NOTE: Confidential, for use of the Commission only.
SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, Texas 75062
(972) 258-8507
August 28, 1997
Dear Shareholder:
You are cordially invited to attend the Special Meeting
of Shareholders of the Company to be held at 9:00 a.m.
local time, Thursday, September 25, 1997, at the Offices
of the Company located at 4441 West Airport Freeway,
Irving, Texas.
At the meeting you will be asked to authorize the
adoption of the 1997 Non-Statutory Stock Option Plan, and
to transact such other business as may properly come
before the meeting.
The formal Notice of the Special Meeting of Shareholders
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
page
SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, Texas 75062
(972) 258-8507
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 25, 1997
To the Shareholders of
ShowBiz Pizza Time, Inc.:
Notice is hereby given that a Special Meeting of Shareholders of
ShowBiz Pizza Time, Inc., a Kansas corporation, will be held at the
offices of the Company located at 4441 West Airport Freeway,
Irving, Texas on September 25, 1997, at 9:00 a.m. local time, for
the following purposes:
1. To authorize the adoption of the 1997 Non-Statutory Stock
Option Plan; and
2. To transact such other business as may properly come
before the meeting.
It is desirable that as large a portion as possible of the
shareholders' 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 shareholders of record at the close of business on August 8,
1997 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
August 28, 1997
page
SHOWBIZ PIZZA TIME, INC.
4441 WEST AIRPORT FREEWAY
IRVING, TEXAS 75062
(972) 258-8507
PROXY STATEMENT FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 25, 1997
This proxy statement is furnished to shareholders 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 Special Meeting
of Shareholders (the "Meeting") to be held at 9:00 a.m. local time,
on September 25, 1997 at the offices of the Company located at 4441
West Airport Freeway, Irving, Texas. Proxies in the form enclosed
will be voted at the Meeting, if properly executed, returned to the
Company prior to the Meeting and not revoked. A proxy may be
revoked at any time before it is voted either in person at the
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 shareholders on or about August 8, 1997.
OUTSTANDING CAPITAL STOCK
The record date for the Meeting is August 8, 1997. Only
shareholders of record as of the close of business on the Record
Date are entitled to notice of, and to vote at, the Meeting or any
adjournments thereof. As of the close of business on the Record
Date, there were 18,752,569 shares of Common Stock outstanding, $0.10
par value (the "Common Stock"), and 49,570 shares of Class A
Preferred Stock outstanding, $60 par value (the "Preferred Stock").
No other class of securities of the Company is entitled to notice
of, or to vote at, the Meeting.
ACTION TO BE TAKEN AT THE MEETING
The accompanying proxy, unless the shareholder otherwise specifies
in the proxy, will be voted:
1. To authorize the adoption of the 1997 Non-Statutory Stock
Option Plan; and
2. In the discretion of the proxyholders, as to the
transaction of such other business as may properly come before the
Meeting.
Where shareholders have appropriately specified how their proxies
are to be voted, they will be voted accordingly. Unless
authorization to vote for a proposal pending at the Meeting is
withheld, if no direction is made for a vote cast by proxy, the
proxy shall be voted for such proposal. If any other matter or
business is brought before the 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 Meeting.
page 1
QUORUM AND VOTING
Each shareholder of record on the Record Date is entitled to one
vote for each share of Common Stock and/or Preferred Stock held by
them. A majority of the outstanding shares of Common Stock and
Preferred Stock, represented in person or by proxy, will constitute
a quorum at the Meeting; provided, however, if a quorum is not
present or represented at the Meeting, the shareholders entitled to
vote at the Meeting, present in person or represented by proxy,
have the power to adjourn the Meeting from time to time, without
notice, other than by announcement at the Meeting, until a quorum
is present or represented. At any such adjourned Meeting at which
a quorum is present or represented, any business may be transacted
that might have been transacted at the original date of the
Meeting.
Votes cast by proxy or in person shall be counted by a person or
persons appointed by the Company to act as inspector of election
for the Meeting. The inspector of election will treat shares
presented by proxies that reflect abstentions as shares that are
present and entitled to vote for the purpose of determining the
presence of a quorum. Abstentions will have no effect on the other
proposal to be voted on at the Meeting. Unless authorization to
vote for a proposal pending at the Meeting is withheld, if no
direction is made for a vote cast by proxy, the proxy shall be
voted for such proposal.
