SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities and
Exchange Act of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Good Times Restaurants Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than
the Registrant)
Payment of Filing Fee (check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14-a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
_____________________________________________
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement Number:
3) Filing party:
4) Date filed:
GOOD TIMES RESTAURANTS INC.
8620 Wolff Court
Suite 330
Westminster, Colorado 80030
_______________
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held September 12, 1996
A special meeting of stockholders of Good Times Restaurants Inc.,
a Nevada corporation, will be held at the Doubletree Hotel, 8773
Yates Drive, Westminster, Colorado, on September 12, 1996 at 2:00
P.M., local time:
(1) To consider and act upon an Amendment to the Company's
Articles of Incorporation to authorize the issuance of
5,000,000 shares of preferred stock, $.01 par value,
1,000,000 of which will be designated as Series A
Convertible Preferred Stock and sold to an investor and
4,000,000 of which will be reserved for future issuance
in the discretion of the Board of Directors.
Details relating to the above matter are set forth in the
attached Proxy Statement. The Company's management is not aware
of any other matters to come before the meeting. The Board of
Directors has fixed July 25, 1996 as the record date for
stockholders entitled to notice of, and to vote at, the meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, YOU ARE URGED TO DATE,
SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY. A BUSINESS
REPLY ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Sincerely,
Susan Knutson
Secretary
Denver, Colorado
July 29, 1996
GOOD TIMES RESTAURANTS INC.
8620 Wolff Court
Suite 330
Westminster, Colorado 80030
(303) 427-4221
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 12, 1996
The accompanying proxy is solicited by the Board of
Directors of GOOD TIMES RESTAURANTS INC. (the "Company") for use
at a Special Meeting of Stockholders to be held at the Doubletree
Hotel, 8773 Yates Drive, Westminster, Colorado on September 12,
1996 at 2:00 P.M., local time, and at any and all adjournments
thereof for the purpose set forth in the Notice of Special
Meeting of Stockholders. The Company anticipates that this Proxy
Statement and the accompanying form of proxy will be first sent
or given to stockholders on or about July 29, 1996.
Any stockholder giving such a proxy has the right to revoke
the proxy at any time before it is voted by written notice to the
Secretary of the Company, by executing a new proxy bearing a
later date or by voting in person at the Special Meeting. A
proxy, when executed and not revoked, will be voted in accordance
therewith. If no instructions are given, proxies will be voted
FOR the proposal presented by management.
All expenses in connection with the solicitation of proxies
will be borne by the Company. The Company will also supply
brokers or persons holding stock in their names or in the names
of their nominees with such number of proxies and Proxy
Statements as they may require for mailing to beneficial owners
and will reimburse them for their reasonable expenses incurred in
connection therewith. Certain Directors, Officers and employees
of the Company not specifically employed for that purpose may
solicit proxies without additional compensation by mail,
telephone, facsimile transmission, telegraph or personal
interview. The Company has also engaged Regan & Associates,
Inc., an unrelated company, to solicit proxies on the Company's
behalf by additional mailings and telephone solicitations. The
Company has agreed to pay Regan & Associates a professional fee
of $4,500 plus out-of-pocket expenses (not to exceed $2,250) for
its services, with fifty percent of the professional fee to be
waived in the event that the required affirmative vote to approve
the proposal set forth in the Notice of Special Meeting of
Stockholders is not obtained at such meeting.
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT
CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB/A, INCLUDING
FINANCIAL STATEMENTS AND SCHEDULES THERETO, FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 1995, AND/OR A COPY OF THE SERIES A
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT DATED AS OF MAY
31, 1996, AS AMENDED, INCLUDING SCHEDULES THERETO, TO EACH RECORD
OR BENEFICIAL OWNER OF ITS COMMON STOCK ON THE RECORD DATE. SUCH
REQUESTS SHOULD BE DIRECTED TO THE COMPANY AT 8620 WOLFF COURT,
SUITE 330, WESTMINSTER, COLORADO 80030, ATTENTION: SUSAN
KNUTSON.
VOTING SECURITIES
The close of business on July 25, 1996, has been fixed by
the Board of Directors of the Company as the record date for the
determination of stockholders entitled to notice of and to vote
at the Special Meeting. On that date, the Company had
outstanding 6,314,824 shares of Common Stock, $.001 par value,
all of which are entitled to vote on the matters to come before
the Special Meeting.
