ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is made this 11th day of
August, 1995, between GOOD TIMES RESTAURANTS, INC., a Nevada
corporation ("Good Times"), and HOT CONCEPTS MANAGEMENT
GROUP, LLC, a Colorado limited liability company
("Purchaser"). Good Times and Purchaser hereby agree as
follows:
I.SALE AND PURCHASE OF RTC STOCK
1.1 Sale and Purchase of RTC Stock. Good Times owns
all of the issued and outstanding capital stock of Round The
Corner Restaurants, Inc., a Delaware Corporation ("RTC").
RTC owns all of the issued and outstanding capital stock of
Round The Corner Restaurants, Inc., a Colorado corporation
("RTC-Colo"). Upon the terms and conditions of this
Agreement, at the Closing (as hereinafter defined) Good
Times shall sell and assign to Purchaser and Purchaser shall
purchase and acquire from Good Times all of the capital
stock of RTC (the "RTC Stock").
1.2 Purchase Price. The purchase price for the RTC
Stock shall be $100,000 in cash plus the negotiable
promissory note of Purchaser, RTC and RTC - Colo, made
jointly and severally, in the form attached hereto as
Exhibit A (the "Promissory Note"). The principal amount of
the Promissory Note shall be $200,000 increased to the
extent, if any, that specified current liabilities of RTC
and RTC - Colo on September 30, 1995, exceed specified
current assets of RTC and RTC - Colo by less than $350,000.
For this purpose current liabilities and current assets of
RTC and RTC - Colo shall be determined as set forth on
Exhibit B hereto. To the extent that such specified current
liabilities of RTC and RTC - Colo on September 30, 1995,
exceed such specified current assets of RTC and RTC - Colo
on that date by more than $350,000, Good Times shall pay a
portion of such liabilities equal to such excess. Any
billings for accounts payable of RTC or RTC - Colo relating
to goods and services acquired prior to September 30, 1995,
shall be paid by Purchaser, RTC or RTC - Colo, and the
amount of the Promissory Note shall be decreased by the
total amount of such payments. In the event that the
landlord of the Round The Corner Restaurant located at
Southwest Plaza Mall in the Denver, Colorado metropolitan
area requires RTC- Colo to commence on or before
December 31, 1995, the remodeling of the front of such
restaurant, Good Times shall pay to RTC - Colo an amount
equal to the lesser of one-half of the cost of such
remodeling or $15,000.
1.3 Promissory Note.
(a) The Promissory Note shall bear interest at a
per annum rate equal to two percent below the prime lending
rate as printed in the Business Investors Daily determined
on the last day of each calendar quarter beginning with
September 30, 1995. Principal and interest of the Promissory
Note shall be paid in eighty equal quarterly installments on
the last day of each calendar quarter beginning with
December 31, 1995, with the amount of such equal
installments adjusted each calendar quarter if necessary to
reflect changes in the foregoing prime lending rate in order
to amortize the Promissory Note in equal installments over
the remaining quarterly installments. Not withstanding the
foregoing, all remaining principal and interest of the
Promissory Note shall be due and payable in full on
September 30, 2005.
(b) The obligation represented by the Promissory
Note shall be secured by a pledge in favor of Good Times of
the assets, including the leasehold interests, of the two
(2) Round The Corner Restaurants located at Westminster
Mall, and at Southwest Plaza Mall in the Denver, Colorado
metropolitan area. Upon the request of Purchaser, and with
the approval of Good Times which approval shall not be
unreasonably withheld, Purchaser may substitute as security
other assets of equivalent value for the assets of such
restaurants. Good Times shall, upon the request of Purchaser
or RTC, subordinate the obligation represented by the
Promissory Note, but not the pledge of the foregoing assets,
if required by a lender to Purchaser, RTC or RTC - Colo, and
if the proceeds of such loan are to be utilized for capital
expenditures by RTC or RTC - Colo, provided that such
capital expenditure utilization with respect to which such
subordination shall occur shall not exceed $500,000 for each
Round The Corner Restaurant. In the event of such
subordination, upon any liquidation of Purchaser, RTC or
RTC - Colo, no payment shall be made to Good Times on the
Promissory Note, except from the proceeds of the security
therefor, until such senior loan has been paid (including
payment form the assets securing such senior loan).
