<SEC-DOCUMENT>0000825324-12-000013.txt : 20120619
<SEC-HEADER>0000825324-12-000013.hdr.sgml : 20120619
<ACCEPTANCE-DATETIME>20120619143323
ACCESSION NUMBER:		0000825324-12-000013
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20120619
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Other Events
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20120619
DATE AS OF CHANGE:		20120619

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:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-18590
		FILM NUMBER:		12914763

	BUSINESS ADDRESS:	
		STREET 1:		601 CORPORATE CIRCLE
		CITY:			GOLDEN
		STATE:			CO
		ZIP:			80401
		BUSINESS PHONE:		3033841400

	MAIL ADDRESS:	
		STREET 1:		601 CORPORATE CIRCLE
		CITY:			GOLDEN
		STATE:			CO
		ZIP:			80401

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PARAMOUNT VENTURES INC
		DATE OF NAME CHANGE:	19900205
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>finalform8kspa1.htm
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  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  <p class=MsoNormal align=center style='text-align:center'><b>UNITED STATES</b></p>
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  <p class=MsoNormal align=center style='text-align:center'><b>SECURITIES AND EXCHANGE COMMISSION</b></p>
  </td>
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  <p class=MsoNormal align=center style='text-align:center'><b>Washington, D.C. 20549</b></p>
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  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
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  <p class=MsoNormal align=center style='text-align:center'><b>FORM 8-K</b></p>
  </td>
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  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>CURRENT REPORT</b></p>
  </td>
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  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  </td>
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  <p class=MsoNormal align=center style='text-align:center'><b>Pursuant to Section 13 or 15(d) of the Securities
  Exchange Act of 1934</b></p>
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  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>Date of Report (Date of earliest event reported)</p>
  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>June 13, 2012</p>
  </td>
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  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>Good Times Restaurants Inc.</b></p>
  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(Exact name of registrant as specified in its
  charter)</p>
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  </td>
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  <td width=252 colspan=2 valign=top style='width:189.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>Nevada</p>
  </td>
  <td width=192 valign=top style='width:2.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>000-18590</p>
  </td>
  <td width=228 valign=top style='width:171.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>84-1133368</p>
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  <p class=MsoNormal align=center style='text-align:center'>(State or other jurisdiction of incorporation)</p>
  </td>
  <td width=192 style='width:2.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(Commission File Number)</p>
  </td>
  <td width=228 valign=top style='width:171.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(IRS Employer Identification No.)</p>
  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>601 Corporate Circle, Golden, Colorado 80401</p>
  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(Address of principal executive offices)&nbsp;&nbsp; (Zip
  Code)</p>
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  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>Registrant's telephone number, including area code:
  (303) 384-1400</p>
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  <p class=MsoNormal align=center style='text-align:center'>Not applicable</p>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(Former name or former address, if changed since
  last report.)</p>
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  </td>
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  <td width=672 colspan=4 valign=top style='width:7.0in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>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.):</p>
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  </td>
  <td width=618 colspan=3 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Written communications
  pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</p>
  </td>
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  </td>
  <td width=618 colspan=3 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Soliciting material
  pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</p>
  </td>
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  </td>
  <td width=618 colspan=3 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Pre-commencement
  communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
  240.14d-2(b))</p>
  </td>
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  <p class=MsoNormal align=center style='text-align:center'>[_]</p>
  </td>
  <td width=618 colspan=3 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Pre-commencement
  communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
  240.13e-4(c))</p>
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<p class=MsoNormal><b>Item 1.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Entry
into a Material Definitive Agreement.</b></p>



<p class=MsoNormal>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Investment
Transaction</u></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On
June 13, 2012, Good Times Restaurants Inc. (the &quot;Company&quot;) entered into a
Securities Purchase Agreement (the &quot;Purchase Agreement&quot;) with Small Island
Investments Limited, a Bermuda corporation (the &quot;Investor&quot;), pursuant to which
the Company has agreed to sell and issue to the Investor 473,934 shares (the
&quot;Shares&quot;) of a new series of the Company's preferred stock, par value $0.001
per share, to be designated as &quot;Series C Convertible Preferred Stock&quot; (&quot;Series
C Preferred Stock&quot;), at a purchase price of $4.22 per share, or an aggregate
purchase price of $2,000,001.48.&nbsp; Each share of the Series C Preferred Stock is
convertible into two shares of the Company's common stock, par value $0.001 per
share (&quot;Common Stock&quot;).&nbsp; As described below, the closing of the investment
transaction (the &quot;Investment Transaction&quot;) under the Purchase Agreement (the
&quot;Closing&quot;) is subject to certain conditions, including the receipt of
stockholder approval of the Investment Transaction.&nbsp; The Company expects the
Closing to occur promptly following the satisfaction of such condition and by
September 30, 2012.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Investor is a Bermuda corporation based in Boston, Massachusetts.&nbsp; At the
present time, the Investor beneficially owns approximately 50.74% of the
Company's outstanding Common Stock.&nbsp; Assuming no change in the foregoing,
immediately following the Closing, the Investor's beneficial ownership of the
Company's capital stock will increase to approximately 63.45%.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David
L. Dobbin, Chairman of the Company's Board of Directors, is a principal of the
Investor.&nbsp; Accordingly, the Investment Transaction constitutes a related party
transaction and was reviewed and approved by the Audit Committee of the
Company's Board of Directors.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Under
the terms of the Purchase Agreement, the Shares to be issued and purchased in
the Investment Transaction, and the shares of the Company's common stock
issuable upon conversion of the Shares (collectively, the &quot;Securities&quot;), will
be issued in a transaction not involving any public offering and will not be
registered under the Securities Act of 1933, as amended (the &quot;Securities
Act&quot;).&nbsp; However, in connection with the Closing of the Investment Transaction,
the Company will enter into an amendment to its existing Registration Rights
Agreement dated December 13, 2010 with the Investor (the &quot;Registration Rights
Agreement&quot;) (the &quot;Registration Rights Agreement Amendment&quot;), to include the
shares of the Company's Common Stock issuable upon conversion of the Shares as
&quot;Registrable Securities&quot; under the Registration Rights Agreement.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A
copy of the Company's June 19, 2012 press release announcing the Investment
Transaction is filed herewith as Exhibit 99.1 to this Current Report on Form
8-K.&nbsp; Each of the material agreements relating to the Investment Transaction is
summarized below.&nbsp; The summaries do not purport to be complete and are
qualified in their entirety by the full text of the related agreements, copies
of which are filed as exhibits to this Current Report on Form 8-K.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Securities
Purchase Agreement</u></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As
described above, on June 13, 2012, the Company and the Investor entered into
the Purchase Agreement, pursuant to which the Company has agreed to sell and
issue to the Investor, and the Investor has agreed to purchase form the
Company, 473,934 Shares of newly designated Series C Preferred Stock of the
Company, at a purchase price of $4.22 per share.&nbsp; The Purchase Agreement
contains customary representations and warranties by the Company, which are in
certain cases modified by &quot;materiality&quot; and &quot;knowledge&quot; qualifiers.</p>



<p class=MsoFooter align=center style='text-align:center'>2</p>



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<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Purchase Agreement provides that the obligation of the Investor to complete the
purchase of the Shares at the Closing is subject to certain conditions (which
may be waived by the Investor), including:</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (i)
that the Registration Rights Agreement Amendment has been duly executed by the
Company and delivered to the Investor;</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (ii)
that the representations and warranties of the Company contained in the
Purchase Agreement are true and correct in all material respects (or true and
correct in all respects as to representations and warranties which are
qualified by materiality) as of the Closing as though made on and as of such
date;</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iii)
that the Company has received all consents, waivers, authorizations and
approvals from third parties necessary in connection with the Investment
Transaction;</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (iv)
that the Company's stockholders have approved and authorized the Investment
Transaction, including the approval of stockholders holding a majority of the
outstanding shares of Common Stock not held by the Investor or its affiliates;
and</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (v)
that the Company has filed the Certificate of Designations with the Nevada
Secretary of State.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Company has agreed to indemnify the Investor (and certain &quot;Investor Parties&quot; as
defined in the Purchase Agreement) for all liabilities, losses or damages as a
result of or relating to any breach of any representations, warranties,
covenants or agreements made by the Company in the Purchase Agreement.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Purchase Agreement provides that after the Closing, for so long as the Investor
holds at least 50 percent of the Company's outstanding capital stock, (i) the
Company's Board of Directors shall consist of no more than seven members, and
(ii) the Investor with have the right to designate four members of the Board.&nbsp;
In addition, the Purchase Agreement provides that, for so long as the Investor
continues to hold at least 75 percent of the Shares and/or the shares of Common
Stock issuable upon conversion thereof, the Investor will have a right of first
refusal to purchase additional securities which are offered and sold by the
Company for the purpose of maintaining its percentage ownership interest in the
Company as of the Closing of the Investment Transaction.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Purchase Agreement may be terminated at any time prior to the Closing only as
follows:</p>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>by
     the Investor or the Company, if the Closing has not occurred by September
     30, 2012, provided that the right to terminate shall not be available to
     either party whose failure to perform its obligations under the Purchase
     Agreement is the primary cause of the failure of the Closing to have
     occurred by such date;</li>
</ul>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>by
     the Investor or the Company, if the Company's stockholders do not vote to
     approve the Investment Transaction;</li>
</ul>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>at
     any time by mutual agreement of the Company and the Investor; or</li>
</ul>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>by
     either the Company or the Investor, if there has been a material breach of
     any representation, warranty, covenant or obligation of the other party
     contained in the Purchase Agreement, which has not been cured within 15
     days after notice thereof.</li>
</ul>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; A
copy the Purchase Agreement dated June 13, 2012 is attached as Exhibit 10.1 to
this Current Report on Form 8-K.</p>

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<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Certificate
of Designations</u></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
disclosure required by Item 1.01 in connection with the Certificate of
Designations is included in Item 3.02 below and is hereby incorporated herein
by reference.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Registration
Rights Agreement Amendment</u></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
disclosure required by Item 1.01 in connection with the Registration Rights
Agreement Amendment is included in Item 3.02 below and is hereby incorporated
herein by reference.</p>



<p class=MsoNormal style='text-align:justify'><b>Item
3.02&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unregistered Sales of Equity Securities.</b></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
information disclosed under Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 3.02 in its entirety.&nbsp; The Company has agreed to
the Investment Transaction in reliance upon the exemption from the registration
requirements of the Securities Act set forth in Section 4(2) thereof and Rule
506 promulgated thereunder, and in reliance upon the Investment Transaction
being a transaction by the Company not involving any public offering.&nbsp; The
Securities will be deemed &quot;restricted securities&quot; under Rule 144 promulgated
under the Securities Act.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
rights, preferences, and privileges of the Shares will be set forth in a
Certificate of Designations for the Series C Preferred Stock (the &quot;Certificate
of Designations&quot;), which will be filed with the Nevada Secretary of State prior
to the Closing as a condition thereof.&nbsp; The rights, preferences, and privileges
of the Shares will be as follows:</p>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>Following
     the Closing, Dividends shall accrue on shares of Series C Preferred Stock
     at the rate of 8.0% per annum of the original issue price of $4.22 per
     share, with such accrued dividends payable quarterly.&nbsp; The accrued
     dividends on shares of Series C Preferred Stock shall be payable prior and
     in preference to any dividends on the Company's Common Stock.&nbsp; In the
     event the Series C Preferred Stock has not been converted to Common Stock
     within 18 months following the Closing, thereafter (i) the rate of the
     accrued dividends shall increase to 15.0% per annum from the date that is
     18 months after the Closing until converted or redeemed by the Company,
     and (ii) the Company may upon the approval of a majority of the
     disinterested members of the Board of Directors redeem all or from time to
     time a portion of the Series C Preferred Stock by payment of its
     liquidation preference.</li>
</ul>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>In
     the event of any voluntary or involuntary liquidation, dissolution, or
     winding up of the Company, or a transaction which is deemed to be a
     liquidation pursuant to the Certificate of Designations, holders of Series
     C Preferred Stock shall be entitled be entitled to receive a preference
     payment equal to the original issue price of $4.22 per share, plus any
     accrued but unpaid dividends, before any assets of the Company are
     distributed to holders of the Company's Common Stock.</li>
</ul>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>Shares
     of Series C Preferred Stock shall vote together with the Common Stock on
     an as-if-converted basis.&nbsp; In addition, shares of Series C Preferred Stock
     shall have the right to vote, as a separate class, on certain major
     corporate transactions.</li>
</ul>



