Document:

EXHIBIT 10.4

 

PATENT
AND TRADEMARK SECURITY AGREEMENT

 

This Patent and Trademark Security Agreement
(the “Agreement”), dated as of March 30,
2009, is made by and between GRANITE CITY FOOD AND
BREWERY, LTD., a Minnesota corporation having a business location at
the address set forth below next to its signature (the “Debtor”),
and HARMONY EQUITY INCOME FUND, L.L.C., a
South Dakota limited liability company (“Agent”), for
the benefit of the Lenders a party to the Credit Agreement (defined below), and
having a business location at the address set forth below next to its
signature.

 

Recitals

 

A.           Debtor
and Agent are parties to that certain Bridge Loan Agreement (as amended,
supplemented or restated from time to time, the “Credit
Agreement”) dated the same date as this Agreement, setting forth the
terms by which the Lenders set forth therein may now or hereafter extend credit
to or for the account of Debtor.

 

B.           As a
condition to extending credit to or for the account of Debtor, Agent and
Lenders have required the execution and delivery of this Agreement by Debtor.

 

ACCORDINGLY, in consideration of the mutual covenants contained in the
Loan Documents and herein, the parties hereby agree as follows:

 

1.            Definitions. All terms defined in the Recitals
hereto or in the Credit Agreement that are not otherwise defined herein shall
have the meanings given to them in the Credit Agreement.  In addition, the following terms have the
meanings set forth below:

 

“Patents” means all of Debtor’s right,
title and interest in and to patents or applications for patents, fees or
royalties with respect to each, and including without limitation the right to
sue for past infringement and damages therefor, and licenses thereunder, all as
presently existing or hereafter arising or acquired, including without
limitation the patents listed on Exhibit A.

 

“Security Interest” has the meaning
given in Section 2.

 

“Trademarks” means all of Debtor’s right, title and interest
in and to: (i) trademarks, service marks, collective membership marks,
registrations and applications for registration for each, and the respective
goodwill associated with each, (ii) licenses, fees or royalties with
respect to each, (iii) the right to sue for past, present and future
infringement, dilution and damages therefor, and (iv) licenses thereunder,
all as presently existing or hereafter arising or acquired, including, without
limitation, the marks listed on Exhibit B.

 

2.            Security Interest. Debtor hereby irrevocably
pledges and assigns to, and grants Agent (for the benefit of Lenders)  a security interest (the “Security Interest”) with power of sale to the extent
permitted by law, in the Patents and in the Trademarks to secure payment of the
Obligations. As set forth in the Credit Agreement, the Security Interest is
coupled with a security 

 

 

interest in substantially all of the personal property
of Debtor.  This Agreement grants only
the Security Interest herein described, is not intended to and does not affect
any present transfer of title of any trademark registration or application and
makes no assignment and grants no right to assign or perform any other action
with respect to any intent to use trademark application, unless such action is
permitted under 15 U.S.C. § 1060.

 

3.            Representations, Warranties and Agreements.
Debtor represents, warrants and agrees as follows:

 

(a)           Existence; Authority. Debtor is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, and this Agreement has been duly and
validly authorized by all necessary corporate action on the part of Debtor.

 

(b)           Patents. Exhibit A
accurately lists all Patents owned or controlled by Debtor as of the date
hereof, or to which Debtor has a right as of the date hereof to have assigned
to it, and accurately reflects the existence and status of applications and
letters patent pertaining to the Patents as of the date hereof. If after the
date hereof, Debtor owns, controls or has a right to have assigned to it any
Patents not listed on Exhibit A,
or if Exhibit A
ceases to accurately reflect the existence and status of applications and
letters patent pertaining to the Patents, then Debtor shall within 60 days
provide written notice to Agent with a replacement Exhibit A, which
upon acceptance by Agent shall become part of this Agreement.

 

(c)           Trademarks.  Exhibit B accurately lists all
Trademarks owned or controlled by Debtor as of the date hereof and accurately
reflects the existence and status of Trademarks and all applications and
registrations pertaining thereto as of the date hereof; provided, however, that
Exhibit B
need not list common law marks (i.e., Trademarks for which there are no
applications or registrations) which are not material to Debtor’s or any
Affiliate’s business(es).  If after the
date hereof, Debtor owns or controls any Trademarks not listed on Exhibit B (other
than common law marks which are not material to Debtor’s or any Affiliate’s
business(es)), or if Exhibit B
ceases to accurately reflect the existence and status of applications and registrations
pertaining to the Trademarks, then Debtor shall promptly provide written notice
to Agent with a replacement Exhibit B, which upon acceptance by Agent shall
become part of this Agreement.

 

(d)           Affiliates. As of the date hereof, no
Affiliate owns, controls, or has a right to have assigned to it any items that
would, if such item were owned by Debtor, constitute Patents or Trademarks. If
after the date hereof any Affiliate owns, controls, or has a right to have
assigned to it any such items, then Debtor shall promptly either: (i) cause
such Affiliate to assign all of its rights in such item(s) to Debtor; or (ii) notify
Agent of such item(s) and cause such Affiliate to execute and deliver to
Agent a patent and trademark security agreement substantially in the form of
this Agreement.

 

2

 

(e)           Title. Debtor has absolute title to each
Patent and each Trademark listed on Exhibits A and B, free and clear of all Liens except
Permitted Liens.  Debtor (i) will
have, at the time Debtor acquires any rights in Patents or Trademarks hereafter
arising, absolute title to each such Patent or Trademark free and clear of all
Liens except Permitted Liens, and (ii) will keep all Patents and
Trademarks free and clear of all Liens except Permitted Liens.

 

(f)            No Sale. Except as permitted in the Credit
Agreement, Debtor will not assign, transfer, encumber or otherwise dispose of
the Patents or Trademarks, or any interest therein, without Agent’s prior
written consent.

 

(g)           Defense. Debtor will at its own expense and
using commercially reasonable efforts, protect and defend the Patents and
Trademarks against all claims or demands of all Persons other than those
holding Permitted Liens.

 

(h)           Maintenance. Debtor will at its own expense
maintain the Patents and the Trademarks to the extent reasonably advisable in
its business including, but not limited to, filing all applications to obtain
letters patent or trademark registrations and all affidavits, maintenance fees,
annuities, and renewals possible with respect to letters patent, trademark
registrations and applications therefor. 
Debtor covenants that it will not abandon nor fail to pay any
maintenance fee or annuity due and payable on any Patent or Trademark, nor fail
to file any required affidavit or renewal in support thereof, without first
providing Agent:  (i) sufficient
written notice, of at least 30 days, to allow Agent to timely pay any such
maintenance fees or annuities which may become due on any Patents or
Trademarks, or to file any affidavit or renewal with respect thereto, and (ii) a
separate written power of attorney or other authorization to pay such
maintenance fees or annuities, or to file such affidavit or renewal, should
such be necessary or desirable.

