UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended:March 31, 1998 Commission File Number: 0-18590
GOOD TIMES RESTAURANTS INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
84-1133368
(I.R.S. Employer Identification No.)
601 CORPORATE CIRCLE, GOLDEN, CO 80401
(Address of principal executive offices) (Zip Code)
(303) 384-1400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Total number of shares of common stock outstanding at March
31, 1998.
1,312,705 SHARES OF COMMON STOCK, .001 PAR VALUE
<PAGE>
Form 10-QSB
Quarter Ended March 31, 1998
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - 3
March 31, 1998 and September 30, 1997
Consolidated Statements of Operations - 5
For the three months ended March 31,
1998 and 1997 and for the six months ended
March 31, 1998 and 1997
Consolidated Statements of Cash Flow - 6
For the three months ended March 31,
1998 and 1997 and for the six months
ended March 31, 1998 and 1997
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis 8
PART II - OTHER INFORMATION
ITEMS 1 through 6. 12
Signature 14
<PAGE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, September 30,
1998 1997
CURRENT ASSETS:
Cash and cash equivalent $ 430,000 $ 408,000
Receivables 34,000 81,000
Inventories 55,000 51,000
Prepaid expenses and other 95,000 11,000
Receivable from settlement of RTC Claims 0 300,000
Notes receivable 57,000 41,000
Total current assets 671,000 892,000
PROPERTY AND EQUIPMENT, at cost:
Land and building 2,607,000 2,561,000
Leasehold improvements 2,648,000 2,646,000
Fixtures and equipment 3,176,000 3,082,000
8,431,000 8,289,000
Less accumulated depreciation
and amortization (2,818,000) (2,459,000)
5,613,000 5,830,000
OTHER ASSETS:
Notes receivable 397,000 414,000
Deposits & other 21,000 56,000
418,000 470,000
TOTAL ASSETS $6,702,000 $7,192,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 26,000 $ 25,000
Short-term debt 100,000 0
Current portion of capital
lease obligations 124,000 122,000
Accounts payable 430,000 465,000
Accrued liabilities - Las Vegas 22,000 14,000
Accrued liabilities - RTC 170,000 125,000
Accrued liabilities - other 622,000 675,000
Total current liabilities 1,494,000 1,426,000
LONG-TERM LIABILITIES:
Debt 465,000 478,000
Las Vegas accrued liabilities 144,000 166,000
RTC accrued liabilities 193,000 277,000
Capital lease obligations,
net of current portion 4,000 68,000
Deferred liabilities 268,000 265,000
Total long-term liabilities 1,074,000 1,254,000
MINORITY INTERESTS IN PARTNERSHIPS 1,541,000 1,619,000
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
1,000,000 shares of Series A Convertible
Cumulative Preferred Stock issued and
outstanding as of March 31, 1998
and 1,000,000 issued and outstanding
at September 30, 1997
(liquidation preference of $513,750
includes unpaid dividends of $45,000) 10,000 10,000
<PAGE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Cont.)
March 31, September 30,
1998 1997
Common stock, $.001 par value;
50,000,000 shares authorized,
1,312,705 shares issued and
outstanding as of March 31,
1998 and 1,286,970 shares
issued and outstanding as
of September 30, 1997 6,000 6,000
Capital contributed in excess
of par value 11,836,000 11,822,000
Accumulated deficit (9,259,000) (8,945,000)
Total stockholders' equity 2,593,000 2,893,000
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $6,702,000 $7,192,000
<PAGE>
<TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET REVENUES:
Restaurant sales, net $2,982,000 $2,448,000 $6,040,000 $5,218,000
Franchise net revenues 32,000 39,000 80,000 61,000
Total revenues 3,014,000 2,487,000 6,120,000 5,279,000
RESTAURANT OPERATING EXPENSES:
Food & paper costs 1,073,000 917,000 2,151,000 1,959,000
Labor, occupancy & other 1,346,000 1,210,000 2,695,000 2,512,000
Accretion of deferred rent 10,000 12,000 20,000 24,000
Depreciation & amortization 169,000 137,000 334,000 286,000
Total restaurant operating costs 2,598,000 2,276,000 5,200,000 4,781,000
INCOME FROM RESTAURANT OPERATIONS 416,000 211,000 920,000 498,000
OTHER OPERATING EXPENSES:
Selling, general & administrative expenses 558,000 483,000 1,110,000 971,000
Loss (income) from operating RTC stores 6,000 42,000 12,000 11,000
Total other operating expenses 564,000 525,000 1,122,000 988,000
INCOME (LOSS) FROM OPERATIONS (148,000) (314,000) (202,000) (484,000)
OTHER INCOME & (EXPENSES)
Minority income (expense), net (36,000) (7,000) (81,000) (18,000)
Interest, net (15,000) (8,000) (30,000) (14,000)
Loss from RTC & Las Vegas lease liabilities (55,000) (313,000) (55,000) (313,000)
Other, net 1,000 2,000 53,000 20,000
Total other income & (expenses) (105,000) (326,000) (113,000) (325,000)
NET INCOME (LOSS) ($253,000) ($640,000) ($315,000) ($809,000)
PREFERRED STOCK DIVIDENDS IN ARREARS 20,000 15,000 45,000 25,000
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS (273,000) (655,000) (360,000) (834,000)
NET INCOME (LOSS) PER COMMON SHARE ($.21) ($0.51) ($.28) ($0.65)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 1,306,912 1,279,556 1,301,300 1,279,556
</TABLE>
<PAGE>
<TABLE>
GOOD TIMES RESTAURANTS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ($253,000) ($640,000) ($315,000) ($809,000)
Depreciation and amortization 182,000 158,000 360,000 335,000
Changes in operating assets & liabilities--
(Increase) decrease in:
Prepaids & receivables 51,000 (88,000) 262,000 (131,000)
Inventories 17,000 0 (4,000) (6,000)
Other assets 19,000 2,000 35,000 22,000
Opening expenses 0 (3,000) 0 (3,000)
(Decrease) increase in:
Accounts payable (26,000) 33,000 (36,000) 14,000
Accrued interest 0 0 0 0
Accrued property taxes 33,000 16,000 39,000 42,000
Accrued payroll & P/R taxes 2,000 8,000 (10,000) 15,000
Other accrued liabilities/deferred income 24,000 (253,000) (130,000) (44,000)
Net cash provided by (used in)
operating activity 49,000 (261,000) 201,000 (565,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Purchase) sale - FF&E, land, building
& improvements (39,000) (86,000) (142,000) 284,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt incurred (paid) 63,000 (27,000) 26,000 (649,000)
Minority interest (38,000) (9,000) (78,000) (41,000)
Paid in capital activity 0 289,000 15,000 789,000
Net cash provided by (used in) 25,000 253,000 (37,000) 99,000
financing activities
INCREASE (DECREASE) IN CASH $ 35,000 ($ 94,000) $ 22,000 ($ 182,000)
</TABLE>
<PAGE>
1. UNAUDITED FINANCIAL STATEMENTS:
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all of the normal recurring
adjustments necessary to present fairly the financial position of the
Company as of March 31, 1998, the results of its operations and its cash
flow for the three month period ended March 31, 1998 and for the six
month period ended March 31, 1998. Operating results for the three
month period ended March 31, 1998 and for the six month period ended
March 31, 1998 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1998.
The consolidated balance sheet as of September 30, 1997 is derived
from the audited financial statements, but does not include all
disclosures required by generally accepted accounting principles. As a
result, these financial statements should be read in conjunction with
the Company's Form 10-KSB for the fiscal year ended September 30, 1997.
2. REVERSE STOCK SPLIT:
On February 12, 1998, the shareholders approved a one-for-five
reverse stock split of the Company's Common Stock. All references to
number of shares, except shares authorized, and to per share information
in the consolidated financial statements have been adjusted to reflect
the reverse stock split on a retroactive basis.
