SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, Texas 75062
(214) 258-8507
May 16, 1996
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of the Company to be held at 9:00 a.m. local
time, Thursday, June 20, 1996, at the DoubleTree - Park
West Hotel located at 1590 LBJ Freeway, Dallas, Texas.
At the meeting you will be asked to re-elect three
current directors, to authorize amendments to the 1988
Non-Statutory Stock Option Plan, the Non-Employee
Directors Stock Option Plan, and the Stock Grant Plan, to
authorize an amendment to the Restated Articles of
Incorporation, and to transact such other business as
may properly come before the meeting.
The formal Notice of the Annual Meeting of Stockholders
and Proxy Statement accompanying this letter provide
detailed information concerning matters to be considered
and acted upon at the meeting.
It is important that your shares be represented at the
meeting, whether or not you attend personally. I urge
you to sign, date and return the enclosed proxy at your
earliest convenience.
Sincerely,
RICHARD M. FRANK
Chairman and Chief
Executive Officer
SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, Texas 75062
(214) 258-8507
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 1996
To the Stockholders of
ShowBiz Pizza Time, Inc.:
Notice is hereby given that the annual meeting of stockholders of
ShowBiz Pizza Time, Inc., a Kansas corporation, will be held at the
DoubleTree - Park West Hotel located at 1590 LBJ Freeway, Dallas,
Texas on June 20, 1996, at 9:00 a.m. local time, for the following
purposes:
1. To re-elect three Class II directors to serve for a term
of three years each or until their respective successors
are elected and qualified or until their earlier
resignation or removal;
2. To authorize amendments to the 1988 Non-Statutory Stock
Option Plan, the Non-Employee Directors Stock Option
Plan, and the Stock Grant Plan;
3. To authorize an amendment to the Restated Articles of
Incorporation ; and
4. To transact such other business as may properly come
before the meeting.
It is desirable that as large a proportion as possible of the
stockholders' interests be represented at the meeting. Whether or
not you plan to be present at the meeting, you are requested to
sign and return the enclosed proxy in the envelope provided so that
your stock will be represented. The giving of such proxy will not
affect your right to vote in person, should you later decide to
attend the meeting. Please date and sign the enclosed proxy and
return it promptly in the enclosed envelope.
Only stockholders of record at the close of business on May 15,
1996 are entitled to notice of, and to vote at, the meeting or any
adjournment thereof.
By Order of the Board of Directors,
MARSHALL R. FISCO, JR.
Secretary
Irving, Texas
May 16, 1996
SHOWBIZ PIZZA TIME, INC.
4441 WEST AIRPORT FREEWAY
IRVING, TEXAS 75062
(214) 258-8507
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 20, 1996
This proxy statement is furnished to stockholders of ShowBiz Pizza
Time, Inc., a Kansas corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the
Company (the "Board of Directors") for use at the annual meeting of
stockholders (the "Annual Meeting") to be held at 9:00 A.M. local
time, on June 20, 1996 at the DoubleTree - Park West Hotel located
at 1590 LBJ Freeway, Dallas, Texas. Proxies in the form enclosed
will be voted at the Annual Meeting, if properly executed, returned
to the Company prior to the Annual Meeting and not revoked. A
proxy may be revoked at any time before it is voted either in
person at the Annual Meeting or by giving prior written notice to
the Secretary of the Company. This proxy statement was first sent
or given to the Company's stockholders on or about May 24, 1996.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of, and to vote
at, the Annual Meeting is May 15, 1996. At the close of business
on that date, the Company had issued and outstanding and entitled
to receive notice of and vote at the Annual Meeting 12,235,927
shares of Common Stock, $0.10 par value (the "Common Stock"), and
49,570 shares of Class A Preferred Stock, $60 par value (the
"Preferred Stock"). No other class of securities of the Company is
entitled to notice of, or to vote at, the Annual Meeting of
stockholders.
ACTION TO BE TAKEN AT THE ANNUAL MEETING
The accompanying proxy, unless the stockholder otherwise specifies
in the proxy, will be voted:
1. For the re-election of the three Class II director
nominees named herein, to serve for a term of three years each or
until their respective successors shall be elected and qualified or
until their earlier resignation or removal;
2. To authorize amendments to the 1988 Non-Statutory Stock
Option Plan, the Non-Employee Directors Stock Option Plan, and the
Stock Grant Plan;
3. To authorize an amendment to the Restated Articles of
Incorporation; and
4. In the discretion of the proxyholders, as to the
transaction of such other business as may properly come before
the Annual Meeting.
Where stockholders have appropriately specified how their proxies
are to be voted, they will be voted accordingly. If any other
matter or business is brought before the Annual Meeting, the
proxyholders may vote the proxies in their discretion. The Board of
Directors is not presently aware of any other matters or business
to be brought before the Annual Meeting.
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority
of the aggregate outstanding shares of Common Stock and Preferred
Stock is necessary to constitute a quorum at the Annual Meeting.
The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock and Preferred Stock, voting
together as one class, represented in person or by proxy at the
Annual Meeting, is necessary to approve all matters to be submitted
to the stockholders other than the election of directors. In
deciding all questions, a holder is entitled to one vote, in person
or by proxy, for each share of Common Stock or Preferred Stock held
in his name on the record date. Solely with respect to the
election of directors, the bylaws of the Company provide that a
stockholder shall have that number of votes equal to the number of
shares held by him as of the record date multiplied by the number
of directors being elected and is entitled to cumulate his votes
and cast them all for any single nominee or to spread his votes, so
cumulated, among as many nominees and in such manner as he sees
fit. Directors must be elected by a plurality of the votes cast.
A stockholder who is present, in person or by proxy, and who
withholds his vote in the election of directors will be counted for
purposes of determining whether a quorum exists, but the
withholding of his vote will not affect the election of directors.
A stockholder who is present, in person or by proxy, and who
abstains from voting on other proposals, will be counted for
purposes of a quorum, and the abstention will have the same effect
as a vote against the proposals. Brokers' "non-votes" are treated
the same as votes withheld or abstained.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the
power to revoke it at any time before it is voted at the Annual
Meeting. It may be revoked by filing with the Secretary of the
Company, Marshall R. Fisco, Jr., 4441 West Airport Freeway, Irving,
Texas 75062, a written notice of revocation or duly executed proxy
bearing a later date, or it may be revoked by attending the Annual
Meeting and voting in person. Attendance at the Annual Meeting
will not, by itself, revoke a proxy.
PRINCIPAL HOLDERS OF CAPITAL STOCK
The table on the following page sets forth information, as of
May 15, 1996, relating to the beneficial ownership of the Company's
Common Stock and Preferred Stock by: (i) each director and
executive officer (as hereinafter defined) of the Company as of
such date, (ii) the directors and the executive officers of the
Company as a group (11 persons) as of such date, and (iii) each
person, as that term is used in the Securities Exchange Act of
1934, as amended (the "Exchange Act") known to the Company to own
beneficially 5% or more of the outstanding shares of Common Stock
or Preferred Stock. Except as otherwise indicated, each of the
persons named in the table is believed by the Company to possess
sole voting and investment power with respect to the shares of
Common Stock or Preferred Stock beneficially owned by such person.
Information as to the beneficial ownership of Common Stock and
Preferred Stock by directors and executive officers of the Company
has been furnished by the respective directors and executive
officers.
Percentage of
Class Outstanding
------------------
Name (and address Number of Number of Stock
for 5% beneficial Shares of Shares of ------------
owners Common Stock Preferred Stock Common Preferred
- --------------- ----------- --------------- ------- ---------
Charles A. Crocco, Jr.
4,430(A)(B)(Q) 0 (C) 0.0%
Richard M. Frank
690,024(D) 0 5.6% 0.0%
Anthony J. Gumbiner
2,500(A)(B)(E)(F)(Q) 0 0.0% 0.0%
Richard T. Huston
49,212(G) 0 (C) 0.0%
Robert L. Lynch
3,113(A)(B)(Q) 0 (C) 0.0%
Michael H. Magusiak
58,497(H) 0 (C) 0.0%
Louis P. Neeb
2,500(B)(Q) 0 00.0% 0.0%
Larry G. Page
164(I) 0 (C) 0.0%
Cynthia I. Pharr
2,500(B)(Q) 0 0.0% 0.0%
J. Thomas Talbot
10,000(A)(B)(Q) 0 (C) 0.0%
Brian M. Troup
2,500(A)(B)(E)(J)(Q) 0 0.0% 0.0%
Directors and Executive
Officers as a Group
827,776 0 6.8% 0.0%
The Hallwood Group
Incorporated
3710 Rawlins, Suite 1500
Dallas, TX 75219
1,781,693 (K) 0 14.6% 0.0%
Massachusetts Financial
Services Company
500 Boylston Street
Boston, MA 02116-0741
1,139,900(L) 0 9.3% 0.0%
Snyder Capital Management, Inc.
350 California Street
Suite 1460
San Francisco, CA 94104
1,184,700(M) 0 9.7% 0.0%
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, PA 15258
669,000(N) 0 5.5% 0.0%
Time Warner, Inc.
75 Rockefeller Plaza
New York, NY 10019
0 16,011(O) 0.0% 32.3%
River Forest State Bank
& Trust Co.
7727 West Lake Street
River Forest, IL 60305
0 3,139 (P) 0.0% 6.3%
(Footnotes appear on the following page)
(A) Excludes shares owned of record by The Hallwood Group, Inc.
("Hallwood"), described in Footnote K.
(B) Excludes 5,000 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(C) Constitutes less than 1% of the Company's outstanding Common
Stock.
(D) Includes 110,083 shares which are subject to forfeiture
pursuant to the terms of Mr. Frank's employment agreement. See
"Employment Agreements." Excludes 10,000 shares purchasable
pursuant to options issued under the Company's 1988 Non-Statutory Stock
Option Plan which are not exercisable within
60 days of the date hereof.
(E) Excludes 200,144 shares pledged to IBJ Schroder Bank & Trust
Company, as trustee under an indenture, as collateral for
bonds issued by Hallwood Holdings SA, a Luxembourg corporation
("HHSA"). HHSA previously owned certain warrants issued by
the Company which entitled HHSA to purchase such shares, but
HHSA distributed such warrants to its shareholders as part of
a reduction of capital and premium in July 1993. HHSA no
longer claims any beneficial interest in the shares, but the
shares remain pledged as collateral for bonds issued by HHSA.
Mr. Gumbiner is a director of HHSA. Mr. Gumbiner's address is
c/o The Hallwood Group Incorporated, 3710 Rawlins, Suite 1500,
Dallas, TX 75219. Mr. Troup is also a director of HHSA. Mr.
Troup's address is c/o The Hallwood Group Incorporated, 3710
Rawlins, Suite 1500, Dallas, TX 75219. This note is based
upon information in Amendment No. 3 to Schedule 13D of HHSA
dated July 5, 1993.
(F) Excludes 496,382 shares held by a trust for which Mr. Gumbiner
has the power to designate and replace the trustees, 120,086
shares of which are included in footnote (E).
(G) Includes 30,600 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan but
excludes 54,900 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(H) Includes 31,320 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan but
excludes 92,880 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(I) Excludes 24,240 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(J) Excludes 330,922 shares held by a trust for which Mr. Troup
has the power to designate and replace the trustees, 80,058
shares of which are included in footnote (E).
(K) Based on information in Form 4 dated May 9, 1996. The
directors of Hallwood are Anthony J. Gumbiner, Brian M. Troup,
Charles A. Crocco, Jr., Robert L. Lynch and J. Thomas Talbot.
Mr. Gumbiner is Chairman of the Board and Chief Executive
Officer of Hallwood. Mr. Troup is President and Chief
Operating Officer of Hallwood. The Company has also been
informed that such shares are pledged as collateral to secure
certain obligations of Hallwood.
(L) Based on information in Amendment No. 2 to Schedule 13G dated
February 12, 1996. This number includes 755,000 shares
beneficially owned by MFS Series Trust II as well as MFS
Emerging Growth Fund.
(M) Based on information in Schedule 13G dated February 7, 1996.
Of its total shares, Snyder Capital Management, Inc. has
shared voting power over 1,006,600 shares and shared
dispositive power over 1,117,100 shares. This number also
includes 117,000 shares owned by Stirling Partners, of which
Snyder Capital Management, Inc. is the general partner.
