Valuation, Structure and Consideration
Pursuant to the discussions that we have had with Granite City Food & Brewery, Ltd. (the Company), DHW Leasing, L.L.C. (DHWL) and Mr. & Mrs. Donald A. Dunham, Jr. and Mr. Charles J. Hey (collectively, together with DHWL, Dunham Capital Management, L.L.C., Mr. & Mrs. Dunham and their and its affiliates, Dunham) and your teams, the following is a summary of the material terms of the undersigneds proposal to purchase $9.0 million of the Companys newly issued convertible preferred stock, arrange for a new $10 million senior lending facility for the Company, arrange for the Companys repurchase of 3,000,000 shares of Common Stock of the Company (Common Stock) that are currently held by DHWL, and assist in structuring various transactions focused on lowering the Companys res taurant occupancy costs (collectively, the Transaction).
Valuation, Structure and Consideration. At the closing of the Transaction (the Closing), Investor will purchase 3,000,000 shares of newly issued Convertible Preferred Stock (the Preferred) for $9,000,000, each share of which will be convertible into 2.0 shares of Common Stock at a conversion price of $1.50 per share (the Purchase Price) at any time upon the election of the Investor. The Preferred shall carry a dividend rate of 9.0% per annum throu gh December 31, 2013, which shall be paid quarterly at an annualized rate of 4.5% in cash and 4.5% in the form of newly issued Common Stock, with the Common Stock valued at the average closing price per share of the Common Stock for the ninety (90) trading day period immediately preceding the dividend record date. If not already converted, the Preferred shall automatically convert on December 31, 2014. On the date of conversion, the Company shall pay all accumulated but unpaid dividends on the Preferred.