Exhibit 10.1

CEC ENTERTAINMENT, INC.

2004 RESTRICTED STOCK PLAN

The CEC Entertainment, Inc. 2004 Restricted Stock Plan (hereinafter called the
“Plan” as amended, from time to time) was adopted by the Board of Directors of
CEC Entertainment, Inc., a Kansas corporation (hereinafter called the
“Company”), on March 29, 2004, became effective in 2004 as of the date the Plan
was approved by the stockholders of the Company, and was amended by the Board of
Directors of the Company on April 17, 2007 and became effective in 2007 as of
the date the amendments to the Plan were approved by the stockholders of the
Company. Further amendments to the Plan were approved by the Board of Directors
of the Company on April 15, 2008 and will be effective upon their approval by
the stockholders of the Company.

ARTICLE 1

PURPOSE

The purpose of the Plan is to attract, retain, and reward the services of the
employees of the Company and its Subsidiaries and to provide such persons with a
proprietary interest in the Company through the granting of restricted stock,
that will:

 

  (a) increase the interest of such persons in the Company’s welfare;

 

  (b) furnish an incentive to such persons to continue their services to the
Company; and

 

  (c) provide a means through which the Company may attract able persons as
employees.

ARTICLE 2

DEFINITIONS

For the purpose of the Plan, unless the context requires otherwise, the
following terms shall have the meanings indicated:

2.1 “Board” means the Board of Directors of the Company.

2.2 “Change of Control” means any of the following: (i) any consolidation,
merger or share exchange of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company’s
Common Stock would be converted into cash, securities or other property, other
than a consolidation, merger or share exchange of the Company in which the
holders of the Company’s Common Stock immediately prior to such transaction have
the same proportionate ownership of Common Stock of the surviving corporation
immediately after such transaction; (ii) any sale, lease, exchange or other
transfer (excluding transfer by way of pledge or hypothecation) in one
transaction or a series of related transactions, of all or substantially all of
the assets of the Company; (iii) the stockholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company; (iv) the
cessation of control (by virtue of their not constituting a majority of
directors) of the Board by the individuals (the “Continuing Directors”) who were
members of the Board for the immediately preceding two (2) years (unless the
election, or the nomination for election by the Company’s stockholders, of each
new director was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were directors at the beginning of such a
period); (v) the acquisition of beneficial ownership (within the meaning of Rule
13d-3 under the Exchange Act, as defined in Section 2.10) of an aggregate of 30%
of the voting power of the Company’s outstanding voting securities by any person
or group (as such term is used in Rule 13d-5 under the Exchange Act, as defined
in Section 2.10) who beneficially owned less than 15% of the

 

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voting power of the Company’s outstanding voting securities on the date of this
Plan, or the acquisition of beneficial ownership of an additional 15% of the
voting power of the Company’s outstanding voting securities by any person or
group who beneficially owned at least 15% of the voting power of the Company’s
outstanding voting securities on the date of this Plan, provided, however, that
notwithstanding the foregoing, an acquisition shall not constitute a Change of
Control hereunder if the acquirer is (A) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company and acting in such
capacity, (B) a Subsidiary of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of voting securities of the Company or (C) any
other person whose acquisition of shares of voting securities is approved in
advance by a majority of the Continuing Directors; or (vi) in a Title 11
bankruptcy proceeding, the appointment of a trustee or the conversion of a case
involving the Company to a case under Chapter 7.

2.3 “Code” means the Internal Revenue Code of 1986, as amended.

2.4 “Committee” means the committee appointed or designated by the Board to
administer the Plan in accordance with Article 3 of this Plan.

2.5 “Common Stock” means the common stock of the Company, par value $ 0.10 per
share, which the Company is currently authorized to issue or may in the future
be authorized to issue.

2.6 “Date of Grant” means the effective date on which a Restricted Stock Award
is made to a Participant as set forth in the applicable Restricted Stock
Agreement.

2.7 “Director” means a member of the Board.

2.8 “Disability” means the “disability” of a person as defined in a then
effective long-term disability plan maintained by the Company that covers such
person, or if such a plan does not exist at any relevant time, “Disability”
means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code. Section 22(e)(3) of the Code provides that an
individual is totally and permanently disabled if he is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve
(12) months.

2.9 “Employee” means a common law employee, including an employee who is also an
Officer or Director, (as defined in accordance with the Regulations and Revenue
Rulings then applicable under Section 3401(c) of the Code) of the Company or any
Subsidiary. “Employee” does not include Non-employee Directors.