(c) The obligation represented by the Promissory Note
shall be accelerated, and be due and payable in full
upon any failure to make any payment thereunder when
due or upon any failure of Purchaser, RTC or RTC - Colo
to comply with the terms of any other obligation of it
for borrowed money. Any default under a lease for the
assets of a pledged Round The Corner Restaurant or any
failure to exercise a renewal option within ninety
days of the termination of such lease (or to replace
the lease with a new lease on more favorable terms)
shall also constitute a default under, and resulting
the acceleration of, the Promissory Note.
1.4 Retention of Assets. RTC or RTC - Colo shall
distribute to Good Times prior to Closing, and Good Times
shall retain for its own account the following assets of RTC
or RTC - Colo:
(i) The limited partner interests in RTC
Associate IV and RTC Associates V;
(ii) The Promissory note receivable from Theresa's
Pizza Colore in the current principal amount
of $8,296.90;
(iii) The promissory note receivable of Ed Massey &
Associates Inc. in the principal amount of
approximately $10,000; and
(iv) The real property and other assets, including
furniture, fixtures, equipment, and current
assets in existence at the Closing, but not
the leasehold interest in the ground,
utilized for the Round The Corner Restaurant
at Hampden and Locust in Denver, Colorado
(the "Park Hampden Restaurant"). Good Times
shall assume and discharge the liabilities of
the Park Hampden Restaurant in existence at
Closing, and such assets and liabilities
shall not be considered in the computation
with respect to the principal amount of the
Promissory Note described in paragraph 1.2
above. RTC or RTC - Colo shall retain the
ownership and operation of the Park Hampden
Restaurant and shall utilize therefor the
real property and other assets thereof
distributed to and retained by Good Times. As
consideration for the use of such assets
Purchaser, RTC or RTC - Colo shall pay to
Good Times fifty percent of the net cash flow
of the Park Hampden Restaurant realized each
calendar quarter determined after deducting
therefrom a management fee of $200 per
month. Any deficit cash flow for a calendar
quarter shall be reimbursed by Good Times.
Such arrangement shall continue for so long
as requested by Good Times and shall be
pursuant to the terms and conditions of the
Lease attached hereto as Exhibit C.
(iv) The right to receive back the real property
lease deposits for the Park Hampden
Restaurant, the Round The Corner Restaurant
at the Union Plaza Shopping Center in
Colorado Springs, Colorado, and the former
Round The Corner Restaurant in the Hill area
of Boulder, Colorado together with any
utility or other comparable refundable
deposits with respect to the Park Hampden
Restaurant.
1.5 Retention of Liabilities. Good Times shall assume
and discharge in accordance with its terms the promissory
note payment obligation of RTC or RTC - Colo to Boulder
Radiologists, Inc. Defined Benefit Plan - Dubach in the
principal amount of $150,000.
II. REPRESENTATIONS AND WARRANTIES OF GOOD TIMES
Good Times hereby represents and warrants to Purchaser
that;
2.1 Corporate Organization and Good Standing. Good
Times, RTC and RTC - Colo are corporations duly organized,
validly existing and in good standing under the laws of the
States of Nevada, Delaware and Colorado, respectively.
2.2 Capital Stock of RTC. The outstanding capital
stock of RTC consists of 2, 258,883 common shares all of which
are owned be Good Times free and clear of all liens,
encumbrances, charges, assessments, and all of which are duly
authorized, validly issued, fully paid and non assessable. Except
with respect to Round The Corner Limited Partnership 1991-I, RTC
Limited of Colorado, and RTC Limited of Colorado -1986, there are
no outstanding subscriptions options, warrants, rights
convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or
other securities of RTC.
2.3 Authority. Good Times has the corporate power and
authority to execute, deliver, and perform this Agreement and the
transactions contemplated hereby, and the performance of the
terms and provisions hereof has been duly authorized by all
necessary corporate actions on the part of Good Times. This
Agreement constitutes the legal, valid and binding obligation of
Good Times enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency
or other similar laws affecting creditors' rights generally.
2.4 Necessary Approvals and Consents. Except as set
forth on Schedule 2.4 hereto, no authorization, consent. permit
or license or approval of any person or governmental entity is
necessary for the execution of this Agreement and consummation of
the transactions contemplated hereby.
2.5 Full Disclosure. To the best of the knowledge and
belief of Good Times, and in view of the fact that Scott LeFever,
President of Purchaser, has been President of RTC and RTC - Colo
since June 1993, and employed by RTC and RTC - Colo since 1978,
with such employment being in executive positions since 1983,
Purchaser is aware of all material information with respect to
the business, assets, liabilities, commitments, and financial
position of RTC and RTC - Colo.