(N) Based on information in Schedule 13G dated January 22, 1996.
Of its total shares, Mellon Bank Corporation has sole voting
power over 543,000 shares, sole dispositive power over 552,000
shares, and shared dispositive power over 117,000 shares.
(O) Based on information in Amendment No. 2 to Schedule 13D dated
July 1, 1994. Of its total shares, Time Warner, Inc. has
shared voting power over 16,011 shares and shared dispositive
power over 16,011 shares.
(P) Based on information obtained from Transfer Agent on May 15,
1996.
(Q) Excludes 2,500 shares purchasable pursuant to options issued
under the Company's Non-Employee Directors Stock Option Plan
which are not exercisable within 60 days of the date hereof.
PROPOSAL 1:
RE-ELECTION OF CLASS II DIRECTORS
The terms of the three Class II directors expire at the Annual
Meeting of the stockholders in 1996. The Board of Directors has
nominated for re-election at the Annual Meeting all three incumbent
Class II directors, each to serve for a term of three years. Each
nominee of the Board of Directors has expressed his/her intention
to serve the entire term for which re-election is sought.
Directors will be elected by cumulative voting. To be elected as
a director, a candidate must be among the three candidates who
receive the most votes out of all votes cast at the Annual Meeting
for the election of directors. See "Quorum and Voting."
The following table lists the names and ages (as of May 15, 1996)
of the three director nominees and the six directors whose terms of
office will continue after the Annual Meeting, the year in which
each director was first elected as a director of the Company, the
class to which each director has been or will be elected, and the
Annual Meeting at which the term of each director will expire.
Director Term
Nominee Directors Age Since Class Expires
- ----------------- --- -------- ----- -----
Charles A. Crocco, Jr. 57 1988 II 1996
Robert L. Lynch 78 1988 II 1996
Cynthia I. Pharr 47 1994 II 1996
Continuing Directors
J. Thomas Talbot 60 1988 III 1997
Brian M. Troup 49 1988 III 1997
Louis P. Neeb 57 1994 III 1997
Richard M. Frank 48 1985 I 1998
Anthony J. Gumbiner 51 1988 I 1998
Michael H. Magusiak 40 1988 I 1998
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH
OF THE NAMED NOMINEES.
ADDITIONAL INFORMATION ABOUT THE EXECUTIVE OFFICERS, BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE OFFICERS
The following table sets forth the names and certain other
information regarding the executive officers of the Company as of
May 15, 1996.
Year First Elected
Name Age Position as Executive Officer
- ---- --- -------- ----------------------
Richard M. Frank 48 Chairman of the Board and 1985
Chief Executive Officer
Michael H. Magusiak 40 President 1988
Richard T. Huston 50 Executive Vice President-- 1986
Marketing and Entertainment
Larry G. Page 52 Executive Vice President, Chief 1994
Financial Officer and Treasurer
BUSINESS HISTORY OF EXECUTIVE OFFICERS AND DIRECTORS
A brief description of the business history of the directors and
executive officers of the Company is provided below.
RICHARD M. FRANK has been Chairman of the Board and Chief Executive
Officer of the Company since March 1986 and has been a director of
the Company since June 1985. He served as President and Chief
Operating Officer from June 1985 until October 1988. He joined the
Company in 1985. He has served as a director for Monterey Tex-Mex
Cafe since May 1994.
MICHAEL H. MAGUSIAK was elected President of the Company in June
1994. He had previously served as Executive Vice President, Chief
Financial Officer and Treasurer since June 1988. He has also
served as a director of the Company since 1988. He was Vice
President of the Company from October 1987 to June 1988 and
Controller of the Company from October 1987 to January 1989. He
joined the Company in July 1987. He has served as a director for
Monterey Tex-Mex Cafe since May 1994.
RICHARD T. HUSTON has served as Executive Vice President of the
Company since July 1986 and as Director of Marketing and Strategic
Development since January 1993. His responsibilities were expanded
in June 1994 to include entertainment as well as marketing. He
served as Director of Marketing and Development from October 1988
to January 1993. He served as Vice President from October 1985 to
July 1986, as Director of Marketing from October 1985 to October
1988, and as a director from July 1986 to September 1988. He
joined the Company in 1985.
LARRY G. PAGE has served as Executive Vice President, Chief
Financial Officer and Treasurer of the Company since October 1994.
Prior to joining the Company, Mr. Page served as Vice President and
Regional General Manager in the retail services division of Comdata
Holdings Corporation, a publicly-held financial services company,
from July 1985 to October 1994. Mr. Page is a Certified Public
Accountant and was a partner in various national and regional
public accounting firms, including Arthur Andersen LLP, from August
1978 through July 1985.
CHARLES A. CROCCO, JR. was elected as a director of the Company in
September 1988. He is a shareholder in the New York City law firm
of Crocco & DeMaio, P.C. He has served as a director of The
Hallwood Group, Inc. ("Hallwood"), a merchant bank and diversified
holding company, since 1981 and as a director of First Banks
America, Inc., a publicly-held bank holding company, since April
1988.
ANTHONY J. GUMBINER was elected as a director of the Company in
September 1988. He has served as a director and Chairman of the
Board of Hallwood since 1981 and as Chief Executive Officer of
Hallwood since 1984; as Chairman of Hallwood Holdings S.A., a real
estate investment company, since March 1984; as a director of
Hallwood Energy Corporation, a publicly-held oil and gas company,
that is the general partner of Hallwood Energy Partners L.P., since
May 1984 and as Chairman of the Board and Chief Executive Officer
of Hallwood Energy Corporation since February 1987; as a director
and Chairman of the Board of Hallwood Realty Corporation, which is
the general partner of Hallwood Realty Partners L.P., a publicly
traded master limited partnership, since 1990; and as a director of
Hallwood Consolidated Resources Corporation, an oil and gas
company, since May 1992. He is a Solicitor of the Supreme Court of
Judicature of England.
ROBERT L. LYNCH was elected as a director of the Company in
September 1988. He has served as a director and Vice Chairman of
Hallwood since May 1984. He is Chairman of the Board and Chief
Executive Officer of Perpetual Storage, Inc. and has served as a
director of that company since 1969.
LOUIS P. NEEB was elected as a director in August 1994. Mr. Neeb
has served as Chairman of the Board and CEO of Casa Ole'
Restaurants, Inc. From October 1995 to the present. From August
1982 to present, Mr. Neeb has been President of Neeb Enterprises,
Inc., a management consulting firm specializing in restaurants.
From October 1993 through January 1994, he was Chairman of the
Board of Spaghetti Warehouse, Inc., a publicly-traded restaurant
company. From July 1991 through January 1994, Mr. Neeb was
President and Chief Executive Officer of Spaghetti Warehouse, Inc.
From September 1989 through June 1991, Mr. Neeb was President and
Chief Executive Officer of GEEST USA (and its affiliates), a
refrigerated food business. Mr. Neeb has also had other extensive
experience in the restaurant industry including serving as Chairman
of the Board of Burger King Corporation. Mr. Neeb was instrumental
in the development of Applebee's Neighborhood Grill and Bar as well
as Bennigan's. Mr. Neeb has also been a member of the Board of
Directors of the Franchise Finance Corporation of America, a
publicly-traded real estate trust which provides real estate for
restaurants, and is a member of the Board of Directors for Silver
Diner Development, Inc.
CYNTHIA I. PHARR was elected as a director of the Company in August
1994. She is currently President and Owner of C. Pharr & Company,
a communications management consulting firm. She has served in that
position since March 1993. From May 1989 through February 1993,
Ms. Pharr was President and Chief Executive Officer of Tracy -
Locke/Pharr P R, a public relations firm. From August 1986 through
April 1989, she was President and owner of C. Pharr & Company, Inc.
a public relations agency. Ms. Pharr has served as a member of the
Board of Directors of Spaghetti Warehouse, Inc. since August 1991,
as well as Chairman of the Board of GuestCare, Inc., a privately
held technology company, from February 1994 to present.
J. THOMAS TALBOT was elected as a director of the Company in
September 1988. He served as Chairman of the Board and Chief
Executive Officer of HAL, Inc., Hawaiian Airlines, and West Maui
Airport from August 1989 until July 1991. Mr. Talbot founded Jet
America Airlines, Inc., a commercial airline company, and served as
its Chairman from December 1980 until October 1986. He also has
been owner of The Talbot Company, a sole proprietorship, since
1982; a partner of Shaw and Talbot, a commercial real estate
investment and development company, since April 1975; and a partner
of Pacific Management Group, an asset management firm, since
December 1986. Mr. Talbot has served as a director of Hallwood
since 1984; as a director of Alliance Bancorporation, a bank
holding company, since April 1988 and as Chairman and Chief
Executive Officer of Alliance Bancorporation from August 1992 until
February 1994; as a director of Fidelity National Financial since
April 1991; as a director of Resort Income Investors from June 1992
until October 1993; as a Director of The Baldwin Company and the
Koll Real Estate Group, Inc. since June 1993; and as a Director of
Hemmeter Enterprises, Inc. since October 1993.
BRIAN M. TROUP was elected as a director of the Company in
September 1988. He has served as a director of Hallwood since 1981
and as President and Chief Operating Officer of Hallwood since
April 1986; as a director of Hallwood Holdings S.A. since March
1984; as a director of Hallwood Energy Corporation since May 1984;
as a director of Hallwood Realty Corporation since 1990 and as a
director of Hallwood Consolidated Resources Corporation since May
1992. He is an associate of the Institute of Bankers in Scotland
and a member of the Society of Investment Analysts in the United
Kingdom.
Except as set forth above, none of the directors of the Company
hold directorships in any company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of
1934 (the "Exchange Act") or subject to the requirements of Section
15(d) of the Exchange Act or any company registered as an
investment company under the Investment Company Act of 1940.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Two regularly scheduled and eight special meetings of the Board of
Directors were held during 1995. Each of the directors attended at
least 75% of the meetings held by the Board of Directors, and by
each committee on which he or she served, in 1995.
The Board of Directors has established an Executive Committee of
four members to assist the Board of Directors in carrying out its
duties. The Executive Committee (comprised of Messrs. Frank,
Gumbiner, Neeb and Troup) acts in the place of the Board of
Directors when the Board of Directors is not in session and may
exercise substantially all of the powers of the Board of Directors
other than those powers specifically required by law or by the
Company's Bylaws to be exercised by the full Board of Directors.
The Executive Committee held a number of informal meetings in
person or by telephone in 1995.
The Board of Directors has also established an Audit Committee of
four members. The Audit Committee is comprised of Messrs. Crocco,
Lynch, Talbot and Troup. The functions performed by the Audit
Committee are: (i) consideration of the Company's system of
internal controls, (ii) review of the performance and findings of
the Company's Internal Audit Department and (iii) review of
services provided by the Company's independent auditors. The Audit
Committee met two times in 1995.
The Board of Directors has established a Compensation Committee of
three members. The Compensation Committee is comprised of Messrs.
Frank, Gumbiner and Troup. The functions performed by the
Compensation Committee are the: (i) recommendation of compensation,
including performance bonuses, payable to the Company's executive
officers (excluding Mr. Frank), and (ii) recommendation of
performance bonuses for other employees of the Company. The
Compensation Committee met on one occasion in 1995.
In March 1992, the Board of Directors established a Stock Option
Committee and a Stock Grant Committee, each comprised of Messrs.
Gumbiner and Troup, to administer the 1988 Option Plan and the
Company's Stock Grant Plan, respectively. The Stock Option
Committee met on one occasion and took actions by various unanimous
written consents in 1995.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid to the Chief
Executive Officer and to each of the other most highly paid
executive officers of the Company (the "Named Executive Officers")
for the fiscal years ended December 31, 1993, December 30, 1994,
and December 29, 1995 (designated herein as fiscal years 1993, 1994
and 1995, respectively.)
