STOCK OPTION PLAN



 EXHIBIT 4.1 
  

CEC ENTERTAINMENT, INC. 
 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN 
  
 ARTICLE I 
 PURPOSE AND ADMINISTRATION 
  
 1.1 Purpose. The purpose of the CEC Entertainment, Inc. Non-Employee Directors Stock Option Plan (the “Plan”) is to strengthen CEC
Entertainment, Inc. (the “Company”) by providing a means of retaining and attracting competent non-employee personnel to serve on its board of directors by extending such individuals added long-term incentives for high levels of
performance and for unusual efforts designed to improve the financial performance of the Company. In order to effectuate this intent, the Company will, pursuant to this Plan, grant to each non-employee director the herein specified options to
acquire shares of common stock of the Company (“Common Stock”), which options shall vest over a specified period of time. 
  
 1.2 Administration. The Plan shall be administered by a committee (the “Committee”) which shall be comprised of the President of
the Company and the Chief Financial Officer of the Company. 
  
 Subject to the express provisions of the Plan, the Committee shall have powers and authorities which are exclusively ministerial in nature, including the authority to construe and interpret the Plan, to define the terms used in the Plan, to
prescribe, amend and rescind rules and regulations relating to the administration of the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. The determinations of the Committee on all such matters
referred to in this Plan shall be conclusive. No member of the Committee shall be liable for any action, failure to act, determination or interpretation made in good faith with respect to the Plan or any transaction under the Plan. 
  
 1.3 Participation. Each member of the Board of Directors of the
Company (the “Board”) who is not employed by the Company or any Affiliate (collectively, the “Non-Employee Directors”) shall be eligible and shall participate in the Plan. For purposes of the Plan, the term
“Affiliate” shall mean any entity in which the Company directly or through intervening subsidiaries owns twenty-five percent (25%) or more of the total combined vetoing power or value of all classes of stock or, in the case of an
unincorporated entity, a twenty-five percent (25%) or more interest in the capital and profits. 
  
 1.4 Stock Subject to the Plan. Subject to adjustment as provided in Section 3.1 hereof, the stock to be offered under the Plan shall be treasury
shares or shares of the Company’s authorized but unissued Common Stock (hereinafter collectively called “Stock”). The aggregate number of shares of Stock to be issued upon exercise of all options granted under the Plan shall
not exceed 437,500 shares, subject to adjustments as set forth in Section 3.1 hereof. If any option granted hereunder shall lapse or terminate for any reason without having been fully exercised, the shares subject thereto shall again be available
for purposes of the Plan. 
  
 1.5 Restrictions on Exercise.
No option granted hereunder may be exercised until a registration statement under the Securities Act of 1933, as amended (the “Act”), relating to the 







 Stock issuable upon exercise of such option has been filed with, and declared effective by, the Securities and Exchange
Commission (the “Commission”), and there is available for delivery a prospectus meeting the requirements of Section 10 of the Act, or until the Committee has determined that the issuance of Stock upon such exercise is exempt from
the registration and prospectus requirements of the Act. 
  
 ARTICLE II 
 STOCK OPTIONS 
  
 2.1 Grant and Option Price. 
  
 (a) On the day a Non-Employee Director is first elected or appointed to the Board, such Non-Employee Director shall be granted an option
to purchase 15,000 shares of Stock. 
  
 (b) On the
fifth Business Day in January of the year following the effective date of the Plan, each Non-Employee Director who was previously elected to the Board and who continues to serve in such capacity at such time shall be granted an option to purchase
7,500 shares of Stock. For purposes of the Plan, the term “Business Day” shall mean a day on which the New York Stock Exchange is open for business and is conducting normal trading activity. 
  
 (c) The purchase of the Stock covered by each option granted
under the Plan shall be equal to the Fair Market Value of such Stock on the grant date. For purposes of the Plan, the term “Fair Market Value” shall mean the average of the closing prices of the Common Stock as reported by the New York
Stock Exchange for the five trading-day period ending on and including the date of grant. 
  
 (d) The total grant under both paragraphs (a) and (b) above shall be limited accordingly to the greatest number of whole shares of Stock
which may thus be granted thereunder. 
  
 2.2 Stock Option
Agreement. Each option granted pursuant to the Plan shall be evidenced by a Stock Option Agreement or Certificate (“Option Agreement”), in such form as the Committee shall require, between the Company and the Non-Employee
Director to whom the option has been granted (the “Optionee”). 
  
 2.3 Option Period. Each option and all rights or obligations thereunder shall expire on the seventh anniversary of the grant date (the “Expiration Date”); provided, however, the option shall be
subject to earlier termination as hereinafter provided. 
  

