<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
JANUARY 3, 1997
Date of Report (Date of earliest event reported)
SHOWBIZ PIZZA TIME, INC.
(Exact name of registrant as specified in its charter)
KANSAS 0-15782 NO. 48-0905805
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4441 WEST AIRPORT FREEWAY
IRVING, TEXAS 75062
(Address of principal executive offices) (Zip Code)
(972) 258-8507
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS.
(a) Employment Agreements
ShowBiz Pizza Time, Inc. (the "Company") entered into new
employment agreements with each of Richard M. Frank, the Company's Chief
Executive Officer, and Michael H. Magusiak, the Company's President, dated
March 3, 1997 and January 3, 1997, respectively. Mr. Frank's employment
agreement provides for a three-year term commencing January 1, 1998 (following
the termination of Mr. Frank's current employment agreement on December 31,
1997). Mr. Magusiak's employment agreement provides for a three-year term
commencing January 6, 1997. Copies of such employment agreements are attached
hereto as Exhibits 10.1 and 10.2, respectively, and are hereby incorporated by
reference.
(b) Supplemental Information
On February 24, 1997, the Company filed a Registration Statement
on Form S-3 (Registration No. 333-22229) with the Securities and Exchange
Commission (the "Commission") relating to an offering (the "Offering") of
shares of its common stock, par value $.10 per share (the "Shares"), owned by
The Hallwood Group Incorporated ("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 (the "Hallwood Directors"),
will resign from the Company's Board of Directors upon the closing of the
Offering. The business experience of each of the Hallwood Directors is set
forth below.
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 Hallwood, a 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 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 of a claim by
the Commission arising from Hallwood's sale of a small portion of its holdings
in the stock of the Company during a four-day period in June 1993. Mr.
Gumbiner is not subject to any separate injunction concerning his future
personal activities.
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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.
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 Hallwood since 1984; 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.
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.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
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(c) Exhibits
The following are set forth as exhibits to this Form 8-K:
<TABLE>
<CAPTION>
Exhibit Number Description Page
-------------- ----------- ----
<S> <C> <C>
10.1 Employment Agreement dated March 3, 1997 by and
between the Company and Richard M. Frank
10.2 Employment Agreement dated January 3, 1997 by and
between the Company and Michael H. Magusiak
</TABLE>
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<PAGE> 5
SIGNATURE
Pursuant to the requirements 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.
SHOWBIZ PIZZA TIME, INC.
March 10, 1997 By: /s/ Michael H. Magusiak
----------------------------------------
Michael H. Magusiak
President
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.1 Employment Agreement dated March 3, 1997 by and
between the Company and Richard M. Frank
10.2 Employment Agreement dated January 3, 1997 by and
between the Company and Michael H. Magusiak
</TABLE>
<PAGE> 1
EXHIBIT 10.1
1998 EMPLOYMENT AGREEMENT
This 1998 Employment Agreement (the "Agreement") is executed as of the
3rd day of March, 1997, by and between RICHARD M. FRANK ("Employee") and
SHOWBIZ PIZZA TIME, INC., a Kansas corporation ("Company").
RECITALS:
WHEREAS, the Employee and the Company have heretofore entered into an
agreement whereby Employee is employed by the Company pursuant to certain terms
and conditions; and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has offered Employee continued employment in consideration for the
compensation and the other benefits hereinafter set forth, and Employee is
willing to continue in the employ of the Company on these terms;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed:
1. Current Employment Agreement. The Company and Employee
heretofore entered into an employment agreement dated April 14, 1993 (the
"Current Employment Agreement"), which Current Employment Agreement was amended
by written instrument effective August 1, 1996. The term of the Current
Employment Agreement expires on December 31, 1997. Company and Employee hereby
agree and affirm that the Current Employment Agreement as amended effective as
of August 1, 1996, and as might be hereafter further amended, is and shall be
in full force and effect through December 31, 1997.
2. Term. Following the expiration of the Current Employment
Agreement, the Company employs Employee and Employee accepts employment from
the Company upon the terms and conditions specified in this Agreement. Subject
to the provisions regarding termination set forth in Sections 14, 15 and 16
hereof, the term of this Agreement shall begin as of January 1, 1998 (the
"Effective Date") and shall terminate on the last day of the fiscal year of the
Company ending on or about December 31, 2000 (the "Term").
