effect.

 

20.                               Governing Law and Jurisdiction.  The Plan and this Agreement shall be construed in accordance with and governed by the laws of the State of Delaware.  The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), the Plan will be exclusively in the courts in the State of North Carolina, County of Mecklenburg, including the Federal Courts located therein (should Federal jurisdiction exist).  As consideration for and by accepting the Award, the Recipient agrees that the Governing Law and Jurisdiction provisions of this Section 20 shall supersede any Governing Law or similar provisions contained or referenced in any prior equity awards made by the Company to the Recipient, and, accordingly, such prior equity awards shall become subject to the terms and conditions of the Governing Law and Jurisdiction provisions of this Section 20.

 

21.                               Successors.  All obligations of the Company under this Agreement will be binding on any successor to the Company, whether the existence of the successor results from a direct or indirect purchase of all or substantially all of the business or assets of the Company or both, or a merger, consolidation or otherwise.

 

22.                               Erroneously Awarded Compensation.  This Award shall be subject to any compensation recovery policy adopted by the Company to comply with applicable law,  including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with good corporate governances practices, as such policy may be amended from time to time.  As consideration for and by accepting the Award, the Recipient agrees that all prior equity awards made by the Company to the Recipient shall become subject to the terms and conditions of the Erroneously Awarded Compensation provisions of this Section 22.

 

9EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is entered into effective as of December 2, 2013 (the “Effective Date”) between Granite City Food & Brewery Ltd., a Minnesota corporation (the “Company”), and Michael Staenberg, Trustee of the MHS Trust dated January 13, 1986 (together with its successors and assigns, the “Investor”).

 

WHEREAS, Investor desires to purchase and receive from the Company and the Company desires to issue and sell to Investor, Redeemable Preferred Stock and warrants to purchase the Company’s common stock (collectively, the “Securities”) in consideration of Investor’s payment of the Purchase Price to the Company pursuant to the terms of this Agreement.

 

NOW, THEREFORE, based upon the foregoing and the mutual promises in this Agreement, the parties agree as follows:

 

1.                                      Investment.  In exchange for Investor’s cash payment in the amount of $2,000,000 (the “Purchase Price”), the Company will issue, sell, transfer and assign to Investor (i) 2,000 shares of Redeemable Preferred Stock, par value $0.01 per share (the “Redeemable Preferred”) having the rights, preferences and limitations as set forth in the Certificate of Designation in the form of Exhibit A hereto (“Certificate of Designation”) and (ii) a warrant to purchase up to 350,000 shares of the Company’s common stock in the form of Exhibit B hereto (the “Warrant”).

 

2.                                      Closing; Payment.  The closing of the sale to, and purchase by, the Investor of the Shares (the “Closing”) shall occur on a date mutually acceptable to the parties, but in no event later than December 4, 2013 (the “Closing Date”). On the Closing Date:

 

(a)                                 The Company shall deliver to the Investor by email a facsimile of (i) the certificate evidencing the Redeemable Preferred and (ii) the executed warrant agreement in the name of Investor or his or its designee(s), with such certificate and warrant agreement to be delivered by overnight courier on the business day following the Closing Date.

 

(b)                                 The Investor will deliver to the Company the Purchase Price by wire transfer in full payment for the Securities.

 

3.                                      Representations by Investor. In consideration of the Company’s issuance of the Securities, Investor makes the following representations and warranties to the Company, which warranties and representations shall survive the issuance of the Securities by the Company:

 

(a)                                 The Securities are being purchased for the Investor’s own account and not with a view to the distribution or sale thereof.

 

(b)                                 This Agreement has been duly executed and delivered by the Investor and is a valid and binding agreement on the Investor, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally,

 

 

and except for judicial limitations on the enforcement of the remedy of specific enforcement and other equitable remedies.

 

(c)                                  No person, firm or corporation has or will have, as a result of any act or omission by the Investor, any right, interest or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by this Agreement.  The Investor will indemnify and hold the Company harmless against any and all liability with respect to any commission, fee or other compensation which may be payable or determined to be payable as a result of the actions of the Investor in connection with the transactions contemplated by this Agreement.

 

(d)                                 The Investor has been afforded access to and the opportunity to obtain all financial and other information about the Company that the Investor desires (including the opportunity to meet with Company officers), and the Investor has either been supplied with such information or has determined that such information was not required.  The Investor acknowledges that he or it has been provided with an opportunity to review a copy of the reports filed by the Company with the SEC under the Securities Exchange Act of 1934 (the “Exchange Act”).  The Investor further acknowledges that he or it has carefully read and reviewed, and is familiar with and understands the contents thereof, including, without limitation, the Cautionary Statement set forth in the Company’s Quarterly Report on Form 10-Q for the period ended April 2, 2013.  There is no further information about the Company that the Investor desires or requires to make his or its decision to buy the Securities.

 

(e)                                  Investor hereby acknowledges that the issuance of the Securities has not been reviewed by the SEC nor any state regulatory authority since the issuance of the Securities is intended to be exempt from the registration requirements of Section 5 of the Securities Act of 1933 (the “Securities Act”).  Investor acknowledges that the Securities have not been registered under the Securities Act or qualified under the securities laws of any state or other jurisdiction or any other regulatory authority, or any other applicable blue sky laws, in reliance, in part, on Investor’s representations, warranties and agreements made herein.

 

(f)                                   Investor understands that the right to transfer the Securities will be restricted unless the transfer is not in violation of the Securities Act, and any other applicable state securities laws (including investment suitability standards), that the Company will not consent to a transfer of any Securities unless the transferee is an “accredited investor,” and that the Company has the right, in its absolute discretion, to refuse to consent to such transfer.

 

(g)                                  Investor represents that the Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act, and that the Investor is able to bear the economic risk of an investment in the Securities.

 

4.                                      Representations by the Company.  The Company hereby represents and warrants to the Investor as follows:

 

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(a)                                 The Company has been duly incorporated and is validly existing in good standing under the laws of Minnesota.

