<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SHOWBIZ PIZZA TIME, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SHOWBIZ PIZZA TIME, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
SHOWBIZ PIZZA TIME, INC.
4441 WEST AIRPORT FREEWAY
IRVING, TEXAS 75062
(972) 258-8507
May 21, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of the
Company to be held at 9:00 a.m. local time, Thursday, June 25, 1998, at the
Sheraton Grand Hotel located at 4440 West John Carpenter Freeway, Irving, Texas.
At the meeting you will be asked to re-elect three current directors, to
authorize the amendment of the Restated Articles of Incorporation, to (i) change
the name of the Company to CEC Entertainment, Inc., and (ii) increase the number
of authorized shares of the Company's common stock to one hundred million
shares, and to transact such other business as may properly come before the
meeting.
The formal Notice of the Annual Meeting of Stockholders and Proxy Statement
accompanying this letter provide detailed information concerning matters to be
considered and acted upon at the meeting.
It is important that your shares be represented at the meeting, whether or not
you attend personally. I urge you to sign, date and return the enclosed proxy
at your earliest convenience.
Sincerely,
RICHARD M. FRANK
Chairman and Chief Executive Officer
<PAGE>
SHOWBIZ PIZZA TIME, INC.
4441 WEST AIRPORT FREEWAY
IRVING, TEXAS 75062
(972) 258-8507
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1998
To the Stockholders of
ShowBiz Pizza Time, Inc.:
Notice is hereby given that the annual meeting of stockholders of ShowBiz Pizza
Time, Inc., a Kansas corporation, will be held at the Sheraton Grand Hotel
located at 4440 West John Carpenter Freeway, Irving, Texas on June 25, 1998, at
9:00 a.m. local time, for the following purposes:
1. To re-elect three Class I directors to serve for a term of three years
or until their successors are elected and qualified or until their
earlier resignation or removal;
2. To authorize the amendment of the Restated Articles of Incorporation to
change the name of the corporation;
3. To authorize the amendment of the Restated Articles of Incorporation to
increase the number of shares of common stock authorized for issuance to
one hundred million shares; and
4. To transact such other business as may properly come before the meeting.
It is desirable that as large a proportion as possible of the stockholders'
interests be represented at the meeting. Whether or not you plan to be present
at the meeting, you are requested to sign and return the enclosed proxy in the
envelope provided so that your stock will be represented. The giving of such
proxy will not affect your right to vote in person, should you later decide to
attend the meeting. Please date and sign the enclosed proxy and return it
promptly in the enclosed envelope.
Only stockholders of record at the close of business on May 7, 1998 are entitled
to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors,
MARSHALL R. FISCO, JR.
Secretary
Irving, Texas
May 21, 1998
<PAGE>
SHOWBIZ PIZZA TIME, INC.
4441 WEST AIRPORT FREEWAY
IRVING, TEXAS 75062
(972) 258-8507
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 25, 1998
This proxy statement is furnished to stockholders of ShowBiz Pizza Time, Inc., a
Kansas corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board of Directors") for
use at the annual meeting of stockholders (the "Annual Meeting") to be held at
9:00 a.m. local time, on June 25, 1998 at the Sheraton Grand Hotel located at
4440 West John Carpenter Freeway, Irving, Texas. Proxies in the form enclosed
will be voted at the Annual Meeting, if properly executed, returned to the
Company prior to the Annual Meeting and not revoked. A proxy may be revoked at
any time before it is voted either in person at the Annual Meeting or by giving
prior written notice to the Secretary of the Company. This proxy statement was
first sent or given to the Company's stockholders on or about May 21, 1998.
OUTSTANDING CAPITAL STOCK
The record date for stockholders entitled to notice of, and to vote at, the
Annual Meeting is May 7, 1998. At the close of business on that date, the
Company had issued and outstanding and entitled to receive notice of and vote at
the Annual Meeting 18,371,303 shares of Common Stock, $0.10 par value (the
"Common Stock"), and 49,570 shares of Class A Preferred Stock, $60 par value
(the "Preferred Stock"). No other class of securities of the Company is
entitled to notice of, or to vote at, the Annual Meeting.
ACTION TO BE TAKEN AT THE ANNUAL MEETING
The accompanying proxy, unless the stockholder otherwise specifies in the proxy,
will be voted:
1. For the re-election of the three Class I director nominees named
herein, to serve for a term of three years or until their respective successors
shall be elected and qualified or until their earlier resignation or removal;
2. To authorize the amendment of the Restated Articles of Incorporation
to change the name of the Company;
3. To authorize the amendment of the Restated Articles of Incorporation
to increase the number of shares of common stock authorized for issuance; and
4. In the discretion of the proxyholders, as to the transaction of such
other business as may properly come before the Annual Meeting.
Where stockholders have appropriately specified how their proxies are to be
voted, they will be voted accordingly. Unless authorization to vote for a
proposal pending at the Annual 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 Annual Meeting, the proxyholders may
vote the proxies in their discretion. The Board of Directors is not presently
aware of any other matters or business to be brought before the Annual Meeting.