<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>Shares
     of Series C Preferred Stock shall be convertible into shares of Common
     Stock at any time, at a conversion ratio shall be two shares of Common
     Stock for each share of Series C Preferred Stock converted (subject to
     adjustment in the event of any stock split, combination, reorganization, or
     reclassification of the Common Stock.)</li>
</ul>

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<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='text-align:justify'>The
     Company may require the conversion of all outstanding shares of Series C
     Preferred Stock into shares of Common Stock at the above conversion ratio
     at any time after 36 months following the Closing based upon the public
     trading price and the trading volume of the Common Stock.&nbsp; In addition,
     the Series C Preferred Stock shall automatically convert to Common Stock
     upon a qualified public offering of the Company's Common Stock based upon
     the size and price of such public offering or a sale of all or
     substantially of the Company's assets.</li>
</ul>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
form of Certificate of Designations is attached as Exhibit 4.1 to this Current
Report on Form 8-K.</p>



<p class=MsoNormal style='text-align:justify'>Effective
at the Closing, the Company will enter into a Registration Rights Agreement
Amendment with the Investor to include the shares of the Company's Common Stock
issuable upon conversion of the Shares as &quot;Registrable Securities&quot; under the
Registration Rights Agreement.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
form of Registration Rights Agreement Amendment is attached as Exhibit 4.2 to
this Current Report on Form 8-K.</p>



<p class=MsoNormal style='text-align:justify'><b>Item
8.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other Events</b></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As
set forth above, on June 19, 2012, the Company issued a press release
announcing the execution of the Purchase Agreement and the Investment
Transaction.&nbsp; A copy of the Company's press release is filed herewith as
Exhibit 99.1 to this Current Report on Form 8-K.</p>



<p class=MsoNormal style='text-align:justify'>Item
9.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Financial Statements and Exhibits.</p>



<p class=MsoNormal style='text-align:justify'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Exhibits.&nbsp;
The following exhibits are filed as part of this report:</p>



<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=540
 style='width:405.0pt;margin-left:41.4pt;border-collapse:collapse'>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Exhibit</p>
  <p class=MsoNormal style='text-align:justify'><u>Number</u></p>
  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>

  <p class=MsoNormal style='text-align:justify'><u>Description</u></p>
  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>4.1</p>
  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Form
  of Certificate of Designations of Series C Preferred Stock </p>

  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>4.2</p>
  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Form
  of First Amendment to Registration Rights Agreement</p>
  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>10.1</p>
  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Securities
  Purchase Agreement between the Company and Small Island Investments Limited,
  dated June 13, 2012.</p>

  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>99.1</p>
  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Company
  Press Release dated June 19, 2012.</p>
  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=72 valign=top style='width:.75in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=468 valign=top style='width:351.0pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
</table>



<p class=MsoNormal style='text-align:justify'><b>Important
Information</b></p>



<p class=MsoNormal style='text-align:justify'>This
Current Report on Form 8-K shall not constitute an offer to sell or the
solicitation of an offer to buy any security.&nbsp; The shares of the Company's
Series C Preferred Stock to be issued and purchased in the Investment
Transaction, and the shares of the Company's Common Stock issuable upon
conversion thereof, are being so issued and purchased pursuant to an applicable
exemption from the registration requirements of the Securities Act and applicable
state securities laws.</p>

<p class=MsoFooter align=center style='text-align:center'>5</p>



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<p class=MsoNormal style='text-align:justify'><b>SIGNATURES</b></p>



<p class=MsoNormal style='text-align:justify'>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.</p>



<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
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  </td>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>GOOD
  TIMES RESTAURANTS INC.</b></p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>Date:&nbsp;
  June 19, 2012</p>
  </td>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>By<i><u>:/s/
  Boyd E. Hoback</u></i></p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Boyd
  E. Hoback</p>
  </td>
 </tr>
 <tr>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=319 valign=top style='width:239.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; President
  and Chief Executive Officer</p>
  </td>
 </tr>
</table>





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<TYPE>EX-1
<SEQUENCE>2
<FILENAME>certofdesignations41b1.htm
<TEXT>
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<div class=WordSection1>

<p class=MsoNormal align=center style='text-align:center'><b><u>&nbsp;</u></b></p>

<p class=MsoNormal align=center style='text-align:center'><b><u>&nbsp;</u></b></p>









<p class=MsoNormal align=center style='text-align:center'><b><u>EXHIBIT A</u></b></p>

<p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>CERTIFICATE OF</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>DESIGNATIONS,
PREFERENCES, AND RIGHTS</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>OF</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>SERIES C
CONVERTIBLE PREFERRED STOCK</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>OF GOOD TIMES
RESTAURANTS INC.</b></p>



<p class=MsoNormal style='text-align:justify'>Pursuant to Nevada Revised
Statutes (<b>&quot;NRS&quot;</b>) 78.1955</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The undersigned DOES
HEREBY CERTIFY that the following resolution was duly adopted by the Board of
Directors (the &quot;Board of Directors&quot;) of Good Times Restaurants Inc., a Nevada
corporation (the &quot;Corporation&quot;), pursuant to authority granted to the Board of
Directors under Article IV of the Corporation's Articles of Incorporation, as
amended (the &quot;Articles of Incorporation&quot;), and in accordance with the
provisions of NRS 78.1955:</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; RESOLVED, that
pursuant to the authority invested in the Board of Directors by the Articles of
Incorporation and out of the Corporation's preferred stock, $0.001 par value
per share (the &quot;Preferred Stock&quot;) authorized therein, 473,934 shares of the
Preferred Stock be, and hereby are, created and designated as &quot;Series C
Convertible Preferred Stock,&quot; and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of the Series C
Preferred Stock, and the qualifications, limitations, and restrictions of such
shares (this &quot;Certificate of Designations&quot;), are as follows:</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Designation
and Amount</u>.&nbsp; The shares of such series shall be designated &quot;Series C
Convertible Preferred Stock&quot; (the &quot;Series C Preferred Stock&quot;) and the number of
shares constituting such series shall be 473,934.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Dividends</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; From
and after the date of the issuance of any shares of Series C Preferred Stock
(the &quot;Original Issuance Date&quot;), dividends shall accrue on such shares of Series
C Preferred Stock at the rate of 8.0% per annum of the Series C Original Issue
Price (as hereafter defined), subject to adjustment as provided in Section 2(c)
(the &quot;Accruing Dividends&quot;).&nbsp; The Accruing Dividends shall be payable quarterly
on August 15, November 15, February 15, and&nbsp; May 15 of each year (each, a
&quot;Payment Date&quot;) and such dividends shall be cumulative if not paid.&nbsp; The
Corporation shall not declare, pay, or set aside any dividends on shares of
Common Stock or any other stock ranking with respect to dividends or on
liquidation junior to the Series C Preferred Stock (such stock being referred
to hereinafter collectively as &quot;Junior Stock&quot;) unless the holders of the Series
C Preferred Stock then outstanding shall first receive, or simultaneously
receive, a dividend on each outstanding share of Series C Preferred Stock in an
amount at least equal to the greater of (i) the amount of the aggregate Accruing
Dividends then accrued on such share of Series C Preferred Stock and not
previously paid and (ii) to the extent that the Board of Directors duly
approves a dividend to be paid on the Common Stock, the amount such holder
would have received had such holder converted its Series C Preferred Stock into
Common Stock </p>



<p class=MsoNormal style='text-align:justify'><sup>1</sup> The Series C Original Issue Price shall be equal to
two times the closing price of the Corporation's Common Stock on the day prior
to execution of the Securities Purchase Agreement.</p>

<p class=MsoFooter align=center style='text-align:center'>1</p>



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<p class=MsoNormal style='text-align:justify'>immediately prior to such
distribution.&nbsp; For purposes hereof, the term &quot;Series C Original Issue Price&quot;
shall mean $4.22 per share,<sup>1</sup> subject to appropriate adjustment in
the event of any stock dividend, stock split, stock distribution, combination,
or other similar recapitalization with respect to the Series C Preferred Stock.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notwithstanding
anything in this Certificate of Designations to the contrary, if at any time
after the Original Issuance Date, the Aggregate Cash Flow (as hereafter
defined) of the Corporation for its four preceding fiscal quarters is less than
150% of the Company's aggregate of its principal and interest debt payments and
capital lease payments during that period, as determined in the good faith
discretion of the Board of Directors, the Accruing Dividends shall not be
payable until a Payment Date upon which the foregoing condition no longer
exists.&nbsp; At such Payment Date the Corporation shall pay the Accruing Dividends
(without interest thereon) due on that Payment Date together with any other
accrued but unpaid Accruing Dividends to the extent that the subtraction of
such accrued but unpaid Accruing Dividends and of the Accruing Dividends due
and paid on such Payment Date from Aggregate Cash Flow for such four preceding
fiscal quarters does not cause the Aggregate Cash Flow for such four preceding
fiscal quarters to become less than 150% of the Corporation's aggregate
principal and interest debt payments and capital lease payments during that
period.&nbsp; For purposes hereof, the term &quot;Aggregate Cash Flow&quot; shall mean the net
income of the Corporation, plus interest, depreciation and amortization
expenses, plus or minus other non-cash adjustments to net income, and less
Accruing Dividends paid during the applicable fiscal quarters, as determined in
the good faith discretion of the Board of Directors.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If
the Series C Preferred Stock has not been converted to Common Stock within 18
months following the Original Issuance Date, thereafter (i) the rate of
Accruing Dividends shall increase to 15% per annum from the date that is 18
months after the Original Issuance Date until converted or until the Series C
Preferred Stock is no longer outstanding, and (ii) the Corporation may upon the
approval of a majority of the disinterested Directors of the Corporation, and
with 20 days prior written notice to the holders of the Series C Preferred
Stock, redeem all or from time to time a portion of the Series C Preferred
Stock by the payment for such redeemed Series C Preferred Stock of the Series C
Liquidation Preference Payment set forth in Section 3(a) below.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Liquidation</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
the event of any voluntary or involuntary liquidation, dissolution, or winding
up of the Corporation, the holders of shares of Series C Preferred Stock then
outstanding shall be entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders, before any payment shall be
made to the holders of Junior Stock upon such liquidation, dissolution, or
winding up, an amount equal to (i) the Series C Original Issue Price per share,
plus (ii) an amount equal to all Accruing Dividends accrued but unpaid on each
share computed to the date payment thereof is made (the <b>&quot;Series C
Liquidation Preference Payment&quot;</b>).&nbsp; If upon any such liquidation,
dissolution, or winding up of the Corporation the remaining assets of the
Corporation available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series C Preferred Stock the full
amount to which </p>