3. Basic Salary. For services rendered by Employee under this
Agreement, the Company shall pay Employee the "Basic Salary," provided for in
this Section 3, as follows:
(a) During the Term of Employee's employment under this
Agreement, Employee shall receive as minimum Basic Salary the amount of
One Million Dollars $1,000,000.00) per year.
<PAGE> 2
(b) The Basic Salary provided for in this Section 3 shall be
in addition to any other compensation and/or benefits provided to
Employee (i) pursuant to this Agreement or (ii) otherwise at the
discretion of the Board of Directors, including, but not limited to, the
annual bonus opportunity available to home office employees and officers
of the Company at a level commensurate with his position as Chief
Executive Officer.
4. New Stock Grant. The Company and the Employee acknowledge that
in connection with this Agreement the Stock Grant Committee of the Board of
Directors has granted to Employee as of January 6, 1997, 105,000 shares of
Common Stock under the Company's Stock Grant Plan. Commencing in the 1998
calendar year, of the total 105,000 shares granted, 8,750 shares shall vest at
the end of each fiscal quarter of the Company during the Term of this
Agreement.
5. Severance Pay. If the Company terminates the employment of
Employee at any time (other than pursuant to Section 15 hereof), or if a
"Change of Control" occurs with respect to Company and Employee voluntarily
terminates his employment with Company within one year after such a Change of
Control, Company shall be required to pay Employee severance pay in the amount
of Three Million Dollars ($3,000,000.00). Such severance pay shall be payable
to Employee by the Company in cash on or before the tenth (10th) day after the
effective date of such termination.
For purposes of this Section 5, a "Change of Control" shall be deemed to
have occurred with respect to Company if: (a) any person or group of persons
acting in concert (other than The Hallwood Group Incorporated or any affiliate
thereof and other than proxies designated to act as such by the Company's Board
of Directors), in which person or group of persons the Employee 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 thirty-three
percent (33%) of the then outstanding voting securities of the Company; or (b)
during any consecutive eighteen (18) month period a majority of the Company's
Board of Directors is elected or appointed and consists of persons who are not
directors of the Company as of the Effective Date, and whose election or
appointment as directors of the Company was actively opposed by Employee, as
evidenced by Employee's vote (in his capacity or capacities, if any, as a
director and/or stockholder of the Company) against their election or
appointment and by written notice of his opposition to their election or
appointment given by Employee to the current directors of the Company not more
than five (5) business days following their respective election or appointment;
provided, however, that in no event shall a change in composition of the
Company's Board of Directors pursuant to an election of Board of Directors
members pursuant to Section 4.6 of the Company's Articles of Incorporation, as
amended through the date of this Agreement, constitute or result in a "Change
of Control" for purposes of this Section 5.
6. Expenses. Subject to the rules and procedures the Company may
specify from time to time, the Company shall reimburse Employee for all
reasonable expenses incurred by Employee on behalf of the Company.
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<PAGE> 3
7. Automobile. Employer shall pay to Employee the sum of One
Thousand Three Hundred Dollars ($1,300.00) per month (subject to adjustment
from time to time in direct proportion to generally applicable adjustment by
the Company to its automobile allowances) to reimburse Employee for the use of
Employee's automobile in the performance of his duties under this Agreement,
and the Company shall further pay directly or by reimbursement to Employee (as
the Company and Employee may from time to time agree) the premiums upon a
policy of collision and liability insurance covering such automobile. All
other costs and expenses incurred in the operation and maintenance of
Employee's automobile, including but not limited to the cost of all fuel, oil,
maintenance and repairs, shall be paid solely by Employee.
8. Duties of Employee. In accepting continued employment by the
Company, Employee agrees to undertake and assume the responsibility, subject to
the general direction and control of the Board of Directors, of performing for
and on behalf of the Company the duties of Chairman of the Board of Directors
and Chief Executive Officer of the Company, including formulation of policies
and administration of the Company's affairs, and such other duties as are
normally associated with and inherent in such capacity. Employee shall have
authority to hire the staff necessary to accomplish the Company's goals. In
addition, if requested, Employee shall serve as an officer and/or director of
any affiliates of the Company without additional compensation.
