EXHIBIT 10

 

PAPA JOHN’S INTERNATIONAL, INC.

2003 STOCK OPTION PLAN

FOR NON-EMPLOYEE DIRECTORS

 

1.                                      Purpose.  The purpose of this 2003 Stock
Option Plan for Non-Employee Directors (“Plan”) is to promote the interests of
Papa John’s International, Inc. (“Company”), its subsidiaries and its
stockholders by encouraging non-employee directors to acquire an ownership
interest in the Company.  Such investments should increase the personal interest
and the special effort of such persons in working for the continued success and
progress of the Company.  In addition, the incentives provided by the Plan
should enhance the Company’s efforts to attract and retain highly qualified
non-employee directors.

 

2.                                      Definitions.  The following terms when
used in this Plan (whether singular or plural form) shall have the meanings set
forth below, unless a different meaning is plainly required by the context.

 

a.                                       Board.  The Board of Directors of the
Company.

 

b.                                       Change in Control.  A Change in Control
shall occur upon the occurrence of an event or events that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act; provided that, without limitation, a Change
in Control shall be deemed to have occurred if  (i) any “person” or “group” (as
such terms are used in Section 13(d) and 14(d) of the Exchange Act) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company’s then outstanding securities
(other than the Company or any employee benefit plan of the Company and other
than John H. Schnatter unless his beneficial ownership exceeds 40% of the
combined voting power of the Company’s then outstanding securities) (ii)
stockholders of the Company shall approve any consolidation or merger of the
Company in which the Company is not the surviving or continuing corporation or
pursuant to which the shares of Common Stock  would be converted into cash,
securities or other property, other than a merger of the Company in which the
stockholders of the Company immediately prior to the merger have (directly or
indirectly) at least an 80% ownership in the outstanding voting stock of the
surviving corporation immediately after the merger, (iii) stockholders of the
Company shall approve any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company, (iv) stockholders of the Company shall approve any
plan or proposal for the liquidation or dissolution of the Company, or

 

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(D) as the result of, or in connection with, any cash tender offer, exchange
offer, merger or other business combination, sale of assets, proxy or consent
solicitation (other than by the Board), contested election or substantial stock
accumulation (a “Control Transaction”), the members of the Board immediately
prior to the first public announcement relating to such Control Transaction
shall thereafter cease to constitute a majority of the Board.

 

c.                                       Code.  The Internal Revenue Code of
1986, as amended from time to time, or any successor thereto.

 

d.                                       Committee.  The Committee provided for
in Section 6.

 

e.                                       Common Stock.  Shares of the Company’s
common stock, par value $.01 per share.

 

f.                                         Company.  Papa John’s International,
Inc., a Delaware corporation.

 

g.                                      Disability.  Permanent or total
disability within the meaning of section 22(e)(3) of the Code.

 

h.                                      Exchange Act.  The Securities Exchange
Act of 1934, as amended.

 

i.                                         Fair Market Value.  The fair market
value of a share of Common Stock, as of any applicable date.  If the Common
Stock is listed on the NASDAQ National Market System or a national or regional
stock exchange, the Fair Market Value shall be the closing sale price of the
Common Stock on any applicable date.  If there are no Common Stock transactions
reported for such date, the determination shall be made as of the last
immediately preceding date on which Common Stock transactions were reported.  If
the Common Stock is not listed on the NASDAQ National Market System or a
national or regional stock exchange, the Fair Market Value of the Common Stock
as of a particular date shall be determined by such method as shall be
determined by the Committee.

 

j.                                         Non-Employee Director.  A member of
the Board who is not an employee of the Company or any of its subsidiaries.

 

k.                                     Option.  An option granted to an Optionee
pursuant to the Plan.

 

l.                                         Option Agreement.  A written
agreement between the Company and an Optionee evidencing the grant of an Option
and containing terms and conditions concerning the exercise of the Option.

 

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m.                                   Option Price.  The price to be paid for
shares to be purchased pursuant to the exercise of an Option.

 

n.                                      Optionee.  A Non-Employee Director who
has been granted an Option or the personal representative, heir or legatee of an
Optionee who has the right to exercise the Option upon the death of the original
Optionee.

 

o.                                       Person.  A person as that term is
defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and
14(d) of the Exchange Act, including a “group” as defined in Section 13(d).