 

(b)                                 This Agreement has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights generally, and except for judicial limitations on the enforcement of the remedy of specific enforcement and other equitable remedies. The Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

 

(c)                                  No consent, approval, authorization or order of any court, governmental agency or other body is required for execution and delivery by the Company of this Agreement or the performance by the Company of any of its obligations hereunder.

 

(d)                                 Neither the execution and delivery by the Company of this Agreement nor the performance by the Company of any of its obligations hereunder (a) materially violates, conflicts with, results in a breach of, or constitutes a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) or gives to any person any rights of termination, amendment, acceleration or cancellation under (i) the articles of incorporation or by-laws of the Company, (ii) any decree, judgment, order, law, treaty, rule, regulation or determination of any court, governmental agency or body, or arbitrator having jurisdiction over the Company or any of its subsidiaries or any of their respective properties or assets, or (iii) the terms of any bond, debenture, indenture, credit agreement, note or any other evidence of indebtedness, or any agreement, stock option or other similar plan, lease, mortgage, deed of trust or other instrument to which the Company or any of its subsidiaries is a party, by which the Company or any of its subsidiaries is bound, or to which any of the properties or assets of the Company or any of its subsidiaries is subject; or (b) results in the creation or imposition of any lien, charge or encumbrance upon any of the Securities or upon any of the properties or assets of the Company or any of its subsidiaries.

 

(e)                                  No person, firm or corporation has or will have, as a result of any act or omission by the Company, any right, interest or valid claim against the Investor for any commission, fee or other compensation as a finder or broker, or in any similar capacity, in connection with the transactions contemplated by this Agreement.  The Company will indemnify and hold the Investor harmless against any and all liability with respect to any commission, fee or other compensation which may be payable or determined to be payable as a result of the actions of the Company in connection with the transactions contemplated by this Agreement.

 

(f)                                   The Company agrees to use the net proceeds from the sale of the Securities to fund construction of new restaurants; provided, however, that until the Company uses the net proceeds for the above-described purpose, the Company may invest such proceeds in short-term, investment-grade instruments, interest-bearing securities, or direct or guaranteed obligations of the United States.

 

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5.                                      Debt Facilities.

 

(a)                                 Subordination.  Notwithstanding any provision contained in this Agreement or the Certificate of Designation to the contrary, neither the Company nor any of its direct or indirect subsidiaries shall be obligated to, and in no event shall any of them (nor shall any Persons require them to), make any dividend or distribution to the Investor for the purposes of redeeming or otherwise purchasing or acquiring, or making any dividend or other distribution in respect of, and shall not themselves, directly or indirectly, redeem, otherwise purchase or acquire or make any distribution in respect of, any Redeemable Preferred, the Warrant or any of the securities subject thereto (collectively, the “Subject Securities”) to the extent such distribution, redemption, purchase, acquisition, dividend, distribution or payment is prohibited or otherwise not permitted under the terms of the Senior Loan Documents (defined below).  In addition, notwithstanding any provision contained in this Agreement to the contrary, but expressly subject to Section 5(h) hereinafter, and in addition to any other limitations set forth herein and in the Certificate of Designation, until the date that is 91 days following the date that the Senior Loans have been paid in full in cash, the Investor shall not take or continue any action, or exercise any rights, remedies or powers or exercise or continue to exercise any other right or remedy at law or in equity that the Investor might otherwise possess, to collect any amount that is due and payable under this Agreement or the Certificate of Designation or otherwise with respect to the Subject Securities, including, without limitation, the commencement of any action to enforce payment.  All payments or distributions upon or with respect to the Subject Securities which are made by or on behalf of Company or received by or on behalf of the Investor in violation of or contrary to the provisions of this Section 5 or the terms of the Certificate of Designation shall be received in trust for the benefit of Administrative Agent and the Lenders and shall be paid over upon demand to the Administrative Agent until the date that is 91 days following the date in which the Senior Loans shall have been paid in full in cash.

 

(b)                                 Bankruptcy.  In the event of any insolvency, bankruptcy or similar proceeding relative to the Company, any of its subsidiaries, any of its properties or assets, or any receivership, liquidation, reorganization or other similar proceedings in connection therewith, or, in the event of any proceedings for voluntary liquidation, dissolution or other winding up of the Company or any of its subsidiaries or any distribution or marshaling of its assets or any composition with creditors of one another or any other Person, whether or not involving insolvency or bankruptcy, or if the Company or any of its subsidiaries shall cease its operations, call a meeting of its creditors or no longer do business as a going concern (each individually or collectively, an “Event of Insolvency”), then, in any such case, all indebtedness, obligations and liabilities of the Company and each of its subsidiaries in respect of the Senior Loans shall first be indefeasibly paid in full in cash and all commitments to lend under the Senior Loan Documents shall have been terminated before any distribution (whether in cash, securities or other property) may or shall be made to the Investor for or in respect of any obligations hereunder by the Company or any of its subsidiaries.  Any such distribution which would, but for the provisions hereof, be payable or deliverable in respect of such obligations, shall be paid or delivered directly to the Administrative Agent for application to the Senior Loans (in accordance with their relative priorities) until the same is paid in

 

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full in cash.  The Investor shall agree to execute, verify, deliver and file any proofs of claim in respect of the Subject Securities requested by the Administrative Agent in connection with any relevant Event of Insolvency and shall irrevocably authorize, empower and appoint the Administrative Agent its agent and attorney-in-fact to do the same and to vote the claim of the Investor in any Event of Insolvency with respect to the Company and each of its subsidiaries.  The provisions hereof shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Senior Loans is rescinded or must otherwise be returned by the Administrative Agent or the Lenders for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Company or any of its subsidiaries) all as though such payment had not been made.

