As filed with the Securities and Exchange Commission on January 22, 1999
Securities Act Registration No. 33-72052
_____________________________________________________________________________
Securities Exchange Act Registration No. 0-18590
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 4 TO FORM SB-2 ON FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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, Colorado 80401
(303) 384-1400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Boyd E. Hoback, President
Good Times Restaurants Inc.
601 Corporate Circle
Golden, Colorado 80401
(303) 384-1400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
With a copy to:
Andrew L. Pidcock, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
1225 17th Street, Suite 2300
Denver, Colorado 80202
(303) 299-7313
(303) 296-3956 (FAX)
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
Calculation of Registration Fee
=============================================================================
Proposed Proposed
Title of maximum maximum
each class of offering aggregate Amount of
securities to be Amount to be price offering registration
registered registered per unit price fee
Common Stock,
$.001 par value 322,000(1) $3.875(2) $1,247,750 $347(3)
=============================================================================
(1) The number of shares of Common Stock, which reflects a one share-for-
five shares reverse split of the Registrant's shares of Common Stock in
February 1998, underlying the Registrant's previously registered and now
publicly traded Series B Redeemable Common Stock Purchase Warrants.
Pursuant to Rule 416, this Registration Statement also covers an
indeterminate number of additional shares which may be issued pursuant
to anti-dilution provisions applicable to the warrants.
(2) Estimated solely for purposes of calculation of the registration fee
pursuant to Rule 457(c). Represents the average of the closing bid and
ask prices of the Common Stock as quoted on the Nasdaq Small Cap Market
for January 20, 1999.
(3) $1,666 previously paid.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
PROSPECTUS
Subject to Completion, January 22, 1999
GOOD TIMES RESTAURANTS INC.
322,000 Shares of Common Stock
Underlying Series B Redeemable Common Stock Purchase Warrants
This Prospectus is for the offer and sale of 322,000 shares of the
Company's Common Stock underlying the Company's publicly traded Series B
Redeemable Common Stock Purchase Warrants. A registered holder of a Series B
Warrant is currently entitled to purchase one share of Common Stock at an
exercise price of $10.00 until February 10, 1999. The Company has determined
to amend the terms of the Series B Warrants to extend the term to ____________
and to reduce the exercise price to $________ per share of Common Stock. The
number of shares of Common Stock underlying the Series B Warrants indicated in
this Prospectus reflects a 1share-for-5 shares reverse split of the Company's
Common Stock in February 1998.
The Common Stock is listed for trading on the Nasdaq SmallCap Market
under the symbol "GTIM." The Series B Warrants are listed for trading on the
Nasdaq SmallCap Market under the symbol "GTIMZ."
The Company will receive all of the proceeds from the exercise of the
Series B Warrants and the corresponding issuance of the underlying shares of
Common Stock. The Company will bear all expenses (other than fees and
expenses of counsel and other advisers to the holders of the Series B
Warrants) in connection with the registration and issuance of the underlying
shares of Common Stock.
Consider carefully the risk factors beginning on page five in this
Prospectus.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined that this Prospectus is accurate
or complete. Any representation to the contrary is a criminal offense.
The information in this Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with
the SEC is effective. This Prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
The date of this Prospectus is January ____, 1999
TABLE OF CONTENTS
Page
SUMMARY 3
RISK FACTORS 5
MATERIAL CHANGES 7
USE OF PROCEEDS 7
DESCRIPTION OF COMMON STOCK 8
LEGAL MATTERS 8
EXPERTS 8
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE 8
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 9
SUMMARY
This Summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision.
The Company
Good Times Restaurants Inc.
601 Corporate Circle
Golden, Colorado 80401
(303) 384-1400
The Company was organized under Nevada law in 1987 and is the holding
company for a wholly-owned subsidiary that is engaged in the business of
developing, owning, operating and franchising restaurants under the name "Good
Times Drive Thru Burgers." Good Times Drive Thru Burgers restaurants are
owned, operated and franchised by the Company's subsidiary, Good Times Drive
Thru Inc. The restaurants feature fast service and a limited, high quality
menu for drive-through and walk-up customers. Due to the simplicity of the
menu, the relatively low capital investment, and the efficient design of the
Good Times buildings and equipment, the Company can sell its products at
comparable or lower prices than the major fast food hamburger chains except
during short term discount promotions by the competition. Most of the
Company's 29 restaurants are located in the Denver, Colorado metropolitan
area.
The existing double drive-through Good Times restaurants are less than
one-third the size of the typical restaurants of the four largest hamburger
chains and require approximately one-half the land area based upon
management's experience in the restaurant industry and research reports. The
current standard Good Times restaurant building is a double drive-through and
walk-up style structure containing approximately 880 square feet built on
18,000 to 30,000 square-foot lots. Most existing Good Times restaurants
utilize a double drive-through concept that allows simultaneous service from
opposite sides of the restaurant and one or two walk-up windows with a patio
for outdoor eating.
The hamburger fast food market remains intensely competitive with the
major competitors aggressively discounting menu prices. Over the last two
fiscal years, the Company has changed its strategy from a price point focus to
one based on superior taste, product quality and speed of service. The
Company believes that it has an advantage in providing a superior level of
service, quality and overall value based upon consumer research studies, but
has been limited in its ability to effectively advertise and build awareness
of its brand until "critical mass" in restaurant sales are achieved in the
Colorado market for consistent television and radio advertising. The Company
believes that it is beginning to reach critical mass.
The Company's objectives for 1999 are to concentrate its efforts and
capital on the growth of its restaurant chain in Colorado through additional
company-owned, joint-venture and franchised restaurants. Management expects
that the Company and its franchisees will develop a total of 4 to 7
restaurants in the Denver metropolitan area in 1999.
The Offering
This Prospectus is for the offer and sale of 322,000 shares of the
Company's Common Stock underlying the Company's publicly traded Series B
Redeemable Common Stock Purchase Warrants. A registered holder of a Series B
Warrant is currently entitled to purchase one share of Common Stock at an
exercise price of $10.00 until February 10, 1999. The Company has determined
to amend the terms of the Series B Warrants to extend the term to ____________
and to reduce the exercise price to $________ per share of Common Stock. The
number of shares of Common Stock underlying the Series B Warrants indicated in
this Prospectus reflects a 1 share-for-5 shares reverse split of the Company's
Common Stock in February 1998.
The Common Stock is listed for trading on the Nasdaq SmallCap Market
under the symbol "GTIM." The Series B Warrants are listed for trading on the
Nasdaq SmallCap Market under the symbol "GTIMZ."