 

p.                                       Plan.  This 2003 Stock Option Plan for
Non-Employee Directors, as the same may be amended from time to time.

 

3.                                      Shares Subject to the Plan.  The shares
available for issuance under the Plan shall be shares of Common Stock, which may
be unissued shares or treasury shares.  Subject to adjustment as provided in
Section 7, the total number of shares of Common Stock authorized for issuance
under the Plan shall be 350,000 shares.  Within the foregoing limitations,
shares for which Options have been granted but which have lapsed or have
otherwise terminated shall become available for the grant of additional Options
under the Plan.

 

4.                                      Grant of Options.

 

a.                                       Initial Grants.  Each Non-Employee
Director who is serving as a director of the Company as of August 5, 2003, shall
be granted an Option to purchase 7,000 shares of Common Stock.  Notwithstanding
the foregoing, the Plan shall be submitted to stockholders of the Company for
approval at the next annual meeting of stockholders convened after the date of
the Plan (“Next Annual Meeting”) and if the Plan is not approved by stockholders
at the Next Annual Meeting, all Options granted before the Next Annual Meeting
shall automatically become null and void.

 

b.                                       Additional Annual Grants.  Provided
that stockholder approval of the Plan is obtained at the Next Annual Meeting, on
the date of the Next Annual Meeting and on the date of each subsequent annual
meeting of stockholders (“Annual Meeting Date”) held prior to the termination or
expiration of the Plan, each Non-Employee Director who is serving as a director
of the Company on such Annual Meeting Date shall automatically be granted an
Option to purchase 7,000 shares of Common Stock provided that: (i) such
Non-Employee Director shall have continually served as a director of the Company
since the previous Annual Meeting Date and (ii)

 

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the number of shares of Common Stock available for issuance under the Plan is
sufficient to permit such automatic grant.

 

c.                                       Additional Interim Grants.  Each
Non-Employee Director who is elected or appointed on or after the date of the
adoption of the Plan on a date other than an Annual Meeting Date shall be
granted an Option to purchase a number of shares of Common Stock equal to the
product of (i) 7,000 multiplied by (ii) a fraction, the numerator of which is
the number of months remaining until the next Annual Meeting Date, and the
denominator of which is 12.

 

5.                                      Terms and Conditions of Options.  All
Options granted under the Plan shall be subject to the following terms and
conditions which shall be set forth in the Option Agreement:

 

a.                                       Number of Shares.  The number of shares
of Common Stock to which the Option pertains shall be the number set forth in
Section 4.

 

b.                                       Exercise Price.  The exercise price of
the Option shall be equal to the Fair Market Value of the Common Stock on the
date of grant.

 

c.                                       When Exercisable.  The Option shall
become exercisable with respect to all shares of Common Stock to which the
Option pertains one year following the date of grant and, subject to Section
5(g), shall thereafter continue to be exercisable during the term of the Option.

 

d.                                       Payment of Exercise Price.  The Option
Price shall be paid in cash at the time of exercise, except that in lieu of all
or a portion of the cash, the Optionee may tender to the Company shares of
Common Stock owned by the Optionee having a Fair Market Value at the close of
business on the date the Company receives the notice of exercise equal to the
exercise price, less any cash paid.  The Company, in its sole discretion, may
establish cashless exercise procedures whereby a Non-Employee Director, subject
to the requirements of Rule 16b-3 under the Exchange Act, Federal income tax
laws, the Sarbanes-Oxley Act of 2002 and other Federal, state and local tax,
corporate and securities laws may exercise an Option or a portion thereof
without making a direct payment of the option price to the Company.  If the
Company so elects to establish a cashless exercise program, the administrative
procedures and policies shall be binding on any Optionee wishing to utilize the
cashless exercise program.

 

e.                                       Term of the Option.  The term of the
Option shall be 30 months.

