<PAGE> 1
FORM 10 K/A
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 27, 1996.
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
_____ TO _____.
COMMISSION FILE NUMBER 0-15782
SHOWBIZ PIZZA TIME, INC.
(Exact name of registrant as specified in its charter)
KANSAS 48-0905805
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4441 WEST AIRPORT FREEWAY
P.O. BOX 152077
IRVING, TEXAS 75015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 258-8507
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $.10 each
(Title of Class)
Class A Preferred Stock, par value $60.00 each
(Title of Class)
<PAGE> 2
EXPLANATORY NOTE:
This Form 10-K/A is being filed for the purpose of including in the
registrant's Annual Report on Form 10-K for the fiscal year ended December 27,
1996 the information required by Part III (Items 10, 11, 12 and 13) of Form
10-K.
Item 10. Directors and Executive Officers of the Registrant.
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the
executive officers and directors of ShowBiz Pizza Time, Inc. (the "Company").
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Richard M. Frank 49 Chairman of the Board and Chief Executive Officer
Michael H. Magusiak 41 President and Director
Richard T. Huston 51 Executive Vice President--Marketing and Entertainment
Larry G. Page 52 Executive Vice President, Chief Financial Officer and
Treasurer
Charles A. Crocco, Jr. 58 Director
Anthony J. Gumbiner 52 Director
Robert L. Lynch 79 Director
Louis P. Neeb 58 Director
Cynthia I. Pharr 48 Director
J. Thomas Talbot 61 Director
Brian M. Troup 50 Director
</TABLE>
The business experience of each of the executive officers and directors
is set forth 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 Acquisition Corp. 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 Acquisition
Corp. 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 Incorporated, a
diversified holding company ("Hallwood"), 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 Chairman of the Board and Chief Executive Officer of the general
partner of Hallwood Energy Partners L.P., a publicly-traded oil and gas limited
partnership, 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 real estate 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. On July 22, 1996, Mr. Gumbiner and Hallwood, in order
to avoid the extraordinary time and expense that would be involved in
protracted litigation with the government, agreed to a settlement (the
"Settlement") of a claim by the Securities and Exchange Commission (the
"Commission"), arising from Hallwood's sale of approximately 5% of Hallwood's
holdings of the Common Stock of the Company during a four-day period in June
1993. Hallwood made these and other similar sales pursuant to a pre-planned,
long-term selling program begun in December 1992. The Commission asserted in
its claim that some, but not all, of Hallwood's June 1993 sales were improper
because, before the sales program was completed, Hallwood allegedly received
non-public information about the Company. In connection with the Settlement,
Hallwood and its affiliates agreed to be subject to an injunction against any
future violations of certain federal securities laws. Hallwood was also ordered
to disgorge $953,125 and to pay $240,665.60 in pre-judgment interest in
connection therewith. In addition, the Commission alleged that Mr. Gumbiner, as
Chairman of the Board and Chief Executive Officer of Hallwood, failed to take
appropriate action to discontinue Hallwood's sales of the Company's common
stock during the four days in question in 1993. Mr. Gumbiner did not directly
conduct the sales, nor did he sell any shares for his own account or for the
account of any trust for which he had the power to designate the trustee. The
Commission assessed a civil penalty of $477,000 against Mr. Gumbiner as a
"control person" of Hallwood which Mr. Gumbiner paid. Mr. Gumbiner did not
admit or deny the allegations made by the Commission.
Robert L. Lynch was elected as a director of the Company in September
1988. 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. He has
served as a director and Vice Chairman of Hallwood since May 1984.
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 the present, Mr. Neeb has been
President of Neeb Enterprises, Inc., a management consulting firm specializing
in publicly-traded restaurant company. From July 1991 through January 1994, Mr.
Neeb was President and Chief Executive Officer of Spaghetti Warehouse, Inc. 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
is 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.
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 the 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. Mr.
