UNITED STATES |
SECURITIES AND EXCHANGE COMMISSION |
Washington, D.C. 20549 |
FORM 8-K |
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CURRENT REPORT |
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Date of Report (Date of earliest event reported) |
December 27, 2011 |
Good Times Restaurants Inc. |
(Exact name of registrant as specified in its charter) |
Nevada |
000-18590 |
84-1133368 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
601 Corporate Circle, Golden, Colorado 80401 |
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(Address of principal executive offices) (Zip Code) |
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Registrant's telephone number, including area code: (303) 384-1400 |
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Not applicable |
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(Former name or former address, if changed since last report.) |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.): |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On December 27, 2011, Good Times Restaurants Inc. and its subsidiary Good Times Drive Thru Inc. (together, the "Company") entered into a First Amendment to Amended and Restated Credit Agreement and Waiver of Defaults with Wells Fargo Bank, N.A. (the "Bank") and a Second Amended and Restated Term Note payable to the Bank in the principal amount of $470,874.00 (together the "Amendments").
The Amendments provide for a reduction in the principal amount of the loan by an additional $100,000 intended to be paid from the proceeds of the sale of a restaurant, the release of collateral associated with that restaurant and a modification to the repayment terms and maturity date of the loan to December 31, 2013. The Amendments waive the current covenant defaults asserted by the Bank and modify certain financial covenants in the Amended and Restated Credit Agreement which as modified require the Company to have a Net Worth not less than $2,500,000 as of December 31, 2012 and thereafter, a ratio of Total Liabilities divided by Tangible Net Worth of not greater than 3.0 to 1.0 at any time, and an EBITDA Coverage Ratio not less than (i) 0.30 to 1.00 as of the end of the third quarter ending June 30, 2012, (ii) 0.70 to 1.00 as of the end of the fiscal year ending September 30, 2012, and (iii) .90 to 1.00 as of the end of each fiscal quarter thereafter, determined on a rolling 4-quarter basis. Pursuant to the Amendments, the Company is also required to prepay its term loan up to the full outstanding principal balance of the note (in addition to any and all other obligations due to Bank including under any interest rate swap agreement) upon the sale of any stock or other equity interest in the Company. Repayment of the loan is secured by equipment in various restaurants owned by the Company.
A copy of the First Amendment to Amended and Restated Credit Agreement and Waiver of Defaults dated December 27, 2011 is attached hereto as Exhibit 10.1 and is hereby incorporated by reference.
A copy of the Second Amended and Restated Term Note December 27, 2011 is attached hereto as Exhibit 10.2 and is hereby incorporated by reference.
Information contained in this report, other than historical information, may be considered forward looking in nature and is subject to known and unknown risks, which may cause the Company's actual results to differ materially from results expressed or implied by the forward looking information. These risks include such factors as the pending and uncertain nature of the Company's efforts to obtain a waiver for a loan agreement default, the pending and uncertain nature of the Company's efforts to obtain additional financing, the pending and uncertain nature of the Company's new brand initiatives, delays in developing and opening new restaurants due to adverse credit market and other economic conditions, weather, local permitting matters, increased competition, cost increases or shortages in raw food products, continued widespread adverse economic conditions and other matters discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2010. Although the Company may from time to time voluntarily update its forward looking statements, it disclaims any commitment to do so except as required by securities laws.
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Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The disclosure regarding the Amendments set forth under Item 1.01 above is hereby incorporated by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed as part of this report:
Exhibit Number |
Description |
10.1 |
First Amendment to Amended and Restated Credit Agreement and Waiver of Defaults dated December 27, 2011. |
10.2 |
Second Amended and Restated Term Note December 27, 2011. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
GOOD TIMES RESTAURANTS INC. |
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Date: December 27, 2011 |
By: |
/s/ Boyd E Hoback |
Boyd E. Hoback |
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President |
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FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND WAIVER OF DEFAULTS
THIS FIRST AMENDMENT (this "Amendment"), dated as of December 27, 2011, is entered into by and among GOOD TIMES RESTAURANTS INC., a Nevada corporation ("GTR"), and GOOD TIMES DRIVE THRU INC., a Colorado corporation ("GTDT" and, together, with GTR, "Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
Borrower and Bank are parties to an Amended and Restated Credit Agreement dated December 13, 2010 (as amended from time to time, the "Credit Agreement"). Capitalized terms used in these recitals have the meanings given to them in the Credit Agreement unless otherwise specified.
