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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
-------------
(Amendment No. 5)
Ground Round Restaurants, Inc.
- --------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.16-2/3 460200-10-8
per share
- ----------------------------------- -----------------------------------
(Title of class of securities) (CUSIP number)
Joseph Schollenberger
Great South Beach Improvement Co.
16 West River Road
P.O. Box 521
Rumson, NJ 07760
(908) 842-4886
- --------------------------------------------------------------------------
(Name, address and telephone number of person authorized to receive
notices and communications)
August 23, 1994
- --------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [_].
Check the following box if a fee is being paid with the statement [_].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7.)
Note: When filing this statement in paper format, six copies of this
statement, including exhibits, should be filed with the Commission. See
Rule 13d-1(a) for other parties to whom copies are to be sent.
(Continued on following page(s))
(Page 1 of 12 Pages)
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CUSIP No. 460200-10-8 13D Page of 12
1 NAME OF REPORTING PERSON: GSB Holdings, Inc.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF Delaware
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER:
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 640,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 640,000
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.8%
14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 460200-10-8 13D Page of 12
1 NAME OF REPORTING PERSON: Great South Beach Improvement Co.
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF New York
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER:
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 640,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER:
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 640,000
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [_]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5.8%
14 TYPE OF REPORTING PERSON: CO
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CUSIP No. 460200-10-8 13D Page of 12
1 NAME OF REPORTING PERSON: David H. Clarke
S.S. OR I.R.S. IDENTIFICATION NO.
OF ABOVE PERSON:
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [x]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS: Not Applicable
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [_]
REQUIRED PURSUANT TO ITEM 2(d) OR 2(e):
6 CITIZENSHIP OR PLACE OF United States
ORGANIZATION:
NUMBER OF 7 SOLE VOTING POWER: 26,467
SHARES
BENEFICIALLY 8 SHARED VOTING POWER: 640,000
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER: 26,467
REPORTING
PERSON WITH 10 SHARED DISPOSITIVE 640,000
POWER:
11 AGGREGATE AMOUNT BENEFICIALLY 666,467
OWNED BY REPORTING PERSON:
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [x]
EXCLUDES CERTAIN SHARES:
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 6.0%
14 TYPE OF REPORTING PERSON: IN
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This Statement amends and restates the Statement on Schedule
13D filed with the Securities and Exchange Commission (the
"Commission") by GSB Holdings, Inc. ("GSB"), Great South Beach
Improvement Co. ("Improvement"), and David H. Clarke (collectively
referred to herein as the "Beneficial Owners"), with respect to their
beneficial ownership of the Common Stock, par value $.16-2/3 per share
("Common Stock"), of Ground Round Restaurants, Inc., a New York
corporation (the "Company"), as previously amended by Amendments Nos.
1 through 4 thereto.
Item 1. Security and Issuer.
-------------------
This statement relates to the Common Stock issued by the
Company. The address of the principal executive office of the Company
is 35 Braintree Office Hill Park, Braintree, Massachusetts 02184-9078.
Item 2. Identity and Background.
-----------------------
(a) - (c), (f) Improvement, a New York corporation, is
principally engaged in real estate development.
GSB, a Delaware corporation, is engaged principally in the
business of holding investments. GSB is a wholly-owned subsidiary of
Improvement.
The principal business address of each of the Beneficial
Owners and the name, business address, citizenship and principal
occupation or employment of each director and executive officer of
each of the Beneficial Owners are listed on Schedule A.
(d) - (e) Neither any of the Beneficial Owners nor, to the
best of their knowledge, any of their respective directors and
executive officers has, during the last five years, (i) been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation
of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Not applicable.
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Item 4. Purpose of Transaction.
----------------------
On August 23, 1994, the Company entered into an Agreement
and Plan of Merger (the "Merger Agreement") by and among GRR, Inc.
("Parent"), GRR Acquisition Corp. ("Purchaser") and the Company. The
Merger Agreement provides that, upon the terms and subject to the
conditions set forth therein, Purchaser will merge with and into the
Company (the "Merger") and each share of Common Stock will be
converted into the right to receive $9.00 per share in cash. The
Beneficial Owners have been advised that the business address of
Parent and Purchaser is c/o 399 Ventures, Inc., 399 Park Avenue, New
York, New York 10022 and that 399 Ventures, Inc. is an affiliate of
Citicorp.
