Amendment to Current CEO Agreement

Former CEO Agreement

Amendment to Former CEO Agreement

EX-10.2 5 dex102.htm MICHAEL H. MAGUSIAK 2005 EMPLOYMENT AGREEMENT

Exhibit 10.2

MICHAEL H. MAGUSIAK

2005 EMPLOYMENT AGREEMENT

This Michael H. Magusiak 2005 Employment Agreement (the “Agreement”) is executed as of the 29th day of March, 2005, by and between MICHAEL H. MAGUSIAK (“Employee”) and CEC ENTERTAINMENT, INC., a Kansas corporation (“Company”).

RECITALS:

WHEREAS, the Employee and the Company have heretofore entered into an agreement whereby Employee is employed by the Company as President pursuant to certain terms and conditions; and

WHEREAS, the Board of Directors of the Company (the “Board of Directors”) has offered Employee continued employment in consideration for the compensation and the other benefits hereinafter set forth, and Employee is willing to continue in the employ of the Company on these terms;

NOW, THEREFORE, in consideration of the mutual promises hereinafter contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed:

1. Current Employment Agreement. The Company and Employee heretofore entered into an employment agreement dated May 8, 2001, (the “Current Employment Agreement”). The term of the Current Employment Agreement expires on the last day of the fiscal year of the Company ending on or about December 31, 2005. Company and Employee hereby agree and affirm that the Current Employment Agreement is and shall be in full force and effect through the last day of the fiscal year of the Company ending on or about December 31, 2005.

2. Term. Following the expiration of the Current Employment Agreement, the Company employs Employee and Employee accepts employment from the Company upon the terms and conditions specified in this Agreement. Subject to the provisions regarding termination set forth in Sections 15 and 16 hereof, the term of this Agreement shall begin as of the first day of the fiscal year of the Company beginning on or about January 1, 2006 (the “Effective Date”) and shall terminate on the last day of the fiscal year of the Company ending on or about December 31, 2010 (the “Term”).

3. Basic Salary. For services rendered by Employee under this Agreement, the Company shall pay Employee the “Basic Salary,” provided for in this Section 3, as follows:

(a) During the Term of Employee’s employment under this Agreement, the Employee shall receive as Basic Salary the amount of Five Hundred Fifty Thousand Dollars ($550,000.00) per year. The Basic Salary may be increased in such amounts and on such dates as the Compensation Committee of the Board of Directors (the “Compensation Committee”) may determine from time to time.

 

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(b) The Basic Salary provided for in this Section 3 shall be in addition to any other compensation and/or benefits provided to Employee (i) pursuant to this Agreement or (ii) otherwise at the discretion of the Compensation Committee, including, but not limited to, the annual bonus opportunity available to home office employees and officers of the Company at a level commensurate with his position as President.

4. Stock Options. Employee has received from the Company on March 4, 2005 options (the “Stock Options”) to purchase one hundred twenty-five thousand (125,000) shares of the Company’s Common Stock, par value $ .10 per share (Common Stock) pursuant to the Company’s 1997 Non-Statutory Stock Option Plan. Of the Stock Options granted as described in this Section 4, twenty-five percent (25%) shall vest on March 4, 2006, fifty percent (50%) shall vest on March 4, 2007, seventy-five percent (75%) shall vest on March 4, 2008 and one hundred percent (100%) shall vest on March 4, 2009. During the Term of this Agreement, Employee shall be entitled to receive additional options to purchase shares of Common Stock in such amounts and at such prices as may be determined by the Compensation Committee, and he shall also be entitled to receive Common Stock pursuant to restricted stock awards according to the Company’s 2004 Restricted Stock Plan in such amounts and under such terms as may be determined by the Compensation Committee.

5. Severance Pay. If the Company terminates the employment of Employee at any time (other than pursuant to Section 16 hereof), or if a “Change of Control” occurs with respect to the Company and Employee voluntarily terminates his employment with the Company within one year after such Change of Control, the Company shall be required to pay Employee severance pay in an amount equal to the product of (a) Employee’s then Basic Salary, multiplied by (b) the number two (2). Such severance pay shall be payable to Employee by the Company in cash on or before the tenth (10th) day after the Termination Date, as defined in Section 15.

For purposes of this Section 5, a “Change of Control” shall be deemed to have occurred with respect to the Company if: (a) any person or group of persons acting in concert, in which person or group of persons the Employee is not an investor, partner, officer, director or member, shall acquire, directly or indirectly, the power to vote, or direct the voting of, more than thirty-three percent (33%) of the then outstanding voting securities of the Company; or (b) during any consecutive eighteen (18) month period a majority of the Company’s Board of Directors is elected or appointed and consists of persons who are not directors of the Company as of the Effective Date, and whose election or appointment as directors of the Company was actively opposed by Employee, as evidenced by Employee’s vote (in his capacity or capacities, if any, as a director and/or stockholder of the Company) against their election or appointment and by written notice of his opposition to their election or appointment given by Employee to the then current directors of the Company not more than five (5) business day following their respective election or appointment.

 

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6. Additional Payments.

(a) In the event that any payment or benefit (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”)) to the Employee or for his benefit paid or payable or distributed or distributable (at any time or from time to time) pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment with the Company or a change in ownership or effective control of the Company or of a substantial portion of its assets ( a “Payment” or “Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, being hereinafter collectively referred to as the “Excise Tax”), then the Employee will be entitled to receive an additional payment or payments, as the case may be (referred to individually or collectively as a “Gross-Up Payment”), in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes and the Excise Tax, other than interest and penalties imposed by reason of the Employee’s failure to file timely a tax return or pay taxes shown due on his return), including any Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

(b) An initial determination as to whether a Gross-Up Payment is required pursuant to this Agreement and the amount of such Gross-Up Payment shall be made at the Company’s expense by an accounting firm selected by the Company, and reasonably acceptable to the Employee, which is designated as one of the largest national accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to the Company and the Employee within ten (10) days of the Termination Date, as defined in Section 15, or such other time as requested by the Company or by the Employee (provided the Employee reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Employee with respect to a Payment or Payments, it shall furnish the Employee with an opinion reasonably acceptable to the Employee that he has substantial authority not to report any Excise Tax on his federal tax return with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Employee, the Employee shall have the right to dispute the Determination. The Gross-Up Payment, if any, as determined pursuant to this Section 6(b) shall be paid by the Company to the Employee within five (5) days of the receipt of the Determination. The existence of the dispute shall not in any way affect the Employee’s right to receive the Gross-Up Payment in accordance with the Determination. Upon the final resolution of a dispute, the Company shall promptly pay to the Employee any additional amount required by such resolution. If there is no dispute, the Determination shall be binding, final and conclusive upon the Company and the Employee.

(c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten (10) business days after the Employee knows of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be

 

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paid. The Employee shall not pay such claim prior to the expiration of the thirty (30) day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall:

 

 

(i)

give the Company any information reasonably requested by the Company relating to such claim,

 

 

(ii)

take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company.

