<SEC-DOCUMENT>0000825324-12-000018.txt : 20120719
<SEC-HEADER>0000825324-12-000018.hdr.sgml : 20120719
<ACCEPTANCE-DATETIME>20120719130852
ACCESSION NUMBER:		0000825324-12-000018
CONFORMED SUBMISSION TYPE:	DEFR14A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20120719
DATE AS OF CHANGE:		20120719
EFFECTIVENESS DATE:		20120719

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:		DEFR14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-18590
		FILM NUMBER:		12969649

	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>DEFR14A
<SEQUENCE>1
<FILENAME>finalprer14a11.htm
<TEXT>
<html>

<head>
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<body lang=EN-US link=blue vlink=purple>

<div class=WordSection1>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M0"></a><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>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M1"></a><b>SECURITIES AND EXCHANGE COMMISSION</b></p>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M2"></a><b>Washington, D.C. 20549</b></p>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M3"></a><b>SCHEDULE 14A</b></p>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M4"></a><b>(Rule 14a-101)</b></p>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M5"></a><b>SCHEDULE 14A INFORMATION</b></p>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M6"></a>Proxy Statement Pursuant to Section 14(a)
of the Securities</p>

<p class=MsoNormal align=center style='text-align:center'><a name="_DV_M7"></a>Exchange Act of 1934</p>

<p class=MsoNormal style='margin-top:12.0pt'><a name="_DV_M8"></a>Filed by the Registrant [x]</p>

<p class=MsoNormal style='margin-bottom:12.0pt'><a name="_DV_M9"></a>Filed by a Party other than the Registrant
[&nbsp; ]</p>

<p class=MsoNormal style='margin-bottom:6.0pt'><a name="_DV_M10"></a>Check the appropriate box:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal style='margin-right:-4.1pt'>[x]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Preliminary
  Proxy Statement</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Confidential,
  for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Definitive
  Proxy Statement</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Definitive
  Additional Materials</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Soliciting
  Material Pursuant to &sect;240.14a-12</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>GOOD TIMES RESTAURANTS INC.</b></p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(Name of Registrant as Specified In Its
  Charter)</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><b>&nbsp;</b></p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>(Name of Person(s) Filing Proxy
  Statement, if other than the Registrant)</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=624 colspan=7 valign=top style='width:6.5in;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Payment of
  Filing Fee (Check the appropriate box):</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>[x]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>No fee
  required.</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=19 colspan=2 valign=top style='width:13.9pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=7 valign=top style='width:5.4pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=598 colspan=4 valign=top style='width:448.7pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Fee computed on
  table below per Exchange Act Rules 14a-6(i)(4) and 0-11.</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(1)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Title of each
  class of securities to which transaction applies:</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>
  <div style='border:none;border-bottom:solid black 1.0pt;padding:0in 0in 0in 0in'>

  </div>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=22 colspan=3 style='width:16.2pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=7 colspan=2 style='width:5.4pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 style='width:6.05in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(2)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Aggregate
  number of securities to which transaction applies:</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>
  <div style='border:none;border-bottom:solid black 1.0pt;padding:0in 0in 0in 0in'>

  </div>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=22 colspan=3 style='width:16.2pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=7 colspan=2 style='width:5.4pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 style='width:6.05in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:24.75pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:24.75pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:24.75pt'>
  <p class=MsoNormal>(3)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:24.75pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:24.75pt'>
  <p class=MsoNormal>Per unit price
  or other underlying value of transaction computed pursuant to Exchange Act
  Rule 0-11 (set forth the amount on which the filing fee is calculated and
  state how it was determined):</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>
  <div style='border:none;border-bottom:solid black 1.0pt;padding:0in 0in 0in 0in'>

  </div>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=22 colspan=3 style='width:16.2pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=7 colspan=2 style='width:5.4pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 style='width:6.05in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(4)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Proposed
  maximum aggregate value of transaction:__________________________________________ </p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=22 colspan=3 style='width:16.2pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=7 colspan=2 style='width:5.4pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 style='width:6.05in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(5)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Total fee paid:_______________________________________________________________________ </p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=36 colspan=4 valign=top style='width:27.0pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=6 valign=top style='width:4.5pt;background:white;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=582 colspan=2 valign=top style='width:436.5pt;background:white;
  padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=36 colspan=4 valign=top style='width:27.0pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'><br clear=all style='page-break-before:
  always'>

  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=6 valign=top style='width:4.5pt;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=582 colspan=2 valign=top style='width:436.5pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>Fee paid
  previously with preliminary materials:</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=36 colspan=4 style='width:27.0pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=6 style='width:4.5pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=582 colspan=2 style='width:436.5pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
 </tr>
 <tr style='height:37.1pt'>
  <td width=36 colspan=4 valign=top style='width:27.0pt;background:white;
  padding:0in 0in 0in 0in;height:37.1pt'>
  <p class=MsoNormal>[&nbsp; ]</p>
  </td>
  <td width=6 valign=top style='width:4.5pt;background:white;padding:0in 0in 0in 0in;
  height:37.1pt'>

  </td>
  <td width=582 colspan=2 valign=top style='width:436.5pt;background:white;
  padding:0in 0in 0in 0in;height:37.1pt'>
  <p class=MsoNormal style='margin-right:4.5pt'>Check box if any part of the fee is offset as provided by Exchange
  Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
  paid previously. Identify the previous filing by registration statement
  number, or the Form or Schedule and the date of its filing.</p>
  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(1)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Amount
  Previously Paid:_______________________________________________________________ </p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=22 colspan=3 style='width:16.2pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

  </td>
  <td width=7 colspan=2 style='width:5.4pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 style='width:6.05in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(2)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Form, Schedule
  or Registration Statement No.:_______________________________________________ </p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=22 colspan=3 style='width:16.2pt;padding:0in 0in 0in 0in;
  height:1.0pt'>

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  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(3)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Filing Party:_________________________________________________________________________ </p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=14 style='width:.15in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
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  height:1.0pt'>

  </td>
  <td width=7 colspan=2 style='width:5.4pt;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
  <td width=581 style='width:6.05in;padding:0in 0in 0in 0in;height:1.0pt'>

  </td>
 </tr>
 <tr style='height:12.4pt'>
  <td width=14 valign=top style='width:.15in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>

  </td>
  <td width=22 colspan=3 valign=top style='width:16.2pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>
  <p class=MsoNormal>(4)</p>
  </td>
  <td width=7 colspan=2 valign=top style='width:5.4pt;background:white;
  padding:0in 0in 0in 0in;height:12.4pt'>

  </td>
  <td width=581 valign=top style='width:6.05in;background:white;padding:0in 0in 0in 0in;
  height:12.4pt'>
  <p class=MsoNormal>Date Filed:__________________________________________________________________________ </p>
  </td>
 </tr>
 <tr height=0>
  <td width=14 style='border:none'></td>
  <td width=4 style='border:none'></td>
  <td width=7 style='border:none'></td>
  <td width=10 style='border:none'></td>
  <td width=6 style='border:none'></td>
  <td width=1 style='border:none'></td>
  <td width=581 style='border:none'></td>
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<p class=MsoNormal style='line-height:1.0pt'><a name="_DV_M12"></a>&nbsp;</p>







<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><b>GOOD TIMES RESTAURANTS INC.</b></p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><a
name="_DV_M13"></a><b>601 Corporate Circle</b></p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><a
name="_DV_M14"></a><b>Golden, Colorado 80401</b></p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><a
name="_DV_M15"></a><b>NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS</b></p>

<p class=MsoNormal align=center style='margin-bottom:.25in;text-align:center'><a
name="_DV_M16"></a><b>To Be Held August 22, 2012</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M17"></a>To the Stockholders of Good
Times Restaurants Inc.:</p>

<p class=Style25 style='text-indent:0in'><a name="_DV_M18"></a>The Annual Meeting of the
Stockholders (the &quot;Annual Meeting&quot;) of Good Times Restaurants Inc., a Nevada
corporation (the &quot;Company&quot;), will be held at our corporate offices, which are
located at 601 Corporate Circle, Golden, Colorado 80401 on August 22, 2012<b> </b>at
9:00 a.m. local time.&nbsp; The purposes of the Annual Meeting are:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:35.8pt;border-collapse:collapse'>
 <tr>
  <td width=31 valign=top style='width:23.6pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-autospace:none'><a name="_DV_M19"></a>1.</p>
  </td>
  <td width=598 valign=top style='width:448.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-autospace:none'>To
  elect seven directors of the Company to serve for the next year;</p>

  </td>
 </tr>
 <tr>
  <td width=31 valign=top style='width:23.6pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style25 style='text-indent:0in'>2.</p>
  </td>
  <td width=598 valign=top style='width:448.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style25 style='text-indent:0in'>To
  consider and approve a $2,000,001.48 equity investment in the Company through
  the issuance of 473,934 shares (the &quot;Shares&quot;) of newly designated &quot;Series C
  Convertible Preferred Stock&quot; of the Company, which shall be convertible into
  the Company's common stock at a ratio of two shares of common stock for each
  share of Series C Convertible Preferred Stock, to Small Island Investments
  Limited, a Bermuda corporation (the &quot;Investor&quot;), referred to herein as the
  &quot;Investment Transaction&quot;;</p>
  </td>
 </tr>
 <tr>
  <td width=31 valign=top style='width:23.6pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style25 style='text-indent:0in'>3.</p>
  </td>
  <td width=598 valign=top style='width:448.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style25 style='text-indent:0in'>To
  consider and approve an amendment to the Company's 2008 Omnibus Equity
  Incentive Compensation Plan to increase the number of shares of the Company's
  common stock available for issuance thereunder from 184,022 shares to a total
  of 500,000 shares, referred to herein as the &quot;2008 Plan Amendment&quot;;<a
  name="_DV_M21"></a> and</p>
  </td>
 </tr>
 <tr>
  <td width=31 valign=top style='width:23.6pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style25 style='text-indent:0in'>4.</p>
  </td>
  <td width=598 valign=top style='width:448.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style25 style='text-indent:0in'>To
  transact such other business as may properly come before the Annual Meeting
  and any adjournments or postponements thereof.</p>
  </td>
 </tr>
</table>

<p class=Style25 style='text-indent:0in'><a name="_DV_M22"></a>The accompanying proxy statement
(the &quot;Proxy Statement&quot;) contains additional information about the Annual
Meeting.&nbsp; Only stockholders of record at the close of business on the record
date of July 9, 2012 are entitled to notice of and to vote at the Annual
Meeting and any adjournments or postponements thereof.&nbsp; The Proxy Statement is being
mailed to stockholders entitled to vote at the Annual Meeting on or about
August 2, 2012.</p>

<p class=Style25 style='text-indent:0in'><a name="_DV_M23"></a><b>All stockholders are cordially
invited to attend the Annual Meeting.&nbsp; If you do not plan to attend the
meeting, please sign, date, and promptly return the enclosed proxy card.&nbsp; A
business reply envelope is enclosed for your convenience.&nbsp; The delivery of a
proxy will not affect your right to vote in person if you attend the Annual
Meeting.&nbsp; Your vote is important.</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M24"></a>Sincerely,</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><i>/Susan M. Knutson/</i></p>

<p class=MsoNormal><a name="_DV_M25"></a>Susan
M. Knutson</p>

<p class=MsoNormal><a name="_DV_M26"></a>Secretary
and Controller</p>

<p class=MsoNormal><a name="_DV_M27"></a>[________],
2012</p>





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<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><b>TABLE OF CONTENTS</b></p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:9.9pt;border-collapse:collapse'>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>GENERAL
  INFORMATION</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>1</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>PROPOSAL
  #1 - ELECTION OF DIRECTORS</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>4</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>CORPORATE
  GOVERNANCE</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>8</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>AUDIT
  COMMITTEE REPORT</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>12</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>INDEPENDENT
  AUDITOR INFORMATION</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>12</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>SECURITY
  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>15</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>EXECUTIVE
  COMPENSATION</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>17</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>PROPOSAL
  #2 - APPROVAL OF THE INVESTMENT TRANSACTION</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>20</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>PROPOSAL
  #3 - APPROVAL OF THE 2008 PLAN AMENDMENT</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>26</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>INTEREST
  OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>32</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>STOCKHOLDER
  NOMINATIONS AND OTHER PROPOSALS</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>32</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>OTHER
  MATTERS</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>32</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>WHERE
  YOU CAN FIND MORE INFORMATION</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>32</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>INCORPORATION
  OF DOCUMENTS BY REFERENCE</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal align=right style='text-align:right'>33</p>
  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>

  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>

  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>ANNEX
  A - SECURITIES PURCHASE AGREEMENT, DATED JUNE 13, 2012, BETWEEN THE COMPANY
  AND THE INVESTOR</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>

  </td>
 </tr>
 <tr style='height:.3in'>
  <td width=582 style='width:436.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>
  <p class=MsoNormal style='margin-left:17.1pt'>ANNEX
  B - PROPOSED AMENDMENT TO 2008 OMNIBUS EQUITY INCENTIVE COMPENSATION PLAN</p>
  </td>
  <td width=54 style='width:40.5pt;padding:0in 5.4pt 0in 5.4pt;height:.3in'>

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





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</b>

<div class=WordSection2>









<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center;
line-height:150%'><b>GOOD TIMES
RESTAURANTS INC.</b></p>

<p class=MsoNormal align=center style='text-align:center;line-height:150%'><b>601 Corporate Circle</b></p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center;
line-height:150%'><b>Golden,
Colorado 80401</b></p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center;
line-height:150%;page-break-after:avoid'><b>PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS</b></p>

<p class=MsoNormal align=center style='margin-bottom:.25in;text-align:center'><b>To Be Held August 22, 2012</b></p>

<p class=MsoNormal style='margin-top:0in;margin-right:.7pt;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;page-break-after:avoid'>This Proxy Statement relates to the Annual Meeting of
Stockholders (the &quot;Annual Meeting&quot;) of Good Times Restaurants Inc., a Nevada
corporation (the &quot;Company&quot;).&nbsp; The Annual Meeting will be held on Wednesday,
August 22, 2012, at 9:00 a.m. local time, at our corporate offices, which are
located at 601 Corporate Circle, Golden, Colorado 80401, or at such other time
and place to which the Annual Meeting may be adjourned or postponed.&nbsp; The
enclosed proxy is solicited by our Board of Directors (the &quot;Board&quot;).&nbsp; The proxy
materials relating to the Annual Meeting are first being mailed to stockholders
entitled to vote at the meeting on or about August 2, 2012.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The terms &quot;we,&quot; &quot;us,&quot; and &quot;our&quot; in this Proxy
Statement refer to the Company.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting of Stockholders To Be Held on August 22, 2012</b>:&nbsp; This Proxy Statement is also available at our
website at www.goodtimesburgers.com.</p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><b>GENERAL INFORMATION</b></p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>What is the purpose of the Annual Meeting?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>At the Annual Meeting,
the stockholders will act upon the matters outlined in the accompanying Notice
of Annual Meeting and this Proxy Statement, including:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:.25in;border-collapse:collapse'>
 <tr>
  <td width=31 valign=top style='width:23.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
  auto'>1.</p>
  </td>
  <td width=622 valign=top style='width:466.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
  auto'>The election of seven
  directors of the Company;</p>
  </td>
 </tr>
 <tr>
  <td width=31 valign=top style='width:23.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
  auto'>2.</p>
  </td>
  <td width=622 valign=top style='width:466.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
  auto'>The approval of a
  $2,000,001.48 equity investment in the Company through the issuance of
  473,934 shares (the &quot;Shares&quot;) of the Company's preferred stock, par value
  $0.001 per share (&quot;Preferred Stock&quot;), to be designated as &quot;Series C
  Convertible Preferred Stock&quot; and which shall be convertible into shares of the
  Company's common stock, par value $0.001 per share (&quot;Common Stock&quot;), at a
  ratio of two shares of Common Stock for each share of Series C Convertible
  Preferred Stock, to Small Island Investments Limited, a Bermuda corporation
  (the &quot;Investor&quot;), referred to herein as the &quot;Investment Transaction&quot;; and</p>
  </td>
 </tr>
 <tr>
  <td width=31 valign=top style='width:23.4pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
  auto'>3.</p>
  </td>
  <td width=622 valign=top style='width:466.2pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
  auto'>The approval of an
  amendment to the Company's 2008 Omnibus Equity Incentive Compensation Plan to
  increase the number of shares of Common Stock issuable thereunder from
  184,022 shares to a total of 500,000 shares, referred to herein as the &quot;2008
  Plan Amendment&quot;.</p>
  </td>
 </tr>
</table>



<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>Who is entitled to attend and vote at the
Annual Meeting?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>Only stockholders of
record at the close of business on the record date of July 9, 2012, or their
duly appointed proxies, are entitled to receive notice of the Annual Meeting,
attend the meeting, and vote their shares at the Annual Meeting or any
adjournment or postponement thereof.&nbsp; At the close of business on July 9, 2012,
there were 2,726,214 shares of our Common Stock outstanding.&nbsp; Each outstanding
share of our Common Stock is entitled to one vote.&nbsp; Our Bylaws do not allow
holders to accumulate votes in the election of directors.</p>



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<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>How do I vote?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>You may vote on matters
to come before the Annual Meeting in two ways: (i) you can attend the Annual
Meeting and cast your vote in person, or (ii) you can vote by completing,
signing, and dating the enclosed proxy card and returning it to us in the
enclosed business reply envelope or via facsimile to Boyd E. Hoback, our
President and Chief Executive Officer, at (303) 273-0177.&nbsp; If you return the
proxy card, you will authorize the individuals named on the proxy card,
referred to as proxy holders, to vote your shares according to your
instructions or, if you provide no instructions, according to the recommendations
of our Board.&nbsp; If your shares are held by a broker in &quot;street name,&quot; you will
receive a voting instruction form from your broker or the broker's agent asking
you how your shares should be voted.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>What if I vote and then change my mind?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>You may revoke a proxy
at any time before the vote is taken at the Annual Meeting by either (i) filing
with our corporate secretary a written notice of revocation, (ii) sending in
another duly executed proxy bearing a later date, or (iii) attending the
meeting and casting your vote in person.&nbsp; Your last vote will be the vote that
is counted.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>How can I get more information about
attending the Annual Meeting and voting in person?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>The Annual Meeting will
be held on Wednesday, August 22, 2012, at 9:00 a.m., local time, at the
Company's corporate offices, which are located at 601 Corporate Circle, Golden,
Colorado 80401, or at such other time and place to which the Annual Meeting may
be adjourned or postponed.&nbsp; For additional details about the Annual Meeting,
including directions to the meeting site and information about how you may vote
in person if you so desire, please call or email Boyd E. Hoback, our President
and Chief Executive Officer, at (303) 384-1400 or at bhoback@gtrestaurants.com.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>What are the Board's recommendations?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>Unless you give other instructions
on your proxy card, the persons named on the proxy card will vote in accordance
with the recommendations of our Board, which are described in this Proxy
Statement.&nbsp; Our Board recommends a vote FOR each of the proposals described in
the accompanying Notice of Annual Meeting of Stockholders and this Proxy
Statement.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>With respect to any other matter
that properly comes before the meeting, the proxy holders will vote as
recommended by our Board or, if no recommendation is given, in their own
discretion.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>What constitutes a quorum?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>The presence at the Annual Meeting,
in person or by proxy, of the holders of a majority of the issued and
outstanding shares of our Common Stock on the record date will constitute a quorum
at the Annual Meeting, permitting us to conduct our business at the Annual
Meeting.&nbsp; Proxies received but marked as abstentions and broker non-votes
(defined below) will be included in the calculation of the number of shares
considered to be present at the meeting for purposes of determining whether a
quorum is present.&nbsp; If a quorum is not present, the Annual Meeting may be
adjourned until a quorum is obtained.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>What vote is required to approve each proposal?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'><i>Vote Required</i>.&nbsp; Approval of each proposal to be
considered and voted upon at the Annual Meeting will require the affirmative
vote of a majority of the votes cast by the holders of our Common Stock present
in person or represented by proxy at the Annual Meeting (assuming we have a
quorum as described above).&nbsp; In addition, in order for the Investor to be
obligated to close the Investment Transaction, among other conditions that must
be satisfied, the Investment Transaction must be approved by a majority of the
votes cast by the holders of our Common Stock other than the Investor and its
affiliates.&nbsp; A properly executed proxy marked &quot;ABSTAIN&quot; with respect to a
proposal will not be voted for that proposal but will be counted for purposes
of whether there is a quorum at the meeting.&nbsp; Abstentions will result in the
respective proposal receiving fewer votes.</p>

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<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'><i>Effect of Broker
Non-Votes</i>.&nbsp; If
your shares are held by your broker in &quot;street name,&quot; you will receive a voting
instruction form from your broker or the broker's agent asking you how your
shares should be voted.&nbsp; Please complete the form and return it in the envelope
provided by the broker or agent.&nbsp; No postage is necessary if mailed in the
United States.&nbsp; If you do not instruct your broker how to vote, your broker may
vote your shares at its discretion or, on some matters, may not be permitted to
exercise voting discretion.&nbsp; Votes that could have been cast on the matter in
question if the brokers have received their customers' instructions, and as to
which the broker has notified us on a proxy form in accordance with industry
practice or has otherwise advised us that it lacks voting authority, are
referred to as &quot;broker non-votes.&quot;&nbsp; Thus, if you do not give your broker or
nominee specific instructions, your shares may not be voted on those matters
and will not be counted as a vote cast in determining the number of shares
necessary for approval of those matters.&nbsp; Shares represented by such broker
non-votes, however, will be counted in determining whether there is a quorum.&nbsp;
Accordingly, broker non-votes will result in the respective proposal receiving
fewer votes.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>Can I dissent or exercise rights of appraisal?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>Neither Nevada law nor
our Articles of Incorporation or Bylaws provide our stockholders with
dissenters' or appraisal rights in connection with the proposals to be voted on
at the Annual Meeting.&nbsp; If the proposals are approved at the Annual Meeting,
stockholders voting against such proposals will not be entitled to seek
appraisal for their shares.</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify'>Who pays for this proxy solicitation?</p>