The Company will receive all of the proceeds from the exercise of the
Series B Warrants and the corresponding issuance of the underlying shares of
Common Stock. The Company intends to use the net proceeds received from the
exercise of the Warrants to satisfy the Company's cash requirements and for
other general business purposes. The Company will bear all expenses (other
than fees and expenses of counsel and other advisers to the holders of the
Series B Warrants) in connection with the registration and issuance of the
underlying shares of Common Stock.
RISK FACTORS
You should consider carefully the following risk factors before making an
investment decision on the securities covered by this Prospectus:
This Prospectus contains or incorporates by reference forward-looking
statements within the meaning of the Securities Act of 1933. Also, documents
subsequently filed by the Company with the SEC and incorporated in this
Prospectus by reference may contain forward-looking statements. You are
cautioned that any forward-looking statements made by the Company in this
Prospectus are not guarantees of future performance and that actual results
could differ materially from those in the forward-looking statements as a
result of various factors, including but not limited to the following:
- The Company competes with numerous well established competitors
who have substantially greater financial resources and longer
operating histories than the Company. Competitors have
increasingly offered selected food items and combination meals,
including hamburgers, at discounted prices, and continued
discounting by competitors may adversely affect revenues and
profitability of Company restaurants.
- The Company may be negatively impacted if the Company is unable to
sustain same store sales increases that were experienced during
the last two quarters of the fiscal year ended September 30, 1998.
Sales increases will be dependent, among other things, on the
success of Company advertising and promotion of new and existing
menu items. We cannot assure you that the Company's advertising
and promotional efforts will in fact be successful.
The Company may also be negatively impacted by other factors common to
the restaurant industry, such as:
- changes in consumer tastes away from red meat and fried foods;
- increases in the cost of food, paper, labor, health care, workers'
compensation or energy;
- an inadequate number of hourly paid employees; and/or
- decreases in the availability of affordable capital resources.
You are cautioned that the risk factors listed above and those discussed below
are not exhaustive, particularly with respect to documents subsequently filed
by the Company with the SEC and incorporated in this Prospectus by reference.
Risks Relating to the Company
The Company Has Not Earned a Profit During Any Fiscal Year. As of
September 30, 1998, the Company had a working capital deficit of ($114,000)
and a net worth of $2,682,000. Losses from inception to that date aggregated
$9,171,000. The Company's wholly owned subsidiary, Good Times Drive Thru Inc.
("Drive Thru") which owns and operates the restaurants, has incurred losses
every year since inception. Management believes the losses at Drive Thru are
due to high general and administrative expenses, expenses associated with
training and regional management and other costs associated with preparing
Good Times for significant growth. As additional Good Times units are
developed, we expect that the increase in operating income generated by those
units will improve Good Times' financial results. However, we cannot assure
you that the Company will achieve profitability on a consistent basis.
Limited Site Selection. Location of restaurants for Good Times in high-
traffic and readily accessible areas is an important factor to its success.
Drive-through restaurants require sites with specific characteristics which
limit the number of sites available in a market. Suitable locations are in
great demand and may be difficult to obtain at a reasonable cost. In
addition, we cannot assure you that sites selected by management will be
successful.
Substantial Competition. Good Times competes with many recognized
national and regional fast-food hamburger restaurant chains that have a well-
established customer base as well as small, regional and local hamburger and
other fast-food restaurants, many of which feature drive-through service.
Most of Good Times' competitors have financial resources, advertising budgets,
marketing programs and name recognition exceeding that of Good Times.
Moreover, since only a relatively small capital investment is required to
establish a Good Times' restaurant, other firms may compete with Good Times
for consumer sales and available locations by establishing restaurants similar
to those of Good Times. Good Times ability to compete in times of inflation
may be hindered as it may not have the same ability to absorb increased costs
as would better-capitalized competing hamburger chains. We cannot assure you
that we will be able to successfully compete on a profitable basis.
Restaurant companies that currently compete with Good Times in the Denver
market include McDonald's, Burger King, Wendy's and Carl's Jr.
Need for Additional Financing in Order to Fully Implement Business Plan.
In order to fully develop the Denver and Colorado Springs markets and to
expand into markets outside of Colorado with Good Times restaurants, Drive
Thru will require additional financing. We cannot assure you that any
required financing will be available at all or on reasonable terms.
Dependence on Management. The current operations and future success of
the Company are dependent largely on the efforts and abilities of its
management and, in particular, Boyd E. Hoback. While the Company has entered
into an employment agreement with Mr. Hoback, the Company does not maintain
key-man insurance on Mr. Hoback's life. The loss or unavailability to the
Company of Mr. Hoback could have a material adverse effect upon its business.
Lack of Federal Trademark Protection. Drive Thru has registered its mark
"Good Times! Drive Thru Burgers"SM in the State of Colorado and will endeavor
to register such mark in each state it or a franchisee intends to open a
restaurant. However, we cannot assure you that Good Times will be able to
register the mark in each such state. Good Times relies solely upon common
law trademark protection and state registration. Such reliance will not
protect Good Times against a prior user of the mark. If prior use is
established, Good Times may not be able to use the mark in the area of such
use. Drive Thru has applied for federal trademark registration. We cannot
assure you that any such registration will be granted, or if it is granted,
that Good Times' right to the name will be protected in all desirable
jurisdictions.
Dependence on Franchises. As of the date of this Prospectus, 13
franchises have been sold but we cannot assure you that Drive Thru will be
able to sell additional franchises or that its existing franchisees will
fulfill their obligations under their franchise agreements. The development
of the Denver and Colorado Springs markets by Good Times would be adversely
impacted by its inability to sell franchises or the existing franchisees'
inability to fulfill their obligations to Drive Thru.
Dependence Upon Availability of and Low Cost for Supplies and Labor.
Profitable operation of restaurants is partially dependent upon the
availability of adequate food supplies at reasonable prices and an adequate
labor supply. The cost and availability of food supplies is subject to
seasonal and local factors beyond management's control. Labor is typically
paid on an hourly basis in amounts at or moderately above the minimum wage.
Future increases in the minimum wage could have a material adverse effect upon
the Company.
Risks of Ground Lease Financing. Ground leases are often an attractive
method of financing the acquisition of real estate for the development of
restaurants. However, such arrangements offer risks which may not otherwise
be present. Drive Thru may lease the land and, at its cost, may construct the
improvements thereon. Any default by Drive Thru under the lease may, subject
to cure rights, give the lessor the right to terminate the ground lease,
thereby depriving Drive Thru not only of any interest in the land, but also of
the improvements. Also, rent may increase over the term of the lease based on
increases in the applicable price index or otherwise. Finally, the resale
value of a lessee's interest in a ground lease may be less than if the land
were owned, particularly toward the end of the lease term.