<PAGE>
QUORUM AND VOTING
Each stockholder 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 Annual Meeting; provided, however, if
a quorum is not present or represented at the Annual Meeting, the stockholders
entitled to vote at the Annual Meeting, present in person or represented by
proxy, have the power to adjourn the Annual Meeting from time to time, without
notice, other than by announcement at the Annual Meeting, until a quorum is
present or represented. At any such adjourned Annual 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 Annual 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 Annual 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 other
proposals to be voted on at the Annual Meeting. Unless authorization to vote for
a proposal pending at the Annual 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 proposals 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 Annual Meeting. It may be revoked by
filing with the Secretary of the Company, Marshall R. Fisco, Jr., 4441 West
Airport Freeway, Irving, Texas 75062, a written notice of revocation or duly
executed proxy bearing a later date, or it may be revoked by attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not,
by itself, revoke a proxy.
2
<PAGE>
PRINCIPAL HOLDERS OF CAPITAL STOCK
The following table sets forth information, as of May 7, 1998, 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 (10 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.
<TABLE>
<CAPTION>
Percentage of Class Outstanding
-------------------------------
Name (and address for Number of Shares of Number of Shares of
5% beneficial owners) Common Stock Preferred Stock Common Stock Preferred Stock
- --------------------- ------------ ---------------- ------------- ----------------
<S> <C> <C> <C> <C>
Richard M. Frank 678,536 (A) 0 3.7% 0.0%
Michael H. Magusiak 76,081 (B) 0 (C) 0.0%
Richard T. Huston 72,293 (D) 0 (C) 0.0%
Larry G. Page 24,051 (E) 0 (C) 0.0%
Gene F. Cramm, Jr. 1,200 (F) 0 (C) 0.0%
Tim T. Morris 0 (G) 0 (C) 0.0%
Louis P. Neeb 13,125 (H) 0 (C) 0.0%
Cynthia I. Pharr 13,125 (H) 0 (C) 0.0%
Walter Tyree 0 (G) 0 (C) 0.0%
Raymond Wooldridge 3,000 (G) 0 (C) 0.0%
Directors and Executive Officers as a
Group 881,411 0 4.8% 0.0%
FMR Corp.
82 Devonshire Street
Boston, MA 02109-3614 1,492,000 (I) 0 8.1% 0.0%
Lynch & Mayer
200 East Berry Street
Fort Wayne, IN 46802-2706 1,188,900 (J) 0 6.5% 0.0%
Massachusetts Financial Services
Company
500 Boylston Street
Boston, MA 02116-0741 1,017,000 (K) 0 5.5% 0.0%
Time Warner, Inc.
75 Rockefeller Plaza
New York, NY 10019 0 16,011 (L) 0.0% 32.3%
River Forest State Bank & Trust Co.
7727 West Lake Street
River Forest, IL 60305 0 3,139 (M) 0.0% 6.3%
</TABLE>
(Footnotes appear on the following page)
3
<PAGE>
- ------------------
(A) Includes 117,792 shares which are subject to forfeiture pursuant to the
terms of Mr. Frank's employment agreement. See "Employment Agreements."
Includes 215,000 shares purchasable pursuant to options issued under the
Company's Non-Statutory Stock Option Plan which are exercisable within 60
days of the date hereof, but excludes 300,000 shares purchasable pursuant
to options issued under the Company's Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(B) Includes 43,200 shares purchasable pursuant to options issued under the
Company's Non-Statutory Stock Option Plan which are exercisable within 60
days of the date hereof, but excludes 139,400 shares purchasable pursuant
to options issued under the Company's 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 47,375 shares purchasable pursuant to options issued under the
Company's Non-Statutory Stock Option Plan which are exercisable within 60
days of the date hereof, but excludes 42,315 shares purchasable pursuant to
options issued under the Company's Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(E) Includes 23,805 shares purchasable pursuant to options issued under the
Company's Non-Statutory Stock Option Plan which are exercisable within 60
days of the date hereof, but excludes 41,063 shares purchasable pursuant to
options issued under the Company's Non-Statutory Stock Option Plan which
are not exercisable within 60 days of the date hereof.
(F) Includes 1,200 shares purchasable pursuant to options issued under the
Company's Non-Statutory Stock Option Plan which are exercisable within 60
days of the date hereof, but excludes 33,109 shares purchasable pursuant to
options issued under the Company's Non-Statutory Stock Option plan which
are not exercisable within 60 days of the date hereof.
(G) Includes 0 shares purchasable pursuant to options issued under the Non-
Employee Directors Stock Option Plan which are exercisable within 60 days
of the date hereof, but excludes 10,000 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.
(H) Includes 11,250 shares purchasable pursuant to options issued under the
Company's Non-Statutory Stock Option Plan and 1,875 shares purchasable
pursuant to options issued under the Company's Non-Employee Directors Stock
Option Plan which are exercisable within 60 days of the date hereof, but
excludes 6,875 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.
(I) 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.