<p class=Style31 style='margin-right:.7pt;text-align:justify;page-break-after:
auto'>The Company will bear
the entire cost of this proxy solicitation, including the preparation,
assembly, printing, and mailing of this Proxy Statement, the proxy card, and
any additional solicitation materials furnished to the stockholders.&nbsp; In
addition to solicitation by mail, proxies may be solicited by our directors,
officers, and regular employees by telephone or personal interview.&nbsp; These
individuals will not receive any compensation for their services other than
their regular salaries.&nbsp; Arrangements will also be made with brokerage houses
and other custodians and fiduciaries to forward solicitation materials to the
beneficial owners of the shares held on the record date, and we may reimburse
those persons for reasonable out-of-pocket expenses incurred by them in so doing.</p>

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<p class=MsoNormal style='line-height:1.0pt'><a name="_Toc92016732"></a><a
name="_Toc89839944"></a><a name="_Toc89839449">&nbsp;</a></p>







<p class=Style31 style='margin-right:.7pt'>PROPOSAL
#1 - ELECTION OF DIRECTORS</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M47"></a>Pursuant to our Bylaws, the
size of our Board has been set at seven directors.&nbsp; All of our directors are
elected annually to serve a one-year term expiring at the next annual meeting
of stockholders.<a name="_Toc92016733">&nbsp; The seven nominees for election at the
Annual Meeting, listed below, are currently serving as directors of the
Company.&nbsp; Each nominee has consented to be named in this Proxy Statement and to
serve as a director if elected.&nbsp; However, if any nominee is unable to serve or
for good cause will not serve as a director, each of the persons named in the
proxy intend to vote in his or her discretion for a substitute who will be
designated by our Board.</a></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Director Nominees</u></p>

<p class=MsoNormal style='text-align:justify'>The
following table sets forth certain information about the Company's seven
director nominees.</p>



<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='border-collapse:collapse;border:none'>
 <tr>
  <td width=133 style='width:99.9pt;border:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><u>Name</u></p>
  </td>
  <td width=38 style='width:.4in;border:solid windowtext 1.0pt;border-left:
  none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><u>Age</u></p>
  </td>
  <td width=65 style='width:48.75pt;border:solid windowtext 1.0pt;border-left:
  none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><u>Director Since</u></p>
  </td>
  <td width=152 style='width:113.95pt;border:solid windowtext 1.0pt;border-left:
  none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><u>Other Positions Held with the Company</u></p>
  </td>
  <td width=288 style='width:216.2pt;border:solid windowtext 1.0pt;border-left:
  none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><u>Employment and Business Experience</u></p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Geoffrey R. Bailey </p>

  </td>
  <td width=38 valign=top style='width:.4in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>60</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>1996</p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Member of the Compensation
  Committee</p>
  </td>
  <td width=288 valign=top style='width:216.2pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Mr. Bailey is a director of
  The Erie County Investment Co., which owns 99% of The Bailey Company.&nbsp; The
  principal business of The Bailey Company is owning and operating 51 Arby's
  restaurants as a franchisee, and The Bailey Company has also been a franchisee
  and joint venture partner of the Company since 1987.&nbsp; Mr. Bailey joined The
  Erie County Investment Co. in 1979.&nbsp; Mr. Bailey is a graduate of the
  University of Denver with a Bachelor's degree in Business Administration.</p>

  <p class=MsoNormal>Mr. Bailey was selected to
  serve on our Board in light of his substantial experience within the
  restaurant industry and his broad knowledge concerning corporate governance
  and management.</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Neil Calvert</p>

  </td>
  <td width=38 valign=top style='width:.4in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>61</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2012<sup>1</sup></p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Chairman of the Audit
  Committee</p>
  </td>
  <td width=288 valign=top style='width:216.2pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='background:white'>Mr. Calvert currently serves as an advisor to Lease Corporation
  International, a London-based helicopter leasing company (2011-present).&nbsp;
  Previously, Mr. Calvert held various executive positions in the CHC Group,
  and a subsidiary, Heli One, where he was responsible for flight operations
  and maintenance (1998-2011).&nbsp; As President of Heli One (2005-2011), he had direct oversight of a Chief Financial Officer,
  responsibility for preparation &amp; accuracy of financial statements,
  communication with the company's auditors on all significant accounting
  policies and review of financials with the board.&nbsp; Additionally, he built the company into a $400 million business with
  over 1,000 employees around the world.&nbsp; He also served as Managing Director
  of the British operations for CHC UK (1999-2003).</p>

  <p class=MsoNormal style='background:white'>Mr. Calvert was selected to serve on our Board in light of his
  various executive positions with major companies and his experience
  overseeing and assessing those companies' performance.</p>
  </td>
 </tr>
</table>



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<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='border-collapse:collapse;border:none'>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>David L. Dobbin</p>
  </td>
  <td width=38 valign=top style='width:.4in;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>51</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2010</p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Chairman of the Board</p>
  </td>
  <td width=288 valign=top style='width:216.2pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoPlainText>Mr.
  Dobbin serves as Chairman of the Board of Small Island Investments Limited
  (2010-present).&nbsp; In addition, he serves as Chairman of the Board of Welaptega
  Marine Ltd. (2008-present), a leading supplier of offshore mooring inspection
  systems.&nbsp; Prior to March 2012, he also served as Chairman of the Boards of
  Terra Nova Pub Groups Ltd., and its subsidiaries and affiliates, including
  Elephant &amp; Castle Group, Inc. (2007-2012).</p>

  <p class=MsoPlainText>Previously,
  Mr. Dobbin served in several capacities with CHC Helicopter Corporation, the
  world's leading offshore helicopter services provider, and led Canadian Ocean
  Resource Associates Inc., a consulting firm specializing in international
  best practice reviews in various sectors, third world institutional support,
  and public/private partnerships.&nbsp; Mr. Dobbin holds a Bachelor of Commerce
  degree from Memorial University of Newfoundland.</p>

  <p class=MsoPlainText>Mr.
  Dobbin was selected to serve on our Board in light of his substantial
  experience in the restaurant industry and his experience as an investor in
  the transportation, service, real estate, and hospitality sectors.</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Gary J. Heller</p>

  </td>
  <td width=38 valign=top style='width:.4in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>45</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2010</p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Principal of Heathcote
  Capital, LLC, financial advisor to the Company; Prior Member of the Audit
  Committee (2010-2012); Prior Chairman of the Compensation Committee
  (2010-2012)<sup>2</sup></p>

  </td>
  <td width=288 valign=top style='width:216.2pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Mr. Heller is the principal
  of Heathcote Capital, LLC, a financial and strategic advisory services company.&nbsp;
  Prior to March 2012, he served as Secretary and a Director of Elephant &amp;
  Castle Group Inc. (2007-2012), Secretary and a Manager of Massachusetts Pub
  Group LLC (2008-2012), and Executive Vice President of Terra Nova Pub Group
  Ltd. (2009-2012).&nbsp; Prior to entering the restaurant industry in 2007, Mr.
  Heller spent 16 years as an investment banker, including serving as a
  Managing Director of FTI Capital Advisors, LLC (2002-2006) and a Director of
  Andersen Corporate Finance LLC (1999-2002).&nbsp; Mr. Heller holds a BA in
  Economics from the University of Pennsylvania and an MBA in Finance from New
  York University.</p>

  <p class=MsoNormal>Mr. Heller was selected to
  serve on our Board in light of his substantial experience in the restaurant
  industry and his experience as a financial advisor and an investment banker.</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Boyd E. Hoback</p>
  </td>
  <td width=38 valign=top style='width:.4in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>57</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>1992</p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>President and Chief
  Executive Officer</p>
  </td>
  <td width=288 valign=top style='width:216.2pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Mr. Hoback has served as
  our President and Chief Executive Officer since December 1992 and has been in
  the restaurant business since the age of 16.&nbsp; Mr. Hoback has been a vital
  part of the development of the Company to a 46-restaurant chain and has been
  involved in developing and managing all areas of the Company.&nbsp; Mr. Hoback</p>
  </td>
 </tr>
</table>



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<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0
 style='border-collapse:collapse;border:none'>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'><br
  clear=all style='page-break-before:always'>


  </td>
  <td width=38 valign=top style='width:.4in;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=65 valign=top style='width:48.75pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=152 valign=top style='width:113.95pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=288 valign=top style='width:216.2pt;border:solid windowtext 1.0pt;
  border-left:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>is an honors graduate of
  the University of Colorado in Finance.</p>

  <p class=MsoNormal>Mr. Hoback was selected to
  serve on our Board in light of his in-depth understanding of our business and
  the restaurant industry and his position as our President and Chief Executive
  Officer.</p>
  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Eric W. Reinhard</p>
  </td>
  <td width=38 valign=top style='width:.4in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>54</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2005</p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Member of the Audit and
  Compensation Committees; Prior Chairman of the Board (2005-2010)</p>
  </td>
  <td width=288 valign=top style='width:216.2pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Mr. Reinhard serves as
  President of the Pepsi Cola Bottler's Association, a beverage association
  management and consulting association (2006-present).&nbsp; Prior to June 2004 he
  was the General Manager for the Pepsi Bottling Group's Great West Business
  Unit.&nbsp; While in this role, Mr. Reinhard was also a member of the Pepsi
  Bottling Group's Chairman's Operating Council, a member of the Food Service
  Strategic Planning Committee, and a member of The Dr. Pepper Bottler Marketing
  Committee.&nbsp; Mr. Reinhard joined Pepsi Cola in 1984 after four years with The
  Proctor &amp; Gamble Distributing Company.&nbsp; Since 1984 he has held several
  field and headquarters positions including Vice President/General Manager
  Pepsi-Lipton Tea partnership (JV), General Manager Mid-Atlantic business
  Unit, Area Vice President Retail Channels, Vice President On-Premise
  Operations and Area Vice President of Franchise Operations.&nbsp; Mr. Reinhard
  holds a BA from Michigan State University and has completed the Executive
  Business Program at the University of Michigan.</p>

  <p class=MsoNormal>Mr. Reinhard was selected
  to serve on our Board in light of his substantial experience within the
  beverage industry and his broad knowledge concerning corporate governance and
  management.</p>

  </td>
 </tr>
 <tr>
  <td width=133 valign=top style='width:99.9pt;border:solid windowtext 1.0pt;
  border-top:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Alan A. Teran</p>
  </td>
  <td width=38 valign=top style='width:.4in;border-top:none;border-left:none;
  border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>67</p>
  </td>
  <td width=65 valign=top style='width:48.75pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>2012<sup>3</sup></p>
  </td>
  <td width=152 valign=top style='width:113.95pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Member of the Audit
  Committee; Chairman of the Compensation Committee </p>
  </td>
  <td width=288 valign=top style='width:216.2pt;border-top:none;border-left:
  none;border-bottom:solid windowtext 1.0pt;border-right:solid windowtext 1.0pt;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal>Mr. Teran is currently a
  principal in multiple private restaurants.&nbsp; He previously served on our Board
  from 1994 to 2010.&nbsp; Mr. Teran also served as a Director of Morton's Restaurant
  Group, Inc. from 1994 until February 2012.&nbsp; He served as president of the
  Cork &amp; Cleaver restaurant chain from 1975 to 1981 and served as a
  Director for Boulder Valley National Bank and Charlie Brown's Restaurants.&nbsp;
  He was one of the first franchisees of Le Peep Restaurants.&nbsp; Mr. Teran
  graduated from the University of Akron in 1968 with a degree in business.&nbsp;
  Mr. Teran was selected to serve on our Board in light of his substantial
  experience within the restaurant industry, his experience as an investor in
  multiple private restaurants, and his prior service on our Board.</p>
  </td>
 </tr>
</table>



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<p class=MsoNormal style='line-height:1.0pt'><sup>&nbsp;</sup></p>



<p class=MsoNormal style='line-height:1.0pt'><sup>&nbsp;</sup></p>

<p class=MsoNormal style='margin-left:.5in;text-align:justify'><sup>1 </sup>Mr.
Calvert was elected as a director on July 3, 2012 to fill the vacancy created
by the resignation of Keith A. Radford effective June 30, 2012.&nbsp; On the same
date, Mr. Calvert was appointed as chairman of the Audit Committee, to succeed
Mr. Radford in such capacity.</p>



<p class=MsoNormal style='margin-top:0in;margin-right:.5in;margin-bottom:12.0pt;
margin-left:.5in;text-align:justify'><sup>2 </sup>Mr. Heller resigned as a member of the Audit Committee
and as chairman of the Compensation Committee effective April 6, 2012, upon the
Company's engagement of Heathcote Capital, LLC, a company of which Mr. Heller
is the principal, as its financial advisor.</p>

<p class=MsoNormal style='margin-top:0in;margin-right:.5in;margin-bottom:12.0pt;
margin-left:.5in;text-align:justify'><sup>3 </sup>Mr. Teran was elected as a director effective April
10, 2012 to fill the vacancy created by the resignation of John F. Morgan on
August 10, 2011.&nbsp; On the same date, Mr. Teran was appointed as a member of the
Audit Committee and as the chairman of the Compensation Committee, to succeed
Mr. Heller in both capacities.&nbsp; Mr. Teran also served on our Board from 1994 to
2010.</p>

<p class=MsoNormal style='text-align:justify'>As
set forth above, prior to March 2012, Messrs. Dobbin and Heller each served as
a director and executive officer of Elephant &amp; Castle Group Inc.&nbsp; On June
28, 2011, Elephant &amp; Castle Group, Inc. and related subsidiaries
(collectively, the &quot;Elephant &amp; Castle Group&quot;) filed a voluntary petition
under Chapter 11 of the United States Bankruptcy Code.&nbsp; The Elephant &amp;
Castle Group subsequently sold all of its assets in a sale under the bankruptcy
proceedings.</p>



<p class=Style25 style='text-indent:0in'>There
are no family relationships among the directors.&nbsp; As discussed below, under the
heading &quot;Director Independence&quot;, the Board has determined that of the current
directors Messrs. Bailey, Calvert, Reinhard, and Teran are independent
directors under the NASDAQ listing standards.</p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in'><a name="_DV_M49"></a><a
name="_DV_M57"></a><a name="_DV_M60"></a><a name="_DV_M61"></a><a name="_DV_M62"></a><a
name="_DV_M63"></a><a name="_DV_M64"></a><a name="_DV_M65"></a><a name="_DV_M66"></a>Geoffrey R. Bailey was originally elected to the Board
pursuant to contractual board representation rights granted to The Bailey
Company in connection with its investment in shares of our Series A Convertible
Preferred Stock in 1996.&nbsp; Mr. Bailey has continued to serve on the Board
pursuant to contractual board representation rights held by The Bailey Company
and its affiliates (&quot;The Bailey Group&quot;) in connection with our Series B
Convertible Preferred Stock financing in February 2005 and the subsequent
modification of those contractual rights in connection with the closing of our
initial investment transaction with the Investor in December 2010, whereby The
Bailey Group is entitled to designate one individual for election to our Board.</p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in'>Eric W. Reinhard was originally elected to the Board pursuant to
contractual board representation rights granted to certain investors in
connection with our Series B Convertible Preferred Stock financing in February
2005 and the subsequent modification of those contractual rights in connection
with the closing of our initial investment transaction with the Investor in
December 2010, whereby Mr. Reinhard and his affiliates are entitled to
designate one individual for election to our Board.</p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in'><a name="_DV_M67"></a>Messrs. Calvert, Dobbin, Heller, and Teran were
originally elected to the Board pursuant to the director designation rights
granted to the Investor under the Securities Purchase Agreement dated October
29, 2010 between the Company and the Investor (the &quot;Prior Purchase
Agreement&quot;).&nbsp; The Prior Purchase Agreement provides that, for so long as the
Investor continues to own at least 50% of our outstanding capital stock, (i)
our Board shall not consist of more than seven directors, and (ii) the Investor
shall have the right to designate four individuals for election to our Board.&nbsp;
In connection with the Investment Transaction, the Securities Purchase
Agreement entered into by the Company and the Investor on June 13, 2012
reconfirms and continues the Investor's director designation rights as provided
by the Prior Purchase Agreement.&nbsp; Pursuant to both the Prior Purchase Agreement
and the Securities Purchase Agreement entered into in connection with the
Investment Transaction, the Investor has also agreed to vote its shares in any
election of directors for one individual designated by The Bailey Group and one
individual designated by Mr. Reinhard and his affiliates, in addition to the
Investor<a name="_DV_C10">'s four director designees.</a></p>

<p class=Style17 style='text-indent:0in;page-break-after:avoid'><a
name="_DV_M71"></a><b>Vote
Required for Approval</b></p>

<p class=Style17 style='text-indent:0in;page-break-after:avoid'>Approval of Proposal
#1 - the election of seven directors - will require the affirmative vote of a
majority of the votes cast by the holders of our Common Stock present in person
or represented by proxy at the meeting and entitled to vote on the matter.</p>

<p class=Style17 style='text-indent:0in'><b>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE &quot;FOR&quot; THE COMPANY'S SEVEN DIRECTOR NOMINEES LISTED ON THE
ENCLOSED PROXY CARD.</b></p>

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



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<p class=Style74 align=center style='margin-top:0in;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center;text-indent:0in;
page-break-after:avoid'><b>CORPORATE GOVERNANCE</b></p>

<p class=Style25 style='text-indent:0in;page-break-after:avoid'><a
name="_DV_M72"></a><b>Director
Independence</b></p>

<p class=Style25 style='text-indent:0in;page-break-after:avoid'>The Company's Common Stock is
listed on the NASDAQ Capital Market under the trading symbol &quot;GTIM&quot;.&nbsp; NASDAQ
listing rules require that a majority of the Company's directors be
&quot;independent directors&quot; as defined by NASDAQ corporate governance standards.</p>

<p class=Style25 style='text-indent:0in'>The
Board has determined that of the current directors Messrs. Bailey, Calvert,
Reinhard, and Teran are independent directors under the NASDAQ listing
standards, while Messrs. Dobbin, Heller, and Hoback are not independent under
such standards.&nbsp; The Board has also determined that each of the three current
members of the Audit Committee is &quot;independent&quot; for purposes of Section
10A(m)(3) of the Securities Exchange Act of 1934 under the rules of the Securities
and Exchange Commission (&quot;SEC&quot;) promulgated thereunder.&nbsp; In addition, the Board
previously determined that Mr. Radford qualified as an independent director
under both the NASDAQ listing standards and SEC rules until his resignation
from the Board effective June 30, 2012, and that Mr. Heller qualified as an
independent director under both the NASDAQ listing standards and SEC rules
prior to the Company's engagement of Heathcote Capital, LLC as a financial
advisor on April 6, 2012.&nbsp; </p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'><b>Leadership
Structure</b></p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Board does
not have a policy regarding the separation of the roles of Chief Executive
Officer and Chairman of the Board as the Board believes it is in the best
interests of the Company to make that determination from time to time based on
the position and direction of the Company and the membership of the Board.&nbsp;
However, the Board has determined that separating these roles is in the best
interests of the Company's stockholders at this time.&nbsp; The Board believes that
this structure permits the Chief Executive Officer to focus on the management
of the Company's day-to-day operations.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M83"></a><b>Risk
Oversight</b></p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>Material risks
are identified and prioritized by the Company's management and reported to the
Board for oversight.&nbsp; The Board as a whole administers the Board's risk
oversight function.&nbsp; The Board regularly reviews information regarding the
Company's credit, liquidity, and operations, as well as the risks associated
with each.&nbsp; In addition, the Board continually works, with the input of the
Company's executive officers, to assess and analyze the most likely areas of
future risk for the Company.</p>

<p class=Style25 style='text-indent:0in;page-break-after:avoid'><b>Code of Ethics</b></p>

<p class=Style25 style='text-indent:0in'>The
Company has adopted a Code of Business Conduct which applies to all directors,
officers, employees, and franchisees of the Company.&nbsp; The Code of Business Conduct
was filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended September 30, 2003.&nbsp; The Code of Business Conduct is also
available on the Company's website at www.goodtimesburgers.com.</p>

<p class=Style25 style='text-indent:0in'><b>Board
Committees</b></p>

<p class=Style25 style='text-indent:0in'>The
standing committees of the Board are the Audit Committee, which is currently
comprised of Messrs. Calvert (Chairman), Reinhard, and Teran, and the
Compensation Committee, which is currently comprised of Messrs. Bailey,
Reinhard, and Teran (Chairman).&nbsp; As discussed under the heading &quot;Nominee
Selection Process&quot; below, there is no standing nominating committee of the
Board and instead the Board as a whole acts as the nominating committee for the
selection of nominees for election as directors.</p>