No Dividends. The Company has never paid dividends on its Common Stock
and does not anticipate paying dividends in the foreseeable future. The
Company's ability to pay future dividends will necessarily depend on its
earnings and financial condition. In addition, since restaurant development
is capital intensive, it is the intent of the Company to retain earnings to
satisfy capital requirements.
Effect of Issuance of Preferred Stock. The Board of Directors has the
authority to issue up to 5,000,000 shares of Preferred Stock, in one or more
series and with the relative rights and preferences as the Board of Directors
may determine. No shares of Preferred Stock are currently issued and
outstanding. The rights of the holders of Preferred Stock that may be issued
from time to time could materially adversely affect the rights of the holders
of Common Stock.
Market Risks
Substantial Market Overhang. The Company has outstanding derivative
securities (securities such as options and warrants with a conversion,
exercise, exchange or other right or privilege to acquire Common Stock) for
the purchase of up to 664,093 shares for an aggregate purchase price of
approximately $6,051,925 or an average of $9.11 per share. It is unlikely
that the right to acquire shares of Common Stock will be exercised by the
holders of the derivative securities unless the then market price of the
Common Stock significantly exceeds the acquisition price. However, if the
acquisition right is exercised, it is likely that the Common Stock issued upon
such exercise will be sold soon thereafter, which may have a depressive effect
on the then market price of the Common Stock.
No Assurance of Public Trading Market. At the present time shares of the
Company's Common Stock are listed for trading on the Nasdaq Small Cap Market
System ("Nasdaq"). The Nasdaq maintenance rules require among other things
that the Common Stock share price remain above $1.00 and that the Company has
minimum net tangible assets in excess of $2 million. The Company recently was
required to obtain shareholder approval for a reverse stock split in order to
maintain its listing on Nasdaq. If, for whatever reason, the Company were
delisted from Nasdaq its securities could continue to trade over the counter
on the OTC Bulletin Board maintained by the NASD. However, we cannot assure
you that such a market would develop or that it would be liquid if it did
develop.
MATERIAL CHANGES
There are no material changes in the Company's affairs which have
occurred since September 30, 1998.
USE OF PROCEEDS
The Company intends to use the net proceeds received from the exercise of
the Series B Warrants to satisfy the Company's cash requirements and for other
general business purposes.
DESCRIPTION OF COMMON STOCK
The shares of Common Stock covered by this Prospectus will be fully paid
and nonassessable when issued upon exercise of the Series B Warrants in
accordance with their terms, as amended. Holders of the Common Stock have no
preemptive rights. Each stockholder is entitled to one vote for each share of
Common Stock held of record by such stockholder. There is no right to
cumulate votes for election of directors. Upon liquidation of the Company,
the assets then legally available for distribution to holders of the Common
Stock (after distribution to any preferred stockholders with superior
distribution rights) will be distributed ratably among such shareholders in
proportion to their stock holdings. Holders of Common Stock are entitled to
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor.
LEGAL MATTERS
The law firm of Ballard Spahr Andrews & Ingersoll, LLP, 1225 17th Street,
Suite 2300, Denver, Colorado 80202, has passed upon the legality of the Shares
offered hereby.
EXPERTS
The audited consolidated financial statements of the Company incorporated
by reference into this Prospectus have been audited by Hein + Associates LLP,
to the extent and for the periods indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of such
firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows the Company to "incorporate by reference" information into
this Prospectus, which means that we can disclose important information to you
by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this Prospectus,
except for any information superseded by information contained directly in
this Prospectus. This Prospectus incorporates by reference the documents set
forth below that we have previously filed with the SEC. These documents
contain important information about the Company and its financial condition.
SEC Filings (File No. 0-18590) Period
Annual Report on Form 10-KSB Fiscal Year ended September
30,1998
Registration Statement on Form 8-A Dated February 9, 1994
Registration Statement on Form 8-A Dated May 11, 1990, as amended by
Amendment No. 1 on Form 8 dated
July 27, 1992
In addition, all documents that we file with the SEC pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the
date of this Prospectus and prior to the termination of the offering
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of the filing of such
documents. This means that any future annual, quarterly and special SEC
reports and proxy materials filed by us until we terminate the offering will
automatically update the information in this Prospectus. In all cases, you
should rely on the later information over different information included in
this Prospectus.
As a recipient of this Prospectus, you may request a copy of any document
we incorporate by reference, except exhibits to the documents (unless the
exhibits are specifically incorporated by reference), at no cost, by writing
or calling us at: Good Times Restaurants Inc., 601 Corporate Circle, Golden,
Colorado 80401, Attention: Boyd E. Hoback; (303) 384-1400.
We filed a registration statement relating to the shares of Common Stock
underlying the Series B Warrants with the SEC. This Prospectus is part of the
registration statement, but the registration statement includes additional
information.
You may read and copy any reports, statements or other information we
file at the SEC's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You can request copies of these documents, upon payment of a
copying fee, by writing to the SEC. You may obtain further information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Our SEC filings are also available to the public on the SEC Internet site
(http://www.sec.gov).
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Nevada General Corporation Law provides for indemnification by a
corporation of costs incurred by directors, employees, and agents in
connection with an action suit, or proceeding brought by reason of their
position as a director, employee, or agent. The person being indemnified must
have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation.
Provisions of the Company's Articles of Incorporation and Bylaws obligate
the Company to indemnify its directors and officers to the fullest extent
permitted under Nevada law.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Company pursuant to the foregoing provisions or otherwise, the Company has
been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
PROSPECTUS
GOOD TIMES RESTAURANTS INC.
322,000 Shares of Common Stock
Underlying Series B Redeemable Common Stock Purchase Warrants
You should rely only on the information contained or incorporated by reference
in this Prospectus. We have not authorized anyone to provide you with
different information.
We are not offering the securities in any state where the offer is not
permitted.
We do not claim the accuracy of the information contained in this Prospectus
as of any date other than the date stated on the front cover of this
Prospectus. We do not claim the accuracy of any information incorporated by
reference in this Prospectus after the date stated on the front cover of this
Prospectus as of any date other than the date that the subsequent information
is incorporated by reference.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of the offering, all of which are to be borne by
the Company, are as follows:
Total Registration Fee Under the Securities Act of 1933 $ 0(1)
Printing and Engraving 250*
Accounting Fees and Expenses 2,000*
Legal Fees and Expenses 5,000*
Blue Sky Fees and Expenses (including related legal fees) 3,000*
Miscellaneous 500*
Total $10,750
(1) The current registration fee is $347. A registration fee of $1,666
was paid upon the original filing of this Registration Statement.
