As filed with the Securities and Exchange Commission on December 15, 2003
Registration No. 333-___________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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.
1997 NON-STATUTORY 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
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CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
BE REGISTERED (1) REGISTERED SHARE (2) PRICE (2) REGISTRATION FEE
Common Stock,
par value $.10 per share 1,000,000 shares $50.52 $50,520,000 $4,087
(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. 1997 Non-Statutory 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) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h) promulgated under the Securities Act on the
basis of the average of the high and low sale prices of the Common Stock on
December 12, 2003, as reported on the New York Stock Exchange.
INCORPORATION BY REFERENCE
The 1,000,000 shares of Common Stock being registered hereby shall be
issued under the Company's 1997 Non-Statutory Stock Option Plan, which was
amended effective February 2003, to increase the number of shares of Common
Stock available for issuance under the Plan. Pursuant to Instruction E of Form
S-8, the contents of the Company's Registration Statements on Form S-8, as filed
with the Securities and Exchange Commission (the "Commission") on November 26,
1997, Registration No. 333-41039, on July 23, 1999, Registration No. 333-83691,
on August 24, 2000, Registration No. 333-44434, on November 6, 2001,
Registration No. 333-72878, and on March 4, 2003, Registration No. 333-103572,
are incorporated by reference herein. Pursuant to Instruction C of Form S-8, the
Company is including a re-offer prospectus within this registration statement.
RE-OFFER PROSPECTUS
CEC ENTERTAINMENT, INC.
4,111,899 SHARES
COMMON STOCK, $.10 PAR VALUE PER SHARE
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This prospectus relates to 4,111,899 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. 1997 Non-Statutory 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 December 12, 2003, the last reported sale price of our common
stock was $50.04 per share.
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THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
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YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON
PAGE 1 OF THIS PROSPECTUS.
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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.
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The date of this prospectus is December 15, 2003.
TABLE OF CONTENTS
PAGE
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CEC ENTERTAINMENT, INC............................................................................................1
RISK FACTORS......................................................................................................1
FORWARD-LOOKING STATEMENTS........................................................................................3
USE OF PROCEEDS...................................................................................................4
SELLING STOCKHOLDERS..............................................................................................4
PLAN OF DISTRIBUTION..............................................................................................5
LEGAL MATTERS.....................................................................................................5
EXPERTS...........................................................................................................5
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................6
WHERE YOU CAN FIND MORE INFORMATION...............................................................................6
i
CEC ENTERTAINMENT, INC.
CEC Entertainment, Inc. was incorporated in the State of Kansas in 1980
and is engaged in the family restaurant/entertainment center business. As of
September 30, 2003, we operated 452 Chuck E. Cheese's restaurants, and our
franchisees operated 51 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.
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 our 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 financings, 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 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.
1
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." These fun centers have experienced rapid expansion which has affected
our historical performance. 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 our 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 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, less than 12% of 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.
2
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' results 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 new stores;
o our ability to acquire additional locations for stores on
favorable terms;
o our ability to enhance the performance of these acquired
stores;
o the results of our litigation;
o interest rates; 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 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.
3
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 reoffers 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 October 31, 2003,
the name of such selling stockholder, the number of shares of common stock
beneficially owned, the number of shares offered by this prospectus and the
number and percent of shares of common stock assuming the sale of all of the
shares offered hereby.
Number of Shares Owned After
Number of Shares Number of Shares the Offering
Name Beneficially Owned Offered Number Percent
----------------------------- ---------------------- ------------------ ---------------- -----------------
Roger Cardinale 314,365 314,365 0 0.00
Rodney Carter 274,140 274,140 0 0.00
Gene Cramm 280,061 280,061 0 0.00
Mark Flores 253,710 253,710 0 0.00
Richard Frank 1,616,519 1,397,500 219,019 13.55
Richard Huston 362,520 332,932 29,588 8.16
Michael Magusiak 1,066,822 950,000 116,822 10.95
Thomas Oliver 309,191 309,191 0 0.00
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The information provided in the table above with respect to the selling
stockholders has been obtained from the selling stockholders. Except as
otherwise disclosed herein 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.
4
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).
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 29, 2002 and December 30, 2001 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
29, 2002 are incorporated by reference in this prospectus from our Form 10-K
filed March 26, 2003. These financial statements have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report, which is
incorporated by reference herein, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
5
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 29, 2002;
o The portions of our proxy statement for our 2003 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 each of the three
months ended March 30, 2003, June 29, 2003 and September 28,
2003.