Each outstanding share of Common Stock entitles the holder
to one vote. The presence in person or by proxy of a majority of
the outstanding shares of Common Stock is necessary to constitute
a quorum at the meeting. If a quorum is not present, the meeting
may be adjourned from time to time until a quorum is obtained.
The affirmative vote of a majority of the outstanding shares will
be required to approve the matter specified herein to be voted
upon.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of July 16, 1996, certain
information with respect to the record and beneficial ownership
of the Company's Common Stock by all stockholders known by the
Company to own more than five percent of its outstanding Common
Stock, and by all Directors and executive officers individually
and as a
group.
Percentage of
Name, Address and Number of Shares Outstanding
Position Held Beneficially Owned Common Stock**
Dan W. James II 400,365(1) 6.3%
8620 Wolff Court,
Suite 330
Westminster, CO 80030
Chairman, Director
First Registration
Corporation 183,270(1)(2) 2.9%
of Oklahoma City
120 N. Robinson Ave.
P.O. Box 25189
Oklahoma City, OK 73125
Shareholder
Boyd E. Hoback 165,424(3) 2.6%
8620 Wolff Court,
Suite 330
Westminster, CO 80030
Officer and Director
B. Edwin Massey 113,799(4) 1.8%
8620 Wolff Court,
Suite 330
Westminster, CO 80030
Director
Richard J. Stark 17,083(5) *
6075 South Quebec
Suite 103
Englewood, CO 80111
Director
Thomas P. McCarty 5,500(6) *
8779 Johnson Street
Arvada, CO 80005
Director
Alan A. Teran 5,000(7) *
2126 Knollwood Drive
Boulder, CO 80302
Director
Robert D. Turrill 60,703(8) *
8620 Wolff Court,
Suite 330
Westminster, CO 80030
Officer
All executive officers 951,144(9) 14.4%
and Directors as a
group (7 persons)
* Less than one percent
** Rule 13-d under the Securities Exchange Act of 1934,
involving the determination of beneficial owners of
securities, includes as beneficial owners of securities,
among others, any person who directly or indirectly, through
any contract, arrangement, understanding, relationship or
otherwise has or shares voting power and/or investment power
with respect to such securities; and, any person who has the
right to acquire beneficial ownership of such security
within sixty days through means, including, but not limited
to, the exercise of any option, warrant, right or conversion
of a security. Any securities not outstanding that are
subject to such options, warrants, rights or conversion
privileges shall be deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the
class owned by such person, but shall not be deemed to be
outstanding for the purpose of computing the percentage of
the class owned by any other person.
All shares held by the executive officers, Directors and
principal stockholders listed above are restricted
securities and as such are subject to limitations on
resale. The shares may be sold pursuant to Rule 144 under
the Securities Act of 1933, as amended, under certain
circumstances.
(1) Includes 7,682 shares owned by the son of Mr. James, an
aggregate of 6,966 shares owned by the Kent B. Hayes Trust,
and an aggregate of 3,483 shares covered by presently
exercisable warrants held by the Kent B. Hayes Trust for the
benefit of Mr. James.
(2) May be deemed to be beneficially owned by Mr. James since
First Registration Corporation of Oklahoma City is the
nominee of trusts administered by and for Mr. James and
members of his family.
(3) Includes an aggregate of 151,666 shares covered by presently
exercisable options and warrants.
(4) Includes 20,804 shares owned by the children of Mr. Massey
and an aggregate of 52,063 shares covered by presently
exercisable warrants. Mr. Massey has indicated that he will
resign as a Director in order to facilitate the election of
the Directors by the holders of Series A Convertible
Preferred Stock as discussed in this Proxy Statement.
(5) Includes an aggregate of 10,689 shares covered by presently
exercisable options and warrants.
(6) Includes an aggregate of 5,000 shares covered by presently
exercisable options.
(7) Includes an aggregate of 5,000 shares covered by presently
exercisable options.
(8) Includes an aggregate of 50,000 shares covered by presently
exercisable options.
(9) Includes 277,901 shares covered by presently exercisable
options and warrants and 218,722 shares held of record by
others which may be deemed to be beneficially owned.
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
OF THE COMPANY
The Board of Directors of the Company believes it advisable
and in the best interests of the Company to amend its Articles of
Incorporation to authorize 5,000,000 shares of Preferred Stock,
$.01 par value (the "Amendment"). One million of such shares
will be designated as Series A Convertible Preferred Stock (the
"Series A Preferred Stock") in order that the financing
transaction described below may be consummated. The proposed
Amendment shall be substantially in the form set forth in Exhibit
A attached to this Proxy Statement. Approval of the Amendment
requires the affirmative vote of the holders of a majority of the
outstanding shares of the Company's Common Stock. The Board of
Directors has unanimously approved the Amendment and recommends
that stockholders vote FOR the Amendment.