*Estimated
Item 15. Indemnification of Directors and Officers.
Article IX of the Bylaws of the Registrant, in accordance with the Nevada
General Corporation Law, provides as follows:
Section 1. Indemnification Against Third Party Claims. The corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, except an action by
or in the right of the corporation, by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he
had reasonable cause to believe that his conduct was unlawful.
Section 2. Indemnification Against Derivative Claims. The corporation
shall further indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses, including amounts
paid in settlement and attorneys' fees actually and reasonably incurred by him
in connection with the defense or settlement of the action or suit if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation; provided that
indemnification shall not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
II-1
Section 3. Rights to Indemnification. To the extent that a director,
officer, employee or agent of the corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in subsections 1 and 2, or in defense of any claim, issue or matter therein,
he shall be indemnified by the corporation against expenses, including
attorneys' fees, actually and reasonably incurred by him in connection with
the defense.
Section 4. Authorization of Indemnification. Any indemnification under
subsections 1 and 2, unless ordered by a court or advanced pursuant to
subsection 5, shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The determination
shall be made: (a) by the stockholders, (b) by the Board of Directors by
majority vote of a quorum consisting of directors who were not parties to the
act, suit or proceeding, (c) if a majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion, or (d) if a quorum consisting
of directors who were not parties to the act, suit or proceeding cannot be
obtained, by independent legal counsel in a written opinion.
Section 5. Advancement of Expenses. The expenses of officers and
directors incurred in defending a civil or criminal action, suit or
proceeding, by reason of the fact that he was a director or officer of the
corporation, shall be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding, upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined by a court of competent jurisdiction
that he is not entitled to be indemnified by the corporation. The provisions
of this subsection 5 do not affect any rights to advancement of expenses to
which corporate personnel other than directors and officers may be entitled
under any contract or otherwise by law.
Section 6. Indemnification by Court Order. The indemnification and
advancement of expenses authorized in or ordered by a court pursuant to this
section (a) does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under these
Articles of Incorporation or the Bylaws of the corporation, or any other
agreement, vote of stockholders or disinterested directors or otherwise, for
either an action in his official capacity or an action in another capacity
while holding his office, except that indemnification, unless ordered by a
court pursuant to subsection 2 hereof or for the advancement of the expenses
made pursuant to subsection 5 hereof, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts or
omissions involved intentional misconduct, fraud or a knowing violation of the
law and was material to the cause of action and (b) continues for a person who
has ceased to be a director, officer, employee or agent and inures to the
benefit of the heirs, executors and administrators of such a person.
Section 7. Insurance. The Board of Directors may, in its discretion,
direct that the corporation purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or rising out of his
status as such, whether or not the corporation would have the power to
indemnify him against liability under the provision of this Section.
Section 8. Settlement by Corporation. The right of any person to be
indemnified shall be subject always to the right of the corporation by the
Board of Directors, in lieu of such indemnification, to settle any such claim,
action, suit or proceeding at the expense of the corporation by the payment of
the amount of such settlement and the costs and expenses incurred in
connection therewith.
Article IX of the Articles of Incorporation of the Registrant provides as
follows:
The Corporation shall indemnify all officers, directors and agents of the
Corporation to the fullest extent permitted by Nevada law, as the same exists
or may hereafter be amended. Such indemnification shall include, but not be
limited to, indemnification against monetary damages for breach of fiduciary
duty.
II-2
Article XIV of the Articles of Incorporation of the Registrant provides
as follows:
No director or officer of the Corporation shall have any personal
liability to the Corporation or its stock holders for damages for breach of
fiduciary duty as a director or officer; provided that directors and officers
shall not be exonerated from personal liability for (a) acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law or
(b) the payment of distributions in violation of Section 78.300 of the Nevada
Revised Statutes.
Item 16. Exhibits
The following is a list of exhibits furnished as part of this
Registration Statement:
Exhibit No. Description
4.1 Form of Series B Redeemable Common Stock Purchase Warrant
Certificate for the purchase of shares of Registrant's
Common Stock registered herewith. (Previously filed as
Exhibit 4.1 to Amendment No. 3 to the Company's
Registration Statement on Form SB-2 (Registration No. 33-
72052) and incorporated herein by reference).
4.2 Series B Warrant Agreement (Previously filed as Exhibit
4.2 to Amendment No. 3 to the Company's Registration
Statement on Form SB-2 (Registration No. 33-72052) and
incorporated herein by reference).
4.3 First Amended and Restated Series B Warrant Agreement
dated effective as of February 10, 1997*
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP*
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP
(Included in Exhibit 5.1)*
23.2 Consent of Hein + Associates LLP*
24.1 Power of Attorney (included in Part II of this
Registration Statement)*
* Filed herewith.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
set forth in the registration statement;
(iii) Include any additional or changed material information
on the plan of distribution.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
II-3
(2) For determining any liability under the Securities Act of
1933, to treat each post-effective amendment as a new registration statement
of securities offered, and the offering of the securities at that time shall
be deemed to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Golden, State of Colorado on January 22, 1999.
GOOD TIMES RESTAURANTS INC.