9. Exclusive Service. Employee shall devote substantially his full
time and attention to rendering services to the Company and in furtherance of
the Company's best interests, provided that Employee may make and manage his
personal passive investments. During the Term of this Agreement, other than as
an officer and/or director of an affiliate of the Company, Employee shall not
be employed by any other person or engage in any other business or occupation;
provided that Employee may engage in the business of making and managing his
personal passive investments.
10. Health and Disability Insurance. The Company shall provide
Employee and his family with health, medical, hospitalization and dental
insurance coverage and/or cost reimbursement benefits which provide for one
hundred percent (100%) of such costs and expenses to be paid on behalf of
and/or reimbursed to Employee and his family, whether through existing
insurance and/or reimbursement plans covering the Company's employees or
through special plans relating specifically to employee, or a combination
thereof. For purposes of this Section 10, the Employee's family shall include
his spouse and children. The Company shall also provide disability insurance
coverage to Employee under any Company plan(s) for such coverage as in effect
from time to time for that category or class of the Company's employees which
includes the Company's senior executive officers, provided that if necessary to
provide Employee with monthly disability income benefits of at least fifty
percent (50%) of Employee's Basic Salary in the event of Employee's permanent
disability, the Company shall adopt a special plan relating specifically to
Employee which results in Employee having coverage providing total benefits of
at least 50% of Employee's Basic Salary.
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<PAGE> 4
11. Continuation of Health Benefit Coverage. Upon the termination of
Employee's employment for any reason, including a termination due to the
expiration of the Term of this Agreement or any renewal thereof, the Company
shall provide Employee and his family the health, medical, hospitalization and
dental insurance coverage and/or cost reimbursement benefits set forth in
Section 10 hereof, for a period not to exceed the earlier of (i) five (5) years
or (ii) the date on which Employee and his family become covered under a policy
or plan paid for by a new employer of Employee providing substantially similar
coverage and benefits. In the event Employee's employment terminates and this
Section 11 becomes effective, and thereafter Employee dies while the benefits
provided herein are still in effect, such benefits shall continue for
Employee's family until five (5) years have passed following his termination of
employment. The benefits set forth under this Section 11 shall be provided in
addition to any other payments, benefits or compensation, if any, to which
Employee, his estate or his designated beneficiary is entitled due to his
termination of employment as set forth in this Agreement.
12. Life Insurance. The Company shall maintain and pay the premiums
on one or more life insurance policies on Employee's life, which may include
insurance on Employee's life under any group term life insurance plan
maintained from time to time by the Company for its employees. The aggregate
face amount(s) of such policy or policies shall be at least Five Hundred
Thousand Dollars ($500,000.00).
Any policy of insurance or certificate of insurance under a group term
policy maintained by the Company under this Section 12 shall be owned by the
Company, and the Employee (or his assignee) shall have the sole right to
designate the beneficiary or beneficiaries of the proceeds payable thereunder
upon the death of the Employee.
13. Vacation and Days Off. Employee may take reasonable vacations
and days off agreeable to the Company and Employee; provided, however, that
Employee shall be entitled to at least five (5) weeks of paid vacation per
year, which Employee may use at any time during each year, and to the extent
not used, during a subsequent year.
14. Termination After Notice. Either Employee or the Company may
terminate the employment of Employee at any time during the Term of this
Agreement or any renewal thereof upon at least ninety (90) days' prior written
notice. In the event of such termination, the Company shall pay to Employee
the severance pay provided for under Section 5 hereof, if applicable, together
with all other compensation that would otherwise have been payable to Employee,
as provided in Section 16 hereof, and for the purposes of said Section 16, the
"Termination Date" shall be the effective date of termination pertaining to the
ninety (90) days prior written notice referred to in the preceding sentence.
15. Termination Upon Death or Disability.
(a) Upon the termination of Employee's employment due to the
death of Employee, the Company shall pay to the estate of Employee (or
the beneficiaries designated by Employee, if applicable) certain
compensation that would otherwise have
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<PAGE> 5
been payable to Employee, as provided in Section 16 hereof, and for the
purposes of said section, the "Termination Date" shall be the date of
Employee's death.
(b) (i) During any period of disability, illness or
incapacity during the Term of this Agreement, which renders
Employee temporarily unable to perform the services required
under this Agreement, Employee shall continue to receive the
compensation payable under this Agreement. Employee's employment
under this Agreement may be terminated as provided below upon
Employee's permanent disability (as defined below).
