As filed with the Securities and Exchange Commission on November 6, 2001
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-8 POS
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
CEC ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0905805
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4441 West Airport Freeway 75062
Irving, Texas (Zip Code)
(Address of principal executive offices)
CEC ENTERTAINMENT, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(Full title of the plan)
Richard M. Frank
Chairman of the Board and Chief Executive Officer
CEC Entertainment, Inc.
4441 West Airport Freeway
Irving, Texas 75602
(972) 258-8507
(Name, address and telephone number, including area code, of agent for service)
with a copy to:
Ted S. Schweinfurth
Winstead Sechrest & Minick P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
-------------------------
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of securities to be Amount to be registered offering price per share aggregate offering Amount of registration fee
registered (1) price
Common Stock, (2) (2) (2) (2)
par value $.10 per share
(1) Shares of common stock of CEC Entertainment, Inc. (the "Company"), par
value $.10 per share (the "Common Stock"), being registered hereby relate
to the CEC Entertainment, Inc. Non-Employee Directors Stock Option Plan
(the "Plan"). Pursuant to Rule 416 promulgated under the Securities Act of
1933, as amended (the "Securities Act"), there are also being registered
such additional shares of Common Stock as may become issuable pursuant to
the anti-dilution provisions of the Plan.
(2) This registration statement is being filed for the purpose of including a
re-offer prospectus within the registration statement on Form S-8 (No.
333-13077) filed by the Company on September 30, 1996. Pursuant to
Registration Statement No. 333-13077, the Company registered 100,000 Shares
of Common Stock. The fee for the registration of such 100,000 shares was
previously paid in connection with such registration statement. This
registration statement includes an additional increase in shares to 125,000
shares due solely to various splits of the Company's common stock. Pursuant
to Rule 416, no additional fee is required.
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INCORPORATION BY REFERENCE
The 225,000 shares (as increased to reflect various splits of the Company's
common stock) of Common Stock issuable under the Company's Non-Employee
Directors Stock Option Plan have been registered previously on the Company's
Registration Statement on Form S-8, as filed with Securities and Exchange
Commission (the "Commission") on September 30, 1996, Registration No. 333-13077,
which is incorporated by reference herein. The Company is filing this
registration statement for the purpose of including a Re-Offer Prospectus within
the registration statement pursuant to Instruction C of Form S-8.
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RE-OFFER PROSPECTUS
CEC ENTERTAINMENT, INC.
56,875 shares
Common Stock, $.10 par value per share
----------------------------
This prospectus relates to 56,875 shares of common stock, $.10 par value
per share, of CEC Entertainment, Inc. which may be offered from time to time by
the selling stockholders identified under the caption "Selling Stockholders" in
this prospectus for their own accounts. Each of the selling stockholders
acquired or will acquire the shares of common stock covered by this prospectus
pursuant to the CEC Entertainment, Inc. Non-Employee Directors Stock Option
Plan.
This prospectus has been prepared for the purpose of registering the shares
of common stock under the Securities Act to allow for future sale by the selling
stockholders, on a continuous or delayed basis, to the public without
restriction. Each selling stockholder and any participating broker or dealer may
be deemed to be an "underwriter" within the meaning of the Securities Act, in
which event any profit on the sale of shares by the selling stockholder and any
commissions or discounts received by those brokers or dealers may be deemed to
be underwriting compensation under the Securities Act.
Our common stock is traded on the New York Stock Exchange under the symbol
"CEC." On November 5, 2001, the last reported sale price of our common stock was
$38.50 per share.
-------------------------------
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933.
-------------------------------
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON
PAGE 1 OF THIS PROSPECTUS.
---------------------------
Neither the Securities and Exchange commission nor any state securities
commission has approved or disapproved the shares of common stock we are
offering, or determined that this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
---------------------------
The date of this prospectus is November 6, 2001.