2.10 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
any successor statute. Reference in the Plan to any section of the Exchange Act
shall be deemed to include any amendments or successor provisions to such
section and rules and regulations relating to such section.

2.11 “Fair Market Value” of a share of Common Stock means the closing price of
the Common Stock as reported on the New York Stock Exchange Consolidated Tape,
or such reporting service as the Committee may select, on the Date of Grant.

2.12 “Officer” means a person who is an “officer” of the Company or a Subsidiary
within the meaning of Section 16 of the Exchange Act (whether or not the Company
is subject to the requirements of the Exchange Act).

2.13 “Non-employee Director” means a member of the Board who is not an Employee.

 

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2.14 “Participant” means an Employee to whom a Restricted Stock Award is granted
under the Plan.

2.15 “Performance Awards” means Restricted Stock Awards subject to Performance
Goals, as provided for in Section 6.1 of this Plan.

2.16 “Restriction Period” means the period during which the Common Stock under a
Restricted Stock Award is nontransferable and subject to “Forfeiture
Restrictions” as defined in Section 6.2 of this Plan and set forth in any
related Restricted Stock Agreement.

2.17 “Restricted Stock” means shares of Common Stock issued or transferred to a
Participant pursuant to Section 6.1 of this Plan which are subject to
restrictions or limitations set forth in this Plan and in any related Restricted
Stock Agreement.

2.18 “Restricted Stock Agreement” means the written document evidencing the
grant of a Restricted Stock Award executed by the Company, including any
amendments thereto. Each Restricted Stock Agreement shall be subject to the
terms and conditions of the Plan and need not be executed by the Participant
receiving the Restricted Stock Award pursuant to the Restricted Stock Agreement.

2.19 “Restricted Stock Award” means an award granted under Section 6.1 of this
Plan of shares of Common Stock issued to the Participant for such consideration,
if any, and subject to such restrictions on transfer, rights of first refusal,
repurchase provisions, forfeiture provisions and other terms and conditions as
are established by the Committee.

2.20 “Securities Act” means the Securities Act of 1933, as amended, and any
successor statute. Reference in the Plan to any section of the Securities Act
shall be deemed to include any amendments or successor provisions to such
section and any rules and regulations relating to such section.

2.21 “Subsidiary” means (i) any corporation in an unbroken chain of corporations
beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing a majority of the total
combined voting power of all classes of stock in one of the other corporations
in the chain, (ii) any limited partnership, if the Company or any corporation
described in item (i) above owns a majority of the general partnership interests
and a majority of the limited partnership interests entitled to vote on the
removal and replacement of the general partner, and (iii) any partnership or
limited liability company, if the partners or members thereof are composed only
of the Company, any corporation listed in item (i) above or any limited
partnership listed in item (ii) above. “Subsidiaries” means more than one of any
such corporations, limited partnerships, partnerships or limited liability
companies.

2.22 “Termination of Service” occurs when a Participant shall cease to serve as
an Employee for any reason.

ARTICLE 3

ADMINISTRATION

The Plan shall be administered by the Committee. The Committee shall consist of
not fewer than two persons. Any member of the Committee may be removed at any
time, with or without cause, by resolution of the Board. Any vacancy occurring
in the membership of the Committee may be filled by appointment by the Board.

While the Common Stock of the Company is publicly traded, if necessary to
satisfy the requirements of Code Section 162(m) and/or Rule 16b-3 promulgated
under the Exchange Act, membership on the Committee shall be limited to those
members of the Board who are “outside directors” under Section 162(m) of the
Code and/or “non-employee directors” as defined in Rule 16b 3 promulgated under
the Exchange Act, and/or who exhibit the independence necessary to comply with
the rules of any exchange upon which the Company’s securities are traded, and
any other applicable law, as necessary. The Committee shall select one of its
members to act as its Chairman. A majority of the Committee shall constitute a
quorum, and the act of a majority of the members of the Committee present at a
meeting at which a quorum is present shall be the act of the Committee.

 

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The Compensation Committee of the Board shall serve as the Committee unless and
until such time as the Board appoints other members of the Board to serve as the
Committee.

The Committee shall determine the Participants to whom Restricted Stock Awards
shall be granted, and shall set forth in the Restricted Stock Agreement of each
Participant the Restricted Stock Award, the Restriction Period, the Date of
Grant, and such other terms, provisions, and limitations as are approved by the
Committee, but not inconsistent with the Plan.