 

(c)                                  Reliance; Enforceability; Modification.  The Company and the Investor each hereby agrees and acknowledges: (i) the provisions hereof are, and are intended to be, an inducement to and are made in consideration of the Administrative Agent and the Lenders, to continue to hold, the Senior Loans, the Administrative Agent and the Lenders shall be deemed conclusively to have relied on the terms hereof in acquiring and holding, or in continuing to hold, the Senior Loans, (ii) the provisions hereof shall be enforceable against the Company and the Investor by the Administrative Agent and the Lenders, and (iii) none of the terms of this Section 5, the meaning of any defined terms used herein, or the Certificate of Designations shall be amended or otherwise modified without the prior written consent of the Administrative Agent and the Lenders.

 

(d)                                 No Contest.  The Investor hereby covenants and agrees that it will not, and will not encourage any other Person to, at any time, contest the validity, perfection, priority or enforceability of the provisions hereof, the Senior Loans, the Senior Loan Documents or the security interests or liens granted pursuant thereto.  The Investor agrees that all dividends or distributions owing from the Company or any other Person for the purposes of redeeming or otherwise purchasing or acquiring, or making any dividend or other distribution in respect of the Subject Securities are unsecured and that the Investor shall not take any liens or security interests in any assets or property of the Company or any of its subsidiaries.

 

(e)                                  No Conflicts.  In the event of any conflict or inconsistency between the provisions of this Section 5 and the other terms of this Agreement, the rights and obligations of the parties will be governed by the provisions of this Section 5.

 

(f)                                   Defined Terms.  As used herein, the term (i) “Senior Loan Documents” means that certain Amended and Restated Credit Agreement dated as of May 31, 2013 (the “Credit Agreement”), by and among the Company, Fifth Third Bank, as administrative agent (in such capacity, the “Administrative Agent”) for the Lenders, and the financial institutions from time to time party thereto as lenders (the “Lenders”) and any agreements, documents or instruments executed in connection therewith (in each case, subject to Section 5(h), as amended, restated, supplemented, replaced, extended, refinanced in whole or in part or otherwise modified from time to time), and (ii) “Senior Loans” means all indebtedness, obligations and liabilities of the Company and each of its direct and indirect subsidiaries in respect of the Senior Loan Documents and related

 

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agreements, documents and instruments as from time to time in effect; provided, however, in the case of this clause (ii) the maximum principal amount of indebtedness, obligations and liabilities of the Company and each of its direct and indirect subsidiaries in respect of the Senior Loan Documents and related agreements, documents and instruments shall be $37,000,000 unless otherwise consented to in writing by the Investor (which such consent shall not be unreasonably withheld, conditioned or delayed) (the “Maximum Senior Loan Amount”).

 

(g)                                  Purchase Right.  While the Redeemable Preferred is outstanding, the Investor shall have the opportunity (but not the obligation) to purchase in full all (but not less than all) of the Senior Loans and related obligations due to the Administrative Agent and the Lenders at any time on or after May 31, 2018 (but, to the extent the maturity date of the Senior Loans is extended under the Credit Agreement, on or after such date) for cash equal to 100% of all outstanding amounts thereunder (including all unpaid principal and all accrued but unpaid interest, fees, and expenses).  If the Investor elects to purchase the Senior Loans pursuant to this Section 5(g), the Investor shall deliver an irrevocable written notice to the Administrative Agent no earlier than fifteen (15) business days and no later than ten (10) business days prior to the purchase date and such purchase will (A) include all principal of, and all accrued and unpaid interest, fees and expenses in respect of, all Senior Loans outstanding at the time of purchase (and shall be paid in the respective currencies in which such outstanding Senior Loans are denominated or owed), (B) include the deposit by Investor with the Administrative Agent or its designee by wire transfer of immediately available funds (in the respective currencies in which such Letters of Credit (as defined in the Credit Agreement) are denominated), 105% of the aggregate undrawn amount of all then outstanding Letters of Credit and the aggregate facing and similar fees that will accrue thereon through the stated maturity of the Letters of Credit (assuming no extensions thereof and drawings thereon before stated maturity), (C) be effectuated by wire transfer of immediately available funds from the Investor to the Administrative Agent, (D) be made pursuant to an assignment and assumption agreement in form and substance reasonably satisfactory to, and prepared by counsel for, the Administrative Agent, whereby the Investor shall, among other things, assume all funding commitments and obligations of the Administrative Agent and the Lenders under the Loan Documents, and (E) otherwise be subject to the terms and conditions of this Section 5(g).  For the avoidance of doubt, in no event shall this Section 5(g) limit the rights and remedies of the Administrative Agent and the Lenders at any time prior to the consummation of any such purchase and sale transaction pursuant to this Section 5(g).  The Administrative Agent and the Lenders will retain all rights to indemnification provided in the Loan Documents for all claims and other amounts relating to facts and circumstances relating to the Administrative Agent or such Lender’s holdings of Senior Loans, and such rights shall be secured by the liens securing the Senior Loans.  No amendment, modification or waiver following any purchase under this Section 5(g) of any indemnification provisions under the Loan Documents shall be effective as to the Administrative Agent or any Lender or any affiliate or officer, director, employee or other related indemnified person of the Administrative Agent or any Lender (each, an “Indemnified Person”) without the prior written consent of such Indemnified Person, and such indemnification provisions shall continue in full force and effect for the benefit of the Indemnified Persons whether or not any Loan Document otherwise remains in

 

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effect.  The Company and its subsidiaries irrevocably consent to any such sale/purchase transaction under this Section 5(g).

 

(h)                                 Mandatory Redemption.  The Company shall, at the request of the Investor, redeem the Redeemable Preferred if (i) the Maximum Senior Loan Amount is exceeded or (ii) the maturity date of the Senior Loans is extended beyond May 31, 2018, due to the Company’s entry into any amendment, restatement, supplement, replacement, extension, tolling, forbearance, refinancing in whole or in part, whether by the Administrative Agent or any other third party, or other modification in anticipation of the maturity or the earlier termination of the Senior Loans. If the Company fails to redeem the Redeemable Preferred at the times set in this Section 5(h), then the amount of dividends payable shall increase to eighteen percent (18%) per annum.