By:/s/ Boyd E. Hoback
_____________________________________
Boyd E. Hoback, Director, Chief Executive
Officer and President (a principal executive
officer and director)
GENERAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, each person whose signature appears
below, hereby authorizes, constitutes and appoints Boyd E. Hoback his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this registration statement for the registration under the
Securities Act of 1933, as amended, of securities of Good Times Restaurants
Inc. and any and all pre-effective and post-effective amendments to this
registration statement, together with any and all exhibits thereto and other
documents required to be filed with respect hereto and thereto and to file the
same with the Securities and Exchange Commission and any other regulatory
authority, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite or
necessary to be done, hereby ratifying and confirming all that said attorney-
in-fact and agent or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof and incorporate such changes as such attorney-in-
fact deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Geoffrey R. Bailey
_____________________ Chairman of the Board of January 22, 1999
Geoffrey R. Bailey Directors, Director
/s/ Boyd E. Hoback
______________________ Director, Chief Executive January 22, 1999
Boyd E. Hoback Officer and President (a
principal executive
officer and director)
/s/ Susan Knutson
______________________ Controller January 22, 1999
Susan Knutson
/s/Dan W. James II Director January 22, 1999
______________________
Dan W. James II
______________________ Director January 22, 1999
Richard J. Stark
/s/ Thomas P. McCarty Director January 22, 1999
______________________
Thomas P. McCarty
/s/ Alan A Teran Director January 22, 1999
______________________
Alan A. Teran
/s/ David E. Bailey Director January 22, 1999
______________________
David E. Bailey
EXHIBIT 4.3
FIRST AMENDED AND RESTATED SERIES B WARRANT AGREEMENT
THIS FIRST AMENDED AND RESTATED SERIES B WARRANT AGREEMENT (this
"Agreement"), dated effective as of February 10, 1997, is between GOOD TIMES
RESTAURANTS INC., a Nevada corporation (the "Company") and AMERICAN SECURITIES
TRANSFER, INCORPORATED, an independent stock transfer company (called, as well
as any successor acting as warrant agent under this Agreement, the "Warrant
Agent"),
RECITALS:
A. This Agreement amends and restates the Series B Warrant Agreement
dated as of February 10, 1994 between the Company and the Warrant Agent.
B. In connection with a public offering by the Company in 1994, the
Company issued 1,400,000 Series B Redeemable Common Stock Purchase Warrants
(the "Warrants") to purchase in the aggregate up to 1,400,000 shares of common
stock, par value $.001 per share ("Common Stock") (all shares to be purchased
upon the exercise of the Warrants being called the "Warrant Stock").
C. The Common Stock and Warrants were issued in units (the "Units"),
each Unit consisting of two shares of Common Stock and one Warrant, with each
Warrant being exercisable for the purchase of one share of Common Stock. The
Units were offered and sold pursuant to a Registration Statement on Form SB-2,
as amended (Registration No. 33-72052), filed with the Securities and Exchange
Commission on November 23, 1993.
D. The Company desires to enter into this Agreement to establish the
terms and conditions of the Warrants, to set forth the rights of the
registered holders of the Warrants (the "Warrant Holders"), and to provide for
the issuance, transfer and exercise of the Warrants and other matters; and
E. The Company desires the Warrant Agent to act on behalf of the
Company with respect to the Warrants and the Warrant Agent is willing so to
act under the terms of this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual agreements stated in this
Agreement, the Company and the Warrant Agent agree:
Section 1. Warrants. Subject to the provisions of this Agreement, a
Warrant shall entitle the Warrant Holder by exercising such Warrant to
purchase from the Company one share of Common Stock at a price of $2.00 per
Share for each Warrant (called the "Exercise Price"). The Warrants will be
exercisable at any time and will expire at 3:00 p.m., Denver, Colorado time,
on February 10, 1999, or, if such day in Denver, Colorado shall be either a
holiday or a day on which banks are authorized or obligated by law to be
closed, then at 3:00 p.m., Denver, Colorado time, on the next following day
which in Denver, Colorado, shall not be either a holiday or a day on which
banks are authorized or obligated by law to be closed (the actual time of
expiration of the Warrants being called the "Expiration Date"). At the time
of expiration of the Warrants, any unexercised Warrants will become void and
all rights of the Warrant Holders under the terms of the Warrant Certificates,
this Agreement and otherwise shall cease.
Section 2. Warrant Certificates. The Warrant Certificates shall be
in registered form only. The text of the Warrant Certificates, including the
forms of exercise and assignment to be printed on the reverse side of the
Warrant Certificate, shall be substantially in the form set forth in Exhibit A
attached to this Agreement. Warrant Certificates shall be signed by, or shall
bear the facsimile signatures of the President or a Vice President of the
Company and the Secretary or an Assistant Secretary of the Company, and shall
bear a facsimile of the Company's seal. If any person whose facsimile
signature has been placed upon any Warrant Certificates as the signature of an
officer of the Company shall have ceased to be such officer before such
Warrant Certificate is countersigned, issued and delivered, such Warrant
Certificate may be countersigned, issued and delivered with the same effect as
if such person had not ceased to be such officer. Any Warrant Certificate may
be signed by, or may bear the facsimile signature of, any person who at the
actual date of the preparation of such Warrant Certificate shall be a proper
officer of the Company to sign such Warrant Certificate even though such
person was not such an officer upon the date of this Agreement.
Warrant Certificates shall be manually countersigned by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent is hereby authorized to countersign and deliver to, or in accordance
with the instructions of, any Warrant Holder any Warrant Certificate which is
properly issued under the terms of this Agreement.
Section 3. Registration of Transfers and Exchanges.
a. The Warrant Agent shall from time to time register
the transfer of any outstanding Warrant Certificate upon records to be
maintained by the Warrant Agent for such purpose upon surrender of such
Warrant Certificate to the Warrant Agent for transfer, accompanied by
appropriate instruments of transfer in form satisfactory to the Company and
the Warrant Agent and duly executed by the Warrant Holder or a duly authorized
attorney. Upon any such registration of transfer, a new Warrant Certificate
shall be issued in the name of and to the transferee and the surrendered
Warrant Certificate shall be cancelled.
b. Any outstanding Warrant Certificate may be
surrendered by the Warrant Holder to the Warrant Agent in exchange for other
Warrant Certificates of like tenor and representing in the aggregate the same
number of Warrants. Warrant Certificates so surrendered for exchange shall be
cancelled.
Section 4. Exercise of Warrants.
a. Warrants may be exercised at any time on or before
the Expiration Date. Warrants shall be exercised by the Warrant Holder by
surrendering to the Warrant Agent the Warrant Certificate evidencing such
Warrants with the exercise form on the reverse of such Warrant Certificate
duly completed and executed and paying to the Warrant Agent, in lawful money
of the United States of America in cash or by good check (either certified or
a bank cashier's check) payable to the order of the Company, the Exercise
Price for the Shares to be purchased. In order for the exercise of a Warrant
to be valid, a properly executed Warrant with the appropriate payment must be
received by the Warrant Agent prior to the Expiration Date.
b. Upon receipt of a Warrant Certificate with the
exercise form thereon duly executed together with payment in full of the
Exercise Price for the Shares for which Warrants are then being exercised, the
Warrant Agent shall requisition from any transfer agent for the Shares, and
upon receipt shall make delivery of, certificates evidencing the total number
of whole Shares for which Warrants are then being exercised in such names and
denomination as are required for delivery to, or in accordance with the
instructions of, the Warrant Holder. The Warrant Agent shall promptly deliver
to the Company cash or checks received in payment of the Exercise price, and
shall establish such procedures as the Company reasonably requests to assure
collection of such payments before delivering such certificates. Such
certificates for the Shares shall be deemed to be issued, and the person to
whom such Shares are issued of record shall be deemed to have become a holder,
of record of such Shares, as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price, whichever shall last occur,
provided that if the books of the Company with respect to the Shares shall be
closed as of such date, the certificates for such Shares shall be deemed to be
issued, and the person to whom such Shares are issued of record shall be
deemed to have become a holder of record of such Shares, as of the date on
which such books shall next be open (whether before, on or after the
Expiration Date).