<p class=Style25 style='text-indent:0in'>Prior
to his resignation from the Board effective June 30, 2012, Keith Radford served
as chairman of the Audit Committee.&nbsp; Prior to April 6, 2012, Gary Heller served
as a member of the Audit Committee and as chairman of the Compensation
Committee.&nbsp; Mr. Heller resigned from those positions (but not from our Board)
on April 6, 2012 in connection with the Company's engagement of Heathcote
Capital, LLC as a financial advisor.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_Toc92016737"></a><a name="_Toc89839946"></a><a name="_Toc89839451"></a><a
name="_DV_M74"></a><b>Audit Committee</b><a
name="_DV_M75"></a></p>

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<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Audit Committee currently consists of Messrs.
Calvert (Chairman), Reinhard, and Teran.&nbsp; The Board has determined that all of
the members of the Audit Committee are &quot;independent,&quot; as defined by the NASDAQ
listing standards and by applicable SEC rules.&nbsp; In addition, the Board has
determined that Mr. Calvert is an audit committee financial expert, as that
term is defined by the SEC rules, by virtue of having the following attributes
through relevant experience: (i) an understanding of generally accepted
accounting principles and financial statements; (ii) the ability to assess the
general application of such principles in connection with the accounting for
estimates, accruals, and reserves; (iii) experience preparing, auditing,
analyzing, or evaluating financial statements that present a breadth and level
of complexity of accounting issues that are generally comparable to the breadth
and complexity of issues that can reasonably be expected to be raised by the
Company's financial statements, or experience actively supervising one or more
persons engaged in such activities; (iv)&nbsp; an understanding of internal controls
and procedures for financial reporting; and (v) an understanding of audit
committee functions.&nbsp; Prior to his resignation from the Board effective June
30, 2012, Keith Radford served as our audit committee financial expert.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The function of the Audit Committee relates to
oversight of the auditors, the auditing, accounting, and financial reporting
processes, and the review of the Company's financial reports and information.&nbsp;
In addition, the functions of this Committee have included, among other things,
recommending to the Board the engagement or discharge of independent auditors,
discussing with the auditors their review of the Company's quarterly results
and the results of their audit, and reviewing the Company's internal accounting
controls.&nbsp; The Audit Committee operates pursuant to a written Charter adopted
by the Board.&nbsp; A current copy of the Audit Committee Charter is available on
our website at www.goodtimesburgers.com.&nbsp; The Audit Committee held four
meetings during the fiscal year ended September 30, 2011.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'><a
name="_Toc92016738"></a><a name="_Toc89839947"></a><a name="_Toc89839452"></a><a
name="_DV_M76"></a><b>Compensation
Committee</b><a name="_DV_M77"></a></p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Compensation
Committee currently consists of Messrs. Bailey, Reinhard, and Teran
(Chairman).&nbsp; The Board has determined that all of the members of the
Compensation Committee are &quot;independent,&quot; as defined by the NASDAQ listing
standards.&nbsp; The function of the Compensation Committee is to consider and
determine all matters relating to the compensation of the President and Chief
Executive Officer and other executive officers, including matters relating to
the employment agreements.&nbsp; The Compensation Committee held one meeting during
the fiscal year ended September 30, 2011.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M78"></a>The
Compensation Committee does not have a written Charter. The responsibility of
the Compensation Committee is to review and approve the compensation and other
terms of employment of our Chief Executive Officer and our other executive
officers, including all of the executive officers named in the Summary
Compensation Table in this Proxy Statement (the &quot;Named Executive Officers&quot;).&nbsp;
Among its other duties, the Compensation Committee oversees all significant
aspects of the Company's compensation plans and benefit programs.&nbsp; The
Compensation Committee annually reviews and approves corporate goals and
objectives for the Chief Executive Officer's compensation and evaluates the
Chief Executive Officer's performance in light of those goals and objectives.&nbsp;
The Compensation Committee also recommends to the Board the compensation and
benefits for members of the Board.&nbsp; The Compensation Committee has also been appointed
by the Board to administer our 2008 Omnibus Equity Incentive Compensation Plan,
which is the successor equity compensation plan to the Company's 2001 Stock
Option Plan.&nbsp; The Compensation Committee does not delegate any of its authority
to other persons.</p>

<p class=Style91 style='margin-top:0in;margin-right:6.05pt;margin-bottom:12.0pt;
margin-left:.2pt;text-align:justify'><a name="_DV_M79"></a>In carrying out
its duties, the Compensation Committee participates in the design and
implementation and ultimately reviews and approves specific compensation
programs.&nbsp; The Compensation Committee reviews and determines the base salaries
for the Named Executive Officers, and also approves awards to the Named
Executive Officers under the Company's equity compensation plans.</p>

<p class=Style91 style='margin-top:0in;margin-right:.25pt;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'><a name="_DV_M80"></a>In determining
the amount and form of compensation for Named Executive Officers other than the
Chief Executive Officer, the Compensation Committee obtains input from the
Chief Executive Officer regarding the duties, responsibilities, and performance
of the other executive officers and the results of performance reviews.&nbsp; The
Chief Executive Officer also recommends to the Compensation Committee the base
salary levels for all Named Executive Officers and the award levels for all
Named Executive Officers under the Company's equity compensation programs.&nbsp; No
Named Executive Officer attends any executive session of the Compensation Committee
or is present during final deliberations or determinations of such Named
Executive Officer's compensation.&nbsp; The Chief Executive Officer also provides
input with respect to the amount and form of compensation for the members of
the Board.</p>

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<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Compensation
Committee has the authority to directly engage, at the Company's expense, any
compensation consultants or other advisers as it deems necessary to carry out
its responsibilities in determining the amount and form of executive and
director compensation.&nbsp; For the fiscal year ended September 30, 2011, the
Compensation Committee did not use the services of a compensation consultant or
other adviser.&nbsp; However, the Compensation Committee has reviewed surveys,
reports, and other market data against which it has measured the
competitiveness of the Company's compensation programs.&nbsp; In determining the
amount and form of executive and director compensation, the Compensation
Committee has reviewed and discussed historical salary information as well as
salaries for similar positions at comparable companies.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'><b>Communication
with Directors</b></p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Board
welcomes questions or comments about us and our operations.&nbsp; Those interested
may contact the Board as a whole or any one or more specified individual
directors by sending a letter to the intended recipients' attention in care of
Good Times Restaurants Inc., Attention: Corporate Secretary, 601 Corporate
Circle, Golden, CO 80401.&nbsp; All such communications other than commercial
advertisements will be forwarded to the appropriate director or directors for
review.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_Toc92016739"></a><a name="_Toc89839948"></a><a name="_Toc89839453"></a><a
name="_DV_M82"></a><a name="_DV_M84"></a><b>Director
Attendance at Meetings</b><a name="_DV_M85"></a></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>There were four meetings of the Board held during the
fiscal year ended September 30, 2011. No member of the Board attended fewer
than 75% of the Board meetings and applicable committee meetings for the fiscal
year ended September 30, 2011.</p>

<p class=Style25 style='text-indent:0in'><a name="_DV_M86"></a>The Company does not have a
formal policy on director attendance at the annual meeting.&nbsp; Messrs. Bailey,
Dobbin, and Hoback attended the annual meeting of stockholders for the fiscal
year ended September 30, 2010, which was held on September 21, 2011.&nbsp; Messrs.
Heller, Radford, and Reinhard did not attend the last annual meeting.&nbsp; John
Morgan resigned from our Board on August 10, 2011, prior to the last annual
meeting, and neither Mr. Calvert nor Mr. Teran served on our Board at that
time.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'><b>Nominee
Selection Process</b></p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>Our Board as a
whole acts as the nominating committee for the selection of nominees for
election as directors.&nbsp; We do not have a separate standing nominating committee
since we require that our director nominees be approved as nominees by a
majority of our independent directors.&nbsp; The Board will consider suggestions by
stockholders for possible future nominees for election as directors at the next
annual meeting when the suggestion is delivered in writing to the corporate
secretary of the Company by November 15 of the year immediately preceding the
annual meeting.&nbsp; No request for a recommended nominee was made by the 2011
deadline by any stockholder or group of stockholders with beneficial ownership
of more than five percent of our Common Stock as indicated in a Schedule 13D or
13G, other than those stockholders with contractual board representation or
director designation rights as discussed above.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Board
selects each nominee, subject to contractual representation or designation
rights held by certain stockholders, based on the nominee's skills,
achievements, and experience, with the objective that the Board as a whole
should have broad and relevant experience in high policymaking levels in business
and a commitment to representing the long-term interests of the stockholders.&nbsp;
The Board believes that each nominee should have experience in positions of
responsibility and leadership, an understanding of our business environment,
and a reputation for integrity.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Board
evaluates each potential nominee individually and in the context of the Board
as a whole.&nbsp; The objective is to recommend a group that will effectively
contribute to our long-term success and represent stockholder interests.&nbsp; In
determining whether to recommend a director for re-election, the Board also
considers the director's past attendance at meetings and participation in and
contributions to the activities of the Board.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>When seeking
candidates for director, the Board solicits suggestions from incumbent
directors, management, stockholders, and others.&nbsp; The Board does not have a
charter for the nominating process.</p>

<p class=Style91 style='margin-bottom:12.0pt;text-align:justify'>The Company does
not have a formal policy with regard to the consideration of diversity in
identifying director nominees, but the Board strives to nominate directors with
a variety of complementary skills so that, as a group, the Board will possess
the appropriate talent, skills, and expertise to oversee the Company's
business.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'><a name="_Toc92016740"></a><a name="_Toc89839949"></a><a
name="_Toc89839454"></a><a name="_DV_M87"></a><b>Directors'
Compensation</b><a name="_DV_M88"></a></p>

<p class=MsoNormal style='margin-right:-27.0pt;page-break-after:avoid'>The following table sets forth compensation
information for the fiscal year ended September 30, 2011 with respect to
directors:</p>



<p class=MsoFooter align=center style='text-align:center'>10</p>



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<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr style='height:15.75pt'>
  <td width=661 colspan=8 style='width:495.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:15.75pt'>
  <p class=MsoNormal><b>Director Compensation
  Table for Fiscal Year Ended September 30, 2011</b></p>
  </td>
 </tr>
 <tr style='height:.6in'>
  <td width=121 valign=bottom style='width:90.9pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Name</p>
  </td>
  <td width=72 style='width:.75in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Fees Earned or Paid in Cash ($)</p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Stock Awards ($)</p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Option Awards ($) <sup>1, 2</sup></p>
  </td>
  <td width=96 style='width:1.0in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Non-Equity Incentive Plan Compensation ($)</p>
  </td>
  <td width=96 style='width:1.0in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Nonqualified Deferred Compensation Earnings $</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>All Other Compensation $ </p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:.6in'>
  <p class=MsoNormal align=center style='text-align:center'>Total $</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=bottom style='width:90.9pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>Geoffrey R. Bailey</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>2,000</p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>840</p>
  </td>
  <td width=96 style='width:1.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>2,840</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=top style='width:90.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>David Dobbin</p>
  </td>
  <td width=72 style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>2,000</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>840</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>2,840</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=bottom style='width:90.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>Gary Heller</p>
  </td>
  <td width=72 style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>1,500</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>840</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>2,340</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=bottom style='width:90.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>Eric W. Reinhard </p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>1,000</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>840</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>1,840</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=top style='width:90.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>Keith Radford</p>
  </td>
  <td width=72 style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>1,500</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>840</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>2,340</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=bottom style='width:90.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>John Morgan <sup>3</sup></p>
  </td>
  <td width=72 style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>1,500</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>840</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>2,340</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=121 valign=bottom style='width:90.9pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal>Boyd E. Hoback <sup>4</sup></p>
  </td>
  <td width=72 valign=bottom style='width:.75in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-right:.05in;text-align:center'>-</p>
  </td>
  <td width=96 style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=96 valign=bottom style='width:1.0in;padding:0in 5.4pt 0in 5.4pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:6.7pt;text-align:right'>0</p>
  </td>
 </tr>
</table>

<p class=MsoNormal><sup>&nbsp;</sup></p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr>
  <td width=24 valign=top style='width:17.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><sup>1</sup></p>
  </td>
  <td width=637 valign=top style='width:478.1pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>The value of stock option awards shown in this column
  includes all amounts expensed in the Company's financial statements in 2011
  for equity awards in accordance with the guidance of FASB ASC 718-10-30,
  Compensation - Stock Compensation, excluding any estimate for forfeitures.&nbsp;
  The Company's accounting treatment for, and assumptions made in the valuation
  of equity awards are set forth in Note 1 of the notes to the Company's 2011
  consolidated financial statements included in the Company's Annual Report on Form
  10-K for the fiscal year ended September 30, 2011.&nbsp; There were no option
  awards re-priced in 2011.</p>
  </td>
 </tr>
 <tr>
  <td width=24 valign=top style='width:17.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><sup>&nbsp;2</sup></p>
  </td>
  <td width=637 valign=top style='width:478.1pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>As of September 30, 2011, the following directors
  held options to purchase the following number of shares of our Common Stock:&nbsp;
  Mr. Bailey 5,333 shares; Mr. Dobbin 667 shares; Mr. Heller 667 shares; Mr.
  Reinhard 6,167 shares; Mr. Radford 667 shares; and Mr. Hoback 57,081 shares.</p>
  </td>
 </tr>
 <tr>
  <td width=24 valign=top style='width:17.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><sup>3</sup></p>
  </td>
  <td width=637 valign=top style='width:478.1pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>Resigned as a director effective as of August 10,
  2011.&nbsp; Mr. Morgan's options expired without being exercised subsequent to his
  resignation.</p>
  </td>
 </tr>
 <tr>
  <td width=24 valign=top style='width:17.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal><sup>4</sup></p>
  </td>
  <td width=637 valign=top style='width:478.1pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>Mr. Hoback is an employee director and does not
  receive additional fees for service as a member of the Board.</p>
  </td>
 </tr>
</table>



<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Each non-employee director receives $500 for each
Board meeting attended.&nbsp; Members of the Compensation and Audit Committees
generally each receive $100 per meeting attended.&nbsp; However, where both
Compensation and Audit Committee meetings are held at the same gathering only
$100 is paid to directors attending both committee meetings.&nbsp; Additionally, for
the fiscal year ended September 30, 2011, each non-employee director, with the
exception of Messrs. Calvert and Teran, received a non-statutory stock option
to acquire 5,000 shares of Common Stock at an exercise price of $1.31 per
share.&nbsp; Mr. Teran received a non-statutory stock option to acquire 2,000 shares
of Common Stock at an exercise price of $2.12 per share in April 2012, when he
was elected to the Board to fill the vacancy resulting from John Morgan's
resignation.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Certain Relationships and Related Person Transactions</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M120"></a>Our corporate headquarters
are located in a building owned by The Bailey Company and in which The Bailey
Company also has its corporate headquarters.&nbsp; We currently lease our executive
office space of approximately 3,693 square feet from The Bailey Company for
approximately $59,000 per year.&nbsp; The lease expired September 30, 2009 and we
continue to lease the space on a month to month basis.<a name="_DV_M121"></a></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Bailey Company is the owner of one franchised Good
Times Drive Thru restaurant which is located in Loveland, Colorado.&nbsp; The
Company has entered into a letter agreement with The Bailey Company for the
purchase of this restaurant for a purchase price of approximately $100,000.&nbsp; We
expect that the Company's purchase of the Loveland, Colorado restaurant from
the Bailey Company will close by the end of July 2012.&nbsp; The Bailey Company was
also previously the owner of one franchised restaurant in Thornton, Colorado
which was closed in October 2009. The Bailey Company has entered into two
franchise and management agreements with us.&nbsp; Franchise royalties and
management fees paid under those agreements totaled approximately $53,000 and
$50,000 for the fiscal years ending September 30, 2011 and 2010, respectively.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>In December 2010, the Company repaid an outstanding
loan from Golden Bridge, LLC (&quot;Golden Bridge&quot;), in the principal amount of
$185,000 plus accrued interest thereon in the amount of $18,000. Directors Eric
Reinhard and Alan Teran and former directors Ron Goodson, David Grissen, and
Richard Stark, who are all stockholders of the Company, are the sole members of
Golden Bridge, and Eric Reinhard is the sole manager of Golden Bridge.&nbsp; The
Company's repayment of the Golden Bridge loan was duly approved in advance by
our Board by the affirmative vote of members thereof who did not have an
interest in the transaction.</p>

<p class=MsoFooter align=center style='text-align:center'>11</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=Style17 style='text-indent:0in'>On April 6, 2012, the Company entered into a
financial advisory services agreement with Heathcote Capital, LLC
(&quot;Heathcote&quot;), pursuant to which the Company engaged Heathcote to provide
exclusive financial advisory services in connection with a possible strategic
transaction.&nbsp; The services to be provided by Heathcote involve identifying and
contacting potential acquisition targets and/or sources of financing for the
Company, advising and assisting the Company in evaluating various structures
and forms of any strategic transaction, assisting in the preparation of
proposals and evaluation of offers, and assisting the Company in negotiating
the financial aspects of the such transaction.</p>

<p class=Style17 style='text-indent:0in'>Gary J. Heller, a director of the Company, is the
principal of Heathcote.&nbsp; Accordingly, the Company's agreement with Heathcote
constitutes a related party transaction and was reviewed and approved by the
Audit Committee.&nbsp; Mr. Heller did not participate in the Audit Committee's
consideration of the agreement and abstained from the committee's vote to
approve the agreement.&nbsp; Concurrently with the Company's engagement of
Heathcote, Mr. Heller resigned as a member of the Audit Committee and as
Chairman of the Compensation Committee, though he has continued to serve on our
Board and has been nominated by the Company for re-election at the Annual
Meeting.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>On June 13, 2012, the Company entered into the
Securities Purchase Agreement with the Investor, pursuant to which the Company
has agreed to issue and sell to the Investor 473,934 Shares of newly designated
Series C Convertible Preferred Stock for an aggregate purchase price of
$2,000,001.48 (i.e., $4.22 per share), subject to the satisfaction of certain
conditions precedent set forth in the Securities Purchase Agreement.&nbsp; David L.
Dobbin, the Chairman of our Board, is a principal of the Investor.&nbsp;
Accordingly, the Securities Purchase Agreement constitutes a related party
transaction and was reviewed and approved by the Audit Committee.&nbsp; See
&quot;Proposal #2 - Approval of the Investment Transaction&quot; and &quot;Interests of
Certain Persons in Matters to be Acted Upon&quot; below.</p>

<p class=Style74 align=center style='margin-top:0in;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center;text-indent:0in;
page-break-after:avoid'><a name="_DV_M122"></a><a name="_DV_M89"></a><a
name="_DV_M90"></a><b>AUDIT COMMITTEE REPORT</b></p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in;page-break-after:avoid'>Management is responsible for the internal controls
and financial reporting process for the Company.&nbsp; The independent accountants
for the Company are responsible for performing an independent audit of the
financial statements in accordance with generally accepted auditing standards
and to issue a report on those financial statements.&nbsp; The Audit Committee's
responsibility is to monitor and oversee these processes.</p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in'><a name="_DV_M91"></a>In this context, the Audit Committee met with
management and the independent accountants to review and discuss the Company's
financial statements for the fiscal year ended September 30, 2011.&nbsp; Management
represented to the Audit Committee that the financial statements were prepared
in accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the financial statements with management
and the independent accountants.</p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in'><a name="_DV_M92"></a>The Audit Committee has discussed with the independent
accountants matters required to be discussed by Statement on Auditing Standards
No. 61, Communication with Audit Committees.&nbsp; The Audit Committee has also
received the written disclosures and the letter from the independent
accountants required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountants'
communications with the Audit Committee concerning independence and the Audit
Committee discussed with the independent accountants that firm's independence.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M93"></a>Based on the Audit
Committee's review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Good Times Restaurants Annual Report on Form 10-K for the
fiscal year ended September 30, 2011 for filing with the SEC.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Audit Committee</u></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><i>Neil
  Calvert (Chairman)</i></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><i>Eric
  W. Reinhard</i></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><i>Alan
  A. Teran</i></p>
  </td>
 </tr>
</table>



<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><b>INDEPENDENT AUDITOR INFORMATION</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M123"></a>The Board appointed HEIN
&amp; ASSOCIATES LLP as the Company's independent auditors for the fiscal year
ended September 30, 2010 and the fiscal year ended September 30, 2011, and to
perform other accounting services.&nbsp; Representatives of HEIN &amp; ASSOCIATES
LLP are expected to be present at the annual meeting of stockholders, and will
have the opportunity to make a statement if they so desire and to respond to
appropriate stockholder questions.</p>

<p class=MsoFooter align=center style='text-align:center'><a name="_DV_M124"></a>12</p>



<div class=MsoNormal align=center style='text-align:center'>

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<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Audit Fees</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The aggregate fees billed for professional services
rendered by HEIN &amp; ASSOCIATES LLP for its audit of the Company's annual
financial statements for the fiscal year ended September 30, 2011, and its
reviews of the financial statements included in the Company's Quarterly Reports
on Form 10-Q for fiscal year 2011, were $71,482 compared to $75,910 in fees for
the fiscal year ended September 30, 2010.</p>

<p class=MsoEnvelopeAddress style='margin-top:0in;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in;text-align:justify'><a name="_DV_M125"></a><b>Audit Related
Fees</b></p>