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TABLE OF CONTENTS
Page
CEC ENTERTAINMENT...........................................................5
RISK FACTORS................................................................5
FORWARD-LOOKING STATEMENTS..................................................7
USE OF PROCEEDS.............................................................8
SELLING STOCKHOLDERS........................................................8
PLAN OF DISTRIBUTION........................................................8
LEGAL MATTERS...............................................................9
EXPERTS.....................................................................9
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...........................9
WHERE YOU CAN FIND MORE INFORMATION........................................10
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CEC ENTERTAINMENT
CEC Entertainment, Inc. was incorporated in the State of Kansas in 1980 and
is engaged in the family restaurant/entertainment center business. As of July
26, 2001, we operated 336 Chuck E. Cheese's(R)restaurants, and our franchisees
operated 54 restaurants.
Chuck E. Cheese's restaurants offer a variety of pizza, a salad bar,
sandwiches and desserts and feature musical and comic entertainment by
life-size, computer-controlled robotic characters, family-oriented games, rides
and arcade-style activities. The restaurants are intended to appeal to families
with children between the ages of 2 and 12.
To maintain a unique and exciting atmosphere in the restaurants, we believe
it is essential to reinvest capital through the evolution of our games, rides
and entertainment packages and to continue enhancing our facilities. In 2000, we
initiated a Phase III upgrade program which includes a new toddler play area,
skill games and rides, kiddie games and rides, sky-tube enhancements and prize
area enhancements with ticket counting machines. We completed Phase III upgrades
in 27 restaurants in 2000 and plan to complete Phase III upgrades in
approximately 100 restaurants in 2001.
Our principal offices are located at 4441 West Airport Freeway, Irving,
Texas 75062 and our telephone number is (214) 258-8507.
RISK FACTORS
You should carefully consider the risks described below before making an
investment decision. We believe these are all the material risks currently
facing our business. Our business, financial condition or results of operations
could be materially adversely affected by these risks. The trading price of our
common stock could decline due to any of these risks, and you may lose all or
part of your investment. You should also refer to the other information included
or incorporated by reference in this prospectus, including our financial
statements and related notes.
We may not be able to implement successfully our growth strategy.
Our continued growth depends, to a significant degree, on our ability to
implement successfully its growth strategies. Among such strategies, we plan to
continue to open new stores in selected markets. The opening and success of new
Chuck E. Cheese's restaurant/entertainment centers will depend on various
factors, including the availability of suitable sites, the negotiation of
acceptable lease terms for such locations, the ability to meet construction
schedules, the ability to manage such expansion and hire and train personnel, as
well as general economic and business conditions. Our ability to open
successfully new stores will also depend upon the availability of sufficient
funds for such purpose, including funds from operations, our existing credit
facility, future debt financing, future equity offerings or a combination
thereof. There can be no assurance that we will be successful in opening and
operating the number of anticipated new stores on a timely or profitable basis.
Our growth is also dependent on management's ability to evolve continually and
update our concept to anticipate and respond to changing customer needs and
competitive conditions. There can be no assurance that management will be able
to anticipate successfully changes in competitive conditions or customer needs
or that the market will accept our concepts.
The success of the restaurant/entertainment industry is dependent upon many
factors, over which we have little or no control.
The restaurant/entertainment industry is affected by national, regional and
local economic conditions, demographic trends and consumer tastes. The
performance of individual restaurants may be affected by factors such as traffic
patterns and the type, number and location of competing restaurants. Dependence
on frequent deliveries of fresh food products also subjects food service
businesses to the risk that shortages or interruptions in supply caused by
adverse weather or other conditions could adversely affect the availability,
quality and cost of ingredients. In addition, factors such as inflation,
increased food, labor and employee benefit costs and the availability of
experienced management and hourly employees may also adversely affect the
restaurant industry in general and our
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restaurant/entertainment centers in particular. The entertainment industry is
affected by many factors, including changes in customer preferences and
increases in the type and number of entertainment offerings. Operating costs may
also be affected by further increases in the minimum hourly wage, unemployment
tax rates, sales taxes and similar matters over which we have no control.
