-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OUeEeAAAfy47vN+hed/rG7ArYHCGAaI1NbC53A6SeyYmph1exBfrXPrlQmR5AuF8 K6z6HCSLjIwQttlaTzPWmg== 0000825324-98-000008.txt : 19980807 0000825324-98-000008.hdr.sgml : 19980807 ACCESSION NUMBER: 0000825324-98-000008 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19980806 EFFECTIVENESS DATE: 19980806 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GOOD TIMES RESTAURANTS INC CENTRAL INDEX KEY: 0000825324 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 841133368 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-60813 FILM NUMBER: 98678586 BUSINESS ADDRESS: STREET 1: 8620 WOLFF CT STE 330 CITY: WESTMINSTER STATE: CO ZIP: 80030 BUSINESS PHONE: 3034274221 MAIL ADDRESS: STREET 1: 8620 WOLFF COURT STREET 2: SUITE 330 CITY: WESTMINSTER STATE: CO ZIP: 80030 FORMER COMPANY: FORMER CONFORMED NAME: PARAMOUNT VENTURES INC DATE OF NAME CHANGE: 19900205 S-8 1 As filed with the Securities and Exchange Commission on August 5, 1998 File No. 33- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT Under The Securities Act of 1933 GOOD TIMES RESTAURANTS INC. (Exact name of issuer as specified in its charter) Nevada 84-1133368 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 601 Corporate Circle, Golden, Colorado 80401 (Address of Principal Executive Offices) (Zip Code) Good Times Restaurants Inc. 401(K) Savings and Investment Plan Good Times Restaurants Inc. - 1992 Incentive Stock Option Plan Good Times Restaurants Inc. - 1992 Non-Statutory Stock Option Plan (Full title of the plans) Boyd E. Hoback, President 601 Corporate Circle Golden, Colorado 80401 (Name and address of agent for service) (303) 384-1400 (Telephone number, including area code, of agent for service) Copy to: Roger V. Davidson, Esq. Andrew L. Pidcock, Esq. Cohen Brame & Smith Professional Corporation 1700 Lincoln Street, Suite 1800 Denver, Colorado 80203 CALCULATION OF REGISTRATION FEE Proposed Proposed Title of Maximum Maximum Securities Offering Aggregate Amount to be Amount to be Price Offering of Reg Registered Registered Per Share Price Fee Common Stock, $.001 par value 300,000(1) $2.625(2) $787,500(1) $233 (1 The number of shares of Common Stock includes a maximum of 150,000 shares available for issuance under the Good Times Restaurants Inc. - 1992 Incentive Stock Option Plan, a maximum of 60,000 available for issuance under the Good Times Restaurants Inc. - 1992 Non-Statutory Stock Option Plan and 90,000 shares which the Company estimates will be issued under its 401(k) Savings and Investment Plan over the next several years. This Registration Statement also covers an indeterminate number of additional shares as may be issuable under the Plans by reason of adjustments in the number of shares covered thereby as described in the Plans and Prospectus. (2 Estimated solely for purposes of calculation of the registration fee. Based upon the closing bid price of the Common Stock as quoted on NASDAQ on June 23, 1998, pursuant to Rule 457(c). PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The following documents are deemed to be incorporated by reference in this registration statement and to be a part hereof. 1. The Registrant's annual report on form 10-KSB for its fiscal year ended September 30, 1997. 2. All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") since October 1, 1997. 3. The description of the Registrant's common stock which is contained in the Registrant's registration statement filed pursuant to Section 12 of the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Registrant with the Securities and Exchange Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this registration statement and to be a part hereof from the date of filing of such documents. Item 4. Description of Securities. Incorporated by reference. Item 5. Interests of Named Experts and Counsel. Attorneys at the Company's counsel, Cohen Brame & Smith, own an aggregate of less than 1,000 shares of the Company's Common Stock. Item 6. 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. 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. 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 7. Exemption From Registration Claimed. Inapplicable. Item 8. Exhibits. 4.1 1992 Incentive Stock Option Plan of the Registrant, as amended 4.2 1992 Non-Statutory Stock Option Plan of the Registrant, as amended 4.3 Nonstandardized Prototype Cash or Deferred Profit-Sharing Plan and Trust/Custodial Account for Good Times Drive Thru, Inc. as a Subsidiary of Good Times Restaurants, Inc. 4.4 Good Times Drive Thru, Inc. as a Subsidiary of Good Times Restaurants, Inc. 401(k) Savings and Investment Plan Summary Plan Description 5.1 Opinion of Cohen Brame & Smith Professional Corporation re legality of the Common Stock offered hereby 23.1 Consent of Cohen Brame & Smith Professional Corporation (included in Exhibit 5.1 to this registration statement) 23.2 Consent of Hein & Associates LLP independent certified public accountants Item 9. 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 registration statement is on Form S-3 or Form S-8 and 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 Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for the purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, 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 Act 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 Act and will be governed by the final adjudication of such issue. INDEPENDENT AUDITOR'S REPORT July 6, 1998 Trustees of the Good Times Restaurants Inc. 401(k) Savings and Investment Plan Golden, Colorado We have audited the accompanying statements of net assets available for benefits of Good Times Restaurants Inc. 401(k) Savings and Investment Plan as of September 30, 1997 and 1996 and the related statement of changes in net assets available for benefits with fund information for the years then ended, and the supplemental schedules of assets held for investment purposes as of September 30, 1997 and 1996 and the supplemental schedules of reportable transactions for the years ended September 30, 1997 and 1996. These financial statements and supplementary schedules are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based upon our audits. Except as discussed in the following paragraph, we conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As permitted by 29 CFR 2520.103-8 of the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, investment assets held by Wells Fargo, the custodian of the Plan, and transactions in those assets were excluded from the scope of our audit of the Plan's September 30, 1996 financial statements, except for comparing the information provided by the trustee, which is summarized in Note 3, with the related information included in the financial statements. Because of the significance of the information that we did not audit (summarized in Note 3), we are unable to, and do not, express an opinion on the Plan's financial statements as of September 30, 1996. The form and content of the information included in the September 30, 1996 financial statements, other than that derived from the information certified by the trustee, have been audited by us and, in our opinion, are presented in compliance with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the financial statements referred to above of Good Times Restaurants Inc. 401(k) Savings and Investment Plan as of September 30, 1997 and for the year then ended present fairly, in all material respects, the financial status of Good Times Restaurants Inc. 401(k) Savings and Investment Plan as of September 30, 1997, and changes in its financial status for the year then ended in conformity with generally accepted accounting principles. Certified Public Accountants Denver, Colorado GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS September 30, 1997 1996 ASSETS Investments, at Fair Value: Mutual funds $295,900 $200,800 Good Times Restaurants Inc. common stock 64,900 37,500 Loans to participants 10,000 7,900 Receivables: Employer contribution 17,900 39,000 Participant contributions 7,500 7,400 Total Assets 396,200 292,600 Liabilities - - Net Assets Available for Benefits $396,200 $292,600 See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1997
Fidelity S&P Advisor Invesco Fidelity 500 Stock Equity Select Adv. Equity Fund* Growth* Income Income* ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest & dividends $ 18,600 $ 600 $ 800 $ 500 Net investment gain (loss) (10,800) 5,300 700 4,900 Net earnings on investments 7,800 5,900 1,500 5,400 Contributions: Employer (non-cash) - - - - Participants 4,700 6,600 4,700 9,300 Total Contributions 4,700 6,600 4,700 9,300 Total additions to net assets 12,500 12,500 6,200 14,700 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits & distributions paid to participants 9,200 1,400 1,100 500 Net increase (decrease) prior to interfund transfers 3,300 11,100 5,100 14,200 Interfund transfers 2,400 (1,400) (3,700) (7,700) Net increase (decrease) 5,700 9,700 1,400 6,500 Net assets available for benefits: Beginning of year 21,100 18,500 12,900 17,000 End of year $26,800 $28,200 $14,300 $23,500 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1997.
See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1997
Stagecoach Scudder Invesco Treasury Growth Dynamics Janus Money and Fund* Fund* Market Income* ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest & dividends $ 2,300 $ 5,000 $ 500 $ 1,700 Net investment gain (loss) 5,800 8,100 100 7,300 Net earnings on investments 8,100 13,100 600 9,000 Contributions: Employer (non-cash) - - - - Participants 6,700 20,500 9,600 6,600 Total Contributions 6,700 20,500 9,600 6,600 Total additions to net assets 14,800 33,600 10,200 15,600 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits & distributions paid to participants 6,600 1,500 6,300 1,600 Net increase (decrease) prior to interfund transfers 8,200 32,100 3,900 14,000 Interfund transfers 7,500 1,100 (11,100) 8,700 Net increase (decrease) 15,700 33,200 (7,200) 22,700 Net assets available for benefits: Beginning of year 23,700 36,600 13,100 12,300 End of year $39,400 $69,800 $ 5,900 $35,000 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1997.
See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1997
Strong Strong Templeton Westcore Total Government Foreign Midco Return Securities Fund Growth ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest & dividends $ 600 $ 800 $ 700 $ 1,600 Net investment gain (loss) 400 500 2,400 2,200 Net earnings on investments 1,000 1,300 3,100 3,800 Contributions: Employer - - - - Participants 1,300 3,800 5,400 4,500 Total Contributions 1,300 3,800 5,400 4,500 Total additions to net assets 2,300 5,100 8,500 8,300 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits & distributions paid to participants - 6,000 1,800 900 Net increase (decrease) prior to interfund transfers 2,300 (900) 6,700 7,400 Interfund transfers (800) (2,900) (3,300) (1,100) Net increase (decrease) 1,500 (3,800) 3,400 6,300 Net assets available for benefits: Beginning of year 3,600 15,800 13,400 12,800 End of year $5,100 $12,000 $16,800 $19,100 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1997.
GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1997
Good Times Participant Stock* Loans Other Total ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest & dividends $ - $ - $ - $33,700 Net investment gain (loss) (11,600) - - 15,300 Net earnings on investments (11,600) - - 49,000 Contributions: Employer - - 17,900 17,900 Participants - - - 83,700 Total Contributions - - 17,900 101,600 Total additions to net assets (11,600) - 17,900 150,600 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Benefits & distributions paid to participants 8,300 1,800 - 47,000 Net increase (decrease) prior to interfund transfers (19,900) (1,800) 17,900 103,600 Interfund transfers 47,300 3,900 (38,900) - Net increase (decrease) 27,400 2,100 (21,000) 103,600 Net assets available for benefits: Beginning of year 37,500 7,900 46,400 292,600 End of year $ 64,900 $ 10,000 $ 25,400 $ 396,200 _______________ * Investments account for 5% or more of the plan's net assets available for benefits at September 30, 1997.
See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1996
Fidelity Money Equity Advisor Invesco Market Index Equity Select Account Fund* Growth* Income ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest on participants loans $ - $ - $ - $ - Other interest - 100 100 500 Net investment gain (loss) - 1,900 1,300 (500) Net earning on investments - 2,000 1,400 - Contributions: Employer (non-cash) - - - - Participants - 6,600 7,600 6,900 Total Contributions - 6,600 7,600 6,900 Total additions to net assets - 8,600 9,000 6,900 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Other expense 2,100 - - - Benefits & distributions paid to participants 45,800 10,400 1,100 4,300 Total deductions from net assets 47,900 10,400 1,100 4,300 Net increase (decrease) prior to interfund transfers (47,900) (1,800) 7,900 2,600 Interfund transfers (93,300) 22,900 10,600 10,300 Net increase (decrease) (141,200) 21,100 18,500 12,900 Net assets available for benefits: Beginning of year 141,200 - - - End of year $ - $ 21,100 $ 18,500 $ 12,900 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1996.
See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1996
Stagecoach Scudder Fidelity Invesco Treasury Growth Adv. Equity Dynamics Janus Money and Income* Fund* Fund* Market Income ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest on participants loans $ - $ - $ - $ - $ - Other interest 300 300 400 400 300 Net investment gain (loss) 300 1,800 2,700 - 600 Net earning on investments 600 2,100 3,100 400 900 Contributions: Employer (non-cash) - - - - - Participants 9,300 7,900 19,400 1,600 5,500 Total Contributions 9,300 7,900 19,400 1,600 5,500 Total additions to net assets 9,900 10,000 22,500 2,000 6,400 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Other expense - - - - - Benefits & distributions paid to participants 1,500 1,200 18,900 21,200 5,600 Total deductions from net assets 1,500 1,200 18,900 21,200 5,600 Net increase (decrease) prior to interfund transfers 8,400 8,800 3,600 (19,200) 800 Interfund transfers 8,600 14,900 33,000 32,300 11,500 Net increase (decrease) 17,000 23,700 36,600 13,100 12,300 Net assets available for benefits: Beginning of year - - - - - End of year $ 17,000 $ 23,700 $ 36,600 $ 13,100 $ 12,300 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1996.
See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1996
Strong Strong Templeton Westcore Total Government Foreign Midco Return Securities* Fund Growth ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest on participants loans $ - $ - $ - $ - Other interest - 500 100 100 Net investment gain (loss) 100 (500) 700 1,200 Net earning on investments 100 - 800 1,300 Contributions: Employer - - - - Participants 1,900 7,000 7,000 4,800 Total Contributions 1,900 7,000 7,000 4,800 Total additions to net assets 2,000 7,000 7,800 6,100 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Other expense - - - - Benefits & distributions paid to participants 500 5,900 3,500 600 Total deductions from net assets 500 5,900 3,500 600 Net increase (decrease) prior to interfund transfers 1,500 1,100 4,300 5,500 Interfund transfers 2,100 14,700 9,100 7,300 Net increase (decrease 3,600 15,800 13,400 12,800 Net assets available for benefits: Beginning of year - - - - End of year $ 3,600 $ 15,800 $ 13,400 $ 12,800 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1996.
See accompanying notes to these financial statements. GOOD TIMES RESTAURANTS INC. 401(K) SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED SEPTEMBER 30, 1996
Good Times Participant Stock* Loans Other Total ADDITIONS TO NET ASSETS ATTRIBUTED TO: Earning on Investments: Interest on participants loans $ - $ 400 $ - $ 400 Other interest - - - 3,100 Net investment gain (loss) (47,800) - - (38,200) Net earning on investments (47,800) 400 - (34,700) Contributions: Employer - - 39,000 39,000 Participants 13,600 - 7,400 106,500 Total Contributions 13,600 - 46,400 145,500 Total additions to net assets (34,200) 400 46,400 110,800 DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO: Other expense - - - 2,100 Benefits & distributions paid to participants 8,500 - - 129,000 Total deductions from net assets 8,500 - - 131,100 Net increase (decrease) prior to interfund transfers (42,700) 400 46,400 (20,300) Interfund transfers (24,100) 1,100 (61,000) - Net increase (decrease (66,800) 1,500 (14,600) (20,300) Net assets available for benefits: Beginning of year 104,300 6,400 61,000 312,900 End of year $ 37,500 $ 7,900 $ 46,400 $ 292,600 _______________ * Investments account for 5% or more of the Plan's net assets available for benefits at September 30, 1996.