The Company has entered into a Series A Convertible
Preferred Stock Purchase Agreement dated as of May 31, 1996 (the
"Purchase Agreement"), with The Bailey Company, a Colorado
limited partnership ("Bailey"), pursuant to which Bailey has
agreed to purchase and Good Times has agreed to sell 1,000,000
shares of Series A Convertible Preferred Stock. The Purchase
Agreement is contingent upon, among other matters, approval by
the stockholders of the Amendment authorizing and designating the
Series A Preferred Stock. The following discussion summarizes
the principal terms of the Purchase Agreement and the Series A
Preferred Stock. A copy of the full Purchase Agreement
containing such terms may be obtained from the Company in the
manner specified on pages 1 and 2 of this Proxy Statement.
The purchase price to be paid by Bailey for the 1,000,000
shares of Series A Preferred Stock is $1.00 per share, or a total
of $1,000,000. The purchase and payment will take place in three
installments. The first installment will occur on the first day
of the month following stockholder approval of the authorization
of the Amendment and Bailey will purchase on such date 500,000
shares of the Series A Preferred Stock in consideration of
$250,000 cash and the cancellation of a promissory note of the
Company payable to Bailey in the amount of $250,000 arising out
of a loan in that amount made by Bailey to the Company on March
1, 1996. Bailey will purchase the second installment of 250,000
shares of the Series A Preferred Stock three months after the
date of the first installment for $250,000 cash. Bailey will
purchase the third installment of 250,000 shares of the Series A
Preferred Stock three months after the date of the second
installment for $250,000 cash. The proceeds of the purchase are
intended to be used by the Company for the development of new
Good Times restaurants through the period ending December 31,
1997. The Company understands that Bailey has extensive
experience in the restaurant business through its ownership and
operation of a substantial number of Arby's Roast Beef
Restaurants in Colorado.
In reaching its decision to approve the Purchase Agreement
with Bailey, and therefore to approve the Amendment authorizing
the Preferred Stock and designating the Series A Preferred Stock
and to recommend that the stockholders of the Company vote for
the Amendment, the Board of Directors considered a number of
factors, including the following:
(a) The Company's need for additional
capital to develop additional Good Times
restaurants;
(b) The prior inability of the Company
to attract such capital from other investors
on more favorable terms; and
(c) The successful experience of Bailey
and its principals in the fast-food
restaurant business.
The Board of Directors also considered the fairness opinion on
the Purchase Agreement of Cohig & Associates, Inc. described
below.
The purpose of the proposed Amendment to the Company's
Articles of Incorporation to authorize 4,000,000 shares of
Preferred Stock in addition to the 1,000,000 shares of Series A
Preferred Stock is to improve the Company's ability and
flexibility in meeting its future capital needs. The Company
however has no current plans to issue shares of Preferred Stock
in addition to the Series A Preferred Stock.
If the proposed Amendment is adopted, the additional shares
of Preferred Stock may be issued from time to time in one or more
series and each such series will have such designations, rates of
dividend, redemption prices, voting rights, liquidation
preferences, sinking fund provisions, conversion or exchange
rights and other special rights as the Board of Directors may fix
prior to the time of issuance of such series. The Board of
Directors will be empowered to authorize the Company to issue
some or all of the additional Preferred Stock at such time or
times, to such persons and for such consideration as it may deem
desirable without a further vote of the stockholders and without
offering such Preferred Stock to the holders of the Common Stock
of the Company.
The principal terms of the Purchase Agreement and of the
Series A Preferred Stock are as follows:
Voting. Except with respect to certain matters relating to
the Board of Directors (see "Board Size and Membership"), the
Series A Preferred Stock will vote together with the Common Stock
of the Company as a single class on all actions to be taken by
the stockholders of the Company. Each share of Series A
Preferred Stock will be entitled to such number of votes on each
action equal to the number of shares of Common Stock into which
such share of the Series A Preferred Stock is convertible at the
time of such vote. The Purchase Agreement and the provisions of
the Articles of Incorporation with respect to the Series A
Preferred Stock may not however be amended without the
affirmative vote of the holders of at least two-thirds of the
outstanding shares of the Series A Preferred Stock.