 

 

(iii)

cooperate with the Company in good faith in order to effectively contest such claim, and

 

 

(iv)

permit the Company to participate in any proceedings relating to such claim, provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provision of this Section 6(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund, or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

 

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(d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company’s complying with the requirements of Section 6(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 6(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

7. Expenses. Subject to the rules and procedures the Company may specify from time to time, the Company shall reimburse Employee for all reasonable expenses incurred by Employee on behalf of the Company.

8. Automobile. Employer shall pay to Employee the sum of One Thousand Dollars ($1,000.00) per month (subject to adjustment from time to time in direct proportion to generally applicable adjustments by the Company to its automobile allowances) to reimburse Employee for the use of Employee’s automobile in the performance of his duties under this Agreement, and the Company shall further pay directly or by reimbursement to Employee (as the Company and Employee may from time to time agree) the premiums upon a policy of collision and liability insurance covering such automobile. All other cost and expenses incurred in the operation and maintenance of Employee’s automobile, including but not limited to the cost of all fuel, oil, maintenance and repairs, shall be paid solely by Employee.

9. Duties of Employee. In accepting continued employment by the Company, Employee agrees to undertake and assume the responsibility, subject to the general direction and control of the Board of Directors and the Chief Executive Officer, of performing for and on behalf of the Company the duties of President of the Company, including formulation of the policies and administration of the Company’s affairs, and such other duties as are agreed to by the Company and the Employee. In addition, if requested, Employee shall serve as as an employee, officer and/or director of any affiliates of the Company without additional compensation, although such affiliates may assume some or all of the payments due to Employee hereunder.

10. Exclusive Service. Employee shall devote substantially his full time and attention to rendering services to the Company and in furtherance of the Company’s best interests, provided that Employee may make and manage his personal passive investments. During the Term of this Agreement, other than as an employee, officer and/or director of an affiliate of the Company, Employee shall not be employed by any other person or engage in any other business or occupation; provided that Employee may engage in the business of making and managing his personal passive investments.

11. Medical and Disability Insurance. The Company shall provide Employee and his family with insurance coverage and/or cost reimbursement benefits which provide for 100% of the health, medical, hospitalization, prescription drug and dental costs and expenses incurred by or on

 

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behalf of Employee and his Family, whether through existing insurance and/or reimbursement plans covering the Company’s employees or through special plans relating specifically to Employee, or a combination thereof. For purposes of this Agreement, the Employee’s “Family” shall include his spouse, as well as his children until such time that his children are no longer eligible for coverage under the health insurance plans covering the Company’s employees or until they become covered under a policy or plan provided by their employer which provides substantially similar coverage and benefits. The Company shall also take the necessary action to (a) include Employee under a Company sponsored disability plan for executives, (b) acquire a specific disability insurance policy for Employee and/or (c) assist Employee in acquiring or paying for a disability plan or insurance policy, which action results in Employee having coverage providing total disability income benefits of at least 50% of Employee’s Basic Salary which benefits will be payable if Employee became disabled until he attains age 65. If only a portion of the disability income benefits described above can be provided by insurance policies or plans, the company shall have the obligation to provide the remaining portion.

12. Continuation of Medical Benefit Coverage. Upon the termination of Employee’s employment for any reason, including a termination due to the expiration of the Term of this Agreement, the Company shall provide Employee and his Family the health, medical, hospitalization, prescription drug and dental insurance coverage and/or cost reimbursement benefits set forth in Section 11 hereof, for a period not to exceed the earlier of (a) five (5) years or (b) the date on which the Employee and his Family become covered under a policy or plan paid for by a new employer of Employee providing substantially similar coverage and benefits. In the event Employee’s employment terminates and this Section 12 becomes effective, and thereafter Employee dies while the benefits provided herein are still in effect, such benefits shall continue for Employee’s Family until five (5) years have passed following his termination of employment. The benefits set forth under this Section 12 shall be provided in addition to any other payments, benefits or compensation, if any, to which Employee, his estate of his designated beneficiary is entitled due to his termination of employment as set forth in this Agreement.

13. Life Insurance. The Company shall maintain and pay the premiums on one or more life insurance policies on Employee’s life, which may include insurance on Employee’s life under any group term life insurance plan maintained form time to time by the Company for its employees. The aggregate face amount(s) of such policy or policies shall be at least Five Hundred Thousand Dollars ($500,000.00).

Any policy of insurance or certificate of insurance under a group term policy maintained by the Company to provide the death benefits described pursuant to this Section 13 shall be owned by the Company, and the Employee (or his assignee) shall have the sole right to designate the beneficiary or beneficiaries of the proceeds payable thereunder upon the death of the Employee.

14. Vacation and Days Off. Employee may take reasonable vacations and days off agreeable to the Company and Employee; provided, however, that Employee shall be entitled to at least five (5) weeks of paid vacation per year, which Employee may use at any time during each year, and to the extent not used, during a subsequent year.

 

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15. Termination After Notice. Either Employee or the Company may terminate the employment of Employee at any time during the Term of this Agreement upon at least ninety (90) days’ prior written notice. In the event of such termination, the Company shall pay to Employee the severance pay provided for under Section 5 hereof, if applicable, together with all other compensation that would otherwise have been payable to Employee, as provided in Section 17 hereof, and for the purposes of said Section 17, the “Termination Date” shall be the effective date of termination set forth in the ninety (90) days prior written notice referred to in the preceding sentence.

16. Termination Upon Death or Disability.

(a) Upon the termination of the Employee’s employment due to the death of Employee, the Company shall pay to the estate of Employee certain compensation that would otherwise have been payable to Employee, as provided in Section 17 hereof, and for the purposes of said section, the “Termination Date” shall be the date of Employee’s death. Employee shall not be entitled to the severance payment described in Section 5 if his employment is terminated by death; provided, however, if the ninety (90) days prior written notice of termination had been given by either the Company or Employee, as described in section 15, but Employee dies prior to the effective date of termination set forth in said notice and Employee would have been entitled to the severance payment in Section 5 had he survived, then his estate shall be paid such severance payment. If Employee dies during the Term of this Agreement and all of the Stock Options listed in Section 4, as well as any other stock options issued to Employee by the Company that are not listed in Section 4 (such other stock options being defined as “Stock Options” for purposes of this Section 16(a)), are not vested at the time of his death, then all such Stock Options that have been outstanding for at least one year shall become immediately vested at Employee’s death and shall be exercisable by the representative of his estate pursuant to the terms of his respective Stock Option agreements or certificates. Furthermore, if Employee dies during the Term of this Agreement, any restricted stock awards granted to Employee pursuant to the Company’s 2004 Restricted Stock Plan that are not vested shall become immediately vested at Employee’s death if they were granted at least one year prior to Employee’s death.

(b) (i) During any period of disability, illness or incapacity during the Term of this Agreement, which renders Employee temporarily unable to perform the services required under this Agreement, Employee shall continue to receive the compensation payable under this Agreement. Employee’s employment under this Agreement may be terminated as provided below upon Employee’s permanent disability (as defined below).