 

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f.                                         Non-Transferability of Option.  The
Option shall not be transferable by the Optionee otherwise than by bequest or
the laws of descent and distribution, and shall be exercisable during the
Optionee’s lifetime only by the Optionee.  Notwithstanding anything herein to
the contrary, an Optionee may transfer all or a portion of the Option to (i)
Optionee’s spouse or lineal descendants (“Family Members”), (ii) a trust for the
exclusive benefit of the Optionee and/or Family Members, (iii) a charitable
remainder trust of which the Optionee and/or Family Members  are the exclusive
beneficiaries (other than the charitable beneficiary), or (iv) a partnership or
a limited liability company in which the Optionee and Family Members are the
sole partners or members, as applicable.  In the event that any Option is
transferred by an Optionee in accordance with the provisions of the immediately
preceding sentence, then subsequent transfers of the Option by the transferee
shall be prohibited.  For purposes of the Option Agreement and the Plan, the
term “Optionee” shall be deemed to refer to the transferee wherever applicable,
and the provisions of Section 5(g) regarding termination of the Option shall
refer to the Optionee, not the transferee, but the transferee shall be permitted
to exercise the Option during the period provided for in Section 5(g) following
the Optionee ceasing to be a director.

 

g.                                      Termination of Option.

 

i.                                         Other Than for Death, Disability or
Removal for Cause.  If the Optionee ceases to be a director of the Company for
any reason other than death, disability or removal for cause, the Option shall
terminate three months after the Optionee ceases to be a director of the Company
(unless the Optionee dies during such period), or on the Option’s expiration
date, if earlier, and shall be exercisable during such period after the Optionee
ceases to be a director of the Company only with respect to the number of shares
which the Optionee was entitled to purchase on the day preceding the date on
which the Optionee ceased to be a director.

 

ii.                                     Removal for Cause.  If the Optionee
ceases to be a director of the Company because of removal for cause, the Option
shall terminate on the date of the Optionee’s removal.

 

iii.                                 Death or Disability.  In the event of the
Optionee’s death or Disability while a director of the Company, or the
Optionee’s death within three months after the Optionee ceases to be a director
(other than by reason of removal for cause), the Option shall terminate upon the
earlier to occur of (A) 12 months after the date

 

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of the Optionee’s death or Disability or (B) the Option’s expiration date.  The
Option shall be exercisable during such period after the Optionee’s death or
Disability with respect to the number of shares as to which the Option shall
have been exercisable on the date preceding the Optionee’s death or Disability,
as the case may be.

 

6.                                      Administration.

 

a.                                       The Committee.  The Plan is designed to
operate automatically and not require any administration.  To the extent
administration is required, it shall be provided by the Nominating and Corporate
Governance Committee of the Board, or by any other committee appointed by the
Board which shall include two or more directors of the Company who are
“disinterested persons” within the meaning of Rule 16b-3 (or any successor
provision) under the Exchange Act  and “independent directors” within the
meaning of Section 163(m) under the Code (“Committee”).  The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board.

 

b.                                       Authority of the Committee.  Subject to
the provisions of the Plan, the Committee shall have the authority to:

 

i.                                         Construe and interpret the Plan and
any agreement or instrument entered into under the Plan;

 

ii.                                     Determine the application of the rights,
conditions and restrictions provided for herein with respect to Options; and

 

iii.                                 Establish, amend and rescind rules and
procedures for the Plan’s administration.

 

The Committee shall have sole discretion to make all other determinations which
may be necessary or advisable for the administration of the Plan.  To the extent
permitted by law and Rule 16b-3 under the Exchange Act, the Committee may
delegate its authority under the Plan.

 

c.                                       Decisions Binding.  All determinations
and decisions made by the Committee pursuant to the provisions of the Plan, and
all related orders or resolutions of the Board, shall be final, conclusive and
binding upon all persons, including the Company, the Non-Employee Directors and
their representatives, estates and beneficiaries.

 

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d.                                       Section 16 Compliance.  It is the
intention of the Company that the Plan and the administration of the Plan comply
in all respects with Section 16(b) of the Exchange Act and the rules and
regulations promulgated thereunder.  If any Plan provision or any aspect of the
administration of the Plan is found not to be in compliance with Section 16(b)
of the Exchange Act, the provision or administration shall be deemed null and
void and in all events the Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3 under the Exchange Act.

 

7.                                      Adjustments Upon Change in
Capitalization.  Notwithstanding the limitations set forth in Section 3, in the
event of a merger, consolidation, reorganization, recapitalization,
reclassification, liquidation, split-up, spin-off, separation, stock dividend,
stock split, reverse stock split, share combination, share exchange or other
change in the corporate structure or capitalization affecting the Common Stock,
or in the event of an extraordinary cash or noncash dividend being declared with
respect to the Common Stock, the Committee shall equitably substitute or adjust
(i) the total number and kind of shares available under the Plan for issuance of
Options, and (ii) the number, kind and Option Price of shares subject to Options
outstanding under the Plan in order to prevent dilution or enlargement of the
rights of Non-Employee Directors under the Plan and outstanding Options.