 2 








 2.4 Vesting and Exercise of Options. 
  
 (a) Subject to Section 3.2 hereof, an option granted pursuant to Sections 2.1(a) or (b) hereof shall be
exercisable only to the extent of shares that have vested in accordance with the following schedule: 
  

			
	 Annual Anniversary of Date of Grant

	 	 Portion of Shares That are Vested
 On or After Such Anniversary
 and Before Next Anniversary


	 First
	 	0%                                    
	 Second
	 	50%                                    
	 Third
	 	100%                                    

  
 (b)
The purchase price of the stock purchased upon exercise of an option shall be paid in full in cash or by check at the time of each exercise of an option; provided, however, that if the Option Agreement so provides and upon receipt of all regulatory
approvals, the person exercising the option may deliver in payment of a portion or all of the purchase price certificates for Common Stock of the Company, which shall be valued at the Fair Market Value of such Stock on the date of exercise of the
option. 
  
 2.5 Transferability of Options. An option
certificate or contract may permit an Optionee to transfer his or her options to members of his or her Immediate Family, to one or more trusts for the benefit of such Immediate Family members, or to one or more partnerships where such Immediate
Family members are the only partners if (i) the certificate or contract setting forth such options expressly provides that the options may be transferred, (ii) the Optionee obtains the prior written consent of the Committee for such transfer, and
(iii) the Optionee does not receive any consideration in any form whatsoever for said transfer. Any options so transferred shall continue to be subject to the same terms and conditions in the hands of the transferee as were applicable to said option
immediately prior to the transfer thereof. Any option not (i) granted pursuant to any certificate or contract expressly allowing the transfer of said option or (ii) amended expressly to permit its transfer shall not be transferable by the Optionee
otherwise than by will or by the laws of descent and distribution and such option shall be exercisable during the Optionee’s lifetime only by the Optionee. “Immediate Family” means the children, grandchildren or spouse of the
Optionee. 
  
 2.6 Termination of Directorship. 

 
 (a) If the directorship of the Optionee is terminated for
any reason other than (i) death of the Optionee, or (ii) on account of any act of fraud or intentional misrepresentation or embezzlement, misappropriation or conversion of assets or opportunities of the Company or any Affiliate, an option (to the
extent otherwise exercisable on the date of such termination) shall be exercisable by the Optionee at any time prior to the Expiration Date of the option or within thirty (30) days after the date of such termination of the directorship, whichever is
the shorter period. 
  
 (b) If an Optionee dies
while serving as a member of the Board, the option shall be exercisable (whether or not exercisable on the date of the death of such 
  

 3 








 Optionee) by the person or persons entitled to do so under the Optionee’s will, or, if the Optionee
shall fail to make testamentary disposition of said option or shall die intestate, by the Optionee’s legal representative or representatives, at any time prior to the Expiration Date of the option or within six (6) months after the date of such
death, whichever is the shorter period. If an Optionee dies during the thirty (30) day period described in subsection (a) above, the option shall be exercisable (but only to the extent exercisable on the date of death of such Optionee) by the person
or persons described above at any time within the thirty (30) day period described in subsection (a) above or within six (6) months after the date of such death, whichever is the longer period, but in no event after the Expiration Date of the
option. 
  
 (c) The option of a Non-Employee
Director shall automatically terminate as of the date his or her directorship is terminated, if the directorship is terminated on account of any act of (a) fraud or intentional misrepresentation, or (b) embezzlement, misappropriation or conversion
of assets or opportunities of the Company or any Affiliate. 
  
 2.7 Issuance of Stock Certificates. Upon exercise of an option, but subject to the provisions of Section 3.5 of the Plan, the person exercising the option shall be entitled to one stock certificate evidencing the shares acquired upon
such exercise; provided, however, that any person who tenders Common Stock in payment of a portion or all of the purchase price of Stock purchased upon exercise of the option shall be entitled to receive a separate certificate representing the
number of shares purchased in consideration of the tender of such Common Stock. 
  
 ARTICLE III 
 OTHER PROVISIONS 
  
 3.1 Adjustments Upon Changes in Capitalization. 
  
 (a) If a dividend or stock split shall be hereinafter declared upon the Common Stock of the Company payable
in shares of Common Stock of the Company, the number of shares of Common Stock (i) then subject to grant under Section 2.1 (a) and (b), (ii) then subject to any option which has been granted, and (iii) then reserved for issuance pursuant to the Plan
but not yet covered by an option shall be adjusted by adding to each such share the numbers of shares which would be distributable thereon if such share had been outstanding on the date fixed for determining the stockholders entitled to receive such
stock dividend or stock split. 
  