Dividends. The holders of the Series A Preferred Stock will
be entitled to cumulative cash dividends equal to $.08 per share
per annum, or eight percent of the purchase price paid for the
Series A Preferred Stock, commencing to accrue on the date the
shares of Series A Preferred Stock are issued. The dividends are
payable on the first day of each calendar quarter commencing July
1, 1997 and shall be payable at the option of each holder of the
Series A Preferred Stock in cash or in shares of Common Stock of
the Company. For such purpose the number of shares of Common
Stock will be calculated by dividing the dollar amount of the
dividend by 75 percent of the average of the public market
closing prices of the Common Stock for the 14 trading days
immediately prior to the dividend payment date (the "Dividend
Conversion Rate"). Notwithstanding the foregoing, the divisor
for the first dividend will not be less than $.46875. If a
holder elects to receive a dividend in cash, the Company may
defer the payment of the dividend if in the reasonable judgment
of the Board of Directors payment thereof would jeopardize the
Company's ability to meet its current and foreseeable
obligations.
Liquidation. Upon any liquidation, dissolution or winding
up of the Company, the holders of the shares of Series A
Preferred Stock will be entitled to a preference over the Common
Stock equal to the original purchase price of the Series A
Preferred Stock plus all accrued dividends which have not been
paid.
Conversion. The holders of the Series A Preferred Stock
will have the right at any time during each conversion period
shown on the table below to convert up to the maximum number of
shares of Series A Preferred Stock shown on such table for such
conversion period into the number of shares of Common Stock which
is equal to the number of shares of Series A Preferred Stock to
be converted divided by the applicable conversion factor (or per
share price) as set forth in the table. Also shown in the table
is the percentage of all outstanding Common Stock that full
conversion during each period would represent assuming no further
issuances of Common Stock by the Company other than pursuant to
such conversions. If the holders of Series A Preferred Stock
convert all of such shares at the earliest permitted times, they
will hold an aggregate of 25.3% of all outstanding Common Stock
assuming no further issuances of Common Stock by the Company
other than pursuant to such conversions.
Percentage of
Maximum Outstanding
Aggregate Common Stock
Number of Represented
Conversion Preferred Conversion by Full
Period Shares Factor Conversion
October 1, 1997 - 500,000 .46875 14.5%
October 31, 1997
November 1, 1997 - 500,000(1) .56875 12.2%
December 31, 1997
January 1, 1998 - 250,000 .46875 7.8%(2)
January 31, 1998 500,000(1) .56875 11.4%
February 1, 1998 - 750,000(1) .56875 17.3%
March 31, 1998
April 1, 1998 - 250,000 .46875 7.8%(2)
April 30, 1998 750,000(1) .56875 16.2%
May 1, 1998 - 1,000,000(1) .56875 21.8%
April 30, 1999
May 1, 1999 1,000,000(1) the greater of (i) the
and thereafter Dividend Conversion Rate
at the time of conversion
and (ii) .46875
(1) To the extent not previously converted.
(2) Assumes no prior conversions.
Redemption. The Company may from time to time at its option
redeem some or all of the shares of the Series A Preferred Stock
at any time after the second anniversary of the initial purchase
thereof. The redemption price will be the original purchase
price plus any unpaid accrued dividends. The Company must give
at least thirty (but not more than forty) days' prior notice of
any intent to redeem and the holders of the Series A Preferred
Stock subject to redemption may after such notice convert their
Series A Preferred Stock to Common Stock as provided above.
Board Size and Membership. The number of Directors of the
Company may not be increased above seven without the affirmative
vote of the holders of at least two-thirds of the then
outstanding shares of Series A Preferred Stock. The holders of
the Series A Preferred Stock will have the right to elect two
directors to the Board of Directors of the Company, one of which
Directors will have the right to serve as Chairman of the Board.
The remaining Directors will be elected by all Common and Series
A Preferred stockholders voting as a group. In the event (i) the
Board fails to declare a Series A Preferred Stock dividend,
unless such dividend is to be paid in cash and then unless in the
reasonable judgement of the Board of Directors payment thereof
would jeopardize the Company's ability to meet its current and
foreseeable obligations; (ii) the Company files for bankruptcy or
is adjudged insolvent; or (iii) the Company fails to cure a
breach of the agreement between it and the holders of the Series
A Preferred Stock after notice thereof, the holders of the Series
A Preferred Stock may remove Directors and elect four Directors
to the Board.