The Committee, in its discretion, shall (i) interpret the Plan, (ii) prescribe,
amend, and rescind any rules and regulations necessary or appropriate for the
administration of the Plan, and (iii) make such other determinations and take
such other action as it deems necessary or advisable in the administration of
the Plan. Any interpretation, determination, or other action made or taken by
the Committee shall be final, binding, and conclusive on all interested parties.

With respect to restrictions in the Plan that are based on the rules of any
exchange or inter-dealer quotation system upon which the Company’s securities
are listed or quoted, or any other applicable law, rule or restriction, to the
extent that any such restrictions are no longer required by applicable law, the
Committee shall have the sole discretion and authority to prescribe terms for
Restricted Stock Awards that are not subject to such mandated restrictions
and/or to waive any such mandated restrictions with respect to outstanding
Restricted Stock Awards.

ARTICLE 4

ELIGIBILITY

Any Employee whose judgment, initiative and efforts are expected to contribute
to the successful performance of the Company is eligible to participate in the
Plan. Restricted Stock Awards may be granted by the Committee at any time and
from time to time to new Participants, or to then Participants, or to a greater
or lesser number of Participants, and may include or exclude previous
Participants, as the Committee may determine. Except as required by this Plan,
Restricted Stock Awards granted at different times need not contain similar
provisions. The Committee’s determinations under the Plan (including without
limitation recommendations regarding which Employees, if any, are to receive
Restricted Stock Awards, the form, amount and timing of such Restricted Stock
Awards, the terms and provisions of such Awards and the agreements evidencing
same) need not be uniform and may be made by it selectively among Employees who
receive, or are eligible to receive, Restricted Stock Awards under the Plan.

ARTICLE 5

SHARES SUBJECT TO THE PLAN

Shares to be issued may be made available from Common Stock held by the Company
in its treasury or Common Stock that is newly issued; provided, however, that to
the extent a Restricted Stock Award is made to a newly hired Employee as a
condition of employment, only shares of Common Stock held by the Company in its
treasury may be used.

Subject to adjustment as provided in Articles 9 and 10, the maximum number of
shares of Common Stock that may be issued pursuant to Restricted Stock Awards
granted under the Plan is 1,600,000 shares. Shares of Common Stock previously
subject to Restricted Stock Awards which are forfeited or terminated or are
withheld for payment of any applicable employment taxes and/or withholding
obligations may be reissued pursuant to future Restricted Stock Awards.

ARTICLE 6

GRANT OF RESTRICTED STOCK AWARD

6.1 (a) In General.  The grant of a Restricted Stock Award shall be authorized
by the Committee and shall be evidenced by a Restricted Stock Agreement setting
forth the Restricted Stock, the Restriction Period, the Date of

 

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Grant, and such other terms, provisions, and limitations as are approved by the
Committee, but not inconsistent with the Plan. The Company shall issue a
Restricted Stock Agreement to the Participant after the Committee approves the
issuance of a Restricted Stock Award.

Each Restricted Stock Agreement shall be in such form and shall contain such
terms and conditions as the Committee shall deem appropriate. The terms and
conditions of such Restricted Stock Agreements may change from time to time and
the terms and conditions of separate Restricted Stock Agreements need not be
identical, but each such Restricted Stock Agreement shall be subject to the
applicable terms and conditions of this Article 6.

(b) Performance Awards.  The Committee may grant Performance Awards to one or
more Participants. The terms and conditions of Performance Awards shall be
specified at the time of the grant and may include provisions establishing the
performance period, the Performance Goals to be achieved during a performance
period, and the maximum or minimum settlement values, provided that such terms
and conditions are (i) not inconsistent with the Plan and (ii) to the extent a
Performance Award issued under the Plan is subject to Section 409A of the Code,
in compliance with the applicable requirements of Section 409A of the Code and
the regulations or other guidance issued thereunder. The Performance Awards may
provide for the issuance of the shares of Restricted Stock at the time of the
grant of the Performance Award or at the time of the certification by the
Committee that the Performance Goals for the performance period have been met;
provided, however, if shares of Restricted Stock are issued at the time of the
grant of the Performance Award, the consideration for the issuance of such
shares shall be the achievement of the Performance Goals established at the time
of the grant of the Performance Award, and if, at the end of the performance
period, the Performance Goals are not certified by the Committee to have been
fully satisfied, then, notwithstanding any other provisions of this Plan to the
contrary, the Restricted Stock shall be forfeited in accordance with the terms
of the grant to the extent the Committee determines that the Performance Goals
were not met. The forfeiture of Restricted Stock issued at the time of the grant
of the Performance Award due to failure to achieve the established Performance
Goals shall be separate from and in addition to any other Forfeiture
Restrictions (as defined in Section 6.2 hereof) provided for in this Plan. Each
Performance Award granted to one or more Participants shall have its own terms
and conditions.