(J) Based on information in Schedule 13G dated February 4, 1998. Of its total
shares, Lynch & Mayer, Inc. has sole voting and dispositive power over
1,188,900 shares.
(K) Based on information in Schedule 13G dated February 12, 1998. Of its total
shares, Massachusetts Financial Services Company has sole voting and
dispositive power over 1,017,000 shares.
(L) Based on information in Amendment No. 2 to Schedule 13D dated July 1, 1994.
Of its total shares, Time Warner, Inc. has shared voting and dispositive
power over 16,011 shares.
(M) Based on information obtained from the Company's Transfer Agent on
May 7, 1998.
4
<PAGE>
PROPOSAL 1:
ELECTION OF DIRECTORS
The terms of the Class I directors expire at the Annual Meeting of the
stockholders in 1998. The Board of Directors has nominated Richard M. Frank,
Michael H. Magusiak, and Walter Tyree for re-election at the Annual Meeting, to
serve for a term of three years. Messrs. Frank, Magusiak and Tyree have
expressed their intention to serve the entire term for which re-election is
sought.
Directors will be elected by cumulative voting. To be elected as a director, a
candidate must be among the three candidates who receive the most votes out of
all votes cast at the Annual Meeting for the election of directors. See "Quorum
and Voting."
The following table lists the names and ages (as of May 7, 1998) of the three
director nominees and the four directors whose terms of office will continue
after the Annual Meeting, the year in which each director was first elected as a
director of the Company, the class to which each director has been or will be
elected, and the Annual Meeting at which the term of each director will expire.
Director Term
Nominee Directors Age Since Class Expires
- ----------------- ---- ----- ----- -------
Richard M. Frank....... 50 1985 I 1998
Michael H. Magusiak.... 42 1988 I 1998
Walter Tyree........... 46 1997 I 1998
Continuing Directors
- --------------------
Cynthia I. Pharr....... 49 1994 II 1999
Raymond E. Wooldridge.. 59 1997 II 1999
Tim T. Morris.......... 51 1997 III 2000
Louis P. Neeb.......... 59 1994 III 2000
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE NAMED NOMINEES.
5
<PAGE>
ADDITIONAL INFORMATION ABOUT THE EXECUTIVE OFFICERS, BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
EXECUTIVE OFFICERS
The following table sets forth the names and certain other information regarding
the executive officers of the Company as of May 7, 1998.
<TABLE>
<CAPTION>
Year First Elected
Name Age Position as Executive Officer
- ---- --- -------- --------------------
<S> <C> <C> <C>
Richard M. Frank.................. 50 Chairman of the Board and 1985
Chief Executive Officer
Michael H. Magusiak............... 42 President 1988
Richard T. Huston................. 52 Executive Vice President, 1986
Marketing
Larry G. Page..................... 54 Executive Vice President, Chief 1994
Financial Officer and Treasurer
Gene F. Cramm, Jr................. 40 Executive Vice President, 1997
Construction and Entertainment
</TABLE>
BUSINESS HISTORY OF EXECUTIVE OFFICERS AND DIRECTORS
A brief description of the business history of the directors and executive
officers of the Company is provided below.
RICHARD M. FRANK has been Chairman of the Board and Chief Executive Officer of
the Company since March 1986 and has been a director of the Company since June
1985. He served as President and Chief Operating Officer from June 1985 until
October 1988. He joined the Company in 1985. He has served as a director for
Monterey Acquisition Corp. from May 1994 to June 1997.
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. from May 1994 to June 1997.
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 from June 1994 to March 1997 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. 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.
6
<PAGE>
GENE F. CRAMM, JR. has served as Executive Vice President of the Company since
September 1997. Prior to that time he served as a Senior Vice President since
September 1989. He assumed the duties of Director of Construction in June 1994.
Mr. Cramm has held various positions with the Company since 1980, including
Director of Entertainment and Games, Senior Vice President, International
Development and Special Projects, Senior Vice President, Operational Support,
and Vice President and Director of Purchasing.
TIM T. MORRIS was elected as a director of the Company in June 1997. Mr. Morris
is currently a Partner of River Associates, LLC, an investment firm; he has
served in that position since 1990. From 1981 through 1990 Mr. Morris was an
Office Managing Partner of Deloitte & Touche, an accounting firm. From 1977
through 1981 Mr. Morris was a Partner of Rogers, Morris, Millsaps & Underwood,
CPA's, an accounting firm. From 1968 through 1977 Mr. Morris was a Partner of
Hazlett, Lewis & Bieter, CPA's, an accounting firm.
LOUIS P. NEEB was elected as a director in August 1994. Mr. Neeb has served as
Chairman of the Board and Chief Executive Officer of Casa Ole' Restaurants, Inc.
from October 1995 to the present. From August 1982 to present, Mr. Neeb has
been President of Neeb Enterprises, Inc., a management consulting firm
specializing in consulting to restaurant companies. 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, and Silver Diner, Inc., a publicly-traded
restaurant company.