 (b) If the
outstanding shares of the Common Stock of the Company shall be changed into or exchanged for a different number or kind of shares of stock or other securities of the Company or of another corporation, whether through reorganization,
recapitalization, stock split, combination of shares, merger or consolidation, and the Company continues thereafter as the surviving entity, then there shall be substituted for each share of Stock subject to any such option and for each share of
Stock reserved for issuance pursuant to the Plan but not yet covered by an option, the number and kind of 
  

 4 








 shares of stock or other securities into which each outstanding share of Common Stock shall be changed or
for which each such share shall be exchanged. 
  
 (c) If there shall be any change, other than as specified above in subsection (a) and (b), in the number or kind or outstanding shares of Common Stock of the Company or of any stock or other securities into which Common Stock shall have
been changed or for which it shall have been exchanged, then if the Committee shall in its sole discretion determine that such change equitably requires an adjustment in the number or kind of shares theretofore reserved for issuance pursuant to the
Plan but not yet covered by an option and of the shares then subject to an option or options, such adjustment shall be made by the Committee and shall be effective and binding for all purposes of the Plan and of each Option Agreement. 
  
 (d) In the case of any such substitution or adjustment as
provided for in this Section 3.1, the option price in each Option Agreement for each share covered thereby prior to such substitution or adjustment will be the option price for all shares of stock or other securities which shall have been
substituted for such share or to which such adjustment provided for in this Section 3.1 shall be made. No adjustment or substitution provided for in this Section 3.1 shall require the Company pursuant to any Option Agreement to sell a fractional
share, and the total substitution or adjustment with respect to each Option Agreement shall be limited accordingly. 
  
 3.2 Continuation of Directorship. Nothing contained in this Plan (nor in any option granted pursuant to this Plan) shall confer upon any
Non-Employee Director any right to continue as a member of the Board or constitute any contract or agreement or interfere in any way with the right of the Company to remove such Non-Employee Director from the Board. Nothing contained herein or in
any Option Agreement shall affect any other contractual rights of a Non-Employee Director. 
  
 3.25 Change of Control. If while any unexercised options remain outstanding under the Plan, a Change of Control (as hereinafter defined) shall have occurred, then all such options shall be exercisable in full,
notwithstanding Section 2.4 hereof or any other provision in the Plan or Option Agreement to the contrary. For purposes of the Plan, a “Change of Control” shall be deemed to have occurred with respect to the Company: (A) on the date in
which the Company executes an agreement or an agreement in principle (i) with respect to any merger, consolidation or other business combination by the Company with or into another entity and the Company is not the surviving entity, or (ii) to sell
or otherwise dispose of all or substantially all of its assets, or (iii) to adopt a plan of liquidation; or (B) on the date in which public announcement is made that the “beneficial ownership” [as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)], of securities representing more than 50% of the combined voting power of the Company is being acquired by a “person” within the meaning of sections 13(d) and 14(d) of the
Exchange Act; or (C) if, during any period of eighteen (18) consecutive months, individuals who at the beginning of such period were members of the Board of Directors cease for any reason to constitute at least a majority thereof (unless the
appointment or election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period);
provided, however, that in no event shall a change in 
  

 5 








 the composition of the Company’s Board of Directors pursuant to an election of Board members pursuant to Section 4.6
of the Company’s Articles of Incorporation, as amended, constitute or result in a Change of Control for purposes of this Section 3.25. 
  
 3.3 Amendment and Termination. The Board may at any time suspend or terminate the Plan. No option may be granted during any suspension of the Plan
or after such termination. The amendment, suspension or termination of the Plan shall not, without the consent of the Optionee, alter or impair any rights or obligations under any option theretofore granted under the Plan. 
  
 The Board may at any time amend the Plan as it shall deem advisable without
further action on the part of the stockholders of the Company, provided, that the Board may not amend any provision of the Plan relating to the amount and price of Stock subject to the options granted hereunder or the timing of grants hereunder more
than once every six months, other than to comport with changes in the Internal Revenue Code of 1986, as amended, the Employee Retirement Income Security Act, or the rules thereunder, and provided further, that any amendment to the Plan must be
approved by the stockholders of the Company if the amendment would (a) materially increase the aggregate number of shares of Stock which may be issued pursuant to options granted under the Plan, (b) materially modify the requirements as to
eligibility for participation in the Plan, or (c) materially increase the benefits accruing to holders of options under the Plan. 
  
 3.4 Time of Exercise. An option shall be deemed to be exercised when the Secretary of the Company receives written notice of such exercise from the
person entitled to exercise the option together with payment of the purchase price made in accordance with Section 2.4 of the Plan. 
  