Broker non-votes occur where a broker holding shares in street name
votes the shares on some proposals but not others. Brokers are
permitted to vote on routine, non-controversial proposals in
instances where they have not received voting instructions from the
beneficial owner of the shares but are not permitted to vote on
non-routine proposals. The missing votes on non-routine proposals
are deemed to be "broker non-votes." The inspector of election
shall treat broker non-votes as shares that are present and
entitled to vote for the purpose of determining the presence of a
quorum. However, for the purpose of determining the outcome of any
proposal as to which the broker has indicated on the proxy that it
does not have discretionary authority to vote, those shares will be
treated as not present and not entitled to vote with respect to
that proposal (even though those shares are considered entitled to
vote for quorum purposes and may be entitled to vote on other
proposals). Except for the purpose of determining the presence of
a quorum, broker non-votes will have no effect on the outcome of
the proposal to be voted on at the Meeting.
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 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 Meeting
and voting in person. Attendance at the Meeting will not, by
itself, revoke a proxy.
Page 2
PRINCIPAL HOLDERS OF CAPITAL STOCK
The following table sets forth information, as of August 8, 1997,
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 (6
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
Number of Class Outstanding
Name and address Number of Shares of -----------------
for 5% beneficial Shares of Preferred Common Preferred
Owners Common Stock Stock Stock Stock
- - ---------------- ------------ -------- ----- -----
Richard M. Frank 902,224(A) 0 4.8% 0.0%
Richard T. Huston 69,218(B) 0 (C) 0.0%
Michael H. Magusiak 125,521(D) 0 (C) 0.0%
Tim T. Morris 2,000(E) 0 (C) 0.0%
Louis P. Neeb 11,250(F) 0 (C) 0.0%
Larry G. Page 17,121(G) 0 (C) 0.0%
Cynthia I. Pharr 11,250(F) 0 (C) 0.0%
Walter Tyree 0(E) 0 (C) 0.0%
Raymond E. Wooldridge 1,000(E) 0 (C) 0.0%
Directors and Executive
Officers as a Group 1,139,584 0 6.0% 0.0%
FMR Corp.
82 Devonshire St.
Boston, MA 02109-3614 1,492,000(H) 0 8.0% 0.0%
Massachusetts Financial
Services Company
500 Boylston Street
Boston, MA 02116-0741 1,280,500(I) 0 6.8% 0.0%
Time Warner, Inc.
75 Rockefeller Plaza
New York, NY 10019 0 16,011(J) 0.0% 32.3%
River Forest State Bank &
Trust Co.
7727 West Lake Street
River Forest, IL 60305 0 3,139(K) 0.0% 6.3%
(Footnotes appear on the following page)
Page 3
- - ------------
(A) Includes 47,188 shares which are subject to forfeiture
pursuant to the terms of Mr. Frank's employment agreement. See
"Employment Agreements." Includes 15,000 shares purchasable
pursuant to options issued under the Company's 1988 Non-Statutory
Stock Option Plan which are exercisable within 60
days of the date hereof, but excludes 400,000 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 and 105,000 shares granted
to Mr. Frank as of January 6, 1997, pursuant to his new
employment agreement, which shall not begin to vest until the
1998 calendar year.
(B) Includes 48,300 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are exercisable within 60 days of the date hereof, but
excludes 62,250 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 62,240 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are exercisable within 60 days of the date hereof, but
excludes 161,560 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 7,500 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.
(F) Includes 11,250 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are exercisable within 60 days of the date hereof, but
excludes 6,250 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.
(G) Includes 16,875 shares purchasable pursuant to options issued
under the Company's 1988 Non-Statutory Stock Option Plan which
are exercisable within 60 days of the date hereof, but
excludes 33,680 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) Based upon information obtained from FMR Corp. on April 29,
1997. This number includes 1,441,600 shares beneficially
owned by Fidelity Management & Research Company, as an
investment adviser to various investment companies and certain
other funds; 47,400 shares beneficially owned by Fidelity
Management Trust Company, as a trustee or managing agent for
various private investment accounts; and 3,000 shares
beneficially owned by Fidelity International Limited, as an
investment advisor to various non-U.S. investment companies.