(i) Employee shall be deemed to have suffered “permanent disability” if Employee is unable by reason of any medically determined physical or mental impairment to perform the duties required of him under this Agreement for a period of one hundred eighty (180) consecutive days in any twelve-month period. Periods of disability arising from unrelated causes shall not be combined. Upon a determination of permanent disability, the Board of Directors may terminate Employee’s employment upon thirty (30) days’ prior written notice. In the event of such termination, the Company shall pay to Employee certain compensation that would otherwise have been payable to Employee, as provided in Section 17, and for the purposes of said Section, the “Termination Date” shall be the effective date of

 

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termination following the Company’s notice under the preceding sentence, but Employee shall not be entitled to the severance payment described in Section 5 in such event of termination.

17. Payments Due Upon Termination of Employee’s Employment. In the event of termination of Employee’s employment under this Agreement pursuant to Sections 15 or 16 hereof, the Company shall pay Employee or his estate, as the case may be, the following payments or other items of compensation, for which purpose the “Termination Date” shall be the Termination Date specified in Sections 15 or 16 hereof, whichever is applicable:

(a) Basic Salary that would otherwise have payable to Employee under Section 3(a) hereof through the Termination Date;

(b) all payments, if any, payable pursuant to Section 5 hereof.

18. Waiver of Breach. The waiver by the Company of a breach of any of the provisions of this Agreement by Employee shall not be construed as a waiver of any subsequent breach of Employee.

19. Binding Effect: Assignment. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, whether by reason of merger, consolidation, acquisition or other business combination, or otherwise. This Agreement is a personal employment contract that may not be sold, assigned, transferred or pledged as collateral by the Employee.

20. Invalid Provisions. It is understood and agreed that in the event any paragraph, provision or clause of this Agreement or any combination thereof is found to be unenforceable at law, in equity, or under any presently existing or hereafter enacted legislation, regulation or order of the United States, any state of subdivision thereof or any municipality, those findings shall not in any way affect the other paragraphs, provisions or clauses in this Agreement, which shall continue in full force and effect.

21. Performance. This Agreement shall be performed in Dallas, County, Texas.

22. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Texas.

23. Entire Agreement. This Agreement contains the entire agreement of the parties and supersedes all prior agreements and understandings, oral or written, with respect to the subject matter hereof, except to the extent that provisions of the Current Employment Agreement are expressly stated herein to be effective. This Agreement may be changed only by an agreement in writing signed by the party against whom any waiver, change, amendment, modification or discharge is sought.

24. Headings. The headings contained in the Agreement are for reference purposed only and shall not affect the meaning or interpretation of this Agreement.

 

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25. Notice. Any notice required or permitted to be given under this Agreement to the Company shall be sufficient if in writing and if sent by certified or registered mail, first class, return receipt requested, to the registered office of the Company. Any notice required or permitted to be given under this Agreement to Employee shall be sufficient if in writing and if sent by certified or registered mail, first class, return receipt requested to Employee at his last known address. Employee shall be solely responsible for notifying the Company of his address on the date of this Agreement and all subsequent changes of address.

26. Gender. When the context in which words are used in this Agreement indicate that such is the intent, words in the singular number shall include the plural and vice versa and words in the masculine gender shall include the feminine and neuter genders and vice versa.

In WITNESS WHEREOF, the parties have executed this Agreement, effective as of the date and year first above written.

 

COMPANY:

CEC ENTERTAINMENT, INC.

By:

 

/s/ Richard M. Frank

 

Richard M. Frank

 

Chief Executive Officer

EMPLOYEE:

/s/ MHM

Michael H. Magusiak

 

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EX-10.30 7 dex1030.htm AMENDMENT NO. 1 TO THE MICHAEL H. MAGUSIAK 2005 EMPLOYMENT AGREEMENT

Exhibit 10.30

AMENDMENT NO. 1

TO THE

MICHAEL H. MAGUSIAK

2005 EMPLOYMENT AGREEMENT

THIS AMENDMENT NO. 1 TO THE MICHAEL H. MAGUSIAK 2005 EMPLOYMENT AGREEMENT (the “Amendment”) is executed as of the 17th day of December, 2007, by and between MICHAEL H. MAGUSIAK (“Employee”) and CEC ENTERTAINMENT, INC., a Kansas corporation (the “Company”).

RECITALS

The Company and the Employee entered into the Michael H. Magusiak 2005 Employment Agreement dated as of March 29, 2005 (the “Employment Agreement”); and

The Company and Employee have determined that it is in the best interests of the parties to amend the Employment Agreement to reflect the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, which are applicable to the Employment Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and Employee hereby agree that, effective as of December 17, 2007, the Employment Agreement shall be amended as follows:

1. Section 3(a) is amended by adding the following as the second sentence of said section:

Payment of the Basic Salary shall be made at periodic times, no less frequently than monthly, in accordance with the Company’s normal payroll practices.

2. Section 5 is amended by striking the last sentence of the first paragraph of said section and substituting the following:

Such severance pay shall be payable to Employee by the Company in cash on the date which is six (6) months following the date of Employee’s “separation from service,” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (or, if earlier, the date of death of Employee).

3. Section 6(b) is amended by adding the following at the end of said section:

Notwithstanding the foregoing provisions of this paragraph (b), in no event shall the Gross-Up Payment or any additional amount be paid to Employee later than the end of the calendar year next following the calendar year in which Employee remits the related taxes.


4. Section 6(d) is amended by adding the following at the end of said section:

Notwithstanding the foregoing provisions of this paragraph (d) and the foregoing paragraph (c), (i) any payment made to or on behalf of Employee which relates to taxes imposed on Employee shall be made not later than the end of the calendar year next following the calendar year in which such taxes are remitted by or on behalf of Employee, and (ii) any payment made to or on behalf of Employee which relates to reimbursement of expenses incurred due to a tax audit or litigation addressing the existence or amount of a tax liability shall be made by the end of the calendar year following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, the end of the calendar year following the calendar year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation.

5. Section 7 is amended by striking said section and substituting in lieu thereof the following:

7. Expenses. Subject to the rules and procedures the Company may specify from time to time, the Company shall reimburse Employee for all reasonable business expenses incurred by Employee on behalf of the Company during the Term of this Agreement and as identified in the Company’s rules and procedures regarding reimbursement of business expenses, which are incorporated herein by reference. The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. Reimbursement of eligible expenses shall be made on or before the last day of the calendar year following the calendar year in which the expenses were incurred.

6. Section 8 is amended by adding the following immediately before the last sentence of said section:

Payment or reimbursement of such insurance premiums during the Term of this Agreement shall be made on or before the last day of the calendar year following the calendar year in which the premiums are due, and such payment or reimbursement during a calendar year shall not affect the premiums eligible for payment or reimbursement in any other calendar year.