<p class=MsoFooter align=center style='text-align:center'>2</p>



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<p class=MsoNormal style='text-align:justify'>they shall be entitled, the holders
of shares of Series C Preferred Stock shall share ratably in any distribution
of the remaining assets and funds of the Corporation in proportion to the
respective amounts which would otherwise be payable in respect of the shares
held by them upon such distribution if all amounts payable on or with respect
to said shares were paid in full.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Upon
any such liquidation, dissolution, or winding up of the Corporation,
immediately after the holders of Series C Preferred Stock shall have been paid
in full the Series C Liquidation Preference Payment, the remaining net assets
of the Corporation available for distribution shall be distributed among the
holders of Junior Stock.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
consolidation or merger of the Corporation into or with any other entity or
entities which results in the exchange of more than fifty percent of the voting
power or shares of the Corporation for securities or other consideration issued
or paid or caused to be issued or paid by any such entity or affiliate thereof
(other than a merger to reincorporate the Corporation in a different
jurisdiction), and the sale, lease, transfer, or other disposition (but
exclusive of a collateral pledge) by the Corporation of all or substantially
all its assets, shall be deemed a liquidation, dissolution, or winding up of
the Corporation within the meaning of the provisions of this <u>Section 3</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Voting</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Each
issued and outstanding share of Series C Preferred Stock, shall be entitled to
the number of votes equal to the number of shares of Common Stock into which
each such share of Series C Preferred Stock is then convertible, at each
meeting of stockholders of the Corporation (or pursuant to any action by
written consent) with respect to any and all matters presented to the
stockholders of the Corporation for their action or consideration.&nbsp; Except as
provided by law and by the provisions of Section 4(b) below, holders of Series
C Preferred Stock shall vote together with the holders of Common Stock as a
single class.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
addition to any other rights provided by law, for as long as at least
three-fourths of the shares of Series C Preferred Stock remain outstanding and
for so long as at least three-fourths of the shares of Common Stock into which
the Series C Preferred Stock has been converted remains held by the former
holders of such converted Series C Preferred Stock, the Corporation shall not,
and shall not cause or permit any of its subsidiaries to, (whether by merger,
recapitalization or otherwise), either directly or indirectly, without the written
consent or affirmative vote of the holders of a majority of the then
outstanding shares of Series C Preferred Stock, given in writing or by vote at
a meeting, consenting or voting (as the case may be) separately as a class:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Liquidate,
dissolve or wind up the Corporation; consolidate or merge into or with any
other entity or entities which results in the exchange of more than fifty
percent of the voting power or shares of the Corporation (other than a merger
to reincorporate the Corporation in a different jurisdiction); or sell, lease,
abandon, transfer, or otherwise dispose of all or substantially all of the
Company's total assets (but exclusive of a collateral pledge);</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Enter
into any material agreement for the acquisition of another entity outside of
its core business operations;</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amend,
alter, or repeal the Corporation's Articles of Incorporation (including this
Certificate of Designations);</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Institute
any increase in the outstanding shares of Preferred Stock of any class or series
or issue any Common Stock in a material amount at less than $3.00 per share
(subject to appropriate adjustment in the event of any stock dividend, stock
split, stock distribution, combination, or other similar recapitalization with
respect to the Common Stock), other than pursuant to commitments or rights
outstanding on the date of this Certificate of Designations or pursuant to
options or other equity incentives granted at any time to employees,
consultants, or Directors of the Corporation (provided that such excluded
options or equity incentives are approved by a majority of the disinterested
members of the Board of Directors);</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cause
any redemption, repurchase, or other acquisition for value of any of the
Corporation's equity securities, other than from present or former consultants,
directors, or employees pursuant to the terms of a stock option plan of the
Corporation;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(vi)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Institute
any amendment of the Bylaws of the Corporation &nbsp;which is directly detrimental
to the rights and preferences of the Series C Preferred Stock; </p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(vii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Institute
any payment of cash dividends or other distributions on any shares of Common
Stock; </p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(viii)&nbsp;&nbsp;&nbsp;&nbsp; Enter
into any debt agreements in excess of $500,000, other than the refinance or
extension of the existing PFGI II LLC note payable; or</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(ix)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase
the maximum number of directors constituting the Board of Directors of the
Corporation in excess of seven.</p>



<p class=MsoNormal style='text-align:justify;text-indent:.5in'>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Conversion</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Right
to Convert</u>.&nbsp; Subject to the terms and conditions of this Section 5, the
holders of Series C Preferred Stock shall have the right at any time to convert
outstanding shares of Series C Preferred Stock into fully paid and
nonassessable shares of Common Stock, at an initial conversion ratio of two
shares of Common Stock for each one share of Series C Preferred Stock
surrendered for conversion, subject to adjustment as provided in Sections 5(d)
and 5(e) below.&nbsp; Such right of conversion shall be exercised by a holder of
Series C Preferred Stock by giving written notice to the Corporation stating
that the holder elects to convert a stated number of shares of Series C
Preferred Stock into Common Stock and by surrender of a certificate or
certificates for the shares so to be converted to the Corporation at its
principal office (or such other office or agency of the Corporation as the
Corporation may designate by notice in writing to the holders of the Series C
Preferred Stock) at any time during its usual business hours on the date set
forth in such notice, together with a statement of the name or names, with
addresses, in which the certificate or certificates for shares of Common Stock
shall be issued.</p>

<p class=MsoFooter align=center style='text-align:center'>4</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Issuance
of Certificate; Time Conversion Effected</u>.&nbsp; Promptly after the receipt of
the written notice referred to in Section 5(a) and surrender of the certificate
or certificates for the share or shares of Series C Preferred Stock to be
converted, the Corporation shall issue and deliver, to the holder, registered
in such name or names as such holder may direct, a certificate or certificates
for the number of whole shares of Common Stock issuable upon the conversion of
such shares of Series C Preferred Stock.&nbsp; Such conversion shall be deemed to
have been effected as of the close of business on the date on which such
written notice shall have been received by the Corporation and the certificate
or certificates for such share or shares shall have been surrendered, and at
such time the rights of the holder of such share or shares of Series C
Preferred Stock shall cease and the person or persons in whose name or names
any certificate or certificates for shares of Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder or holders of
record of the shares represented thereby.&nbsp; Upon any such conversion, all
accrued but unpaid Accruing Dividends shall be paid in cash within seven days
following the conversion date (unless there are no legally available funds with
which to make such cash payment, in which event such cash payment shall be made
as soon as possible).</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Fractional
Shares; Partial Conversion</u>.&nbsp; No fractional shares shall be issued upon
conversion of Series C Preferred Stock into Common Stock.&nbsp; If any fractional
share of Common Stock would, except for the provisions of the foregoing
sentence, be delivered upon such conversion, the Corporation, in lieu of
delivering such fractional share, shall pay to the holder surrendering the
Series C Preferred Stock for conversion an amount in cash equal to the current
fair market value of such fractional share as determined in the good faith
discretion of the Board of Directors.&nbsp; If the number of shares of Series C
Preferred Stock represented by the certificate or certificates surrendered
pursuant to Section 5(a) exceeds the number of shares converted, the
Corporation shall, upon such conversion, execute and deliver to the holder, at
the expense of the Corporation, a new certificate or certificates for the
number of shares of Series C Preferred Stock represented by the certificate or
certificates surrendered which are not converted.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Subdivision
or Combination of Common Stock</u>.&nbsp; In case the Corporation shall at any time
subdivide (by stock split, stock dividend, or otherwise) its outstanding shares
of Common Stock into a greater number of shares, the number of shares of Common
Stock into which the Series C Preferred Stock is convertible shall be
proportionately increased.&nbsp; In case the Corporation shall at any time combine
(by reverse stock split or otherwise) its outstanding shares of Common Stock
into a lesser number of shares, the number of shares of Common Stock into which
the Series C Preferred Stock is convertible shall be proportionately decreased.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Reorganization
or Reclassification</u>.&nbsp; If any capital reorganization or reclassification of
the capital stock of the Corporation shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities, or
assets with respect to or in exchange for Common Stock, then, as a condition of
such reorganization or reclassification, lawful and adequate provisions shall
be made whereby each holder of Series C Preferred Stock shall upon conversion
of the Series C Preferred Stock as described in this Certificate of
Designations have the right to receive, upon the basis and upon the terms and
conditions specified herein and in lieu of the shares of Common Stock
immediately therefor receivable upon the conversion of such share or shares of
Series C Preferred Stock, such shares of stock, securities, or assets as may be
issued or payable with respect to or in exchange for a number of </p>

<p class=MsoFooter align=center style='text-align:center'>5</p>



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<p class=MsoNormal style='text-align:justify'>outstanding shares of Common
Stock equal to the number of shares of such Common Stock immediately receivable
upon such conversion had such reorganization or reclassification not taken
place.&nbsp; In any such case, appropriate provisions shall be made with respect to
the rights and interests of such holder to the end that the provisions hereof
shall thereafter be applicable, as nearly as may be, in relation to any shares
of stock, securities, or assets thereafter deliverable upon the exercise of
such conversion rights.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Mandatory
Conversion</u>.&nbsp; At any time after 36 months following the Original Issuance
Date, the Corporation may, at its option, upon at least 20 days' written notice
to the holders of Series C Preferred Stock pursuant to Section 5(g) below,
demand that each share of Series C Preferred Stock be automatically converted
into shares of Common Stock; provided, however, that each of the following
conditions is satisfied:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Common Stock shall have a trailing 20 consecutive trading day volume weighted
average price (&quot;VWAP&quot;) of not less than $3.50 per share.&nbsp; The formula for the
VWAP shall be calculated as follows:&nbsp; for each trade during the 20 day period
prior to the date of the mandatory conversion notice, the number of shares
traded shall be multiplied by the trade price with the product of each such
transaction summed and the total of all such products divided by the total
number of shares traded over such 20-day period.&nbsp; In the event of any
subdivision or combination of Common Stock as described in Section 5(d), the
foregoing $3.50 per share of Common Stock VWAP shall be proportionately
decreased or increased to reflect such changed number of outstanding shares of
Common Stock;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
average daily volume shall not be less than 50,000 shares per day for each of
the 20 trading days prior to the date of the mandatory conversion notice;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At
the time of such notice, the Common Stock of the Corporation shall be listed
for trading on a nationally recognized securities exchange or automated
quotation system and for a continuous period of at least three months prior to
the date of such notice; and</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; During
the foregoing three-month period, the Corporation shall have publicly reported
its financial results for its most recently completed fiscal quarter prior to
the date of such notice.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Notwithstanding the
foregoing, each share of Series C Preferred Stock shall automatically be
converted into shares of Common Stock in the event of (A) an underwritten
public offering of shares of the Corporation's stock at a per-share offering
price (prior to underwriting commissions and expenses) of not less than $3.00
per share (as adjusted for stock splits and combinations) and for total gross
offering proceeds of not less than $10,000,000 (a &quot;Qualified Public Offering&quot;),
or (B) a sale of all or substantially all of the assets of the Corporation
which has the effect of valuing the Common Stock of the Corporation at not less
than $3.00 per share.&nbsp; In the event of any subdivision or combination of Common
Stock as described in Section 5(d), the foregoing $3.00 per share of Common
Stock consideration shall be proportionately decreased or increased to reflect
such changed number of outstanding shares of Common Stock.</p>

