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
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.
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
-------------------------
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of securities to be Amount to be offering price per aggregate offering Amount of registration
registered (1) registered share (2) price (2) fee
Common Stock, 1,300,000 shares $39.01 $50,713,000 $12,679
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. 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
November 5, 2001, as reported on the New York Stock Exchange.
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INCORPORATION BY REFERENCE
The 1,300,000 shares of Common Stock being registered hereby shall be
issued under the Company's 1997 Non-Statutory Stock Option Plan, which was
amended effective June 28, 2001, to, among other things, 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. 333-8369 and on August 24, 2000, Registration No.
333-44434, 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.
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RE-OFFER PROSPECTUS
CEC ENTERTAINMENT, INC.
1,587,147 shares
Common Stock, $.10 par value per share
----------------------------
This prospectus relates to 1,587,147 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 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 5, 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 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
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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 ofoperations;
o quarterly variations in our competitors' resultof operations;
o changes in earnings estimates or buy/sellrecommendations by financial
analysts;
o the stock price performance of comparablecompanies; and
o general market conditions or market conditionsspecific 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 newstores;
o our ability to acquireadditional 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 these
forward-looking statements, which speak only as of the date of this prospectus.
Except as required by law, we
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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 5, 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
-------------------------------------- ------------------- --------------------
Roger Cardinale 113,135 99,365 13,770 12.17
Rodney Carter 69,140 69,140 0 0.00
Gene Cramm 91,219 89,890 1,329 1.46
Mark Flores 82,669 82,669 0 0.00
Richard Frank 872,469 647,500 224,969 25.79
Richard Huston 173,980 144,392 29,588 17.00
Michael Magusiak 466,822 350,000 116,822 25.02
Thomas Oliver 104,191 104,191 0 0.00
------------------
* = 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
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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 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 thre 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
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amendment, which indicates that all securities offered have been sold or which
de-registers 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 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.
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 4,387,500. 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
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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
- 12 -
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
- 13 -
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.
- 14 -
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
- 15 -
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
Rodney Carter Officer 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
- 16 -
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
- 17 -
EXHIBIT 4.1
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 4,387,500. 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
- 18 -
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
- 19 -
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
- 20 -
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.
- 21 -
EXHIBIT 5.1
OPINION OF LEGAL COUNSEL
November 2, 2001
CEC Entertainment, Inc.
4441 West Airport Freeway
Irving, Texas 75602
Gentlemen:
CEC Entertainment, Inc., a Kansas corporation (the "Company"), intends to
file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Registration Statement") on Form S-8 under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
covers 1,300,000 shares of common stock, $.10 par value per share (the "Common
Stock"), of the Company, and such additional shares of Common Stock as may
become issuable pursuant to the anti-dilution provisions of the Plan (such
shares collectively referred to as the "Securities"). Such Securities are to be
issued pursuant to the Company's 1997 Non-Statutory Stock Option Plan, as
amended (the "Plan").
We have acted as counsel to the Company in connection with the preparation
and filing of the Registration Statement. In rendering this opinion we have
examined such corporate records, documents and instruments of the Company and
such certificates of public officials, have received such representations from
officers of the Company, and have reviewed such questions of law as in our
judgment are necessary, relevant or appropriate to enable us to render the
opinion expressed below. In such examination, we have assumed the genuineness of
all signatures, the authenticity of all corporate records, documents and
instruments submitted to us as originals, the conformity to original documents
of all documents submitted to us as conformed, certified or photostatic copies
thereof, and the authenticity of the originals of such photostatic, certified or
conformed copies.
Based upon such examination and review and upon representations made to us
by officers of the Company, we are of the opinion that upon issuance and
delivery of the Securities in accordance with the terms and conditions of the
Plan, and upon receipt by the Company of the full consideration for the
Securities as determined pursuant to the Plan, the Securities will be validly
issued, fully paid and nonassessable shares of Common Stock.
Our opinion is limited in all respects to the substantive law of the State
of Texas, federal law and our review of relevant provisions of the General
Corporation Code of Kansas as set forth in the unofficial compilation of such
law prepared and published by Aspen Law and Business in Volume 4 of its
Prentice-Hall Corporation State Statutes series.
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the Act
or the rules and regulations of the Commission thereunder.
Respectfully submitted,
WINSTEAD SECHREST & MINICK P.C.
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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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