 

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7. Section 11 is amended by adding the following immediately after the first sentence of said section:

To the extent provision of such insurance coverage or cost reimbursement benefits during the Term of this Agreement are taxable to Employee, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year, unless the insurance coverage or cost reimbursement benefits provide for a limit on the amount of expenses that may be reimbursed under such arrangement over some or all of the period in which such arrangement remains in effect. To the extent the Company directly provides to Employee any cost reimbursement benefits, payment of such benefits shall be made on or before the last day of the calendar year following the calendar year in which such costs are incurred.

8. Section 11 is amended further by adding the following immediately before the last sentence of said section:

To the extent the Company provides such disability insurance coverage during the Term of this Agreement, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided, in any other calendar year. To the extent the Company reimburses Employee or pays on Employee’s behalf for such disability insurance coverage, payment or reimbursement of such insurance premiums shall be made on or before the last day of the calendar year following the calendar year in which the premiums are due, and such payment or reimbursement during a calendar year shall not affect the premiums eligible for payment or reimbursement in any other calendar year.

9. Section 11 is amended further by adding the following immediately after the last sentence of said section:

To the extent the Company directly provides any disability income benefits which can only be provided in part by insurance policies or plans, the payment of said benefits shall be made monthly only upon a disability as defined in said insurance policies or plans, provided that the definition of disability applied under such disability insurance policies or plans otherwise complies with the requirements of Section 1.409A-3(i)(4) of the Final Regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

10. Section 12 is amended by adding the following at the end of said section:

To the extent provision of such insurance coverage or cost reimbursement benefits are taxable to Employee and/or his Family and the provision of such benefits extend beyond the applicable period of time during which Employee would be entitled (or would, but for this Agreement, be entitled) to

 

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continuation coverage under the Company’s group health plan pursuant to Section 4980B of the Code ( the “COBRA period”), (i) the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year, unless the insurance coverage or cost reimbursement benefits provide for a limit on the amount of expenses that may be reimbursed under such arrangement over some or all of the period in which such arrangement remains in effect, and (ii) to the extent the Company directly provides to Employee any cost reimbursement benefits, payment of such benefits shall be made on or before the last day of the calendar year following the calendar year in which such costs are incurred.

11. Section 13 is amended by adding the following at the end of the first paragraph of said section:

To the extent provision of such insurance coverage during the Term of this Agreement is taxable to Employee, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

12. Section 15 is amended by adding the following at the end of the last sentence of said section:

,but in no event shall said effective date of termination be later than one hundred twenty (120) days following the giving of such written notice.

In all other respects, the Employment Agreement shall remain in effect and is confirmed and ratified.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the 17th day of December, 2007.

 

COMPANY:

CEC ENTERTAINMENT, INC.

By:

 

/s/ Richard M. Frank

 

Richard M. Frank

 

Chief Executive Officer

EMPLOYEE:

/s/ Michael H. Magusiak

Michael H. Magusiak

 

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                                RICHARD M. FRANK
                            2005 EMPLOYMENT AGREEMENT
 
     This  Richard M. Frank  2005  Employment  Agreement  (the  "Agreement")  is
executed  as of the 29th day of March,  2005,  by and  between  RICHARD M. FRANK
("Employee") and CEC ENTERTAINMENT, INC., a Kansas corporation ("Company").
 
                                    RECITALS:
 
     WHEREAS,  the  Employee  and the Company  have  heretofore  entered into an
agreement whereby Employee is employed by the Company as Chief Executive Officer
pursuant to certain terms and conditions; and
 
     WHEREAS,  the Board of Directors of the Company (the "Board of  Directors")
has offered Employee continued  employment in consideration for the compensation
and the other  benefits  hereinafter  set  forth,  and  Employee  is  willing to
continue in the employ of the Company on these terms;
 
     NOW,  THEREFORE,  in  consideration  of  the  mutual  promises  hereinafter
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, it is agreed:
 
     1.  Current  Employment  Agreement.  The  Company and  Employee  heretofore
entered into an  employment  agreement  dated  November 13, 2000,  (the "Current
Employment Agreement").  The term of the Current Employment Agreement expires on
the last day of the fiscal year of the Company  ending on or about  December 31,
2005.  Company and Employee hereby agree and affirm that the Current  Employment
Agreement  is and shall be in full force and effect  through the last day of the
fiscal year of the Company ending on or about December 31, 2005.
 
     2. Term. Following the expiration of the Current Employment Agreement,  the
Company employs Employee and Employee  accepts  employment from the Company upon
the terms and conditions specified in this Agreement.  Subject to the provisions
regarding  termination set forth in Sections 15 and 16 hereof,  the term of this
Agreement  shall  begin as of the first day of the  fiscal  year of the  Company
beginning on or about January 1, 2006 (the "Effective Date") and shall terminate
on the last day of the fiscal  year of the Company  ending on or about  December
31, 2010 (the "Term").
 
     3. Basic Salary.  For services  rendered by Employee under this  Agreement,
the Company shall pay Employee the "Basic Salary,"  provided for in this Section
3, as follows:
 
          (a) During the Term of Employee's employment under this Agreement, the
     Employee  shall  receive  as Basic  Salary the  amount of One  Million  Two
     Hundred Thousand Dollars  ($1,200,000.00) per year. The Basic Salary may be
     increased in such amounts and on such dates as the  Compensation  Committee
     of the Board of Directors (the "Compensation Committee") may determine from
     time to time.
 
<PAGE>
 
 
          (b) The  Basic  Salary  provided  for in this  Section  3 shall  be in
     addition to any other compensation and/or benefits provided to Employee (i)
     pursuant to this  Agreement  or (ii)  otherwise  at the  discretion  of the
     Compensation  Committee,  including,  but not limited to, the annual  bonus
     opportunity  available to home office employees and officers of the Company
     at a level commensurate with his position as Chief Executive Officer.
 
     4. Stock  Options.  Employee has received from the Company on March 4, 2005
options (the "Stock  Options") to purchase one hundred fifty thousand  (150,000)
shares of the Company's  Common Stock,  par value $ .10 per share (Common Stock)
pursuant to the  Company's  1997  Non-Statutory  Stock Option Plan. Of the Stock
Options granted as described in this Section 4, twenty-five  percent (25%) shall
vest on March  4,  2006,  fifty  percent  (50%)  shall  vest on  March 4,  2007,
seventy-five  percent (75%) shall vest on March 4, 2008 and one hundred  percent
(100%) shall vest on March 4, 2009. During the Term of this Agreement,  Employee
shall be entitled  to receive  additional  options to purchase  shares of Common
Stock  in  such  amounts  and  at  such  prices  as  may  be  determined  by the
Compensation  Committee,  and he shall also be entitled to receive  Common Stock
pursuant to restricted  stock awards  according to the Company's 2004 Restricted
Stock Plan in such  amounts  and under such  terms as may be  determined  by the
Compensation Committee.
 
     5. Severance  Pay. If the Company  terminates the employment of Employee at
any time (other than pursuant to Section 16 hereof), or if a "Change of Control"
occurs with  respect to the  Company and  Employee  voluntarily  terminates  his
employment  with the Company  within one year after such Change of Control,  the
Company  shall be required to pay Employee  severance pay in the amount of Three
Million Dollars ($3,000,000.00). Such severance pay shall be payable to Employee
by the Company in cash on or before the tenth  (10th) day after the  Termination
Date, as defined in Section 15.
 