As a condition to their willingness to enter into the Merger
Agreement, GSB entered into a Shareholder Agreement, dated August 23,
1994, with Parent and Purchaser (the "Shareholder Agreement").
Pursuant to the Shareholder Agreement, GSB granted Parent and
Purchaser an option (the "Option") to purchase all of the shares of
Common Stock owned by it (the "Option Shares") at $9.00 per share.
The Option is exercisable in whole (but not in part) at any time after
(x) the Company terminates the Merger Agreement pursuant to Section
6.1(g) thereof and (y) the fair market value (as defined in the
Shareholder Agreement) of the consideration with respect to the
Qualifying Acquisition Proposal (as defined below) is or becomes less
than or equal to $10.50 per share of Common Stock. Pursuant to
Section 6.1(g) of the Merger Agreement, the Company may terminate the
Merger Agreement if it receives, prior to shareholder adoption of the
Merger Agreement, a proposal meeting certain criteria described in the
Merger Agreement regarding an acquisition or purchase of all or a
substantial portion of the Company's assets or equity, a merger or
other business combination involving the Company or certain
recapitalizations involving the Company (a "Qualifying Acquisition
Proposal"), provided that it pays the Fee and Expenses (each as
defined in the Merger Agreement) to Parent.
Pursuant to the Shareholder Agreement, Parent and Purchaser
have agreed, for the benefit of the Company's shareholders, that in
the event they acquire the Option Shares upon exercise of the Option
and the Qualifying Acquisition Proposal is not consummated, they will
to use their best efforts to consummate a merger with the Company or
other similar transaction (on terms substantially similar to the
Merger Agreement) as soon as practicable thereafter which results in
all shareholders (other than Parent and Purchaser) receiving
consideration of not less than $9.00 per share of Common Stock in cash
(the per share exercise price of the Option).
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Pursuant to the Shareholder Agreement, GSB agreed to vote
all Option Shares in favor of the Merger and in the manner specified
by Parent or Purchaser with respect to any other matter which, in
Parent or Purchaser's reasonable judgment, may contradict any
provision of the Shareholder Agreement or the Merger Agreement, make
it more difficult for or less desirable to Parent and Purchaser to
consummate the Merger or delay or hinder the consummation of the
Merger; provided, that GSB has not agreed to vote against a Qualifying
Acquisition Proposal unless the Option has been exercised and the
exercise price has been tendered to GSB (in which event Parent and
Purchaser shall have the obligation to use their best efforts to
effect a merger or similar transaction involving the Company, as
described in the preceding paragraph). In addition, GSB granted an
irrevocable proxy to Parent and Purchaser to vote all the Option
Shares as described in the preceding sentence.
In the Shareholder Agreement, GSB has also agreed not to
sell, exchange, pledge, encumber or otherwise transfer or dispose of,
or agree to sell, exchange, pledge, encumber or otherwise transfer or
dispose of, any Option Shares, or any interest therein, except upon
exercise of the Option or pursuant to the Merger Agreement. In
addition, GSB agreed to certain non-solicitation provisions.
Concurrently with the execution of the Shareholder
Agreement, HM Holdings, Inc., another shareholder of the Company,
entered into a substantially identical agreement with Parent and
Purchaser. Parent and Purchaser agreed that they would not exercise
or terminate the Option without also exercising or terminating the
option granted by HM Holdings, Inc. David H. Clarke is a director and
executive officer of HM Holdings, Inc., which is an indirect, wholly-
owned subsidiary of Hanson PLC.
A copy of the Shareholder Agreement has been filed as
Exhibit 3 to this Amendment No. 5 and is incorporated herein by
reference.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a), (b) (i) As of the date of this Amendment, GSB was the
direct beneficial owner of 640,000 shares of Common Stock, which
constitute approximately 5.8% of the 11,113,269 shares of Common Stock
outstanding as of August 23, 1994.
(ii) By virtue of its ownership of all of the outstanding
shares of capital stock of GSB, Improvement may be
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deemed to be, for purposes of this Schedule 13D, beneficial owner of
all the shares of Common Stock beneficially owned by GSB.
