Cec Entertainment Inc – ‘PRER14A’ on 4/20/95

As of:  Thursday, 4/20/95   ·   Accession #:  813920-95-4   ·   File #:  0-15782

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Revised Preliminary Proxy Solicitation Material   —   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRER14A     1995 Proxy Form                                       41    173K 

Document Table of Contents

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Amended proxy - Original did not include Letter to Stockholders or              
-------------   Notice of Annual Meeting of Stockholders                        

                SHOWBIZ PIZZA TIME, INC.
                 4441 West Airport Freeway
               Irving, Texas 75062

May 8, 1995                                                                     

Dear Stockholder:                                                               

You are cordially invited to attend the annual meeting of stockholders of the   
Company to the held at 9:00a.m. local time, Thursday, June 8, 1995, at the      
Company's Chuck E. Cheese's restaurant lcated at 7935 Grapevine Highway,        
North Richland Hills, Texas.                                                    

At the meeting you will be asked to re-elect three current directors, authorize 
an increase in the number of shares available for issuance under the Company's  
current stock option plan and adopt a new formula stock option plan for non-    
employee directors of the Company.                                              

The formal Notice of the Annual Meeting of Stockholders and Proxy Statement     
accompanying this leter 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                                            

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                          SHOWBIZ PIZZA TIME, INC.
                         4441 West Airport Freeway
                          Irving, Texas  75062

                      (214) 258-8507

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 Company's Chuck E.        
Cheese's restaurant located at 7935 Grapevine Highway, North Richland Hills     
Texas on June 8, 1995, at 9:00a.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 respective successors are elected and qualified or until
their earlier resignation or removal;                               

2.  to authorize an increase in the number of shares available for isuance  
pursuant to the Company's 1988 Non-Statutory Stock Option Plan;     

3.  to adopt a Non-Employee Directors Stock Option Plan; 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 stockholder's     
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 stockholdrs of record at the close of business on May 1, 1995 are          
entitled to notive of, and to vote at, the meeting or any adjournment thereof.  

By Order of the Board of Directors,                                             

RICHARD A. BLUNK                                                                
Secretary                                                                       

Irving, Texas                                                                   
May 8, 1995                                                                     

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              SHOWBIZ PIZZA TIME, INC.
             4441 WEST AIRPORT FREEWAY
           IRVING, TEXAS 75062
          (214) 258-8507

         PROXY STATEMENT FOR
          ANNUAL MEETING OF STOCKHOLDERS
         TO BE HELD JUNE 8, 1995

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 8, 1995 at the Company's Chuck E. Cheese's restaurant              
located at 7935 Grapevine Highway, North Richland Hills, 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 8, 1995.                                                           

   OUTSTANDING CAPITAL STOCK

The record date for stockholders entitled to notice of, and to vote             
at, the Annual Meeting is May 1, 1995.  At the close of business on             
that date, the Company had issued and outstanding and entitled to               
receive notice of and vote at the Annual Meeting 12,275,177 shares              
of Common Stock, $.10 par value (the "Common Stock"), and 49,570                
shares of Class A Preferred Stock, $60 par value (the "Preferred                
Stock").  No other class of securities of the Company is entitled               
to notice of, or to vote at, the Annual Meeting of stockholders.                

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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
            each or until their respective successors shall be
                  elected and qualified or until their earlier resignation
or removal;                           

2.         To authorize an increase in the number of shares 
                  available for issuance pursuant to the Company's current
                1988 Non-Statutory Stock Option Plan (the "1988 Option
Plan");                               

       3.         To adopt a Non-Employee Directors Stock Option Plan (the
"Formula Stock Option Plan"); and     

4.         In the discretion of the proxyholders, as to the 
                 transaction of such other business as may properly come
before the Annual Meeting.            

Where stockholders have appropriately specified how their proxies               
are to be voted, they will be voted accordingly.  If any other                  
matter or business is brought before the Annual Meeting, the                    
proxyholders may vote the proxies in their discretion.  The Board               
of Directors is not presently aware of any other matters or                     
business to be brought before the Annual Meeting.                               

 QUORUM AND VOTING

The presence, in person or by proxy, of the holders of a majority               
of the aggregate outstanding shares of Common Stock and Preferred               
Stock is necessary to constitute a quorum at the Annual Meeting.                
The affirmative vote of the holders of a majority of the                        
outstanding shares of Common Stock and Preferred Stock, voting                  
together as one class, represented in person or by proxy at the                 
Annual Meeting, is necessary to approve all matters to be submitted             
to the stockholders.  In deciding all questions, a holder is                    
entitled to one vote, in person or by proxy, for each share of                  
Common Stock or Preferred Stock held in his name on the record                  
date.  Solely with respect to the election of directors, the bylaws             
of the Company provide that a stockholder shall have that number of             
votes equal to the number of shares held by him as of the record                
date multiplied by the number of directors being elected and is                 
entitled to cumulate his votes and cast them all for any single                 
nominee or to spread his votes, so cumulated, among as many                     
nominees and in such manner as he sees fit.  Directors must be                  
elected by a plurality of the votes cast.                                       

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A stockholder who is present, in person or by proxy, and who                    
withholds his vote in the election of directors will be counted for             
purposes of determining whether a quorum exists, but the                        
withholding of his vote will not affect the election of directors.              
A stockholder who is present, in person or by proxy, and who                    
abstains from voting on other proposals, will be counted for                    
purposes of a quorum, and the abstention will have the same effect              
as a vote against the proposals.  Brokers' "non-votes" are treated              
the same as votes withheld or abstained.                                        

REVOCABILITY OF PROXIES 

Any person giving a proxy pursuant to this solicitation has the                 
power to revoke it at any time before it is voted at the Annual                 
Meeting.  It may be revoked by filing with the Secretary of the                 
Company, Richard A. Blunk, 4441 W. Airport Freeway, Irving, Texas               
75062, a written notice of revocation or duly executed proxy                    
bearing a later date, or it may be revoked by attending the Annual              
Meeting and voting in person.  Attendance at the Annual Meeting                 
will not, by itself, revoke a proxy.                                            

PRINCIPAL HOLDERS OF CAPITAL STOCK

The table on the following page sets forth information, as of                   
May 1, 1995, relating to the beneficial ownership of the Company's              
Common Stock and Preferred Stock by: (i) each director and Named                
Executive Officer (as hereinafter defined) of the Company as of                 
such date, (ii) the directors and the Named 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, 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 Named Executive Officers of the Company has been                  
furnished by the respective directors and Named Executive Officers.             

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                                                                [Download Table]
                         Percentage of Class Outstanding                      
                         -------------------------------                      

                                                                              
                                            Number of                         
Name (and address                           Shares of                         
    for 5%               Number of Shares   Preferred   Common     Preferred  
beneficial owners)       of Common Stock      Stock      Stock       Stock    
------------------       ----------------   ---------   --------   -----------
Charles A. Crocco, Jr.      1,930  (A)(B)       0         (C)         0.0%    

Richard M. Frank          690,024  (D)          0         5.6%        0.0%    

Anthony J. Gumbiner             0  (A)(E)(F)    0         (C)         0.0%    

Richard T. Huston          33,612  (G)          0         (C)         0.0%    

Robert L. Lynch               613  (A)(B)       0         (C)         0.0%    

Michael H. Magusiak        42,177  (H)          0         (C)         0.0%    

Louis P. Neeb                   0  (B)          0         (C)         0.0%    

Cynthia I. Pharr                0  (B)          0         (C)         0.0%    

J. Thomas Talbot            7,500  (A)(B)       0         (C)         0.0%    

Brian M. Troup                  0  (A)(E)(I)    0         (C)         0.0%    

Directors and Executive                                                       
Officers as a Group       775,856               0        6.3%         0.0%    

The Hallwood Group      1,784,193  (J)          0       14.5%         0.0%    
  Incorporated                                                                
3710 Rawlins, Suite 1500                                                      
Dallas, TX 75219                                                              

Massachusetts Financial                                                       
 Services Company      1,144,900   (K)          0        9.3%         0.0%    
500 Boylston Street                                                           
Boston, MA 02116-0741                                                         

Snyder Capital         1,173,200   (L)          0        9.6%        0.0%     
  Management, Inc.                                                            
350 California Street                                                         
Suite 1460                                                                    
San Francisco, CA 94104                                                       

Legg Mason, Inc.        763,400   (M)           0         6.2%        0.0%    
111 South Calvert Street                                                      
Baltimore, MD 21203-1476                                                      

Time Warner, Inc.             0            16,011(N)      0.0%       32.3%    
75 Rockefeller Plaza                                                          
New York, NY 10019                                                            

River Forest State Bank &   22              3,139(O)      0.0%        6.3%    
  Trust Co.                                                                   
7727 West Lake Street                                                         
River Forest, IL 6030                                                         

(Footnotes appear on the following page)                                      


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__________________                                                              

(A)       Excludes shares owned of record by The Hallwood Group, Inc.           
("Hallwood"), described in Footnote J.                      

(B)       Excludes 7,500 shares purchasable pursuant to options issued          
under the Company's 1988 Option Plan, which options vest in 
 equal annual increments of 2,500 shares on each of August 19,
1995, August 19, 1996 and August 19, 1997.                  

(C)       Constitutes less than 1% of the Company's outstanding Common          
Stock.                                                      

(D)       Includes 172,983 shares which are subject to forfeiture               
  pursuant to the terms of Mr. Frank's employment agreement. See
"Employment Agreements."                                    

(E)       Excludes 200,144 shares pledged to IBJ Schroder Bank & Trust          
  Company, as trustee under an indenture as collateral for bonds
issued by Hallwood Holdings SA, a Luxembourg corporation    
("HHSA").  HHSA previously owned certain warrants issued by 
the Company which entitled HHSA to purchase such shares, but
 HHSA distributed such warrants to its shareholders as part of
a reduction of capital and premium in July 1993.  HHSA no   
longer claims any beneficial interest in the shares, but the
 shares remain pledged as collateral for bonds issued by HHSA.
  Mr. Gumbiner is a director of HHSA.  Mr. Gumbiner's address is
c/o The Hallwood Group Incorporated, 3710 Rawlins Street,   
Suite 1500, Dallas, Texas  75219.  Mr. Troup is also a      
director of HHSA.  Mr. Troup's address is c/o The Hallwood  
Group Incorporated, 3710 Rawlins Street, Suite 1500, Dallas,
 Texas  75219.  This note is based on information in Amendment
No. 3 to Schedule 13D of HHSA dated July 5, 1993.           

(F)       Excludes 496,382 shares held by a trust for which Mr. Gumbiner        
       has the power to designate and replace the trustees, 120,086 shares
of which are included in Footnote (E).                      

(G)       Includes 15,000 shares purchasable pursuant to options issued         
under the 1988 Option Plan but excludes 60,000 shares       
purchasable pursuant to options issued under the 1988 Option
Plan which are not exercisable within 60 days of the date   
hereof.                                                     

(H)       Includes 15,000 shares purchasable pursuant to options issued         
under the 1988 Option Plan but excludes 90,000 shares       
purchasable pursuant to options issued under the 1988 Option
Plan which are not exercisable within 60 days of the date   
hereof.                                                     

(I)       Excludes 330,922 shares held by a trust for which Mr. Troup           
      has the power to designate and replace the trustees, 80,058 shares
of which are included in Footnote (E).                      

