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EXHIBIT 10.5
AMENDMENT TO STOCKHOLDER AGREEMENT
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AMENDMENT dated as of September 12, 1996 to the Stockholder
Agreement dated as of August 1, 1991 ("Stockholder Agreement") among JUSI
HOLDINGS INC., successor in interest to HM Holdings, Inc. ("JUSI"), and GROUND
ROUND RESTAURANTS, INC. ("Company" or "GRR").
WHEREAS, in connection with GRR refinancing of its credit
facility with the Bank of New York, as Agent for the Lenders ("Lenders") (such
refinancing of the credit facility being referred to herein as the "Credit
Agreement"), the Lenders have agreed that upon delivery by JUSI of One hundred
thousand (100,000) shares of common stock of GRR to the Lenders it shall no
longer constitute an Event of Default under the Credit Agreement if U.S.
Industries, Inc., JUSI's ultimate parent corporation ("USI") and its affiliates
(i) cease to be the legal and beneficial owners of at least twenty-five percent
(25%) of the outstanding shares of capital stock of GRR, or (ii) shall fail to
have two (2) nominees serving on the Board of Directors of GRR while they own
twenty percent (20%) or more of the capital stock of GRR, and one (1) nominee
serving on the Board of Directors of GRR so long as they own ten percent (10%)
or more but less than 20% of the outstanding capital stock of GRR; and
WHEREAS, in connection with the Credit Agreement, GRR has issued
Convertible Notes (as defined in the Credit Agreement) to the Lenders, and, in
connection therewith, has entered into a Registration Rights Agreement with the
Lenders ("Registration
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Rights Agreement") whereby Lenders are granted certain demand and "piggy-back"
registration rights with respect to shares of GRR common stock issuable upon
exercise by the Lenders of their conversion rights pursuant to the Convertible
Notes and 100,000 shares of GRR common stock that may be transferred by JUSI to
the Lenders; and
WHEREAS, pursuant to the Stockholder Agreement, JUSI has certain
demand and "piggy-back" registration rights which conflict with the registration
rights granted to Lenders in the Registration Rights Agreement, and JUSI is
willing to amend the Stockholders Agreement so as to eliminate such conflict and
to enable GRR to enter into the Registration Rights Agreement with the Lenders;
and
WHEREAS, the parties desire to amend the Stockholder Agreement
so as to enable JUSI and the Company to comply with their obligations and obtain
the benefits of the Credit Agreement;
NOW, THEREFORE, in consideration of the premises and other
valuable consideration, receipt of which is hereby acknowledged, the parties
hereby agree as follows:
1. All references in the Stockholder Agreement to "HMH" shall
be deemed to mean "JUSI", and all references to the "Xxxxxx Group" shall
be deemed to mean "JUSI and its subsidiaries and affiliates."
2. JUSI hereby consents to the Registration Rights Agreement
and agrees to amend Paragraph (c)(ii) of Annex A to the Stockholder Agreement by
changing the period (".") at the end thereof to a semicolon (";") and adding the
following language at the end thereof:
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"provided, however, that if such Registration
Statement shall be filed pursuant to Paragraph
(a) hereof, and one or more of the Lenders
exercises its "piggy-back" registration rights
pursuant to Section 3(b) of the Registration
Rights Agreement, dated as of September 12, 1996,
among GRR and the Lenders, any reduction of the
number of shares sought to be registered by all
shareholders, including the initiating party
(other than GRR) shall be reduced PRO RATA in
proportion to the number of shares sought to be
registered by all such persons (other than GRR)
to the extent recommended by the managing underwriter."
3. Section 3.2(b) is hereby deleted in its entirety.
4. JUSI hereby acknowledges that GRR has complied with
Section 3.3(b) in connection with the issuance of the Convertible Notes to the
Lenders pursuant to the Credit Agreement and hereby waives its rights pursuant
to Section 3.3(b) with respect thereto.
5. Effective upon delivery by JUSI of 100,000 shares of common
stock of GRR to the Lenders in accordance with Section 6.01(k) of the Credit
Agreement, Paragraph 4 of the Stockholder Agreement shall thereupon be deleted
in its entirety.
6. In all other respects the provisions of the Stockholder
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment as of the date first above written.
JUSI Holdings Inc.:
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By: /s/ Xxxxxx X. XxxXxxx
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Name: Xxxxxx X. XxxXxxx
Title: Sr. Vice President
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Ground Round Restaurants, Inc.:
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By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Vice President
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