Long Term
Annual Compensation (A) Compensation Awards
------------------------- ---------------------
Securities
Name and Restricted Underlying
Principal Fiscal Other Annual Stock Options
Position Year Salary Bonus Compensation ($)(B) (#)
- -------- ----- ------ ----- ---------- -------- ---------
Richard M. Frank
(Chief Executive Officer)----
1995 1,000,000 $-- 23,656 $-- 10,000
1994 1,000,000 -- 25,005 -- --
1993 987,692 -- 24,791 -- --
Richard T. Huston
(Executive Vice President)----
1995 149,807 $-- 13,384 $-- 21,000
1994(C) 145,000 -- 12,602 -- 60,000
1993 144,827 -- 12,016 -- 10,000
Michael H. Magusiak
(President)----
1995 240,000 $-- 14,917 $-- 19,200
1994(D) 193,096 -- 12,467 -- 90,000
1993 144,827 -- 11,676 -- 10,000
Larry G. Page
(Executive Vice President
and Chief Financial Officer)----
1995 127,000 $3,500 13,753 $-- --
1994(E) 31,250 -- 11,578 -- 15,000
1993 -- -- -- -- --
(A) Includes car allowance of $15,600 per year for Mr. Frank and
$9,000 per year for Messrs. Huston, Magusiak, and Page.
Relocation expense is included for Mr. Page in 1994.
(B) Dollar values are calculated as the closing market price of
the Company's Common Stock on the date of grant minus the par
value of $.10 per share payable by the recipient multiplied by
the number of shares of restricted stock awarded. All such
stock is awarded under the Company's Stock Grant Plan. The
aggregate value of such restricted shares held by Mr. Frank on
December 29, 1995 (based on 295,883 shares at a closing price
of $12.125) is $3,587,581. Dividends are payable on such
restricted stock on the same terms as on other shares of the
Company's Common Stock. See "Employment Agreements" regarding
the number of shares awarded and vesting schedule.
(C) Options for 21,000 shares of Common Stock issued to Mr. Huston
on January 11, 1994, were surrendered in connection with the
granting on January 6, 1995 of options to acquire 21,000
shares of Common Stock.
(D) Options for 19,200 shares of Common Stock issued to Mr.
Magusiak on January 11, 1994, were surrendered in connection
with the granting on January 6, 1995 of options to acquire
19,200 shares of Common Stock.
(E) The amount indicated is Mr. Page's actual salary received
during fiscal 1994 which is less than his annualized salary of
$127,000 because his employment with the Company did not
commence until October 1994.
EMPLOYMENT AGREEMENTS
Each of Messrs. Frank and Magusiak has entered into an employment
agreement (individually, an "Employment Agreement" and together,
the "Employment Agreements") with the Company, both of which expire
on December 31, 1997. Mr. Frank's Employment Agreement provides
that he is to be paid a base salary of $1,000,000 per year, with
such additional benefits and/or compensation as may be determined
by the Board of Directors. Pursuant to his Employment Agreement,
Mr. Frank was issued 414,508 restricted shares of the Company's
Common Stock on April 1993 under the Stock Grant Plan, of which
20,725 shares would vest at the end of each fiscal quarter of the
Company during the term of his Employment Agreement, other than the
last of such fiscal quarters at the end of which 20,733 shares
vest. Effective March 31, 1995, Mr. Frank forfeited 60,000 of the
unvested restricted shares previously awarded to him, which
forfeiture is applied in equal annual increments of 20,000 shares,
applied quarterly to the shares otherwise scheduled to vest for
that particular quarter. As of May 15, 1996, 244,425 of such
shares had vested. Mr. Magusiak's Employment Agreement originally
provided for an annual base salary of $145,000, which amount may be
increased in such amounts and on such dates as the Compensation
Committee of the Board of Directors may determine. In January
1994, Mr. Magusiak's annual base salary was increased to $175,000.
In September 1994, Mr. Magusiak's annual base salary was increased
to $240,000. In addition, the Board of Directors, in its sole
discretion, may provide other compensation and/or benefits to
Messrs. Frank and Magusiak.
Under the terms of the respective Employment Agreements, if the
covered executive's employment with the Company is terminated by
the Company (other than as a result of "permanent disability" (as
defined in the Employment Agreements) or, in the case of Mr.
Magusiak, upon his death or for "Cause" (as defined in his
Employment Agreement)), Mr. Frank will be entitled to receive a
severance amount equal to $3,000,000 and Mr. Magusiak will be
entitled receive a severance amount equal to twice his then current
annual base salary (together, the "Severance Amounts"). In the
event Mr. Magusiak is terminated for Cause, he shall receive his
base salary through the date on which the Board of Directors takes
its action to terminate him. In the event of his death, Mr.
Magusiak shall be entitled to receive his base salary through the
date of his death.
The Employment Agreements also provide that each of Messrs. Frank
and Magusiak will receive his respective Severance Amount in the
event there is a Change of Control (as defined below)of the Company
and the covered executive voluntarily terminates his employment
within one year after such a Change of Control. A "Change of
Control" is deemed to have occurred with respect to the Company if
(i) any person or group of persons acting in concert (other than
Hallwood or its affiliates) in which the covered executive is not
an investor, partner, officer, director or member, shall acquire,
directly or indirectly, the power to vote, or direct the voting of,
more than 33% of the then outstanding voting securities of the
Company or (ii) during any consecutive 18 month period a majority
of the Board of Directors is elected or appointed and consists of
persons who were not directors of the Company as of the date of the
respective Employment Agreement and whose election or appointment
as directors of the Company is actively opposed by the covered
executive.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options
granted to each of the Named Executive Officers in the fiscal year
ended December 29, 1995.
Potential realizable
Value at assumed
Number of % of Total Annual rates of
Securities Options Stock price
Underlying Granted to Exercise Appreciation for
Options Employees in Price Expiration for Option term ($)
Granted # Fiscal year ($/Share) Date 5% 10%
- --------- ----------- -------- --------- ----- ------
Richard M. Frank----
10,000 (A) 3.83% $11.875 10/11/00 $32,775 $72,556
Richard T. Huston----
21,000 (B) 8.04% $8.50 01/06/00 $49,266 $109,064
Michael H. Magusiak----
19,200 (C) 7.35% $8.50 01/06/00 $45,043 $99,715
Larry G. Page----
0 0% N/A N/A $0 $0
(A) Options to acquire these 10,000 shares are exercisable as
follows: (i) one hundred percent (100%) of the option after
October 11, 1996.
(B) Options to acquire these 21,000 shares were repriced in
January 1995 and are exercisable as follows: (i) fifty
percent (50%) of the option after January 6, 1997, and (ii) an
aggregate of one hundred percent (100%) of the option after
January 6, 1998. See "Ten-Year Option Repricings" and
"Compensation Committee Report on Executive Compensation".
(C) Options to acquire these 19,200 shares were repriced in January
1995 and are exercisable as follows: (i) fifty percent (50%)
of the option after January 6, 1997, and (ii) an aggregate
of one hundred percent (100%) of the option after January 6, 1998.
See "Ten-Year Option Repricings" and "Compensation Committee Report
on Executive Compensation".
TEN-YEAR OPTION REPRICINGS
The following table sets forth information regarding the repricing
of stock options during the last ten completed fiscal years.
Length of
Securities Original
Underlying Market Price Exercise Options
number of of stock Price at New Remaining
Of options time of Time of Exercise at date of
Name Date repriced Repricing Repricing Price($) repricing
- ----- ---- ---------- ---------- --------- ------- ---------
Richard T. Huston
Executive VP----
1/11/94 10,000(A) $13.75 $33.50 $13.75 4 years
1/06/95 21,000(B) $ 8.50 $13.75 $ 8.50 4 years
Michael H. Magusiak
President----
1/11/94 10,000(A) $13.75 $33.50 $13.75 4 years
1/06/95 19,200(C) $ 8.50 $13.75 $ 8.50 4 years
John T. Spaight(D)----
1/11/94 10,000(A) $13.75 $33.50 $13.75 4 years
- -----------------
(A) These options were forfeited in connection with the granting
on January 11, 1994 of options to acquire 60,000 shares of
Common stock at an exercise price of $13.75 per Share.
(B) These options were forfeited in connection with the granting
on January 6, 1995 of options to acquire 21,000 shares of
Common Stock at an exercise price of $8.50 per share.
(C) These options were forfeited in connection with the granting
on January 6, 1995 of options to acquire 19,200 shares of
Common Stock at an exercise price of $8.50 per share.
(D) Mr. Spaight resigned from his position with the Company in
January 1995 and all unexpired options were canceled pursuant
to the 1988 Option plan.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth, for each of the Named Executive
Officers, information regarding his exercise of stock options
during the fiscal year ended December 29, 1995 and the value of his
unexercised stock options as of December 29, 1995. The closing
price for the Company's Common Stock, as reported by the Nasdaq
National Market, on December 29, 1995 (the last trading day of the
fiscal year) was $12.125.
Number of Value of
Unexercised Unexercised In-the
Options at -Money Options at
Shares Dec. 29, 1995 Dec. 29, 1995
Acquired Value (exercisable/ (exercisable/
on Exercise Realized unexercisable) unexercisable)
(#) (B) (#) ($)(C)
----------- -------- -------------- ---------------
Richard M. Frank(A) ----
0 -- 0 0(E)
10,000(U) 2,500(U)
Richard T. Huston
0 -- 15,000(E) 0(E)
60,000(U) 76,125(U)
Michael H. Magusiak
0 -- 15,000(E) 0(E)
90,000(U) 189,600(U)
Larry G. Page
0 -- 0 (E) 0(E)
15,000(U) 62,775(U)
(A) Does not include shares issued under the Stock Grant Plan.
See "Summary Compensation Table."
(B) Calculated by determining the difference between the fair
market value of the securities underlying the options and
the exercise price of the options at the time of exercise.
(C) Calculated by determining the difference between the exercise
price of the options and the fair market value of the securities
underlying the options at fiscal year end.
(E) Options which are exercisable at December 29, 1995.
(U) Options which are not exercisable at December 29, 1995.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The executive compensation program of the Company is designed as a
tool to reinforce the Company's strategic principles --- to be a
premier and progressive growth company, with an objective of
enhancing long term shareholder value. To this end, the following
principles have guided the development of the executive
compensation program:
- Provide competitive levels of compensation to attract and
retain the best qualified executive talent. The
Compensation Committee strongly believes that the caliber
of the Company's management group makes a significant
difference in the Company's success over the long term.
- Embrace a "pay-for-performance" philosophy by placing
significant amounts of compensation "at risk" that is, a
significant component of the compensation payouts to
executives must vary according to the overall performance
of the Company.
- Directly link executives' interests with those of
stockholders by providing opportunities for long-term
incentive compensation based on changes in shareholder
value.
The executive compensation program is intended to
appropriately balance the Company's short term operating goals with
its long term strategy through a careful mix of base salary, annual
bonuses (payable upon satisfaction by the Company of established
revenue and profitability objectives) and long term performance
compensation through the issuance of stock options under the 1988
Option Plan.
The compensation of the executive officers of the Company
(excluding Mr. Frank) is reviewed and determined annually by the
Compensation Committee. The compensation of such executive
officers in 1995 was based on individual and corporate performances
as well as assigned responsibilities. In establishing and
reviewing executive compensation, consideration is also given to
executive salary ranges of comparable companies. Individual
performance is reflected in the executive officer's salary.
Corporate performance is reflected in a bonus, payable annually, if
earned, to each executive officer, based on the achievement of
targets for corporate revenue and profitability. Although no bonus
compensation was actually paid to executive officers for services
rendered in 1995, bonus compensation of each of the executive
officers in 1995 would have been between 30% and 35% of the
officer's salary if the 1995 target levels for revenue and
profitability had been reached.
The Stock Option Committee and the Stock Grant Committee are
made up of the non-employee director members of the Compensation
Committee. The Stock Option Committee and Stock Grant
Committee ratify and approve option and grant recommendations,
respectively, made by the Compensation Committee. In 1995, the
Compensation Committee determined the number of options to issue
in accordance with the 1988 Option Plan. No stock grants were
awarded in 1995.
In January, 1995, the Stock Option Committee issued to certain of the
executive officers of the Company options to acquire 40,200 shares
of Common Stock (each with an exercise price of $8.50 per share) in
connection with the surrender by such individuals to the Company of
previously granted options to acquire 40,200 shares of Common Stock
(each with an exercise price of $13.75 per share). The issuance of
these new options was determined to be in the best interests of the
stockholders of the Company in order to properly provide incentives
to such individuals to enhance stockholder value.
