Attached files
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
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FORM
8-K
CURRENT
REPORT
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Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date
of report (Date of earliest
event reported): February
23, 2010
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CEC
ENTERTAINMENT, INC.
(Exact
Name of Registrant as Specified in Charter)
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Kansas
(State
or other jurisdiction of incorporation)
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0-13687
(Commission
File Number)
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48-0905805
(IRS
Employer Identification No.)
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4441
West Airport Freeway
Irving,
Texas
(Address
of Principal Executive Offices)
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75062
(Zip
Code)
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(972)
258-8507
(Registrant’s
Telephone Number, Including Area Code)
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Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
5.02. Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory Arrangements with
Certain Officers.
(e) On
February 23, 2010, CEC Entertainment, Inc. (the “Company”) entered into new
employment agreements with Michael H. Magusiak, the Company's President and
Chief Executive Officer, and Richard M. Frank, Executive Chairman of the
Company's Board of Directors (the “Board”). The new employment
agreements are referred to herein collectively as the "Employment Agreements,"
and each, individually, as an "Employment Agreement."
Mr. Magusiak's
Employment Agreement provides for a seventy-three (73) month term commencing on
February 23, 2010 and ending on March 31, 2016. The Employment
Agreement replaces Mr. Magusiak's prior employment agreement with the Company
dated March 29, 2005, as amended. Mr. Magusiak's Employment Agreement
provides for (i) a base salary of $750,000, (ii) a cash bonus, payable
annually, if earned, based upon the achievement of corporate objectives pursuant
to the Company’s Incentive Bonus Plan, (iii) the grant of performance-based
restricted stock or restricted stock unit awards (“Restricted Stock Awards”) in
accordance with the terms of the Company’s Second Amended and Restated 2004
Restricted Stock Plan or any successor plan (the “Restricted Stock Plan”) in
such number of shares and under such terms as may be determined by the
Compensation Committee, in accordance with the terms of the Restricted Stock
Plan, (iv) the reimbursement of reasonable business expenses, (v) an automobile
allowance of $24,000 annually and a reimbursement of automobile insurance
premiums of $1,000 annually, (vi) at least $500,000 in life insurance coverage,
(vii) at least five (5) weeks vacation and (viii) such additional benefits
and/or compensation as may be determined by the Compensation Committee. The
Employment Agreement also provides for certain severance and change-in-control
payments described below.
Mr. Frank's
Employment Agreement provides for a forty-nine (49) month term commencing on
February 23, 2010 and ending on March 31, 2014. The Employment
Agreement replaces Mr. Frank's prior employment agreement with the Company dated
March 29, 2005, as amended. The Employment Agreement provides for
(i) a base salary of $750,000, (ii) a cash bonus, payable annually, if
earned, based upon the achievement of corporate objectives pursuant to the
Company’s Incentive Bonus Plan, (iii) the grant of Restricted Stock Awards
in accordance with the terms of the Company’s Restricted Stock Plan in such
number of shares and under such terms as may be determined by the Compensation
Committee, in accordance with the terms of the Restricted Stock Plan, with any
such awards vesting over the term of the employment agreement, (iv) the
reimbursement of reasonable business expenses, (v) an automobile allowance of
$24,000 annually and a reimbursement of automobile insurance premiums of $1,000
annually, (vi) at least $500,000 in life insurance coverage, (vii) at least five
(5) weeks vacation and (viii) such additional benefits and/or compensation
as may be determined by the Compensation Committee. The Employment
Agreement also provides for certain severance and change-in-control payments
described below.
Under the
terms of their respective Employment Agreements, if Mr. Frank’s or
Mr. Magusiak’s employment with the Company is terminated by the Company
other than (i) for “Cause” (as defined in the Employment Agreements), (ii) as a
result of death, (iii) as a result of a “Significant Medical Condition” (as
defined in the Employment Agreements), or (iv) as a result of a “Permanent
Disability” (as defined in the Employment Agreements), then Messrs. Frank
and Magusiak will each be entitled to receive a severance amount equal to
$2,000,000, which will be payable in cash in a lump sum within five (5) business
days of such date of termination. In addition, if Mr. Frank’s or
Mr. Magusiak’s employment with the Company is terminated for any reason
(including death or disability) or as a result of a Significant Medical
Condition, or if there is a “Change of Control” (as defined in the Employment
Agreements), any Restricted Stock Awards that were granted to Messrs. Frank
and Magusiak under the Company's Restricted Stock Plan at least one year prior
to such executive's respective termination date will vest immediately upon
termination of employment, subject to any requirements of the Restricted Stock
Plan and satisfaction of any applicable performance-based criteria.