 

6.                                      Agreement to Indemnify.

 

(a)                                 Investor hereby agrees to indemnify and hold the Company, its principals, the Company’s officers, directors, attorneys, employees, affiliates, controlling persons and agents and their respective heirs, representatives, successors and assigns, harmless from any and all liabilities, damages, costs and expenses (including actual and reasonable attorneys’ fees) (collectively, “Losses”) which they may incur by reason of Investor’s breach of any of Investor’s representations, warranties or agreements contained in this Agreement.

 

(b)                                 The Company hereby agrees to indemnify and hold the Investor, its principals, the Investor’s officers, directors, attorneys, employees, affiliates, controlling persons and agents and their respective heirs, representatives, successors and assigns, harmless from any and all Losses which they may incur arising from the Company’s breach of any of the Company’s representations, warranties or agreements contained in this Agreement.

 

7.                                      Notices.  Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, or delivered by hand against written receipt therefor, addressed as follows:

 

(a)                                 if to the Company, to:

 

Granite City Food & Brewery Ltd.
 701 Xenia Avenue South, Suite 120
 Minneapolis, MN 55416
 Attn: Jim Gilbertson, Chief Financial Officer

 

With a copy to (which shall not constitute notice):

 

Brett D. Anderson, Esq.
 Briggs and Morgan, P.A.
 2200 IDS Center
 80 South Eighth Street
 Minneapolis, MN 55402-2157

 

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(b)                                 if to the Investor, to:

 

Michael H. Staenberg
 2127 Innerbelt Business Center Drive, Suite 310
 St. Louis, MO 63114

 

With a copy to (which shall not constitute notice):

 

Jeffrey A. Cohen, Esq.
 Capes, Sokol, Goodman & Sarachan, P.C.
 7701 Forsyth Boulevard, 12th Floor
 St. Louis, MO 63105

 

Notices shall be deemed to have been given or delivered on the date of mailing, except notices of change of address, which shall be deemed to have been given or delivered when received.

 

8.                                      Investment Representation Binding on Heirs, etc.  This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the Investor.  If the undersigned is more than one person, the obligations of the undersigned shall be joint and several and the representations and warranties shall be deemed to be made by and be binding on each such person and his or her heirs, executors, administrators, successors, and assigns.

 

9.                                      Execution Authorized.  If this Agreement is executed on behalf of a corporation, partnership, trust or other entity, the undersigned has been duly authorized and empowered to legally represent such entity and to execute this Agreement and all other instruments in connection with the Securities and the signature of the person is binding upon such entity.

 

10.                               Adoption of Terms and Provisions.  The Investor hereby adopts, accepts and agrees to be bound by all the terms and provisions hereof.

 

11.                               Amendments.  Except as otherwise provided herein, this Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.

 

12.                               Governing Law.  NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA WITHOUT REGARD TO SUCH STATE’S PRINCIPLES OF CONFLICTS OF LAW.  IN THE EVENT THAT A JUDICIAL PROCEEDING IS NECESSARY, THE SOLE FORUM FOR RESOLVING DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT IS THE COURTS LOCATED IN THE STATE OF MINNESOTA IN AND FOR THE COUNTY OF HENNEPIN OR THE FEDERAL COURTS FOR SUCH STATE AND COUNTY, AND ALL RELATED APPELLATE COURTS, THE PARTIES HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF SUCH COURTS AND AGREE TO SAID VENUE.

 

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13.                               Legal Costs and Expenses.  In order to discourage frivolous claims, the parties agree that unless a claimant in any proceeding arising out of this Agreement succeeds in establishing his claim and recovering a judgment against another party (regardless of whether such claimant succeeds against one of the other parties to the action), then the other party shall be entitled to recover from such claimant all of its/their reasonable legal costs and expenses relating to such proceeding and/or incurred in preparation therefor.

 

14.                               Severability.  The holding of any provision of this Agreement to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.  If any provision of this Agreement shall be declared by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part, such provision shall be interpreted so as to remain enforceable to the maximum extent permissible consistent with applicable law and the remaining conditions and provisions or portions thereof shall nevertheless remain in full force and effect and enforceable to the extent they are valid, legal and enforceable, and no provisions shall be deemed dependent upon any other covenant or provision unless so expressed herein.

 

15.                               Waiver.  It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach by that same party.

 

16.                               Further Assurances.  The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.

 

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

 

18.                               Third Party Beneficiaries.  Except with respect to the Administrative Agent and the Lenders as set forth in Section 5 above, nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to this Agreement.

 

(Signature page follows)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	
 
    	
INVESTOR:
    
	
 
    	
MHS   TRUST DATED JANUARY 13, 1986
    
	
 
    	
 
    
	
 
    	
/s/   Michael H. Staenberg
    
	
 
    	
By:   Michael H. Staenberg
    
	
 
    	
Its:   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Please indicate the name and form of   ownership in which Investor will hold title to his or its interest in the   Securities:
    
	
 
    	
 
    
	
 
    	
MHS Trust dated January 13,   1986.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GRANITE   CITY FOOD & BREWERY LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   James G. Gilbertson
    
	
 
    	
By:   James G. Gilbertson
    
	
 
    	
Its:   Chief Financial Officer
    

 

[Signature Page to Securities Purchase Agreement dated December 2, 2013]

 

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EXHIBIT A

 

CERTIFICATE OF DESIGNATION OF RIGHTS AND PREFERENCES
 OF
 REDEEMABLE PREFERRED STOCK

 

Granite City Food & Brewery Ltd., a Minnesota corporation (the “Corporation”), does hereby certify that pursuant to authority vested in it by the provisions of the Articles of Incorporation, as amended, of the Corporation, the Board of Directors of the Corporation by action in writing taken pursuant to Section 302A.239 of the Minnesota Business Corporation Act, did adopt the following resolution authorizing the creation and issuance of a series of preferred stock designated as Redeemable Preferred Stock:

 