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(J)       Based on information in Amendment No. 8 to Schedule 13D dated         
June 3, 1994.  The directors of Hallwood are Anthony J.     
Gumbiner, Brian M. Troup, Charles A. Crocco, Jr., Robert L. 
Lynch and J. Thomas Talbot.  Mr. Gumbiner is Chairman of the
Board and Chief Executive Officer of Hallwood.  Mr. Troup is
President and Chief Operating Officer of Hallwood.  The     
  Company has also been informed that such shares are pledged as
collateral to secure certain obligations of Hallwood.       

(K)       Based on information in Amendment No. 1 to Schedule 13G dated         
February 6, 1995.  This number includes 750,000 shares      
beneficially owned by MFS Series Trust II - MFS Emerging    
Growth Fund.                                                

(L)       Based on information in Amendment No. 1 to Schedule 13D               
 received August 3, 1994.  Of its total shares, Snyder Capital
  Management, Inc. has shared voting power over 1,019,500 shares
and shared dispositive power over 1,173,200 shares.  This   
number also includes 117,000 shares owned by Stirling       
Partners, of which Snyder Capital Management, Inc. is the   
general partner.                                            

(M)       Based on information in Schedule 13G received February 13,            
 1995.  These shares are held by Legg Mason Special Investment
Trust, Inc., a subsidiary of Legg Mason, Inc.               

(N)       Based on information in Amendment No. 2 to Schedule 13D dated         
July 1, 1994.  Of its total shares, Time Warner, Inc. has   
 shared voting power over 16,011 shares and shared dispositive
power over 16,011 shares.                                   

(O)       Based on records of stock transfer agent.                             

           PROPOSAL 1:
              RE-ELECTION OF CLASS I DIRECTORS

The terms of the three Class I directors expire at the Annual                   
Meeting of the stockholders in 1995.  The Board of Directors has                
nominated for re-election at the Annual Meeting all three incumbent             
Class I directors, each to serve for a term of three years.  Each               
nominee of the Board of Directors has expressed his 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 one of 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 1, 1995) of             
the three director nominees and the six directors whose terms of                
office will continue after the Annual Meeting, the year in which                
each director was first elected as a director of the Company, the               
class to which each director has been or will be elected, and the               
Annual Meeting at which the term of each director will expire.                  

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                                                                [Download Table]

                                                                            
                                   Director                         Term    
Nominee Directors          Age      Since          Class            Expires 
-----------------          ---    ---------       ------           ---------

Richard M. Frank            47       1985            I                1995  
Anthony J. Gumbiner         50       1988            I                1995  
Michael H. Magusiak         39       1988            I                1995  

Continuing                                                                  
Directors                                                                   
-----------                                                                 

Charles A.Crocco,Jr.       56        1988            II               1996  
Robert L. Lynch            77        1988            II               1996  
Cynthia I. Pharr           46        1994            II               1996  
J. Thomas Talbot           59        1988           III               1997  
Brian M. Troup             48        1988           III               1997  
Louis P. Neeb              56        1994           III               1997  


THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF              
THE NAMED NOMINEES.                                                             

ADDITIONAL INFORMATION ABOUT THE EXECUTIVE OFFICERS, BOARD OF                   
DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS                              

EXECUTIVE OFFICERS    
-------------------   

The following table sets forth the names and certain other                      
information regarding the executive officers of the Company as of               
May 1, 1995.                                                                    
                                                  Year First Elected
Name                     Age     Position               as Executive Officer    
------                   ---     --------              ---------------------    

Richard M. Frank         47    Chairman of the Board                            
 and Chief Executive
                  Officer                         1985

Michael H. Magusiak      39    President                       1988             

Richard T. Huston        49    Executive Vice                                   
President--       
Marketing and     
                  Entertainment                   1986

Larry G. Page            51    Executive Vice                                   
President, Chief  
Financial Officer 
                   and Treasurer                    1994

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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.                                                                

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.                                                

RICHARD T. HUSTON has served as Executive Vice President of the                 
Company since July 1986 and as Director of Marketing and Strategic              
Development since January 1993.  His responsibilities were expanded             
in June, 1994 to include entertainment as well as marketing.  He                
served as Director of Marketing and Development from October 1988               
to January 1993.  He served as Vice President from October 1985 to              
July 1986, as Director of Marketing from October 1985 to October                
1988, and as a director from July 1986 to September 1988.  He                   
joined the Company in 1985.                                                     

LARRY G. PAGE has served as Executive Vice President, Chief                     
Financial Officer and Treasurer of the Company since October 1994.              
Prior to joining the Company, Mr. Page served as Vice President and             
Regional General Manager in the retail services division of Comdata             
Holdings Corporation, a publicly-held financial services company,               
from July 1985 to October 1994.   Mr. Page is a Certified Public                
Accountant and was a partner in various national and regional                   
public accounting firms, including Arthur Andersen LLP, from August             
1978 through July 1985.                                                         

CHARLES A. CROCCO, JR. was appointed 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 merchant bank and diversified holding company, since                
1981; and as a director of BancTEXAS Group, Inc., a publicly-held               
bank holding company, since April 1988.                                         

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ANTHONY J. GUMBINER was elected as a director of the Company in                 
September 1988.  He has served as a director and Chairman of the                
Board of Hallwood since 1981 and as Chief Executive Officer of                  
Hallwood since 1984; as Chairman of Hallwood Holdings S.A., a real              
estate investment company, since March 1984; as a director of                   
Hallwood Energy Corporation, a publicly-held oil and gas company                
that is the general partner of Hallwood Energy Partners L.P., since             
May 1984 and as Chairman of the Board and Chief Executive Officer               
since February 1987; as a director and Chairman of the Board of                 
Hallwood Realty Corporation, which is the general partner of                    
Hallwood Realty Partners L.P., a publicly traded master limited                 
partnership, since 1990;  and as a director of Hallwood                         
Consolidated Resources Corporation, a oil and gas company, since                
May 1992.   He is a Solicitor of the Supreme Court of Judicature of             
England.                                                                        

ROBERT L. LYNCH was elected as a director of the Company in                     
September 1988.  He has served as a director and Vice Chairman of               
Hallwood since May 1984.  He is Chairman of the Board and Chief                 
Executive Officer of Perpetual Storage, Inc. and has served as a                
director of that company since 1969.                                            

LOUIS P. NEEB was elected as a director in August 1994.  From                   
August 1982 to present, Mr. Neeb has been President of Neeb                     
Enterprises, Inc., a management consulting firm specializing in                 
restaurants.  From October 1993 through January 1994, he was                    
Chairman of the Board of Spaghetti Warehouse, Inc., a                           
publicly-traded restaurant company.  From July 1991 through January             
1994, Mr. Neeb was President and Chief Executive Officer of                     
Spaghetti Warehouse, Inc.  From September 1989 through June 1991,               
Mr. Neeb was President and Chief Executive Officer of GEEST USA                 
(and its affiliates), a refrigerated food business.  Mr. Neeb has               
also had other extensive experience in the restaurant industry                  
including serving as Chairman of the Board of Burger King                       
Corporation.  Mr. Neeb was instrumental in the development of                   
Applebee's Neighborhood Grill and Bar as well as Bennigan's.  Mr.               
Neeb has also been a member of the Board of Directors of the                    
Franchise Finance Corporation of America, a publicly-traded real                
estate trust which provides real estate for restaurants, since                  
August 1994.                                                                    

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.                                                                        

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J. THOMAS TALBOT was elected as a director of the Company in                    
September 1988.  He served as Chairman of the Board and Chief                   
Executive Officer of HAL, Inc., Hawaiian Airlines, and West Maui                
Airport from August 1989 until July 1991.  Mr. Talbot founded Jet               
America Airlines, Inc., a commercial airline company, and served as             
its Chairman from December 1980 until October 1986.  He also has                
been owner of The Talbot Company, a sole proprietorship, since                  
1982; a partner of Shaw and Talbot, a commercial real estate                    
investment and development company, since April 1975; and a partner             
of Pacific Management Group, an asset management firm, since                    
December 1986.  Mr. Talbot has served as a director of Hallwood                 
since 1984; as a director of Alliance Bancorporation, a bank                    
holding company, since April 1988 and as Chairman and Chief                     
Executive Officer of Alliance Bancorporation from August 1992 until             
February 1994; as a director of Fidelity National Financial since               
April 1991; and as a director of Resort Income Investors from June              
1992 until October 1993; as a Director of The Baldwin Company and               
the Koll Real Estate Group, Inc. since June 1993 and as a Director              
of Hemmeter Enterprises, Inc. since October 1993.                               

BRIAN M. TROUP was elected as a director of the Company in                      
September 1988.  He has served as a director of Hallwood since 1981             
and as President and Chief Operating Officer of Hallwood since                  
April 1986; as a director of Hallwood Holdings S.A. since March                 
1984; as a director of Hallwood Energy Corporation since May 1984;              
as a director of Hallwood Realty Corporation since 1990 and as a                
director of Hallwood Consolidated Resources Corporation since May               
1992.  He is an associate of the Institute of Bankers in Scotland               
and a member of the Society of Investment Analysts in the United                
Kingdom.                                                                        

Except as set forth above, none of the directors of the Company                 
hold directorships in any company with a class of securities                    
registered pursuant to Section 12 of the Securities Exchange Act of             
1934 (the "Exchange Act") or subject to the requirements of Section             
15(d) of the Exchange Act or any company registered as an                       
investment company under the Investment Company Act of 1940.                    

     COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

Four meetings of the Board of Directors were held during 1994.                  
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 1994.                                                                

The Board of Directors has established an Executive Committee of                
four members to assist the Board of Directors in carrying out its               
duties.  The Executive Committee (comprised of Messrs.  Frank,                  
Gumbiner, Magusiak and Troup) acts in the place of the Board of                 
Directors when the Board of Directors is not in session and may                 
exercise substantially all of the powers of the Board of Directors              
other than those powers specifically required by law or by the                  

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Company's Bylaws to be exercised by the full Board of Directors.                
The Executive Committee held informal meetings in person or by                  
telephone on an irregular basis in 1994.                                        

The Board of Directors has also established an Audit Committee of               
three members.  The Audit Committee is comprised of Messrs. Crocco,             
Talbot and Troup.  The functions performed by the Audit Committee               
are: (i) consideration of the Company's system of internal                      
controls, (ii) review of the performance and findings of the                    
Company's Internal Audit Department and (iii) review of services                
provided by the Company's independent auditors.  The Audit                      
Committee met four times in 1994.                                               

The Board of Directors has established a Compensation Committee of              
three members.  The Compensation Committee is comprised of Messrs.              
Frank, Gumbiner and Troup.  The functions performed by the                      
Compensation Committee are the: (i) recommendation of compensation,             
including performance bonuses, payable to the Company's executive               
officers (excluding Mr. Frank), and (ii) recommendation of                      
performance bonuses for other employees of the Company.  The                    
Compensation Committee met on one occasion in 1994.                             

In March 1992, the Board of Directors established a Stock Option                
Committee and a Stock Grant Committee, each comprised of Messrs.                
Gumbiner and Troup, to administer the 1988 Option Plan and the                  
Company's Stock Grant Plan, respectively.  These committees took                
actions by various unanimous written consents in 1994.                          