In
addition, under his Employment Agreement, Mr. Frank is entitled to deferred
compensation payments equaling $25,000 per year for 10 years after the date he
leaves the Company, upon the earlier of (i) the date his employment is
terminated for any reason (including retirement, death, disability or as a
result of a Significant Medical Condition) or (ii) the end of the term of his
Employment Agreement. Under his Employment Agreement, Mr. Magusiak is
entitled to deferred compensation payments equaling $25,000 per year for 10
years after the date he leaves the Company, upon the earlier of (i) the date the
Company terminates his employment for any reason, (ii) the
2
end of
the term of his Employment Agreement, (iii) the date he and the Company agree to
terminate his employment due to a Significant Medical Condition or (iv) a Change
of Control. In the event Mr. Magusiak voluntarily terminates his
employment with the Company for any reason (other than due to a Significant
Medical Condition) prior to a Change of Control, he is entitled to a prorated
amount based on the percentage of completion of the term of his Employment
Agreement when he leaves the Company. The Company is also obligated
to provide for each executive medical benefit coverage for each executive and
his “Family” (as defined in the Employment Agreements) during the term of their
employment agreements and, upon certain termination events, for up to ten years
from the date of termination or until such executive and his Family become
covered under a policy or plan providing substantially similar coverage by a new
employer.
The
Employment Agreements also provide that each of Messrs. Frank and Magusiak will
receive a lump sum cash payment of $3,000,000 in the event there is a Change of
Control and his employment is terminated by the Company within one year after
such a Change of Control or such executive voluntarily terminates his
employment. Each executive will also be entitled to such payment if his
employment is terminated for any reason prior to a Change of Control (whether or
not the Change of Control ever occurs) and such termination either (i) was at
the request or direction of a person who has entered into an agreement with the
Company, the consummation of which would constitute a Change of Control or (ii)
was otherwise in connection with or in anticipation of a Change of
Control. In no event will the Company gross-up the executive’s
respective severance amounts or any other amounts paid by the Company to the
executives to satisfy any excise or similar taxes.
The
preceding description of the Employment Agreements with Messrs. Magusiak and
Frank is qualified in its entirety by reference to the Employment Agreements
filed with this Current Report on Form 8-K as Exhibits 10.1 and 10.2, and
incorporated herein by reference.
Item
8.01 Other Events.
On February 23, 2010, upon the
recommendation of the Nominating/Corporate Governance Committee, the Company’s
Board approved amendments to the Company’s Corporate Governance Guidelines in
order to further enhance the Company’s corporate governance
practices. In general, the amendments provide, among other things,
that the Company’s independent directors, after considering the recommendation
of the Nominating/Corporate Governance Committee, will annually select one
independent director to serve as the Board’s Lead Independent
Director. The Lead Independent Director will have the following
authority, responsibilities and duties:
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separate
authority to call for and conduct executive sessions of the Board at which
only outside independent directors are permitted to be present, along with
other persons invited to attend such sessions by the Lead Independent
Director or a majority of the outside, independent
directors;
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presides
at all meetings of the Board at which the Executive Chairman is not
present, including executive sessions of the independent
directors;
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serves as
a liaison between the Executive Chairman and the independent
directors;
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approves
materials sent to the Board that are initially prepared by or under the
direction of the Executive Chairman;
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approves
meeting agendas for the Board that are initially prepared by or under the
direction of the Executive Chairman;
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approves
meeting schedules that are initially prepared by or under the direction of
the Executive Chairman in order to assure that there is sufficient time
for discussion of all agenda items;
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recommends to the
Executive Chairman or the Board matters for consideration by the Board;
and
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if
requested by major stockholders, is available for consultation and direct
communication.
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In addition, on February 23, 2010, upon the recommendation of the
Nominating/Corporate Governance Committee, the Company’s independent directors
elected Raymond E. Wooldridge to serve as the Board’s Lead Independent
Director.
The
preceding description of the changes to the Corporate Governance Guidelines is
qualified in its entirety by reference to the Corporate Governance Guidelines
filed with this Current Report on Form 8-K as Exhibit 99.1 and incorporated
herein by reference.
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Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits
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Exhibit
Number
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Description
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10.1
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Michael
H. Magusiak 2010 Employment Agreement dated February 23,
2010
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10.2
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Richard
M. Frank 2010 Employment Agreement dated February 23,
2010
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99.1
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Corporate
Governance Guidelines effective as of February 23, 2010
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
| CEC ENTERTAINMENT, INC. | |||
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Date:
February 26, 2010
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By:
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/s/ Christopher D. Morris | |
| Christopher D. Morris | |||
| Executive Vice President | |||
| Chief Financial Officer | |||
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EXHIBIT
INDEX
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Exhibit
Number
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Description
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10.1
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Michael
H. Magusiak 2010 Employment Agreement dated February 23,
2010
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10.2
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Richard
M. Frank 2010 Employment Agreement dated February 23,
2010
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99.1
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Corporate
Governance Guidelines effective as of February 23, 2010
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