Of its total shares, FMR Corp. has sole voting power over
47,400 shares and sole dispositive power over 1,489,000
shares. Fidelity International Limited has sole voting and
dispositive power over 3,000 shares.
(I) Based upon information obtained from Massachusetts Financial
Services Company on April 24, 1997.
(J) 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.
(K) Based on information obtained from Transfer Agent on August 8,
1997.
Page 4
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 30, 1994, December 29, 1995,
and December 27, 1996 (designated herein as fiscal years 1994, 1995
and 1996, respectively.)
Long Term
Compensation Awards
---------------------
Restricted Securities
Name and Other Annual Stock Underlying
Principal Fiscal Compensation Awards Options
Position Year Salary ($) Bonus($) ($)(A) ($) (#)(B)
- - --------- ------ ----------- ------- ---------- ----- --------
Richard M. Frank
Chief Executive Officer
1996 1,000,000 $-- 27,333 $--
1995 1,000,000 -- 23,656 -- 15,000
1994 1,000,000 -- 25,005 -- --
Richard T. Huston
(Executive Vice President)
1996 150,000 60,930(C) 15,869 $-- 15,750
1995 149,807 -- 13,384 -- 31,500
1994(D) 145,000 -- 12,602 -- 90,000
Michael H. Magusiak
(President)
1996 240,000 113,736(C) 15,846 $-- 28,800
1995 240,000 -- 14,917 -- 28,800
1994(E) 193,096 -- 12,467 -- 135,000
Larry G. Page
(Executive Vice President
and Chief Financial Officer)
1996 132,000 53,618(C) 14,176 $-- 13,860
1995 127,000 3,500 13,753 -- --
1994(F) 31,250 -- 11,578 -- 22,500
- - --------------
(A) Includes car allowance of $15,600 per year for Mr. Frank in
1994 and 1995 and $13,600 per year for Mr. Frank in 1996, and
$9,000 per year for Messrs. Huston, Magusiak, and Page.
Relocation expense is included for Mr. Page in 1994.
(B) On May 22, 1996, the Common Stock of the Company split 3-for-2,
resulting in an acquisition of additional shares of Common
Stock by the Named Executive Officers. The amounts listed
above have been adjusted to reflect the stock split.
(C) Includes bonus compensation earned in 1996 and paid in 1997.
(D) Includes options for 31,500 shares of Common Stock issued to
Mr. Huston on January 11, 1994, that were surrendered in
connection with the granting on January 6, 1995 of options to
acquire 31,500 shares of Common Stock.
(E) Includes options for 28,800 shares of Common Stock issued to
Mr. Magusiak on January 11, 1994, that were surrendered in
connection with the granting on January 6, 1995 of options to
acquire 28,800 shares of Common Stock.
(F) 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.
Page 5
EMPLOYMENT AGREEMENTS
Richard M. Frank has entered into an employment agreement with the
Company expiring on December 31, 1997. Mr. Frank's employment
agreement provides for an annual base salary of $1,000,000, 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 621,762 restricted shares of the Company's
Common Stock on April 1993 under the Stock Grant Plan, of which
31,088 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 31,100 shares vest
(the number of shares underlying the grant have been adjusted to
reflect the occurrence of a 3-for-2 stock split in the Common Stock
of the Company). Effective March 31, 1995, Mr. Frank forfeited
90,000 of the unvested restricted shares previously awarded to him,
which forfeiture is applied in equal annual increments of 30,000
shares, applied quarterly to the shares otherwise scheduled to vest
for that particular quarter. As of August 8, 1997, 484,572 of such
shares had vested. On March 3, 1997, Mr. Frank entered into a new
employment agreement with the Company providing for a three-year
term commencing on January 1, 1998. Mr. Frank's new employment
agreement provides for an annual base salary of $1,000,000, 105,000
shares of the Company's Common Stock issued under the Company's
Stock Grant Plan, a cash bonus, payable annually, if earned, based
upon the achievement of targets for corporate revenue and
profitability, with such additional benefits and/or compensation as
may be determined by the Compensation Committee or the Board of
Directors.