 

(i)            Agent’s Right to Take Action. If Debtor
fails to perform or observe any of its covenants or agreements set forth in
this Section 3, and if such failure continues for a period of ten (10) calendar
days after Agent gives Debtor written notice thereof (or, in the case of the
agreements contained in subsection (h), immediately upon the occurrence of such
failure, without notice or lapse of time), or if Debtor notifies Agent that it
intends to abandon a Patent or Trademark, Agent may (but need not) perform or
observe such covenant or agreement or take steps to prevent such intended
abandonment on behalf and in the name, place and stead of Debtor (or, at Agent’s
option, in Agent’s own name) and may (but need not) take any and all other
actions which Agent may reasonably deem necessary to cure or correct such
failure or prevent such intended abandonment.

 

(j)            Costs and Expenses. Except to the extent
that the effect of such payment would be to render any loan or forbearance of
money usurious or otherwise illegal under any applicable law, Debtor shall pay
Agent on demand the amount of all moneys expended and all costs and expenses
(including reasonable attorneys’ fees and disbursements) incurred by Agent in
connection with or as a result of Agent’s taking action under subsection (i) or
exercising its rights under Section 6, together with interest thereon from
the date expended or incurred by Agent at the Default Rate.

 

3

 

(k)           Power of Attorney. To facilitate Agent’s
taking action under subsection (i) and exercising its rights under Section 6,
Debtor hereby irrevocably appoints (which appointment is coupled with an
interest) Agent, or its delegate, as the attorney-in-fact of Debtor with the
right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file, in the name and on behalf of Debtor, any and
all instruments, documents, applications, financing statements, and other
agreements and writings required to be obtained, executed, delivered or
endorsed by Debtor under this Section 3, or, necessary for Agent, after an
Event of Default, to enforce or use the Patents or Trademarks or to grant or
issue any exclusive or non-exclusive license under the Patents or Trademarks to
any third party, or to sell, assign, transfer, pledge, encumber or otherwise
transfer title in or dispose of the Patents or Trademarks to any third party.
Debtor hereby ratifies all that such attorney shall lawfully do or cause to be
done by virtue hereof. The power of attorney granted herein shall terminate
upon the termination of the Credit Agreement as provided therein and the
payment and performance of all Indebtedness.

 

4.            Debtor’s Use of the Patents and Trademarks.
Debtor shall be permitted to control and manage the Patents and Trademarks,
including the right to exclude others from making, using or selling items
covered by the Patents and Trademarks and any licenses thereunder, in the same
manner and with the same effect as if this Agreement had not been entered into,
so long as no Event of Default occurs and remains uncured.

 

5.            Events of Default. As used herein, the term “Event of Default” shall have the meaning assigned to such
term in the Credit Agreement.

 

6.            Remedies. Upon the occurrence and during the
continuance of an Event of Default, Agent may, at its option, take any or all
of the following actions, subject in each case to the last two sentences of
this Section 6:

 

(a)           Agent may exercise
any or all remedies available under the Credit Agreement.

 

(b)           Agent may exercise
its rights with respect to the Patents and Trademarks set forth in that certain
IP Agreement of even date herewith by and between Debtor and Agent (the “IP Agreement”).

 

The rights of Agent as
secured creditor with respect to the Patents and Trademarks following the
occurrence and during the continuance of an Event of Default are limited in all
respects to the rights of Agent under the terms of the IP Agreement.  In the event of any conflict between this
Agreement and the IP Agreement, with respect to the Patents and Trademarks, the
terms of the IP Agreement shall govern.

 

7.            Miscellaneous. This Agreement can be waived,
modified, amended, terminated or discharged, and the Security Interest can be
released, only explicitly in a writing signed by Agent. A waiver signed by
Agent shall be effective only in the specific instance and for the specific
purpose given. Mere delay or failure to act shall not preclude the exercise or
enforcement of any 

 

4

 

of Agent’s rights or remedies. All rights and remedies
of Agent shall be cumulative and may be exercised singularly or concurrently,
at Agent’s option, and the exercise or enforcement of any one such right or
remedy shall neither be a condition to nor bar the exercise or enforcement of
any other. All notices to be given to Debtor under this Agreement shall be
given in the manner and with the effect provided in the Credit Agreement. Agent
shall not be obligated to preserve any rights Debtor may have against prior parties,
to realize on the Patents and Trademarks at all or in any particular manner or
order, or to apply any cash proceeds of Patents and Trademarks in any
particular order of application. This Agreement shall be binding upon and inure
to the benefit of Debtor and Agent and their respective participants,
successors and assigns and shall take effect when signed by Debtor and
delivered to Agent, and Debtor waives notice of Agent’s acceptance hereof.
Agent may execute this Agreement if appropriate for the purpose of filing, but
the failure of Agent to execute this Agreement shall not affect or impair the
validity or effectiveness of this Agreement. A carbon, photographic or other
reproduction of this Agreement or of any financing statement signed by Debtor
shall have the same force and effect as the original for all purposes of a
financing statement. This Agreement shall be governed by the internal law of
Minnesota without regard to conflicts of law provisions. If any provision or
application of this Agreement is held unlawful or unenforceable in any respect,
such illegality or unenforceability shall not affect other provisions or
applications which can be given effect and this Agreement shall be construed as
if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and warranties
contained in this Agreement shall survive the execution, delivery and
performance of this Agreement and the creation and payment of the Indebtedness.

 

8.             THE PARTIES WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS
AGREEMENT.

 

[Signature
Page Follows.]

 

5

 

IN WITNESS WHEREOF, the parties have executed this Patent and Trademark
Security Agreement as of the date written above.

 

	
  Address for
  Notice 

  	
   

  	
  GRANITE
  CITY FOOD & BREWERY, LTD. 

  
	
  5402
  Parkdale Drive, Suite 101  

  	
   

  	
   

  	
   

  
	
  Minneapolis,
  MN 55416  

  	
   

  	
   

  	
   

  
	
  Attention:
                           

  	
   

  	
  By

  	
  /s/ James G.
  Gilbertson 

  
	
   

  	
   

  	
   

  	
  Its CFO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address for
  Notice.

  	
   

  	
  HARMONY
  EQUITY INCOME FUND, L.L.C.  

  
	
  201
  S. Phillips Ave., Suite 100

  	
   

  	
   

  	
   

  
	
  Sioux
  Falls, SD 57104  

  	
   

  	
   

  	
   

  
	
  Attention: Gene McGowan

  	
   

  	
  By

  	
  /s/ Eugene E.
  McGowan 

  
	
   

  	
   

  	
   

  	
  Its Managing
  Member

  

 

	
  STATE OF
                          

  	
  )

  
	
   

  	
  )

  
	
  COUNTY OF
                     

  	
  )

  

 

 

The foregoing instrument was acknowledged before me this     
day of March, 2009, by                                  ,
the                             
of Granite City Food & Brewery, a Minnesota corporation, on behalf of
the corporation.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  

 

STATE OF SOUTH DAKOTA)

                                               )

COUNTY OF MINNEHAHA  )

 

The foregoing instrument was acknowledged before me this 30th day of March, 2009, by Eugene E. McGowan, the
Managing Member of Harmony Equity Income Fund, L.L.C., a South Dakota limited
liability company, on behalf of the company.