CEO Performance Evaluation
Although Mr. Frank's salary is established by the terms of his
Employment Agreement (see "Employment Agreements"), the
Compensation Committee, excluding Mr. Frank, nevertheless annually
evaluates his performance based on the same criteria as are applied
to the other executive officers of the Company. Any future stock
option issuances or restricted stock grants to Mr. Frank, and any
increase in his annual base salary or the granting of a bonus, will
be based on individual and corporate performance, applying the same
factors for each as described above for the Company's other
executives. The Compensation Committee would also consider the
number of unvested shares available to Mr. Frank under his
Employment Agreement and the Stock Grant Plan at such time.
The Compensation Committee has also considered the potential impact
of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), adopted under the Omnibus Budget Reconciliation Act
of 1993. This section disallows a tax deduction for any
publicly-held corporation for individual compensation to certain
executives of such corporation exceeding $1,000,000 in any taxable
year, unless compensation is performance-based. As discussed
above, Mr. Frank's annual base salary is $1,000,000. It is the
intent of the Company and the Compensation Committee to qualify to
the maximum extent possible its executives' compensation for
deductibility under applicable tax laws. The Compensation
Committee will continue to monitor the impact of such limitations
on tax deductions and will take other appropriate actions if
warranted in the future.
The Compensation Committee is comprised of Messrs. Frank, Gumbiner
and Troup. The Stock Option Committee and the Stock Grant
Committee are both comprised of Messrs. Gumbiner and Troup.
Richard M. Frank
Anthony J. Gumbiner
Brian M. Troup
COMPENSATION OF DIRECTORS
Ms. Pharr and Messrs. Crocco, Lynch, Neeb and Talbot, who are not
otherwise employed by the Company or by Hallwood or its affiliates,
receive a retainer from the Company at the rate of $10,000 per
year, plus $750 for each meeting of the Board of Directors
attended. Other directors, who are either officers or employees of
the Company or employed by Hallwood or its affiliates, do not
receive separate compensation for their services as directors of
the Company.
PROPOSAL 2:
AMENDMENTS OF THE 1988 NON-STATUTORY STOCK OPTION PLAN,
THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN, AND THE STOCK GRANT PLAN
The 1988 Non-Statutory Stock Option Plan ("Employee Plan")
became effective in December, 1988. The purpose of the Employee
Plan is to secure for the Company and its stockholders the benefits
of the incentives inherent in stock ownership by certain directors
and key employees of the Company and its subsidiaries. The
Employee Plan is currently administered by the Stock Option
Committee, which is comprised of Messrs. Gumbiner and Troup, who
are not employed by the Company and who are ineligible to receive
options under the Employee Plan. The Stock Option Committee has
the power to determine, in its discretion but subject to the
limitations set forth in the Employee Plan, the persons to whom
options are granted, the number of shares covered by options and
the exercise price of options. The Stock Option Committee also
determines the conditions, if any, imposed upon the granting of
options under the Employee Plan. To date, the Stock Option
Committee has issued options under the Employee Plan to eligible
directors (who are not members of the Stock Option Committee) and
eligible employees in proportion to their respective
responsibilities to the Company. The Stock Option Committee
provides for various periods of time to pass before options become
exercisable according to the Company's long term strategic plans.
The Non-Employee Directors Stock Option Plan ("Directors
Plan") became effective in June 1995. Options to purchase up to
100,000 shares of the Company's Common Stock may be granted under
the Directors Plan. The Directors Plan provides for the granting
of nonqualified stock options to non-employee directors of the
Company or its Affiliates (as defined in the Directors Plan). The
goal of the Directors Plan is to provide a means of retaining and
attracting competent non-employee personnel to serve on the Board
of Directors by extending to such individuals long-term incentives
for high levels of performance and to award for unusual efforts
designed to improve the financial performance of the Company. The
Directors Plan is administered by a committee comprised of the
President and the Chief Financial Officer of the Company.
The Stock Grant Plan ("Grant Plan") became effective in
December, 1988. Awards of up to 1,145,758 shares of the Company's
Common Stock may be granted under the Grant Plan. The Grant Plan
provides for the award of shares of common stock to senior
executives of the Company or any of its Subsidiaries (as defined in
the Grant Plan). The goal of the Grant Plan is to provide a means
of retaining and attracting competent senior executives of the
Company by extending to such individuals added long-term incentives
for high levels of performance and to award for unusual efforts
designed to improve the financial performance of the Company. The
Grant Plan is administered by a committee comprised of two (2)
Directors who are not employees of the Company and, therefore, not
eligible for grants under the Plan.
In May 1996, the Board of Directors adopted, subject to the
approval of the Company's stockholders, amendments to the Employee
Plan, Directors Plan, and Grant Plan (collectively referred to as
the "Plans") providing that (1) individuals who are granted options
under the Employee Plan or the Directors Plan must sign and return
their option contracts to the Company prior to the expiration of
one hundred and twenty (120) days after the date such options are
granted or the option will be void and of no further force or
effect, and (2) in the event a "Change of Control" (as defined in
the amendments) with respect to the Company occurs, then the
options outstanding under the Employee Plan or Directors Plan that
are not otherwise exercisable and the shares awarded under the
Grant Plan that are not vested shall be exercisable and vested,
respectively, even though certain conditions otherwise provided in
the Plans, option contracts or awards have not been satisfied at
the time of the "Change of Control." A copy of the amended
Employee Plan, Directors Plan, and Grant Plan, as proposed, are
attached hereto as Exhibits "A," "B" and "C," respectively.
The Board of Directors believes that the proposed amendments
to the Employee Plan, Directors Plan, and Grant Plan will enable
the Company and its stockholders, through future grants and stock
options, to continue to secure the benefits of the incentive
inherent in stock ownership by certain of its employees and non-
employee directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ABOVE DESCRIBED AMENDMENTS TO THE 1988 NON-STATUTORY STOCK OPTION
PLAN, THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN, AND THE STOCK
GRANT PLAN.
PROPOSAL 3:
AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION
TO ESTABLISH 50,000,000 AUTHORIZED SHARES OF COMMON STOCK
The Company is currently authorized to issue 30,000,000 shares
of Common stock, 49,570 shares of Class A Preferred Stock and
500,000 shares of Class B Preferred Stock. The Company's Board of
Directors has adopted and recommended to the stockholders for
adoption at the annual meeting an amendment to the Company's
Restated Articles of Incorporation that would establish the
authorized number of shares of its Common Stock at 50,000,000 and,
accordingly, the authorized shares of all stock at 50,549,570. The
additional authorized shares of Common Stock will provide the
Company with flexibility regarding its future capital needs and
corporate growth and its ability to declare stock dividends payable
in shares of Common Stock. The Board of Directors has no present
intention to issue any additional shares of stock other than as
presently authorized pursuant to the 1988 Non-Statutory Stock
Option Plan, Non-Employee Directors Stock Option Plan, and the
Stock Grant Plan. Newly authorized shares may be issued on such
terms and at such times as the Board of Directors may determine
without further action by the stockholders, unless otherwise
required by applicable laws or regulations. The issuance of
additional shares will (except in certain circumstances including
the declaration of stock dividends) have the effect of reducing the
relative voting power and ownership interests of existing
stockholders in the Company. Stockholders have no pre-emptive
rights to subscribe for additional shares of the Company's stock.
A copy of the amended Restated Articles of Incorporation, as
proposed, are attached hereto as Exhibit "D."
THE BOARD OF DIRECTORS HAS APPROVED THE AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION AND UNANIMOUSLY RECOMMENDS A
VOTE "FOR" THE ABOVE DESCRIBED AMENDMENT TO THE RESTATED ARTICLES
OF INCORPORATION.
INDEMNIFICATION
The bylaws of the Company provide for each director and officer of
the Company to be indemnified by the Company, as of right, to the
full extent permitted or authorized by the laws of the State of
Kansas against any liability, judgment, fine, amount paid in
settlement, cost and expense asserted or threatened against or
incurred by such person in his capacity, or arising out of his
status, as a director or officer. The Company's Restated Articles
of Incorporation include a provision which eliminates director
liability for monetary damages for breach of the director's duty of
due care, as permitted under Kansas law.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION;
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
Richard M. Frank, Anthony J. Gumbiner and Brian M. Troup served on
the Compensation Committee of the Company's Board of Directors in
1995. The functions performed by the Compensation Committee are
the (i) recommendation of compensation, including performance
bonuses, payable to the Company's executive officers (excluding Mr.
Frank), and (ii) recommendation of performance bonuses for other
employees of the Company. Mr. Frank is Chairman of the Board and
Chief Executive Officer of the Company. Mr. Gumbiner is Chairman
of the Board and Chief Executive Officer of Hallwood. Mr. Troup is
President and Chief Operating Officer of Hallwood. See "Principal
Holders of Capital Stock" and "Certain Relationships and Related
Transactions." As discussed under the heading "Committees and
Meetings of the Board of Directors," the Stock Option Committee and
the Stock Grant Committee are both comprised of Messrs. Gumbiner
and Troup.
The Board of Directors is responsible for approving any amendment
to either Mr. Frank's or Mr. Magusiak's employment agreement. See
"Employment Agreements".
The Board of Directors intends that transactions with officers,
directors and affiliates will be entered into on terms no less
favorable to the Company than could be obtained from unrelated
third parties and will be approved by at least a simple majority of
the directors of the Company.
With the exception of directors Pharr and Neeb, the directors of
the Company who are not employees of the Company are also directors
of Hallwood and Integra. As of May 15, 1995, Hallwood owned all of
the common stock of Integra. See "Principal Holders of Capital
Stock" and "Business History of Executive Officers and Directors."
Effective January 1989, the Company agreed to pay to Hallwood
$125,000 per year, in consideration for financial and management
consulting services being rendered to the Company by Hallwood in
the ordinary course of business. The Company's agreement with
Hallwood will continue at the discretion of the Board of Directors
for such time and in such amounts as may be authorized so as to
fairly compensate Hallwood for its services.
In consideration for rent reductions resulting from Hallwood's
negotiation of the Company's home office lease agreement in
December 1990, the Company assigned to Hallwood its sublease
interest in the portion of the home office building subleased to
Integra, with a fair value of approximately $120,000 per year.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative yearly total
stockholder return (change in share price plus reinvestment of any
dividends) on the Company's Common Stock since December 29, 1989
(the date the Company's Common Stock first traded on the NASDAQ
system), versus two indexes. The graph assumes $100 was invested
on January 3, 1989. The Company has not paid any cash dividends on
its Common Stock during the applicable period. The share price of
the Company's Common Stock has been adjusted for three-for-two
stock splits in the form of stock dividends distributed on March
26, 1991 and March 20, 1992.
The Company's Common Stock is labeled on the graph as "SHBZ." The
index labeled "Restaurants," which was prepared by the Center for
Research in Securities Prices ("CRSP") at The University of
Chicago, Graduate School of Business, 1101 East 58th Street,
Chicago, Illinois 60637 (telephone 312-702-7467) measures the total
return (weighted for the market capitalization of the component
companies) on the approximately 144 domestic and foreign companies
which operate restaurants or other eating and drinking places (SIC
Code 58) and whose equity securities are traded on the Nasdaq
National Market or the NASDAQ Small-Cap Market. The identities of
the companies included in the "Restaurant" index will be made
available in a prompt manner to any shareholder upon written
request addressed to Investor Relations at the Company's Irving
address upon request. The index labeled "NASDAQ," also prepared by
CRSP, measures the total return on the approximately 4,000 United
States companies whose common stock is traded on the Nasdaq
National Market or the NASDAQ Small-Cap Market.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and the persons who own
more than ten percent of the Company's Common Stock to file initial
reports of ownership of Common Stock and reports of changes of
ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. and to furnish the
Company with copies of such reports. Based on review of such
copies and other records of the Company, the Company has no reason
to believe that any reports were untimely filed or that any Form 5
filings were made by any executive officers, directors or persons
owning more than ten percent of the Company's Common Stock.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP served as the Company's
independent public accountants for the fiscal year ending December
29, 1995. A representative of Deloitte & Touche LLP is expected to
be present and available at the Annual Meeting of stockholders to
respond to appropriate questions and will be given an opportunity
to make a statement, if desired.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the
1997 annual meeting of stockholders and who wishes to have it set
forth in the proxy statement and identified in the form of proxy
prepared by the Company, must deliver such proposal to the Company
at its principal executive offices, not less than 60 days nor more
than 90 days prior to the date of the applicable annual meeting of
stockholders; provided, however, that in the event that less than
70 days' notice or prior public disclosure of the date of the
meeting is given or made, notice by the stockholder to be timely
must be so received not later than the close of business on the
tenth (10th) day following the day on which such notice of the date
of the applicable annual meeting was mailed or such public
disclosure of the date of such annual meeting was made, whichever
first occurs. For purposes of this section, the date of a public
disclosure shall include, but not be limited to, the date on which
such disclosure is made in a press release reported by the Dow
Jones News Services, the Associated Press or any comparable
national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14, or 15(d) (or the rules and regulations thereunder)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
To be in proper written form, a stockholder's notice to the
Secretary of the Company must set forth (a) as to each person whom
the stockholder proposes to nominate for election as a director (i)
the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person,
(iii) the class or series and number of shares of capital stock of
the corporation that are owned beneficially or of record by the
person and (iv) any other information relating to the person that
would be required to be disclosed in a proxy statement or other
filing required to be made in connection with solicitations of
proxies for election of directors pursuant to Section 14 of the
Exchange Act and (b) as to the stockholder giving the notice (i)
the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the corporation
that are owned beneficially or of record by such stockholder, (iii)
a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholders, (iv) a representation that
such stockholder intends to appear in person or by proxy at the
meeting to nominate the persons named in its notice and (v) any
other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filing
required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act
and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee
to being named as a nominee and to serve as a director if elected.