III. REPRESENTATION AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Good
Times that:
3.1 Corporate Organization and Good Standing.
Purchaser is a Colorado limited company duly organized, validly
existing and in good standing under the laws of the State of
Colorado.
3.2 Authority. Purchaser has the corporate power and
authority to execute, deliver, and perform this Agreement and the
transactions contemplated hereby, and the performance of the
terms and provisions hereof has been duly authorized by all
necessary corporate actions on the part of Purchaser. This
Agreement constitutes the legal, valid and binding obligation of
Purchaser enforceable against it in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency
or other similar laws affecting creditors' rights generally.
3.3 Necessary Approvals and Consents. Except as set
forth on Schedules 2.4, and 3.3 hereto, no authorization,
consent, permit or license or approval of any person or
governmental entity is necessary for the execution of this
Agreement, and the consummation of the transactions contemplated
hereby.
3.4 Financial. On or before August 25, 1995, Purchaser
shall furnish to Good Times a balance sheet which has been
prepared in accordance with generally accepted accounting
principles showing a liquid net worth of not less than $350,000.
Purchaser does not have any liabilities or obligations, absolute,
contingent or otherwise, except as set forth in this Agreement.
3.5 Investment Representations. Purchaser acknowledges
that Scott LeFever, President of Purchaser, has been President of
RTC and RTC - Colo since June 1993, and employed by RTC and
RTC - Colo since 1978, with such employment being in executive
position s since 1983. Accordingly, Purchaser further
acknowledges and represents that Purchaser is fully informed with
respect to the business and financial condition of RTC and
RTC - Colo, and requires no further information thereon from Good
Times, and as a result thereof Purchaser is aware of and accepts
the risks and uncertainties associate with the ownership of the
RTC Stock. Purchaser represents and warrants that it is acquiring
the RTC Stock for investment and not for distribution within the
meaning of the Securities Act of 1933, as amended, and Purchaser
understands that the RTC Stock may not be transferred except in
compliance with such Act. Purchaser also understands and agrees
that a legend will be placed upon certificates representing the
Rtc Stock in accordance with the foregoing representations and
understandings and in conformance with the requirements of such
Act and the rules and regulations thereunder.
IV. CONDITIONS TO CLOSING
4.1 Conditions to Obligations of Good Times. The
obligations of Good Times under this Agreement and to accomplish
the Closing are conditioned upon (i) the representations and
warranties of Purchaser being true and correct at the Closing
with the same force and effect as if made at the Closing and Good
Times having received a certificate of the President of Purchaser
attesting to the foregoing, (ii) no suite or other proceeding
being pending in which it is sought to restrain or prohibit or to
obtain damages or other release in connection with this Agreement
or the transactions contemplated hereby and (iii) all consents
necessary for the consummation of the transactions contemplated
by this Agreement, which are required prior to the Closing,
having been obtained.
4.2 Conditions to Obligations or Purchaser. The
obligations of Purchaser under this Agreement and to accomplish
the Closing hereof are conditioned upon (i) the representations
and warranties of Good Times being true and correct at the
Closing with the same force and effect as if made at the Closing
and Purchaser having received a certificate of the President of
Good Times attesting to the foregoing, (ii) no suite or other
proceeding being pending in which it is sought to restrain or
prohibit or to obtain damages or other release in connection
with this Agreement or the transactions contemplated hereby and
(iii) all consents necessary for the consummation of the
transactions contemplated by this Agreement, which are required
prior to the Closing, having been obtained. The obligation of
Purchaser to accomplish the Closing is also conditioned upon
there having been entered into a new lease for the Round The
Corner Restaurant located at Crossroads Mall in Boulder,
Colorado with a term of not less than five years,and an initial
base rent of not more than $76,100 combined with a percentage
rent of not more than seven percent and otherwise containing
terms and conditions generally customary for restaurants of that
nature located in similar shopping centers.
V. CLOSING
The Closing of the Sale and Purchase of the RTC Stock
shall take place on September 30 1995, or on such other earlier
date as Good Times and Purchaser may agree. At the Closing Good
Times and Purchaser may agree. At the Closing Good Times shall
sign and deliver to Purchaser certificates evidencing the RTC
Stock and Purchaser shall deliver to Good Times $100,000 cash and
the Promissory Note. Good Times, Purchaser, RTC and RTC - Colo
shall also execute and deliver at Closing, or thereafter if
appropriate, all other documents and instruments, including the
Lease, as may reasonably be required to carry out the intent,
terms and conditions of this Agreement.