RESOLVED that, pursuant to authority expressly granted to the Board of Directors of the Corporation by the provisions of the Articles of Incorporation of the Corporation, the Board of Directors of the Corporation hereby creates and authorizes the issuance of a series of shares of preferred stock of the Corporation and hereby fixes, in addition to the relative rights, voting power, preferences and restrictions stated in the Articles of Incorporation of the Corporation, the following designation and number of shares of such preferred stock of the Corporation and the following voting, dividend rate, liquidation preference, conversion and other rights, preferences and restrictions with respect to such shares of preferred stock of the Corporation:

 

1.                                      Designation of Series of Preferred Stock.

 

Of the shares of preferred stock which the Corporation is authorized to issue pursuant to its Articles of Incorporation, 2,000 of such shares are hereby designated Redeemable Preferred Stock of the Corporation, par value $0.01 per share (“Redeemable Preferred”).  Shares of Redeemable Preferred shall have a stated value of $1,000 per share (the “Stated Value”).  Such shares of Redeemable Preferred, together with the 3,000,000 shares of Series A Convertible Preferred Stock (the “Series A”), 90,000,000 shares of authorized common stock of the Corporation, the remaining balance of 6,998,000 undesignated shares of preferred stock of the Corporation and any other common stock or preferred stock that may hereafter be authorized in or pursuant to the Articles of Incorporation of the Corporation, are hereinafter collectively referred to as the “capital stock.”

 

2.                                      Voting.

 

The holders of the Redeemable Preferred shall have no voting rights.

 

3.                                      Dividends.

 

(a)                                 The holders of shares of Redeemable Preferred shall be entitled to receive cumulative dividends, out of funds legally available therefor, at a rate of eleven percent (11%) per annum, before any dividend or distribution in cash or other property on common stock or any other class or series of stock of the Corporation shall be declared or paid or set apart for payment.

 

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(b)                                 Dividends on the Redeemable Preferred shall be payable on March 31, June 30, September 30 and December 31 of each year until the Redeemable Preferred is redeemed in full or is otherwise no longer outstanding (each such date being hereinafter individually a “Dividend Payment Date”), except that if such date is a Saturday, Sunday or legal holiday then such dividend shall be payable on the first immediately preceding calendar day which is not a Saturday, Sunday or legal holiday, to holders of record as they appear on the books of the Corporation on such respective dates, not exceeding sixty (60) days preceding such Dividend Payment Date, as may be determined by the Board of Directors in advance of the payment of each particular dividend.  Dividends in arrears may be declared and paid at any time, without reference to any regular Dividend Payment Date, to holders of record on such date as may be fixed by the Board of Directors of the Corporation.  Dividends declared and paid in arrears shall be applied first to the earliest dividend period or periods for which any dividends remain outstanding.  The amount of dividends payable per share of Redeemable Preferred for each dividend period shall be computed by dividing the annual rate of 11% by four.  Dividends payable on the Redeemable Preferred for the initial dividend period and for any other period less than a full quarterly period shall be computed and prorated on the basis of a 360-day year of twelve 30-day months.

 

(c)                                  If the Corporation is unable to pay a dividend on a Dividend Payment Date, the dividend shall be cumulative and shall accrue from and after the date of original issuance thereof, whether or not declared by the Board of Directors.  Accrued dividends shall bear interest at a rate of eleven percent (11%) per annum.

 

(d)                                 No cash dividend may be declared on any other class or series of stock ranking on junior to the Redeemable Preferred as to dividends in respect of any dividend period unless there shall also be or have been declared and paid on Redeemable Preferred accrued, unpaid dividends for all quarterly periods coinciding with or ending before such quarterly period, ratably in proportion to the respective annual dividend rates fixed therefor.

 

(e)                                  Dividends on the Redeemable Preferred shall be paid in cash.

 

(f)                                   Notwithstanding anything contained herein to the contrary, until the payment in full in cash of all of the Obligations (as defined in the Credit Agreement) owing under that certain Amended and Restated Credit Agreement dated as of May 31, 2013 (as amended, restated, supplemented, replaced, extended, refinanced in whole or in part or otherwise modified from time to time, the “Credit Agreement”), by and among the Corporation, Fifth Third Bank, as Administrative Agent and a Lender, and the other Lenders from time to time party thereto, the Corporation shall not pay any cash dividends unless the following conditions are satisfied, in each case, both before and after giving effect to the payment of such cash Dividend: (i) no Default or Event of Default (each as defined in the Credit Agreement) shall have occurred and be continuing, and (ii) the Corporation shall be in pro forma compliance with the covenants set forth in Section 6.20 of the Credit Agreement.

 

4.                                      Liquidation Preference.

 

In the event of an involuntary or voluntary liquidation or dissolution of the Corporation at any time, the holders of shares of Redeemable Preferred shall be entitled to receive out of the

 

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assets of the Corporation an amount per share equal to the Stated Value, plus dividends unpaid and accumulated or accrued thereon, and any interest due thereon.  In the event of either an involuntary or a voluntary liquidation or dissolution of the Corporation, payment shall be made to the holders of shares of Redeemable Preferred in the amounts herein fixed before any payment shall be made or any assets distributed to the holders of the Series A, the common stock or any other class of shares of the Corporation with respect to payment upon dissolution or liquidation of the Corporation.

 

5.                                      Redemption.

 

(a)                                 Mandatory Redemption.  The Corporation shall redeem for cash, out of any source of funds legally available therefor, at a redemption price equal to 100% of the Stated Value per share being redeemed, plus dividends unpaid and accumulated or accrued thereon, and any interest due thereon (to the extent such dividends and interest have not previously been paid) (the “Redemption Price”), all outstanding shares of Redeemable Preferred on September 1, 2018 (the “Required Redemption Date”); provided, however, in no event shall any outstanding shares of Redeemable Preferred be redeemed on the Required Redemption Date if and to the extent a Default or Event of Default (each as defined in the Credit Agreement) under the Credit Agreement exists or would result therefrom.