Talbot has served as a director of Alliance Bancorporation, a bank holding
company, since April 1988; as a director of Fidelity National Financial since
April 1991; 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. Mr. Talbot has served as a director of Hallwood since 1984.
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 the general partner of
Hallwood Energy Partners, L.P. 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.
<PAGE> 3
On February 24, 1997, the Company filed a Registration Statement on Form
S-3 (Registration No. 333-22229) with the Commission relating to an offering
(the "Offering") of shares of its Common Stock (the "Shares") owned by Hallwood
and its affiliates. In connection with the sale of the Shares by Hallwood, it
is anticipated that Charles A. Crocco, Jr., Anthony J. Gumbiner, Robert L.
Lynch, J. Thomas Talbot and Brian M. Troup, each of whom is affiliated with
Hallwood, will resign from the Company's Board of Directors upon the closing of
the Offering. It is anticipated that after the closing of the Offering, the
number of directors constituting the entire Board of Directors will be reduced
to seven from nine, and that the four directors remaining after the anticipated
resignations of Messrs. Crocco, Gumbiner, Lynch, Talbot and Troup will elect
three new directors to fill the vacancies created by these resignations, which
are anticipated to be effective upon the closing of the Offering.
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.
<PAGE> 4
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Four regularly scheduled and eight special meetings of the Board of
Directors were held during 1996. 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 1996.
The Board of Directors has established an Executive Committee, an Audit
Committee, a Compensation Committee, a Stock Option Committee and a Stock Grant
Committee. The responsibilities and composition of each of these committees
are described below.
The Executive Committee consists of four directors. The Executive
Committee is responsible for assisting the Board of Directors in carrying out
its duties and 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
members of the Executive Committee are Messrs. Frank, Gumbiner, Troup and
Magusiak.
The Audit Committee consists of four directors. The Audit Committee is
responsible for (i) considering the Company's system of internal controls, (ii)
reviewing the performance and findings of the Company's Internal Audit
Department and (iii) reviewing services provided by the Company's independent
auditors. The members of the Audit Committee are Messrs. Crocco, Lynch, Talbot
and Troup.
The Compensation Committee consists of three directors. The
Compensation Committee is responsible for (i) recommending the compensation,
including performance bonuses, payable to the Company's executive officers
(excluding Mr. Frank), and (ii) recommending the performance bonuses for other
employees of the Company. The members of the Compensation Committee are
Messrs. Frank, Gumbiner and Troup.
The Stock Option Committee and Stock Grant Committee each consist of two
directors. The Stock Option Committee and Stock Grant Committee are
responsible for administering the 1988 Non-Statutory Stock Option Plan and the
Company's Stock Grant Plan, respectively. The members of the Stock Option
Committee and the Stock Grant Committee are Messrs. Gumbiner and Troup.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act 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.
Item 11. Executive Compensation.
COMPENSATION OF EXECUTIVE OFFICERS
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.)
<PAGE> 5
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------------- ------------
Securities
Name and Fiscal Other Annual Underlying
Principal Position Year Salary Bonus Compensation (a) Options (b)
- ------------------ ---- ------ ----- ---------------- -----------
<S> <C> <C> <C> <C>
Richard M. Frank 1996 $1,000,000 -- $27,333 --
(Chief Executive 1995 1,000,000 -- 23,656 15,000
Officer) 1994 1,000,000 -- 25,005 --
Richard T. Huston 1996 $150,000 -- $15,869 15,750
(Executive Vice 1995 149,807 -- 13,384 31,500
President) 1994 (c) 145,000 -- 12,602 90,000
Michael H. Magusiak 1996 $240,000 -- $15,846 28,800
(President) 1995 240,000 -- 14,917 28,800
1994 (d) 193,096 -- 12,467 135,000
Larry G. Page 1996 $131,807 -- $14,176 13,860
(Executive Vice 1995 127,000 $3,500 13,753 --
President and Chief 1994 (e) 31,250 -- 11,578 22,500
Financial Officer)
- ---------------
</TABLE>
(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 Company effected a three-for-two stock split in the
form of a 50% stock dividend of shares of Common Stock (the "Stock
Split"). The number of shares of Common Stock underlying options granted
prior to the Stock Split has been adjusted to reflect the occurrence of
the Stock Split.