<p class=MsoFooter align=center style='text-align:center'>6</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Notice
of Mandatory Conversion; Conversion Procedure</u>.&nbsp; All holders of record of
shares of Series C Preferred Stock shall be given at least 20 days' prior
written notice of the date fixed and the place designated for mandatory
conversion of all of such shares of Series C Preferred Stock pursuant to
Section 5(f).&nbsp; Such notice shall be sent by mail, first class, postage prepaid,
to each record holder of shares of Series C Preferred Stock at such holder's
address appearing on the stock register.&nbsp; On or before the date fixed for
conversion, each holder of shares of Series C Preferred Stock shall surrender
its certificates or certificates for all such shares to the Corporation at the
place designated in such notice, and shall thereafter receive certificates for
the number of shares of Common Stock to which such holder is entitled pursuant
to this Section 5.&nbsp; All certificates evidencing shares of Series C Preferred
Stock which are required to be surrendered for conversion in accordance with
the provisions hereof shall, from and after the date such certificates are so
required to be surrendered, be deemed to have been retired and canceled and the
shares of Series C Preferred Stock represented thereby converted into shares of
Common Stock as described above for all purposes, notwithstanding the failure
of the holder or holders thereof to surrender such certificates on or prior to
such date.&nbsp;&nbsp; Upon any such mandatory conversion of Series C preferred Stock,
all accrued but unpaid Accruing Dividends thereon shall be paid in cash within
seven days following the conversion date (unless there are no legally available
funds with which to make such cash payment, in which event such cash payment
shall be made as soon as possible).</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Stock
to be Reserved</u>.&nbsp; The Corporation shall at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon the conversion of Series C Preferred Stock as herein provided,
such number of shares of Common Stock as shall then be issuable upon the
conversion of all outstanding shares of Series C Preferred Stock.&nbsp; The
Corporation covenants that all shares of Common Stock which shall be so issued
shall be duly and validly issued and fully paid and nonassessable and free from
all taxes, liens, and charges with respect to the issue thereof.&nbsp; The
Corporation shall take all such action as may be necessary to assure that all
such shares of Common Stock may be so issued without violation of any
applicable law or regulation, or of any requirement of any securities exchange
upon which the Common Stock may be listed.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Closing
of Books</u>.&nbsp; The Corporation shall at no time close its transfer books
against the transfer of any Series C Preferred Stock or of any shares of Common
Stock issued or issuable upon the conversion of any shares of Series C
Preferred Stock in any manner which interferes with the timely conversion of
such Series C Preferred Stock, except as may otherwise be required to comply
with applicable securities laws.</p>



<p class=MsoNormal style='text-align:justify;text-indent:.5in'>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendments.&nbsp;
No provision of this Certificate of Designations of the terms of the Series C
Preferred Stock may be amended, modified, or waived without the written consent
or affirmative vote of the holders of a majority of the then-outstanding shares
of Series C Preferred Stock.</p>

<p class=MsoFooter align=center style='text-align:center'>7</p>



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<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS WHEREOF,
Good Times Restaurants Inc. has caused this Certificate of Designations,
Preferences, and Rights of Series C Convertible Preferred Stock to be duly
executed by its President and Chief Executive Officer this __ day of _________,
2012.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>GOOD
TIMES RESTAURANTS INC.</b></p>





<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; By:
_______________________________ </p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Name:&nbsp;&nbsp; Boyd
E. Hoback</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; President
and Chief Executive Officer</p>



<p class=MsoFooter align=center style='text-align:center'>8</p>



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<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>3
<FILENAME>registrationrights42b1.htm
<TEXT>
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<p class=MsoNormal align=center style='text-align:center'><b><u>&nbsp;</u></b></p>

<p class=MsoNormal align=center style='text-align:center'><b><u>&nbsp;</u></b></p>









<p class=MsoNormal align=center style='text-align:center'><b><u>EXHIBIT B</u></b></p>

<p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>FIRST AMENDMENT TO</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>REGISTRATION
RIGHTS AGREEMENT</b></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This FIRST AMENDMENT
TO REGISTRATION RIGHTS AGREEMENT (this &quot;<b>Amendment</b>&quot;) is made and entered
into as of __________, 2012, by and between Good Times Restaurants Inc., a
Nevada corporation (the &quot;<b>Compan</b>y&quot;), and Small Island Investments
Limited, a Bermuda corporation (the &quot;Investor&quot;).&nbsp; This Amendment amends the
Registration Rights Agreement dated as of December 13, 2010 (the &quot;<b>Registration
Rights Agreement</b>&quot;) between the Company and the Investor.&nbsp; Capitalized terms
used but not otherwise defined in this Amendment shall have the meanings given
to such terms in the Registration Rights Agreement.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the Company
and the Investor are parties to that certain Securities Purchase Agreement
dated as of June 13, 2012 (the &quot;<b>Purchase Agreement</b>&quot;), pursuant to which
the Company has agreed to sell and issue to the Investor, and the Investor has
agreed to purchase from the Company, shares of the Company's Series C
Convertible Preferred Stock (the &quot;<b>Series C&nbsp; Shares</b>&quot;); </p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, the Company
and the Investor desire to amend the Registration Rights Agreement as set forth
herein to include the shares of the Company's Common Stock issued or issuable
to the Investor upon conversion of the Series C Shares as Registrable
Securities; and</p>



<p class=MsoNormal style='text-align:justify'>WHEREAS, Section 8(a) of the
Registration Rights Agreement provides that the Registration Rights Agreement
may be amended only by a writing signed by the Company and the Investor.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW, THEREFORE, in
consideration of the mutual covenants, agreements, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Investor hereby agree as follows:</p>



<p class=MsoNormal style='text-align:justify;text-indent:.5in'>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amendment
of Registration Rights Agreement.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
following defined terms shall be added to Section 1 of the Registration Rights
Agreement:</p>



<p class=MsoNormal style='margin-left:1.0in;text-align:justify;text-indent:
40.5pt'>&quot;<b>Preferred Stock</b>&quot; shall mean the preferred stock of the Company,
par value $0.001 per share.</p>



<p class=MsoNormal style='margin-left:1.0in;text-align:justify;text-indent:
40.5pt'>&quot;<b>Series C Preferred Stock</b>&quot; shall mean a series of Preferred
Stock of the Company designated as &quot;<b>Series C Convertible Preferred Stock</b>.&quot;</p>



<p class=MsoNormal style='margin-left:1.0in;text-align:justify;text-indent:
40.5pt'>&quot;<b>Series C Shares</b>&quot; shall mean the shares of Series C Preferred
Stock to be issued to the Investor under the Securities Purchase Agreement
dated June 13, 2012 between the Company and the Investor (the &quot;<b>Series C Purchase
Agreement</b>&quot;).</p>

<p class=MsoFooter align=center style='text-align:center'>1</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
definition of &quot;<b>Registrable Securities</b>&quot; in Section 1 of the Registration
Rights Agreement shall be amended to read in its entirety as follows:</p>



<p class=MsoNormal style='margin-left:1.0in;text-align:justify;text-indent:
..5in'>&quot;<b>Registrable Securities</b>&quot; shall mean (i) the Shares, (ii) any
shares of Common Stock issued or issuable to the Investor upon conversion of
the Series C Shares; and (iii) any other securities issued or issuable with
respect to or in exchange for Registrable Securities; provided, that a security
shall cease to be a Registrable Security upon (A) sale pursuant to a
Registration Statement or Rule 144, or (B) such security becoming eligible for
sale by the Investor without restriction pursuant to Rule 144.</p>



<p class=MsoNormal style='text-align:justify;text-indent:.5in'>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Effect
of this Amendment</u>.&nbsp; Except as specifically amended as set forth herein,
each term and condition of the Registration Rights Agreement shall continue in
full force and effect.</p>



<p class=MsoNormal style='text-align:justify;text-indent:.5in'>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Counterparts;
Facsimile Signatures</u>.&nbsp; This Amendment may be executed or consented to in
counterparts, each of which shall be deemed an original and all which taken
together shall constitute one and the same instrument.&nbsp; This Amendment may be
executed and delivered by facsimile or electronically and, upon such delivery,
the facsimile or electronically transmitted signature shall be deemed to have
the same effect as if the original signature had been delivered to the other
party.</p>



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Intentionally Left Blank.]</p>

<p class=MsoFooter align=center style='text-align:center'>2</p>



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<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; IN WITNESS WHEREOF,
the parties hereto have caused this Amendment to be duly executed by their
respective authorized signatories as of the date first indicated above.</p>



<p class=MsoNormal style='margin-left:3.0in;text-align:justify'><b>COMPANY:</b></p>

<p class=MsoNormal style='margin-left:3.0in;text-align:justify'><b>GOOD TIMES
RESTAURANTS INC.</b></p>



<p class=MsoNormal style='margin-left:3.0in;text-align:justify'>By:____________________________ </p>

<p class=MsoNormal style='margin-left:3.0in;text-align:justify'>Name:&nbsp; Boyd E.
Hoback</p>

<p class=MsoNormal style='margin-left:3.0in;text-align:justify'>Title:&nbsp;&nbsp;&nbsp; President
&amp; CEO</p>



<p class=MsoNormal style='margin-left:3.0in;text-align:justify'><b>INVESTOR:</b></p>

<p class=MsoNormal style='margin-left:3.0in;text-align:justify'><b>SMALL ISLAND
INVESTMENTS LIMITED</b></p>



<p class=MsoNormal style='margin-left:3.0in;text-align:justify'>By:____________________________ </p>

<p class=MsoNormal style='margin-left:3.0in;text-align:justify'>Name:&nbsp; David L.
Dobbin</p>

<p class=MsoNormal style='margin-left:3.0in;text-align:justify'>Title:&nbsp;&nbsp;&nbsp; Chairman</p>





<p class=MsoFooter align=center style='text-align:center'>3</p>



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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>finalspa1011.htm
<TEXT>
<html>

<head>
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<p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>









<p class=MsoNormal align=center style='text-align:center'><b>SECURITIES
PURCHASE AGREEMENT</b></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; This Securities
Purchase Agreement (this <b>&quot;Agreement&quot;</b>) is dated as of June 13, 2012,
between Good Times Restaurants Inc., a Nevada corporation (the <b>&quot;Company&quot;</b>),
and Small Island Investments Limited, a Bermuda corporation (the <b>&quot;Investor&quot;</b>).</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act (as defined below), the Company desires to issue and
sell to the Investor, and the Investor desires to purchase from the Company
certain securities of the Company, as more fully described in this Agreement.</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and the Investor agree as follows:</p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
1.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>DEFINITIONS</b></p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Action&quot;</b> means any action,
suit, inquiry, notice of violation, proceeding (including any partial
proceeding such as a deposition), or investigation pending or threatened in
writing against or affecting the Company, the Subsidiary, or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, or local),
stock market, stock exchange, or trading facility.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Affiliate&quot;</b> means any
Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, a Person, as
such terms are used in and construed under Rule 144.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Board&quot;</b> means the Board of
Directors of the Company.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Business Day&quot;</b> means any
day except Saturday, Sunday, and any day which is a federal legal holiday.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Certificate of Designation&quot;</b>
means a Certificate of Designation filed by the Company with the Nevada
Secretary of State to designate the Series C Preferred and the powers,
preferences and rights thereof, and the qualifications, limitations and
restrictions thereof, in substantially the form of Exhibit A hereto.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Closing&quot;</b> means the
closing of the purchase and sale of the Shares pursuant to Article 2.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Closing Date&quot;</b> means the
first Business Day on which all of the conditions set forth in Sections 5.1 and
5.2 hereof are satisfied, or such other date as the parties may agree.</p>



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<p class=MsoNormal style='text-align:justify'><b>&quot;Commission&quot;</b> means the
U.S. Securities and Exchange Commission.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Common Stock&quot;</b> means the
common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereafter be reclassified.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Company Deliverables&quot;</b> has
the meaning set forth in Section 2.3(a).</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Conversion Shares&quot;</b> means
the shares of Common Stock issuable upon conversion of the Shares.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Disclosure Materials&quot;</b> has
the meaning set forth in Section 3.1(h).</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Equity Securities&quot;</b> means
any (i) Common Stock, (ii) any debt or equity security of the Company
convertible into or exchangeable for shares of Common Stock, with or without
consideration being paid, (iii) any option, warrant or other right to purchase
shares of Common Stock or securities convertible into or exchangeable for
shares of Common Stock or any other security so convertible, or (iv) any debt
securities having voting rights, which shall be included in any calculation of
beneficial ownership pursuant to Rule 13d-3 promulgated under the Exchange Act
as the equivalent of shares of Common Stock having the same voting power.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Exchange Act&quot;</b> means the
Securities Exchange Act of 1934, as amended.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;GAAP&quot;</b> means U.S.
generally accepted accounting principles.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Investment Amount&quot;</b> means
the aggregate purchase price for the Shares purchased by the Investor.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Investor Deliverables&quot;</b>
has the meaning set forth in Section 2.3(b).</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Lien&quot;</b> means any lien,
charge, encumbrance, security interest, right of first refusal, or other
restriction of any kind.</p>