 

(b)                                 Redemption at Option of the Corporation.  Subject to clause (a) above, at any time and from time to time, at the option of the Corporation and upon five calendar days’ prior written notice to the record holder(s) of the Redeemable Preferred, the Corporation may redeem for cash, out of any source of funds legally available therefor, all, but not less than all, of the outstanding shares of Redeemable Preferred, at the Redemption Price.

 

(c)                                  Redemption Upon Change in Control.  Upon the occurrence of a Change in Control, as defined below, the Corporation shall redeem for cash, out of any source of funds legally available therefor, all the outstanding shares of Redeemable Preferred, at the Redemption Price, unless such redemption is waived by the holder(s) of record of the Redeemable Preferred.  A “Change of Control” shall mean the occurrence of any one of the following events:

 

(i)                                     an acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of 50% or more of either:

 

(1)                                 the Corporation’s then outstanding common stock; or

 

(2)                                 the combined voting power of the Corporation’s outstanding voting securities entitled to vote generally in the election of directors immediately after the merger or acquisition; provided, however, that the following acquisitions shall not constitute a Change of Control:

 

a.                                      any acquisition directly from the Corporation;

 

b.                                      any acquisition by the Corporation or a Subsidiary, as defined below;

 

A-3

 

c.                                       any acquisition by the trustee or other fiduciary of any employee benefit plan or trust sponsored by the Corporation or a Subsidiary; or

 

d.                                      any acquisition by any corporation with respect to which, following such acquisition, more than 50% of the common stock or combined voting power of common stock and other voting securities of the Corporation is beneficially owned by substantially all of the individuals and entities who were beneficial owners of the common stock and other voting securities of the Corporation immediately prior to the acquisition in substantially similar proportions immediately before and after such acquisition; or

 

(ii)                                  individuals who, as of October 31, 2013, constituted the Corporation’s Board of Directors (the “Incumbent Board”), cease to constitute at least a majority of the Board.  Individuals nominated by the Incumbent Board and subsequently elected shall be deemed for this purpose to be members of the Incumbent Board; or

 

(iii)                               approval by the shareholders of the Corporation of a reorganization, merger, consolidation, liquidation, dissolution, sale or statutory exchange of the common stock which changes the beneficial ownership of the common stock and other voting securities so that after the corporate change the immediately previous owners of 50% of the common stock and other voting securities do not own 50% of the Corporation’s common stock and other voting securities either legally or beneficially; or

 

(iv)                              the sale, transfer or other disposition of all or substantially all of the Corporation’s assets; or

 

(v)                                 a merger of the Corporation with another entity after which the pre-merger shareholders of the Corporation own less than 50% of the stock of the surviving corporation.

 

For purposes of this section, “Subsidiary” shall mean a company (whether a company, partnership, joint venture or other form of entity) in which the Corporation, or a company in which the Corporation owns a majority of the shares of capital stock directly or indirectly, owns an equity interest of fifty percent (50%) or more, and shall have the same meaning as the term “Subsidiary Company” as defined in Section 424(f) of the Internal Revenue Code.

 

(d)                                 Procedure for Mandatory or Optional Redemption; Notices.

 

(i)                                     In the event that the Corporation shall redeem shares of Redeemable Preferred pursuant to Section 5(a) or 5(b) hereof, notice of such redemption shall be mailed by first-class mail, postage prepaid, and mailed (1) in the case of a mandatory redemption under Section 5(a), not less than 30 days nor more than 90 days prior to the Required Redemption Date, and (2) in the case of an optional redemption under Section 5(b), not less than 5 days nor more than 90 days prior to the redemption date, in any case to the holder(s) of record of the shares to be redeemed at their respective addresses as they shall appear in the records of the Corporation; provided, however, that failure of the Corporation to give such notice or any defect therein or in the mailing thereof shall not affect the validity of the proceeding for the redemption of any shares so to be redeemed except as to the holder to whom the Corporation has failed to give such notice or except as to the holder to whom notice was defective.  Each such notice shall state:  (A) the redemption date; (B) the amount of dividends unpaid and accumulated or accrued

 

A-4

 

thereon, and any interest due thereon, to be paid; (C) the number of shares of Redeemable Preferred to be redeemed; (D) the Redemption Price; and (E) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price (which place shall be the principal place of business of the Corporation).

 

(ii)                                  In the event the Corporation does not have sufficient funds legally available to redeem for cash at the Redemption Price on the Required Redemption Date all then- outstanding shares of Redeemable Preferred, the Corporation shall redeem for cash at the Redemption Price the maximum number of shares that can be redeemed by the Corporation out of any source of funds legally available therefor, and shall redeem for cash at the Redemption Price the remaining shares to have been redeemed as soon as the Corporation has sufficient funds legally available therefor.

 

(e)                                  Procedure for Change in Control Redemption.  If a Change in Control should occur, the Corporation shall give written notice by first-class mail, postage prepaid, within 10 business days following the occurrence of the Change in Control to each holder of record of Redeemable Preferred at its address as it appears in the records of the Corporation.  Such notice shall (A) describe such Change in Control, including a description of the person(s) now in control of the Corporation and, if applicable, the effect of the Change in Control on the common stock, and shall state the date on which the Change in Control took place or is expected to take place, (B) the amount of dividends unpaid and accumulated or accrued thereon, and any interest due thereon, to be paid; (C) the number of shares of Redeemable Preferred to be redeemed; (D) the Redemption Price; (E) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price (which place shall be the principal place of business of the Corporation); and (F) the procedures to be followed by a holder to waive redemption, if applicable.

 

(f)                                   Notice by the Corporation having been mailed as provided in Sections 5(d)  or 5(e) hereof, and provided that on or before the applicable redemption date funds necessary for such redemption shall have been set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the shares so called for or entitled to redemption, so as to be and to continue to be available therefor, then, from and after the redemption date (unless the Corporation defaults in the payment of the Redemption Price, in which case such rights shall continue until the Redemption Price is paid), such shares shall no longer be deemed to be outstanding and shall not have the status of shares of Redeemable Preferred, and all rights of the holders thereof as shareholders of the Corporation shall cease.  Upon surrender of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and a notice by the Corporation shall so state), such shares shall be redeemed by the Corporation for cash at the Redemption Price as aforesaid.  In case fewer than all the shares represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed shares without cost to the holder thereof.