(c) 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.
(d) 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.
(e) The amount indicated is Mr. Page's actual salary received during fiscal
1994 which is less than his annualized salary of $127,000 because his
employment with the Company did not commence until October 1994.
<PAGE> 6
The following table sets forth information regarding stock options
granted to each of the Named Executive Officers in the fiscal year ended
December 27, 1996.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Potential Realizable
% of Total Value at Assumed Annual
Number of Options Rates of Stock Price
Securities Granted to Appreciation for
Underlying Employees Exercise Option Term ($)
Options in Fiscal Price Expiration ---------------
Name Granted (a) Year ($/Share)(b) Date 5% 10%
---- ----------- ---- ------------ ---- -- ---
<S> <C> <C> <C> <C> <C>
Richard M. Frank 0 0% N/A N/A $ 0 $ 0
Richard T. Huston 15,750 (c) 6.29% $8.283 01/08/01 36,006 79,661
Michael H. Magusiak 28,800 (d) 11.50% $8.283 01/08/01 65,840 145,666
Larry G. Page 13,860 (e) 5.53% $8.283 01/08/01 31,685 70,102
- ---------------------
</TABLE>
(a) The number of shares underlying options granted prior to May 22, 1996
have been adjusted to reflect the occurrence of the Stock Split.
(b) The exercise price for options granted prior to May 22, 1996 has been
adjusted to reflect the occurrence of the Stock Split.
(c) Options to acquire these 15,750 shares are exercisable as follows: (i)
fifty percent (50%) of the option after January 8, 1998, and (ii) an
aggregate of one hundred percent (100%) of the option after January 8,
1999.
(d) Options to acquire these 28,800 shares are exercisable as follows: (i)
fifty percent (50%) of the option after January 8, 1998, and (ii) an
aggregate of one hundred percent (100%) of the option after January 8,
1999.
(e) Options to acquire these 13,860 shares are exercisable as follows: (i)
fifty percent (50%) of the option after January 8, 1998, and (ii) an
aggregate of one hundred percent (100%) of the option after January 8,
1999.
The following table sets forth, for each of the Named Executive
Officers, information regarding his exercise of stock options during the fiscal
year ended December 27, 1996 and the value of his unexercised stock options as
of December 27, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Shares Unexercised Options at Value of Unexercised In-the-Money
Acquired on Value December 27, 1996 options at December 27, 1996
Name Exercise (#) Realized (exercisable/unexercisable) (exercisable/unexercisable)($)(a)
---- ------------ -------- --------------------------- ---------------------------------
<S> <C> <C> <C> <C>
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)
- ---------------------
</TABLE>
(a) 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.
<PAGE> 7
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.
EMPLOYMENT AND OTHER AGREEMENTS
Richard M. Frank has entered into an employment agreement with the
Company expiring 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. On March 3, 1997,
Mr. Frank entered into a new employment agreement with the Company providing
for a three-year term commencing January 1, 1998.
On January 3, 1997, Michael H. Magusiak entered into an employment
agreement with the Company providing for a three-year term. Mr. Magusiak's
employment agreement provides for an annual base salary of $250,000, with such
additional benefits and/or compensation as may be determined by 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 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> 8
Item 12. Security Ownership of Certain Beneficial Owners and Management.