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE COMPANY
General
On September 30, 1995, the Company completed the sale of Round The
Corner Restaurants, Inc. ("RTC") to Hot Concepts Management Group, L.L.C. In
October 1996, RTC filed for Chapter 11 bankruptcy. The Company entered into a
settlement agreement with RTC whereby RTC would pay the Company $300,000 in
two installments for the settlement of all of the Company's claims against
RTC. Both installments have been received as of March 31, 1998.
Effective February 24, 1998, the Company's Board of Directors approved a
Shareholder Rights Plan for the purpose of impeding any possible effort which
might be made to acquire the Company on terms that are inconsistent with its
underlying value and which would not therefore be in the best interests of the
shareholders. A copy of the Shareholder Rights Plan and Shareholder Letter
are attached hereto as Exhibits 4.1 and 4.2, respectively.
Drive Thru had twenty-seven units open at March 31, 1998, of which
eleven were franchised units, nine joint-venture units and seven company-owned
units compared to twenty-five units open at March 31, 1997, of which eleven
were franchised units, seven joint-venture units and seven company-owned
units.
During the three months ended March 31, 1998, one company-owned unit was
closed and moved to temporary storage due to the condemnation of the property
on which it was located. The Company is currently negotiating with the
condemning authority to recover condemnation proceeds which is anticipated to
offset the costs incurred to move the building and equipment as well as the
cost of all abandoned site improvements. The building and equipment will be
moved to a new location as soon as a suitable site is found.
Management anticipates that Drive Thru and its existing franchisees will
develop a total of four Good Times units in the Denver ADI in 1998.
The following presents certain historical financial information of the
operations of the Company. This financial information includes the results of
the Company and Drive Thru for the three months and six months ended March 31,
1997 and the results of the Company and Drive Thru for the three months and
six months ended March 31, 1998.
Results of Operations
Net Revenues. Net restaurant sales for the three months ended March 31,
1998 increased $534,000 (21.8%) to $2,982,000 from $2,448,000 for the same
prior year period. Increased net restaurant sales of $419,000 were
attributable to three Drive Thru units that were not open for the same prior
year period. Decreased net restaurant sales of $49,000 were attributable to
one company-owned unit that was closed in March 1998. Same store net
restaurant sales for company-owned and joint-venture units increased $164,000
or 7.1% for the three months ended March 31, 1998 from the same prior year
period. Franchise revenue decreased $7,000 for the three months ended March
31, 1998 due to a decrease in franchise fee income from the same prior year
period.
Net restaurant sales for the six months ended March 31, 1998 increased
$822,000 (15.8%) to $6,040,000 from $5,218,000 for the same prior year period.
Increased net restaurant sales of $749,000 were attributable to three Drive
Thru units that were not open for the same prior year period. Decreased net
restaurant sales of $142,000 were attributable to one joint-venture unit that
was sold to a franchisee in November 1996 and one company-owned unit that was
closed in March 1998. Same store net restaurant sales for company-owned and
joint-venture units increased $215,000 or 4.4% for the six months ended March
31, 1998 from the same prior year period. Franchise revenue increased $19,000
during the six months ended March 31, 1998 from the same prior year period due
to higher franchise royalty fees and lower franchise expenses.
<PAGE>
Food and Paper Costs. Food and paper costs decreased to 35.9% of net
restaurant sales for the three months ended March 31, 1998, compared to 37.5%
for the same prior year period. The decrease in Drive Thru's food and paper
costs is primarily attributable to menu price increases taken during the last
eight months of the fiscal year ended September 30, 1997, with less than
proportionate increases in food and paper costs.
Food and paper costs decreased to 35.6% of net restaurant sales for the
six months ended March 31, 1998 compared to 37.6% for the same prior year
period.
Income From Restaurant Operations. For the three months ended March 31,
1998, income from restaurant operations increased to $416,000 from $211,000
for the same prior year period. Drive Thru's income from restaurant operations
as a percentage of net restaurant sales increased to 13.9% for the three
months ended March 31, 1998 from 8.6% for the same prior year period.
Cash flow from restaurant operations (income from restaurant operations
plus depreciation and amortization) increased to 19.6% of net restaurant sales
for the three months ended March 31, 1998 from 14.2% for the same prior year
period.
For the six months ended March 31, 1998, income from restaurant
operations increased to $920,000 from $498,000 for the same prior year period.
Drive Thru's income from restaurant operations as a percentage of net
restaurant sales increased to 15.2% for the six months ended March 31, 1998
from 9.5% for the same prior year period.
Cash flow from restaurant operations (income from restaurant operations
plus depreciation and amortization) increased to 20.7% of net restaurant sales
for the six months ended March 31, 1998 from 15% for the same prior year
period.
The improvement in both income and cash flow from restaurants as a
percentage of net restaurant sales is a direct result of 1) management's focus
on improving restaurant labor efficiencies and restaurant expenses; 2) a
reduction in food and paper costs as a percentage of net restaurant sales due
to menu price increases; and 3) an increase in same store net restaurant
sales, which causes restaurant expenses to decrease as a percentage of net
restaurant sales.
Income (Losses) From Operations. The Company had a loss from operations
of ($148,000) in the three months ended March 31, 1998 compared to a loss from
operations of ($314,000) for the three months ended March 31, 1997. The
improvement in income from operations of $166,000 is primarily attributable to
an increase in income from restaurant operations of $205,000, offset by an
increase in advertising expenses of $59,000, an increase in general and
administrative expenses of $16,000 and a decrease in the loss from operating
RTC stores of $36,000 compared to the same prior year period. The increase in
advertising expenses is attributable to a television advertising campaign
launched in September, 1997. The general and administrative expense increase
was due to costs incurred for a proxy statement related to the one-for-five
reverse stock split and annual shareholder meeting held on February 12, 1998.
For the six months ended March 31, 1998, losses from operations
decreased to ($202,000) from ($484,000) in the same prior year period. The
improvement in income from operations of $282,000 for the six months ended
March 31, 1998 is primarily attributable to an increase in income from
restaurant operations of $422,000 offset by an increase in selling, general
and administrative expenses of $139,000 compared to the same prior year
period, primarily attributable to costs incurred for the television
advertising campaign.
Net Income (Loss). The net loss for the Company was ($253,000) for the
three months ended March 31, 1998 compared to a net loss for the Company of
($640,000) for the comparable prior year period. Minority interest expense
increased $29,000 in the three months ended March 31, 1998 from the same prior
year period. This increase was attributable to the improved income from
restaurant operations from the Colorado joint-venture units compared to the
same prior year period. Net interest expense increased $7,000 for the three
months ended March 31, 1998 from the same prior year period. The loss from
RTC and Las Vegas lease liabilities decreased $258,000 for the three months
ended March 31, 1998 compared to the same prior year period. During the three
months ended March 31, 1998 there was a loss of ($55,000) due to an increase
in the reserve for future lease liabilities from one RTC restaurant, which the
Company is currently marketing for sublease. During the three months ended
March 31, 1997, a loss of ($313,000) was due to future lease liabilities under
two leases in Las Vegas, Nevada.
For the six months ended March 31, 1998, the net loss for the Company
was ($315,000) compared to a net loss for the Company of ($809,000) from the
same prior year period. Minority interest expense increased $63,000 in the
six months ended March 31, 1998 from the same prior year period. Other income
for the six months ended March 31, 1998 increased $33,000 from the same prior
year period. Included in other income for the six months ended March 31, 1998
is a gain of $53,000 related to the sale of a long-term land investment held
by the Company.
