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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Ground Round Restaurants, Inc.
------------------------------
(Name of Issuer)
Common Stock ($0.16-2/3 par value per share)
--------------------------------------------
(Title of Class of Securities)
460200-10-8
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(CUSIP Number)
Dennis J. Shaughnessy, Managing Director
Grotech Capital Group IV, LLC
9690 Deereco Road
Timonium, Maryland 21093
(410) 560-2000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
February 21, 1997
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(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: / /
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Check the following box if a fee is being paid with this statement: / /
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Page 1 of 13 Pages
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CUSIP No. 460200-10-8 Page 2 of 13 Pages
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(1) NAME OF REPORTING PERSON: Grotech Capital Group IV,LLC
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 52-2004737
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
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WC of Grotech Partners IV, L.P.
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
/ /
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
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(7) SOLE VOTING POWER
NUMBER OF None
SHARES ---------------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY None
EACH ---------------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON None
WITH ---------------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
None
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(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
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(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
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(14) TYPE OF REPORTING PERSON*
OO (limited liability company)
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 460200-10-8 Page 3 of 13 Pages
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(1) NAME OF REPORTING PERSON: Grotech Partners IV, L.P.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 52-1846258
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(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /X/
(b) / /
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(3) SEC USE ONLY
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(4) SOURCE OF FUNDS*
WC
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(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
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(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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(7) SOLE VOTING POWER
NUMBER OF None
SHARES ---------------------------------------------------------------
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY None
EACH ---------------------------------------------------------------
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON None
WITH ---------------------------------------------------------------
(10) SHARED DISPOSITIVE POWER
None
- ------------------------------------------------------------------------------
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
None
- ------------------------------------------------------------------------------
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* / /
- ------------------------------------------------------------------------------
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
None
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(14) TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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ITEM 1. SECURITY AND ISSUER
This Statement relates to the common stock, par value $0.16-2/3 per share
("Common Stock"), of Ground Round Restaurants, Inc., a New York corporation
(the "Issuer"). The address of the principal executive offices of the Issuer
is 35 Braintree Office Hill Park, Braintree, Massachusetts 02184-9078.
This Statement is being filed on behalf of Grotech Capital Group IV, LLC
("GCG") and Grotech Partners IV, L.P. ("Grotech IV"). GCG and Grotech IV are
hereinafter collectively referred to as the "Reporting Entities".
ITEM 2. IDENTITY AND BACKGROUND
GCG, a Maryland limited liability company, which has its principal
executive offices at 9690 Deereco Road, Timonium, Maryland 21093, was formed
to act as a partner and/or member in one or more investment partnerships
and/or limited liability companies. GCG has full and sole authority to manage
and direct the investments of Grotech IV. The following persons are directors
of GCG and hold the office(s) set forth after their respective names: Frank
A. Adams, President, Dennis J. Shaughnessy, Managing Director, Hugh A.
Woltzen, Managing Director, and Stuart D. Frankel, Managing Director and
Secretary.
GCG is the general partner of Grotech IV, a limited partnership organized
in 1994 under the laws of the State of Delaware, which has its principal
executive offices at 9690 Deereco Road, Timonium, Maryland 21093. Grotech IV
is a venture capital fund organized for the purpose of investing in the
equity and equity-oriented securities of portfolio companies.
None of the Reporting Entities, and to best of their knowledge, none of
their respective directors and executive officers set forth herein has,
during the last five years, been (i) convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or (ii) 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.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Pursuant to a letter agreement, dated February 21, 1997 (the "Letter
Agreement"), U.S. Industries, Inc. ("USI") granted to GCG, or an affiliate, the
irrevocable option (the "Option") to purchase, at any time prior to Noon, March
24, 1997, 3,632,100 shares of Common Stock (the "Shares") at the per share price
of $1.75. GCG paid to USI $50,000 (the "Option Fee") for the Option.
On February 28, 1997, GCG notified USI that it does not intend to exercise
the Option, and considers the Option terminated.
Page 4 of 13 Pages
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ITEM 4. PURPOSE OF TRANSACTION
The information set forth in the response to Item 3 above is incorporated
herein by reference.