 

 

	
   

  	
  /s/ Jennifer Starnes

  
	
   

  	
  Notary Public

  

 

 

EXHIBIT
A

PATENTS

 

	
  Description

  	
   

  	
  Inventor

  	
   

  	
  Assignee

  	
   

  	
  Patent
  No.

  Application

  	
   

  	
  Filed

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Method and Apparatus for
  Distributed Production of Beer

  	
   

  	
  William
  E. Burdick

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  7,214,402

  10/411,002

  	
   

  	
  4/9/2003

  
	
  Method of Production of
  Beer for Distribution

  	
   

  	
  William
  E. Burdick

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  11/800,752

  	
   

  	
  5/7/2007

  
	
  Apparatus for Distributed
  Production of Beer

  	
   

  	
  William
  E. Burdick

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  11/800,753

  	
   

  	
  5/7/2007

  

 

 

EXHIBIT
B

UNITED
STATES ISSUED TRADEMARKS, SERVICE MARKS

AND
COLLECTIVE MEMBERSHIP MARKS

 

	
  Description

  	
   

  	
  Owner/Applicant

  	
   

  	
  Filing/Registration

  Date

  	
   

  	
  Jurisdiction

  
	
  Brother Benedict’s Mai Bock

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Brother Benedict’s Mai
  Bock and design

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Duke of Wellington

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Duke of Wellington and
  design

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Fermentus Interruptus

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  2/15/2005

  10/21/2008

  	
   

  	
  United States

  
	
  GC

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  6/7/2007

  2/12/2008

  	
   

  	
  United States

  
	
  GC Granite City
  Food & Brewery & design

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  1/28/2000

  3/19/2002

  	
   

  	
  United States

  
	
  Granite City

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  6/7/2007

  2/19/2008

  	
   

  	
  United States

  
	
  Granite City
  Food & Brewery

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  6/7/2007

  2/19/2008

  	
   

  	
  United States

  
	
  Granite City Food & Brewery &
  design

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Northern Light

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Northern
  Light & design

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Pride of Pilsen

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Pride of Pilsen & design

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Victory Lager

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Victory
  Lager & design

  	
   

  	
  Granite City
  Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  MinnesotaEXHIBIT 10.5

 

IP AGREEMENT

 

This IP Agreement dated
this 30th day of
March, 2009 (“Effective Date”)
is by and between Granite City Food &
Brewery Ltd., a corporation organized and existing under the laws of
the State of Minnesota, USA (“Company”), and Harmony Equity Income Fund, L.L.C., a limited liability
company organized and existing under the laws of the State of South Dakota, USA
(“Harmony”); referred to herein as “Party”
or collectively as “Parties”.

 

RECITALS

 

WHEREAS, Company is in the business of operating
restaurants and microbreweries, and operates a restaurant and microbrewery
facility under the name “Granite City” (the “Restaurant”) at 2620 S. Louise
Avenue, Sioux Falls, South Dakota (the “Existing Location”); and

 

WHEREAS, Harmony serves as administrative agent for
certain lenders identified in a certain Bridge Loan Agreement dated of even
date herewith who are making loans (the “Loan”) to the Company in reliance on
this Agreement; and

 

WHEREAS, Harmony has been granted a lien and
mortgage on Company’s leasehold interest in the Location (the “Lease”), and a
lien and mortgage on Company’s trademarks, copyrights, works of authorship,
patents and certain know-how (the “Intellectual Property”) relating to the
Restaurant; and

 

WHEREAS, as part of the security for the Loan,
Harmony desires to obtain a license from Company to use the Intellectual
Property in connection with the operation of a restaurant and microbrewery at
the Location, and Company desires to grant the license.

 

NOW,
THEREFORE, in consideration
of the foregoing, the covenants hereinafter set forth, and for other good and
valuable consideration, the receipt, and adequacy of which are hereby
acknowledged, the Parties agree as follows:

 

AGREEMENT

 

ARTICLE
1 — DEFINITION

 

Certain terms used herein shall
have the following meanings:

 

1.1          “Agreement” shall mean this IP Agreement.

 

1.2          “Company” shall have the meaning set forth in
the preamble of this Agreement.

 

1.3          “Confidential Information” shall have the
meaning set forth in Section 4.1 of this Agreement.

 

1.4          “Default” is a Default as defined in the
Loan Agreement.

 

 

1.5          “Disclosing Party” shall have the meaning set
forth in Section 4.1 of this Agreement.

 

1.6          “Effective Date” shall have the meaning set
forth in the preamble of this Agreement.

 

1.7          “Event of Default” is an Event of Default
as defined in the Loan Agreement.

 

1.8          “Existing Location” shall have the meaning set forth in the
recitals of this Agreement.

 

1.9          “Granite City Intellectual Property” or “IP”
shall mean:

 

(i)       those
patents and patent applications, and the inventions described and claimed
therein and all reissues, re-examinations, divisions, continuations, renewals,
extensions and continuations-in-part thereof as set forth on Exhibit A
attached hereto;

 

(ii)      the
recipes, works of authorship, copyrights (whether or not registered), formats, systems, methods, procedures, rights
of publicity and moral rights (regardless of the medium of fixation or means of
expression), and standards for
establishing, developing and operating a Granite City full-service restaurant
and microbrewery, which offers to customers high quality, made-to-order food,
as the Grantor may now or in the future approve for its restaurants, as updated
from time to time by Company (the “System”),
including, unique, specially developed formats for food, beer and beverages;
specified computer systems and proprietary software; distinctive designs and
layouts; designated signage, confidential operating procedures; methods and
techniques for brewing beer, financial controls, recordkeeping, accounting and
reporting, sales promotion, marketing and advertising; hiring, training and
management of employees; and proprietary know-how developed by the Company to
integrate all of such into a marketing and sales program to provide customers a
quality dining experience, any of which characteristics may be changed,
improved, modified, added to, deleted and further developed by the Company from
time to time as the System develops or is refined; but not including third
party software or other intellectual property rights which Company has no right
to transfer or assign without the consent of the owner or licensor thereof;

 

(iii)     the
names and marks “Granite City” and “Granite City Food & Brewery®” and
all such other trademarks, service marks, logos and trade names now or
hereafter used in connection with the System, including the goodwill associated
therewith, as set forth on Exhibit B hereto.

 

1.10        “Indebtedness” means indebtedness of Company
to Harmony under the Loan Agreement.

 

1.11        “Indemnification Claim Notice” shall have the
meaning set forth in Section 6.4 of this Agreement.

 

1.12        “Indemnified Party” shall have the meaning
set forth in Section 6.4 of this Agreement.

 

1.13        “License” shall have the meaning set forth in
Section 2.1 of this Agreement.

 

1.14        “Loan Agreement” shall mean the Bridge Loan
Agreement of even date herewith between Harmony, Company and Granite City
Operations, Inc.

 

2

 

1.15        “Loan Documents” means the agreements between
Company and Company entitling relating to the Indebtedness, which grants
Harmony, among other things, the right to foreclose upon and assume Company’s
real estate and equipment leases for the Location, including, without
limitation, the Loan Agreement.