Liquidity and Capital Resources
As of March 31, 1998, the Company and Drive Thru had $430,000 cash and
cash equivalents on hand. The Company entered into a $100,000 short-term
working capital loan during the three months ended March 31, 1998 to cover the
Company's working capital needs for the balance of the 1998 fiscal year. The
$100,000 working capital loan matures on June 1, 1998. Management is actively
negotiating the sale of one existing Drive Thru restaurant to a franchisee,
the proceeds of which will be used for increasing the Company's working
capital reserves and for the development of new restaurants. New sources of
financing will be required to augment these proceeds for the development of
additional company-owned restaurants.
The Company had a working capital deficit of ($823,000) including
$124,000 of current maturities of capital lease obligations, $100,000 in
current debt, $26,000 in current maturities of long-term debt and $192,000 of
accrued lease expenses associated with the RTC and Las Vegas lease
liabilities. Because restaurant sales are collected in cash and accounts
payable for food and paper products are paid two to four weeks later,
restaurant companies often operate with working capital deficits.
Cash flow from operating activities for the three months ended March 31,
1998 includes the receipt of $110,000 from RTC as the last installment for the
settlement of all of the Company's claims against RTC.
Cash flow from investing activities for the three months ended March 31,
1998 includes final costs of $28,000 incurred to remodel and add inside
seating to a previously closed company-owned store. The remodeled store
reopened in November, 1997.
Cash flow from financing activities for the three months ended March 31,
1998 includes proceeds of $100,000 from a short-term working capital loan
agreement entered into by the Company in February 1998.
For the six months ended March 31, 1998, cash increased $22,000. Cash
provided by operations was $201,000, cash used in investing activities was
$142,000, and cash used in financing activities was $37,000.
Cash flow from operating activities for the six months ended March 31,
1998 includes $300,000 received from RTC for the settlement of all of the
Company's claims against RTC.
Neither the Company nor Drive Thru have any bank lines of credit.
Impact of Inflation
Drive Thru has not experienced a significant impact from inflation. It
is anticipated any operating expense increases will be recovered by increasing
menu prices to the extent that is prudent considering competition.
Seasonality
Revenues of Drive Thru are subject to seasonal fluctuation based
primarily on weather conditions adversely affecting restaurant sales in
January, February and March.
<PAGE>
GOOD TIMES RESTAURANTS INC. & SUBSIDIARIES
Part II. - Other Information
Item 1. - Legal Proceedings
O'Brien v. Harkins and Good Times Drive Thru Inc. On September 11,
1997, Amy Colleen O'Brien ("O'Brien") filed a complaint in the Colorado
District Court for Jefferson County alleging that she, as a former employee of
Drive Thru in 1995, was physically assaulted by co-defendant Richard Everett
Harkins, a former Drive Thru employee, and that Drive Thru was responsible for
any resulting injuries because of its alleged negligent hiring and supervision
of Harkins. It is Drive Thru's position that the exclusive remedy for
O'Brien's claims are those remedies available pursuant to the Colorado
Worker's Compensation Act with respect to which the Company has insurance.
Accordingly, the Company requested that its applicable worker's compensation
insurance carrier concede coverage and provide a defense to this action.
During the period for which this report is filed, the insurance carrier
acknowledged its agreement with Drive Thru's position that the exclusive
remedy for O'Brien's claims are those remedies available pursuant to the
Colorado Worker's Compensation Act, but denied that the Company is entitled to
either coverage or a defense to this action. Accordingly, the Company has
filed a declaratory judgment action against the insurance carrier requesting a
determination that the Company is entitled to coverage in a defense to this
action. Irrespective of such determination, the Company intends to vigorously
defend all claims brought by O'Brien against the Company.
Item 2. - Changes in Securities
On February 12, 1998, the date of the Company's annual shareholder's
meeting, a one-for-five reverse split was approved. The reverse split was
necessary to meet the revised listing requirements for continued listing on
the NASDAQ stock exchange.
Item 3. - Defaults Upon Senior Securities
None.
Item 4. - Submission of Matters to a Vote of Security Holders
On February 12, 1998, a one-for-five reverse split of the Company's
Common Stock was approved at its Annual Shareholders Meeting. The Board of
Directors of the Company believed it was advisable and in the best interests
of the Company to reverse split the Company's issued and outstanding shares of
common stock on the basis of one share for each five shares of issued and
outstanding or held as treasury stock (the "Reverse Split"). The purpose of
the Reverse Split was to meet the new Nasdaq requirement of maintaining a
minimum bid price of $1.00 per share in order to continue as a trading
company on The Nasdaq SmallCap Market System. Results of this matter are as
follows:
FOR AGAINST ABSTAIN NOT VOTED
7,715,292 194,429 32,021 2,687
<PAGE>
The election of directors of the Company was also voted upon at the
Annual Shareholders Meeting. The results of this matter are as follows:
FOR WITHHOLD
GEOFFREY R. BAILEY 7,769,040 175,389
DAN W. JAMES, II 7,777,540 166,889
BOYD E. HOBACK 7,741,679 202,750
RICHARD J. STARK 7,776,340 168,089
THOMAS P. MCCARTY 7,775,129 169,300
ALAN A. TERAN 7,772,329 172,100
DAVID E. BAILEY 7,771,540 172,889
Item 5. - Other Information
None.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibit 4.1: Shareholder Rights Plan dated February 24, 1998.
(b) Exhibit 4.2: Letter to Shareholders dated April 30, 1998
regarding Shareholder Rights Plan.
(c) No reports on Form 8-K.
<PAGE>
SIGNATURE
Pursuant to the requirements of The Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOOD TIMES RESTAURANTS INC.
DATE: April 29, 1998 BY: /s/ Boyd E. Hoback, President
and Chief Executive Officer
Boyd E. Hoback, President
and Chief Executive Officer
BY: /s/ Susan Knutson, Controller
Susan Knutson, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 430000
<SECURITIES> 0
<RECEIVABLES> 34000
<ALLOWANCES> 0
<INVENTORY> 55000
<CURRENT-ASSETS> 671000
<PP&E> 8431000
<DEPRECIATION> 2818000
<TOTAL-ASSETS> 6702000
<CURRENT-LIABILITIES> 1494000
<BONDS> 0
0
10000
<COMMON> 6000
<OTHER-SE> 2593000
<TOTAL-LIABILITY-AND-EQUITY> 6702000
<SALES> 2982000
<TOTAL-REVENUES> 3014000
<CGS> 1073000
<TOTAL-COSTS> 2598000
<OTHER-EXPENSES> 564000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (15000)
<INCOME-PRETAX> (253,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (253,000)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
</TABLE>
GOOD TIMES RESTAURANTS INC.
SHAREHOLDER RIGHTS PLAN
Dated as of February 24, 1998
<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . 1
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . 1
Section 2. Rights . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3. Exercise of Rights; Purchase Price; Expiration Date
of Rights. . . . . . . . . . . . . . . . . . . . . . . 4
Section 4. Company Covenants Concerning Shares and Rights 4
Section 5. Record Date. . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Adjustment of Purchase Price, Number and Type of
Shares or Number of Rights . . . . . . . . . . . . . . 5
Section 7. Certificate of Adjusted Purchase Price or Number of
Shares . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power . . . . . . . . . . . . . . . . . . . 11
Section 9. Fractional Rights and Fractional Shares. . . . . . . . 13
Section 10. Agreement of Rights Holders. . . . . . . . . . . . . . 14
Section 11. Redemption . . . . . . . . . . . . . . . . . . . . . . 14
Section 12. Notice of Certain Events . . . . . . . . . . . . . . . 15
Section 13. Notices. . . . . . . . . . . . . . . . . . . . . . . . 16
Section 14. Supplements and Amendments . . . . . . . . . . . . . . 16
Section 15. Successors; Certain Covenants. . . . . . . . . . . . . 16
Section 16. Severability . . . . . . . . . . . . . . . . . . . . . 16
Section 17. Governing Law. . . . . . . . . . . . . . . . . . . . . 16
Section 18. Descriptive Headings . . . . . . . . . . . . . . . . . 16
Exhibit A. Form of Right Certificate
<PAGE>
SHAREHOLDER RIGHTS PLAN
This Shareholder Rights Plan (the "Plan") of Good Times Restaurants
Inc., a Nevada corporation (the "Company"), is made effective as of
the 24th day of February, 1998.