(ii) Employee shall be deemed to have suffered
"permanent disability" if Employee is unable by reason of any
medically determined physical or mental impairment to perform the
duties required of him under this Agreement for a period of one
hundred eighty (180) consecutive days in any twelve-month period.
Periods of disability arising from unrelated causes shall not be
combined. Upon a determination of permanent disability, the
Board of Directors may terminate Employee's employment upon
thirty (30) days' prior written notice. In the event of such
termination, the Company shall pay to Employee certain
compensation that would otherwise have been payable to Employee,
as provided in Section 16, and for the purposes of said Section,
the "Termination Date" shall be the effective date of termination
following the Company's notice under the preceding sentence.
16. Payments Due Upon Termination of Employee's Employment. In the
event of termination of Employee's employment under this Agreement, pursuant to
Sections 14 or 15 hereof, the Company shall pay Employee, his estate, or his
designated beneficiaries, as the case may be, the following payments or other
items of compensation, for which purpose the "Termination Date" shall be the
Termination Date specified in Sections 14 or 15 hereof, whichever is
applicable:
(a) Basic Compensation that would otherwise have been payable
to Employee under Section 3(a) hereof through the Termination Date;
(b) all payments, if any, payable pursuant to Section 5
hereof.
17. Waiver of Breach. The waiver by the Company of a breach of any
of the provisions of this Agreement by Employee shall not be construed as a
waiver of any subsequent breach of Employee.
18. Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company, whether by reason of merger,
consolidation, acquisition or other business combination, or otherwise. This
Agreement is a personal employment contract that may not be sold, assigned,
transferred or pledged as collateral by the Employee.
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<PAGE> 6
19. Invalid Provisions. It is understood and agreed that in the
event any paragraph, provision or clause of this Agreement or any combination
thereof is found to be unenforceable at law, in equity, or under any presently
existing or hereafter enacted legislation, regulation or order of the United
States, any state or subdivision thereof or any municipality, those findings
shall not in any way affect the other paragraphs, provisions or clauses in this
Agreement, which shall continue in full force and effect.
20. Performance. This Agreement shall be performed in Dallas County,
Texas.
21. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
22. Entire Agreement. This Agreement contains the entire agreement
of the parties and supersedes all prior agreements and understandings, oral or
written, with respect to the subject matter hereof, except to the extent that
provisions of the Prior Agreement are expressly stated herein to be effective.
This Agreement may be changed only by an agreement in writing signed by the
party against whom any waiver, change, amendment, modification or discharge is
sought.
23. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
24. Notice. Any notice required or permitted to be given under this
Agreement to the Company shall be sufficient if in writing and if sent by
certified or registered mail, first class, return receipt requested, to the
registered office of the Company. Any notice required or permitted to be given
under this Agreement to Employee shall be sufficient if in writing and if sent
by certified or registered mail, first class, return receipt requested to
Employee at his last known address. Employee shall be solely responsible for
notifying the Company of his address on the date of this Agreement and all
subsequent changes of address.
25. Gender. When the context in which words are used in this
Agreement indicate that such is the intent, words in the singular number shall
include the plural and vice versa and words in the masculine gender shall
include the feminine and neuter genders and vice versa.
26. Successors. This Agreement shall be binding upon the successors
and assigns of the Company but not of Employee.
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IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the date and year first above written.
COMPANY:
-------
SHOWBIZ PIZZA TIME, INC.
By:/s/ Michael H. Magusiak
------------------------------------------
Michael H. Magusiak
President
EMPLOYEE:
--------
/s/ Richard M. Frank
---------------------------------------------
Richard M. Frank
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<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is executed as of the 3rd
day of January, 1997, by and between MICHAEL H. MAGUSIAK ("Employee") and
SHOWBIZ PIZZA TIME, INC., a Kansas corporation ("Company").
RECITALS:
WHEREAS, the Employee and the Company have heretofore entered into an
agreement whereby Employee is employed by the Company pursuant to certain terms
and conditions; and
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has offered Employee continued employment in consideration for the
compensation and the other benefits hereinafter set forth, and Employee is
willing to continue in the employ of the Company on these terms;
NOW, THEREFORE, in consideration of the mutual promises hereinafter
contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed that any prior
employment agreements between the Company and the Employee be superceded by the
terms and conditions hereof, as follows:
1. Employment. The Company employs Employee and Employee accepts
employment from the Company upon the terms and conditions specified in this
Agreement.