 

1.16        “Locations” shall mean the Existing Location
and the location of any other restaurants that Harmony elects to operate in the
Territory.

 

1.17        “Party/Parties” shall have the meaning set
forth in the preamble of this Agreement.

 

1.18        “Receiving Party” shall have the meaning set
forth in Section 4.1 of this Agreement.

 

1.19        “Right” shall have the meaning set forth in Section 2.1
of this Agreement.

 

1.20        “System” shall have the meaning set forth in
section (ii) of the definition of Granite City Intellectual Property.

 

1.21        “Term” shall have the meaning set forth in Section 7.1
of this Agreement.

 

1.22        “Territory” shall mean a 100 mile radius
from the Existing Location; provided, however, that if the Company currently
operates another restaurant under the name “Granite City” within such 100 mile
radius which is also operated by the Company on the date that Harmony exercises
its rights as a secured creditor under the Loan Documents, then the Territory
in the direction of such other restaurant shall be reduced to fifty (50%) of
the distance between the Existing Location and such other restaurant.

 

1.23        “Third Party Claim”
shall have the meaning set forth in Section 6.5 of this Agreement.

 

ARTICLE
2— LICENSING

 

2.1          Grant of Right
and License.  If, and only if, there
is a default under the Loan Agreement or Loan Documents and Harmony exercises
its rights as a secured creditor under the Loan Documents, Harmony immediately
shall be deemed to have acquired, and is hereby granted, without further notice
or action of any kind: (i) an undivided one (1) percent interest in
all rights of every kind and nature embodied in and to the IP (the “Right”),
wherein the Right shall be limited by and subject to the terms and conditions
set forth in this Agreement, including, without limitation, the restrictions
set forth in Section 2.2 below; and (ii) an exclusive (even as to the
Company), irrevocable and fully-paid license to use the IP to operate one or more restaurants and/or
microbrewery Locations within the Territory (the “License”), subject to the
restrictions set forth in Section 2.2 below.  Harmony shall have the right to grant
sublicenses under the Right and/or the License, provided that any such
sublicense must be consistent with the terms and conditions of this Agreement.

 

2.2          Restrictions.  The
Right and License granted pursuant to Section 2.1 shall be fully-paid and
exclusive (even as to the Company) within the Territory, and are subject only
to the following restrictions:

 

3

 

2.2.1       The Right and License permit Harmony to use
the IP upon Harmony’s (or its permitted assignee’s or sublicensee’s) succession
to the Lease and its (or its permitted assignee’s or sublicensee’s) operation
of a restaurant at the Existing Location and any additional Locations  within the Territory.

 

2.2.2       The Right and License are limited to the
operation of one or more restaurants and/or microbrewery at Locations within
the Territory, and neither Harmony nor any other party shall have any rights to
use, enjoy, or exploit the Right or the License in any manner outside the
Territory.

 

2.2.3       The Right and the License are granted only to
Harmony and its permitted sublicensees, and contractors;

 

2.2.4       The Right and the License are transferable as
set forth in Section 8.1.

 

2.3          Termination.  The Right and the License
granted under this Agreement shall terminate, and shall be deemed immediately
revoked, upon:  (i) termination of
this Agreement in accordance with its terms; or (ii) payment of the
Indebtedness and satisfaction of Company’s obligations under the Loan
Documents.

 

2.4          Bankruptcy.  Company acknowledges that if Company as
debtor-in-possession or a trustee in bankruptcy in a case under the United
States Bankruptcy Code rejects this Agreement or any agreement supplementary
hereto, Harmony may elect to retain its rights under the Agreement, or any
agreement supplementary hereto as provided in Section 365(n) of the
Bankruptcy Code.  Upon written request of
Harmony to Company or the bankruptcy trustee, Company or such bankruptcy
trustee shall not interfere with the rights of Harmony as provided in this
Agreement, or any agreement supplementary hereto.

 

2.5          Reservation of Rights.  All
rights not expressly granted by Company hereunder are reserved by Company.  Without limiting the generality of the
foregoing, the Parties expressly acknowledge that nothing contained herein
shall be construed or interpreted as a grant, by implication or otherwise, of
any licenses including implied license rights which are expressly waived by
Harmony.

 

2.6          Ownership and Maintenance of Granite City
Intellectual Property.  As between the Parties, and except as set
forth in the preceding Sections of this Article, Company is the sole and
exclusive owner of all rights and interests in and to the Granite City
Intellectual Property.  Company will
maintain and defend all intellectual property rights embodied in the Granite
City Intellectual Property during the Term, and will use its best efforts and
take any and all necessary steps to maintain any registrations that have or may
be filed or registered in the Territory. 
Upon occurrence and the continuance of a Default, if Company fails to
fulfill its obligations under this Section 2.6, Company hereby authorizes
Harmony to take any and all actions on its behalf, and execute any and all
documents and certificates in its name, that are recommended or necessary to
fulfill such obligations, at the sole cost of Company.  In all cases, registrations shall be made and
maintained at the expense and in the name of Company.  In addition to any other legal and equitable
remedies, Harmony also shall be entitled to seek injunctive relief and to have
such obligations specifically enforced by any court having equity jurisdiction.
Upon occurrence and the continuance of a Default, Company shall provide Harmony
with written notice at least sixty (60) days in advance of the applicable date
of all actions necessary to maintain or continue each patent, trademark or
copyright in

 

4

 

full
force and effect, and shall also execute any additional documents, and do such
other acts as Harmony reasonably may request in connection with Harmony’s
maintenance or continuation of the Granite City Intellectual Property as contemplated
by this Section.  Harmony agrees not to
challenge, contest, or dispute Company’s ownership interest or the validity
and/or enforceability of the Granite City Intellectual Property.

 

2.7          No Accounting.  The Parties agree that neither Party, nor its
successors and assigns, shall have any obligation to account to the other for
its use of the Granite City Intellectual Property and each Party hereby waives
any such right it would otherwise have.

 

ARTICLE
3 — QUALITY CONTROL

 

3.1          Quality Standards. 
Harmony shall use the Granite City Intellectual Property in accordance
with such reasonable guidance and written directions as are furnished to
Harmony by Company, or its representatives or agents, from time to time, if
any, but always the quality of the food and beverage products and services
shall be no less than the quality of services generally provided by the Company’s
restaurants in other locations.  Harmony
will permit duly authorized representatives of the Company to inspect the
Locations during normal business hours and upon reasonable advance notice to
Company for the purpose of ascertaining or determining compliance with this Section 3.1
in particular, and with this Agreement in general.

 

3.2          Marking.  Harmony shall comply with
Company’s reasonable written instructions pertaining to intellectual property
marking requirements, and Harmony shall not alter, remove, obliterate, or
otherwise affect such markings applied to the Granite City Intellectual
Property without Company’s approval.