RECITALS
On February 24, 1998 the Board of Directors of the Company
authorized and declared a dividend distribution of one right
("Right") for each share of Common Stock, $.001 par value, of the
Company (a "Common Share") outstanding as of the close of business
on February 24, 1998 (the "Record Date"), with each Right initially
representing the right to purchase one Common Share, upon the terms
and subject to the conditions hereinafter set forth, and further
authorized the issuance of one Right with respect to each Common
Share issued or delivered by the Company after the Record Date but
prior to the Distribution Date (as hereinafter defined);
Section 1. Certain Definitions. For purposes of this Plan, the
following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (other than the
Company or any Related Person) who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial
Owner of twenty percent or more of the Common Shares then
outstanding; provided however that (i) any Person who or which,
together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of twenty percent or more of the Common Shares
then outstanding in connection with a transaction or series of
transactions approved prior to such transaction or transactions by
the Board of Directors of the Company shall not be deemed an
Acquiring Person by virtue of such transactions or series of
transactions, and (ii) a Person shall not be deemed to have become
an Acquiring Person solely as a result of a reduction in the number
of Common Shares outstanding, unless subsequent to such reduction
such Person or any Affiliate or Associate of such Person shall
become the Beneficial Owner of any additional Common Shares other
than as a result of a stock dividend, stock split or similar
transaction effected by the Company in which all shareholders are
treated equally.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the
Exchange Act, as in effect on the date of this Plan.
(c) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to
acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or
upon the exercise of conversion rights, exchange rights,
rights (other than the Rights), warrants or options, or
otherwise; provided however that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange; or
(ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote
or dispose of, including pursuant to any agreement,
arrangement or understanding (whether or not in writing); or
(iii) of which any other Person is the Beneficial
Owner if such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding
(whether or not in writing) with such other Person (or any of
such other Person's Affiliates or Associates) with respect to
acquiring, holding, voting or disposing of any securities of
the Company other than pursuant to a revocable proxy or a
securities underwriting arrangement.
(d) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of
Colorado are authorized or obligated by law or executive order to
close.
(e) "Close of Business" on any given date shall mean 5:00
p.m., Mountain Time, on such date; provide however, that if such
date is not a Business Day it shall mean 5:00 p.m., Mountain Time,
on the next succeeding Business Day.
(f) "Common Shares" when used with reference to the Company
shall mean the Common Stock, $.001 par value, of the Company;
provided, however, that, if the Company is the continuing or
surviving corporation in a transaction described in Section
6(a)(ii) or Section 8(a)(ii) hereof, "Common Shares" when used with
reference to the Company shall mean the capital stock or equity
security with the greatest aggregate voting power of the Company.
"Common Shares" when used with reference to any corporation or
other legal entity, other than the Company, including an Issuer (as
defined in Section 8(b) hereof), shall mean the capital stock or
equity security with the greatest aggregate voting power of such
corporation or other legal entity.
(g) "Company" shall mean Good Times Restaurants Inc., a
Nevada corporation.
(h) "Distribution Date" shall mean the earlier of:
(i) the Close of Business on the twentieth calendar day
(or if the Share Acquisition Date results from the
consummation of a Permitted Offer, such later date as may be
determined by the Company's Board of Directors before the
Distribution Date) after the Share Acquisition Date; or
(ii) the Close of Business on the twentieth calendar
day (or such later date as may be specified by the Board of
Directors prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement of a
tender or exchange offer (as determined by reference to Rule
14d-2(a) under the Exchange Act) by any Person (other than the
Company or any Related Person), the consummation of which
could result in beneficial ownership by such Person of twenty
percent or more of the outstanding Common Shares (including
any such date which is after the date of this Plan and prior
to the issuance of the Rights).
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Expiration Date" shall mean the earlier of (i) the
Close of Business on the Final Expiration Date and (ii) the time at which
the Rights are redeemed as provided in Section 11 hereof.
(k) "Final Expiration Date" shall mean December 31, 1999.
(1) "Flip-in Event" shall mean any event described in clauses
(A), (B) or (C) of Section 6(a)(ii) hereof.
(m) "Flip-over Event" shall mean any event described in
subsections (i), (ii) or (iii) of Section 8(a) hereof.
(n) "Issuer" shall have the meaning set forth in Section 8(b)
of this Plan.
(o) "NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotation System.
(p) "Permitted Offer" shall mean a tender offer or an
exchange offer for all outstanding shares of Common Stock at a
price and on terms for all outstanding shares of Common Stock
determined by at least a majority of the members of the Board of
Directors who are not officers or employees of the Company and who
are not representatives, nominees, Affiliates or Associates of an
Acquiring Person to be (a) that are fair to stockholders (taking
into account all factors that such members of the Board deem
relevant including, without limitation, prices that could
reasonably be achieved if the Company or its assets were sold on an
orderly basis designed to realize maximum value) and (b) otherwise
in the best interests of the Company and its stockholders.
(q) "Person" shall mean any individual, firm, corporation,
partnership or other legal entity, and shall include any successor
(by merger or otherwise) of such entity.
(r) "Purchase Price" shall mean initially $20.00 per share of
Common Stock and shall be subject to adjustment from time to time
as provided in this Plan.
(s) "Redemption Price" shall mean $.001 per Right, subject to
adjustment by resolution of the Board of Directors of the Company
to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof.
(t) "Related Person" shall mean (i) any Subsidiary of the
Company or (ii) any employee benefit or stock ownership plan of the
Company or any entity holding Common Shares for or pursuant to the
terms of any such plan.
(u) "Right" shall have the meaning set forth in the Recitals
to this Plan.
(v) "Right Certificates" shall mean certificates evidencing
the Rights, in substantially the form of Exhibit A attached hereto.
(w) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(x) "Share Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person (by press
release, filing made with the Securities and Exchange Commission or
otherwise) that an Acquiring Person has become such.
(y) "Subsidiary" of any Person shall mean any corporation or
other legal entity of which a majority of the voting power of the
voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
(z) "Trading Day" shall mean any day on which the principal
national securities exchange or other transaction reporting system
on which the Common Shares are listed or admitted to trading is
open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities
exchange, a Business Day.
(aa) "Triggering Event" shall mean any Flip-in Event or
Flip-over Event.
Section 2. Rights. (i) The Rights will be evidenced by the
certificates representing Common Shares registered in the names of
the record holders thereof (which certificates representing Common
Shares shall also be deemed to be Right Certificates) and not by
separate Right Certificates, (ii) the Rights will be transferable
only in connection with the transfer of the underlying Common
Shares, and (iii) the transfer of any certificates evidencing Com-
mon Shares shall also constitute the transfer of the Rights
associated with the Common Shares evidenced by such certificates.
Section 3. Exercise of Rights; Purchase Price; Expiration Date Of
Rights.
(a) Until the Distribution Date, the registered holder of any
Right may exercise such Right by written notice to the Company of
such exercise together with payment of the Purchase Price for the
Common Share as to which such Right is exercised. The Purchase
Price shall be payable in lawful money of the United States of
America by certified check or bank draft payable to the order of
the Company.
(b) Subject to Section 6(a)(ii) hereof, upon the exercise of
a Right and payment as described above, the Company shall promptly
(i) requisition from any transfer agent of the Common Shares
certificates representing the number of Common Shares to be
purchased and the Company hereby irrevocably authorizes its
transfer agent to comply with all such requests, (ii) after receipt
of such certificates cause the same to be delivered to or upon the
order of the registered holder of such Right, registered in such
name or names as may be designated by such holder, (iii) if
appropriate, deliver to or upon the order of the registered holder
of such Right the amount of cash to be paid in lieu of the issuance
of fractional shares in accordance with Section 9 hereof or in lieu
of the issuance of Common Shares in accordance with Section
6(a)(iii) hereof, and (iv) deliver any due bill or other instrument
to the registered holder of such Right as provided by Section 6(l)
hereof.