MISCELLANEOUS
The accompanying proxy is being solicited on behalf of the Board of
Directors of the Company. The expense of preparing, printing and
mailing the proxy and the material used in the solicitation thereof
will be borne by the Company. In addition to the use of the mails,
proxies may be solicited by directors and regular officers and
employees of the Company by means of personal interview, telephone
or telegram. Arrangements may also be made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding
of solicitation materials to the beneficial owners of stock held of
record by such persons, and the Company may reimburse them for
reasonable out-of-pocket expenses of such solicitation.
By Order of the Board of Directors,
MARSHALL R. FISCO, JR.
Secretary
Irving, Texas
May 16, 1995
Exhibit A
SHOWBIZ PIZZA TIME, INC.
NON-STATUTORY STOCK OPTION PLAN
SHOWBIZ PIZZA TIME, INC., a corporation organized and existing
under the laws of the state of Kansas (the "Company"), hereby
formulates and adopts, with respect to the shares of common stock
of the Company ("Common Stock"), a non-statutory stock option plan
for certain individuals who are directors or key employees of the
Company or its subsidiaries, as follows:
1. Purpose of Plan. The purpose of this Non-Statutory
Option Plan (the "Plan") is to encourage certain individuals who
are directors or key employees to participate in the ownership of
the Company, and to provide additional incentive for such
individuals to promote the success of its business through sharing
in the future growth of such business.
2. Effectiveness of Plan. The provisions of this Plan
became effective on December 30, 1988.
3. Administration. This Plan shall be administered by the
Stock Option Committee of the Board of Directors of the Company
(the "Committee"), which shall be comprised of two (2) or more
directors, each of whom shall be "disinterested persons," as
defined in Rule 16b-3(c)(2)(i), promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The
Committee shall have full power and authority to construe,
interpret and administer the Plan, and may from time to time adopt
such rules and regulations for carrying out this Plan as it may
deem proper and in the best interests of the Company. Subject to
the terms, provisions and conditions of the Plan, the Committee
shall have the authority to select the individuals to whom options
shall be granted, to determine the number of shares subject to each
option, to determine the time or times when options will be
granted, to determine the option price of the shares subject to
each option, to determine the time when each option may be
exercised, to fix such other provisions of each option agreement as
the Committee may deem necessary or desirable, consistent with the
terms of this Plan, and to determine all other questions relating
to the administration of this Plan. The interpretation and
construction of this Plan by the Committee shall be final,
conclusive and binding upon all persons.
4. Eligibility. Options to purchase shares of Common Stock
shall be granted under this Plan only to those individuals selected
by the Committee from time to time who, in the sole discretion of
the Committee, are currently directors or key employees and who
have made material contributions in the past, or who are expected
to make material contributions in the future, to the successful
performance of the Company. Options shall not be granted to any
individual while he is a member of the Committee.
5. Shares Subject to the Plan. Options granted under this
Plan shall be granted solely with respect to shares of Common
Stock. Subject to any adjustments made pursuant to the provisions
of Section 12, the aggregate number of shares of Common Stock which
may be issued upon exercise of all the options which may be granted
under this Plan shall not exceed 1,848,025. If any option granted
under this Plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject to
such options shall be added to the number of shares otherwise
available for options which may be granted in accordance with the
terms of this Plan. The shares to be delivered upon exercise of
the options granted under this Plan shall be made available, at the
discretion of the Committee, from either the authorized but
unissued shares of Common Stock or any treasury shares of Common
Stock held by the Company.
6. Option Contract. Each option granted under this Plan
shall be evidenced by a non-statutory stock option contract which
shall be signed by an officer of the Company and by the individual
to whom the option is granted (the "Optionee"). The terms of said
contract shall be in accordance with the provisions of this Plan,
but it may include such other provisions as may be approved by the
Committee. The grant of an option under this Plan shall be deemed
to occur on the date on which the contract evidencing such option
is executed by the Company, and every Optionee, upon the execution
of a contract, shall be bound by the terms and restrictions of this
Plan and such contract; provided, however, if an Optionee does not
sign and return to the Company one (1) duplicate original of their
option contract prior to the expiration of one hundred and twenty
(120) days after the grant date, then the grant shall be withdrawn,
and the option shall be void and of no further force or effect.
7. Option Price. The price at which shares of Common Stock
may be purchased under an option granted pursuant to this Plan
shall be determined by the Committee, but in no event shall the
price be less than 100 percent of the fair market value of such
shares on the date that the option is granted. The fair market
value of shares of Common Stock for purposes of this Plan shall be
determined by the Committee, in it sole discretion.
8. Period and Exercise of Option.
(a) Period -- Subject to the provisions of Section 9 and
10 hereof with respect to the death or termination of employment of
an Optionee, the period during which each option granted under this
Plan may be exercised shall be fixed by the Committee at the time
such option is granted, provided that such period shall expire no
later than five (5) years from the date on which the option is
granted (the "Granting Date").
(b) Employment -- The Option may not be exercised to any
extent until the Optionee has been continuously, for a period of at
least one (1) year after the Granting Date, employed by the Company
or a subsidiary of the Company.
(c) Exercise -- Any Option granted under this Plan may
be exercised by the Optionee only by delivering to the Company
written notice of the number of shares with respect to which he is
exercising his option right, paying in full the option price of the
purchased shares, and furnishing to the Company a representation in
writing signed by the Optionee that he is familiar with the
business and financial condition of the Company, is purchasing the
shares of stock in good faith for himself for investment purposes
and not with a view towards the sale or distribution thereof, and
will not effect any sale in violation of any laws or regulations of
the United States or any state. Subject to the limitations of this
Plan and the terms and conditions of the respective stock option
contract, each option granted under this Plan shall be exercisable
in whole or in part at such time or times as the Committee may
specify in such stock option contract.
(d) Payment for shares -- Payment for shares of Common
Stock purchased pursuant to an option granted under this Plan may
be made in either cash or in shares of Common Stock.
(e) Delivery of certificates -- As soon as practicable
after receipt by the Company of the notice and representation
described in Subsection (c), and of payment in full of the option
price for all of the shares being purchased pursuant to an option
granted under this Plan, a certificate or certificates representing
such shares of stock shall be registered in the name of the
Optionee and shall be delivered to the Optionee. However, no
certificate for fractional shares of stock shall be issued by the
Company notwithstanding any request therefor. Neither any
Optionee, nor the legal representative, legatee or distributee of
any Optionee, shall be deemed to be a holder of any shares of stock
subject to an option granted under this Plan unless and until the
certificate or certificates for such shares have been issued. All
stock certificates issued upon the exercise of any options granted
pursuant to this Plan may bear such legend as the Committee shall
deem appropriate regarding restrictions upon the transfer or sale
of the shares evidenced thereby.
(f) Withholding -- The Company shall have the right to
deduct any sums that the Committee reasonably determines that
Federal, state or local tax law requires to be withheld with
respect to the exercise of any option or as otherwise may be
required by those laws. The Company may require as a condition to
issuing shares of Common Stock upon exercise of the option that the
Optionee or other person exercising the option pay any sums that
Federal, state or local tax law required to be withheld with
respect to the exercise. The Company shall not be obligated to
advise any Optionee of the existence of the tax or the amount which
the Company will be so required to withhold. Upon exercise of an
option, if tax withholding is required, an Optionee may, with the
consent of the Committee, have shares of Common Stock withheld
("Share Withholding") by the Company from the shares otherwise to
be received; provided, however, that if the Optionee is subject to
the provisions of Section 16 under the Exchange Act, no Share
Withholding shall be permitted unless such transaction complies
with the requirements of Rule 16b-3(e) promulgated under the
Exchange Act. The number of shares so withheld should have an
aggregate fair market value (as determined in accordance with the
terms of the Plan) on the date of exercise sufficient to satisfy
the applicable withholding taxes.
9. Termination of Employment. If an Optionee shall cease to
be an employee of the Company or subsidiary of the Company for any
reason other than death after he shall have served in such capacity
continuously for at lease one (1) year from the Granting Date, he
may, but only within ten (10) business days next succeeding such
cessation, exercise his option to the extent that he was entitled
to exercise it at the date of such cessation. Nothing in this Plan
or any stock option contract shall be construed as an obligation on
the part of the Company or of any of its subsidiary corporations to
continue the Optionee as an employee.
10. Death of Optionee. In the event of the death of an
Optionee while serving as an employee of the Company or its
subsidiary, any option or unexercised portion thereof granted to
him under this Plan which is otherwise exercisable may be exercised
by the person or persons to whom such Optionee's rights under the
option pass by operation of the Optionee's will or the laws of
descent and distribution, at any time within a period of three (3)
months following the death of the Optionee (even though such period
is later than the expiration date of the option as specified in
Section 8(a) and in the respective stock option contract). Such
option shall be exercisable even though the Optionee's death occurs
before he has continuously served as an employee of the Company or
its subsidiary for a period of one (1) year after the date of
grant.
11. Non-Transferability of Options. Each option granted
under this Plan shall not be transferable or assignable by the
Optionee other than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order
and during the lifetime of the Optionee may otherwise be exercised
only by him.
12. Adjustments upon Changes in Capitalization. In the event
of any change in the capital structure of the Company, including
but not limited to a change resulting from a stock dividend, stock
split, reorganization, merger, consolidation, liquidation or any
combination or exchange of shares, and the Company continues
thereafter as the surviving entity, then the number of shares of
Common Stock subject to this Plan and the number of such shares
subject to each option granted hereunder shall be correspondingly
adjusted by the Committee. The option price for which shares of
Common Stock may be purchased pursuant to an option granted under
this Plan shall be adjusted so that there will be no change in the
aggregate purchase price payable upon the exercise of any option.
13. Amendment and Termination of Plan. No option shall be
granted pursuant to this Plan after December 31, 1998, on which
date this Plan shall expire except as to options then outstanding
under the Plan, which options shall remain in effect until they
have been exercised or have expired. The Committee may at any time
before such date, amend, modify or terminate the Plan. No
amendment, modification or termination of this Plan may adversely
affect the rights of any Optionee under any then outstanding option
granted hereunder without the consent of such Optionee.
14. Termination of Old Option Contract and Grant of New
Option Contract. An option may be granted under this Plan which
may be conditioned upon the termination of a non-statutory stock
option contract previously granted to the Optionee which has not
yet been terminated or been exercised.
15. Change of Control. If while unexercised options remain
outstanding under the Plan, a Change of Control (as hereinafter
defined) shall have occurred, then all such options shall be
exercisable in full, notwithstanding Section 8(b) hereof or any
other provision in the Plan or Option Contract to the contrary.