<p class=MsoEnvelopeAddress style='margin-top:0in;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in;text-align:justify'>There were no aggregate fees billed by
HEIN &amp; ASSOCIATES LLP for assurance and related services that are
reasonably related to the performance of the audit or review of our financial
statements and are not reported under &quot;Audit Fees&quot; for the fiscal years ended
September 30, 2011 and September 30, 2010.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M126"></a><b>Tax Fees</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The aggregate fees billed by HEIN &amp; ASSOCIATES LLP
for the preparation and review of the Company's tax returns for the fiscal year
ended September 30, 2011 were $10,500 compared to $10,500 in fees for the
fiscal year ended September 30, 2010.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'><a name="_DV_M127"></a><a name="_DV_M128"></a><b>All Other Fees</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The aggregate fees billed to the Company for all other
services rendered by HEIN &amp; ASSOCIATES LLP for the fiscal year ended
September 30, 2011 were $14,030 compared to $12,214 in fees for the fiscal year
ended September 30, 2010.&nbsp; These fees are primarily related to a 401(k) plan
audit.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'><b>Policy on Pre-Approval Policies of
Auditor Services </b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'>Under the provisions of the Audit
Committee Charter, all audit services and all permitted non-audit services
(unless subject to a de minimis exception allowed by law) provided by our
independent auditors, as well as fees and other compensation to be paid to
them, must be approved in advance by our Audit Committee.&nbsp; All audit and other
services provided by HEIN &amp; ASSOCIATES LLP during the fiscal year ended
September 30, 2011, and the related fees as discussed above, were approved in
advance in accordance with SEC rules and the provisions of the Audit Committee
Charter.&nbsp; There were no other services or products provided by HEIN &amp;
ASSOCIATES LLP to us or related fees during the fiscal year ended September 30,
2011 except as discussed above.</p>

<p class=MsoFooter align=center style='text-align:center'>13</p>



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clear=all style='page-break-before:always'>














<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M129"></a><b>Auditor
Independence</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Audit Committee of our Board has considered the
effect that the provision of the services described above under the caption
&quot;All Other Fees&quot; may have on the independence of HEIN &amp; ASSOCIATES LLP.&nbsp;
The Audit Committee has determined that provision of those services is compatible
with maintaining the independence of HEIN &amp; ASSOCIATES LLP as the Company's
principal accountants.</p>



<p class=MsoFooter align=center style='text-align:center'><a name="_DV_M94"></a>14</p>



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<p class=MsoNormal align=center style='margin-top:12.0pt;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center'><b>OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</b></p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
12.0pt;margin-left:0in;text-align:justify'>The
following table shows the beneficial ownership of shares of the Company's
Common Stock as of July 9, 2012 by each person known by the Company to be the
beneficial owner of more than five percent of the shares of the Company's
Common Stock, each director and each executive officer named in the Summary
Compensation Table, and all directors and executive officers as a group.&nbsp; The
address for the principal stockholders and the directors and officers is 601
Corporate Circle, Golden, CO 80401.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:5.4pt;border-collapse:collapse'>
 <tr style='height:.1in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.1in'>
  <p class=MsoNormal><b>Holder</b></p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.1in'>
  <p class=MsoNormal align=center style='margin-left:.3pt;text-align:center'><b>Number of shares</b></p>
  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.1in'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.3pt;
  margin-bottom:0in;margin-left:.9pt;margin-bottom:.0001pt;text-align:center'><b>Percent of</b></p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'><b><br
  clear=all style='page-break-before:always'>
  </b>
  <p class=MsoNormal><b><u>Principal
  stockholders:</u></b></p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=center style='margin-left:.3pt;text-align:center'><b><u>beneficially owned</u></b></p>
  </td>
  <td width=90 valign=top style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.3pt;
  margin-bottom:0in;margin-left:.9pt;margin-bottom:.0001pt;text-align:center'><b><u>class**</u></b></p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Small Island Investments Ltd.</p>
  </td>
  <td width=138 valign=bottom style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>1,383,334<sup>1</sup></p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>50.74%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>The Bailey Co.</p>
  </td>
  <td width=138 valign=bottom style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>273,837<sup>2</sup></p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>10.04%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>The Erie Co. Investment Co.</p>
  </td>
  <td width=138 valign=bottom style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>338,730<sup>2</sup></p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>12.42%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal style='margin-top:6.0pt'><b><u>Directors and Officers:</u></b></p>
  </td>
  <td width=138 valign=bottom style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>

  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Geoffrey R. Bailey-Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>14,766<sup>3</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>*</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>David L. Dobbin-Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>1,389,001<sup>4</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>50.84%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Gary J. Heller-Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>5,667<sup>5</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>*</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Boyd E. Hoback-Director/Officer</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>45,214<sup>6</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>1.63%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Sue M. Knutson-Officer</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>6,847<sup>7</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>*</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Scott G. Lefever-Officer</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>12,699<sup>8</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>*</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Alan A. Teran - Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>35,069<sup>9</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>1.28%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Keith A. Radford-Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>5,667<sup>10</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>*</p>
  </td>
 </tr>
 <tr style='height:.1in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.1in'>
  <p class=MsoNormal>Eric Reinhard-Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.1in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>109,334<sup>11</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.1in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>3.98%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>Neil Calvert-Director</p>
  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>0<sup>12</sup></p>
  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>0.00%</p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>

  </td>
  <td width=138 style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>

  </td>
  <td width=90 style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:.2in'>

  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=432 colspan=2 valign=top style='width:4.5in;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal>All directors and executive
  officers as a group</p>
  <p class=MsoNormal>(9 persons including all
  those named above)</p>
  </td>
  <td width=138 valign=bottom style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:30.6pt;
  margin-bottom:0in;margin-left:.3pt;margin-bottom:.0001pt;text-align:right'>1,624,464<sup> 13, 14</sup></p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal align=right style='margin-right:17.1pt;text-align:right'>56.68%</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-top:12.0pt;text-align:center'><sup>1</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-top:12.0pt;margin-right:6.3pt;margin-bottom:
  0in;margin-left:0in;margin-bottom:.0001pt;text-align:justify'>Small Island Investments Ltd. is owned and controlled
  by director David L. Dobbin and members of his family.&nbsp; Does not include the
  Shares issuable to Small Island Investments Ltd. in the Investment
  Transaction or the shares of Common Stock issuable upon conversion thereof.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>2</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>The Bailey Company is 99% owned by The Erie County
  Investment Co., which should be deemed the beneficial owner of the Company's
  Common Stock held by The Bailey Company.&nbsp; The Erie County Investment Co. also
  owns 194,680 shares of the Company's Common Stock in its own name.&nbsp; Geoffrey
  R. Bailey is a director and executive officer of The Erie County Investment
  Co.&nbsp; Geoffrey R. Bailey disclaims beneficial ownership of the shares of
  Common Stock held by The Bailey Company and The Erie County Investment Co.&nbsp;
  Because of his ownership of only 26% of the voting shares of The Erie County
  Investment Co., Paul T. Bailey disclaims beneficial ownership of the shares
  of Common Stock held by The Bailey Company and The Erie County Investment Co.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>3</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 10,333 shares underlying presently
  exercisable stock options.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>4</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes shares of Common Stock held beneficially by
  Small Island Investments Ltd.&nbsp; Also includes 5,667 shares underlying
  presently exercisable stock options.&nbsp; Does not include the Shares issuable to
  Small Island Investments Ltd. in the Investment Transaction or the shares of
  Common Stock issuable upon conversion thereof.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>5</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 5,667 shares underlying presently
  exercisable stock options.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>6</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 30,217 shares underlying presently
  exercisable stock options.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>7</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 6,847 shares underlying presently
  exercisable stock options.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>8</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 12,699 shares underlying presently
  exercisable stock options. </p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>9</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 2,000 shares underlying presently
  exercisable stock options and 5,834 warrants to purchase stock.&nbsp; Mr. Teran
  was elected as a director effective April 10, 2012 to fill the vacancy
  created by the resignation of John Morgan on August 10, 2011.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>10</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 5,667 shares underlying presently
  exercisable stock options.&nbsp; Mr. Radford resigned as a director effective June
  30, 2012.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>11</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Includes 11,167 shares underlying presently exercisable
  stock options and 12,500 warrants to purchase stock.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>12</sup></p>
  </td>
  <td width=600 colspan=3 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Mr. Calvert was elected as a director on July 3, 2012
  to fill the vacancy created by the resignation of Keith Radford effective
  June 30, 2012.</p>
  </td>
 </tr>
 <tr height=0>
  <td width=60 style='border:none'></td>
  <td width=372 style='border:none'></td>
  <td width=138 style='border:none'></td>
  <td width=90 style='border:none'></td>
 </tr>
</table>



<p class=MsoFooter align=center style='text-align:center'>15</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>












<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:5.4pt;border-collapse:collapse'>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>13</sup></p>
  </td>
  <td width=600 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Does not include shares of Common Stock held
  beneficially by The Bailey Company and The Erie County Investment Co.&nbsp; If
  those shares were included, the number of shares of Common Stock beneficially
  held by all directors and executive officers as a group would be 1,963,194
  and the percentage of the class would be 68.50%.&nbsp; </p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>14</sup></p>
  </td>
  <td width=600 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Does not include the Shares issuable to Small Island
  Investments Ltd. in the Investment Transaction or the shares of Common Stock
  issuable upon conversion thereof.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'><sup>&nbsp;</sup></p>
  </td>
  <td width=600 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>*</p>
  </td>
  <td width=600 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt;text-align:justify'>Less than one percent.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='text-align:center'>**</p>
  </td>
  <td width=600 valign=top style='width:6.25in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:6.3pt'>Under
  SEC rules, beneficial ownership includes shares over which the individual or
  entity has voting or investment power and any shares which the individual or
  entity has the right to acquire within sixty days.</p>
  </td>
 </tr>
</table>



<p class=MsoFooter align=center style='text-align:center'><a name="_DV_M97"></a>16</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










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

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Executive Officers<a name="_Toc92016743"></a><a
name="_Toc89839951"></a><a name="_Toc89839456"></a><a name="_DV_M98"></a></b></p>

<p class=MsoNormal style='margin-bottom:6.0pt;text-align:justify'>The executive officers of the Company are as follows:</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='margin-left:5.4pt;border-collapse:collapse'>
 <tr style='height:11.5pt'>
  <td width=144 valign=top style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'><b><u>Name</u></b></p>
  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:0in;
  margin-bottom:6.0pt;margin-left:-2.55pt;text-align:center'><b><u>Age</u></b></p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:.05in'><b><u>Position</u></b></p>
  </td>
  <td width=222 valign=top style='width:166.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:6.0pt;margin-left:0in;text-align:center'><b><u>Date Began With Company</u></b></p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td width=144 valign=top style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Boyd
  E. Hoback</p>
  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:0in;
  margin-bottom:6.0pt;margin-left:-2.55pt;text-align:center'>57</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:2.85pt'>President &amp; CEO</p>
  </td>
  <td width=222 valign=top style='width:166.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:12.6pt;margin-bottom:
  6.0pt;margin-left:44.1pt'>September 1987</p>
  </td>
 </tr>
 <tr style='height:11.5pt'>
  <td width=144 valign=top style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Susan
  M. Knutson</p>
  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:0in;
  margin-bottom:6.0pt;margin-left:-2.55pt;text-align:center'>53</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:2.85pt'>Controller</p>
  </td>
  <td width=222 valign=top style='width:166.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.5pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:12.6pt;margin-bottom:
  6.0pt;margin-left:44.1pt'>September 1987</p>
  </td>
 </tr>
 <tr style='height:11.85pt'>
  <td width=144 valign=top style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;
  height:11.85pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>Scott
  G. LeFever</p>
  </td>
  <td width=120 valign=top style='width:1.25in;padding:0in 5.4pt 0in 5.4pt;
  height:11.85pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:0in;
  margin-bottom:6.0pt;margin-left:-2.55pt;text-align:center'>54</p>
  </td>
  <td width=138 valign=top style='width:103.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.85pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:0in;margin-bottom:6.0pt;
  margin-left:2.85pt'>VP of Operations</p>
  </td>
  <td width=222 valign=top style='width:166.5pt;padding:0in 5.4pt 0in 5.4pt;
  height:11.85pt'>
  <p class=MsoNormal style='margin-top:0in;margin-right:12.6pt;margin-bottom:
  6.0pt;margin-left:44.1pt'>September 1987</p>
  </td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:6.0pt;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'><a name="_DV_M99"></a><i>Boyd E. Hoback.</i>&nbsp;
See the description of Mr. Hoback's business experience under the heading
&quot;Director Nominees&quot; under &quot;Proposal #1 - Election of Directors&quot; above.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M100"></a><i>Susan M. Knutson </i>has been Controller since 1993 with direct
responsibility for overseeing the accounting department, maintaining cash
controls, producing budgets, financials, and quarterly and annual reports
required to be filed with the SEC, acting as the principal financial officer of
the Company, and preparing all information for the annual audit.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M101"></a><i>Scott G. LeFever</i> has been Vice President of Operations since August
1995, and has been involved in all phases of operations with direct
responsibility for restaurant service performance, personnel, and cost
controls.</p>

<p class=Style74 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;text-indent:0in'><a name="_DV_M102"></a>Executive officers do not have fixed terms and serve
at the discretion of the Board.&nbsp; There are no family relationships among the
executive officers or directors.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M103"></a><a name="_DV_M104"></a><b>Executive Compensation</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The following table sets forth
compensation information for the fiscal years ended September 30, 2011 and
September 30, 2010 with respect to the Named Executive Officers:</p>

<p class=MsoNormal style='margin-bottom:6.0pt'><a name="_DV_M105"></a><b>Summary Compensation Table for the Fiscal
Years Ended September 30, 2011 and September 30, 2010:</b></p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0 width=660
 style='margin-left:1.5pt;border-collapse:collapse'>
 <tr style='height:.5in'>
  <td width=102 colspan=2 valign=bottom style='width:76.5pt;border:none;
  border-bottom:solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Name and Principal Position</b></p>
  </td>
  <td width=42 valign=bottom style='width:31.5pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Year</b></p>
  </td>
  <td width=48 valign=bottom style='width:.5in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Salary $</b></p>
  </td>
  <td width=42 valign=bottom style='width:31.5pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Bonus $</b></p>
  </td>
  <td width=48 valign=bottom style='width:.5in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Stock Awards $</b></p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Option Awards $<sup>3</sup></b></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Non-Equity Incentive Plan Compensation $</b></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Nonqualified Deferred Compensation
  Earnings $</b></p>
  </td>
  <td width=84 valign=bottom style='width:63.0pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>All Other Compensation $</b></p>
  </td>
  <td width=66 valign=bottom style='width:49.5pt;border:none;border-bottom:
  solid black 1.0pt;padding:0in 1.5pt 0in 1.5pt;height:.5in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Total $</b></p>
  </td>
 </tr>
 <tr>
  <td width=102 colspan=2 valign=top style='width:76.5pt;border:none;
  padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=42 valign=top style='width:31.5pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=48 valign=top style='width:.5in;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=42 valign=top style='width:31.5pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=48 valign=top style='width:.5in;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=60 valign=top style='width:45.0pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=84 valign=top style='width:63.0pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=84 valign=top style='width:63.0pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=84 valign=top style='width:63.0pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
  <td width=66 valign=top style='width:49.5pt;border:none;padding:0in 1.5pt 0in 1.5pt'>

  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=102 colspan=2 valign=top style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal>Boyd E. Hoback</p>
  </td>
  <td width=42 valign=top style='width:31.5pt;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal>2011</p>
  </td>
  <td width=48 style='width:.5in;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>133,000</p>
  </td>
  <td width=42 valign=top style='width:31.5pt;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:3.0pt;text-align:right'>17,816</p>
  </td>
  <td width=84 style='width:63.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>16,961<sup>1</sup></p>
  </td>
  <td width=66 style='width:49.5pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:5.5pt;text-align:right'>167,777</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=102 colspan=2 style='width:76.5pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal>President and
  Chief Executive Officer</p>
  </td>
  <td width=42 style='width:31.5pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>2010</p>
  </td>
  <td width=48 style='width:.5in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-bottom:6.0pt;text-align:right'>148,000</p>
  </td>
  <td width=42 style='width:31.5pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=48 style='width:.5in;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:3.0pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>29,381</p>
  </td>
  <td width=84 style='width:63.0pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>13,978<sup>1</sup></p>
  </td>
  <td width=66 style='width:49.5pt;border:none;border-bottom:solid black 1.0pt;
  padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:5.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>191,359</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=102 colspan=2 style='width:76.5pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal>Scott G. LeFever</p>
  </td>
  <td width=42 style='width:31.5pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal>2011</p>
  </td>
  <td width=48 style='width:.5in;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>75,000</p>
  </td>
  <td width=42 style='width:31.5pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=48 style='width:.5in;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:3.0pt;text-align:right'>9,565</p>
  </td>
  <td width=84 style='width:63.0pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:16.5pt;text-align:right'>12,470<sup>2</sup></p>
  </td>
  <td width=66 style='width:49.5pt;border:none;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal align=right style='margin-right:5.5pt;text-align:right'>97,035</p>
  </td>
 </tr>
 <tr style='height:1.0pt'>
  <td width=102 colspan=2 style='width:76.5pt;padding:0in 1.5pt 0in 1.5pt;
  height:1.0pt'>
  <p class=MsoNormal>Vice President
  of Operations</p>
  </td>
  <td width=42 style='width:31.5pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal style='margin-bottom:6.0pt'>2010</p>
  </td>
  <td width=48 style='width:.5in;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-bottom:6.0pt;text-align:right'>90,625</p>
  </td>
  <td width=42 style='width:31.5pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=48 style='width:.5in;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=60 style='width:45.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:3.0pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>11,645</p>
  </td>
  <td width=84 style='width:63.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center'>_</p>
  </td>
  <td width=84 style='width:63.0pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:16.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>10,580<sup>2</sup></p>
  </td>
  <td width=66 style='width:49.5pt;padding:0in 1.5pt 0in 1.5pt;height:1.0pt'>
  <p class=MsoNormal align=right style='margin-top:0in;margin-right:5.5pt;
  margin-bottom:6.0pt;margin-left:0in;text-align:right'>112,850</p>
  </td>
 </tr>
 <tr>
  <td width=42 valign=top style='width:31.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-13.7pt;text-align:center'><sup>&nbsp;</sup></p>
  </td>
  <td width=618 colspan=10 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=42 valign=top style='width:31.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-13.7pt;text-align:center'><sup>1</sup></p>
  </td>
  <td width=618 colspan=10 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:12.6pt;text-align:justify'>The amount indicated for Mr. Hoback
  includes an automobile allowance, long-term disability, and personal
  expenses.</p>
  </td>
 </tr>
 <tr>
  <td width=42 valign=top style='width:31.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-13.7pt;text-align:center'><sup>2</sup></p>
  </td>
  <td width=618 colspan=10 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:12.6pt;text-align:justify'>The amount indicated for Mr. LeFever
  includes an automobile allowance and long-term disability. </p>
  </td>
 </tr>
 <tr>
  <td width=42 valign=top style='width:31.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-13.7pt;text-align:center'><sup>3</sup></p>
  </td>
  <td width=618 colspan=10 valign=top style='width:463.5pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:12.6pt;text-align:justify'>The value of stock option awards shown in
  this column includes all amounts expensed in the Company's financial
  statements in 2010 and 2011 for equity awards in accordance with the guidance of FASB ASC 718-10-30, Compensation -
  Stock Compensation, excluding any estimate for
  forfeitures.&nbsp; The Company's accounting treatment for, and assumptions made in
  the valuations of, equity awards is set forth in Note 1 of the notes to the
  Company's 2011 consolidated financial statements included in the Company's
  Annual Report on Form 10-K for the fiscal year ended September 30, 2011.&nbsp;
  There were no option awards re-priced in 2011.</p>
  </td>
 </tr>
 <tr height=0>
  <td width=42 style='border:none'></td>
  <td width=60 style='border:none'></td>
  <td width=42 style='border:none'></td>
  <td width=48 style='border:none'></td>
  <td width=42 style='border:none'></td>
  <td width=48 style='border:none'></td>
  <td width=60 style='border:none'></td>
  <td width=84 style='border:none'></td>
  <td width=84 style='border:none'></td>
  <td width=84 style='border:none'></td>
  <td width=66 style='border:none'></td>
 </tr>
</table>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:-13.7pt;margin-bottom:
6.0pt;margin-left:9.35pt'><a name="_DV_M106"></a>There were no shares of SARs granted during 2011 or 2010 nor has
there been any nonqualified deferred compensation paid to any Named Executive
Officers during 2011 or 2010.&nbsp; The Company does not have any plans that provide
for specified retirement payments and benefits at, following, or in connection
with retirement.</p>

<p class=MsoFooter align=center style='text-align:center'><a name="_DV_M107"></a>.17</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



</div>

<br
clear=all style='page-break-before:always'>


<div class=WordSection3>

<p class=MsoNormal style='line-height:1.0pt'><a name="_DV_M108"></a>&nbsp;</p>







<p class=MsoNormal style='margin-top:0in;margin-right:-13.7pt;margin-bottom:
6.0pt;margin-left:0in'>The following table sets
forth information as of September 30, 2011 on all unexercised options
previously awarded to the Named Executive Officers:</p>