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
deregisters all securities then 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, at our website located at www.chuckecheese.com and at the
web site maintained by the SEC at 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.
6
EXHIBIT A
CEC ENTERTAINMENT, INC. 1997 NON-STATUTORY STOCK OPTION PLAN
CEC ENTERTAINMENT, 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 key employees of
the Company or its subsidiaries, as follows:
1. Purpose of Plan. The purpose of this 1997 Non-Statutory Option Plan
(the "Plan") is to encourage certain individuals who are 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.
2. Effective Date of the Plan. The provisions of this Plan became
effective on August 1, 1997.
3. 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
"Non-Employee Directors," as defined in Rule 16b-3(c), promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and who are
also "Outside Directors," as defined in Section 162(m) of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), and any Treasury
Regulations that may be promulgated thereunder. The Committee shall have full
power and authority to construe, interpret and administer this 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 this 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.
4. 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 key employees of
the Company or its subsidiaries at the time of the grant 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 or its
subsidiaries.
5. 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 6,787,500. 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 options shall be
added to the number of shares otherwise available for options 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.
6. Option Certificate or Contract. Each option granted under this Plan
shall be evidenced by either a certificate or 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") in the event a
contract has been issued. 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 grant of an option under this Plan shall be
deemed to occur on the date on which the certificate or contract evidencing such
option is executed by the Company, and every Optionee shall be bound by the
terms and restrictions of this Plan and such certificate or contract.
7. 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 (100%)
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.
8. Period and Exercise of Option.
(a) Period -- Subject to the provisions of Section 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 seven (7) years from the date on
which the option is granted (the "Grant Date").
(b) 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 Grant Date, employed by the Company or a subsidiary of the
Company.
(c) Exercise -- Any option granted under this Plan may be
exercised by the Optionee only by delivering to the Company, or its agent,
written or verbal notice, as may be specified by the Company from time to time,
of the number of shares with respect to which he or she is exercising his or her
option right, paying in full the option price of the purchased shares, and
furnishing to the Company, or its agent, a representation in writing signed by
the Optionee that he or she is familiar with the business and financial
condition of the Company, is purchasing the shares of stock in good faith for
himself or herself 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
certificate or 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 certificate or contract.
(d) 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.
(e) 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, or book entry with the Company's transfer agent, representing such
shares of stock shall be registered in the name of the Optionee and any such
certificate(s) shall be delivered to the Optionee. However, no certificate or
book entry for fractional shares of stock shall be issued or recorded 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, or book entry with the
Company's transfer agent, for such shares have been issued or recorded,
respectively. 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.
(f) 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 required 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 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 this Plan) on the date of exercise sufficient to
satisfy the applicable withholding taxes.
9. 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 or she shall have served in such capacity continuously for at
lease one (1) year from the Grant Date, he or she may, but only within thirty
(30) days next succeeding such cessation, exercise his or her option to the
extent that he or she was entitled to exercise it at the date of such cessation.
Nothing in this Plan or any stock option certificate or 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.
10. 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 six (6)
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 certificate or contract). Such option shall be
exercisable even though the Optionee's death occurs before he or she has
continuously served as an employee of the Company or its subsidiary for a period
of one (1) year after the date of grant.
11. 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.
12. 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, and the
Company continues thereafter as the surviving entity, then 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.
13. Amendment and Termination of Plan. No option shall be granted
pursuant to this Plan after July 31, 2007, on which date this Plan shall expire
except as to options then outstanding under this 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 this Plan;
provided, however, 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. 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.
14. Grant of New Option and Repricing. An option may be granted under
this Plan which may be conditioned upon the termination of a non-statutory stock
option certificate or contract previously granted to the Optionee which has not
yet been terminated or been exercised; provided, however, (a) the price for
which shares of Common Stock may be purchased under the new option may not be
less than the price of shares of Common Stock that were subject to purchase
under the terminated option unless the shareholders of the Company approve the
issuance at a lower price, and (b) the Committee may not, without prior
shareholder approval, re-price underwater stock options by either lowering the
exercise price of outstanding options or canceling outstanding options and
granting new replacement options with a lower exercise price.
15. Change of Control. If while unexercised options remain outstanding
under this Plan, a Change of Control (as hereinafter defined) shall have
occurred, then all such options shall be exercisable in full, notwithstanding
Section 8(b) hereof or any other provision in this Plan or option certificate or
contract to the contrary. For purposes of this 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
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 shareholders,
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 15.