For purposed of the Plan, a "Change of Control" shall be deemed to
have occurred with respect to the Company: (A) on the date in which
the Company executes an agreement or an agreement in principle (i)
with respect to any merger, consolidation or other business
combination by the Company with or into another entity and the
Company is not the surviving entity, or (ii) to sell or otherwise
dispose of all or substantially all of its assets, or (iii) to
adopt a plan of liquidation; or (B) on the date in which public
announcement is made that the "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) of securities representing more
than 50% of the combined voting power of the Company is being
acquired by a "person" within the meaning of sections 13(d) and
14(d) of the Exchange Act; or (C) if, during any period of eighteen
(18) consecutive months, individuals who at the beginning of such
period were members of the Board of Directors cease for any reason
to constitute at least a majority thereof (unless the appointment
or election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at
least a majority of the directors then still in office who were
directors at the beginning of such period); provided, however, that
in no event shall a change in the composition of the Company's
Board of Directors pursuant to an election of Board members
pursuant to Section 4.6 of the Company's Articles of Incorporation,
as amended, constitute or result in a Change of Control for
purposes of this Section 15.
The Committee shall have the right, at the time of grant or
subsequently, in its sole discretion, to establish conditions under
which a specific employee may cease to be a full-time employee of
the Company or any of its Subsidiaries but not be deemed to have
terminated his employment with the Company or any of its
Subsidiaries for purposes of the Plan, including but not limited to
conditions involving part-time employment or consulting services.
Unless otherwise specifically provided for in an employee's stock
option contract or in an amendment or supplement thereto, an
employee's employment with the Company or any of its Subsidiaries
shall be deemed to terminate when he ceases to be a full-time
employee of the Company or any of its Subsidiaries.
In the event of a merger, consolidation, reorganization or
recapitalization of the Company, the Committee shall have the right
to accelerate the vesting schedule with respect to all or any
portion of the shares of Common Stock granted to any or all of the
employees under the Plan, if and to the extent it deems appropriate
in its sole discretion.
Exhibit B
SHOWBIZ PIZZA TIME, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
ARTICLE I
PURPOSE AND ADMINISTRATION
1.1 Purpose. The purpose of the ShowBiz Pizza Time, Inc.
Non-Employee Directors Stock Option Plan (the "Plan") is to
strengthen ShowBiz Pizza Time, Inc. (the "Company") by providing a
means of retaining and attracting competent non-employee personnel
to serve on its board of directors by extending such individuals
added long-term incentives for high levels of performance and for
unusual efforts designed to improve the financial performance of
the Company. In order to effectuate this intent, the Company will,
pursuant to this Plan, grant to each non-employee director the
herein specified options to acquire shares of common stock of the
Company ("Common Stock"), which options shall vest over a specified
period of time.
1.2 Administration. The Plan shall be administered by a
committee (the "Committee") which shall be comprised of the
President of the Company and the Chief Financial Officer of the
Company.
Subject to the express provisions of the Plan, the Committee
shall have powers and authorities which are exclusively ministerial
in nature, including the authority to construe and interpret the
Plan, to define the terms used in the Plan, to prescribe, amend and
rescind rules and regulations relating to the administration of the
Plan, and to make all other determinations necessary or advisable
for the administration of the Plan. The determinations of the
Committee on all such matters referred to in this Plan shall be
conclusive. No member of the Committee shall be liable for any
action, failure to act, determination or interpretation made in
good faith with respect to the Plan or any transaction under the
Plan.
1.3 Participation. Each member of the Board of Directors of
the Company (the "Board") who is not employed by the Company or any
Affiliate (collectively, the "Non-Employee Directors") shall be
eligible and shall participate in the Plan. For purposes of the
Plan, the term "Affiliate" shall mean any entity in which the
Company directly or through intervening subsidiaries owns twenty-five
percent (25%) or more of the total combined vetoing power or
value of all classes of stock or, in the case of an unincorporated
entity, a twenty-five percent (25%) or more interest in the capital
and profits.
1.4 Stock Subject to the Plan. Subject to adjustment as
provided in Section 3.1 hereof, the stock to be offered under the
Plan shall be treasury shares or shares of the Company's authorized
but unissued Common Stock (hereinafter collectively called
"Stock"). The aggregate number of shares of Stock to be issued
upon exercise of all options granted under the Plan shall not
exceed 100,000 shares, subject to adjustments as set forth in
Section 3.1 hereof. If any option granted hereunder shall lapse or
terminate for any reason without having been fully exercised, the
shares subject thereto shall again be available for purposes of the
Plan.
1.5 Restrictions on Exercise. No option granted hereunder
may be exercised until a registration statement under the
Securities Act of 1933, as amended (the "Act"), relating to the
Stock issuable upon exercise of such option has been filed with,
and declared effective by, the Securities and Exchange Commission
(the "Commission"), and there is available for delivery a
prospectus meeting the requirements of Section 10 of the Act, or
until the Committee has determined that the issuance of Stock upon
such exercise is exempt from the registration and prospectus
requirements of the Act.
ARTICLE II
STOCK OPTIONS
2.1 Grant and Option Price. (a) On the effective date of
this Plan, Anthony J. Gumbiner and Brian M. Troup shall each be
granted an option to purchase 7,500 shares of Stock. Thereafter,
on the day a Non-Employee Director is first elected or appointed to
the Board, such Non-Employee Director shall be granted an option to
purchase 7,500 shares of Stock.
(b) On the fifth Business Day in January of the year
following the effective date of the Plan, each Non-Employee
Director who was previously elected to the Board and who continues
to serve in such capacity at such time shall be granted an option
to purchase 2,500 shares of Stock. For purposes of the Plan, the
term "Business Day" shall mean a day on which the Nasdaq National
Market is open for business and is conducting normal trading
activity.
(c) The purchase of the Stock covered by each option granted
under the Plan shall be equal to the Fair Market Value of such
Stock on the grant date. For purposes of the Plan, the term "Fair
Market Value" shall mean the average of the closing prices of the
Common Stock as reported by the Nasdaq National Market for the five
trading-day period ending on and including the date of grant.
(d) The total grant under both paragraphs (a) and (b) above
shall be limited accordingly to the greatest number of whole shares
of Stock which may thus be granted thereunder.
2.2 Stock Option Agreement. Each option granted pursuant to
the Plan shall be evidenced by a Stock Option Agreement ("Option
Agreement"), in such form as the Committee shall require, between
the Company and the Non-Employee Director to whom the option has
been granted (the "Optionee").
2.3 Option Period. Except as otherwise provided herein, each
option and all rights or obligations thereunder shall expire on the
fifth anniversary of the grant date (the "Expiration Date"), and
shall be subject to earlier termination as hereinafter provided.
2.4 Vesting and Exercise of Options. (a) Subject to Section
3.2 hereof, an option granted pursuant to Sections 2.1(a) or (b)
hereof shall be exercisable only to the extent of shares that have
vested in accordance with the following schedule:
Portion of Shares
That are Vested
On or After
Such Anniversary
Annual Anniversary and Before
of Date of Grant Next Anniversary
- ------------------- ----------------
First......................................... 0%
Second........................................ 50%
Third......................................... 100%
(b) The purchase price of the stock purchased upon exercise
of an option shall be paid in full in cash or by check at the time
of each exercise of an option; provided, however, that if the
Option Agreement so provides and upon receipt of all regulatory
approvals, the person exercising the option may deliver in payment
of a portion or all of the purchase price certificates for Common
Stock of the Company, which shall be valued at the Fair Market
Value of such Stock on the date of exercise of the option.
2.5 Non-Transferability of Options. An option granted under
the Plan shall, by its terms, be non-transferable by the Optionee
other than by will or by the laws of descent and distribution or
pursuant to a qualified domestics relations order. During the
Optionee's lifetime, the option shall be exercisable only by the
Optionee or by the Optionee's duly appointed guardian or personal
representative.
2.6 Termination of Directorship. (a) If the directorship of
the Optionee is terminated for any reason other than (i) death of
the Optionee, or (ii) on account of any act of fraud or intentional
misrepresentation or embezzlement, misappropriation or conversion
of assets or opportunities of the Company or any Affiliate, an
option (to the extent otherwise exercisable on the date of such
termination) shall be exercisable by the Optionee at any time prior
to the Expiration Date of the option or within thirty (30) days
after the date of such termination of the directorship, whichever
is the shorter period.
(b) If an Optionee dies while serving as a member of the
Board, the option shall be exercisable (whether or not exercisable
on the date of the death of such Optionee) by the person or persons
entitled to do so under the Optionee's will, or, if the Optionee
shall fail to make testamentary disposition of said option or shall
die intestate, by the Optionee's legal representative or
representatives, at any time prior to the Expiration Date of the
option or within ninety (90) days after the date of such death,
whichever is the shorter period. If an Optionee dies during the
thirty (30) day period described in subsection (a) above, the
option shall be exercisable (but only to the extent exercisable on
the date of death of such Optionee) by the person or persons
described above at any time within the thirty (30) day period
described in subsection (a) above or within ninety (90) days after
the date of such death, whichever is the longer period, but in no
event after the Expiration Date of the option.
(c) The option of a Non-Employee Director shall automatically
terminate as of the date his or her directorship is terminated, if
the directorship is terminated on account of any act of (a) fraud
or intentional misrepresentation, or (b) embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or any Affiliate.
2.7 Issuance of Stock Certificates. Upon exercise of an
option, but subject to the provisions of Section 3.5 of the Plan,
the person exercising the option shall be entitled to one stock
certificate evidencing the shares acquired upon such exercise;
provided, however, that any person who tenders Common Stock in
payment of a portion or all of the purchase price of Stock
purchased upon exercise of the option shall be entitled to receive
a separate certificate representing the number of shares purchased
in consideration of the tender of such Common Stock.
ARTICLE III
OTHER PROVISIONS
3.1 Adjustments Upon Changes in Capitalization. (a) If a
dividend or stock split shall be hereinafter declared upon the
Common Stock of the Company payable in shares of Common Stock of
the Company, the number of shares of Common Stock then subject to
any such option and the number of shares reserved for issuance
pursuant to the Plan but not yet covered by an option shall be
adjusted by adding to each such share the numbers of shares which
would be distributable thereon if such share had been outstanding
on the date fixed for determining the stockholders entitled to
receive such stock dividend or stock split.
(b) If the outstanding shares of the Common Stock of the
Company shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of
another corporation, whether through reorganization,
recapitalization, stock split, combination of shares, merger or
consolidation, and the Company continues thereafter as the
surviving entity, then there shall be substituted for each share of
Stock subject to any such option and for each share of Stock
reserved for issuance pursuant to the Plan but not yet covered by
an option, the number and kind of shares of stock or other
securities into which each outstanding share of Common Stock shall
be changed or for which each such share shall be exchanged.
(c) If there shall be any change, other than as specified
above in subsection (a) and (b), in the number or kind or
outstanding shares of Common Stock of the Company or of any stock
or other securities into which Common Stock shall have been changed
or for which it shall have been exchanged, then if the Committee
shall in its sole discretion determine that such change equitably
requires an adjustment in the number or kind of shares theretofore
reserved for issuance pursuant to the Plan but not yet covered by
an option and of the shares then subject to an option or options,
such adjustment shall be made by the Committee and shall be
effective and binding for all purposes of the Plan and of each
Option Agreement.
(d) In the case of any such substitution or adjustment as
provided for in this Section 3.1, the option price in each Option
Agreement for each share covered thereby prior to such substitution
or adjustment will be the option price for all shares of stock or
other securities which shall have been substituted for such share
or to which such adjustment provided for in this Section 3.1 shall
be made. No adjustment or substitution provided for in this
Section 3.1 shall require the Company pursuant to any Option
Agreement to sell a fractional share, and the total substitution or
adjustment with respect to each Option Agreement shall be limited
accordingly.
3.2 Continuation of Directorship. Nothing contained in this
Plan (nor in any option granted pursuant to this Plan) shall confer
upon any Non-Employee Director any right to continue as a member of
the Board or constitute any contract or agreement or interfere in
any way with the right of the Company to remove such Non-Employee
Director from the Board. Nothing contained herein or in any Option
Agreement shall affect any other contractual rights of a Non-Employee
Director.