If it is determined to be necessary in order to satisfy Code Section 162(m), the
Committee shall, at the time of the grant of a Performance Award, and to the
extent permitted under Code Section 162(m) and the regulations issued
thereunder, provide for the manner in which the Performance Goals shall be
reduced to take into account the negative effect on the achievement of specified
levels of the Performance Goals which may result from enumerated corporate
transactions, extraordinary events, accounting changes and other similar
occurrences which were unanticipated at the time of the grant. In no event,
however, may the Committee increase the Restricted Stock earned under a
Performance Award, unless the reduction in the Performance Goals would reduce or
eliminate the Restricted Stock to be earned under the Performance Award and the
Committee determines not to make such reduction or elimination. The extent to
which any applicable performance objective has been achieved shall be
conclusively determined by the Committee.

With respect to a Performance Award that is not intended to satisfy the
requirements of Code Section 162(m), if the Committee determines, in its sole
discretion, that the established performance measures or objectives are no
longer suitable because of a change in the Company’s business, operations,
corporate structure, or for other reasons that the Committee deemed
satisfactory, the Committee may modify the performance measures or objectives
and/or the performance period.

(c) Maximum Performance Award.  Notwithstanding the foregoing, in order to
comply with the requirements of Section 162(m) of the Code, no employee may
receive in any calendar year Performance Awards having an aggregate value of
more than $3,000,000.00, based on the Fair Market Value of the Restricted Stock
on the Date of Grant.

(d) Performance Goals.  Performance Awards may be made subject to the attainment
of Performance Goals relating to one or more business criteria which, where
applicable, shall be within the meaning of

 

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Section 162(m) of the Code and consist of one or more or any combination of the
following criteria: cash flow; cost; revenues; same store or general sales;
ratio of debt to debt plus equity; net borrowing, credit quality or debt
ratings; profit before tax; economic profit; earnings before interest and taxes;
earnings before interest, taxes, depreciation and amortization; gross margin;
earnings per share (whether on a pre-tax, after-tax, operational or other
basis); operating earnings; capital expenditures; expenses or expense levels;
economic value added; ratio of operating earnings to capital spending or any
other operating ratios; free cash flow; net profit; net sales; net asset value
per share; the accomplishment of mergers, acquisitions, dispositions, public
offerings or similar extraordinary business transactions; sales growth; price of
the Company’s Common Stock; return on assets, equity or stockholders’ equity;
market share; inventory levels, inventory turn or shrinkage; or total return to
stockholders (“Performance Criteria”). Any Performance Criteria may be used to
measure the performance of the Company as a whole or any business unit of the
Company and may be measured relative to a peer group or index. Any Performance
Criteria may include or exclude (i) extraordinary, unusual and/or non-recurring
items of gain or loss, (ii) gains or losses on the disposition of a business,
(iii) changes in tax or accounting regulations or laws, (iv) the effect of a
merger or acquisition, as identified in the Company’s quarterly and annual
earnings releases, or (v) other similar occurrences. In all other respects,
Performance Criteria shall be calculated in accordance with the Company’s
financial statements, under generally accepted accounting principles, or under a
methodology established by the Committee prior to the issuance of a Performance
Award which is consistently applied and identified in the audited financial
statements, including footnotes, or the Compensation Discussion and Analysis
section of the Company’s annual report.

6.2 Forfeiture Restrictions. Shares of Common Stock that are the subject of a
Restricted Stock Award shall be subject to restrictions on disposition by the
Participant and to an obligation of the Participant to forfeit and surrender the
shares to the Company under certain circumstances (the “Forfeiture
Restrictions”). The Forfeiture Restrictions shall be determined by the
Committee, in its sole discretion, and the Committee may provide that the
Forfeiture Restrictions shall lapse on the passage of time or the occurrence of
such other event or events determined to be appropriate by the Committee. The
Forfeiture Restrictions applicable to a particular Restricted Stock Award (which
may differ from any other such Restricted Stock Award) shall be stated in the
Restricted Stock Agreement.