See accompanying notes to these financial statements. 1. Summary Description of the Plan: The following description of the Good Times Restaurants Inc. (the "Company" or "Employer") 401(k) Savings and Investment Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. The Plan receives all contributions from the Company. Nature of Operations - The Plan became effective on April 1, 1992, and has a year-end of September 30. The Plan is a defined contribution profit sharing plan covering all employees who have completed a year of service and are at least 21 years old. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan is intended to be a "Qualified" plan under Internal Revenue Code (IRC) Section 401(a). As such, contributions made to the Plan are not taxable to the participant until distributed. Contributions - Each participant may contribute up to 14% of eligible compensation, subject to the limits of IRC Section 402(g). Management of the Company may also elect to make matching contributions to the Plan. For the years ended September 30, 1997 and 1996, management of the Company elected to make a matching contributions equal to 25% and 50%, respectively, of each participant's salary deferrals, up to a maximum matching contribution of 6% of eligible compensation. Management of the Company may also elect to make discretionary contributions to the Plan. Management can elect to make discretionary contributions to either all non-highly compensated employees, or to all eligible employees. Management of the Company elected to make no discretionary contributions for the plan years ended September 30, 1997 and 1996. Total employer and participant contributions must not exceed the annual limitation set forth by IRC Section 402(g). All matching contributions are made by the Company in the form of Good Times Inc. common stock, which is valued at the quoted market price as of the last day of the Plan year. Participant Accounts - Each participant's account is credited with the employee's contributions and an allocation of the employer's contribution. Allocation of employer contributions are based on the ratio of each individual participant's eligible compensation to the eligible compensation of all participants who receive contributions. Plan income is allocated to participant accounts on a pro rata basis based on account balances. Vesting - Participants are immediately vested in their elective contributions plus actual earnings thereon. Vesting in the remainder of their accounts is based on years of continuous service. A participant becomes 100% vested after five years of credited service. A participant's account also becomes fully vested in the event of total disability or death, or upon reaching the normal retirement age of 65. Payment of Benefits - A participant's account balance may be distributed when the participant terminates from service, retires, or dies. Benefits may be received in a lump sum, an annuity, or a combination of both. Participant Loans - Participants may borrow from the Plan in an amount greater than $1,000 up to a maximum of the lesser of $50,000 or 50 percent of the participant's vested account balance. Loans must be repaid within five years (unless the loan is for the purchase of a home) and bear interest at rates similar to those being charged by local commercial banks. Interest rates on participant loans ranged from 10.3% to 11.8% for the years ended September 30, 1997 and 1996. Administrative Expenses - The Company pays certain expenses related to the Plan including payroll and other general and administrative expenses of administering the Plan, and audit fees. Forfeited Accounts - At September 30, 1997 and 1996, forfeitures totaled $2,600 and $2,300, respectively. These amounts were used to reduce the employer matching contribution. 2. Summary of Significant Accounting Policies: Basis of Accounting - The financial statements of the Plan are presented on the accrual basis of accounting. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investment Valuation - The Plan's investments are stated at fair value. Shares of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end. Participant loans are valued at cost which approximates fair value. Payments of Benefits - Benefits are recorded when paid. Fair Value of Financial Instruments - The Company's financial instruments include investments and loans to participants. Investments are recorded at fair value. The difference between the fair value and the carrying value of participant loans is immaterial to the financial statements taken as a whole. 3. Investments: The Plan's custodian has certified that the following information is complete and accurate: Investments at September 30, 1996: Equity Index Fund $ 21,100 Fidelity Advisor Equity Growth 18,500 Invesco Select Income 12,900 Fidelity Advisor Equity Income 17,000 Invesco Dynamics Fund 23,700 Janus Fund 36,600 Stagecoach Treasury Money Market 13,100 Scudder Growth and Income 12,300 Strong Total Return 3,600 Strong Government Securities 15,800 Templeton Foreign Fund 13,400 Westcore Midco Growth 12,800 Good Times Common Stock 37,500 Total investments $238,300 Participant Loans $ 7,900 Earnings (loss) from investments for the year ended September 30, 1996: Equity Index Fund $ 2,000 Fidelity Advisor Equity Growth 1,400 Invesco Select Income - Fidelity Advisor Equity Income 600 Invesco Dynamics Fund 2,100 Janus Fund 3,100 Stagecoach Treasury Money Market 400 Scudder Growth and Income 900 Strong Total Return 100 Strong Government Securities - Templeton Foreign Fund 800 Westcore Midco Growth 1,300 Good Times Common Stock (47,800) Interest on Participant Loans 400 Total (loss) $(34,700) Upon enrolling in the Plan, participants may direct that contributions be invested in any of the following investments, and in any percentage determined by the participant: Wells Fargo S&P 500 Stock Fund - The Fund seeks to provide total returns comparable to the returns of the S&P 500 stock index. Fidelity Advisor Equity Growth - The Fund seeks aggressive capital growth by investing in growth stocks, preferred stocks, convertible securities, and corporate debt obligations. Invesco Select Income - The Fund seeks a high level of current income by investing in government and corporate debt securities. Fidelity Advisor Equity Income - The Fund seeks income by investing in income-producing common stocks, preferred stocks, convertible securities, and corporate debt obligations. Invesco Dynamics Fund - The Fund seeks capital appreciation by investing primarily in common stocks. Janus Fund - The Fund seeks capital appreciation consistent with preservation of capital by investing primarily in common stocks of companies and industries experiencing favorable demand for their products and services. Stagecoach Treasury Money Market Accounts - The Fund is an AAA rated fund by Moody's and Standard & Poor's, which seeks to provide current income while preserving principal by investing only in U.S. Treasury obligations or repurchase agreements which are collateralized by U.S. Treasury obligations. Scudder Growth and Income - The Fund seeks growth of capital, current income, and growth of income by investing in dividend-paying common stocks, preferred stocks, and convertible securities with growth potential. Strong Total Return - The Fund seeks income and capital appreciation consistent with reasonable risk. The Fund invests primarily in common stocks, corporate bonds and debentures, and money market instruments. Strong Government Securities - The Fund seeks current income by investing in fixed income securities issued or guaranteed by the U.S. government and its agencies or instrumentalities and in investment-grade corporate securities. Templeton Foreign Fund - The Fund seeks long-term capital appreciation by investing in stocks and debt obligations of companies and governments outside the United States. Westcore Midco Growth - The Fund seeks long-term capital appreciation by investing in growth stocks of medium-size companies which are likely to show strong earnings growth. Good Times Common Stock - Good Times Restaurants Inc. common stock. 4. Plan Termination: Although it has not expressed any intent to do so, the Employer reserves the right to terminate the Plan at any time by resolution of its Board of Directors. If termination occurs, the balances of all participants become fully vested and each participant will receive a total lump sum distribution. 5. Party in Interest: The Plan has investments in a money market account and an S&P 500 stock fund that are managed by Wells Fargo. Wells Fargo is the custodian of the Plan's assets and, therefore, transactions occur in these accounts are party-in-interest transactions. 6. Reconciliation of Financial Statements to Form 5500: The Form 5500 was prepared on the cash basis of accounting and the financial statements were prepared on the accrual basis of accounting. Following is a reconciliation between these financial statements and the Form 5500: Net Assets Available for Benefits at September 30, 1997 1996 Total per the financial statements $396,200 $292,600 Less, employer contribution receivable (17,900) (39,000) Less, employee contribution receivable* (7,500) - Total per Form 5500 (rounded) $370,800 $253,600 ________________________ * Included on Form 5500 for the plan year ended September 30, 1996. 7. Tax Status: The Internal Revenue Service has determined and informed the Company by a letter dated in April 1997, that the prototype plan adopted by the Company is designed in accordance with applicable sections of the IRC. The Plan has been amended since receiving the determination letter. However, the Plan administrator and the Plan's tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC. GOOD TIMES RESTAURANTS INC. 401(k) SAVINGS AND INVESTMENT PLAN EIN 84-1133368 PLAN NO. 001 ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES SEPTEMBER 30, 1997
(C) Description of Investment Including (B) Maturity Date, Rate of (E) Identity of Issue, Borrower, Interest, Collateral, Par, (D) Current (A)** Lessor, or Similar Party or Maturity Value Cost Value * Stagecoach Treasury Money Market Money Market Fund $ 5,900 $ 5,900 Strong Government Securities Mutual Fund 11,900 12,000 Invesco Select Income Mutual Fund 13,900 14,300 Strong Total Return Mutual Fund 4,600 5,100 Wells Fargo S&P 500 Stock Fund Mutual Fund 28,300 26,800 Janus Mutual Fund 59,300 69,800 Scudder Growth & Income Mutual Fund 27,600 35,000 Fidelity Advisor Equity Income Mutual Fund 19,000 23,500 Westcore Midco Growth Mutual Fund 16,000 19,100 Invesco Dynamics Mutual Fund 32,400 39,400 Fidelity Advisor Equity Growth Mutual Fund 22,400 28,200 Templeton Foreign Mutual Fund 14,000 16,800 Good Times Common Stock Stock Fund 70,300 64,900 Participant Loans Interest Rates Range from 10.3% to 11.8% - 10,000
** This column will have an asterisk on each line which is identified as a party-in-interest to the Plan. Wells Fargo acts as the Plan's custodian and manages the Stagecoach Treasury Money Market account and the Wells Fargo S&P 500 Stock Fund. GOOD TIMES RESTAURANTS INC. 401(k) SAVINGS AND INVESTMENT PLAN EIN 84-1133368 PLAN NO. 001 ITEM 27a-SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES SEPTEMBER 30, 1996
(C) Description of Investment Including (B) Maturity Date, Rate of (E) Identity of Issue, Borrower, Interest, Collateral, Par, (D) Current (A)** Lessor, or Similar Party or Maturity Value Cost Value * Stagecoach Treasury Money Market Money Market Fund $ 10,400 $ 10,400 Strong Government Securities Mutual Fund 16,200 15,800 Invesco Select Income Mutual Fund 13,200 12,900 Strong Total Return Mutual Fund 3,400 3,600 Equity Index Mutual Fund 19,400 21,100 Janus Mutual Fund 33,900 36,600 Scudder Growth & Income Mutual Fund 11,700 12,300 Fidelity Advisor Equity Income Mutual Fund 16,800 17,000 Westcore Midco Growth Mutual Fund 11,700 12,800 Invesco Dynamics Mutual Fund 22,000 23,700 Fidelity Advisor Equity Growth Mutual Fund 17,300 18,500 Templeton Foreign Mutual Fund 12,700 13,400 Good Times Common Stock Stock Fund 32,500 37,500 Good Times Stock Liquidity Stock Liquidity Fund 2,700 2,700 Participant Loans Interest Rates Range from 8% to 10.9% - 7,900
** This column will have an asterisk on each line which is identified as a party-in-interest to the Plan. Wells Fargo acts as the Plan's custodian and manages the money market account. GOOD TIMES RESTAURANTS INC. 401(k) SAVINGS AND INVESTMENT PLAN EIN 84-1133368 PLAN NO. 001 ITEM 27d-SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED SEPTEMBER 30, 1997
(H) Current (A) Identity of Party Value of (I) Involved and (C) (D) (G) Asset on Net (B) Description Purchase Selling Cost of Transaction Gain of Asset Price Price Asset Date (Loss) Strong Government Securities $ 10 $ - $ 5,300 $ 5,300 $ - Strong Government Securities - 10 9,700 9,600 (100) Wells Fargo S&P 500 Stock Fund 26 - 28,300 28,300 - Wells Fargo S&P 500 Stock Fund - 28 19,400 11,900 (7,500) Janus Fund 26 - 30,300 30,300 - Janus Fund - 26 4,900 5,100 200 Scudder Growth and Income 24 - 18,100 18,100 - Scudder Growth and Income - 24 2,200 2,500 300 Fidelity Advisor Equity Income 23 - 11,100 11,100 - Fidelity Advisor Equity Income - 22 8,800 9,400 600 Invesco Dynamics Fund 13 - 17,300 17,300 - Invesco Dynamics Fund - 14 6,900 7,400 500 Fidelity Advisor Equity Growth 44 - 12,100 12,100 - Fidelity Advisor Equity Growth - 44 7,100 7,700 600 Good Times Common Stock 1 - 51,200 51,200 - Good Times Common Stock - 1 13,500 12,200 (1,300)
GOOD TIMES RESTAURANTS INC. 401(k) SAVINGS AND INVESTMENT PLAN EIN 84-1133368 PLAN NO. 001 ITEM 27d-SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED SEPTEMBER 30, 1996
(H) Current (A) Identity of Party Value of (I) Involved and (C) (D) (G) Asset on Net (B) Description Purchase Selling Cost of Transaction Gain of Asset Price Price Asset Date (Loss) Stagecoach Money Market $ 1 $ $ 31,600 $ 31,600 $ - Stagecoach Money Market 1 21,200 21,200 - Stock Liq. Stock Liquidity 1 25,700 25,700 - Stock Liq. Stock Liquidity 1 24,600 24,600 - Stock Fund 1 23,700 23,700 - Stock Fund 1 17,700 10,100 (7,600) Scudder Mutual Fund 20 18,300 18,300 - Scudder Mutual Fund 22 6,500 6,700 200 Strong Gvt. Mutual Fund 11 22,200 22,200 - Strong Gvt. Mutual Fund 10 6,000 5,900 (100) Templeton Mutual Fund 10 16,100 16,100 - Templeton Mutual Fund 10 3,300 3,500 200 Equity Mutual Fund 202 29,600 29,600 - Equity Mutual Fund 211 9,800 10,400 600 Fidelity Adv. Mutual Fund 39 19,400 19,400 - Fidelity Adv. Mutual Fund 40 2,000 2,100 100 Invesco Select Mutual Fund 6 18,700 18,700 - Invesco Select Mutual Fund 6 5,600 5,300 (300) Fid. Adv. Equity Port Mutual Fund 21 19,300 19,300 - Fid. Adv. Equity Port Mutual Fund 21 2,400 2,500 100 Invesco Dynamic Mutual Fund 13 23,200 23,200 - Invesco Dynamic Mutual Fund 13 1,300 1,200 (100) Janus Mutual Fund 25 53,700 53,700 - Janus Mutual Fund 25 19,700 19,900 200
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-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver and State of Colorado on the 31st day of July, 1998. 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 July 31, 1998 Geoffrey R. Bailey Directors, Director /s/ Boyd E. Hoback Director, Chief Executive July 31, 1998 Boyd E. Hoback Officer, and President (a principal executive officer and director) /s/ Dan W. James II Director July 31, 1998 Dan W. James II /s/ Richard J. Stark Director July 31, 1998 Richard J. Stark /s/ Thomas P. McCarty Director July 31, 1998 Thomas P. McCarty /s/ Alan A. Teran Director July 31, 1998 Alan A. Teran /s/ David E. Bailey Director July 31, 1998 David E. Bailey EXHIBIT INDEX Sequential Exhibit No. Page No. 4.1 1992 Incentive Stock Option Plan of the Registrant, as amended 4.2 1992 Non-Statutory Stock Option Plan of the Registrant, as amended 4.3 Nonstandardized Prototype Cash or Deferred Profit-Sharing Plan and Trust/Custodial Account for Good Times Drive Thru, Inc. as a Subsidiary of Good Times estaurants, Inc. 4.4 Good Times Drive Thru, Inc. as a Subsidiary of Good Times Restaurants, Inc. 401(k) Savings and Investment Plan Summary Plan Description 5.1 Opinion of Cohen Brame & Smith Professional Corporation re legality of the Common Stock offered hereby 23.1 Consent of Cohen Brame & Smith Professional Corporation (included in Exhibit 5.1 to this registration statement) 23.2 Consent of Hein & Associates, LLP independent certified public accountants REOFFER PROSPECTUS Subject to Completion, August 5, 1998 GOOD TIMES RESTAURANTS INC. 90,000 Shares of Common Stock ($.001 par value) 210,000 Shares of Common Stock Underlying Options THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS." This Prospectus relates to (a) 90,000 shares ("401(k) Shares") of common stock, $.001 par value per share ("Common Stock"), of GOOD TIMES RESTAURANTS INC. (the "Company" or "Good Times") issued or issuable pursuant to the Company's 401(k) Savings and Investment Plan (the "401(k) Plan); and (b) 210,000 shares ("Option Shares") of Common Stock underlying incentive and non-statutory stock options issued or issuable pursuant to the Company's 1992 Incentive Stock Option Plan ("ISO") and 1992 Non-Statutory stock Option Plan ("NSO" and together with the ISO, the "Option Plans"). The 401(k) Shares and Option Shares are together hereinafter referred to as the "Shares." The Shares may be offered by certain shareholders of the Company (the "Selling Shareholders") from time to time (i) in transactions in the over-the-counter market, in negotiated transac- tions, through the writing of options on the Shares, or a combination of such methods of sale, and (ii) at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through securities broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the Shares for whom such broker-dealers may act as agent or to whom they sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). See "Selling Shareholders" and "Sale of Shares." None of the proceeds from the sale of the Shares by the Selling Shareholders will be received by the Company. The Company will however receive proceeds from the exercise of the stock options issued pursuant to the Option Plans. The Company has agreed to bear all expenses (other than underwriting discounts, selling commissions and underwriter expense allowance, and fees and expenses of counsel and other advisers to the Selling Shareholders) in connection with the registration and sale of the Shares being offered by the Selling Shareholders. THIS OFFERING INVOLVES A HIGH DEGREE OF RISK (SEE "RISK FACTORS") INCLUDING: - NEITHER THE COMPANY NOR ITS SUBSIDIARY GOOD TIMES DRIVE THRU INC. HAS EARNED A PROFIT DURING ANY FISCAL YEAR - SUBSTANTIAL COMPETITION - NEED FOR ADDITIONAL FINANCING IN ORDER TO FULLY IMPLEMENT BUSINESS PLAN - SUBSTANTIAL AMOUNT OF SHARES ELIGIBLE FOR FUTURE SALE - IMMEDIATE AND SUBSTANTIAL DILUTION THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESEN- TATION TO THE CONTRARY IS A CRIMINAL OFFENSE. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission"). Proxy statements, reports and other information concerning the Company can be inspected and copied at Room 1024 of the Commis- sion's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and the Commission's Regional Offices in New York (Room 1228, 75 Park Place, New York, New York 10007), and Chicago (Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60621-2511), and copies of such material can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. This Prospectus does not contain all information set forth in the Registration Statement of which this Prospectus forms a part and exhibits thereto which the Company has filed with the Commission under the Securities Act of 1933, as amended (the "Securities Act") and to which reference is hereby made. RISK FACTORS These securities involve a high degree of risk. Prospective purchasers should consider carefully, among other factors set forth in this Prospectus, the following: Risks Relating to the Company Neither the Company Nor Drive Thru Has Earned a Profit During Any Fiscal Year. As of September 30, 1997, the Company had a working capital deficit of ($534,000) and a net worth of $2,893,000. Losses from inception to that date aggregated $8,945,000. 