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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 January 1, 1993, December 31, 1993, and              
December 30, 1994 (designated herein as fiscal years 1992, 1993 and             
1994, respectively.)                                                            

                                                                [Download Table]
                                                        Long Term           
                  Annual Compensation               Compensation Awards     
                 ----------------------            ----------------------   
                                                                            
                                                       Restricted           
Name (and                       Other Annual             Stock              
Principal     Fiscal            Compensation             Awards   Options   
Position)     Year     Salary($)    ($)(A)     Bonus($)  ($)(B)     (#)     
----------    -------  ---------  ------------ -------  --------  --------  

Richard M.                                                                  
Frank           1994   1,000,000     25,005       --        --         --   
(Chief                                                                      
Executive       1993     987,692     24,791       --     11,823,841    --   
Officer)        1992     360,000     21,441   2,978,516     --         --   

Richard T.      1994     145,000     12,602       --        --        60,000
Huston          1993     144,827     12,016       --        --        10,000
(Executive Vice 1992     139,808     11,933      69,648     --        15,000
President)                                                                  

Michael H.      1994     193,096     12,467        --        --       90,000
Magusiak        1993     144,827     11,676        --        --       10,000
(President)     1992     139,423     11,564      50,839      --       15,000

Larry G.                                                                    
Page(B)         1994     31,240      11,578        --                 15,000
                1993       --           --         --                   --  
                1992       --           --         --                   --  

John T.         1994    250,000      21,644        --        --       60,000
Spaight(C)      1993    250,000      17,676        --        --       10,000
(Executive Vice 1992    248,077      16,908     115,357      --       15,000
President)                                                                  


______________                                                                  

(A)    Includes car allowance of $15,600 per year for Mr. Frank and $9,000 per  
      year for Messrs. Huston, Magusiak, Page and Spaight.  Relocation expense
of $9,293 is included for Mr. Page in 1994.                       

(B)    Dollar values are calculated as the closing market price of Common Stock 
   on the date of grant minus par value of $.10 per share payable by the
recipient multiplied by the number of shares of restricted stock  
 awarded.  All such stock is awarded under the Company's Stock Grant
    Plan.  The aggregate value of such restricted shares held by Mr. Frank
 on December 30, 1994 (based on 248,708 shares at a closing price of
    $7.765) is $1,906,347.  Dividends are payable on such restricted stock
 on the same terms as on other shares of the Company's Common Stock.

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(C)    The amount indicated is Mr Page's actual salary received during fiscal   
   1994 which is less than his annualized salary of $127,000 because his
employment with the Company did not commence until October 1994.  

(D)    Mr. Spaight was President of the Company until June 1994 at which time   
    he became Executive Vice President - Operations.  Mr. Spaight resigned
his position with the Company in January 1995.                    

             EMPLOYMENT AGREEMENTS

Each of Messrs. Frank and Magusiak has entered into an employment agreement     
(individually, an "Employment Agreement" and together, the "Employment          
Agreements") with the Company, both of which expire on December 31, 1997.       
Mr. Frank's Employment Agreement provides that he is to be paid a base annual   
salary of $1,000,000 per year, with such additional benefits and/or             
compensation as may be determined by the Board of Directors.  Pursuant to his   
Employment Agreement, Mr. Frank was issued 414,508 restricted shares of the     
Company's Common Stock in April 1993 under the Stock Grant Plan, of which       
20,725 shares would vest at the end of each fiscal quarter of the Company       
during the term of his Employment Agreement, other than the last of such        
fiscal quarters at the end of which 20,733 shares vest.  As of May 1, 1995,     
181,525 of such shares have vested.  Effective March 31, 1995, Mr. Frank        
forfeited 60,000 of the unvested restricted shares previously awarded to him,   
which forfeiture is applied in equal annual increments of 20,000 shares,        
applied quarterly to the shares otherwise scheduled to vest for that            
particular quarter.  Mr. Magusiak's Employment Agreement originally provided    
for an annual base salary of $145,000, which amount may be increased in such    
amounts and on such dates as the Compensation Committee of the Board of         
Directors may determine.  In January 1994, Mr. Magusiak's annual base salary    
was increased to $175,000.  In September 1994, Mr. Magusiak's annual base       
salary was increased to $240,000.  In addition, the Board of Directors, in      
its sole discretion, may provide other compensation and/or benefits to          
Messrs. Frank and Magusiak.                                                     

Under the terms of the respective Employment Agreements, if the covered         
executive's employment with the Company is terminated by the Company (other     
than as a result of "permanent disability" (as defined in the Employment        
Agreement) or, in the case of Mr. Magusiak, upon his death or for "Cause" (as   
defined in his Employment Agreement")), Mr. Frank will be entitled to receive   
a severance amount equal to $3,000,000 and Mr. Magusiak will be entitled        
receive a severance amount equal to twice his then current annual base salary   
(together, the "Severance Amounts").  In the event Mr. Magusiak is terminated   
for Cause, he shall receive his base salary through the date on which the       
Board of Directors takes its action to terminate him.  In the event of his      
death, Mr. Magusiak shall be entitled to receive his base salary through the    
date of his death.                                                              

The Employment Agreements also provide that each of Messrs. Frank and           
Magusiak will receive their respective Severance Amount in the event there is   
a Change of Control (as defined below)  of the Company and the covered          
executive voluntarily terminates his employment within one year after such a    
Change of Control.  A "Change of Control" is deemed to have occurred with       
respect to the Company if: (i) any person or group of persons acting in         
concert (other than Hallwood) or its affiliates in which the covered            

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executive is not an investor, partner, officer, director or member shall        
acquire, directly or indirectly, the power to vote, or direct the voting of,    
more than 33% of the then outstanding voting securities of the Company or       
(ii) during any consecutive 18 month period a majority of the Board of          
Directors is elected or appointed  and consists of persons who were not         
directors of the Company as of the date of the respective Employment            
Agreement and whose election or appointment as directors of the Company is      
actively opposed by the covered executive.                                      

OPTION GRANTS IN LAST FISCAL YEAR     

The following table sets forth information regarding stock options              
granted to each of the Named Executive Officers in the fiscal year              
ended December 30, 1994.                                                        

                                                                [Download Table]
                                                 Potential Realizable Value at 
                                                    Assumed Annual Rates of    
         Number of         % of Total             Stock Price Appreciation     
         Securities         Options                    for Option Term         
         Underlying        Granted to              --------------------------  
        Options Granted    Employees in   Exercise                             
                                           Price     Expiration                
             (#)           Fiscal Year    (Share)      Date      5%     10%    
       ----------------  --------------  -----------  -------   ----    ----   
                                                                               

Richard                                                                        
 M. Frank     --               --             --         --      --     --     

Richard T.  60,000 (A)        16.8%           (A)       (A)    186,624  410,228
  Houston                                                                      

Michael H.  60,000 (B)        16.8%           (B)       (B)    190,165  418,237
  Magusiak  30,000 (C)         8.4%          8.13     8-18-99   67,385  148,903

Larry G.    15,000(D)          4.2%          7.94     10-3-99   32,905   72,712
  Page                                                                         

John T.     60,000            16.8%           (E)       (E)        --      --  
  Spaight(E)                                                                   


____________________                                                            

(A)    Options to acquire 39,000 of such shares at an exercise price of         
$13.75 per share, which options expire on January 11, 1999, are   
exercisable as follows:  (i) 40% on January 11, 1996, (ii) 30%    
on January 11, 1997 and (iii) 30% on January 11, 1998 and options 
to acquire the remaining 21,000 shares which expire on January 4, 
   2000, were repriced in 1995 with an exercise price of $8.50 per share
 and a vesting schedule of:  (i) 50% on January 6, 1997 and (ii) 50%
     on January 6, 1998.  See "Ten-Year Option Repricings" and "Compensation
Committee Report on Executive Compensation."                      

(B)    Options to acquire 40,800 of such shares at an exercise price of $13.75  
  per share, which options expire on January 11, 1999, are exercisable
    as follows:  (i) 40% on January 11, 1996, (ii) 30% on January 11, 1997
    and (iii) 30% on January 11, 1998 and options to acquire the remaining
    19,200 shares, which options expire on Janaury 4, 2000, were repreiced
      in 1995 with an exercise price of $8.50 per share and a vesting schedule
   of:  (i) 50% on January 6, 1997 and (ii) 50% on January 6, 1998.  See
"Ten-Year Option Repricings" and "Compensation Committee Report on
Executive Compensation."                                          

(C)    Options to acquire these shares become exercisable on August 19, 1996.   

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(D)    Options to acquire these shares are exercisable as follows: (i)  50% on  
   October 4, 1996, (ii) 25% on October 4, 1997 and (iii) 25% on October
4, 1998.                                                          

(E)    Mr. Spaight resigned from his position with the Company in January 1995  
and, as a result, all of his options were cancelled.              

            TEN YEAR OPTION REPRICINGS

The following table sets forth information regarding the repricing of stock     
options during the last ten completed fiscal years.                             

                                                                [Download Table]
                                                                             
                                                                    Length   
                       Number of     Market                       of original
                       securities   price of   Exercise          option term 
                      underlying    stock at     price     New     remaining 
                        options     time of    at time   exercise  at date of
Name           Date    repriced     repricing repricing    price   repricing 
-----          -----   --------     --------  ---------    -----   ----------
Richard T.                                                                   
Huston         1/11/94  10,000(A)    $13.75    $33.50    $13.75    4 years   

Michael H.                                                                   
Magusiak       1/11/94  10,000(A)    $13.75    $33.50    $13.75    4 years   

John T.                                                                      
Spaight        1/11/94  10,000(A)    $13.75    $33.50    $13.75    4 years   


----------------                                                                

(A)  These options were forfeited in connection with the granting on January    
11, 1994 of options to acquire 60,000 shares of Common Stock at an exercise     
price of $13.75 per share.                                                      

     AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
   AND FISCAL YEAR-END OPTION VALUES

The following table sets forth, for each of the Named Executive Officers,       
information regarding his exercise of stock options during the fiscal year      
ended December 30, 1994 and the value of his unexercised stock options as of    
December 30, 1994.  The closing price for the Company's Common Stock, as        
reported by the Nasdaq National Market, on December 30, 1994 (the last          
trading day of the fiscal year) was $7.675.                                     

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                                                                [Download Table]
                                                                             
                                          Number of            Value of      
                                         Unexercised       Unexercised In-The
               Shares                     Options at        Money Options at 
              Acquired                  Dec. 30, 1994         Dec. 30, 1994  
                on                      (exercisable/         (exercisable/  
              Exercise        Value     unexercisable)         unexercisable 
               (#)          Realized(D)      (#)                   ($)       
           -----------      ----------   --------------       -------------- 

Richard M.                                                                   
 Frank (A)     --               --            0                    --        

Richard T.                                                                   
 Huston      16,875         $110,194        15,000(E)              0(E)      
                                            60,000(U)(B)           0(U)      

Michael H.                                                                   
Magusiak     18,000         $124,172        15,000(E)              0(E)      
                                            90,000(U)(B)           0(U)      

Larry G.                                                                     
Page          --               --                0(E)              0(E)      
                                            15,000(U)(B)           0(U)      

John T.                                                                      
Spaight (C)   --               --           15,000(E)(C)           0(E)      
                                            60,000(U)(B)(C)        0(U)      

__________________                                                              

(A)   Does not include shares issued under the Stock Grant Plan.  See "Summary  
Compensation Table."                                                

(B)   See "Option Grants in Last Fiscal Year" table.                            