<p class=MsoNormal style='text-align:justify'><a name="OLE_LINK2"><b>&quot;Material
Adverse Effect&quot;</b> means any of (i) a material and adverse effect on the
legality, validity, or enforceability of any Transaction Document, (ii) a
material and adverse effect on the results of operations, assets, liabilities,
property, business, or condition (financial or otherwise) of the Company and
the Subsidiary, taken as a whole, or (iii) a material and adverse impairment to
the Company's ability to perform on a timely basis its obligations under any
Transaction Document.</a></p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Person&quot;</b> means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof), or other entity of any kind.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Preferred Stock&quot;</b> means
the preferred stock of the Company, par value $0.001 per share.</p>



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<p class=MsoNormal style='text-align:justify'><b>&quot;Proceeding&quot;</b> means an
action, claim, suit, investigation, or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Registration Rights
Agreement&quot;</b> means the Registration Rights Agreement, dated as of December
13, 2010, between the Company and the Investor, as amended by the Registration
Rights Agreement Amendment.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Registration Rights Agreement
Amendment&quot;</b> means the First Amendment to Registration Rights Agreement,
dated as of the Closing Date, between the Company and the Investor, in the form
of Exhibit B hereto.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Registration Statement&quot;</b>
means a registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale by the Investor of
Registrable Securities (as defined in the Registration Rights Agreement).</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Rule 144&quot;</b> means Rule 144
promulgated by the Commission pursuant to the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;SEC Reports&quot;</b> has the
meaning set forth in Section 3.1(h).</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Securities Act&quot;</b> means the
Securities Act of 1933, as amended.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Series C Preferred&quot;</b> means
a series of Preferred Stock of the Company designated as &quot;Series C Convertible
Preferred Stock.&quot; </p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Shares&quot;</b> means the shares
of Series C Preferred to be purchased by the Investor pursuant to this
Agreement.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Subsidiary&quot;</b> means Good
Times Drive Thru Inc., a Colorado corporation, a wholly-owned subsidiary of the
Company.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Trading Market&quot;</b> means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ National Market, the NASDAQ Capital Market, or the OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date in question.</p>



<p class=MsoNormal style='text-align:justify'><b>&quot;Transaction Documents&quot;</b>
means this Agreement, the Registration Rights Agreement Amendment, and any
other documents or agreements executed in connection with the transactions
contemplated hereunder.</p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
2.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>PURCHASE AND SALE</b></p>



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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>2.1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Purchase
and Sale of Shares.&nbsp; </u>Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to the Investor and
the Investor shall purchase from the Company 473,934 Shares for an Investment
Amount of $2,000,001.48.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Closing</u>.&nbsp;
The Closing shall take place remotely by the exchange of documents and
signatures at 10:00 a.m. (Mountain time) on the Closing Date or at such other
location or time as the parties may agree.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Closing
Deliveries</u>.&nbsp; At the Closing, the Company shall deliver or cause to be
delivered to the Investor (i)&nbsp; a filed copy of the Certificate of Designation,
(ii) a certificate evidencing the Shares, registered in the name of the
Investor, and (iii) the duly executed signature page of the Registration Rights
Agreement Amendment for the Company (together, the <b>&quot;Company Deliverables&quot;</b>).</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; At
the Closing, the Investor shall deliver or cause to be delivered to the Company
(i) the Investment Amount, in immediately available funds, by wire transfer to
an account designated in writing by the Company for such purpose, and (ii) the
duly executed signature page of the Registration Rights Agreement Amendment for
the Investor (together, the <b>&quot;Investor Deliverables&quot;).</b></p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
3.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>REPRESENTATIONS
AND WARRANTIES</b></p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Representations
and Warranties of the Company</u>.&nbsp; The Company hereby makes the following
representations and warranties to the Investor, except as set forth on the
schedule of exceptions attached as Exhibit C hereto and made a part hereof by
this reference (the <b>&quot;Schedule of Exceptions&quot;</b>):</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Subsidiaries</u>.&nbsp;
The Company has no direct or indirect subsidiaries other than the Subsidiary.&nbsp;
The Company owns, directly or indirectly, all of the capital stock of the
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of the Subsidiary are validly issued and
are fully paid, non-assessable, and free of preemptive and similar rights.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Organization
and Qualification</u>.&nbsp; The Company and the Subsidiary are each duly
incorporated or otherwise organized, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation, with the requisite
power and authority to own and use its properties and assets and to carry on
its business as currently conducted.&nbsp; Neither the Company nor the Subsidiary is
in violation of any of the provisions of its respective articles of
incorporation, bylaws, or other organizational or charter documents, except
where the violation would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect.&nbsp; The Company and the
Subsidiary are duly qualified to conduct their respective businesses, and each
is in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Authorization;
Enforcement</u>.&nbsp; The Company has the requisite corporate power and authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder.&nbsp;
Upon the approval of the transactions contemplated by the Transaction Documents
by the Company's shareholders and the filing of the Certificate of Designation,
(i) the execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated thereby
shall have been duly authorized by all necessary action on the part of the
Company and no further action shall be required by the Company in connection
therewith, and (ii) each Transaction Document, when delivered in accordance
with the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and remedies or by
other equitable principles of general application.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Conflicts</u>.&nbsp; Upon the approval of the transactions contemplated by the
Transaction Documents by the Company's shareholders and the filing of the
Certificate of Designation, the execution, delivery, and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or the Subsidiary's articles of
incorporation, bylaws, or other organizational or charter documents (including
revisions to such organizational or charter documents made in conjunction with
and to effect the provisions of this Agreement, if applicable, as disclosed in
the Schedule of Exceptions), or (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration, or
cancellation (with or without notice, lapse of time, or both) of, any agreement
or other instrument or other understanding to which the Company or the
Subsidiary is a party or by which any property or asset of the Company or the
Subsidiary is bound or affected, or (iii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree, or other restriction of
any court or governmental authority to which the Company or the Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or the Subsidiary is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could
not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Filings,
Consents, and Approvals</u>.&nbsp; The Company is not required to obtain any
consent, waiver, authorization, or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, provincial,
local, or other United States or foreign governmental authority in connection
with the execution, delivery, and performance by the Company of the Transaction
Documents, other than (i) the filing with the Commission of preliminary and
definitive proxy materials under the Commission's proxy rules related to
approval by the Company's shareholders of the transactions contemplated by the
Transaction Documents; (ii) the filing of the Certificate of Designation with
the Nevada Secretary of State; (iii) the filing with the Commission of one or
more Registration Statements in accordance with the requirements of the
Registration Rights Agreement; (iv) the filings required, if any, in accordance
with Section 4.4; (v) filings required by federal or state securities laws,
including Form D pursuant to Regulation D of the Securities Act; and (vi) those
that have been made or obtained prior to the date of this Agreement.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Issuance
of the Shares</u>.&nbsp; Upon the approval of the transactions contemplated by the
Transaction Documents by the Company's shareholders and the filing of the
Certificate of Designation, (i) the Shares will have been duly authorized and,
when issued and paid for in accordance with the Transaction Documents, will be
duly and validly issued, fully paid, and nonassessable, free and clear of all
Liens, and (ii) the Company will have reserved from its duly authorized capital
stock the shares of Common Stock issuable pursuant to this Agreement in order to
issue the Conversion Shares.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Capitalization</u>.&nbsp;
The number of shares and type of all authorized, issued, and outstanding
capital stock of the Company, and all shares of Common Stock reserved for
issuance under the Company's various option and incentive plans, is specified
in the Schedule of Exceptions, which information is accurate as of the date of
this Agreement.&nbsp; Except as specified in the Schedule of Exceptions, no
securities of the Company are entitled to preemptive or similar rights, and no
Person other than the Investor has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents.&nbsp; Except as specified in
the Schedule of Exceptions, there are no outstanding options, warrants, scrip
rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities, rights, or obligations convertible into or
exchangeable for, or giving any Person other than the Investor any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings, or arrangements by which the Company or the
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock.&nbsp; The issue and sale of the Shares will not, immediately or with the
passage of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Investor) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange, or reset price under such securities.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>SEC
Reports; Financial Statements</u>. &nbsp;The Company has filed all reports required
to be filed by it under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, since October 1, 2010 (the
foregoing materials being collectively referred to herein as the &quot;SEC Reports&quot;
and, together with the Schedule of Exceptions, the &quot;Disclosure Materials&quot;) on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.&nbsp;
As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.&nbsp; The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing.&nbsp; Such financial statements
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects
the financial position of the Company and the Subsidiary as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Press
Releases</u>.&nbsp; To the Company's best knowledge, the press releases disseminated
by the Company since October 1, 2010 taken as a whole do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made and when made, not misleading.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'><a
name="OLE_LINK1">(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Material Changes</u>.&nbsp; Since the date of the
Company's most recently filed Form 10-Q, except as specifically disclosed in
the Schedule of Exceptions, (i) there has been no event, occurrence, or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect; (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses, and
other liabilities incurred in the ordinary course of business consistent with
past practice, and (B) liabilities not required to be reflected in the
Company's financial statements pursuant to GAAP or required to be disclosed in
filings made with the Commission; (iii) the Company has not altered its method
of accounting or the identity of its auditors; (iv) the Company has not
declared or made any dividend or distribution of cash or other property to its
shareholders or purchased, redeemed, or made any agreements to purchase or
redeem any shares of its capital stock; and (v) except as disclosed in the
Schedule of Exceptions, the Company has not issued any equity securities to any
officer, director, or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information.</a></p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Litigation</u>.&nbsp;
There is no Action which (i) adversely affects or challenges the legality, validity,
or enforceability of any of the Transaction Documents or the Shares, or (ii)
except as specifically disclosed in the Schedule of Exceptions, could, if there
were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.&nbsp; Neither the
Company nor the Subsidiary, nor any director or officer thereof (in his or her
capacity as such), is or has been the subject of any Action involving a claim
of violation of or liability under any federal, state, or local laws.&nbsp; There
has not been, and to the knowledge of the Company, there is not pending any
investigation by the Commission involving the Company or any current or former
director or officer of the Company (in his or her capacity as such).&nbsp; The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or the
Subsidiary under the Exchange Act or the Securities Act.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Compliance</u>.&nbsp;
Neither the Company nor the Subsidiary (i) is in default under or in violation
of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or the
Subsidiary under), nor has the Company or the Subsidiary received written
notice of a claim that it is in default under or that it is in violation of,
any agreement or instrument to which it is a party or by which it or any of its
properties is bound (except where such default or violation has been waived);
(ii) is in violation of any order of any United States court, arbitrator, or
governmental body; or (iii) is or has been in violation of any statute, rule,
or regulation of any United States governmental authority, including without
limitation any federal, state, and local law relating to taxes, environmental
protection, occupational health and safety, product quality and safety, and
employment and labor matters; except in the case of each of clauses&nbsp; (i), (ii),
and (ii) such as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company is
in compliance with all effective requirements of the Sarbanes-Oxley Act of
2002, as amended, and the rules and regulations thereunder, that are applicable
to it, except where such noncompliance could not have or reasonably be expected
to result in a Material Adverse Effect.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Regulatory
Permits</u>.&nbsp; The Company and the Subsidiary possess all certificates,
authorizations, and permits issued by the appropriate federal, state, or local
regulatory authorities necessary to conduct their respective businesses as
described in the SEC Reports, except where the failure to possess such permits
could not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, and neither the Company nor the Subsidiary
has received any written or other notice of proceedings relating to the
revocation or modification of any such permits.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Title
to Assets</u>.&nbsp; Except as set forth in the Schedule of Exceptions, the Company
and the Subsidiary have good and marketable title in fee simple to all real
property owned by them that is material to their respective businesses and good
and marketable title to all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiary. Any real property and facilities held under
lease by the Company and the Subsidiary are held by them under valid,
subsisting, and enforceable leases of which the Company and the Subsidiary are
in compliance, except as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Insurance</u>.&nbsp;
The Company and the Subsidiary are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiary are
engaged.&nbsp; The Company has no reason to believe that it will not be able to
renew its and the Subsidiary's existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business on terms consistent with market for the
Company's and the Subsidiary's respective lines of business.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(p)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Environmental
Matters</u>.&nbsp; The Company and the Subsidiary are in compliance with all
applicable federal, state, and local laws, regulations, rules, ordinances, and
orders which impose requirements relating to environmental protection,
hazardous substances, or public or employee health and safety (collectively,
&quot;Environmental Laws&quot;), except as could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(q)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Transactions
With Affiliates and Employees</u>.&nbsp; Except for the transaction contemplated by
the Transaction Documents and as otherwise set forth in the Schedule of
Exceptions, none of the officers or directors of the Company or the Subsidiary
and, to the knowledge of the Company, none of the employees of the Company or
the Subsidiary is presently a party to any transaction with the Company or the
Subsidiary (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director, or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee, or partner.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(r)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Internal
Accounting Controls</u>.&nbsp; The Company and the Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.&nbsp; The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including the Subsidiary, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company's Form 10-K or 10-Q, as the case may be, is being prepared.&nbsp;
The Company's certifying officers have evaluated the effectiveness of the Company's
controls and procedures in accordance with Item 307 of Regulation S-K under the
Exchange Act for the Company's most recently ended fiscal quarter or fiscal
year-end (such date, the &quot;Evaluation Date&quot;).&nbsp; The Company presented in its most
recently filed Form 10-Q the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.&nbsp; Since the Evaluation Date, there have
been no significant changes in the Company's internal controls (as such term is
defined in Item 308(c) of Regulation S-K under the Exchange Act) or, to the
Company's knowledge, in other factors that could significantly affect the
Company's internal controls.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(s)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Certain
Fees</u>.&nbsp; No brokerage or finder's fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank, or other Person with respect to the
transactions contemplated by this Agreement.&nbsp; The Investor shall have no
obligation with respect to any fees or with respect to any claims (other than
such fees or commissions owed by the Investor pursuant to written agreements
executed by the Investor which fees or commissions shall be the sole
responsibility of the Investor) made by or on behalf of other Persons for fees
of a type contemplated in this Section that may be due in connection with the
transactions contemplated by this Agreement.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(t)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Certain
Registration Matters</u>. &nbsp;Assuming the accuracy of the Investor's
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Shares by the
Company to the Investor under the Transaction Documents.&nbsp; Except as set forth
in the Schedule of Exceptions, the Company has not granted or agreed to grant
to any Person other than the Investor any rights (including &quot;piggy&#8209;back&quot;
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority that have not been satisfied.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(u)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Listing
and Maintenance Requirements</u>.&nbsp; Except as specified in the Schedule of
Exceptions, the Company has not, in the two years preceding the date hereof,
received notice from any Trading Market to the effect that the Company is not
in compliance with the listing or maintenance requirements thereof.&nbsp; The
issuance and sale of the Shares under the Transaction Documents does not
contravene the rules and regulations of the Trading Market on which the Common
Stock is currently listed or quoted.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>The Investor
acknowledges and agrees that the Company has not made and does not make any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.1 and the
Schedule of Exceptions.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Representations
and Warranties of the Investor</u>.&nbsp; The Investor hereby represents and
warrants to the Company as follows:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Organization;
Authority</u>.&nbsp; The Investor is a corporation duly organized, validly existing,
and in good standing under the laws of Bermuda with the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations thereunder. The execution, delivery, and performance by the
Investor of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Investor.&nbsp; Each
of the Transaction Documents has been (or upon delivery will have been) duly
executed by the Investor, and when delivered by the Investor in accordance with
the terms hereof and thereof, will constitute the valid and legally binding
obligation of the Investor, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies
or by other equitable principles of general application.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Investment
Intent</u>.&nbsp; The Investor is acquiring the Shares as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling such Shares or the Conversion shares or any part thereof, without
prejudice, however, to the Investor's right at all times to sell or otherwise
dispose of all or any part of such Shares or Conversion Shares in compliance
with applicable federal and state securities laws and pursuant to the
Registration Rights Agreement.&nbsp; Subject to the immediately preceding sentence,
nothing contained herein shall be deemed a representation or warranty by the
Investor to hold the Shares or Conversion Shares for any period of time.&nbsp; The
Investor does not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Shares or Conversion Shares.</p>