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 a result of 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, the increase in operating income generated by those units is anticipated to improve Good Times' financial results. However, no assurance can be given 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. Furthermore, there is no assurance 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. No assurance can be given that Good Times 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 ADIs and to expand into markets outside of Colorado with Good Times restaurants, Drive Thru will require additional financing. No assurance can be given 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. No assurance can be given, however, 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. No assurance can be given that any such registration will issue or, if it does issue, 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 no assurance can be given that Drive Thru will be able to sell additional franchises or that its existing franchisees will fulfill their obligations under their respective franchise agreements. The development of the Denver and Colorado Springs ADIs 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. Substantial Cost of Compliance With Government Regulations. Operation of any restaurant is subject to a multitude of federal, state and local rules and regulations relating, among other things, to food preparation and cleanliness; safety in the work place; accommodations for the disabled; wage and hour requirements; and discrimination or discriminatory practices based upon race, religion, sex and other factors. Furthermore, federal government proposals regarding healthcare may result in higher costs for the Company and Drive Thru and may have an adverse impact on earnings. Although to date Drive Thru has not experienced any significant regulatory problems, no such continued assurances can be given. The development and opening of new restaurants may be delayed as a result of government regulations which may require certain licenses and approvals prior to opening. Management will have no control over any delays caused by such government regulations. As a result, Drive Thru may incur losses due to such delays or may have to abandon a site completely if the required approvals and licenses are not obtained. Drive Thru will endeavor to work with government officials to obtain any required licenses or approvals on a timely basis. Uninsured Losses and Perils. The Company has obtained comprehensive insurance, including fire, general and products liability and extended coverage, of the types and in amounts customarily obtained by companies in the restaurant industry. However, there are certain types of losses (generally of a catastrophic nature, such as earthquakes and floods) which are either uninsurable or not economically insurable. An uninsured or partially insured loss could have a material adverse effect upon the Company. 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 upon 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 upon 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 Company has authorized 1,000,000 shares of Preferred Stock. 200,000 of such shares are designated Series A Convertible Preferred Stock and are currently issued and outstanding. Such 200,000 shares of Series A Convertible Preferred Stock are convertible into a maximum of 426,667 shares of Common Stock. The rights of the holder of the Series A Convertible Preferred Stock and any other series of preferred stock issued from time to time by Good Times could materially adversely effect 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 the Company's shares trade on the Nasdaq Small Cap service mark Market System ("Nasdaq"). The maintenance requirements of Nasdaq require among others that the Company's share price remain above $1.00 per share and that the Company has minimum net tangible assets of in excess of $2 million, to avoid delisting. The Company recently was required to obtain shareholder approval for a reverse 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 Bulletin Board maintained by the NASD. However, there is no assurance that such a market would develop or that it would be liquid if it did develop. USE OF PROCEEDS The Company intends to use the net proceeds received from the exercise of the stock options issued pursuant to the Option Plans to satisfy the Company's cash requirements and for other general business purposes. The Company does not receive any proceeds in connection with the 401(k) Shares. SELLING SHAREHOLDERS This Prospectus covers 210,000 shares of Common Stock underlying stock options issued or issuable pursuant to the Option Plans and 90,000 shares of Common Stock issued or issuable pursuant to the 401(k) Plan. The selling shareholders consists of the following: (a) 401(k) Plan Participants. All participants in the Company's 401(k) Plan. The eligible participants in the 401(k) Plan are those employees of the Company who are at least 21 years of age and have been employed by the Company for at least six months and completed 1,000 hours of service for the Company. There are approximately 100 employees of the Company eligible to participant in the 401(k) Plan on the date of this Prospectus. Any selling shareholders owning less than 1,000 shares may resell their shares pursuant to this Prospectus without being named herein. To Company's knowledge, as of the date of this Prospectus, no employee intends at this time to resell their 401(k) Shares and/or Option Shares. (b) Incentive Stock Option Holders. All holders of the Company's Incentive Stock Options which are issuable only to key employees, including officers, of the Company; and (c) Non-Statutory Stock Option Holders. All holders of the Company's Non-Statutory Stock Options which are issuable to key employees, Directors of the Company and such other persons who, in the opinion of the Board of Directors of the Company, are primarily responsible for the promotion and protection of the interests of the Company. PLAN OF DISTRIBUTION The sale of the 401(k) Shares and Option Shares by the Selling Shareholders may be effected from time to time (i) in transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Shares, or through a combination of such methods of sale, and (ii) at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the Shares for which such broker-dealers may act as agent or to whom they may sell, as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary compensa- tion). The Selling Shareholders and any broker-dealers who act in connection with the sale of the Shares hereunder may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any commissions received by them and profit on any resale of the Shares as principal might be deemed to be underwriting discounts and commissions under the Securities Act. The Company has agreed to indemnify the Selling Shareholders and any securities broker-dealers who may be deemed to be underwriters against certain liabilities, including liabilities under the Securities Act as underwriters or otherwise. The Company has advised the Selling Shareholders that they and any securities broker-dealers or others who may be deemed to be statutory underwriters may be subject to the Prospectus delivery requirements under the Securities Act of 1933. The Company has also advised each Selling Shareholder that in the event of a "distribution" of his or its shares, such Selling Shareholder, any "affiliated purchasers," and any broker-dealer or other person who participates in such distribution may be subject to Regulation M under the Securities Exchange Act of 1934 ("1934 Act") until his or its participation in that distribution is completed. A "distribu- tion" is defined in Regulation M as an offering of securities "that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods." Regulation M limits the conditions under which any person who is participating in a distribution to bid for or purchase stock of the same class as is the subject of the distribution. If Regulation M applies to the offer and sale of any of the Shares, then participating broker-dealers may be obligated to cease certain market making activities five business days prior to their participation in the offer and sale of such Shares and may not recommence market making activities until their participation in the distribution has been completed. If Regulation M applies to one or more of the principal market makers in the Company's Common Stock, the market price of such stock could be adversely affected. DESCRIPTION OF COMMON STOCK The shares of Common Stock covered by this Prospectus are fully paid and nonassessable. 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 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 Cohen Brame & Smith Professional Corporation, 1700 Lincoln Street, Suite 1800, Denver, Colorado 80203, will pass upon the legality of the Shares offered hereby. EXPERTS The audited financial statements of Good Times Restaurants Inc.'s 401(k) Savings and Investment Plan included in the Registration Statement and the audited consolidated financial statements of the Company incorporated by reference into this Prospectus have been audited by HEIN + ASSOCIATES, LLP certified public accountants, 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. DOCUMENTS INCORPORATED BY REFERENCE The Company has provided, without charge, to each holder of any Options or Shares; including any beneficial owner, a copy of the Company's Annual Report on 10-KSB for the fiscal year ended September 30, 1997, The Company will also provide, without charge, to each person to whom a copy of this Prospectus is delivered, including any beneficial owner, upon the written or oral request of such person, a copy of any or all of the other documents incorporated by reference herein (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information that the Prospectus incorporates). Requests should be directed to: Good Times Restaurants Inc. 601 Corporate Circle Golden, Colorado 80401 Telephone number: (303) 384-1400 Attention: Boyd E. Hoback, President & CEO The following documents filed with the Commission by the Company (File Number 0-16365) are hereby incorporated by reference into this Prospectus: (1) The Company's Annual Report on Form 10-KSB for the fiscal year ended September 30,1997; (2) The Company's Quarterly Report on Form 10-QSB for the quarter ended December 31, 1997; and (3) The Company's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1998. All documents filed with the Commission by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subse- quent to the date of this Prospectus and prior to the termination of the offering registered hereby shall be deemed to be incorpo- rated by reference into this Prospectus and to be a part hereof from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Such statement so modified or supersed- ed shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN CONTAINED AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT ANY INFORMATION CONTAINED HEREIN IS CORRECT AS TO ANY OF THE TIME SUBSEQUENT TO ITS DATE. ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURI- TIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. Index Page AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . 2 RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 2 Risks Relating to the Company . . . . . . . . . . . . . 2 Market Risks. . . . . . . . . . . . . . . . . . . . . . 3 USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 4 SELLING SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . 4 PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 4 DESCRIPTION OF COMMON STOCK . . . . . . . . . . . . . . . . . 5 LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 5 EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 DOCUMENTS INCORPORATED BY REFERENCE. . . . . . . . . . . . . . 5 EX-4.1 2 GOOD TIMES RESTAURANTS INC. 1992 INCENTIVE STOCK OPTION PLAN (as revised 3-31-94) 1. Purpose. The purpose of this 1992 Incentive Stock Option Plan (the "Plan") is to grant to employees of Good Times Restaurants Inc., a Nevada corporation (the "Company"), options to purchase its stock so that they may have an increased incentive to promote the interests of the Company. 2. Eligible Employees. Key employees of the Company who, in the opinion of the Board of Directors of the Company, are primarily responsible for the management, promotion and protection of the interests of the Company shall be eligible to be granted options under the Plan. A key employee shall not be ineligible because such person is also a director of the Company. One or more additional options may be granted to persons who at that time hold an option or options. 3. Option Shares and Option Price. The aggregate number of shares of the common stock, $.001 par value ("Common Stock"), of the Company with respect to which such options may be granted under the Plan shall be 750,000. The purchase price for each share of Common Stock purchased by exercise of an option granted under the Plan shall be at least 100% of the fair market value of such share at the time such option is granted, and shall not be exercisable after the expiration of ten years from the date such option is granted; provided, however, that any options granted to any eligible employee who is, at the time of grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation shall have a purchase price equal to at least 110% of the fair market value of the stock subject to the option and shall not be exercisable after the expiration of five years from the date such option is granted. In the event of any change in the Company's corporate structure through merger, consolidation, reorganization, recapitalization, stock dividend or other change, appropriate proportionate adjust- ment shall be made in the number and purchase price of the shares subject to options granted under the Plan. To the extent the aggregate fair market value (determined at the grant date) of the stock which is exercisable for the first time by an employee in any calendar year under any stock option granted to such employee under this Plan and any other incentive stock option plan of the Company, its parent or subsidiaries, exceeds $100,000, such options shall be treated as options which are not incentive stock options. 4. Effective Date and Term of Plan. The Effective Date of the Plan is April 23, 1992, which is the date of adoption of the Plan by the Board of Directors (and which precedes the date of approval of the Plan by shareholders). Unless this Plan is sooner terminated, any option granted pursuant to this Plan shall be granted within ten years from the Effective Date. 5. Exercise of Option. Any option granted under the Plan may be exercised in accordance with the specific terms and conditions relating thereto set forth in such option, consistent with the Plan, provided, however, that such option shall be exercisable at the rate of no less than 20% per year over a five year period beginning with the date on which such option is granted. Exercise shall be accompanied by delivery to the Company of written notice specifying the number of shares with respect to which such option is exercised and full payment of the purchase price for such shares. Options may be exercised only with respect to full shares. No fractional share of stock will be issued. 6. Acceleration of the Option. Any option granted under the Plan shall become fully exercisable (i) immediately prior to the completion of the merger or sale of substantially all of the stock or assets of the Company in a transaction in which the Company is not the survivor (see paragraph 11), except for the merger of the Company into a wholly-owned subsidiary; or (ii) upon termination of the employee's employment because of his death or disability or for any other reason, except termination for cause by the Company or its subsidiaries or termination by the employee for any reason. 7. Expiration of Option. (a) Subject to specific provisions of each option agreement, each option granted under the Plan shall expire upon the earliest to occur of (i) five or ten years from the date such option is granted; or (ii) upon completion of the merger or sale of substantially all of the stock or assets of the Company with or to another company in a transaction in which the Company is not the survivor (see paragraph 11), except for the merger of the Company into a wholly-owned subsidiary, provided that the Company shall have given the employee at least 60 days' prior written notice of its intent to enter into such merger or sale; or (iii) three months immediately following the termination of the employment of the employee to whom such option is granted for any reason, except for termination for cause by the Company or termination because of such employee's death or disability. (b) If an employee to whom an option was granted under the Plan shall cease to be employed by the Company for any reason, except for termination for cause by the Company or termi- nation because of such employee's death or disability, such employee may, but only within the period of three months immedi- ately following such termination of employment and in no event after the expiration date of such option, exercise such option to the extent that he was entitled to exercise such option at the date of his termination of employment. If the employment of an employee to whom an option was granted by the Company is terminated for cause, all rights under any option of such employee shall expire immediately upon notice to the employee of such termination. (c) In the event of the death or disability of an employee while in the employ of the Company or within the three-month period referred to in subparagraph (a)(iii) above, the person to whom the option held by such employee at the time of his death is transferred by will or the laws of descent and distribution in the case of death (including the decedent's personal representa- tive), or the employee or his guardian in the case of disability of the employee, may, but only to the extent such employee was entitled to exercise such option immediately prior to his death or disability exercise such option at any time within a period of one year succeeding the date of death or disability of such employee, but in no event after the expiration date of such option. (d) The term "disability" as used herein shall be as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. 8. Employment Obligation. In consideration for the granting of an option under the Plan, the employee to whom such option is granted shall agree to remain in the employment of the Company for a period and under terms and conditions determined and approved by the Board of Directors of the Company and such employee. 9. Investment Intent. Each option granted under the Plan shall be granted only to an employee who agrees to purchase any shares acquired by his exercise of the option for investment purposes only and agrees not to resell any of such shares in any manner violating the Securities Act of 1933 or any applicable state statute. 