We may not be able to compete successfully with our competitors in the
restaurant and entertainment center industries.
We believe that our combined restaurant/entertainment center concept puts
us in a niche which combines elements of both the restaurant and entertainment
industries. As a result, we, to some degree, compete with entities in both
industries. Although other restaurant chains presently utilize the concept of
combined family restaurant/entertainment operations, we believe these
competitors operate primarily on a local or regional, market- by-market basis.
Within the traditional restaurant sector, we compete with other casual
restaurants on a nationwide basis. In addition to such national restaurant
chains and regional and local restaurant/family entertainment competitors, we
compete with other concepts that target the same consumer, including "fun
centers." Our high operating leverage may make us particularly susceptible to
competition. Such competitive market conditions, including the emergence of
significant new competition, could adversely affect our ability to successfully
increase its results of operations.
Our business depends on a limited number of key personnel, and the loss of any
of these could materially and adversely affect our business.
The success of our business will continue to be highly dependent upon
Richard M. Frank, our Chairman of the Board and Chief Executive Officer, Michael
H. Magusiak, our President, and other members of our senior management. Although
we have entered into employment agreements with each of Mr. Frank and Mr.
Magusiak, the loss of the services of either of such individuals could have a
material adverse effect upon our business and development. Our success will also
depend upon our ability to retain and attract additional skilled management
personnel to our senior management team and at our operational level. There can
be no assurances that we will be able to retain the services of Messrs. Frank or
Magusiak, senior members of our management team or the required operational
support at the store level in the future.
Our success depends greatly upon the success of our franchise operations.
Our success is also dependent, to some degree, upon our franchise
operations and the manner in which our franchisees operate and develop their
restaurant/entertainment centers to promote and develop our concept and our
reputation for quality and value. Currently, 14% our restaurant/entertainment
centers are owned and operated by our franchisees. Although we have established
criteria to evaluate prospective franchisees, there can be no assurance that
current or prospective franchisees will have the business abilities or access to
financial resources necessary to successfully develop or operate
restaurant/entertainment centers in their franchise areas in a manner consistent
with our concepts and standards.
We may be subject to adverse effects from potential negative publicity.
Our target market of 2 to 12 year old children and families with small
children is potentially highly sensitive to adverse publicity. There can be no
assurance that we will not experience negative publicity regarding one or more
of our restaurant/entertainment centers. The occurrence of negative publicity
regarding one or more of our locations could materially and adversely affect our
image with our customers and our results of operations.
Our results of operations greatly fluctuate between quarters.
We have experienced, and in the future could experience, quarterly
variations in revenues as a result of a variety of factors, many of which are
outside our control, including the timing and number of new store openings, the
timing of capital investments in existing stores, unfavorable weather conditions
and natural disasters. We typically experience lower net sales in the second and
fourth quarters than in the first and third quarters. If revenues are below
expectations in any given quarter, our operating results would likely be
materially adversely affected for that quarter.
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We and our franchisees are subject to government regulation and failure to, or
the inability to, comply with these regulations may adversely affect our
business.
We and our franchisees are subject to various federal, state and local laws
and regulations affecting operations, including those relating to the use of
video and arcade games and rides, the preparation and sale of food, and those
relating to building and zoning requirements. We and our franchisees are also
subject to laws governing our relationship with employees, including minimum
wage requirements, overtime, working and safety conditions and citizenship
requirements. In addition, we are subject to regulation by the Federal Trade
Commission and must comply with certain state laws which govern the offer, sale
and termination of franchises and the refusal to renew franchises. Difficulties
or failures in obtaining required licenses or other regulatory approvals could
delay or prevent the opening of a new restaurant/entertainment center, and the
suspension of, or inability to renew, a license or permit could interrupt
operations at an existing restaurant.
Our stock price is volatile.