<table class=MsoNormalTable border=1 cellspacing=0 cellpadding=0 width=942
 style='margin-left:-17.1pt;border-collapse:collapse;border:none'>
 <tr style='height:.2in'>
  <td width=942 colspan=13 style='width:706.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal style='margin-left:8.1pt'><b>Outstanding
  Equity Awards at Fiscal Year-End </b></p>
  </td>
 </tr>
 <tr style='height:.2in'>
  <td width=513 colspan=7 style='width:385.1pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Option Awards</b></p>
  </td>
  <td width=16 valign=top style='width:11.8pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:.2in'>
  <p class=MsoNormal><b>&nbsp;</b></p>
  </td>
  <td width=413 colspan=5 style='width:4.3in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:.2in'>
  <p class=MsoNormal align=center style='text-align:center'><b>Stock Awards</b></p>
  </td>
 </tr>
 <tr style='height:85.0pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  border-bottom:solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=center style='text-align:center'>Name</p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Number of Securities Underlying Unexercised Options
  -Exercisable (#)</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Number of Securities Underlying Unexercised Options
  -Unexercisable (#)</p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Equity Incentive Plan Awards: Number of Securities
  Underlying Unexercised Unearned Options (#)</p>
  </td>
  <td width=60 valign=bottom style='width:45.0pt;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Option Exercise Price $</p>
  </td>
  <td width=72 colspan=3 valign=bottom style='width:.75in;border:none;
  border-bottom:solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Option Expiration Date</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Number of Shares or Units of Stock That Have Not
  Vested (#)</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Market Value of Shares or Units of Stock That Have
  Not Vested ($)</p>
  </td>
  <td width=108 valign=bottom style='width:81.0pt;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Equity Incentive Plan Awards: Number of Unearned
  Shares, Units or Other Rights That Have Not Vested (#)</p>
  </td>
  <td width=144 valign=bottom style='width:1.5in;border:none;border-bottom:
  solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:85.0pt'>
  <p class=MsoNormal align=right style='text-align:right'>Equity Incentive Plan Awards: Market or Payout Value
  of Unearned Shares, Units or Other Rights That Have Not Vested ($)</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal style='margin-left:8.1pt'>Boyd
  E. Hoback</p>
  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>16,667</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$5.25</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/11</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>1,250</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$8.10</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/12</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>1,300</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$10.80</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/13</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>4,000</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$9.33</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/14</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>2,833</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$17.04</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/15</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>6,333</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$19.14</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/16</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=top style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>0</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>9,501 <sup>(1)</sup></p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$4.41</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>11/14/18</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>0</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>4,551 <sup>(2)</sup></p>
  </td>
  <td width=89 style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$3.45</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>11/06/19</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  border-bottom:solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>0</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>10,647 <sup>(3)</sup></p>
  </td>
  <td width=89 style='width:66.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$1.56</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>12/13/20</p>
  </td>
  <td width=72 style='width:.75in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal style='margin-left:8.1pt'>Scott
  G. LeFever</p>
  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>420</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>-</p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$8.10</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/12</p>
  </td>
  <td width=72 valign=bottom style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 valign=bottom style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 valign=bottom style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 valign=bottom style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>860</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>-</p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$10.80</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/13</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>1,917</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>-</p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$9.33</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/14</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>1,917</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>-</p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$17.04</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/15</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>1,917</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>-</p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$19.14</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>10/01/16</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>0</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>5,669<sup> (1)</sup></p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$4.41</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>11/14/18</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 valign=bottom style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>0</p>
  </td>
  <td width=102 valign=bottom style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>1,449<sup> (2)</sup></p>
  </td>
  <td width=89 valign=bottom style='width:66.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$3.45</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>11/06/19</p>
  </td>
  <td width=72 style='width:.75in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;padding:0in 5.4pt 0in 5.4pt;
  height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr style='height:12.75pt'>
  <td width=127 colspan=2 valign=bottom style='width:95.5pt;border:none;
  border-bottom:solid black 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>

  </td>
  <td width=90 style='width:67.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>0</p>
  </td>
  <td width=102 style='width:76.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=right style='margin-right:13.6pt;text-align:right'>7,985 <sup>(3)</sup></p>
  </td>
  <td width=89 style='width:66.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=60 style='width:45.0pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=right style='text-align:right'>$1.56</p>
  </td>
  <td width=72 colspan=3 style='width:.75in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>12/13/20</p>
  </td>
  <td width=72 style='width:.75in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:2.2pt;text-align:center'>-</p>
  </td>
  <td width=78 style='width:58.5pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='text-align:center'>-</p>
  </td>
  <td width=108 style='width:81.0pt;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='margin-right:8.1pt;text-align:center'>-</p>
  </td>
  <td width=144 style='width:1.5in;border:none;border-bottom:solid black 1.5pt;
  padding:0in 5.4pt 0in 5.4pt;height:12.75pt'>
  <p class=MsoNormal align=center style='margin-top:0in;margin-right:.05in;
  margin-bottom:0in;margin-left:.05in;margin-bottom:.0001pt;text-align:center'>-</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-6.8pt;text-align:center'><sup>&nbsp;</sup></p>
  </td>
  <td width=882 colspan=12 valign=top style='width:661.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-6.8pt;text-align:center'><sup>1</sup></p>
  </td>
  <td width=882 colspan=12 valign=top style='width:661.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>The options were granted on November 14, 2008. The
  shares under the option agreements will became fully exercisable on November
  14, 2011, following the end of the fiscal year.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-6.8pt;text-align:center'><sup>2</sup></p>
  </td>
  <td width=882 colspan=12 valign=top style='width:661.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>The options were granted on November 6, 2009.
  Assuming continued employment with the Company, the shares under the option
  agreements will become fully exercisable on November 6, 2012.</p>
  </td>
 </tr>
 <tr>
  <td width=60 valign=top style='width:45.0pt;border:none;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal align=center style='margin-right:-6.8pt;text-align:center'><sup>3</sup></p>
  </td>
  <td width=882 colspan=12 valign=top style='width:661.5pt;border:none;
  padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-right:8.1pt;text-align:justify'>The options were granted on December 13, 2010.
  Assuming continued employment with the Company, the shares under the option
  agreements will become fully exercisable on December 13, 2013.</p>
  </td>
 </tr>
 <tr height=0>
  <td width=60 style='border:none'></td>
  <td width=67 style='border:none'></td>
  <td width=90 style='border:none'></td>
  <td width=102 style='border:none'></td>
  <td width=89 style='border:none'></td>
  <td width=60 style='border:none'></td>
  <td width=45 style='border:none'></td>
  <td width=16 style='border:none'></td>
  <td width=11 style='border:none'></td>
  <td width=72 style='border:none'></td>
  <td width=78 style='border:none'></td>
  <td width=108 style='border:none'></td>
  <td width=144 style='border:none'></td>
 </tr>
</table>

<p class=MsoFooter align=center style='text-align:center'>18</p>



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<div class=WordSection4>

<p class=MsoNormal style='line-height:1.0pt'><a name="_DV_M109"></a><a
name="_DV_M111"></a>&nbsp;</p>







<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Employment Agreement</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Mr. Hoback entered into an employment agreement with
us in October 2001 and the terms of the agreement were revised effective
October 2007 for compliance with Section 409A of the Internal Revenue Code.&nbsp;
The revised agreement provides for his employment as President and Chief
Executive Officer for two years from the date of the agreement at a minimum
salary of $190,000 per year, terminable by us only for cause.&nbsp; The agreement
provides for payment of one year's salary and benefits in the event that change
of ownership control results in a termination of his employment or termination
other than for cause.&nbsp; This agreement renews automatically unless specifically
not renewed by the Board.&nbsp; Mr. Hoback's compensation, including salary, expense
allowance, bonus and any equity award, is reviewed and set annually by the
Compensation Committee.&nbsp; Mr. Hoback's bonus, when applicable, is based on the
Company's achieving certain Earnings Before Interest, Taxes, Depreciation and
Amortization (&quot;EBITDA&quot;) targets for the year.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><a
name="_DV_M112"></a><a name="_DV_M113"></a><b>Other
Employment Arrangements</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Mr. LeFever and Ms. Knutson are employed as an
&quot;employees at will&quot; and do not have written employment agreements with the
Company.&nbsp; Their compensation, including salary, expense allowance, bonus, and
any equity awards, is reviewed and approved by the Compensation Committee
annually.&nbsp; Each of Mr. LeFever and Ms. Knutson participates in a bonus program
that is based on both the Company's level of EBITDA for the year and achieving
certain operating metrics and sales targets.<a name="_DV_M114"></a></p>



<p class=MsoFooter align=center style='text-align:center'>19</p>



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<p class=MsoNormal style='line-height:1.0pt'><a name="_Toc92016736"></a><a
name="_Toc89839945"></a><a name="_Toc89839450"></a><a name="_DV_M46"></a><a
name="_DV_M73"></a>&nbsp;</p>







<p class=Style31 style='margin-right:.7pt'>PROPOSAL
#2 - APPROVAL OF THE INVESTMENT TRANSACTION</p>

<p class=Style17 style='text-indent:0in'>Our Common Stock is listed on the NASDAQ Capital
Market, and therefore the Company is subject to various NASDAQ Listing Rules.&nbsp;
We are seeking stockholder approval of this Proposal #2 for the purpose of
complying with NASDAQ Listing Rules 5365(c) and 5365(d), which require that the
Company seek stockholder approval of the Investment Transaction because the
Shares to be issued to the Investor in the Investment Transaction may
ultimately be converted into shares of our Common Stock at a price less than
the then-prevailing market prices of the shares of our Common Stock.</p>

<p class=Style17 style='text-indent:0in'>In addition, pursuant to the Securities Purchase
Agreement, stockholder approval of this Proposal #2 is a condition to the
closing of the Investment Transaction.&nbsp; The Securities Purchase Agreement
provides that the obligation of the Investor to complete the Investment
Transaction is subject, among other things, to the Company's stockholders
having approved and authorized the Investment Transaction, including the
approval of stockholders holding a majority of the outstanding shares of our
Common Stock not held by the Investor or its affiliates.</p>

<p class=Style17 style='text-indent:0in'><b>The Parties to the Investment Transaction</b></p>

<p class=Style17 style='text-indent:0in'><i>The Company</i>.&nbsp; The Company was incorporated
in the State of Nevada in 1987.&nbsp; The Company's Common Stock is quoted on the
NASDAQ Capital Market (symbol: GTIM).&nbsp; The Company is essentially a holding
company for its wholly owned subsidiary, Good Times Drive Thru Inc. (&quot;GTDT&quot;), a
Colorado corporation, which is engaged in the business of developing, owning, operating,
and franchising hamburger-oriented drive-through restaurants under the name
Good Times Burgers &amp; Frozen Custard&trade;.&nbsp; Most of our restaurants are located
in the front-range communities of Colorado but we also have franchised
restaurants in North Dakota and Wyoming.&nbsp; </p>

<p class=Style17 style='text-indent:0in'><i>The Investor</i>.&nbsp; The Investor is a Bermuda
corporation based in Boston, Massachusetts.&nbsp; At the present time, the Investor
beneficially owns approximately 50.74 percent of the Company's outstanding
Common Stock.&nbsp; Assuming no change in the foregoing, immediately following the
closing of the Investment Transaction, the Investor's beneficial ownership of
the Company's capital stock will increase to approximately 63.45 percent.&nbsp;
David L. Dobbin, Chairman of our Board, 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 our Board.&nbsp; See
&quot;INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON&quot; below.</p>

<p class=Style17 style='text-indent:0in'><b>Background to the Proposed Investment Transaction</b></p>

<p class=Style17 style='text-indent:0in'>On February 16, 2012, we received a letter from the
Listing Qualifications Staff of the NASDAQ Stock Market, notifying us that the
Company no longer satisfies NASDAQ Listing Rule 5550(b)(1), which requires the
Company to maintain minimum stockholders' equity of $2,500,000 for continued
listing on the NASDAQ Capital Market, if it does not otherwise&nbsp; have a market
value of listed securities of $35,000,000 or net income from continuing
operations of $500,000 in the most recently completed fiscal year or in two of
the last three most recently completed fiscal years.&nbsp; Based on the information
contained in the Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 2011, the NASDAQ staff determined that the Company's stockholders'
equity does not satisfy Rule 5550(b)(1) and the Company does not meet the other
alternatives of market value of listed securities or net income from continuing
operations.</p>

<p class=Style17 style='text-indent:0in'>On April 6, 2012, the Company entered into a
financial advisory services agreement with Heathcote Capital, LLC
(&quot;Heathcote&quot;), pursuant to which the Company engaged Heathcote to provide
exclusive financial advisory services in connection with a possible strategic
transaction.&nbsp; The services to be provided by Heathcote involve identifying and
contacting potential acquisition targets and/or sources of financing for the
Company, advising and assisting the Company in evaluating various structures
and forms of any strategic transaction, assisting in the preparation of
proposals and evaluation of offers, and assisting the Company in negotiating
the financial aspects of the such transaction.</p>

<p class=Style17 style='text-indent:0in'>At the same time, the Company submitted a compliance
plan to NASDAQ in a timely fashion stating an expectation that compliance would
be achieved by the accomplishment of its acquisition of a restaurant group or
an equity financing.&nbsp; However, on May 3, 2012, the Company received written
notice from the NASDAQ staff that it had rejected the Company's proposed
compliance plan for continued listing on the NASDAQ Capital Market.&nbsp; Because no
formal agreements or contracts had yet been signed with respect to a proposed
acquisition or equity financing, the NASDAQ staff determined that the Company
did not provide a definitive plan evidencing its ability to achieve near term
compliance with the continued listing requirements or sustain such compliance
over an extended period of time.</p>

<p class=MsoFooter align=center style='text-align:center'>20</p>



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<p class=Style17 style='text-indent:0in'>In order to deter the suspension of trading of the
Company's Common Stock and the removal of the Company's securities from listing
and registration on NASDAQ, the Company filed an appeal of the staff's
delisting determination before a NASDAQ Listing Qualifications Panel (the
&quot;Panel&quot;) on May 10, 2012.&nbsp; The appeal hearing was held on June 14, 2012, at
which time the Company presented the proposed Investment Transaction, including
the signed Purchase Agreement, to the Panel.&nbsp; On July 10, 2012, the Company
received notice from the Panel that the Panel has granted the Company's request
for continued listing on The NASDAQ Capital Market, subject to the Company
evidencing stockholders' equity of at least $2,500,000, as required by NASDAQ
Listing Rule 5550(b), by September 22, 2012.&nbsp; The Investment Transaction being
presented to stockholders for approval at the Annual Meeting is intended to
allow The Company to satisfy this condition.</p>

<p class=Style17 style='text-indent:0in'><b>Board's Evaluation of the Fairness of the Terms of
the Investment Transaction</b></p>

<p class=Style17 style='text-indent:0in'>In reaching its decision to approve and proceed with
the Securities Purchase Agreement and the Investment Transaction, our Board
carefully considered a number of factors and consulted with the Company's
senior management and outside advisors.</p>

<p class=Style17 style='text-indent:0in'>In view of the complexity and wide variety of
information and factors considered in connection with its evaluation of the
Securities Purchase Agreement and the Investment Transaction, the Board did not
find it practicable to and did not quantify or otherwise assign relative or
specific weights to the factors it considered in reaching its determination.&nbsp;
Instead, the material factors considered by the Board included (without
limitation) the following:</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
completion of the Investment Transaction will provide additional capital to
meet current liabilities and grow our business in the future, and will allow us
to continue to pursue a possible strategic transaction such as an acquisition
of a restaurant group or a subsequent equity financing.</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
completion of the Investment Transaction will increase our stockholders' equity
in excess of $2,500,000, which should allow us to regain compliance with the
minimum stockholders' equity requirement for the continued listing of our
Common Stock on the NASDAQ Capital Market.&nbsp; Alternatively, if the Investment
Transaction is not completed, and the Company is unable to secure additional
investment capital from another source, we anticipate that NASDAQ will take
action to suspend trading of the Company's Common Stock and to de-list the
Company's securities from trading on NASDAQ.</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our
ability to raise funds from other sources depends on many factors, including,
among other things, the growth of our revenues, our profit margins, leverage in
our operating expenses, and the cost and availability of other forms of
third-party financing to expand our business operations.&nbsp; In the view of the
Board, many of these factors are subject to significant uncertainty</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
completion of the Investment Transaction will strengthen our overall financial
position and reduce our financial risk.</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
Board believes the terms and conditions of the Securities Purchase Agreement
are in the best interests of the Company and its stockholders because, among
other things, the per share purchase price payable by the Investor for the
Shares reflects the market price of the Company's Common Stock as of the date
on which the terms of the Investment Transaction were negotiated and the
stockholders have an opportunity to approve the Investment Transaction.</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
No
fee is payable to Heathcote in connection with the Investment Transaction.</p>

<p class=Style17 style='text-indent:0in'>The Board also considered the following negative
factors associated with the Securities Purchase Agreement and the Investment
Transaction:</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
Shares to be issued to the Investor in the Investment Transaction will be
shares of newly designated Series C Convertible Preferred Stock which will
provide the Investor with certain rights, preferences, and privileges over the
holders of our Common Stock. </p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
issuance of the Shares to the Investor will increase the Investor's percentage
ownership in the Company from approximately 50.74 percent prior to such
issuance to approximately 63.45 percent following such issuance.</p>

<p class=Style17 style='margin-left:.25in;text-indent:-.25in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The
issuance of the Shares to the Investor in the Investment Transaction will
dilute the percentage ownership of our existing stockholders other than the
Investor.</p>

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<p class=Style17 style='text-indent:0in;page-break-after:avoid'><b>Securities Act
Matters</b></p>

<p class=Style17 style='text-indent:0in;page-break-after:avoid'>The Investor has
represented to the Company that it is an accredited investor, as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the &quot;Securities Act&quot;).&nbsp; Neither the Shares nor the shares of
Common Stock issuable upon conversion of the Shares (the &quot;Conversion Shares&quot;)
have been registered under the Securities Act or state securities laws, and
neither the Shares nor the Conversion Shares may be offered or sold in the
United States in the absence of an effective registration statement or
exemption from the applicable federal and state registration requirements.&nbsp; The
Company has relied on the exemption from the registration requirements of the
Securities Act set forth in Section 4(2) thereof and the rules and regulations
promulgated thereunder for the purposes of the Investment Transaction.&nbsp;
Effective at the closing of the Investment Transaction, the Company intends to
enter into an amendment to the Registration Rights Agreement dated December 13,
2010 between the Company and the Investor (the &quot;Registration Rights Agreement&quot;)
(the &quot;Registration Rights Agreement Amendment&quot;) in order to include the
Conversion Shares as &quot;Registrable Securities&quot; under the Registration Rights
Agreement.</p>

<p class=Style17 style='text-indent:0in'><b>Recommendation of the Board of Directors</b></p>

<p class=Style17 style='text-indent:0in'>After taking into account the factors described
above and other factors, our Board has unanimously (with David Dobbin
abstaining from the Board's discussion and vote) approved the designation and
issuance of the Shares and has determined that the Investment Transaction is
advisable and in the best interests of our stockholders and recommends that you
vote FOR Proposal #2.</p>

<p class=Style17 style='text-indent:0in;page-break-after:avoid'><b>Summary of the
Investment Transaction Documents</b></p>

<p class=Style17 style='text-indent:0in;page-break-after:avoid'>Each of the material
agreements relating to the Investment Transaction is summarized below.&nbsp; The
summaries below do not purport to be complete and are qualified in their
entirety by the full text of the related agreements, copies of which have been
filed as exhibits to the Company's Current Report on Form 8-K filed with the SEC
on June 19, 2012.&nbsp; A copy of the Securities Purchase Agreement is also attached
to this Proxy Statement as Annex A.&nbsp; We urge you to carefully read the full
text of the Securities Purchase Agreement, because that is the legal document
that governs the sale of the Shares to the Investor, as well as certain other
transactions and events contemplated by the Securities Purchase Agreement.&nbsp;
This section of the Proxy Statement is not intended to provide you with any
other factual information about the Company. &nbsp;Such information can be found
elsewhere in this Proxy Statement and in the public filings we make with the
SEC, as described below in this Proxy Statement.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Securities Purchase Agreement</u></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>As described above, on June 13, 2012, the Company and
the Investor entered into the Securities 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 Convertible Preferred Stock of the Company, at a purchase price of $4.22 per
share.&nbsp; Upon issuance the Shares will be convertible into shares of our Common
Stock at a ratio of two shares of Common Stock for each share of Series C
Convertible Preferred Stock so converted.&nbsp; The Securities 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=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Securities 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='margin-bottom:12.0pt;text-align:justify;text-indent:
..5in'>(i) that the Registration Rights Agreement
Amendment has been duly executed by the Company and delivered to the Investor;</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;text-indent:
..5in'>(ii) that the representations and
warranties of the Company contained in the Securities 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='margin-bottom:12.0pt;text-align:justify;text-indent:
..5in'>(iii) that the Company has received all
consents, waivers, authorizations, and approvals from third parties necessary
in connection with the Investment Transaction;</p>