CYNTHIA I. PHARR was elected as a director of the Company in August 1994. She
is currently President and owner of C. Pharr & Company, a communications
management consulting firm. She has served in that position since March 1993.
From May 1989 through February 1993, Ms. Pharr was President and Chief Executive
Officer of Tracy -Locke/Pharr P R, a public relations firm. From August 1986
through April 1989, she was President and owner of C. Pharr & Company, Inc. a
public relations agency. Ms. Pharr has served as a member of the Board of
Directors of Spaghetti Warehouse, Inc. since August 1991, as well as Chairman
of the Board of GuestCare, Inc., a privately held technology company, from
February 1994 to present.
WALTER TYREE was elected as a director of the Company in June 1997. Mr. Tyree is
currently Chief Operating Officer of BCBM Southwest, Inc., a Boston Market
franchisee. Mr. Tyree has served in that position since January 1993. From
1980 through 1992, Mr. Tyree served in various positions with Steak and Ale, a
restaurant company, most recently as a Regional Director.
RAYMOND E. WOOLDRIDGE was elected as a director of the Company in June 1997. Mr.
Wooldridge is currently Vice Chairman and Chairman of the Executive Committee of
Southwest Securities Group, Inc., a publicly owned holding firm. Mr. Wooldridge
is also a director of Dadco, Inc., a subsidiary of D.A. Davidson & Company, a
member of NASD and the Pacific Stock Exchange. Mr. Wooldridge has served in
these positions since 1986. From 1964 through 1986, Mr. Wooldridge served in
various positions with Eppler, Guerin and Turner, Inc., a regional brokerage and
investment banking firm, most recently as the firm's President and Chief
Executive Officer.
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.
7
<PAGE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Three regularly scheduled and twelve special meetings of the Board of Directors
were held during 1997. 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 1997.
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 Executive
Committee (comprised of Messrs. Frank, Magusiak, and Neeb and Ms. Pharr in 1997)
held a number of informal meetings in person and by telephone in 1997.
The Audit Committee consists of three 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 Audit Committee (comprised of Messrs. Morris, Tyree and
Wooldridge in 1997) held two meetings in 1997.
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 Compensation Committee (comprised of Messrs. Frank, Neeb and
Wooldridge in 1997) held four meetings in 1997.
The Stock Option Committee and a Stock Grant Committee each consist of two
directors who are responsible for administering the 1988 Non-Statutory Stock
Option Plan, the 1997 Non-Statutory Stock Option Plan and the Company's Stock
Grant Plan, respectively. The Stock Option Committee and a Stock Grant
Committee were each comprised of Messrs. Neeb and Wooldridge in 1997. The Stock
Option Committee and Stock Grant Committee held five and two meetings,
respectively, in 1997.
8
<PAGE>
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 29,
1995, December 27, 1996 and January 4, 1998 (designated herein as fiscal years
1995, 1996 and 1997, respectively.)
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
------------------- -------------------
Restricted Securities
Other Annual Stock Underlying
Name (and Fiscal Compensation Awards Options
Principal Position) Year Salary ($) Bonus ($) ($) (A) ($) (#) (B)
- ------------------- ------ ---------- --------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Frank 1997 1,000,000 $-- 29,841 $-- 500,000
(Chief Executive Officer) 1996 1,000,000 -- 27,333 -- --
1995 1,000,000 -- 23,656 -- 15,000
Michael H. Magusiak 1997 250,000 94,879 (C) 17,874 $-- 125,000
(President) 1966 240,000 113,736 (D) 15,846 -- 28,800
1995 240,000 -- 14,917 -- 28,800
Richard T. Huston 1997 160,000 52,003 (C) 15,672 $-- 16,800
(Executive Vice President) 1996 150,000 60,930 (D) 15,869 -- 15,750
1995 149,807 -- 13,384 -- 31,500
Larry G. Page 1997 134,500 43,789 (C) 14,923 $-- 14,123
(Executive Vice President 1996 132,000 53,618 (D) 14,176 -- 13,860
and Chief Financial 1995 127,000 3,500 13,753 -- --
Officer)
Gene F. Cramm, Jr. 1997 120,593 34,699 (C) 9,191 $-- 13,984
(Executive Vice President) 1996 109,423 37,235 (C) 7,981 -- 9,900
1995 94,615 -- 7,485 -- 22,500
- ------------------
</TABLE>
(A) Includes car allowances for Mr. Frank of $15,600, $13,600 and $15,600 per
year for 1995, 1996 and 1997, respectively, and for Messrs. Huston,
Magusiak, and Page of $9,000 per year, and for Mr. Cramm of $6,000, $6,000
and $6,750 per year for 1995, 1996 and 1997, respectively.
(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 for fiscal years 1995 and 1996. The amounts listed
above have been adjusted to reflect the stock split.
(C) Includes bonus compensation earned in 1997 and paid in 1998.
(D) Includes bonus compensation earned in 1996 and paid in 1997.