Restrictions. While any shares of Series A Preferred Stock
are outstanding, the Company may not do any of the following
without the consent of the Directors which are elected by the
holders of the Series A Preferred Stock, as described above:
a. Consent to any liquidation or dissolution of the
Company; consolidate, merge or acquire the stock or assets of any
entity (except for one exception relating to certain Steak-Out
restaurants); or sell or transfer a majority of its assets.
b. Incur any debt that is payable over a period of longer
than a year at any time when the Company's earnings before
interest, taxes, depreciation and amortization are less than 120
percent of the aggregate payments on long-term debt which the
Company reasonably expects to make over the 12 months after such
debt is to be incurred.
c. Amend or repeal its Articles of Incorporation.
d. Pay any dividend on any shares of stock other than the
Series A Preferred Stock, except for stock dividends, or purchase
any shares of the Company's Common Stock except pursuant to any
contractual obligation to repurchase the Common Stock of former
employees.
e. Engage in any business other than the restaurant
business.
Future Transactions. The Purchase Agreement grants Bailey a
right of participation in any future equity offerings of the
Company on the same terms as those offered to others to the
extent necessary to preserve Bailey's proportionate equity
interest in the Company represented by the Series A Preferred
Stock and the Common Stock issued upon conversion of the Series A
Preferred Stock. This right of participation does not apply to
securities issued: (A) upon conversion of the Preferred Stock;
(B) as a stock dividend or stock split of the Common Stock; (C)
pursuant to outstanding subscriptions, warrants, options and
convertible securities; (D) solely in consideration for the
acquisition by the Company of another entity; or (E) pursuant to
a firm commitment underwriting. In addition, the Board of
Directors may not authorize the issuance of additional Preferred
Stock without the concurrence of Bailey so long as Bailey holds
two-thirds of the Series A Preferred Stock and/or the Common
Stock acquired by the conversion thereof. The Board of Directors
also may not authorize an amendment to the Company's Articles of
Incorporation increasing or decreasing the authorized Common
Stock of the Company without the concurrence of Bailey so long as
Bailey holds two-thirds of the Series A Preferred Stock and/or
the Common Stock acquired by the conversion thereof.
In connection with the proposed transaction, the Company has
entered into a Registration Rights Agreement whereby the holders
of the Series A Preferred Stock are given certain registration
rights with respect to the public resale of Common Stock acquired
by conversion of the Series A Preferred Stock. The holders of
fifty percent or more of such stock may require the Company to
register all or a lesser number of such shares for public sale
under the Securities Act of 1933, as amended. The holders of
such Common Stock are limited to two such demands for
registration. Notwithstanding the foregoing, if the Company is
at the time eligible to register its Common Stock using Form S-3
or any successor thereto, any Series A Preferred Stock holder may
require the Company to register its Common Stock on such form,
provided that the reasonably anticipated aggregate price to the
public for such shares would exceed $1,000,000. The limitation
on the number of demands for registration is not applicable to
demands for registration on Form S-3 provided the foregoing
conditions are satisfied.
The holders of the Series A Preferred Stock are also
entitled to notice from the Company of any registration of the
Company's Common Stock on a form which would permit registration
of the Common Stock acquired by conversion of the Series A
Preferred Stock, and to have their shares of Common Stock
registered on such form. The number of shares of Common Stock
which must be so registered may be reduced if the managing
underwriter for a public offering for which the registration is
being made concludes that inclusion in the offering of the number
of shares of Common Stock requested to be registered would
adversely affect the marketing of the securities to be sold by
the Company therein.
The Company has, in effect, a right of first refusal to
purchase any shares of Series A Preferred Stock offered by Bailey
to a third party on the same terms and conditions as those
offered to such third party.
Fairness Opinion. The Company retained Cohig & Associates,
Inc. ("Cohig") to render an opinion as to the fairness from a
financial point of view of the Purchase Agreement and the
issuance of the Series A Preferred Stock to Bailey. Cohig is a
securities and investment banking firm which has been involved in
the evaluation of businesses and their securities for other
companies. Cohig has also acted in the past as an underwriter of
the Company's securities and has maintained a market in the
Common Stock of the Company as well as owned shares of the
Company's Common Stock and its Common Stock purchase warrants.
The Company is paying Cohig a fee of $4,000 for its services in
rendering the fairness opinion. Such fee was based on the time
spent by Cohig and payment of the fee was not contingent upon the
content of the opinion or the approval of the Series A Preferred
Stock.