On January 3, 1997, Michael H. Magusiak entered into an employment
agreement with the Company providing for a three-year term
commencing on January 6, 1997. Mr. Magusiak's employment agreement
provides for an annual base salary of $250,000, options to purchase
100,000 shares of the Company's Common Stock issued under the
Company's 1988 Non-Statutory Stock Option Plan, a cash bonus,
payable annually, if earned, based upon the achievement of targets
for corporate revenue and profitability, with such additional
benefits and/or compensation as may be determined by the
Compensation Committee or the Board of Directors
Under the terms of the respective employment agreements (the
"Employment Agreements"), if the covered executive's employment
with the Company is terminated by the Company (other than as a
result of death or "permanent disability" (as defined in the
Employment Agreements)) Mr. Frank will be entitled to receive a
severance amount equal to $3,000,000, and Mr. Magusiak will be
entitled to receive a severance amount equal to twice his then
current annual base salary (together, the "Severance Amounts").In
the event of the executive's death, his estate is entitled to
receive his base salary through the date of his death.
The Employment Agreements also provide that each of Messrs. Frank
and Magusiak will receive his respective Severance Amount in the
event there is a Change of Control (as defined below) of the
Company and the covered executive voluntarily terminates his
employment within one year after such a Change of Control. A
"Change of Control" is deemed to have occurred with respect to the
Company if (i) any person or group of persons acting in concert
(other than Hallwood or its affiliates) in which the covered
executive is not an investor, partner, officer, director or member,
shall acquire, directly or indirectly, the power to vote, or direct
the voting of, more than 33% of the then outstanding voting
securities of the Company or (ii) during any consecutive 18 month
period a majority of the Board of Directors is elected or appointed
and consists of persons who were not directors of the Company as of
the date of the respective Employment Agreement and whose election
or appointment as directors of the Company is actively opposed by
the covered executive.
Page 6
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options
granted to each of the Named Executive Officers in the fiscal year
ended December 27, 1996.
Potential Realizable
Value at Assumed
Annual Rates
of Stock Price
Appreciation of
Options Granted to Exercise Option Term ($)
Granted Employees Price Expiration --------------
(#) (A)(B) in Year ($/Share)(C) Date 5% 10%
---------- ------- ----------- ------ ---- -----
Richard M. Frank
0 0% N/A N/A $0 $0
Richard T. Huston
15,750 6.29% $8.283 01/08/01 $36,006 $79,661
Michael H. Magusiak
28,800 11.50% $8.283 01/08/01 $65,840 $145,666
Larry G. Page
13,860 5.53% $8.283 01/08/01 $31,685 $70,102
- - ---------------
(A) The number of shares underlying these options, which were
granted prior to May 22, 1996, have been adjusted to reflect
the occurrence of a 3-for-2 stock split in the Common Stock of
the Company.
(B) Options to acquire these shares are exercisable as follows:
(i) fifty percent (50%) of the option after January 8, 1998,
and (ii) an aggregate of one hundred percent (100%) of the
option after January 8, 1999.
(C) The exercise price for these options, which were granted prior
to May 22, 1996, has been adjusted to reflect the occurrence
of a 3-for-2 stock split in the Common Stock of the Company.
Page 7
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 27, 1996 and the value of his
unexercised stock options as of December 27, 1996. The closing
price for the Company's Common Stock, as reported by the Nasdaq
National Market, on December 27, 1996 (the last trading day of the
fiscal year) was $18.25.
Value of Unexercised In-
Options at the-Money Options at
Shares December 27, 1996 December 27, 1996
Acquired on Value (exercisable (exercisable
Exercise (#) Realized(A) /unexercisable)(#) /unexercisable)($)(B)
----------- ---------- ----------------- --------------------
Richard M. Frank
0 -- 15,000 (E) 154,995 (E)
0 (U) 0 (U)
Richard T. Huston
0 -- 45,900 (E) 265,710 (E)
82,350 (U) 872,158 (U)
Michael H. Magusiak
0 -- 91,980 (E) 853,004 (E)
94,320 (U) 982,968 (U)
Larry G. Page
0 -- 11,250 (E) 145,178 (E)
25,110 (U) 283,920 (U)
- - --------------------
(A) 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.