6.3 Minimum Vesting Restrictions. The Forfeiture Restrictions for any particular
Restricted Stock Award shall not provide for (i) a vesting period of less than
one year nor more than five years, (ii) full vesting within a period of less
than three years and (iii) vesting that is more favorable than a pro rata
vesting over a period of three years.

6.4 Restricted Stock Awards. At the time any Restricted Stock Award is granted
under the Plan, the Company shall issue to the Participant a Restricted Stock
Agreement setting forth each of the matters addressed in this Article 6 and such
other matters as the Committee may determine to be appropriate. Shares of Common
Stock awarded pursuant to a Restricted Stock Award shall be represented by a
stock certificate registered in the name of the Participant of such Restricted
Stock Award or by a book entry account with the Company’s transfer agent. The
Participant shall have the right to receive dividends with respect to the shares
of Common Stock subject to a Restricted Stock Award, to vote the shares of
Common Stock subject thereto and to enjoy all other stockholder rights with
respect to the shares of Common Stock subject thereto, except that, unless
provided otherwise in the Restricted Stock Agreement, (i) the Participant shall
not be entitled to delivery of the certificate evidencing the shares of Common
Stock covered by a Restricted Stock Award until the Forfeiture Restrictions have
expired, (ii) the Company or an escrow agent shall retain custody of the
certificate evidencing the shares of Common Stock (or such shares shall be held
in a book entry account with the Company’s transfer agent) until the Forfeiture
Restrictions have expired, (iii) the Participant may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the shares of Common Stock until
the Forfeiture Restrictions have expired, and (iv) a breach of the terms and
conditions established by the Committee and set forth in the Restricted Stock
Agreement shall cause a forfeiture of the Restricted Stock Award. At the time of
such Restricted Stock Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions or restrictions relating to the
Restricted Stock Award, including rules pertaining to the Participant’s
Termination of Service prior to expiration of the Forfeiture Restrictions. Such
additional terms, conditions or restrictions shall also be set forth in the
Restricted Stock Agreement made in connection with the Restricted Stock Award.

 

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6.5 Rights and Obligations of Participant. One or more stock certificates
representing shares of Common Stock, free of Forfeiture Restrictions, shall be
delivered to the Participant promptly after, and only after, the Forfeiture
Restrictions have expired and Participant has satisfied all applicable federal,
state and local income and employment tax withholding requirements. Each
Restricted Stock Agreement shall require that (i) the Participant, by his or her
acceptance of the Restricted Stock Award, shall irrevocably grant to the Company
a power of attorney to transfer any shares so forfeited to the Company and
agrees to execute any documents requested by the Company in connection with such
forfeiture and transfer, and (ii) such provisions regarding transfers of
forfeited shares of Common Stock shall be specifically performable by the
Company in a court of equity or law.

6.6 Restriction Period. The Restriction Period for a Restricted Stock Award
shall commence on the Date of Grant of the Restricted Stock Award and, unless
otherwise established by the Committee and stated in the Restricted Stock
Agreement, shall expire upon satisfaction of the conditions set forth in the
Restricted Stock Agreement pursuant to which the Forfeiture Restrictions will
lapse. The Committee may, in its sole discretion, accelerate the Restriction
Period for all or a part of a Restricted Stock Award; provided, however, that
the Committee shall have no discretion to accelerate the Restriction Period for
any Participant unless that Participant has been continuously an Employee for at
least one (1) year after the Date of Grant.

6.7 Securities Restrictions. The Committee may impose other conditions on any
shares of Common Stock subject to a Restricted Stock Award as it may deem
advisable, including (i) restrictions under applicable state or federal
securities laws, and (ii) the requirements of any stock exchange or national
market system upon which shares of Common Stock are then listed or quoted.

6.8 Payment for Restricted Stock. The Committee shall determine the amount and
form of any payment for shares of Common Stock received pursuant to a Restricted
Stock Award; provided, that in the absence of such a determination, the
Participant shall not be required to make any payment for shares of Common Stock
received pursuant to a Restricted Stock Award, except to the extent otherwise
required by law.

6.9 Forfeiture of Restricted Stock. Subject to the provisions of the particular
Restricted Stock Agreement, on Participant’s Termination of Service during the
Restriction Period, the shares of Common Stock still subject to the Forfeiture
Restrictions contained in the Restricted Stock Award shall be forfeited by the
Participant. Upon any forfeiture, all rights of the Participant with respect to
the forfeited shares of Common Stock subject to the Restricted Stock Award shall
cease and terminate, without any further obligation on the part of the Company,
except that if so provided in the Restricted Stock Agreement applicable to the
Restricted Stock Award, the Company shall repurchase each of the shares of
Common Stock forfeited for the purchase price per share paid by the Participant.
The Committee will have discretion to determine the date of the Participant’s
Termination of Service.