9
<PAGE>
EMPLOYMENT AGREEMENTS
On March 3, 1997, Richard M. 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, and
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, 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, and such additional benefits and/or compensation as may be
determined by the Compensation Committee or the Board of Directors. On December
11, 1997, Mr. Magusiak entered into an amendment to his employment agreement
extending the term of his employment until December 31, 2000 and providing for
an additional 25,000 shares of the Company's Common Stock issued under the
Company's 1988 Non-Statutory Stock Option Plan.
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 $3,000,000, and Mr. Magusiak
will be entitled to receive a severance amount equal to twice his then current
annual base salary (together, the "Severance Amounts"). In the event of the
executive's death, his estate is entitled to receive his base salary through the
date of his death.
The Employment Agreements also provide that each of Messrs. Frank and Magusiak
will receive his respective Severance Amount in the event there is a Change of
Control (as defined below) of the Company and the covered executive voluntarily
terminates his employment within one year after such a Change of Control. A
"Change of Control" is deemed to have occurred with respect to the Company if
(i) any person or group of persons acting in concert (other than The Hallwood
Group Incorporated or its affiliates) in which the covered executive is not an
investor, partner, officer, director or member, shall acquire, directly or
indirectly, the power to vote, or direct the voting of, more than 33% of the
then outstanding voting securities of the Company or (ii) during any consecutive
18 month period a majority of the Board of Directors is elected or appointed and
consists of persons who were not directors of the Company as of the date of the
respective Employment Agreement and whose election or appointment as directors
of the Company is actively opposed by the covered executive.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted to
each of the Named Executive Officers in the fiscal year ended January 4, 1998.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of
Securities Options Stock Price
Underlying Granted to Exercise Appreciation
Options Granted Employees in Price Expiration for Option Term ($)
(#) Fiscal Year ($/Share) Date 5% 10%
--------------- ------------ --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Frank (A) 400,000 44.21% $17.250 01/06/02 $1,904,400 $4,215,900
Richard M. Frank (B) 100,000 11.05% 20.500 12/11/04 834,350 1,945,450
Michael H. Magusiak (C) 100,000 11.05% 17.250 01/06/02 476,100 1,053,975
Michael H. Magusiak (D) 25,000 2.76% 20.500 12/11/02 141,450 313,138
Richard T. Huston (E) 16,800 1.86% 17.250 01/06/02 79,985 177,068
Larry G. Page (E) 14,123 1.56% 17.250 01/06/02 67,240 148,853
Gene F. Cramm, Jr. (E) 10,440 1.15% 17.250 01/06/02 49,705 110,035
Gene F. Cramm, Jr. (F) 3,544 0.39% 21.813 09/26/02 21,336 47,234
</TABLE>
- ------------------
(A) Options to acquire these shares are exercisable as follows: (i) fifty
percent (50%) of the option after January 5, 1998, and (ii) an aggregate of
one hundred percent (100%) of the option after January 5, 1999.
(B) Options to acquire these shares are exercisable as follows: (i) fifty
percent (50%) of the option after December 11, 1998, and (ii) an aggregate
of one hundred percent (100%) of the option after December 11, 1999.
(C) Options to acquire these shares are exercisable as follows: (i) forty
percent (40%) of the option after January 5, 1999, and (ii) an aggregate of
one hundred percent (100%) of the option after December 16, 1999.
(D) Options to acquire these shares are exercisable as follows: one hundred
percent (100%) of the option after December 11, 2000.
(E) Options to acquire these shares are exercisable as follows: (i) fifty
percent (50%) of the option after January 6, 1999, (ii) an aggregate of
seventy-five percent (75%) of the option after January 6, 2000, and (iii)
an aggregate of one hundred percent (100%) of the option after January 6,
2001.
(F) Options to acquire these shares are exercisable as follows: (i) fifty
percent (50%) of the option after September 26, 1999, (ii) an aggregate of
seventy-five percent (75%) of the option after September 26, 2000, and
(iii) an aggregate of one hundred percent (100%) of the option after
September 26, 2001.
11
<PAGE>
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
January 4, 1998 and the value of his unexercised stock options as of January 4,
1998. The closing price for the Company's Common Stock, as reported by the
Nasdaq National Market, on January 2, 1998 (the last trading day of the fiscal
year) was $23.000.
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised In-
Acquired Options at the-Money Options at
on Value January 4, 1998 January 4, 1998
Exercise Realized (exercisable/unexercisable) (exercisable/unexercisable)
(#) (A) (#) ($) (B)
--------- --- ---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Richard M. Frank 0 -- 215,000 (E) 1,376,245 (E)
300,000 (U) 1,400,000 (U)
Michael H. Magusiak 22,500 893,988 62,240 (E) 930,116 (E)
186,560 (U) 1,564,919 (U)
Richard T. Huston 0 333,237 59,150 (E) 928,472 (E)
44,400 (U) 492,314 (U)
Larry G. Page 0 -- 16,875 (E) 298,823 (E)
33,608 (U) 384,792 (U)
Gene F. Cramm, Jr. 0 241,473 11,250 (E) 194,996 (E)
34,309 (U) 171,572 (U)
</TABLE>
- ------------------
(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 January 4, 1998.