The stock price of our common stock has been volatile and can be expected
to be significantly affected by factors such as:
o quarterly variations in our results of operations;
o quarterly variations in our competitors' result of operations;
o changes in earnings estimates or buy/sell recommendations by financial
analysts;
o the stock price performance of comparable companies; and
o general market conditions or market conditions specific to particular
industries.
FORWARD-LOOKING STATEMENTS
The statements, other than statements of historical facts included in this
prospectus, are forward-looking statements. Forward-looking statements generally
can be identified by the use of forward-looking terminology such as "may,"
"will," "expect," "intend," "estimate," "anticipate" or "believe." We believe
that the expectations reflected in such forward-looking statements are accurate.
However, we cannot assure you that these expectations will occur. Our actual
future performance could differ materially from these statements. Factors that
could cause or contribute to these differences include, but are not limited to,
o uncertainties regarding the ability to open news stores;
o our ability to acquire additional rent-to-own stores on favorable
terms;
o our ability to enhance the performance of these acquired stores;
o the results of our litigation;
o the passage of legislation adversely affecting the rent-to-own
industry;
o interest rates;
o our ability to collect on our rental purchase agreements at the
current rate; and
o the other risks detailed from time to time in our SEC reports.
Additional factors that could cause our actual results to differ materially
from our expectations are discussed under the section entitled "Risk Factors"
and elsewhere in this prospectus. You should not unduly rely on
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these forward-looking statements, which speak only as of the date of this
prospectus. Except as required by law, we are not obligated to publicly release
any revisions to these forward-looking statements to reflect events or
circumstances occurring after the date of this prospectus or to reflect the
occurrence of unanticipated events.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of common
stock by the selling stockholders.
SELLING STOCKHOLDERS
The shares of our common stock to which this prospectus relates are being
registered for re-offers and resales by the selling stockholders, who acquired
or will acquire shares of common stock pursuant to the Plan. The selling
stockholders may resell all, a portion or none of these shares of common stock
from time to time. The table below sets forth with respect to each selling
stockholder, based upon information available to us as of November 6, 2001, the
number of shares of common stock beneficially owned, the number of shares
registered by this prospectus and the number and percent of outstanding shares
of common stock assuming the sale of all of the registered shares of common
stock.
Number of Shares Number of Shares
Beneficially Owned Owned After the
Number of Shares Offering
Name Registered Number Percent
-------------------- --------------------- ------------------ -----------------
Tim Morris 7,875 6,875 1,000 12.70
Louis Neeb 12,500 12,500 0 0.00
Cynthia Pharr 12,650 12,500 150 1.20
Walter Tyree 12,500 8,750 3,750 30.00
Raymond Wooldridge 27,500 12,500 15,000 54.55
------------------
* = less than one percent
The information provided in the table above with respect to the selling
stockholders has been obtained from the selling stockholders. Except as
otherwise disclosed above or in documents incorporated herein by reference, the
selling stockholders have not within the past three years had any position,
office or other material relationship with us. Because the selling stockholders
may sell all or some portion of the shares of common stock beneficially owned by
them, only an estimate (assuming the selling stockholder sells all of the shares
offered hereby) can be given as the number of shares that will be beneficially
owned by the selling stockholders after this offering. In addition, the selling
stockholders may have sold, transferred or otherwise disposed of, or may sell,
transfer or otherwise dispose of, at any time or from time to time since the
dates on which they provided the information regarding the shares of common
stock beneficially owned by them in transactions exempt from the registration
requirements of the Securities Act.
PLAN OF DISTRIBUTION
Each selling stockholder may sell his or her shares of common stock for
value from time to time under this prospectus in one or more transactions on the
New York Stock Exchange, in negotiated transactions or in a combination of such
methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at prices otherwise negotiated. The
selling stockholders may effect such transactions by selling the shares of
common stock to or through broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the selling stockholders and/or the purchasers of the shares of common
stock for whom such broker-dealers may act as agent (which compensation may be
less than or in excess of customary commissions).