(iii) By virtue of his controlling interest in
Improvements, Mr. Clarke may be deemed to be, for purposes of this
Schedule 13D, beneficial owner of all the shares of Common Stock
beneficially owned by Improvements. In addition, as of the date of
this Amendment, David H. Clarke was the direct beneficial owner of
26,467 shares of Common Stock, which represent approximately 0.2% of
the outstanding Common Stock. Mr. Clarke disclaims beneficial
ownership of an aggregate of 31,600 shares of Common Stock directly
owned by his wife, Leslie M. Clarke, and children; 3,680,000 shares of
Common Stock beneficially owned by HM Holdings, Inc.; and any other
shares of Common Stock that may be beneficially owned by directors,
executive officers and/or employees of Hanson PLC and its
subsidiaries, directly or through individual employee savings plan
accounts.
(iv) As of the date of this Amendment, Leslie M. Clarke
was the direct beneficial owner of 500 shares of Common Stock, which
represent less than .01% of the outstanding Common Stock.
(c) Except as set forth above, none of the Beneficial
Owners has effected any transactions in the Common Stock during the
past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
--------------------------------------------------------
with Respect to Securities of the Issuer.
----------------------------------------
The description of the Shareholder Agreement contained in
Item 4 is incorporated in this Item 6 by reference.
GSB and the Company are parties to a Registration Rights
Agreement, dated as of August 20, 1991, which allows GSB certain
registration rights with respect to the shares of Common Stock owned
by it. The Company agreed, if requested, to include no less than
50,000 shares of Common Stock owned by GSB in any registration
statement it otherwise files (other than registration statements
relating to employee stock options). GSB agreed to observe the same
lock-ups with regard to the sale of the shares of Common Stock owned
by it as the Company agrees to, if any, in connection with such
registration statement if so requested by the managing underwriter.
The Company and GSB also
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agreed to indemnify each other for certain liabilities that may arise
in connection with any such registration statement.
Except for the agreements described or referred to in this
Item 6, and the Group Agreement filed as Exhibit 1 to this Schedule
13D, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the Beneficial Owners, as
named in Item 2, or between any of the Beneficial Owners and any
person, with respect to the securities of the Company.
Item 7. Material to be Filed as Exhibits.
--------------------------------
The following is filed herewith as an Exhibit to this
Amendment:
1. Group Agreement, dated August 26, 1994, by and among
Improvement, GSB and David H. Clarke.
2. Registration Rights Agreement, dated as of August 20,
1991, by and between GSB and the Company (incorporated by reference to
Amendment No. 4 to this Schedule 13D).
3. Shareholder Agreement, dated August 23, 1994, by and
among Parent, Purchaser and GSB Holdings, Inc.
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SIGNATURES
----------
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Dated: August 26, 1994
GREAT SOUTH BEACH IMPROVEMENT CO.
By: /s/ David H. Clarke
------------------------------
David H. Clarke
Vice President
GSB HOLDINGS, INC.
By: /s/ David H. Clarke
------------------------------
David H. Clarke
Vice President
/s/ David H. Clarke
-----------------------------------
DAVID H. CLARKE
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Schedule A
----------
1. GREAT SOUTH BEACH IMPROVEMENT CO.
Set forth below are the name, business address and position
with Great South Beach Improvement Co. ("Improvement") and the present
principal occupation or employment of each director, and executive
officer (as defined in the regulations of the Securities and Exchange
Commission (the "Commission")) of Improvement. The principal business
address of Improvement is 16 West River Road, P.O. Box 521, Rumson,
New Jersey, 07760 and, unless otherwise indicated, the business
address of each person listed below is the aforesaid address. Each
person listed below is a citizen of the United States.
Position with Improvement
and Present Principal
Name and Business Address Occupation or Employment
------------------------- ------------------------
Leslie M. Clarke . . . . . . . Director, President and
Secretary
Joseph Schollenberger . . . . . Executive Vice President
David H. Clarke . . . . . . . . Director, Vice President and
Hanson Industries Treasurer. Mr. Clarke is a
99 Wood Avenue South Director of Hanson PLC and
Iselin, NJ 08830 Deputy Chairman of Hanson
Industries
Robert J. Kennedy . . . . . . . Director and Assistant
Secretary
Virginia S. Kennedy . . . . . . Vice President
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Schedule A
----------
2. GSB HOLDINGS, INC.
Set forth below are the name, business address and position
with GSB Holdings, Inc. ("GSB") and the present principal occupation
or employment of each director and executive officer of GSB. The
principal business address of GSB and, unless otherwise indicated, the
business address of each person listed below is 16 West River Road,
P.O. Box 521, Rumson, New Jersey, 07760. Each person listed below is
a citizen of the United States.