6.10 Lapse of Forfeiture Restrictions in Certain Events; Committee’s Discretion.
Notwithstanding the provisions of Section 6.9 or any other provision in the Plan
to the contrary, the Committee may, on account of the Participant’s Disability
or retirement, in its discretion and as of a date determined by the Committee,
fully vest any or all Common Stock awarded to the Participant pursuant to a
Restricted Stock Award, and upon such vesting, all Forfeiture Restrictions
applicable to such Restricted Stock Award shall lapse or terminate; provided,
however, that the Committee shall have no discretion to fully vest any Common
Stock awarded unless the Participant has been continuously an Employee for at
least one (1) year after the Date of Grant. The Committee shall have discretion
to determine whether a Participant’s Termination of Service was as a result of
Disability or retirement. Notwithstanding the foregoing provisions of this
Section 6.10, the Committee shall not have the discretion or the right, in the
case of a Participant’s retirement, to grant to or permit a Participant to
retain a Restricted Stock Award that is a Performance Award designated by the
Committee as being an Award to which Section 162(m) of the Code applies, except
to the extent the Performance Goals which were established in order for such
Performance Award to be granted or to be retained have been met. Any action by
the Committee pursuant to this Section 6.10 may vary among individual
Participants and may vary among the Restricted Stock Awards held by any
individual Participant.

 

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6.11 Lapse of Forfeiture Restrictions Upon Death. Notwithstanding the provisions
of Section 6.9 or any other provision in the Plan or the applicable Restricted
Stock Agreement to the contrary, all Common Stock awarded to a Participant
pursuant to a Restricted Stock Award shall fully vest upon the death of such
Participant, and upon such vesting all Forfeiture Restrictions applicable to
such Restricted Stock Award shall lapse or terminate; even though the
Participant’s death occurs before he has been continuously an Employee for at
least one (1) year after the Date of Grant.

6.12 Withholding Taxes. The Committee may establish such rules and procedures as
it considers desirable in order to satisfy any obligation of the Company to
withhold applicable federal, state and local income and employment taxes with
respect to the lapse of Forfeiture Restrictions applicable to Restricted Stock
Awards. Prior to delivery of shares of Common Stock upon the lapse of Forfeiture
Restrictions applicable to a Restricted Stock Award, the Participant shall pay
or make adequate provision acceptable to the Committee for the satisfaction of
all tax withholding obligations of the Company.

ARTICLE 7

AMENDMENT OR DISCONTINUANCE

Subject to the limitations set forth in this Article 7, the Board or the
Committee may at any time and from time to time, alter, amend, revise, suspend,
or discontinue the Plan in whole or in part; provided, however, that any
amendment to the Plan must be approved by the stockholders of the Company if the
amendment would (a) materially increase the aggregate number of shares of Common
Stock which may be issued under the Plan, (b) materially modify the requirements
as to eligibility for participation in the Plan, (c) materially increase the
benefits accruing to Participants under the Plan, or (d) otherwise require
stockholder approval due to the requirements of any securities exchange or
inter-dealer quotation system on which the Common Stock is listed or traded or
in order for the Plan or Restricted Stock Awards to continue to comply with
sections of the Code or any other laws applicable to Restricted Stock Awards
made under this Plan. Any such amendment shall, to the extent deemed necessary
by the Committee, be applicable to any outstanding Restricted Stock Awards
theretofore granted under the Plan, notwithstanding any contrary provisions
contained in any Restricted Stock Agreement. In the event of any such amendment
to the Plan, the holder of any Restricted Stock Awards outstanding under the
Plan shall, upon request of the Committee and as a condition to the applicable
lapse of Forfeiture Restrictions thereon, execute a conforming amendment in the
form prescribed by the Committee to any Restricted Stock Agreement relating
thereto. Notwithstanding anything contained in this Plan to the contrary, unless
required by law, no action contemplated or permitted by this Article 7 shall
adversely affect any rights of Participants or obligations of the Company to
Participants with respect to any Restricted Stock Awards theretofore granted
under the Plan without the consent of the affected Participant.