2. Term. Subject to the provisions regarding termination set forth
in Sections 14, 15, and 16 hereof, the initial term of this Agreement shall
begin as of January 6, 1997 (the "Effective Date") and shall terminate on the
last day of the fiscal year of the Company ending on or about December 31, 1999
(the "Initial Term")
3. Basic Salary. For services rendered by Employee under this
Agreement, the Company shall pay Employee the "Basic Salary," provided for in
this Section 3, as follows:
(a) Employee shall receive as minimum Basic Salary the amount
of $20,833.33 per month.
(b) The Basic Salary may be adjusted in such amounts and on
such dates as the Compensation Committee of the Board of Directors may
determine from time to time.
(c) The Basic Salary provided for in this Section 3 shall be
in addition to any other compensation and/or benefits provided to
Employee (i) pursuant to this Agreement or (ii) otherwise at the
discretion of the Board of Directors, including, but not limited to, the
annual bonus opportunity available to home office employees and officers
of the Company at a level commensuate with his position as President.
<PAGE> 2
4. Stock Options. Employee has received from the Company on the
Effective Date options (the "Options") to purchase one hundred thousand
(100,000) shares of the Company's Common Stock, par value $.10 per share
("Common Stock") pursuant to the ShowBiz Pizza Time, Inc. Non-Statutory Stock
Option Plan. Of the Options granted as described in this Section 4, 40% shall
vest on January 6, 1999, and the remaining 60% of the Options shall vest on
December 17, 1999.
5. Severance Pay. If Company terminates the employment of Employee
at any time (other than pursuant to Section 15 hereof), or if a 'Change of
Control' (as defined below) occurs with respect to Company and Employee
voluntarily terminates his employment with Company within one year after such a
Change of Control, Company shall be required to pay Employee severance pay in
an amount equal to the product of (a) the Employee's then Basic Salary,
multiplied by (b) the number twenty-four (24). Such severance pay shall be
payable to Employee by Company in cash on or before the thirtieth (30th) day
after the effective date of such termination.
For purposes of this Section 5, a 'Change of Control' shall be deemed to
have occurred with respect to Company if: (a) any person or group of persons
acting in concert (other than The Hallwood Group Incorporated or any affiliate
thereof and other than proxies designated to act as such by the Company's Board
of Directors), in which person or group of persons the Employee 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 thirty-three
percent (33%) of the then outstanding voting securities of the Company; or (b)
during any consecutive eighteen (18) month period a majority of the Company's
Board of Directors is elected or appointed and consists of persons who are not
directors of the Company as of the Effective Date, and whose election or
appointment as directors of the Company was actively opposed by Employee, as
evidenced by Employee's vote (in his capacity or capacities, if any, as a
director and/or stockholder of the Company) against their election or
appointment and by written notice of his opposition to their election or
appointment given by Employee to the current Board of Directors not more than
five (5) business days following their respective election or appointment;
provided, however, that in no event shall a change in composition of the
Company's Board of Directors pursuant to an election of Board of Directors
members pursuant to Section 4.6 of the Company's Articles of Incorporation, as
amended through the date of this Agreement, constitute or result in a 'Change
of Control' for purposes of this Section 5.
6. Expenses. Subject to the rules and procedures the Company may
specify from time to time, the Company shall reimburse Employee for all
reasonable expenses incurred by Employee on behalf of the Company.
7. Automobile. Employer shall pay to Employee the sum of Seven
Hundred Fifty Dollars ($750.00) per month (subject to adjustment from time to
time in direct proportion to generally applicable adjustment by the Company to
its automobile allowances) to reimburse Employee for the use of Employee's
automobile in the performance of his duties under this Agreement, and Employer
shall further pay directly or by reimbursement to Employee (as
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<PAGE> 3
Employer and Employee may from time to time agree) the premiums upon a policy
of collision and liability insurance covering such automobile. All other costs
and expenses incurred in the operation and maintenance of Employee's
automobile, including but not limited to the cost of all fuel, oil, maintenance
and repairs, shall be paid solely by Employee.