(U) Options which are not exercisable at January 4, 1998.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The executive compensation program of the Company is designed as a tool to
reinforce the Company's strategic principles -- to be a premier and progressive
growth company, with an objective of enhancing long term stockholder value. To
this end, the following principles have guided the development of the executive
compensation program:
. Provide competitive levels of compensation to attract and retain the
best qualified executive talent. The Compensation Committee strongly
believes that the caliber of the Company's management group makes a
significant difference in the Company's success over the long term.
. Embrace a "pay-for-performance" philosophy by placing significant
amounts of compensation "at risk"--that is, a significant component of
the compensation payouts to executives must vary
12
<PAGE>
according to the overall performance of the Company.
. Directly link executives' interests with those of stockholders by
providing opportunities for long term incentive compensation based on
changes in stockholder value.
The executive compensation program is intended to appropriately balance the
Company's short term operating goals with its long term strategy through a
careful mix of base salary, annual bonuses (payable upon satisfaction by the
Company of established revenue and profitability objectives) and long term
performance compensation through the issuance of stock options under the 1988
Non-Statutory Stock Option Plan and the 1997 Non-Statutory Stock Option Plan,
and stock grants through the Stock Grant Plan.
The compensation of the executive officers of the Company (excluding Messrs.
Frank and Magusiak) is reviewed and determined annually by the Compensation
Committee. The compensation of such executive officers in 1997 was based on
individual and corporate performances as well as assigned responsibilities. In
establishing and reviewing executive compensation, consideration is also given
to executive salary ranges of comparable companies. Individual performance is
reflected in the executive officer's salary. Corporate performance is reflected
in a bonus, payable annually, if earned, to each executive officer, based on the
achievement of targets for corporate revenue and profitability. Although no
bonus compensation was paid in 1997 based upon performances in 1997, Messrs.
Magusiak, Huston, Page and Cramm and all executive officers as a group (four
persons, excluding Mr. Frank, who receives a bonus compensation pursuant to the
terms of his employment agreement, as described above) received $94,879,
$52,003, $43,789, $34,699, respectively, and $225,370 (collectively) in 1998, in
bonus compensation pursuant to such plan for services rendered in 1997.
The Stock Option Committee and the Stock Grant Committee are made up of the
non-employee director members of the Compensation Committee. The Stock Option
Committee and Stock Grant Committee ratify and approve option and grant
recommendations, respectively, made by the Compensation Committee. In 1997, the
Compensation Committee determined the number of options to issue in accordance
with the 1988 Non-Statutory Stock Option Plan and the 1997 Non-Statutory Stock
Option Plan based upon base salaries and levels of responsibility. Also, in
1997, the Stock Grant Committee awarded a stock grant to Mr. Frank.
CEO PERFORMANCE EVALUATION
Although Mr. Frank's salary is established by the terms of his Employment
Agreement (see "Employment Agreements"), the Compensation Committee, excluding
Mr. Frank, nevertheless annually evaluates his performance based on the same
criteria as is applied to the other executive officers of the Company. Stock
option issuances, restricted stock grants to Mr. Frank, and any increase in his
annual base salary or the granting of a bonus, are based on individual and
corporate performance, applying the same factors for him as described above for
the Company's other executives. The Compensation Committee also considers the
number of unvested shares available to Mr. Frank under his current Employment
Agreement and the Stock Grant Plan at such time.
The Compensation Committee has also considered the potential impact of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), adopted
under the Omnibus Budget Reconciliation Act of 1993. This section disallows a
tax deduction for any publicly-held corporation for individual compensation to
certain executives of such corporation exceeding $1,000,000 in any taxable year,
unless compensation is performance-based. As discussed above, Mr. Frank's
annual base salary is $1,000,000. It is the intent of the Company and the
Compensation Committee to qualify to the maximum extent possible its executives'
compensation for deductibility under applicable tax laws. The Compensation
Committee will continue to monitor the impact of such limitations on tax
deductions and will take other appropriate actions if warranted in the future.
The Compensation Committee was comprised of Messrs. Frank, Neeb and Wooldridge
in 1997. The Stock Option Committee and the Stock Grant Committee were both
comprised of Messrs. Neeb and Wooldridge in 1997.
Richard M. Frank
13
<PAGE>
Louis P. Neeb
Raymond E. Wooldridge
COMPENSATION OF DIRECTORS
Non-employee directors of the Company 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. 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 continues 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.
PROPOSAL 2:
AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
The Company is currently authorized to operate under the name "ShowBiz
Pizza Time, Inc." The Company's Board of Directors has adopted and recommended
to the stockholders for adoption at the annual meeting an amendment to the
Company's Restated Articles of Incorporation that would change the name of the
Company to "CEC Entertainment, Inc." The new name will provide the Company with
the ability to more closely associate its corporate name with its business
operations and provide for any future diversification. A copy of the amended
Restated Articles of Incorporation, as proposed, are attached hereto as Exhibit
"A."
