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This VOTING AGREEMENT AND IRREVOCABLE PROXY, dated as of February 8, 2011 (as amended, this "Voting Agreement") between DHW Leasing, LLC, a South Dakota limited liability company ("DHW"), the undersigned shareholders listed on Schedule A hereto ("Shareholders", and each individually, "Shareholder") of Granite City Food & Brewery Ltd., a Minnesota corporation (the "Company"), Joel C. Longtin, an individual resident in South Dakota ("Longtin"), Steven J. Wagenheim, an individual resident in Minnesota ("Wagenheim"; Longtin and Wagenheim are collectively referred to as the "Proxies" herein), and Concept Development Partners, LLC ("Investor").
WHEREAS, the Company and Investor have entered into a Stock Purchase Agreement dated the date hereof (the "Stock Purchase Agreement"), pursuant to which Investor will purchase 3,000,000 shares of newly issued convertible preferred stock from the Company (the "Preferred Stock Purchase Transaction"), and DHW, the Company, the Investor and certain other parties have entered into a Stock Repurchase Agreement dated the date hereof (the "Stock Repurchase Agreement"), pursuant to which the Company will repurchase 3,000,000 shares of its common stock from DHW (the "Stock Repurchase Transaction") (collectively, the Preferred Stock Purchase Transaction and the Stock Repurchase Transaction are referred to as the "Transactions," and the Stock Purchase Agreement and the Stock Repurchase Agreement are collectively referred to as the "Transaction Agreements"); and
WHEREAS, the Company intends to ask its shareholders to approve the Transactions, as well as an option exchange program which would permit the Company's employees to exchange certain stock options for newly issued options (the "Option Exchange Program"), at a special meeting of the Company's shareholders and will be sending a proxy statement regarding those proposals (the "Proxy Statement"); and
WHEREAS, the Company and Investor will incur substantial expenses in connection with the Transactions and may be required to pay break-up or termination fees as a result of the termination of the Transactions; and
WHEREAS, in order to induce the Company and Investor to enter into the Transaction Agreements, each of the Shareholders is willing to make certain representations, warranties, covenants and agreements with respect to the shares of common stock, par value $0.01 per share, of the Company ("Company Common Stock") beneficially owned by such Shareholder and set forth across from Shareholder's name on Schedule A hereto (the "Original Shares" and, together with any additional shares of Company Common Stock pursuant to Section 6 hereof, the "Shares").
NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Certain Definitions. In addition to terms defined elsewhere herein, capitalized terms used and not defined herein have the respective meanings ascribed to them in the Stock Purchase Agreement or the Stock Repurchase Agreement, as appropriate, which are incorporated by reference herein. For purposes of this Voting Agreement:
(a) "Affiliate" means, as to any specified Person, (i) any shareholder, equity- holder, officer, or director of such Person and their family, members or (ii) any other Person which, directly or indirectly, controls, is controlled by, employed by or is under common control with, any of the foregoing. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
(b) "Beneficially Own" or "Beneficial Ownership" with respect to any securities means having "beneficial ownership" of such securities as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including pursuant to any agreement, arrangement or understanding, whether or not in writing. Without duplicative counting of the same securities by the same holder, securities Beneficially Owned by a Person shall include securities Beneficially Owned by all other Persons with whom such Person would constitute a "group" within the meaning of Section 13(d)(3) of the Exchange Act.
(c) "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.
2. Disclosure. Each Shareholder hereby authorizes the Company to publish and disclose in the Proxy Statement and any and all other filings of the Company (including all documents and schedules filed with the SEC), and any press release or other disclosure document which the Company or Investor reasonably determines to be necessary or desirable in connection with the Transactions and the Option Exchange Program, Shareholder's identity and ownership of the Shares and the nature of Shareholder's commitments, arrangements and understandings under this Voting Agreement.
3. Voting of Company Stock. Each Shareholder hereby agrees that, during the period commencing on the date hereof and continuing until the termination of this Voting Agreement, at any meeting of the shareholders of the Company, however called, or in connection with any written consent of the shareholders of the Company, he, she or it shall vote (or cause to be voted) the Shares held by Shareholder (i) in favor of approval of the Transactions, and in favor of approval of the Option Exchange Program, and any actions required in furtherance thereof and hereof, and (ii) against any action or agreement that would result in a breach in any respect of any covenant, representation or warranty, or any other obligation or agreement, of the Company under the Stock Purchase Agreement or the Stock Repurchase Agreement or of Shareholder under this Voting Agreement. Further, no Shareholder shall enter into any agreement or understanding with any Person the effect of which would be inconsistent with or violative of any provision contained in this Section 3. Notwithstanding the foregoing, nothing in this Section 3 shall require Shareholder to exercise any options with respect to the Shares.
4. Grant of Proxy; Appointment of Proxy. Each Shareholder hereby irrevocably grants to, and appoints, Joel C. Longtin and Steven J. Wagenheim, or each of them individually, as Shareholder's proxies and attorneys-in-fact (with full power of substitution), for and in the name, place and stead of Shareholder, to vote such Shareholder's Shares, or grant a consent or approval in respect of such Shares as set forth in Section 3 hereof. Shareholder shall not have any claim against such proxies and attorneys-in-fact, for any action taken, decision made or instruc