Principal Occupation
Name Position with GSB or Employment
---- ----------------- --------------------
Leslie M. Clarke Director and See Part 1 of this
President Schedule A
David H. Clarke Director and Vice See Part 1 of this
Hanson Industries President Schedule A
99 Wood Avenue South
Iselin, NJ 08830
Robert J. Kennedy Director, Secretary See Part 1 of this
and Treasurer Schedule A
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1 Agreement, dated August 26, 1994
3 Shareholder Agreement, dated August 23, 1994
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Exhibit 1
---------
AGREEMENT
---------
In accordance with Rule 13d-1(f) under the Securities
Exchange Act of 1934, as amended, the persons named below agree to the
joint filing on behalf of each of them of the Schedule 13D (and any
amendments filed by them) with respect to the shares of the Common
Stock, $.16-2/3 par value, of Ground Round Restaurants, Inc.
Dated: August 26, 1994
GREAT SOUTH BEACH IMPROVEMENT CO.
By: /s/ David H. Clarke
--------------------------------
David H. Clarke
Vice President
GSB HOLDINGS, INC.
By: /s/ David H. Clarke
--------------------------------
David H. Clarke
Vice President
/s/ David H. Clarke
-----------------------------------
DAVID H. CLARKE
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EXECUTION COPY
--------------
SHAREHOLDER AGREEMENT
AGREEMENT (this "Agreement"), dated August 23, 1994, by and
among GRR, Inc., a Delaware corporation ("Parent"), GRR Acquisition
Corp., a New York corporation ("Purchaser"), and GSB Holdings, Inc., a
Delaware corporation ("GSB").
RECITALS
A. Parent, Purchaser and Ground Round Restaurants, Inc., a
New York corporation (the "Company"), are concurrently entering into
an Agreement and Plan of Merger of even date herewith (the "Merger
Agreement") which provides, among other things, that Purchaser will
merge with and into the Company (the "Merger"), upon the terms and
subject to the conditions set forth in the Merger Agreement.
B. As a condition to the willingness of Parent and
Purchaser to enter into the Merger Agreement, GSB has agreed to grant
Parent and Purchaser an option to purchase all of the shares of the
Company's common stock, par value $.16-2/3 per share (the "Common
Stock"), owned by it (the "Option Shares") and an irrevocable proxy
with respect to such Option Shares, upon the terms and subject to the
conditions of this Agreement.
The parties therefore agree as follows:
1. Grant of Option. GSA hereby grants to Parent and
---------------
Purchaser an option (the "Option") to purchase all of the Option
Shares in the manner and circumstance and at the purchase price set
forth in Sections 2 and 3 of this Agreement.
2. Exercise of Option.
------------------
(a) The Option may be exercised by Parent or Purchaser in
whole (but not in part) at any time after (x) the Merger Agreement has
been terminated pursuant to Section 6.1(g) thereof and (y) the fair
market value of the consideration with respect to the Qualifying
Acquisition Proposal (as such term is defined in the Merger Agreement)
is or becomes less than or equal to $10.50 per share (adjusted to
reflect any change in the issued and outstanding Common Stock by
reason of any stock dividend, split-up, recapitalization, merger or
other change in the corporate or capital structure of the Company).
The "fair market value" shall mean for non-cash consideration (x) in
the event of publicly traded securities, the average closing price for
the 10 trading days prior to the announcement of the Qualifying
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Acquisition Proposal and (y) otherwise as determined by the Company's
financial advisor.
(b) As long as this Agreement and the HMH Agreement (as
defined below) remain in full force and effect, Parent and Purchaser
(i) may not exercise the Option without also exercising the option
granted to Parent and Purchaser pursuant to that certain Shareholder
Agreement, dated the date hereof, among Parent, Purchaser and HM
Holdings, Inc., a Delaware corporation (the "HMH Agreement") and (ii)
may not terminate this Option without also terminating the option
granted pursuant to the HMH Agreement.