10. Transferability. Options granted under the Plan shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the employee to whom such option is granted only by such employee. 11. Administration of the Plan. The Plan shall be administered by the Board of Directors of the Company or a committee of two or more directors, as determined by the Board of Directors. The interpretation and construction of any provision of the Plan by the Board of Directors shall be final, unless otherwise determined by the Board of Directors. The term "survivor," however, as used in subsection (i) of paragraph 6 and subsection (a) (ii) of paragraph 7 shall not apply to the Company in a reverse triangular merger where the Company has become a wholly owned subsidiary of another corporation. No member of the Board of Directors shall be liable for any action or determination made by him in good faith. 12. Intent and Construction. It is the intention of the Company that all options granted under the Plan shall constitute incentive stock options within the meaning of the Code, and the Plan shall be construed and administered in order to effect such intention. EX-4.2 3 GOOD TIMES RESTAURANTS INC. 1992 NON-STATUTORY STOCK OPTION PLAN (as revised 3-31-94) 1. Purpose. The purpose of this 1992 Non-Statutory Stock Option Plan (the "Plan") is to grant to employees and directors of Good Times Restaurants Inc., a Nevada corporation (the "Company"), and such other persons as may be determined by the Board of Directors, options to purchase stock so that they may have an increased incentive to promote the interests of the Company. 2. Eligible Participants. Key employees, directors of the Company and such other persons who, in the opinion of the Board of Directors of the Company, are primarily responsible for the promotion and protection of the interests of the Company shall be eligible to be granted options under the Plan. One or more addi- tional options may be given to persons who at that time hold an option or options. Persons granted options under the Plan who are not key employees of the Company shall annually receive financial statements of the Company. 3. Option Shares and Option Price. The aggregate number of shares of the common stock, $.001 par value ("Common Stock"), of the Company with respect to which options may be granted under the Plan shall be 300,000. The purchase price for each share of Common Stock purchased by exercise of an option granted under the Plan shall be at least 100% of the fair market value of such share at the time such option is granted, and shall not be exercisable after the expiration of five years from the date such option is granted; provided, however, that any options granted to any eligible employee who is, at the time of grant of such option, the owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its parent or subsidiary corporation shall have a purchase price equal to at least 110% of the fair market value of the stock subject to the option. 4. Effective Date and Term of Plan. The Effective Date of the Plan is April 23, 1992, which is the date of adoption of the Plan by the Board of Directors. Unless sooner terminated, the Plan shall remain in effect for a period of ten years from the Effective Date. 5. Exercise of Option. Any option granted under the Plan may be exercised in accordance with the specific terms and conditions relating thereto set forth in such option, consistent with the Plan, provided, however, that such option shall be exercisable at the rate of no less than 20% per year over a five year period beginning with the date on which such option is granted. Exercise shall be accomplished by delivery to the Company of written notice specifying the number of shares with respect to which such option is exercised and full payment of the purchase price for such shares. Options may be exercised only with respect to full shares. No fractional share of stock will be issued. 6. Adjustment of Option. In the event of any change in the Company's corporate structure through merger, consolidation, reorganization, recapitalization, stock dividend or other change, appropriate proportionate adjustment shall be made in the number and purchase price of shares subject to options granted under the Plan. 7. Expiration of Option. Each option granted under the Plan shall expire upon the earliest to occur of (i) five years from the date such option is granted; or (ii) the date of completion of the merger or sale of substantially all of the stock or assets of the Company with or to another company in a transaction in which the Company is not the survivor (see paragraph 10), except for the merger of the Company into a wholly-owned subsidiary, provided that the Company shall have given the optionee at least 60 days' prior written notice of its intent to enter into such merger or sale; (iii) if the optionee is an employee of the Company, 180 days following the optionee's death or termination of the optionee's employment because of disability; or (iv) if the optionee is an employee of the Company, 60 days following the termination of the optionee's employment by the Company for any reason other than death or disability or termination for cause; provided, however, that this subsection (iv) shall not be operative if the optionee, upon termination of employment, remains on, or becomes a member of, the Board of Directors of the Company. The term "disability" as used herein shall be as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended. If the employment of an employee to whom an option was granted by the Company under the Plan is terminated for cause, all rights under any option of such employee shall expire immediately upon notice to the employee of such termination. 8. Investment Intent. Each option granted under the Plan shall be granted only to a participant who agrees to purchase any shares acquired by his exercise of the option for investment purposes only and agrees not to resell any of such shares in any manner violating the Securities Act of 1933 or any applicable state statute. 9. Transferability. Options granted under the Plan shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the lifetime of the participant to whom such option is granted only by such participant. 10. Administration of the Plan. The Plan shall be administered by the Board of Directors of the Company or a committee of two or more directors, as determined by the Board of Directors. The interpretation and construction of any provision of the Plan by the Board of Directors shall be final, unless otherwise determined by the Board of Directors. The term "survivor," however, as used in subsection (ii) of paragraph 7 shall not apply to the Company in a reverse triangular merger where the Company has become a wholly owned subsidiary of another corporation. No member of the Board of Directors shall be liable for any action or determination made by him in good faith. 11. Intent and Construction. It is the intention of the Company that all options granted under the Plan shall constitute non-statutory stock options, and the Plan shall be construed and administered in order to effect such intention. EX-4.3 4 NONSTANDARDIZED PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST/CUSTODIAL ACCOUNT for Good Times Drive Thru, Inc. as a Subsidary of Good Times Restaurants, Inc. SPONSORED BY WELLS FARGO BANK, N.A. Effective Date: February 1, 1998 Plan #004 NONSTANDARDIZED ADOPTION AGREEMENT PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST/CUSTODIAL ACCOUNT Sponsored by WELLS FARGO BANK, N.A. The Employer named below hereby establishes a Cash or Deferred Profit-Sharing Plan for eligible Employees as provided in this Adoption Agreement and the accompanying Basic Prototype Plan and Trust/Custodial Account Basic Plan Document #04. 1. EMPLOYER INFORMATION NOTE: If multiple Employers are adopting the Plan, complete this section based on the lead Employer. Additional Employers may adopt this Plan by attaching executed signature pages to the back of the Employer's Adoption Agreement. (a) NAME AND ADDRESS: Good Times Drive Thru, Inc. as a Subsidary of Good Times Restaurants, Inc. 8680 Wolf Court, Suite # 330 Westminster, CO 80030 (b) TELEPHONE NUMBER: (303)427-4221 (c) TAX ID NUMBER: 84-1133368 (d) FORM OF BUSINESS: [ ] (i) Sole Proprietor [ ] (ii) Partnership [x] (iii)Corporation [ ] (iv) "S"Corporation (formerly known as SubchapterS) [ ] (v) Other: (e) NAME OF INDIVIDUAL AUTHORIZED TO ISSUE INSTRUCTIONS TO THE TRUSTEE/CUSTODIAN: See Designation of Committee Form (f) NAME OF PLAN: Good Times Drive Thru, Inc. as a Subsidary of Good Times Restaurants, Inc. 401(k) Savings and Investment Plan (g) THREE DIGIT PLAN NUMBER FOR ANNUAL RETURN/REPORT: 001 2. EFFECTIVE DATE (a) This is a new Plan having an effective date of . (b) This is an amended Plan. The effective date of the original Plan was April 1, 1992 . The effective date of the amended Plan is February 1, 1998 . (c) If different from above, the Effective Date for the Plan's Elective Deferral provisions shall be . [If no date is entered, the effective date for Elective Deferrals is the same as 2(a) or 2(b)]. 3. DEFINITIONS (a) "Collective or Commingled Funds" (Applicable to institutional Trustees only.) Investment in collective or commingled funds as permitted at paragraph 13.3(b) of the Basic Plan Document #04 shall only be made to the following specifically named fund(s): See Attachment 3(a) Funds made available after the execution of this Adoption Agreement will be listed on schedules attached to the end of this Adoption Agreement. (b) "Compensation" Compensation shall be determined on the basis of the: [x] (i) Plan Year. If elected, Compensation is based on the period during which the Employee is a Participant in the Plan. [ ] (ii) Employer's Taxable Year. [ ] (iii)Calendar Year. Compensation shall be determined on the basis of the following safe-harbor definition of Compensation in IRS Regulation Section 1.414(s)-1(c): [x] (iv) Code Section 6041 and 6051 Compensation, [ ] (v) Code Section 3401(a) Compensation, or [ ] (vi) Code Section 415 Compensation. For purposes of the Plan, Compensation shall be limited to $ , the maximum amount which will be considered for Plan purposes. [If an amount is specified, it will limit the amount of contributions allowed on behalf of higher compensated Employees. Completion of this section is not intended to coordinate with the $200,000 of Code Section 415(d), thus the amount should be less than $200,000 as adjusted for cost-of-living increases.] (vii) Exclusions From Compensation: (1) overtime. (2) bonuses. (3) commissions. (4) Contributions made pursuant to a salary reduction agreement as defined at paragraph 1.12 of Basic Plan Document #04. (5) Compensation for Purposes of: Exclusion(s) Determining Employee Elective Deferrals expressed as a percentage of Compensation [Section 7(b)] Determining Employer Matching Contributions [Section 7(c)] Allocating Employer Qualified Non-Elective Contributions [Section 7(d)] and Non-Elective Contributions [Section 7(e)] Determining Actual Deferral and Contribution Percentages in connection with the antidiscrimination tests. Such definition must satisfy Code Section 414(s). (c) "Entry Date" [ ] (i) The first day of the Plan Year nearest the date on which an Employee meets the eligibility requirements. [ ] (ii) The earlier of the first day of the Plan Year or the first day of the seventh month of the Plan Year coinciding with or following the date on which an Employee meets the eligibility requirements. [ ] (iii) The first day of the Plan Year following the date on which the Employee meets the eligibility requirements. If this election is made, the Service requirement at 4(a)(ii) may not exceed 1/2 year and the age requirement at 4(b)(ii) may not exceed 20-1/2. [ ] (iv) The first day of the month coinciding with or following the date on which an Employee meets the eligibility requirements. [x] (v) The first day of the Plan Year, or the first day of the fourth month, or the first day of the seventh month or the first day of the tenth month, of the Plan Year coinciding with or following the date on which an Employee meets the eligibility requirements. (d) "Hours of Service" Shall be determined on the basis of the method selected below. Only one method may be selected. The method selected shall be applied to all Employees covered under the Plan as follows: [x] (i) On the basis of actual hours for which an Employee is paid or entitled to payment. [ ] (ii) On the basis of days worked. An Employee shall be credited with ten (10) Hours of Service if under paragraph 1.42 of the Basic Plan Document #04 such Employee would be credited with at least one (1) Hour of Service during the day. [ ] (iii) On the basis of weeks worked. An Employee shall be credited with forty-five (45) Hours of Service if under paragraph 1.42 of the Basic Plan Document #04 such Employee would be credited with at least one (1) Hour of Service during the week. [ ] (iv) On the basis of semi-monthly payroll periods. An Employee shall be credited with ninety-five (95) Hours of Service if under paragraph 1.42 of the Basic Plan Document #04 such Employee would be credited with at least one (1) Hour of Service during the semi-monthly payroll period. [ ] (v) On the basis of months worked. An Employee shall be credited with one-hundred-ninety (190) Hours of Service if under paragraph 1.42 of the Basic Plan Document #04 such Employee would be credited with at least one (1) Hour of Service during the month. (e) "Limitation Year" The 12-consecutive month period commencing on October 1 and ending on September 30. If applicable, the Limitation Year will be a short Limitation Year commencing on and ending on . Thereafter, the Limitation Year shall end on the date last specified above. (f) "Net Profit" [x] (i) Not applicable (profits will not be required for any contributions to the Plan). [ ] (ii) As defined in paragraph 1.49 of the Basic Plan Document #04. [ ] (iii) Shall be defined as: (Only use if definition in paragraph 1.49 of the Basic Plan Document #04 is to be superseded.) (g) "Plan Year" The 12-consecutive month period commencing on October 1 and ending on September 31. If applicable, the Plan Year will be a short Plan Year commencing on and ending on . Thereafter, the Plan Year shall end on the date last specified above. (h) "Qualified Early Retirement Age" For purposes of making distributions under the provisions of a Qualified Domestic Relations Order, the Plan's Qualified Early Retirement Age with regard to the Participant against whom the order is entered [x] shall [ ] shall not be the date the order is determined to be qualified. If "shall" is elected, this will only allow payout to the alternate payee(s). (i) "Qualified Joint and Survivor Annuity" The safe-harbor provisions of paragraph 8.7 of the Basic Plan Document #04 [x] are [ ] are not applicable. If not applicable, the survivor annuity shall be % (50%, 66-2/3%, 75% or 100%) of the annuity payable during the lives of the Participant and Spouse. If no answer is specified, 50% will be used. (j) "Taxable Wage Base" [paragraph 1.79] [x] (i) Not Applicable - Plan is not integrated with Social Security. [ ] (ii) The maximum earnings considered wages for such Plan Year under Code Section 3121(a). [ ] (iii) % (not more than 100%) of the amount considered wages for such Plan Year under Code Section 3121(a). [ ] (iv) $ , provided that such amount is not in excess of the amount determined under paragraph 3(j)(ii) above. [ ] (v) For the 1989 Plan Year $10,000. For all subsequent Plan Years, 20% of the maximum earnings considered wages for such Plan Year under Code Section 3121(a). NOTE: Using less than the maximum at (ii) may result in a change in the allocation formula in Section 7. (k) "Valuation Date(s)" Allocations to Participant Accounts under a daily valuation system will be performed in accordance with paragraph 5.4(b) of the Basic Plan Document #04. Allocatons to Participant Accounts under a balance forward valuation system will be performed in accordance with paragraph 5.4(a) of Basic Plan Document #04: (i) Monthly (iv) Semi-Annually (ii) Bi-Monthly (v) Annually (iii) Quarterly Indicate Valuation Date(s) to be used by specifying option from list above: Type of Contribution(s) Valuation Date(s) After-Tax Voluntary Contributions [Section 6] iii Elective Deferrals [Section 7(b)] iii Matching Contributions [Section 7(c)] iii Qualified Non-Elective Contributions [Section 7(d)] iii Non-Elective Contributions [Section 7(e), (f) and (g)] iii Minimum Top-Heavy Contributions [Section 7(i)] iii (l) "Year of Service" (i) For Eligibility Purposes: The 12-consecutive month period during which an Employee is credited with 1000 (not more than 1,000) Hours of Service. (ii) For Allocation Accrual Purposes: The 12-consecutive month period during which an Employee is credited with 1000 (not more than 1,000) Hours of Service. (iii) For Vesting Purposes: The 12-consecutive month period during which an Employee is credited with 1000 (not more than 1,000) Hours of Service. 4. ELIGIBILITY REQUIREMENTS (a) Service: [ ] (i) The Plan shall have no service requirement. [x] (ii) The Plan shall cover only Employees having completed at least 1 [not more than three (3)] Years of Service. If more than one (1) is specified, for Plan Years beginning in 1989 and later, the answer will be deemed to be one (1). NOTE: If the eligibility period selected is less than one year, an Employee will not be required to complete any specified number of Hours of Service to receive credit for such period. (b) Age: [ ] (i) The Plan shall have no minimum age requirement. [x] (ii) The Plan shall cover only Employees having attained age 21 (not more than age 21). (c) Classification: The Plan shall cover all Employees who have met the age and service requirements with the following exceptions: [ ] (i) No exceptions. [x] (ii) The Plan shall exclude Employees included in a unit of Employees covered by a collective bargaining agreement between the Employer and Employee Representatives, if retirement benefits were the subject of good faith bargaining. For this purpose, the term "Employee Representative" does not include any organization more than half of whose members are Employees who are owners, officers, or executives of the Employer. [ ] (iii) The Plan shall exclude Employees who are nonresident aliens and who receive no earned income from the Employer which constitutes income from sources within the United States. [ ] (iv) The Plan shall exclude from participation any nondiscriminatory classification of Employees determined as follows: (d) Employees on Effective Date: [x] (i) Not Applicable. All Employees will be required to satisfy both the age and Service requirements specified above. [ ] (ii) Employees employed on the Plan's Effective Date do not have to satisfy the Service requirements specified above. [ ] (iii) Employees employed on the Plan's Effective Date do not have to satisfy the age requirements specified above. 5. RETIREMENT AGES (a) Normal Retirement Age: If the Employer imposes a requirement that Employees retire upon reaching a specified age, the Normal Retirement Age selected below may not exceed the Employer imposed mandatory retirement age. [x] (i) Normal Retirement Age shall be 65 (not to exceed age 65). [ ] (ii) Normal Retirement Age shall be the later of attaining age (not to exceed age 65) or the (not to exceed the 5th) an- niversary of the first day of the first Plan Year in which the Participant commenced participation in the Plan. (b) Early Retirement Age: [x] (i) Not Applicable. [ ] (ii) The Plan shall have an Early Retirement Age of (not less than 55) and completion of Years of Service. 