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Each selling stockholder and any broker-dealers that participate in the
distribution of the shares of common stock may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and any profit on the resale of the shares sold by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
All selling and other expenses incurred by the selling stockholders will be done
by the selling stockholders.
In addition to the shares of commons stock sold hereunder, the selling
stockholders, may, at any same time, sell any shares of common stock, including
the shares of common stock owned by them in compliance with all of the
requirements of Rule 144, regardless of whether such shares are covered by this
prospectus.
There is no assurance that the selling stockholders will sell all or any
portion of the shares of common stock offered or that the selling stockholders
will transfer, devise or gift these shares by other means.
We will pay all expenses in connection with this offering and will not
receive any proceeds from sales of any shares of common stock by the selling
stockholders.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Winstead Sechrest & Minick P.C.
EXPERTS
The consolidated financial statements of CEC Entertainment, Inc. and its
subsidiaries as of December 31, 2000 and January 2, 2000 and the related
consolidated statements of earnings and comprehensive income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2000 are incorporated in this prospectus by reference from our Form 10-K
filed March 20, 2001. These financial statements have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given on their authority as experts in accounting and
auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
We will provide without charge, upon written or oral request, a copy of any
or all of the documents which are incorporated by reference into this
prospectus. You should contact us at: CEC Entertainment, Inc., Attention:
Corporate Counsel, 4441 West Airport Freeway, Irving, Texas 75062, telephone
number (214) 258-8507 should you desire any of these documents.
The following documents, which we previously filed with the SEC pursuant to
Sections 13 or 15 of the Exchange Act, are incorporated by reference into this
prospectus:
o Our Annual Report on Form 10-K for the twelve months ended December
31, 2000;
o The portions of our proxy statement for our 200 annual meeting of our
stockholders that have been incorporated by reference into our Annual
Report; and
o Our Quarterly Reports on Form 10-Q for the three months ended March
31, 2001 and July 1, 2001.
In addition, we incorporate by reference the description of our common stock
contained in our Form 8-A (Registration No. 001-13687) filed with the SEC
pursuant to Section 12 of the Exchange Act, as updated in any amendment or
report filed for such purpose.
Finally, we incorporate by reference in this prospectus all documents that
we may file under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this prospectus and before the filing of a post-effective amendment,
which indicates that all securities offered have been sold or which de-registers
all securities then
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remaining unsold. Those documents are a part of this prospectus from the date of
filing. Any statement incorporated by reference in this prospectus shall be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein, or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein, modifies or
supersedes that statement. Any statement that is modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements and other information we file at the SEC's public
reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois.
Please call 1-800-SEC-0330 for further information on the public reference
rooms. Our filings are also available to the public from commercial document
retrieval services and at the web site maintained by the SEC at
http://www.sec.gov.
We have filed a registration statement on Form S-8 to register with the SEC
the common stock we are offering under the Plan. This prospectus is part of that
registration statement. As allowed by the SEC's rules, this prospectus does not
contain all of the information you can find in the registration statement or the
exhibits to the registration statement.
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EXHIBIT A
CEC ENTERTAINMENT, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
ARTICLE I
PURPOSE AND ADMINISTRATION
1.1 Purpose. The purpose of the CEC Entertainment, Inc. Non-Employee
Directors Stock Option Plan (the "Plan") is to strengthen CEC Entertainment,
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 vetoing 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.
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
225,000 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.
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ARTICLE II
STOCK OPTIONS
2.1 Grant and Option Price. (a) 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 4,000 shares of Stock. For purposes of
the Plan, the term "Business Day" shall mean a day on which the New York Stock
Exchange is open for business and is conducting normal trading activity.
(c) The purchase of the Stock covered by each option granted under the Plan
shall be equal to the Fair Market Value of such Stock on the grant date. For
purposes of the Plan, the term "Fair Market Value" shall mean the average of the
closing prices of the Common Stock as reported by the New York Stock Exchange
for the five trading-day period ending on and including the date of grant.