(B) 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 27, 1996.
(U) Options which are not exercisable at December 27, 1996.
COMPENSATION OF DIRECTORS
Non-Employee Directors of the Company 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. In addition thereto, 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 the Common Stock of the Company. Each
January thereafter, a Non-Employee Director who was previously
elected to the Board and who continued to serve in such capacity
shall be granted an option to purchase 2,500 shares of the Common
Stock of the Company. Other directors, who are either officers or
employees of the Company or its affiliates, do not receive separate
compensation for their services as directors of the Company.
Page 8
PROPOSAL:
ADOPTION OF THE 1997 NON-STATUTORY STOCK OPTION PLAN
In August 1997, the Board of Directors adopted the 1997 Non-Statutory
Stock Option Plan ("Employee Plan"), subject to the
approval of the Company's shareholders. The purpose of the
Employee Plan is to secure for the Company and its shareholders the
benefits of the incentives inherent in stock ownership by key
employees of the Company and its subsidiaries. The Employee Plan
terminates on July 31, 2007, and no option may be granted after
such date pursuant to the Employee Plan. The Employee Plan will be
administered by the Stock Option Committee. 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
would determine the conditions, if any, imposed upon the granting
of options under the Employee Plan. The Stock Option Committee
would provide for various periods of time to pass before options
become exercisable according to the Company's long term strategic
plans. A copy of the Employee Plan, as proposed, is attached
hereto as Exhibit "A." The description of the Employee Plan
contained herein is not intended to be complete and is qualified in
its entirety by reference to Exhibit A, which contains the complete
text of the Employee Plan.
Options granted under the Employee Plan shall be granted solely with
respect to shares of Common Stock. Subject to any adjustments made as a
result of various changes in the capitalization of the Company, the aggregate
number of shares of Common Stock which may be issued upon exercise of all the
options which may be granted under the Employee Plan shall not exceed 900,000.
If any option granted under the Employee 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 the Employee
Plan.
Each option granted under the Employee Plan shall be evidenced by a stock
option contract. The price at which shares of Common Stock may be purchased
under the Employee Plan shall be determined by the Stock Option 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 period during which each option granted under the Employee Plan may be
exercised shall be fixed by the Stock Option Committee at the time such
option is granted, provided that such period shall expire no later than
seven (7) years from the date on which the option is granted (the "Grant
Date"). The Option may not be exercised for a period of at least one (1)
year after the Grant Date.
Any Option granted under the Employee Plan may be exercised by the
optionee only. If an Optionee shall cease to be an employee of the Company
for any reason other than death, 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. In the event
of the death of an Optionee, any unexercised portion of an option granted to
an Optionee 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. Such
option shall be exercisable even though the Optionee's death occurs before
he had served as an employee of the Company for a period of one (1) year
after the Grant Date.
Each option granted under the Employee Plan shall not be transferable or
assignable by the Optionee other than upon death.
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, then the number of shares of Common Stock subject to
the Employee 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 the Employee Plan shall be adjusted so that there
will be no change in the aggregate purchase price payable upon the exercise
of any option.
Page 9
An option may be granted conditioned upon the termination of a prior
option contract; provided, however, that the price for the new option may
not be less than the price of shares under the terminated option unless the
shareholders of the Company approve otherwise.
In the event a "Change of Control" (as defined in Exhibit A) of the
Company occurs, then the options outstanding under the Employee Plan that
are not otherwise exercisable shall be exercisable and vested, even though
certain conditions otherwise provided for in the Employee Plan or option
contracts have not been satisfied at the time of the Change of Control.
No amendment may be made to the Employee Plan concerning any Executive
Officer of the Company which would (i) increase the maximum amount that can
be paid to any one Executive Officer pursuant to the Employee Plan or (ii)
modify the requirements as to the Executive Officer's eligibility for
participation in the Employee Plan, unless the Company's shareholders have
first approved such amendment in a manner which would permit the deduction
under Section 162(m) of the Internal Revenue Code of such payment in the
fiscal year it is paid. Subject to any adjustments made as a result of
various changes in the capitalization of the Company, the maximum number of
shares of Common Stock which options may be granted to any Executive Officer
during any calendar year may not exceed ----------- shares.