6. EMPLOYEE CONTRIBUTIONS [x] (a) Participants shall be permitted to make Elective Deferrals in any amount from 1% up to 14 % of their Compensation. If (a) is applicable, Participants shall be permitted to amend their Salary Savings Agreements to change the contribution percentage as provided below: [ ] (i) On the Anniversary Date of the Plan, [ ] (ii) On the Anniversary Date of the Plan and on the first day of the seventh month of the Plan Year, [x] (iii) On the Anniversary Date of the Plan and on the first day following any Valuation Date, or [ ] (iv) Upon 30 days notice to the Employer. [ ] (b) Participants shall be permitted to make after tax Voluntary Contributions in any amount from % up to % of their Compensation. [ ] (c) Participants shall be required to make after tax Voluntary Contributions as follows (Thrift Savings Plan): [ ] (i) % of Compensation. [ ] (ii) A percentage determined by the Employee on his or her enrollment form. [ ] (d) If necessary to pass the Average Deferral Percentage Test, Participants [ ] may [ ] may not have Elective Deferrals recharacterized as Voluntary Contributions. NOTE: The Average Deferral Percentage Test will apply to contributions under (a) above. The Average Contribution Percentage Test will apply to contributions under (b) and (c) above, and may apply to (a). 7. EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF NOTE: The Employer shall make contributions to the Plan in accordance with the formula or formulas selected below. The Employer's contribution shall be subject to the limitations contained in Articles III and X. For this purpose, a contribution for a Plan Year shall be limited for the Limitation Year which ends with or within such Plan Year. Also, the integrated allocation formulas below are for Plan Years beginning in 1989 and later. The Employer's allocation for earlier years shall be as specified in its Plan prior to amendment for the Tax Reform Act of 1986. (a) Profits Requirement: (i) Current or Accumulated Net Profits are required for: [ ] (A) Matching Contributions. [ ] (B) Qualified Non-Elective Contributions. [ ] (C) discretionary contributions. (ii) No Net Profits are required for: [x] (A) Matching Contributions. [x] (B) Qualified Non-Elective Contributions. [x] (C) discretionary contributions. NOTE: Elective Deferrals can always be contributed regardless of profits. [x] (b) Salary Savings Agreement: The Employer shall contribute and allocate to each Participant's account an amount equal to the amount withheld from the Compensation of such Participant pursuant to his or her Salary Savings Agreement. If applicable, the maximum percentage is specified in Section 6 above. An Employee who has terminated his or her election under the Salary Savings Agreement other than for hardship reasons may not make another Elective Deferral: [ ] (i) until the first day of the next Plan Year. [x] (ii) until the first day of the next valuation period. [ ] (iii) for a period of month(s) (not to exceed 12 months). [x] (c) Matching Employer Contribution [See paragraphs (h) and (i)]: [ ] (i) Percentage Match: The Employer shall contribute and allocate to each eligible Participant's account an amount equal to % of the amount contributed and allocated in accordance with paragraph 7(b) above and (if checked) % of [ ] the amount of Voluntary Contributions made in accordance with paragraph 4.1 of the Basic Plan Document #04. The Employer shall not match Participant Elective Deferrals as provided above in excess of $ or in excess of % of the Participant's Compensation or if applicable, Voluntary Contributions in excess of $ or in excess of % of the Participant's Compensation. In no event will the match on both Elective Deferrals and Voluntary Contributions exceed a combined amount of $ or %. [x] (ii) Discretionary Match: The Employer shall contribute and allocate to each eligible Participant's account a percentage of the Participant's Elective Deferral contributed and allocated in accordance with paragraph 7(b) above. The Employer shall set such percentage prior to the end of the Plan Year. The Employer shall not match Participant Elective Deferrals in excess of $ or in excess of 6 % of the Participant's Compensation. [ ] (iii) Tiered Match: The Employer shall contribute and allocate to each Participant's account an amount equal to % of the first % of the Participant's Compensation, to the extent deferred. % of the next % of the Participant's Compensation, to the extent deferred. % of the next % of the Participant's Compensation, to the extent deferred. NOTE: Percentages specified in (iii) above may not increase as the percentage of Participant's contribution increases. [ ] (iv) Flat Dollar Match: The Employer shall contribute and allocate to each Participant's account $ if the Participant defers at least 1% of Compensation. [ ] (v) Percentage of Compensation Match: The Employer shall contribute and allocate to each Participant's account % of Com- pensation if the Participant defers at least 1% of Compensation. [ ] (vi) Proportionate Compensation Match: The Employer shall contribute and allocate to each Participant who defers at least 1% of Compensation, an amount determined by multiplying such Employer Matching Contri- bution by a fraction the numerator of which is the Participant's Compensation and the denominator of which is the Compensation of all Participants eligible to receive such an allocation. The Employer shall set such discretionary contribution prior to the end of the Plan Year. [ ] (vii) Qualified Match: Employer Matching Contributions will be treated as Qualified Matching Contributions to the extent specified below: [ ] (A) All Matching Contributions. [ ] (B) None. [ ] (C) % of the Employer's Matching Contribution. [ ] (D) Up to % of each Par- ticipant's Compensation. [ ] (E) The amount necessary to meet the [ ] Average Deferral Percentage (ADP) Test, [ ] Average Contribution Percentage (ACP) Test, [ ] Both the ADP and ACP Tests. (viii) Matching Contribution Computation Period: The time period upon which matching contributions will be based shall be [ ] (A) weekly [ ] (B) bi-weekly [ ] (C) semi-monthly [ ] (D) monthly [ ] (E) quarterly [ ] (F) semi-annually [x] (G) annually (ix) Eligibility for Match: Employer Matching Contributions, whether or not Qualified, will only be made on Employee Contributions not withdrawn prior to the end of the applicable [ ] payroll period [ ] valuation period [x] Plan Year. [x] (d) Qualified Non-Elective Employer Contribution - [See paragraphs (h) and (i)] These contributions are fully vested when contributed. The Employer shall have the right to make an additional discretionary contribution which shall be allocated to each eligible Employee in proportion to his or her Compensation as a percentage of the Compensation of all eligible Employees. This part of the Employer's contribution and the allocation thereof shall be unrelated to any Employee contributions made hereunder. The amount of Qualified non-Elective Contributions taken into account for purposes of meeting the ADP or ACP test requirements is: [x] (i) All such Qualified non-Elective Contributions. [ ] (ii) The amount necessary to meet [ ] the ADP test, [ ] the ACP test, [ ] Both the ADP and ACP tests. Qualified non-Elective Contributions will be made to: [ ] (iii) All Employees eligible to participate. [x] (iv) Only non-Highly Compensated Employees eligible to participate. [x] (e) Additional Employer Contribution Other Than Qualified Non-Elective Contributions - Non-Integrated [See paragraphs (h) and (i)] The Employer shall have the right to make an additional discretionary contribution which shall be allocated to each eligible Employee in proportion to his or her Compensation as a percentage of the Compensation of all eligible Employees. This part of the Employer's contribution and the allocation thereof shall be unrelated to any Employee contributions made hereunder. [ ] (f) Additional Employer Contribution - Integrated Allocation Formula [See paragraphs (h) and (i)] The Employer shall have the right to make an additional discretionary contribution. The Employer's contribution for the Plan Year plus any forfeitures shall be allocated to the accounts of eligible Participants as follows: (i) First, to the extent contributions and forfei- tures are sufficient, all Participants will receive an allocation equal to 3% of their Com- pensation. (ii) Next, any remaining Employer Contributions and forfeitures will be allocated to Participants who have Compensation in excess of the Taxable Wage Base (excess Compensation). Each such Participant will receive an allocation in the ratio that his or her excess compensation bears to the excess Compensation of all Participants. Participants may only receive an allocation of 3% of excess Compensation. (iii) Next, any remaining Employer contributions and forfeitures will be allocated to all Participants in the ratio that their Compensation plus excess Compensation bears to the total Compensation plus excess Compensation of all Participants. Participants may only receive an allocation of up to 2.7% of their Compensation plus excess Compensation, under this allocation method. If the Taxable Wage Base defined at Section 3(j) is less than or equal to the greater of $10,000 or 20% of the maximum, the 2.7% need not be reduced. If the amount specified is greater than the greater of $10,000 or 20% of the maximum Taxable Wage Base, but not more than 80%, 2.7% must be reduced to 1.3%. If the amount specified is greater than 80% but less than 100% of the maximum Taxable Wage Base, the 2.7% must be reduced to 2.4%. NOTE: If the Plan is not Top-Heavy or if the Top-Heavy minimum contribution or benefit is provided under another Plan [see Section 11(c)(ii)] covering the same Employees, sub-paragraphs (i) and (ii) above may be disregarded and 5.7%, 4.3% or 5.4% may be substituted for 2.7%, 1.3% or 2.4% where it appears in (iii) above. (iv) Next, any remaining Employer contributions and forfeitures will be allocated to all Partici- pants (whether or not they received an allo- cation under the preceding paragraphs) in the ratio that each Participant's Compensation bears to all Participants' Compensation. [ ] (g) Additional Employer Contribution-Alternative Integrated Allocation Formula. [See paragraph (h) and (i)] The Employer shall have the right to make an additional discretionary contribution. To the extent that such contributions are sufficient, they shall be allocated as follows: % of each eligible Participant's Compensation plus % of Compensation in excess of the Taxable Wage Base defined at Section 3(j) hereof. The percentage on excess compensation may not exceed the lesser of (i) the amount first specified in this paragraph or (ii) the greater of 5.7% or the percentage rate of tax under Code Section 3111(a) as in effect on the first day of the Plan Year attributable to the Old Age (OA) portion of the OASDI provisions of the Social Security Act. If the Employer specifies a Taxable Wage Base in Section 3(j) which is lower than the Taxable Wage Base for Social Security purposes (SSTWB) in effect as of the first day of the Plan Year, the percentage contributed with respect to excess Compensation must be adjusted. If the Plan's Taxable Wage Base is greater than the larger of $10,000 or 20% of the SSTWB but not more than 80% of the SSTWB, the excess percentage is 4.3%. If the Plan's Taxable Wage Base is greater than 80% of the SSTWB but less than 100% of the SSTWB, the excess percentage is 5.4%. NOTE: Only one plan maintained by the Employer may be integrated with Social Security. (h) Allocation of Excess Amounts (Annual Additions) In the event that the allocation formula above results in an Excess Amount, such excess, after distribution of Employee related contributions pursuant to paragraph 10.2 of the Basic Plan Document shall be: [ ] (i) Suspense Account - placed in a suspense account accruing no gains or losses for the benefit of the Participant. [x] (ii) Spillover - reallocated as additional Employer contributions to all other Participants to the extent that they do not have any Excess Amount. (i) Minimum Employer Contribution Under Top-Heavy Plans: For any Plan Year during which the Plan is Top-Heavy, the sum of the contributions and forfeitures as allocated to eligible Employees under paragraphs 7(d), 7(e), 7(f), 7(g) and 9 of this Adoption Agreement shall not be less than the amount required under paragraph 14.2 of the Basic Plan document #04. Top-Heavy minimums will be allocated to: [x] (i) all eligible Participants. [ ] (ii) only eligible non-Key Employees who are Participants. (j) Return of Excess Contributions and/or Excess Aggregate Contributions: In the event that one or more Highly Compensated Employees is subject to both the ADP and ACP tests and the sum of such tests exceeds the Aggregate Limit, the limit will be satisfied by reducing: [ ] (i) the ADP of the affected Highly Compensated Employees. [ ] (ii) the ACP of the affected Highly Compensated Employees. [x] (iii) a combination of the ADP and/or ACP of the affected Highly Compensated Employees. 8. ALLOCATIONS TO TERMINATED EMPLOYEES [ ] (a) The Employer will not allocate Employer related contributions to Employees who terminate during a Plan Year, unless required to satisfy the requirements of Code Section 401(a)(26) and 410(b). (These requirements are effective for 1989 and subsequent Plan Years.) [x] (b) The Employer will allocate Employer matching and other related contributions as indicated below to Employees who terminate during the Plan Year as a result of: Matching Other [x] [x] (i) Retirement. [x] [x] (ii) Disability. [x] [x] (iii) Death. [ ] [ ] (iv) Other termination of employment provided that the Participant has completed a Year of Service as defined for Allocation Accrual Purposes. [ ] [ ] (v) Other termination of employment even though the Participant has not completed a Year of Service. [ ] [ ] (vi) Termination of employment (for any reason) provided that the Participant had completed a Year of Service for Allocation Accrual Purposes. 9. ALLOCATION OF FORFEITURES NOTE: Subsections (a), (b) and (c) below apply to forfeitures of amounts other than Excess Aggregate Contributions. (a) Allocation Alternatives: If forfeitures are allocated to Participants, such allocations shall be done in the same manner as the Employer's contribution. [ ] (i) Not Applicable. All contributions are always fully vested. [x] (ii) Forfeitures attributable to Employer discretionary contributions and Top-Heavy minimums: [ ] will be allocated to: [ ] all eligible Participants. [ ] only those Participants eligible for an allocation of Employer contributions in the current year. [ ] only those Participants eligible for an allocation of matching contributions in the current year. [x] will be applied to reduce the Employer's contribution for such Plan Year. [ ] shall be applied to offset administrative expenses of the Plan. If forfeitures exceed these expenses, the excess will be applied to reduce the Employer's contribution for such Plan Year. [x] (iii) Forfeitures attributable to Employer Matching contributions: [ ] will be allocated to: [ ] all eligible Participants. [ ] only those Participants eligible for an allocation of Employer contributions in the current year. [ ] only those Participants eligible for an allocation of matching contributions in the current year. [x] will be applied to reduce the Employer's contribution for such Plan Year. [ ] shall be applied to offset administrative expenses of the Plan. If forfeitures exceed these expenses, the excess will be applied to reduce the Employer's contribution for such Plan Year. (b) Date for Reallocation: NOTE: If no distribution has been made to a former Participant, sub-section (i) below will apply to such Participant even if the Employer elects (ii), (iii) or (iv) below as its normal administrative policy. [ ] (i) Forfeitures shall be reallocated at the end of the Plan Year during which the former Participant incurs his or her fifth consecutive one year Break In Service. [ ] (ii) Forfeitures will be reallocated as of the next Valuation Date following the date on which the former Participant receives payment of his or her vested benefit. [ ] (iii) Forfeitures shall be reallocated at the end of the Plan Year during which the former Employee incurs his or her (1st, 2nd, 3rd, or 4th) consecutive one year Break In Service. [x] (iv) Forfeitures will be reallocated as of the end of the Plan Year during which the former Participant receives payment of his or her vested benefit. (c) Restoration of Forfeitures: If amounts are forfeited prior to five consecutive 1-year Breaks in Service, the Funds for restoration of account balances will be obtained from the following resources in the order indicated (fill in the appropriate number): [1] (i) Current year's forfeitures. [2] (ii) Additional Employer contribution. [3] (iii) Income or gain to the Plan. (d) Forfeitures of Excess Aggregate Contributions shall be: [x] (i) Applied to reduce Employer contributions. [ ] (ii) Allocated, after all other forfeitures under the Plan, to the Matching Contribution account of each non-Highly Compensated Participant who made Elective Deferrals or Voluntary Contributions in the ratio which each such Participant's Compensation for the Plan Year bears to the total Compensation of all such Participants for such Plan Year. Such forfeitures cannot be allocated to the account of any Highly Compensated Employee. Forfeitures of Excess Aggregate Contributions will be so applied at the end of the Plan Year in which they occur. 10. CASH OPTION [ ] (a) The Employer may permit a Participant to elect to defer to the Plan, an amount not to exceed % of any Employer paid cash bonus made for such Participant for any year. A Participant must file an election to defer such contribution at least fifteen (15) days prior to the end of the Plan Year. If the Employee fails to make such an election, the entire Employer paid cash bonus to which the Participant would be entitled shall be paid as cash and not to the Plan. Amounts deferred under this section shall be treated for all purposes as Elective Deferrals. Notwithstanding the above, the election to defer must be made before the bonus is made available to the Participant. [x] (b) Not Applicable. 11. LIMITATIONS ON ALLOCATIONS [x] This is the only Plan the Employer maintains or ever maintained, therefore, this section is not applicable. [ ] The Employer does maintain or has maintained another Plan (including a Welfare Benefit Fund or an individual medical account (as defined in Code Section 415(l)(2)), under which amounts are treated as Annual Additions) and has completed the proper sections below. Complete (a), (b) and (c) only if the Employer maintains or ever maintained another qualified plan, including a Welfare Benefit Fund or an individual medical account [as defined in Code Section 415(l)(2)] in which any Participant in this Plan is (or was) a participant or could possibly become a participant. (a) If the Participant is covered under another qualified Defined Contribution Plan maintained by the Employer, other than a Master or Prototype Plan: [ ] (i) the provisions of Article X of the Basic Plan Document #04 will apply, as if the other plan were a Master or Prototype Plan. [ ] (ii) Attach provisions stating the method under which the plans will limit total Annual Additions to the Maximum Permissible Amount, and will properly reduce any Excess Amounts, in a manner that precludes Employer discretion. (b) If a Participant is or ever has been a participant in a Defined Benefit Plan maintained by the Employer: Attach provisions which will satisfy the 1.0 limitation of Code Section 415(e). Such language must preclude Employer discretion. The Employer must also specify the interest and mortality assumptions used in determining Present Value in the Defined Benefit Plan. (c) The minimum contribution or benefit required under Code Section 416 relating to Top-Heavy Plans shall be satisfied by: [ ] (i) this Plan. [ ] (ii) (Name of other qualified plan of the Employer). [ ] (iii) Attach provisions stating the method under which the minimum contribution and benefit provisions of Code Section 416 will be satisfied. If a Defined Benefit Plan is or was maintained, an attachment must be provided showing interest and mortality assumptions used in the Top-Heavy Ratio. 