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<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;text-indent:
..5in'>(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='margin-bottom:12.0pt;text-align:justify;text-indent:
..5in'>(v) that the Company has filed a
Certificate of Designations for the Series C Convertible Preferred Stock (the
&quot;Certificate of Designations&quot;) with the Nevada Secretary of State.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Company has agreed to indemnify the Investor (and
certain &quot;Investor Parties&quot; as defined in the Securities 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 Securities Purchase Agreement.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Securities Purchase Agreement provides that after
the closing of the Investment Transaction, for so long as the Investor holds at
least 50 percent of the Company's outstanding capital stock, (i) the Board
shall consist of no more than seven members, and (ii) the Investor will have
the right to designate four members of the Board.&nbsp; In addition, the Securities
Purchase Agreement provides that, for so long as the Investor continues to hold
at least 75 percent of the Shares and/or the Conversion Shares, the Investor
will have a right 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='margin-bottom:12.0pt;text-align:justify'>The Securities Purchase Agreement may be terminated at
any time prior to the closing of the Investment Transaction only as follows:</p>

<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='margin-bottom:12.0pt;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 Securities Purchase Agreement is the primary
     cause of the failure of the closing to have occurred by such date;</li>
 <li class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>by the Investor or the Company, if the Company's
     stockholders do not vote to approve the Investment Transaction;</li>
 <li class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>at any time by mutual agreement of the Company
     and the Investor; or</li>
 <li class=MsoNormal style='margin-bottom:12.0pt;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 Securities Purchase
     Agreement, which has not been cured within 15 days after notice thereof.</li>
</ul>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>A copy the Securities Purchase Agreement was filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on
June 19, 2012.&nbsp; In addition, a copy of the Securities Purchase Agreement is
attached hereto as Annex A.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;page-break-after:avoid'><u>Certificate of Designations</u></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'>Our Articles of Incorporation, as amended
(the &quot;Articles of Incorporation&quot;), authorize a total of 5,000,000 shares of
Preferred Stock, of which 1,000,000 shares have previously been designated as
&quot;Series A Convertible Preferred Stock&quot; and 1,240,000 shares have previously
been designated as &quot;Series B Convertible Preferred Stock&quot;.&nbsp; No shares of Series
A Convertible Preferred Stock or of Series B Convertible Preferred Stock are
currently outstanding.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Pursuant to the Articles of Incorporation, our
authorized but undesignated shares of Preferred Stock may be issued from time
to time in one or more series and for such consideration as our Board shall
determine.&nbsp; The Articles of Incorporation expressly authorize our Board to fix
by resolution from time to time the designation of such series of Preferred
Stock and the powers, preferences, and rights of the shares of such series, and
the qualifications, limitations, or restrictions thereof.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Accordingly, if the Investment Transaction is approved
by our stockholders, pursuant to the authority granted in our Articles of
Incorporation, our Board will approve and adopt the Certificate of Designations
for the Series C Convertible Preferred Stock, which will designate 473,934
shares of our authorized Preferred Stock as the Series C Convertible Preferred
Stock with the rights, preferences, and privileges set forth therein.&nbsp; The
Certificate of Designations will be filed with the Nevada Secretary of State prior
to the closing of the Investment Transaction, as a condition precedent thereto.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Certificate of Designations will set forth the
rights, preferences, and privileges of the Shares as follows:</p>

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<ul style='margin-top:0in' type=disc>
 <li class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Following the closing of the Investment
     Transaction, dividends shall accrue on shares of Series C Convertible
     Preferred Stock at the rate of 8.0% per annum of the original issue price
     of $4.22 per share, with such dividends payable quarterly.&nbsp; The dividends
     on shares of Series C Convertible 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 Convertible Preferred Stock has not been converted to
     Common Stock within 18 months following the closing of the Investment
     Transaction, thereafter (i) the rate of the dividends shall increase to
     15.0% per annum from the date that is 18 months after the closing of the
     Investment Transaction 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 redeem all or from time to time a portion of the
     Series C Convertible Preferred Stock by payment of its liquidation
     preference.</li>
 <li class=MsoNormal style='margin-bottom:12.0pt;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 Convertible Preferred Stock shall 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>
 <li class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Shares of Series C Convertible Preferred Stock
     shall vote together with the Common Stock on an as-if-converted basis.&nbsp; In
     addition, shares of Series C Convertible Preferred Stock shall have the
     right to vote, as a separate class, on certain major corporate
     transactions for which the approval of the holders of a majority of the
     outstanding shares of Series C Convertible Preferred Stock is required.</li>
 <li class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Shares of Series C Convertible Preferred Stock
     shall be convertible into shares of Common Stock at any time at the option
     of the holder, at a conversion ratio shall be two shares of Common Stock
     for each share of Series C Convertible Preferred Stock converted (subject
     to adjustment in the event of any stock split, combination,
     reorganization, or reclassification of the Common Stock.)</li>
 <li class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Company may require the conversion of all
     outstanding shares of Series C Convertible Preferred Stock into shares of
     Common Stock at the above conversion ratio at any time after 36 months
     following the closing of the Investment Transaction provided that the
     public trading price and the trading volume of the Common Stock meet
     certain criteria.&nbsp; In addition, the Series C Convertible Preferred Stock
     shall automatically convert to Common Stock upon a qualified public
     offering of the Company's Common Stock provided that the size and price of
     such public offering or a sale of all or substantially of the Company's assets
     meet certain criteria.</li>
</ul>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The form of Certificate of Designations is attached as
Exhibit A to the Securities Purchase Agreement, a copy of which is attached as
Annex A hereto.&nbsp; The form of Certificate of Designations was also filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K filed with the SEC on
June 19, 2012.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'><u>Registration Rights Agreement
Amendment</u></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'>Effective at the Closing, the Company
will enter into the Registration Rights Agreement Amendment with the Investor
to include the Conversion Shares issuable to the Investor upon conversion of
the Shares as &quot;Registrable Securities&quot; under the Registration Rights Agreement,
which will entitle the Investor to certain demand and piggy-back registration
rights with respect to the resale of the Conversion Shares</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The form of Registration Rights Agreement Amendment is
attached as Exhibit B to the Securities Purchase Agreement, a copy of which is
attached as Annex A hereto.&nbsp; The form of Registration Rights Agreement
Amendment was also filed as Exhibit 4.2 to the Company's Current Report on Form
8-K filed with the SEC on June 19, 2012.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'><b>Use of Proceeds</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'>If this Proposal #2 is approved by our
stockholders, and the closing of the Investment Transaction occurs, the net
proceeds of the Investment Transaction after payment of related fees and
expenses will be used to pay off the outstanding principal and accrued interest
on our loan from Wells Fargo Bank, N.A. and for other working capital purposes
approved by our Board.</p>

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<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><b>Investor Board Designees</b></p>

<p class=Style17 style='text-indent:0in'>The Prior Purchase Agreement provides that, for so
long as the Investor continues to own at least 50% of our outstanding capital
stock, (i) our Board shall not consist of more than seven directors, and (ii)
the Investor shall have the right to designate four individuals for election to
our Board.&nbsp; In connection with the Investment Transaction, the Securities
Purchase Agreement entered into by the Company and the Investor on June 13,
2012 reconfirms and continues the Investor's director designation rights as
provided by the Prior Purchase Agreement.</p>

<p class=Style17 style='text-indent:0in'>The Investor has designated four individuals for
election to our Board at the Annual Meeting.&nbsp; The Investor's designated
individuals are:&nbsp; Neil Calvert, David L. Dobbin, Gary J. Heller, and Alan A.
Teran.&nbsp; Information concerning the Investor's designees is set forth under the
heading &quot;Director Nominees&quot; under &quot;Proposal #1 - Election of Directors&quot; above.</p>

<p class=Style17 style='text-indent:0in'><b>Effect of the Investment Transaction on Existing
Stockholder</b>s</p>

<p class=MsoNormal style='margin-top:0in;margin-right:.5pt;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>If
stockholders vote to approve the Investment Transaction, and assuming the other
conditions to the closing of the Investment Transaction are satisfied or waived
in accordance with the terms of the Securities Purchase Agreement, among other
things:</p>

<ol style='margin-top:0in' start=1 type=1>
 <li class=MsoNormal style='margin-right:.5pt;margin-bottom:12.0pt;text-align:
     justify'>The Board will approve and adopt
     the Certificate of Designations for the Series C Convertible Preferred
     Stock designating 473,934 shares of the Company's currently authorized
     undesignated Preferred Stock as &quot;Series C Convertible Preferred Stock&quot;
     with the rights, preferences, and privileges set forth in the Certificate
     of Designations;</li>
 <li class=MsoNormal style='margin-right:.5pt;margin-bottom:12.0pt;text-align:
     justify'>The Company will file the
     Certificate of Designations with the Nevada Secretary of State;</li>
 <li class=MsoNormal style='margin-right:.5pt;margin-bottom:12.0pt;text-align:
     justify'>The Company will issue and sell to
     the Investor 473,934 Shares of Series C Convertible Preferred Stock and
     the Investor will pay to the Company an aggregate purchase price of
     $2,000,001.48 (i.e., $4.22 per share); and</li>
 <li class=MsoNormal style='margin-right:.5pt;margin-bottom:12.0pt;text-align:
     justify'>The Company will enter into an
     amendment to the Registration Rights Agreement Amendment to include the
     Conversion Shares as &quot;Registrable Securities&quot; under the Registration
     Rights Agreement, which will entitle the Investor to certain demand and
     piggy-back registration rights with respect to the resale of the
     Conversion Shares.</li>
</ol>

<p class=MsoNormal style='margin-top:0in;margin-right:.5pt;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>If the
Investment Transaction is completed, the issuance of the Shares to the Investor
will increase the Investor's percentage ownership of the Company from
approximately 50.74 percent to approximately 63.45 percent immediately
following the closing of the Investment Transaction.&nbsp; The holdings of the
Company's stockholders other than the Investor will be diluted accordingly.&nbsp; In
addition, the Shares to be issued to the Investor in the Investment Transaction
will be shares of newly designated Series C Convertible Preferred Stock which
will provide the Investor with certain rights, preferences, and privileges over
the holders of our Common Stock, including (without limitation):&nbsp; (i) the
Shares will accrue dividends at a rate of 8 percent per annum, payable
quarterly, and such dividends will be payable prior and in preference to any
dividends on shares of our Common Stock; (ii) upon an actual or deemed
liquidation of the Company, the Shares will be entitled to a preference payment
equal to the initial purchase price of such Shares plus any accrued but unpaid
dividends; (iii) the Shares will have the right to vote as a separate class on
certain matters for which the approval of the holders of a majority of the
outstanding shares of Series C Convertible Preferred Stock is required; (iv)
the Shares will be convertible at any time into shares of our Common Stock at a
conversion ratio of two shares of Common Stock for each share of Series C
Convertible Preferred Stock converted; and (v) if the Shares are not converted
within 18 months following issuance, the rate of the accrued dividend will
increase to 15 percent per annum or the Company may elect to repurchase the
outstanding Shares by payment of their liquidation preference.</p>

<p class=MsoNormal style='margin-top:0in;margin-right:.5pt;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'><b>Effect on
Existing Stockholders if the Investment Transaction is Not Completed</b></p>

<p class=MsoNormal style='margin-top:0in;margin-right:.5pt;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>As discussed
above under &quot;Background and Description of the Investment Transaction,&quot; the
Company is currently non-compliant with the minimum stockholders' equity
requirement for continued listing of its Common Stock on the NASDAQ Capital
Market.&nbsp; If the Investment Transaction is not completed and the Company cannot
obtain additional investment capital from other sources in a relatively short
time frame, the Company anticipates that NASDAQ will take action to suspend
trading of the Company's Common Stock and to de-list the Company's securities
from trading on NASDAQ.</p>

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<p class=Style17 style='text-indent:0in;page-break-after:avoid'><b>Vote Required for
Approval</b></p>

<p class=Style17 style='text-indent:0in;page-break-after:avoid'>Approval of Proposal
#2 - the stockholder resolution authorizing the Investment Transaction - will
require the affirmative vote of (i) a majority of the votes cast by the holders
of our Common Stock present in person or represented by proxy at the meeting
and entitled to vote on the matter, and (ii) a majority of the votes cast by
the holder of our Common Stock other than the Investor and its affiliates.</p>

<p class=Style17 style='text-indent:0in'><b>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE &quot;FOR&quot; PROPOSAL #2.</b></p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center;
page-break-after:avoid'><b>PROPOSAL #3 -
APPROVAL OF 2008 PLAN AMENDMENT</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'>On July 6, 2012, our Board unanimously
approved an amendment to the Company's 2008 Omnibus Equity Incentive
Compensation Plan (the &quot;2008 Plan&quot;) that would increase the number of shares of
Common Stock available for issuance thereunder from 184,022 shares to a total
of 500,000 shares, and directed the submission of the amendment for approval by
the Company's stockholders at the Annual Meeting.&nbsp; The form of the proposed
2008 Plan Amendment and the 2008 Plan are attached as Annex B.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>As of June 13, 2012, there were 184,022 shares of
Common Stock available for issuance under the 2008 Plan, of which 178,956
shares have been reserved for awards made previously to the Company's
employees, non-employee directors, and consultants that were outstanding as of
such date, and of which 5,066 shares remained available for award of such
date.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The weighted average exercise price of the 178,956
options outstanding under the 2008 Plan is $6.12, well in excess of the current
market price of our Common Stock, which makes such options out-of-the-money and
their exercise is uncertain.&nbsp; Such options are subject to expiration over the
next 6.5 years.&nbsp; Accordingly, the Board believes that the outstanding options
under the 2008 Plan do not currently fill their intended purpose of
incentivizing our employees, non-employee directors, and consultants.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Board considers the proposed increase in the
number of shares of Common Stock available for issuance under the 2008 Plan
desirable because it will give the Board the flexibility to issue additional
awards to employees, non-employee directors, and consultants of the Company and
our affiliates.&nbsp; The Board and management believe that this amount will be
sufficient for the Company's equity compensation needs for the foreseeable
future.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Set forth below is a summary of the principal
provisions of the 2008 Plan, as amended by the proposed 2008 Plan Amendment.&nbsp;
The summary is qualified by reference to the full text of the proposed 2008
Plan Amendment, and the 2008 Plan, both of which are attached to this Proxy
Statement as Annex B.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'><b>Purpose</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify;page-break-after:
avoid'>The purpose of the 2008 Plan is to
promote the growth of the Company by permitting the Company to grant
nonqualified stock options, incentive stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares, performance
units, and other stock-based awards to employees, non-employee directors, and
consultants of the Company and our affiliates.&nbsp; </p>

<p class=Style62 style='text-align:justify'><b>Administration</b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'>The 2008 Plan is administered by the Compensation
Committee of the Board or any other duly authorized committee of the Board
performing similar functions, as appointed from time to time by the Board (the
&quot;Committee&quot;).&nbsp; The Committee has full and exclusive discretion in interpreting
the terms and the intent of the 2008 Plan and any other agreement made in
connection with the 2008 Plan, determining eligibility for awards, and adopting
such rules, regulations, and guidelines for administering the 2008 Plan as the
Committee may deem necessary or proper.&nbsp; Such authority includes, but is not be
limited to, selecting award recipients, establishing all award terms and
conditions and, subject to the 2008 Plan, adopting modifications and
amendments, or subplans, to the 2008 Plan or any award agreement, including,
without limitation, any that are necessary or appropriate to comply with laws
or compensation practices of the jurisdictions in which we and our affiliates
operate.</p>

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<p class=Style61 style='text-align:justify;text-indent:0in;page-break-after:
avoid'><b>Eligibility and Participation</b></p>

<p class=Style61 style='text-align:justify;text-indent:0in;page-break-after:
avoid'>Individuals eligible to participate in
the 2008 Plan include our non-employee directors and all current employees and
consultants of the Company or our affiliates.&nbsp; Subject to the provisions of the
2008 Plan, the Committee may, from time to time, in its sole discretion select
from among eligible employees, non-employee directors, and consultants, those
to whom awards shall be granted under the 2008 Plan, and shall determine in its
discretion the nature, terms, conditions, and amount of each award.&nbsp; </p>

<p class=Style61 style='text-align:justify;text-indent:0in'><b>Duration of the 2008 Plan</b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'>The 2008 Plan was adopted by our Board, and approved
by our stockholders, at our annual meeting held on January 24, 2008 and became
effective on such date.&nbsp; The 2008 Plan shall remain in effect, subject to the
right of the Committee to amend or terminate the 2008 Plan at any time, until
the earlier of the tenth anniversary of the effective date of the 2008 Plan or
when all shares of Common Stock subject to the 2008 Plan have been purchased or
acquired according to the provisions of the 2008 Plan.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><b>Types of Awards</b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Stock Options</u>:&nbsp;
Subject to the terms and provisions of the 2008 Plan, incentive and
nonqualified stock options may be granted to participants in consideration for
the services and benefit that they provide to us in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee.&nbsp; Notwithstanding the foregoing, no incentive stock options may be
granted more than ten years after the effective date of the 2008 Plan.&nbsp; Each
stock option granted to a participant shall expire at such time as the
Committee shall determine at the time of grant; provided, however, that no
stock option shall be exercisable later than the tenth anniversary date of its
grant and provided further that no incentive stock option granted to a
significant stockholder, as defined in the 2008 Plan, shall be exercisable
later than the fifth anniversary of the date of its grant.&nbsp; Stock options
granted under the 2008 Plan shall be exercisable at such times and on the
occurrence of such events, and be subject to such restrictions and conditions,
as the Committee shall in each instance approve, which need not be the same for
each grant or for each participant.</p>

<p class=Style64 style='text-align:justify;text-indent:0in'>The stock option price for each grant of a stock
option shall be determined by the Committee and shall be specified in the award
agreement.&nbsp; The stock option price for a nonqualified stock option may include
a stock option price based on 100% of the fair market value of the shares of
Common Stock on the date of grant, a stock option price that is set at a
premium to the fair market value of the shares of Common Stock on the date of
grant, or a stock option price that is indexed to the fair market value of the
shares of Common Stock on the date of grant, with the index determined by the
Committee in its discretion.&nbsp; The stock option price for an incentive stock
option shall be not less than 100% of the fair market value of the shares of
Common Stock on the date of grant; provided that the stock option price for an
incentive stock option granted to a significant stockholder, as defined in the
2008 Plan, shall be not less than 110% of the fair market value of the shares
of Common Stock.</p>

<p class=Style64 style='text-align:justify;text-indent:0in'><u>Stock Appreciation Rights</u>:&nbsp; Subject to the terms and conditions of the 2008
Plan, stock appreciation rights, or SARs, may be granted to participants at any
time and from time to time and upon such terms as shall be determined by the
Committee in its discretion.&nbsp; The Committee may grant freestanding SARs, tandem
SARs, or any combination of these forms of SARs.&nbsp; A tandem SAR means a SAR that
the Committee specifies is granted in connection with a related stock option
pursuant to the 2008 Plan, the exercise of which shall require forfeiture of
the right to purchase a share of Common Stock under the related stock option
(and when a share of Common Stock is purchased under the stock option, the
tandem SAR shall similarly be cancelled) or a SAR that is granted in tandem
with a stock option but the exercise of such stock option does not cancel the
SAR, but rather results in the exercise of the related SAR.&nbsp; Regardless of
whether a stock option is granted coincident with a SAR, a SAR is not a tandem
SAR unless so specified by the Committee at time of grant.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Restricted Stock and Restricted Stock Unit Awards</u>:&nbsp; Subject to the terms and conditions of the 2008
Plan, the Committee, at any time and from time to time, may grant shares of restricted
stock or restricted stock units to participants in such amounts and upon such
terms as the Committee shall determine.&nbsp; Restricted stock are shares of Common
Stock that are subject to a period of restriction.&nbsp; A restricted stock unit is
an award denominated in units subject to a period of restriction, with a right
to receive shares of Common Stock or cash or a combination thereof upon
settlement of the award.&nbsp; During the period of restriction, restricted stock
and restricted stock units are subject to forfeiture based on the passage of
time, the achievement of performance criteria, or upon the occurrence of other
events as determined by the Committee.&nbsp; To the extent required by law,
participants holding shares of restricted stock shall have the right to
exercise full voting rights with respect to those shares of Common Stock during
the period of restriction.&nbsp; A participant shall have no voting rights with
respect to any restricted stock units.</p>

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<p class=Style64 style='text-align:justify;text-indent:0in'>The Committee shall impose, in the award agreement at
the time of grant or anytime thereafter, such other conditions or restrictions
on any shares of restricted stock or restricted stock units granted pursuant to
the 2008 Plan as it may deem advisable, including, without limitation, a
requirement that participants pay a stipulated purchase price for each share of
restricted stock or each restricted stock unit, restrictions based upon the
achievement of specific performance criteria, time-based restrictions on
vesting following the attainment of the performance criteria, time-based
restrictions, restrictions under applicable laws or under the requirements of
any stock exchange or market upon which such shares are listed or traded, or
holding requirements or sale restrictions placed on the shares of Common Stock
by us upon vesting of such restricted stock or restricted stock units.</p>

<p class=Style64 style='text-align:justify;text-indent:0in'>During the period of restriction, participants holding
shares of restricted stock or restricted stock units granted under the 2008
Plan may, if the Committee so determines, be credited with dividends paid with
respect to the underlying shares or dividend equivalents while they are so held
in a manner and with such restrictions as may be determined by the Committee in
its sole discretion. </p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Performance Shares and Performance Units</u>:&nbsp; Subject to the terms and conditions of the 2008
Plan, the Committee, at any time and from time to time, may grant performance
shares or performance units to participants in such amounts and upon such terms
as the Committee shall determine.&nbsp; Each performance share shall have an initial
value equal to the fair market value of a share of Common Stock on the date of
grant.&nbsp; Each performance unit shall have an initial value that is established
by the Committee at the time of grant which may be less than, equal to, or greater
than the fair market value of a share of Common Stock.&nbsp; The Committee shall set
performance criteria for a performance period in its discretion, which,
depending on the extent to which they are met, will determine, in the manner
determined by the Committee and set forth in the award agreement, the value or
number of each performance share or performance unit that will be paid to the
participant. </p>