 

ARTICLE
4 — CONFIDENTIALITY

 

4.1          Confidential Information. 
During the term of this Agreement, each Party (the “Receiving Party”) may be provided with,
have access to, or otherwise learn confidential and/or proprietary information
of the other Party (the “Disclosing Party”)
that is of value to the Disclosing Party, based at least in part on the fact
that the information is not generally known, and/or which is identified as
confidential at the time of disclosure, or which should reasonably be
considered, under the circumstances of its disclosure, to be confidential to
the Disclosing Party, and whether disclosed visually (such as by means of a
facility tour or facility access), orally, in writing or otherwise (“Confidential Information”).

 

4.2          Confidentiality Obligations.  As between
the parties, all Confidential Information remains the property of the
Disclosing Party.  The Receiving Party
may disclose the Confidential Information of the Disclosing Party only to its
employees, contractors and representatives who need to know the Confidential
Information for purposes of performing under this Agreement; and Receiving
Party will cause such recipients to treat the Confidential Information
confidentially and be responsible for any violation by them of the terms
hereof.  The Receiving Party will not use
the Confidential Information without the Disclosing Party’s prior written
consent except in accordance with this Agreement.  The Receiving Party will take measures to
maintain the confidentiality of the Confidential Information equivalent to
those measures the Receiving Party uses to maintain the confidentiality of its
own confidential information of like importance, but in no event less than
reasonable measures.  The Receiving Party
will give immediate notice to the Disclosing Party of any unauthorized use or
disclosure of the Confidential Information that comes to the attention of the 

 

5

 

Receiving
Party’s senior management, and agrees to assist the Disclosing Party in
remedying such unauthorized use or disclosure.

 

4.3          Exceptions.  The confidentiality
obligations do not extend to Confidential Information which:  (i) becomes part of the public domain
without the fault of the Receiving Party; (ii) is rightfully obtained by
the Receiving Party from a third party with the right to transfer such
information without obligation of confidentiality; (iii) is independently
developed by the Receiving Party without reference to or use of the Disclosing
Party’s Confidential Information, as evidenced by written records; or (iv) was
lawfully in the possession of the Receiving Party at the time of disclosure,
without restriction on disclosure, as evidenced by written records.  In addition, the Receiving Party may disclose
Confidential Information of the Disclosing Party as may be required by law, a
court order, or a governmental agency with jurisdiction, provided that before
making such a disclosure the Receiving Party first notifies the Disclosing
Party promptly and in writing and cooperates with the Disclosing Party, at the
Disclosing Party’s reasonable request and expense, in any lawful action to
contest or limit the scope of such required disclosure.

 

4.4          Return of Confidential Information.  Upon
termination or expiration of this Agreement for any reason or upon request of
the Disclosing Party, the Receiving Party will return to the Disclosing Party
all tangible copies of Confidential Information of the Disclosing Party in the
Receiving Party’s possession or control and will erase from its computer systems
all electronic copies thereof.

 

4.5          Confidentiality of the Agreement. 
Neither Party will disclose any terms of this Agreement to any third
party without the prior written consent of the other Party, except:  (i) as required by law; (ii) to its
attorneys, accountants, and other professional advisors under a duty of
confidentiality; (iii) to a third party under a duty of confidentiality in
connection with obtaining financing or a proposed merger or a proposed sale of
all or part of such Party’s business; or (iv) in connection with the
enforcement of this Agreement against the other Party.

 

ARTICLE
5 - REPRESENTATIONS, WARRANTIES, AND COVENANTS

 

5.1          Representations,
Warranties, and Covenants of Harmony.  Harmony warrants and
represents that it has the legal right and corporate authority to enter into
this Agreement, and that Harmony is not party to, or otherwise bound by, any
agreement, order, or other arrangement that would have the effect of limiting
Harmony’s ability to fully perform its respective obligations under this
Agreement.  Harmony warrants and
represents that it will comply with all laws, regulations and standards
relating or pertaining to Harmony’s performance of its obligations under this
Agreement.

 

5.2          Representations,
Warranties, and Covenants of Company.  Company hereby represents,
warrants and covenants at all times during the Term that:  (i) it has the legal right and corporate
authority to enter into this Agreement; (ii) there are no actions, suits,
claims, proceedings or governmental investigations pending or threatened
against Company with respect to the Granite City Intellectual Property before
any court or administrative agency or before any governmental department,
commission, board, bureau, agency or instrumentality, whether within or outside
of the United States; (iii) Company shall at all times maintain its rights
in the Granite City Intellectual Property in full force and effect during the
Term; (iv) to the best of Company’s knowledge, Company has the sole and
exclusive rights, title and interest in and to the Granite City Intellectual
Property; (v) to the best of Company’s knowledge, the Granite City
Intellectual Property does not and will not infringe upon the rights of any
third party; (vi) to the best of Company’s knowledge, except for the

 

6

 

Granite
City Intellectual Property, there are no other intellectual property rights
that would be required by Harmony for Harmony to exploit the Right or the
License anywhere in the Territory as contemplated herein; and (vii) there
are not, and will not be outstanding at any time, liens, claims, charges,
encumbrances, restrictions, agreements, commitments, arrangements whatsoever
with any person, or any obligation (past, present, or future), or any defaults
under, or breaches of any contract, license, or agreement that can, or will, in
any way interfere with, impair, abrogate, or adversely or otherwise affect any
of Harmony’s rights granted pursuant to this Agreement.

 

5.3          DISCLAIMER OF WARRANTIES. 
EXCEPT AS SET FORTH ABOVE IN THIS SECTION 5 OF THIS AGREEMENT, TO
THE FULL EXTENT PERMITTED BY LAW, THE LICENSE PROVIDED HEREUNDER IS ON AN “AS
IS” BASIS, AND NEITHER PARTY MAKES, AND HEREBY DISCLAIMS, ANY AND ALL OTHER
EXPRESS AND/OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, NONINFRINGEMENT, QUIET TITLE, FITNESS FOR A PARTICULAR
PURPOSE, AND ANY WARRANTIES ARISING FROM A COURSE OF DEALING, OR TRADE
PRACTICE.

 

5.4          LIMITATION ON
LIABILITY.  TO THE MAXIMUM EXTENT ALLOWED
BY LAW.  NEITHER PARTY SHALL HAVE
LIABILLITY IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, AND IN
PARTICULAR NO LIABILITY WITH RESPECT TO OBLIGATIONS UNDER THIS AGREEMENT OR
OTHERWISE FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTIA, OR PUNITIVE
DAMAGES EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  IN ANY EVENT, THE TOTAL AGGREGATE LIABILITY
OF EITHER PARTY FOR ANY REASON AND UPON ANY CAUSE OF ACTION SHALL BE LIMITED TO
$10,000.  THIS LIMITATION APPLIES TO ALL
CAUSES OF ACTION IN THE AGGREGATE (OTHER THAN FOR THE PAYMENT OF FEES AND
EXPESES HEREUNDER) INCLUDING, WITHOUT LIMITATION, TO BREACH OF CONTRACT, BREACH
OF WARRANT, NEGLIGENCE, STRICT LIABILITY, GROSS NEGLIGENCE, MISREPRESENTATIONS,
AND OTHER TORTS, EXCLUDING FOR PERSONAL INJURY AND FURTHER EXCEPTING THIRD
PARTY CLAIMS AGAINST EITHER PARTY UNDER THIS AGREEMENT.