(C)   Mr. Spaight resigned from his position with the Company in January 1995   
 and all such options were cancelled pursuant to the 1988 Option Plan.

(D)   Calculated as the closing price of common stock on the date of exercise   
  (minus the exercise price) multiplied by the number of shares acquired
on exercise.                                                        

(E)   Options which are exercisable within 60 days of the date hereof.          

(U)   Options which are not exercisable within 60 days of the date hereof.      

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION     

The executive compensation program of the Company is designed as a tool to      
reinforce the Company's strategic principles--to be a premier and progressive   
growth company, with an objective of enhancing long-term shareholder value.     
To this end, the following principles have guided the development of the        
executive compensation program:                                                 

*    Provide competitive levels of compensation to attract and retain the best  
   qualified executive talent.  The Compensation Committee strongly believes
that the caliber of the Company's management group makes a significant
difference in the Company's success over the long-term.               

*    Embrace a "pay-for-performance" philosophy by placing significant amounts  
of compensation "at risk"-- that is, a significant component of the   
compensation payouts to executives must vary according to the overall 
performance of the Company.                                           

*    Directly link executives' interests with those of shareholders by providing
opportunities for long-term incentive compensation based on changes in
shareholder value.                                                    

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The executive compensation program is intended to appropriately balance the     
Company's short-term operating goals with its long-term strategy through a      
careful mix of base salary, annual bonuses (payable upon satisfaction by the    
Company of established revenue and profitability objectives) and long-term      
performance compensation through the issuance of stock options under the 1988   
Option Plan.                                                                    

The compensation of the executive officers of the Company (excluding Mr.        
Frank) is reviewed and determined annually by the Compensation Committee.       
The compensation of such executive officers in 1994 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 officer's salary.  Corporate performance is     
reflected in a bonus, payable annually if earned, to each officer, based on     
the achievement of targets for corporate revenue and profitability.  Although   
no bonus compensation was actually paid to executive officers for services      
rendered in 1994, bonus compensation of each of the executive officers in       
1994 would have been between 22% and 47.5% of the officer's salary at the       
1994 target levels for revenue and profitability.                               

The Stock Grant Committee and the Stock Option Committee are made up of the     
non-employee director members of the Compensation Committee.  The Stock Grant   
Committee and Stock Option Committee ratify and approve option and grants       
recommendations, respectively, made by the Compensation Committee.  No stock    
grants were awarded in 1994.  However, the Compensation Committee determined    
the number of options to issue in accordance with the 1988 Option Plan based    
upon base salary and levels of responsibility.                                  

In January, 1994, the Stock Option Committee issued to certain of the           
executive officers of the Company options to acquire 180,000 shares of the      
Common Stock (each with an exercise price of $13.75 per share) in connection    
with the surrender by such individuals to the Company of previously granted     
options to acquire 30,000 shares of the Common Stock (each with an exercise     
price of $33.50 per share).  The issuance of these new options was determined   
to be in the best interests of the shareholders of the Company in order to      
properly incentivize such individuals to enhance shareholder value.             

CEO Performance Evaluation                                                      

Although Mr. Frank's salary is established by the terms of his Employment       
Agreement (see "Employment Agreements"), the Compensation Committee,            
excluding Mr. Frank, nevertheless annually evaluates his performance based on   
the same criteria as are applied to the other executive officers of the         
Company.  Any future stock option issuances or restricted stock grants to Mr.   
Frank, and any increase in his annual base salary or the granting of a bonus,   
will be based on individual and corporate performance, applying similar         
factors for each as described above for the Company's other executives.  The    
Compensation Committee would also consider the number of unvested shares        
available to Mr. Frank under his employment agreement and the Stock Grant       
Plan at such time.                                                              

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The Compensation Committee has also considered the potential impact of          
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),   
adopted under the Omnibus Budget Reconciliation Act of 1993.  This section      
disallows a tax deduction for any publicly-held corporation for individual      
compensation to certain executives of such corporation exceeding $1,000,000     
in any taxable year, unless compensation is performance-based.  As discussed    
above, Mr. Frank's annual base salary is $1,000,000.  It is the intent of the   
Company and the Compensation Committee to qualify to the maximum extent         
possible its executives' compensation for deductibility under applicable tax    
laws.  The Compensation Committee will continue to monitor the impact of such   
limitations on tax deductions and will take other appropriate actions if        
warranted in the future.                                                        

The Compensation Committee is comprised of Messrs. Frank, Gumbiner and Troup.   
The Stock Option Committee and the Stock Grant Committee are both comprised     
of Messrs. Gumbiner and Troup.                                                  

Richard M. Frank                      
Anthony J. Gumbiner                   
Brian M. Troup                        

COMPENSATION OF DIRECTORS           

Ms. Pharr and Messrs. Crocco, Lynch, Neeb and Talbot, who are not otherwise     
employed by the Company or by Hallwood or its affiliates, receive a retainer    
from the Company at the rate of $10,000 per year plus $750 for each meeting     
of the Board of Directors attended.  Other directors, who are either officers   
or employees of the Company are employed by Hallwood or its affiliates, do      
not receive separate compensation for their services as directors of the        
Company.                                                                        

PROPOSAL 2:           
INCREASE IN NUMBER OF SHARES AVAILABLE        
UNDER 1988 OPTION PLAN            

The 1988 Option Plan became effective in December 1988.  The purpose of the     
1988 Option Plan is to secure for the Company and its stockholders the          
benefits of the incentive inherent in stock ownership by certain directors      
and key employees of the Company and its subsidiaries.  The 1988 Option Plan    
is currently administered by the Stock Option Committee, which is comprised     
of Messrs. Gumbiner and Troup, who are not employed by the Company and who      
are ineligible to receive options under the 1988 Option Plan.  The Stock        
Option Committee has the power to determine, in its discretion but subject to   
the limitations set forth in the 1988 Option Plan, the persons to whom          
options are granted, the number of shares covered by options and the exercise   
price of options.  The Stock Option Committee also determines the conditions,   
if any, imposed upon the granting of options under the 1988 Option Plan.  To    
date, the Stock Option Committee has issued options under the 1988 Option       
Plan to eligible directors (who are not members of the Stock Option             
Committee) and eligible employees in correlation with their respective          
responsibilities to the Company.  However see "Proposal 3:  Addition of         
Formula Stock Option Plan."  The periods over which ownership of such options   
vest in the optionees is based on the period over which the Stock Option        
Committee deems such incremental vesting of ownership appropriate in order to   
support the Company's long term strategic plans.                                

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In March 1993, the Stock Option Committee adopted, subject to stockholder       
approval, a proposal to increase the number of shares available for grant       
under the 1988 Option Plan from 1,098,025 to 1,348,025.  This amendment was     
approved by the stockholders in June                                            
1993.                                                                           

As a result, the aggregate number of shares of the Common Stock which may be    
issued pursuant to options granted under the 1988 Option Plan currently may     
not exceed 1,348,025.  Options granted under the 1988 Option Plan which         
expire or terminate without being exercised may be regranted prior to           
termination of the 1988 Option Plan.  The exercise price for an option          
granted under the 1988 Option Plan may be not less than the fair market value   
of the Common Stock as of the date of the grant.  Options granted pursuant to   
the 1988 Option Plan are exercisable no later than five years after the date    
of the grant.                                                                   

The 1988 Option Plan terminates on December 31, 1998, and no option may be      
granted after such date pursuant to the 1988 Option Plan.  Options granted      
under the 1988 Option Plan may not be exercised to any extent until the         
optionee has been continuously employed by the Company or a subsidiary for a    
period of at least one year after the date of grant.  Payment for shares        
purchased pursuant to an option must be made at the time of exercise either     
in cash or in other shares of the Common Stock.                                 

Options granted pursuant to the 1988 Option Plan may not be transferred,        
except upon death or pursuant to a qualified domestic relations order, and      
may only be exercised by the optionee, or, in the event of his death, by his    
heirs or estate.  If an optionee who has been employed for more than one year   
ceases to be employed by the Company or its subsidiaries through termination    
or resignation, the optionee may exercise his option within ten business days   
following such termination or resignation, after which period of time any       
unexercised option terminates.  Even though an optionee has not been employed   
for one year, upon his death, the option may be exercised by the optionee's     
heirs or estate within three months following the optionee's death, after       
which period of time any unexercised option terminates.                         

The Stock Option Committee may amend, modify or terminate the 1988 Option       
Plan, including modification or waiver of terms as they may apply to            
individual optionees.  In August 1994, the Stock Option Committee amended the   
1988 Option Plan to address certain technical issues affecting, among other     
things, the 1988 Option Plan's compliance with the provisions of Rule 16b-3     
promulgated under the Exchange Act.  A copy of the 1988 Option Plan, as         
amended, is attached hereto as Exhibit "A."  No amendment, modification or      
termination of the 1988 Option Plan may adversely affect the rights of any      
optionee under any then outstanding option contract without the consent of      
the optionee.  The 1988 Option Plan provides for automatic adjustment to        
prevent dilution or enlargement of the optionees' rights in the event of a      
stock split, stock dividend or similar transaction.                             

Under the Code, the holder of an option granted under the 1988 Option Plan      
will realize no taxable income upon the receipt of the option but will          
realize compensation upon the exercise of such option, taxable as ordinary      
income to the extent that the fair market value on the date of exercise         
exceeds the option price.  The Company is entitled to a deduction from income   

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in an equal amount at the time the optionee realizes such income.  Upon a       
resale of shares acquired pursuant to exercise of an option by an optionee,     
any difference between the sale price and the fair market value of the shares   
on the date of exercise of the option will be treated as capital gain or        
loss.                                                                           

As of May 1, 1995, there were 112,502 shares available for grant under the      
1988 Option Plan.  As a result, in April, 1995, the Stock Option Committee      
adopted, subject to the approval of the Company's stockholders, an amendment    
to the 1988 Option Plan providing that the number of shares of Common Stock     
which may be issued under the 1988 Option Plan would be increased from          
1,348,025 to 1,848,025.                                                         

The Board of Directors believes that the proposed amendments to the 1988        
Option Plan will enable the Company and its stockholders, through future        
grants of stock options, to continue to secure the benefits of the incentive    
inherent in stock ownership by certain of its employees.                        

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ABOVE            
DESCRIBED AMENDMENTS TO THE 1988 OPTION PLAN.                                   

PROPOSAL 3:         
ADDITION OF FORMULA STOCK OPTION PLAN       

In April, 1995, the Board of Directors adopted the Formula Stock Option Plan,   
subject to the approval thereof by the Company's stockholders.   Options to     
purchase up to 100,000 shares of the Company's Common Stock may be granted      
under the Formula Stock Option Plan.  The Formula Stock Option Plan provides    
for the granting of nonqualified stock options to non-employee directors of     
the Company or its Affiliates (as defined in the Formula Stock Option Plan)     
(the "Non-employee Directors").  The goal of the Formula Stock Option Plan is   
to provide a means of retaining and attracting competent non-employee           
personnel to serve on the Board of Directors by extending to such individuals   
added long-term incentives for high levels of performance and for unusual       
efforts designed to improve the financial performance of the Company.   The     
Formula Stock Option Plan would be administered by a committee comprised of     
the President and the Chief Financial Officer of the Company.  A copy of the    
Formula Stock Option Plan is attached hereto as Exhibit "B".  The description   
of the Formula Stock Option Plan contained herein is not intended to be         
complete and is qualified in its entirety by reference to Exhibit B, which      
contains the complete text of the Formula Stock Option Plan.                    