8. Duties of Employee. In accepting continued employment by the
Company, Employee agrees to undertake and assume the responsibility, subject to
the general direction and control of the Board of Directors and the Chief
Executive Officer, of performing for and on behalf of the Company the duties of
President of the Company, including formulation of policies and administration
of the Company's affairs, and such other duties as are agreed to by the Company
and the Employee. In addition, if requested, Employee shall serve as an
officer and/or director of any affiliates of the Company without additional
compensation.
9. Exclusive Service. Employee shall devote substantially his full
time and attention to rendering services to the Company and in furtherance of
the Company's best interests, provided that Employee may make and manage his
personal passive investments. During the term of this Agreement, other than as
an officer and/or director of an affiliate of the Company, Employee shall not
be employed by any other person or engage in any other business or occupation;
provided that Employee may engage in the business of making and managing his
personal passive investments.
10. Health and Disability Insurance. The Company shall provide
Employee and his family with health, medical, hospitalization and dental
insurance coverage and/or cost reimbursement benefits which provide for one
hundred percent (100%) of such costs and expenses to be paid on behalf of
and/or reimbursed to Employee and his family, whether through existing
insurance and/or reimbursement plans covering the Company's employees or
through special plans relating specifically to employee, or a combination
thereof. For purposes of this Section, the Employee's family shall include his
spouse and children. The Company shall also provide disability insurance
coverage to Employee under any Company plan(s) for such coverage as in effect
from time to time for that category or class of the Company's employees which
includes the Company's senior executive officers, provided that if necessary to
provide Employee with monthly disability income benefits of at least fifty
percent (50%) of Employee's Basic Salary in the event of Employee's permanent
disability, the Company shall adopt a special plan relating specifically to
Employee which results in Employee having coverage providing total benefits of
at least 50% of Employee's Basic Salary.
11. Continuation of Health Benefit Coverage. Upon the termination of
Employee's employment for any reason, including a termination due to the
expiration of the Initial Term of this Agreement or any renewal thereof, the
Company shall provide Employee and his family the health, medical,
hospitalization and dental insurance coverage and/or cost reimbursement
benefits set forth in Section 10 hereof, for a period not to exceed the earlier
of (i) five (5) years or (ii) the date on which Employee and his family become
covered under a policy or plan paid for by a new employer of Employee providing
substantially similar coverage and benefits. In the event Employee's
employment terminates and this Section 11 becomes effective, and thereafter
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<PAGE> 4
Employee dies while the benefits provided herein are still in effect, such
benefits shall continue for Employee's family until five (5) years have passed
following his termination of employment. The benefits set forth under this
Section 11 shall be provided in addition to any other payments, benefits or
compensation, if any, to which Employee, his estate or his designated
beneficiary is entitled due to his termination of employment as set forth in
this Agreement.
12. Life Insurance. The Company shall maintain and pay the premiums
on one or more life insurance policies on Employee's life, which may include
insurance on Employee's life under any group term life insurance plan
maintained from time to time by the Company for its employees. The aggregate
face amount(s) of such policy or policies shall be consistent with those
amounts available for senior executive officers of the Company.
Any policy of insurance or certificate of insurance under a group term
policy maintained by the Company under this Section 12 shall be owned by the
Company, and the Employee (or his assignee) shall have the sole right to
designate the beneficiary or beneficiaries of the proceeds payable thereunder
upon the death of the Employee.
13. Vacation and Days Off. Employee may take reasonable vacations
and days off agreeable to the Company and Employee; provided, however, that
Employee shall be entitled to at least five (5) weeks of paid vacation per
year, which Employee may use at any time during each year, and to the extent
not used, during a subsequent year.
14. Termination After Notice. Either Employee or the Company may
terminate the employment of Employee at any time during the Initial Term of
this Agreement or any renewal thereof upon at least ninety (90) days' prior
written notice. In the event of such termination, the Company shall pay to
Employee the severance pay provided for under Section 5 hereof, if applicable,
together with all other compensation that would otherwise have been payable to
Employee, as provided in Section 16 hereof, and for the purposes of said
Section 16, the 'Termination Date' shall be the effective date of termination
pertaining to the ninety (90) days prior written notice referred to in the
preceding sentence.