The Board of Directors believes that the proposed adoption of
the Employee Plan will enable the Company and its shareholders,
through future stock options, to continue to secure the benefits of
the incentive inherent in stock ownership by certain of its
employees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
ABOVE DESCRIBED ADOPTION OF THE 1997 NON-STATUTORY STOCK OPTION
PLAN.
Page 10
SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder who wishes to present a proposal for action at the
1998 annual meeting of shareholders 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
shareholders; 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 shareholder 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 Exchange Act.
To be in proper written form, a shareholder's notice to the
Secretary of the Company must set forth (a) as to each person whom
the shareholder 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 shareholder giving the notice (i)
the name and record address of such shareholder, (ii) the class or
series and number of shares of capital stock of the corporation
that are owned beneficially or of record by such shareholder, (iii)
a description of all arrangements or understandings between such
shareholder 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 shareholders, (iv) a representation that
such shareholder 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 shareholder 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 officers and employees of
the Company by means of personal interview, telephone or telegram.
The Company has retained Corporate Investor Communications, Inc.
("CIC") to aid in the solicitation of proxies. CIC's fee is not
expected to exceed $7,000 in addition to out-of-pocket
expenditures. 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
August 28, 1997
Page 11
Exhibit A
SHOWBIZ PIZZA TIME, INC.
1997 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 key employees of the Company or its
subsidiaries, as follows:
1. Purpose of Plan. The purpose of this 1997 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. Effective Date of the Plan. The provisions of this Plan
became effective on August 1, 1997.
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 "Non-Employee Directors," as
defined in Rule 16b-3(c), promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and who are also
"Outside Directors," as defined in Section 162(m) of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"),
and any Treasury Regulations that may be promulgated thereunder.
The Committee shall have full power and authority to construe,
interpret and administer this 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 this 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 key employees at the time of the grant 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.
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 900,000. 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.
A-1
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 seven (7) years from the date on which the option is
granted (the "Grant 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 Grant 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 this Plan) on the date of exercise sufficient to satisfy
the applicable withholding taxes.
A-2
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 Grant 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, 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 July 31, 2007, on which date
this Plan shall expire except as to options then outstanding under
this 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 this 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; provided, however, that the price for which shares of Common Stock
may be purchased under the new option may not be less than the price of
shares of Common Stock that were subject to purchase under the terminated
option unless the shareholders of the Company approve the issuance at a
lower price.
15. Change of Control. If while unexercised options remain
outstanding under this 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 this Plan or option contract to the contrary.
For purposes of this 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
shareholders, 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 this 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.
A-3
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 this Plan, if and to the extent it deems
appropriate in its sole discretion.
16. Restrictions Applicable to Executive Officers. The provisions of
this Section 16 shall apply only to those executive officers whose
compensation is required to be reported in the Company's proxy statement
pursuant to Item 402(a)(3)(i) (or any successor thereto) and of Regulation
S-K (or any successor thereto) under the general rules and regulations under
the Exchange Act ("Executive Officers"). In the event of any inconsistencies
between this Section 16 and the other provisions of this Plan, as they
pertain Executive Officers, the provisions of this Section shall control.
No amendment of this Plan with respect to any Executive
Officer may be made which would (i) increase the maximum amount
that can be paid to any one Executive Officer pursuant to this Plan or
(ii) modify the requirements as to the Executive Officer's eligibility
for participation in this Plan, unless the Company's shareholders
have first approved such amendment in a manner which would permit
the deduction under Section 162(m) (or any successor thereto) of
the Code of such payment in the fiscal year it is paid. The
Committee shall amend this Section 16 and such other provisions as
it deems appropriate, to cause amounts payable to certain Executive
Officers to satisfy the requirements of Section 162(m) (or any
successor thereto) and the Treasury Regulations that may be
promulgated thereunder.
The maximum number of shares of Common Stock with respect to
which options may be granted hereunder to any Executive Officer
during any calendar year may not exceed -------------(--------)
shares, subject to any adjustments made pursuant to the provisions
of Section 12.
A-4