3.25 Change of Control. If while any unexercised options
remain outstanding under the Plan, a Change of Control (as
hereinafter defined) shall have occurred, then all such options
shall be exercisable in full, notwithstanding Section 2.4 hereof or
any other provision in the Plan or Option Agreement to the
contrary. For purposes of the Plan, a "Change of Control" shall be
deemed to have occurred with respect to the Company: (A) on the
date in which the Company executes an agreement or an agreement in
principle (i) with respect to any merger, consolidation or other
business combination by the Company with or into another entity and
the Company is not the surviving entity, or (ii) to sell or
otherwise dispose of all or substantially all of its assets, or
(iii) to adopt a plan of liquidation; or (B) on the date in which
public announcement is made that the "beneficial ownership" [as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")], of securities representing more than
50% of the combined voting power of the Company is being acquired
by a "person" within the meaning of sections 13(d) and 14(d) of the
Exchange Act; or (C) if, during any period of eighteen (18)
consecutive months, individuals who at the beginning of such period
were members of the Board of Directors cease for any reason to
constitute at least a majority thereof (unless the appointment or
election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at
least a majority of the directors then still in office who were
directors at the beginning of such period); provided, however, that
in no event shall a change in the composition of the Company's
Board of Directors pursuant to an election of Board members
pursuant to Section 4.6 of the Company's Articles of Incorporation,
as amended, constitute or result in a Change of Control for
purposes of this Section 3.25.
3.3 Amendment and Termination. The Board may at any time
suspend or terminate the Plan. No option may be granted during any
suspension of the Plan or after such termination. The amendment,
suspension or termination of the Plan shall not, without the
consent of the Optionee, alter or impair any rights or obligations
under any option theretofore granted under the Plan.
The Board may at any time amend the Plan as it shall deem
advisable without further action on the part of the stockholders of
the Company, provided, that the Board may not amend any provision
of the Plan relating to the amount and price of Stock subject to
the options granted hereunder or the timing of grants hereunder
more than once every six months, other than to comport with changes
in the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act, or the rules thereunder, and
provided further, that any amendment to the Plan must be approved
by the stockholders of the Company if the amendment would (a)
materially increase the aggregate number of shares of Stock which
may be issued pursuant to options granted under the Plan, (b)
materially modify the requirements as to eligibility for
participation in the Plan, or (c) materially increase the benefits
accruing to holders of options under the Plan.
3.4 Time of Exercise. An option shall be deemed to be
exercised when the Secretary of the Company receives written notice
of such exercise from the person entitled to exercise the option
together with payment of the purchase price made in accordance with
Section 2.4 of the Plan.
3.5 Privileges of Stock Ownership and Non-Distributive
Intent. The holder of an option shall not be entitled to the
privilege of stock ownership as to any shares of Stock not actually
issued and delivered to the holder. Subject to the provisions of
Section 1.5 above, upon exercise of an option for Stock at a time
when there is not in effect under the Act a registration statement
relating to the Stock issuable upon exercise thereof or not
available for delivery a prospectus meeting the requirements of
Section 10 of the Act, the holder of the option shall execute a
stock purchase agreement in which he shall represent and warrant in
writing to the Company that, inter alia, the shares of Stock
purchased are being acquired for investment and not with a view to
the resale or distribution thereof. No shares of Stock shall be
issued upon the exercise of any option unless and until there shall
have been compliance with any then applicable requirements of the
Commission, other regulatory agencies having jurisdiction and any
exchanges upon which securities subject to the option may be
listed.
3.6 Effective Date of the Plan. The Plan shall be effective
upon approval by the affirmative vote of the holders of a majority
of the outstanding shares of Common Stock and the Company's
outstanding shares of preferred stock, voting as one class, present
and entitled to vote at a meeting duly held or by the written
consent of the holders of a majority of the Common Stock and the
Company's outstanding shares of preferred stock, voting as one
class, entitled to vote.
3.7 Expiration. Unless previously terminated or extended by
the Board, the Plan shall expire at the close of business on the
date which is the last day of the five (5) year period beginning on
the date on which the stockholders approve the Plan, and no option
shall be granted under it thereafter, but such expiration shall not
affect any option theretofore granted.
3.8 Governing Law. The Plan and the options issued hereunder
shall be governed by, and construed and enforced in accordance
with, the laws of the State of Texas applicable to contracts made
and performed within that State.
3.9 Applications of Funds. The proceeds received by the
Company from the sale of shares pursuant to options shall be used
for general corporate purposes.
3.10 No Liability for Good Faith Determinations. Neither the
members of the Board not any member of the Committee shall be
liable for any act, omission or determination taken or made in good
faith with respect to the Plan or any option granted under it.
3.11 Information Confidential. As partial consideration for
the granting of each option hereunder, the Optionee shall agree
with the Company that he will keep confidential all information and
knowledge which he has relating to the manner and amount of his
participation in the Plan; provided, however, that such information
may be given in confidence to the Optionee's spouse or to a
financial institution to the extent that such information is
necessary.
3.12 Execution of Receipts and Releases. Any payment or any
issuance or transfer of shares of Stock to the Optionee, or to his
legal representative, heir, legatee or distributee, in accordance
with the provisions hereof, shall, to the extent thereof, be in
full satisfaction of all claims of such persons hereunder. The
Board may required any Optionee, legal representative, heir,
legatee or distributee, as a condition precedent to such payment,
to execute a release and receipt therefor in such form as it shall
determine.
3.13 No Guarantee of Interests. Neither the Board nor the
Company guarantees the Stock from loss or depreciation.
3.14 Payment of Expenses. All expenses incident to the
administration, termination or protection of the Plan, including,
but not limited to, legal and accounting fees, shall be paid by the
Company.
3.15 Company Records. Records of the Company and any
Affiliate regarding the Optionee's period of service, termination
of service and the reason therefor, leaves of absence, and other
matters shall be conclusive for all purposes hereunder, unless
determined by the Board to be incorrect.
3.16 Information. The Company and any Affiliate shall, upon
request or as may be specifically required hereunder, furnish or
cause to be furnished all of the information or documentation
which is necessary or required by the Committee to perform its
duties and functions under the Plan.
3.17 No Liability of Company. The Company assumes no
obligation or responsibility to the Optionee or his or her personal
representatives, heirs, legatees or distributees for any act of, or
failure to act on the part of, the Board or the Committee.
3.18 Company Action. Any action required of the Company
shall be by resolution of the Board or by a person authorized to
act by Board resolution.
3.19 Severability. If any provision of this Plan shall be
held to be illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining provisions hereof, but
shall be fully severable and the Plan shall be construed and
enforced as if the illegal or invalid provision had never been
included herein.
3.20 Notice. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered
or sent by mail. Except as otherwise provided in Section 3.4 of
this Plan, any notice required or permitted to be delivered
hereunder shall be deemed to be delivered on the date on which it
is personally delivered or, whether actually received or not, on
the third (3rd) business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to
the person who is to receive it at the address which such person
has theretofore specified by written notice delivered in accordance
herewith. The Company or an Optionee may change, at any time and
from time to time, by written notice to the other, the address
which it or he had theretofore specified for receiving notice.
Until it is changed in accordance herewith, the Company and each
Optionee shall specify as its and his address for receiving notice
the address set forth in the Option Agreement pertaining to the
shares to which such notice relates.
3.21 Waiver of Notices. Any person entitled to notice
hereunder may waive such notice.
3.22 Successors. The Plan shall be binding upon the
Optionee, his or her heirs, legatees and legal representatives,
upon the Company, its successors and assigns and upon the Board and
its successors.
3.23 Headings. The titles and headings of sections and
paragraphs are included for convenience of reference only and are
not to be considered in construction of the provisions hereof.
3.24 Word Usage. Words used in the masculine shall apply to
the feminine where applicable and, wherever the context of this
Plan dictates, the plural shall be read as the singular and the
singular as the plural.
Exhibit C
SHOWBIZ PIZZA TIME, INC.
STOCK GRANT PLAN
1. Purpose. The purpose of the Plan is to provide senior
executives of the Company or any of its Subsidiaries with a
proprietary interest in the Company through the granting of stock
which will:
(a) increase the interest of the senior executives in
the Company's welfare;
(b) furnish an incentive to the senior executives to
continue their services to the Company or its
Subsidiaries; and
(c) provide a means through which the Company may
attract able persons to enter its employ or the employ of
its Subsidiaries.
2. Administration. The Plan will be administered by the
Committee.
3. Participants. The Committee shall, from time to time,
select the particular senior executives of the Company or any of
its Subsidiaries to whom shares of Common Stock of the Company are
to be granted, and who will, upon such grant, become participants
in the Plan.
4. Shares Subject to the Plan. The Committee may not makes
grants under the Plan for more than an aggregate of 1,145,758
shares of Common Stock. Such maximum number of shares shall be
adjusted to reflect any stock dividend, stock split, share
combination, recapitalization or the like, of or by the Company.
Shares to be granted may be made available from either authorized
but unissued Common Stock or Common Stock held by the Company in
its treasury. Share of Common Stock granted under the Plan that
are canceled, surrendered, or forfeited to the Company under the
vesting restrictions imposed on such shares pursuant to Section 6
of the Plan, or otherwise, may be regranted under the Plan.
5. Grants of Stock. The Committee shall determine from time to
time the number of shares of Common Stock to be granted to senior
executives of the Company or its Subsidiaries. All grants of
Common Stock under the Plan shall be made by the Committee. Each
grant of Common Stock under the Plan shall be authorized by a
resolution of the Committee and evidenced by a certificate of
participation setting forth the name of the participant, the number
of shares of Common Stock granted, the date of grant, the vesting
schedule applicable to the shares of Common Stock granted and such
other provisions as may be deemed appropriate by the Committee, but
neither such resolution nor such certificate may be inconsistent
with the Plan.
Any grant of shares of Common Stock to a senior executive
shall not be deemed either to entitle the senior executive to, or
to disqualify the senior executive from, (i) participation in any
other grant of shares of Common Stock under the plan, (ii)
participation in any stock option or other plan of the Company or
(iii) the continuance of his employment by the Company or any of
its Subsidiaries.
6. Restrictions on Stock Granted Under the Plan. All shares
of Common Stock granted under the Plan shall be subject to the
following restriction or provisions:
(a) With respect to each separate grant of shares of
Common Stock hereunder, the shares so granted may not be
sold or otherwise alienated or hypothecated (except to
the Company) until the participant has become vested in
those shares as hereinafter provided in this Section 6.
(b) Except as otherwise expressly provided herein, in
the event a participant's employment terminates, if such
termination is for any reason other than normal
retirement, death, total disability or early retirement
with the consent of the Board, then the participant shall
forfeit to the Company those shares in which he has not
become vested under the provisions of this Section 6 and
his certificate of participation, or any amendment or
supplement thereto, as of the date of his termination.
(c) In the event a participant's employment terminates
because of normal retirement or early retirement with the
consent of the Board, then the Committee shall have the
right at the time of the grant, or subsequently, to
provide for the acceleration of, or to accelerate, the
vesting schedule with respect to all or any portion of
the shares of Common Stock granted to such participant,
if and to the extent it deems appropriate in its sole
discretion.
(d) In the event a participant's employment terminates
because of his death or total disability, then the
vesting schedule with respect to all shares of Common
Stock granted to such participant prior to his death or
total disability shall be accelerated, automatically and
without further action of the Committee, to the date next
preceding the date of such participant's termination of
employment, and the participant shall then be fully
vested as to all shares so granted him hereunder.
(e) In the event that a participant's employment with
the Company and its Subsidiaries is terminated by the
employer by written notice to the participant, or
otherwise (as opposed to a voluntary termination or
termination resulting from the death, total disability or
retirement of the participant), if such termination is
for any reason other than "For Cause" (as herein after
defined), then the Committee shall have the right, at the
time of grant, or subsequently, to provide for the
acceleration of, or to accelerate, the vesting schedule
with respect to all or any portion of the shares of
Common Stock granted to such participant under the Plan,
if and to the extent it deems appropriate in its sole
discretion. For purposes hereof, a participant's
employment shall be deemed to have been terminated by the
Company "For Cause" only if such termination shall be
based upon such participant's gross negligence or willful
misconduct in the performance of his duties with the
Company or any of its Subsidiaries or such participant's
conviction of a felony.
(f) The Committee shall have the right, at the time of
grant or subsequently, in its sole discretion, to
establish conditions under which a specific participant
may cease to be a full-time employee of the Company or
any of its Subsidiaries but not be deemed to have
terminated his employment with the Company or any of its
Subsidiaries for purposes of the Plan, including but not
limited to conditions involving part-time employment or
consulting services. Unless otherwise specifically
provided for in a participant's certificate of
participation or in an amendment or supplement thereto,
a participant's employment with the Company or any of its
Subsidiaries shall be deemed to terminate when he ceases
to be a full-time employee of the Company or any of its
Subsidiaries.