PRINCIPAL HOLDERS OF CAPITAL STOCK
The following table sets forth information, as of March 15, 1997,
relating to the beneficial ownership of the Company's Common Stock and Series A
Preferred Stock (the "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 as of such date,
and (iii) each person, as that term is used in 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.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF NUMBER OF PERCENTAGE OF CLASS OUTSTANDING
SHARES OF SHARES OF
PREFERRED COMMON PREFERRED COMMON
NAME AND ADDRESS FOR BENEFICIAL OWNERS STOCK STOCK STOCK STOCK
-------------------------------------- ----- ----- ---------- ------
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Charles A. Crocco, Jr. (A)(B)(P) 0 10,395 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Richard M. Frank (D) 0 1,144,388 0 6.2%
- ------------------------------------------------------------------------------------------------------------------
Anthony J. Gumbiner (A)(E)(F)(Q) 0 0 0 0%
- ------------------------------------------------------------------------------------------------------------------
Richard T. Huston (G) 0 84,618 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Robert L. Lynch (A)(B)(P) 0 8,419 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Michael H. Magusiak (H) 0 125,021 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Louis P. Neeb (B)(P) 0 7,500 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Larry G. Page (I) 0 17,121 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Cynthia I. Pharr (B)(P) 0 7,500 0 (C)
- ------------------------------------------------------------------------------------------------------------------
J. Thomas Talbot (A)(B)(P) 0 18,750 0 (C)
- ------------------------------------------------------------------------------------------------------------------
Brian M. Troup (A)(E)(J)(Q) 0 0 0 0%
- ------------------------------------------------------------------------------------------------------------------
Directors and Executive Officers as a Group 0 1,423,712 0 7.7%
- ------------------------------------------------------------------------------------------------------------------
The Hallwood Group Incorporated (K) 0 2,632,983 0 14.2%
3710 Rawlins, Suite 1500
Dallas, TX 75219
- ------------------------------------------------------------------------------------------------------------------
Massachusetts Financial Services Company (L) 0 1,073,150 0 5.8%
500 Boylston Street
Boston, MA 02116-0741
- ------------------------------------------------------------------------------------------------------------------
Snyder Capital Management, Inc. (M) 0 1,184,700 0 6.4%
350 California Street
Suite 1460
San Francisco, CA 94104
- ------------------------------------------------------------------------------------------------------------------
Time Warner, Inc. (N) 16,011 0 32.3% 0%
75 Rockefeller Plaza
New York, NY 10019
- ------------------------------------------------------------------------------------------------------------------
River Forest State Bank & Trust Co. (O) 3,139 0 6.3% 0%
7727 West Lake Street
River Forest, IL 60305
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(Footnotes appear on the following page)
<PAGE> 9
_____________________
(A) Excludes shares owned of record by Hallwood, described in Footnote K.
(B) Includes 7,500 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 3,750 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 94,352 shares which are subject to forfeiture pursuant
to the terms of Mr. Frank's employment agreement. 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 does not include 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.
(E) Excludes 300,216 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 613,057 shares held by a trust for which Mr. Gumbiner has the
power to designate and replace the trustees, 180,129 shares of which are
included in footnote (E).
(G) Includes 56,700 shares purchasable pursuant to options issued under the
Company's 1988 Non-Statutory Stock Option Plan but excludes 65,850
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 61,740 shares purchasable pursuant to options issued under the
Company's 1988 Non-Statutory Stock Option Plan 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.
(I) 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 33,608 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 408,705 shares held by a trust for which Mr. Troup has the
power to designate and replace the trustees, 120,087 shares of which are
included in footnote (E).
(K) 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 1,020,000 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.
(N) 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.
(O) Based on information obtained from Transfer Agent on February 13, 1997.
(P) 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.
(Q) Excludes 17,500 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.
<PAGE> 10
Item 13. Certain Relationships and Related Transactions.
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 1996. The
functions performed by the Compensation Committee are the (i) the
recommendation of compensation, including performance bonuses, payable to the
Company's executive officers (excluding Mr. Frank), and (ii) the 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. 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.
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.
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. It is anticipated that the
Company's agreement with Hallwood will be terminated upon the closing of the
Offering.
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.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Dated: March 19, 1997 SHOWBIZ PIZZA TIME, INC.
By: /s/ Michael H. Magusiak
---------------------------
Michael H. Magusiak
President