On the date the Formula Stock Option Plan is approved by the stockholders,      
each of Messrs. Gumbiner and Troup will be granted an option to purchase        
7,500 shares of the Company's Common Stock.  Any newly elected director would   
also receive an option for 7,500 shares upon election.  Thereafter, on the      
fifth business day of each successive January, each Non-employee Director       
shall be granted an option to purchase 2,500 shares of the Company's Common     
Stock.  The number of shares subject to such options shall be adjusted as a     
result of various changes in the capitalization of the Company.  Fifty          
percent (50%) of the options granted under the Formula Stock Option Plan        
shall vest on each of the second and third anniversaries of the respective      
dates of grant.                                                                 

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The exercise price of options granted under the Formula Stock Option Plan       
will be the average of the closing prices of the Company's Common Stock         
as reported by the Nasdaq National Market for the five-day period ending on     
and including the date of grant.  No option granted under the Formula Stock     
Option Plan will be transferable by the optionholder other than upon death or   
pursuant to a qualified domestic relations order.  Options may be granted       
until five years following the date of adoption of the Formula Stock Option     
Plan.  No option will be exercisable after the expiration of five years from    
its date of grant.                                                              

Options granted under the Formula Stock Option Plan generally will become       
exercisable as set forth above.  Upon the termination of the directorship of    
an optionholder for any reason other than death or on account of any act of     
fraud or intentional misrepresentation or embezzlement, misappropriation or     
conversion of assets or opportunities of the Company or any affiliate, an       
option (to the extent otherwise exercisable on the date of such termination)    
will be exercisable by the optionholder at any time prior to the expiration     
date of the option or within thirty days after the date                         
of such termination of the directorship, whichever is the shorter period.  If   
an optionholder dies while serving as a member of the Board of Directors, the   
option will be exercisable (whether or not exercisable on the date of the       
death of such optionholder) at any time prior to the expiration date of the     
option or within ninety days after the date of death, whichever is the          
shorter period.  An option granted under the Formula Stock Option Plan will     
automatically terminate as of the date the optionholder's directorship is       
terminated, if the directorship is terminated on account of any act of fraud    
or intentional misrepresentation, or embezzlement, misappropriation or          
conversion of assets or opportunities of the Company or any affiliate.          

The Board of Directors may not amend any provision of the Formula Stock         
Option Plan relating to the amount and price of the Company's Common Stock      
subject to the options granted thereunder or the timing of grants thereunder    
more than once every six months, other than to comport with changes in the      
Code, and applicable law.  Any amendment to the Formula Stock Option Plan       
must be approved by the stockholders of the Company if the amendment would:     
(i) materially increase the aggregate number of shares of the Company's         
Common Stock which may be issued pursuant to options granted under the          
Formula Stock Option Plan, (ii) materially modify the requirements as to        
eligibility for participation in the Formula Stock Option Plan, or (iii)        
materially increase the benefits accruing to holders of options under the       
Formula Stock Option Plan.                                                      

A Non-employee Director who is granted an option under the Formula Stock        
Option Plan will not be subject to federal income tax upon the grant of the     
option, and the Company will not be entitled to a tax deduction by reason of    
such grant.  Subject to the following sentence, upon exercise of the option,    
the excess of the fair market value of the shares acquired on the exercise      
date over the exercise price will be considered compensation taxable as         
ordinary income to the optionholder, and the Company may claim a tax            
deduction at that time equal to the amount of taxable income realized by the    
optionholder, provided that applicable federal income tax withholding and       
reporting requirements are satisfied.  If any profits associated with a sale    
of Common Stock acquired pursuant to the exercise of an option under the        
Formula Stock Option Plan could subject the optionholder to liability under     

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the six-month provisions of Section 16(b) of the Exchange Act, there will be    
no concurrent federal income tax consequences to either the optionholder or     
the Company as a result of the exercise of such option.  The inclusion of       
such profits as income to the optionholder is generally deferred until the      
earlier of: (i) the six-month period to which the preceding sentence refers,    
or (ii) the date on which the Section 16(b) restrictions terminate.  However,   
if the optionholder makes a timely and proper election under Section 83(b) of   
the Code to be taxed at the time shares of the Company's Common Stock are       
transferred to him or her, then the excess of the fair market value of shares   
of the Company's Common Stock on the exercise date over the exercise price      
will be taxed as ordinary income.  Such election must be made within thirty     
days from the date of exercise.  In the absence of such an election, the        
excess of the fair market value of shares of the Company's Common Stock on      
the date the Section 16(b) restrictions expire (or, if earlier, the date on     
which the six-month period referred to above                                    
expires) over the exercise price will be considered compensation taxable as     
ordinary income to the optionholder.  The Company will be entitled to a tax     
deduction in an amount equal to the amount required to be recognized as         
ordinary income by the optionholder at the time the optionholder is subject     
to tax, provided that the applicable federal income tax withholding and         
reporting requirements are satisfied.                                           

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE      
FORMULA STOCK OPTION PLAN.                                                      

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 AND BOARD OF DIRECTORS
INTERLOCKS AND INSIDER PARTICIPATION  

Richard M. Frank, Anthony J. Gumbiner and Brian M. Troup served on the          
Compensation Committee of the Company's Board of Directors in 1994.  The        
functions performed by the Compensation Committee are the: (i) recommendation   
of compensation, including performance bonuses, payable to the Company's        
executive officers (excluding Mr. Frank) and (ii) recommendation of             
performance bonuses for other employees of the Company.  Mr. Frank is           
Chairman of the Board and Chief Executive Officer of the Company.  Mr.          
Gumbiner is Chairman of the Board and Chief Executive Officer of Hallwood.      
Mr. Troup is President and Chief Operating Officer of Hallwood.  See            
"Principal Holders of Capital Stock" and "Certain Relationships and Related     
Transactions."  As discussed under the heading "Committees and Meetings of the  
Board of Directors," the Stock Option Committee and the Stock Grant Committee   
are both compromised of Messrs. Gumbiner and Troup.                             

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The Board of Directors is responsible for approving any amendment to either     
Mr. Frank's or Mr. Magusiak's employment agreement.  See "Employment            
Agreements."                                                                    

  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Board of Directors intends that transactions with officers, directors and   
affiliates will be entered into on terms no less favorable to the Company       
than could be obtained from unrelated third parties and will be approved by     
at least a simple majority of the directors of the Company.                     

With the exception of directors Pharr and Neeb, each of the directors of the    
Company who are not employees of the Company are also directors of Hallwood     
and Integra.  As of May 1, 1995, Hallwood owned all of the common stock of      
Integra.  See "Principal Holders of Capital Stock" and "Business History of     
Executive Officers and Directors."                                              

Effective January 1989, the Company agreed to pay to Hallwood $125,000 per      
year, in consideration for financial and management consulting services being   
rendered to the Company by Hallwood in the ordinary course of business.  The    
Company's agreement with Hallwood will continue at the discretion of the        
Board of Directors for such time and in such amounts as may be authorized so    
as to fairly compensate Hallwood for its services.                              

In consideration for rent reductions resulting from Hallwood's negotiation of   
the Company's home office lease agreement in December 1990, the Company         
assigned to Hallwood its sublease interest in the portion of the home office    
building subleased to Integra, with a fair value of approximately $120,000      
per year.                                                                       

STOCK PERFORMANCE GRAPH     

The following graph compares the cumulative monthly total shareholder 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 and March 20, 1992.   

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The Company's Common Stock is labelled on the graph as "SHBZ." The index        
labelled "Restaurants," which was prepared by the Center for Research in        
Securities Prices ("CRSP") at The University of Chicago, Graduate School of     
Business, 1101 East 58th Street, Chicago, Illinois 60637 (telephone             
312-702-7467) measures the total return (weighted for the market                
capitalization of the component companies) on the approximately 144 domestic    
and foreign companies which operate restaurants or other eating and drinking    
places (SIC Code 58) and whose equity securities are traded on the NASDAQ       
National Market or the NASDAQ Small-Cap Market.  The identities of the          
companies included in the "Restaurant" index will be made available in a        
prompt manner to any shareholder upon written request addressed to Investor     
Relations at the Company's Irving address upon request.  The index labelled     
"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.                      

                                                                [Download Table]
                                                                                
CRSP Total                                                                      
Returns                                                                         
Index For:    1/3/89  12/29/89  12/28/90  12/27/91  12/31/92  12/31/93  12/30/94
----------    ------  --------  --------  --------  --------  --------  --------

ShowBiz Pizza                                                                   
Time, Inc.    100.0     300.0    456.8      872.7    1370.5    542.0      311.9 

Nasdaq Stock                                                                    
Market (US                                                                      
Companies)    100.0     121.6    102.5      159.9     192.8    221.4      216.5 

NASDAQ                                                                          
Stocks (SIC                                                                     
5800-5899 US                                                                    
+ Foreign)                                                                      
Eating and                                                                      
drinking                                                                        
places       100.0     130.4    105.5       169.1     247.7    250.8      181.5 

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                      COMPLIANCE WITH SECTION 16(a) OF                          
                     THE SECURITIES EXCHANGE ACT OF 1934                        

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's     
executive officers and directors and the persons who own more than ten          
percent of the Company's Common Stock to file initial reports of ownership of   
Common Stock and reports of changes of ownership with the Securities and        
Exchange Commission and the National Association of Securities Dealers, Inc.    
and to furnish the Company with copies of such reports.  Based on review of     
such copies and other records of the Company, the Company has no reason to      
believe that any reports were untimely filed or that any Form 5 filings were    
made by any executive officers, directors or persons owning more than ten       
percent of the Company's Common Stock.                                          

                       INDEPENDENT PUBLIC ACCOUNTANTS                           

The firm of Deloitte & Touche LLP served as the Company's independent public    
accountants for the fiscal year ending December 30, 1994.  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 1996         
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,   
no later than January 8, 1996, in such form as is required under regulations    
promulgated by the Securities and Exchange Commission.                          

                              MISCELLANEOUS                                     

The accompanying proxy is being solicited on behalf of the Board of Directors   
of the Company.  The expense of preparing, printing and mailing the proxy and   
the material used in the solicitation thereof will be borne by the Company.     
In addition to the use of the mails, proxies may be solicited by directors      
and regular officers and employees of the Company by means of personal          
interview, telephone or telegram.  Arrangements may also be made with           
brokerage houses and other custodians, nominees and fiduciaries for the         
forwarding of solicitation materials to the beneficial owners of stock held     
of record by such persons, and the Company may reimburse them for reasonable    
out-of-pocket expenses of such solicitation.                                    