(c) In the event Parent or Purchaser wishes to exercise the
Option, Parent or Purchaser shall send a written notice to GSB stating
that Parent or Purchaser intends to purchase the Option Shares from
GSB and specifying the place, date and time (but not later than 10
business days from the date such notice is given) for the closing of
such purchase. Parent's or Purchaser's obligation to purchase and pay
for Option Shares upon the exercise of the Option are subject to (i)
the truth and correctness in all material respects of GSB's
representations and warranties contained in this Agreement as of the
date specified for the closing of such purchase as though then made,
(ii) the compliance by GSB in all material respects with each covenant
and agreement made by GSB in this Agreement and (iii) the expiration
or termination of any applicable waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "Hart-Scott
Act"). GSB's obligation to sell and deliver Option Shares upon
exercise of the Option is subject to (i) the expiration or termination
of any applicable waiting period under the Hart-Scott Act, (ii) the
truth and correctness of the representation made in Section 5(e) and
(iii) the compliance by Parent and Purchaser with their covenant and
agreement in Section 2(b). Upon 5 business days prior written notice
by Parent or Purchaser, GSB shall promptly take all action required to
effect all necessary filings by GSB under the Hart-Scott Act.
(d) In the event Parent or Purchaser acquires the Option
Shares and the Qualifying Acquisition Proposal is not consummated,
Parent and Purchaser agree, for the benefit of the Company's
shareholders, to use their best efforts to consummate a merger with
the Company, or other similar transaction (on terms substantially
similar to the Merger Agreement), as soon as practicable thereafter
which results in all shareholders (other than Parent and Purchaser)
receiving consideration of not less than $9.00 per share in cash
(adjusted to reflect any change in the issued and outstanding Common
Stock by reason of any stock
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dividend, split-up, recapitalization, merger or other change in the
corporate or capital structure of the Company).
3. Purchase of Option Shares. At the closing under
-------------------------
Section 2(c) of this Agreement, GSB shall deliver to Parent or
Purchaser the certificate or certificates representing the number of
Option Shares being purchased in proper form for transfer, and Parent
or Purchaser will purchase such Option Shares at a price of $9.00 per
Option Share in cash (the "Exercise Price"). Any payment made by
Parent or Purchaser pursuant to this Agreement shall be made by Parent
or Purchaser by wire transfer of immediately available funds to an
account designated by GSB.
4. Certain Option Adjustments. In the event of any change
--------------------------
in the issued and outstanding shares of Common Stock by reason of any
stock dividend, split-up, recapitalization, merger or other change in
the corporate or capital structure of the Company, Parent or Purchaser
shall be entitled to receive, upon exercise of the Option and upon
payment of the applicable Exercise Price, the stock or other
securities, cash or property which GSB received or is entitled to
receive as a consequence of such change.
5. Representations and Warranties of Parent and Purchaser.
------------------------------------------------------
Parent and Purchaser hereby represent and warrant to GSB that (a)
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power to enter into and perform this Agreement; (b)
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of New York and has the
requisite corporate power to enter into and perform this Agreement;
(c) this Agreement has been duly authorized by all necessary corporate
action on the part of Parent and Purchaser; (d) Parent and Purchaser
are not subject to or obligated under any provision of (i) their
respective certificate of incorporation or by-laws, (ii) any contract,
(iii) any license, franchise or permit, or (iv) any law, regulation,
order, judgment or decree, which would be breached or violated by its
execution, delivery and performance of this Agreement and the
consummation by it of the transactions contemplated hereby; (d) other
than in connection with or in compliance with the provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Hart-Scott Act, no authorization, consent or approval of, or filing
with, any public body, court or authority is necessary on the part of
Parent or Purchaser for the consummation by Parent and Purchaser of
the transactions contemplated by this Agreement; and (e) Parent and
Purchaser will not dispose of any acquired Option Shares in
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contravention of the Securities Act of 1933, as amended, or any
applicable state securities laws. Such representations and warranties
shall be deemed to be made again upon and as of the date of the
closing under Section 2 of this Agreement.
