EXHIBIT 10.6
[GOOD TIMES DRIVE THRU BURGERS LOGO APPEARS HERE]
March 12, 1999
The Xxxxxx Company, LLLP
000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxxxx
Chief Financial Officer and Vice President
Gentlemen:
This letter will set forth the agreement between Good Times
Restaurants Inc. ("Good Times") and The Xxxxxx Company, LLLP with respect to the
purchase by The Xxxxxx Company, LLLP and persons or entities controlling,
controlled by or under common control with it, all of which are together
hereinafter referred to as "Xxxxxx", of shares of Good Times common stock (the
"Stock").
1. On March 31, 1999, (the "First Closing") Xxxxxx shall purchase
from Good Times 100,000 shares of Stock at a purchase price of $3.00 per share
for an aggregate purchase price of $300,000. On June 30, 1999, or upon such
earlier date as Xxxxxx obtains a loan intended to be utilized in part for the
purchase of the Stock (the "Second Closing") Xxxxxx shall purchase from Good
Times 250,000 shares of Stock at a purchase price of $3.00 per share for an
aggregate purchase price of $750,000. At each Closing, Xxxxxx shall pay the
purchase price to Good Times in cash and Good Times shall issue a certificate
for the Stock to such entity or entities as designated by Xxxxxx.
Notwithstanding the foregoing, Xxxxxx shall not be required to purchase the
Stock at the Second Closing if prior thereto there has been a substantial
adverse change in the business, financial condition or future prospects of Good
Times involving, for example, a disease caused by Good Times' food products,
commencement of a bankruptcy proceeding or comparable catastrophic occurrence.
2. At the Second Closing, Good Times shall issue to Xxxxxx a warrant
entitling Xxxxxx to purchase at any time or times on or before March 31, 2004,
up to 25,000 shares of common stock of Good Times at a purchase price of $4.00
per
Page 9 of 11 Pages
Xx. Xxxxxxx X. Xxxxxxxxxx
March 12, 1999
Page 2
share (the "Warrant"). Notwithstanding the foregoing, (i) the Warrant shall
terminate prior to March 31, 2004, upon any acquisition of substantially all of
the assets or capital stock of Good Times (an "Acquisition"); (ii) Xxxxxx shall
receive thirty days prior written notice of an Acquisition; and (iii) Xxxxxx
shall have the right to exercise the Warrant prior to the closing of an
Acquisition. Upon each exercise of the Warrant, Xxxxxx shall pay the Warrant
exercise price to Good Times in cash and Good Times shall issue a certificate
for the purchased common stock of Good Times to such entity or entities as
designated by Xxxxxx. The Warrant shall contain customary anti-dilution
provisions with respect to any change in the capital structure of Good Times as
a result of a subdivision, combination, reorganization or reclassification of
the common stock of Good Times or as a result of a dividend paid in common stock
of Good Times. The Warrant shall contain such other terms and conditions as are
customary and as are approved by Xxxxxx, with such approval not to be
unreasonably withheld.
3. Xxxxxx understands that the Stock will not have been registered
under the Securities Act of 1933, as amended (the "Act"), pursuant to an
exemption thereunder; that the Stock must be held indefinitely unless a
subsequent disposition thereof is so registered or is exempt from such
registration; that certificates representing the Stock shall be endorsed with an
appropriate legend with respect to the foregoing; and that the Stock shall
constitute restricted stock under Rule 144 of the Act. The Stock shall be
deemed to constitute additional shares of "Restricted Stock" under the May 31,
1996 Registration Rights Agreement between Good Times and Xxxxxx and shall be
entitled to the registration rights afforded Restricted Stock under Section 5 of
the Registration Rights Agreement. Notwithstanding anything to the contrary
contained in the foregoing, the Stock shall not be sold prior to June 30, 2001
except pursuant to a transaction not involving a public trading market of Good
Times or a transaction involving the acquisition of substantially all of the
capital stock of Good Times.
4. Any disagreement between Good Times and Xxxxxx under this letter
agreement or with respect to the Stock shall be resolved by arbitration in
accordance with the Colorado Uniform Arbitration Act in Denver, Colorado.
5. Good Times and Xxxxxx shall from time to time execute any
additional documents as may reasonably be required to carry out the intention
and provisions of this letter agreement.
6. The terms and conditions of this letter agreement shall bind and
inure to the benefit of Good Times and Xxxxxx and their respective successors
and assigns.
Page 10 of 11 Pages
Xx. Xxxxxxx X. Xxxxxxxxxx
March 12, 1999
Page 3
7. Good Times and Xxxxxx acknowledge that the provisions of this
letter agreement have been unanimously approved by the Board of Directors of
Good Times at a meeting in which Directors representing Xxxxxx did not
participate, and have been approved by the Board of Directors of The Erie County
Investment Co., the general partner of Xxxxxx.
If this letter correctly sets forth our agreement, please sign and
return the attached copy hereof.
Very truly yours,
GOOD TIMES RESTAURANTS INC.
By /s/ Xxxx X. Xxxxxx
-------------------------
President
Agreed to this 16th day of March, 1999
THE XXXXXX COMPANY, LLLP
By: The Erie County Investment Co.
Its.: General Partner
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx, President
Page 11 of 11 Pages