                                           By Order of the Board of Directors,  

                                           RICHARD A. BLUNK                     
                                           Secretary                            
Irving, Texas                                                                   
May 8, 1995                                                                     

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                             SHOWBIZ PIZZA TIME, INC.                           
                         NON-STATUTORY STOCK OPTION PLAN                        

     SHOWBIZ PIZZA TIME, INC., a corporation organized and existing under the   
laws of the State of Kansas (the "Company"), hereby formulates and adopts,      
with respect to the shares of common stock of the Company ("Common Stock"),     
a non-statutory stock option plan for certain individuals who are directors     
or key employees of the Company or its subsidiaries, as follows:                

     a.  Purpose of Plan.  The purpose of this Non-Statutory Option Plan (the   
"Plan") is to encourage certain individuals who are directors or key            
employees to participate in the ownership of the Company, and to provide        
additional incentive for such individuals to promote the success of its         
business through sharing in the future growth of such business.                 

     b.  Effectiveness of Plan.  The provisions of this Plan became effective on
December 30, 1988.                                                              

     c.  Administration.  This Plan shall be administered by the Stock Option   
Committee of the Board of Directors of the Company (the "Committee"), which     
shall be comprised of two (2) or more directors, each of whom shall be          
"disinterested persons," as defined in Rule 16b-3(c)(2)(i), promulgated under   
the Securities Exchange Act of 1934, as amended (the "Exchange Act").  The      
Committee shall have full power and authority to construe, interpret and        
administer the Plan, and may from time to time adopt such rules and             
regulations for carrying out this Plan as it may deem proper and in the best    
interests of the Company.  Subject to the terms, provisions and conditions of   
the Plan, the Committee shall have the authority to select the individuals to   
whom options shall be granted, to determine the number of shares subject to     
each option, to determine the time or times when options will be granted, to    
determine the option price of the shares subject to each option, to determine   
the time when each option may be exercised, to fix such other provisions of     
each option agreement as the Committee may deem necessary or desirable,         
consistent with the terms of this Plan, and to determine all other questions    
relating to the administration of this Plan.  The interpretation and            
construction of this Plan by the Committee shall be final, conclusive and       
binding upon all persons.                                                       

     d.  Eligibility.  Options to purchase shares of Common Stock shall be      
granted under this Plan only to those individuals selected by the Committee     
from time to time who, in the sole discretion of the Committee, are currently   
directors or key employees and who have made material contributions in the      
past, or who are expected to make material contributions in the future, to      
the successful performance of the Company.  Options shall not be granted to     
any individual while he is a member of the Committee.                           

     e.  Shares Subject to the Plan.  Options granted under this Plan shall be  
granted solely with respect to shares of Common Stock.  Subject to any          
adjustments made pursuant to the provisions of Section 12, the aggregate        
number of shares of Common Stock which may be issued upon exercise of all the   
options which may be granted under this Plan shall not exceed 1,348,025.  If    
any option granted under this Plan shall expire or terminate for any reason     
without having been exercised in full, the unpurchased shares subject to such   
option shall be added to the number of shares otherwise available for options   

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which may be granted in accordance with the terms of this Plan.  The shares     
to be delivered upon exercise of the options granted under this Plan shall be   
made available, at the discretion of the Committee, from either the             
authorized but unissued shares of Common Stock or any treasury shares of        
Common Stock held by the Company.                                               

     f.  Option Contract. Each option granted under this Plan shall be evidenced
by a non-statutory stock option contract which shall be signed by an officer    
of the Company and by the individual to whom the option is granted (the         
"optionee").  The terms of said contract shall be in accordance with the        
provisions of this Plan, but it may include such other provisions as may be     
approved by the Committee.  The granting of an option under this Plan shall     
be deemed to occur on the date on which the contract evidencing such option     
is executed by the Company and the optionee, and every optionee, upon the       
execution of a contract shall be bound by the terms and restrictions of this    
Plan and such contract.                                                         

     g.  Option Price.  The price at which shares of Common Stock may be        
purchased under an option granted pursuant to this Plan shall be determined     
by the Committee, but in no event shall the price be less than 100 percent of   
the fair market value of such shares on the date that the option is granted.    
The fair market value of shares of Common Stock for purposes of this Plan       
shall be determined by the Committee, in it sole discretion.                    

     h.  Period and Exercise of Option. Period -- Subject to the provisions of  
Sections 9 and 10 hereof with respect to the death or termination of            
employment of an optionee, the period during which each option granted under    
this Plan may be exercised shall be fixed by the Committee at the time such     
option is granted, provided that such period shall expire no later than five    
(5) years from the date on which the option is granted (the "Granting Date").   

     (1)  Employment -- The Option may not be exercised to any extent until     
the optionee has been continuously, for a period of at least one (1) year       
after the Granting Date, employed by the Company or a subsidiary of the         
Company.                                                                        

     (2)  Exercise -- Any Option granted under this Plan may be exercised by    
the optionee only by delivering to the Company written notice of the number     
of shares with respect to which he is exercising his option right, paying in    
full the option price of the purchased shares, and furnishing to the Company    
a representation in writing signed by the optionee that he is familiar with     
the business and financial condition of the Company, is purchasing the shares   
of stock in good faith for himself for investment purposes and not with a       
view towards the sale or distribution thereof, and will not effect any sale     
in violation of any laws or regulations of the United States or any state.      
Subject to the limitations of this Plan and the terms and conditions of the     
respective stock option contract, each option granted under this Plan shall     
be exercisable in whole or in part at such time or times as the Committee may   
specify in such stock option contract.                                          

     (3)  Payment for shares -- Payment for shares of Common Stock purchased    
pursuant to an option granted under this Plan may be made in either cash or     
in shares of Common Stock.                                                      

     (4)  Delivery of certificates -- As soon as practicable after receipt by   
the Company of the notice and representation described in Subsection (c), and   
of payment in full of the option price for all of the shares being purchased    
pursuant to an option granted under this Plan, a certificate or certificates    
representing such shares of stock shall be registered in the name of the        
optionee and shall be delivered to the optionee.  However, no certificate for   
fractional shares of stock shall be issued by the Company notwithstanding any   
request therefor.  Neither any optionee, nor the legal representative,          
legatee or distributee of any optionee, shall be deemed to be a holder of any   
shares of stock subject to an option granted under this Plan unless and until   
the certificate or certificates for such shares have been issued.  All stock    
certificates issued upon the exercise of any options granted pursuant to this   
Plan may bear such legend as the Committee shall deem appropriate regarding     
restrictions upon the transfer or sale of the shares evidenced thereby.         

     (5)  Withholding -- The Company shall have the right to deduct any sums    
that the Committee reasonably determines that Federal, state or local tax law   
requires to be withheld with respect to the exercise of any option or as        
otherwise may be required by those laws.  The Company may require as a          
condition to issuing shares of Common Stock upon exercise of the option that    
the optionee or other person exercising the option pay any sums that Federal,   
state or local tax law requires to be withheld with respect to the exercise.    
The Company shall not be obligated to advise any optionee of the existence of   
the tax or the amount which the Company will be so required to withhold.        
Upon the exercise of an option, if tax withholding is required, an optionee     
may, with the consent of the Committee, have shares of Common Stock withheld    
("Share Withholding") by the Company from the shares otherwise to be            
received; provided, however, that if the optionee is subject to the             
provisions of Section 16 under the Exchange Act, no Share Withholding shall     
be permitted unless such transaction complies with the requirements of Rule     
16b-3(e) promulgated under the Exchange Act.  The number of shares so           
withheld should have an aggregate fair market value (as determined in           
accordance with the terms of the Plan) on the date of exercise sufficient to    
satisfy the applicable withholding taxes.                                       

     a. Termination of Employment.  If an optionee shall cease to be an employee
of the Company or subsidiary of the Company for any reason other than death     
after he shall have served in such capacity continuously for at least one (1)   
year from the Granting Date, he may, but only within ten (10) business days     
next succeeding such cessation, exercise his option to the extent that he was   
entitled to exercise it at the date of such cessation.  Nothing in this Plan    
or any stock option contract shall be construed as an obligation on the part    
of the Company or of any of its subsidiary corporations to continue the         
optionee as an employee.                                                        

     b. Death of optionee.  In the event of the death of an optionee while      
serving as an employee of the Company or its subsidiary, any option or          
unexercised portion thereof granted to him under this Plan which is otherwise   
exercisable may be exercised by the person or persons to whom such optionee's   
rights under the option pass by operation of the optionee's will or the laws    
of descent and distribution, at any time within a period of three (3) months    
following the death of the optionee (even though such period is later than      
the expiration date of the option as specified in Section 8(a) and in the       
respective stock option contract).  Such option shall be exercisable even       
though the optionee's death occurs before he has continuously served as an      
employee of the Company or its subsidiary for a period of one (1) year after    
the date of grant.                                                              

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     c.  Nontransferability of Options.  Each option granted under this Plan    
shall not be transferable or assignable by the optionee other than by will or   
the laws of descent and distribution, or pursuant to a qualified domestic       
relations order and during the lifetime of the optionee may otherwise be        
exercised only by him.                                                          

     d.  Adjustments upon Changes in Capitalization. In the event of any change 
in the capital structure of the Company, including but not limited to a         
change resulting from a stock dividend, stock split, reorganization, merger,    
consolidation, liquidation or any combination or exchange of shares, the        
number of shares of Common Stock subject to this Plan and the number of such    
shares subject to each option granted hereunder shall be correspondingly        
adjusted by the Committee.  The option price for which shares of Common Stock   
may be purchased pursuant to an option granted under this Plan shall be         
adjusted so that there will be no change in the aggregate purchase price        
payable upon the exercise of any option.  The provisions of this Section        
shall not apply to the one-for-ten reverse stock split proposed for adoption    
at the 1988 annual meeting of the stockholders of the Company.                  

     e.  Amendment and Termination of Plan.  No option shall be granted pursuant
to this Plan after December 31, 1998, on which date this Plan shall expire      
except as to options then outstanding under the Plan, which options shall       
remain in effect until they have been exercised or have expired.  The           
Committee may at any time before such date amend, modify or terminate the       
Plan.  No amendment, modification or termination of this Plan may adversely     
affect the rights of any optionee under any then outstanding option granted     
hereunder without the consent of such optionee.                                 

     f.  Termination of Old Option Contract and Grant of New Option Contract.   
An option may be granted under this Plan which may be conditioned upon the      
termination of a non-statutory stock option contract previously granted to      
the optionee which has not yet been terminated or been exercised.               

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                                            EXHIBIT B                           
                                     SHOWBIZ PIZZA TIME, INC.                   
                              NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN          

                                      SHOWBIZ PIZZA TIME, INC.                  