VI. CONDUCT OF RTC BUSINESS PENDING THE CLOSING
Prior to the Closing, Good Times shall:
6.1 Full Access. Provide to Purchaser and its
authorized representatives, investors and lenders full access to
all properties, books and records of RTC and RTC - Colo.
6.2 Carry on Business In Regular Course. Cause RTC
and RTC - Colo to carry on their business in the ordinary course
and to utilize its reasonable best efforts to preserve such
business intact, including maintaining intact RTC's and
RTC - Colo's relationships with its employees, suppliers and
customers.
6.3 Consent. Use its reasonable best efforts to obtain
the consents set forth on Schedule 2.4.
6.4 Negative Covenants. Not cause RTC or RTC - Colo to
enter into any agreement or commitment or to incur any liability
or obligation other than in the ordinary course of its business
and pursuant to customary terms and procedures, nor, by
dividend, distribution, redemption of stock or otherwise, cause
RTC or RTC - Colo to transfer to Good Times any assets other than
provided for by this Agreement.
VII. INDEMNIFICATIONS
7.1 By Good Times. Good Times shall indemnify and hold
Purchaser, RTC and RTC - Colo harmless against, from and in
respect of any and all losses, liabilities, claims, costs, and
expenses with respect to any claims of limited partners accruing
prior to Closing under RTC Limited of Colorado, RTC Limited of
Colorado - 1986, Round The Corner, California Street Ltd., RTC
Florida Mall Partnership Ltd. and Round The Corner Limited
Partnership - I.
7.2 By Purchaser and RTC. Purchaser, RTC and RTC -
Colo shall, jointly and severally, indemnify and hold Good Times
harmless against, from and in respect of any and all losses,
liabilities, claims, costs, and expenses with respect to Good
Times, RTC and RTC - Colo, including the limited partnerships
described in paragraph 7.1., accruing form and after Closing.
VII. OTHER AGREEMENTS
8.1 Stock Options. Good Times shall cause the stock
purchase options held on the date of the Agreement by Scott
LeFever, Donald Beck, Timothy Swanson, Katherine Lee, and
Christy Idler to be amended in order to enable such stock options
to be exercised in accordance with their terms for the remainder
of their stated durations irrespective of the sale of the RTC
Stock by Good Times.
8.2 Additional Indemnification. Purchasers, RTC and
RTC - Colo, by their execution of this Agreement, hereby agree to
indemnify and hold harmless Good Times Dan W. James II and
B. Edwin Massey with respect to any liability accruing after the
Closing under the real property leases for the Round The Corner
Restaurants located in the Westland Shopping Center, on Colorado
Boulevard, and in the Aurora Mall in the Denver, Colorado,
metropolitan area and Good Times with respect to the prospective
real property lease for the Round The Corner Restaurant located
in the Crossroads shopping Center in Boulder, Colorado.
8.3 Repair and Maintenance Service. Good Times shall
provide its restaurant repair and maintenance personnel for the
use at Purchaser's restaurants at a cost of $25 per hour for up
to an aggregate of 3333 hours. Such personnel use shall be with
reasonable notice to Good Times and shall be scheduled in a
manner not to unreasonably interfere with the use of such
personnel by Good Times. Purchaser shall pay for all materials
utilized in such repairs and maintenance work.
IX. MISCELLANEOUS
9.1 Survival of Representations and Warranties. The
representation and warranties of Good Times and Purchaser shall
survive the Closing hereunder.
9.2 Resignation of Directors. Upon the Closing
Boyd E. Hoback and B. Edwin Massey shall resign as Directors of
RTC.
9.3 Benefit. This Agreement and all of its terms and
conditions shall inure to the benefit and be binding upon Good
Times and PUrchaser and their respective successors. Not
withstanding the foregoing, Purchaser may not assign its rights
under this Agreement.
IN WITNESS WHEREOF this Agreement has been executed the
the day and year first above written.
GOOD TIMES RESTAURANTS, INC.
By:
President - Boyd Hoback
ROUND THE CORNER RESTAURANTS, INC.,
a Delaware Corporation
By:
President Scott LeFever
ROUND THE CORNER RESTAURANTS, INC.,
a Colorado Corporation
By:
President Scott LeFever
HOT CONCEPTS MANAGEMENT GROUP, LLC.
a Colorado Limited Liability Company
By:
Manager Ron Olson