12. VESTING Employees shall have a fully vested and nonforfeitable interest in any Employer contribution and the investment earnings thereon made in accordance with paragraphs (select one or more options) [ ] 7(c), [ ] 7(e), [ ] 7(f), [ ] 7(g) and [ ] 7(i) hereof. Contributions under paragraph 7(b), 7(c)(vii) and 7(d) are always fully vested. If one or more of the foregoing options are not selected, such Employer contributions shall be subject to the vesting table selected by the Employer. Each Participant shall acquire a vested and nonforfeitable percentage in his or her account balance attributable to Employer contributions and the earnings thereon under the procedures selected below except with respect to any Plan Year during which the Plan is Top-Heavy, in which case the Two-twenty vesting schedule [Option (b)(iv)] shall automatically apply unless the Employer has already elected a faster vesting schedule. If the Plan is switched to option (b)(iv), because of its Top-Heavy status, that vesting schedule will remain in effect even if the Plan later becomes non-Top-Heavy until the Employer executes an amendment of this Adoption Agreement indicating otherwise. (a) Computation Period: The computation period for purposes of determining Years of Service and Breaks in Service for purposes of computing a Participant's nonforfeitable right to his or her account balance derived from Employer contributions: [ ] (i) shall not be applicable since Participants are always fully vested, [ ] (ii) shall commence on the date on which an Employee first performs an Hour of Service for the Employer and each subsequent 12-consecutive month period shall commence on the anniversary thereof, or [x] (iii) shall commence on the first day of the Plan Year during which an Employee first performs an Hour of Service for the Employer and each subsequent 12-consecutive month period shall commence on the anniversary thereof. A Participant shall receive credit for a Year of Service if he or she completes at least 1,000 Hours of Service [or if lesser, the number of hours specified at 3(l)(iii) of this Adoption Agreement] at any time during the 12-consecutive month computation period. Consequently, a Year of Service may be earned prior to the end of the 12-consecutive month computation period and the Participant need not be employed at the end of the 12-consecutive month computation period to receive credit for a Year of Service. (b) Vesting Schedules: NOTE: The vesting schedules below only apply to a Participant who has at least one Hour of Service during or after the 1989 Plan Year. If applicable, Participants who separated from Service prior to the 1989 Plan Year will remain under the vesting schedule as in effect in the Plan prior to amendment for the Tax Reform Act of 1986. (i) Full and immediate vesting. Years of Service 1 2 3 4 5 6 7 (ii) % 100% (iii) % % 100% (iv) % 20% 40% 60% 80% 100% (v) % % 20% 40% 60% 80% 100% (vi) 10% 20% 30% 40% 60% 80% 100% (vii) 0 % 40 % 60 % 80 % 100% (viii) % % % % % % 100% NOTE: The percentages selected for schedule (viii) may not be less for any year than the percentages shown at schedule (v). [x] All contributions other than those which are fully vested when contributed will vest under schedule vii above. [ ] Contributions other than those which are fully vested when contributed will vest as provided below: Vesting Type Of Employer Option Selected Contribution 7(c) Employer Match on Salary Savings 7(c) Employer Match on Employee Voluntary 7(e) Employer Discretionary 7(f) & (g) Employer Discretionary- Integrated (c) Service disregarded for Vesting: [x] (i) Not Applicable. All Service shall be considered. [ ] (ii) Service prior to the Effective Date of this Plan or a predecessor plan shall be disregarded when computing a Participant's vested and nonforfeitable interest. [ ] (iii) Service prior to a Participant having attained age 18 shall be disregarded when computing a Participant's vested and nonfor- feitable interest. 13. SERVICE WITH PREDECESSOR ORGANIZATION For purposes of satisfying the Service requirements for eligibility, Hours of Service shall include Service with the following predecessor organization(s): (These hours will also be used for vesting purposes.) RTC Express, Inc. Round The Corner Restaurants, Inc. 14. ROLLOVER/TRANSFER CONTRIBUTIONS (a) Rollover Contributions, as described at paragraph 4.3 of the Basic Plan Document #04, [x] shall [ ] shall not be permitted. If permitted, Employees [ ] may [x] may not make Rollover Contributions prior to meeting the eligibility requirements for participation in the Plan. (b) Transfer Contributions, as described at paragraph 4.4 of the Basic Plan Document #04 [x] shall [ ] shall not be permitted. If permitted, Employees [ ] may [x] may not make Transfer Contributions prior to meeting the eligibility requirements for participation in the Plan. NOTE: Even if available, the Employer may refuse to accept such contributions if its Plan meets the safe-harbor rules of paragraph 8.7 of the Basic Plan Document #04. 15. HARDSHIP WITHDRAWALS Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan Document #04, [x] are [ ] are not permitted. 16. PARTICIPANT LOANS Participant loans, as provided for in paragraph 13.5 of the Basic Plan Document #04, [x] are [ ] are not permitted. If permitted, repayments of principal and interest shall be repaid to [x] the Participant's segregated account or [ ] the general Fund. 17. INSURANCE POLICIES The insurance provisions of paragraph 13.6 of the Basic Plan Document #04 [ ] shall [x] shall not be applicable. 18. EMPLOYER INVESTMENT DIRECTION The Employer investment direction provisions, as set forth in paragraph 13.7 of the Basic Plan Document #04, [x] shall [ ] shall not be applicable. 19. EMPLOYEE INVESTMENT DIRECTION (a) The Employee investment direction provisions, as set forth in paragraph 13.8 of the Basic Plan Document #04, [x] shall [ ] shall not be applicable. If applicable, Participants may direct their investments: [x] (i) among funds offered by the Trustee. [ ] (ii) among any allowable investments. (b) Participants may direct the following kinds of contributions and the earnings thereon (check all applicable): [ ] (i) All Contributions [x] (ii) Elective Deferrals [ ] (iii) Employee Voluntary Contributions (after-tax) [ ] (iv) Employee Mandatory Contributions (after-tax) [ ] (v) Employer Qualified Matching Contributions [ ] (vi) Other Employer Matching Contributions [ ] (vii) Employer Qualified Non-Elective Contributions [ ] (viii) Employer Discretionary Contributions [x] (ix) Rollover Contributions [ ] (x) Transfer Contributions [ ] (xi) All of above which are checked, but only to the extent that the Participant is vested in those contributions. NOTE: To the extent that Employee investment direction was previously allowed, the Trustee shall have the right to either make the assets part of the general Trust, or leave them as separately invested subject to the rights of paragraph 13.8. 20. EARLY PAYMENT OPTION (a) A Participant who separates from Service prior to retirement, death or Disability [x] may [ ] may not make application to the Employer requesting an early payment of his or her vested account balance. (b) A Participant who has attained age 59-1/2 and who has not separated from Service [x] may [ ] may not obtain a distribution of his or her vested Employer contributions. Distribution can only be made if the Participant is 100% vested. (c) A Participant who has attained the Plan's Normal Retirement Age and who has not separated from Service [x] may [ ] may not receive a distribution of his or her vested account balance. NOTE: If the Participant has had the right to withdraw his or her account balance in the past, this right may not be taken away. Notwithstanding the above, to the contrary, required minimum distributions will be paid. For timing of distributions, see item 21(a) below. 21. DISTRIBUTION OPTIONS (a) Timing of Distributions: In cases of termination for other than death, Disability or retirement, benefits shall be paid: [ ] (i) As soon as administratively feasible, following the close of the valuation period during which a distribution is requested or is otherwise payable. [ ] (ii) As soon as administratively feasible following the close of the Plan Year during which a distribution is requested or is otherwise payable. [x] (iii) As soon as administratively feasible, following the date on which a distribution is requested or is otherwise payable. [ ] (iv) As soon as administratively feasible, after the close of the Plan Year during which the Participant incurs consecutive one-year Breaks in Service. [ ] (v) Only after the Participant has achieved the Plan's Normal Retirement Age, or Early Retirement Age, if applicable. In cases of death, Disability or retirement, benefits shall be paid: [ ] (vi) As soon as administratively feasible, following the close of the valuation period during which a distribution is requested or is otherwise payable. [ ] (vii) As soon as administratively feasible following the close of the Plan Year during which a distribution is requested or is otherwise payable. [x] (viii) As soon as administratively feasible, following the date on which a distribution is requested or is otherwise payable. (b) Optional Forms of Payment: [x] (i) Lump Sum. [x] (ii) Installment Payments. [ ] (iii) Life Annuity*. [ ] (iv) Life Annuity Term Certain*. Life Annuity with payments guaranteed for years (not to exceed 20 years, specify all applicable). [ ] (v) Joint and [ ] 50%, [ ] 66-2/3%, [ ] 75% or [ ] 100% survivor annuity* (specify all applicable). [ ] (vi) Other form(s) specified: *Not available in Plan meeting provisions of paragraph 8.7 of Basic Plan Document #04. (c) Recalculation of Life Expectancy: In determining required distributions under the Plan, Participants and/or their Spouse (Surviving Spouse) [x] shall [ ] shall not have the right to have their life expectancy recalculated annually. If "shall", [ ] only the Participant shall be recalculated. [ ] both the Participant and Spouse shall be recalculated. [x] who is recalculated shall be determined by the Participant. 22. SPONSOR CONTACT Employers should direct questions concerning the language contained in and qualification of the Prototype to: Henry P. Schneider, APA (Job Title) Assistant Vice President (Phone Number) (619) 622-6701 In the event that the Sponsor amends, discontinues or abandons this Prototype Plan, notification will be provided to the Employer's address provided on the first page of this Agreement. 23. SIGNATURES: Due to the significant tax ramifications, the Sponsor recommends that before you execute this Adoption Agreement, you contact your attorney or tax advisor, if any. (a) EMPLOYER: Name and address of Employer if different than specified in Section 1 above. This agreement and the corresponding provisions of the Plan and Trust/Custodial Account Basic Plan Document #04 were adopted by the Employer the day of , 19 . Signed for the Employer by: Title: Signature: The Employer understands that its failure to properly complete the Adoption Agreement may result in disqualification of its Plan. Employer's Reliance: An Employer who adopts a Standardized Plan and who maintains or has ever maintained or who later adopts any Plan [including, after December 31, 1985, a Welfare Benefit Fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for Key Employees, as defined in Section 419A(d)(3)] or an individual medical account, as defined in Code Section 415(l)(2) in addition to this Plan may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under Section 401 of the Code. If the Employer who adopts or maintains multiple Plans wishes to obtain reliance that such Plan(s) are qualified, application for a determination letter should be made to the appropriate Key District Director of Internal Revenue. The Employer understands that its failure to properly complete the Adoption Agreement may result in disqualification of its plan. The Employer may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under Section 401 of the Code unless the terms of the Plan, as herein adopted or amended, that pertain to the requirements of Sections 401(a)(4), 401(a)(17), 401(l), 401(a)(5), 410(b) and 414(s) of the Code, as amended by the Tax Reform Act of 1986 or later laws, (a) are made effective retroactively to the first day of the first Plan Year beginning after December 31, 1988 (or such other date on which these requirements first become effective with respect to this Plan); or (b) are made effective no later than the first day on which the Employer is no longer entitled, under regulations, to rely on a reasonable, good faith interpretation of these requirements, and the prior provisions of the Plan constitute such an interpretation. An Employer who adopts a Nonstandardized Plan may not rely on an opinion letter issued by the National Office of the Internal Revenue Service as evidence that the Plan is qualified under Code Section 401. In order to obtain reliance with respect to Plan qualification, the Employer must apply to the appropriate Key District Office for a determination letter. This Adoption Agreement may only be used in conjunction with Basic Plan Document #04. [x] (b) TRUSTEE: Name of Trustee: Wells Fargo Bank, N.A. 4365 Executive Drive, Suite 1700 San Diego, CA 92121-2130 The assets of the Fund shall be invested in accordance with paragraph 13.3 of the Basic Plan Document #04 as a Trust. As such, the Employer's Plan as contained herein was accepted by the Trustee the day of , 19 . Signed for the Trustee by: Tony Scarabino Brian Dinh Title: Assistant Vice President Trust Officer Signature: [ ] (c) CUSTODIAN: Name of Custodian: The assets of the Fund shall be invested in accordance with paragraph 13.4 of the Basic Plan Document #04 as a Custodial Account. As such, the Employer's Plan as contained herein was accepted by the Custodian the day of , 19 . Signed for the Custodian by: Title: Signature: (d) SPONSOR: The Employer's Agreement and the corresponding provisions of the Plan and Trust/Custodial Account Basic Plan Document #04 were accepted by the Sponsor the day of , 19 . Signed for the Sponsor by: Henry P. Schneider, APA Title: Assistant Vice President Compliance Signature: EX-4.4 5 Good Times Drive Thru, Inc. as a Subsidary of Good Times Restaurants, Inc. 401(k) Savings and Investment Plan SUMMARY PLAN DESCRIPTION February 1, 1998 SUMMARY PLAN DESCRIPTION TABLE OF CONTENTS PAGE I INTRODUCTION 1 II PLAN DATA 1 Agent For Service Of Legal Process 1 Effective Date 1 Employer 1 Plan Administrator 1 Plan Year 1 Trustee 1 Type Of Administration 1 III DEFINITIONS 1 Break In Service 1 Compensation 2 Disability 2 Effective Date 2 Elective Deferral 2 Entry Date 2 Family Member 2 Highly Compensated Employee 2 Hour Of Service 3 Maternity/Paternity Leave 3 Normal Retirement Age 3 Spouse 3 Year Of Service 4 IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION 4 V EMPLOYEE CONTRIBUTIONS 4 Elective Deferrals 4 Rollover And Transfer Contributions 5 VI EMPLOYER CONTRIBUTIONS 5 Contribution Formula 5 Eligibility For Allocation 6 VII GOVERNMENT REGULATIONS 6 VIII PARTICIPANT ACCOUNTS 7 IX VESTING 7 Determining Vested Benefit 7 Payment Of Vested Benefit 8 Loss Of Benefits 8 Timing of Forfeitures 8 Reemployment 9 X TOP-HEAVY RULES 10 XI RETIREMENT BENEFITS AND DISTRIBUTIONS 10 Retirement Benefits 10 Distributions During Employment 11 Hardship Withdrawals 11 Beneficiary 12 Death Benefits 12 Form Of Payment 12 Rollover Of Payment 13 Time Of Payment 14 XII INVESTMENTS 14 Trust Fund 14 Investment Responsibility 14 Employee Investment Direction 14 Participant Loans 15 XIII ADMINISTRATION 15 Plan Administrator 15 Trustee 15 XIV AMENDMENT AND TERMINATION 16 XV LEGAL PROVISIONS 16 Rights Of Participants 16 Fiduciary Responsibility 17 Employment Rights 17 Benefit Insurance 17 Claims Procedure 17 Assignment 18 Questions 18 Conflicts With Plan 18 I INTRODUCTION Your Employer has established a retirement plan to help supplement your retirement income. Under the program, the Employer makes contributions to a Trust Fund which will pay you a benefit at retirement. Details about how the Plan works are contained in this summary. While the summary describes the principal provisions of the Plan, it does not include every limitation or detail. If there is a discrepancy between this booklet and the official Plan document, the Plan document shall govern. You may obtain a copy of the Plan document from the Plan Administrator. The Plan Administrator may charge a reasonable fee for providing you with the copy. II PLAN DATA A. Agent For Service Of Legal Process: The Employer or Trustee. B. Effective Date: The Effective Date of the original Plan was April 1, 1992; the Effective Date of the amended Plan is February 1, 1998. C. Employer: Good Times Drive Thru, Inc. as a Subsidary of Good Times Restaurants, Inc. 401(k) Savings and Investment PLan Address: 8680 Wolf Court, Suite #330 Westminster, CO 80030 Telephone No.: (303)427-4221 Tax I.D. No.: 84-1133368 Plan No.: 001 D. Plan Administrator: The Employer has been designated to serve as Plan Administrator. E. Plan Year: The 12-month period beginning on October 1 and ending on September 31. F. Trustee(s): Wells Fargo Bank, N.A. Address: 4365 Executive Drive, 17th Floor San Diego, CA 92121-2130 Telephone No.: (619) 622-6701 G. Type Of Administration: Trust Fund III DEFINITIONS A. Break In Service. A 12 consecutive month period during which you are not credited with or are not paid for more than 500 hours. If you go into the military service of the United States, you are not considered terminated as long as you return to work within the time required by law. If you separate from employment and incur a Break in Service, all contributions to your various accounts are suspended. [See special rules relating to maternity and paternity leave below. Also, see Section VI(B) to determine your eligibility to share in the Employer's Contribution if you separate from employment, but do not incur a Break in Service.] If a Break in Service occurs and you return to full time employment with the Employer, your rights are explained in the section entitled "Vesting". B. Compensation. Your total salary, pay, or earned income from the Employer, as reflected on tax Form W-2, even if not subject to withholding taxes when earned. Compensation will include amounts received by you during the Plan Year and earned while a Participant. Compensation shall be limited to $150,000 as adjusted for inflation. C. Disability. A potentially permanent illness or injury, as certified to by a physician who is approved by the Employer, which prevents you from engaging in work for which you are qualified for a period of at least 12 months. D. Effective Date. The date on which the Plan starts or an amendment is