(c) Notwithstanding anything in this Plan to the contrary,
the Rights shall not be exercisable in any jurisdiction if the
requisite qualification or registration in such jurisdiction shall
not have been effected or the exercise of the Rights shall not be
permitted under applicable laws, including but not limited to the
Securities Act and applicable state securities laws.
Section 4. Company Covenants Concerning Shares and Rights. The
Company covenants and agrees that:
(a) It will cause to be reserved and kept available out of
its authorized and unissued Common Shares the number of Common
Shares that will be sufficient to permit the exercise pursuant to
Section 3 hereof of all outstanding Rights.
(b) So long as the Common Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon the exercise of the
Rights may be listed on a national securities exchange or other
transaction reporting system, it will endeavor to cause, from and
after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange or system
upon official notice of issuance.
(c) It will take all such action as may be necessary to
ensure that all Common Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) delivered
upon exercise of Rights, at the time of delivery of the
certificates for such shares, shall be (subject to payment of the
Purchase Price) duly and validly authorized and issued, fully paid
and nonassessable shares, free and clear of any liens, encumbrances
or other adverse claims and not subject to any rights of call or
first refusal.
(d) It will pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Rights or of any Common Shares (or
other securities, as the case may be) upon the exercise of Rights;
provided however that it will not be required to pay any transfer
tax or charge which may be payable in respect of any transfer,
issuance or delivery of certificates representing Common Shares (or
other securities, as the case may be).
(e) It will use its best efforts to (i) file on an
appropriate form, as soon as practicable following the later to
occur of a Triggering Event or the Distribution Date, a
registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such
securities, or (B) the Expiration Date. The Company will also take
such action as may be appropriate under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in
connection with the exercisability of the Rights; provided however
that the Company may temporarily suspend the exercisability of the
Rights in order to prepare and file such registration statement and
permit it to become effective and upon any such suspension, the
Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no
longer in effect.
(f) Notwithstanding anything in this Plan to the contrary,
the Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 11 or Section 14
hereof, take (or permit any Subsidiary to take) any action if at
the time such action is taken it is reasonably foreseeable that
such action will diminish or otherwise eliminate the benefits
intended to be afforded by the Rights.
(g) In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other
property pursuant to Sections 6 and 8 hereof, it will make all
arrangements necessary so that such other securities, cash and/or
property are available for distribution, if and when appropriate.
Section 5. Record Date. Each Person in whose name any certificate
representing Common Shares (or other securities, as the case may
be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Common Shares (or
other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights
were duly exercised hereunder and payment of the Purchase Price
(and all applicable transfer taxes) was made. Prior to the
exercise of a Right, the holder of such Right shall not be entitled
by virtue thereof to any rights of a shareholder of the Company
with respect to securities for which the Right shall be
exercisable, including without limitation the right to vote,
receive dividends or other distributions or exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company except as provided herein.
Section 6. Adjustment of Purchase Price, Number and Type of Shares
or Number of Rights. The Purchase Price, the number and kind of
shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this
Section 6.
(a) (i) In the event that the Company shall at any time
after the date of this Plan (A) declare a dividend on the
Common Shares payable in Common Shares, (B) subdivide the
outstanding Common Shares, (C) combine the outstanding Common
Shares into a smaller number of shares or (D) issue any shares
of its capital stock in a reclassification of the Common
Shares (including any such reclassification in connection with
a consolidation or merger in which the Company is the
continuing or surviving corporation), the Purchase Price in
effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or
reclassification, and/or the number and/or kind of shares of
capital stock issuable on such date upon exercise of a Right,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
upon payment of the Purchase Price then in effect the
aggregate number and kind of shares of capital stock which, if
such Right had been exercised immediately prior to such date
and at a time when the Common Shares transfer books of the
Company were open, he or she would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an
event occurs which would require an adjustment under both this
Section 6(a)(i) and Section 6(a)(ii) hereof or Section 8
hereof, the adjustment provided for in this Section 6(a)(i)
shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 6(a)(ii) or Section 8
hereof.
(ii) In the event that:
(A) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the
date of this Plan, directly or indirectly, shall (1)
merge into the Company or otherwise combine with the
Company and the Company shall be the continuing or
surviving corporation of such merger or combination
(other than in a transaction subject to Section 8
hereof), (2) merge or otherwise combine with any Sub-
sidiary of the Company, (3) in one or more transactions
(other than in connection with the exercise of Rights or
the exercise or conversion of securities exercisable or
convertible into capital stock of the Company or any of
its Subsidiaries) transfer any assets to the Company or
any of its Subsidiaries in exchange (in whole or in part)
for shares of any class of capital stock of the Company
or any of its Subsidiaries or for securities exercisable
for or convertible into shares of any class of capital
stock of the Company or any of its Subsidiaries, or
otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any
additional shares of any class of capital stock of the
Company or any of its Subsidiaries or securities
exercisable for or convertible into shares of any class
of capital stock of the Company or any of its
Subsidiaries (other than as part of a pro rata
distribution to all holders of such shares of any class
of capital stock of the Company, or any of its
Subsidiaries), (4) sell, purchase, lease, exchange,
mortgage, pledge, transfer or otherwise dispose (in one
or more transactions) of any assets (including
securities), to, from, with or of, as the case may be,
the Company or any of its Subsidiaries (other than in a
transaction subject to Section 8 hereof), (5) receive any
compensation from the Company or any of its Subsidiaries
other than compensation as a director or for full-time
employment as a regular employee, in either case, at
rates in accordance with the Company's (or its
Subsidiaries') past practices, or (6) receive the
benefit, directly or indirectly (except proportionately
as a shareholder), of any loans, advances, guarantees,
pledges or other financial assistance or any tax credits
or other tax advantage provided by the Company or any of
its Subsidiaries; or
(B) during such time as there is an Acquiring
Person, there shall be any reclassification of securities
(including any reverse stock split), or recapitalization
of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other
transaction or series of transactions involving the
Company or any of its Subsidiaries (whether or not with
or into or otherwise involving an Acquiring Person),
other than a transaction subject to Section 8 of this
Plan, which has the effect, directly or indirectly, of
increasing by more than one percent the proportionate
share of the outstanding shares of any class of equity
securities or of securities exercisable for or
convertible into equity securities of the Company or any
of its Subsidiaries of which an Acquiring Person or any
Associate or Affiliate of any Acquiring Person, is the
Beneficial Owner; or
(C) any Person (other than the Company or any
Related Person) who or which, together with all
Affiliates and Associates of such Person, shall at any
time after the date of this Plan, become an Acquiring
Person other than through a purchase of Common Shares
pursuant to a tender offer made in the manner prescribed
by Section 14(d) of the Exchange Act and the rules and
regulations promulgated thereunder and which is a
Permitted Offer;
then in each such case proper provision shall be made so that
each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof in
accordance with the term of this Plan at an exercise price per
Right equal to the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right
was exercisable immediately prior to the first occurrence of
such Flip-in Event (but assuming the rights were then
exercisable), such number of Common Shares as shall equal the
result obtained by multiplying the then-current Purchase Price
by the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of such
Flip-in Event (assuming exercisability), and dividing that
product by fifty percent of the current per share market price
of a Common Share (determined pursuant to Section 6(d) hereof)
on the date of the first occurrence of any such Flip-in Event.