Borrower has requested that certain amendments be made to the Credit Agreement, which Bank is willing to make pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed as follows:
"SECTION 1.5 MANDATORY PREPAYMENTS.
(a) On or before December 30, 2011, Borrower shall prepay the Term Loan without penalty in an amount not less than $100,000, which prepayment shall be applied to reduce the unpaid principal of the Term Loan and shall be applied on the most remote principal installment or installments of the Term Loan then unpaid. If Borrower sells its property, and the leasehold interest in the restaurant, located at 8234 S. Kipling Parkway in Littleton, Colorado on or before December 30, 2011, then upon receipt of such $100,000 prepayment on or before December 30, 2011, Bank shall release, terminate and satisfy its security interest in the property located at 8234 S. Kipling Parkway in Littleton, Colorado.
(b) Borrower shall prepay the Term Loan without penalty, together with any amounts due to Bank under any interest rate swap agreement between Borrower and Bank, in an amount equal to the net proceeds from any sale of any stock or other equity interest in Borrower, which proceeds shall be paid directly to Bank. Each such prepayment of the Term Loan (i) shall be due and payable immediately upon such sale of any stock or other equity interest in Borrower and (ii) shall be applied to reduce the
unpaid principal of the Term Loan and shall be applied on the most remote principal installment or installments of the Term Loan then unpaid.
(c) Borrower's prepayment obligations set forth in this Section 1.5 shall be without prejudice to Borrower's obligations under any interest rate swap agreement between Borrower and Bank, which shall remain in full force and effect subject to the terms of such interest rate swap agreement (including provisions that may require a reduction, modification or early termination of a swap transaction, in whole or in part, in the event of such prepayment, and may require Borrower to pay any fees or other amounts for such reduction, modification or early termination), and no such fees or amounts shall be deemed a penalty hereunder or otherwise."
"(a) Net Worth not less than $2,500,000 at any time on or after December 31, 2012, with "Net Worth" defined as the aggregate of total stockholders' equity plus debt subject to a subordination agreement in favor of and acceptable to Bank, less any intangible assets, all determined for GTR on a consolidated basis.
(b) Total Liabilities divided by Tangible Net Worth not greater than 3.0 to 1.0 at any time, with "Total Liabilities" defined as the aggregate of current liabilities and non-current liabilities less debt subject to a subordination agreement in favor of and acceptable to Bank, and with "Tangible Net Worth" as defined above, all determined for GTR on a consolidated basis.
(c) EBITDA Coverage Ratio not less than (i) 0.30 to 1.00 as of the end of the fiscal quarter ending June 30, 2012, (ii) 0.70 to 1.00 as of the end of the fiscal quarter ending September 30, 2012, and (iii) 0.90 to 1.00 as of the end of each fiscal quarter thereafter, determined on a rolling 4-quarter basis with "EBITDA" defined as net profit before tax plus interest expense payable in cash (net of capitalized interest expense), depreciation expense and amortization expense, less dividends, with "EBITDA Coverage Ratio" defined as EBITDA divided by the aggregate of total interest expense payable in cash plus the prior period current maturity of long-term debt (but specifically excluding any prepayments required by Section 1.5 above) and the prior period current maturity of debt subject to a subordination agreement in favor of and acceptable to Bank, all determined for GTR on a consolidated basis."
"(d) Any default in the payment or performance of any obligation greater than $50,000 (including without limitation Borrower's indebtedness and obligations owing to PFGI II, LLC), or any defined event of default, under the terms of any contract, instrument or document (other than any of the Loan Documents) pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in Borrower if a partnership or joint venture (with each such guarantor, general partner and/or joint
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venturer referred to herein as a "Third Party Obligor") has incurred any debt or other liability to any person or entity, including Bank."