effective. E. Elective Deferral. Employer contributions made to the Plan at your election, instead of being given to you in cash as part of your salary. You can elect to defer a portion of your salary, instead of receiving it in cash, and your Employer will contribute it to the Plan on your behalf. F. Entry Date. The date on which you enter the Plan. Your Entry Date will be the first day of the Plan Year, or the first day of the fourth month, the first day of the seventh month, or the first day of the tenth month of the Plan Year coinciding with or following the date you satisfy the eligibility requirements. G. Family Member. The Spouse or lineal ascendant or descendant (or Spouse thereof) of either a more than 5% owner of the Employer or one of the ten highest compensated Highly Compensated Employees of the Employer. H. Highly Compensated Employee. Any Employee who during the current or prior Plan Year (1) was a more than 5% owner, (2) received more than $75,000 in Compensation as adjusted for inflation (3) received more than $50,000 in Compensation as adjusted for inflation and was in the top 20% of Employees when ranked by Compensation, or (4) was an officer receiving more than $45,000 in Compensation as adjusted for inflation. Family Members of any 5% owner, or Highly Compensated Employee in the group of the ten Employees with the greatest Compensation, will be combined as if they were one person for purposes of Compensation and contributions. If you are not currently or never were Highly Compensated, or a Family Member of a Highly Compensated Employee, you are a Non-highly Compensated Employee. I. Hour Of Service. You will receive credit for each hour you are (1) paid for being on your job, (2) paid even if you are not at work (vacation, sickness, leave of absence, or disability), or (3) paid for back pay if hours were not already counted. A maximum of 501 hours will be credited in any year for periods during which you are not at work but are paid. Hours of Service will be calculated based on actual hours you are entitled to payment. Your Hours of Service with RTC Express, Inc. and Round The Corner Restaurants, Inc. are included for eligibility and vesting in this Plan. J. Maternity/Paternity Leave. You may be eligible for additional Hours of Service if you leave employment, even if temporarily, due to childbirth or adoption. If this is the case, you will be credited with enough hours (up to 501) of service to prevent a Break in Service, either in the year you leave employment or the following year. For example, if you have 750 Hours of Service in the year that your child is born, you would not get any more hours credited for that Plan Year since you do not have a Break in Service. Therefore, if you do not return to employment the following year, you will get 501 Hours of Service so you will not have a Break in Service in that year. Alternatively, if you do return the following year, but work only 300 hours, you will receive an additional 201 hours in order to prevent a break. These Hours of Service for maternity or paternity leave must all be used in one Plan Year. They are used only to prevent a Break in Service and not for calculating your Years of Service for eligibility, vesting or benefits. K. Normal Retirement Age. The attainment of age 65. L. Spouse. The person to whom you are or were legally married, or your common law Spouse if common law marriage is recognized by the state in which you live. In order for your Spouse to receive a benefit under this Plan, he or she may not predecease you. A former Spouse may be treated as a "Spouse" under this definition if recognized as such under a Qualified Domestic Relations Order as explained at Section XV(F) of this Summary Plan Description. M. Year Of Service. Eligibility For purposes of determining your eligibility to participate in the Plan, a Year of Service is a 12-consecutive month period beginning on your date of hire during which you are credited with at least 1000 Hours of Service. Contribution For purposes of determining whether or not you are entitled to have a contribution allocated to your account, a Year of Service is a 12-consecutive month period, which is the same as the Plan Year, during which you are credited with at least 1000 Hours of Service. Vesting For purposes of determining the extent to which you are vested in your account balance, a Year of Service is a 12-consecutive month period, which is the same as the Plan Year, during which you are credited with 1000 Hours of Service. IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION You are eligible to participate in this Plan upon completing 1 Year of Service and attaining age 21. You are considered to have completed 1 Year of Service for purposes of eligibility on the anniversary of your first day of employment, provided that you worked at least 1000 hours during that 12-month period. The second and subsequent measuring periods, if applicable, shall be the Plan Year. The Plan will not cover Employees covered by a collective bargaining agreement. Your participation in the Plan will begin on the Entry Date defined at Section III. V EMPLOYEE CONTRIBUTIONS A. Elective Deferrals You, as an eligible Employee, may authorize the Employer to withhold from 1% up to 14% of your Compensation, not to exceed $7,000 as adjusted for inflation, and to deposit such amount in the Plan fund. If you participate in a similar plan of an unrelated employer and your Elective Deferrals under this Plan and the other plan exceed the $7,000 limit, for a given year you must designate one of the Plans as receiving an excess amount. If you choose this Plan as the one receiving the excess, you must notify the Plan Administrator by March 1 of the following year so that the excess and any income thereon may be returned to you by April 15. You may increase, decrease, or terminate your Elective Deferral percentage on the anniversary date of the Plan and on the first day following any Valuation Date. If you terminate contributions, you may not reinstate payroll withholding until the first day of the next valuation period. The Employer may also reduce or terminate your withholding if required to maintain the Plan's qualified status. B. Rollover And Transfer Contributions Rollover and Transfer Contributions are permitted. In order to make a Rollover or Transfer Contribution, you must be a Participant. An Employer can refuse to allow Transfer Contributions to its profit-sharing Plan if the transfer will affect the Plan's ability to offer lump sum distributions as the normal form of distribution. A rollover or transfer of your retirement benefits may originate from another qualified retirement plan or special individual retirement arrangement (known as a "conduit" IRA) to this Plan. If you have already received a lump-sum payment from another qualified retirement plan, or if you received payment from another qualified plan and placed it in a separate "conduit" IRA, you may be eligible to redeposit that payment to this Plan. The last day you may make a Rollover Contribution to this Plan is the 60th day after you receive the distribution from the other plan or IRA. A transfer occurs when the trustee of the old plan transfers your assets to this Plan. If you believe you qualify for a transfer or rollover, see the Plan Administrator for more details. VI EMPLOYER CONTRIBUTIONS A. Contribution Formula Elective Deferrals: The Employer will contribute all Compensation which you elect to defer to the Plan within the limits outlined in Section V(A). Matching Contributions: The Employer may make a Matching Contribution to each Participant based on his or her Elective Deferrals in a percentage set by the Employer prior to the end of each Plan Year. The Employer shall not match your Elective Deferrals that are in excess of 6% of your Compensation. The time period which will be used for determining the amount of Matching Contributions owed shall be annually. Employer Matching Contributions will only be made on Elective Deferrals made to the Plan. Elective Deferrals withdrawn prior to the end of the Plan Year will not receive Matching Contributions. Qualified Non-Elective Contributions: The Employer may also contribute an additional amount determined in its sole judgement. This additional contribution, if any, will be allocated to only Non-highly Compensated Participants, in proportion to each eligible Employee's Compensation as a ratio of all eligible Employees' Compensation. These Contributions will be nonforfeitable and subject to withdrawal restrictions. Discretionary: The Employer may also contribute an additional amount determined in its sole judgement. Such additional contribution, if any, shall be allocated to each Participant in proportion to his or her Compensation for the Plan Year while a Participant. B. Eligibility For Allocation The Employer's Contribution will be made to all Participants who are employed at the end of the Plan Year provided that the Participant has completed a Year of Service during the Plan Year. The Employer shall also make matching and other related contributions as indicated below to Employees who terminate during the Plan Year as a result of: Matching Other x x (i) Retirement. x x (ii) Disability. x x (iii) Death. VII GOVERNMENT REGULATIONS The federal government sets certain limitations on the level of contributions which may be made to a Plan such as this. There is also a "percentage" limitation which means that the percentage of Compensation which you may contribute (Elective Deferrals) depends on the average percentage of Compensation that the other Participants are contributing. Simply stated, all Participants are divided into 2 categories: Highly Compensated and Non-highly Compensated and the average for each group is calculated. The average contribution that the Highly Compensated may make is based on the average contribution that the Non-highly Compensated make. If a Highly Compensated Participant is contributing more than he or she is allowed, the excess, plus or minus any gain or loss, will be returned. Keep in mind that if you are a 5% owner of the business or one of the ten highest paid Highly Compensated employees, your Family Member's contribution percentages and Compensations will be combined with yours for purposes of determining your contributions under the Plan. VIII PARTICIPANT ACCOUNTS The Employer will set up a record keeping account in your name to show the value of your retirement benefit. The Employer will make the following additions to your account: A. your allocated share of the Employer's Contribution (including your Elective Deferrals), B. the amount of your personal Transfer Contributions and Rollover Contributions, if any, C. your share of forfeited accounts of former employees. (These are amounts left behind by employees who terminated before becoming 100% vested in their benefit), and D. your share of investment earnings and appreciation in the value of investments. The Employer will make the following subtractions from your account: E. any withdrawals or distributions made to you, and F. your share of investment losses and depreciation in the value of investments. G. your share of administrative fees and expenses paid out of the Plan, if applicable. The Employer will value your account quarterly. The Employer will provide you with a statement of account activity at least once annually. IX VESTING A. Determining Vested Benefit Vesting refers to your earning or acquiring a nonforfeitable right to the full amount of your account. Any Elective Deferrals, Qualified Non-Elective Contributions, Rollover Contributions, Transfer Contributions, plus or minus any earnings or losses, are always 100% vested and cannot be forfeited for any reason. Any contribution (including forfeitures) not listed in the previous sentence, and the earnings or losses thereon, will vest in accordance with the following table: Years of Service 1 2 3 4 5 6 7 0% 40% 60% 80% 100% You are considered to have completed 1 Year of Service for purposes of vesting upon the completion of 1000 Hours of Service at any time during a Plan Year. You automatically become fully vested, regardless of the vesting table, upon attainment of Normal Retirement Age, upon retirement due to Disability, upon death, and upon termination of the Plan. B. Payment Of Vested Benefit If you separate from Service before your retirement, death or Disability, you may request early payment of your vested benefit by submitting a written request to the Plan Administrator. If your vested account balance at the time of termination or at the time of any prior distributions exceeds or exceeded $3,500, you may defer the payment of your benefit until April 1 of the calendar year following the calendar year during which you attain age 70-1/2. The portion of your account balance to which you are not vested is called a "forfeiture" and remains in the Plan. Forfeitures of Employer Discretionary, Top-Heavy, and Matching contributions shall be used to reduce the Employer's contribution. C. Loss Of Benefits There are only two events which can cause the loss of all or a portion of your account. One is termination of employment before you are 100% vested according to the vesting provisions described at IX(A) and the other is a decrease in the value of your account from investment losses or administrative expenses and other costs of maintaining the Plan. D. Timing of Forfeitures If you terminate employment and receive payment of the vested portion of your account the nonvested portion of your account will be forfeited at the time you receive your payment. If you have not received a distribution of your vested balance, your nonvested portion will be forfeited at the end of the Plan Year during which you incur your fifth consecutive 1-year Break in Service. E. Reemployment If you terminate service with you Employer, then are reemployed in a Plan Year subsequent to the Plan Year you terminated, then you will become a Participant as of the earlier of the next Valuation Date or the next Entry Date [see Section III] following your return to employment. If you are reemployed in the same Plan Year that you terminated service with your Employer, then you shall become a Participant immediately and all Service and Compensation, for the entire Plan Year, shall be considered. If you are not a member of a class of employees eligible to participate in the Plan and later become a member of the eligible class, you will participate upon reaching the next Entry Date if you have satisfied the minimum age and service requirements. Should you become ineligible to share in future Contributions and forfeitures because you are no longer a member of an eligible class, you shall again share upon your return to an eligible class. All years of prior Service will be counted when calculating your vested percentage in your new account balance. The following rules apply in connection with reemployed Participants. (a) Terminated Partially Vested Participants. If you terminate employment and receive payment of the vested portion of your account, the nonvested portion of your account will be forfeited at the time you receive your payment. If you are reemployed prior to incurring five consecutive 1-year Breaks in Service you may have the Plan restore your forfeiture by repaying the amount of the distribution you received attributable to Employer contributions. This repayment right applies only if you do not incur five consecutive 1-year Breaks in Service. You must make this repayment within five years of your date of reemployment. If you do not repay the amount you received, the forfeited portion will not be restored to your account. Whether you repay or not, your prior Service will count toward vesting service for future Employer contributions. For example, assume that you terminate your job with your current Employer. At the time of termination you had accrued a total benefit of $10,000 under the retirement Plan. Although this amount had been allocated to your account, you were only 40% vested in that amount when you left. You decided to take a distribution of your vested account balance (40% of $10,000, or $4,000) when you quit. The nonvested balance of your account ($6,000) was forfeited. Three years later, you became reemployed by the same Employer. Since you were reemployed within 5 years, you have the right to repay the $4,000 distribution you received when you quit. You would have to repay the $4,000 within 5 years of being rehired. If you do so, the nonvested portion of your account ($6,000) will be restored to your account. After restoration, you will be vested in 40% of this account, but your vested percentage will increase based on your Years of Service after your reemployment. Your prior Service will always count towards vesting of Employer Contributions which you receive after reemployment, whether or not you decide to repay and restore your prior account. (b) Terminated Nonvested Participants. If you were not vested in any portion of your Employer Contribution account prior to your separation from service and are reemployed before incurring five consecutive one-year Breaks in Service, you will be credited for vesting with all pre-break and post-break service. Your prior unpaid account balance will automatically be restored and you will continue to vest in that account. If you are reemployed after incurring five consecutive one-year Breaks in Service, you will lose your prior account balance, but your pre-break Years of Service will count towards vesting, in your new account balance. X TOP-HEAVY RULES A "top-heavy" plan is one in which more than 60% of the contributions or benefits are attributable to certain "key employees", such as owners, officers and stockholders. The Plan Administrator is responsible for determining each year if the Plan is "top-heavy". If the Plan becomes top-heavy special rules apply to the allocation of the Employer's contribution. These special rules require that all Participants will generally receive an allocation of the Employer's contribution equal to 3% of compensation, or if less, the greatest percentage allocated to the account of any key employee. All participants are entitled to receive a minimum allocation upon completing at least one Hour of Service in the top-heavy Plan Year provided they are employed on the last day of the Plan Year. The Employer's minimum contribution can be satisfied by another Employer sponsored retirement plan, if so elected by the Employer. The following vesting schedule shall apply for the Plan Year the Plan becomes top-heavy, for any type of Employer Contribution, unless the Employer has already elected a faster schedule: Years of Service 1 2 3 4 5 6 0% 20% 40% 60% 80% 100% XI RETIREMENT BENEFITS AND DISTRIBUTIONS A. Retirement Benefits The full value of your account balance is payable at your Normal Retirement Age, even if you continue to work, or you may defer payment until April 1 following the year you reach age 70-1/2. If you work beyond your Normal Retirement Age, you will continue to fully participate in the Plan. B. Distributions During Employment Upon attainment of age 59-1/2, benefits attributable to Employer contributions, allocated to your account(s) in excess of two years, are available for withdrawal if you are 100% vested in those benefits. If applicable, benefits attributable to your rollovers are available for withdrawal upon request to the Plan Administrator. Transfers Contributions may be withdrawn only if they originate from plans meeting certain safe harbor provisions. C. Hardship Withdrawals You may file a written request for a hardship withdrawal of the portion of your account