<p class=Style64 style='text-align:justify;text-indent:0in'>Subject to the terms of the 2008 Plan, the Committee,
in its sole discretion, may pay earned performance shares or performance units
in the form of cash or in shares of Common Stock (or in a combination thereof)
equal to the value of the earned performance shares or performance units, as
applicable, at the end of the applicable performance period.&nbsp; Any shares of Common
Stock may be granted subject to any restrictions deemed appropriate by the
Committee.&nbsp; The Committee shall determine whether participants holding
performance shares will receive dividend equivalents with respect to dividends
declared with respect to the performance shares.&nbsp; <a name="_Toc180913301"></a><a
name="_Toc180916250"></a><a name="_Toc180916388"></a><a name="_Toc180916526"></a><a
name="_Toc180916718"></a><a name="_Toc180916975"></a><a name="_Toc180917113"></a><a
name="_Toc181171936"></a><a name="_Toc181180439"></a><a name="_Toc181182400"></a><a
name="_Toc184458891"></a><a name="_Toc184520951"></a><a name="_Toc184521044"></a></p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Stock-Based Awards</u>:&nbsp; The Committee may grant other types of equity-based or
equity-related awards not otherwise described by the terms of the 2008 Plan
(including the grant or offer for sale of unrestricted shares of Common Stock)
in such amounts and subject to such terms and conditions, including, but not
limited to, being subject to performance criteria, or in satisfaction of such
obligations, as the Committee shall determine.&nbsp; Such awards may involve the
transfer of actual shares of Common Stock to participants, or payment in cash
or otherwise of amounts based on the value of shares of Common Stock.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Performance Measures</u>:&nbsp; Notwithstanding any other terms of the 2008 Plan, the vesting,
payability or value (as determined by the Committee) of each award other than a
stock option or SAR that, at the time of grant, the Committee intends to be
performance-based compensation to a covered employee, shall be determined by
the attainment of one or more performance goals as determined by the Committee
in conformity with Section 162(m) of the Internal Revenue Code.&nbsp; A list of
general performance measures on which performance goals may be based is set
forth in Article 11 of the 2008 Plan.&nbsp; The Committee shall specify in writing,
by resolution or otherwise, the participants eligible to receive such an award
(which may be expressed in terms of a class of individuals) and the performance
goal(s) applicable to such awards within 90 days after the commencement of the
period to which the performance goal(s) relate(s), or such earlier time as
required to comply with Section&nbsp;162(m) of the Internal Revenue Code.&nbsp; No
such award shall be payable unless the Committee certifies in writing, by
resolution or otherwise, that the performance goal(s) applicable to the award
were satisfied.&nbsp; In no case may the Committee increase the value of an award of
performance-based compensation above the maximum value determined under the
performance formula by the attainment of the applicable performance goal(s),
but the Committee may retain the discretion to reduce the value below such
maximum.</p>

<p class=Style61 style='text-align:justify;text-indent:0in;page-break-after:
avoid'><b>Deferrals</b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'>The Committee may permit or require a participant to
defer such participant's receipt of any award, or payment in settlement or
exercise of any award, provided that any such deferral must comply with the
applicable requirements of Section 409A of the Internal Revenue Code.</p>

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<p class=Style61 style='text-align:justify;text-indent:0in;page-break-after:
avoid'><b>Tax Matters </b></p>

<p class=Style61 style='text-align:justify;text-indent:0in;page-break-after:
avoid'>The following is a brief summary of
certain federal income tax consequences of certain transactions under the 2008
Plan under current laws and regulations.&nbsp; This summary is not intended to be
exhaustive and does not describe state or local tax consequences. </p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Incentive Stock Options</u>:&nbsp; The grant of an incentive stock option will not
result in any immediate tax consequences to us or the optionee.&nbsp; An optionee
will not recognize taxable income, and we will not be entitled to any deduction
upon the timely exercise of an incentive stock option, but the excess of the
fair market value of the shares of Common Stock acquired over the stock option
price will be an item of tax preference for purposes of the alternative minimum
tax.&nbsp; If the optionee does not dispose of the shares of Common Stock acquired
within one year after their receipt (and within two years after the stock
option was granted), gain or loss recognized on the subsequent disposition of
the shares of Common Stock will be treated as long-term capital gain or loss.&nbsp;
Capital losses of individuals are deductible only against capital gains and a
limited amount of ordinary income.&nbsp; In the event of an earlier disposition, the
optionee will recognize ordinary taxable income in an amount equal to the
lesser of (i) the excess of the fair market value of the shares of Common Stock
on the date of exercise over the stock option price, or (ii) if the disposition
is a taxable sale or exchange, the amount of any gain recognized.&nbsp; Upon such a
disqualifying disposition, we will be entitled to a deduction in the same
amount and at the same time as the optionee recognizes such ordinary taxable
income. </p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Nonqualified Stock Options</u>:&nbsp; The grant of a nonqualified stock option will not
result in any immediate tax consequences to us or the optionee.&nbsp; Upon the
exercise of a nonqualified stock option, the optionee will recognize ordinary
taxable income, and we will be entitled to a deduction, equal to the difference
between the stock option price and the fair market value of the shares of
Common Stock&nbsp; acquired at the time of exercise. </p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Stock Appreciation Rights</u>:&nbsp; The grant of either a tandem SAR or a freestanding
SAR will not result in any immediate tax consequences to us or the grantee.&nbsp;
Upon the exercise of either a tandem SAR or a freestanding SAR, any cash
received and the fair market value on the exercise date of any shares of Common
Stock received will constitute ordinary taxable income to the grantee.&nbsp; We will
be entitled to a deduction in the same amount and at the same time. </p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Restricted Stock</u>:&nbsp; A grantee normally will not recognize taxable income upon an award
of restricted stock, and we will not be entitled to a deduction, until the
termination of the restrictions.&nbsp; Upon such termination, the grantee will
recognize ordinary taxable income in an amount equal to the fair market value
of the shares of Common Stock at that time, plus the amount of any dividends
and interest thereon to which the grantee then becomes entitled. However, a
grantee may elect to recognize ordinary taxable income in the year the
restricted stock is awarded in an amount equal to its fair market value at that
time, determined without regard to the restrictions.&nbsp; We will be entitled to a
deduction in the same amount and at the same time as the grantee recognizes
income, subject to the limitations of Section 162(m) of the Internal Revenue
Code.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Restricted Stock Units, Performance Shares and
Performance Units</u>:&nbsp; The grant of a
restricted stock unit, performance share or performance unit will not result in
any immediate tax consequences to us or the grantee.&nbsp; Upon payment of a
restricted stock unit, performance share or performance unit, the grantee will
recognize ordinary taxable income in an amount equal to the fair market value
of the shares of Common Stock or cash received at that time.&nbsp; We will be
entitled to a deduction in the same amount and at the same time, subject to the
limitations of Section 162(m) of the Internal Revenue Code.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Payouts of Performance Compensation Awards</u>:&nbsp; The designation of an award of restricted stock or
performance shares or the grant of a restricted stock unit or a performance
unit as a performance compensation award will not change the tax treatment
described above to an employee who receives such an award or grant.&nbsp; Such a
designation will, however, enable such award or grant to qualify as
performance-based compensation not subject to the $1 million limitation on
deductible compensation under Section 162(m) of the Internal Revenue Code.
Applicable taxes required by law will be withheld from all amounts paid in
satisfaction of an award.&nbsp; The amount of the withholding will generally be
determined with reference to the closing price of the shares of Common Stock as
reported on the NASDAQ Capital Market on the date of determination.</p>

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<p class=Style61 style='text-align:justify;text-indent:0in'><u>Golden Parachute Tax and Section 280G of the Internal
Revenue Code</u>:&nbsp; If an award is
accelerated as a result of a change in control of us, all or a portion of the
value of the award at that time may be a &quot;parachute payment&quot; under Section 280G
of the Internal Revenue Code for certain employees and other individuals who
perform services for us.&nbsp; Section 280G generally provides that if parachute
payments equal or exceed three times an award holder's average W-2 compensation
for the five tax years preceding the year of the change in control, we will not
be permitted to claim its deduction with respect to any &quot;excess parachute
payments&quot; made to the individual. &nbsp;An &quot;excess parachute payment&quot; generally is
the portion of a parachute payment that exceeds such individual's historical
average compensation.&nbsp; Section 280G of the Internal Revenue Code generally
applies to employees or other individuals who perform services for us if within
the 12 month period preceding the change in control the individual is one of
our officers, a stockholder owning more than one percent of the our stock, or a
member of the group consisting of the lesser of the highest paid one percent of
our employees or our highest paid 250 employees.&nbsp; A recipient of an excess
parachute payment is subject to a 20 percent excise tax on such excess
parachute payment under Section 4999 of the Internal Revenue Code.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'>The discussion set forth above is intended only as a
summary and does not purport to be a complete enunciation or analysis of all
potential tax consequences relevant to recipients of awards under the 2008
Plan.&nbsp; We have not undertaken to discuss the tax treatment of awards under the
2008 Plan in connection with a merger, consolidation, or similar transaction.&nbsp;
Such treatment will depend on the terms of the transaction and the method of
dealing with the awards in connection therewith.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><b>Change of Control </b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Accelerated Vesting and Payment</u>:&nbsp; Subject to the provisions of the 2008 Plan or as
otherwise provided in the award agreement, in the event of a change of control,
unless otherwise specifically prohibited under law or by the rules and
regulations of a national securities exchange or market on which the shares are
listed or traded:</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any and all stock options and SARs
granted shall be accelerated to become immediately exercisable in full;</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any period of restriction and other
restrictions imposed on restricted stock or restricted stock units shall lapse,
and restricted stock units shall be immediately settled and payable;</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The target payout opportunities
attainable under all outstanding awards of performance-based restricted stock,
performance-based restricted stock units, performance shares and performance
units (including, but not limited to, awards intended to be performance-based
compensation) shall be deemed to have been fully earned based on targeted
performance being attained as of the effective date of the change of control,
and:</p>

<p class=Style61 style='margin-left:1.0in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The vesting of all awards denominated
in shares of Common Stock shall be accelerated as of the effective date of the
change of control, and shall be paid out to participants within 30 days
following the effective date of the change of control; and</p>

<p class=Style61 style='margin-left:1.0in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Awards denominated in cash shall be
paid to participants in cash within 30 days following the effective date of the
change of control;</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Upon a change of control, unless
otherwise specifically provided in a written agreement entered into between the
participant and us or an affiliate, the Committee shall immediately vest and
pay out all other stock-based awards as determined by the Committee; and</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Committee shall have the ability to
unilaterally determine that all outstanding awards are cancelled upon a change
in control, and the value of such awards, as determined by the Committee in
accordance with the terms of the 2008 Plan and the award agreement, be paid out
in cash in an amount based on the change of control price within a reasonable
time subsequent to the change in control; provided, however, that no such
payment shall be made on account of an incentive stock option using a value
higher than the fair market value on the date of settlement.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><u>Alternate Awards</u>:&nbsp; Subject to certain conditions set forth in the 2008 Plan, no
cancellation, acceleration of vesting, lapsing of restrictions, payment of an
award, cash settlement, or other payment shall occur with respect to any award
if the Committee reasonably determines in good faith prior to the occurrence of
a change of control that such award shall be honored or assumed, or new rights
substituted therefor by any successor, all as described in the 2008 Plan.</p>

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<p class=Style61 style='text-align:justify;text-indent:0in'><u>Compliance with Section 280G of the Internal Revenue
Code</u>:&nbsp; In the event that any
accelerated award vesting or payment received or to be received by a
participant pursuant to the 2008 Plan, referred to herein as a benefit, would
(i) constitute a &quot;parachute payment&quot; within the meaning of and subject to
Section 280G of the Internal Revenue Code and (ii) but for the limitations set
forth in the 2008 Plan, be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code, then such benefit shall be reduced to the extent
necessary so that no portion of the benefit will be subject to the excise tax,
as determined in good faith by the Committee; provided, however, that if, in
the absence of any such reduction (or after such reduction), the participant
believes that the benefit or any portion thereof (as reduced, if applicable)
would be subject to the excise tax, the benefit shall be reduced (or further
reduced) to the extent determined by the participant in his or her discretion
so that the excise tax would not apply.&nbsp; If, notwithstanding any such reduction
(or in the absence of such reduction), the Internal Revenue Service determines
that the participant is liable for the excise tax as a result of the benefit,
then the participant shall be obligated to return to us, within 30 days of such
determination by the Internal Revenue Service, a portion of the benefit sufficient
such that none of the benefit retained by the participant constitutes a
&quot;parachute payment&quot; within the meaning of Section 280G of the Internal Revenue
Code that is subject to the excise tax.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><a
name="_Toc181172030"></a><a name="_Toc181180533"></a><a name="_Toc181182494"></a><a
name="_Toc184458982"></a><a name="_Toc184521042"></a><a name="_Toc184521135"><u>Compliance with Section 409A of the Internal Revenue
Code</u></a>:&nbsp; To the extent applicable,
it is intended that the 2008 Plan and any awards made hereunder shall not
provide for the payment of &quot;deferred compensation&quot; within the meaning of
Section 409A of the Internal Revenue Code or shall be structured in a manner
and have such terms and conditions that would not cause a participant to be
subject to taxes and interest pursuant to Section 409A of the Internal Revenue
Code.&nbsp; Notwithstanding anything in the 2008 Plan or in any award agreement to
the contrary, to the extent that any amount or benefit that would constitute
&quot;deferred compensation&quot; for purposes of Section 409A of the Internal Revenue
Code would otherwise be payable or distributable under the 2008 Plan or any
award agreement by reason of the occurrence of a change of control or the
participant's disability or separation from service, such amount or benefit
will not be payable or distributable to the participant by reason of such
circumstance unless (i) the circumstances giving rise to such change of
control, disability or separation from service meet the description or
definition of &quot;change in control event,&quot; &quot;disability,&quot; or &quot;separation from
service,&quot; as the case may be, in Section 409A of the Internal Revenue Code, and
(ii) the payment or distribution of such amount or benefit would otherwise
comply with Section 409A of the Internal Revenue Code and not subject the
participant to taxes and interest pursuant to Section 409A of the Internal
Revenue Code (which may require, if the participant is a &quot;specified employee&quot; within
the meaning of Section 409A of the Internal Revenue Code, that the payment date
shall not be earlier than the date that is six months after the date of the
participant's separation from service).&nbsp; This provision does not prohibit the
vesting of any award or the vesting of any right to eventual payment or
distribution of any amount or benefit under the 2008 Plan or any award
agreement.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><b>Amendment, Modification, Suspension, and Termination </b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'>The Committee or our Board may, at any time and from
time to time, alter, amend, modify, suspend, or terminate the 2008 Plan in
whole or in part; provided, however, that: </p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Without the prior approval of our
stockholders, stock options and SARs issued under the 2008 Plan will not be
repriced, replaced, or regranted such that the stock option price of a
previously granted stock option or the grant price of a previously granted SAR
is effectively reduced from the original stock option price or grant price.</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; No amendment or modification which
would increase the total number of shares of Common Stock available for
issuance under the 2008 Plan or the total number of shares of Common Stock
available for incentive stock options under the 2008 Plan shall be effective
unless approved by our stockholders.</p>

<p class=Style61 style='margin-left:.5in;text-align:justify;text-indent:-.5in'>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; To the extent necessary under any
applicable law, regulation, or securities exchange or market requirement, no
amendment shall be effective unless approved by our stockholders in accordance
with applicable law, regulation, or securities exchange or market requirement.</p>

<p class=Style61 style='text-align:justify;text-indent:0in'><b>Adjustment of Awards</b></p>

<p class=Style61 style='text-align:justify;text-indent:0in'>The Committee may make appropriate proportionate
adjustments or substitutions in the terms and conditions of, and the criteria
included in, awards in recognition of unusual or nonrecurring events affecting
us or our financial statements or of changes in applicable laws, regulations,
or accounting principles, whenever the Committee determines that such
adjustments are appropriate in order to prevent unintended dilution or
enlargement of the benefits or potential benefits intended to be made available
under the 2008 Plan.</p>

<p class=Style17 style='text-indent:0in'><b>Vote Required for Approval</b></p>

<p class=Style17 style='text-indent:0in'>Approval of Proposal #3 - the stockholder resolution
approving the proposed 2008 Plan Amendment - will require the affirmative vote
of a majority of the votes cast by the holders of our Common Stock present in
person or represented by proxy at the meeting and entitled to vote on the
matter.</p>

<p class=Style17 style='text-indent:0in'><b>THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE &quot;FOR&quot; PROPOSAL #3.</b></p>

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<p class=Style25 align=center style='text-align:center;text-indent:0in;
page-break-after:avoid'><b>INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON</b></p>

<p class=Style25 style='text-indent:0in;page-break-after:avoid'>On June 13, 2012, the Company
entered into the Securities Purchase Agreement with the Investor, pursuant to
which the Company has agreed to issue and sell to the Investor 473,934 Shares
of newly designated Series C Convertible Preferred Stock for an aggregate
purchase price of $2,000,001.48 (i.e., $4.22 per share), subject to the
satisfaction of certain conditions precedent set forth in the Securities
Purchase Agreement.&nbsp; Upon issuance the Shares will be convertible into shares
of our Common Stock at a ratio of two shares of Common Stock for each share of
Series C Convertible Preferred Stock.&nbsp; David L. Dobbin, the Chairman of our
Board, is a principal of the Investor.&nbsp; Accordingly, the Securities Purchase
Agreement constitutes a related party transaction and was reviewed and approved
by the Audit Committee.</p>

<p class=Style25 style='text-indent:0in;page-break-after:avoid'>The Securities Purchase Agreement
dated June 13, 2012 reconfirms and continues the Investor's director
designation rights under the Prior Purchase Agreement, which provide that as
long as the Investor continues to hold at least 50 percent of our outstanding
capital stock, (i) our Board shall consist of no more than seven directors, and
(ii) the Investor shall have the right to designate four individuals for
election to our Board.&nbsp; Pursuant to the designation rights under both the Prior
Purchase Agreement and the Securities Purchase Agreement dated June 13, 2012,
the Investor has designated four director nominees for election by the
stockholders at the Annual Meeting. &nbsp;The four individuals designated by the
Investor are:&nbsp; Neil Calvert, David L. Dobbin, Gary J. Heller, and Alan A.
Teran.&nbsp; Information
concerning the Investor's designees is set forth under the heading &quot;Director
Nominees&quot; under &quot;Proposal #1 - Election of Directors&quot; above.</p>

<p class=Style25 style='text-indent:0in;page-break-after:avoid'>In addition to the Investor's
four designees, both the Prior Purchase Agreement and the Securities Purchase
Agreement dated June 13, 2012 provide that the Investor will vote its shares in
the election of directors in favor of one individual designated by The Bailey
Company and its affiliates (the &quot;Bailey Designee&quot;) and one individual
designated by Eric W. Reinhard and his affiliates (the &quot;Reinhard Designee&quot;).&nbsp;
Geoffrey W. Bailey is the Bailey Designee and Eric W. Reinhard is the Reinhard
Designee.</p>

<p class=MsoNormal align=center style='margin-bottom:12.0pt;text-align:center'><a
name="_Toc92016746"></a><a name="_Toc89839954"></a><a name="_Toc89839459"><b>STOCKHOLDER NOMINATIONS AND OTHER PROPOSALS</b></a></p>

<p class=Style104 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'><a name="_DV_M130"></a>Any stockholder proposal for the annual meeting of
stockholders for the fiscal year ended September 30, 2012, to be held in 2013,
must be received by the Company by December 15, 2012 for the proposal to be
included in the Company's proxy statement and form of proxy for that meeting.&nbsp;
If notice of a proposal for which a stockholder will conduct his or her own
proxy solicitation is not received by the Company by December 15, 2012, such
proposal will be considered untimely pursuant to Rules 14a-4 and 14a-5(e) of
the Securities Exchange Act of 1934, and the person named in proxies solicited
by the Board may use his or her discretionary authority when the matter is
raised at the meeting, without including any discussion of the matter in the
proxy statement.</p>

<p class=Style104 align=center style='margin-top:0in;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center'><b>OTHER MATTERS</b></p>

<p class=Style104 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'><a name="_Toc92016779"></a><a
name="_Toc89839962"></a><a name="_Toc89839467"></a><a name="_DV_M132"></a>As of the date of this Proxy Statement, our Board does
not intend to present at the Annual Meeting any matters other than those
described herein and does not presently know of any matters that will be
presented by other parties.&nbsp; If any other matter is properly brought before the
Annual Meeting for action by the stockholders, proxies in the enclosed form
returned to us will be voted in accordance with the recommendation of our Board
or, in the absence of such recommendation, in accordance with the judgment of
the proxy holder.<a name="_DV_M133"></a></p>

<p class=Style104 align=center style='margin-top:0in;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center'><b>WHERE YOU CAN FIND MORE INFORMATION</b></p>