15. Termination Upon Death or Disability.
(a) Upon the termination of Employee's employment due to the death of
Employee, the Company shall pay to the estate of Employee (or the beneficiaries
designated by Employee, if applicable) certain compensation that would
otherwise have been payable to Employee, as provided in Section 16 hereof, and
for the purposes of said section, the 'Termination Date' shall be the date of
Employee's death.
(b) (i) During any period of disability, illness or incapacity
during the term of this Agreement, which renders Employee temporarily
unable to perform the services required under this Agreement, Employee
shall continue to receive the Basic Salary payable under this Agreement.
Employee's employment under this Agreement may be terminated as provided
below upon Employee's permanent disability (as defined below).
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(ii) Employee shall be deemed to have suffered 'permanent
disability' if Employee is unable by reason of any medically determined
physical or mental impairment to perform the duties required of him
under this Agreement for a period of one hundred eighty (180)
consecutive days in any twelve-month period. Periods of disability
arising from unrelated causes shall not be combined. Upon a
determination of permanent disability, the Board of Directors of the
Company may terminate Employee's employment upon thirty (30) days' prior
written notice. In the event of such termination, the Company shall pay
to Employee certain compensation that would otherwise have been payable
to Employee, as provided in Section 16, and for the purposes of said
Section, the 'Termination Date' shall be the effective date of
termination following the Company's notice under the preceding sentence.
16. Payment Due Upon Termination of Employee's Employment. In the
event of termination of Employee's employment under this Agreement, pursuant to
Sections 14 or 15 hereof, the Company shall pay Employee, his estate, or his
designated beneficiaries, as the case may be, the following payments or other
items of compensation, for which purpose the 'Termination Date' shall be the
Termination Date specified in Sections 14 or 15 hereof, whichever is
applicable:
(a) Basic Salary that would otherwise have been payable to
Employee under Section 3(a) hereof through the Termination Date;
(b) all payments, if any, payable pursuant to Section 5
hereof.
17. Waiver of Breach. The waiver by the Company of a breach of any
of the provisions of this Agreement by Employee shall not be construed as a
waiver of any subsequent breach of Employee.
18. Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company, whether by reason of merger,
consolidation, acquisition or other business combination, or otherwise. This
Agreement is a personal employment contract that may not be sold, assigned,
transferred or pledged as collateral by the Employee.
19. Invalid Provisions. It is understood and agreed that in the
event any paragraph, provision or clause of this Agreement or any combination
thereof is found to be unenforceable at law, in equity, or under any presently
existing or hereafter enacted legislation, regulation or order of the United
States, any state or subdivision thereof or any municipality, those findings
shall not in any way affect the other paragraphs, provisions or clauses in this
Agreement, which shall continue in full force and effect.
20. Performance. This Agreement shall be performed in Dallas County,
Texas.
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21. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Texas.
22. Entire Agreement. This Agreement contains the entire agreement
of the parties and supersedes all prior agreements and understandings, oral or
written, with respect to the subject matter hereof. This Agreement may be
changed only by an agreement in writing signed by the party against whom any
waiver, change, amendment, modification or discharge is sought.
23. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
24. Notice. Any notice required or permitted to be given under this
Agreement to the Company shall be sufficient if in writing and if sent by
certified or registered mail, first class, return receipt requested, to the
registered office of the Company. Any notice required or permitted to be given
under this Agreement to Employee shall be sufficient if in writing and if sent
by certified or registered mail, first class, return receipt requested to
Employee at his last known address. Employee shall be solely responsible for
notifying the Company of his address on the date of this Agreement and all
subsequent changes of address.
25. Gender. When the context in which words are used in this
Agreement indicate that such is the intent, words in the singular number shall
include the plural and vice versa and words in the masculine gender shall
include the feminine and neuter genders and vice versa.
26. Successors. This Agreement shall be binding upon the successors
and assigns of the Company but not of Employee.
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IN WITNESS WHEREOF, the parties have executed this Agreement, effective
as of the date and year first above written.
COMPANY:
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SHOWBIZ PIZZA TIME, INC.
By:/s/ Richard M. Frank
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Richard M. Frank
Chief Executive Officer
EMPLOYEE:
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/s/ Michael H. Magusiak
---------------------------------------------
Michael H. Magusiak
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