6. Representations and Warranties of GSB; Restriction on
-----------------------------------------------------
Transfer. GSB represents and warrants to Parent and Purchaser that
--------
(a) GSB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power to enter into and perform this Agreement, (b) this
Agreement has been duly authorized by all necessary corporate action
on the part of GSB, (c) GSB is not subject to or obligated under any
provision of (i) its certificate of incorporation or by-laws, (ii) any
contract, (iii) any license, franchise or permit or (iv) any law,
regulation, order, judgment or decree which would be breached or
violated by its execution, delivery and performance of this Agreement
and the consummation by it of the transactions contemplated hereby;
(d) other than in connection with or in compliance with the provisions
of the Exchange Act and the Hart-Scott Act, no authorization, consent
or approval of, or any filing with, any public body or authority is
necessary for consummation by GSB of the transactions contemplated by
this Agreement; (e) when delivered by GSB to Parent or Purchaser upon
exercise of the Option, good, legal and valid title in and to the
Option Shares will be vested in Parent or Purchaser, free and clear of
any claims, liens, encumbrances, security interests and charges of any
nature whatsoever except for any liens, claims or encumbrances which
may attach thereto by virtue of any contract, agreement or arrangement
to which Purchaser or Parent may be a party; and (f) the Option Shares
constitute all of the shares of the Company over which GSB possesses
dispositive or voting power. Such representations and warranties
shall be deemed to be made again upon and as of the date of the
closing under Section 2 of this Agreement. Until and unless this
Agreement has been terminated, GSB shall not sell, exchange, pledge,
encumber or otherwise transfer or dispose of, or agree to sell,
exchange, pledge, encumber or otherwise transfer or dispose of, any
Option Shares beneficially owned by GSB, or any interest therein,
except transfers to Parent and Purchaser upon exercise of the Option
or pursuant to the Merger Agreement.
7. Voting Agreement. GSB shall vote, or cause to be
----------------
voted, all Option Shares held by it as follows:
(a) in favor of the Merger at the Special Meeting (as such
term is defined in the Merger Agreement; and
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(b) in the manner specified by Parent or Purchaser from
time to time with respect to any other matter which, in Parent's
or Purchaser's reasonable judgment, may contradict any provision
of this Agreement or the Merger Agreement or may make it more
difficult for or less desirable to Parent and Purchaser to
consummate the Merger or may delay or hinder the consummation of
the Merger; provided, however, that GSB shall not vote against a
-------- -------
Qualifying Acquisition Proposal unless Parent or Purchaser first
exercises the Option and has tendered to GSB the Exercise Price
thereof.
8. Irrevocable Proxy. Additionally, GSB hereby appoints
-----------------
Parent and Purchaser and the proper officers of each of Parent and
Purchaser with full power of substitution in the premises, its proxies
to vote all Option Shares at the Special Meeting as provided above,
and hereby appoints Parent and Purchaser and the proper officers of
Parent and Purchaser, with full power of substitution in the premises,
its true and lawful attorneys-in-fact to execute one or more consents
or other instruments from time to time in order to take such actions
informally without the necessity of a meeting of the shareholders of
the Company (to the extent permitted by law and the Company's
certificate of incorporation and bylaws); provided, however, that
-------- -------
Parent or Purchaser may not use the proxy granted herein to vote
against a Qualifying Acquisition Proposal unless Parent or Purchaser
first exercises the Option and has tendered to GSB the Exercise Price
thereof.
The proxy and power of attorney granted herein shall be
-------------------------------------------------------
irrevocable during the term of this Agreement, shall be deemed to be
--------------------------------------------------------------------
coupled with an interest and shall revoke all prior proxies granted by
----------------------------------------------------------------------
GSB.
---
During the term of this Agreement, GSB shall not grant any
----------------------------------------------------------
proxy to any person which conflicts with the proxy granted herein and
---------------------------------------------------------------------
any attempt to do so shall be void.
----------------------------------
9. Expenses. All costs and expenses incurred in
--------
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
10. Non-Solicitation. GSB shall immediately cease, and
----------------
cause each of its subsidiaries, representatives, agents, advisors and
affiliates to terminate any existing activities, discussions or
negotiations previously conducted with any parties other than Parent
and Purchaser with respect to any Alternative Transaction (as defined
in the Merger Agreement) or the sale or assignment of any Option
Shares (an "Option Share Disposition");
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and GSB shall not, and shall cause each of its subsidiaries, officers,
directors, representatives, agents, advisors and affiliates not to,
solicit or encourage inquiries or proposals with respect to, or
furnish any non-public information relating to or participate in any
negotiations or discussions concerning, any Acquisition Proposal (as
defined in the Merger Agreement) or any Option Share Disposition. GSB
shall notify Parent and Purchaser promptly if any Acquisition Proposal
is received by, or any such negotiations or discussions are sought to
be initiated with, GSB or any of its subsidiaries or, to the best of
GSB's knowledge, any of its affiliates regarding an Acquisition
Proposal or an Option Share Disposition; provided, however, that this
-------- -------
Section 10 shall not restrict any individual who is a designee of GSB
on the Company's Board of Directors from taking any action in his
capacity as a director of the Company.