<p class=Style104 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>The Company
is subject to the informational requirements of the Securities Exchange Act of
1934, as amended.&nbsp; The Company files reports, proxy statements, and other
information with the SEC.&nbsp; The public may read and copy any materials that we
file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E.,
Washington D.C. 20549.&nbsp; The public may obtain information on the operation of
the Public Reference Room by calling 1-800-SEC-0330.&nbsp; The statements and forms
we file with the SEC have been filed electronically and are available for
viewing or copy on the SEC maintained Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC.&nbsp; The Internet address for this site can be
found at www.sec.gov.</p>

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<p class=Style104 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify'>A copy of
the Company's Annual Report on Form 10-K for the fiscal year ended September
30, 2011 and copies of the Company's Quarterly Reports on Form 10-Q for the
fiscal quarters ended December 31, 2011 and March 31, 2012, can be found at the
SEC's Internet site.&nbsp; The Company's Annual Report on Form 10-K (including the
financial information set forth therein) is incorporated by reference into this
Proxy Statement, as described below.&nbsp; The Company will provide upon written
request, without charge to each stockholder of record as of the record date, a
copy of the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2011, as filed with the SEC.&nbsp; Any exhibits listed in the Form
10-K report also will be furnished upon request at the actual expense incurred
by the Company in furnishing such exhibits.&nbsp; Any such requests should be
directed to the attention of our corporate secretary at the Company's corporate
offices located at 601 Corporate Circle, Golden, Colorado 80401.</p>

<p class=Style104 align=center style='margin-top:0in;margin-right:0in;
margin-bottom:12.0pt;margin-left:0in;text-align:center;page-break-after:avoid'><b>INCORPORATION OF DOCUMENTS BY REFERENCE</b></p>

<p class=Style104 style='margin-top:0in;margin-right:0in;margin-bottom:12.0pt;
margin-left:0in;text-align:justify;page-break-after:avoid'><a name="_DV_M134"></a>The SEC allows the Company to &quot;incorporate by
reference&quot; into this Proxy Statement documents that we file with the SEC.&nbsp; This
means that the Company can disclose important information to you by referring
to those documents.&nbsp; The information incorporated by reference is considered to
be a part of this Proxy Statement.&nbsp; We incorporate by reference the following
information form the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 2011:</p>

<p class=Style28 style='margin-left:23.05pt;text-indent:-23.05pt'><a
name="_DV_M136"></a>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the
information under the caption &quot;Item 6. Management's Discussion and Analysis of
Financial Condition and Results of Operations&quot;;</p>

<p class=Style28 style='margin-left:23.05pt;text-indent:-23.05pt'><a
name="_DV_M137"></a>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the
information under the caption &quot;Item 7. Financial Statements&quot;; and</p>

<p class=Style28 style='margin-left:23.05pt;text-indent:-23.05pt'><a
name="_DV_M138"></a>&#149;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the
information under the caption &quot;Item 8. Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure&quot;.</p>

<p class=Style28 style='margin-left:0in;text-align:justify;text-indent:0in'>STOCKHOLDERS ARE URGED TO
IMMEDIATELY MARK, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.&nbsp; YOUR VOTE IS IMPORTANT.</p>

<p class=MsoNormal style='margin-top:12.0pt;margin-right:0in;margin-bottom:
6.0pt;margin-left:0in'><a name="_DV_M139"></a><b>BY
ORDER OF THE BOARD OF DIRECTORS</b></p>



<p class=MsoNormal style='margin-bottom:6.0pt'><i>/Boyd
E. Hoback/</i></p>

<p class=MsoNormal><a name="_DV_M140"></a>Boyd
E. Hoback</p>

<p class=MsoNormal><a name="_DV_M141"></a>President
and Chief Executive Officer</p>



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<p class=MsoNormal align=right style='text-align:right'><b>ANNEX A</b></p>



<p class=MsoNormal align=center style='text-align:center'><b><u>Securities Purchase Agreement</u></b></p>





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



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



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<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></a> 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.</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>



<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>

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<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>



<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>2.1.&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&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;&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>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(e)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(l)&nbsp;&nbsp;&nbsp;&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;&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;&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>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(o)&nbsp;&nbsp;&nbsp;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(q)&nbsp;&nbsp;&nbsp;&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;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(t)&nbsp;&nbsp;&nbsp;&nbsp;&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>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(u)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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>

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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(h)&nbsp;&nbsp;&nbsp;&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;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&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=MsoFooter align=center style='text-align:center'>A-8</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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=MsoFooter align=center style='text-align:center'>A-9</p>



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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.7&nbsp;&nbsp;&nbsp;&nbsp;&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;&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>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:1.5in'>(ii)&nbsp;&nbsp;&nbsp;&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=MsoFooter align=center style='text-align:center'>A-10</p>



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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>4.9.&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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;&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>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:1.0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:.5in'>6.2&nbsp;&nbsp;&nbsp;&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=MsoFooter align=center style='text-align:center'>A-12</p>



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</div>



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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>6.3&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If
to the Investor:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.4&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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=MsoFooter align=center style='text-align:center'>A-13</p>



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<p class=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.7&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:27.0pt'>7.10&nbsp;&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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>



<p class=MsoNormal align=center style='text-align:center'>[Remainder of Page Intentionally Left Blank.]</p>

<p class=MsoNormal align=center style='text-align:center'>[Signature Pages Follow.]</p>

<p class=MsoFooter align=center style='text-align:center'>A-14</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;&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;&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>



<p class=MsoFooter align=center style='text-align:center'>A-15</p>



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<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 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;&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;&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. <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. <u>Dividends</u>.</p>



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&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'>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;&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=MsoFooter align=center style='text-align:center'>A-16</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>

<p class=MsoNormal style='line-height:1.0pt'><sup>&nbsp;</sup></p>

<sup><br
clear=all style='page-break-before:always'>
</sup>

<p class=MsoNormal style='line-height:1.0pt'><sup>&nbsp;</sup></p>

<p class=MsoNormal style='line-height:1.0pt'><sup>&nbsp;</sup></p>



<p class=MsoNormal style='line-height:1.0pt'><sup>&nbsp;</sup></p>

<p class=MsoNormal><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'>A-17</p>



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



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



<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(a)&nbsp;&nbsp;&nbsp;&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;&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;&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=MsoFooter align=center style='text-align:center'>A-18</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(ii)&nbsp;&nbsp;&nbsp;&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>

<p class=MsoFooter align=center style='text-align:center'>A-19</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.5in'>(iii)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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;&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;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&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=MsoFooter align=center style='text-align:center'>A-20</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(c)&nbsp;&nbsp;&nbsp;&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;&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;&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 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;&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;&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;&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;&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;&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;&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'>A-21</p>



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<p class=MsoNormal style='text-align:justify;text-indent:1.0in'>(g)&nbsp;&nbsp;&nbsp;&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;&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;&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;&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=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&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;&nbsp;&nbsp;&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;&nbsp;&nbsp;&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;&nbsp;&nbsp;&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;&nbsp;&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;&nbsp;&nbsp;&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;&nbsp;&nbsp;&nbsp;&nbsp; President
and Chief Executive Officer</p>



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<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;&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;&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;&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;&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;&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;&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=MsoNormal style='text-align:justify;text-indent:1.0in'>(b)&nbsp;&nbsp;&nbsp;&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;&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=MsoFooter align=center style='text-align:center'>A-23</p>



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<p class=MsoNormal style='text-align:justify;text-indent:.5in'>3.&nbsp;&nbsp;&nbsp;&nbsp;&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>

<p class=MsoNormal align=center style='text-align:center'>[Remainder of Page Intentionally Left Blank.]</p>

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

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

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

<p class=MsoFooter align=center style='text-align:center'>A-24</p>



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<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center;
line-height:150%'><b><u>EXHIBIT
C</u></b></p>

<p class=MsoNormal align=center style='margin-bottom:6.0pt;text-align:center;
line-height:150%'><b>SCHEDULE
OF EXCEPTIONS</b></p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>Pursuant to the Securities Purchase Agreement, dated
as of June 13, 2012 (the <b>&quot;Purchase Agreement&quot;</b>), by and between Good
Times Restaurant Inc., a Nevada corporation (the <b>&quot;Company&quot;</b>), and Small
Island Investments Limited, a Bermuda corporation (the <b>&quot;Investor&quot;</b>), this
Schedule of Exceptions is being delivered by the Company to the Investor.&nbsp; All
defined terms herein have the same meanings assigned to them in the Purchase
Agreement, unless otherwise defined.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The representations and warranties of the Company set
forth in Section 3.1 of the Purchase Agreement are made and given subject to
the disclosures in this Schedule of Exceptions.&nbsp; The section numbers in this
Schedule of Exceptions correspond to the section numbers of the Purchase
Agreement requiring such disclosure.&nbsp; Any information disclosed herein under
any section number in Section 3.1 of the Purchase Agreement shall be deemed to
be disclosed and incorporated into any other section number under Section 3.1
of the Purchase Agreement where the applicability of such disclosure to such
other section number is reasonably apparent to the Investor based on the face
of such disclosure. </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(e)</u>:&nbsp;
As discussed in Section 3.1(g) of this Schedule of Exceptions, the Company
intends to obtain waivers from its Series B investors of their participation
rights with respect to this transaction.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(g)</u>:&nbsp;
Immediately prior to the Closing, the authorized capital stock of the Company
consists of (i) 50,000,000 shares of Common Stock, par value $0.001 per share,
of which 2,726,214 shares are issued and outstanding, fully paid and
non-assessable, and (ii) 5,000,000 shares of Preferred Stock, par value $0.01
per share, none of which are issued and outstanding.&nbsp; As of immediately prior
to the Closing, the Company has reserved an aggregate of 184,022 shares of its
Common Stock for issuance under the Company's Omnibus Equity Plan (the <b>&quot;Plan&quot;</b>),
of which options to purchase 178,956 shares of Common Stock have been issued
and the remaining 5,066 shares remain available under the Plan.&nbsp; In addition,
the Company has reserved an aggregate of 101,704 shares of its Common Stock for
issuance upon the exercise of outstanding warrants.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Company has granted Participation Rights to the
holders of the shares of Common Stock issued upon conversion of the Series B
Convertible Preferred Stock.&nbsp; The Series B investors will waive their right to
participation in connection with this transaction.&nbsp; </p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(j)</u>:&nbsp;
None.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(k)</u>:&nbsp;
None.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(l)</u>:&nbsp;
None.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(q)</u>:
The Company's corporate headquarters are located in a building owned by The
Bailey Company and in which The Bailey Company also has its corporate
headquarters.&nbsp; The Company currently leases its executive office space of
approximately 3,693 square feet from The Bailey Company for approximately
$55,000 per year.&nbsp; The lease expired September 30, 2009 and the Company
continues to lease the space on a month to month basis.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>The Bailey Company is also the owner of one franchised
Good Times Drive Thru restaurant which is located in Loveland, Colorado and was
the owner of one franchised restaurant in Thornton, Colorado which was closed
in October 2009. The Bailey Company has entered into two franchise and
management agreements with the Company.&nbsp; Franchise royalties and management
fees paid under those agreements totaled approximately $78,000 and $94,000 for
the fiscal years ending September 30, 2009 and 2008, respectively.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'>On April 6, 2012, the Company entered into a financial
advisory services agreement with Heathcote Capital LLC (&quot;Heathcote&quot;), pursuant
to which Heathcote will provide the Company with exclusive financial advisory
services in connection with a possible strategic transaction. Gary J. Heller, a
member of the Company's Board of Directors, is the principal of Heathcote.</p>

<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(t)</u>:
The Company has granted registration rights to in connection with shares of its
Common Stock issuable upon exercise of certain outstanding warrants.&nbsp; </p>

<p class=MsoFooter align=center style='text-align:center'>A-25</p>



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<p class=MsoNormal style='margin-bottom:12.0pt;text-align:justify'><u>Section 3.1(u)</u>:&nbsp;
On May 3, 2012, the Company received a letter from The NASDAQ Stock Market
stating that the staff has rejected the Company's proposed compliance plan for
continued listing on The NASDAQ Capital Market because no formal agreements or
contracts had been yet signed with respect to a proposed acquisition or equity
financing.&nbsp; The Company has appealed the staff's determination by requesting a
hearing before a NASDAQ Listing Qualifications Panel, which had the effect of
staying the delisting of the Company's securities.&nbsp; If the Panel does not grant
the Company an extension to complete the transaction, the Company's securities
will be delisted from NASDAQ.</p>





<p class=MsoFooter align=center style='text-align:center'>A-26</p>



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<p class=MsoNormal align=right style='text-align:right'><b>ANNEX B</b></p>



<p class=MsoNormal align=center style='text-align:center'><b><u>2008 Plan Amendment</u></b></p>



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

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

<p class=MsoNormal align=center style='text-align:center'><b>2008 OMNIBUS EQUITY INCENTIVE COMPENSATION PLAN</b></p>



<p class=MsoNormal style='text-align:justify'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Good
Times Restaurants Inc. (the &quot;Company&quot;) previously approved and adopted the Good
Times Restaurants Inc. 2008 Omnibus Equity Incentive Compensation Plan (the
&quot;2008 Plan&quot;) to promote the success and enhance the value of the Company by
linking the personal interests of the 2008 Plan's participants to those of the
Company's stockholders and by providing such individuals with an incentive for
outstanding performance in order to help grow the Company and to generate
superior returns to its stockholders.&nbsp; By this Amendment, the Company desires
to amend the 2008 Plan to increase the number of shares available under the
2008 Plan.</p>



<p class=Style146 style='margin-left:0in'>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Capitalized terms used
but not otherwise defined herein shall have the respective meanings assigned to
such terms in the 2008 Plan.</p>

<p class=Style146 style='margin-left:0in'>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The effective date of
this Amendment to the 2008 Plan shall be [________], 2012.</p>

<p class=Style146 style='margin-left:0in'>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section 4.1 of the
2008 Plan is amended and restated in its entirety as follows:</p>

<p class=MsoNormal style='margin-top:0in;margin-right:1.0in;margin-bottom:0in;
margin-left:1.0in;margin-bottom:.0001pt;text-align:justify'>&quot;<u>Number of Shares Available for Awards</u>. &nbsp;Subject
to adjustment as provided in Section 4.2 herein, the number of Shares hereby
reserved for issuance to Participants under the Plan shall be 500,000 (such
total number of Shares, including such adjustment, the &quot;Total Share
Authorization&quot;).&nbsp; Any Shares issued in connection with an Option or SAR shall
be counted against the Total Share Authorization limit as one (1) Share for
every one (1) Share issued; for Awards other than Options and SARs, any Shares
issued shall be counted against the Total Share Authorization limit as two (2)
Shares for every one (1) Share issued.&nbsp; The maximum aggregate number of Shares
that may be issued through Nonqualified Stock Options shall be equal to the
Total Share Authorization.&nbsp; The maximum aggregate number of Shares that may be
issued through Incentive Stock Options shall be equal to the Total Share
Authorization.&quot; </p>



<p class=Style146 style='margin-left:0in'>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Amendment shall
amend only the provisions of the 2008 Plan as set forth herein.&nbsp; Those
provisions of the 2008 Plan not expressly amended hereby shall be considered in
full force and effect.</p>

<p class=Style146>IN WITNESS
WHEREOF, the Company has caused this Amendment to be executed by its duly
authorized representative on this ____ day of ________, 2012.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style112><b>GOOD TIMES RESTAURANTS
  INC.</b></p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style112 style='margin-bottom:0in;margin-bottom:.0001pt'>By: _________________________________ </p>
  </td>
 </tr>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=338 valign=top style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=338 style='width:253.8pt;padding:0in 5.4pt 0in 5.4pt'>
  <p class=Style112 style='margin-bottom:0in;margin-bottom:.0001pt'>Its: _________________________________ </p>
  </td>
 </tr>
</table>





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



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<div class=WordSection7>









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

<p class=MsoNormal><b>&nbsp;</b></p>

<p class=Style17 style='margin-bottom:0in;margin-bottom:.0001pt;text-indent:
0in'><b>THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS IN CONNECTION WITH THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 22, 2012.</b></p>

<p class=Style17 style='margin-bottom:0in;margin-bottom:.0001pt;text-indent:
0in'><b>&nbsp;</b></p>

<p class=MsoNormal style='text-align:justify'>The
undersigned hereby revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held on August 22, 2012 and
the Proxy Statement, and appoints Boyd E. Hoback and Susan M. Knutson (or
either of them), the proxy of the undersigned, each with full power of
substitution, to vote all shares of common stock of Good Times Restaurants
Inc., a Nevada corporation (the &quot;Company&quot;), that the undersigned is entitled to
vote, either on his or her own behalf or on behalf of any entity or entities,
at the Annual Meeting of Stockholders of the Company to be held on August 22,
2012, beginning at 9:00 a.m. Mountain Daylight Time, at the Company's corporate
offices, which are located at 601 Corporate Circle, Golden, Colorado 80401, and
at any adjournment or postponement thereof, with the same force and effect as
the undersigned might or could do if personally present thereat.&nbsp; The shares
represented by this proxy shall be voted in the matter set forth herein.</p>



<p class=MsoNormal style='text-align:justify'><b>PROPOSAL
#1 - ELECTION OF DIRECTORS</b>:&nbsp; To elect
seven directors of the Company to serve for the next year.</p>



<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b><u>Director Nominees</u></b><b>:</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>&nbsp;</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Geoffrey
  R. Bailey</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Neil
  Calvert</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>David
  L. Dobbin</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Boyd
  E. Hoback</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Gary
  J. Heller</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Eric
  W. Reinhard</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>

  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Alan
  A. Teran</b></p>
  </td>
  <td width=58 valign=top style='width:.6in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[
  &nbsp;]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='text-align:justify'><b>[&nbsp;
  ]</b></p>
  </td>
 </tr>
</table>







<p class=Style17 style='margin-bottom:6.0pt;text-indent:0in'><a
name="_Toc89840040"></a><a name="_Toc89839545"><b>PROPOSAL #2 - APPROVAL OF
INVESTMENT TRANSACTION</b></a>:&nbsp;
To
approve a $2,000,001.48 equity investment in the Company through the issuance
of 473,934 Shares of newly designated Series C Convertible Preferred Stock of
the Company at a purchase price of $4.22 per share, to Small Island Investments
Limited, a Bermuda corporation, referred to herein as the &quot;Investment
Transaction&quot;.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>[&nbsp; ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>[&nbsp; ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>[&nbsp; ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
 </tr>
</table>

<p class=Style17 style='margin-bottom:6.0pt;text-indent:0in'><b>PROPOSAL #3 -
APPROVAL OF 2008 PLAN AMENDMENT</b>:&nbsp; To approve an amendment to the Company's 2008
Omnibus Equity Incentive Compensation Plan to increase the number of shares of
the Company's common stock available for issuance thereunder to a total of
500,000 shares, referred to herein as the &quot;2008 Plan Amendment&quot;.</p>

<table class=MsoNormalTable border=0 cellspacing=0 cellpadding=0
 style='border-collapse:collapse'>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>For</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>[&nbsp; ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>Against</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>[&nbsp; ]</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>Abstain</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>[&nbsp; ]</b></p>
  </td>
 </tr>
 <tr>
  <td width=173 valign=top style='width:1.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=77 valign=top style='width:.8in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
  <td width=48 valign=top style='width:.5in;padding:0in 5.4pt 0in 5.4pt'>
  <p class=MsoNormal style='margin-bottom:12.0pt'><b>&nbsp;</b></p>
  </td>
 </tr>
</table>

<p class=Style17 style='text-indent:0in'>This proxy when properly executed will be voted in
the manner directed by the undersigned.</p>

<p class=Style17 style='text-indent:0in'><b>If this proxy is properly executed but no voting
directions are given, this proxy will be voted &quot;For&quot; the election of each of
the director nominees set forth above and &quot;For&quot; the approval of each of
Proposals #2 and #3 set forth above.</b></p>

<p class=MsoFooter align=center style='text-align:center'>B-11</p>



<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>



<br
clear=all style='page-break-before:always'>










<p class=Style17 style='text-indent:0in'>This proxy also confers discretionary authority to
the proxies to vote on any other matters that may properly be presented at the
meeting.&nbsp; As of the date of the accompanying Proxy Statement, the Company did
not know of any other matters to be presented at the meeting.&nbsp; If any other
matters are properly presented at the meeting, this proxy will be voted in
accordance with the recommendations of the Company's Board of Directors.</p>

<p class=Style17 style='text-indent:0in'>Please sign exactly as your name appears below.&nbsp;
When joint tenants hold shares, both should sign.&nbsp; When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.&nbsp;
If a corporation, please sign in full corporate name by the president or other
authorized officer.&nbsp; If a partnership or limited liability company, please sign
in such name by an authorized person.</p>

<p class=Style17 style='text-indent:0in'>Please complete, date and sign this proxy card and
return it promptly in the accompanying envelope.</p>

<p class=MsoNormal style='margin-bottom:12.0pt'>Shares
Owned: _____________________________ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dated: ____________________________ </p>

<p class=MsoNormal>________________________________________ &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; __________________________________ </p>

<p class=MsoNormal style='margin-bottom:6.0pt'>Signature
of Shareholder &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Signature
(if held jointly)</p>

<p class=MsoNormal style='margin-right:-.5in'>(Sign
exactly as name appears on stock certificate</p>







<div class=MsoNormal align=center style='text-align:center'>

<hr size=2 width="100%" noshade style='color:navy' align=center>

</div>





</div>

</body>

</html>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
