ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On May 7, 2020, Good Times Restaurants Inc., a Nevada corporation, and three of
its wholly-owned subsidiaries, Bad Daddy's International, LLC, Good Times
Drive-Thru Inc. and BD of Colorado, LLC (each a "Borrower"), entered into
unsecured loans in the aggregate principal amount of $11,645,000 (the "Loans")
with Cadence Bank, N.A. (the "Lender") pursuant to the Paycheck Protection
Program (the "PPP"), which is sponsored by the Small Business Administration
(the "SBA"). The PPP is part of the Coronavirus Aid, Relief and Economic
Security Act (the "CARES Act").
The Loans are evidenced by individual promissory notes of each of the Borrowers
dated April 29, 2020 executed by each Borrower on May 7, 2020 (together, the
"Notes") in favor of the Lender which Notes bear interest at the rate of 1.00%
per annum. All or a portion of the Loans may be forgiven by the SBA upon
application by the Borrowers accompanied by documentation of expenditures in
accordance with SBA requirements under the PPP, which includes employees being
kept on the payroll for eight weeks after the date of the Loans and the proceeds
of such Loans being used for payroll, rent, mortgage interest or utilities.
The SBA and the Treasury continue to develop and issue new and updated guidance
regarding the PPP loan application process, including guidance regarding
required borrower certifications and requirements for forgiveness of loans made
under the PPP. The Company continues to track the guidance as it is released and
assess and re-assess various aspects of its application as necessary based on
the guidance. However, in the absence of final guidance or regulations and based
on the Company's projected ability to use the loan proceeds for qualifying
expenses, the Company cannot give any assurance that the Loans will be
forgivable in whole or in part.
In the event that any portion of the Loans are not forgiven in accordance with
the PPP, following a deferral period that ends November 2, 2020, the Company
will be required to pay the Lender monthly payments of principal and interest to
repay the PPP Loan in full on or before April 29, 2022. The Loans may be prepaid
by the Company at any time prior to maturity with no prepayment penalties. The
Notes contain certifications and agreements related to the PPP, as well as
customary default and other provisions.
The foregoing description of the Notes is qualified in its entirety by
references to the Notes, copies of which are filed as Exhibits 10.1, 10.2, 10.3
and 10.4 to this Current Report on Form 8-K and incorporated herein by
reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth above in Item 1.01 is hereby incorporated by reference
into this Item 2.03.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
Exhibit Number Title
10.1 Promissory Note, dated as of May 7, 2020, by Good Times
Restaurants, Inc. in favor of Cadence Bank, NA
10.2 Promissory Note, dated as of May 7, 2020, by Bad Daddy's
International, LLC. in favor of Cadence Bank, NA
10.3 Promissory Note, dated as of May 7, 2020, by Good Times
Drive-Thru Inc. in favor of Cadence Bank, NA
10.4 Promissory Note, dated as of May 7, 2020, by BD of Colorado,
LLC. in favor of Cadence Bank, NA
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