Section/Covenant |
Required Performance |
Actual Performance |
Section 4.9(a) |
Maintain Net Worth not less than $2,500,000 at any time, with "Net Worth" defined as the aggregate of total stockholders' equity plus debt subject to a subordination agreement in favor of and acceptable to Bank, less any intangible assets, all determined for GTDT on a consolidated basis |
Borrower's |
Section 4.12 |
Deliver to Bank, on or before March 31, 2011, a landlord's disclaimer and consent and a recordable memorandum related thereto, each fully executed (and notarized if requested by Bank), by each of the following landlords or their successors or assigns: Reliable Investment Company, LLP (Store # 103), DOUBLE RTJ, LTD., LLLP (Store #140), and Michelle Jury Habing and Mark Jury (Store # 154) |
Borrower has not delivered
the required landlord documents |
Upon the terms and subject to the conditions set forth in this Amendment, Bank hereby waives the Existing Defaults. This waiver shall be effective only in this specific instance and for
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the specific purpose for which it is given, and this waiver shall not entitle Borrower to any other or further waiver in any similar or other circumstances.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
GOOD TIMES RESTAURANTS INC. |
WELLS FARGO BANK, NATIONAL ASSOCIATION |
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By: /s/ Boyd E. Hoback |
By: Nick Brokke |
Name: Boyd E. Hoback |
Name: Nick Brokke |
Title: President |
Title: Assistant Vice President |
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GOOD TIMES DRIVE THRU INC. |
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By: /s/ Boyd E. Hoback |
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Name: Boyd E. Hoback |
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Title: President |
Signature Page to
First Amendment to Amended and Restated Credit Agreement
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTORS
The undersigned, each a guarantor of the indebtedness of GOOD TIMES RESTAURANTS INC., a Nevada corporation ("GTR"), and GOOD TIMES DRIVE THRU INC., a Colorado corporation ("GTDT" and, together, with GTR, "Borrower"), to Wells Fargo Bank, National Association ("Bank"), pursuant to the separate Guaranty of each dated December 13, 2010 (each, a "Guaranty"), hereby (i) acknowledges receipt of the foregoing Amendment; (ii) consents to the terms (including without limitation the release set forth in Paragraph 14 of the Amendment) and execution thereof; (iii) reaffirms all obligations to Bank pursuant to the terms of its Guaranty; and (iv) acknowledges that Bank may amend, restate, extend, renew or otherwise modify the Credit Agreement and any indebtedness or agreement of GTDT or GTR, or enter into any agreement or extend additional or other credit accommodations, without notifying or obtaining the consent of the undersigned and without impairing the liability of the undersigned under its Guaranty for all of Borrower's present and future indebtedness to Bank.
GOOD TIMES RESTAURANTS INC. |
GOOD TIMES DRIVE THRU INC. |
By: /s/ Boyd E. Hoback |
By: /s/ Boyd E. Hoback |
Name: Boyd E. Hoback |
Name: Boyd E. Hoback |
Title: President |
Title: President |
Signature Page to
Acknowledgment and Agreement of Guarantors
SECOND AMENDED AND RESTATED TERM NOTE
$470,874.00 |
Denver, Colorado |
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December 27, 2011 |
FOR VALUE RECEIVED, each of the undersigned GOOD TIMES RESTAURANTS INC. and GOOD TIMES DRIVE THRU INC. (together, "Borrower") jointly and severally promises to pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its office at Denver, Colorado, or at such other place as the holder hereof may designate, in lawful money of the United States of America and in immediately available funds, the principal sum of Four Hundred Seventy Thousand Eight Hundred Seventy-Four Dollars ($470,874.00), with interest thereon as set forth herein.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear interest (computed on the basis of a 360-day year, actual days elapsed) at a rate per annum one half of one percent (0.50%) below the Prime Rate in effect from time to time. The term "Prime Rate" means at any time the rate of interest most recently announced within Bank at its principal office as its Prime Rate, with the understanding that the Prime Rate is one of Bank's base rates and serves as the basis upon which effective rates of interest are calculated for those loans making reference thereto, and is evidenced by the recording thereof after its announcement in such internal publication or publications as Bank may designate. Each change in the rate of interest hereunder shall become effective on the date each Prime Rate change is announced within Bank.
(b) Payment of Interest. Interest accrued on this Note shall be payable on the first day of each month, commencing January 1, 2012.