 

5.5          BASIS FOR THE
BARGAIN.  THE PARTIES EXPRESSLY AGREE
THAT THE LIMITATIONS SET FORTH IN THIS SECTION 5 REPRESENT AN AGREED
ALLOCATION OF RISK AND SHALL SURVIVE ANY DETERMINATION BY A COURT OF COMPETENT
JURISDICTION THAT THIS AGREEMENT FAILS OF ITS ESSENTIAL PURPOSE.

 

ARTICLE
6— INFRINGEMENT AND INDEMNIFICATION MATTERS

 

6.1          Infringement
Prosecution.  Each party shall notify the other promptly in
writing of any alleged infringement and of any available evidence of
infringement or violation by a third party of the Granite City Intellectual
Property of which it becomes aware. 
Company shall diligently pursue and seek redress for any such
infringement that may have an affect upon the Right or the License at its own
cost.  Company shall keep Harmony fully
informed of the actions and positions taken by both Company and the alleged
infringer in connection with the prosecution, defense and/or settlement of such
matter.  Any royalties, payments,
damages, expenses, fees or other awards received as a result of an infringement
suit, whether through judgment or settlement, shall first be

 

7

 

used
to reimburse Company for its expenses associated with such infringement
suit.  Any award of compensatory damages
pertaining to the Restaurant remaining after reimbursement of such costs shall
be applied toward any outstanding balance owed to Harmony under the Loan
Document, and the remaining balance, if any, shall be retained by Company.   In any such dispute Harmony shall, at the
request and expense of Company, reasonably cooperate in all respects with the
prosecution of such dispute.  Harmony
shall have no right to bring or maintain any suit, action, or proceeding to
enforce the Granite City Intellectual Property, without the express written
consent of Company; provided, however, that in the event that Company fails to
fulfill its obligations under this Section 6.1, Company hereby authorizes
Harmony to take any and all actions on its behalf, and execute any and all
documents and certificates in its name, that are reasonably recommended or
necessary to fulfill such obligations, at the sole cost of Company.

 

6.2          Indemnification by
Harmony.  Harmony hereby covenants to
indemnify, defend and hold harmless
Company and its Affiliates and their respective officers, directors and
employees from and against all claims, losses, expenses (including reasonable
attorney’s fees and disbursements), costs, damages, fines, penalties, charges,
assessments, judgments, settlements, claims, causes of action and other
obligations of any nature (collectively “Losses”) whatsoever that Company may
at any time, directly or indirectly, suffer which arise from, in connection
with or incident to: (i) the breach by Harmony, or inaccuracy of, any
agreement, representation or warranty made by Harmony in this Agreement; (ii) any
claim of infringement relating to the use of the IP in violation of the terms
and conditions of this Agreement; or (iii) any Losses arising out of
Harmony’s operation of a restaurant and/or microbrewery at the Locations or
within the Territory other than in accordance with its obligations as set forth
in this Agreement.

 

6.3          Indemnification by
Company.  Subject to Sections 5.4 and 5.5, Company
hereby covenants to indemnify, defend and hold harmless Harmony and its
officers, directors, employees and affiliates from and against all Losses that
such indemnified parties may at any time, directly or indirectly, suffer which
arise from, in connection with or incident to: 
(i) any breach of this Agreement or act or omission by Company, its
employees or agents; (ii) any claim by a third party that the Granite City
Intellectual Property infringes such party’s rights; provided, however, that
Company shall have no obligation of indemnification if (i) the claim
relates to the use of the Granite City Intellectual Property in combination
with any other technology, device, method, process, or apparatus not provided
or required by Company, and such claim of infringement would have been avoided
but for the use of such combination; (ii) the Granite City Intellectual
Property is not being used in accord with the Company’s written instructions
delivered to Harmony for use, and such claim would have been avoided but for
such failure; or (iii) the Granite City Intellectual Property has been
altered, modified, or changed by Harmony without Company’s express written
permission, and such claim would have been avoided but for such unauthorized
alteration or modification.

 

6.4          Remedy for
Infringement.  As between the
Parties, Harmony’s sole and exclusive remedy for infringement shall be, at
Company’s discretion and at no cost to Harmony: (i) to modify the Granite
City Intellectual Property with a version that does not violate the third party
rights in question; (ii) obtain a license or permission to allow Harmony
to continue to use the Granite City Intellectual Property substantially as set
forth in this Agreement; or (iii) in the event that forgoing options are
not possible or practical Company may terminate this Agreement and the Right,
only to the extent necessary to remedy the infringement.  Company shall have no obligation to Harmony
for any of this foregoing unless it also has, or would have, an obligation for
indemnification as set forth in Section 7.3.

 

8

 

6.5          Notice of Claim.  The
indemnified party shall give the indemnifying party prompt written notice (an “Indemnification
Claim Notice”) of any Losses or discovery of fact upon which such indemnified
Party intends to base a request for indemnification, but in no event shall the
indemnifying Party be liable for any Losses that result from any delay in
providing such notice.  Each
Indemnification Claim Notice must contain a description of the claim and the
nature and amount of such Loss (to the extent that the nature and amount of
such Loss is known at such time).  The
indemnified Party shall furnish promptly to the indemnifying Party copies of
all papers and official documents received in respect of any Losses.  All indemnification claims in respect of a
Party, its Affiliates or their respective directors, officers, employees and
agents shall be made solely by such Party to this Agreement (the “Indemnified
Party”).

 

6.6          Third Party Claims.  The
obligations of an indemnifying Party under this Section 6 with respect to
Losses arising from claims of any third party that are subject to
indemnification as provided for in Sections 6.2 or 6.3 (a “Third Party Claim”)
shall be governed by and be contingent upon the following additional terms and
conditions:

 

6.6.1       Control
of Defense.  At its option, the Indemnifying Party may
assume the defense of any Third Party Claim by giving written notice to the
Indemnified Party within thirty (30) days after the Indemnifying Party’s
receipt of an Indemnification Claim Notice. 
The assumption of the defense of a Third Party Claim by the Indemnifying
Party shall not be construed as an acknowledgment that the Indemnifying Party
is liable to indemnify any Indemnified Party in respect of the Third Party
Claim, nor shall it constitute a waiver by the Indemnifying Party of any
defenses it may assert against any Indemnified Party’s claim for
indemnification.  Upon assuming the
defense of a Third Party Claim, the Indemnifying Party may appoint as lead
counsel in the defense of the Third Party Claim any legal counsel selected by
the Indemnifying Party.  In the event the
Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified
Party shall immediately deliver to the Indemnifying Party all original notices
and documents (including court papers) received by any Indemnified Party in
connection with the Third Party Claim. 
Should the Indemnifying Party assume the defense of a Third Party Claim,
the Indemnifying Party shall not be liable to the Indemnified Party or any
other Indemnified Party for any legal expenses subsequently incurred by such
Indemnified Party in connection with the analysis, defense or settlement of the
Third Party Claim.  In the event that it
is ultimately determined that the Indemnifying Party is not obligated to
indemnify, defend or hold harmless an Indemnified Party from and against the
Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party
for any and all costs and expenses (including attorneys’ fees and costs of
suit) and any Losses incurred by the Indemnifying Party in its defense of the
Third Party Claim with respect to such Indemnified Party.