 

8.                                      Amendment and Discontinuance.

 

a.                                       General.  Except as provided in Section
8(b), the Board may discontinue, amend, modify or terminate the Plan at any
time.

 

b.                                       Securities Law Requirements.  To the
extent required to meet the conditions for exemption from Section 16(b) under
the Exchange Act or the requirements of the NASDAQ National Market System, any
national securities or regional securities exchange on which the Common Stock is
the listed or reported, or the requirements of any regulatory body having
jurisdiction with respect thereto, amendments to the Plan shall be subject to
stockholder approval.

 

c.                                       No Effect on Outstanding Options.  Any
Option which is outstanding under the Plan at the time of the Plan’s amendment
or termination shall remain in effect in accordance with its terms, conditions
and restrictions and those of the Plan in effect when the Option was granted.

 

10.                               Merger, Consolidation or Similar Transaction.

 

a.                                       Conversion Upon Merger, Consolidation
or Acquisitions.  In the event the Company merges or consolidates with another
corporation, or all or

 

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substantially all of the Company’s capital stock or assets are acquired by
another corporation and the surviving corporation issues shares of its stock to
the Company’s stockholders in connection with the merger, consolidation or
acquisition, the surviving or acquiring corporation shall adopt the Plan and,
upon the exercise of an Option, the Optionee shall, at no additional cost (other
than the Option Price), be entitled to receive, in lieu of the number of shares
of Common Stock to which the Option is then exercisable, the number and class of
shares of stock or other securities to which the Optionee would have been
entitled pursuant to the terms of the merger, consolidation or acquisition if
immediately prior thereto the Optionee had been the holder of record of the
number of shares of Common Stock equal to the number of shares of Common Stock
as to which the Option shall then be exercisable.

 

b.                                       No Conversion Upon Certain Mergers,
Consolidations or Acquisitions.  In the event that the Company merges or
consolidates with another corporation, or all or substantially all of the
Company’s capital stock or assets are acquired by another corporation, and the
surviving or acquiring corporation does not issue shares of its stock to the
Company’s stockholders in connection with the merger, consolidation or
acquisition, then, notwithstanding any other provision of the Plan to the
contrary, no Option may be exercised after the effective date of the merger,
consolidation or acquisition.

 

11.                               Change in Control.  Notwithstanding the
provisions of Section 5, if the Company’s stockholders have approved the Plan,
immediately upon a Change in Control, the Optionee shall have the right to
exercise all Options in full.

 

12.                               Effectiveness and Termination of Plan.

 

a.                                       Effective Date.  The Plan shall become
effective upon adoption by the Board.  Notwithstanding the foregoing, the Plan
is subject to stockholder approval and any and all Options granted hereunder
shall automatically become null and void in the event that stockholder approval
of the Plan is not obtained at the Next Annual Meeting.

 

b.                                       Termination Date.  The Plan shall
terminate on the earliest to occur of (i) the date when all the Common Stock
available under the Plan shall have been acquired through the exercise of
Options granted under the Plan; (ii) 5 years after the date of adoption of the
Plan by the Board; and (iii) such other date as the Board may determine.

 

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13.                               No Right of Re-election.  Neither the Plan,
nor any action taken under the Plan, shall be interpreted as conferring upon a
Non-Employee Director any right to continue as a director of the Company, or to
be renominated by the Nominating and Corporate Governance Committee or reelected
by stockholders of the Company.

 

14.                               Indemnification.  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, the Committee and each officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation.

 

15.                               Severability.  In the event any provision of
the Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of the Plan.  In all events, the
Plan shall be construed and enforced to the maximum extent permitted by
applicable law.

 

16.                               Governing Law.  The Plan shall be governed by,
and construed in accordance with, the laws of the State of Delaware without
regard to its conflicts of laws rules.

 

 

Dated: August 6, 2003

PAPA JOHN’S INTERNATIONAL,  INC.

 

 

 

 

 

By:

/s/ John H. Schnatter

 

 

 

 

Title:

Chairman, Chief Executive
Officer and President

 

 

 

 

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