11. Amendment; Assignment. This Agreement may not be
---------------------
modified, amended, altered or supplemented except by a writing signed
by Parent, Purchaser and GSB. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the
prior written consent of the other parties hereto, except that the
rights and obligations of Parent and Purchaser hereunder may be
assigned by Parent and Purchaser to any of their affiliates, but no
such transfer shall relieve Parent and Purchaser of its obligations
hereunder if such transferee does not perform such obligations.
12. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given
(and, except as otherwise provided in this Agreement, shall be deemed
to have been duly given if so given) if delivered in person, by cable,
telegram or telex, or sent by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties as
follows:
If to GSB:
GSB Holdings, Inc.
10 Woodbridge Center Drive
Woodbridge, New Jersey 07095
Attention: General Counsel
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If to Parent or Purchaser:
GRR Acquisition Corp.
c/o 399 Ventures, Inc.
399 Park Avenue
New York, New York 10022
Attention: Harold O. Rosser
with a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Kirk A. Radke, Esq.
or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change
of address shall only be effective upon receipt.
13. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original,
but each of which together shall constitute one and the same document.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
15. Specific Performance. The parties hereto agree that if
--------------------
any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached,
irreparable damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the parties
shall (without the posting of bond or other security), be entitled to
obtain from any court of competent jurisdiction specific performance
of the terms hereof, in addition to any other remedy at law or equity.
16. Binding Effect. This Agreement shall be binding upon,
--------------
inure to the benefit of, and be enforceable by the successors and
assigns of the parties hereto. Nothing expressed or referred to in
this Agreement is intended or shall be construed to give any person
other than the parties to this Agreement, or their respective
successors or assigns, any legal or equitable right, remedy or claim
under or in respect of this
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Agreement or any provision contained herein other than with respect to
Section 2(d).
17. Entire Agreement. This Agreement constitutes the
----------------
entire agreement between the parties hereto with respect to the
subject matter hereof.
18. Termination. This Agreement shall terminate on the
-----------
first to occur of (i) the Expiration Date (as defined in the Merger
Agreement), (ii) the date when all the Option Shares are purchased,
(iii) the date when a Qualifying Acquisition Proposal is consummated
pursuant to which all of the Company's shareholders shall become
entitled to receive consideration the fair market value of which
exceeds $10.50 per share (adjusted to reflect any stock dividend,
split-up, recapitalization, merger or other change in the corporate or
capital structure of the Company), (iv) the valid termination of the
Merger Agreement pursuant to Section 6.1(a), 6.1(b) (provided that
--------
Parent or Purchaser is not contesting or disputing such termination or
if Parent or Purchaser is so contesting or disputing such termination,
the date such adjudication is completed), 6.1(c), 6.1(d), 6.1(e) (as
long as GSB has not breached its obligations pursuant to Section 7 or
Section 8 hereof), 6.1(f) or 6.1(h), and (v) if after exercise of the
Option, Parent or Purchaser does not tender the Exercise Price to GSB
on the date specified pursuant to Section 2(c), such date. In the
event of the termination of this Agreement, this Agreement shall
forthwith become void and there shall be no liability on the part of
Parent, Purchaser or GSB under this Agreement, except that no such
termination shall affect any party's obligations if prior to such
termination, Parent or Purchaser has exercised the Option and has
tendered to GSB the Exercise Price thereof.
19. Severability. If any term, provision, covenant or
------------
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
20. Further Assurances. GSB will, upon the request of
------------------
Parent or Purchaser, execute and deliver such documents and take such
action reasonably deemed by Parent or Purchaser to be necessary or
desirable to more effectively complete and evidence the sale and
transfer of Option Shares purchased by Parent or Purchaser pursuant to
this Agreement.
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21. Miscellaneous. The headings contained in this
-------------
Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. References to
Sections, subsections and clauses refer to Sections, subsections and
clauses of this Agreement unless otherwise stated.
* * * * *
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SHAREHOLDER AGREEMENT
Signature Page
--------------
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed on the day and year first above written.
GRR, INC.
By: /s/ Joseph Silvestri
-------------------------------------
Name: Joseph Silvestri
Title: Vice President
GRR ACQUISITION CORP.
By: /s/ Joseph Silvestri
-------------------------------------
Name: Joseph Silvestri
Title: Vice President
GSB HOLDINGS, INC.
By: /s/ David H. Clarke
-------------------------------------
Name: David H. Clarke
Title: Vice President
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