In arriving at its opinion Cohig:
(i) reviewed the Purchase Agreement, the terms of
the amendment to the Company's Articles of
Incorporation designating the powers, preferences and
rights of the Series A Preferred Stock, financial
information on the Company furnished to it by
management of the Company, including financial
projections for the Company, and publicly available
information on the Company;
(ii) held discussions with the management of the
Company concerning its business, operations and
prospects;
(iii) analyzed the value of the Series A
Preferred Stock based upon its conversion rate,
dividend rate and other terms and based upon the
trading market of the Company's Common Stock;
(iv) considered the revenue, net income, cash flow
and stockholders equity of the Company and changes in
such factors from prior periods to current periods;
(v) reviewed the Registration Rights Agreement to
be entered into by the Company and Bailey;
(vi) reviewed the valuations of publicly traded
companies in the same or similar industry as the
Company; and
(vii) made such other studies and inquiries as
Cohig deemed relevant.
Cohig relied upon and assumed, without independent verification,
the accuracy and completeness of all financial and other
information furnished to it by the Company. With respect to the
financial projections of the Company, Cohig relied upon
management's assurances that such projections had been reasonably
prepared on a basis reflecting the best currently available
estimates and judgments of management.
Based upon the foregoing analysis of the Company and Cohig's
general knowledge of and experience in the valuation of
securities, Cohig concluded that the Purchase Agreement and the
issuance of the Series A Preferred Stock to Bailey is fair from a
financial point of view to the Company's stockholders. The full
opinion of Cohig is attached to this Proxy Statement as Exhibit
B.
Although the proposed Amendment will not change the right of
the holders of the outstanding Common Stock to receive dividends
at such times and in such amounts as the Board of Directors may
determine, satisfaction of any dividend obligations on
outstanding Preferred Stock, including the Series A Preferred
Stock, will reduce the amount of funds available for the payment
of dividends on Common Stock. If additional shares of Common
Stock are issued in the future, which may include issuances
pursuant to the conversion of Preferred Stock, including the
Series A Preferred Stock, the voting rights of the holders of
outstanding Common Stock will be proportionately diluted. The
holders of Series A Preferred Stock are entitled, and the holders
of any other series of Preferred Stock issued would normally be
entitled, to receive, in the event of any liquidation or other
dissolution or winding up of the Company, a liquidation
preference (plus any accrued but unpaid dividends, if cumulative)
before any distribution of assets of the Company is made to the
holders of the Common Stock.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the
next Annual Meeting of Stockholders must be received by the
Company on or before November 30, 1996, in order to be eligible
for inclusion in the Company's proxy statement and form of proxy.
To be so included, a proposal must also comply with all
applicable provisions of Rule 14a-8 under the Securities Exchange
Act of 1934.
OTHER MATTERS
Management does not know of any other matters to be brought
before the Special Meeting. If any other matters not mentioned
in this proxy statement are properly brought before the meeting,
the individuals named in the enclosed proxy intend to vote such
proxy in accordance with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
July 29, 1996
SPECIAL MEETING OF STOCKHOLDERS
GOOD TIMES RESTAURANTS INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT
The undersigned stockholder of Good Times Restaurants Inc.,
a Nevada corporation, hereby appoints Boyd E. Hoback, Chief
Executive Officer and a Director of Good Times Restaurants Inc.,
my proxy to attend and represent me at the Special Meeting of
Stockholders of the corporation to be held on September 12, 1996
at 2:00 p.m., and at any adjournment thereof, and to vote my
shares on any matter or resolution which may come before the
meeting and to take any other action which I could personally
take if present at the meeting.
Proposed Amendment to the Company's Articles of
Incorporation: The Company has proposed to amend its Articles of
Incorporation to authorize 5,000,000 shares of preferred stock,
$.01 par value, 1,000,000 of which will be designated as Series A
Convertible Preferred Stock with rights, preferences and powers
set forth in such amendment.
FOR AGAINST ABSTAIN
PLEASE NOTE: Failure to check one of the boxes will give
management the authority to vote the proxy in its discretion.
Shares owned:
Dated this day of , 1996.
Stockholder
(Sign exactly as name appears on
certificate for shares.)
(When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such.
If signer is a corporation, sign
full corporate name by duly autho-
rized officer. If shares are held
in the name of two or more persons,
all should sign.)