THE BOARD OF DIRECTORS HAS APPROVED THE AMENDMENT TO THE RESTATED ARTICLES
OF INCORPORATION AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ABOVE DESCRIBED
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION.
PROPOSAL 3:
AMENDMENT OF THE RESTATED ARTICLES OF INCORPORATION
TO ESTABLISH 100,000,000 AUTHORIZED SHARES OF COMMON STOCK
The Company is currently authorized to issue 50,000,000 shares of Common
Stock, 49,570 shares of Class A Preferred Stock and 500,000 shares of Class B
Preferred Stock. The Company's Board of Directors has adopted and recommended
to the stockholders for adoption at the annual meeting an amendment to the
Company's Restated Articles of Incorporation that would establish the authorized
number of shares of its Common Stock at 100,000,000 and, accordingly, the
authorized shares of all stock at 100,549,570. The additional authorized shares
of Common Stock will provide the Company with flexibility regarding its future
capital needs and corporate growth and its ability to declare stock dividends
payable in shares of Common Stock. The Board of Directors has no present
intention to issue any additional shares of stock other than as presently
authorized pursuant to the 1988 Non-Statutory Stock Option Plan, 1997
Non-Statutory Stock Option Plan, Non-Employee Directors Stock Option Plan, and
the Stock Grant Plan. Newly authorized shares may be issued on such terms and at
such times as the Board of Directors may determine without further action by the
stockholders, unless otherwise required by applicable laws or regulations. The
issuance of additional shares will (except in certain circumstances including
the declaration of stock dividends) have the effect of reducing the relative
voting power and ownership interests of existing stockholders in the Company.
Stockholders have no pre-emptive rights to subscribe for additional shares of
the Company's stock. A copy of the amended Restated Articles of Incorporation,
as proposed, are attached hereto as Exhibit "B."
14
<PAGE>
THE BOARD OF DIRECTORS HAS APPROVED THE AMENDMENT TO THE RESTATED ARTICLES
OF INCORPORATION AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ABOVE DESCRIBED
AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION.
15
<PAGE>
INDEMNIFICATION
The Bylaws of the Company provide for each director and officer of the Company
to be indemnified by the Company, as of right, to the full extent permitted or
authorized by the laws of the State of Kansas against any liability, judgment,
fine, amount paid in settlement, cost and expense asserted or threatened against
or incurred by such person in his capacity, or arising out of his status, as a
director or officer. The Company's Restated Articles of Incorporation include a
provision which eliminates director liability for monetary damages for breach of
the director's duty of due care, as permitted under Kansas law.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION;
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 1989, the Company agreed to pay to The Hallwood Group
Incorporated $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. 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. Effective March 26, 1997, the management
consulting services agreement was terminated.
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 uninterested directors of the Company.
16
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative yearly total stockholder return
(change in share price plus reinvestment of any dividends) on the Company's
Common Stock since January 3, 1989 (the date the Company's Common Stock first
traded on the NASDAQ system), versus two indexes. The graph assumes $100 was
invested on January 3, 1989. The Company has not paid any cash dividends on its
Common Stock during the applicable period. The share price of the Company's
Common Stock has been adjusted for three-for-two stock splits in the form of
stock dividends distributed on March 26, 1991, March 20, 1992 and May 22, 1996.
The Company's Common Stock is labeled on the graph as "SHBZ." The index labeled
"Restaurants," which was prepared by the Center for Research in Securities
Prices ("CRSP") at The University of Chicago, Graduate School of Business, 1101
East 58th Street, Chicago, Illinois 60637 (telephone 312-702-7467) measures the
total return (weighted for the market capitalization of the component companies)
on the approximately 144 domestic and foreign companies which operate
restaurants or other eating and drinking places (SIC Code 58) and whose equity
securities are traded on the Nasdaq National Market or the NASDAQ Small-Cap
Market. The identities of the companies included in the "Restaurant" index will
be made available in a prompt manner to any stockholder upon written request
addressed to Investor Relations at the Company's Irving address. The index
labeled "NASDAQ," also prepared by CRSP, measures the total return on the
approximately 4,000 United States companies whose common stock is traded on the
Nasdaq National Market or the NASDAQ Small-Cap Market.
<Graph>
LEGEND
<TABLE>
<CAPTION>
Symbol CRSP Total Returns Index for: 01/03/89 12/29/89 12/27/91 12/31/93 12/29/95 01/02/98
- ------ ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
ShowBiz Pizza Time, Inc. 100.0 300.0 872.7 542.0 496.0 1411.4
Nasdaq Stock Market (US Companies) 100.0 121.6 159.8 221.2 305.8 464.9
NASDAQ Stocks (SIC 5800-5899 US + 100.0 130.4 169.1 250.8 220.7 185.2
Foreign) Eating and drinking places
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the nonthly interval, based on the fiscal year-end, is not a
trading day, the preceeding trading day is used.