 

(g)                                  Reclassification, Consolidation, Merger or Sale of Assets.  In the event that (1) the Corporation shall be a party to any transaction pursuant to which the Corporation’s common stock is converted into the right to receive other securities, cash or other property (including without limitation any capitalization or reclassification of the common stock (other than a change

 

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in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination of the common stock), any consolidation of the Corporation with, or merger of the Corporation into, any other entity, any merger of another entity into the Corporation (other than a merger which does not result in a reclassification, conversion, exchange or cancellation of outstanding shares of common stock), any sale or transfer of all or substantially all of the assets of the Corporation or any share exchange), and (2) one or more holders of the Redeemable Preferred has waived redemption pursuant to Section 5(c), then effective provisions shall be made in the certificate or articles of incorporation of the resulting or surviving corporation, in any contract of sale, conveyance, lease, transfer or otherwise so that the provisions set forth herein for the protection of the rights of the holders of Redeemable Preferred shall thereafter continue to be applicable, and any such resulting or surviving corporation shall expressly assume the obligation to pay dividends on and redeem the Redeemable Preferred as set forth herein.  The above provisions shall similarly apply to successive transactions of the foregoing type.

 

6.                                      No Conversion Rights.

 

The Redeemable Preferred is not convertible into shares of common stock or any other securities, and is entitled solely to the designations, relative rights and preferences set forth in this certificate.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation of Rights and Preferences on behalf of the Corporation as of the 2nd day of December, 2013.

 

	
 
    	
GRANITE   CITY FOOD & BREWERY LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
Name:   
    	
James   G. Gilbertson
    
	
 
    	
Title:
    	
Chief   Financial Officer
    

 

A-7

 

EXHIBIT B

 

FORM OF

WARRANT TO PURCHASE 350,000 SHARES OF

COMMON STOCK OF

GRANITE CITY FOOD & BREWERY LTD.

 

This Warrant and the securities issuable upon exercise of this Warrant have not been registered under the Securities Act of 1933 (the “Securities Act”) or under any state securities or “Blue Sky” laws (“Blue Sky Laws”).  No transfer, sale, assignment, pledge, hypothecation or other disposition of this Warrant or the securities issuable upon exercise of this Warrant or any interest therein may be made except (a) pursuant to an effective registration statement under the Securities Act and any applicable Blue Sky Laws or (b) if the Company has been furnished with an opinion of counsel for the holder, which opinion and counsel shall be reasonably satisfactory to the Company, to the effect that no registration is required because of the availability of an exemption from registration under the Securities Act and applicable Blue Sky Laws.  This Warrant is subject to termination by the Company under certain conditions, as provided herein.

 

THIS CERTIFIES THAT, for good and valuable consideration, Michael H. Staenberg, Trustee of the MHS Trust dated January 13, 1986, or his registered assigns (“Holder”), is entitled to subscribe for and purchase from Granite City Food & Brewery Ltd., a Minnesota corporation (the “Company”), at any time permitted pursuant to Section 1(a) of this Warrant, 350,000 (Three Hundred Fifty Thousand) fully paid and nonassessable shares of the Company’s Common Stock, $0.01 par value per share (the “Common Stock”) at the price of $1.50 per share (the “Warrant Exercise Price”), subject to the antidilution provisions of this Warrant.  The shares which may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.”

 

This Warrant is subject to the following provisions, terms and conditions:

 

1.                                      Exercise; Vesting; Termination; Transferability .

 

(a)                                 Subject to Sections 1(b) and 1(c) hereof, the rights represented by this Warrant may be exercised by the Holder hereof at any time through October 31, 2018, in whole or in part (but not as to a fractional share of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Company at the principal office of the Company prior to the expiration of this Warrant and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such shares.

 

(b)                                 This Warrant becomes exercisable as follows:

 

·                  Upon issuance, it is exercisable as to 175,000 shares of Common Stock.

 

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·                  Upon the first anniversary of issuance, if some or all of the Company’s Redeemable Preferred Stock, par value $0.01 per share (the “Redeemable Preferred Stock”) remains outstanding at that date, the Warrant will become exercisable as to an additional 58,333 shares of Common Stock.

 

·                  Upon the second anniversary of issuance, if some or all of the Redeemable Preferred Stock remains outstanding at that date, the Warrant will become exercisable as to an additional 58,333 shares of Common Stock.

 

·                  Upon the third anniversary of issuance, if some or all of the Redeemable Preferred Stock remains outstanding at that date, the Warrant will become exercisable as to the remaining 58,334 shares of Common Stock.

 

(c)                                  Any portion of this Warrant that has not become exercisable pursuant to Section 1(b) shall be terminated on the date that all shares of Redeemable Preferred Stock are redeemed or are otherwise no longer outstanding.

 

(d)                                 Subject to the provisions of Section 7 hereof, this Warrant shall be fully transferable to an “accredited investor” as that term is defined under Regulation D under the Securities Act, in whole or in part; provided that this Warrant shall be transferable only on the books of the Company by the Holder in person, or by duly authorized attorney, on surrender of the Warrant, properly assigned.

 

2.                                      Exchange and Replacement.  Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Company at its office for new warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.  The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges incurred by it in connection with the preparation, execution, and delivery of warrants pursuant to this Section 2.

 

3.                                      Issuance of the Warrant Shares.

 

(a)                                 The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid.  Subject to the provisions of

 

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paragraph (b) of this Section 3, certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised and which have not terminated pursuant to Section 1(c) shall also be delivered to the Holder within such time.

 

(b)                                 Notwithstanding the foregoing, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws.  Nothing herein, however, shall obligate the Company to effect registrations under federal or state securities laws.  The Holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the issuance of the Warrant Shares.