 

6.6.2       Right
to Participate in Defense.  Any Indemnified Party shall be
entitled to participate in, but not control, the defense of a Third Party
Claim, and to employ counsel of its choice for such purpose; provided, however,
that such employment shall be at the Indemnified Party’s own expense unless (i) the
employment thereof has been specifically authorized by the Indemnifying Party
in writing or (ii) the Indemnifying Party has failed to assume the defense
and employ counsel in accordance with its obligations under this Agreement (in
which case the Indemnified Party shall control the defense).

 

9

 

6.6.3       Settlement. 
With respect to any Losses relating solely to the payment of money
damages in connection with a Third Party Claim and that will not result in the
Indemnified Party’s becoming subject to injunctive or other relief or otherwise
adversely affect the business of the Indemnified Party in any manner, and as to
which the Indemnifying Party shall have acknowledged in writing the obligation
to indemnify the Indemnified Party hereunder, the Indemnifying Party shall have
the sole right to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss, on such terms as the Indemnifying
Party, in its sole discretion, shall deem appropriate.  With respect to all other Losses in
connection with Third Party Claims, where the Indemnifying Party has assumed
the defense of the Third Party Claim in accordance with this Agreement, the
Indemnifying Party shall have authority to consent to the entry of any
judgment, enter into any settlement or otherwise dispose of such Loss provided
it obtains the prior written consent of the Indemnified Party (which consent
shall not be unreasonably withheld or delayed). 
The Indemnifying Party shall not be liable for any settlement or other
disposition of a Loss by an Indemnified Party that is reached without the
written consent of the Indemnifying Party. 
Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, no Indemnified Party shall admit any liability
with respect to, or settle, compromise or discharge, any Third Party Claim
without the prior written consent of the Indemnifying Party.

 

6.6.4       Cooperation. 
Regardless of whether the Indemnifying Party chooses to defend or
prosecute any Third Party Claim, the Indemnified Party shall, and shall cause
each other Indemnified Party to, cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, provide such
witnesses and attend such conferences, discovery proceedings, hearings, trials
and appeals as may be reasonably requested in connection therewith.  Such cooperation shall include access during
normal business hours afforded to the Indemnifying Party to, and reasonable
retention by the Indemnified Party of, records and information that are
reasonably relevant to such Third Party Claim, and making Indemnified Parties
and other employees and agents available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder, and the Indemnifying Party shall reimburse the Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith.

 

6.6.5       Expenses.  Except as
provided above, the costs and expenses, including fees and disbursements of
counsel, incurred by the Indemnified Party in connection with any claim shall
be reimbursed on a calendar quarter basis by the Indemnifying Party, without
prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s
right to indemnification and subject to refund in the event the Indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified
Party.

 

ARTICLE
7— TERM AND TERMINATION

 

7.1          Term.  Unless sooner terminated as provided in this
Agreement, the term of this Agreement shall be from the Effective Date until the
earlier of: (i) Harmony ceasing to operate a restaurant at all the
Locations following a default by Company under the Loan Documents; (ii) Company’s
payment of the Indebtedness in full; or (iii) Harmony’s delivery of
written notice to Company of Harmony’s election to terminate this Agreement
(the “Term”).

 

10

 

7.2          Termination for
Breach.  This Agreement may be
terminated by either Party in the event of any material breach of any of the
terms or conditions of this Agreement by the other Party, which breach is not
cured within sixty (60) days after the breaching Party has been provided with
written notice of such breach.

 

7.3          Survival.  The following provisions shall survive any
termination of this Agreement:  Articles
4, 5, 6, and 8.

 

ARTICLE
8— MISCELLANEOUS PROVISIONS

 

8.1          Assignability.  The Parties
hereto have entered into this Agreement as part of an integrated transaction to
secure Company’s full performance of its obligations due to Harmony under the
Loan Documents.  Harmony is
administrative agent for certain lenders under the Loan Agreement, and,
accordingly, may assign this Agreement to any successor administrative agent
under the Loan Agreement or to any lender or lenders under the Loan Agreement
upon notice to Company and without the Company’s consent.  If Company is in Default under the Loan
Agreement, and in addition to any other rights under this Agreement or in
equity, Harmony shall have the right to assign or to sublicense all or any
portion of its rights under this Agreement 
to any party without the consent of Company.

 

8.2          Notices.  All
payments, notices, demands and other communications permitted or required
hereunder shall be in writing and shall be given by personal delivery, via
facsimile transmission (receipt telephonically confirmed), by nationally
recognized overnight courier (prepaid), or by certified or registered first
class mail, postage prepaid, return receipt requested, sent to each Party, at
its address as set forth below or at such other address or in such other manner
as may be designated by such Party in written notice to each of the other
Parties.  All such notices, demands, and
communications shall be effective when personally delivered, one (1) business
day after delivery to the overnight courier, upon telephone confirmation of
facsimile transmission or upon receipt after dispatch by mail to the Party to
whom the same is so given or made:

 

	
  If to Company:

  	
   

  	
  Granite City Food & Brewery Ltd.

  
	
   

  	
   

  	
  5402 Parkdale Drive, Suite 101

  
	
   

  	
   

  	
  Minneapolis, MN 55416

  
	
   

  	
   

  	
   

  
	
  If to Harmony:

  	
   

  	
  Harmony Equity Income Fund, L.L.C.

  
	
   

  	
   

  	
  201 S. Phillips Avenue, Suite 101

  
	
   

  	
   

  	
  Sioux Falls, SD 57104

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Maslon Edelman Borman & Brand, LLP

  
	
   

  	
   

  	
  3300 Wells Fargo Center

  
	
   

  	
   

  	
  90 South 7th Street

  
	
   

  	
   

  	
  Minneapolis, Minnesota 55402

  
	
   

  	
   

  	
  Facsimile: (612) 642-8369

  
	
   

  	
   

  	
  Attn: Joseph Alexander

  

 

8.3          Choice of Law and Venue.  This Agreement, including the documents,
instruments and agreements to be executed and/or delivered by the Parties
pursuant hereto, shall be construed, 

 

11

 

governed
by and enforced in accordance with the internal laws of the State of Minnesota,
without giving effect to the principles of comity or conflicts of laws
thereof.  Each of the Parties hereto
irrevocably consents to the exclusive personal jurisdiction and venue of any
state or federal court within the State of Minnesota, United States of America,
in connection with any matter based upon or arising out of this Agreement, or
the matters contemplated herein.