     For  purposes of this  Section 5, a "Change of Control"  shall be deemed to
have occurred with respect to the Company if: (a) any person or group of persons
acting in concert,  in which  person or group of persons the  Employee is not an
investor,  partner,  officer,  director or member,  shall  acquire,  directly or
indirectly,  the power to vote, or direct the voting of, more than  thirty-three
percent (33%) of the then outstanding  voting securities of the Company;  or (b)
during any  consecutive  eighteen  (18) month period a majority of the Company's
Board of Directors  is elected or appointed  and consists of persons who are not
directors  of the  Company  as of the  Effective  Date,  and whose  election  or
appointment  as directors of the Company was  actively  opposed by Employee,  as
evidenced  by  Employee's  vote (in his  capacity  or  capacities,  if any, as a
director  and/or   stockholder  of  the  Company)   against  their  election  or
appointment  and by  written  notice  of his  opposition  to their  election  or
appointment  given by Employee to the then current  directors of the Company not
more  than  five  (5)  business  day  following  their  respective  election  or
appointment.
 
     6. Additional Payments.
 
          (a) In the event that any  payment or benefit  (within  the meaning of
     Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"))
     to the  Employee  or for his  benefit  paid or  payable or  distributed  or
 
<PAGE>
 
 
     distributable  (at any time or from time to time)  pursuant to the terms of
     this  Agreement  or otherwise in  connection  with,  or arising out of, his
     employment  with the Company or a change in ownership or effective  control
     of the Company or of a  substantial  portion of its assets ( a "Payment" or
     "Payments"),  would be subject to the excise tax imposed by Section 4999 of
     the Code,  or any interest or penalties  are incurred by the Employee  with
     respect  to such  excise  tax  (such  excise  tax,  together  with any such
     interest and penalties,  being hereinafter  collectively referred to as the
     "Excise Tax"),  then the Employee will be entitled to receive an additional
     payment  or  payments,  as the case may be  (referred  to  individually  or
     collectively as a "Gross-Up Payment"), in an amount such that after payment
     by the Employee of all taxes  (including any interest or penalties  imposed
     with  respect to such taxes and the Excise  Tax,  other than  interest  and
     penalties imposed by reason of the Employee's  failure to file timely a tax
     return or pay taxes  shown due on his  return),  including  any  Excise Tax
     imposed upon the Gross-Up  Payment,  the Employee  retains an amount of the
     Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
 
          (b) An  initial  determination  as to  whether a  Gross-Up  Payment is
     required pursuant to this Agreement and the amount of such Gross-Up Payment
     shall be made at the Company's  expense by an  accounting  firm selected by
     the Company, and reasonably acceptable to the Employee, which is designated
     as one of the largest  national  accounting firms in the United States (the
     "Accounting  Firm").  The Accounting  Firm shall provide its  determination
     (the "Determination"),  together with detailed supporting  calculations and
     documentation  to the Company and the Employee  within ten (10) days of the
     Termination Date, as defined in Section 15, or such other time as requested
     by the  Company  or by  the  Employee  (provided  the  Employee  reasonably
     believes  that any of the Payments may be subject to the Excise Tax) and if
     the  Accounting  Firm  determines  that no  Excise  Tax is  payable  by the
     Employee  with  respect  to a Payment or  Payments,  it shall  furnish  the
     Employee with an opinion reasonably  acceptable to the Employee that he has
     substantial  authority  not to report  any Excise  Tax on his  federal  tax
     return with respect to any such  Payment or Payments.  Within ten (10) days
     of the delivery of the  Determination  to the Employee,  the Employee shall
     have the right to dispute the Determination.  The Gross-Up Payment, if any,
     as determined pursuant to this Section 6(b) shall be paid by the Company to
     the Employee within five (5) days of the receipt of the Determination.  The
     existence of the dispute shall not in any way affect the  Employee's  right
     to receive the Gross-Up Payment in accordance with the Determination.  Upon
     the final  resolution of a dispute,  the Company shall  promptly pay to the
     Employee any additional amount required by such resolution.  If there is no
     dispute, the Determination shall be binding,  final and conclusive upon the
     Company and the Employee.
 
          (c) The  Employee  shall notify the Company in writing of any claim by
     the Internal Revenue Service that, if successful, would require the payment
     by the Company of the Gross-Up Payment. Such notification shall be given as
     soon as  practicable  but no later  than ten (10)  business  days after the
 
<PAGE>
 
     Employee knows of such claim and shall apprise the Company of the nature of
     such claim and the date on which such claim is  requested  to be paid.  The
     Employee  shall not pay such claim  prior to the  expiration  of the thirty
     (30) day period  following  the date on which he gives  such  notice to the
     Company  (or such  shorter  period  ending on the date that any  payment of
     taxes with  respect  to such claim is due).  If the  Company  notifies  the
     Employee in writing prior to the  expiration of such period that it desires
     to contest such claim, the Employee shall:
 
               (i) give the Company any information  reasonably requested by the
          Company relating to such claim,
 
               (ii) take such action in connection with contesting such claim as
          the Company  shall  reasonably  request in writing  from time to time,
          including,  without  limitation,  accepting legal  representation with
          respect  to such  claim  by an  attorney  reasonably  selected  by the
          Company.
 
               (iii)  cooperate  with  the  Company  in good  faith  in order to
          effectively contest such claim, and
 
               (iv)  permit  the  Company  to  participate  in  any  proceedings
          relating to such claim, provided, however, that the Company shall bear
          and pay directly all costs and expenses (including additional interest
          and  penalties)  incurred in  connection  with such  contest and shall
          indemnify and hold the Employee  harmless,  on an after-tax basis, for
          any Excise Tax or income tax,  including  interest and penalties  with
          respect  thereto,  imposed  as a  result  of such  representation  and
          payment of costs and  expenses.  Without  limitation  of the foregoing
          provision  of  this  Section  6(c),  the  Company  shall  control  all
          proceedings  taken in  connection  with such  contest and, at its sole
          option,  may  pursue or  forego  any and all  administrative  appeals,
          proceedings,  hearings and  conferences  with the taxing  authority in
          respect of such claim and may, at its sole option,  either  direct the
          Employee to pay the tax  claimed and sue for a refund,  or contest the
          claim in any permissible  manner, and the Employee agrees to prosecute
          such contest to a determination before any administrative tribunal, in
          a court of initial  jurisdiction and in one or more appellate  courts,
          as the Company shall determine; provided, however, that if the Company
          directs  the  Employee  to pay such  claim and sue for a  refund,  the
          Company shall  advance the amount of such payment to the Employee,  on
          an  interest-free  basis and  shall  indemnify  and hold the  Employee
          harmless,  on an after-tax  basis,  from any Excise Tax or income tax,
          including  interest or penalties  with respect  thereto,  imposed with
          respect to such  advance or with  respect to any  imputed  income with
          respect to such  advance;  and further  provided that any extension of
          the  statute  of  limitations  relating  to  payment  of taxes for the
          taxable  year of the  Employee  with  respect to which such  contested
          amount  is  claimed  to be due is  limited  solely  to such  contested
          amount.  Furthermore,  the  Company's  control of the contest shall be
          limited to issues with  respect to which a Gross-Up  Payment  would be
          payable  hereunder  and the  Employee  shall be  entitled to settle or
          contest,  as the case may be, any other issue  raised by the  Internal
          Revenue Service or any other taxing authority.
 