c. If less than all of the Warrants evidenced by a
Warrant Certificate are exercised upon a single occasion, a new Warrant
Certificate for the balance of the Warrants not so exercised shall be issued
and delivered to, or in accordance with transfer instructions properly given
by, the Warrant Holder.
d. The Company may, in whole or in part and at any time
and from time to time, on not less than 45 days' written notice, call the
Warrants for redemption at a price of $.05 per share covered thereby at any
time after the closing high bid price of the Common Stock (if then traded on
the over-the-counter market other than on the National Market System of
NASDAQ) or the closing price of the Common Stock (if then traded on the
National Market System of NASDAQ or on a national securities exchange) exceeds
150% of the Exercise Price for a period of 20 of the 30 consecutive trading
days immediately preceding the date of mailing of the notice of redemption.
Notice of any redemption will be mailed to the Warrant Holders at their
addresses of record. The Warrants may be exercised any time prior to the
specified redemption date set forth in such notice; provided, however, that in
the event exercise of the Warrants is not made prior to the redemption date,
then the right to purchase the shares of Common Stock underlying such Warrants
shall be forfeited.
e. All Warrant Certificates surrendered upon exercise of
Warrants shall be cancelled.
Section 5. Reduction of Exercise Price and/or Extension of Expiration
Date. At any time prior to the Expiration Date, the Company may reduce the
Exercise Price and/or extend the Expiration Date effective on thirty days'
prior written notice to the Warrant Holders. A copy of the resolution of the
Board of Directors of the Company authorizing such extension shall be made
available by the Company for inspection by the Warrant Holders and the Warrant
Agent during such 30-day notice period.
Section 6. Payment of Taxes. The Company will pay all taxes
attributable to the initial issuance of Warrant Stock upon exercise of
Warrants. The Company shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue of any Warrant
Certificates or in the issue of any certificates for Warrant Stock in a name
other than that of the Warrant Holder upon the exercise of any Warrant.
Section 7. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate is mutilated, lost, stolen, or destroyed, the Company and the
Warrant Agent may, on such terms as to indemnity or otherwise as they may in
their discretion impose (which shall, in the case of a mutilated Warrant
Certificate, include the surrender thereof), and upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such loss, theft or
destruction, issue a substitute Warrant Certificate of like denomination and
tenor as the Warrant Certificate so mutilated, lost, stolen or destroyed.
Applicants for such substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay any reasonable charges as the Company or
the Warrant Agent may prescribe. If any Warrant Certificate is mutilated,
lost, stolen or destroyed, and the Warrant Holder desires to exercise any
Warrants evidenced thereby, the Company and the Warrant Agent may authorize
such exercise upon receipt of such evidence and indemnity in lieu of issuing
any substitute Warrant Certificate to evidence the Warrants so exercised.
Section 8. Reservation of Shares.
a. The Company will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock, for the purpose of enabling it to satisfy
any obligation to issue Warrant Stock upon exercise of Warrants, the full
number of shares issuable upon the exercise of all outstanding Warrants.
b. The Company covenants that all Warrant Stock which
may be issued upon exercise of Warrants will upon issue be fully paid and
nonassessable by the Company and free from all taxes, liens, charges and
security interests with respect to the issue thereof.
Section 9. Obtaining of Governmental Approvals and Stock Exchange
Listings. If any Warrant Stock issuable upon the exercise of Warrants require
registration or approval of any governmental authority or the taking of any
other action under the laws of the United States of America, any state or any
political subdivision thereof before such Warrant Stock may be validly and
lawfully issued, the Company will in good faith and as expeditiously as
possible after surrender of the Warrant Certificates to the Warrant Agent for
exercise of Warrants evidenced thereby endeavor to secure such registration or
approval or to take such other action, provided that in no event shall such
Warrant Stock be issued, and the Company shall have the authority to suspend
the exercise of all Warrants, until such registration or approval shall have
been obtained or such other action shall have been taken, but all Warrants the
exercise of which is requested during any such suspension shall be exercisable
at the Exercise Price and upon the other conditions in effect on the date of
surrender of the Warrant Certificate and payment of the Exercise Price. If
the Company is unable to obtain such registration or approval within a
reasonable time, the Company may direct the Warrant Agent to return the
Warrant to the Warrant Holder and inform him that such Warrant may not be
exercised in such jurisdiction, and the Warrant Agent shall comply with such
directions.
Section 10. Adjustments of Exercise Price and Either Shares
Purchasable or Number of Warrants. The Exercise Price and either the number
of Shares purchasable upon exercise of each Warrant or the number of Warrants
outstanding shall be subject to adjustment from time to time as provided
herein.
a. Adjustment of Number of Shares. In case the Company
shall at any time issue shares of Common Stock by way of dividend or other
distribution to the holders of the outstanding shares of Common Stock of the
Company or subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall be proportionately decreased in the case of such issuance
(on the day following the date fixed for determining shareholders entitled to
receive such dividend or other distribution) or decreased in the case of such
subdivision or increased in the case of such combination (on the date that
such subdivision or combination shall become effective).
b. No Adjustment for Small Amounts. The Company shall
not be required to give effect to any adjustment in the Exercise Price unless
and until the net effect of one or more adjustments, determined as above
provided, shall have required a change of the Exercise Price by at least one
cent, but when the cumulative net effect of more than one adjustment so
determined shall be to change the actual Exercise Price by at least one cent,
such change in the Exercise Price shall thereupon be given effect.
c. Number of Shares Adjusted. Upon any adjustment of
the Exercise Price, the holder of this Warrant shall thereafter (until another
such adjustment) be entitled to purchase, at the new Exercise Price, the
number of Shares of Common Stock, calculated to the nearest full share,
obtained by multiplying the number of Shares initially issuable upon exercise
of this Warrant by the Exercise Price in effect on the date hereof and
dividing the product so obtained by the new Exercise Price.
d. Officer's Certificate. Whenever the Exercise Price
shall be adjusted as required herein, the Company shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its principal office,
and with its Warrant Agent, an officer's certificate showing the adjusted
Exercise Price determined as herein provided and setting forth in reasonable
detail the facts requiring such adjustment. Each such officer's certificate
shall be made available at all reasonable times for inspection by the Holder
and the Company shall, forthwith after each such adjustment, give notice
thereof to the Holder. Such certificate shall be conclusive as to the
correctness of such adjustment.