balance attributable to Elective Deferrals and certain Employer Contributions to the extent vested. Earnings on Elective Deferrals up to the last day of the Plan Year prior to July 1, 1989 may be included in any hardship withdrawal, but earnings on Elective Deferrals after that date may not be included. You must generally have your Spouse's written consent for a hardship withdrawal unless you are advised otherwise by the Plan Administrator. Prior to receiving a hardship distribution, you must take any other distribution and borrow the maximum non-taxable loan amount allowed under this and any other plans of the Employer. Note, however, that if the effect of the loan would be to increase the amount of your financial need, you are not required to take the loan. For example, if you need funds to purchase a principal residence, and a plan loan would disqualify you from obtaining other necessary financing, you do not have to take the loan. Hardship withdrawals may be authorized by the Employer for the following reasons: (a) to assist you in purchasing a personal residence which is your primary place of residence (not including mortgage payments), (b) to assist you in paying tuition and related educational expenses for you, your Spouse, or your dependents, for the next twelve months of post-secondary education, (c) to assist you in paying expenses incurred or necessary on behalf of you, your Spouse, or your dependents for hospitalization, doctor or surgery expenses which are not covered by insurance, or (d) to prevent your eviction from or foreclosure on your principal residence. Any hardship distribution is limited to the amount needed to meet the financial need. Hardship withdrawals must be approved by the Employer and will be administered in a non-discriminatory manner. Such withdrawals will not affect your eligibility to continue to participate in Employer Contributions to the Plan, although, your right to make Elective Deferrals will be suspended for twelve months. Any withdrawals you receive under these rules may not be recontributed to the Plan and may be subject to taxation, as well as an additional 10% penalty tax if the withdrawal is received before you reach age 59-1/2. These payments shall also be subject to a mandatory 20% withholding for income tax purposes. D. Beneficiary Every Participant or former Participant with Plan benefits may designate a person or persons who are to receive benefits under the Plan in the event of his or her death. The designation must be made on a form provided by and returned to the Plan Administrator. You may change your designation at any time. If you are married, your beneficiary will automatically be your Spouse. If you and your Spouse wish to waive this automatic designation, you must complete a beneficiary designation form. The form must be signed by you and, if applicable, your Spouse in front of a Plan representative or a Notary Public. E. Death Benefits In the event of your death, the full value of your account is payable to your beneficiary in a lump sum, or in installments payable over any period which does not exceed the life expectancy of your beneficiary. If you die after benefit payments have started under an installment option and after the attainment of age 70-1/2, your beneficiary will continue to receive payments in accordance with the payment option you selected. F. Form Of Payment When benefits become due, you or your representative should apply to the Employer requesting payment of your account and specifying the manner of payment. The normal or automatic form of payment is generally a lump sum unless the Plan Administrator notifies you otherwise. If you do not wish to receive the normal form of payment when your payments are due to start, you may request to receive your benefit in any of the optional forms indicated: - lump sum. - installment payments. In some cases, election of one of the optional forms of payment will require the written consent of your Spouse. Also, payments may not be made over a period which exceeds the life expectancy of you and your beneficiary. The Plan Administrator will advise you if any special rules apply in connection with the payments of your benefits. G. Rollover Of Payment If your benefits qualify as eligible rollovers, you have the option of having them paid directly to you, when they become due, or having them directly rolled over to another qualified plan or an IRA. If you do not choose to have the benefits directly rolled over, the Plan is required to automatically withhold 20% of your payment for tax purposes. If you do choose to have the payment made to you, you still have the option of rolling over the payment yourself to a qualified plan or an IRA within sixty days (first check with a tax advisor to make sure it is an eligible rollover). However, 20% of your payment will still be withheld. The following example illustrates how this works: If you have $100,000 in your vested account balance and choose to have the payment of your benefits made directly to an IRA or another qualified plan, the entire $100,000 will be transferred to the trustee of the other plan or the IRA, and you will treat the entire amount as a rollover on your tax return so that you will not pay taxes on the entire amount. If you choose not to have the account transferred directly to an IRA or qualified plan, 20% or $20,000 will automatically be withheld from your payment. Thus, you will receive only $80,000 as a distribution of your benefits. In order to roll the entire amount over into your IRA, you would have to come up with $20,000 out of your own pocket to make up the difference. If this is done, the $20,000 which was withheld may be returned when you file your taxes at the end of the year. However, if you are unable to produce the extra cash, the rollover amount will only be $80,000, and the other $20,000 which was withheld will be treated as taxable income to you. If you are under age 591/2 when you receive your benefit payment, the withheld amount will also be subject to the 10% early distribution penalty. However, if you receive your benefit payment due to a separation of service, after attainment of age 55, there will be no 10% early distribution penalty. Certain benefit payments are not eligible for rollover and therefore will also not be subject to the 20% mandatory withholding. They are as follows: 1. annuities paid over life; 2. installments for a period of at least 10 years; and 3. minimum required distributions at age 70-1/2. There are also several operational exceptions and a "de minimis" exception for payments of less than $200. Also Employee Voluntary contributions are not eligible for rollover. H. Time Of Payment If you retire, become disabled, or die, payments will start as soon as administratively feasible following the date on which a distribution is requested by you or is otherwise payable. If you terminate for a reason other than death, Disability, or retirement, payments will start as soon as administratively feasible following the date on which a distribution is requested by you or is otherwise payable. XII INVESTMENTS A. Trust Fund The monies contributed to the Plan may be invested in any security or form of property considered prudent for a retirement plan. Such investments include, but are not limited to, common and preferred stocks, exchange traded put and call options, bonds, money market instruments, mutual funds, savings accounts, certificates of deposit, Treasury bills, or insurance contracts. An institutional Trustee may invest in its own deposits or those of affiliates which bear a reasonable interest rate, or in a group or collective trust maintained by such Trustee. B. Investment Responsibility The Plan's assets are held by the Trustee who is identified in Section II of this Summary. The Trustee is responsible for the safekeeping of Plan assets and for the investment management of such assets unless the Employer elects to direct investments, appoints an outside investment manager or permits Participants to direct the investment of their individual accounts. C. Employee Investment Direction Participants may direct the investments of their accounts among alternative investment funds provided under the Plan. The following contributions are available for making an investment election: Elective Deferrals Rollover Contributions The procedures for making an election are shown in a separate Investment Election Form which can be obtained from the Plan Administrator. You may change your investment selection and move monies from one fund to another in accordance with the rules established by the Plan Administrator. D. Participant Loans Participant loans are permitted under the Plan. In order to get a loan from the Plan, you must make application to the Plan Administrator. Loans must be approved by the Plan Administrator and are subject to a strict set of rules established by law. The rules are covered in a separate Loan Application Form and Promissory Note Form. These Forms are available from the Plan Administrator. XIII ADMINISTRATION The Plan will be administered by the following parties: A. Plan Administrator The Employer is the party who has established the Plan and who has overall control and authority over administration of the Plan. The Employer's duties as Plan Administrator include: (a) appointing the Plan's professional advisors needed to administer the Plan including, but not limited to, an accountant, attorney, actuary, or administrator, (b) directing the Trustee with respect to payments from the Fund, (c) communicating with Employees regarding their participation and benefits under the Plan, including the administration of all claims procedures and domestic relations orders, (d) filing any returns and reports with the Internal Revenue Service, Department of Labor, or any other governmental agency, (e) reviewing and approving any financial reports, investment reviews, or other reports prepared by any party appointed by the Employer, (f) establishing a funding policy and investment objectives consistent with the purposes of the Plan and the Employee Retirement Income Security Act of 1974, and (g) construing and resolving any question of Plan interpretation. The Plan Administrator's interpretation and application thereof is final. B. Trustee The Trustee shall be responsible for the administration of investments held in the Fund. These duties shall include: (a) receiving contributions under the terms of the Plan, (b) investing Plan assets unless investment responsibility is delegated to another party by the Employer, (c) making distributions from the Fund in accordance with written instructions received from the Plan Administrator, (d) keeping accounts and records of the financial transactions of the Fund, and (e) rendering an annual report of the Fund showing the financial transactions for the Plan Year. XIV AMENDMENT AND TERMINATION The Employer may amend the Plan at any time, provided that no amendment will divert any part of the Plan's assets to any purpose other than for the exclusive benefit of you and the other Participants in the Plan or eliminate an optional form of distribution. The Employer may also terminate the Plan. In the event of an actual Plan termination, all amounts credited to your account will be fully vested and will be paid to you. Depending on the facts and circumstances, a partial termination may be found to occur where a significant number of Employees are terminated by the Employer or excluded from Plan participation. In case of a partial termination, only those affected will become 100% vested. XV LEGAL PROVISIONS A. Rights Of Participants As a Plan Participant, you have certain rights and protection under the Employee Retirement Income Security Act of 1974 (ERISA). The law says that you are entitled to: (a) Examine, without charge, all documents relating to the operation of the Plan and any documents filed with the U.S. Department of Labor. These documents are available for review in the Employer's offices during regular business hours. (b) Obtain copies of all Plan documents and other Plan information upon written request to the Employer. The Employer may impose a reasonable charge for producing the copies. (c) Receive from the Employer at least once each year a summary of the Plan's annual financial report. (d) Obtain, at least once a year, a statement of the total benefits accrued for you, and your nonforfeitable (vested) benefits, if any. The Plan provides that you will receive this statement automatically. If you are not vested, you may request a statement showing the date when your account will begin to become nonforfeitable. (e) File suit in a federal court, if any materials requested are not received within 30 days of your request, unless the materials were not sent because of matters beyond the control of the Employer. If you are improperly denied access to information you are entitled to receive, the Employer may be required to pay up to $100 for each day's delay until the information is provided to you. B. Fiduciary Responsibility ERISA imposes obligations upon the persons who are responsible for the administration of the Plan. These persons are referred to as "fiduciaries." Fiduciaries must act solely in your interest as a Plan Participant and they must exercise prudence in the performance of their duties. Fiduciaries who violate ERISA may be removed and required to reimburse any losses they have caused you or other Participants in the Plan. C. Employment Rights Participation in the Plan is not a guarantee of employment. However, the Employer may not fire you or discriminate against you to prevent you from becoming eligible for the Plan or from obtaining a benefit or exercising your rights under ERISA. D. Benefit Insurance Your benefits under this Plan are not insured by the Pension Benefit Guaranty Corporation since the law does not provide plan termination insurance for this type of Plan. E. Claims Procedure If you feel you are entitled to a benefit under the Plan, mail or deliver your written claim to the Plan Administrator. The Plan administrator will notify you, your beneficiary, or authorized representative of the action taken within 60 days of receipt of the claim. If you believe that you are being improperly denied a benefit in full or in part, the Administrator must give you a written explanation of the reason for the denial. If the Administrator denies your claim, you may, within 60 days after receiving the denial, submit a written request asking the Administrator to review your claim for benefits. Any such request should be accompanied by documents or records in support of your appeal. You, your beneficiary, or your authorized representative may review pertinent documents and submit issues and comments in writing. If you get no satisfaction from the Administrator, you have the right to request assistance from the U.S. Department of Labor or you can file suit in a state or federal court. Service of legal process may be made on the Plan Administrator at the address of the Employer. If you are successful in your lawsuit, the court may require the Employer to pay your legal costs, including your attorney's fees. If you lose, and the court finds that your claim is frivolous, you may be required to pay the Employer's legal fees. F. Assignment Your rights and benefits under this Plan cannot be assigned, sold, transferred or pledged by you or reached by your creditors or anyone else except under a qualified domestic relations order or as provided by state law. A qualified domestic relations order (QDRO) is a court order issued under state domestic relations law relating to divorce, legal separation, custody, or support proceedings. The QDRO recognizes the right of someone other than you to receive your Plan benefits. You will be notified if a QDRO relating to your Plan benefits is received. Receipt of a qualified domestic relations order shall allow for an earlier than normal distribution to the person(s) other than the Participant listed in the order. G. Questions If you have any questions about this statement of your rights under ERISA, please contact the Employer or the Pension and Welfare Benefits Administration, Room N-5644, U.S. Department of Labor, 200 Constitution Ave., N.W., Washington, D.C. 20210. H. Conflicts With Plan This booklet is not the Plan document, but only a Summary Plan Description of its principal provisions and not every limitation or detail of the Plan is included. Every attempt has been made to provide concise and accurate information. However, if there is a discrepancy between this booklet and the official Plan document, the Plan document shall prevail. EX-5.1 6 August 3, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Judiciary Plaza Washington, D. C. 20549 Re: Good Times Restaurants Inc. - Registration Statement on Form S-8 Gentlemen: We have acted as counsel to Good Times Restaurants Inc., a Nevada corporation (the "Company"), with respect to the legality of 300,000 shares of common stock, $.001 par value (the "Shares"), to be offered by the Company pursuant to its 401(k) Savings and Investment Plan, 1992 Incentive Stock Option Plan and 1992 Non-Statutory Stock Option Plan. The Shares are being registered pursuant to the Company's Registration Statement on Form S-8 and are being offered by the Prospectus delivered to the Company's employees. In our opinion, the Shares being offered, upon issuance and payment therefor, will be duly authorized, validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. Very truly yours, COHEN BRAME & SMITH Professional Corporation /s/ Cohen Brame & Smith Professional Corporation cc: Good Times Restaurants Inc. EX-23.1 7 August 3, 1998 Securities and Exchange Commission 450 Fifth Street, N.W. Judiciary Plaza Washington, D. C. 20549 Re: Good Times Restaurants Inc. - Registration Statement on Form S-8 Gentlemen: We have acted as counsel to Good Times Restaurants Inc., a Nevada corporation (the "Company"), with respect to the legality of 300,000 shares of common stock, $.001 par value (the "Shares"), to be offered by the Company pursuant to its 401(k) Savings and Investment Plan, 1992 Incentive Stock Option Plan and 1992 Non-Statutory Stock Option Plan. The Shares are being registered pursuant to the Company's Registration Statement on Form S-8 and are being offered by the Prospectus delivered to the Company's employees. In our opinion, the Shares being offered, upon issuance and payment therefor, will be duly authorized, validly issued, fully paid and non-assessable. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement. Very truly yours, COHEN BRAME & SMITH Professional Corporation /s/ Cohen Brame & Smith Professional Corporation cc: Good Times Restaurants Inc. EX-23.2 8 INDEPENDENT AUDITOR'S CONSENT We consent to the use in the Registration Statement and Prospectus of Good Times Restaurants Inc. 401(k) Savings and Investment Plan, 1992 Incentive Stock Option Plan, and 1992 Non-Statutory Stock Option Plan of our report dated July 6, 1998, accompanying the consolidated financial statements of Good Times Restaurants Inc. 401(k) Savings and Investment Plan contained in such Registration Statement and to the incorporation by reference of our report dated November 11, 1997, accompanying the consolidated financial statements of Good Times Restaurants Inc., incorporated by reference in the registration statement, and to the use of our name and the statements with respect to us, as appearing under the heading "Experts" in the Prospectus. HEIN + ASSOCIATES, LLP Certified Public Accountants /s/ HEIN + ASSOCIATES, LLP Denver, Colorado July 29, 1998 -----END PRIVACY-ENHANCED MESSAGE-----