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SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT (this "Agreement"), dated as of August 29,
1997, by and between GRR Holdings, LLC, a Delaware limited liability company
("Parent"), GRR Merger Corp. ("Sub"), a New York corporation and a wholly owned
subsidiary of Parent, and ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ (each a
"Seller" and collectively, the "Sellers").
WHEREAS, concurrently herewith, Parent, Sub and Ground Round
Restaurants, Inc. (the "Company"), a New York corporation, are entering into an
Agreement and Plan of Merger of even date herewith (the "Merger Agreement";
capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement), pursuant to which Sub agrees to make a tender offer
(the "Offer") for all outstanding shares of common stock, par value $.16 2/3 per
share (the "Shares"), of the Company, at $1.65 per share, net to the seller in
cash, to be followed by a merger (the "Merger") of Sub with and into the
Company;
WHEREAS, as of the date hereof, the Sellers beneficially own an
aggregate of 3,102,100 Shares (the "Owned Shares"); and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement and to make the Offer, Parent and Sub have required that
Sellers agree, and Sellers have agreed, to tender pursuant to the Offer all of
the Owned Shares, together with any Shares acquired after the date hereof and
prior to the termination of the Offer, whether upon the exercise of options,
conversion of convertible securities or otherwise (collectively, the "Tender
Shares"), on the terms and subject to the conditions provided for in this
Agreement;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Agreement to Tender and Vote.
1.1 Tender. Each Seller hereby agrees to validly
tender his respective Tender Shares no later than 5 business days prior to the
initial expiration of the Offer by physical delivery of the certificates for
such Tender Shares to the depositary for the Offer.
1.2 Voting. Each Seller hereby agrees that, during
the time this Agreement is in effect, at any meeting of the shareholders of the
Company, however called, he shall (a) vote his respective Tender Shares in favor
of the Merger; (b) vote his respective
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Tender Shares against any action or agreement that would result in a breach in
any material respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement; and (c) vote
his respective Tender Shares against any action or agreement (other than the
Merger Agreement or the transactions contemplated thereby) that would impede,
interfere with, delay, postpone or attempt to discourage the Merger or the
Offer, including, but not limited to: (i) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company; (ii) a sale or transfer of a material amount of assets of
the Company or any of its subsidiaries or a reorganization, recapitalization or
liquidation of the Company or any of its subsidiaries; (iii) any change in the
management or board of directors of the Company, except as otherwise agreed to
in writing by Parent and Sub; (iv) any material change in the present
capitalization or dividend policy of the Company; or (v) any other material
change in the Company's corporate structure or business.
2. Expiration. This Agreement and each Seller's obligation to
tender his respective Tender Shares provided herein shall terminate on the
earlier of (a) the consummation of the purchase of such Tender Shares and (b)
the termination of the Merger Agreement in accordance with its terms.
3. Representations and Warranties.
3.1 Representations and Warranties of Parent and
Sub. Parent and Sub hereby represent and warrant to Sellers as follows:
(a) Organization; Due Authorization. Parent is a
limited liability company duly organized, validly existing and
in good standing under the laws of Delaware. Parent has full
limited liability company power and authority to execute and
deliver this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Managing Member of Parent, and no other limited liability
company proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and constitutes a valid and
binding agreement of Parent, enforceable against Parent in
accordance with its terms.
(b) Organization; Due Authorization. Sub is a
corporation duly organized, validly existing and in good
standing under the laws of New York. Sub has full corporate
power and authority to execute and deliver this Agreement. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Sub, and no
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other corporate proceedings on the part of Sub are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
executed and delivered by Sub and constitutes a valid and
binding agreement of Sub, enforceable against Sub in
accordance with its terms.
3.2 Representations and Warranties of Sellers.
Each Seller hereby represents and warrants to Parent as follows with respect to
himself:
(a) Title. Such Seller has good and valid title to
the Owned Shares owned by him, free and clear of any lien,
charge, encumbrance or claim of whatever nature and, upon the
purchase of the Tender Shares by Sub, such Seller will deliver
good and valid title to the Tender Shares owned by him, free
and clear of any lien, charge, encumbrance or claim of
whatever nature.
(b) Ownership of Shares. On the date hereof, such
Seller owns, of record or beneficially, the number of Shares
set forth next to such Seller's name on the signature page of
this Agreement. Such Seller has sole voting power and sole
power of disposition with respect to his respective Owned
Shares, with no restrictions, subject to applicable federal
securities laws, on his rights of disposition pertaining
thereto.