Section 11. Notices to Warrant Holders. So long as this Warrant
shall be outstanding and unexercised (i) if the Company shall pay any dividend
or make any distribution upon the Common Stock; or (ii) if the Company shall
offer to the holders of Common Stock for subscription or purchase by them any
shares of stock of any class or any other rights; or (iii) if any capital
reorganization of the Company; reclassification of the capital stock of the
Company; or voluntary or involuntary dissolution, liquidation or winding up of
the Company shall be effected, then, in any such case, the Company shall cause
to be given to the Holder, at least ten calendar days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record
is to be taken for the purpose of such dividend, distribution or rights, or
(y) such reclassification, reorganization, consolidation, dissolution,
liquidation or winding up is to take place and the date, if any is to be
fixed, as of which the holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other property
deliverable upon such reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation or winding up.
Section 12. Reclassification, Reorganization or Merger. In case of
(i) any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than a change in par
value, or from par value to no par value, or from no par value to par value,
or as a result of an issuance of Common Stock by way of dividend or other
distribution or of a subdivision or combination); or (ii) in case the Company
should spin-off a subsidiary by distributing to the shareholders of the
Company, as a dividend or otherwise, the capital stock of the subsidiary, the
Company shall cause effective provision to be made so that the Holder shall
have the right thereafter, by exercising this Warrant prior to the Expiration
Date, to purchase or acquire the kind and amount of shares of stock and other
securities and property receivable upon such reclassification, capital
reorganization or other change, consolidation, as if the Holder had exercised
this Warrant prior to such transaction. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section shall similarly apply to successive
reclassification, capital reorganizations and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
Section 13. Merger or Sale. In case of (i) any consolidation or
merger of the Company with or into another corporation (other than a merger
with a subsidiary in which merger the Company is the continuing corporation)
or (ii) any sale, lease, exchange or other disposition of all or substantially
all of the property and assets of the Company not in the usual and regular
course of the Company's business and in a transaction or series of
transactions requiring shareholder approval under the laws of the State of
Colorado, the Company shall cause notice thereof to be given to the Holder at
least 30 calendar days prior to the anticipated date of closing of such
transaction and, notwithstanding any other provisions of this Agreement, the
Warrant shall expire upon the completion of such transaction to the extent not
exercised prior to such transaction closing.
Section 14. No Fractional Shares. No fractional shares or scrip
representing fractional shares will be issued upon exercise of this Warrant.
With respect to any fraction of a share called for upon exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the then current fair market value per Share determined by the
Company.
Section 15. Notice to Warrant Holders. Any notice required to be
given to the Holder shall be deemed to have been given if in writing and upon
deposit in the United States mail, with postage fully prepaid, and addressed
to the Holder at the registered address maintained on the books of the Company
or the Warrant Agent. Any notice or other communication to the Company shall
be deemed to have been given or to be effective for any purpose only upon
actual receipt thereof by the Company at its principal office or by the
Warrant Agent, as the case may be.
The form of Warrant Certificate need not be changed because of any
adjustment in the Exercise Price, the number of Shares purchasable upon the
exercise of a Warrant or the number of Warrants outstanding and Warrant
Certificates issued after any such adjustment may state the same Exercise
Price, the same number of Warrants and the same number of Shares purchasable
upon exercise of a Warrant as are stated in the Warrant Certificates issued
before such adjustment as if such adjustment had not occurred. However, the
Company may at any time with the approval of the Warrant Agent make any change
in the form of Warrant Certificate that it may deem appropriate and that does
not affect the substance thereof and any Warrant Certificates thereafter
issued or countersigned, whether in exchange or substitution for an
outstanding Warrant Certificate or otherwise, may be in the form as so
changed.
Section 16. Rights of Warrant Holders.
a. No Warrant Holder, as such, shall have any rights of
a stockholder of the Company, either at law or equity, and the rights of the
Warrant Holders, as such, are limited to those rights expressly provided in
this Agreement or in the Warrant Certificates.
b. The Company and the Warrant Agent may treat the
registered Warrant Holder in respect of any Warrant Certificate as the
absolute owner thereof for all purposes notwithstanding any notice to the
contrary.
Section 17. Warrant Agent.
a. The Company hereby appoints the Warrant Agent to act
as the agent of the Company in accordance with this Agreement and the Warrant
Agent hereby accepts such appointment.
b. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions
by all of which the Company and every Warrant Holder, by acceptance of any
Warrants, shall be bound:
(1) The statements contained in this Agreement and
in the Warrant Certificates shall be taken as statements of the Company and
the Warrant Agent assumes no responsibility for the correctness of any of the
same except such as describe the Warrant Agent or action taken or to be taken
by it.
(2) The Warrant Agent shall not be responsible for
any failure of the Company to comply with any of the covenants contained in
this Agreement or in the Warrant Certificates to be complied with by the
Company.
(3) The Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for the Company) and the
Warrant Agent shall incur no liability or responsibility to the Company or to
any Warrant Holder in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of
such counsel, provided the Warrant Agent shall have exercised reasonable care
in the selection and continued employment of such counsel.
(4) The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrant Holder for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate or
other paper, document or instrument believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(5) The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by the Warrant Agent in the
execution of this Agreement including fees for exercise of the Warrants, to
reimburse the Warrant Agent for all expenses, taxes and governmental charges
and other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
counsel fees, for anything done or omitted by the Warrant Agent in the
execution of this Agreement except as a result of the Warrant Agent's
negligence, bad faith or willful misconduct.
(6) The Warrant Agent shall be under no obligation
to institute any action, suit or legal proceeding or to take any other action
likely to involve expense unless the Company or one or more Warrant Holders
shall furnish the Warrant Agent with reasonable security and indemnity for any
costs and expenses which may be incurred, but this provision shall not affect
the power of the Warrant Agent to take such action as the Warrant Agent may
consider proper, whether with or without any such security or indemnity. All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrant
Certificates or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent, and any recovery
of judgment shall be for the ratable benefit of the Warrant Holders as their
respective rights or interests may appear.
(7) The Warrant Agent and any stockholder,
director, officer or employee of the Warrant Agent may buy, sell or deal in
any of the Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to the Company or otherwise as fully and freely as
though it were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company
or for any other legal entity.