<p class=MsoFooter>10</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Investor
Status</u>.&nbsp; At the time the Investor was offered the Shares, it was, and at
the date hereof it is, (i) knowledgeable, sophisticated, and experienced in
making, and qualified to make, decisions with respect to investments in
securities representing an investment decision similar to that involved in the
purchase of the Shares, including investments in securities issued by the
Company and comparable entities, and (ii) an &quot;accredited investor&quot; as defined
in Rule 501(a) under Regulation D promulgated the Securities Act.&nbsp; The Investor
shall provide reasonable and customary information to the Company to confirm
its accredited investor status.&nbsp; The Investor is not a registered broker-dealer
under Section 15 of the Exchange Act.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Certain
Trading Activities</u>.&nbsp; The Investor covenants that neither it nor any Person
acting on its behalf or pursuant to any understanding with it will engage in
any transactions in the securities of the Company prior to the time that the
transactions contemplated by the Transaction Documents are publicly disclosed.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Reliance
on Investor Representations</u>.&nbsp; The Investor understands that (i) the Shares
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the Securities Act and the rules and regulations
promulgated thereunder, and any applicable state or foreign securities laws;
(ii) the Company is relying upon the truth and accuracy of, and the Investor's
compliance with, the representations, warranties, agreements, acknowledgements,
and understandings of the Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of the Investor to acquire
the Shares; and (iii) under such laws and rules and regulations the Shares may
be resold without registration under the Securities Act only in certain limited
circumstances.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Risks
of Investment</u>.&nbsp; The Investor understands that its investment in the Shares
involves a significant degree of risk, and the Investor has full cognizance of
and understands all of the risk factors related to the Investor's purchase of
the Shares, including, but not limited to, those set forth in the SEC Reports.&nbsp;
The Investor understands that no representation is being made as to the future
value of the Shares.&nbsp; The Investor has the knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and has the ability to bear the economic
risks of an investment in the Shares.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Approvals</u>.&nbsp; The Investor understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Shares.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Location
of Offices</u>.&nbsp; The Investor's principal executive offices are in the
jurisdiction set forth in Section 7.3 hereof.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Independent
Investment Decision</u>.&nbsp; The Investor has independently evaluated the merits
of its decision to purchase Shares pursuant to the Transaction Documents, and
has relied on its own industry, business and/or legal advisors in making such
decision.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Voting Agreements</u>.&nbsp; The Investor has not entered into any agreement or
arrangement regarding the voting or disposition of the Shares.</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Company acknowledges and agrees that the Investor has not made and does not
make any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.2.</p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
4.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>OTHER AGREEMENTS
OF THE PARTIES</b></p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Restrictive
Legends on Certificates</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Shares and/or Conversion Shares may only be disposed of in compliance with
federal, state, and foreign securities laws or pursuant to the Registration
Rights Agreement.&nbsp; In connection with any transfer of the Shares or Conversion
Shares other than pursuant to an effective registration statement, to the
Company, or to an Affiliate of the Investor, the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Shares or Conversion Shares under the
Securities Act or any other applicable securities law.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certificates
evidencing the Shares and/or Conversion Shares will contain the following
legend, until such time as it is not required under Section 4.1(c):</p>