On February 24, 1997, Grotech IV and the Issuer entered into a non-binding
(except for the obligation of the Issuer, among other things, to reimburse
Grotech IV for the Option Fee and other transaction costs) letter of intent (the
"Letter of Intent"), relating to the issuance by the Issuer of up to $10 Million
in principal amount of its 12% Subordinated Debentures (the "Debentures") and
detached warrants to acquire, in the aggregate, up to 3,000,000 shares of its
Common Stock.
On February 28, 1997, Grotech IV notified the Issuer that it has determined
not to continue further with the proposed transaction described in the Letter of
Intent, and has requested reimbursement for the Option Fee, and will provide the
Issuer with invoices for other transaction costs, which in the aggregate, are
not material in amount to the Issuer.
Except as set forth above, neither of the Reporting Entities has, as of
the date hereof, any plans or proposals which relate to or would result in:
(a) the acquisition by any person of additional securities of the Issuer or
the disposition of securities of the Issuer; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquidation of securities of
the Issuer; (c) a sale or transfer of a material amount of assets of the
Issuer; (d) any change in the present management of the Issuer; (e) any
material change in the present capitalization or dividend policy of the
Issuer; (f) any other material change in the Issuer's business or corporate
structure; (g) any changes in the Issuer's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition or
control of the Issuer by any person; (h) causing the Common Stock to become
delisted from NASDAQ; (i) causing the Common Stock to become eligible for
deregistration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or (j) any action similar to any of those enumerated above.
Notwithstanding anything to the contrary contained herein, the Reporting
Entities reserve the right to change their present intentions with respect to
the matters described in this paragraph.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The response to Item 3 is incorporated herein by reference. Pursuant to Rule
13d-3 of the Securities Exchange Act of 1934, as amended, and as the result of
obtaining the Option, GCG was deemed to beneficially own 3,632,100 shares of
Common Stock upon the grant of the Option, which constituted approximately 32.5%
of the 11,173,421 shares of Common Stock reported to be outstanding by the
Issuer in its Quarterly Report on Form 10-Q for the fiscal quarter ended
December 29, 1996.
As a result of GCG's termination of the Option, GCG currently beneficially
owns no shares of Common Stock.
Page 5 of 13 Pages
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Except as set forth above, none of the Reporting Entities has effected any
transactions in the Common Stock during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
The information set forth in the responses to Items 3 and 4 above is
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1--Joint Filing Agreement
Exhibit 2--Letter agreement, dated February 21, 1997, by and between USI and
GCG.
{remainder of page intentionally left blank}
Page 6 of 13 Pages
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SIGNATURE
After reasonable 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: February 28, 1997
GROTECH CAPITAL GROUP IV, LLC
By: /s/ Dennis J. Shaughnessy
------------------------------------
Dennis J. Shaughnessy
Managing Director
SIGNATURE
After reasonable 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: February 28, 1997
GROTECH PARTNERS IV, L.P.
By: Grotech Capital Group IV, LLC, General Partner
By: /s/ Dennis J. Shaughnessy
------------------------------------
Dennis J. Shaughnessy
Managing Director
4
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EXHIBIT INDEX
Exhibit 1: Joint Filing Agreement.
Exhibit 2: Letter agreement, dated February 21, 1997,
by and between U.S. Industries, Inc. and
Grotech Capital Group IV, LLC.
Page 9 of 13 Pages
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EXHIBIT 1
JOINT FILING AGREEMENT
The undersigned each hereby agrees that the Schedule 13D to which this Joint
Filing Agreement is an Exhibit herewith and any amendments thereto relating to
the acquisition of shares of common stock, par value $0.16-2/3 per share, of
Ground Round Restaurants, Inc., a New York corporation, is filed jointly on
behalf of each such entity.
GROTECH CAPITAL GROUP IV, LLC February 28, 1997
By: /s/ Dennis J. Shaughnessy
-----------------------------------
Dennis J. Shaughnessy
Managing Director
GROTECH PARTNERS IV, L.P., February 28, 1997
By: Grotech Capital Group IV, LLC, General Partner
By: /s/ Dennis J. Shaughnessy
-----------------------------------
Dennis J. Shaughnessy
Managing Director
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EXHIBIT 2
February 21, 1997
Mr. Dennis J. Shaughnessy
Grotech Capital Group IV, LLC
9690 Deereco Road
Timonium, Maryland 21093
Dear Mr. Shaughnessy:
We understand that Grotech Capital Group IV, LLC, or an affiliate
("Grotech") is presently contemplating making an investment in debt or equity
securities of Ground Round Restaurants, Inc. ("Ground Round"), which
investment could include the purchase of some or all of the 3,632,100 shares
of Ground Round common stock (the "USI Shares") beneficially owned by U.S.