(c) Power; Binding Agreement. Such Seller has the
legal capacity, power and authority to enter into and perform
all of his obligations under this Agreement. The execution,
delivery and performance of this Agreement by such Seller will
not violate any other agreement to which such Seller is a
party including, without limitation, any voting agreement,
stockholders agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Seller
and constitutes a valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms.
(d) No Conflicts. Other than in connection with or
in compliance with the provisions of the NYBCL with respect to
the transactions contemplated hereby, the Exchange Act, the
securities laws of the various states and the HSR Act, no
authorization, consent or approval of, or filing with, any
court or any public body or authority is necessary for the
consummation by such Seller of the transactions contemplated
by this Agreement. The execution, delivery and performance of
this Agreement by such Seller will not constitute a breach,
violation or default (or any event which, with notice or lapse
of time or both, would constitute a default) under or, result
in the
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termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or
result in the creation of any lien or encumbrance upon any of
the properties or assets of such Seller under, any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement
or other instrument to which such Seller is a party or by
which his respective properties or assets are bound, other
than breaches, violations, defaults, terminations,
accelerations or creation of liens and encumbrances which, in
the aggregate, would not materially impair the ability of such
Seller to perform his obligations hereunder.
4. Certain Covenants of Sellers. Each Seller hereby covenants
and agrees as follows:
4.1 Restriction on Transfer, Proxies and
Non-Interference. Such Seller hereby agrees, while this Agreement is in effect,
and except as contemplated hereby, not to (i) sell, transfer, pledge, encumber,
assign or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of his respective Owned
Shares or Tender Shares (ii) grant any proxies, deposit any shares of capital
stock of the Company into a voting trust or enter into a voting agreement with
respect to any such shares or (iii) take any action that would make any
representation or warranty of such Seller contained herein untrue or incorrect
or have the effect of preventing or disabling such Seller from performing his
obligations under this Agreement.
4.2 Additional Shares. Such Seller hereby agrees,
while this Agreement is in effect, to promptly notify Parent and Sub of the
number of new Shares acquired by such Seller, if any, after the date hereof.
5. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective the transactions
contemplated by Section 1 of this Agreement.
6. Stop Transfer Order. In furtherance of this Agreement,
concurrently herewith, each Seller shall and hereby does authorize the Company's
counsel to notify the Company's transfer agent that there is a stop transfer
order with respect to all of his respective Owned Shares and Tender Shares (and
that this Agreement places limits on the voting and transfer of such Shares),
other than transfers of Tender Shares to Sub in the Offer.
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7. Miscellaneous.
7.1 Non-Survival. The respective representations
and warranties made herein shall terminate upon the respective Seller's sale of
his Tender Shares to Sub in the Offer, other than each Seller's representation
and warranty in Section 3.2(a) which shall survive the sale of the Tender Shares
and the termination of this Agreement following such sale.
7.2 Entire Agreement; Assignment. This Agreement
(i) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and (ii) shall not be assigned by operation of law or
otherwise, provided that Parent or Sub may assign its rights and obligations
hereunder to any direct or indirect wholly owned subsidiary of Parent, but no
such assignment shall relieve Parent or Sub of its obligations hereunder if such
assignee does not perform such obligations.
7.3 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so given) by hand
delivery, telegram, telex or telecopy, by mail (registered or certified mail,
postage prepaid, return receipt requested) or by any courier service, such as
Federal Express, providing proof of delivery. All communications hereunder shall
be delivered to the respective parties at the following addresses:
To each seller as follows:
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
The Law Offices of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To Parent or Sub:
c/o Boston Ventures Management, Inc.
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
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▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.5 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
7.6 Specific Performance. Each of the parties
hereto recognizes and acknowledges that a breach by it of any covenants or
agreements contained in this Agreement will cause the other party to sustain
damages for which it would not have an adequate remedy at law for money damages,
and therefore each of the parties hereby agrees that in the event of any such
breach the aggrieved party shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
7.7 Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same Agreement.
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7.8 Descriptive Headings. This descriptive
headings used hereby are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
7.8 Severability. Whenever possible, each
provision or portion of any provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law but if any
provision or portion of any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will no affect any
other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision had
never been contained herein.
[Signatures on the following page]
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IN WITNESS WHEREOF, Parent, Sub and Sellers have caused this
Agreement to be duly executed as of the day and year first above written.
GRR HOLDINGS, LLC
By: Boston Ventures Limited Partnership V,
its Managing Member
By: Boston Ventures Company V, L.L.C.,
its General Partner
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
GRR MERGER CORP.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SELLERS
/s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Shares Owned: 1,902,100
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Shares Owned: 1,200,000
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