The Committee shall have the right, at the time of grant or
subsequently, in its sole discretion, to establish conditions under which a
specific employee may cease to be a full-time employee of the Company or any of
its subsidiaries but not be deemed to have terminated his or her employment with
the Company or any of its subsidiaries for purposes of this Plan, including but
not limited to conditions involving part-time employment or consulting services.
Unless otherwise specifically provided for in an employee's stock option
certificate or contract or in an amendment or supplement thereto, an employee's
employment with the Company or any of its subsidiaries shall be deemed to
terminate when he or she ceases to be a full-time employee of the Company or any
of its subsidiaries.
In the event of a merger, consolidation, reorganization or
recapitalization of the Company, the Committee shall have the right to
accelerate the vesting schedule with respect to all or any portion of the shares
of Common Stock granted to any or all of the employees under this Plan, if and
to the extent it deems appropriate in its sole discretion.
16. Restrictions Applicable to Executive Officers. The provisions of
this Section 16 shall apply only to those executive officers whose compensation
is required to be reported in the Company's proxy statement pursuant to Item
402(a)(3)(i) (or any successor thereto) and of Regulation S-K (or any successor
thereto) under the general rules and regulations under the Exchange Act
("Executive Officers"). In the event of any inconsistencies between this Section
16 and the other provisions of this Plan, as they pertain Executive Officers,
the provisions of this Section shall control.
No amendment of this Plan with respect to any Executive Officer may be
made which would (i) increase the maximum amount that can be paid to any one
Executive Officer pursuant to this Plan or (ii) modify the requirements as to
the Executive Officer's eligibility for participation in this Plan, unless the
Company's shareholders have first approved such amendment in a manner which
would permit the deduction under Section 162(m) (or any successor thereto) of
the Code of such payment in the fiscal year it is paid. The Committee shall
amend this Section 16 and such other provisions as it deems appropriate, to
cause amounts payable to certain Executive Officers to satisfy the requirements
of Section 162(m) (or any successor thereto) and the Treasury Regulations that
may be promulgated thereunder.
The maximum number of shares of Common Stock with respect to which
options may be granted hereunder to any Executive Officer during any calendar
year may not exceed two hundred and fifty thousand (250,000) shares, subject to
any adjustments made pursuant to the provisions of Section 12.
ITEM 8. EXHIBITS.
The following are filed as exhibits to this Registration Statement:
Exhibit No. Description
4.1 CEC Entertainment, Inc. 1997 Non-Statutory Stock Option.*
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).
5.1 Opinion of Winstead Sechrest & Minick P.C.*
23.1 Consent of Winstead Sechrest & Minick P.C. (included in
Exhibit 5.1).*
23.2 Consent of Deloitte & Touche LLP.*
24.1 Power of Attorney (included on the signature page of the
Registration Statement).*
----------
* filed herewith
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 December 15, 2003.
CEC ENTERTAINMENT, INC.
By: /s/ RICHARD M. FRANK
------------------------------------
Richard 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 of Directors, Chief December 15, 2003
------------------------------------ Executive Officer and Director
Richard M. Frank
/s/ MICHAEL H. MAGUSIAK President and Director December 15, 2003
------------------------------------
Michael H. Magusiak
/s/ RICHARD T. HUSTON Director December 15, 2003
------------------------------------
Richard T. Huston
/s/ TIM T. MORRIS Director December 15, 2003
------------------------------------
Tim T. Morris
/s/ LOUIS P. NEEB Director December 15, 2003
------------------------------------
Louis P. Neeb
/s/ CYNTHIA I. PHARR Director December 15, 2003
------------------------------------
Cynthia I. Pharr
/s/ WALTER TYREE Director December 15, 2003
------------------------------------
Walter Tyree
/s/ RAYMOND E. WOOLDRIDGE Director December 15, 2003
------------------------------------
Raymond E. Wooldridge
EXHIBIT INDEX
Exhibit No. Description
---------- -----------
4.1 CEC Entertainment, Inc. 1997 Non-Statutory 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).
5.1 Opinion of Winstead Sechrest & Minick P.C.*
23.1 Consent of Winstead Sechrest & Minick P.C. (included in
Exhibit 5.1).*
23.2 Consent of Deloitte & Touche LLP.*
24.1 Power of Attorney (included on the signature page of the
Registration Statement).*
----------
* filed herewith