Industries, Inc. ("USI"). We understand further that in order to make a
determination whether or not to proceed with such a transaction, Grotech
desires to undertake a due diligence review of Ground Round pursuant to a
confidentiality agreement to be entered into between Grotech and Ground Round
and that, in connection therewith, Ground Round may agree to reimburse
Grotech under certain circumstances for certain out-of-pocket expenses
incurred by Grotech in connection with such due diligence review. In order to
further facilitate Grotech's due diligence efforts, please be advised that
USI hereby agrees to take the following actions:
1. USI hereby grants to Grotech an irrevocable option to purchase all,
and not less than all, of the USI Shares for a cash purchase price of $1.75
per share (the "Option"). The Option is exercisable at any time during the
period commencing on the date of this letter and ending at Noon, Eastern
Standard Time, on March 24, 1997 (the "Option Period"). Grotech may exercise
the Option by providing USI with written notice of its determination to do so
(an "Exercise Notice") at any time during the Option Period. If Grotech
exercises the Option, the closing of the purchase and sale of the USI Shares
(the "Closing") shall take place on the second business day following the
date on which Grotech delivers the Exercise Notice to USI. At the Closing,
(i) USI shall deliver (or cause to be delivered) to Grotech (x) certificates
for the USI Shares together with duly executed stock powers, and (y) a
representation and warranty solely as to USI's authority to sell the USI
Shares and USI's ownership thereof free and clear of all liens and third
party claims other than those set forth in the stockholders' agreement
between USI and Ground Round, and (ii) Grotech shall deliver (or cause to be
delivered) to USI (x) the purchase price for the USI Shares in immediately
available funds, and (y) a representation and warranty solely as to Grotech's
authority to purchase the USI Shares and Grotech's status as an "accredited
investor" purchasing the USI Shares for investment purposes and not with a
view to distributing the USI Shares in violation of U.S. securities laws.
Page 11 of 13 Pages
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2. In consideration for granting the Options, upon execution of this letter
agreement, Grotech shall pay USI the non-refundable sum of $50,000 (the "Option
Payment"). In the event Grotech exercises the Option, the Option Payment shall
be credited against the purchase price for the USI Shares to be paid by Grotech
to USI.
3. During the Option Period, USI will not sell, transfer, encumber, pledge
or otherwise dispose of the USI Shares to any person or entity other than
Grotech, or enter into any agreement or understanding to effect the same.
4. If Grotech purchases the USI Shares, Grotech will agree to be bound by
the terms and conditions of the stockholders' agreement between USI and Ground
Round, as such agreement may be amended by Grotech and Ground Round.
5. USI represents and warrants to Grotech that it has the requisite power
and authority to execute and deliver this agreement, to comply with its terms
and to consummate the transaction herein contemplated, and that this agreement
is binding upon and enforceable against USI in accordance with its terms.
6. This agreement may not be amended or supplemented, except by the written
consent of the parties hereto.
7. This agreement may be executed in counterparts, by facsimile, each of
which shall be deemed to be an original but which together shall be deemed to be
one and the same instrument.
8. The parties hereto agree that irreparable damage would occur if any of
the provisions of this agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of this agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state thereof having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
9. Ground Round filed a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") on January 23, 1997 relating to the registration of, among other
things, the USI Shares. USI agrees that during the Option Period it shall not
demand or request that Ground Round rescind or withdraw the Registration
Statement.
10. Except as otherwise provided herein, this agreement shall not confer any
rights or remedies upon any person or entity not a party to this agreement.
Page 12 of 13 Pages
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11. This agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to conflicts of law
principles thereof.
As discussed, USI will attach this letter as an exhibit to an amendment to
the Schedule 13D that USI will promptly file with the Commission.
Very truly yours,
U.S. INDUSTRIES, INC.
By: /s/George MacLean
----------------------
George MacLean, Vice
President and General Counsel
Accepted and Agreed:
GROTECH CAPITAL GROUP IV, LLC
By: /s/Dennis J. Shaughnessy
------------------------
Dennis J. Shaughnessy,
Managing Director
Page 13 of 13 Pages