<p class=MsoNormal style='margin-top:0in;margin-right:58.5pt;margin-bottom:
0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify'>THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR FOREIGN
JURISIDICTION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE &quot;SECURITIES ACT&quot;), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE AND PROVINCIAL
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Certificates
evidencing Shares and/or any Conversion Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)): (i) with respect to a sale
or transfer of such Shares or Conversion Shares pursuant to an effective
registration statement (including the Registration Statement), or (ii) with
respect to a sale or transfer of such Shares or Conversion Shares pursuant to
Rule 144.&nbsp; The Company agrees that following the effective date of the initial
Registration Statement filed with the Commission pursuant to the Registration
Rights Agreement or at such time as such legend is no longer required under
this Section 4.1(c), it will, no later than seven Business Days following the
delivery by the Investor to the Company or the Company's transfer agent of a
certificate representing Shares or Conversion Shares issued with a restrictive
legend, together with the written request of the Investor accompanied by the
written representation letter in customary form, deliver or cause to be
delivered to the Investor a certificate representing such Shares or Conversion
Shares that is free from all restrictive and other legends.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Investor agrees that the removal of the restrictive legend from certificates
representing Shares or Conversion Shares as set forth in this Section 4.1 is
predicated upon the Company's reliance that the Investor will sell any such
Shares or Conversion Shares pursuant to either the registration requirements of
the Securities Act, including any applicable prospectus delivery requirements,
or an exemption therefrom.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Furnishing
of Information</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Securities Act and the
Exchange Act.&nbsp; The Company further covenants that it will take such further
action as any holder of Shares may reasonably request, all to the extent
required from time to time to enable such Person to sell the Shares without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The
Investor covenants to timely file all reports required to be filed by the
Investor after the date hereof pursuant to the Exchange Act, including Sections
13(d) and 16(a) thereof.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Indemnification</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investor and its directors, officers,
managers, shareholders, investors, members, partners, employees, and agents
(each, an <b>&quot;Investor Party&quot;) </b>harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs, and expenses,
including all judgments, amounts paid in settlements, court costs, and
reasonable attorneys' fees and costs of investigation (collectively, <b>&quot;Losses&quot;</b>),
that any such Investor Party may suffer or incur as a result of or relating to
any misrepresentation, breach, or inaccuracy of any representation, warranty,
covenant, or agreement made by the Company in any Transaction Document.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In
addition to the indemnity provided in the Registration Rights Agreement, the
Investor will indemnify and hold the Company and its directors, officers,
managers, shareholders, investors, members, partners, employees, and agents
(each, a <b>&quot;Company Party&quot;</b>) harmless from any and all Losses that any such
Company Party may suffer or incur as a result of or relating to any
misrepresentation, breach, or inaccuracy of any representation, warranty,
covenant, or agreement made by the Investor in any Transaction Document.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Listing
of Shares</u>. &nbsp;The Company agrees, (i) it will utilize its best efforts to
continue the listing and trading of its Common Stock on its current Trading
Market on the date of this Agreement and will comply in all material respects
with the Company's reporting, filing, and other obligations under the bylaws or
rules of such Trading Market, (ii) it will make such required notice or other
filing with respect to the transactions contemplated by this Agreement and the
Shares with its current Trading Market and obtain any approvals, and (iii) if
the Company applies to have the Common Stock traded on any Trading Market other
than that of the date of this Agreement, it will include in such application the
Shares, and will take such other action as is necessary or desirable to cause
the Shares to be listed on such other Trading Market as promptly as possible.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Conduct
of Business Prior to Closing</u>.&nbsp; From the date hereof until the Closing,
except as otherwise provided in this Agreement or consented to in writing by
the Investor (which consent shall not be unreasonably withheld or delayed), the
Company and the Subsidiary shall conduct their respective businesses in the
ordinary course consistent with past practice, and, at the Closing, the Company
shall deliver to the Investor a Certificate of Good Standing for each of the
Company and the Subsidiary.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Use
of Proceeds</u>.&nbsp; The Company shall use the net proceeds from the sale of the
Shares hereunder to pay the outstanding principal and accrued interest under
its note to Wells Fargo Bank, N.A. and for other corporate purposes approved by
the Board.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Board
Composition</u>.&nbsp; So long as the Investor holds at least fifty percent of the
Company's then outstanding capital stock (i) the Board shall not consist of
more than seven directors, and (ii) the Investor shall have a right to
designate four members of the Company's Board (the &quot;Investor Designees&quot;), and
the Company agrees to include the Investor Designees on its slate of directors
recommended for approval at each annual meeting of the Company's shareholders.&nbsp;
The Investor shall vote its shares in any election of directors in favor of (x)
its four designees, (y) one Person designated by The Bailey Company (the &quot;Bailey
Designee&quot;), and (z) one Person designated by Eric W. Reinhard (the &quot;Reinhard
Designee&quot;); provided, however, that if The Bailey Company or Eric W. Reinhard
(in each case, together with its or his Affiliates) ceases to own at least
200,000 shares of the Company's Common Stock (adjusted for any stock splits,
reverse splits or similar capital stock transactions), then in lieu of the
Bailey Designee or the Reinhard Designee, as the case may be, the Investor
agrees to vote its shares in any election of directors in favor of a Person,
other than an Investor Designee, who receives the majority of votes of holders
of Common Stock other than the Investor.&nbsp; The Investor agrees that The Bailey
Company and Eric W. Reinhard constitute third party beneficiaries of the
foregoing provision.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Purchase
Rights</u>.&nbsp; For so long as the Investor continues to hold at least 75 percent
of the Shares and/or Conversion Shares, the Company hereby grants to the
Investor rights to purchase securities of the Company for the purpose of
maintaining up to its percentage ownership interest of the Company, as set
forth in the provisions below.</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Subsequent
Offerings</u>.&nbsp; The Investor shall have a right of first refusal (the &quot;Purchase
Right&quot;) to purchase up to its &quot;Pro Rata Share&quot; of all Equity Securities which
may be issued and sold by the Company other than those excluded pursuant to
Section 4.8(c) below.&nbsp; The Investor's Pro Rata Share shall be calculated as of
the time immediately prior to the issuance of such Equity Securities by the Company
as the ratio of (i) the number of shares of Common Stock beneficially owned by
the Investor on a fully diluted basis at such time to (ii) the total number of
shares of Common Stock of the Company outstanding on a fully diluted basis at
such time</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Exercise
of Rights</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If
the Company proposes to issue any Equity Securities, it shall first give the
Investor written notice (the &quot;Company's Issuance Notice&quot;) of its intention,
describing the Equity Securities, the price and the other terms and conditions
upon which the Company proposes to issue such Equity Securities.&nbsp; The Investor
shall have ten Business Days after the giving of the Company's Issuance Notice
to agree to purchase up to its Pro Rata Share of the Equity Securities, for the
price and upon the other terms and conditions specified in the notice, by
giving written notice to the Company (the &quot;Investor's Purchase Notice&quot;) and
stating therein the quantity of such Equity Securities to be purchased.&nbsp; If the
Investor exercises its Purchase Right hereunder, the Company and the Investor
shall then effect the sale and purchase of the Equity Securities at the closing
of the issuance of Equity Securities described in the Company's Issuance
Notice.&nbsp; On the date of such closing, the Company shall deliver to the Investor
the certificates representing the Equity Securities to be purchased by the
Investor, each certificate to be properly endorsed for transfer, and at such
time, the Investor shall pay the purchase price for the Equity Securities.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Issuance
of Equity Securities to Other Persons</u>.&nbsp; If the Investor fails to exercise
in full its Purchase Right, the Company shall have sixty days thereafter to
sell the Equity Securities in respect of which the Investor's Purchase Right
was not exercised, at a price and upon general terms and conditions no more
favorable to the purchasers thereof than specified in the Company's Issuance
Notice.&nbsp; If the Company has not sold such Equity Securities within such sixty
days, the Company shall not thereafter issue or sell any Equity Securities,
without first again complying with this Section 4.8.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Exercise
of Options and Warrants</u>.&nbsp; Notwithstanding the foregoing, the Investor's
Purchase Right with respect to Common Stock issued by the Company upon the
exercise of incentive stock options or warrants outstanding on the date of this
Agreement or subsequently issued pursuant to the Company's existing equity
incentive plan shall be governed exclusively by Section 4.8(d).</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Excluded
Securities.&nbsp; The Purchase Rights established by this Section 4.8 shall have no
application to any of the following Equity Securities:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Subject
to the applicable provisions of the Registration Rights Agreement, Equity
Securities issued and sold by the Company in an underwritten public offering
thereof under a then-effective registration statement under the 1933 Act; or</p>

<p class=MsoFooter>15</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any
Common Stock issued as consideration in connection with or relating to any
acquisitions, mergers or strategic partnership transactions of the Company or
the Subsidiary (other than transactions entered into primarily for equity
financing purposes) that have been approved by the Board after the Closing
Date.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Adjustments
to Purchase Price due to Stock Dividends, Combinations, or Splits</u>.&nbsp; If,
prior to the Closing, the outstanding shares of Common Stock are subdivided, by
stock split, or otherwise, into a greater number of shares of Common Stock, or
if the Company shall declare or pay any dividend on the Common Stock payable in
shares of Common Stock, then the number of Shares issuable to the Investor at
the Closing shall be proportionately increased, and the purchase price per
share shall be proportionately decreased, upon the occurrence of such event.&nbsp;
If, prior to the Closing, the outstanding shares of Common Stock are combined
or consolidated, by reclassification, reverse stock split, or otherwise, into a
lesser number of shares of Common Stock, then the number of Shares issuable to
the Investor at the Closing shall be proportionately decreased, and the
purchase price per Share shall be proportionately increased, upon the
occurrence of such event.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Best
Efforts</u>.&nbsp; Each party shall use its commercially reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate the transactions contemplated by the
Transaction Documents as soon as practicable after the date hereof.</p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
5.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>CONDITIONS
PRECEDENT TO CLOSING</b></p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Conditions
Precedent to the Obligations of the Investor to Purchase Shares</u>.&nbsp; The
obligation of the Investor to acquire Shares at the Closing is subject to the
satisfaction or waiver by the Investor, at or before the Closing, of each of
the following conditions:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Representations
and Warranties</u>.&nbsp; The representations and warranties of the Company
contained herein shall be true and correct in all material respects (or true
and correct in all respects as to representations and warranties which are
qualified by materiality) as of the date when made and as of the Closing as
though made on and as of such date;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Performance</u>.&nbsp;
The Company shall have performed, satisfied, and complied in all material
respects with all covenants, agreements, and conditions required by the
Transaction Documents to be performed, satisfied, or complied with by it at or
prior to the Closing;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Consents</u>.&nbsp;
The Company shall have received all consents, waivers, authorizations, and
approvals from third parties necessary in connection with the transactions
contemplated by the Transaction Documents, and no such consent, waiver,
authorization, or approval shall have been revoked;</p>



<p class=MsoFooter>16</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No
Injunction.&nbsp; No statute, rule, regulation, executive order, decree, ruling, or
injunction shall have been enacted, entered, promulgated, or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Adverse Changes</u>.&nbsp; Since the date of execution of this Agreement, no event
or series of events shall have occurred that constitute or reasonably could
have or result in a Material Adverse Effect;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Suspensions of Trading in Common Stock; Listing</u>.&nbsp; Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market
(except for any suspensions of trading of not more than one Business Day solely
to permit dissemination of material information regarding the Company) at any
time since the date of execution of this Agreement, the Common Stock shall have
been at all times since such date listed for trading on a Trading Market, and
the Company shall have obtained all approvals necessary for continued listing
of its Common Stock on a Trading Market;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Shareholder
Approval</u>.&nbsp; The Company's shareholders shall have authorized and approved
the issuance and sale of the Shares in accordance with the terms and provisions
of this Agreement, which approval shall include a majority of the outstanding
shares of capital stock of the Company not held by the Investor or its
Affiliates;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Filing
of Certificate of Designation</u>.&nbsp; The Certificate of Designation shall have
been filed with the Nevada Secretary of State and shall be in full force and
effect; and</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Company
Deliverables</u>.&nbsp; The Company shall have delivered the Company Deliverables in
accordance with Section 2.3(a).</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Conditions
Precedent to the Obligations of the Company to Sell Shares</u>.&nbsp; The obligation
of the Company to sell Shares at the Closing is subject to the satisfaction or
waiver by the Company, at or before the Closing, of each of the following
conditions:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Representations
and Warranties</u>.&nbsp; The representations and warranties of the Investor
contained herein shall be true and correct in all material respects as of the
date when made and as of the Closing Date as though made on and as of such
date;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Performance</u>.&nbsp;
The Investor shall have performed, satisfied, and complied in all material
respects with all covenants, agreements, and conditions required by the
Transaction Documents to be performed, satisfied, or complied with by the
Investor at or prior to the Closing;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Consents</u>.&nbsp;
The Company shall have received all consents, waivers, authorizations, and
approvals from third parties necessary in connection with the transactions
contemplated by the Transaction Documents, and no such consent, waiver,
authorization, or approval shall have been revoked;</p>



<p class=MsoFooter>17</p>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Injunction</u>.&nbsp; No statute, rule, regulation, executive order, decree, ruling,
or injunction shall have been enacted, entered, promulgated, or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Shareholder
Approval</u>.&nbsp; The Company's shareholders shall have authorized and approved
the issuance and sale of the Shares in accordance with the terms and provisions
of this Agreement, which approval shall include a majority of the outstanding
shares of capital stock of the Company not held by the Investor or its
Affiliates;</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Filing
of Certificate of Designation</u>.&nbsp; The Certificate of Designation shall have
been filed with the Nevada Secretary of State and shall be in full force and
effect; and</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Investor
Deliverables</u>.&nbsp; The Investor shall have delivered its Investor Deliverables
in accordance with Section 2.3(b).</p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
6.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>TERMINATION PRIOR
TO CLOSING</b></p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>6.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Termination</u>.&nbsp;
This Agreement may be terminated and the transactions contemplated hereunder
abandoned at any time prior to the Closing only as follows:</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; by
the Investor or the Company, upon written notice to the other, if the Closing
shall not have taken place and all conditions thereto have not been satisfied
by 6:30 p.m., Mountain Time, on September 30, 2012, or such later date as may
be required solely in order to seek the approval of the Company's shareholders;
provided, that the right to terminate this Agreement pursuant to this Section
6.1(a) shall not be available to any party whose failure to perform any of its
obligations under this Agreement is the primary cause of the failure of the
Closing to have occurred by such date and time; or</p>

<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; by
the Investor or the Company if the Company's shareholders do not vote to
approve the issuance and sale of the Shares at a shareholder meeting duly
called and held for such purposes or any adjournment or postponement thereof;
or </p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; at
any time by mutual agreement of the Company and the Investor; or </p>

<p class=MsoNormal style='text-align:justify'>by the Investor, if there has
been a material breach of any representation or warranty, or covenant or
obligation, of the Company contained herein and the same has not been cured
within 15 days after notice thereof; or</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; by
the Company, if there has been a material breach of any representation,
warranty, or covenant of the Investor contained herein and the same has not
been cured within 15 days after notice thereof.</p>



<p class=MsoFooter>18</p>

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<p class=MsoNormal style='text-align:justify;text-indent:.5in'>6.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Effect
of Termination</u>.&nbsp; Except as otherwise provided in this Agreement, any
termination pursuant to this Article 6 shall be without liability on the part
of any party, unless such termination is the result of a material breach of
this Agreement by a party to this Agreement in which case such breaching party
shall remain liable for such breach notwithstanding any termination of this
Agreement.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>6.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Extension;
Waiver</u>.&nbsp; At any time prior to the Closing, the Investor or the Company may
(a) extend the time for the performance of any of the obligations of the other
party hereto, (b) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant
hereto, and (c) waive compliance with any of the agreements or conditions for
the benefit of such party contained herein.&nbsp; Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed on behalf of such party.</p>