<PAGE>
 
 
          (d) If, after the receipt by the Employee of an amount advanced by the
     Company  pursuant to Section 6(c), the Employee becomes entitled to receive
     any refund with respect to such claim,  the Employee  shall (subject to the
     Company's  complying with the requirements of Section 6(c)) promptly pay to
     the Company the amount of such refund  (together  with any interest paid or
     credited thereon after taxes applicable thereto).  If, after the receipt by
     the Employee of an amount advanced by the Company pursuant to Section 6(c),
     a  determination  is made that the  Employee  shall not be  entitled to any
     refund  with  respect  to such  claim and the  Company  does not notify the
     Employee in writing of its intent to contest such denial of refund prior to
     the  expiration  of thirty  (30) days after such  determination,  then such
     advance  shall be  forgiven  and shall not be required to be repaid and the
     amount of such advance shall offset,  to the extent thereof,  the amount of
     Gross-Up Payment required to be paid.
 
     7.  Expenses.  Subject to the rules and  procedures the Company may specify
from time to time,  the Company  shall  reimburse  Employee  for all  reasonable
expenses incurred by Employee on behalf of the Company.
 
     8. Automobile. Employer shall pay to Employee the sum of One Thousand Three
Hundred  Dollars  ($1,300.00) per month (subject to adjustment from time to time
in direct proportion to generally  applicable  adjustments by the Company to its
automobile   allowances)  to  reimburse  Employee  for  the  use  of  Employee's
automobile  in the  performance  of his  duties  under this  Agreement,  and the
Company  shall  further pay  directly or by  reimbursement  to Employee  (as the
Company and Employee may from time to time agree) the premiums  upon a policy of
collision and liability  insurance covering such automobile.  All other cost and
expenses  incurred in the operation and  maintenance  of Employee's  automobile,
including but not limited to the cost of all fuel, oil, maintenance and repairs,
shall be paid solely by Employee.
 
     9. Duties of Employee.  In accepting  continued  employment by the Company,
Employee  agrees to  undertake  and  assume the  responsibility,  subject to the
general  direction and control of the Board of Directors,  of performing for and
on behalf of the Company the duties of Chief  Executive  Officer of the Company,
including  formulation  of the  policies  and  administration  of the  Company's
affairs,  and such other duties as are normally  associated with and inherent in
such  capacity.  Employee  shall have  authority to hire the staff  necessary to
accomplish the Company's goals. In addition, if requested,  Employee shall serve
as Chairman of the Board of Directors, without additional compensation,  and, if
requested,  serve as an employee,  officer and/or  director of any affiliates of
the Company without additional compensation, although such affiliates may assume
some or all of the payments due to Employee hereunder.
 
     10. Exclusive  Service.  Employee shall devote  substantially his full time
and  attention to rendering  services to the Company and in  furtherance  of the
Company's  best  interests,  provided  that  Employee  may make and  manage  his
personal passive investments.  During the Term of this Agreement,  other than as
an employee,  officer and/or  director of an affiliate of the Company,  Employee
shall not be  employed  by any other  person or engage in any other  business or
occupation;  provided  that  Employee  may engage in the  business of making and
managing his personal passive investments.
 
<PAGE>
 
 
     11. Medical and Disability  Insurance.  The Company shall provide  Employee
and his family with insurance coverage and/or cost reimbursement  benefits which
provide for 100% of the health, medical, hospitalization,  prescription drug and
dental costs and  expenses  incurred by or on behalf of Employee and his Family,
whether  through  existing  insurance  and/or  reimbursement  plans covering the
Company's employees or through special plans relating  specifically to Employee,
or a  combination  thereof.  For  purposes  of this  Agreement,  the  Employee's
"Family"  shall  include his spouse,  as well as his children and step  children
until such time that his children and step  children are no longer  eligible for
coverage under the health  insurance  plans covering the Company's  employees or
until they become  covered  under a policy or plan  provided  by their  employer
which provides  substantially  similar coverage and benefits.  The Company shall
also take the necessary action to (a) include Employee under a Company sponsored
disability  plan for  executives,  (b) acquire a specific  disability  insurance
policy for  Employee  and/or (c) assist  Employee in  acquiring  or paying for a
disability  plan or insurance  policy,  which action results in Employee  having
coverage  providing  total  disability  income  benefits  of  at  least  50%  of
Employee's  Basic  Salary  which  benefits  will be payable if  Employee  became
disabled  until he attains  age 65. If only a portion of the  disability  income
benefits  described  above can be provided by insurance  policies or plans,  the
company shall have the obligation to provide the remaining portion.
 
     12.  Continuation  of Medical  Benefit  Coverage.  Upon the  termination of
Employee's  employment  for  any  reason,  including  a  termination  due to the
expiration of the Term of this Agreement, the Company shall provide Employee and
his Family the health,  medical,  hospitalization,  prescription drug and dental
insurance  coverage and/or cost  reimbursement  benefits set forth in Section 11
hereof,  for a period not to exceed the earlier of (a) five (5) years or (b) the
date on which the Employee and his Family become  covered under a policy or plan
paid for by a new employer of Employee providing  substantially similar coverage
and benefits.  In the event Employee's employment terminates and this Section 12
becomes  effective,  and  thereafter  Employee dies while the benefits  provided
herein are still in effect,  such benefits shall continue for Employee's  Family
until five (5) years have passed  following his  termination of employment.  The
benefits  set forth  under this  Section 12 shall be provided in addition to any
other payments, benefits or compensation,  if any, to which Employee, his estate
of his designated  beneficiary is entitled due to his  termination of employment
as set forth in this Agreement.
 
     13. Life Insurance.  The Company shall maintain and pay the premiums on one
or more life insurance  policies on Employee's life, which may include insurance
on Employee's life under any group term life insurance plan maintained form time
to time by the Company for its  employees.  The aggregate face amount(s) of such
policy  or  policies   shall  be  at  least  Five   Hundred   Thousand   Dollars
($500,000.00).
 
     Any policy of insurance  or  certificate  of  insurance  under a group term
policy  maintained  by the  Company  to  provide  the death  benefits  described
pursuant to this Section 13 shall be owned by the Company,  and the Employee (or
his  assignee)  shall  have  the sole  right to  designate  the  beneficiary  or
beneficiaries of the proceeds payable thereunder upon the death of the Employee.
 