(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 or Certificate ("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. Each option and all rights or obligations thereunder
shall expire on the seventh anniversary of the grant date (the "Expiration
Date"); provided, however, the option 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 Anniversary On or After Such Anniversary
of Date of Grant and Before
Next Anniversary
First..................... 0%
Second.................... 50%
Third..................... 100%
(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 Transferability of Options. An option certificate or contract may
permit an Optionee to transfer his or her options to members of his or her
Immediate Family, to one or more trusts for the benefit of such Immediate Family
members, or to one or more partnerships where such Immediate Family members are
the only partners if (i) the certificate or contract setting forth such options
expressly provides that the options may be transferred, (ii) the Optionee
obtains the prior written consent of the Committee for such transfer, and (iii)
the Optionee does not receive any consideration in any form whatsoever for said
transfer. Any options so transferred shall continue to be subject
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to the same terms and conditions in the hands of the transferee as were
applicable to said option immediately prior to the transfer thereof. Any option
not (i) granted pursuant to any certificate or contract expressly allowing the
transfer of said option or (ii) amended expressly to permit its transfer shall
not be transferable by the Optionee otherwise than by will or by the laws of
descent and distribution and such option shall be exercisable during the
Optionee's lifetime only by the Optionee. "Immediate Family" means the children,
grandchildren or spouse of the Optionee.
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 six (6) months 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 six (6) months 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.
2.7 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 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.
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
(i) then subject to grant under Section 2.1 (a) and (b), (ii) then subject to
any option which has been granted, and (iii) then reserved for issuance pursuant
to the Plan but not yet covered by an option shall be adjusted by adding to each
such share the numbers 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, and the Company continues thereafter as the surviving entity,
then there shall be substituted for each share of Stock subject to any such
option and for each share of 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
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 or outstanding shares of Common
Stock of the Company or of any stock or other securities into which Common
- 13 -
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 3.1, 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.
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.
3.25 Change of Control. If while any unexercised options remain outstanding
under the Plan, a Change of Control (as hereinafter defined) shall have
occurred, then all such options shall be exercisable in full, notwithstanding
Section 2.4 hereof or any other provision in the Plan or Option Agreement to the
contrary. For purposes of the Plan, a "Change of Control" shall be deemed to
have occurred with respect to the Company: (A) on the date in which the Company
executes an agreement or an agreement in principle (i) with respect to any
merger, consolidation or other business combination by the Company with or into
another entity and the Company is not the surviving entity, or (ii) to sell or
otherwise dispose of all or substantially all of its assets, or (iii) to adopt a
plan of liquidation; or (B) on the date in which public announcement is made
that the "beneficial ownership" [as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")], of securities
representing more than 50% of the combined voting power of the Company is being
acquired by a "person" within the meaning of sections 13(d) and 14(d) of the
Exchange Act; or (C) if, during any period of eighteen (18) consecutive months,
individuals who at the beginning of such period were members of the Board of
Directors cease for any reason to constitute at least a majority thereof (unless
the appointment or election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of
such period); provided, however, that in no event shall a change in the
composition of the Company's Board of Directors pursuant to an election of Board
members pursuant to Section 4.6 of the Company's Articles of Incorporation, as
amended, constitute or result in a Change of Control for purposes of this
Section 3.25.
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 the Plan.
- 14 -
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 or she 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.
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 the Company's outstanding shares of 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
Company's outstanding shares of preferred stock, voting as one class, 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 fifteen (15) 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 Applications 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 not 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 or she
will keep confidential all information and knowledge which he or she has
relating to the manner and amount of his or her 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 or her 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 required 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 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.
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.
- 15 -
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 or an Optionee may change, at any time and
from time to time, by written notice to the other, the address which it or he or
she had theretofore specified for receiving notice. Until it is changed in
accordance herewith, the Company and each Optionee shall specify as its and his
or her 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.
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.