Notwithstanding anything in this Plan to the contrary, from
and after the first occurrence of any such Flip-in Event, any
Rights of which any Acquiring Person or any Associate or
Affiliate of such Acquiring Person involved in such Flip-in
Event is or was at any time the Beneficial Owner after the
date upon which such Acquiring Person became such shall become
void and any holder of such Rights shall thereafter have no
right to exercise such Rights under any provision of this
Plan.
(iii) In the event that there shall not be sufficient
authorized but unissued Common Shares or authorized and issued
Common Shares held in treasury to permit the exercise in full
of the Rights in accordance with the foregoing subsection
(ii), and the Company is unable to obtain the authorization of
the necessary additional Common Shares within ninety calendar
days after the occurrence of the Flip-in Event, then, notwith-
standing anything in this Plan to the contrary, the Company
shall determine the excess of the value of the Common Shares
issuable upon the exercise of a Right over the Purchase Price
(such excess being hereinafter referred to as the "Spread")
and shall be obligated to deliver, upon the surrender of such
Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available) and cash (to the
extent permitted by applicable law and any agreements or
instruments to which the Company is a party in effect
immediately prior to the first occurrence of any Flip-in
Event) in an amount equal to the Spread. To the extent that
any legal or contractual restrictions prevent the Company from
paying the full amount of cash payable in accordance with the
foregoing sentence, the Company shall pay to holders of the
Rights as to which such payments are payable all amounts which
are not then restricted on a pro rata basis and shall continue
to make payments on a pro rata basis as funds become available
until the full amount due to each such Right holder has been
paid.
(b) In the event that the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Common Shares entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase
Common Shares (or securities having equivalent rights, privileges
and preferences as the Common Shares ("equivalent common shares"))
or securities convertible into Common Shares or equivalent common
shares at a price per Common Share or equivalent common share (or
having a conversion price per share, if a security convertible into
Common or equivalent common shares) less than the current per share
market price of the Common Shares (as determined pursuant to
Section 6(d) hereof) on such record date, the Purchase Price to be
in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Common
Shares outstanding on such record date plus the number of Common
Shares which the aggregate offering price of the total number of
Common Shares and/or equivalent common shares so to be offered
(and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current per
share market price and the denominator of which shall be the number
of Common Shares outstanding on such record date plus the number of
additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all
of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in
a written statement which shall be conclusive for all purposes.
Common Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights, options or
warrants are not so issued, the Purchase Price shall be adjusted to
be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In the event that the Company shall fix a record date for
the making of a distribution to all holders of Common Shares
(including any such distribution made in connection with a con-
solidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness, cash (other
than a regular periodic cash dividend at a rate not in excess of
125 percent of the rate of the highest regular periodic cash
dividend paid during the immediately preceding two years), assets,
stock (other than a dividend payable in Common Shares) or subscrip-
tion rights, options or warrants (excluding those referred to in
Section 6(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price
in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current per share market price of
the Common Shares (as determined pursuant to Section 6(d) hereof)
on such record date or, if earlier, the date on which Common Shares
begin to trade on an ex-dividend or when-issued basis with respect
to such distribution, less the fair market value (as determined in
good faith by the Board of Directors of the Company, whose
determination shall be described in a written statement which shall
be conclusive for all purposes) of the portion of the cash, assets,
stock or evidences of indebtedness so to be distributed (in the
case of periodic cash dividends, only that portion in excess of 125
percent of the rate of the highest regular periodic cash dividend
paid during the immediately preceding two years) or of such
subscription rights, options or warrants applicable to Common
Shares, and the denominator of which shall be such current per
share market price of the Common Shares. Such adjustments shall be
made successively whenever such a record date is fixed; in the
event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, the
"current per share market price" of Common Shares on any date shall
be deemed to be the average of the daily closing prices per share
of such Common Shares for the thirty consecutive Trading Days
immediately prior to such date; provided however that in the event
that the current per share market price of the Common Shares is
determined during a period following the announcement by the issuer
of such Common Shares of (A) a dividend or distribution on such
Common Shares payable in such Common Shares or securities
convertible into such Common Shares (other than the Rights) or (B)
any subdivision, combination or reclassification of such Common
Shares, and prior to the expiration of thirty Trading Days after
the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification,
then, and in each such case, the current per share market price
shall be appropriately adjusted to take into account ex-dividend
trading or to reflect the current per share market price per Common
Share equivalent. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on
such day, the average of the closing bid and asked prices, regular
way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common
Shares are listed or admitted to trading or, if the Common Shares
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average
of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or,
if on any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the
Common Shares selected by the Board of Directors of the Company.
If the Common Shares are not publicly held or not so listed or
traded, or not the subject of available bid and asked quotes,
"current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a written
statement which shall be conclusive for all purposes.
(e) Except as set forth below, no adjustment in the Purchase
Price shall be required unless such adjustment would require an
increase or decrease of at least one percent in such price;
provided, however, that any adjustments which by reason of this
Section 6(e) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calcu-
lations under Section 6 shall be made to the nearest cent or to the
nearest whole Common Share or other share, as the case may be.
Notwithstanding the first sentence of this Section 6(e), any
adjustment required by Section 6 shall be made no later than the
earlier of (i) three years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
8(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Com-
pany other than Common Shares, thereafter the number of such other
shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Common Shares contained in this Section 6 and the provisions of
Sections 3, 4, 5, 8 and 9 hereof with respect to the Common Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence
the right to purchase, at the adjusted Purchase Price, the number
of Common Shares purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided in this Plan.
(h) Upon each adjustment of the Purchase Price as a result of
the calculations made in Section 6(b) hereof and Section 6(c)
hereof made with respect to a distribution of subscription rights,
options or warrants applicable to Common Shares, each Right
outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted
Purchase Price, that number of Common Shares (calculated to the
nearest whole Common Share) obtained by (i) multiplying the number
of Common Shares covered by a Right immediately prior to this
adjustment by the Purchase Price in effect immediately prior to
such adjustment of the Purchase Price and (ii) dividing the product
so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value of the Common
Shares issuable upon exercise of the Rights, the Company shall take
any corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable
Common Shares at such adjusted Purchase Price.
(j) In any case in which this Section 6 shall require that an
adjustment in the Purchase Price be made effective as of a record
date for a specified event, the Company may elect to defer until
the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of Common Shares
or other capital stock or securities of the Company, if any,
issuable upon such exercise over and above the number of Common
Shares or other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in
effect prior to such adjustment; provided however that the Company
shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such
additional shares, capital stock or securities upon the occurrence
of the event requiring such adjustment.
(k) Notwithstanding anything in this Plan to the contrary,
the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required
by this Section 6, as and to the extent that in their good faith
judgment the Board of Directors of the Company shall determine to
be advisable in order that any (i) consolidation or subdivision of
the Common Shares, (ii) issuance wholly for cash of Common Shares
at less than the current per share market price therefor, (iii)
issuance wholly for cash of securities which by their term are
convertible into or exchangeable for Common Shares, (iv) stock
dividends, or (v) issuance of rights, options or warrants referred
to in this Section 6, hereafter made by the Company to holders of
its Common Shares shall not be taxable to such shareholders.
(l) Notwithstanding anything in this Plan to the contrary, in
the event that the Company shall at any time after the date of this
Plan and prior to the Distribution Date (i) declare a dividend on
the outstanding Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares, (iii) combine the
outstanding Common Shares into a smaller number of shares, or (iv)
issue any shares of its capital stock in a reclassification of the
outstanding Common Shares, the number of Rights associated with
each Common share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter
associated with each Common Share following any such event shall
equal the result obtained by multiplying the number of Rights
associated with each Common Share immediately prior to such event
by a fraction the numerator of which shall be the total number of
Common Shares outstanding immediately prior to the occurrence of
the event and the denominator of which shall be the total number of
Common Shares outstanding immediately following the occurrence of
such event, provided that any resulting fractional amount shall be
rounded to the nearest whole number.