D. The index level for all series was set to $100.0 on 01/03/89.
17
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and the persons who own more than ten percent
of the Company's Common Stock to file initial reports of ownership of Common
Stock and reports of changes of ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. and to
furnish the Company with copies of such reports. Based on review of such copies
and other records of the Company, the Company has no reason to believe that any
reports were untimely filed or that any Form 5 filings were made by any
executive officers, directors or persons owning more than ten percent of the
Company's Common Stock.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP served as the Company's independent public
accountants for the fiscal year ending January 4, 1998. A representative of
Deloitte & Touche LLP is expected to be present and available at the Annual
Meeting of stockholders to respond to appropriate questions and will be given an
opportunity to make a statement, if desired.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the 1999 annual
meeting of stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by the Company, must
deliver such proposal to the Company at its principal executive offices, not
less than 60 days nor more than 90 days prior to the date of the applicable
annual meeting of stockholders; provided, however, that in the event that less
than 70 days' notice or prior public disclosure of the date of the meeting is
given or made, notice by the stockholder to be timely must be so received not
later than the close of business on the tenth (10th) day following the day on
which such notice of the date of the applicable annual meeting was mailed or
such public disclosure of the date of such annual meeting was made, whichever
first occurs. For purposes of this section, the date of a public disclosure
shall include, but not be limited to, the date on which such disclosure is made
in a press release reported by the Dow Jones News Services, the Associated Press
or any comparable national news service or in a document publicly filed by the
corporation with the Securities and Exchange Commission pursuant to Sections 13,
14, or 15(d) (or the rules and regulations thereunder) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
To be in proper written form, a stockholder's notice to the Secretary of the
Company must set forth (a) as to each person whom the stockholder proposes to
nominate for election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or employment of
the person, (iii) the class or series and number of shares of capital stock of
the corporation that are owned beneficially or of record by the person and (iv)
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filing required to be made in connection
with solicitations of proxies for election of directors pursuant to Section 14
of the Exchange Act and (b) as to the stockholder giving the notice (i) the name
and record address of such stockholder, (ii) the class or series and number of
shares of capital stock of the corporation that are owned beneficially or of
record by such stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholders, (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the persons
named in its notice and (v) any other information relating to such stockholder
that would be required to be disclosed in a proxy statement or other filing
required to be made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules and
regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
18
<PAGE>
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. Arrangements may also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of stock held of record by such persons, and
the Company may reimburse them for reasonable out-of-pocket expenses of such
solicitation.
By Order of the Board of Directors,
MARSHALL R. FISCO, JR.
Secretary
Irving, Texas
May 21, 1998
19
<PAGE>
EXHIBIT A
PROPOSAL 2: AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
FIRST. The name of the corporation is:
CEC Entertainment, Inc.
EXHIBIT B
PROPOSAL 3: AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION
FOURTH. The total number of shares of stock that the corporation shall
have authority to issue is One Hundred Million Five Hundred Forty-Nine Thousand
Five Hundred Seventy (100,549,570) shares, which shall be divided into three (3)
classes as follows: (i) Forty-Nine Thousand Five Hundred Seventy (49,570)
shares of Class A Preferred Stock, of the par value of Sixty Dollars ($60.00)
each (hereinafter "Preferred A Shares"); (ii) Five Hundred Thousand (500,000)
shares of Class B Preferred Stock, of the par value of One Hundred Dollars
($100.00) each (hereinafter "Preferred B Shares"); and One Hundred Million
(100,000,000) shares of Common Stock, of the par value of Ten Cents ($0.10) each
(hereinafter "Common Shares"). The designations, powers, preferences, and
rights of each class, and the qualifications, limitations, or restrictions
thereof, shall be as set forth in this ARTICLE FOURTH.
EXHIBITS
<PAGE>
SHOWBIZ PIZZA TIME, INC.
4441 West Airport Freeway
Irving, Texas 75062
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Larry G. Page and Richard T. Huston, and
each of them as proxies, with full power of substitution and revocation, and
appoints them to represent and vote, as designated on the reverse side, all of
the shares of Common Stock or Preferred Stock of ShowBiz Pizza Time, Inc. Which
the undersigned is entitled to vote at the annual meeting of stockholders of
ShowBiz Pizza Time, Inc. to be held on June 25, 1998, or at any adjournment
thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
<TABLE>
<CAPTION>
<S> <C> <C>
1. ELECTION OF DIRECTORS 2. Proposal to amend the Restated FOR AGAINST ABSTAIN
Nominees: Richard M. Frank, Articles of Incorporation to [ ] [ ] [ ]
Michael H. Magusiak, change the name of the corporation
and Walter Tyree. to CEC Entertainment, Inc.
FOR WITHHELD 3. Proposal to amend the Restated FOR AGAINST ABSTAIN
[ ] [ ] Articles of Incorporation to [ ] [ ] [ ]
establish 100,000,000 authorized
shares of Common Stock
4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign. (Please make any address corrections at left.)
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature: Date: Signature: Date:
---------------------------- ------------------ ---------------------------- --------------
</TABLE>