(c) Default Interest. The outstanding principal balance of this Note shall bear interest until paid in full at an increased rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent (4%) above the rate of interest from time to time applicable to this Note during each of the following periods: (i) upon the occurrence and during the continuation of any Event of Default, (ii) from and after the maturity date of this Note, and (iii) from the date all principal owing hereunder becomes due and payable by acceleration or otherwise.
REPAYMENT AND PREPAYMENT:
(a) Repayment. Principal shall be payable on the first day of each month in installments as set forth on Schedule 1 attached hereto and incorporated herein by this reference, commencing January 1, 2012, and continuing up to and including December 1, 2013, with a final installment consisting of all remaining unpaid principal due and payable in full on December 31, 2013.
(b) Application of Payments. Each payment made on this Note shall be credited first, to any interest then due and second, to the outstanding principal balance hereof.
(c) Prepayment. Borrower may prepay principal on this Note at any time, in any amount and without penalty. All prepayments of principal shall be applied on the most remote principal installment or installments then unpaid.
EVENTS OF DEFAULT:
This Note is made pursuant to and is subject to the terms and conditions of that certain Amended and Restated Credit Agreement among Borrower and Bank dated as of December 13, 2010, as amended from time to time (the "Credit Agreement"). Any default in the payment or performance of any obligation under this Note, or any defined event of default under the Credit Agreement, shall constitute an "Event of Default" under this Note.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note, at the holder's option, may declare all sums of principal and interest outstanding hereunder to be immediately due and payable without presentment, demand, notice of nonperformance, notice of protest, protest or notice of dishonor, all of which are expressly waived by Borrower. Borrower shall pay to the holder immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys' fees (to include outside counsel fees and all allocated costs of the holder's in-house counsel), expended or incurred by the holder in connection with the enforcement of the holder's rights and/or the collection of any amounts which become due to the holder under this Note, and the prosecution or defense of any action in any way related to this Note, including without limitation, any action for declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Borrower or any other person or entity.
(b) Second Amended and Restated Term Note. This Note is issued in replacement of and in substitution for, but not in repayment of, the Amended and Restated Term Note of Good Times Restaurants Inc. and Good Times Drive Thru Inc., dated as of December 13, 2010, payable to the order of Bank in the original principal amount of $689,671, and is issued pursuant to, and is subject to, the Credit Agreement, which provides, among other things, for acceleration hereof. This Note is the Term Note referred to in the Credit Agreement.
(c) Obligations Joint and Several. Should more than one person or entity sign this Note as a Borrower, the obligations of each such Borrower shall be joint and several.
(d) Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Colorado.
[Remainder of this page left intentionally blank]
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.
GOOD TIMES RESTAURANTS INC. |
GOOD TIMES DRIVE THRU INC. |
By: Boyd E. Hoback |
By: Boyd E. Hoback |
Name: Boyd E. Hoback |
Name: Boyd E. Hoback |
Title: President |
Title: President |
TO
SECOND AMENDED AND RESTATED TERM NOTE
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Principal Payment Date |
Principal Payment Amount |
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01/01/2012 |
$22,050.00 |
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02/01/2012 |
$14,550.00 |
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03/01/2012 |
$14,550.00 |
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04/01/2012 |
$14,550.00 |
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05/01/2012 |
$14,550.00 |
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06/01/2012 |
$14,550.00 |
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07/01/2012 |
$14,550.00 |
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08/01/2012 |
$14,550.00 |
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09/01/2012 |
$14,550.00 |
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10/01/2012 |
$14,550.00 |
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11/01/2012 |
$14,550.00 |
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12/01/2012 |
$14,550.00 |
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01/01/2013 |
$14,550.00 |
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02/01/2013 |
$14,550.00 |
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03/01/2013 |
$14,550.00 |
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04/01/2013 |
$14,550.00 |
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05/01/2013 |
$14,550.00 |
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06/01/2013 |
$14,550.00 |
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07/01/2013 |
$14,550.00 |
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08/01/2013 |
$14,550.00 |
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09/01/2013 |
$14,550.00 |
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10/01/2013 |
$14,550.00 |
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11/01/2013 |
$14,550.00 |
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12/01/2013 |
$14,550.00 |
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12/31/2013 |
Remaining Balance |