EXHIBIT 1
AMENDMENT TO STOCKHOLDER AGREEMENT
----------------------------------
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 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:
"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, shall be reduced
pro rata in proportion to the number of shares
--- ----
sought to be registered by all such persons 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.:
------------------
BY:
-------------------------------
NAME
-------------------------------
TITLE
GROUND ROUND RESTAURANTS, INC.:
------------------------------
By:
-------------------------------
Name
-------------------------------
Title
NYF11...:\95\78595\0001\1664\AGR0016N.300