<PAGE>
 
 
     14. Vacation and Days Off. Employee may take reasonable  vacations and days
off  agreeable to the Company and  Employee;  provided,  however,  that Employee
shall be entitled to at least five (5) weeks of paid  vacation  per year,  which
Employee  may use at any time  during  each  year,  and to the  extent not used,
during a subsequent year.
 
     15. Termination After Notice.  Either Employee or the Company may terminate
the employment of Employee at any time during the Term of this Agreement upon at
least ninety (90) days' prior written notice.  In the event of such termination,
the Company shall pay to Employee the severance pay provided for under Section 5
hereof, if applicable, together with all other compensation that would otherwise
have been  payable to  Employee,  as provided in Section 17 hereof,  and for the
purposes of said Section 17, the "Termination  Date" shall be the effective date
of termination  set forth in the ninety (90) days prior written notice  referred
to in the preceding sentence.
 
     16. Termination Upon Death or Disability.
 
          (a) Upon the termination of the Employee's employment due to the death
     of  Employee,  the  Company  shall pay to the  estate of  Employee  certain
     compensation  that  would  otherwise  have been  payable  to  Employee,  as
     provided in Section 17 hereof,  and for the purposes of said  section,  the
     "Termination  Date" shall be the date of Employee's  death.  Employee shall
     not be  entitled to the  severance  payment  described  in Section 5 if his
     employment is terminated by death;  provided,  however,  if the ninety (90)
     days  prior  written  notice of  termination  had been  given by either the
     Company or Employee, as described in section 15, but Employee dies prior to
     the  effective  date of  termination  set forth in said notice and Employee
     would  have been  entitled  to the  severance  payment  in Section 5 had he
     survived, then his estate shall be paid such severance payment. If Employee
     dies during the Term of this  Agreement and all of the Stock Options listed
     in Section 4, as well as any other stock options  issued to Employee by the
     Company  that are not listed in Section 4 (such other stock  options  being
     defined as "Stock  Options" for purposes of this  Section  16(a)),  are not
     vested at the time of his death, then all such Stock Options that have been
     outstanding  for at least  one year  shall  become  immediately  vested  at
     Employee's  death and shall be  exercisable  by the  representative  of his
     estate pursuant to the terms of his respective  Stock Option  agreements or
     certificates.  Furthermore,  if  Employee  dies  during  the  Term  of this
     Agreement,  any restricted stock awards granted to Employee pursuant to the
     Company's  2004  Restricted  Stock  Plan that are not vested  shall  become
     immediately  vested at  Employee's  death if they were granted at least one
     year prior to Employee's death.
 
          (b) (i) During any period of disability,  illness or incapacity during
     the Term of this Agreement,  which renders Employee  temporarily  unable to
     perform the services required under this Agreement, Employee shall continue
     to  receive  the  compensation  payable  under this  Agreement.  Employee's
     employment  under this  Agreement may be terminated as provided  below upon
     Employee's permanent disability (as defined below).
 
<PAGE>
 
 
          (ii) Employee shall be deemed to have suffered "permanent  disability"
     if Employee  is unable by reason of any  medically  determined  physical or
     mental  impairment  to  perform  the  duties  required  of him  under  this
     Agreement for a period of one hundred eighty (180)  consecutive days in any
     twelve-month  period.  Periods of disability  arising from unrelated causes
     shall not be combined.  Upon a determination of permanent  disability,  the
     Board of Directors may  terminate  Employee's  employment  upon thirty (30)
     days' prior written notice. In the event of such  termination,  the Company
     shall pay to Employee certain  compensation  that would otherwise have been
     payable to  Employee,  as provided  in Section 17, and for the  purposes of
     said  Section,  the  "Termination  Date"  shall  be the  effective  date of
     termination  following the Company's  notice under the preceding  sentence,
     but Employee  shall not be entitled to the severance  payment  described in
     Section 5 in such event of termination.
 
     17. Payments Due Upon Termination of Employee's Employment. In the event of
termination of Employee's  employment under this Agreement  pursuant to Sections
15 or 16 hereof,  the Company shall pay Employee or his estate,  as the case may
be, the following payments or other items of compensation, for which purpose the
"Termination  Date" shall be the Termination Date specified in Sections 15 or 16
hereof, whichever is applicable:
 
          (a) Basic Salary that would  otherwise  have payable to Employee under
     Section 3(a) hereof through the Termination Date;
 
          (b) all payments, if any, payable pursuant to Section 5 hereof.
 
     18.  Waiver of Breach.  The waiver by the Company of a breach of any of the
provisions of this  Agreement by Employee  shall not be construed as a waiver of
any subsequent breach of Employee.
 
     19. Binding Effect:  Assignment.  The rights and obligations of the Company
under this Agreement shall inure to the benefit of and shall be binding upon the
successors   and  assigns  of  the   Company,   whether  by  reason  of  merger,
consolidation,  acquisition or other business  combination,  or otherwise.  This
Agreement  is a personal  employment  contract  that may not be sold,  assigned,
transferred or pledged as collateral by the Employee.
 
     20. Invalid  Provisions.  It is understood and agreed that in the event any
paragraph,  provision or clause of this Agreement or any combination  thereof is
found to be unenforceable at law, in equity, or under any presently  existing or
hereafter  enacted  legislation,  regulation or order of the United States,  any
state of subdivision  thereof or any  municipality,  those findings shall not in
any way affect the other  paragraphs,  provisions or clauses in this  Agreement,
which shall continue in full force and effect.
 
     21.  Performance.  This  Agreement  shall be performed  in Dallas,  County,
Texas.
 
     22.  Governing  Law.  This  Agreement  shall be  construed  and enforced in
accordance with the laws of the State of Texas.
 
<PAGE>
 
 
     23. Entire Agreement.  This Agreement  contains the entire agreement of the
parties and supersedes all prior agreements and understandings, oral or written,
with respect to the subject matter hereof,  except to the extent that provisions
of the Current Employment Agreement are expressly stated herein to be effective.
This  Agreement  may be changed only by an  agreement  in writing  signed by the
party against whom any waiver, change,  amendment,  modification or discharge is
sought.
 
     24.  Headings.  The headings  contained in the  Agreement are for reference
purposed  only and  shall not  affect  the  meaning  or  interpretation  of this
Agreement.
 
     25.  Notice.  Any  notice  required  or  permitted  to be given  under this
Agreement  to the  Company  shall be  sufficient  if in  writing  and if sent by
certified or registered  mail,  first class,  return receipt  requested,  to the
registered  office of the Company.  Any notice required or permitted to be given
under this  Agreement to Employee  shall be sufficient if in writing and if sent
by certified  or  registered  mail,  first class,  return  receipt  requested to
Employee at his last known  address.  Employee shall be solely  responsible  for
notifying  the  Company  of his  address on the date of this  Agreement  and all
subsequent changes of address.
 
     26.  Gender.  When the  context in which  words are used in this  Agreement
indicate that such is the intent, words in the singular number shall include the
plural  and vice  versa and words in the  masculine  gender  shall  include  the
feminine and neuter genders and vice versa.
 