<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'><b>ARTICLE
7.</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>MISCELLANEOUS</b></p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Fees
and Expenses</u>.&nbsp; Each party shall pay the expenses incurred by such party
incident to the negotiation, preparation, execution, delivery, and performance of
the Transaction Documents.&nbsp; The Company shall pay all stamp and other taxes and
duties levied in connection with the sale of the Shares.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Entire
Agreement</u>.&nbsp; The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings, discussions, and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits, and schedules.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Notices</u>.&nbsp;
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile on a Business Day, (b) the Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (c) upon actual receipt by the party to whom such
notice is required to be given.&nbsp; The address for such notices and
communications shall be as follows:</p>

<p class=MsoNormal style='margin-left:1.0in;text-align:justify'>If to the
Company:&nbsp;&nbsp;&nbsp;&nbsp; Good Times Restaurants Inc.</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 601
Corporate Circle</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Golden,
CO 80401</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Facsimile:
(303) 384-1400</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Attention:&nbsp;
Boyd E. Hoback, President &amp; CEO</p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If to the
Investor:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Small Island Investments Limited</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 50
Congress Street, Suite 900</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Boston,
MA 02109</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Facsimile:
(617) 720-2102</p>

<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Attention:
David Dobbin</p>



<p class=MsoNormal style='text-align:justify'>or such other address as may be
designated in writing hereafter, in the same manner, by such Person.</p>

<p class=MsoFooter>19</p>

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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Amendments;
Waivers; No Additional Consideration</u>.&nbsp; Except as provided in Section 6.3
above, no provision of this Agreement may be waived or amended except in a
written instrument signed by the Company and the Investor.&nbsp; No waiver of any
default with respect to any provision, condition, or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition, or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Construction.</u>&nbsp;
The headings herein are for convenience only, do not constitute a part of this
Agreement, and shall not be deemed to limit or affect any of the provisions
hereof.&nbsp; The language used in this Agreement will be deemed to be the language
chosen by the parties and their counsel to express their mutual intent, and no
rules of strict construction will be applied against any party.&nbsp; This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Successors
and Assigns</u>.&nbsp; The rights and obligations of the parties hereto shall inure
to the benefit of and shall be binding upon the authorized successors and
permitted assigns of each party.&nbsp; No party may assign its rights or obligations
under this Agreement or designate another person (i) to perform all or part of
its obligations under this Agreement or (ii) to have all or part of its rights
and benefits under this Agreement, in each case without the prior written
consent of the other party; provided, however, that the Investor may assign its
rights and delegate its duties hereunder in whole or in part to an Affiliate
without the prior written consent of the Company, provided, that no such
assignment shall affect the obligations of the Investor hereunder.&nbsp; In the
event of any assignment in accordance with the terms of this Agreement, the
assignee shall specifically assume and be bound by the provisions of this
Agreement by executing and agreeing to an assumption agreement reasonably
acceptable to the other party.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>No
Third-Party Beneficiaries</u>.&nbsp; This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.3.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Governing
Law</u>.&nbsp; All questions concerning the construction, validity, enforcement, and
interpretation of this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Nevada, without
regard to the principles of conflicts of law thereof.&nbsp; If any party shall
commence a Proceeding to enforce any provision of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
to the Proceeding for its reasonable attorneys' fees and other costs and
expenses incurred with the investigation, preparation, and prosecution of such
Proceeding.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Survival</u>.&nbsp;
The representations, warranties, agreements, and covenants contained herein
shall survive the Closing and the delivery of the Shares for a period of 12
months thereafter, after which time they shall expire and be of no further
force or effect.</p>



<p class=MsoFooter>20</p>

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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Execution</u>.&nbsp;
This Agreement may be executed in counterparts, all of which when taken
together shall be considered one and the same agreement, and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.&nbsp; In the event that any signature is delivered by facsimile or
electronic transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or electronic
signature page were an original thereof.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Severability</u>.&nbsp;
If any provision of this Agreement is held to be invalid or unenforceable in
any respect, the validity and enforceability of the remaining terms and
provisions of this Agreement shall not in any way be affected or impaired
thereby and the parties will attempt to agree upon a valid and enforceable
provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Replacement
of Shares</u>.&nbsp; If any certificate or instrument evidencing any Shares or
Conversion Shares is mutilated, lost, stolen, or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft, or destruction and customary
and reasonable indemnity, if requested.&nbsp; The applicants for a new certificate
or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Shares or
Conversion Shares.&nbsp; If a replacement certificate or instrument evidencing any
Shares or Conversion Shares is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a
condition precedent to any issuance of a replacement.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Remedies</u>.&nbsp;
In addition to being entitled to exercise all rights provided herein or granted
by law, including recovery of damages, each of the Investor and the Company
will be entitled to specific performance under the Transaction Documents.&nbsp; The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agree to waive in any action for specific performance of
any such obligation the defense that a remedy at law would be adequate.</p>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Execution</u>.&nbsp;
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement.&nbsp; This Agreement
shall become effective when counterparts have been signed by the Company and
the Investor and such counterparts have been delivered to the Investor (in the
case of the Company's signature) or the Company (in the case of the Investor's
signature), it being understood that the parties need not sign the same counterpart.&nbsp;
In the event that any signature is delivered by facsimile or electronic
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or electronic signature page were an
original thereof.</p>



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<p class=MsoNormal align=center style='text-align:center'>IN WITNESS WHEREOF,
the parties hereto have caused this Securities Purchase Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.</p>



<p class=MsoNormal style='text-align:justify'><b>COMPANY:</b></p>

<p class=MsoNormal style='text-align:justify'><b>GOOD TIMES RESTAURANTS INC.</b></p>



<p class=MsoNormal style='text-align:justify'>By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i><u>/s/ Boyd E. Hoback</u></i></p>



<p class=MsoNormal>Name: Boyd E. Hoback</p>

<p class=MsoNormal>Title: President &amp; CEO</p>



<p class=MsoNormal style='text-align:justify'><b>INVESTOR:</b></p>

<p class=MsoNormal style='text-align:justify'><b>SMALL ISLAND INVESTMENTS
LIMITED</b></p>



<p class=MsoNormal style='text-align:justify'>By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <i><u>/s/ David L.
Dobbin</u></i></p>



<p class=MsoNormal style='text-align:justify'>Name: David L. Dobbin</p>

<p class=MsoNormal style='text-align:justify'>Title: Chairman</p>



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  <p class=MsoNormal style='text-align:justify'><b><u>FOR IMMEDIATE RELEASE</u></b></p>
  </td>
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  <p class=MsoNormal style='text-align:justify'><b>News</b></p>
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  <p class=MsoNormal style='text-align:justify'><b>June
  19, 2012</b></p>
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  <p class=MsoNormal style='text-align:justify'><b>Nasdaq
  SmallCap - GTIM</b></p>
  </td>
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</table>



<p class=MsoNormal align=center style='text-align:center'><b>Good Times Restaurants Inc. Reports Entering into
Stock Purchase Agreement</b></p>

<p class=MsoNormal align=center style='text-align:center'><b>for the Sale of $2 Million of Preferred Stock</b></p>



<p class=MsoNormal style='text-align:justify;text-autospace:none'>(GOLDEN, CO)&nbsp; Good Times Restaurants Inc. (GTIM)
(&quot;Good Times&quot; or the &quot;Company&quot;) today announced that it has entered into a
Stock Purchase Agreement with Small Island Investments Ltd. (&quot;SII&quot;) for the
sale of 473,934 shares of a new series of its preferred stock to be designated
as &quot;Series C Convertible Preferred Stock&quot; (&quot;Series C Preferred Stock&quot;) at a
price per share of $4.22, for an aggregate purchase price of approximately $2
million. Each share of the Series C Preferred Stock is convertible into two
shares of the Company's common stock.</p>



<p class=MsoNormal style='text-align:justify;text-autospace:none'>SII is currently the Company's largest shareholder and
David Dobbin, Chairman of the Company's Board of Directors, is a principal of
SII.&nbsp; The closing of the investment transaction under the Purchase Agreement is
subject to the receipt of stockholder approval of the transaction by September
30, 2012, the end of the Company's current fiscal year.</p>



<p class=MsoNormal style='text-align:justify;text-autospace:none'>President &amp; CEO, Boyd Hoback said, &quot;We anticipate
that this capital infusion along with our continued improvement in operating
results will allow us to regain compliance with the minimum stockholders'
equity requirement for continued listing on the Nasdaq Capital Market as well
as providing a stronger balance sheet for pursuing acquisitions of other
restaurant concepts.&nbsp; We are not currently in need of additional working
capital and the only other designated use of funds is the payoff of our
remaining term debt to Wells Fargo Bank of approximately $250,000.&quot;&nbsp;&nbsp; Regarding
future acquisitions he added, &quot;We are evaluating several concepts for possible
acquisition that, if completed, would allow us to further leverage our G&amp;A
structure as a multi-brand company and accelerate our growth opportunities.&quot;</p>



<p class=MsoNormal style='text-align:justify'>The
Company also reported that its same store sales increased 4.6% in May compared
to the prior year, its 23<sup>rd</sup> consecutive monthly increase.&nbsp;
Commenting on the improved results, Hoback said &quot;We are maintaining our sales
growth through both permanent and seasonal menu innovation with limited
broadcast advertising and this, when combined with the sale of a few underperforming
restaurants, is resulting in improved operating margins and cash flow from
operations.&nbsp;&nbsp; We have one restaurant we are marketing for a sale and leaseback,
which if successfully completed will allow us to be debt free and further
position the Company for acquisition of another restaurant concept.&quot; </p>



<p class=MsoNormal style='text-align:justify'>Good
Times is a regional chain of quick service restaurants located primarily in
Colorado providing a menu of high quality all natural hamburgers, 100% breast
of chicken sandwiches, fresh frozen custard, fresh squeezed lemonades and other
unique offerings.&nbsp; Good Times currently operates and franchises 41 restaurants.</p>



<p class=MsoNormal style='text-align:justify'>This
press release contains forward looking statements within the meaning of federal
securities laws.&nbsp; The words &quot;intend,&quot; &quot;may,&quot; &quot;believe,&quot; &quot;will,&quot; &quot;should,&quot;
&quot;anticipate,&quot; &quot;expect,&quot; &quot;seek&quot; and similar expressions are intended to identify
forward looking statements.&nbsp; These statements involve known and unknown risks,
which may cause Good Times' actual results to differ materially from results
expressed or implied by the forward looking statements.&nbsp; These risks include
such factors as the uncertain nature of current restaurant development plans
and the ability to implement those plans<b>,</b> delays in developing and
opening new restaurants because of weather, local permitting or other reasons,
increased competition, cost increases or shortages in raw food products, and
other matters discussed under the &quot;Risk Factors&quot; section of Good Times' Annual
Report on Form 10-K for the fiscal year ended September 30, 2011 filed with the
SEC.&nbsp; Although Good Times may from time to time voluntarily update its forward
looking statements, it disclaims any commitment to do so except as required by
securities laws.</p>



<p class=MsoNormal style='text-align:justify'><b>INVESTOR
RELATIONS CONTACTS:</b></p>

<p class=MsoNormal style='text-align:justify'>Good
Times Restaurants Inc.</p>

<p class=MsoNormal style='text-align:justify'>Boyd
E. Hoback, President and CEO, 303/384-1411</p>

<p class=MsoFooter>Christi Pennington, Executive
Assistant, 303/384-1440</p>

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