 3.5 Privileges of Stock Ownership and Non-Distributive Intent. The holder of an option shall not be entitled to the privilege of stock ownership as
to any shares of Stock not actually issued and delivered to the holder. Subject to the provisions of Section 1.5 above, upon exercise of an option for Stock at a time when there is not in effect under the Act a registration statement relating to the
Stock issuable upon exercise thereof or not available for delivery a prospectus meeting the requirements of Section 10 of the Act, the holder of the option shall execute a stock purchase agreement in which he or she shall represent and warrant in
writing to the Company that, inter alia, the shares of Stock purchased are being acquired for investment and not with a view to the resale or distribution thereof. No shares of Stock shall be issued upon the exercise of any option unless and until
there shall have been compliance with any then applicable requirements of the Commission, other regulatory agencies having jurisdiction and any exchanges upon which securities subject to the option may be listed. 
  
 3.6 Effective Date of the Plan. The Plan shall be effective upon
approval by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock and the Company’s outstanding shares of preferred stock, voting as one class, present and entitled to vote at a meeting duly held or by the
written consent of the holders of a majority of the Common Stock and the Company’s outstanding shares of preferred stock, voting as one class, entitled to vote. 
  

 6 








 3.7 Expiration. Unless previously terminated or extended by the Board, the Plan shall expire at
the close of business on the date which is the last day of the fifteen (15) year period beginning on the date on which the stockholders approve the Plan, and no option shall be granted under it thereafter, but such expiration shall not affect any
option theretofore granted. 
  
 3.8 Governing Law. The Plan
and the options issued hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of Texas applicable to contracts made and performed within that State. 
  
 3.9 Applications of Funds. The proceeds received by the Company from
the sale of shares pursuant to options shall be used for general corporate purposes. 
  
 3.10 No Liability for Good Faith Determinations. Neither the members of the Board not any member of the Committee shall be liable for any act, omission or determination taken or made in good faith with respect
to the Plan or any option granted under it. 
  
 3.11
Information Confidential. As partial consideration for the granting of each option hereunder, the Optionee shall agree with the Company that he or she will keep confidential all information and knowledge which he or she has relating to the
manner and amount of his or her participation in the Plan; provided, however, that such information may be given in confidence to the Optionee’s spouse or to a financial institution to the extent that such information is necessary. 

 
 3.12 Execution of Receipts and Releases. Any payment or any
issuance or transfer of shares of Stock to the Optionee, or to his or her legal representative, heir, legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be in full satisfaction of all claims of such
persons hereunder. The Board may required any Optionee, legal representative, heir, legatee or distributee, as a condition precedent to such payment, to execute a release and receipt therefore in such form as it shall determine. 
  
 3.13 No Guarantee of Interests. Neither the Board nor the Company
guarantees the Stock from loss or depreciation. 
  
 3.14
Payment of Expenses. All expenses incident to the administration, termination or protection of the Plan, including, but not limited to, legal and accounting fees, shall be paid by the Company. 
  
 3.15 Company Records. Records of the Company and any Affiliate
regarding the Optionee’s period of service, termination of service and the reason therefore, leaves of absence, and other matters shall be conclusive for all purposes hereunder, unless determined by the Board to be incorrect. 
  
 3.16 Information. The Company and any Affiliate shall, upon request or
as may be specifically required hereunder, furnish or cause to be furnished all of the information or documentation which is necessary or required by the Committee to perform its duties and functions under the Plan. 
  

 7 








 3.17 No Liability of Company. The Company assumes no obligation or responsibility to the Optionee
or his or her personal representatives, heirs, legatees or distributees for any act of, or failure to act on the part of, the Board or the Committee. 
  
 3.18 Company Action. Any action required of the Company shall be by resolution of the Board or by a person authorized to act by Board resolution.

  
 3.19 Severability. If any provision of this Plan shall
be held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had
never been included herein. 
  
 3.20 Notice. Whenever any
notice is required or permitted hereunder, such notice must be in writing and personally delivered or sent by mail. Except as otherwise provided in Section 3.4 of this Plan, any notice required or permitted to be delivered hereunder shall be deemed
to be delivered on the date on which it is personally delivered or, whether actually received or not, on the third (3rd) business day after it is deposited in the United States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified by written notice delivered in accordance herewith. The Company or an Optionee may change, at any time and from time to time, by written notice to the other, the address
which it or he or she had theretofore specified for receiving notice. Until it is changed in accordance herewith, the Company and each Optionee shall specify as its and his or her address for receiving notice the address set forth in the Option
Agreement pertaining to the shares to which such notice relates. 
  
 3.21 Waiver of Notices. Any person entitled to notice hereunder may waive such notice. 
  
 3.22 Successors. The Plan shall be binding upon the Optionee, his or her heirs, legatees and legal representatives, upon the Company, its
successors and assigns and upon the Board and its successors. 
  
 3.23 Headings. The titles and headings of sections and paragraphs are included for convenience of reference only and are not to be considered in construction of the provisions hereof. 
  
 3.24 Word Usage. Words used in the masculine shall apply to the
feminine where applicable and, wherever the context of this Plan dictates, the plural shall be read as the singular and the singular as the plural. 
  

 8