                               NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN         

                                        TABLE OF CONTENTS                       

ARTICLE I - PURPOSE AND ADMINISTRATION. . . . . . . . . . . . . . . . . . . . 1 
      1.1            Purpose. . . . . . . . . . . . . . . . . . . . . . . . . 1 
      1.2            Administration . . . . . . . . . . . . . . . . . . . . . 1 
      1.3            Participation. . . . . . . . . . . . . . . . . . . . . . 1 
      1.4            Stock Subject to the Plan. . . . . . . . . . . . . . . . 1 
      1.5            Restrictions on Exercise . . . . . . . . . . . . . . . . 2 

ARTICLE II - STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 2 
      2.1            Grant and Option Price . . . . . . . . . . . . . . . . . 2 
      2.2            Stock Option Agreement . . . . . . . . . . . . . . . . . 2 
      2.3            Option Period. . . . . . . . . . . . . . . . . . . . . . 2 
      2.4            Vesting and Exercise of Options. . . . . . . . . . . . . 2 
      2.5            Non-Transferability of Options . . . . . . . . . . . . . 3 
      2.6            Termination of Directorship. . . . . . . . . . . . . . . 3 
      2.7            Issuance of Stock Certificates . . . . . . . . . . . . . 4 

ARTICLE III - OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 4 
      3.1            Adjustments Upon Changes in Capitalization . . . . . . . 4 
      3.2            Continuation of Directorship . . . . . . . . . . . . . . 5 
      3.3            Amendment and Termination. . . . . . . . . . . . . . . . 5 
      3.4            Time of Exercise . . . . . . . . . . . . . . . . . . . . 5 
      3.5            Privileges of Stock Ownership and                          
            Non-Distributive Intent . . . . . . . . . . . . . . . . . . . . . 6 
      3.6            Effective Date of the Plan . . . . . . . . . . . . . . . 6 
      3.7            Expiration . . . . . . . . . . . . . . . . . . . . . . . 6 
      3.8            Governing Law. . . . . . . . . . . . . . . . . . . . . . 6 
      3.9            Application of Funds . . . . . . . . . . . . . . . . . . 6 
      3.10           No Liability for Good Faith Determinations . . . . . . . 6 
      3.11           Information Confidential . . . . . . . . . . . . . . . . 6 
      3.12           Execution of Receipts and Releases . . . . . . . . . . . 6 
      3.13           No Guarantee of Interests. . . . . . . . . . . . . . . . 7 
      3.14           Payment of Expenses. . . . . . . . . . . . . . . . . . . 7 
      3.15           Company Records. . . . . . . . . . . . . . . . . . . . . 7 
      3.16           Information. . . . . . . . . . . . . . . . . . . . . . . 7 
      3.17           No Liability of Company. . . . . . . . . . . . . . . . . 7 
      3.18           Company Action . . . . . . . . . . . . . . . . . . . . . 7 
      3.19           Severability . . . . . . . . . . . . . . . . . . . . . . 7 
      3.20           Notice . . . . . . . . . . . . . . . . . . . . . . . . . 7 
      3.21           Waiver of Notices. . . . . . . . . . . . . . . . . . . . 8 
      3.22           Successors . . . . . . . . . . . . . . . . . . . . . . . 8 
      3.23           Headings . . . . . . . . . . . . . . . . . . . . . . . . 8 
      3.24           Word Usage . . . . . . . . . . . . . . . . . . . . . . . 8 

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                                   SHOWBIZ PIZZA TIME, INC.                     
                           NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN             
                                           ARTICLE I                            
                                  PURPOSE AND ADMINISTRATION                    

     1.1 - Purpose.  The purpose of the ShowBiz Pizza Time, Inc.                
Non-Employee Directors Stock Option Plan (the "Plan") is to                     
strengthen ShowBiz Pizza Time, Inc. (the "Company") by providing a              
means of retaining and attracting competent non-employee personnel              
to serve on its board of directors by extending such individuals                
added long-term incentives for high levels of performance and for               
unusual efforts designed to improve the financial performance of                
the Company.  In order to effectuate this intent, the Company will,             
pursuant to this Plan, grant to each non-employee director the                  
herein specified options to acquire shares of common stock of the               
Company ("Common Stock"), which options shall vest over a specified             
period of time.                                                                 

     1.2 - Administration.  The Plan shall be administered by a                 
committee (the "Committee") which shall be comprised of the                     
President of the Company and the Chief Financial Officer of the                 
Company.                                                                        

     Subject to the express provisions of the Plan, the Committee               
shall have powers and authorities which are exclusively ministerial             
in nature, including the authority to construe and interpret the                
Plan, to define the terms used in the Plan, to prescribe, amend and             
rescind rules and regulations relating to the administration of the             
Plan, and to make all other determinations necessary or advisable               
for the administration of the Plan.  The determinations of the                  
Committee on all such matters referred to in this Plan shall be                 
conclusive.  No member of the Committee shall be liable for any                 
action, failure to act, determination or interpretation made in                 
good faith with respect to the Plan or any transaction under the                
Plan.                                                                           

     1.3 - Participation.  Each member of the Board of Directors of             
the Company (the "Board") who is not employed by the Company or any             
Affiliate (collectively, the "Non-Employee Directors") shall be                 
eligible and shall participate in the Plan.  For purposes of the                
Plan, the term "Affiliate" shall mean any entity in which the                   
Company directly or through intervening subsidiaries owns                       
twenty-five percent (25%) or more of the total combined voting                  
power or value of all classes of stock or, in the case of an                    
unincorporated entity, a twenty-five percent (25%) or more interest             
in the capital and profits.                                                     

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     1.4 - Stock Subject to the Plan.  Subject to adjustment as                 
provided in Section 3.1 hereof, the stock to be offered under the               
Plan shall be treasury shares or shares of the Company's authorized             
but unissued Common Stock (hereinafter collectively called                      
"Stock").  The aggregate number of shares of Stock to be issued                 
upon exercise of all options granted under the Plan shall not                   
exceed 100,000 shares, subject to adjustments as set forth in                   
Section 3.1 hereof.  If any option granted hereunder shall lapse or             
terminate for any reason without having been fully exercised, the               
shares subject thereto shall again be available for purposes of the             
Plan.                                                                           

     1.5 - Restrictions on Exercise.  No option granted hereunder may           
be exercised until a registration statement under the Securities                
Act of 1933, as amended (the "Act"), relating to the Stock issuable             
upon exercise of such option has been filed with, and declared                  
effective by, the Securities and Exchange Commission (the                       
"Commission"), and there is available for delivery a prospectus                 
meeting the requirements of Section 10 of the Act, or until the                 
Committee has determined that the issuance of Stock upon such                   
exercise is exempt from the registration and prospectus                         
requirements of the Act.                                                        

                                    ARTICLE II                                  
                                   STOCK OPTIONS                                

     2.1             Grant and Option Price.                                    

     (a)      On the effective date of this Plan, Anthony J. Gumbiner and       
Brian M. Troup shall each be granted an option to purchase 7,500                
shares of Stock.  Thereafter, on the day a Non-Employee Director is             
first elected or appointed to the Board, such Non-Employee Director             
shall be granted an option to purchase 7,500 shares of Stock.                   

     (b)      On the fifth Business Day in January of the year following        
the effective date of the Plan, each Non-Employee Director who was              
previously elected to the Board and who continues to serve in such              
capacity at such time shall be granted an option to purchase 2,500              
shares of Stock.  For purposes of the Plan, the term "Business Day"             
shall mean a day on which the NASDAQ National Market is open for                
business and is conducting normal trading activity.                             

     (c)      The purchase price of the Stock covered by each option            
granted under the Plan shall be equal to the Fair Market Value of               
such Stock calculated as the average of the closing prices of the               
Company's Common Stock for the trading day period ending on and including       
the date of grant. Stock as reported by the Nasdaq National Market on such      
date, or,if no reported sale of the Stock shall have occurred on such date,     
then the closing price of the Stock as reported by the Nasdaq                   
National Market on the next preceding date on which there was such              
a reported sale.                                                                

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     (d)      The total grant under both paragraphs (a) and (b) above           
shall be limited accordingly to the greatest number of whole shares             
of Stock which may thus be granted thereunder.                                  

     2.2 - Stock Option Agreement.  Each option granted pursuant to             
the Plan shall be evidenced by a Stock Option Agreement ("Option                
Agreement"), in such form as the Committee shall require, between               
the Company and the Non-Employee Director to whom the option has                
been granted (the "Optionee").                                                  

     2.3 - Option Period.  Except as otherwise provided herein, each            
option and all rights or obligations thereunder shall expire on the             
fifth anniversary of the grant date (the "Expiration Date"), and                
shall be subject to earlier termination as hereinafter provided.                

     2.4 - Vesting and Exercise of Options.                                     

     (a)   Subject to Section 3.2 hereof, an option granted pursuant            
to Sections 2.1(a) or (b) hereof shall be exercisable only to the               
extent of shares that have vested in accordance with the following              
schedule:                                                                       

                                                          Portion of Shares     
                                                           That are Vested      
     Annual                                                 On and After        
   Anniversary                                             Such Anniversary     
     of Date                                                  and Before        
     of Grant                                              Next Anniversary     
   ------------                                           -------------------   

    First. . . . . . . . . . . . . . . . . . . . . . . . . . . .      0%        
    Second . . . . . . . . . . . . . . . . . . . . . . . . . . .     50%        
    Third. . . . . . . . . . . . . . . . . . . . . . . . . . . .   1000%        

      (b)  The purchase price of the Stock purchased upon exercise of           
an option shall be paid in full in cash or by check at the time of              
each exercise of an option; provided, however, that if the Option               
Agreement so provides and upon receipt of all regulatory approvals,             
the person exercising the option may deliver in payment of a                    
portion or all of the purchase price certificates for Common Stock              
of the Company, which shall be valued at the Fair Market Value of               
such Stock on the date of exercise of the option.                               

      2.5 - Non-Transferability of Options.  An option granted under            
the Plan shall, by its terms, be non-transferable by the Optionee               
other than by will or by the laws of descent and distribution or                
pursuant to a qualified domestics relations order.  During the                  
Optionee's lifetime, the option shall be exercisable only by the                
Optionee or by the Optionee's duly appointed guardian or personal               
representative.                                                                 

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      2.6 - Termination of Directorship.                                        

      (a)  If the directorship of the Optionee is terminated for any            
reason other than (i) death of the Optionee, or (ii) on account of              
any act of fraud or intentional misrepresentation or embezzlement,              
misappropriation or conversion of assets or opportunities of the                
Company or any Affiliate, an option (to the extent otherwise                    
exercisable on the date of such termination) shall be exercisable               
by the Optionee at any time prior to the Expiration Date of the                 
option or within thirty (30) days after the date of such                        
termination of the directorship, whichever is the shorter period.               

      (b)  If an Optionee dies while serving as a member of the Board,          
the option shall be exercisable (whether or not exercisable on the              
date of the death of such Optionee) by the person or persons                    
entitled to do so under the Optionee's will, or, if the Optionee                
shall fail to make testamentary disposition of said option or shall             
die intestate, by the Optionee's legal representative or                        
representatives, at any time prior to the Expiration Date of the                
option or within ninety (90) days after the date of such death,                 
whichever is the shorter period.  If an Optionee dies during the                
thirty (30) day period described in subsection (a) above, the                   
option shall be exercisable (but only to the extent exercisable on              
the date of death of such Optionee) by the person or persons                    
described above at any time within the thirty (30) day period                   
described in subsection (a) above or within ninety (90) days after              
the date of such death, whichever is the longer period, but in no               
event after the Expiration Date of the option.                                  

      (c)  The option of a Non-Employee Director shall automatically            
terminate as of the date his or her directorship is terminated, if              
the directorship is terminated on account of any act of (a) fraud               
or intentional misrepresentation, or (b)  embezzlement,                         
misappropriation or conversion of assets or opportunities of the                
Company or any Affiliate.                                                       

      (d)  Issuance of Stock Certificates.  Upon exercise of an                 
option, but subject to the provisions of Section 3.5 of the Plan,               
the person exercising the option shall be entitled to one stock                 
certificate evidencing the shares acquired upon such exercise;                  
provided, however, that any person who tenders Common Stock of the              
Company in payment of a portion or all of the purchase price of                 
Stock purchased upon exercise of the option shall be entitled to                
receive a separate certificate representing the number of shares                
purchased in consideration of the tender of such Common Stock.                  

