Exhibits
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Exhibit
Number Description
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10(a) Employment Agreement, dated April 28, 1999,
between Xxxxxxx X. Xxxxxxxx and the Company.
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is executed as of the
28th day of April, 1999, by and between XXXXXXX X. XXXXXXXX
("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
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 that any prior employment agreements between the Company and
the Employee be superceded by the terms and conditions hereof, as
follows:
1. Employment. The Company employs Employee and Employee
accepts employment from the Company upon the terms and conditions
specified in this Agreement.
2. Term. Subject to the provisions regarding termination
set forth in Sections 14, 15, and 16 hereof, the initial term of
this Agreement shall begin as of January 4, 1999 (the "Effective
Date") and shall terminate on the last day of the fiscal year of the
Company ending on or about December 31, 2003 (the "Initial 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) Employee shall receive as minimum Basic Salary the
amount of $25,000.00 per month.
(b) The Basic Salary may be adjusted in such amounts and on
such dates as the Compensation Committee of the Board of Directors
may determine from time to time.
(c) 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 Board of Directors, 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 January 8, 1999 options (the "Stock options")to purchase one
hundred thousand (100,000) 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, thirty percent (30%) shall vest on
January 8, 2001, thirty-five percent (35%) shall vest on January 8,
2002, and the remaining thirty-five (35%) of the Stock Options
shall vest on January 8, 2003.
5. Severance Pay. If Company terminates the employment of
Employee at any time (other than pursuant to Section 15 hereof), or
if a "Change of Control" (as defined below) occurs with respect to
Company and Employee voluntarily terminates his employment with
Company within one year after such a Change of Control, Company
shall be required to pay Employee severance pay in an amount equal
to the product of (a) the Employee's then Basic Salary, multiplied
by (b) the number twenty-four (24). Such severance pay shall be
payable to Employee by Company in cash on or before the thirtieth
(30th) day after the effective date of such termination.
For purposes of this Section 5, a "Change of Control" shall be
deemed to have occurred with respect to 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 current Board of Directors not
more than five (5) business days following their respective
election or appointment; provided, however, that in no event shall
a change in composition of the Company's Board of Directors
pursuant to an election of Board of Directors members pursuant to
Section 4.6 of the Company's Articles of Incorporation, as amended
through the date of this Agreement, constitute or result in a
"Change of Control" for purposes of this Section 5.
6. 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.
7. 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
adjustment 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 Employer shall
further pay directly or by reimbursement to Employee (as Employer
and Employee may from time to time agree) the premiums upon a
policy of collision and liability insurance covering such
automobile. All other costs 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.
8. 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 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 an officer and/or director of any affiliates of the
Company without additional compensation.
9. 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 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.
10. Health and Disability Insurance. The Company shall provide
Employee and his Family with health, medical, hospitalization and
dental insurance coverage and/or cost reimbursement benefits which
provide for one hundred percent (100%) of such costs and expenses
to be paid on behalf of and/or reimbursed to 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 only
include his spouse and dependent children. The Company shall also
provide disability insurance coverage to Employee under any Company
plan(s) for such coverage as in effect from time to time for that
category or class of the Company's employees which includes the
Company's senior executive officers, provided that if necessary to
provide Employee with monthly disability income benefits of at
least fifty percent (50%) of Employee's Basic Salary in the event
of Employee's permanent disability, the Company shall adopt a
special plan relating specifically to Employee which results in
Employee having coverage providing total benefits of at least 50%
of Employee's Basic Salary.
11. Continuation of Health Benefit Coverage. Upon the
termination of Employee's employment for any reason, including a
termination due to the expiration of the Initial Term of this
Agreement or any renewal thereof, the Company shall provide
Employee and his Family the health, medical, hospitalization and
dental insurance coverage and/or cost reimbursement benefits set
forth in Section 10 hereof, for a period not to exceed the earlier
of (i) five (5) years or (ii) the date on which 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 11 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 11 shall be provided in addition to any
other payments, benefits or compensation, if any, to which
Employee, his estate or his designated beneficiary is entitled due
to his termination of employment as set forth in this Agreement.
12. 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 from time to time by the Company for
its employees. The aggregate face amount(s) of such policy or
policies shall be consistent with those amounts available for
senior executive officers of the Company.
Any policy of insurance or certificate of insurance under a group
term policy maintained by the Company under this Section 12 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.
13. 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.
14. Termination After Notice. Either Employee or the Company may
terminate the employment of Employee at any time during the Initial
Tenn of this Agreement or any renewal thereof 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 16 hereof, and for the purposes of said Section
16, the "Termination Date" shall be the effective date of termination
pertaining to the ninety (90) days prior written notice referred to
in the preceding sentence.
15. Termination Upon Death or Disability.
(a) Upon the termination of Employee's employment due to the
death of Employee, the Company shall pay to the estate of Employee
(or the beneficiaries designated by Employee, if applicable)
certain compensation that would otherwise have been payable to
Employee, as provided in Section 16 hereof, and for the purposes
of said section, the "Termination Date" shall be the date of
Employee's death. If Employee dies during the Initial Term of
this Agreement or any renewal thereof 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 15(a)), are not vested at the time of his death, then
all of such Stock Options shall become immediately vested at
Employee's death and shall be exercisable by his estate or
beneficiary pursuant to the terms of his respective Stock Option
agreements or certificates.
(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
Basic Salary payable under this Agreement.
Employee's employment under this Agreement may be
terminated as provided below upon Employee's
permanent disability (as defined below).
(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 of the Company 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
16, 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.
16. Payment Due Upon Termination of Employee's Employment. In
the event of termination of Employee's employment under this
Agreement, pursuant to Sections 14 or 15 hereof, the Company shall
pay Employee, his estate, or his designated beneficiaries, 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 14 or 15 hereof, whichever is
applicable:
(a) Basic Salary that would otherwise have been payable to
Employee under Section 3(a) hereof through the Termination Date;
(b) all payments, if any, payable pursuant to Section 5
hereof.
17. 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.
18. 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.
19. 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 or 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.
20. Performance. This Agreement shall be performed in Dallas
County, Texas.
21. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Texas.
22. 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. 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.
23. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
24. 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.
25. 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.
26. Successors. This Agreement shall be binding upon the
successors and assigns of the Company but not of Employee.
IN WITNESS WHEREOF, the parties have executed this Agreement,
effective as of the date and year first above written.
COMPANY:
CEC ENTERTAINMENT, INC.
By:_______________________
Xxxxxxx X. Xxxxx
Chief Executive Officer
EMPLOYEE:
________________________
Xxxxxxx X. Xxxxxxxx