ARTICLE 8

TERM

Unless sooner terminated by action of the Board, the Plan will terminate on
December 31, 2014, but Restricted Stock Awards granted before that date will
continue to be effective in accordance with the terms and conditions of the
respective Restricted Stock Agreement.

ARTICLE 9

CAPITAL ADJUSTMENTS

If at any time while the Plan is in effect, or Restricted Stock Awards are
outstanding, there shall be any increase or decrease in the number of issued and
outstanding shares of Common Stock resulting from (1) the

 

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declaration or payment of a stock dividend, (2) any recapitalization resulting
in a stock split up, combination, or exchange of shares of Common Stock, or
(3) other increase or decrease in such shares of Common Stock effected without
receipt of consideration by the Company, then and in such event:

 

  (a) An appropriate adjustment shall be made in the maximum number of shares of
Common Stock then subject to being awarded under the Plan and in the maximum
number of shares of Common Stock that may be awarded to a Participant to the end
that the same proportion of the Company’s issued and outstanding shares of
Common Stock shall continue to be subject to being so awarded.

 

  (b) Appropriate adjustments shall be made in the number of outstanding shares
of Restricted Stock with respect to which Forfeiture Restrictions have not yet
lapsed prior to any such change.

Except as otherwise expressly provided herein, the issuance by the Company of
shares of its capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to the number of outstanding shares of Restricted Stock.

Upon the occurrence of each event requiring an adjustment with respect to any
Restricted Stock Award, the Company shall communicate by reasonable means
intended to reach each affected Participant its computation of such adjustment
which shall be conclusive and shall be binding upon each such Participant.

ARTICLE 10

RECAPITALIZATION, MERGER AND

CONSOLIDATION; CHANGE IN CONTROL

10.1 The existence of this Plan and Restricted Stock Awards granted hereunder
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations, or other changes in the Company’s capital structure and its
business, or any merger or consolidation of the Company, or any issue of bonds,
debentures, preferred or preference stocks ranking prior to or otherwise
affecting the Common Stock or the rights thereof (or any rights, options, or
warrants to purchase same), or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

10.2 Subject to any required action by the stockholders, if the Company shall be
the surviving or resulting corporation in any merger, consolidation or share
exchange, any Restricted Stock Awards granted hereunder shall pertain to and
apply to the securities or rights (including cash, property, or assets) to which
a holder of the number of shares of Common Stock subject to the Restricted Stock
Awards would have been entitled.

10.3 In the event of any merger, consolidation or share exchange pursuant to
which the Company is not the surviving or resulting corporation, there shall be
substituted for each share of Common Stock subject to the outstanding Restricted
Stock Awards, that number of shares of each class of stock or other securities
or that amount of cash, property, or assets of the surviving, resulting or
consolidated company which were distributed or distributable to the stockholders
of the Company in respect to each share of Common Stock held by them, such
outstanding Restricted Stock Awards to be thereafter applicable to such stock,
securities, cash, or property in accordance with their terms. Notwithstanding
the foregoing, however, all such Restricted Stock Awards may be canceled by the
Company as of the effective date of any such reorganization, merger,
consolidation, or share exchange by giving notice to each holder thereof or his
personal representative of its intention to do so and by

 

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permitting the purchase by the Company during the thirty (30) day period next
preceding such effective date of all of the shares of Common Stock subject to
such outstanding Restricted Stock Awards at a price equal to the Fair Market
Value of such shares on the date of purchase.

10.4 In the event of a Change of Control, then, notwithstanding any other
provision in this Plan to the contrary, all Restricted Stock Awards outstanding
shall thereupon automatically be vested. The determination of the Committee that
any of the foregoing conditions has been met shall be binding and conclusive on
all parties.

ARTICLE 11

LIQUIDATION OR DISSOLUTION

In case the Company shall, at any time while any Restricted Stock Award under
this Plan shall be in force and remain unexpired, (i) sell all or substantially
all of its property, or (ii) dissolve, liquidate, or wind up its affairs, then
each Participant shall be thereafter entitled to receive, in lieu of each share
of Common Stock of the Company in which the Participant is vested, pursuant to
the terms of the Participant’s Restricted Stock Agreement, as of the date the
Company sells all or substantially all of its property, or dissolves, liquidates
or winds up its affairs, the same kind and amount of any securities or assets as
may be issuable, distributable, or payable upon any such sale, dissolution,
liquidation, or winding up with respect to each share of Common Stock of the
Company. Notwithstanding the foregoing, the Committee may, in its sole and
absolute discretion accelerate the vesting of any Participant’s Restricted Stock
Award in connection with any sale, dissolution, liquidation, or winding up
contemplated in this Article 11.

