UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Report for Event: September 12, 1996
GOOD TIMES RESTAURANTS INC.
(Exact name of registrant as specified in its charter)
Nevada 0-18590 84-1133368
(State or other (Commission (IRS Employer
jurisdiction of File No.) Identification No.)
incorporation)
8620 Wolff Court, Suite 330, Westminster, CO 80030
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(303) 427-4221
Not applicable
(Former name and address)
Item 1. Changes in Control of Registrant
Not applicable.
Item 2. Acquisition or Disposition of Assets
Not applicable.
Item 3. Bankruptcy or Receivership
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant
Not applicable.
Item 5. Other Events
On October 1, 1996, the Registrant closed the first installment
of the sale of an aggregate of one million shares Series A
Convertible Preferred Stock ("Series A Preferred Stock") to The
Bailey Company ("Bailey") pursuant to the Series A Convertible
Preferred Stock Purchase Agreement dated as of May 31, 1996, as
amended (the "Purchase Agreement"). The aggregate purchase price
for the one million shares of Series A Preferred Stock is $1
million.
The first installment sale was for 500,000 shares in
consideration of $250,000 cash and the cancellation of a
promissory note of the Registrant payable to Bailey in the amount
of $250,000 arising out of a loan in that amount made by Bailey
to the Registrant on March 1, 1996. The second installment of
250,000 shares will occur on January 1, 1996, in consideration of
$250,000 cash and the third installment of 250,000 shares will
occur on April 1, 1996, in consideration of $250,000 cash. The
Registrant intends to use the funds received for the development
of additional Good Times restaurants.
The Series A Preferred Stock was authorized by the stockholders
of the Company at a special meeting held September 12, 1996. At
such meeting, the stockholders approved an amendment to the
Registrant's Articles of Incorporation (the "Amendment")
authorizing five million shares of preferred stock, $.01 par
value. One million of such shares are designated as Series A
Preferred Stock with rights, designations, powers, preferences
and restrictions set forth in the Amendment. The remaining four
million shares may be issued from time to time in one or more
series, as determined by the Board of Directors, subject to
certain restrictions described below.
The holders of the Series A Preferred Stock are entitled to a
dividend of $.08 per share per annum, payable at the option of
the holder in cash or in Common Stock of the Registrant, valued
for such purpose at 75 percent of the average market value of the
Common Stock for the fourteen trading days preceding the dividend
payment date. The one million shares of Series A Preferred Stock
are convertible into a maximum of 2,133,333 shares of Common
Stock in staggered intervals beginning October 1, 1997. The
shares of Series A Preferred Stock are entitled to vote together
with the Common Stock to the extent that such shares are
convertible into Common Stock at the time of the vote. The
Registrant may redeem the outstanding Series A Preferred Stock
upon at least thirty days written notice at any time after
October 1, 1998 by paying to the holders the original purchase
price plus any accrued but unpaid dividends. The Registrant also
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.
The holders of the Series A Preferred Stock also have the right
to elect two Directors to the Board of Directors, one of which
will have the right to serve as Chairman of the Board. In
addition, the number of Directors of the Registrant may not be
increased above seven without the approval of the holders of
two-thirds of the shares of Series A Preferred Stock. In
anticipation of the issuance of the Series A Preferred Stock, Mr.
B. Edwin Massey resigned as a Director of the Registrant
effective June 5, 1996. Bailey has indicated its intention to
elect David Bailey and Geoffrey Bailey to the Board of Directors.
Each of these men has extensive experience in the operation of
fast food restaurants. Upon such election, the Board of
Directors of the Registrant will consist of seven directors.
The holders of the Series A Preferred Stock have certain demand
and "piggyback" registration rights with respect to the shares of
Common Stock acquired by conversion of the Series A Preferred
Stock. The Purchase Agreement also grants to Bailey a right of
participation, with certain exceptions, in any future equity
offerings of the Registrant on the same terms as those offered to
others to the extent necessary to preserve Bailey's proportionate
equity interest in the Registrant represented by the Series A
Preferred Stock and the Common Stock issued upon conversion of
the Series A Preferred Stock. In addition, the Board of
Directors may not authorize the issuance of additional shares of
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.
Item 6. Resignations of Registrant's Directors
Not applicable.
Item 7. Financial Statements and Exhibits.
Not applicable.
Item 8. Change in Fiscal Year
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
GOOD TIMES RESTAURANTS INC.
Date: October 14, 1996 By: /s/ Boyd E. Hoback
Boyd E. Hoback
Its: Chief Executive
Officer and
President