- 16 -
Item 8. Exhibits.
The following are filed as exhibits to this Registration Statement:
Exhibit No. Description
4.1 CEC Entertainment, Inc. Non-Employee DirectorsStock Option Plan.*
4.2 Specimen form of certificate representing Common Stock, par value $.10
per share (incorporated by reference to Exhibit 4(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 28,
1990).
23.2 Consent of Deloitte & Touche LLP.*
24.1 Power of Attorney (included on the signature page of the Registration
Statement).*
----------------
* filed herewith
- 17 -
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irving, State of Texas, on October 31, 2001.
CEC ENTERTAINMENT, INC.
By: /s/ RICHARD M. FRANK
----------------------
Richard M. Frank M. FRANK
Chairman of the Board and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes Richard M.
Frank or Michael H. Magusiak to file one or more amendments (including
post-effective amendments) to this registration statement, which amendments may
make such changes in this registration statement as each of them deems
appropriate, and each such person hereby appoints Richard M. Frank or Michael H.
Magusiak as attorney-in-fact to execute in the name and on behalf of the Company
and any such person, individually and in each capacity stated below, any such
amendments to this registration statement.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Title Date
/s/ RICHARD M. FRANK Chairman of the Board October 31, 2001
-------------------- of Directors,Chief Executive
Richard M. Frank Officer and Director
/s/ MICHAEL H. MAGUSIAK President and Director October 31, 2001
-----------------------
Michael H. Magusiak
/s/ RODNEY CARTER Executive Vice President, October 31, 2001
----------------- Chief Financial Officer
Rodney Carter and Treasurer
/s/ RICHARD T. HUSTON Director October 31, 2001
---------------------
Richard T. Huston
/s/ TIM T. MORRIS Director October 31, 2001
-----------------
Tim T. Morris
/s/ LOUIS P. NEEB Director October 31, 2001
-----------------
Louis P. Neeb
/s/ CYNTHIA I. PHARR Director October 31, 2001
--------------------
Cynthia I. Pharr
/s/ WALTER TYREE Director October 31, 2001
----------------
Walter Tyree
/s/ RAYMOND E. WOOLDRIDGE Director October 31, 2001
-------------------------
Raymond E. Wooldridge
EXHIBIT INDEX
Exhibit No. Description
4.1 CEC Entertainment, Inc. Non-Employee Directors Stock Option Plan.*
4.2 Specimen form of certificate representing Common Stock, par value $.10
per share (incorporated by reference to Exhibit 4(a) to the Company's
Annual Report on Form 10-K for the fiscal year ended December 28,
1990).
23.2 Consent of Deloitte & Touche LLP.*
24.1 Power of Attorney (included on the signature page of the Registration
Statement).*
----------------
* filed herewith
- 18 -
EXHIBIT 4.1
CEC ENTERTAINMENT, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
ARTICLE I
PURPOSE AND ADMINISTRATION
1.1 Purpose. The purpose of the CEC Entertainment, Inc. Non-Employee
Directors Stock Option Plan (the "Plan") is to strengthen CEC Entertainment,
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 vetoing 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.
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
225,000 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 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
- 19 -
time shall be granted an option to purchase 4,000 shares of Stock. For purposes
of the Plan, the term "Business Day" shall mean a day on which the New York
Stock Exchange is open for business and is conducting normal trading activity.
(c) The purchase of the Stock covered by each option granted under the Plan
shall be equal to the Fair Market Value of such Stock on the grant date. For
purposes of the Plan, the term "Fair Market Value" shall mean the average of the
closing prices of the Common Stock as reported by the New York Stock Exchange
for the five trading-day period ending on and including the date of grant.