     In WITNESS WHEREOF, the parties have executed this Agreement,  effective as
of the date and year first above written.
 
 
                                       COMPANY:
 
                                       CEC ENTERTAINMENT, INC.
 
 
 
                                       By:  /s/ Michael H. Magusiak
                                            ------------------------------
                                            Michael H. Magusiak
                                            President
 
 
                                       EMPLOYEE:
 
 
                                       /s/ Richard M. Frank
                                       -----------------------------------
                                       Richard M. Frank
 
 
 
</TEXT>
</DOCUMENT>

 







EX-10.29 6 dex1029.htm AMENDMENT NO. 1 TO THE RICHARD M. FRANK 2005 EMPLOYMENT AGREEMENT

Exhibit 10.29

AMENDMENT NO. 1

TO THE

RICHARD M. FRANK

2005 EMPLOYMENT AGREEMENT

THIS AMENDMENT NO. 1 TO THE RICHARD M. FRANK 2005 EMPLOYMENT AGREEMENT (the “Amendment”) is executed as of the 17th day of December, 2007, by and between RICHARD M. FRANK (“Employee”) and CEC ENTERTAINMENT, INC., a Kansas corporation (the “Company”).

RECITALS

The Company and the Employee entered into the Richard M. Frank 2005 Employment Agreement dated as of March 29, 2005 (the “Employment Agreement”); and

The Company and Employee have determined that it is in the best interests of the parties to amend the Employment Agreement to reflect the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, which are applicable to the Employment Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and Employee hereby agree that, effective as of December 17th, the Employment Agreement shall be amended as follows:

1. Section 3(a) is amended by adding the following as the second sentence of said section:

Payment of the Basic Salary shall be made at periodic times, no less frequently than monthly, in accordance with the Company’s normal payroll practices.

2. Section 5 is amended by striking the last sentence of the first paragraph of said section and substituting the following:

Such severance pay shall be payable to Employee by the Company in cash on the date which is six (6) months following the date of Employee’s “separation from service,” as defined in Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder (or, if earlier, the date of death of Employee).

3. Section 6(b) is amended by adding the following at the end of said section:

Notwithstanding the foregoing provisions of this paragraph (b), in no event shall the Gross-Up Payment or any additional amount be paid to Employee later than the end of the calendar year next following the calendar year in which Employee remits the related taxes.


4. Section 6(d) is amended by adding the following at the end of said section:

Notwithstanding the foregoing provisions of this paragraph (d) and the foregoing paragraph (c), (i) any payment made to or on behalf of Employee which relates to taxes imposed on Employee shall be made not later than the end of the calendar year next following the calendar year in which such taxes are remitted by or on behalf of Employee, and (ii) any payment made to or on behalf of Employee which relates to reimbursement of expenses incurred due to a tax audit or litigation addressing the existence or amount of a tax liability shall be made by the end of the calendar year following the calendar year in which the taxes that are the subject of the audit or litigation are remitted to the taxing authority, or where as a result of such audit or litigation no taxes are remitted, the end of the calendar year following the calendar year in which the audit is completed or there is a final and non-appealable settlement or other resolution of the litigation.

5. Section 7 is amended by striking said section and substituting in lieu thereof the following:

7. Expenses. Subject to the rules and procedures the Company may specify from time to time, the Company shall reimburse Employee for all reasonable business expenses incurred by Employee on behalf of the Company during the Term of this Agreement and as identified in the Company’s rules and procedures regarding reimbursement of business expenses, which are incorporated herein by reference. The amount of expenses eligible for reimbursement during a calendar year shall not affect the expenses eligible for reimbursement in any other calendar year. Reimbursement of eligible expenses shall be made on or before the last day of the calendar year following the calendar year in which the expenses were incurred.

6. Section 8 is amended by adding the following immediately before the last sentence of said section:

Payment or reimbursement of such insurance premiums during the Term of this Agreement shall be made on or before the last day of the calendar year following the calendar year in which the premiums are due, and such payment or reimbursement during a calendar year shall not affect the premiums eligible for payment or reimbursement in any other calendar year.

 

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7. Section 11 is amended by adding the following immediately after the first sentence of said section:

To the extent provision of such insurance coverage or cost reimbursement benefits during the Term of this Agreement are taxable to Employee, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year, unless the insurance coverage or cost reimbursement benefits provide for a limit on the amount of expenses that may be reimbursed under such arrangement over some or all of the period in which such arrangement remains in effect. To the extent the Company directly provides to Employee any cost reimbursement benefits, payment of such benefits shall be made on or before the last day of the calendar year following the calendar year in which such costs are incurred.

8. Section 11 is amended further by adding the following immediately before the last sentence of said section:

To the extent the Company provides such disability insurance coverage during the Term of this Agreement, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided, in any other calendar year. To the extent the Company reimburses Employee or pays on Employee’s behalf for such disability insurance coverage, payment or reimbursement of such insurance premiums shall be made on or before the last day of the calendar year following the calendar year in which the premiums are due, and such payment or reimbursement during a calendar year shall not affect the premiums eligible for payment or reimbursement in any other calendar year.

9. Section 11 is amended further by adding the following immediately after the last sentence of said section:

To the extent the Company directly provides any disability income benefits which can only be provided in part by insurance policies or plans, the payment of said benefits shall be made monthly only upon a disability as defined in said insurance policies or plans, provided that the definition of disability applied under such disability insurance policies or plans otherwise complies with the requirements of Section 1.409A-3(i)(4) of the Final Regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

10. Section 12 is amended by adding the following at the end of said section:

To the extent provision of such insurance coverage or cost reimbursement benefits are taxable to Employee and/or his Family and the provision of such benefits extend beyond the applicable period of time during which Employee would be entitled (or would, but for this Agreement, be entitled) to

 

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continuation coverage under the Company’s group health plan pursuant to Section 4980B of the Code ( the “COBRA period”), (i) the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year, unless the insurance coverage or cost reimbursement benefits provide for a limit on the amount of expenses that may be reimbursed under such arrangement over some or all of the period in which such arrangement remains in effect, and (ii) to the extent the Company directly provides to Employee any cost reimbursement benefits, payment of such benefits shall be made on or before the last day of the calendar year following the calendar year in which such costs are incurred.

11. Section 13 is amended by adding the following at the end of the first paragraph of said section:

To the extent provision of such insurance coverage during the Term of this Agreement is taxable to Employee, the provision of such in-kind benefits during a calendar year shall not affect the in-kind benefits to be provided in any other calendar year.

12. Section 15 is amended by adding the following at the end of the last sentence of said section:

,but in no event shall said effective date of termination be later than one hundred twenty (120) days following the giving of such written notice.

In all other respects, the Employment Agreement shall remain in effect and is confirmed and ratified.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the 17th day of December, 2007.

 

COMPANY:

CEC ENTERTAINMENT, INC.

By:

 

/s/ Michael H. Magusiak

 

Michael H. Magusiak

 

President

EMPLOYEE:

By:

 

/s/ Richard M. Frank

 

Richard M. Frank

 

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