Section 7. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 6 or
Section 8(a) hereof, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of
the facts accounting for such adjustment, (b) promptly file with
the transfer agent for the Common Shares, a copy of such
certificate, and (c) if such adjustment is made after the Distribu-
tion Date, mail a brief summary of such adjustment to each holder
of a Right Certificate in accordance with Section 13 hereof.
Section 8. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) Except as provided in Section 8(c) of this Plan, in the
event that, following the Share Acquisition Date, directly or
indirectly,
(i) the Company shall consolidate with, or merge with or
into, any other Person (other than a Related Person in a
transaction which complies with Section 4(f) hereof) and the
Company shall not be the continuing or surviving corporation
of such consolidation or merger;
(ii) any Person (other than a Related Person in a trans-
action which complies with Section 4(f) hereof) shall
consolidate with the Company, or merge with or into the
Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection
with such merger or consolidation, all or part of the Common
Shares shall be changed into or exchanged for stock or other
securities of such other Person or cash or any other property;
or
(iii) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or more transactions,
assets or earning power (including without limitation
securities creating any obligation on the part of the
Company and/or any of its Subsidiaries) representing in
the aggregate more than fifty percent of the assets or
earning power of the Company and its Subsidiaries (taken
as a whole) to any Acquiring Person or Persons (other
than the Company or any Related Person in one or more
transactions each of which complies with Section 4(f)
hereof),
then, and in each such case, proper provision shall be made so that
(A) except as provided below, each holder of a Right shall
thereafter have the right to receive, upon the exercise of it in
accordance with the terms of this Plan at an exercise price per
Right equal to the product of the then-current Purchase Price
multiplied by the number of Common Shares for which a Right is then
exercisable, in lieu of Common Shares, such number of validly
authorized and issued, fully paid, nonassessable and freely
tradeable Common Shares of the Issuer (as such term is hereinafter
defined), free and clear of any liens, encumbrances and other
adverse claims and not subject to any rights of call or first
refusal, as shall be equal to the result obtained by multiplying
the then-current Purchase Price by the number of Common Shares for
which a Right is exercisable immediately prior to the first
occurrence of any Flip-over Event (or, if a Flip-in Event has
occurred prior to the first occurrence of a Flip-over Event,
multiplying the number of Common Shares for which a Right was
exercisable immediately prior to the first occurrence of a Flip-in
Event, assuming the Rights were then exercisable by the Purchase
Price in effect immediately prior to such first occurrence), and
dividing that product by fifty percent of the current per share
market price of the Common Shares of the Issuer (determined
pursuant to Section 6(d) hereof), on the date of consummation of
such Flip-over Event; (B) the Issuer shall thereafter be liable
for, and shall assume, by virtue of such Flip-over Event, all the
obligations and duties of the Company pursuant to this Plan; (C)
the term "Company" shall thereafter be deemed to refer to the
Issuer; and (D) the Issuer shall take such steps (including without
limitation the reservation of a sufficient number of its Common
Shares to permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to ensure
that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be possible, in relation to its Common
Shares thereafter deliverable upon the exercise of the Rights.
(b) For purposes of this Section 8, "Issuer" shall mean (i)
in the case of any Flip-over Event described in Sections 8(a)(i) or
(ii) above, the Person that is the continuing, surviving, resulting
or acquiring Person (including the Company as the continuing or
surviving corporation of a transaction described in Section
8(a)(ii) above), and (ii) in the case of any Flip-over Event
described in Section 8(a)(iii) above, the Person that is the party
receiving the greatest portion of the assets or earning power
(including without limitation securities creating any obligation on
the part of the Company and/or any of its Subsidiaries) transferred
pursuant to such transaction or transactions; provided however that
in any such case, (A) if (1) no class of equity security of such
Person is, at the time of such merger, consolidation or transaction
and has been continuously over the preceding twelve-month period,
registered pursuant to Section 12 of the Exchange Act, and (2) such
Person is a Subsidiary, directly or indirectly, of another Person,
a class of equity security of which is and has been so registered,
the term "Issuer" shall mean such other Person; and (B) in case
such Person is a Subsidiary, directly or indirectly, of more than
one Person, a class of equity security of two or more of which are
and have been so registered, the term "Issuer" shall mean whichever
of such Persons is the issuer of the equity security having the
greatest aggregate market value. Notwithstanding the foregoing, if
the Issuer in any of the Flip-over Events listed above is not a
corporation or other legal entity having outstanding equity
securities, then, and in each such case, (i) if the Issuer is
directly or indirectly wholly owned by a corporation or other legal
entity having outstanding equity securities, then all references to
Common Shares of the Issuer shall be deemed to be references to the
Common Shares of the corporation or other legal entity having
outstanding equity securities which ultimately controls the Issuer,
and (ii) if there is no such corporation or other legal entity
having outstanding equity securities, (Y) proper provision shall be
made so that the Issuer shall create or otherwise make available
for purposes of the exercise of the Rights in accordance with the
terms of this Plan, a type or types of security or securities
having a fair market value at least equal to the economic value of
the Common Shares which each holder of a Right would have been
entitled to receive if the Issuer had been a corporation or other
legal entity having outstanding equity securities; and (Z) all
other provisions of this Plan shall apply to the issuer of such
securities as if such securities were Common Shares.
(c) Notwithstanding anything contained in this Plan to the
contrary, the adjustments described in Section 8(a) of this Plan
shall not be made upon the occurrence of an event described in
Section 8(a)(i) or Section 8(a)(ii) if all of the following are
met:
(i) the Company shall merge or consolidate with an
Acquiring Person (or a wholly owned subsidiary of such
Acquiring Person) who became an Acquiring Person pursuant to
a Permitted Offer;
(ii) the per share consideration offered in such merger
or consolidation is equal to or greater than the price per
Common Share paid to all holders of Common Stock whose shares
were purchased pursuant to such Permitted Offer; and
(iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such
transaction is the same as the form of consideration paid
pursuant to such Permitted Offer.
(d) The Company shall not consummate any Flip-over Event
unless the Issuer shall have a sufficient number of authorized
Common Shares (or other securities as contemplated in Section 8(b)
above) which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this
Section 8 and unless prior to such consummation the Company and the
Issuer shall have both executed an agreement providing for the
terms set forth in subsections (a) and (b) of this Section 8 and
further providing that as soon as practicable after the
consummation of any Flip-over Event, the Issuer will
(i) prepare and file a registration statement under the
Securities Act, with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form,
and will use its best efforts to cause such registration
statement to (A) become effective as soon as practicable after
such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until the
Expiration Date; and
(ii) deliver to holders of the Rights historical
financial statements of the Issuer and each of its Affiliates
which comply in all respects with the requirements for
registration on Form 10 under the Exchange Act.
(e) The provisions of this Section 8 shall similarly apply to
successive mergers or consolidations or sales or other transfers.
In the event that a Flip-over Event occurs at any time after the
occurrence of a Flip-in Event, the Rights which have not thereto-
fore been exercised shall thereafter become exercisable in the
manner described in this Section 8.
Section 9. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of
Rights. In lieu of any fractional Rights which would otherwise
result from this Plan, the number of Rights to be issued to a
shareholder of the Company shall be rounded to the nearest whole
Right.
(b) The Company shall not be required to issue fractions of
Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares. In lieu of
any fractional Common Shares which would otherwise result from this
Plan, the number of Common Shares to be issued by the Company under
the Plan shall be rounded to the nearest whole Common Share.
Section 10. Agreement of Rights Holders. Every holder of a Right
by accepting the same consents and agrees with the Company and with
every other holder of a Right that, notwithstanding anything in
this Plan to the contrary, the Company shall not have any liability
to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Plan by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission,
or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided however that
the Company shall use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as
reasonably possible.
Section 11. Redemption.