(g) All shares of Common Stock granted to a participant
under the Plan shall be subject to forfeiture under a
vesting schedule to be determined by the Committee and
set forth in the certificate of participation issued to
the participant; provided, however, that such shares
shall be subject to a vesting schedule providing the full
vesting within a period not shorter than two years from
the date of grant (subject to acceleration as provided
for in the Plan) and not longer than ten years from the
date of grant.
(h) Upon a Change of Control (as hereinafter defined),
the vesting schedule with respect to all of the shares of
Common Stock granted to any participant under the Plan
shall be accelerated, notwithstanding Section 6(g) hereof
or any other provision in the Plan or certificate of
participation to the contrary, as long as such
participant's employment has not been terminated as of
the Change of Control. For purposes of the Plan, a
"Change of Control" shall be deemed to have occurred with
respect to the Company: (1) on the date in which the
Company executes an agreement or an agreement in
principle (A) with respect to any merger, consolidation
or other business combination by the Company with or into
another entity and the Company is not the surviving
entity, or (B) to sell or otherwise dispose of all or
substantially all of its assets, or, to adopt a plan of
liquidation; or (2) on the date in which public
announcement is made that the "beneficial ownership" [as
defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")], of securities
representing more than 50% of the combined voting power
of the Company is being acquired by a "person" within the
meaning of sections 13(d) and 14(d) of the Exchange Act;
or (3) if, during any period of eighteen (18) consecutive
months, individuals who at the beginning of such period
were members of the Board of Directors cease for any
reason to constitute at least a majority thereof (unless
the appointment or election, or the nomination for
election by the Company's stockholders, of each new
director was approved by a vote of at least a majority of
the directors then still in office who were directors at
the beginning of such period); provided, however, that in
no event shall a change in the composition of the
Company's Board of Directors pursuant to an election of
Board members pursuant to Section 4.6 of the Company's
Articles of Incorporation, as amended, constitute or
result in a Change of Control for purposes of this
subsection.
(i) Upon approval of this Plan by stockholders of the
Company, as provided for in Section 16 hereof, unvested
shares granted to a participant shall have the right to
vote, and the participant shall receive any dividends
thereon duly declared by the Company according to law,
less any taxes or other amounts which the Company may be
required to withhold with respect thereto; provided,
however, that if shares are forfeited hereunder prior to
being voted or prior to the actual payment of any such
dividend, the participant to whom such shares had been
granted shall have no right to vote, or to receive such
dividend, as to the shares so forfeited.
7. Other Restrictions on Stock Granted Under the Plan. The
Committee may impose such other conditions or restrictions upon the
grant of any shares, or upon any shares of Common Stock granted,
under the Plan as it may deem necessary or advisable, including,
without limitation, conditions requiring reimbursement to the
Company of any withholding taxes for which the Company may be
liable in respect of any shares of Common Stock so granted,
restrictions under the Securities Act of 1933, as amended (the
"1933 Act"), compliance with the requirements of any stock exchange
upon which such shares, or shares of the same class, are then
listed, and restrictions under any Blue Sky or state securities
laws applicable to such shares. At the time any shares of Common
Stock are granted to any participant under the Plan, the
participant shall pay in cash or by check to the Company an amount
equal to a sum calculated by multiplying the then par value of such
shares by the number of shares so granted. In the event any shares
of Common Stock granted to a participant under the Plan are
forfeited, the Company shall pay in cash or by check to the
participant an amount equal to a sum calculated by multiplying the
then par value of such shares by the number of shares so forfeited,
if and to the extent the Company is then legally permitted to do
so.
8. Escrow and Legend. In order to enforce the restrictions
imposed upon the shares of Common Stock granted under the Plan, all
certificates representing such shares shall remain in the physical
custody of the Company, in escrow, until all of the restrictions
imposed pursuant to this Plan which could result in the forfeiture
of such shares have terminated, and the Committee may cause a
legend or legends to be placed on any certificates representing
shares of Common Stock granted under the Plan, which legend or
legends may make appropriate reference to the restrictions imposed
hereunder and any restrictions upon transferability under the 1933
Act and under state Blue Sky or securities laws. The certificates
evidencing shares of Common Stock held in escrow pursuant to this
Section 8 shall be held in custody by the Company until the
participant has become fully vested as to such shares and the
participant has made arrangements satisfactory to the Board for
reimbursement to the Company of any amounts which the Company may
be required to withhold in respect of such shares. Upon the making
of such satisfactory arrangements for reimbursement of amounts
which the Company may be required to withhold in respect of such
shares and the satisfaction of all conditions under this Plan, the
Company shall deliver to the participant, or his legal
representative, the certificates representing all shares of Common
Stock as to which the participant has become fully vested, with any
legend making reference to restrictions imposed hereunder (other
than any restrictions under the 1933 Act of state Blue Sky or
securities laws) being removed.
9. Reimbursement of Withholding Taxes. A participant may, at
his election, satisfy the obligation hereunder to reimburse the
Company for any amounts which the Company may be required to
withhold in respect of any shares of Common Stock granted to the
participant hereunder by the payment to the Company of the amount
of such tax liability in cash or the transfer and delivery to the
Company, free and clear of any and all liens, claims and
encumbrances whatsoever, of that number of shares of Common Stock
(which may include, without limitation, shares of Common Stock
granted to the participant hereunder and as to which the
participant has become fully vested) having an aggregate "fair
market value," on the date of such transfer and delivery to the
Company, equal to the amount of such tax liability. For purposes
hereof, the "fair market value" of shares of Common Stock shall be
determined as follows:
(a) During such time as shares of Common Stock are
listed upon an established stock exchange, the "fair
market value" thereof shall be deemed to be the mean
between the high and low trading prices thereof on such
exchange on the last trading day on which there were
sales of Common Stock reported next preceding the date of
any such transfer and delivery; and
(b) During such time as shares of Common Stock are not
listed upon an established stock exchange, the "fair
market value" thereof shall be deemed to be the mean
between the dealer "bid" and "asked" prices thereof in
the over-the-counter market on the last trading day on
which shares of Common Stock were quoted next preceding
the date of any such transfer and delivery. The
participant and the Company may rely upon information
published in the "Wall Street Journal", or other similar
financial publication, in determining such "bid" and
"asked" or trading prices.
10. Registration of Common Stock. The Company shall, on or
before June 1, 1989, prepare and file a registration statement
under the 1933 Act on Form S-8 (or such other comparable form as
may then be available) with respect to shares of Common Stock
granted or to be granted hereunder and shall use its best efforts
to cause the same to become and remain effective. The Company
shall use its best efforts to cause such registration statement on
Form S-8 to provide for the "shelf registration" of such shares for
reoffer or resale pursuant to Rule 415 promulgated under the 1933
Act (or such other comparable rule as may then be in effect) and to
include in such registration statement on Form S-8 a separate
prospectus covering such reoffers or resales prepared in accordance
with the requirements of Form S-3 (or such other comparable form as
may then be available). In no event shall the Company be required
to prepare and file a separate registration statement with respect
to the reoffer or resale by participants of any shares of Common
Stock granted hereunder. The costs of filing and maintaining such
registration statement on Form S-8, and of any separate prospectus
included therein, shall be borne solely by the Company. In the
event that the Company shall fail to carry out its obligations
under this Section 10 with respect to any participant, and such
default shall continue for more than thirty (30) days following
written notice of such default given by a particular participant to
the Company, then and in such event the vesting schedule with
respect to all shares of Common Stock granted to such participant
hereunder shall be accelerated, automatically and without further
action of any party, to the date such notice was given, and such
participant shall then be fully vested as to all shares so granted
him hereunder.
11. Adjustment of Shares.
(a) If at anytime while the Plan is in effect there
shall be any increase of decrease in the number of issued
and outstanding shares of Common Stock through the
declaration of a stock dividend or through any
recapitalization resulting in a stock split-up,
combination or exchange of shares, then an appropriate
adjustment shall be made in the maximum number of shares
then subject to being granted under the Plan, so that the
same proportion of the Company's issued and outstanding
shares shall continue to be subject to being so granted
under this Plan.
(b) If the Company is the surviving entity following a
consolidation or merger with another corporation or
following its participation in a corporate
reorganization, then the stock, securities or other
assets which the participant is entitled to receive, or
has received, in any such transaction by reason of
ownership of shares of Common Stock which are subject to
forfeiture, shall be held in escrow by the Company in
accordance with Section 8 of the Plan and shall be
subject to the same restrictions and conditions as those
to which the granted shares were subject.
(c) The existence of any outstanding shares subject to
forfeiture under the Plan shall not affect in any manner the
right or power of the Company to make, authorize or consummate
(1) any or all adjustments, recapitalizations, reorganizations
or other changes in the capital structure or business of the
Company or any of its Subsidiaries; (2) any merger or
consolidation of the Company or any of its Subsidiaries; (3)
any issue by the Company or any of its Subsidiaries of debt
securities or equity securities; (4) the dissolution or
liquidation of the Company or any of its Subsidiaries; (5) any
sale, transfer or assignment of all or any part of the assets
or business of the Company or any of its Subsidiaries; or (6)
any other corporate act or proceeding, whether of a similar
character or otherwise.
12. Interpretation. The Committee shall interpret the Plan
and shall prescribe such rules and regulations in connection with
the operation of the Plan as it determines to be advisable for the
administration of the Plan. The Committee may rescind and amend
its rules and regulations from time to time.
13. Amendment or Discontinuance. The Plan may be amended or
discontinued by the Board without the approval of the stockholders
of the Company; provided, however, that no such amendment may
without the approval of the stockholders of the Company:
(a) increase the aggregate number of shares of Common
Stock subject to the Plan; or
(b) change the class of persons eligible to receive
grants under the Plan.
No amendment or discontinuance of the Plan may, without the
prior written consent of the participant, adversely affect the
right of any participant to receive any shares of Common Stock
previously granted under the Plan to such participant.
14. Effect of this Plan. Neither the adoption of the Plan
nor any action of the Committee or the Board shall be deemed to
give any senior executive any right to be granted shares of Common
Stock of the Company or any other rights. A certificate of
participation evidencing the grant of Common Stock hereunder shall
be delivered to the participant, evidencing his rights under the
Plan.
15. Definitions. For the purpose of this Plan, unless the
context requires otherwise, the following terms shall have the
meanings indicated:
(a) "Plan" means this Stock Grant Plan, as amended from
time to time.
(b) "Company" means ShowBiz Pizza Time, Inc., a Kansas
Corporation.
(c) "Board" means the Board of Directors of the
Company.
(d) "Committee means the Stock Grant Committee of the
Board, consisting of two (2) Directors who are not
employees of the Company, thereby being ineligible for
grants under the Plan.
(e) "Common Stock" means the Common Stock which the
Company is currently authorized to issue or may in the
future be authorized to issue (as long as the Common
Stock varies from that currently authorized, if at all,
only in amount of par value).
(f) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if, at
the time of the grant, each of the corporations other
than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other
corporations in the chain, and "Subsidiaries" means more
than one of any such corporations.
16. Non-transferability of Options. Each option granted
under this Plan shall not be transferable or assignable by the
optionee other than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order
and during the lifetime of the optionee may otherwise be exercised
only by him.
17. Effectiveness of Plan. The provisions of this Plan
became effective on December 30, 1988.
Exhibit D
PROPOSED AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
FOURTH. The total number of shares of stock that the corporation
shall have authority to issue is Fifty Million Five Hundred Forty-Nine
Thousand Five Hundred Seventy (50,549,570) shares, which shall
be divided into three (3) classes as follows: (i) Forty-Nine
Thousand Five Hundred Seventy (49,570) shares of Class A Preferred
Stock, of the par value of Sixty Dollars ($60.00) each (hereinafter
"Preferred A Shares"); (ii) Five Hundred Thousand (500,000) shares
of Class B Preferred Stock, of the par value of One Hundred Dollars
($100.00) each (hereinafter "Preferred B Shares"); and Fifty
Million (50,000,000) shares of Common Stock, of the par value of
Ten Cents ($0.10) each (hereinafter "Common Shares"). The
designations, powers, preferences, and rights of each class, and
the qualifications, limitations, or restrictions thereof, shall be
as set forth in this ARTICLE FOURTH.