 

8.4          Integration.  This
Agreement sets forth the entire agreement and understanding between the Parties
as to the subject matter hereof, and supercedes all prior and contemporaneous
discussions and understandings, oral or written between them regarding such
subject matter.  None of the Parties
shall be bound by any agreements, understandings, representations, or
warranties with respect to such subject matter hereof other than as expressly
provided herein or in a writing signed by an authorized representative of the
Party to be bound thereby.

 

8.5          Amendments.  No
purported amendment, modification or waiver of any provision of this Agreement
or any of the documents, instruments or agreements to be executed by the
Parties pursuant hereto shall be effective unless in a writing specifically
referring to this Agreement and signed by all of the Parties hereto.

 

8.6          Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective permitted
successors and authorized assigns.  In
the event of an assignment of rights and/or delegation of duties under this
Agreement, all references to Company or Harmony, as applicable to the
assignment in this Agreement shall also be deemed to be references to the
person to which this Agreement is assigned.

 

8.7          Fees and Expenses.  Each
Party hereto shall pay their own fees and expenses incurred in connection with
negotiating and preparing this Agreement and consummating the transactions
contemplated hereby, including, but not limited to fees and disbursements of
their respective counsel.  If any action
at law or in equity is brought to enforce or interpret the provisions of this
Agreement, the prevailing Party in such action shall be entitled to recover its
reasonable attorneys’ fees and costs from the non-prevailing Party.

 

8.8          Counterparts and Facsimile Signature.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same Agreement.  The counterparts of this Agreement may be
executed and delivered by facsimile signature by any of the Parties to any
other Party and the receiving Party may rely on the receipt of such document so
executed and delivered by facsimile as if the original had been received.

 

8.9          Headings.  The
headings of the articles, sections and subsections of this Agreement are
intended for the convenience of the Parties only and shall in no way be held to
explain, modify, construe, limit, amplify or aid in the interpretation of the
provisions hereof.  The terms “this
Agreement,” “hereof,” “herein,” “hereunder,” “hereto” and similar expressions
refer to this Agreement as a whole and not to any particular article, section,
subsection or other portion hereof and include the Exhibits hereto and any
document, instrument or agreement executed and/or delivered by the Parties
pursuant hereto.

 

8.10        Severability.  In the
event that any provision of this Agreement is declared or held by any court of
competent jurisdiction to be invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, 

 

12

 

the
remaining provisions of this Agreement, unless such invalid or unenforceable
provision goes to the essence of this Agreement, in which case the entire
Agreement may be declared invalid and not binding upon any of the Parties.

 

8.11        Parties in Interest. 
Nothing implied in this Agreement is intended or shall be construed to
confer any rights or remedies under or by reason of this Agreement upon any
person other than Company and Harmony and their respective representatives,
successors and permitted assigns.

 

8.12        Waiver.  The terms,
conditions, warranties, representations and indemnities contained in this
Agreement, including the documents, instruments and agreements executed and
delivered by the Parties pursuant hereto, may be waived only by a written
instrument executed by the Party waiving compliance.  Any such waiver shall only be effective in
the specific instance and for the specific purpose for which it was given and
shall not be deemed a waiver of any other provision hereof or of the same
breach or default upon any recurrence thereof. 
No failure on the part of a Party hereto to exercise and no delay in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.

 

8.13        Construction.  The Parties
have participated jointly in the negotiation and drafting of this
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. 
The words “including,” “include” or “includes” shall mean including
without limitation.  The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance.  If any Party
has breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or
covenant relating to the same subject matter (regardless of the relative levels
of specificity) which the Party has not breached shall not detract from or
mitigate the fact that the Party is in breach of the first representation,
warranty or covenant.

 

8.14        Equitable Remedies.  The
Parties hereto agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. 
It is accordingly agreed that the Parties shall be entitled to
injunctive relief, without the necessity of posting bond, to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof
in any court having jurisdiction pursuant to this Agreement, this being in
addition to any other remedy to which the non-breaching Party may be entitled
at law or in equity.

 

8.15        Force Majeure.  Neither Party shall be considered in breach
of this Agreement, or held responsible for damages caused by any delay or
default due to any cause that such party could not have avoided through the
exercise of due care; provided, however, that the Party that is, or intends to
rely, on a condition of Force Majeure provides notice to the other Party, and
the other Party shall have the right to terminate this Agreement if the
condition of Force Majeure continues for a period of sixty (60) days.

 

13

 

IN
WITNESS WHEREOF, Company and Harmony, by their authorized
representatives, have executed this Agreement as of the date set forth above.

 

	
   

  	
  GRANITE CITY FOOD &
  BREWERY LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ James G. Gilbertson

  
	
   

  	
  Title CFO

  
	
   

  	
  Date March 30, 2009

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HARMONY EQUITY INCOME FUND,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Eugene E. McGowan

  
	
   

  	
  Title Managing Member

  
	
   

  	
  Date March 30, 2009

  

 

14

 

SCHEDULE A

 

PATENTS

 

	
  Description

  	
   

  	
  Inventor

  	
   

  	
  Assignee

  	
   

  	
  Patent No.

  Application

  	
   

  	
  Filed

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Method and Apparatus for Distributed Production of Beer

  	
   

  	
  William E. Burdick

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  7,214,402 

  10/411,002

  	
   

  	
  4/9/2003

  
	
  Method of Production of Beer for Distribution

  	
   

  	
  William E. Burdick

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  11/800,752

  	
   

  	
  5/7/2007

  
	
  Apparatus for Distributed Production of Beer

  	
   

  	
  William E. Burdick

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  11/800,753

  	
   

  	
  5/7/2007

  

 

15

 

SCHEDULE B

 

UNITED STATES ISSUED TRADEMARKS, SERVICE MARKS AND COLLECTIVE
MEMBERSHIP MARKS

 

	
  Description

  	
   

  	
  Owner/Applicant

  	
   

  	
  Filing/Registration 

  Date

  	
   

  	
  Jurisdiction

  
	
  Brother Benedict’s Mai Bock

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Brother
  Benedict’s Mai Bock and design

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Duke
  of Wellington

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Duke
  of Wellington and design

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Fermentus Interruptus

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  2/15/2005 

  10/21/2008

  	
   

  	
  United States

  
	
  GC

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  6/7/2007 

  2/12/2008

  	
   

  	
  United
  States

  
	
  GC
  Granite City Food & Brewery & design

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  1/28/2000 

  3/19/2002

  	
   

  	
  United
  States

  
	
  Granite
  City

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  6/7/2007 

  2/19/2008

  	
   

  	
  United
  States

  
	
  Granite
  City Food & Brewery

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  6/7/2007 

  2/19/2008

  	
   

  	
  United
  States

  
	
  Granite City Food & Brewery & design

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Northern
  Light

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Northern
  Light & design

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Pride
  of Pilsen

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Pride of Pilsen & design

  	
   

  	
  Granite City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Victory
  Lager

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  
	
  Victory
  Lager & design

  	
   

  	
  Granite
  City Food & Brewery Ltd.

  	
   

  	
  12/17/1999

  	
   

  	
  Minnesota

  

 

 

SCHEDULE C

 

EXCLUSIONS FROM GRANITE CITY IP

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00157-of-00352.parquet"}]]