(a) The Board of Directors of the Company may at its option
redeem all but not less than all of the then-outstanding Rights at
the Redemption Price at any time prior to the Close of Business on
the earlier of (i) the Final Expiration Date or (ii) the tenth
business day following the Share Acquisition Date.
(b) If after the occurrence of a Share Acquisition Date and
following the expiration of the right of redemption hereunder but
prior to the occurrence of a Triggering Event, each of the
following shall have occurred and remain in effect: (i) a Person
who is an Acquiring Person shall have transferred or otherwise
disposed of a number of Common Shares in a transaction, or series
of transactions, which did not result in the occurrence of any
Triggering Event such that such Person is thereafter a Beneficial
Owner of ten percent or less of the outstanding Common Shares, (ii)
there are no other Persons, immediately following the occurrence of
the event described in clause (i), who are Acquiring Persons, and
(iii) the transfer or other disposition described in clause (i)
above was other than pursuant to a transaction, or series of
transactions, which directly or indirectly involved the Company or
any of its Subsidiaries, then the right of redemption set forth in
Section 11(a) shall be reinstated and thereafter be subject to the
provisions of this Section 11.
(c) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights, and without any
further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders
of Rights shall be to receive the Redemption Price. Promptly after
the action of the Board of Directors ordering the redemption of the
Rights, the Company shall publicly announce such action and within
ten calendar days thereafter the Company shall give notice of such
redemption to the holders of the then-outstanding Rights by mailing
such notice to all such holders at their last addresses as they
appear upon the registry books of the Company or, prior to the
Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. The
Company may at its option pay the Redemption Price in cash, Common
Shares (based upon the current per share market price of the Common
Shares (determined pursuant to Section 6(d) hereof), at the time of
redemption) or any other form of consideration deemed appropriate
by the Board of Directors.
(d) The Board of Directors of the Company may at any time
relinquish any or all of the rights to redeem the Rights under
Sections 11(a) or 11(b) hereof by duly adopting a resolution to
that effect. Promptly after adoption of such a resolution, the
Company shall publicly announce such action. Immediately upon
adoption of such resolution, the rights of the Board of Directors
under the portions of this Section 18 specified in such resolution
shall terminate without further action and without any notice.
Section 12. Notice of Certain Events.
(a) In case after the Distribution Date the Company shall
propose (i) to pay any dividend payable in stock of any class to
the holders of Common Shares or to make any other distribution to
the holders of Common Shares (other than a regular periodic cash
dividend at a rate not in excess of 125 percent of the rate of the
highest regular periodic cash dividend paid during the immediately
preceding two years), (ii) to offer to the holders of Common Shares
rights, options or warrants to subscribe for or to purchase any
additional Common Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any
reclassification of its Common Shares (other than a
reclassification involving only the subdivision of outstanding
Common Shares), or (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer),
in one or more transactions, of assets or earning power (including
without limitation securities creating any obligation on the part
of the Company and/or any of its Subsidiaries) representing more
than fifty percent of the assets and earning power of the Company
and its Subsidiaries, taken as a whole, to any other Person or
Persons, then in each such case the Company shall give to each
holder of a Right Certificate notice in accordance with Section 13
hereof of such proposed action which shall specify the record date
for the purposes of such stock dividend, distribution or offering
of rights, options or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the Common Shares,
if any such date is to be fixed, and such notice shall be so given
in the case of any action covered by clause (i) or (ii) above at
least twenty calendar days prior to the record date for determining
holders of the Common Shares for purposes of such action, and in
the case of any such other action at least twenty calendar days
prior to the date of the taking of such proposed action or the date
of participation therein by the holders of the Common Shares,
whichever shall be the earlier.
(b) In case any Triggering Event shall occur, then in each
such case the Company shall as soon as practicable thereafter give
to each holder of a Right Certificate notice in accordance with
Section 13 hereof of the occurrence of such event which shall
specify the event and the consequences of the event to holders of
Rights.
Section 13. Notices.
(a) Notices or demands authorized by this Plan to be given or
made by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by (i) confirmed
telefax or (ii) first-class mail with postage prepaid, addressed
(until written notice of another address is given to the holders of
Right Certificates) as follows:
Good Times Restaurants Inc.
601 Corporate Circle
Golden, CO 80401
Telefax: (303) 273-0177
Attn: Mr. Boyd E. Hoback, President
(b) Notices or demands authorized by this Plan to be given or
made by the Company to or on the holder of any Right shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Company.
Section 14. Supplements and Amendments. Prior to the Share
Acquisition Date, the Company shall supplement or amend any
provision of this Plan in any manner which the Company may deem
desirable without the approval of any holders of Rights or certifi-
cates representing Common Shares. Notwithstanding anything in this
Plan to the contrary, no supplement or amendment shall be made
which decreases the stated Redemption Price or the period of time
remaining until the Final Expiration Date.
Section 15. Successors; Certain Covenants. All the covenants and
provisions of this Plan by or for the benefit of the Company shall
bind and inure to the benefit of its successors and assigns
hereunder.
Section 16. Severability. If any term, provision, covenant or
restriction of this Plan is held by a court of competent
jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Plan shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
Section 17. Governing Law. This Plan and each Right Certificate
issued hereunder shall be deemed to be a contract made under the
internal substantive laws of the State of Nevada and for all
purposes shall be governed by and construed in accordance with the
internal substantive laws of such State applicable to contracts to
be made and performed entirely within such State.
Section 18. Descriptive Headings. Descriptive headings of the
several sections of this Plan are inserted for convenience only and
shall not control or affect the meaning or construction of any of
the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Shareholder Rights
Plan to be duly executed on its behalf as of the date first above
written.
GOOD TIMES RESTAURANTS INC.,
a Nevada corporation
By:/s/ Boyd E. Hoback, President
& Chief Executive Officer
Boyd E. Hoback, President &
Chief Executive Officer
April 30, 1998
To our Shareholders:
On February 24, 1998 the Board of Directors of the
Company enacted a Shareholder Rights Plan for the purpose of
impeding any possible effort which might be made to acquire the
Company on terms that are inconsistent with its underlying value
and which would not therefore be in the best interests of the
shareholders. Such plans have become quite common for public
companies and the adoption of the Good Times Shareholder Rights
Plan was not prompted by any prospective acquisition effort of
which the Company is aware.
In brief summary, the Plan provides that each share of
the Company's outstanding common stock will carry with it a Stock
Purchase Right. Each Right will be generally exercisable for the
purchase of one share of the Company's common stock for $20 per
share, which price is substantially in excess of the current market
price of Good Times common stock. However, in the event that any
person or entity acquires twenty percent or more of the Company in
a transaction not approved by the Company's Board of Directors,
each Right will become exercisable for the purchase of one share of
Good Times stock at fifty percent of its trading market price at
that time or, alternatively, one share of the potential acquiror's
common stock at fifty percent of its trading market price. The
ability for the Rights to be exercised on such a dilutive basis
will have the effect of discouraging an acquisition effort which
the Board of Directors does not believe to be fair and in the
interests of our shareholders. The Company will have the right at
any time to reacquire the Rights by the payment of $.001 per Right.
The Plan terminates December 31, 1999 unless extended by the
Company.
The Rights are not represented by separate certificates
but rather simply automatically accompany each common share. The
Rights will not have any separate trading market price and do not
carry with them any voting rights or any other rights enuring to
the common stock. The distribution of the Rights is not taxable to
the shareholders. A complete copy of the Shareholder Rights Plan
is on file at the offices of the Company and will be furnished to
any shareholder so requesting. The Board of Directors retains the
right to amend, supplement or terminate the Shareholder Rights
Plan.
If you have any questions about the Shareholder Rights
Plan, please contact the undersigned.
Very truly yours,
GOOD TIMES RESTAURANTS INC.
By: /s/ Boyd E. Hoback
President & Chief Executive Officer
