Papa Johns 2002 Annual Report Download - page 62

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17. Stockholder Protection Rights Agreement
On February 14, 2000, the Board of Directors of the Company adopted a Stockholder Protection Rights
Agreement (the “Rights Plan”). Under the terms of the Rights Plan, one preferred stock purchase right
was distributed as a dividend on each outstanding share of Papa John’s common stock held of record as of
the close of business on March 1, 2000. The rights generally would not become exercisable until a person
or group acquired beneficial ownership of 15% or more of the Company’s common stock in a transaction
that was not approved in advance by the Board of Directors. In December 2002, the Board of Directors of
the Company adopted an amendment to the Rights Plan to permit a stockholder who becomes the owner
of 15% or more of the Company’s outstanding common stock due to the Company’s repurchase of
outstanding shares to acquire up to an additional 1% of the outstanding shares without triggering the
Agreement’s dilution provisions. The Company’s Founder and CEO, John Schnatter, who owns
approximately 30% of the outstanding common stock, will be excluded from operation of the Rights Plan
unless (together with his affiliates and family members) he acquires more than 40% of the Company’s
common stock.
If the rights are triggered, then each right owned by a stockholder other than the unapproved acquirer
entitles its holder to purchase shares of Company common stock at 50% of its market price. In addition,
after the rights are triggered, if the Company is acquired by an unapproved acquirer in a merger or other
business combination transaction, each right that has not previously been exercised will entitle its holder
to purchase, at the right’s current exercise price, common shares of such other entity having a value of
twice the right’s exercise price. The Company may redeem the rights for a nominal amount at any time
prior to an event that causes the rights to become exercisable.
18. Stock Options
We award stock options from time to time under the Papa John’s International, Inc. 1993 Stock
Ownership Incentive Plan (the “1993 Plan”), the Papa John’s International, Inc. 1993 Non-Employee
Directors Stock Option Plan (the “Directors Plan”) and the Papa John’s International, Inc. 1999 Team
Member Stock Ownership Plan (the “1999 Plan”). Shares of common stock authorized for issuance are
6,400,000 under the 1993 Plan, 370,000 under the Directors Plan and 1,000,000 under the 1999 Plan. As
of December 29, 2002, approximately 1.9 million shares were available for future issuance under the
1993 and 1999 plans and 84,000 shares under the Directors Plan. Options granted under all plans
generally expire ten years from the date of grant and vest over one to five-year periods, except for certain
options awarded under a previous, multi-year operations compensation program that vested immediately
upon grant.
The 1993 Plan and the Directors Plan terminate on April 15, 2003. Under the terms of the 1999 Plan,
shares of common stock reserved for issuance under the 1993 Plan in excess of awards thereunder, plus
shares for which awards lapsed, expired, terminated or were cancelled, are also reserved for issuance
under the 1999 Plan. We expect that approximately 1.9 million shares will remain available for issuance
under the 1999 Plan following the termination of the 1993 Plan.