 

4.                                      Covenants of the Company.  The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable, and free from all taxes, liens, and charges with respect to the issuance thereof.  The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.

 

5.                                      Antidilution Adjustments.  The provisions of this Warrant are subject to adjustment as provided in this Section 5; provided that no adjustment shall be made pursuant to this Section 5 which has the effect of duplicating any adjustment made pursuant to the Articles of Incorporation of the Company or any certificate of designation thereto, if any.

 

(a)                                 In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Warrant Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined into a smaller number of shares, the Warrant Exercise Price in effect immediately prior to such combination shall be proportionately increased.

 

(b)                                 If any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets to another corporation shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition of such reorganization, reclassification, consolidation, merger or sale, and except as otherwise provided herein, lawful and adequate provision shall be made whereby the holder of this Warrant shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares of the Common Stock of the

 

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Company immediately theretofore receivable upon the exercise of this Warrant, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore receivable upon the exercise of this Warrant had such reorganization, reclassification, consolidation, merger or sale not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of the holder of this Warrant to the end that the provisions hereof (including without limitation provisions for adjustments of the Warrant Exercise Price and of the number of shares receivable upon the exercise hereof) shall thereafter be applicable, as nearly as may be in relation to any shares of stock, securities or assets thereafter receivable upon the exercise of this Warrant.  The Company shall not effect any such consolidation, merger or sale, unless prior to the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed to the registered holder of this Warrant, at the last address of such holder appearing on the books of the Company, the obligation to deliver to such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to receive.

 

(c)                                  Simultaneously with any adjustment to the Exercise Price pursuant to Sections 5(a) or 5(b) hereunder, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

 

(d)                                 Upon any adjustment of the Warrant Exercise Price, the Company shall give written notice thereof, by first-class mail, postage prepaid, addressed to the registered holder of this Warrant, as shown on the books of the Company, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.  All calculations under this Section 5 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.

 

(e)                                  In case at any time: (i) there shall be any capital reorganization, or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation; or (ii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give written notice, by first-class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of the Company, of the date on which (a) the books of the Company shall close or a record shall be taken for such dividend, distribution or subscription rights, or (b) such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up shall take place, as the case may be.  Such notice shall also specify the date as of which the holders of Common Stock of record shall participate in such dividend, distribution or subscription rights, or

 

B-4

 

shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation, or winding up, as the case may be.  Such written notice shall be given at least twenty (20) days prior to the action in question and not less than twenty (20) days prior to the record date or the date on which the Company’s transfer books are closed in respect thereto.

 

(f)                                   If any event occurs as to which in the opinion of the Board of Directors of the Company the other provisions of this Section 5 are not strictly applicable or if strictly applicable would not fairly protect the rights of the holder of this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make an adjustment in the application of such provisions, in accordance with such essential intent and principles, so as to protect such rights as aforesaid.

 

(g)                                  As used in this Section 5 the term “Common Stock” shall mean and include the Company’s presently authorized Common Stock and any additional common stock that may be authorized by due action of the Company’s Board of Directors and shareholders entitled to vote thereon.

 

6.                                      No Voting Rights.  This Warrant shall not entitle the Holder to any voting rights or other rights as a shareholder of the Company.

 

7.                                      Notice of Transfer of Warrant or Resale of the Warrant Shares.

 

(a)                                 The Holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer.  Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel.  If the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the Holder thereof, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws; and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

 

(b)                                 If the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares the

 

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Company shall promptly give written notice thereof to the Holder, and the Holder will limit its activities in respect to such transfer or disposition as are permitted by law.

 

8.                                      Fractional Shares.  Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would, except for the provisions of this Section 8, be entitled under the terms hereof to receive a fractional share, the Company shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Fair Market Value of such fractional share over the proportional part of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price, if paid by the Holder, represented by such fractional share.  For purposes of this section, the Fair Market Value of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

 

(a)                                 If the Company’s Common Stock is traded on an exchange or is listed on the Nasdaq Global Market or the Nasdaq Capital Market, then the average closing or last sale prices, respectively, reported for the ten (10) business days immediately preceding the Determination Date; or

 

(b)                                 If the Company’s Common Stock is not traded on an exchange or listed on the Nasdaq Global Market or the Nasdaq Capital Market but is listed on the OTCQB, the OTC Bulletin Board, the National Quotation Bureau, or any comparable reporting service, then the average of the closing bid and ask prices reported for the ten (10) business days immediately preceding the Determination Date; or

 

(c)                                  If the Company’s Common Stock is not listed on an exchange, on the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQB, the OTC Bulletin Board, the National Quotation Bureau, or any comparable reporting service, then the fair market value as determined in good faith by the Board of Directors of the Company.

 

[signature page follows]

 

B-6

 

IN WITNESS WHEREOF, Granite City Food & Brewery Ltd. has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated December 4, 2013.

 

	
 
    	
GRANITE   CITY FOOD & BREWERY LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
 
    
	
 
    	
James   G. Gilbertson
    
	
 
    	
Chief   Financial Officer
    

 

B-7

 

NOTICE OF EXERCISE OF WARRANT

 

(To be signed upon the exercise of the Warrant)

 

The undersigned hereby irrevocably elects to exercise the attached Warrant to purchase, for cash,                                of the shares of Common Stock issuable upon the exercise of such Warrant, and requests that certificates for the shares of Common Stock (together with a new warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) be issued in the name and address set forth below.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Name)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Address)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Social   Security or Tax Ident. No.)
    

 

*                                         The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

 

B-8

 

ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer of the Warrant)

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto                                          the right to purchase                                shares of Common Stock of Granite City Food & Brewery Ltd., to which the within Warrant relates and appoints                                         , as attorney-in-fact, to transfer said right on the books of Granite City Food & Brewery Ltd. with full power of substitution in the premises.  By accepting such transfer, the transferee has agreed to be bound in all respects by the terms and conditions of the within Warrant.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Name)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Address)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Social   Security or Tax Ident. No.)
    

 

*                                         The signature on the Assignment of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

 

B-9

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