Subsequent Events

12 Months Ended

Sep. 24, 2019

Subsequent Events [Abstract]

Subsequent Events

10. Subsequent Events:

CEO Termination

On October 8, 2019, Boyd Hoback’s employment as Chief Executive Officer of Good Times Restaurants Inc. ended by mutual agreement between the Company and Mr. Hoback. Mr. Hoback also resigned from the Company’s Board of Directors. At the same time, the Company appointed the Company’s current Chief Financial Officer, Ryan M. Zink, as acting Chief Executive Officer to serve until such point in time a permanent CEO is named.

Under the terms of a Severance and General Release Agreement dated October 8, 2019 (the “Severance Agreement”) between the Company and Mr. Hoback, Mr. Hoback will receive $629,828.00 in severance payments (the “Severance”), in addition to his accrued rights (compensation, paid time off and expense reimbursement). The Company is also providing Mr. Hoback, among other things, 90 days’ salary ($61,880.00) and employer’s portion of health insurance premiums, in lieu of advance notice of termination. In the event of a change in control of the Company on or before October 8, 2020, Mr. Hoback will also be entitled to $652,112.97 of additional compensation. All payments under the Severance Agreement are subject to applicable withholding. The Severance Agreement contains a customary mutual release of claims by each party thereto, an indemnity in favor of Mr. Hoback and certain post-employment covenants applicable to Mr. Hoback in respect of confidential information and certain other matters.

Under the terms of the Repurchase Option Agreement, Mr. Hoback received 40,697 shares of Common Stock in settlement of Mr. Hoback’s unvested Restricted Stock Units granted under the Company’s 2008 Omnibus Equity Incentive Compensation Plan or its 2018 Omnibus Equity Incentive Plan and, through a cashless exercise, 2,413 shares of Common Stock in respect of all stock options to acquire shares of Common Stock at an exercise price of less than $1.75 per share. The Company granted Mr. Hoback the right to sell to the Company up to 43,110 shares of Common Stock at a price per share of $1.75 (the “Option”) on or before January 3, 2020, subject to any applicable restrictions under the Company’s credit facilities. The Option may only be exercised to effect one sale of shares Common Stock to the Company at one time (i.e., it may not be exercised more than once). The Repurchase Option Agreement is in full satisfaction of any “put” rights of Mr. Hoback under Section 7(f) of his Employment Agreement. Mr. Hoback and the Company made certain customary representations and warranties as more fully set forth in the Repurchase Option Agreement.

Although the termination occurred subsequent to the balance sheet date, the Company assessed it as probable of occurring as of the balance sheet date because certain key elements of the Severance Agreement were agreed to by all parties prior to September 24, 2019, and consistent with various accounting standards, recognized compensation cost of $1,012,000 associated with the event during fiscal 2019, including $277,000 of non-cash stock compensation cost.

Amendment to the Cadence Credit Agreement

On December 9, 2019 the Company Amended the Cadence Credit Agreement, effective September 24, 2019, modifying the credit agreement as follows: (a) amending the definition of “Consolidated EBITDA” for purposes of certain financial covenants contained in the Credit Agreement; (b) providing for repayment of certain loans outstanding under the Credit Agreement in consecutive quarterly installments equal to $250,000 on the last business day of each of March, June, September and December, commencing on March 31, 2020; and (c) permit the Company, under certain circumstances, to make Restricted Payments (as defined in the Credit Agreement) in the form of repurchases or redemptions of certain equity interests of the Company from former directors and officers of the Company in an aggregate amount not to exceed $100,000.