ARTICLE 12

MISCELLANEOUS PROVISIONS

12.1 Investment Intent. The Company may require that there be presented to and
filed with it by any Participant under the Plan, such evidence as it may deem
necessary to establish that the shares of Common Stock to be received from a
Restricted Stock Award are being acquired for investment and not with a view to
their distribution.

12.2 No Right to Continued Employment. Neither the Plan nor any Restricted Stock
Award granted under the Plan shall confer upon any Participant any right with
respect to continuance of employment by the Company or any Subsidiary.

12.3 Indemnification of Board and Committee. No member of the Board or the
Committee, nor any Officer or Employee acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any Officer or Employee
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination, or interpretation.

12.4 Effect of the Plan. Neither the adoption of this Plan nor any action of the
Board or the Committee shall be deemed to give any person any right to be
granted a Restricted Stock Award or any other rights except as may be evidenced
by a Restricted Stock Agreement, or any amendment thereto, duly authorized by
the Committee and executed on behalf of the Company, and then only to the extent
and upon the terms and conditions expressly set forth therein.

12.5 Severability And Reformation. The Company intends all provisions of the
Plan to be enforced to the fullest extent permitted by law. Accordingly, should
a court of competent jurisdiction determine that the scope of any provision of
the Plan is too broad to be enforced as written, the court should reform the
provision to such narrower scope as it determines to be enforceable. If,
however, any provision of the Plan is held to be wholly illegal, invalid, or
unenforceable under present or future law, such provision shall be fully
severable and severed,

 

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and the Plan shall be construed and enforced as if such illegal, invalid, or
unenforceable provision were never a part hereof, and the remaining provisions
of the Plan shall remain in full force and effect and shall not be affected by
the illegal, invalid, or unenforceable provision or by its severance.

12.6 Governing Law. The Plan shall be construed and interpreted in accordance
with the laws of the State of Kansas.

12.7 Compliance With Other Laws and Regulations. Notwithstanding anything
contained herein to the contrary, the Company shall not be required to sell or
issue shares of Common Stock under any Restricted Stock Award if the issuance
thereof would constitute a violation by the Participant or the Company of any
provisions of any law or regulation of any governmental authority or any
national securities exchange or inter-dealer quotation system or other forum in
which shares of Common Stock are quoted or traded (including without limitation
Section 16 of the Exchange Act); and, as a condition of any sale or issuance of
shares of Common Stock under a Restricted Stock Award, the Committee may require
such agreements or undertakings, if any, as the Committee may deem necessary or
advisable to assure compliance with any such law or regulation. The Plan, the
grant and exercise of Restricted Stock Awards hereunder, and the obligation of
the Company to sell and deliver shares of Common Stock, shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as may be required.

12.8 Legend. Each certificate representing shares of Restricted Stock issued to
a Participant shall bear the following legend, or a similar legend deemed by the
Company to constitute an appropriate notice of the provisions hereof (any such
certificate not having such legend shall be surrendered upon demand by the
Company and so endorsed):

On the face of the certificate:

“Transfer of this stock is restricted in accordance with conditions printed on
the reverse of this certificate.”

On the reverse:

“The shares of stock evidenced by this certificate are subject to and
transferable only in accordance with that certain CEC Entertainment, Inc. 2004
Restricted Stock Plan and the related Restricted Stock Agreement, copies of
which are on file at the principal office of the Company in Irving, Texas. No
transfer or pledge of the shares evidenced hereby may be made except in
accordance with and subject to the provisions of said Plan and Agreement. By
acceptance of this certificate, any holder, transferee or pledgee hereof agrees
to be bound by all of the provisions of said Plan and Agreement.”

The following legend shall be inserted on a certificate evidencing Common Stock
issued under the Plan if the shares were not issued in a transaction registered
under the applicable federal and state securities laws:

“Shares of stock represented by this certificate have been acquired by the
holder for investment and not for resale, transfer or distribution, have been
issued pursuant to exemptions from the registration requirements of applicable
state and federal securities laws, and may not be offered for sale, sold or
transferred other than pursuant to effective registration under such laws, or in
transactions otherwise in compliance with such laws, and upon evidence
satisfactory to the Company of compliance with such laws, as to which the
Company may rely upon an opinion of counsel satisfactory to the Company.”

A copy of this Plan shall be kept on file in the principal office of the Company
in Irving, Texas.

 

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