(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 or Certificate ("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. Each option and all rights or obligations thereunder
shall expire on the seventh anniversary of the grant date (the "Expiration
Date"); provided, however, the option 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
On or After Such Anniversary
Annual Anniversary and Before
of Date of Grant Next Anniversary
First......................... 0%
Second........................ 50%
Third......................... 100%
(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 Transferability of Options. An option certificate or contract may
permit an Optionee to transfer his or her options to members of his or her
Immediate Family, to one or more trusts for the benefit of such Immediate Family
members, or to one or more partnerships where such Immediate Family members are
the only partners if (i) the certificate or contract setting forth such options
expressly provides that the options may be transferred, (ii) the Optionee
obtains the prior written consent of the Committee for such transfer, and (iii)
the Optionee does not receive any consideration in any form whatsoever for said
transfer. Any options so transferred shall continue to be subject to the same
terms and conditions in the hands of the transferee as were applicable to said
option immediately prior to the transfer thereof. Any option not (i) granted
pursuant to any certificate or contract expressly allowing the transfer of said
option or (ii) amended expressly to permit its transfer shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and such option shall be exercisable during the Optionee's
lifetime only by the Optionee. "Immediate Family" means the children,
grandchildren or spouse of the Optionee.
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
- 20 -
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 six (6) months 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 six (6) months 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.
2.7 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 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.
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
(i) then subject to grant under Section 2.1 (a) and (b), (ii) then subject to
any option which has been granted, and (iii) then reserved for issuance pursuant
to the Plan but not yet covered by an option shall be adjusted by adding to each
such share the numbers 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, and the Company continues thereafter as the surviving entity,
then there shall be substituted for each share of Stock subject to any such
option and for each share of 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
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 or 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 3.1, 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
- 21 -
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.
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.
3.25 Change of Control. If while any unexercised options remain outstanding
under the Plan, a Change of Control (as hereinafter defined) shall have
occurred, then all such options shall be exercisable in full, notwithstanding
Section 2.4 hereof or any other provision in the Plan or Option Agreement to the
contrary. For purposes of the Plan, a "Change of Control" shall be deemed to
have occurred with respect to the Company: (A) on the date in which the Company
executes an agreement or an agreement in principle (i) with respect to any
merger, consolidation or other business combination by the Company with or into
another entity and the Company is not the surviving entity, or (ii) to sell or
otherwise dispose of all or substantially all of its assets, or (iii) to adopt a
plan of liquidation; or (B) on the date in which public announcement is made
that the "beneficial ownership" [as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")], of securities
representing more than 50% of the combined voting power of the Company is being
acquired by a "person" within the meaning of sections 13(d) and 14(d) of the
Exchange Act; or (C) if, during any period of eighteen (18) consecutive months,
individuals who at the beginning of such period were members of the Board of
Directors cease for any reason to constitute at least a majority thereof (unless
the appointment or election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least a majority
of the directors then still in office who were directors at the beginning of
such period); provided, however, that in no event shall a change in the
composition of the Company's Board of Directors pursuant to an election of Board
members pursuant to Section 4.6 of the Company's Articles of Incorporation, as
amended, constitute or result in a Change of Control for purposes of this
Section 3.25.
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 the 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 or she 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
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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.
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 the Company's outstanding shares of 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
Company's outstanding shares of preferred stock, voting as one class, 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 fifteen (15) 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 Applications 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 not 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 or she
will keep confidential all information and knowledge which he or she has
relating to the manner and amount of his or her 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 or her 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 required 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 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.
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.
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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 or an Optionee may change, at any time and
from time to time, by written notice to the other, the address which it or he or
she had theretofore specified for receiving notice. Until it is changed in
accordance herewith, the Company and each Optionee shall specify as its and his
or her 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.
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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EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
and in the Re-Offer Prospectus, which is part of this Registration Statement, of
CEC Entertainment, Inc. on Form S-8 of our report dated February 16, 2001,
appearing in the Annual Report on Form 10-K of CEC Entertainment, Inc. for the
year ended December 31, 2000. We also consent to the reference to us under the
heading "Experts" in such Re-Offer Prospectus.
DELOITTE & TOUCHE LLP
Dallas, Texas
November 2, 2001
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