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                                    ARTICLE III                                 

                                  OTHER PROVISIONS                              

       3.1 - Adjustments Upon Changes in Capitalization.                        

      (a)  If a dividend or stock split shall be hereinafter declared           
upon the Common Stock of the Company payable in shares of Common                
Stock of the Company, the number of shares of Common Stock then                 
subject to any such option and the number of shares reserved for                
issuance pursuant to the Plan but not yet covered by an option                  
shall be adjusted by adding to each such share the number of shares             
which would be distributable thereon if such share had been                     
outstanding on the date fixed for determining the stockholders                  
entitled to receive such stock dividend or stock split.                         

      (b)  If the outstanding shares of the Common Stock of the                 
Company shall be changed into or exchanged for a different number               
or kind of shares of stock or other securities of the Company or of             
another corporation, whether through reorganization,                            
recapitalization, stock split, combination of shares, merger or                 
consolidation, then there shall be substituted for each share of                
Common Stock subject to any such option and for each share of                   
Common Stock reserved for issuance pursuant to the Plan but not yet             
covered by an option, the number and kind of shares of stock or                 
other securities into which each outstanding share of Common Stock              
shall be so changed or for which each such share shall be                       
exchanged.                                                                      

      (c)  If there shall be any change, other than as specified above          
in subsection (a) and (b), in the number or kind of outstanding                 
shares of Common Stock of the Company or of any stock or other                  
securities into which Common Stock shall have been changed or for               
which it shall have been exchanged, then if the Committee shall in              
its sole discretion determine that such change equitably requires               
an adjustment in the number or kind of shares theretofore reserved              
for issuance pursuant to the Plan but not yet covered by an option              
and of the shares then subject to an option or options, such                    
adjustment shall be made by the Committee and shall be effective                
and binding for all purposes of the Plan and of each Option                     
Agreement.                                                                      

      (d)  In the case of any such substitution or adjustment as                
provided for in this Section, the option price in each Option                   
Agreement for each share covered thereby prior to such substitution             
or adjustment will be the option price for all shares of stock or               
other securities which shall have been substituted for such share               
or to which such adjustment provided for in this Section 3.1 shall              
be made.  No adjustment or substitution provided for in this                    
Section 3.1 shall require the Company pursuant to any Option                    
Agreement to sell a fractional share, and the total substitution or             
adjustment with respect to each Option Agreement shall be limited               
accordingly.                                                                    

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      3.2 - Continuation of Directorship.  Nothing contained in this            
Plan (nor in any option granted pursuant to this Plan) shall confer             
upon any Non-Employee Director any right to continue as a member of             
the Board or constitute any contract or agreement or interfere in               
any way with the right of the Company to remove such Non-Employee               
Director from the Board.  Nothing contained herein or in any Option             
Agreement shall affect any other contractual rights of a                        
Non-Employee Director.                                                          

      3.3 - Amendment and Termination.  The Board may at any time               
suspend or terminate the Plan.  No option may be granted during any             
suspension of the Plan or after such termination.  The amendment,               
suspension or termination of the Plan shall not, without the                    
consent of the Optionee, alter or impair any rights or obligations              
under any option theretofore granted under the Plan.                            

      The Board may at any time amend the Plan as it shall deem                 
advisable without further action on the part of the stockholders of             
the Company, provided, that the Board may not amend any provision               
of the Plan relating to the amount and price of Stock subject to                
the options granted hereunder or the timing of grants hereunder                 
more than once every six months, other than to comport with changes             
in the Internal Revenue Code of 1986, as amended, the Employee                  
Retirement Income Security Act, or the rules thereunder, and                    
provided further, that any amendment to the Plan must be approved               
by the stockholders of the Company if the amendment would                       
(a) materially increase the aggregate number of shares of Stock                 
which may be issued pursuant to options granted under the Plan,                 
(b) materially modify the requirements as to eligibility for                    
participation in the Plan, or (c) materially increase the benefits              
accruing to holders of options under the Plan.                                  

      3.4 - Time of Exercise.  An option shall be deemed to be                  
exercised when the Secretary of the Company receives written notice             
of such exercise from the person entitled to exercise the option                
together with payment of the purchase price made in accordance with             
Section 2.4 of this Plan.                                                       

      3.5 - Privileges of Stock Ownership and Non-Distributive Intent.          
The holder of an option shall not be entitled to the privilege of               
stock ownership as to any shares of Stock not actually issued and               
delivered to the holder.  Subject to the provisions of Section 1.5              
above, upon exercise of an option for Stock at a time when there is             
not in effect under the Act a registration statement relating to                
the Stock issuable upon exercise thereof or not available for                   
delivery a prospectus meeting the requirements of Section 10 of the             
Act, the holder of the option shall execute a stock purchase                    
agreement in which he shall represent and warrant in writing to the             
Company that, inter alia, the shares of Stock purchased are being               
acquired for investment and not with a view to the resale or                    
distribution thereof.  No shares of Stock shall be issued upon the              
exercise of any option unless and until there shall have been                   
compliance with any then applicable requirements of the Commission,             
other regulatory agencies having jurisdiction and any exchanges                 
upon which securities subject to the option may be listed.                      

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      3.6 - Effective Date of the Plan.  The Plan shall be effective            
upon approval by the affirmative vote of the holders of a majority              
of the outstanding shares of Common Stock and Preferred Stock,                  
voting as one class, present and entitled to vote at a meeting duly             
held or by the written consent of the holders of a majority of the              
Common Stock and the Preferred Stock, voting a one clas, entitled to vote.      

      3.7 - Expiration.  Unless previously terminated or extended by            
the Board, the Plan shall expire at the close of business on the                
date which is the last day of the five (5) year period beginning on             
the date on which the stockholders approve the Plan, and no option              
shall be granted under it thereafter, but such expiration shall not             
affect any option theretofore granted.                                          

      3.8 - Governing Law.  The Plan and the options issued hereunder           
shall be governed by, and construed and enforced in accordance                  
with, the laws of the State of Texas applicable to contracts made               
and performed within that State.                                                

      3.9 - Application of Funds.  The proceeds received by the                 
Company from the sale of shares pursuant to options shall be used               
for general corporate purposes.                                                 

      3.10 - No Liability for Good Faith Determinations.  Neither the           
members of the Board nor any member of the Committee shall be                   
liable for any act, omission or determination taken or made in good             
faith with respect to the Plan or any option granted under it.                  

      3.11 - Information Confidential.  As partial consideration for            
the granting of each option hereunder, the Optionee shall agree                 
with the Company that he will keep confidential all information and             
knowledge which he has relating to the manner and amount of his                 
participation in the Plan; provided, however, that such information             
may be given in confidence to the Optionee's spouse or to a                     
financial institution to the extent that such information is                    
necessary.                                                                      

      3.12 - Execution of Receipts and Releases.  Any payment or any            
issuance or transfer of shares of Stock to the Optionee, or to his              
legal representative, heir, legatee or distributee, in accordance               
with the provisions hereof, shall, to the extent thereof, be in                 
full satisfaction of all claims of such persons hereunder.  The                 
Board may require any Optionee, legal representative, heir, legatee             
or distributee, as a condition precedent to such payment, to                    
execute a release and receipt therefor in such form as it shall                 
determine.                                                                      

      3.13 - No Guarantee of Interests.  Neither the Board nor the              
Company guarantees the Stock of the Company from loss or                        
depreciation.                                                                   

      3.14 - Payment of Expenses.  All expenses incident to the                 
administration, termination or protection of the Plan, including,               
but not limited to, legal and accounting fees, shall be paid by the             
Company.                                                                        

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      3.15 - Company Records.  Records of the Company and any                   
Affiliate regarding the Optionee's period of service, termination               
of service and the reason therefor, leaves of absence, and other                
matters shall be conclusive for all purposes hereunder, unless                  
determined by the Board to be incorrect.                                        

      3.16 - Information.  The Company and any Affiliate shall, upon            
request or as may be specifically required hereunder, furnish or                
cause to be furnished all of the information or documentation which             
is necessary or required by the Committee to perform its duties and             
functions under the Plan.                                                       

      3.17 - No Liability of Company.  The Company assumes no                   
obligation or responsibility to the Optionee or his or her personal             
representatives, heirs, legatees or distributees for any act of, or             
failure to act on the part of, the Board or the Committee.                      

      3.18 - Company Action.  Any action required of the Company shall          
be by resolution of the Board or by a person authorized to act by               
Board resolution.                                                               

      3.19 -  Severability.  If any provision of this Plan shall be             
held to be illegal or invalid for any reason, the illegality or                 
invalidity shall not affect the remaining provisions hereof, but                
shall be fully severable and the Plan shall be construed and                    
enforced as if the illegal or invalid provision had never been                  
included herein.                                                                

      3.20 - Notice.  Whenever any notice is required or permitted              
hereunder, such notice must be in writing and personally delivered              
or sent by mail.  Except as otherwise provided in Section 3.4 of                
this Plan, any notice required or permitted to be delivered                     
hereunder shall be deemed to be delivered on the date on which it               
is personally delivered or, whether actually received or not, on                
the third (3rd) business day after it is deposited in the United                
States mail, certified or registered, postage prepaid, addressed                
to the person who is to receive it at the address which such person             
has theretofore specified by written notice delivered in accordance             
herewith.                                                                       

The Company of an Optionee may change, at any time and from time to             
time, by written notice to the other, the address which it or he                
had theretofore specified for receiving notice.  Until it is                    
changed in accordance herewith, the Company and each Optionee shall             
specify as its and his address for receiving notice the address set             
forth in the Option Agreement pertaining to the shares to which                 
such notice relates.                                                            

      3.21 - Waiver of Notices.  Any person entitled to notice                  
hereunder may waive such notice.                                                

      3.22 - Successors.  The Plan shall be binding upon the Optionee,          
his or her heirs, legatees and legal representatives, upon the                  
Company, its successors and assigns and upon the Board and its                  
successors.                                                                     

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      3.23 - Headings.  The titles and headings of sections and                 
paragraphs are included for convenience of reference only and are               
not to be considered in construction of the provisions hereof.                  

      3.24 -  Word Usage.  Words used in the masculine shall apply to           
the feminine where applicable and, wherever the context of this                 
Plan dictates, the plural shall be read as the singular and the                 
singular as the plural.                                                         

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</PAGE>                                                                         

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘PRER14A’ Filing		Date		First		Last			Other Filings
		1/4/00		16
		1/11/99		16
		12/31/98		21		30
		10/4/98		17					10-Q
		1/11/98		16
		1/6/98		16
		12/31/97		15
		10/4/97		17
		8/19/97		7
		1/11/97		16
		1/6/97		16
		10/4/96		17
		8/19/96		7		16
		1/11/96		16
		1/8/96		27
		8/19/95		7
		6/8/95		1		3			DEF 14A
		5/8/95		1		27
		5/1/95		2		25			DEF 14A
Filed on:		4/20/95
		3/31/95		15					10-Q
		2/13/95		8					SC 13G/A
		2/6/95		8
		12/30/94		14		27			10-K,  10-K/A,  PRE 14A
		8/3/94		8
		7/1/94		8
		6/3/94		8
		1/11/94		17
		12/31/93		14
		7/5/93		7
		1/1/93		14
		3/20/92		25
									List all Filings