(8) The Warrant Agent shall act hereunder solely as
agent for the Company, and its duties shall be determined solely by the
provisions hereof.
Section 18. Merger, Consolidation or Change of Name of Warrant Agent.
a. Any corporation into which the Warrant Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Warrant
Agent shall be a party, or any corporation succeeding to the transfer agency
business of the Warrant Agent, shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on
the part of the parties hereto, except that the prior written consent thereto
of the Company shall first be obtained. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement, and
in case at that time any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor to the Warrant Agent may
adopt the countersignature of the original Warrant Agent; and in case at that
time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates
either in the name of the predecessor Warrant Agent or in the name of the
successor Warrant Agent; and in all such cases such Warrant Certificates shall
have the full force provided in the Warrant Certificates and in this
Agreement.
b. In case at any time the name of the Warrant Agent
shall be changed and at such time any of the Warrant Certificates shall have
been countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name; and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
Section 19. Change of Warrant Agent. The Warrant Agent may resign
and be discharged from its duties under this Agreement by giving to the
Company notice in writing, and by giving notice in writing to each Warrant
Holder at his address appearing in the Warrant register, specifying a date
when such resignation shall take affect, which notice shall be sent at least
30 days prior to the date so specified and which notice shall be paid for by
the Company. If the Warrant Agent shall resign or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of
30 days after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or by any Warrant
Holder, then any Warrant Holder may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Pending
appointment of a successor to the Warrant Agent, either by the Company or by
such court, the duties of the Warrant Agent shall be carried out by the
Company. Any successor Warrant Agent, whether appointed by the Company or by
such a court, shall be a transfer agent registered pursuant to Section 17A(c)
of the Securities Exchange Act of 1934, as amended. After appointment the
successor Warrant Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Warrant Agent
without further act or deed and the former Warrant Agent shall deliver and
transfer to the successor Warrant Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Failure to give any notice provided for in
this Section, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be.
Section 20. Notices. Any notice or demand authorized by this
Agreement to be given or made by the Warrant Agent or by any Warrant Holder to
or on the Company shall be sufficiently given or made only if in writing and
upon actual receipt at the following address (until another address is filed
in writing by the Company with the Warrant Agent):
Good Times Restaurants Inc.
8620 Wolff Court, Suite 330
Westminster, CO 80030
Attention:____________________
Any notice or demand authorized by this Agreement to be given or made by any
Warrant Holder or by the Company to or on the Warrant Agent shall be
sufficiently given or made if sent by mail, certified or registered, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company), as follows:
American Securities Transfer, Incorporated
938 Quail Street, Suite 101
Lakewood, CO 80215
Attention:_____________________
Any distribution, notice or demand required or authorized by this Agreement to
be given or made by the Company or the Warrant Agent to or on the Warrant
Holders shall be sufficiently given or made if in writing and upon deposit in
the United States mail, first-class or registered, postage prepaid, addressed
to the Warrant Holders at their last known addresses as they shall appear on
the registration books for the Warrant Certificates maintained by the Warrant
Agent.
Section 21. Supplements and Amendments. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any Warrant Holders in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other change
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not adversely affect the interests of the Warrant Holders.
Section 22. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 23. Termination. This Agreement shall terminate at the close
of business on the Expiration Date or such earlier date upon which all
Warrants have been exercised. The provisions of Section 11 shall survive such
terminations.
Section 24. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Colorado and for all purposes shall be construed in
accordance with the laws of said State.
Section 25. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the Warrant Holders any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Warrant Agent and the
Warrant Holders.
Section 26. Agreement Available to Warrant Holders. A copy of this
Agreement shall be available at all reasonable times at the office of the
Warrant Agent for inspection by any Warrant Holder. As a condition of such
inspection, the Warrant Agent may require any Warrant Holder to submit his
Warrant Certificate for inspection.
Section 27. Counterparts. This Agreement may be executed in any
number of counterparts, each of such counterparts shall for all purposes be
deemed to be an original and all such counterparts shall together constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
GOOD TIMES RESTAURANTS INC.,
[seal] a Nevada corporation
/s/ Boyd E. Hoback
By:________________________________
Boyd E. Hoback, President
ATTEST:
/s/ Susan Knutson
_________________________________
Secretary
AMERICAN SECURITIES TRANSFER,
INCORPORATED, an independent stock
transfer company
[seal]
/s/ Greg D. Tubbs
By:_____________________________
Gregory D. Tibbs, Vice President
ATTEST:
/s/ illegible
__________________________________
Asst. Secretary
EXHIBIT 5.1 and 23.1
January 21, 1999
Good Times Restaurants Inc.
601 Corporate Circle
Golden, Colorado 80401
Re: Common Stock Underlying Series B Redeemable Common Stock
Purchase Warrants
Ladies and Gentlemen:
We have acted as your counsel in connection with the proposed offer and
sale of up to 322,000 shares of your Common Stock underlying your issued and
outstanding Series B Redeemable Common Stock Purchase Warrants (the "Series B
Warrants"), as more fully described in the Post-Effective Amendment No. 4 to
Form SB-2 on Form S-3 Registration Statement (File No. 33-72052) (the
"Registration Statement") to be filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
In that connection, we have examined originals and copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of the
opinion expressed below, including but not limited to the Registration
Statement.
Based upon the foregoing, we are of the opinion that the shares of
Common Stock that may be issued by you pursuant to the exercise of the Series
B Warrants have been duly authorized and, when duly paid for in accordance
with the terms of the Series B Warrants and sold in the manner described in
the Registration Statement, will be duly and validly issued, fully paid and
nonassessable.
We express no opinion concerning the laws of any jurisdiction other
than the laws of the United States and the laws of the State of Colorado.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to this firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration
Statement.
Very truly yours,
/s/ Ballard Spahr Andrews & Ingersoll, LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective
Amendment No. 4 to Form SB-2 on Form S-3 Registration Statement of Good Times
Restaurants Inc. (Registration Statement No. 33-72052) of our report dated
November 13, 1998 on our audits of the consolidated financial statements of
Good Times Restaurants Inc. as of September 30, 1998 and for the years ended
September 30, 1998 and 1997, which report is included in the Good Times
Restaurants Inc. Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1998 (File No. 0-18590). We also consent to the reference to
our firm under the caption "Experts" in this Registration Statement.
/s/ Hein + Associates LLP
_______________________
HEIN + ASSOCIATES LLP
Denver, Colorado
January 19, 1999
